<SUBMISSION>
<ACCESSION-NUMBER>0000905148-03-001614
<TYPE>SC 13D/A
<PUBLIC-DOCUMENT-COUNT>9
<FILING-DATE>20030416
<GROUP-MEMBERS>ARTHUR COADY
<GROUP-MEMBERS>CORYTON MANAGEMENT LTD.
<GROUP-MEMBERS>DAVID J. MATLIN
<GROUP-MEMBERS>ELIAS SABO
<GROUP-MEMBERS>I. JOSEPH MASSOUD
<GROUP-MEMBERS>INLAND PARTNERS, L.P.
<GROUP-MEMBERS>LINKS PARTNERS, L.P.
<GROUP-MEMBERS>MARK R. PATTERSON
<GROUP-MEMBERS>MATLIN PATTERSON ASSET MANAGEMENT LLC
<GROUP-MEMBERS>MATLIN PATTERSON GLOBAL ADVISERS LLC
<GROUP-MEMBERS>MATLIN PATTERSON GLOBAL PARTNERS LLC
<GROUP-MEMBERS>MATLIN PATTERSON LLC
<GROUP-MEMBERS>MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS B, L.P.
<GROUP-MEMBERS>MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.
<GROUP-MEMBERS>MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS(BERMUNDA)L.P
<FILED-BY>
<COMPANY-DATA>
<CONFORMED-NAME>MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS LP
<CIK>0001203389
<IRS-NUMBER>000000000
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 13D/A
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>520 MADISON AVENUE
<STREET2>9TH FLOOR
<CITY>NEW YORK
<STATE>NY
<ZIP>10022
<PHONE>212 651 9500
</BUSINESS-ADDRESS>
</FILED-BY>
<SUBJECT-COMPANY>
<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>SC 13D/A
<ACT>34
<FILE-NUMBER>005-44909
<FILM-NUMBER>03653196
</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>
</SUBJECT-COMPANY>
<DOCUMENT>
<TYPE>SC 13D/A
<SEQUENCE>1
<FILENAME>efc3-0670_5355217sch13d.txt
<TEXT>
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 SCHEDULE 13D
                                (Rule 13d-101)

                   Under the Securities Exchange Act of 1934
                               (Amendment No. 7)

                       Personnel Group of America. Inc.
                       --------------------------------
                               (Name of Issuer)

                    Common Stock, par value $0.01 per share
                        (Title of Class of Securities)

                                   715338109
                                (CUSIP Number)

              MatlinPatterson Global Opportunities Partners L.P.
         MatlinPatterson Global Opportunities Partners (Bermuda) L.P.
             MatlinPatterson Global Opportunities Partners B, 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.
                               Mark R. Patterson
                                David J. Matlin
                                 Arthur Coady
                                  Elias Sabo
                               I. Joseph Massoud

                           (Name of Persons Filing)

<TABLE>
<CAPTION>

<S>                              <C>                                    <C>
    Mark R. Patterson             Joseph Milana and Chrissie Neves      Joseph Milana and Chrissie Neves
   MatlinPatterson LLC                   Links Partners, LP                   Inland Partners, LP
    520 Madison Avenue                    61 Wilton Avenue,                    61 Wilton Avenue,
 New York, New York 10022                     2nd Floor                            2nd Floor
Telephone: (212) 651-9555            Westport, Connecticut 06880          Westport, Connecticut 06880
                                      Telephone: (203) 221 1703            Telephone: (203) 221-l703
</TABLE>

           (Name, Address and Telephone Number of Person Authorized
                    to Receive Notices and Communications)

                                April 14, 2003
            (Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-l(e), 13d-l(f) or 13d-l(g), check the
following box [X]

Note: Schedules filed in paper format shall include a signed original and five
copies of the Schedule, including all exhibits. See Rule 13d-7 for other
parties to whom copies are to be sent.

The information required on this cover page shall not be deemed to be "filed"
for the purpose of Section 18 of the Securities Exchange Act of 1934
("Exchange Act") or otherwise subject to the liabilities of that section of
the Exchange Act but shall be subject to all other provisions of the Exchange
Act (however, see the Notes)

                        (Continued on following pages)



                                 Page 1 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ---------------------------------------------------------
CUSIP No.             715338109                                  Page 2 of 32
--------------------- ---------------------------------------------------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                    MatlinPatterson Global Opportunities Partners L.P.
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP        (a) |_|
                                                                       (b) |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                       |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                          0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                     73,301,898.5
-------------------------------------------------------------------------------
     11         AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                PERSON
                          73,301,898.5
-------------------------------------------------------------------------------
     12        CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES                                       |_|
-------------------------------------------------------------------------------
     13        PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14        TYPE OF REPORTING PERSON
                          PN
-------------------------------------------------------------------------------



                                 Page 2 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ------------------------------------------- -------------
CUSIP No.             715338109                                   Page 3 of 32
--------------------- ------------------------------------------- -------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                   MatlinPatterson Global Opportunities Partners (Bermuda) L.P.
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a)  |_|
                                                                   (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Bermuda
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                   73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                         0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                     73,301,898.5
-------------------------------------------------------------------------------
     11         AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                PERSON
                          73,301,898.5
-------------------------------------------------------------------------------
     12        CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES                                         |_|
-------------------------------------------------------------------------------
     13        PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14        TYPE OF REPORTING PERSON
                          PN
-------------------------------------------------------------------------------



                                 Page 3 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- -------------------------------------------- ------------
CUSIP No.             715338109                                    Page 4 of 32
--------------------- -------------------------------------------- ------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       MatlinPatterson Global Opportunities Partners B, L.P.
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a)  |_|
                                                                   (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------- ----------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                     881,448.45
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                          0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                       932,824
-------------------------------------------------------------------------------
     11         AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
                          932,824
-------------------------------------------------------------------------------
     12        CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES                                           |_|
-------------------------------------------------------------------------------
     13        PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          1.82%
-------------------------------------------------------------------------------
     14        TYPE OF REPORTING PERSON
                          PN
-------------------------------------------------------------------------------



                                 Page 4 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ---------------------------------------------------------
CUSIP No.             715338109                                   Page 5 of 32
--------------------- ---------------------------------------------------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       Links Partners, L.P.
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP     (a)  |_|
                                                                    (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Bermuda
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                         0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                     73,301,898.5
-------------------------------------------------------------------------------
     11         AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
                          73,301,898.5
-------------------------------------------------------------------------------
     12        CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES                                           |_|
-------------------------------------------------------------------------------
     13        PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14        TYPE OF REPORTING PERSON
                          PN
-------------------------------------------------------------------------------



                                 Page 5 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ------------------------------------------- -------------
CUSIP No.             715338109                                   Page 6 of 32
--------------------- ------------------------------------------- -------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       Inland Partners, L.P.
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a)  |_|
                                                                   (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Bahamas
-------------------------------------------------------------------------------
    SHARES                   7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                             8                SHARED VOTING POWER
                                                   73,301,898.5
-------------------------------------------------------------------------------
                             9                SOLE DISPOSITIVE POWER
                                                        0
-------------------------------------------------------------------------------
                             10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11        AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
                          73,301,898.5
-------------------------------------------------------------------------------
     12        CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES                                           |_|
-------------------------------------------------------------------------------
     13        PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14        TYPE OF REPORTING PERSON
                          PN
-------------------------------------------------------------------------------



                                 Page 6 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ------------------------------------------- -------------
CUSIP No.             715338109                                   Page 7 of 32
--------------------- ------------------------------------------- -------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       MatlinPatterson Global Advisers LLC
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a)  |_|
                                                                   (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------
    SHARES                   7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                    73,301,898.5
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                             8                SHARED VOTING POWER
                                                       0
-------------------------------------------------------------------------------
                             9                SOLE DISPOSITIVE POWER
                                                       0
-------------------------------------------------------------------------------
                             10               SHARED DISPOSITIVE POWER
                                                   73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          IA
-------------------------------------------------------------------------------



                                 Page 7 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ------------------------------------------ --------------
CUSIP No.             715338109                                  Page 8 of 32
--------------------- ------------------------------------------ --------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       David J. Matlin
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP     (a)  |_|
                                                                    (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                        0
------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          IN
-------------------------------------------------------------------------------



                                 Page 8 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ------------------------------------------- -------------
CUSIP No.             715338109                                   Page 9 of 32
--------------------- ------------------------------------------- -------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       Mark R. Patterson
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a)  |_|
                                                                  (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------
    SHARES                   7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                         0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          IN
-------------------------------------------------------------------------------



                                 Page 9 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ---------------------------------------- ----------------
CUSIP No.             715338109                                Page 10 of 32
--------------------- ---------------------------------------- ----------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       MatlinPatterson Global Partners LLC
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP  (a)  |_|
                                                                 (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                         0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          HC
-------------------------------------------------------------------------------



                                 Page 10 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ----------------------------------------- ---------------
CUSIP No.             715338109                                 Page 11 of 32
--------------------- ----------------------------------------- ---------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       MatlinPatterson Asset Management LLC
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a)  |_|
                                                                   (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                          0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          HC
-------------------------------------------------------------------------------



                                 Page 11 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ----------------------------------------- ---------------
CUSIP No.             715338109                                 Page 12 of 32
--------------------- ----------------------------------------- ---------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       MatlinPatterson LLC
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a)  |_|
                                                                  (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                         0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                          73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          HC
-------------------------------------------------------------------------------



                                 Page 12 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ---------------------------------------- ----------------
CUSIP No.             715338109                                Page 13 of 32
--------------------- ---------------------------------------- ----------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       Coryton Management Ltd.
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a)  |_|
                                                                  (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Bahamas
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                         0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          CO, HC
-------------------------------------------------------------------------------



                                 Page 13 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ---------------------------------------- ----------------
CUSIP No.             715338109                                Page 14 of 32
--------------------- ---------------------------------------- ----------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       Arthur Coady
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a)  |_|
                                                                  (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Canada
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNE  BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                         0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          IN
-------------------------------------------------------------------------------



                                 Page 14 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ------------------------------------------ --------------
CUSIP No.             715338109                                  Page 15 of 32
--------------------- ------------------------------------------ --------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       Elias Sabo
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a)  |_|
                                                                  (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           United States of America
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                   73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                        0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                   73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          IN
-------------------------------------------------------------------------------



                                 Page 15 of 32
<PAGE>

                                 SCHEDULE 13D

--------------------- ----------------------------------------- ---------------
CUSIP No.             715338109                                 Page 16 of 32
--------------------- ----------------------------------------- ---------------
      1        NAMES OF REPORTING PERSONS
               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
                       I. Joseph Massoud
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a)  |_|
                                                                  (b)  |X|
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           |_|
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           United States of America
-------------------------------------------------------------------------------
    SHARES                    7                SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                          0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------
                              8                SHARED VOTING POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
                              9                SOLE DISPOSITIVE POWER
                                                         0
-------------------------------------------------------------------------------
                              10               SHARED DISPOSITIVE POWER
                                                    73,301,898.5
-------------------------------------------------------------------------------
     11              AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                     PERSON
                     73,301,898.5
-------------------------------------------------------------------------------
     12              CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                     CERTAIN SHARES                                     |_|
-------------------------------------------------------------------------------
     13              PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                          66.90%
-------------------------------------------------------------------------------
     14              TYPE OF REPORTING PERSON
                          IN
-------------------------------------------------------------------------------


                                 Page 16 of 32
<PAGE>



Introduction.
-------------

This Amendment No. 7 amends and supplements the Schedule 13D filed on April 5,
2002 (the "Initial Schedule 13D"), as amended and supplemented by Amendment
No. 1 to Schedule 13D, filed on June 5, 2002 ("Amendment No. l"), Amendment
No. 2 to Schedule 13D, filed on July 25, 2002 ("Amendment No. 2"), Amendment
No. 3 to Schedule 13D, filed on July 31, 2002 ("Amendment No. 3"), Amendment
No. 4 to Schedule 13D, filed on August 30, 2002 ("Amendment No. 4"), Amendment
No. 5 to Schedule 13D, filed on November 20, 2002 ("Amendment No. 5") and
Amendment No. 6 to Schedule 13D, filed on March 17, 2003. The Initial Schedule
13D, Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4,
Amendment No. 5, Amendment No. 6 and Amendment No. 7 are collectively referred
to herein as "Schedule 13D".

Capitalized terms used and not defined in this Amendment No. 7 shall have the
meanings set forth in Schedule 13D.

Schedule 13D was originally filed by (i) Credit Suisse First Boston, a Swiss
bank, on behalf of itself and its subsidiaries to the extent that they
constituted part of the investment banking business of the Credit Suisse First
Boston business unit ("CSFB Business Unit"), in accordance with Securities and
Exchange Commission Release No. 34-39538 (January 12, 1998); (ii) CSFB Global
Opportunities Partners, L.P., a limited partnership organized under the laws
of Delaware ("CSFB Partners (Delaware)"), CSFB Global Opportunities Partners
(Bermuda), L.P., an exempted limited partnership organized under the laws of
Bermuda ("CSFB Partners (Bermuda)"), Links Partners, L.P., a Bahamian exempted
limited partnership ("Links"), and Inland Partners, L.P., a Bahamian exempted
limited partnership ("Inland"), by virtue of their beneficial ownership of the
5-3/4% Convertible Subordinated Notes due July 2004 (the "Notes") of Personnel
Group of America, Inc. (the "Issuer"), which were immediately convertible into
shares of common stock, par value $0.01 per share, of the Issuer (the "Issuer
Common Stock"), (iii) Hemisphere Global Opportunities Partners, Ltd., a
Bermuda corporation ("Hemisphere Partners"), as general partner of CSFB
Partners (Delaware) and CSFB Partners (Bermuda), (iv) Mutual Trust Management
(Bermuda) Limited (formerly The Hemisphere Trust Company Limited), a Bermuda
licensed trust company ("Mutual Trust"), the trustee of The Hemisphere Global
Opportunities Partners Charitable Trust, as the sole shareholder of Hemisphere
Partners, (v) Coryton Management Ltd., a Bahamian corporation ("Coryton"), as
general partner of Links and Inland, (vi) Arthur Coady, as director and sole
shareholder of Coryton and (vii) Elias Sabo and I. Joseph Massoud, as
attorneys-in-fact for each of Links and Inland, who have investment authority
over securities held by Links and Inland, with respect to the Common Stock.

Among other things, (i) Amendment No. 2 deleted Credit Swiss First Boston, on
behalf of itself and its subsidiaries to the extent they constituted part of
the CSFB Business Unit, as a Reporting Person, (ii) Amendment No. 3 added
MatlinPatterson LLC ("MatlinPatterson"), MatlinPatterson Asset Management LLC
("Matlin Asset Management") and MatlinPatterson Global Advisers LLC ("Matlin
Advisers") as Reporting Persons, and reflected the name changes of CSFB
Partners (Delaware) and CSFB Partners (Bermuda) to MatlinPatterson Global
Opportunities Partners L.P. ("Matlin Partners (Delaware)") and MatlinPatterson
Global Opportunities Partners (Bermuda) L.P. ("Matlin Partners (Bermuda)"),
respectively, (iii) Amendment No. 4 deleted Hemisphere Partners and Mutual
Trust as Reporting Persons and added MatlinPatterson Global



                               (Page 17 of 32)
<PAGE>

Partners LLC ("Matlin Partners") as a Reporting Person, (iv) Amendment No. 5
changed the address of the principal office and principal place of business
for MatlinPatterson, Matlin Asset Management, Matlin Partners, Matlin Advisers
and Matlin Partners (Delaware), disclosed the entering into of the Agreement
in Principal to negotiate terms of the Proposed Restructuring and the entering
into of the Purchase Option Agreement, disclosed various purchases of loans
and loan commitments by the Reporting Persons, disclosed the intent of each of
the Reporting Persons, and updated the interest in securities of the Issuer by
the Reporting Persons, and (v) Amendment No. 6 amended or corrected certain
information that changed since the filing of Amendment No. 5 and disclosed the
execution of the Restructuring Agreement among the Issuer, certain
subsidiaries of the Issuer, certain creditors of the Issuer, and certain
noteholders of the Issuer including Matlin Partners (Delaware), Inland and
Links on March 14, 2003 which related to a proposed restructuring of the
Issuer..

This Amendment No. 7 is filed on behalf of (i) Matlin Partners (Delaware),
Matlin Partners (Bermuda), MatlinPatterson Global Opportunities Partners B,
L.P. ("Matlin Partners B"), Links and Inland, by virtue of their beneficial
ownership of shares of Issuer Common Stock, Preferred Stock which are
immediately convertible into shares of Issuer Common shares of Issuer Common
Stock (subject to the restrictions discussed in Subsection F of Item 4 of
Amendment No. 7) and which entitle the holder to vote with the Issuer Common
Stock on an as-converted basis and warrants to purchase shares Issuer Common
Stock, (ii) Matlin Advisers, by virtue of its investment authority over
securities held by Matlin Partners (Delaware), Matlin Partners (Bermuda) and
Matlin Partners B, (iii) Matlin Partners, as general partner of Matlin
Partners (Delaware), Matlin Partners (Bermuda) and Matlin Partners B, (iv)
Matlin Asset Management, as the holder of all of the membership interests in
Matlin Partners and Matlin Advisers, (v) MatlinPatterson, as the holder of all
of the membership interests in Matlin Asset Management, (vi) Mark Patterson
and David Matlin, each as the holder of 50% of the membership interests in
MatlinPatterson (vii) Coryton, as general partner of Links and Inland, (viii)
Arthur Coady, as director and sole shareholder of Coryton and (ix) Elias Sabo
and I. Joseph Massoud, as attorneys-in-fact for each of Links and Inland, who
have investment authority over securities held by Links and Inland (Matlin
Partners (Delaware), Matlin Partners (Bermuda), Matlin Partners B, Links,
Inland, Matlin Advisers, Matlin Partners, Matlin Asset Management,
MatlinPatterson, Mark Patterson, David Matlin, Coryton, Arthur Coady, Elias
Sabo, and I. Joseph Massoud, collectively, the "Reporting Persons" and each a
"Reporting Person"), for purposes of (w) amending certain information that has
changed since the filing of Amendment No. 6, (x) disclosing the changes in the
holding of debt by the Reporting Persons under the credit facility, (y)
disclosing the closing on April 14, 2003 of the Notes Exchange as described
under the heading "The Notes Exchange" in Section D of Item 4 of Amendment No.
6 and (z) the entering into of the Second Amended and Restated Credit
Agreement and the related issuance to the Reporting Persons of common stock
purchase warrant shares and other changes in lieu of consummating the Loan
Exchange.

Item 4.  Purpose of Transaction.
         -----------------------

Subsections E of Item 4 of Schedule 13D is amended and restated in
their entirety as follows.  Subsection F will be added as follows:  Subsection
F in Amendment No. 6 will become subsection G and the second to last paragraph
of Subsection G is amended as follows.

E. PURCHASE OF DEBT UNDER CREDIT FACILITY.

On May 16, 2002, Matlin Partners (Delaware) purchased from a lender an
aggregate of $30.6 million of loan commitment ("Loans") under the Credit
Agreement (the "May 16th Purchase"). On August 12, 2002, Matlin Partners
(Delaware) purchased from a lender under the Credit


                               (Page 18 of 32)
<PAGE>


Agreement an additional $13.6 million of Loans (the "August 12th Purchase").
On November 4, 2002, Matlin Partners (Delaware) purchased from a lender under
the Credit Agreement an additional $13.6 million of Loans ("November 4th
Purchase"). Links and Inland have purchased approximately 50% of such Loans
from Matlin Partners (Delaware). As a result of the May 16th Purchase, the
August 12th Purchase and the November 4th Purchase, paydowns to principal on
the total commitment amount by the Issuer and the reduction of the total
commitment amount under the Credit Agreement by $22 million in connection with
the Issuer entering into the Purchase Option Agreement, the total commitment
amount under the Credit Agreement as of April 10, 2003, was $114 million and
Matlin Partners (Delaware), Links and Inland held an aggregate of
approximately $48.5 million which constituted approximately 42.5% of the total
commitment amount under the Credit Agreement.

On April 11, 2003, Matlin Partners (Delaware), Links and Inland each executed
a trade confirmation with another Restructuring Agreement Noteholder ("Trade
Noteholder") to sell debt under the existing Credit Agreement to such Trade
Noteholder. Pursuant to the trade confirmations, (i) Matlin Partners
(Delaware) agreed to sell $10,470,072.40 of the funded commitment and
$1,118,162.90 of the unfunded commitment (including issued but undrawn letters
of credit) under the Credit Agreement which constituted 50% of the funded and
unfunded commitment held by Matlin Partners (Delaware), (ii) Links agreed to
trade $5,672,174.77 of the funded commitment and $605,766.41 of the unfunded
commitment (including issued but undrawn letters of credit) under the Credit
Agreement which constituted 50% of the funded and unfunded commitment held by
Links and (iii) Inland agreed to sell $5,745,252.84 of the funded commitment
and $613,570.69 of the unfunded commitment (including issued but undrawn
letters of credit) under the Credit Agreement which constituted 50% of the
funded and unfunded commitment held by Links. Under all of the trade
confirmations, the Trade Noteholder agreed to pay 75% of the funded commitment
amounts and to assume all obligations and liabilities of the unfunded
commitment amounts purchased.

As discussed in Subsection F of Item 4 of Amendment No. 7 below, on April 14,
2003 the Issuer and the lenders under the Credit Agreement entered into the
Second Credit Agreement (as defined below). On April 11, 2003, in anticipation
of the Issuer and the lenders entering into the Second Credit Agreement,
Matlin Partners (Delaware) entered into a letter agreement (the "MP Debt
Option") with the Trade Noteholder pursuant to which (i) Matlin Partners
(Delaware) granted to the Trade Noteholder an option to purchase from Matlin
Partners (Delaware) 50% of the aggregate amount of any debt under the Second
Credit Agreement purchased or acquired by Matlin Partners (Delaware) or any of
its related, associated and affiliated persons and entities and (ii) the Trade
Noteholder granted to Matlin Partners (Delaware) an option to purchase from
the Trade Noteholder 25% of the aggregate amount of any debt under the Second
Credit Agreement purchased or acquired by the Trade Noteholder or any of its
related, associated and affiliated persons and entities. In addition, Inland
and Links entered into a letter agreement (the "Inland/Links Debt Option")
with the Trade Noteholder pursuant to which (i) Inland and Links granted to
the Trade Noteholder an option to purchase from Inland and Links 50% of the
aggregate amount of any debt under the Second Credit Agreement purchased or
acquired by Inland and Links or any of their related, associated and
affiliated persons and entities and (ii) the Trade Noteholder granted to Links
and Inland an option to purchase from the Trade Noteholder 25% of the
aggregate amount of any debt under the Second Credit Agreement purchased or
acquired by the Trade Noteholder or any of its related, associated and
affiliated persons. Under


                               (Page 19 of 32)
<PAGE>


each of the letter agreements, the entity exercising the option may purchase
the debt upon the same terms and conditions as the person granting the option.
The options granted under the letter agreements will expire on the termination
date of the letter agreements which is the earlier of May 1, 2005 or the
termination of the Second Credit Agreement.

This brief description of the MP Debt Option and the Inland/Links Debt Option
and the rights of Matlin Partners (Delaware), Inland and Links thereunder is
not intended to be complete and is qualified in its entirety by reference to
the full text of the MP Debt Option and the Inland/Links Debt Option, which
are annexed hereto as Exhibits 16 and 17, respectively, which are incorporated
herein by reference.

Subject to the foregoing agreements and arrangements, the Reporting Persons
may purchase or sell additional Loans pursuant to the Second Credit Agreement
in the future.

F. CLOSING OF NOTES EXCHANGE.

On April 14, 2003, the Notes Exchange was consummated in accordance with the
terms of the Restructuring Agreement as described under the heading "The Notes
Exchange" in Section D of Item 4 of Amendment No. 6. Pursuant to the Notes
Exchange, the Issuer issued to the Restructuring Agreement Noteholders, in the
aggregate, 20,940,425 shares of Issuer Common Stock and 1,044,433 shares of
Series B Convertible Participating Preferred Stock, par value $0.01 per share
of the Issuer ("Preferred Stock"), which together represent approximately 82%
of the outstanding Issuer Common Stock and the existing shareholders of the
Issuer retained ownership of their outstanding 26,881,212 shares of Issuer
Common Stock, which represent approximately 18% of the outstanding Issuer
Common Stock (assuming for this purpose conversion of all shares of Preferred
Stock and subject to dilution by the exercise of options under equity
incentive plans and Warrants (as described in Subsection F of Item 4 of
Amendment No. 7 and as defined therein)).

Each share of Preferred Stock is immediately convertible into 100 shares of
Issuer Common Stock; provided, that, pursuant to the terms of the certificate
of designation for the Preferred Stock, no shares of Preferred Stock may be
converted into shares of Issuer Common Stock until the Issuer's certificate of
incorporation is amended to increase the number of authorized shares of Issuer
Common Stock or to effect a reverse split of outstanding shares of Issuer
Common Stock, such that immediately following such amendment the number of
authorized but unissued shares of Issuer Common Stock shall be greater than
the number of shares of Issuer Common Stock into which all of the then
outstanding shares of Preferred Stock are convertible. The holders of
Preferred Stock vote together with the holders of the Issuer Common Stock as a
single class in the same manner as the holders of Common Stock. In addition,
each holder of shares of Preferred Stock is entitled to the number of votes
equal to the number of votes such holder would be entitled to if such holder
held the whole number of shares of Issuer Common Stock into which all of the
holder's shares of Preferred Stock would be convertible.

Pursuant to the Notes Exchange, Matlin Partners (Delaware) exchanged
$30,268,500 in principal amount of Notes and received $870,219.38 in cash,
5,779,952 shares of Issuer Common Stock and 288,283 shares of Preferred Stock.
Inland and Links are together exchanged an aggregate of


                               (Page 20 of 32)
<PAGE>


$30,268,500 in principal amount of Notes and received an aggregate of
$870,219.38 in cash, 5,779,952 shares of Issuer Common Stock and 288,284
shares of Preferred Stock.

Pursuant to the terms of the Notes Exchange, the Issuer also reconstituted its
Board of Directors (the "Board") to provide for a seven-person Board and the
designation of two representatives of the Reporting Persons to serve as new
Board members, together with the Issuer's Chief Executive Officer, one
independent Board member who was designated by the Restructuring Agreement
Noteholders and three incumbent independent Board members who were designated
by the Issuer with the consent of the Restructuring Agreement Noteholders.

In addition, in connection with the Notes Exchange, the Issuer entered into a
registration rights agreement (the "Registration Rights Agreement"), with each
of the Restructuring Agreement Noteholders and each of the holders of
Warrants. The Registration Rights Agreement contains (i) two demand
registration rights, each right allowing the holders party to the agreement
holding, in the aggregate, a majority of the Issuer Common Stock (as defined
in the Registration Rights Agreement) to request that the Issuer register
shares of Issuer Common Stock so long as the anticipated aggregate offering
price to the public for such registration is expected to be at least $20
million and (ii) unlimited shelf-registration rights, each right allowing
Restructuring Agreement Noteholders holding, in the aggregate, 5% or more of
the outstanding Issuer Common Stock, to request that the Issuer file a
shelf-registration statement on behalf of such Restructuring Agreement
Noteholders. The Registration Rights Agreement also includes, among other
things: (a) provisions requiring the Company to pay for customary fees and
expenses relating to the exercise of such registration rights, (b) customary
indemnification provisions and (c) customary representations and warranties.
The rights of the holders who are party to the Registration Rights Agreement
will terminate under the Registration Rights Agreement with respect to a
holder once the holder is legally able to dispose of all of its securities
registrable under Registration Rights Agreement pursuant to Rule 144 of the
Securities Act of 1933, as amended.

This description of the Registration Rights Agreement and the rights of Matlin
Partners (Delaware), Inland and Links thereunder is not intended to be
complete and is qualified in its entirety by reference to the full text of the
Registration Rights Agreement, which is annexed hereto as Exhibit 15, which is
incorporated herein by reference.

Second Credit Agreement
-----------------------

Pursuant to the terms of the Restructuring Agreement, in lieu of consummating
the Loan Exchange and the transactions contemplated by the Purchase Option
Agreement, the Senior Lenders, Matlin Partners (Delaware), Inland and Links
have each delivered a written consent pursuant to Section 1.1(a)(iv)(A) of the
Restructuring Agreement to enter into the Second Amended and Restated Credit
Agreement dated April 14, 2003 among the Issuer, the subsidiaries of the
Issuer from time to time party thereto and the several lenders from time to
time party thereto (the "Second Credit Agreement"). In connection with such
consents, Restructuring Agreement Noteholders holding at least 90% of the
Notes have consented in writing to consummate the Notes Exchange as
contemplated in the Restructuring Agreement.


                               (Page 21 of 32)
<PAGE>


In connection with entering into the Second Credit Agreement, the Issuer (i)
was forgiven $10,300,000 in principal amount of debt under the existing Credit
Agreement, (ii) repaid approximately $38.0 million of certain outstanding
borrowings pro rata to the lenders under the existing Credit Agreement and
(iii) issued common stock purchase warrant shares (the "Warrants") to the
lenders under the Second Credit Agreement entitling them to purchase
19,224,916 shares of Issuer Common Stock, or approximately 10% of the
outstanding Issuer Common Stock on a fully diluted basis issued. The Second
Credit Agreement provides for a $70.7 million revolving line of credit due May
2004 and is subject to certain maturity date extensions in six-month
increments up through May 2005. The Second Credit Agreement contains customary
covenants, including financial covenants that require monthly maintenance of
minimum tangible net worth and EBITDA levels. The Second Credit Agreement also
contains restrictions on the payment of cash dividends on the Issuer's capital
stock and places additional limitations on share repurchases, acquisitions and
capital expenditures. The Warrants are exercisable in whole or part over a
10-year period and the exercise price thereunder is $0.3121 per share.
Pursuant to the terms of the Second Credit Agreement, Links received 2,117,419
Warrant Shares, Inland received 2,144,699 Warrants and Matlin Partners
(Delaware) received 3,908,471 Warrants.

Pursuant to the trade confirmations, discussed in paragraph E above, Matlin
Partners (Delaware), Inland and Links agreed to sell 50% of the debt under the
existing Credit Agreement held by Matlin Partners (Delaware), Inland and Links
to the Trade Noteholder Upon settlement of the trade, which is expected to
occur in approximately 20 days, Matlin Partners (Delaware), Inland and Links
will transfer the consideration they received with respect to the Second
Credit Agreement relating to such traded debt to the Trade Noteholder,
including 50% of the Warrants received by Matlin Partners (Delaware), Inland
and Links. As such, after the settlement of the sale of the debt, Links will
be the record holder of 1,058,709.5 Warrants, Inland will be the record holder
of 1,072,349.5 Warrants and Matlin Partners (Delaware) will be the record
holder of 1,954,125.5 Warrants. If any options under the MP Debt Option or the
Inland/Links Debt Option (as discussed in Subsection E of Item 4 of Amendment
No. 7) are exercised, Warrants attached to the debt that is traded will also
be transferred and the number of Warrants held by the Reporting Persons will
change accordingly.

AMENDMENT TO SUBSECTION G.

Subsection G is amended to add the following after the second to last
paragraph thereto:

Chris Pechock, an employee of Matlin Advisers, serves on the Board of
Directors of the Issuer. As a director of the issuer, Chris Pechock may have
influence over the corporate activities of the issuer, including activities
which may relate to items described in Items 4(a) - (j) of Schedule 13D.

Item 5.   Interest in Securities of the Issuer.
          -------------------------------------

Subsections (a) and (b) of Item 5 of Schedule 13D are amended and restated in
their entirety to read as follows:

As of the date hereof, the Reporting Persons' interests in Issuer Common Stock
are as follows:

     (a) (i) As of the date hereof, the Reporting Persons' interests in Issuer
Common Stock in the aggregate are as follows: (i) Matlin Partners (Delaware),
Links, Inland



                               (Page 22 of 32)
<PAGE>


MatlinPatterson, Matlin Asset Management, Matlin Advisers, Matlin Partners,
Matlin Partners (Bermuda), Mark Patterson, David Matlin, Coryton, Arthur
Coady, Elias Sabo and I. Joseph Massoud,in the aggregate beneficially own or
may be deemed to beneficially own 73,301,895.5 shares of Issuer Common Stock
consisting of (A) 11,559,904 shares of Issuer Common Stock, (B) 576,567 shares
of Preferred Stock which are immediately convertible into 57,656,700 shares of
Issuer Common Stock (subject to the restrictions discussed in Subsection F of
Item 4 of Amendment No. 7) and which entitle the holder to vote with the
Issuer Common Stock on an as-converted basis and (C) 4,085,294.5 Warrants to
purchase 4,085,294.5 shares of Issuer Common Stock. The 73,301,898.5 shares of
Issuer Common Stock represent beneficial ownership of approximately 66.90% of
the issued and outstanding shares of Issuer Common Stock (based on 47,821,637
shares of Issuer Common Stock issued and outstanding as of April 15, 2003, as
reported in the Issuer's press release included in the Issuer's Form 8-K filed
on April 15, 2003, and assuming conversion of the Preferred Stock and exercise
of the Warrants directly beneficially owned by the Reporting Persons). Matlin
Partners B may be deemed to be an indirect beneficial owner of certain of the
Issuer Common Stock as described in paragraph (vi) of this Item 5(a).

(ii) As of the date hereof, Matlin Partners (Delaware) is the direct
beneficial owner of 36,562,487.5 shares of Issuer Common Stock consisting of
(A) 5,779,952 shares of Issuer Common Stock, (B) 288,283 shares of Preferred
Stock which are immediately convertible into 28,828,300 shares of Issuer
Common Stock (subject to the restrictions discussed in Subsection F of Item 4
of Amendment No. 7) and which entitle the holder to vote with the Issuer
Common Stock on an as-converted basis and (C) 1,954,235.5 Warrants to purchase
1,954,235.5 shares of Issuer Common Stock. The 36,562,487.5 shares of Issuer
Common Stock represent beneficial ownership of approximately 46.51% of the
issued and outstanding shares of Issuer Common Stock (based on 47,821,637
shares of Issuer Common Stock issued and outstanding as of April 15, 2003, as
reported in the Issuer's press release included in the Issuer's Form 8-K filed
on April 15, 2003, and assuming conversion of the Preferred Stock and exercise
of the Warrants directly beneficially owned by Matlin Partners (Delaware)).
Pursuant to the Intercreditor Agreement, Matlin Partners (Delaware) may also
be deemed to beneficially own the shares beneficially owned by Links and
Inland, with the aggregate shares and percentages disclosed in paragraph (i)
of this Item 5(a).

(iii) As of the date hereof, Links is the direct beneficial owner of
18,362,885.5 shares of Issuer Common Stock consisting of (A) 2,889,976 shares
of Issuer Common Stock, (B) 144,142 shares of Preferred Stock which are
immediately convertible into 14,414,200 shares of Issuer Common Stock (subject
to the restrictions discussed in Subsection F of Item 4 of Amendment No. 7)
and which entitle the holder to vote with the Issuer Common Stock on an
as-converted basis and (C) 1,058,709.5 Warrants to purchase 1,058,709.5 shares
of Issuer Common Stock. The 18,362,885.5 shares of Issuer Common Stock
represent beneficial ownership of approximately


                               (Page 23 of 32)
<PAGE>


29.01% of the issued and outstanding shares of Issuer Common Stock (based on
47,821,637 shares of Issuer Common Stock issued and outstanding as of April
15, 2003, as reported in the Issuer's press release included in the Issuer's
Form 8-K filed on April 15, 2003, and assuming conversion of the Preferred
Stock and exercise of the Warrants directly beneficially owned by Links).
Pursuant to the Intercreditor Agreement, Links may also be deemed to
beneficially own the shares beneficially owned by Matlin Partners (Delaware)
and Inland, with the aggregate shares and percentages disclosed in paragraph
(i) of this Item 5(a).

(iv) As of the date hereof, Inland is the direct beneficial owner of
18,376,525.5 shares of Issuer Common Stock consisting of (A) 2,889,976 shares
of Issuer Common Stock, (B) 144,142 shares of Preferred Stock which are
immediately convertible into 14,414,200 shares of Issuer Common Stock (subject
to the restrictions discussed in Subsection F of Item 4 of Amendment No. 7)
and which entitle the holder to vote with the Issuer Common Stock on an
as-converted basis and (C) 1,072,349.5 Warrants to purchase 1,072,349.5 shares
of Issuer Common Stock. The 18,376,525.5 shares of Issuer Common Stock
represent beneficial ownership of approximately 29.03% of the issued and
outstanding shares of Issuer Common Stock (based on 47,821,637 shares of
Issuer Common Stock issued and outstanding as of April 15, 2003, as reported
in the Issuer's press release included in the Issuer's Form 8-K filed on April
15, 2003, and assuming conversion of the Preferred Stock and exercise of the
Warrants directly beneficially owned by Inland). Pursuant to the Intercreditor
Agreement, Inland may also be deemed to beneficially own the shares
beneficially owned by Links and Matlin Partners (Delaware), with the aggregate
shares and percentages disclosed in paragraph (i) of this Item 5(a).

(v) Matlin Partners (Delaware) and Matlin Partners (Bermuda) have entered into
a Participation Agreement (the "Bermuda Participation Agreement") dated as of
May 15, 2001. Pursuant to such agreement, Matlin Partners (Bermuda) holds a
participation interest in its pro rata share of the right, title and interest
in the Issuer Common Stock beneficially owned by Matlin Partners (Delaware).
Matlin Partners (Bermuda)'s pro rata share currently yields a participation
interest equal 9,220,291.54 shares of Issuer Common Stock consisting of (A)
1,457,582.52 shares of Issuer Common Stock, (B) 72,698.9187 shares of
Preferred Stock which are immediately convertible into 7,269,891.87 shares of
Issuer Common Stock (subject to the restrictions discussed in Subsection F of
Item 4 of Amendment No. 7) and which entitle the holder to vote with the
Issuer Common Stock on an as-converted basis and (C) 492,817,15 Warrants to
purchase 492,817.15 shares of Issuer Common Stock. By reason of such
relationship, Matlin Partners (Bermuda) may be deemed to share voting and
dispositive power over 9,220,291.54 shares owned by Matlin Partners
(Delaware). The 9,220,291.54 shares of Issuer Common Stock represent
beneficial ownership of approximately 16.59% of the issued and outstanding
shares of Issuer Common Stock (based on 47,821,637 shares of Issuer Common
Stock issued and outstanding as of April 15, 2003, as reported in the Issuer's
press release included in the Issuer's Form 8-K filed on April 15, 2003, and
assuming conversion of the Preferred Stock and exercise of the Warrants in
which Matlin Partners (Bermuda) has a participation interest). Pursuant to the
Intercreditor Agreement, Matlin Partners (Bermuda) may also be deemed to
beneficially own the shares owned by Matlin Partners (Delaware), Links and
Inland with the aggregate shares and percentages disclosed in paragraph (i) of
this Item 5(a).


                               (Page 24 of 32)
<PAGE>


(vi) Matlin Partners (Delaware) and Matlin Partners B have entered into a
Participation Agreement (the "B Participation Agreement") dated as of July 16,
2002. Pursuant to such agreement, Matlin Partners B holds a participation
interest in 2.4108% of the right, title and interest in the Issuer Common
Stock beneficially owned by Matlin Partners (Delaware). Matlin Partners B's
participation interest equals 881,448.45 shares of Issuer Common Stock
consisting of (A) 139,343.08 shares of Issuer Common Stock, (B) 6,949.9266
shares of Preferred Stock which are immediately convertible into 694,992.66
shares of Issuer Common Stock (subject to the restrictions discussed in
Subsection F of Item 4 of Amendment No. 7) and which entitle the holder to
vote with the Issuer Common Stock on an as-converted basis and (C) 47,112.71
Warrants to purchase 47,112.71 shares of Issuer Common Stock. By reason of
such relationship, Matlin Partners B may be deemed to share voting and
dispositive power over 881,448.45 shares owned by Matlin Partners (Delaware).
The 881,448.45 shares of Issuer Common Stock represent beneficial ownership of
approximately 1.82% of the issued and outstanding shares of Issuer Common
Stock (based on 47,821,637 shares of Issuer Common Stock issued and
outstanding as of April 15, 2003, as reported in the Issuer's press release
included in the Issuer's Form 8-K filed on April 15, 2003, and assuming
conversion of the Preferred Stock and exercise of the Warrants in which Matlin
Partners B has a participation interest).

(vi) Matlin Partners serves as General Partner of Matlin Partners (Delaware).
By reason of such relationship, Matlin Partners may be deemed to share voting
and dispositive power over the shares owned by Matlin Partners (Delaware).
Pursuant to the Intercreditor Agreement, Matlin Partners may also be deemed to
beneficially own the shares owned by Links and Inland with the aggregate
shares and percentages disclosed in paragraph (i) of this Item 5(a).

(vii) Matlin Advisers serves as investment advisor to Matlin Partners
(Delaware). By reason of such relationship, Matlin Advisers may be deemed to
share voting and dispositive power over the shares owned by Matlin Partners
(Delaware). Pursuant to the Intercreditor Agreement, Matlin Advisers may also
be deemed to beneficially own the shares owned by Links and Inland with the
aggregate shares and percentages disclosed in paragraph (i) of this Item 5(a).

(viii) Matlin Asset Management is the holder of all of the membership
interests in Matlin Partners and Matlin Advisers. By reason of such
relationship, Matlin Asset Management may be deemed to share voting and
dispositive power over the shares owned by Matlin Partners (Delaware).
Pursuant to the Intercreditor Agreement, Matlin Asset Management may also be
deemed to beneficially own the shares owned by Links and Inland with the
aggregate shares and percentages disclosed in paragraph (i) of this Item 5(a).

(ix) MatlinPatterson is the holder of all of the membership interests in
Matlin Asset Management. By reason of such relationship, MatlinPatterson may
be deemed to share voting and dispositive power over the shares owned by
Matlin Partners (Delaware). Pursuant to the Intercreditor Agreement,
MatlinPatterson may also be deemed to beneficially own the shares owned by
Links and Inland with the aggregate shares and percentages disclosed in
paragraph (i) of this Item 5(a).


                               (Page 25 of 32)
<PAGE>


(x) Mark Patterson and David Matlin are each the holder of 50% of the
membership interests in MatlinPatterson. By reason of such relationships, each
of Mark Patterson and David Matlin may be deemed to share voting and
dispositive power over the shares owned by Matlin Partners (Delaware).
Pursuant to the Intercreditor Agreement, Mark Patterson and David Matlin may
each also be deemed to beneficially own the shares owned by Links and Inland
with the aggregate shares and percentages disclosed in paragraph (i) of this
Item 5(a).

(xi) Coryton serves as General Partner of Links and Inland. By reason of such
relationships, Coryton may be deemed to share voting and dispositive power
over the shares owned by Links and Inland. Pursuant to the Intercreditor
Agreement, Coryton may also be deemed to share voting and dispositive power
over the shares owned by Matlin Partners (Delaware) with the aggregate shares
and percentages disclosed in paragraph (i) of this Item 5(a).

(xii) Arthur Coady serves as sole shareholder of Coryton. By reason of such
relationship, Arthur Coady may be deemed beneficially own the shares owned by
Links and Inland. Pursuant to the Intercreditor Agreement, Arthur Coady may
also be deemed to beneficially own the shares owned by Matlin Partners
(Delaware) with the aggregate shares and percentages disclosed in paragraph
(i) of this Item 5(a).

(xiii) Elias Sabo and I. Joseph Massoud serve as attorney-in-fact for each of
Links and Inland, who have investment authority over securities held by Links
and Inland. By reason of such relationships, Elias Sabo and I. Joseph Massoud
may be deemed to share voting and dispositive power over the shares owned by
Links and Inland. Pursuant to the Intercreditor Agreement, Elias Sabo and I.
Joseph Massoud may also be deemed to beneficially own the shares owned by
Matlin Partners (Delaware) with the aggregate shares and percentages disclosed
in paragraph (i) of this Item 5(a).

     (b) To the best knowledge of MatlinPatterson, Matlin Asset Management,
Matlin Advisers, Matlin Partners and Coryton with respect to the directors and
executive officers named in their respective schedules to the Schedule 13D,
none of the persons (i) beneficially owns any shares of Issuer Common Stock
(other than in his or her capacity as a controlling member, executive officer
or director of such corporation or limited liability company) or (ii) has the
right to acquire any Issuer Common Stock owned by other parties.

The filing of this Amendment No. 7 shall not be construed as an admission by
any of the Reporting Persons that it is, for purposes of Section 13(d) of the
Exchange Act, the beneficial owner of shares of Issuer Common Stock owned by
other parties.

Pursuant to the Intercreditor Agreement, Matlin Partners (Delaware), Matlin
Partners (Bermuda), Links and Inland agree to vote all of the shares of
capital stock of the Issuer beneficially owned by them, directly or
indirectly, as unanimously agreed upon by them.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
        ---------------------------------------------------------------------
to Securities of the Issuer.
----------------------------

Item 6 of the Schedule 13D is hereby amended and supplemented by adding the
following to the end of said Item 6:


                               (Page 26 of 32)
<PAGE>


Reference is made to the descriptions of the MP Debt Option and the
Inland/Links Debt Option set forth in Subsection E of Item 4 of this Amendment
No. 7 and to the MP Debt Option and the Inland/Links Option which are annexed
hereto as Exhibits 16 and 17.

Reference is made to the description of the Registration Rights Agreement set
forth in Subsection F of Item 4 of this Amendment No. 7 and to the
Registration Rights Agreement which is annexed hereto as Exhibit 15.

Each of Links and Inland has executed a limited power of attorney, dated
November 8, 2002 (each a "Power of Attorney" and together the "Powers of
Attorney") appointing each of I. Joseph Massoud and Elias Sabo as attorney in
fact to take certain actions including, but not limited to, the sale, transfer
or exercise of conversion rights of any securities beneficially owned by each
of Links or Inland.

Reference is made to the descriptions of the Second Amended and Restated
Credit Agreement in Item 4 of this Amendment No. 7 and to the Second Amended
and Restated Credit Agreement which is annexed hereto as Exhibit 11, which is
incorporated herein by reference.

Reference is made to the [descriptions of the certificate of designation for
Series B (the "Certificate of Designation")] in Item 4 of this Amendment No.
7 and to the Certificate of Designation annexed hereto as Exhibit 12, which is
incorporated herein by reference.

Reference is made to the form of the [Issuer Common Stock purchase warrant
(the "Purchase Warrant")] in Item 4 of this Amendment No. 7, and to the
Purchase Warrant annexed hereto as Exhibit 13, which is incorporated herein by
reference. .

Reference is made to the form of the Restructure Agreement in Item 4 of this
Amendment No. 7 and to the Restructure Agreement which is annexed hereto as
Exhibit 14, which is incorporated herein by reference.

Item 7.   Materials to be Filed as Exhibits.
          ---------------------------------

Item 7 of Schedule 13D is hereby amended by replacing Exhibit 5 and adding the
following to the end of said Item 7:

<TABLE>
<CAPTION>

Exhibit No.          Description
-----------          -----------

<S>                  <C>
         5           Joint Filing Agreement,  dated as of April 15, 2003, by and among  MatlinPatterson LLC,
                     MatlinPatterson   Asset   Management   LLC,   MatlinPatterson   Global   Advisers  LLC,
                     MatlinPatterson  Global Partners LLC,  MatlinPatterson  Global  Opportunities  Partners
                     L.P.,  MatlinPatterson  Global Opportunities  Partners (Bermuda) L.P.,  MatlinPatterson
                     Global  Opportunities  Partners B, L.P., Links Partners,  L.P., Inland Partners,  L.P.,
                     Coryton Management Ltd., Mark Patterson,  David Matlin, Arthur Coady, Elias Sabo and I.
                     Joseph Massoud.

        11           Second Amended and Restated Credit Agreement,  dated as of April 14, 2003, by and among
                     Personnel Group of America,  Inc.,  certain of its  subsidiaries  listed  therein,  the
                     several  lenders from time to time party  thereto and Bank of


                               (Page 27 of 32)
<PAGE>


                     America,  N.A.,  formerly NationsBank, N.A.

        12           Certificate of Designation.

        13           Form of the Common Stock Purchase Warrant,  dated April 11, 2003, by Personnel Group of
                     America, Inc.

        14           Restructure  Agreement,  dated April 14, 2003, by and among Personnel Group of America,
                     Inc., certain of its subsidiaries  listed therein,  the several financial  institutions
                     from time to time party thereto and Bank of America, N.A., formerly NationsBank, N.A.

        15           Registration Rights Agreement,  dated April 14, 2003, among Personnel Group of America,
                     Inc. and the parties named therein.

        16           Option   Agreement,   dated  April  11,   2003,   between  R2   Investments,   LDC  and
                     MatlinPatterson Global Opportunities Fund, L.P.

        17           Option  Agreement,  dated April 11, 2003,  among R2 Investments,  LDC, Inland Partners,
                     L.P. and Links Partners, L.P.
</TABLE>


                               (Page 28 of 32)
<PAGE>


                                   SIGNATURE

     After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this Amendment No. 7 is true,
complete and correct.

Dated: April 16, 2003

                                MATLINPATTERSON LLC


                                By:   /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Member


                                MATLINPATTERSON ASSET MANAGEMENT LLC


                                By:  MatlinPatterson LLC, its manager

                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Member


                                MATLINPATTERSON GLOBAL ADVISERS LLC


                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Chairman


                                MATLINPATTERSON GLOBAL PARTNERS LLC


                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Director


                                MATLINPATTERSON GLOBAL
                                OPPORTUNITIES PARTNERS L.P.


                                By:  MatlinPatterson Global Partners LLC

                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Director



                               (Page 29 of 32)
<PAGE>


                                MATLINPATTERSON GLOBAL
                                OPPORTUNITIES PARTNERS (BERMUDA) L.P.

                                By:  MatlinPatterson Global Partners LLC

                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Director

                                MATLINPATTERSON GLOBAL
                                OPPORTUNITIES PARTNERS B, L.P.

                                By:  MatlinPatterson Global Partners LLC

                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Director

                                LINKS PARTNERS, L.P.

                                By:  Coryton Management Ltd., its general
                                     partner

                                By:   /s/ Arthur Coady
                                     ----------------------------------------
                                       Name:   Arthur Coady
                                       Title:  President

                                INLAND PARTNERS, L.P.

                                By:  Coryton Management Ltd., its general
                                     partner

                                By:    /s/ Arthur Coady
                                     ----------------------------------------
                                       Name:   Arthur Coady
                                       Title:  President

                                CORYTON MANAGEMENT LTD

                                By:    /s/ Arthur Coady
                                     ----------------------------------------
                                       Name:   Arthur Coady
                                       Title:  President

                                DAVID J. MATLIN

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

                                MARK R. PATTERSON

                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:  Mark R. Patterson


                               (Page 30 of 32)
<PAGE>


                                ARTHUR COADY

                                By:    /s/ Arthur Coady
                                     ----------------------------------------
                                       Name:  Arthur Coady

                                ELIAS SABO

                                By:    /s/ Elias Sabo
                                     ----------------------------------------
                                       Name:  Elias Sabo


                                I. JOSEPH MASSOUD

                                By:    /s/ I. Joseph Massoud
                                     ----------------------------------------
                                       Name:  I. Joseph Massoud


                               (Page 31 of 32)
<PAGE>


                                                                EXHIBIT INDEX
                                                                -------------

<TABLE>
<CAPTION>

      Exhibit No.         Description
      -----------         -----------

      <S>                 <C>
           5              Joint Filing Agreement,  dated as of April 15, 2003, by and among  MatlinPatterson
                          LLC,  MatlinPatterson Asset Management LLC,  MatlinPatterson  Global Advisers LLC,
                          MatlinPatterson   Global  Partners  LLC,   MatlinPatterson   Global  Opportunities
                          Partners L.P.,  MatlinPatterson  Global  Opportunities  Partners  (Bermuda)  L.P.,
                          MatlinPatterson  Global  Opportunities  Partners B, L.P.,  Links  Partners,  L.P.,
                          Inland  Partners,  L.P.,  Coryton  Management  Ltd., Mark Patterson,  David Matlin
                          Arthur Coady, Elias Sabo and I. Joseph Massoud.

           11             Second Amended and Restated Credit  Agreement,  dated as of April 14, 2003, by and
                          among  Personnel  Group of  America,  Inc.,  certain  of its  subsidiaries  listed
                          therein,  the several lenders from time to time party thereto and Bank of America,
                          N.A., formerly NationsBank, N.A.

           12             Certificate of Designation.

           13             Form of the Common Stock  Purchase  Warrant,  dated April 11,  2003,  by Personnel
                          Group of America, Inc.

           14             Restructure  Agreement,  dated April 14,  2003,  by and among  Personnel  Group of
                          America,  Inc., certain of its subsidiaries listed therein,  the several financial
                          institutions from time to time party thereto and Bank of America,  N.A.,  formerly
                          NationsBank, N.A.

           15             Registration  Rights  Agreement,  dated April 14, 2003,  among  Personnel Group of
                          America, Inc. and the parties named therein.

           16             Option  Agreement,  dated  April  11,  2003,  between  R2  Investments,   LDC  and
                          MatlinPatterson Global Opportunities Fund, L.P.

           17             Option  Agreement,  dated  April  11,  2003,  among R2  Investments,  LDC,  Inland
                          Partners, L.P. and Links Partners, L.P.
</TABLE>



                               (Page 32 of 32)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>3
<FILENAME>efc3-0670_exhibit5.txt
<TEXT>

                                                                    Exhibit 5
                                                                    ---------

                            JOINT FILING AGREEMENT
                          Dated as of April 14, 2003

          In accordance with Rule 13d-1(k)(1) under the Securities Exchange
Act of 1934, as amended, the undersigned hereby agree to the joint filing of
MatlinPatterson LLC, MatlinPatterson Asset Management LLC, MatlinPatterson
Global Advisers LLC, MatlinPatterson Global Partners LLC, MatlinPatterson
Global Opportunities Partners L.P., MatlinPatterson Global Opportunities
Partners (Bermuda) L.P., MatlinPatterson Global Opportunities Partners B,
L.P., David Matlin, Mark Patterson, Links Partners, L.P., Inland Partners,
L.P., Coryton Management Ltd., Arthur Coady, Elias Sabo and I. Joseph Massoud,
on behalf of each of them a statement on Schedule 13D (including amendments
thereto) with respect to shares of common stock, par value $0.01 per share, of
Personnel Group of America, Inc., and that this Agreement be included as an
Exhibit to such joint filing. This Agreement may be executed in any number of
counterparts all of which taken together shall constitute one and the same
instrument.

          IN WITNESS WHEREOF, the undersigned hereby execute this Agreement
this 16th day of April 2003.

                                MATLINPATTERSON LLC

                                By:     /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Member


                                MATLINPATTERSON ASSET MANAGEMENT LLC

                                By:  MatlinPatterson LLC, its manager

                                By:     /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Member


                                MATLINPATTERSON GLOBAL ADVISERS LLC

                                By:     /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Chairman


                                (Page 1 of 4)
<PAGE>


                                MATLINPATTERSON GLOBAL PARTNERS LLC

                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Director


                                MATLINPATTERSON GLOBAL
                                OPPORTUNITIES PARTNERS L.P.

                                By: MatlinPatterson Global Partners LLC

                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Director


                                MATLINPATTERSON  GLOBAL
                                OPPORTUNITIES PARTNERS
                                (BERMUDA) L.P.

                                By: MatlinPatterson Global Partners LLC

                                By:    /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Director

                                MATLINPATTERSON  GLOBAL
                                OPPORTUNITIES PARTNERS
                                B, L.P.

                                By: MatlinPatterson Global Partners LLC

                                By:    Mark R. Patterson
                                     ----------------------------------------
                                       Name:   Mark R. Patterson
                                       Title:  Director


                                (Page 2 of 4)
<PAGE>


                                LINKS PARTNERS, L.P.

                                By:  Coryton Management Ltd.,
                                     its general partner

                                By:    /s/ Arthur Coady
                                     ----------------------------------------
                                       Name:   Arthur Coady
                                       Title:  President


                                INLAND PARTNERS, L.P.

                                By:  Coryton Management Ltd.,
                                     its general partner

                                By:    /s/ Arthur Coady
                                     ----------------------------------------
                                       Name:   Arthur Coady
                                       Title:  President


                                CORYTON MANAGEMENT LTD.

                                By:    /s/ Arthur Coady
                                     ----------------------------------------
                                       Name:   Arthur Coady
                                       Title:  President


                                DAVID J. MATLIN

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

                                MARK R. PATTERSON

                                By:   /s/ Mark R. Patterson
                                     ----------------------------------------
                                       Name:  Mark R. Patterson


                                ARTHUR COADY

                                By:    /s/ Arthur Coady
                                     ----------------------------------------
                                       Name:   Arthur Coady


                                ELIAS SABO

                                By:   /s/ Elias Sabo
                                     ----------------------------------------
                                       Name:   Elias Sabo


                                (Page 3 of 4)
<PAGE>


                                I. JOSEPH MASSOUD

                                By:    /s/ I. Joseph Massoud
                                     ----------------------------------------
                                       Name:   I. Joseph Massoud


                                (Page 4 of 4)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>4
<FILENAME>efc3-0670_ex11.txt
<DESCRIPTION>SECOND AMENDED & RESTTED CREDIT AGMT
<TEXT>
                                                                Exhibit 11








                          SECOND AMENDED AND RESTATED
                               CREDIT AGREEMENT


                          Dated as of April 11, 2003


                                     among


                       PERSONNEL GROUP OF AMERICA, INC.
                                 as Borrower,


                       THE SUBSIDIARIES OF THE BORROWER
                        FROM TIME TO TIME PARTY HERETO,
                                as Guarantors,


                              THE SEVERAL LENDERS
                        FROM TIME TO TIME PARTY HERETO


                                      AND


                            BANK OF AMERICA, N.A.,
                          formerly NationsBank, N.A.,
                                   as Agent



<PAGE>
<TABLE>
<CAPTION>

                               TABLE OF CONTENTS
<S>                                                                                                        <C>
SECTION 1  DEFINITIONS......................................................................................1
           -----------
    1.1     Definitions.....................................................................................1
            -----------
    1.2     Computation of Time Periods....................................................................22
            ---------------------------
    1.3     Accounting Terms...............................................................................22
            ----------------
SECTION 2  CREDIT FACILITIES...............................................................................22
           -----------------
    2.1     Loans..........................................................................................22
            -----
    2.2     Letter of Credit Subfacility...................................................................23
            ----------------------------
SECTION 3  OTHER PROVISIONS RELATING TO CREDIT FACILITIES..................................................28
           ----------------------------------------------
    3.1     Default Rate...................................................................................28
            ------------
    3.2     [Reserved].....................................................................................28
            ---------
    3.3     Prepayments....................................................................................28
            -----------
    3.4     Termination and Reduction of Committed Amount; Extension Options...............................30
            ----------------------------------------------------------------
    3.5     Fees...........................................................................................31
            ----
    3.6     Capital Adequacy...............................................................................32
            ----------------
    3.7     [Reserved].....................................................................................32
            ---------
    3.8     [Reserved].....................................................................................32
            ----------
    3.9     Requirements of Law............................................................................32
            -------------------
    3.10    Taxes..........................................................................................33
            -----
    3.11    Pro Rata Treatment.............................................................................35
            ------------------
    3.12    Sharing of Payments............................................................................36
            -------------------
    3.13    Payments, Computations, Etc....................................................................36
            ----------------------------
    3.14    Evidence of Debt...............................................................................38
            ----------------
    3.15    Mandatory Assignment...........................................................................39
            --------------------
SECTION 4  GUARANTY........................................................................................39
           --------
    4.1     The Guarantee..................................................................................39
            -------------
    4.2     Obligations Unconditional......................................................................40
            -------------------------
    4.3     Reinstatement..................................................................................41
            -------------
    4.4     Certain Additional Waivers.....................................................................41
            --------------------------
    4.5     Remedies.......................................................................................41
            --------
    4.6     Rights of Contribution.........................................................................41
            ----------------------
    4.7     Continuing Guarantee...........................................................................42
            --------------------
SECTION 5  CONDITIONS......................................................................................42
           ----------
    5.1     Closing Conditions.............................................................................42
            ------------------
    5.2     Conditions to all Extensions of Credit.........................................................44
            --------------------------------------
SECTION 6  REPRESENTATIONS AND WARRANTIES..................................................................45
           ------------------------------
    6.1     Financial Condition............................................................................45
            -------------------
    6.2     No Change; Dividends...........................................................................45
            --------------------
    6.3     Organization; Existence; Compliance with Law...................................................46
            --------------------------------------------
    6.4     Power; Authorization; Enforceable Obligations..................................................46
            ---------------------------------------------
    6.5     No Legal Bar...................................................................................47
            ------------
    6.6     No Material Litigation.........................................................................47
            ----------------------
    6.7     No Default.....................................................................................47
            ----------
    6.8     Ownership of Property; Liens...................................................................47
            ----------------------------
    6.9     Intellectual Property..........................................................................47
            ---------------------
    6.10    No Burdensome Restrictions.....................................................................48
            --------------------------


                                     -i-
<PAGE>

    6.11    Taxes..........................................................................................48
            -----
    6.12    ERISA..........................................................................................48
            -----
    6.13    Governmental Regulations, Etc..................................................................49
            -----------------------------
    6.14    Subsidiaries...................................................................................50
            ------------
    6.15    Purpose of Loans and Letters of Credit.........................................................50
            --------------------------------------
    6.16    Environmental Matters..........................................................................51
            ---------------------
    6.17    Perfected Security Interests...................................................................51
            ----------------------------
    6.18    Borrower's Obligations.........................................................................52
            ----------------------
    6.19    Indebtedness...................................................................................52
            ------------
    6.20    Investments....................................................................................52
            -----------
    6.21    Disclosure.....................................................................................52
            ----------
SECTION 7  AFFIRMATIVE COVENANTS...........................................................................52
           ---------------------
    7.1     Information Covenants..........................................................................53
            ---------------------
    7.2     Preservation of Existence and Franchises.......................................................57
            ----------------------------------------
    7.3     Books and Records..............................................................................57
            -----------------
    7.4     Compliance with Law............................................................................57
            -------------------
    7.5     Payment of Taxes and Other Indebtedness........................................................57
            ---------------------------------------
    7.6     Insurance......................................................................................57
            ---------
    7.7     Maintenance of Property........................................................................58
            -----------------------
    7.8     Performance of Obligations.....................................................................58
            --------------------------
    7.9     Use of Proceeds................................................................................58
            ---------------
    7.10    Audits/Inspections.............................................................................58
            ------------------
    7.11    Financial Covenants............................................................................59
            -------------------
    7.12    Additional Credit Parties......................................................................59
            -------------------------
    7.13    Ownership of Subsidiaries......................................................................59
            -------------------------
    7.14    Pledged Assets.................................................................................59
            --------------
    7.15    [Reserved].....................................................................................59
            ----------
    7.16    Field Examination..............................................................................60
            -----------------
    7.17    Engagement of Financial Advisor to Lenders.....................................................60
            ------------------------------------------
    7.18    Deposit Accounts...............................................................................60
            ----------------
    7.19    Periodic Meetings..............................................................................61
            -----------------
SECTION 8  NEGATIVE COVENANTS..............................................................................61
           ------------------
    8.1     Indebtedness...................................................................................61
            ------------
    8.2     Liens..........................................................................................62
            -----
    8.3     Nature of Business.............................................................................62
            ------------------
    8.4     Consolidation, Merger, Sale or Purchase of Assets, etc.........................................62
            -------------------------------------------------------
    8.5     Advances, Investments, Loans, etc..............................................................63
            ----------------------------------
    8.6     Restricted Payments............................................................................63
            -------------------
    8.7     Prepayments of Indebtedness, etc...............................................................64
            ---------------------------------
    8.8     Transactions with Affiliates...................................................................64
            ----------------------------
    8.9     Fiscal Year....................................................................................65
            -----------
    8.10    Limitation on Restrictions on Subsidiary Dividends and Other Distributions, etc................65
            --------------------------------------------------------------------------------
    8.11    Issuance and Sale of Subsidiary Stock..........................................................65
            -------------------------------------
    8.12    Sale Leasebacks................................................................................65
            ---------------
    8.13    No Further Negative Pledges....................................................................65
            ---------------------------
    8.14    No Foreign Subsidiaries........................................................................66
            -----------------------


                                     -ii-
<PAGE>


    8.15    Capital Expenditures...........................................................................66
            --------------------
    8.16    Consolidated Earn-Outs.........................................................................66
            ----------------------
SECTION 9  EVENTS OF DEFAULT...............................................................................66
           -----------------
    9.1     Events of Default..............................................................................66
            -----------------
    9.2     Acceleration; Remedies.........................................................................69
            ----------------------
SECTION 10.................................................................................................70
AGENT......................................................................................................70
-----
    10.1    Appointment and Authorization of Agent.........................................................70
    ----    --------------------------------------
    10.2    Delegation of Duties...........................................................................71
    ----    --------------------
    10.3    Liability of Agent.............................................................................71
    ----    ------------------
    10.4    Reliance by Agent..............................................................................71
            -----------------
    10.5    Notice of Default..............................................................................72
            -----------------
    10.6    Credit Decision; Disclosure of Information by Agent............................................72
            ---------------------------------------------------
    10.7    Indemnification of Agent.......................................................................73
            ------------------------
    10.8    Agent in its Individual Capacity...............................................................73
            --------------------------------
    10.9    Successor Agent................................................................................73
            ---------------
    10.10   Agent May File Proofs of Claim.................................................................74
            ------------------------------
    10.11   Collateral and Guaranty Matters................................................................75
            -------------------------------
SECTION 11  MISCELLANEOUS..................................................................................75
            -------------
    11.1    Notices........................................................................................75
            -------
    11.2    Right of Set-Off...............................................................................76
            ----------------
    11.3    Benefit of Agreement...........................................................................77
            --------------------
    11.4    No Waiver; Remedies Cumulative.................................................................79
            ------------------------------
    11.5    Payment of Expenses, etc.......................................................................79
            ------------------------
    11.6    Amendments, Waivers and Consents...............................................................80
            --------------------------------
    11.7    Counterparts...................................................................................81
            ------------
    11.8    Headings.......................................................................................81
            --------
    11.9    Survival.......................................................................................81
            --------
    11.10   Governing Law; Submission to Jurisdiction; Venue...............................................81
            ------------------------------------------------
    11.11   Severability...................................................................................82
            ------------
    11.12   Entirety.......................................................................................82
            --------
    11.13   Binding Effect; Amendment and Restatement of Existing Credit Agreement.........................82
            ----------------------------------------------------------------------
    11.14   Confidentiality................................................................................83
            ---------------
    11.15   Source of Funds................................................................................83
            ---------------
    11.16   Conflict.......................................................................................84
            --------


</TABLE>


                                    -iii-
<PAGE>


                                   SCHEDULES

Schedule 1.1A          Investments
Schedule 1.1B          Liens
Schedule 1.1C          Form of Amended and Restated Pledge Agreement
Schedule 2.1(a)        Lenders
Schedule 2.1(b)(i)     Form of Notice of Borrowing
Schedule 2.1(e)        Form of Amended, Restated and Substituted Note
Schedule 6.4           Required Consents, Authorizations, Notices and Filings
Schedule 6.9           Intellectual Property
Schedule 6.11          Taxes
Schedule 6.14          Subsidiaries
Schedule 7.1(c)(i)     Form of Officer's Compliance Certificate
Schedule 7.1(c)(ii)    Form of Officer's Compliance Certificate
Schedule 7.1(k)        Form of Borrowing Base Certificate
Schedule 7.12          Form of Joinder Agreement
Schedule 7.18          Form of Agency Agreement
Schedule 8.1           Indebtedness
Schedule 11.3(b)       Form of Assignment and Acceptance



                                     -iv-
<PAGE>
                          SECOND AMENDED AND RESTATED
                               CREDIT AGREEMENT


         THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of April
11, 2003 (the "Credit Agreement"), is by and among PERSONNEL GROUP OF AMERICA,
INC., a Delaware corporation (the "Borrower"), the subsidiaries of the
Borrower identified on the signature pages hereto and such other subsidiaries
as may from time to time become a party hereto (the "Guarantors"), the several
lenders identified on the signature pages hereto and such other lenders as may
from time to time become a party hereto (the "Lenders") and BANK OF AMERICA,
N.A., formerly NationsBank, N.A., as agent for the Lenders (in such capacity,
the "Agent").

                              W I T N E S S E T H

         WHEREAS, 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, Amendment No. 4 to
Amended and Restated Credit Agreement dated as of February 8, 2002 and
Amendment No. 5 to Amended and Restated Credit Agreement and Waiver dated as
of December 31, 2002 and as otherwise modified prior to the date hereof, the
"Existing Credit Agreement").

         WHEREAS, the parties hereto have agreed to amend and restate the
Existing Credit Agreement as set forth herein in order to, among other things,
extend the Termination Date;

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


                                   SECTION 1

                                  DEFINITIONS

1.1      Definitions.

         As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:

                  "Additional Credit Party" means each Person that becomes a
         Guarantor after the Closing Date by execution of a Joinder Agreement.


<PAGE>

                  "Affiliate" means, with respect to any Person, any other
         Person (i) directly or indirectly controlling or controlled by or
         under direct or indirect common control with such Person or (ii)
         directly or indirectly owning or holding five percent (5%) or more of
         the equity interest in such Person. For purposes of this definition,
         "control" when used with respect to any Person means the power to
         direct the management and policies of such Person, directly or
         indirectly, whether through the ownership of voting securities, by
         contract or otherwise; and the terms "controlling" and "controlled"
         have meanings correlative to the foregoing.

                  "Agency Services Address" means Bank of America, N.A.,
         NC1-001-15-04, 101 North Tryon Street, Charlotte, North Carolina
         28255, Attn: Agency Services, or such other address as may be
         identified by written notice from the Agent to the Borrower.

                  "Agent" shall have the meaning assigned to such term in the
         heading hereof, together with any successors or assigns.

                  "Agent-Related Persons" means the Agent, together with its
         Affiliates, and the officers, directors, employees, agents and
         attorneys-in-fact of such Persons and Affiliates.

                  "Agent's Fee Letter" means that certain letter agreement,
         dated as of April 11, 2003, between the Agent and the Borrower, as
         amended, modified, supplemented or replaced from time to time.

                  "Agent's Fees" shall have the meaning assigned to such term
         in Section 3.5(c).

                  "Applicable Percentage" means, for purposes of calculating
         the applicable interest rate for any day for any Loan or the
         applicable rate of the Unused Fee for any day for purposes of Section
         3.5(a) or the applicable rate of the Letter of Credit Fee for any day
         for purposes of Section 3.5(b)(i), the appropriate applicable
         percentage corresponding to the relevant period set forth below:




                                      2
<PAGE>
<TABLE>


        ============================================ ===================== ===================== ===================
                                                          Applicable            Applicable           Applicable
                                                     Percentage for Base      Percentage for       Percentage for
                          Period                          Rate Loans       Letter of Credit Fee      Unused Fee
        -------------------------------------------- --------------------- --------------------- -------------------
        <S>                                          <C>                   <C>                   <C>
        From the Closing Date through June 30, 2003         3.25%                 6.25%                0.50%
        -------------------------------------------- --------------------- --------------------- -------------------
        From July 1, 2003 through December 31, 2003         3.75%                 6.50%                0.50%
        -------------------------------------------- --------------------- --------------------- -------------------
        From January 1, 2004 through June 30, 2004          4.25%                 6.75%                0.50%
        -------------------------------------------- --------------------- --------------------- -------------------
        From July 1, 2004 through December 31, 2004         4.50%                 7.00%                0.50%
        -------------------------------------------- --------------------- --------------------- -------------------
        From January 1, 2005 through                        5.00%                 7.25%                0.50%
        May 1, 2005*
        ============================================ ===================== ===================== ===================

</TABLE>

                   *Applicable Percentages for May 1, 2004 and thereafter are
         contingent on extension option being exercised pursuant to Section
         3.4(e) of this Credit Agreement.

                  "Asset Sale" means (i) any sale, lease, transfer or other
         disposition (including any such transaction effected by way of
         merger, amalgamation or consolidation) by the Borrower or any of its
         Subsidiaries subsequent to the date hereof of any asset (including
         stock in Subsidiaries of the Borrower), including without limitation
         any sale leaseback transaction (whether or not involving a Capital
         Lease), but excluding (a) the sale of inventory in the ordinary
         course of business for fair consideration, (b) the sale or
         disposition of machinery and equipment no longer used or useful in
         the conduct of such Person's business and (c) the sale of any asset
         having a net book value of less than $50,000 and (ii) receipt by the
         Borrower or any of its Subsidiaries of any cash insurance proceeds or
         condemnation award payable by reason of theft, loss, physical
         destruction or damage, taking or similar event with respect to any of
         the property or assets of the Borrower and its Subsidiaries.

                  "Attorney Costs" means and includes all fees, expenses and
         disbursements of any law firm or other external counsel and, without
         duplication, the allocated cost of internal legal services and all
         expenses and disbursements of internal counsel.

                  "Availability" means, as of any date of determination, (i)
         the Committed Amount as of such date minus (ii) the sum of (a) the
         aggregate principal amount of outstanding Loans on such date plus (b)
         LOC Obligations outstanding as of such date.

                  "Bank of America" means Bank of America, N.A. (formerly
         NationsBank, N.A.) and its successors.

                  "Bankruptcy Code" means the Bankruptcy Code in Title 11 of
         the United States Code, as amended, modified, succeeded or replaced
         from time to time.



                                      3
<PAGE>

                  "Bankruptcy Event" means, with respect to any Person, the
         occurrence of any of the following with respect to such Person: (i) a
         court or governmental agency having jurisdiction in the premises
         shall enter a decree or order for relief in respect of such Person in
         an involuntary case under any applicable bankruptcy, insolvency or
         other similar law now or hereafter in effect, or appointing a
         receiver, liquidator, assignee, custodian, trustee, sequestrator (or
         similar official) of such Person or for any substantial part of its
         Property or ordering the winding up or liquidation of its affairs; or
         (ii) there shall be commenced against such Person an involuntary case
         under any applicable bankruptcy, insolvency or other similar law now
         or hereafter in effect, or any case, proceeding or other action for
         the appointment of a receiver, liquidator, assignee, custodian,
         trustee, sequestrator (or similar official) of such Person or for any
         substantial part of its Property or for the winding up or liquidation
         of its affairs, and such involuntary case or other case, proceeding
         or other action shall remain undismissed, undischarged or unbonded
         for a period of sixty (60) consecutive days; or (iii) such Person
         shall commence a voluntary case under any applicable bankruptcy,
         insolvency or other similar law now or hereafter in effect, or
         consent to the entry of an order for relief in an involuntary case
         under any such law, or consent to the appointment or taking
         possession by a receiver, liquidator, assignee, custodian, trustee,
         sequestrator (or similar official) of such Person or for any
         substantial part of its Property or make any general assignment for
         the benefit of creditors; or (iv) such Person shall be unable to, or
         shall admit in writing its inability to, pay its debts generally as
         they become due.

                  "Base Rate" means, for any day, the rate per annum (rounded
         upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
         equal to the greater of (a) the Federal Funds Rate in effect on such
         day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If
         for any reason the Agent shall have determined (which determination
         shall be conclusive absent manifest error) that it is unable after
         due inquiry to ascertain the Federal Funds Rate for any reason,
         including the inability or failure of the Agent to obtain sufficient
         quotations in accordance with the terms hereof, the Base Rate shall
         be determined without regard to clause (a) of the first sentence of
         this definition until the circumstances giving rise to such inability
         no longer exist. Any change in the Base Rate due to a change in the
         Prime Rate or the Federal Funds Rate shall be effective on the
         effective date of such change in the Prime Rate or the Federal Funds
         Rate, respectively.

                  "Base Rate Loan" means any Loan bearing interest at a rate
         determined by reference to the Base Rate.

                  "Bond Conversion" means the conversion to common stock
         equity in the Borrower of at least $109,961,000 of the 5-3/4%
         Convertible Subordinated Notes due 2004.

                  "Borrower" means the Person identified as such in the
         heading hereof, together with any permitted successors and assigns.

                  "Borrower's Obligations" means, without duplication, (i) all
         of the obligations of the Borrower to the Lenders (including the
         Issuing Lender) and the Agent, whenever arising, under the Credit
         Agreement, the Notes or any of the other Credit Documents (including,
         but



                                      4
<PAGE>

         not limited to, any interest accruing after the occurrence of a
         Bankruptcy Event with respect to the Borrower, regardless of whether
         such interest is an allowed claim under the Bankruptcy Code) and (ii)
         all liabilities and obligations, whenever arising, owing from the
         Borrower to any Lender, or any Affiliate of a Lender, arising under
         any Hedging Agreement.

                  "Borrowing Base" means, as of any day, an amount equal to
         the sum of (i) 85% of Eligible Receivables (other than Eligible
         Receivables that are unbilled receivables) as set forth in the
         applicable Borrowing Base report delivered to the Agent in accordance
         with Section 7.1(k) plus (ii) 75% of Eligible Receivables that are
         unbilled receivables as set forth in the applicable Borrowing Base
         report delivered to the Agent in accordance with Section 7.1(k) plus
         (iii) the applicable Overadvance.

                  "Borrowing Base Certificate" shall have the meaning assigned
         to such term in Section 7.1(k).

                  "Business Day" means a day other than a Saturday, Sunday or
         other day on which commercial banks in Charlotte, North Carolina are
         authorized or required by law to close.

                  "Capital Lease" means, as applied to any Person, any lease
         of any Property (whether real, personal or mixed) by that Person as
         lessee which, in accordance with GAAP, is or should be accounted for
         as a capital lease on the balance sheet of that Person.

                  "Cash Collateralize" means to pledge and deposit with or
         deliver to the Agent, for the benefit of the Issuing Lender and the
         Lenders, as collateral for the LOC Obligations, cash or deposit
         account balances pursuant to documentation in form and substance
         satisfactory to the Agent and the Issuing Lender (which documents are
         hereby consented to by the Lenders). Cash collateral shall be
         maintained in blocked, interest bearing deposit accounts at Bank of
         America.

                  "Cash Equivalents" means (a) securities issued or directly
         and fully guaranteed or insured by the United States of America or
         any agency or instrumentality thereof (provided that the full faith
         and credit of the United States of America is pledged in support
         thereof) having maturities of not more than twelve months from the
         date of acquisition, (b) U.S. dollar denominated time deposits and
         certificates of deposit of (i) any Lender, or (ii) any domestic
         commercial bank of recognized standing (y) having capital and surplus
         in excess of $500,000,000 and (z) whose short-term commercial paper
         rating from S&P is at least A-1 or the equivalent thereof or from
         Moody's is at least P-1 or the equivalent thereof (any such bank
         being an "Approved Lender"), in each case with maturities of not more
         than 270 days from the date of acquisition, (c) commercial paper and
         variable or fixed rate notes issued by any Approved Lender (or by the
         parent company thereof) and maturing within six months of the date of
         acquisition, (d) repurchase agreements entered into by a Person with
         a bank or trust company (including any of the Lenders) or recognized
         securities dealer having capital and surplus in excess of
         $500,000,000 for direct obligations issued by or fully guaranteed by
         the United States of America in which such Person shall have a
         perfected first priority security interest (subject to no other
         Liens) and having, on the date of purchase thereof, a





                                      5
<PAGE>

         fair market value of at least 100% of the amount of the repurchase
         obligations, (e) obligations of any State of the United States or any
         political subdivision thereof, the interest with respect to which is
         exempt from federal income taxation under Section 103 of the Code,
         having a long term rating of at least AA- or Aa-3 by S&P or Moody's,
         respectively, and maturing within three years from the date of
         acquisition thereof, (f) Investments in municipal auction preferred
         stock (i) rated AAA (or the equivalent thereof) or better by S&P or
         Aaa (or the equivalent thereof) or better by Moody's and (ii) with
         dividends that reset at least once every 365 days and (g)
         Investments, classified in accordance with GAAP as current assets, in
         money market investment programs registered under the Investment
         Company Act of 1940, as amended, which are administered by reputable
         financial institutions having capital of at least $100,000,000 and
         the portfolios of which are limited to Investments of the character
         described in the foregoing subdivisions (a), (b), (c), (e) and (f).

                  "Change of Control" means the occurrence of any of the
         following events, other than as a result of the Bond Conversion or
         the other transactions contemplated pursuant to the Restructuring
         Agreement: (i) any Person or two or more Persons acting in concert
         shall have acquired beneficial ownership, directly or indirectly, of,
         or shall have acquired by contract or otherwise, or shall have
         entered into a contract or arrangement that, upon consummation, will
         result in its or their acquisition of, control over, Voting Stock of
         the Borrower (or other securities convertible into such Voting Stock)
         representing 30% or more of the combined voting power of all Voting
         Stock of the Borrower, (ii) during any period of up to 24 consecutive
         months, commencing after the Closing Date, individuals who at the
         beginning of such 24 month period were directors of the Borrower
         (together with any new director whose election by the Borrower's
         Board of Directors or whose nomination for election by the Borrower's
         shareholders was approved by a vote of at least two-thirds of the
         directors then still in office who either were directors at the
         beginning of such period or whose election or nomination for election
         was previously so approved) cease for any reason to constitute a
         majority of the directors of the Borrower then in office or (iii) the
         occurrence of a "Change of Control" under and as defined in either
         the Subordinated Note Indenture or the Subordinated Notes. As used
         herein, "beneficial ownership" shall have the meaning provided in
         Rule 13d-3 of the Securities and Exchange Commission under the
         Securities Exchange Act of 1934.

                  "Closing Date" means the date hereof.

                  "Code" means the Internal Revenue Code of 1986, as amended,
         and any successor thereto, as interpreted by the rules and
         regulations issued thereunder, in each case as in effect from time to
         time. References to sections of the Code shall be construed also to
         refer to any successor sections.

                  "Collateral" means a collective reference to the collateral
         which at any time will be covered by the Collateral Documents.

                  "Collateral Documents" means a collective reference to the
         Security Agreement, the Pledge Agreement and such other documents
         executed and delivered in connection with the attachment and
         perfection of the Agent's security interests and liens arising



                                      6
<PAGE>

         thereunder, including without limitation, UCC financing statements
         and patent and trademark filings.

                  "Commitment" means (i) with respect to each Lender, the
         commitment of such Lender in an aggregate principal amount at any
         time outstanding of up to such Lender's Commitment Percentage of the
         Committed Amount, (A) to make Loans in accordance with the provisions
         of Section 2.1(a) and (B) to purchase participation interests in
         Letters of Credit in accordance with the provisions of Section 2.2(c)
         and (ii) with respect to the Issuing Lender, the LOC Commitment.

                  "Commitment Percentage" means, for any Lender, the
         percentage identified as its Commitment Percentage on Schedule
         2.1(a), as such percentage may be modified in connection with any
         assignment made in accordance with the provisions of Section 11.3.

                  "Committed Amount" shall have the meaning assigned to such
         term in Section 2.1(a).

                  "Consolidated Capital Expenditures" means, for any period,
         all capital expenditures of the Borrower and its Subsidiaries on a
         consolidated basis for such period, as determined in accordance with
         GAAP.

                  ["Consolidated Coverage Ratio" means, as of the last day of
         any month, the ratio of (i) Consolidated EBITDA for the twelve month
         period (except as set forth below) ending on such date to (ii)
         Consolidated Interest Expense for the twelve month period (except as
         set forth below) ending on such date for the twelve month period
         (except as set forth below) ending on such date; provided, however,
         that (i) as of June 30, 2003, such ratio shall be calculated only for
         the three month period ending as of such date, (ii) as of July 31,
         2003, such ratio shall be calculated only for the four month period
         ending as of such date, (iii) as of August 31, 2003, such ratio shall
         be calculated only for the five month period ending as of such date,
         (iv) as of September 30, 2003, such ratio shall be calculated only
         for the six month period ending as of such date, (v) as of October
         31, 2003, such ratio shall be calculated only for the seven month
         period ending as of such date, (vi) as of November 30, 2003, such
         ratio shall be calculated only for the eight month period ending as
         of such date, (vii) as of December 31, 2003, such ratio shall be
         calculated only for the nine month period ending as of such date,
         (viii) as of January 31, 2004, such ratio shall be calculated only
         for the ten month period ending as of such date and (ix) as of
         February 29, 2004, such ratio shall be calculated only for the eleven
         fiscal month period ending as of such date.]

                  "Consolidated Earn-Outs" means, for any period, all earn-out
         payments made by the Borrower and its Subsidiaries on a consolidated
         basis for such period.

                  "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,




                                      7
<PAGE>

         local and foreign income, value added and similar taxes, (C)
         depreciation and amortization expense, (D) for any period during the
         Borrower's fiscal year 2003 and beyond, Restructuring Charges taken
         by the Borrower and its Subsidiaries (but in no event shall all of
         the add-backs pursuant to this clause (D) exceed $5,000,000 (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 $3,100,000 in the aggregate incurred by the
         Borrower after December 29, 2002 in connection with any financial
         restructuring transaction) and (E) non-cash intangible asset
         impairment charges taken by the Borrower and its Subsidiaries after
         December 29, 2002 (but in no event shall all of the add-backs
         pursuant to this clause (E) exceed $104,000,000 in the aggregate).

                  "Consolidated Funded Indebtedness" means, for any date, (i)
         the outstanding principal amount of all Funded Indebtedness, without
         duplication, of the Borrower and its Subsidiaries as of such date
         less (ii) so long as no Loans are outstanding hereunder, the
         aggregate amount of cash and Cash Equivalents held by the Borrower as
         of such date.

                  "Consolidated Interest Expense" means, as of the last day of
         any fiscal period, interest expense of the Borrower and its
         Subsidiaries on a consolidated basis required to be paid in cash
         (plus the amortization of ongoing fees previously paid) for the
         relevant period ending on such day. For purposes of this Credit
         Agreement, the interest expense required to be paid under this Credit
         Agreement is the Base Rate plus the margin set forth in the
         definition of "Applicable Percentage".

                  "Consolidated Net Income" means, for any period, (i) net
         income after taxes for such period for the Borrower and its
         Subsidiaries on a consolidated basis, as determined in accordance
         with GAAP plus (ii) to the extent not included in the amount
         determined pursuant to clause (i) above and as calculated on a pro
         forma basis, net income after taxes for such period for any Person
         acquired by the Borrower or any of its Subsidiaries during such
         period (after giving effect to changes in the operating costs of any
         acquired Person as if such changes were in effect for such period and
         are reasonably expected to continue).

                  "Consolidated Scheduled Funded Indebtedness Payments" means,
         as of the last day of any fiscal period, total scheduled payments of
         principal on Funded Indebtedness for the Borrower and its
         Subsidiaries on a consolidated basis for the relevant period
         beginning on the immediately succeeding day. Consolidated Scheduled
         Funded Indebtedness Payments shall not include any Consolidated
         Earn-Outs.

                  "Consolidated Senior Funded Indebtedness" means, for any
         date, (i) the outstanding principal amount of all Consolidated Funded
         Indebtedness, without duplication, of the Borrower and its
         Subsidiaries as of such date less (ii) the outstanding principal
         amount of all Subordinated Indebtedness as of such date.

                  "Credit Documents" means a collective reference to this
         Credit Agreement, the Notes, the LOC Documents, the Collateral
         Documents, each Joinder Agreement, the Agent's Fee Letter, the
         Restructure Agreement, the Warrants, the Registration Rights


                                      8
<PAGE>

         Agreement and all other related agreements and documents issued or
         delivered hereunder or thereunder or pursuant hereto or thereto.

                  "Credit Party" means any of the Borrower and the Guarantors.

                  "Debt Issuance" means the issuance of any Indebtedness for
         borrowed money (including debt securities) by the Borrower or any of
         its Subsidiaries, other than (i) the Loans, (ii) Subordinated
         Indebtedness evidencing contingent earn-out payment obligations or
         similar obligations or incurred pursuant to Section 8.1(g) hereof,
         and (iii) purchase money Indebtedness permitted under Section 8.1(c).

                  "Default" means any event, act or condition which with
         notice or lapse of time, or both, would constitute an Event of
         Default.

                  "Default Rate" means an interest rate equal to (a) the Base
         Rate plus (b) the Applicable Percentage, if any, applicable to Base
         Rate Loans plus (c) 2% per annum.

                  "Dollars" and "$" means dollars in lawful currency of the
         United States of America.

                  "Eligible Receivables" means, as of any date of
         determination and without duplication, the aggregate book value of
         all accounts receivable, receivables, and obligations for payment
         created or arising from the sale of inventory or the rendering of
         services in the ordinary course of business (collectively, the
         "Receivables"), owned by or owing to the Borrower or any of its
         Subsidiaries, net of allowances and reserves for doubtful or
         uncollectible accounts, refunds, discounts and sales adjustments
         consistent with such Person's internal policies and in any event in
         accordance with GAAP, but excluding in any event (i) any Receivable
         which is (a) not subject to a perfected, first priority Lien in favor
         of the Agent to secure the Borrower's Obligations or (b) subject to
         any other Lien that is not a Permitted Lien, (ii) Receivables and
         credit balances which are more than 90 days past due (net of reserves
         for bad debts in connection with any such receivables), (iii) 75% of
         the book value of all non-past-due Receivables owing from an account
         debtor if 50% or more or such account debtor's Receivables are 90
         days or more past due, (iv) Receivables evidenced by notes, chattel
         paper or other instruments, unless such notes, chattel paper or
         instruments have been delivered to and are in the possession of the
         Agent, (v) Receivables owing by an account debtor which is not
         solvent or is subject to any bankruptcy or insolvency proceeding of
         any kind, (vi) Receivables owing by an account debtor located outside
         of the United States (unless payment for the goods shipped is secured
         by an irrevocable letter of credit in a form and from an institution
         acceptable to the Agent), (vii) Receivables which are contingent or
         subject to offset, deduction, counterclaim, dispute or other defense
         to payment, in each case to the extent of such offset, deduction,
         counterclaim, dispute or other defense, (viii) Receivables for which
         any direct or indirect Subsidiary or any Affiliate is the account
         debtor, (ix) Receivables representing a sale to the government of the
         United States of America or any subdivision thereof unless the
         Federal Assignment of Claims Act or other similar applicable law has
         been complied with to the satisfaction of the Agent with respect to
         the granting of a security interest in such Receivable, (x) unbilled
         receivables in excess of




                                      9
<PAGE>

         $10,000,000 in the aggregate and (xi) Receivables which fail to meet
         such other specifications and requirements as may from time to time be
         established by the Agent in its reasonable discretion.

                  "Environmental Laws" means any and all lawful and applicable
         Federal, state, local and foreign statutes, laws, regulations,
         ordinances, rules, judgments, orders, decrees, permits, concessions,
         grants, franchises, licenses, agreements or other governmental
         restrictions relating to the environment or to emissions, discharges,
         releases or threatened releases of pollutants, contaminants,
         chemicals, or industrial, toxic or hazardous substances or wastes
         into the environment including, without limitation, ambient air,
         surface water, ground water, or land, or otherwise relating to the
         manufacture, processing, distribution, use, treatment, storage,
         disposal, transport, or handling of pollutants, contaminants,
         chemicals, or industrial, toxic or hazardous substances or wastes.

                  "Equity Transaction" means any issuance by the Borrower or
         any of its Subsidiaries to any Person of shares of its capital stock
         or other equity interests, any shares of its capital stock or other
         equity interests pursuant to the exercise of options or warrants or
         any shares of its capital stock or other equity interests pursuant to
         the conversion of any debt securities to equity other than (i) the
         Bond Conversion, (ii) the issuance of the Warrants and any issuance
         of common stock upon exercise of the Warrants, (iii) the conversion
         of any shares of newly issued Series B Preferred Stock and (iv) any
         reverse stock splits.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended, and any successor statute thereto, as interpreted
         by the rules and regulations thereunder, all as the same may be in
         effect from time to time. References to sections of ERISA shall be
         construed also to refer to any successor sections.

                  "ERISA Affiliate" means an entity which is under common
         control with any Credit Party within the meaning of Section
         4001(a)(14) of ERISA, or is a member of a group which includes the
         Borrower and which is treated as a single employer under Sections
         414(b), (c), (m), or (o) of the Code.

                  "Event of Default" means such term as defined in Section
         9.1.

                  "Existing Credit Agreement" means such term as defined in
         the preamble hereto.

                  "Fees" means all fees payable pursuant to (i) Section 3.5
         and/or (ii) the Restructure Agreement.

                  "Federal Funds Rate" means, for any day, the rate of
         interest per annum (rounded upwards, if necessary, to the nearest
         whole multiple of 1/100 of 1%) equal to the weighted average of the
         rates on overnight Federal funds transactions with members of the
         Federal Reserve System arranged by Federal funds brokers on such day,
         as published by the Federal Reserve Bank of New York on the Business
         Day next succeeding such day, provided that (A) if such day is not a
         Business Day, the Federal Funds Rate for such day shall be such rate
         on such transactions on the next preceding Business Day and (B) if no
         such rate is so



                                      10
<PAGE>

         published on such next preceding Business Day, the Federal Funds Rate
         for such day shall be the average rate quoted to the Agent on such
         day on such transactions as determined by the Agent.

                  "First Extension Fee" means a fee equal to the Committed
         Amount as of May 1, 2004 multiplied by 0.50%.

                  "First Extension Option" means the Borrower's option to
         extend the Termination Date, as more fully set out in Section
         3.4(e)(i).

                  "Funded Indebtedness" means, with respect to any Person,
         without duplication, (i) all Indebtedness of such Person for borrowed
         money, (ii) all amounts due and owing by such Person under any
         contingent earn-out agreements to which such Person is a party, (iii)
         all purchase money Indebtedness of such Person, including without
         limitation the principal portion of all obligations of such Person
         under Capital Leases, (iv) all Guaranty Obligations of such Person
         with respect to Funded Indebtedness of another Person, (v) the
         maximum available amount of all standby letters of credit or
         acceptances issued or created for the account of such Person, (vi)
         all Funded Indebtedness of another Person secured by a Lien on any
         Property of such Person, whether or not such Funded Indebtedness has
         been assumed, and (vii) the principal balance outstanding under any
         synthetic lease, tax retention operating lease, off-balance sheet
         loan or similar off-balance sheet financing product to which such
         Person is a party, where such transaction is considered borrowed
         money indebtedness for tax purposes but is classified as an operating
         lease in accordance with GAAP. The Funded Indebtedness of any Person
         shall include the Funded Indebtedness of any partnership or joint
         venture in which such Person is a general partner or joint venturer.

                  "GAAP" means generally accepted accounting principles in the
         United States applied on a consistent basis and subject to the terms
         of Section 1.3 hereof.

                  "Governmental Authority" means any Federal, state, local or
         foreign court or governmental agency, authority, instrumentality or
         regulatory body.

                  "Guarantor" means each of those Persons identified as a
         "Guarantor" on the signature pages hereto, and each Additional Credit
         Party which may hereafter execute a Joinder Agreement, together with
         their successors and permitted assigns.

                  "Guaranty Obligations" means, with respect to any Person,
         without duplication, any obligations of such Person (other than
         endorsements in the ordinary course of business of negotiable
         instruments for deposit or collection) guaranteeing or intended to
         guarantee any Indebtedness of any other Person in any manner, whether
         direct or indirect, and including without limitation any obligation,
         whether or not contingent, (i) to purchase any such Indebtedness or
         any Property constituting security therefor, (ii) to advance or
         provide funds or other support for the payment or purchase of any
         such Indebtedness or to maintain working capital, solvency or other
         balance sheet condition of such other Person (including without
         limitation keep well agreements, maintenance agreements, comfort
         letters or similar agreements or arrangements) for the benefit of any
         holder of Indebtedness of such other




                                      11
<PAGE>

         Person, (iii) to lease or purchase Property, securities or services
         primarily for the purpose of assuring the holder of such Indebtedness,
         or (iv) to otherwise assure or hold harmless the holder of such
         Indebtedness against loss in respect thereof. The amount of any
         Guaranty Obligation hereunder shall (subject to any limitations set
         forth therein) be deemed to be an amount equal to the outstanding
         principal amount (or maximum principal amount, if larger) of the
         Indebtedness in respect of which such Guaranty Obligation is made.

                  "Hedging Agreements" means any interest rate protection
         agreement or foreign currency exchange agreement between the Borrower
         and any Lender, or any Affiliate of a Lender.

                  "Indebtedness" of any Person means (i) all obligations of
         such Person for borrowed money, (ii) all obligations of such Person
         evidenced by bonds, debentures, notes or similar instruments, or upon
         which interest payments are customarily made, (iii) all obligations
         of such Person under conditional sale or other title retention
         agreements relating to Property purchased by such Person (other than
         customary reservations or retentions of title under agreements with
         suppliers entered into in the ordinary course of business), (iv) all
         obligations of such Person issued or assumed as the deferred purchase
         price of Property or services purchased by such Person (other than
         trade debt incurred in the ordinary course of business and due within
         six months of the incurrence thereof) which would appear as
         liabilities on a balance sheet of such Person, (v) all obligations of
         such Person under take-or-pay or similar arrangements or under
         commodities agreements, (vi) all Indebtedness of others secured by
         (or for which the holder of such Indebtedness has an existing right,
         contingent or otherwise, to be secured by) any Lien on, or payable
         out of the proceeds of production from, Property owned or acquired by
         such Person, whether or not the obligations secured thereby have been
         assumed, (vii) all Guaranty Obligations of such Person (excluding, to
         the extent entered in the ordinary course of business, any Guaranty
         Obligations of the Borrower with respect to Operating Leases of any
         Subsidiary of the Borrower), (viii) the principal portion of all
         obligations of such Person under Capital Leases, (ix) all obligations
         of such Person in respect of interest rate protection agreements,
         foreign currency exchange agreements, commodity purchase or option
         agreements or other interest or exchange rate or commodity price
         hedging agreements (including, but not limited to, the Hedging
         Agreements), (x) the maximum amount of all standby letters of credit
         issued or bankers' acceptances facilities created for the account of
         such Person and, without duplication, all drafts drawn thereunder (to
         the extent unreimbursed), (xi) all preferred stock issued by such
         Person and required by the terms thereof to be redeemed, or for which
         mandatory sinking fund payments are due, by a fixed date and (xii)
         the principal balance outstanding under any synthetic lease, tax
         retention operating lease, off-balance sheet loan or similar
         off-balance sheet financing product to which such Person is a party,
         where such transaction is considered borrowed money indebtedness for
         tax purposes but is classified as an operating lease in accordance
         with GAAP. The Indebtedness of any Person shall include the
         Indebtedness of any partnership or joint venture in which such Person
         is a general partner or a joint venturer.

                  "Intercompany Indebtedness" means any Indebtedness of a
         Credit Party (other than the Borrower) which (i) is owing to the
         Borrower or any other Credit Party and (ii) by its





                                      12
<PAGE>

         terms is specifically subordinated in right of payment to the prior
         payment of the obligations of the Credit Parties under this Credit
         Agreement and the other Credit Documents on terms and conditions
         reasonably satisfactory to the Required Lenders.

                  "Interest Payment Date" means as to any Loan, the last day
         of each calendar month, the date of repayment of principal of such
         Loan and the Termination Date. If an Interest Payment Date falls on a
         date which is not a Business Day, such Interest Payment Date shall be
         deemed to be the next succeeding Business Day.

                  "Investment", in any Person, means any loan or advance to
         such Person, any purchase or other acquisition of any capital stock,
         warrants, rights, options, obligations or other securities of, or
         equity interest in, such Person, any capital contribution to such
         Person or any other investment in such Person, including, without
         limitation, any Guaranty Obligation incurred for the benefit of such
         Person. In computing the amount involved in any Investment, (i)
         undistributed earnings of, and interest accrued in respect of
         Indebtedness owing by, any such other Person accrued after the date
         of such Investment shall not be included, (ii) there shall not be
         deducted from the amounts invested in any such other Person any
         amounts received as earnings (in the form of dividends, interest or
         otherwise) on such Investment or as loans or advances from such other
         Person, and (iii) unrealized increases or decreases in value, or
         write-ups, write-downs or write-offs, of Investments in any such
         other Person shall be disregarded.

                  "Issuing Lender" means Bank of America.

                  "Issuing Lender Fees" shall have the meaning assigned to
         such term in Section 3.5(b)(iii).

                  "Joinder Agreement" means a Joinder Agreement substantially
         in the form of Schedule 7.12 hereto, executed and delivered by an
         Additional Credit Party in accordance with the provisions of Section
         7.12.

                  "Laws" means, collectively, all international, foreign,
         Federal, state and local statutes, treaties, rules, guidelines,
         regulations, ordinances, codes and administrative or judicial
         precedents or authorities, including the interpretation or
         administration thereof by any Governmental Authority charged with the
         enforcement, interpretation or administration thereof, and all
         applicable administrative orders, directed duties, requests,
         licenses, authorizations and permits of, and agreements with, any
         Governmental Authority, in each case whether or not having the force
         of law.

                  "Lenders" means each of the Persons identified as a "Lender"
         on the signature pages hereto, and each Person which may become a
         Lender by way of assignment in accordance with the terms hereof,
         together with their successors and permitted assigns.

                  "Letter of Credit" means any letter of credit issued by the
         Issuing Lender for the account of the Borrower in accordance with the
         terms of Section 2.2.


                                      13
<PAGE>

                  "Letter of Credit Fee" shall have the meaning assigned to
         such term in Section 3.5(b)(i).

                  "Lien" means any mortgage, pledge, hypothecation,
         assignment, deposit arrangement, security interest, encumbrance, lien
         (statutory or otherwise), preference, priority or charge of any kind
         (including any agreement to give any of the foregoing, any
         conditional sale or other title retention agreement, any financing or
         similar statement or notice filed under the Uniform Commercial Code
         as adopted and in effect in the relevant jurisdiction or other
         similar recording or notice statute, and any lease in the nature
         thereof).

                  "Loan" or "Loans" shall have the meaning assigned to such
         term in Section 2.1(a).

                  "LOC Commitment" means the commitment of the Issuing Lender
         to issue Letters of Credit in an aggregate face amount at any time
         outstanding (together with the amounts of any unreimbursed drawings
         thereon) of up to the LOC Committed Amount.

                  "LOC Committed Amount" shall have the meaning assigned to
         such term in Section 2.2.

                  "LOC Documents" means, with respect to any Letter of Credit,
         such Letter of Credit, any amendments thereto, any documents
         delivered in connection therewith, any application therefor, and any
         agreements, instruments, guarantees or other documents (whether
         general in application or applicable only to such Letter of Credit)
         governing or providing for (i) the rights and obligations of the
         parties concerned or at risk or (ii) any collateral security for such
         obligations.

                  "LOC Obligations" means, at any time, the sum of (i) the
         maximum amount which is, or at any time thereafter may become,
         available to be drawn under Letters of Credit then outstanding,
         assuming compliance with all requirements for drawings referred to in
         such Letters of Credit plus (ii) the aggregate amount of all drawings
         under Letters of Credit honored by the Issuing Lender but not
         theretofore reimbursed.

                  "Material Adverse Effect" means a material adverse effect on
         (i) the condition (financial or otherwise), operations, business,
         assets, liabilities or prospects of the Borrower and its Subsidiaries
         taken as a whole, (ii) the ability of any Credit Party to perform any
         material obligation under the Credit Documents to which it is a party
         or (iii) the material rights and remedies of the Lenders under the
         Credit Documents.

                  "Materials of Environmental Concern" means any gasoline or
         petroleum (including crude oil or any fraction thereof) or petroleum
         products or any hazardous or toxic substances, materials or wastes,
         defined or regulated as such in or under any Environmental Laws,
         including, without limitation, asbestos, polychlorinated biphenyls
         and urea-formaldehyde insulation.

                  "Moody's" means Moody's Investors Service,  Inc., or any
         successor or assignee of the business of such company in the
         business of rating securities.


                                      14
<PAGE>

                  "Multiemployer Plan" means a Plan which is a multiemployer
         plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.

                  "Multiple Employer Plan" means a Plan which the Borrower,
         any Subsidiary of the Borrower or any ERISA Affiliate and at least
         one employer other than the Borrower, any Subsidiary of the Borrower
         or any ERISA Affiliate are contributing sponsors.

                  "Net Proceeds" means cash proceeds, which in the aggregate
         exceed $500,000 for any single transaction, received by the Borrower
         or any of its Subsidiaries from time to time in connection with any
         Asset Sale, any Equity Transaction or any Debt Issuance, net of
         actual costs (including, without limitation, commissions and
         underwriting discounts, if any) and taxes paid by such Person in
         connection with and attributable to such Asset Sale, Equity
         Transaction or Debt Issuance; provided, however, "Net Proceeds" shall
         not include the aggregate cash proceeds received by the Borrower from
         time to time in connection with the issuance by the Borrower of any
         capital stock or other equity interests pursuant to (i) any stock
         option plan, equity plan or other employee benefit plan of the
         Borrower or (ii) the Warrants. It is understood that "Net Proceeds"
         shall include, without limitation, any cash or Cash Equivalents
         received upon the realization or payment of, or sale or other
         disposition of, any non-cash consideration received by any Credit
         Party in connection with any Asset Sale, Equity Transaction or Debt
         Issuance.

                  "Non-Excluded Taxes" means such term as is defined in
         Section 3.10.

                  "Note" means a promissory note of the Borrower in favor of a
         Lender delivered pursuant to Section 2.1(e) and evidencing the Loans
         of such Lender, as such promissory note may be amended, modified,
         restated or replaced from time to time.

                  "Notice of Borrowing" means a written notice of borrowing in
         substantially the form of Schedule 2.1(b)(i), as required by Section
         2.1(b)(i).

                  "Operating Lease" means, as applied to any Person, any lease
         (including, without limitation, leases which may be terminated by the
         lessee at any time) of any Property (whether real, personal or mixed)
         which is not a Capital Lease other than any such lease in which that
         Person is the lessor.

                  "Overadvance" means $17,800,000; provided, however, that the
         amount of such Overadvance shall be permanently reduced by an amount
         equal to all reductions in the Committed Amount pursuant to Section
         3.3(c) or Section 3.4(a); provided, further, that if such reduction
         in the Committed Amount in the preceding proviso involves the
         application of proceeds from a sale that includes the sale of
         Eligible Receivables (or an entity that owns Eligible Receivables),
         then the amount of the reduction in the Overadvance pursuant to the
         preceding proviso shall not include 85% of such Eligible Receivables
         sold.



                                      15
<PAGE>

                  "Participation Interest" means, the extension of credit by a
         Lender by way of a purchase of a participation in any Letters of
         Credit or LOC Obligations as provided in Section 2.2(c) or in any
         Loans as provided in Section 3.13.

                  "PBGC" means the Pension Benefit Guaranty Corporation
         established pursuant to Subtitle A of Title IV of ERISA and any
         successor thereof.

                  "Permitted Investments" means Investments which are either
         (i) cash and Cash Equivalents; (ii) accounts receivable created,
         acquired or made by the Borrower or any of its Subsidiaries in the
         ordinary course of business and payable or dischargeable in
         accordance with customary trade terms; (iii) Investments consisting
         of stock, obligations, securities or other property received by the
         Borrower or any of its Subsidiaries in settlement of accounts
         receivable (created in the ordinary course of business) from
         insolvent or bankrupt obligors; (iv) Investments existing as of the
         Closing Date and set forth in Schedule 1.1A, (v) Guaranty Obligations
         permitted by Section 8.1; (vi) transactions explicitly permitted by
         clauses (i), (ii) and (iv) of Section 8.8; (vii) advances or loans to
         directors, officers, agents, customers or suppliers that do not
         exceed $250,000 in the aggregate at any one time outstanding; (viii)
         short term advances or loans to employees in the ordinary course of
         business for such employees' ordinary business expenses that do not
         exceed $500,000 in the aggregate at any one time outstanding (ix)
         Intercompany Indebtedness permitted by Section 8.1; and (x) other
         Investments, provided that the aggregate outstanding amount of all
         such other Investments taken together shall not exceed $1,000,000.

                  "Permitted Liens" means:

                           (i) Liens in favor of the Agent on behalf of the
                  Lenders;

                          (ii) Liens (other than Liens created or imposed
                  under ERISA) for taxes, assessments or governmental charges
                  or levies not yet due or Liens for taxes being contested in
                  good faith by appropriate proceedings for which adequate
                  reserves determined in accordance with GAAP have been
                  established (and as to which the Property subject to any
                  such Lien is not yet subject to foreclosure, sale or loss on
                  account thereof);

                         (iii) statutory Liens of landlords and Liens of
                  carriers, warehousemen, mechanics, materialmen and suppliers
                  and other Liens imposed by law or pursuant to customary
                  reservations or retentions of title arising in the ordinary
                  course of business, provided that such Liens secure only
                  amounts not yet due and payable or, if due and payable, are
                  unfiled and no other action has been taken to enforce the
                  same or are being contested in good faith by appropriate
                  proceedings for which adequate reserves determined in
                  accordance with GAAP have been established (and as to which
                  the Property subject to any such Lien is not yet subject to
                  foreclosure, sale or loss on account thereof);

                           (iv) Liens (other than Liens created or imposed
                  under ERISA) incurred or deposits made by the Borrower and
                  its Subsidiaries in the ordinary course of




                                      16
<PAGE>

                  business in connection with workers' compensation,
                  unemployment insurance and other types of social security,
                  or to secure the performance of tenders, statutory
                  obligations, bids, leases, government contracts, performance
                  and return-of-money bonds and other similar obligations
                  (exclusive of obligations for the payment of borrowed
                  money);

                           (v) Liens in connection with attachments or
                  judgments (including judgment or appeal bonds) provided that
                  the judgments secured shall, within 30 days after the entry
                  thereof, have been discharged or execution thereof stayed
                  pending appeal, or shall have been discharged within 30 days
                  after the expiration of any such stay;

                           (vi) easements, rights-of-way, restrictions
                  (including zoning restrictions), minor defects or
                  irregularities in title and other similar charges or
                  encumbrances not, in any material respect, impairing the use
                  of the encumbered Property for its intended purposes;

                           (vii) Liens on Property securing purchase money
                  Indebtedness (including Capital Leases) to the extent
                  permitted under Section 8.1(c), provided that any such Lien
                  attaches to such Property concurrently with or within 90
                  days after the acquisition thereof;

                           (viii) normal and customary rights of setoff upon
                  deposits of cash in favor of banks or other depository
                  institutions;

                           (ix) other Liens, provided that the aggregate
                  amount Indebtedness secured by such Liens shall not exceed
                  an aggregate principal amount of $1,000,000; and

                           (x) Liens existing as of the Closing Date and set
                  forth on Schedule 1.1B.

                  "Person" means any individual, partnership, joint venture,
         firm, corporation, limited liability company, association, trust or
         other enterprise (whether or not incorporated) or any Governmental
         Authority.

                  "Plan" means any employee benefit plan (as defined in
         Section 3(3) of ERISA) which is covered by ERISA and with respect to
         which the Borrower, any Subsidiary of the Borrower or any ERISA
         Affiliate is (or, if such plan were terminated at such time, would
         under Section 4069 of ERISA be deemed to be) an "employer" within the
         meaning of Section 3(5) of ERISA.

                  "Pledge Agreement" means the amended and restated pledge and
         security agreement dated as of June 23, 1997, executed in favor of
         the Agent by each Credit Party which owns any stock in any Subsidiary
         of the Borrower, as amended, modified, restated or supplemented from
         time to time.



                                      17
<PAGE>

                  "Prime Rate" means the rate of interest per annum publicly
         announced from time to time by Bank of America as its prime rate in
         effect at its principal office in Charlotte, North Carolina, with
         each change in the Prime Rate being effective on the date such change
         is publicly announced as effective (it being understood and agreed
         that the Prime Rate is a reference rate used by Bank of America in
         determining interest rates on certain loans and is not intended to be
         the lowest rate of interest charged on any extension of credit by
         Bank of America to any debtor).

                  "Pro Forma Basis" means, with respect to any Pro Forma
         Transaction, that such Pro Forma Transaction shall be deemed to have
         occurred as of the first day of the four fiscal-quarter period ending
         as of the most recent fiscal quarter end preceding the date of such
         Pro Forma Transaction with respect to which the Agent and the Lenders
         have received the officer's certificate in accordance with the
         provisions of Section 7.1(c)(i). With respect to any incurrence,
         assumption or retirement of Indebtedness as referred to in Section
         8.1(h), any such Indebtedness which has a floating or formula rate
         shall have an implied rate of interest for the applicable period
         equal to the rate which is or would be in effect with respect to such
         Indebtedness as at the relevant date of determination.

                  "Pro Forma Transaction" means any incurrence, assumption or
         retirement of Indebtedness as referred to in Section 8.1(h).

                  "Property" means any interest in any kind of property or
         asset, whether real, personal or mixed, or tangible or intangible.

                  "Register" shall have the meaning given such term in Section
         11.3(c).

                  "Registration Rights Agreement" means that certain
         Registration Rights Agreement dated as of the date hereof among the
         Borrower, the Guarantors, the Lenders and the Agent as amended,
         modified, restated or supplemented from time to time.

                  "Regulation D, U, or X" means Regulation D, U or X,
         respectively, of the Board of Governors of the Federal Reserve System
         as from time to time in effect and any successor to all or a portion
         thereof.

                  "Release" means any spilling, leaking, pumping, pouring,
         emitting, emptying, discharging, injecting, escaping, leaching,
         dumping or disposing into the environment (including the abandonment
         or discarding of barrels, containers and other closed receptacles
         containing any Materials of Environmental Concern).

                  "Reportable Event" means any of the events set forth in
         Section 4043(c) of ERISA, other than those events as to which the
         post-event notice requirement is waived under subsections .13, .14,
         .18, .19, or .20 of PBGC Reg. ss. 2615.

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



                                      18
<PAGE>

                  "Required Lenders" means, at any time, Lenders which are
         then in compliance with their obligations hereunder (as determined by
         the Agent) and holding in the aggregate at least 66 2/3% of (i) the
         Commitments (and Participation Interests therein) or (ii) if the
         Commitments have been terminated, the outstanding Loans and
         Participation Interests (including the Participation Interests of the
         Issuing Lender in any Letters of Credit).

                  "Requirement of Law" means, as to any Person, the
         certificate of incorporation and by-laws or other organizational or
         governing documents of such Person, and any law, treaty, rule or
         regulation or determination of an arbitrator or a court or other
         Governmental Authority, in each case applicable to or binding upon
         such Person or any of its material property is subject.

                  "Restricted Payment" means (i) any dividend or other
         distribution, direct or indirect, on account of any shares of any
         class of stock of the Borrower or any of its Subsidiaries, now or
         hereafter outstanding, (ii) any redemption, retirement, sinking fund
         or similar payment, purchase or other acquisition for value, direct
         or indirect, of any shares of any class of stock of the Borrower or
         any of its Subsidiaries, now or hereafter outstanding, (iii) any
         payment made to retire, or to obtain the surrender of, any
         outstanding warrants, options or other rights to acquire shares of
         any class of stock of the Borrower or any of its Subsidiaries, now or
         hereafter outstanding and (iv) any payment or prepayment of principal
         of, premium, if any, or interest on, redemption, purchase,
         retirement, defeasance, sinking fund or similar payment with respect
         to, any Subordinated Indebtedness.

                  "Restructure Agreement" means that certain Restructure
         Agreement dated as of the date hereof among the Borrower, the
         Guarantors, the Lenders and the Agent as amended, modified, restated
         or supplemented from time to time

                  "Restructuring Charges" means for any period non-recurring
         restructuring charges taken by the Borrower and its Subsidiaries in
         such period including, without limitation, severance payments,
         abandoned lease obligations, office relocation expenses, re-branding
         expenses, asset write-offs, legal, accounting, audit, tax, financial
         advisor and other professional advisor fees but only to the extent
         the foregoing relate to the Borrower's restructuring and
         rationalization of its operations or to the financial restructuring
         transaction.

                  "S&P" means Standard & Poor's Ratings Services, a division
         of The McGraw-Hill Companies, Inc., or any successor or assignee of
         the business of such division in the business of rating securities.

                  "Second Extension Fee" means a fee equal to the Committed
         Amount as of November 1, 2004 multiplied by 0.75%.

                  "Second Extension Option" means the Borrower's option to
         extend the Termination Date, as more fully set at in Section
         3.4(e)(ii).



                                      19
<PAGE>

                  "Security Agreement" means a security agreement in form and
         substance satisfactory to the Agent to be executed in favor of the
         Agent by the Borrower and each Subsidiary, as amended, modified,
         restated or supplemented from time to time.

                  "Single Employer Plan" means any Plan which is covered by
         Title IV of ERISA, but which is not a Multiemployer Plan.

                  "Solvent" or "Solvency" means, with respect to any Person as
         of a particular date, that on such date (i) such Person is able to
         realize upon its assets and pay its debts and other liabilities,
         contingent obligations and other commitments as they mature in the
         normal course of business, (ii) such Person does not intend to, and
         does not believe that it will, incur debts or liabilities beyond such
         Person's ability to pay as such debts and liabilities mature in their
         ordinary course, (iii) such Person is not engaged in a business or a
         transaction, and is not about to engage in a business or a
         transaction, for which such Person's Property would constitute
         unreasonably small capital after giving due consideration to the
         prevailing practice in the industry in which such Person is engaged
         or is to engage, (iv) the fair value of the Property of such Person
         is greater than the total amount of liabilities, including, without
         limitation, contingent liabilities, of such Person and (v) the
         present fair saleable value of the assets of such Person is not less
         than the amount that will be required to pay the probable liability
         of such Person on its debts as they become absolute and matured. In
         computing the amount of contingent liabilities at any time, it is
         intended that such liabilities will be computed at the amount which,
         in light of all the facts and circumstances existing at such time,
         represents the amount that can reasonably be expected to become an
         actual or matured liability.

                  "Subordinated Indebtedness" means (i) any Indebtedness
         arising under the Subordinated Note Documents and (ii) any additional
         Indebtedness (including contingent earn-outs) incurred by the
         Borrower or any of its Subsidiaries which by its terms is
         specifically subordinated in right of payment to the prior payment of
         the obligations of the Credit Parties under this Credit Agreement and
         the other Credit Documents on terms and conditions satisfactory to
         the Agent.

                  "Subordinated Note" means any of the 5 3/4% Convertible
         Subordinated Notes due 2004 issued by the Borrower in favor of the
         Subordinated Noteholders pursuant to the Subordinated Note Indenture,
         as such Subordinated Notes may be amended, modified, restated or
         supplemented and in effect from time to time.

                  "Subordinated Note Documents" means a collective reference
         to the Subordinated Note Indenture, the Subordinated Notes and all
         other related agreements and documents issued or delivered thereunder
         or pursuant thereto.

                  "Subordinated Note Indenture" means that certain Indenture,
         dated as of June 23, 1997, by and between the Borrower and First
         Union National Bank, as trustee, as the same may be amended,
         modified, restated or supplemented and in effect from time to time.



                                      20
<PAGE>

                  "Subordinated Noteholder" means any of the holders from time
         to time of the Subordinated Notes.

                  "Subsidiary" means, as to any Person, (a) any corporation
         more than 50% of whose stock of any class or classes having by the
         terms thereof ordinary voting power to elect a majority of the
         directors of such corporation (irrespective of whether or not at the
         time, any class or classes of such corporation shall have or might
         have voting power by reason of the happening of any contingency) is
         at the time owned by such Person directly or indirectly through
         Subsidiaries, and (b) any partnership, association, joint venture or
         other entity in which such Person directly or indirectly through
         Subsidiaries has more than 50% equity interest at any time.

                  "Termination Date" means, subject to Section 3.4(e), May 1,
         2004.

                  "Termination Event" means (i) with respect to any Plan, the
         occurrence of a Reportable Event or the substantial cessation of
         operations (within the meaning of Section 4062(e) of ERISA); (ii) the
         withdrawal by the Borrower, any Subsidiary of the Borrower or any
         ERISA Affiliate from a Multiple Employer Plan during a plan year in
         which it was a substantial employer (as such term is defined in
         Section 4001(a)(2) of ERISA), or the termination of a Multiple
         Employer Plan; (iii) the distribution of a notice of intent to
         terminate or the actual termination of a Plan pursuant to Section
         4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to
         terminate or the actual termination of a Plan by the PBGC under
         Section 4042 of ERISA; (v) any event or condition which might
         constitute grounds under Section 4042 of ERISA for the termination
         of, or the appointment of a trustee to administer, any Plan; or (vi)
         the complete or partial withdrawal of the Borrower, any Subsidiary of
         the Borrower or any ERISA Affiliate from a Multiemployer Plan.

                  "Unused Committed Amount" means, for any period, the amount
         by which (a) the then applicable Committed Amount exceeds (b) the
         daily average sum for such period of (i) the outstanding aggregate
         principal amount of all Loans plus (ii) the outstanding aggregate
         principal amount of all LOC Obligations.

                  "Unused Fee" shall have the meaning assigned to such term in
         Section 3.5(a).

                  "Unused Fee Calculation Period" shall have the meaning
         assigned to such term in Section 3.5(a).

                  "Voting Stock" means, with respect to any Person, capital
         stock issued by such Person the holders of which are ordinarily, in
         the absence of contingencies, entitled to vote for the election of
         directors (or persons performing similar functions) of such Person,
         even though the right so to vote has been suspended by the happening
         of such a contingency.

                  "Warrants" shall have the meaning assigned to such term in
         the Restructure Agreement.



                                      21
<PAGE>

1.2      Computation of Time Periods.

         For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."

1.3      Accounting Terms.

         Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall be prepared, in accordance with GAAP applied on a
consistent basis. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual or quarterly financial statements delivered
pursuant to Section 7.1 hereof (or, prior to the delivery of the first
financial statements pursuant to Section 7.1 hereof, consistent with the
financial statements as of December 30, 2001); provided, however, if (a) the
Borrower shall object to determining such compliance on such basis at the time
of delivery of such financial statements due to any change in GAAP or the
rules promulgated with respect thereto or (b) the Agent or the Required
Lenders shall so object in writing within 30 days after delivery of such
financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Borrower
to the Lenders as to which no such objection shall have been made.


                                   SECTION 2

                               CREDIT FACILITIES

2.1      Loans.

         (a) Commitment. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties set forth herein, each Lender
severally agrees to make available to the Borrower such Lender's Commitment
Percentage of revolving credit loans requested by the Borrower in Dollars
("Loans") from time to time from the Closing Date until the Termination Date,
or such earlier date as the Commitments shall have been terminated as provided
herein for the purposes hereinafter set forth; provided, however, that the sum
of the aggregate principal amount of outstanding Loans shall not exceed the
lesser of (i) SEVENTY MILLION SEVEN HUNDRED THOUSAND DOLLARS ($70,700,000) (as
such aggregate maximum amount may be reduced from time to time as provided in
Section 3.4, the "Committed Amount") and (ii) the Borrowing Base; provided,
further, (A) with regard to each Lender individually, such Lender's
outstanding Loans shall not exceed such Lender's Commitment Percentage of the
lesser of (i) the Committed Amount, and (ii) the Borrowing Base; and (B) with
regard to the Lenders collectively, the aggregate principal amount of
outstanding Loans plus LOC Obligations outstanding shall not exceed the lesser
of (1) the Committed Amount and (2) the Borrowing Base. All loans shall be
Base Rate Loans, and may be repaid and reborrowed in accordance with the
provisions hereof.




                                      22
<PAGE>

         (b) Loan Borrowings.

                  (i) Notice of Borrowing. The Borrower shall request a Loan
         borrowing by written notice (or telephone notice promptly confirmed
         in writing) to the Agent not later than 11:00 A.M. (Charlotte, North
         Carolina time) on the Business Day prior to the date of the requested
         borrowing. Each such request for borrowing shall be irrevocable and
         shall specify (A) that a Loan is requested, (B) the date of the
         requested borrowing (which shall be a Business Day), and (C) the
         aggregate principal amount to be borrowed. The Agent shall give
         notice to each affected Lender promptly upon receipt of each Notice
         of Borrowing pursuant to this Section 2.1(b)(i), the contents thereof
         and each such Lender's share of any borrowing to be made pursuant
         thereto.

                  (ii) Minimum Amounts. Each Loan shall be in a minimum
         aggregate principal amount of $500,000 and integral multiples of
         $100,000 in excess thereof (or the remaining amount of the Committed
         Amount, if less).

                  (iii) Advances. Each Lender will make its Commitment
         Percentage of each Loan borrowing available to the Agent for the
         account of the Borrower as specified in Section 3.14(a), or in such
         other manner as the Agent may specify in writing, by 1:00 P.M.
         (Charlotte, North Carolina time) on the date specified in the
         applicable Notice of Borrowing in Dollars and in funds immediately
         available to the Agent. Such borrowing will then be made available to
         the Borrower by the Agent by crediting the account of the Borrower on
         the books of such office with the aggregate of the amounts made
         available to the Agent by the Lenders and in like funds as received
         by the Agent.

         (c) Repayment. The principal amount of all Loans shall be due and
payable in full on the Termination Date.

         (d) Interest. Subject to the provisions of Section 3.1, all Loans
shall bear interest at a per annum rate equal to the Base Rate plus the
Applicable Percentage. Interest on Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be specified
herein).

         (e) Notes. The Loans made by each Lender shall be evidenced by a duly
executed promissory note of the Borrower to such Lender in an original
principal amount equal to such Lender's Commitment Percentage of the Committed
Amount and in substantially the form of Schedule 2.1(e).

2.2      Letter of Credit Subfacility.

         (a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the Issuing
Lender may reasonably require, the Lenders will participate in the issuance by
the Issuing Lender from time to time of such Letters of Credit in Dollars from
the Closing Date until the Termination Date as the Borrower may request, in a
form acceptable to the Issuing Lender; provided, however, that (i) the LOC
Obligations outstanding shall not at any time exceed TWELVE MILLION EIGHT
HUNDRED




                                      23
<PAGE>

THOUSAND DOLLARS ($12,800,000) (the "LOC Committed Amount") and (ii)
the sum of the aggregate principal amount of outstanding Loans plus LOC
Obligations outstanding shall not at any time exceed the lesser of (A) the
Committed Amount and (B) the Borrowing Base. No Letter of Credit shall (x)
have an original expiry date more than one year from the date of issuance or
(y) as originally issued or as extended, have an expiry date extending beyond
the Termination Date (as then in effect), unless (1) such Letter of Credit
will expire within one (1) year of the Termination Date, (2) such Letter of
Credit shall be fully cash collateralized on and after the Termination Date in
accordance with Section 3.3(b)(i)(B), and (3) the Issuing Lender shall have
consented to such expiry date. Each Letter of Credit shall comply with the
related LOC Documents. The issuance and expiry date of each Letter of Credit
shall be a Business Day.

         (b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted by the Borrower to the Issuing Lender at least three
(3) Business Days prior to the requested date of issuance. The Issuing Lender
will, at least quarterly and more frequently upon request, disseminate to each
of the Lenders a detailed report specifying the Letters of Credit which are
then issued and outstanding and any activity with respect thereto which may
have occurred since the date of the prior report, and including therein, among
other things, the beneficiary, the face amount, expiry date as well as any
payment or expirations which may have occurred.

         (c) Participation. Each Lender, upon issuance of a Letter of Credit,
shall be deemed to have purchased without recourse a risk participation from
the applicable Issuing Lender in such Letter of Credit and the obligations
arising thereunder, in each case in an amount equal to its pro rata share of
the obligations under such Letter of Credit (based on the respective
Commitment Percentages of the Lenders) and shall absolutely, unconditionally
and irrevocably assume, as primary obligor and not as surety, and be obligated
to pay to the Issuing Lender therefor and discharge when due, its pro rata
share of the obligations arising under such Letter of Credit. Without limiting
the scope and nature of each Lender's participation in any Letter of Credit,
to the extent that the Issuing Lender has not been reimbursed as required
hereunder or under any such Letter of Credit, each such Lender shall pay to
the Issuing Lender its pro rata share of such unreimbursed drawing in same day
funds on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) hereof. The obligation of
each Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any such reimbursement
shall not relieve or otherwise impair the obligation of the Borrower to
reimburse the Issuing Lender under any Letter of Credit, together with
interest as hereinafter provided.

         (d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower intends
to otherwise reimburse the Issuing Lender for such drawing, the Borrower shall
be deemed to have requested that the Lenders make a Loan in the amount of the
drawing as provided in subsection (e) hereof on the related Letter of Credit,
the proceeds of which will be used to satisfy the related reimbursement
obligations. The Borrower promises to reimburse the Issuing Lender on the day
of drawing under any Letter of Credit (either with the proceeds of a Loan
obtained hereunder or otherwise) in same day funds. If the Borrower shall fail
to reimburse the Issuing Lender as provided hereinabove, the unreimbursed
amount of




                                      24
<PAGE>

such drawing shall bear interest at a per annum rate equal to the Base
Rate plus the Applicable Percentage plus two percent (2%). The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional under
all circumstances irrespective of any rights of setoff, counterclaim or
defense to payment the Borrower may claim or have against the Issuing Lender,
the Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or
any other Person, including without limitation any defense based on any
failure of the Borrower or any other Credit Party to receive consideration or
the legality, validity, regularity or unenforceability of the Letter of
Credit. The Issuing Lender will promptly notify the other Lenders of the
amount of any unreimbursed drawing and each Lender shall promptly pay to the
Agent for the account of the Issuing Lender in Dollars and in immediately
available funds, the amount of such Lender's pro rata share of such
unreimbursed drawing. Such payment shall be made on the day such notice is
received by such Lender from the Issuing Lender if such notice is received at
or before 2:00 P.M. (Charlotte, North Carolina time) otherwise such payment
shall be made at or before 12:00 Noon (Charlotte, North Carolina time) on the
Business Day next succeeding the day such notice is received. If such Lender
does not pay such amount to the Issuing Lender in full upon such request, such
Lender shall, on demand, pay to the Agent for the account of the Issuing
Lender interest on the unpaid amount during the period from the date of such
drawing until such Lender pays such amount to the Issuing Lender in full at a
rate per annum equal to, if paid within two (2) Business Days of the date that
such Lender is required to make payments of such amount pursuant to the
preceding sentence, the Federal Funds Rate and thereafter at a rate equal to
the Base Rate. Each Lender's obligation to make such payment to the Issuing
Lender, and the right of the Issuing Lender to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit Agreement or
the Commitments hereunder, the existence of a Default or Event of Default or
the acceleration of the obligations of the Borrower hereunder and shall be
made without any offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a Lender to the Issuing
Lender, such Lender shall, automatically and without any further action on the
part of the Issuing Lender or such Lender, acquire a participation in an
amount equal to such payment (excluding the portion of such payment
constituting interest owing to the Issuing Lender) in the related unreimbursed
drawing portion of the LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the Borrower with
respect thereto.

         (e) Repayment with Loans. On any day on which the Borrower shall have
requested, or been deemed to have requested, a Loan advance to reimburse a
drawing under a Letter of Credit, the Agent shall give notice to the Lenders
that a Loan has been requested or deemed requested by the Borrower to be made
in connection with a drawing under a Letter of Credit, in which case a Loan
advance comprised of Base Rate Loans shall be immediately made to the Borrower
by all Lenders (notwithstanding any termination of the Commitments pursuant to
Section 9.2) pro rata based on the respective Commitment Percentages of the
Lenders (determined before giving effect to any termination of the Commitments
pursuant to Section 9.2) and the proceeds thereof shall be paid directly to
the Issuing Lender for application to the respective LOC Obligations. Each
such Lender hereby irrevocably agrees to make its pro rata share of each such
Loan immediately upon any such request or deemed request in the amount, in the
manner and on the date specified in the preceding sentence notwithstanding (i)
the amount of such borrowing may not comply with the minimum amount for
advances of Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 5.2 are then satisfied, (iii) whether a Default or an
Event of Default then exists, (iv)




                                      25
<PAGE>

failure for any such request or deemed request for Loan to be made by the time
otherwise required hereunder, (v) whether the date of such borrowing is a date
on which Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Loan cannot for
any reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any Credit Party), then each
such Lender hereby agrees that it shall forthwith purchase (as of the date
such borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to such purchase)
from the Issuing Lender such participation in the outstanding LOC Obligations
as shall be necessary to cause each such Lender to share in such LOC
Obligations ratably (based upon the respective Commitment Percentages of the
Lenders (determined before giving effect to any termination of the Commitments
pursuant to Section 9.2)), provided that at the time any purchase of
participation pursuant to this sentence is actually made, the purchasing
Lender shall be required to pay to the Issuing Lender, to the extent not paid
to the Issuer by the Borrower in accordance with the terms of subsection (d)
hereof, interest on the principal amount of participation purchased for each
day from and including the day upon which such borrowing would otherwise have
occurred to but excluding the date of payment for such participation, at the
rate equal to, if paid within two (2) Business Days of the date of the Loan
advance, the Federal Funds Rate, and thereafter at a rate equal to the Base
Rate.

         (f) Designation of Subsidiaries as Account Parties. Notwithstanding
anything to the contrary set forth in this Credit Agreement, including without
limitation Section 2.2(a) hereof, a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit is issued for the
account of a Subsidiary of the Borrower, provided that notwithstanding such
statement, the Borrower shall be the actual account party for all purposes of
this Credit Agreement for such Letter of Credit and such statement shall not
affect the Borrower's reimbursement obligations hereunder with respect to such
Letter of Credit.

         (g) Renewal, Extension. The renewal or extension of any Letter of
Credit shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.

         (h) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the International
Chamber of Commerce (the "UCP"), in which case the UCP may be incorporated
therein and deemed in all respects to be a part thereof.

         (i) Indemnification; Nature of Issuing Lender's Duties. (i) In
         addition to its other obligations under this Section 2.2, the
         Borrower hereby agrees to protect, indemnify, pay and save the
         Issuing Lender harmless from and against any and all claims, demands,
         liabilities, damages, losses, costs, charges and expenses (including
         reasonable attorneys' fees) that the Issuing Lender may incur or be
         subject to as a consequence, direct or indirect, of (A) the issuance
         of any Letter of Credit or (B) the failure of the Issuing Lender to
         honor a drawing under a Letter of Credit as a result of any act or
         omission, whether rightful or wrongful, of any present or future de
         jure or de facto government or governmental authority (all such acts
         or omissions, herein called "Government Acts").



                                      26
<PAGE>

                  (ii) As between the Borrower and the Issuing Lender, the
         Borrower shall assume all risks of the acts, omissions or misuse of
         any Letter of Credit by the beneficiary thereof. The Issuing Lender
         shall not be responsible: (A) for the form, validity, sufficiency,
         accuracy, genuineness or legal effect of any document submitted by
         any party in connection with the application for and issuance of any
         Letter of Credit, even if it should in fact prove to be in any or all
         respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
         for the validity or sufficiency of any instrument transferring or
         assigning or purporting to transfer or assign any Letter of Credit or
         the rights or benefits thereunder or proceeds thereof, in whole or in
         part, that may prove to be invalid or ineffective for any reason; (C)
         for errors, omissions, interruptions or delays in transmission or
         delivery of any messages, by mail, cable, telegraph, telex or
         otherwise, whether or not they be in cipher; (D) for any loss or
         delay in the transmission or otherwise of any document required in
         order to make a drawing under a Letter of Credit or of the proceeds
         thereof; and (E) for any consequences arising from causes beyond the
         control of the Issuing Lender, including, without limitation, any
         Government Acts. None of the above shall affect, impair, or prevent
         the vesting of the Issuing Lender's rights or powers hereunder.

                  (iii) In furtherance and extension and not in limitation of
         the specific provisions hereinabove set forth, any action taken or
         omitted by the Issuing Lender, under or in connection with any Letter
         of Credit or the related certificates, if taken or omitted without
         gross negligence or bad faith, shall not put such Issuing Lender
         under any resulting liability to the Borrower or any other Credit
         Party. It is the intention of the parties that this Credit Agreement
         shall be construed and applied to protect and indemnify the Issuing
         Lender against any and all risks involved in the issuance of the
         Letters of Credit, all of which risks are hereby assumed by the
         Borrower (on behalf of itself and each of the other Credit Parties),
         including, without limitation, any and all Government Acts. The
         Issuing Lender shall not, in any way, be liable for any failure by
         the Issuing Lender or anyone else to pay any drawing under any Letter
         of Credit as a result of any Government Acts or any other cause
         beyond the control of the Issuing Lender.

                  (iv) Nothing in this subsection (h) is intended to limit the
         reimbursement obligations of the Borrower contained in subsection (d)
         above. The obligations of the Borrower under this subsection (h)
         shall survive the termination of this Credit Agreement. No act or
         omissions of any current or prior beneficiary of a Letter of Credit
         shall in any way affect or impair the rights of the Issuing Lender to
         enforce any right, power or benefit under this Credit Agreement.

                  (v) Notwithstanding anything to the contrary contained in
         this subsection (h), the Borrower shall have no obligation to
         indemnify the Issuing Lender in respect of any liability incurred by
         the Issuing Lender (A) arising out of the gross negligence or willful
         misconduct of the Issuing Lender, as determined by a court of
         competent jurisdiction, or (B) caused by the Issuing Lender's failure
         to pay under any Letter of Credit after presentation to it of a
         request strictly complying with the terms and conditions of such
         Letter of Credit, as determined by a court of competent jurisdiction,
         unless such payment is prohibited by any law, regulation, court order
         or decree.



                                      27
<PAGE>

         (j) Responsibility of Issuing Lender. It is expressly understood and
agreed that the obligations of the Issuing Lender hereunder to the Lenders are
only those expressly set forth in this Credit Agreement and that the Issuing
Lender shall be entitled to assume that the conditions precedent set forth in
Section 5.2 have been satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied; provided, however,
that nothing set forth in this Section 2.2 shall be deemed to prejudice the
right of any Lender to recover from the Issuing Lender any amounts made
available by such Lender to the Issuing Lender pursuant to this Section 2.2 in
the event that it is determined by a court of competent jurisdiction that the
payment with respect to a Letter of Credit constituted gross negligence or
willful misconduct on the part of the Issuing Lender.

         (k) Conflict with LOC Documents. In the event of any conflict between
this Credit Agreement and any LOC Document (including any letter of credit
application), this Credit Agreement shall control.


                                   SECTION 3

                OTHER PROVISIONS RELATING TO CREDIT FACILITIES

3.1      Default Rate.

         If any amount payable by the Borrower under any Credit Document is
not paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to
the Default Rate to the fullest extent permitted by applicable Laws.
Furthermore, while any Event of Default exists, the Borrower shall pay
interest on the principal amount of all outstanding Borrower's Obligations
hereunder at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable laws. Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.

3.2      [Reserved].

3.3      Prepayments.

         (a) Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time without premium or penalty;
provided, however, that each such partial prepayment of Loans shall be in a
minimum principal amount of $500,000 or such lesser amount as may be approved
by the Agent. Subject to the foregoing terms, amounts prepaid under this
Section 3.3(a) shall be applied as the Borrower may elect or, if the Borrower
has not so specified, first to Base Rate Loans and then (after all Loans have
been repaid) to cash collateralize the LOC Obligations (in a manner
satisfactory to the Agent).



                                      28
<PAGE>

         (b) Mandatory Prepayments and Cash Collateralization.

             (i) (A) Committed Amount. If at any time, the sum of the
             aggregate principal amount of outstanding Loans plus LOC
             Obligations outstanding shall exceed the lesser of (I) the
             Committed Amount and (II) the Borrowing Base, the Borrower
             promises to prepay immediately the outstanding principal balance
             on the Loans and (after all Loans have been repaid) cash
             collateralize the LOC Obligations (in a manner satisfactory to
             the Agent) in an amount sufficient to eliminate such excess (to
             be applied as set forth in Section 3.3(c) below). Without
             limiting the foregoing, each Credit Party acknowledges and agrees
             that the Committed Amount will be automatically reduced on the
             dates and in the amounts set forth in Section 3.4(b), and that a
             mandatory prepayment will be required on each such date to the
             extent necessary to cause the sum of the aggregate principal
             amount of outstanding Loans plus LOC Obligations outstanding not
             to exceed the lesser of (I) the reduced Committed Amount as of
             such date and (II) the Borrowing Base.

                 (B) LOC Committed Amount/LOC Expiry. If at any time, the
             aggregate principal amount of LOC Obligations shall exceed the
             LOC Committed Amount, the Borrower immediately shall cash
             collateralize the LOC Obligations (in a manner satisfactory to
             the Agent) in an amount sufficient to eliminate such excess. If
             any Letter of Credit remains outstanding and unexpired or
             uncancelled on the Termination Date, then the Borrower shall
             immediately cash collateralize such Letter of Credit (in a manner
             satisfactory to the Agent) in an amount equal to the maximum
             amount which is, or at any time thereafter may become, available
             to be drawn under such Letter of Credit.

                  (ii) Asset Sales. Immediately upon the occurrence of any
         Asset Sale, the Borrower shall prepay the Loans and (after all Loans
         have been repaid) cash collateralize the LOC Obligations (in a manner
         satisfactory to the Agent) in an amount equal to 100% of the Net
         Proceeds of the related Asset Sale (to be applied as set forth in
         Section 3.3(c) below).

                  (iii) Equity Transactions. Immediately upon the occurrence
         of any Equity Transaction, the Borrower shall prepay the Loans and
         (after all Loans have been repaid) cash collateralize the LOC
         Obligations (in a manner satisfactory to the Agent) in an amount
         equal to 100% of the Net Proceeds of the related Equity Transaction
         (to be applied as set forth in Section 3.3(c) below).

                  (iv) Debt Issuances. Immediately upon the consummation of
         any Debt Issuance, the Borrower shall prepay the Loans and (after all
         Loans have been repaid) cash collateralize the LOC Obligations (in a
         manner satisfactory to the Agent) in an amount equal to 100% of the
         Net Proceeds of the related Debt Issuance (to be applied as set forth
         in Section 3.3(c) below).

                  (v) Tax Refunds. Immediately upon the receipt by the
         Borrower or any of its Subsidiaries of any income tax or other
         similar refund in an amount in excess of $250,000 in the aggregate in
         any fiscal year, the Borrower shall prepay the Loans and




                                      29
<PAGE>

         (after all Loans have been repaid) cash collateralize the LOC
         Obligations (in a manner satisfactory to the Agent) in an amount equal
         to 100% of such refund (to be applied as set forth in Section 3.3(c)
         below).

         (c) Application of Mandatory Prepayments. All amounts required to be
paid pursuant to Section 3.3(b) shall be applied as follows:

             (i) with respect to all amounts prepaid pursuant to Section
         3.3(b)(i)(A), to Loans and (after all Loans have been repaid) to a
         cash collateral account in respect of LOC Obligations;

            (ii) with respect to all amounts prepaid pursuant to Section
         3.3(b)(i)(B), to a cash collateral account in respect of LOC
         Obligations;

           (iii) with respect to all amounts prepaid pursuant to
         Sections 3.3(b)(ii) and 3.3(b)(iv) to Loans and (after all Loans have
         been repaid) to a cash collateral account in respect of LOC
         Obligations (with a corresponding reduction in the Committed Amount
         in an amount equal to 100% of the Net Proceeds of the related Asset
         Sale or Debt Issuance, rounded down to the nearest $500,000;

            (iv) with respect to all amounts prepaid pursuant to Section
         3.3(b)(iii) to Loans and (after all Loans have been repaid) to a cash
         collateral account in respect of LOC Obligations (with a
         corresponding reduction in the Committed Amount in an amount equal to
         100% of the Net Proceeds of the related Equity Transaction, rounded
         up or down to the nearest $500,000); and

             (v) with respect to all amounts paid pursuant to Section
         3.3(b)(v), to Loans and (after all Loans have been repaid) to a cash
         collateral account in respect of LOC Obligations (with a
         corresponding reduction in the Committed Amount in an amount equal to
         100% of the amount of such refund, rounded up or down to the nearest
         $50,000).

3.4      Termination and Reduction of Committed Amount; Extension Options.

         (a) Voluntary Reductions. The Borrower may from time to time
permanently reduce or terminate the Committed Amount in whole or in part (in
minimum aggregate amounts of $1,000,000 or in integral multiples of $1,000,000
in excess thereof (or, if less, the full remaining amount of the then
applicable Committed Amount)) upon five Business Days' prior written notice to
the Agent; provided, however, no such termination or reduction shall be made
which would cause the aggregate principal amount of outstanding Loans plus LOC
Obligations outstanding to exceed the lesser of (i) the Committed Amount and
(ii) the Borrowing Base unless, concurrently with such termination or
reduction, the Loans are repaid to the extent necessary to eliminate such
excess. The Commitments of the Lenders and the Issuing Lender shall
automatically terminate on the Termination Date. The Agent shall promptly
notify each affected Lender of receipt by the Agent of any notice from the
Borrower pursuant to this Section 3.4(a).

         (b) [Reserved]



                                      30
<PAGE>

         (c) Termination Date. The Commitments of the Lenders and the LOC
Commitment of the Issuing Lender shall automatically terminate on the
Termination Date.

         (d) General. The Borrower shall pay to the Agent for the account of
the Lenders in accordance with the terms of Section 3.5(a), on the date of
each termination or reduction of the Committed Amount, the Unused Fee accrued
through the date of such termination or reduction on the amount of the
Committed Amount so terminated or reduced.

         (e) Extension Options.

             (i) If (i) the Borrower has given the Agent and the Lenders
         at least 30 days prior written notice of its desire to extend the
         Termination Date, (ii) as of May 1, 2004, each of the conditions
         precedent set forth in clauses (ii), (iii) and (iv) of Section 5.2 is
         then satisfied (or waived by all of the Lenders, as applicable), as
         certified by a responsible officer of the Borrower in an officer's
         certificate, the form of which shall be satisfactory to the Agent,
         and (iii) on or before May 1, 2004 the Borrower has paid the First
         Extension Fee to the Agent for the benefit of the Lenders, then the
         Borrower may exercise the First Extension Option to extend the
         Termination Date to November 1, 2004.

            (ii) If (i) the Borrower has given the Agent and the Lenders
         at least 30 days prior written notice of its desire to extend the
         Termination Date, (ii) as of November 1, 2004, each of the conditions
         precedent set forth in clauses (ii), (iii) and (iv) of Section 5.2 is
         then satisfied (or waived by all of the Lenders, as applicable), as
         certified by a responsible officer of the Borrower in an officer's
         certificate, the form of which shall be satisfactory to the Agent,
         and (iii) on or before November 1, 2004 the Borrower has paid the
         Second Extension Fee to the Agent for the benefit of the Lenders,
         then the Borrower may exercise the Second Extension Option to extend
         the Termination Date to May 1, 2005.

3.5      Fees.

         (a) Unused Fee. In consideration of the Commitments of the Lenders
hereunder, the Borrower agrees to pay to the Agent for the account of each
Lender a fee (the "Unused Fee") on the Unused Committed Amount computed at a
per annum rate for each day during the applicable Unused Fee Calculation
Period (hereinafter defined) at a rate equal to the Applicable Percentage in
effect from time to time. The Unused Fee commenced to accrue on the date
hereof and is due and payable in arrears on the last business day of each
calendar month (and any date that the Committed Amount is reduced as provided
in Section 3.4(a) and the Termination Date) for the immediately preceding
month (or portion thereof) (each such month or portion thereof for which the
Unused Fee is payable hereunder being herein referred to as an "Unused Fee
Calculation Period").

         (b) Letter of Credit Fees.

             (i) Letter of Credit Issuance Fee. In consideration of the
         issuance of Letters of Credit hereunder, the Borrower promises to pay
         to the Agent for the account of each Lender a fee (the "Letter of
         Credit Fee") on such Lender's Commitment Percentage of the average




                                      31
<PAGE>

         daily maximum amount available to be drawn under each such Letter of
         Credit computed at a per annum rate for each day from the date of
         issuance to the date of expiration equal to the Applicable
         Percentage. The Letter of Credit Fee will be payable monthly in
         arrears on the last Business Day of each calendar month for the
         immediately preceding month (or a portion thereof).

             (ii) Issuing Lender Fees. In addition to the Letter of
         Credit Fee payable pursuant to clause (i) above, the Borrower
         promises to pay to the Issuing Lender for its own account without
         sharing by the other Lenders (A) a letter of credit fronting and
         negotiation fee equal to 0.125% of the average daily maximum amount
         available to be drawn under each Letter of Credit computed at a per
         annum rate for each day from the date of issuance to the date of
         expiration and (B) the customary charges from time to time of the
         Issuing Lender with respect to the issuance, amendment, transfer,
         administration, cancellation and conversion of, and drawings under,
         such Letters of Credit (collectively, the "Issuing Lender Fees").

         (c) Administrative Fees. The Borrower agrees to pay to the Agent, for
its own account, the fees referred to in the Agent's Fee Letter (collectively,
the "Agent's Fees").

3.6      Capital Adequacy.

         If any Lender has determined, after the date hereof, that the
adoption or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or assets as a
consequence of its commitments or obligations hereunder to a level below that
which such Lender could have achieved but for such adoption, effectiveness,
change or compliance (taking into consideration such Lender's policies with
respect to capital adequacy), then, upon notice from such Lender to the
Borrower, the Borrower shall be obligated to pay to such Lender such
additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto.

3.7      [Reserved].

3.8      [Reserved].

3.9      Requirements of Law.

         If, after the date hereof, the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable
to any Lender, or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority, in each case made subsequent to the Closing Date (or,
if later, the date on which such Lender becomes a Lender):



                                      32
<PAGE>

                  (a) shall subject such Lender to any tax of any kind
         whatsoever with respect to any Letter of Credit or change the basis
         of taxation of payments to such Lender in respect thereof (except for
         (i) Non-Excluded Taxes covered by Section 3.10 (including
         Non-Excluded Taxes imposed solely by reason of any failure of such
         Lender to comply with its obligations under Section 3.10(b)) and (ii)
         changes in taxes measured by or imposed upon the overall net income,
         or franchise tax (imposed in lieu of such net income tax), of such
         Lender or its applicable lending office, branch, or any affiliate
         thereof));

                  (b) shall impose, modify or hold applicable any reserve,
         special deposit, compulsory loan or similar requirement against
         assets held by, deposits or other liabilities in or for the account
         of, advances, loans or other extensions of credit by, or any other
         acquisition of funds by, any office of such Lender; or

                  (c) shall impose on such Lender any other condition
         (excluding any tax of any kind whatsoever);

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, upon notice to the Borrower from such Lender,
through the Agent, in accordance herewith, the Borrower shall be obligated to
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable.
If any Lender becomes entitled to claim any additional amounts pursuant to
this subsection, it shall provide prompt notice thereof to the Borrower,
through the Agent, certifying (x) that one of the events described in this
paragraph (a) has occurred and describing in reasonable detail the nature of
such event, (y) as to the increased cost or reduced amount resulting from such
event and (z) as to the additional amount demanded by such Lender and a
reasonably detailed explanation of the calculation thereof. Such a certificate
as to any additional amounts payable pursuant to this subsection submitted by
such Lender, through the Agent, to the Borrower shall be conclusive and
binding on the parties hereto in the absence of manifest error. This covenant
shall survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.

3.10     Taxes.

         (a) Except as provided below in this subsection, all payments made by
the Borrower under this Credit Agreement and any Notes shall be made free and
clear of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any court, or governmental body, agency or
other official, excluding taxes measured by or imposed upon the overall net
income of any Lender or its applicable lending office, or any branch or
affiliate thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of any Lender or its
applicable lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes, imposed: (i) by the jurisdiction under
the laws of which such Lender, applicable lending office, branch or affiliate
is organized or is located, or in which its principal executive office is
located, or any nation




                                      33
<PAGE>

within which such jurisdiction is located or any political subdivision
thereof; or (ii) by reason of any connection between the jurisdiction imposing
such tax and such Lender, applicable lending office, branch or affiliate other
than a connection arising solely from such Lender having executed, delivered
or performed its obligations, or received payment under or enforced, this
Credit Agreement or any Notes. If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to the Agent or
any Lender hereunder or under any Notes, (A) the amounts so payable to the
Agent or such Lender shall be increased to the extent necessary to yield to
the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Credit Agreement and any Notes, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and
shall not be required to increase any such amounts payable to any Lender that
is not organized under the laws of the United States of America or a state
thereof if such Lender fails to comply with the requirements of paragraph (b)
of this subsection whenever any Non-Excluded Taxes are payable by the
Borrower, and (B) as promptly as possible thereafter the Borrower shall send
to the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by the Agent
or any Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.

         (b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:

             (X) (i) on or before the date of any payment by the Borrower
         under this Credit Agreement or Notes to such Lender, deliver to the
         Borrower and the Agent (A) two (2) duly completed copies of United
         States Internal Revenue Service Form 1001 or 4224, or successor
         applicable form, as the case may be, certifying that it is entitled
         to receive payments under this Credit Agreement and any Notes without
         deduction or withholding of any United States federal income taxes
         and (B) an Internal Revenue Service Form W-8 or W-9, or successor
         applicable form, as the case may be, certifying that it is entitled
         to an exemption from United States backup withholding tax;

                     (ii) deliver to the Borrower and the Agent two (2)
                  further copies of any such form or certification on or
                  before the date that any such form or certification expires
                  or becomes obsolete and after the occurrence of any event
                  requiring a change in the most recent form previously
                  delivered by it to the Borrower; and

                     (iii) obtain such extensions of time for filing and
                  complete such forms or certifications as may reasonably be
                  requested by the Borrower or the Agent; or

             (Y) in the case of any such Lender that is not a "bank"
         within the meaning of Section 881(c)(3)(A) of the Internal Revenue
         Code, (i) represent to the Borrower (for the



                                      34
<PAGE>

         benefit of the Borrower and the Agent) that it is not a bank within
         the meaning of Section 881(c)(3)(A) of the Internal Revenue Code,
         (ii) agree to furnish to the Borrower on or before the date of any
         payment by the Borrower, with a copy to the Agent two (2) accurate
         and complete original signed copies of Internal Revenue Service Form
         W-8, or successor applicable form certifying to such Lender's legal
         entitlement at the date of such certificate to an exemption from U.S.
         withholding tax under the provisions of Section 881(c) of the
         Internal Revenue Code with respect to payments to be made under this
         Credit Agreement and any Notes (and to deliver to the Borrower and
         the Agent two (2) further copies of such form on or before the date
         it expires or becomes obsolete and after the occurrence of any event
         requiring a change in the most recently provided form and, if
         necessary, obtain any extensions of time reasonably requested by the
         Borrower or the Agent for filing and completing such forms), and
         (iii) agree, to the extent legally entitled to do so, upon reasonable
         request by the Borrower, to provide to the Borrower (for the benefit
         of the Borrower and the Agent) such other forms as may be reasonably
         required in order to establish the legal entitlement of such Lender
         to an exemption from withholding with respect to payments under this
         Credit Agreement and any Notes;

         unless in any such case any change in treaty, law or regulation has
         occurred after the date such Person becomes a Lender hereunder which
         renders all such forms inapplicable or which would prevent such
         Lender from duly completing and delivering any such form with respect
         to it and such Lender so advises the Borrower and the Agent. Each
         Person that shall become a Lender or a participant of a Lender
         pursuant to subsection 11.3 shall, upon the effectiveness of the
         related transfer, be required to provide all of the forms,
         certifications and statements required pursuant to this subsection,
         provided that in the case of a participant of a Lender the
         obligations of such participant of a Lender pursuant to this
         subsection (b) shall be determined as if the participant of a Lender
         were a Lender except that such participant of a Lender shall furnish
         all such required forms, certifications and statements to the Lender
         from which the related participation shall have been purchased.

3.11     Pro Rata Treatment.

         Except to the extent otherwise provided herein:

                  (a) Loans. Each Loan, each payment or prepayment of
         principal of any Loan or reimbursement obligations arising from
         drawings under Letters of Credit, each payment of interest on the
         Loans or reimbursement obligations arising from drawings under
         Letters of Credit, each payment of Unused Fees, each payment of the
         Standby Letter of Credit Fee, each payment of the Trade Letter of
         Credit Fee, each reduction of the Committed Amount and each
         conversion or extension of any Loan, shall be allocated pro rata
         among the Lenders in accordance with the respective principal amounts
         of their outstanding Loans and Participation Interests.

                  (b) Advances. Unless the Agent shall have been notified in
         writing by any Lender prior to a borrowing that such Lender will not
         make the amount that would constitute its ratable share of such
         borrowing available to the Agent, the Agent may assume



                                      35
<PAGE>

         that such Lender is making such amount available to the Agent, and
         the Agent may, in reliance upon such assumption, make available to
         the Borrower a corresponding amount. If such amount is not made
         available to the Agent by such Lender within the time period
         specified therefor hereunder, such Lender shall pay to the Agent, on
         demand, such amount with interest thereon at a rate equal to the
         Federal Funds Rate for the period until such Lender makes such amount
         immediately available to the Agent. A certificate of the Agent
         submitted to any Lender with respect to any amounts owing under this
         subsection shall be conclusive in the absence of manifest error.

3.12     Sharing of Payments.

         The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the
exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a
secured claim under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar
law or otherwise, or by any other means, in excess of its pro rata share of
such payment as provided for in this Credit Agreement, such Lender shall
promptly purchase from the other Lenders a participation in such Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares
as provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
participation theretofore sold, return its share of that benefit (together
with its share of any accrued interest payable with respect thereto) to each
Lender whose payment shall have been rescinded or otherwise restored. The
Borrower agrees that any Lender so purchasing such a participation may, to the
fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Loan, LOC Obligations or other
obligation in the amount of such participation. Except as otherwise expressly
provided in this Credit Agreement, if any Lender or the Agent shall fail to
remit to the Agent or any other Lender an amount payable by such Lender or the
Agent to the Agent or such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Agent or such other Lender at a rate per annum
equal to the Federal Funds Rate. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu
of a setoff to which this Section 3.12 applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders under this Section 3.12 to
share in the benefits of any recovery on such secured claim.

3.13     Payments, Computations, Etc.

         (a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Agent in dollars in immediately available
funds, without offset, deduction, counterclaim



                                      36
<PAGE>

or withholding of any kind, at the Agent's office specified in Schedule 2.1(a)
not later than 2:00 P.M. (Charlotte, North Carolina time) on the date when
due. Payments received after such time shall be deemed to have been received
on the next succeeding Business Day. The Agent may (but shall not be obligated
to) debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrower maintained with the Agent (with
notice to the Borrower). The Borrower shall, at the time it makes any payment
under this Credit Agreement, specify to the Agent the Loans, LOC Obligations,
Fees, interest or other amounts payable by the Borrower hereunder to which
such payment is to be applied (and in the event that it fails so to specify,
or if such application would be inconsistent with the terms hereof, the Agent
shall distribute such payment to the Lenders in such manner as the Agent may
determine to be appropriate in respect of obligations owing by the Borrower
hereunder, subject to the terms of Section 3.11(a)). The Agent will distribute
such payments to such Lenders, if any such payment is received prior to 12:00
Noon (Charlotte, North Carolina time) on a Business Day in like funds as
received prior to the end of such Business Day and otherwise the Agent will
distribute such payment to such Lenders on the next succeeding Business Day.
Whenever any payment hereunder shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day (subject to accrual of interest and Fees for the period of such
extension). Except as expressly provided otherwise herein, all computations of
interest and fees shall be made on the basis of actual number of days elapsed
over a year of 360 days, except with respect to computation of interest on
Base Rate Loans which (unless the Base Rate is determined by reference to the
Federal Funds Rate) shall be calculated based on a year of 365 or 366 days, as
appropriate. Interest shall accrue from and include the date of borrowing, but
exclude the date of payment.

         (b) Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account of the Borrower's
Obligations or any other amounts outstanding under any of the Credit Documents
or in respect of the Collateral shall be paid over or delivered as follows:

                  FIRST, to the payment of all reasonable out-of-pocket costs
         and expenses (including without limitation reasonable attorneys'
         fees) of the Agent in connection with enforcing the rights of the
         Lenders under the Credit Documents and any protective advances made
         by the Agent with respect to the Collateral under or pursuant to the
         terms of the Collateral Documents;

                  SECOND, to payment of any fees owed to the Agent;

                  THIRD, to the payment of all reasonable out-of-pocket costs
         and expenses (including without limitation, reasonable attorneys'
         fees) of each of the Lenders in connection with enforcing its rights
         under the Credit Documents or otherwise with respect to the
         Borrower's Obligations owing to such Lender;

                  FOURTH, to the payment of all of the Borrower's Obligations
         consisting of accrued fees and interest;


                                      37
<PAGE>


                  FIFTH, to the payment of the outstanding principal amount of
         the Borrower's Obligations;

                  SIXTH, to the Agent for the account of the Issuing Lender,
         to Cash Collateralize that portion of LOC Obligations comprised of
         the aggregate undrawn amount of Letters of Credit;

                  SEVENTH, to all other Borrower's Obligations and other
         obligations which shall have become due and payable under the Credit
         Documents or otherwise and not repaid pursuant to clauses "FIRST"
         through "SIXTH" above; and

                  EIGHTH, to the payment of the surplus, if any, to whoever
         may be lawfully entitled to receive such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive an amount
equal to its pro rata share (based on the proportion that the then outstanding
Loans held by such Lender bears to the aggregate then outstanding Loans) of
amounts available to be applied pursuant to clauses "THIRD", "FOURTH",
"FIFTH", "SIXTH" and "SEVENTH" above.

3.14     Evidence of Debt.

         (a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Credit Agreement. Each Lender will make reasonable efforts to
maintain the accuracy of its account or accounts and to promptly update its
account or accounts from time to time, as necessary.

         (b) The Agent shall maintain the Register pursuant to Section 11.3(c)
hereof, and a subaccount for each Lender, in which Register and subaccounts
(taken together) shall be recorded (i) the amount, type and Interest Period of
each such Loan hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from or for the account of
the Borrower and each Lender's share thereof. The Agent will make reasonable
efforts to maintain the accuracy of the subaccounts referred to in the
preceding sentence and to promptly update such subaccounts from time to time,
as necessary.

         (c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.15 (and, if consistent
with the entries of the Agent, subsection (a)) shall be prima facie evidence
of the existence and amounts of the obligations of the Borrower therein
recorded; provided, however, that the failure of any Lender or the Agent to
maintain any such account, such Register or such subaccount, as applicable, or
any error therein, shall not in any manner affect the obligation of the
Borrower to repay the Loans made by such Lender in accordance with the terms
hereof.


                                      38
<PAGE>
3.15     Mandatory Assignment.

         In the event any Lender delivers to the Borrower any notice in
accordance with Section 3.9, then, provided that no Default or Event of
Default has occurred and is continuing at such time, the Borrower may, at its
own expense (such expense to include any transfer fee payable to the Agent
under Section 11.3(b)), and in its sole discretion require such Lender to
transfer and assign in whole or in part, without recourse (in accordance with
and subject to the terms and conditions of Section 11.3(b)), all or part of
its interests, rights and obligations under this Credit Agreement to any
assignee which shall assume such assigned obligations, provided that (i) such
assignee shall be (a) any Lender or any Affiliate or Subsidiary of a Lender,
or (b) any other commercial bank, financial institution or "accredited
investor" (as defined in Regulation D of the Securities and Exchange
Commission) reasonably acceptable to the Agent and the Required Lenders, (ii)
such assignment shall not conflict with any law, rule or regulation or order
of any court or other Governmental Authority and (iii) the Borrower or such
assignee shall have paid to the assigning Lender in immediately available
funds the principal of and interest accrued to the date of such payment on the
Loans made by it hereunder and all other amounts owed to it hereunder
(including, without limitation, any amounts owing pursuant to Section 3.9).


                                   SECTION 4

                                   GUARANTY

4.1      The Guarantee.

         Each of the Guarantors hereby jointly and severally guarantees to
each Lender, each Affiliate of a Lender that enters into a Hedging Agreement
and the Agent as hereinafter provided the prompt payment of the Borrower's
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Borrower's Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as
mandatory cash collateralization or otherwise), the Guarantors will, jointly
and severally, promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the Borrower's Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.

         Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).



                                      39
<PAGE>

4.2      Obligations Unconditional.

         The obligations of the Guarantors under Section 4.1 hereof are joint
and several, absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Credit
Documents or Hedging Agreements, or any other agreement or instrument referred
to therein, or any substitution, release or exchange of any other guarantee of
or security for any of the Borrower's Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of
a surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor
shall have no right of subrogation, indemnity, reimbursement or contribution
against the Borrower or any other Guarantor of the Borrower's Obligations for
amounts paid under this Guaranty until such time as the Lenders (and any
Affiliates of Lenders entering into Hedging Agreements) have been paid in
full, all Commitments under the Credit Agreement have been terminated and no
Person or Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received
under the Credit Documents or Hedging Agreements. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent
permitted by law, the occurrence of any one or more of the following shall not
alter or impair the liability of any Guarantor hereunder which shall remain
absolute and unconditional as described above:

                  (i) at any time or from time to time, without notice to any
         Guarantor, the time for any performance of or compliance with any of
         the Borrower's Obligations shall be extended, or such performance or
         compliance shall be waived;

                  (ii) any of the acts mentioned in any of the provisions of
         any of the Credit Documents, any Hedging Agreement or any other
         agreement or instrument referred to in the Credit Documents or
         Hedging Agreements shall be done or omitted;

                  (iii) the maturity of any of the Borrower's Obligations
         shall be accelerated, or any of the Borrower's Obligations shall be
         modified, supplemented or amended in any respect, or any right under
         any of the Credit Documents, any Hedging Agreement or any other
         agreement or instrument referred to in the Credit Documents or
         Hedging Agreements shall be waived or any other guarantee of any of
         the Borrower's Obligations or any security therefor shall be released
         or exchanged in whole or in part or otherwise dealt with;

                  (iv) any Lien granted to, or in favor of, the Agent or any
         Lender or Lenders as security for any of the Borrower's Obligations
         shall fail to attach or be perfected; or

                  (v) any of the Borrower's Obligations shall be determined to
         be void or voidable (including, without limitation, for the benefit
         of any creditor of any Guarantor) or shall be subordinated to the
         claims of any Person (including, without limitation, any creditor of
         any Guarantor).

With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the




                                      40
<PAGE>

Agent or any Lender exhaust any right, power or remedy or proceed against any
Person under any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements, or against any other Person under any other guarantee of, or
security for, any of the Borrower's Obligations.

4.3      Reinstatement.

         The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Borrower's Obligations is
rescinded or must be otherwise restored by any holder of any of the Borrower's
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.

4.4      Certain Additional Waivers.

         Without limiting the generality of the provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of N.C. Gen.
Stat.ss.ss.26-7 through 26-9, inclusive. Each Guarantor further agrees that
such Guarantor shall have no right of recourse to security for the Borrower's
Obligations, except through the exercise of the rights of subrogation pursuant
to Section 4.2.

4.5      Remedies.

         The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Borrower's Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 hereof (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section
9.2) for purposes of Section 4.1 hereof notwithstanding any stay, injunction
or other prohibition preventing such declaration (or preventing the Borrower's
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Borrower's
Obligations being deemed to have become automatically due and payable), the
Borrower's Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
Section 4.1.

4.6      Rights of Contribution.

         The Guarantors hereby agree, as among themselves, that if any
Guarantor shall become an Excess Funding Guarantor (as defined below), each
other Guarantor shall, on demand of such Excess Funding Guarantor (but subject
to the succeeding provisions of this Section 4.6), pay to such Excess Funding
Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, assets,
liabilities and debts of such Excess Funding Guarantor) of such Excess Payment
(as defined below). The payment




                                      41
<PAGE>

obligation of any Guarantor to any Excess Funding Guarantor under this Section
4.6 shall be subordinate and subject in right of payment to the prior payment
in full of the obligations of such Guarantor under the other provisions of
this Section 4, and such Excess Funding Guarantor shall not exercise any right
or remedy with respect to such excess until payment and satisfaction in full
of all of such obligations. For purposes hereof, (i) "Excess Funding
Guarantor" shall mean, in respect of any obligations arising under the other
provisions of this Section 4 (hereafter, the "Guaranteed Obligations"), a
Guarantor that has paid an amount in excess of its Pro Rata Share of the
Guaranteed Obligations; (ii) "Excess Payment" shall mean, in respect of any
Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in
excess of its Pro Rata Share of such Guaranteed Obligations; and (iii) "Pro
Rata Share", for the purposes of this Section 4.6, shall mean, for any
Guarantor, the ratio (expressed as a percentage) of (a) the amount by which
the aggregate present fair saleable value of all of its assets and properties
exceeds the amount of all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (b) the amount by
which the aggregate present fair saleable value of all assets and other
properties of the Borrower and all of the Guarantors exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of the Borrower
and the Guarantors hereunder) of the Borrower and all of the Guarantors, all
as of the Closing Date (if any Guarantor becomes a party hereto subsequent to
the Closing Date, then for the purposes of this Section 4.6 such subsequent
Guarantor shall be deemed to have been a Guarantor as of the Closing Date and
the information pertaining to, and only pertaining to, such Guarantor as of
the date such Guarantor became a Guarantor shall be deemed true as of the
Closing Date).

4.7      Continuing Guarantee.

         The guarantee in this Section 4 is a continuing guarantee, and shall
apply to all Borrower's Obligations whenever arising.


                                   SECTION 5

                                  CONDITIONS

5.1      Closing Conditions.

         The obligation of the Lenders to enter into this Credit Agreement and
to make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):

                  (a) The Agent shall have received original counterparts of
         this Credit Agreement executed by each of the parties hereto;

                  (b) The Agent shall have received an appropriate original
         Note for each Lender requesting such Note, executed by the Borrower;



                                      42
<PAGE>

                  (c) The Agent shall have received original counterparts of
         the Restructure Agreement, executed by each of the parties thereto;

                  (d) The Agent shall have received all documents it may
         reasonably request relating to the existence and good standing of
         each of the Credit Parties, the corporate or other necessary
         authority for and the validity of the Credit Documents, and any other
         matters relevant thereto, all in form and substance reasonably
         satisfactory to the Agent;

                   (e) The Agent shall have received, in form and substance
         satisfactory to the Agent, a legal opinion of Robinson, Bradshaw &
         Hinson, P.A., counsel for the Credit Parties, dated as of the Closing
         Date;

                  (f) The Agent shall have received, for its own account and
         for the accounts of the Lenders, all fees and expenses required by
         this Credit Agreement or any other Credit Document to be paid on or
         before the Closing Date (including, without limitation, any and all
         out-of-pocket costs (to the extent invoiced) incurred by the Agent
         (including, without limitation, the reasonable fees and expenses of
         Moore & Van Allen, PLLC and Ernst and Young Corporate Finance LLC),
         and fees and other amounts payable to the Agent, in each case in
         connection with the negotiation, preparation, execution and delivery
         of this Credit Agreement);

                  (g) The Agent, on behalf of each Lender, shall have received
         an amendment fee equal to the sum of (i) 1.00% of each such Lender's
         Commitment after giving effect to the transactions contemplated
         hereby plus (ii) 1.00% of each Lender's portion of the Forgiven
         Balance (as defined in the Restructure Agreement);

                  (h) Availability shall be at least $8,000,000;

                  (i) the Agent shall have received approximately $13,685,000
         in cash on hand from the Borrower to be applied to Loans outstanding
         immediately prior to giving effect to the transactions contemplated
         hereby;

                  (j) the Agent shall have received, for the benefit of the
         Lenders, attached warrants to purchase up to ten percent (10%) of the
         fully diluted shares of common stock of the Borrower in the
         aggregate, such warrants having a strike price equal to in the
         aggregate, $60 million equity value and exercisable within ten years
         of the Closing Date;

                  (k) at least $109,961,000 of the 5-3/4% Convertible
         Subordinated Notes due 2004 shall have been exchanged for common
         stock equity in the Borrower; and

                  (l) The Agent shall have received such other documents,
         agreements or information which may be reasonably requested by the
         Agent.


                                      43
<PAGE>

5.2      Conditions to all Extensions of Credit.

         The obligations of each Lender to make, convert or extend any Loan
and of the Issuing Lender to issue or extend Letters of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of
the conditions set forth in Section 5.1:

                  (i) The Borrower shall have delivered (A) in the case of any
         Loan, an appropriate Notice of Borrowing or (B) in the case of any
         Letter of Credit, the Issuing Lender shall have received an
         appropriate request for issuance in accordance with the provisions of
         Section 2.2(b);

                  (ii) The representations and warranties set forth in Section
         6 shall be, subject to the limitations set forth therein, true and
         correct in all material respects as of such date (except for those
         which expressly relate to an earlier date), which shall be true and
         correct in all material aspects as of such earlier date;

                  (iii) There shall not have been commenced against the
         Borrower or any Guarantor an involuntary case under any applicable
         bankruptcy, insolvency or other similar law now or hereafter in
         effect, or any case, proceeding or other action for the appointment
         of a receiver, liquidator, assignee, custodian, trustee, sequestrator
         (or similar official) of such Person or for any substantial part of
         its Property or for the winding up or liquidation of its affairs, and
         such involuntary case or other case, proceeding or other action shall
         remain undismissed, undischarged or unbonded;

                  (iv) No Default or Event of Default shall exist and be
         continuing either prior to or after giving effect thereto; and

                  (v) Immediately after giving effect to the making of such
         Loan (and the application of the proceeds thereof) or to the issuance
         of such Letter of Credit, as the case may be, (A) the sum of the
         aggregate principal amount of outstanding Loans plus LOC Obligations
         outstanding shall not exceed the lesser of (I) the Committed Amount
         and (II) the Borrowing Base, and (B) the LOC Obligations shall not
         exceed the LOC Committed Amount.

The delivery of each Notice of Borrowing and each request for the issuance of
a Letter of Credit pursuant to Section 2.2(b) shall constitute a
representation and warranty by the Borrower of the correctness of the matters
specified in subsections (ii), (iii), (iv) and (v) above.



                                      44
<PAGE>

                                   SECTION 6

                        REPRESENTATIONS AND WARRANTIES

         The Credit Parties hereby represent to the Agent and each Lender
that:

6.1      Financial Condition.

         (a) The audited consolidated balance sheet of the Borrower and its
Subsidiaries as of December 30, 2001 and the audited consolidated statements
of operations and statements of cash flows for the years ended December 30,
2001 have heretofore been furnished to each Lender. Such financial statements
(including the notes thereto) (i) have been audited by PricewaterhouseCoopers,
LLP, (ii) have been prepared in accordance with GAAP consistently, applied
throughout the periods covered thereby and (iii) present fairly (on the basis
disclosed in the footnotes to such financial statements) the consolidated
financial condition, results of operations and cash flows of the Borrower and
its Subsidiaries as of such date and for such periods. The unaudited interim
balance sheets of the Borrower and its Subsidiaries as at the end of, and the
related unaudited interim statements of operations and of cash flows for, each
quarterly period ended after December 30, 2001 and prior to the Closing Date
have heretofore been furnished to each Lender. Such interim financial
statements for each such quarterly period, (i) have been prepared in
accordance with Regulation S-X of the Securities and Exchange Commission
consistently applied throughout the periods covered thereby and (ii) present
fairly (on the basis disclosed in the footnotes to such financial statements)
the consolidated financial condition, results of operations and cash flows of
the Borrower and its Subsidiaries as of such date and for such periods. During
the period from September 29, 2002 to and including the Closing Date, there
has been no sale, transfer or other disposition by the Borrower or any of its
Subsidiaries of any material part of the business or property of the Borrower
and its Subsidiaries, taken as a whole, and no purchase or other acquisition
by any of them of any business or property (including any capital stock of any
other person) material in relation to the consolidated financial condition of
the Borrower and its Subsidiaries, taken as a whole, in each case, which has
not been disclosed in writing to the Lenders on or prior to the Closing Date
or otherwise publicly disclosed.

         (b) The projected consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries as at the end of, and the related projected
statements of operations and of cash flows for, the years ended December 28,
2003, January 2, 2005 and January 1, 2006 (heretofore furnished to each
Lender) are based upon reasonable assumptions made known to the Lenders and
upon information not known to be incorrect or misleading in any material
respect (except as otherwise previously publicly disclosed), subject to the
uncertainties and approximations inherent in any projections.

6.2      No Change; Dividends.

         Except as set forth on Schedule 6.2, since December 30, 2001, (a)
there has been no development or event relating to or affecting the Borrower
or any of its Subsidiaries which has had or would be reasonably expected to
have a Material Adverse Effect (except as has been publicly disclosed prior to
the Closing Date) and (b) except as permitted under this Credit Agreement, no





                                      45
<PAGE>

dividends or other distributions have been declared, paid or made upon the
capital stock or other equity interest in the Borrower or any of its
Subsidiaries nor, except to the extent permitted under this Credit Agreement,
has any of the capital stock or other equity interest in the Borrower or any
of its Subsidiaries been redeemed, retired, purchased or otherwise acquired
for value by such Person.

6.3      Organization; Existence; Compliance with Law.

         Each of the Borrower and its Subsidiaries (a) is a corporation or
limited liability company or limited partnership, as the case may be, duly
organized, validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the corporate or
other necessary power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, except to the extent that the
failure to have such legal right would not be reasonably expected to have a
Material Adverse Effect, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing would not be reasonably expected to have a
Material Adverse Effect, and (d) is in compliance with all material
Requirements of Law, except to the extent that the failure to comply therewith
would not, in the aggregate, be reasonably expected to have a Material Adverse
Effect.

6.4      Power; Authorization; Enforceable Obligations.

         Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents and Subordinated Note Documents to which it is a party, and in the
case of the Borrower, to borrow hereunder, and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions of
this Credit Agreement and to authorize the execution, delivery and performance
of the Credit Documents and Subordinated Note Documents to which it is a
party. No consent or authorization of, filing with, notice to or other similar
act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by or on behalf of any Credit Party in
connection with the Indebtedness arising under the Subordinated Note
Documents, the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents and
Subordinated Note Documents to which such Credit Party is a party, except for
(i) filings to perfect the Liens created by the Collateral Documents and (ii)
consents, authorizations, notices and filings described in Schedule 6.4, all
of which have been obtained or made or have the status described in such
Schedule 6.4. This Credit Agreement has been, and each other Credit Document
and Subordinated Note Document to which any Credit Party is a party will be,
duly executed and delivered on behalf of the Credit Parties. This Credit
Agreement constitutes and each other Credit Document and each Subordinated
Note Document to which any Credit Party is a party when executed and delivered
will constitute, a legal, valid and binding obligation of such Credit Party
enforceable against such party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).



                                      46
<PAGE>

6.5      No Legal Bar.

         The execution, delivery and performance of the Credit Documents and
Subordinated Note Documents by the Credit Parties, the borrowings hereunder
and the use of the proceeds thereof (a) will not violate any Requirement of
Law or contractual obligation of the Borrower or any of its Subsidiaries, or
cause an event of default under any material indenture, loan agreement,
mortgage, deed of trust, contract or other agreement or instrument to which it
is a party or by which it may be bound, in any respect that would reasonably
be expected to have a Material Adverse Effect, (b) will not result in, or
require, the creation or imposition of any Lien (other than the Liens created
by the Collateral Documents) on any of the properties or revenues of any of
the Borrower or any of its Subsidiaries pursuant to any such Requirement of
Law or contractual obligation, and (c) will not violate or conflict with any
provision of any Credit Party's articles of incorporation or by-laws.

6.6      No Material Litigation.

         No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of
the Credit Parties, threatened by or against the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues which
(a) relates to any of the Credit Documents or any of the transactions
contemplated hereby or thereby, (b) relates to any of the Subordinated Note
Documents or any of the transactions contemplated thereby or (c) would be
reasonably expected to have a Material Adverse Effect.

6.7      No Default.

         Neither the Borrower nor any of its Subsidiaries is in default under
or with respect to any of their contractual obligations in any respect which
would be reasonably expected to have a Material Adverse Effect; 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 6.7.

6.8      Ownership of Property; Liens.

         Each of the Borrower and its Subsidiaries has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in,
all its other material property, and none of such property is subject to any
Lien, except for Permitted Liens.

6.9      Intellectual Property.

         Each of the Borrower and its Subsidiaries owns, or has the legal
right to use, all United States trademarks, tradenames, copyrights,
technology, know-how and processes, if any, necessary for each of them to
conduct its business as currently conducted (the "Intellectual Property")
except for those the failure to own or have such legal right to use would not
be reasonably expected to have a Material Adverse Effect. No claim has been
asserted and is pending by any Person challenging or questioning the use of
any such




                                      47
<PAGE>

Intellectual Property or the validity or effectiveness of any such
Intellectual Property, nor does any Credit Party know of any such claim, and
the use of such Intellectual Property and, to the knowledge of the responsible
officers of the Credit Parties, the use of the Intellectual Property by the
Borrower or any of its Subsidiaries or the granting of a right or a license in
respect of the Intellectual Property from any Credit Party does not infringe
on the rights of any Person, except for such claims and infringements that in
the aggregate, would not be reasonably expected to have a Material Adverse
Effect. Set forth on Schedule 6.9 is a list of all Intellectual Property
registered with the United States Copyright Office or the United States Patent
and Trademark Office and owned by each Credit Party. As of the Closing Date,
none of the Intellectual Property of the Credit Parties is subject to any
licensing agreement or similar agreement with a Credit Party as licensor
except as set forth on Schedule 6.9.

6.10     No Burdensome Restrictions.

         Except as previously disclosed in writing to the Lenders on or prior
to the Closing Date, no Requirement of Law or contractual obligation of the
Borrower or any of its Subsidiaries would be reasonably expected to have a
Material Adverse Effect.

6.11     Taxes.

         Each of the Borrower and its Subsidiaries has filed or caused to be
filed all United States federal income tax returns and all other material tax
returns which, to the best knowledge of the Credit Parties, are required to be
filed and, except to the extent it has made alternative arrangements with the
relevant taxing authority, has disclosed such arrangements to the Agent and is
in compliance with such arrangements, has paid (a) all taxes shown to be due
and payable on said returns or (b) all taxes shown to be due and payable on
any assessments of which it has received notice made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than any (i) taxes, fees or
other charges with respect to which the failure to pay, in the aggregate,
would not have a Material Adverse Effect or (ii) taxes, fees or other charges
the amount or validity of which are currently being contested and with respect
to which reserves in conformity with GAAP have been provided on the books of
such Person), and no tax Lien has been filed, and, to the best knowledge of
the Credit Parties, no claim is being asserted, with respect to any such tax,
fee or other charge. No Credit Party is aware as of the Closing Date of any
proposed tax assessments against it or any other Credit Party except those set
forth on Schedule 6.11.

6.12     ERISA.

         (a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no Termination Event has occurred,
and, to the best knowledge of the Credit Parties, no event or condition has
occurred or exists as a result of which any Termination Event could reasonably
be expected to occur, with respect to any Plan; (ii) no "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412
of the Code, whether or not waived, has occurred with respect to any Plan;
(iii) each Plan has been maintained, operated, and funded in compliance with
its own terms and in material compliance with the provisions of ERISA, the
Code, and any other applicable federal or state laws; and (iv) no lien in
favor of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.



                                      48
<PAGE>

         (b) The actuarial present value of all "benefit liabilities" under
all Single Employer Plans (determined within the meaning of Section 401(a)(2)
of the Code, utilizing the actuarial assumptions used to fund such Plans),
whether or not vested, did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the
current value of the assets of all such Plans.

         (c) Neither the Borrower, any of the Subsidiaries of the Borrower nor
any ERISA Affiliate has incurred, or, to the best knowledge of the Credit
Parties, could be reasonably expected to incur, any withdrawal liability under
ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the
Borrower, any of the Subsidiaries of the Borrower nor any ERISA Affiliate
would become subject to any withdrawal liability under ERISA if the Borrower,
any of the Subsidiaries of the Borrower or any ERISA Affiliate were to
withdraw completely from all Multiemployer Plans and Multiple Employer Plans
as of the valuation date most closely preceding the date on which this
representation is made or deemed made. Neither the Borrower, any of the
Subsidiaries of the Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within the
meaning of Section 4241 of ERISA), is insolvent (within the meaning of Section
4245 of ERISA), or has been terminated (within the meaning of Title IV of
ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or
terminated.

         (d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred with respect to a Plan which has subjected or may subject the
Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate to
any liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section
4975 of the Code, or under any agreement or other instrument pursuant to which
the Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate
has agreed or is required to indemnify any person against any such liability.

6.13     Governmental Regulations, Etc.

         (a) No part of the proceeds of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation G or Regulation U, or for the purpose of
purchasing or carrying or trading in any securities. If requested by any
Lender or the Agent, the Borrower will furnish to the Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR
Form U-1 referred to in said Regulation U. No indebtedness being reduced or
retired out of the proceeds of the Loans was or will be incurred for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U or any "margin security" within the meaning of Regulation T.
"Margin stock" within the meanings of Regulation U does not constitute more
than 25% of the value of the consolidated assets of the Borrower and its
Subsidiaries. None of the transactions contemplated by this Credit Agreement
(including, without limitation, the direct or indirect use of the proceeds of
the Loans) will violate or result in a violation of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, or
regulations issued pursuant thereto, or Regulation G, T, U or X.



                                      49
<PAGE>

         (b) Neither the Borrower nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company Act of 1940, each as amended. In addition,
neither the Borrower nor any of its Subsidiaries is (i) an "investment
company" registered or required to be registered under the Investment Company
Act of 1940, as amended, and is not controlled by such a company, or (ii) a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding
company", within the meaning of the Public Utility Holding Company Act of
1935, as amended.

         (c) Except as set forth on Schedule 6.13, no director, executive
officer or principal shareholder of the Borrower or any of its Subsidiaries is
a director, executive officer or principal shareholder of any Lender. For the
purposes hereof the terms "director", "executive officer" and "principal
shareholder" (when used with reference to any Lender) have the respective
meanings assigned thereto in Regulation O issued by the Board of Governors of
the Federal Reserve System.

         (d) Each of the Borrower and its Subsidiaries has obtained all
material licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective Property and to the conduct of
its business.

         (e) Neither the Borrower nor any of its Subsidiaries is in violation
of any applicable statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or any other
jurisdiction, or of any agency thereof (including without limitation,
environmental laws and regulations), which violation could reasonably be
expected to have a Material Adverse Effect.

         (f) Except as set forth on Schedule 6.13, each of the Borrower and
its Subsidiaries is current with all material reports and documents, if any,
required to be filed with any state or federal securities commission or
similar agency and is in full compliance in all material respects with all
applicable rules and regulations of such commissions.

6.14     Subsidiaries.

         Schedule 6.14 sets forth all the Subsidiaries of the Borrower at the
Closing Date, the jurisdiction of their incorporation and the direct or
indirect ownership interest of the Borrower therein. All of the outstanding
capital stock of such Subsidiaries has been validly issued, is fully paid and
non-assessable and is owned by the Borrower or one or more of its Subsidiaries
free and clear of all Liens (other than Liens in favor of the Agent, for the
benefit of the Lenders). All of the outstanding capital stock of the Borrower
has been validly issued, is fully paid and non-assessable.

6.15     Purpose of Loans and Letters of Credit.

         The proceeds of the Loans hereunder shall be used solely by the
Borrower for working capital and general corporate purposes of the Credit
Parties. The Letters of Credit shall be used only for or in connection with
appeal bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade transactions,
worker's




                                      50
<PAGE>

compensation bonds and obligations not otherwise aforementioned relating to
transactions entered into by the applicable account party in the ordinary
course of business.

6.16     Environmental Matters.

         (a) Each of the facilities and properties owned, leased or operated
by the Borrower or any of its Subsidiaries (the "Properties") and all
operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Properties or the businesses operated by the Borrower or any of
its Subsidiaries (the "Businesses"), and there are no conditions relating to
the Businesses or Properties that could give rise to liability under any
applicable Environmental Laws.

         (b) None of the Properties contains, or has previously contained, any
Materials of Environmental Concern at, on or under the Properties in amounts
or concentrations that constitute or constituted a violation of, or could give
rise to liability under, Environmental Laws.

         (c) Neither the Borrower nor any of its Subsidiaries has received any
written or verbal notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Businesses, nor
does the Borrower or any of its Subsidiaries have knowledge or reason to
believe that any such notice will be received or is being threatened.

         (d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed of
at, on or under any of the Properties or any other location, in each case by
or on behalf of the Borrower or any of its Subsidiaries in violation of, or in
a manner that would be reasonably likely to give rise to liability under, any
applicable Environmental Law.

         (e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of any Credit Party, threatened, under
any Environmental Law to which the Borrower or any of its Subsidiaries is or
will be named as a party, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect
to the Borrower or any of its Subsidiaries, the Properties or the Businesses.

         (f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations (including, without limitation, disposal) of the Borrower or
any of its Subsidiaries in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a manner
that could give rise to liability under Environmental Laws.

6.17     Perfected Security Interests.

         Except as the result of or in connection with a disposition permitted
by Section 8.4(c), at all times after execution and delivery of the Collateral
Documents by the Credit Parties and satisfaction



                                      51
<PAGE>

of the conditions specified therein, the security interests created in favor
of the Agent, for the benefit of the Lenders, will constitute valid, perfected
security interests in the Collateral.

6.18     Borrower's Obligations.

         All of the Borrower's Obligations are "Senior Indebtedness" under and
as defined in the Subordinated Note Indenture.

6.19     Indebtedness.

         Except as otherwise permitted under Section 8.1, the Credit Parties
have no Indebtedness.

6.20     Investments.

         All Investments of each Credit Party are Permitted Investments.

6.21     Disclosure.

         Neither this Credit Agreement nor any financial statements delivered
to the Lenders nor any other document, certificate or statement furnished to
the Lenders by or on behalf of any Credit Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained therein or herein not misleading.

6.22     Tax Shelter Regulations.

         The Borrower does not intend to treat the Loans and/or Letters of
Credit and related transactions as being a "reportable transaction" (within
the meaning of Treasury Regulation Section 1.6011-4). In the event the
Borrower determines to take any action inconsistent with such intention, it
will promptly notify the Agent thereof. If the Borrower so notifies the Agent,
the Borrower acknowledges that one or more of the Lenders may treat its Loans
and/or its interest in Letters of Credit as part of a transaction that is
subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders,
as applicable, will maintain the lists and other records required by such
Treasury Regulation.

                                   SECTION 7

                             AFFIRMATIVE COVENANTS

         Each Credit Party hereby covenants and agrees that so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the
Commitments hereunder shall have terminated:


                                      52
<PAGE>

7.1      Information Covenants.

         The Borrower will furnish, or cause to be furnished, to the Agent:

                  (a) Annual Financial Statements. As soon as available, and
         in any event within 90 days after the close of each fiscal year of
         the Borrower and its Subsidiaries (except that the relevant period
         shall be 106 days with respect to the 2002 fiscal year), a
         consolidated and consolidating balance sheet and income statement of
         the Borrower and its Subsidiaries, as of the end of such fiscal year,
         together with related consolidated and consolidating statements of
         earnings and consolidated statements of retained earnings and of cash
         flows for such fiscal year, setting forth in comparative form
         consolidated and, if applicable, consolidating figures for the
         preceding fiscal year, all such financial information described above
         to be in reasonable form and detail and, and with respect to all such
         consolidated financial statements, audited by independent certified
         public accountants of recognized national standing reasonably
         acceptable to the Agent and whose opinion shall be to the effect that
         such financial statements have been prepared in accordance with GAAP
         (except for changes with which such accountants concur) and shall not
         be limited as to the scope of the audit or qualified as to the status
         of the Borrower and its Subsidiaries as a going concern.

                  (b) Quarterly Financial Statements. As soon as available,
         and in any event within 45 days after the close of each fiscal
         quarter of the Borrower and its Subsidiaries (other than the fourth
         fiscal quarter, in which case 106 days after the end thereof) a
         consolidated and consolidating balance sheet and income statement of
         the Borrower and its Subsidiaries, as of the end of such fiscal
         quarter, together with related consolidated and consolidating
         statements of operations and consolidated statements of retained
         earnings and of cash flows for such fiscal quarter in each case
         setting forth in comparative form consolidated and, if applicable,
         consolidating figures for the corresponding period of the preceding
         fiscal year, all such financial information described above to be in
         reasonable form and detail and reasonably acceptable to the Agent,
         and accompanied by a certificate of the chief financial officer of
         the Borrower to the effect that such quarterly financial statements
         fairly present in all material respects the financial condition of
         the Borrower and its Subsidiaries and have been prepared in
         accordance with GAAP, subject to changes resulting from audit and
         normal year-end audit adjustments.

                  (c) Officer's Certificates.

                           (i) At the time of delivery of the financial
                  statements provided for in Sections 7.1(a) and 7.1(b) above,
                  a certificate of the chief financial officer of the Borrower
                  substantially in the form of Schedule 7.1(c)(i), (A)
                  demonstrating compliance with the financial covenants
                  contained in Section 7.11 by calculation thereof as of the
                  end of each such fiscal period, and (B) 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.



                                      53
<PAGE>

                           (ii) Prior to the consummation of any Pro Forma
                  Transaction, a certificate of the chief financial officer of
                  the Borrower in the form of Schedule 7.1(c)(ii), (A)
                  demonstrating compliance with the financial covenants
                  contained in Section 7.11 by calculation thereof on a Pro
                  Forma Basis and (B) stating that, after giving effect on a
                  Pro Forma Basis to such Pro Forma Transaction, no Default or
                  Event of Default would exist.

                           (iii) Within 90 days after the end of each fiscal
                  year of the Borrower, a certificate of the chief financial
                  officer of the Borrower containing information regarding the
                  amount of all Asset Sales and Equity Transactions (other
                  than the issuance by the Borrower of any capital stock or
                  other equity interests pursuant to any stock option plan,
                  equity plan or other employee benefit plan of the Borrower)
                  that were made during the prior fiscal year.

                           (iv) Upon the issuance of any Subordinated
                  Indebtedness, a certificate of the chief financial officer
                  of the Borrower describing such Subordinated Indebtedness,
                  including, without limitation, (A) the name and address of
                  the holders thereof or, with respect to the Subordinated
                  Notes, the trustee for the Subordinated Noteholders, (B)
                  dates on which scheduled payments are owing with respect to
                  such Subordinated Indebtedness (and the amounts owing on
                  such dates) and (C) any other information requested by the
                  Agent with respect to such Subordinated Indebtedness.

                  (d) Annual Business Plan and Budgets. No later than 30 days
         following the end of each fiscal year of the Borrower, beginning with
         the fiscal year ending December 28, 2003, an annual business plan and
         budget of the Borrower containing, among other things, pro forma
         financial statements for the next fiscal year.

                  (e) Accountant's Certificate. Within the period for delivery
         of the annual financial statements provided in Section 7.1(a), a
         certificate of the accountants conducting the annual audit stating
         that they have reviewed this Credit Agreement and stating further
         whether, in the course of their audit, they have become aware of any
         Default or Event of Default and, if any such Default or Event of
         Default exists, specifying the nature and extent thereof.

                  (f) Auditor's Reports. Promptly upon receipt thereof, a copy
         of any other report or "management letter" submitted by independent
         accountants to the Borrower or any of its Subsidiaries in connection
         with any annual, interim or special audit of the books of such
         Person.

                  (g) Reports. Promptly upon transmission or receipt thereof,
         (a) copies of any filings and registrations with, and reports to or
         from, the Securities and Exchange Commission, or any successor
         agency, and copies of all financial statements, proxy statements,
         notices and reports as the Borrower or any of its Subsidiaries shall
         send to its shareholders or to a holder of any Indebtedness owed by
         the Borrower or any of its Subsidiaries in its capacity as such a
         holder and (b) upon the request of the Agent, all reports and written
         information to and from the United States Environmental Protection
         Agency, or




                                      54
<PAGE>

         any state or local agency responsible for environmental
         matters, the United States Occupational Health and Safety
         Administration, or any state or local agency responsible for health
         and safety matters, or any successor agencies or authorities
         concerning environmental, health or safety matters.

                  (h) Notices. Upon obtaining knowledge thereof, the Borrower
         will give written notice to the Agent immediately of (a) the
         occurrence of an event or condition consisting of a Default or Event
         of Default, specifying the nature and existence thereof and what
         action the Credit Parties propose to take with respect thereto, and
         (b) the occurrence of any of the following with respect to the
         Borrower or any of its Subsidiaries (i) the pendency or commencement
         of any litigation, arbitral or governmental proceeding against such
         Person which if adversely determined is likely to have a Material
         Adverse Effect, (ii) the institution of any proceedings against such
         Person with respect to, or the receipt of notice by such Person of
         potential liability or responsibility for violation, or alleged
         violation of any federal, state or local law, rule or regulation,
         including but not limited to, Environmental Laws, the violation of
         which would likely have a Material Adverse Effect, or (iii) any
         notice or determination concerning the imposition of any withdrawal
         liability by a Multiemployer Plan against such Person or any ERISA
         Affiliate, the determination that a Multiemployer Plan is, or is
         expected to be, in reorganization within the meaning of Title IV of
         ERISA or the termination of any Plan.

                  (i) ERISA. Upon obtaining knowledge thereof, the Borrower
         will give written notice to the Agent promptly (and in any event
         within five business days) of: (i) of any event or condition,
         including, but not limited to, any Reportable Event, that
         constitutes, or might reasonably lead to, a Termination Event; (ii)
         with respect to any Multiemployer Plan, the receipt of notice as
         prescribed in ERISA or otherwise of any withdrawal liability assessed
         against the Borrower or any of its ERISA Affiliates, or of a
         determination that any Multiemployer Plan is in reorganization or
         insolvent (both within the meaning of Title IV of ERISA); (iii) the
         failure to make full payment on or before the due date (including
         extensions) thereof of all amounts which the Borrower, any of the
         Subsidiaries of the Borrower or any ERISA Affiliate is required to
         contribute to each Plan pursuant to its terms and as required to meet
         the minimum funding standard set forth in ERISA and the Code with
         respect thereto; or (iv) any change in the funding status of any Plan
         that could have a Material Adverse Effect, together with a
         description of any such event or condition or a copy of any such
         notice and a statement by the chief financial officer of the Borrower
         briefly setting forth the details regarding such event, condition, or
         notice, and the action, if any, which has been or is being taken or
         is proposed to be taken by the Credit Parties with respect thereto.
         Promptly upon request, the Borrower shall furnish the Agent and the
         Lenders with such additional information concerning any Plan as may
         be reasonably requested, including, but not limited to, copies of
         each annual report/return (Form 5500 series), as well as all
         schedules and attachments thereto required to be filed with the
         Department of Labor and/or the Internal Revenue Service pursuant to
         ERISA and the Code, respectively, for each "plan year" (within the
         meaning of Section 3(39) of ERISA).

                  (j) Subordinated Indebtedness. Immediately upon obtaining
         knowledge thereof, the Borrower will give written notice to each
         holder of Subordinated Indebtedness (or, with




                                      55
<PAGE>

         respect to the Subordinated Notes, the trustee for the Subordinated
         Noteholders) of the occurrence of an event or condition consisting of
         a Default or Event of Default.

                  (k) Monthly Financial Statements/Borrowing Base Certificate.
         Within 30 days after the end of each calendar month, a certificate as
         of the end of the immediately preceding month, substantially in the
         form of Schedule 7.1(k) and certified by the chief financial officer
         of the Borrower to be true and correct as of the date thereof (a
         "Borrowing Base Certificate"). Concurrent with the delivery of such
         Borrowing Base Certificate, a consolidated and consolidating balance
         sheet and income statement of the Borrower and its Subsidiaries, as
         of the end of such calendar month, together with related consolidated
         statements of cash flows for such calendar month, all such financial
         information described above to be in reasonable form and detail and
         reasonably acceptable to the Agent, and accompanied by a certificate
         of the chief financial officer of the Borrower to the effect that
         such monthly financial statements fairly present in all material
         respects the financial condition of the Borrower and its Subsidiaries
         and have been prepared in accordance with GAAP, subject to changes
         resulting from normal quarterly and year-end adjustments and the
         absence of footnotes. Additionally, on a monthly basis concurrently
         with the delivery of the other items set forth in this Section
         7.1(k), 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.

                  (l) Six Month Forecast. On or before the last day of each
         calendar month, commencing in April 2003, a six month rolling cash
         flow forecast (which shall include projected cash flow on a monthly
         basis), in form and substance satisfactory to the Agent, for the six
         month period immediately following the month then ending, prepared
         and signed by the chief financial officer or the chief accounting
         officer of the Borrower, such forecast to be based upon reasonable
         assumptions made known to the Lenders and upon information not known
         to be incorrect or misleading in any material respect. Commencing in
         April 2003, concurrently with the aforesaid cash flow forecast, a
         reconciliation of actual cash flow for the calendar month most
         recently ended against projected cash flow for such calendar month
         contained in the six month rolling cash flow forecast furnished to
         the Lenders pursuant to this Section 7.1(l) during the preceding
         calendar month, such reconciliation to be in a form satisfactory to
         the Agent.

                  (m) 2002 Form 10-K.  No later than April 14, 2003, a copy of
         the Borrower's Form 10-K for the 2002 fiscal year.

                  (n) Promptly after the Borrower has notified the Agent of
         any intention by the Borrower to treat the Loans and/or Letters of
         Credit and related transactions as being a "reportable transaction"
         (within the meaning of Treasury Regulation Section 1.6011-4), a duly
         completed copy of IRS Form 8886 or any successor form;

                  (o) Other Information. With reasonable promptness upon any
         such request, such other information regarding the business,
         properties or financial condition of the



                                      56
<PAGE>

         Borrower or any of its Subsidiaries as the Agent or the Required
         Lenders may reasonably request.

                  (p) Business Day. If the last day for timely delivery of any
         of the items in this Section 7.1 falls on a day that is not a
         Business Day, then such information shall be due on the Business Day
         immediately succeeding such due date.

7.2      Preservation of Existence and Franchises.

         Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4, the Borrower will,
and will cause each of its Subsidiaries to, do all things necessary to
preserve and keep in full force and effect its existence, rights, franchises
and authority.

7.3      Books and Records.

         The Borrower will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment
and maintenance of appropriate reserves).

7.4      Compliance with Law.

         The Borrower will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its property if
noncompliance with any such law, rule, regulation, order or restriction would
have a Material Adverse Effect.

7.5      Payment of Taxes and Other Indebtedness.

         Except as otherwise provided pursuant to the terms of the definition
of "Permitted Liens" set forth in Section 1.1 or (in the case of the following
clause (i)), to the extent alternative arrangements have been made with the
relevant taxing authority, such agreements have been disclosed to the Agent
and the Borrower is in compliance with such arrangements, the Borrower will,
and will cause each of its Subsidiaries to, pay and discharge (i) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they shall become
delinquent, (ii) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien upon any of its
properties, and (iii) except as prohibited hereunder, all of its other
Indebtedness as it shall become due.

7.6      Insurance.

         The Borrower will maintain, and will cause each of its Subsidiaries
to maintain, or be covered under, (i) physical damage insurance on all real
and personal property on an all risks basis (including the perils of flood and
quake), covering the repair and replacement cost of all such property and
consequential loss coverage for extra expense and (ii) public liability
insurance (including products/completed operations liability coverage), all on
terms and conditions and in




                                      57
<PAGE>

scope substantially commensurate with that which is currently maintained (or,
if such terms and conditions and scope are not up to industry standards for a
company of like size and with a similar business, substantially commensurate
with such industry standards) and evidenced by the certificate contemplated by
clause (w) of the second following sentence and with risk retention thereunder
up to an amount which in the good faith business judgement of the Borrower's
or such Subsidiary's management could not reasonably be expected to expose the
Borrower or such Subsidiary to a materially adverse noninsured loss. On or
before the Closing Date, and at all times thereafter, the Agent shall be named
as loss payee or mortgagee, as its interest may appear, and/or additional
insured with respect to any such insurance providing coverage in respect of
any Collateral. All such insurance shall be provided by insurers having an
A.M. Best policyholders rating of not less than B+ or such other insurers as
the Required Lenders may approve in writing. The Borrower will deliver to the
Agent for distribution to each of the Lenders (w) on or before the Closing
Date, a certificate as of a recent date showing the amount of coverage as of
such date, (x) upon request of any Lender through the Agent from time to time
full information as to the insurance carried, (y) within seven Business Days
of receipt of notice from any insurer a copy of any notice of cancellation,
alteration or material change in coverage from that existing on the Closing
Date and (z) forthwith upon receipt thereof, notice of any cancellation or
nonrenewal of coverage by the Borrower or any of its Subsidiaries.

7.7      Maintenance of Property.

         The Borrower will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as
may be needed or proper, to the extent and in the manner customary for
companies in similar businesses.

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.

7.9      Use of Proceeds.

         The Borrower will use the proceeds of the Loans and will use the
Letters of Credit solely for the purposes set forth in Section 6.15.

7.10     Audits/Inspections.

         Upon reasonable notice and during normal business hours, the Borrower
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent, including, without




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<PAGE>

limitation, independent accountants, agents, attorneys, and appraisers to
visit and inspect its property, including its books and records, its accounts
receivable and inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and record any
information such representative obtains and shall permit the Agent or its
representatives to investigate and verify the accuracy of information provided
to the Lenders and to discuss all such matters with the officers, employees
and representatives of such Person.

7.11     Financial Covenants.

         [(a) Consolidated Coverage Ratio.]

         [(b) Minimum Consolidated EBITDA.]

7.12     Additional Credit Parties.

         At the time that any Person becomes a Subsidiary of the Borrower, the
Borrower shall immediately (and in any event within two (2) Business Days) so
notify the Agent and shall within five (5) Business Days (or such longer
period of time as the Agent may agree to) (a) cause such Person to execute a
Joinder Agreement in substantially the form of Schedule 7.12, (b) cause 100%
of the capital stock of such Person to be delivered to the Agent (together
with undated stock powers signed in blank) and pledged to the Agent, for the
benefit of the Lenders, pursuant to an appropriate pledge agreement(s) in
substantially the form of the Pledge Agreement and otherwise in form
acceptable to the Agent and (c) deliver such other documentation as the Agent
may reasonably request in connection with the foregoing, including, without
limitation, certified resolutions and other organizational and authorizing
documents of such Person, appropriate UCC-1 financing statements and favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to above), all in form, content and scope reasonably satisfactory to
the Agent.

7.13     Ownership of Subsidiaries.

         Except to the extent otherwise provided in Section 8.11, the Borrower
shall, directly or indirectly, own at all times 100% of the capital stock of
each of its Subsidiaries.

7.14     Pledged Assets.

         The Borrower will cause, and will cause each Subsidiary to cause, all
of its owned personal property located in the United States to the extent such
property is deemed to be material by the Agent or the Required Lenders in its
or their reasonable discretion, to be subject at all times, except as
otherwise set forth in Section 8.4(c), to first priority, perfected Liens in
favor of the Agent to secure the Borrower's Obligations in accordance with the
terms and conditions of the Collateral Documents, subject in any case to
Permitted Liens.

7.15     [Reserved].



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<PAGE>

7.16     Field Examination.

         The Borrower and each of its Subsidiaries shall permit the Agent (or
a third party satisfactory to the Agent) to conduct a written business audit
of the accounts receivable, inventory, payables, controls and systems of the
Borrower and its Subsidiaries at a frequency to be determined in the
reasonable discretion of the Agent.

7.17     Engagement of Financial Advisor to Lenders.

         (a) The Credit Parties acknowledge and agree that the Agent, on
behalf of the Lenders, may retain a financial advisor (the "Lender's Financial
Advisor") to the Lenders for matters related to the Credit Agreement. The
Lender's Financial Advisor shall agree to abide by the confidentiality terms
set forth in Section 11.14 hereof or other terms regarding confidentiality as
may be agreed to among the Agent, the Lender's Financial Advisor and the
Credit Parties.

         (b) The Credit Parties covenant and agree that they shall cooperate
fully with the Lender's Financial Advisor in order that the Lender's Financial
Advisor shall be able to carry out all duties required by the Lenders in
connection with the Lender's Financial Advisor's work as a consultant.
Specifically, each Credit Party shall (i) permit the Lender's Financial
Advisor to visit and inspect its property during reasonable business hours,
including its books and records, its accounts receivable and its inventory,
its facility and its other business assets, and to make photocopies or
photographs thereof and to write down and record any information the Lender's
Financial Advisor obtains and (ii) permit the Lender's Financial Advisor to
investigate and verify the accuracy of such information and to discuss all
such matters with the officers, employees and representatives of such Credit
Party.

         (c) The Credit Parties agree that they shall pay, on demand, and be
jointly and severally liable for, all reasonable costs and expenses of the
Lender's Financial Advisor, as financial advisor to the Lenders.

7.18     Deposit Accounts.

         The Borrower will, and will cause each of the other Credit Parties,
to establish and maintain at all times any and all deposit accounts, other
than payroll, withholding tax and other fiduciary accounts established in the
ordinary course of business and containing only such amounts as are necessary
to cover obligations incurred and/or liabilities assumed in the ordinary
course of business (collectively, the "Excluded Deposit Accounts"), with
either (i) the Agent or (ii) other Persons approved by the Agent that have
executed tri-party agency agreements in substantially the form attached as
Schedule 7.18 or otherwise in form reasonably acceptable to the Agent (each an
"Agency Agreement"); provided, however, that any of the Credit Parties may
maintain deposit accounts with banking institutions other than the Agent or
Persons executing such Agency Agreements so long as (a) the aggregate amount
of funds contained in all such deposit accounts (other than any amounts in any
Excluded Deposit Accounts) does not exceed $2,500,000 at any time and (b) all
funds contained in such deposit accounts, other than an amount not to exceed
$1,000,000 at any time, relate to deposits in the ordinary course of business
to cover accounts payable to independent contractors for work already
performed. The Borrower shall provide the Agent, within thirty calendar days
after the end of each fiscal month,




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<PAGE>

a report (in a form reasonably satisfactory to the Agent) identifying all
deposit accounts of the Credit Parties and their collected balances as of the
last day of the preceding fiscal month.

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).

                                   SECTION 8

                              NEGATIVE COVENANTS

         Each Credit Party hereby covenants and agrees that, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the
Commitments hereunder shall have terminated:

8.1      Indebtedness.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Indebtedness, except:

                  (a) Indebtedness arising under this Credit Agreement and the
         other Credit Documents;

                  (b) Indebtedness of the Borrower and any of its Subsidiaries
         set forth in Schedule 8.1;

                  (c) purchase money Indebtedness (including Capital Leases)
         hereafter incurred by the Borrower or any of its Subsidiaries to
         finance the purchase of fixed assets provided that (i) the total of
         all such Indebtedness (for all such Persons taken together) shall not
         exceed an aggregate principal amount of $3,000,000 at any one time
         outstanding (including any such Indebtedness referred to in
         subsection (b) above (other than any such Indebtedness incurred in
         connection with acquisitions)); (ii) such Indebtedness when incurred
         shall not exceed the purchase price of the asset(s) financed; and
         (iii) no such Indebtedness shall be refinanced for a principal amount
         in excess of the principal balance outstanding thereon at the time of
         such refinancing;


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<PAGE>

                  (d) obligations of the Borrower in respect of Hedging
         Agreements entered into in order to manage existing or anticipated
         interest rate or exchange rate risks and not for speculative
         purposes;

                  (e) Intercompany Indebtedness incurred in the ordinary
         course of business and consistent with past practices or for cash
         management purposes;

                  (f) additional Subordinated Indebtedness which by its terms
         (i) requires repayment of principal (including any sinking fund) and
         annual cash interest payments in amounts not greater than and at such
         times not earlier than are required by the Subordinated Note
         Documents, (ii) is unsecured, and (iii) is on market terms, including
         without limitation subordination and other intercreditor terms, that
         are consistent with the public bond market and that have been
         approved by the Required Lenders;

                  (g) Subordinated Indebtedness issued in exchange for
         Subordinated Indebtedness listed on Schedule 8.1, provided such
         Subordinated Indebtedness meets the requirements of clauses (i), (ii)
         and (iii) of Section 8.1(f) above; and

                  (h) in addition to the Indebtedness otherwise permitted by
         this Section 8.1, other Indebtedness hereafter incurred by the
         Borrower or any of its Subsidiaries provided that (i) the loan
         documentation with respect to such Indebtedness shall not contain
         covenants or default provisions relating to the Borrower and its
         Subsidiaries that are more restrictive than the covenants and default
         provisions contained in the Credit Documents, (ii) on the date of
         incurrence of such Indebtedness after giving effect on a Pro Forma
         Basis to the incurrence of such Indebtedness of the Borrower or any
         of its Subsidiaries, no Default or Event of Default would exist
         hereunder, and (iii) the aggregate principal amount of such
         Indebtedness shall not exceed $2,500,000 at any time.

8.2      Liens.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
contract, create, incur, assume or permit to exist any Lien with respect to
any of their Property, whether now owned or after acquired, except for
Permitted Liens.

8.3      Nature of Business.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
substantively alter the character or conduct of the business conducted by such
Person as of the Closing Date.

8.4      Consolidation, Merger, Sale or Purchase of Assets, etc.

         The Borrower will not, nor will it permit any of its Subsidiaries to:

                  (a) except in connection with a disposition of assets
         permitted by the terms of subsection (c) below, dissolve, liquidate
         or wind up their affairs;



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<PAGE>

                  (b) enter into any transaction of merger or consolidation;
         provided, however, that, so long as no Default or Event of Default
         would be directly or indirectly caused as a result thereof, any
         Credit Party (other than the Borrower) may merge or consolidate with
         any other Credit Party (other than the Borrower);

                  (c) sell, lease, transfer or otherwise dispose of any
         Property of the Borrower and its Subsidiaries other than (i) the sale
         or disposition of machinery and equipment no longer used or useful in
         the conduct of such Person's business, (ii) other sales of assets
         (but not accounts receivable, except delinquent accounts sold for
         collection purposes only), provided that, after giving effect to such
         sale or other disposition, the aggregate book value of assets sold or
         otherwise disposed of pursuant to this clause (ii) does not exceed
         $500,000 in any fiscal year and (iii) the grant of any option or
         other right to purchase any asset in a transaction that would be
         permitted under the provisions of the foregoing clause (ii), provided
         that no Default or Event of Default has occurred and is continuing at
         the time of such grant;

                  (d) acquire all or any portion of the capital stock or
         securities of any other Person or purchase, lease or otherwise
         acquire (in a single transaction or a series of related transactions)
         all or any portion of the Property of any other Person, except for
         any merger or consolidation permitted pursuant to Section 8.4(b); or

                  (e) become a general partner in any general or limited
         partnership, joint venture or similar arrangement.

Upon a sale of any Property of a Credit Party permitted by Section 8.4(c), the
Agent shall (to the extent applicable) deliver to the Credit Parties, upon the
Credit Parties' request and at the Credit Parties' expense, such documentation
as is reasonably necessary to evidence the release of the Agent's security
interest, if any, in such Property, including, without limitation, amendments
or terminations of UCC financing statements, if any, the return of stock
certificates, if any, and the release of such Credit Party from all of its
obligations, if any, under the Credit Documents.

8.5      Advances, Investments, Loans, etc.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
make Investments in or to any Person, except for Permitted Investments.

8.6      Restricted Payments.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly declare, order, make or set apart any sum for or pay
any Restricted Payment, except (i) to make dividends payable solely in the
same class of capital stock of such Person, (ii) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries of the Borrower), (iii) as permitted by Section 8.7, (iv) to make
payments on Subordinated Indebtedness (other than Indebtedness arising under
the Subordinated Note Documents) in accordance with any subordination
provisions applicable thereto, (v) provided that no Default or Event of
Default has occurred and is continuing at such time or would be directly or
indirectly caused as a result thereof,




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<PAGE>

to make regularly scheduled interest and principal payments in respect of
Indebtedness arising under the Subordinated Note Documents, (vi) payments in
connection with the Bond conversion and the payments for fractional shares
arising from the 25-for-1 reverse stock split of the Borrower's common stock
to be presented for the approval of the Borrower's stockholders at the 2003
annual meeting; provided that the total of all such payments pursuant to this
subclause (vi) shall not exceed [$__________].

8.7      Prepayments of Indebtedness, etc.

         No Credit Party will, nor will it permit any of its Subsidiaries to:

                  (a) (i) amend or modify any of the terms of any Indebtedness
         of such Person (other than Indebtedness arising under the Credit
         Documents) if such amendment or modification would add or change any
         terms in a manner materially adverse to such Person or to the Lenders
         other than the Bond Conversion, or (ii) shorten the final maturity or
         average life to maturity thereof or require any payment thereon to be
         made sooner than originally scheduled or increase the interest rate
         or fees applicable thereto or change any subordination provision
         thereof, or (iii) make (or give any notice with respect thereto) any
         voluntary or optional payment or prepayment thereof, or (iv) make (or
         give any notice with respect thereto) any redemption or acquisition
         for value or defeasance (including without limitation, by way of
         depositing money or securities with the trustee with respect thereto
         before due for the purpose of paying when due), refund, refinance or
         exchange with respect thereto, other than prepayments made by a
         Credit Party in connection with any Asset Sale permitted under
         Section 8.4, in the amount necessary to prepay or retire any
         Indebtedness either secured by a Permitted Lien (ranking senior to
         any Lien of the Agent) on the related Property or incurred in
         connection with the acquisition of any Property that is disposed of
         in connection with such Asset Sale; or

                  (b) make interest payments in respect of any Subordinated
         Indebtedness in violation of the applicable subordination provisions.

8.8      Transactions with Affiliates.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
enter into or permit to exist any transaction or series of transactions with
any officer, director, shareholder, Subsidiary or Affiliate of such Person
other than (i) advances of working capital to any Credit Party, (ii) transfers
of cash and assets to any Credit Party, (iii) transactions permitted by
Section 8.1, Section 8.4, Section 8.5 (other than pursuant to clause (vii) of
the definition of "Permitted Investments" set forth in Section 1.1), or
Section 8.6, (iv) normal compensation and reimbursement of expenses of
officers and directors. (v) transactions contemplated by the Restructuring
Agreement and (vi) except as otherwise specifically limited in this Credit
Agreement, other transactions which are entered into in the ordinary course of
such Person's business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length
transaction with a Person other than an officer, director, shareholder,
Subsidiary or Affiliate.



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<PAGE>

8.9      Fiscal Year.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
change its fiscal year.

8.10     Limitation on Restrictions on Subsidiary Dividends and Other
Distributions, etc.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause, incur, assume, suffer or
permit to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any such Person to (i) pay dividends or make any
other distribution on any of such Person's capital stock, (ii) subject to
subordination provisions under any Intercompany Indebtedness, pay any
Indebtedness owed to the Borrower or any other Credit Party, (iii) make loans
or advances to any other Credit Party or (iv) transfer any of its Property to
any other Credit Party, except for encumbrances or restrictions existing under
or by reason of (A) customary non-assignment provisions in any lease governing
a leasehold interest and (B) this Credit Agreement and the other Credit
Documents.

8.11     Issuance and Sale of Subsidiary Stock.

         The Borrower will not, nor will it permit any of its Subsidiaries to,
except as otherwise permitted under the terms of Section 8.4(c), sell,
transfer or otherwise dispose of, any shares of capital stock of any of its
Subsidiaries or permit any of its Subsidiaries to issue, sell or otherwise
dispose of, any shares of capital stock of any of its Subsidiaries.

8.12     Sale Leasebacks.

         Except to the extent it complies with the mandatory prepayment
provisions for Asset Sales pursuant to Section 3.3, the Borrower will not, nor
will it permit any of its Subsidiaries to, directly or indirectly, become or
remain liable as lessee or as guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any Property (whether
real or personal or mixed), whether now owned or hereafter acquired, (i) which
such Person has sold or transferred or is to sell or transfer to any other
Person other than a Credit Party or (ii) which such Person intends to use for
substantially the same purpose as any other Property which has been sold or is
to be sold or transferred by such Person to any other Person in connection
with such lease.

8.13     No Further Negative Pledges.

         Except (a) pursuant to this Credit Agreement and the other Credit
Documents and (b) with respect to prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular Indebtedness
(which Indebtedness relates solely to such specific Property, and improvements
and accretions thereto, and is otherwise permitted hereby) the Borrower will
not, nor will it permit any of its Subsidiaries to, enter into, assume or
become subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation.


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<PAGE>

8.14     No Foreign Subsidiaries.

         Neither the Borrower nor any of its Subsidiaries will create, acquire
or permit to exist any direct or indirect Subsidiary of such Credit Party
which is not incorporated or organized under the laws of any State of the
United States or the District of Columbia.

8.15     Capital Expenditures.

         Neither the Borrower nor any of its Subsidiaries will permit
Consolidated Capital Expenditures in any fiscal period to exceed the dollar
amount (with no carry over from the preceding fiscal period) set forth below
opposite the relevant fiscal period set forth below:

                  Fiscal Period                     Capital Expenditure Limit
                  -------------                     -------------------------
         December 30, 2002 through                       $1,350,000
           December 28, 2003
        December 29, 2003 through                        $2,000,000
           January 2, 2005
        January 3, 2005 through May 1,                   $1,000,000
                   2005

8.16     Consolidated Earn-Outs.

         Neither the Borrower nor any of its Subsidiaries will permit any
Consolidated Earn-Outs to be made after the Closing Date.


                                   SECTION 9

                               EVENTS OF DEFAULT

9.1      Events of Default.

         An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):

                  (a)      Payment.  Any Credit Party shall

                           (i) default in the payment when due of any
                  principal of any of the Loans or of any reimbursement
                  obligations arising from drawings under Letters of Credit,
                  or

                           (ii) default, and such defaults shall continue for
                  three (3) or more Business Days, in the payment when due of
                  any interest on the Loans or on any reimbursement
                  obligations arising from drawings under Letters of Credit,
                  or of any Fees or other amounts owing hereunder, under any
                  of the other Credit Documents or in connection herewith or
                  therewith; or


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<PAGE>

                  (b) Representations. Any representation, warranty or
         statement made or deemed to be made by any Credit Party herein, in
         any of the other Credit Documents, or in any statement or certificate
         delivered or required to be delivered pursuant hereto or thereto
         shall prove untrue in any material respect on the date as of which it
         was deemed to have been made; or

                  (c)      Covenants.  Any Credit Party shall

                           (i) default in the due performance or observance of
                  any term, covenant or agreement contained in Sections 7.2,
                  7.9, 7.11, 7.12 or 8.1 through 8.17, inclusive, or

                           (ii) default in the due performance or observance
                  of any term, covenant or agreement contained in Section 7.1
                  and such default shall continue for a period of at least
                  three (3) days after the earlier of a responsible officer of
                  a Credit Party becoming aware of such default or notice
                  thereof by the Agent; or

                           (iii) default in the due performance or observance
                  by it of any term, covenant or agreement (other than those
                  referred to in subsections (a), (b) or (c)(i) or (ii) of
                  this Section 9.1) contained in this Credit Agreement and
                  such default shall continue unremedied for a period of at
                  least 30 days after the earlier of a responsible officer of
                  a Credit Party becoming aware of such default or notice
                  thereof by the Agent; or

                  (d) Other Credit Documents. (i) Any Credit Party shall
         default in the due performance or observance of any term, covenant or
         agreement in any of the other Credit Documents (subject to applicable
         grace or cure periods, if any), or (ii) except as the result of or in
         connection with a dissolution, merger or disposition of a Subsidiary
         permitted under Section 8.4, any Credit Document shall fail to be in
         full force and effect or to give the Agent and/or the Lenders the
         Liens, rights, powers and privileges purported to be created thereby,
         or any Credit Party shall state any of the foregoing in writing; or

                  (e) Guaranties. Except as the result of or in connection
         with a dissolution, merger or disposition of a Subsidiary permitted
         under Section 8.4, the guaranty given by any Guarantor hereunder
         (including any Additional Credit Party) or any material provision
         thereof shall cease to be in full force and effect, or any Guarantor
         (including any Additional Credit Party) hereunder or any Person
         acting by or on behalf of such Guarantor shall deny or disaffirm such
         Guarantor's obligations under such guaranty, or any Guarantor shall
         default in the due performance or observance of any term, covenant or
         agreement on its part to be performed or observed pursuant to any
         guaranty; or

                  (f) Bankruptcy, etc. Any Bankruptcy Event shall occur with
         respect to the Borrower or any of its Subsidiaries; or

                  (g) Defaults under Other Agreements.



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<PAGE>

                           (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 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 Repurchase
                  Event, such non-compliance, default or non-performance shall
                  be deemed not to constitute a Default or Event of Default
                  hereunder; or

                           (ii) With respect to any other Indebtedness (other
                  than Indebtedness outstanding under this Credit Agreement)
                  in excess of $1,500,000 in the aggregate for the Borrower
                  and its Subsidiaries taken as a whole, (A) the Borrower or
                  any of its Subsidiaries shall (1) default in any payment
                  (beyond the applicable grace period with respect thereto, if
                  any) with respect to any such Indebtedness, or (2) the
                  occurrence and continuance of a default in the observance or
                  performance relating to such Indebtedness or contained in
                  any instrument or agreement evidencing, securing or relating
                  thereto, or any other event or condition shall occur or
                  condition exist, the effect of which default or other event
                  or condition is to cause, or permit, the holder or holders
                  of such Indebtedness (or trustee or agent on behalf of such
                  holders) to cause (determined without regard to whether any
                  notice or lapse of time is required), any such Indebtedness
                  to become due prior to its stated maturity; or (B) any such
                  Indebtedness shall be declared due and payable, or required
                  to be prepaid other than by a regularly scheduled required
                  prepayment, prior to the stated maturity thereof; or

                  (h) Judgments. One or more judgments or decrees shall be
         entered against the Borrower or any of its Subsidiaries involving a
         liability of $2,500,000 or more in the aggregate (to the extent not
         paid or fully covered by insurance provided by a carrier who has
         acknowledged coverage) and any such judgments or decrees shall not
         have been vacated, discharged or stayed or bonded pending appeal
         within 30 days from the entry thereof; or

                  (i) ERISA. Any of the following events or conditions, if
         such event or condition could be expected to involve possible taxes,
         penalties, and other liabilities in an aggregate amount in excess of
         $1,000,000: (1) any "accumulated funding deficiency," as such term is
         defined in Section 302 of ERISA and Section 412 of the Code, whether
         or not waived, shall exist with respect to any Plan, or any lien
         shall arise on the assets of the Borrower, any Subsidiary of the
         Borrower or any ERISA Affiliate in favor of the PBGC or a Plan; (2) a
         Termination Event shall occur with respect to a Single Employer Plan,
         which is, in the reasonable opinion of the Agent, likely to result in
         the termination of such Plan for purposes of Title IV of ERISA; (3) a
         Termination Event shall occur with respect to a Multiemployer Plan or
         Multiple Employer Plan, which is, in the reasonable opinion of the
         Agent, likely to result in (i) the termination of such Plan for
         purposes of Title IV of ERISA, or (ii) the Borrower, any Subsidiary
         of the Borrower or any ERISA Affiliate incurring any liability in
         connection with a withdrawal from, reorganization of (within the
         meaning of Section 4241 of ERISA), or insolvency or (within the
         meaning of Section 4245 of ERISA) such Plan; or (4) any prohibited
         transaction (within the meaning of Section 406 of ERISA or Section
         4975 of the Code) or breach of fiduciary responsibility shall occur
         which may




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<PAGE>

         subject the Borrower, any Subsidiary of the Borrower or any
         ERISA Affiliate to any liability under Sections 406, 409, 502(i), or
         502(l) of ERISA or Section 4975 of the Code, or under any agreement
         or other instrument pursuant to which the Borrower, any Subsidiary of
         the Borrower or any ERISA Affiliate has agreed or is required to
         indemnify any person against any such liability; or

                  (j) Nature of Business. The Borrower shall engage in any
         business, activity or operations other than owning and holding the
         capital stock of its Subsidiaries and such business activities
         incidental or related thereto (including acting as Borrower hereunder
         and pledging its assets to the Agent, for the benefit of the Lenders,
         pursuant to the Collateral Documents); or

                  (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

                  (l) Collateral. Any of the Borrower's Obligations for any
         reason shall fail to be secured under the Collateral Documents; or

                  (m) Ownership. There shall occur a Change of Control.

9.2      Acceleration; Remedies.

         Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived by the
Required Lenders or cured to the satisfaction of the Required Lenders
(pursuant to the voting procedures in Section 11.6), the Agent shall, upon the
request and direction of the Required Lenders, by written notice to the Credit
Parties take any of the following actions:

                  (i) Termination of Commitments. Declare the Commitments
         terminated whereupon the Commitments shall be immediately terminated.

                  (ii) Acceleration. Declare the unpaid principal of and any
         accrued interest in respect of all Loans, any reimbursement
         obligations arising from drawings under Letters of Credit and any and
         all other indebtedness or obligations of any and every kind owing by
         the Borrower to the Agent and/or any of the Lenders hereunder to be
         due whereupon the same shall be immediately due and payable without
         presentment, demand, protest or other notice of any kind, all of
         which are hereby waived by the Borrower.

                  (iii) Cash Collateral. Direct the Borrower to pay (and the
         Borrower agrees that upon receipt of such notice, or upon the
         occurrence of an Event of Default under Section 9.1(f), it will
         immediately pay) to the Agent additional cash,




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<PAGE>

         to be held by the Agent, for the benefit of the Lenders, in a cash
         collateral account as additional security for the LOC Obligations in
         respect of subsequent drawings under all then outstanding Letters of
         Credit in an amount equal to the maximum aggregate amount which may be
         drawn under all Letters of Credits then outstanding.

                  (iv) Enforcement of Rights. Enforce any and all rights and
         interests created and existing under the Credit Documents and all
         rights of set-off.

         Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur, then the Commitments shall automatically terminate
and all Loans, all reimbursement obligations arising from drawings under
Letters of Credit, all accrued interest in respect thereof, all accrued and
unpaid Fees and other indebtedness or obligations owing to the Agent and/or
any of the Lenders hereunder automatically shall immediately become due and
payable without the giving of any notice or other action by the Agent or the
Lenders.


                                  SECTION 10

                                     AGENT

         10.1   Appointment and Authorization of Agent.

         (a) Each Lender hereby irrevocably appoints, designates and
authorizes the Agent to take such action on its behalf under the provisions of
this Credit Agreement and each other Credit Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms
of this Credit Agreement or any other Credit Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere herein or in any other Credit Document, the
Agent shall not have any duties or responsibilities, except those expressly
set forth herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Credit Agreement or any other Credit Document or otherwise exist
against the Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Credit Documents with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

         (b) The Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents associated
therewith, and the Issuing Lender shall have all of the benefits and
immunities (i) provided to the Agent in this Article X with respect to any
acts taken or omissions suffered by the Issuing Lender in connection with
Letters of Credit issued by it or proposed to be issued by it and the
applications and agreements for letters of credit pertaining to such Letters
of Credit as fully as if the term "Agent" as used in this Article X and in the
definition of "Agent-Related Person" included the Issuing Lender with respect
to such acts or omissions, and (ii) as additionally provided herein with
respect to the Issuing Lender.



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<PAGE>

         10.2  Delegation of Duties.

         The Agent may execute any of its duties under this Credit Agreement
or any other Credit Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects in the absence of gross negligence or
willful misconduct.

         10.3  Liability of Agent.

         No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Credit
Agreement or any other Credit Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct in connection with
its duties expressly set forth herein), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or
warranty made by any Credit Party or any officer thereof, contained herein or
in any other Credit Document, or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent under
or in connection with, this Credit Agreement or any other Credit Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of
this Credit Agreement or any other Credit Document, or for any failure of any
Credit Party or any other party to any Credit Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Lender or participant to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Credit Agreement or any other Credit Document, or to
inspect the properties, books or records of any Credit Party or any Affiliate
thereof.

         10.4  Reliance by Agent.

         (a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to any Credit
Party), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
any Credit Document unless it shall first receive such advice or concurrence
of the Required Lenders as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Credit Agreement
or any other Credit Document in accordance with a request or consent of the
Required Lenders (or such greater number of Lenders as may be expressly
required hereby in any instance) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.


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<PAGE>

         (b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Lender that has signed this Credit Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless the Agent shall
have received notice from such Lender prior to the proposed Closing Date
specifying its objection thereto.

         10.5  Notice of Default.

         The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent for the account
of the Lenders, unless the Agent shall have received written notice from a
Lender or the Borrower referring to this Credit Agreement, describing such
Default and stating that such notice is a "notice of default." The Agent will
notify the Lenders of its receipt of any such notice. The Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article IX; provided, however, that unless and
until the Agent has received any such direction, the Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable or in the best interest of
the Lenders.

         10.6  Credit Decision; Disclosure of Information by Agent.

         Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Agent hereafter
taken, including any consent to and acceptance of any assignment or review of
the affairs of any Credit Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Credit Parties and their respective Subsidiaries, and
all applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Credit
Agreement and to extend credit to the Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Credit
Agreement and the other Credit Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower
and the other Credit Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent herein, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any of the
Credit Parties or any of their respective Affiliates which may come into the
possession of any Agent-Related Person.


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<PAGE>

         10.7  Indemnification of Agent.

         Whether or not the transactions contemplated hereby are consummated,
the Lenders shall indemnify upon demand each Agent-Related Person (to the
extent not reimbursed by or on behalf of any Credit Party and without limiting
the obligation of any Credit Party to do so), pro rata, and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have resulted from such Agent-Related
Person's own gross negligence or willful misconduct; provided, however, that
no action taken in accordance with the directions of the Required Lenders
shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section. Without limitation of the foregoing, each Lender
shall reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Credit Agreement, any other Credit Document, or
any document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive termination of the Commitments, the
payment of all other Borrower's Obligations and the resignation of the Agent.

         10.8  Agent in its Individual Capacity.

         Bank of America and its Affiliates may make loans to, issue letters
of credit for the account of, accept deposits from, acquire equity interests
in and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Credit Parties and their
respective Affiliates as though Bank of America were not the Agent or the
Issuing Lender hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, Bank of America or its
Affiliates may receive information regarding any Credit Party or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of such Credit Party or such Affiliate) and acknowledge
that the Agent shall be under no obligation to provide such information to
them. With respect to its Loans, Bank of America shall have the same rights
and powers under this Credit Agreement as any other Lender and may exercise
such rights and powers as though it were not the Agent or the Issuing Lender,
and the terms "Lender" and "Lenders" include Bank of America in its individual
capacity.

         10.9  Successor Agent.

         The Agent may resign as Agent upon 30 days' notice to the Lenders;
provided that any such resignation by Bank of America shall also constitute
its resignation as Issuing Lender. If the Agent resigns under this Credit
Agreement, the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be consented to
by the Borrower at all times other than during the existence of an Event of
Default (which consent of the Borrower shall not be unreasonably withheld or
delayed). If no successor agent is appointed prior to the effective date of
the resignation of the Agent, the Agent may appoint, after




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<PAGE>

consulting with the Lenders and the Borrower, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
the Person acting as such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and Issuing Lender and the respective
terms "Agent" and Issuing Lender shall mean such successor agent and Letter of
Credit issuer, the retiring Agent's appointment, powers and duties as Agent
shall be terminated and the retiring Issuing Lender's rights, powers and
duties as such shall be terminated, without any other or further act or deed
on the part of such retiring Issuing Lender or any other Lender, other than
the obligation of the successor Issuing Lender to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of
such succession or to make other arrangements satisfactory to the retiring
Issuing Lender to effectively assume the obligations of the retiring Issuing
Lender with respect to such Letters of Credit. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article X and Section
11.5 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Credit Agreement. If no successor agent
has accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of
the duties of the Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.

         10.10  Agent May File Proofs of Claim.

         In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Credit Party, the Agent (irrespective of
whether the principal of any Loan or LOC Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise

         (a)    to file and prove a claim for the whole amount of the principal
         and interest owing and unpaid in respect of the Loans, LOC
         Obligations and all other Borrower's Obligations that are owing and
         unpaid and to file such other documents as may be necessary or
         advisable in order to have the claims of the Lenders and the Agent
         (including any claim for the reasonable compensation, expenses,
         disbursements and advances of the Lenders and the Agent and their
         respective agents and counsel and all other amounts due the Lenders
         and the Agent under Section 3.5 and 11.5) allowed in such judicial
         proceeding; and

         (b)    to collect and receive any monies or other property payable or
         deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Agent and, in the event that the
Agent shall consent to the making of such payments directly to the Lenders, to
pay to the Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agent and its agents and counsel, and any
other amounts due the Agent under Sections 3.5 and 11.5.



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Nothing contained herein shall be deemed to authorize the Agent to authorize
or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Borrower's Obligations or the rights of any Lender or to authorize the Agent
to vote in respect of the claim of any Lender in any such proceeding.

         10.11  Collateral and Guaranty Matters.

         The Lenders irrevocably authorize the Agent, at its option and in its
         discretion,

         (a)    to release any Lien on any property granted to or held by the
         Agent under any Credit Document (i) upon termination of the
         Commitments and payment in full of all Borrower's Obligations (other
         than contingent indemnification obligations) and the expiration or
         termination of all Letters of Credit, (ii) that is sold or to be sold
         as part of or in connection with any sale permitted hereunder or
         under any other Credit Document, or (iii) subject to Section 11.6, if
         approved, authorized or ratified in writing by the Required Lenders;

         (b)    to subordinate any Lien on any property granted to or held by
         the Agent under any Credit Document to the holder of any Lien on such
         property that is permitted by clause (ix) of the definition of
         "Permitted Liens"; and

         (c)    to release any Guarantor from its obligations under Article IV
         if such Person ceases to be a Subsidiary as a result of a transaction
         permitted hereunder.

Upon request by the Agent at any time, the Required Lenders will confirm in
writing the Agent's authority to release or subordinate its interest in
particular types or items of property, or to release any Guarantor from its
obligations under Article IV pursuant to this Section 10.11.


                                  SECTION 11

                                 MISCELLANEOUS

11.1     Notices.

         Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (i) when
delivered, (ii) when transmitted via telecopy (or other facsimile device) to
the number set out below, (iii) the day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (iv) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower, Guarantors and
the Agent, set forth below, and, in the case of the Lenders, set forth on
Schedule 2.1(a), or at such other address as such party may specify by written
notice to the other parties hereto:



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<PAGE>

                  if to the Borrower or the Guarantors:

                           Personnel Group of America, Inc.
                           2709 Water Ridge Parkway
                           Charlotte, NC  28217
                           Attn: James C. Hunt, Chief Financial Officer
                           Telephone:  (704) 442-5105
                           Telecopy:  (704) 442-5138

                  if to the Agent:

                           Bank of America, N.A.
                           1455 Market Street, 5th Floor
                           CA5-701-05-19
                           San Francisco, California 94103
                           Attn:  Agency Management/SuzieAnna Wan
                           Telephone:  (415) 436-2772
                           Telecopy:  (415) 503-5015

                  with a copy to:

                           Bank of America, N.A.
                           100 North Tryon Street, 22nd Floor
                           Charlotte, North Carolina  28255
                           Attn:  Leonard Norman
                           Telephone: (704) 387-3262
                           Telecopy:  (704) 386-7515

11.2     Right of Set-Off.

         In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, each Lender is authorized at any time and
from time to time, without presentment, demand, protest or other notice of any
kind (all of which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special), but excluding
deposits in an Excluded Deposit Account (as defined in Section 7.18), and any
other indebtedness at any time held or owing by such Lender (including,
without limitation branches, agencies or Affiliates of such Lender wherever
located) to or for the credit or the account of any Credit Party against
obligations and liabilities of such Person to such Lender hereunder, under the
Notes, the other Credit Documents or otherwise, irrespective of whether such
Lender shall have made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or unmatured, and any
such set-off shall be deemed to have been made immediately upon the occurrence
of an Event of Default even though such charge is made or entered on the books
of such Lender subsequent thereto. Any Person purchasing a participation in
the Loans and Commitments hereunder pursuant to Section 3.12 or Section
11.3(d) may exercise all rights of set-off with respect to its participation
interest as fully as if such Person were a Lender hereunder.


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<PAGE>

11.3     Benefit of Agreement.

         (a) Generally. This Credit Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns
of the parties hereto; provided that none of the Credit Parties may assign or
transfer any of its interests without prior written consent of the Lenders;
provided further that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be limited as
set forth in this Section 11.3, provided however that nothing herein shall
prevent or prohibit any Lender from (i) pledging its Loans hereunder to a
Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank, or (ii) granting assignments or selling participations
in such Lender's Loans and/or Commitments hereunder to its parent company
and/or to any Affiliate or Subsidiary of such Lender.

         (b) Assignments. Each Lender may assign all or a portion of its
rights and obligations hereunder, pursuant to an assignment agreement
substantially in the form of Schedule 11.3(b), to (i) any Lender or any
Affiliate or Subsidiary of a Lender, or (ii) any other commercial bank,
financial institution or "accredited investor" (as defined in Regulation D of
the Securities and Exchange Commission) reasonably acceptable to the Agent
and, so long as no Default or Event of Default has occurred and is continuing,
the Borrower; provided that (i) any such assignment (other than any assignment
to an existing Lender) shall be in a minimum aggregate amount of $5,000,000
(or, if less, the remaining amount of the Commitment being assigned by such
Lender) of the Commitments and in integral multiples of $1,000,000 above such
amount and (ii) each such assignment shall be of a constant, not varying,
percentage of all such Lender's rights and obligations under this Credit
Agreement. For purposes of the Borrower's acceptance of the proposed assignee
in clause (ii) of the foregoing sentence, the Borrower shall have been deemed
to accept any such assignee unless the Borrower provides to the Agent and such
assigning Lender, written notice of the Borrower's objection to the assignment
setting forth the specific reasons for its objection, such notice to be
delivered no later than three (3) Business Days after the Borrower receives
notice of the requested assignment (as set forth below). Any assignment
hereunder shall be effective upon delivery to the Agent of written notice of
the assignment together with a transfer fee of $3,500 payable to the Agent for
its own account from and after the later of (i) the effective date specified
in the applicable assignment agreement and (ii) the date of recording of such
assignment in the Register pursuant to the terms of subsection (c) below. The
assigning Lender will give prompt notice to the Agent and the Borrower of any
such assignment. Upon the effectiveness of any such assignment (and after
notice to, and (to the extent required pursuant to the terms hereof), with the
consent of, the Borrower as provided herein), the assignee shall become a
"Lender" for all purposes of this Credit Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the Loans and
Commitment components being assigned. Along such lines the Borrower agrees
that upon notice of any such assignment and surrender of the appropriate Note
or Notes, it will promptly provide to the assigning Lender and to the assignee
separate promissory notes in the amount of their respective interests
substantially in the form of the original Note (but with notation thereon that
it is given in substitution for and replacement of the original Note or any
replacement notes thereof). By executing and delivering an assignment
agreement in accordance with this Section 11.3(b), the assigning Lender
thereunder and the assignee thereunder shall be deemed to confirm to and agree




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with each other and the other parties hereto as follows: (i) such assigning
Lender warrants that it is the legal and beneficial owner of the interest
being assigned thereby free and clear of any adverse claim; (ii) except as set
forth in clause (i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the financial condition of
any Credit Party or any of their respective Affiliates or the performance or
observance by any Credit Party of any of its obligations under this Credit
Agreement, any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such assignment
agreement; (iv) such assignee confirms that it has received a copy of this
Credit Agreement, the other Credit Documents and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the Agent, such assigning Lender or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Credit Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agent to take such
action on its behalf and to exercise such powers under this Credit Agreement
or any other Credit Document as are delegated to the Agent by the terms hereof
or thereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Credit Agreement and the
other Credit Documents are required to be performed by it as a Lender.

         (c) Maintenance of Register. The Agent shall maintain at one of its
offices in Charlotte, North Carolina a copy of each Lender assignment
agreement delivered to it in accordance with the terms of subsection (b) above
and a register for the recordation of the identity of the principal amount,
type and Interest Period of each Loan outstanding hereunder, the names,
addresses and the Commitments of the Lenders pursuant to the terms hereof from
time to time (the "Register"). The Agent will make reasonable efforts to
maintain the accuracy of the Register and to promptly update the Register from
time to time, as necessary. The entries in the Register shall be conclusive in
the absence of manifest error and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Credit Agreement. The
Register shall be available for inspection by the Borrower and each Lender, at
any reasonable time and from time to time upon reasonable prior notice.

         (d) Participations. Each Lender may sell, transfer, grant or assign
participations in all or any part of such Lender's interests and obligations
hereunder; provided that (i) such selling Lender shall remain a "Lender" for
all purposes under this Credit Agreement (such selling Lender's obligations
under the Credit Documents remaining unchanged) and the participant shall not
constitute a Lender hereunder, (ii) no such participant shall have, or be
granted, rights to approve any amendment or waiver relating to this Credit
Agreement or the other Credit Documents except to the extent any such
amendment or waiver would (A) reduce the principal of or rate of interest on
or Fees in respect of any Loans in which the participant is participating, (B)
postpone the date fixed for any payment of principal (including extension of
the Termination Date or the date of any mandatory





                                      78
<PAGE>

prepayment), interest or Fees in which the participant is participating or (C)
except as expressly provided in the Credit Documents, release all or
substantially all of the Collateral or release any Guarantor from its guaranty
obligations hereunder, and (iii) sub-participations by the participant (except
to an affiliate, parent company or affiliate of a parent company of the
participant) shall be prohibited. In the case of any such participation, the
participant shall not have any rights under this Credit Agreement or the other
Credit Documents (the participant's rights against the selling Lender in
respect of such participation to be those set forth in the participation
agreement with such Lender creating such participation) and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had
not sold such participation, provided, however, that such participant shall be
entitled to receive additional amounts under Sections 3.6, 3.9 and 3.10 on the
same basis as if it were a Lender.

11.4     No Waiver; Remedies Cumulative.

         No failure or delay on the part of the Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Agent or any Lender and any of
the Credit Parties shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies provided herein are cumulative and not exclusive of any rights or
remedies which the Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle the Borrower or any other
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the Lenders
to any other or further action in any circumstances without notice or demand.

11.5     Payment of Expenses, etc.

         The Borrower agrees to: (i) pay all reasonable out-of-pocket costs
and expenses (A) of the Agent in connection with the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the
other Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Moore &
Van Allen, PLLC, special counsel to the Agent) and any amendment, waiver or
consent relating hereto and thereto including, but not limited to, any such
amendments, waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit Parties
under this Credit Agreement and (B) of the Agent and the Lenders in connection
with enforcement of the Credit Documents and the documents and instruments
referred to therein (including, without limitation, in connection with any
such enforcement, the reasonable fees and disbursements of counsel for the
Agent and each of the Lenders); (ii) pay and hold each of the Lenders harmless
from and against any and all present and future stamp and other similar taxes
with respect to the foregoing matters and save each of the Lenders harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Lender) to
pay such taxes; and (iii) indemnify each Lender, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred
by any of them as a result of, or arising out of, or in any way related to, or
by reason of (A) any investigation, litigation or other




                                      79
<PAGE>

proceeding (whether or not any Lender is a party thereto) related to the
entering into and/or performance of any Credit Document or the use of proceeds
of any Loans (including other extensions of credit) hereunder or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or
other proceeding or (B) the presence or Release of any Materials of
Environmental Concern at, under or from any Property owned, operated or leased
by the Borrower or any of its Subsidiaries, or the failure by the Borrower or
any of its Subsidiaries to comply with any Environmental Law (but excluding,
in the case of either of clause (A) or (B) above, any such losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
gross negligence or willful misconduct on the part of the Person to be
indemnified).

11.6     Amendments, Waivers and Consents.

         Neither this Credit Agreement nor any other Credit Document nor any
of the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in writing entered into by, or approved in writing by, the Required Lenders
and the Borrower, provided that no such amendment, change, waiver, discharge
or termination shall, without the consent of each Lender:

                  (i) extend the final maturity of any Loan, or any portion
         thereof;

                  (ii) reduce the rate or extend the time of payment of
         interest (other than as a result of waiving the applicability of any
         post-default increase in interest rates) on any Loan or fees
         hereunder;

                  (iii) reduce the principal amount on any Loan, or increase
         the Commitments of the Lenders over the amount thereof in effect (it
         being understood and agreed that a waiver of any Default or Event of
         Default or of a mandatory reduction in the total commitments shall
         not constitute a change in the terms of any Commitment of any
         Lender);

                  (iv) except as the result of or in connection with a
         dissolution, merger or disposition of a Subsidiary permitted under
         Section 8.4, release all or substantially all of (A) the Guarantors
         from the guaranty obligations hereunder or (B) the Collateral;

                  (v) amend, modify or waive any provision of this Section
         11.6 or Section 3.6, 3.10, 3.11, 3.12, 9.1(a), 11.2, 11.3, 11.5 or
         11.9;

                  (vi) reduce any percentage specified in, or otherwise
         modify, the definition of "Required Lenders;" or

                  (vii) consent to the assignment or transfer by the Borrower
         (or any Guarantor) of any of its rights and obligations under (or in
         respect of) the Credit Documents to which it is a party.




                                      80
<PAGE>

No provision of Section 2.2 may be amended without the consent of the Issuing
Lender and no provision of Section 10 may be amended without the consent of
the Agent.

11.7     Counterparts.

         This Credit Agreement 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. It shall not be necessary
in making proof of this Credit Agreement to produce or account for more than
one such counterpart.

11.8     Headings.

         The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction
of any provision of this Credit Agreement.

11.9     Survival.

         All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.9, 10.7 or 11.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations
under the Credit Documents and the termination of the Commitments hereunder,
and all representations and warranties made by the Credit Parties herein shall
survive delivery of the Notes and the making of the Loans hereunder.

11.10    Governing Law; Submission to Jurisdiction; Venue.

         (a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NORTH CAROLINA. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the courts of
the State of North Carolina in Mecklenburg County, or of the United States for
the Western District of North Carolina, and, by execution and delivery of this
Credit Agreement, each of the Credit Parties hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Each of the Credit Parties further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at the
address set out for notices pursuant to Section 11.1, such service to become
effective three (3) days after such mailing. Nothing herein shall affect the
right of the Agent to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against any Credit Party in
any other jurisdiction.

         (b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Credit Agreement or any other Credit Document brought in the courts referred
to in subsection (a) hereof and hereby further irrevocably waives and agrees
not to




                                      81
<PAGE>

plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.

         (c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS,
THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

11.11    Severability.

         If any provision of any of the Credit Documents 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.

11.12    Entirety.

         This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.

11.13    Binding Effect; Amendment and Restatement of Existing Credit Agreement.

         (a) This Credit Agreement shall become effective at such time, on or
after the Closing Date, that the conditions precedent set forth in Section 5.1
have been satisfied and when it shall have been executed by each of the Credit
Parties and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures of
each Lender (including the Issuing Lender), and thereafter this Credit
Agreement shall be binding upon and inure to the benefit of each Credit Party,
each Lender (including the Issuing Lender) and the Agent, together with their
permitted successors and assigns. The Credit Parties and the Lenders
(including the Issuing Lender) each hereby agrees that, at such time as this
Credit Agreement shall have become effective pursuant to the terms of the
immediately preceding sentence, (i) the Existing Credit Agreement
automatically shall be deemed amended and restated in its entirety by this
Credit Agreement, and all obligations and commitments outstanding under the
Existing Credit Agreement shall be governed by the terms of this Credit
Agreement (as such obligations or commitments may be modified or amended
hereunder) and (ii) all of the promissory notes executed by the Borrower in
connection with the Existing Credit Agreement automatically shall be
substituted and replaced by the amended and restated promissory notes executed
in connection with this Credit Agreement, and the Lenders agree to promptly
return such prior notes to the Borrower.

         (b) Each of the Credit Parties hereby acknowledges and agrees that it
has no claims, counterclaims, offsets, or defenses to the Credit Documents and
the performance of its obligations




                                      82
<PAGE>

thereunder, or if such Credit Party has any such claims, counterclaims,
offsets, or defenses to the Credit Documents or any transaction related to the
Credit Documents, the same are hereby waived, relinquished and released in
consideration of the Lenders' execution and delivery of this Credit Agreement.

11.14    Confidentiality.

         The Agent and the Lenders agree to keep confidential (and to cause
their respective affiliates, officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to the Agent or any such Lender by or on behalf of any Credit Party
(whether before or after the Closing Date) which relates to the Borrower or
any of its Subsidiaries (the "Information"). Notwithstanding the foregoing,
the Agent and each Lender shall be permitted to disclose Information (i) to
its affiliates, officers, directors, employees, agents and representatives in
connection with its participation in any of the transactions evidenced by this
Credit Agreement or any other Credit Documents or the administration of this
Credit Agreement or any other Credit Documents; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process,
or requested by any Governmental Authority; (iii) to the extent such
Information (A) becomes publicly available other than as a result of a breach
of this Credit Agreement or any agreement entered into pursuant to clause (iv)
below, (B) becomes available to the Agent or such Lender on a non-confidential
basis from a source other than a Credit Party or (C) was available to the
Agent or such Lender on a non-confidential basis prior to its disclosure to
the Agent or such Lender by a Credit Party; (iv) to any assignee or
participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) first specifically
agrees in a writing furnished to and for the benefit of the Credit Parties to
be bound by the terms of this Section 11.14; or (v) to the extent that the
Borrower shall have consented in writing to such disclosure. Nothing set forth
in this Section 11.14 shall obligate the Agent or any Lender to return any
materials furnished by the Credit Parties. Notwithstanding anything herein to
the contrary, the information subject to this Section 11.14 shall not include,
and the Agent and each Lender may disclose without limitation of any kind, any
information with respect to the "tax treatment" and "tax structure" (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Agent or such Lender
relating to such tax treatment and tax structure; provided that with respect
to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transactions as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Loans, Letters of Credit and transactions contemplated hereby

11.15    Source of Funds.

         Each of the Lenders hereby represents and warrants to the Borrower
that at least one of the following statements is an accurate representation as
to the source of funds to be used by such Lender in connection with the
financing hereunder:


                                      83
<PAGE>

                  (a) no part of such funds constitutes assets allocated to
         any separate account maintained by such Lender in which any employee
         benefit plan (or its related trust) has any interest;

                  (b) to the extent that any part of such funds constitutes
         assets allocated to any separate account maintained by such Lender,
         such Lender has disclosed to the Borrower the name of each employee
         benefit plan whose assets in such account exceed 10% of the total
         assets of such account as of the date of such purchase (and, for
         purposes of this subsection (b), all employee benefit plans
         maintained by the same employer or employee organization are deemed
         to be a single plan); or

                  (c) such funds constitute assets of one or more specific
         benefit plans which such Lender has identified in writing to the
         Borrower.

As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section
3 of ERISA.

11.16    Conflict.

         To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document,
on the other hand, this Credit Agreement shall control.




                                      84
<PAGE>

         IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amended and Restated Credit Agreement to be duly executed
and delivered as of the date first above written.


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

                                  By:
                                     --------------------------------
                                  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
                                  VENTURI STAFFING PARTNERS, LLC,
                                  a California limited liability company

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


                                  PERSONNEL GROUP HOLDINGS, INC.,
                                  a Florida corporation
                                  PFI CORP.,
                                  a Delaware corporation

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


                                  VENTURI TEXAS STAFFING PARTNERS, LP,
                                  a Texas limited partnership

                                  By:  StaffPLUS, Inc.
                                  Its:  General Partner

                                        By:
                                           --------------------------
                                        Name:  James C. Hunt
                                        Title: Senior Vice President


<PAGE>

AGENT:                            BANK OF AMERICA, N.A.,
-----                             formerly known as NationsBank, N.A.
                                  and Bank of America Illinois,
                                  as Agent


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


<PAGE>



LENDERS:                          BANC OF AMERICA
-------                           STRATEGIC SOLUTIONS, INC.


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


<PAGE>



                                  -------------------------------------------
                                                    [name of Lender]


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




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>5
<FILENAME>efc3-0670_ex12.txt
<TEXT>
                                                                    Exhibit 12



                          CERTIFICATE OF DESIGNATION

      FOR SERIES B CONVERTIBLE PARTICIPATING PREFERRED STOCK

                                      OF

                       PERSONNEL GROUP OF AMERICA, INC.




         Pursuant to Section 151 of the General Corporation Law

                           of the State of Delaware

          The undersigned, Larry L. Enterline and Ken R. Bramlett, Jr., Chief
Executive Officer and Secretary, respectively, of Personnel Group of America,
Inc. (the "Corporation"), a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "DGCL"), HEREBY CERTIFY
that pursuant to the authority granted by Article Fourth of the Restated
Certificate of Incorporation of the Corporation and in accordance with the
provisions of Section 151 of the DGCL, the Board of Directors of the
Corporation has adopted the following resolution fixing the designation and
certain terms, powers, preferences and other rights of a new series of
Preferred Stock to the Corporation and certain qualifications, limitations and
restrictions thereon:

          RESOLVED, that pursuant to Article Fourth of the Restated
Certificate of Incorporation of the Corporation, there be and hereby is
authorized and created a series of Preferred Stock, having the designation,
preferences and relative, participating, optional or other rights,
qualifications, limitations and restrictions as hereinafter set forth:

          1. Designation. The distinctive serial designation of this series
shall be "Series B Convertible Participating Preferred Stock" (hereinafter
called "Series B"). All capitalized terms used herein and not otherwise
defined shall have the meanings set forth in Section 8 hereof. Each share of
Series B shall be identical in all respects with the other shares of Series B
except as to the dates from and after which dividends thereon shall be
cumulative. The Series B shall consist of 1,047,290 shares with a par value of
$0.01 per share. Shares of Series B purchased by the Corporation, canceled
pursuant to Section 3 below or converted into the common stock, par value
$0.01 per share of the Corporation ("Common Stock"), shall be canceled and
retired and shall revert to authorized but unissued preferred stock of the
Corporation undesignated as to series.

          2. Dividends. The holders of Series B shall be entitled to receive,
when, as and if declared by the Board of Directors, but only out of funds
legally available therefor, dividends and distributions (payable in cash,
stock or otherwise, other than any

<PAGE>

stock dividend for which there is an adjustment pursuant to Section 5 below),
on each date that dividends or other distributions are payable on or in
respect of any Common Stock or any other series of preferred stock of the
Corporation in an amount per share of the Series B pari passu with the amount
holders of the Common Stock and any other series of preferred stock shall
receive, in each case on an as-converted-to-Common-Stock basis. All dividends
or distributions payable with respect to the Series B pursuant to this Section
2 shall be payable in respect of fractional shares, adjusted to reflect such
fractional dividend or distribution. Such dividends or distributions shall be
cumulative and shall be payable on the date specified by the Board of
Directors of the Corporation at the time such dividend is declared.

          3. Liquidation Preference.

          (a) In the event of any Liquidation, the Series B shall be canceled
and the holders of Series B shall thereafter only be entitled to be paid out
of the assets of the Corporation or proceeds thereof available for
distribution to its stockholders, before any distribution or payment is made
to the holders of any Junior Stock but after such payment is to be made to
holders of Senior Stock, the liquidation preference in effect at the time of
such distribution or payment date as provided in subparagraph (b) hereof.

          (b) The liquidation preference for shares of Series B shall be $0.01
per share (as adjusted for any stock splits, recapitalizations or stock
consolidations) plus an amount equal to any declared and unpaid dividends per
share of Series B.

          (c) If the assets of Corporation are greater than the total
liquidation preference for all the shares of Series B, any remaining assets of
the Company legally available for distribution to stockholders will be
distributed pro rata among the holders of the Common Stock and the holders of
the Series B in an amount equal to the amount such holders would receive if
such shares of Series B had been converted into Common Stock immediately prior
to the distribution of such remaining assets.

          (d) If the assets of the Corporation are not sufficient to pay in
full the payments payable to the holders of Series B and any Parity Stock upon
the Liquidation, then the assets of the Corporation or the proceeds thereof
available for distribution to its stockholders and not paid to the holders of
any Senior Stock shall be distributed among the holders of Series B and any
Parity Stock pro rata in accordance with their respective liquidation
preferences.

          4. Redemption. The Series B may not be redeemed by the Corporation
at any time.

          5. Conversion.

          (a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series B shall be convertible at the option of the holder
thereof, at any time, into 100 fully paid and nonassesssable shares of Common
Stock, upon surrender at the principal office of the Corporation or at such
other office or offices as the Board of Directors may designate of the
certificate for the share so to be converted, duly endorsed



                                      2
<PAGE>

or assigned to the Corporation in blank and accompanied by (i) an irrevocably
written notice to the Corporation that the holder thereof elects so to convert
such shares of Series B and specifying the name or names (with address or
addresses) in which a certificate or certificates evidencing shares of Common
Stock are to be issued and (ii) if required pursuant to Section 5(h), an
amount sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
If a holder converts more than one share at a time, the number of full shares
of Common Stock issuable upon conversion shall be based on the total number of
shares of Series B so converted. Subject to the following provisions of this
paragraph, each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for
shares of Series B to be converted shall have been surrendered together with
the irrevocable written notice and payment of taxes (if applicable) as
provided for above, and the person or persons entitled to receive the Common
Stock deliverable upon conversion of such Series B shall be treated for all
purposes as the record holder or holders of such Common Stock at such time on
such date, unless the stock transfer books of the Corporation shall be closed
on such date, in which event such person or persons shall be deemed to have
become such holder or holders of record at the close of business on the next
succeeding day on which such stock transfer books are open, but such
conversion shall be at the conversion rate in effect on the date on which such
shares shall have been surrendered and such notice (and, if applicable,
payment) received by the Corporation. Notwithstanding the foregoing, no shares
of Series B may be converted into shares of Common Stock until the
Corporation's certificate of incorporation is amended to increase the number
of authorized shares of Common Stock or to effect a reverse split of
outstanding shares of Common Stock, such that immediately following such
amendment the number of authorized but unissued shares of Common Stock shall
be greater than the number of shares of Common Stock into which all of the
then outstanding shares of Series B are convertible.

          (b) The number of shares of Common Stock and the number of any other
shares of the Corporation, if any, into which each share of Series B is
convertible, shall be adjusted from time to time as set forth below. Such
adjustments shall be made whether or not there are any outstanding shares of
Series B, and any shares of Series B subsequently issued shall be issued with
such adjustments having been effected.

          (i) Dividends, Subdivisions, Splits and Combinations. In case the
     Corporation shall (A) pay a dividend or make a distribution in shares of
     Common Stock or shares convertible into or otherwise exchangeable or
     exercisable for Common Stock, (B) subdivide or split its outstanding
     shares of Common Stock into a greater number of shares of Common Stock or
     (C) combine or reverse-split its outstanding shares of Common Stock into
     a smaller number of shares of Common Stock, then in each such case the
     number of shares of Common Stock into which each share of Series B shall
     thereafter be convertible shall be proportionately increased or
     decreased, respectively, with effect as of the record date set for such
     dividend or the effective date of such split, subdivision or combination.



                                      3
<PAGE>

          (ii) Reclassifications. In the case of any classifications,
     reclassifications or reorganizations of the Common Stock (whether
     pursuant to a sale of all or substantially all assets, merger or
     consolidation or otherwise) for which an adjustment is not otherwise made
     pursuant to this Section 5 and for which no cancellation is effected
     under Section 3(a), then the holder of each share of Series B shall be
     entitled to receive upon the conversion of such share (on the same basis
     and conditions as set forth herein with respect to the Common Stock), the
     stock, securities or other property (including cash) that such holder
     would have been entitled to receive upon the happening of any of the
     events described above had such share been converted immediately prior to
     the happening of such event and, in any such case, appropriate provision
     shall be made so that such holder's rights and interests herein with
     respect to the Series B (including in this Section 5) shall be applicable
     as nearly may be in relation to stock, securities or other property
     thereafter deliverable upon conversion.

          (c) In case the Corporation shall take a record of the holders of
any class of its capital stock entitled to receive a dividend or other
distribution payable in Common Stock or securities convertible into or
otherwise exchangeable or exercisable for Common Stock, whether or not
immediately exercisable (collectively, "Convertible Securities") or to
subscribe for or purchase or otherwise acquire Common Stock or Convertible
Securities, then such record date shall be deemed to be the date of issue or
sale of the shares deemed to have been issued or sold upon the declaration of
such dividend or other distribution or the granting of such right of
subscription, purchase or acquisition.

          (d) No adjustment in the conversion rate shall be required unless
such adjustment (plus any adjustments not previously made by reason of this
subdivision (d)) would require an increase or decrease of at least 1% in the
number of shares of Common Stock into which each share of Series B is then
convertible; provided, however, that any adjustments which by reason of this
subdivision (d) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
5 shall be made to the nearest one-hundred thousandth of a share. When
evaluating the amount of consideration for any purpose under this Section 5,
the amount of consideration shall be deemed to be the proceeds received before
deducting any expenses incurred or any underwriting commissions or concessions
paid or allowed by the Corporation in connection therewith and any
consideration other than cash shall be established as the fair value at the
time of receipt thereof as determined in good faith by the Board of Directors.

          (e) The Board of Directors may make such adjustments in the
conversion rate, in addition to those required by this Section 5, as shall be
determined in good faith by the Board of Directors, as evidenced by a
resolution of the Board of Directors, to be advisable in order to avoid
taxation so far as practicable of any dividend of stock or stock rights or any
event treated as such for Federal income tax purposes to the recipients. After
no less than five (5) days advance written notice given to the holders of
record of Series B, the Board of Directors shall have the power to resolve any
ambiguity or correct any error in this Section 5 and its action in so doing,
as evidenced by



                                      4
<PAGE>

a written resolution of the Board of Directors that shall not have been
revoked prior to its effectiveness, shall be final and conclusive.

          (f) Whenever any adjustment is required in the shares of Common
Stock into which each share of Series B is convertible, the Corporation shall
forthwith (i) file in the corporate minutes and with any transfer agent of the
Series B a statement describing in reasonable detail the adjustment and the
method of calculation used and (ii) cause a copy of such statement to be
mailed to the holders of record of the Series B as of the effective date of
such adjustment.

          (g) The Corporation shall at all times reserve and keep available
out of its authorized but unissued Common Stock, for the purpose of issuance
upon conversion of the Series B, the full number of shares of Common Stock
then deliverable upon the conversion of all shares of Series B then
outstanding.

          (h) The Corporation will pay any and all taxes that may be payable
in respect of the issuance or delivery of Common Stock on conversion of Series
B. The Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of
Common Stock in a name other than that in which the Series B so converted were
registered, and no such issuance or delivery shall be made unless and until
(i) the person requesting such issuance has paid to the Corporation the amount
of any such tax or has established to the satisfaction of the Corporation that
such tax has been paid and (ii) such issuance and delivery is permitted under
applicable federal, state and foreign securities laws without registration
thereof.

          (i) For the purpose of this Section 5 and, unless the context
otherwise requires, the purpose of this serial designation, the term "Common
Stock" shall include any shares of the Corporation of any class or series
which has no preference or priority in the payment of dividends or in the
distribution of assets upon any Liquidation of the Corporation and which is
not subject to redemption by the Corporation. However, Common Stock issuable
upon conversion of Series B shares shall include only shares of the class
designated as Common Stock as of the original date of issuance of the Series
B, or shares of the Corporation of any classes or series resulting from any
reclassification or reclassifications thereof and which have no preference or
priority in the payment of dividends or in the distribution of assets upon any
Liquidation of the Corporation and which are not subject to redemption by the
Corporation, provided that if at any time there shall be more than one such
resulting class or series, the shares of such class and series then so
issuable shall be substantially in the proportion which the total number of
shares of such class and series resulting from all such reclassifications
bears to the total number of shares of all such classes and series resulting
from all such reclassifications.

          (j) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of Series B. If any such conversion would
otherwise require the issuance of a fractional share, an amount equal to the
fair market value of such fractional share or scrip, as determined in good
faith by the Board of Directors, shall be paid to the holder in cash by the
Corporation.



                                      5
<PAGE>

          (k) The certificate of any independent firm of public accountants or
any independent investment bank or financial advisory firm of nationally
recognized standing selected in good faith by the Board of Directors shall be
presumptive evidence of the correctness of any computation made under this
Section 5.

          (l) Notwithstanding any other provision hereof, if a conversion of
this security is to be made in connection with a holder's participation in a
registered public offering or a Sale Transaction, the conversion may, at the
election of the holder, be conditioned upon the consummation of such public
offering or Sale Transaction in which case such conversion shall not be deemed
to be effective until the consummation of such transaction.

          (m) Other Actions. In case at any time or from time to time the
Corporation shall take any action of the type contemplated herein but not
expressly provided for by such provisions, then, unless in the opinion of the
Board of Directors such action is not reasonably likely to have a material
adverse effect upon the rights of the Series B (taking into consideration, if
necessary, any prior actions which the Board of Directors hereunder deemed not
reasonably likely to materially adversely affect the rights of the Series B),
the Series B shall be adjusted in such manner and at such time as the Board of
Directors may in good faith determine to be equitable in the circumstances.

          6. Automatic Conversion.

          (a) Subject to the final sentence of Section 5(a), the Series B
shall automatically be converted into shares of Common Stock in accordance
with Section 5 herein, in whole but not in part, (i) at the election of the
Corporation upon written notice delivered by the Corporation as provided in
6(b) below, or (ii) upon the written direction of holders holding, in the
aggregate, at least 50% of the shares of the Series B as provided in Section
6(c) below.

          (b) If the Corporation has elected to convert the Series B into
Common Stock pursuant to this Section 6, the Corporation will provide notice
of automatic conversion of shares of Series B pursuant to this Section 6 to
holders of record of the Series B to be converted not less than 15 nor more
than 60 days prior to the date fixed for conversion. Such notice shall include
(i) a statement signed by one of the Corporation's executive officers
certifying that shares of Common Stock are available for the conversion and
(ii) an opinion of counsel that the shares of Common Stock to be received upon
conversion of the Series B has been duly authorized and are validly issued and
nonassessable. Such notice shall be provided by mailing notice of such
conversion first class mail postage prepaid, to each holder of record of the
Series B to be converted, at such holder's address as it appears on the stock
register of the Corporation.

          (c) If the holders holding, in the aggregate, at least 50% of the
issued and outstanding shares of Series B have elected to convert the Series B
into Common Stock pursuant to this Section 6, the holders will provide notice
of such election to the Company and to each other holder of record of Series B
to be converted not less than 15 nor more than 60 days prior to the date fixed
for conversion. Such notice shall list the



                                      6
<PAGE>

holders making such election and the number of shares of Series B held by each
such holder. Such notice shall be provided by mailing notice of such
conversion first class mail postage prepaid, to the Corporation and to each
holder of record of the Series B to be converted, at such holder's address as
it appears on the stock register of the Corporation.

          (d) The holders of Series B shall cause any director nominees,
nominated on behalf of such holders of Series B to recuse themselves from any
deliberation or consideration of actions to cause the Corporation to convert
the Series B, as described in this Section 6.

          7. Voting Rights.

          (a) Except as otherwise required by this Section 7 or as otherwise
required by law, the holders of this Series B shall vote together with the
shares of Common Stock (and any other class or series which may similarly be
entitled to vote with the holders of Common Stock) as a single class at any
annual or special meeting of the stockholders of the Corporation, or by
written consent, in the same manner as the holders of Common Stock. Each
holder of Series B shall be entitled to such number of votes for the shares of
Series B held by such holder on the record date fixed for any meeting, or on
the effective date of any written consent, as shall be equal to number of
votes such holder would be entitled to if such holder held the whole number of
shares of Common Stock into which all of his shares of Series B would be
convertible, notwithstanding the final sentence of Section 5(a) immediately
after the close of business on the record date fixed for such meeting or the
effective date of such written consent.

          (b) In addition to any other vote or consent of stockholders
required by law or by the certificate of incorporation of the Corporation, the
consent of the holders of record of greater than 50% of the outstanding shares
of Series B given in person or by proxy, either in writing without a meeting
or by vote at any meeting called for the purpose, shall be necessary to
effect, validate or take any of the following actions: (i) any amendment or
change that adversely affects the rights, preferences, privileges or powers
of, or the restrictions provided for the benefit of the holders of the Series
B; (ii) any action that authorizes, creates or issues additional shares of
Series B or shares of Parity Stock or Senior Stock or increases the authorized
amount of any such other class or series; (iii) any action that reclassifies
any outstanding shares into Parity Stock or Senior Stock; (iv) any amendment
alteration, modification or repeal of any of the provisions of the certificate
of incorporation of the Corporation (by merger, consolidation or otherwise),
which adversely affects the voting powers, rights, privileges or preferences
of the holders of Series B; (v) the declaration or payment of a dividend on
any Junior Stock (other than a dividend payable solely in shares of Junior
Stock); or (vi) any Sale Transaction.

          8. Definitions.

          As used herein with respect to Series B, the following terms shall
have the following meanings:



                                      7
<PAGE>

          (a) "Board of Directors" shall mean the Board of Directors of the
Corporation (or persons performing a similar function in any successor
entity).

          (b) "Junior Stock" shall mean the Common Stock or any other class or
series of shares of the Corporation hereafter authorized in accordance with
the certificate of incorporation of the Corporation by the terms of which the
holders of shares of Series B would be entitled to the receipt of dividends
and of amounts distributable upon Liquidation or redemption in preference or
priority to the holders of shares of such class or series.

          (c) "Liquidation" shall mean any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation or
the consummation of any Sale Transaction.

          (d) "Parity Stock" shall mean any class or series of stock or other
security of the Corporation hereafter authorized in accordance with the
certificate of incorporation of the Corporation by the terms of which the
holders of shares of Series B would be entitled to the receipt of dividends
and of amounts distributable upon Liquidation or redemption on parity with the
holders of shares of such class or series.

          (e) "Sale Transaction" shall mean the voluntary sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Corporation to, or the consolidation or merger of the Corporation with or
into, one or more other corporations or other entities, where the stockholders
of the Corporation immediately prior to such transaction do not thereafter
beneficially own, collectively, at least a majority of the shares of capital
stock entitled to vote generally in election of directors or persons
performing a similar function of the surviving or successor corporation or
other entity. The good faith determination of a majority of the Board of
Directors of the Corporation (or persons performing a similar function of a
successor entity) that a Sale Transaction has occurred shall conclusively
establish the occurrence of such event.

          (f) "Senior Stock" shall mean any class or series of stock or other
security of the Corporation hereafter authorized in accordance with the
certificate of incorporation of the Corporation by the terms of which the
holders of shares of such shares of such class or series would be entitled to
the receipt of dividends and of amounts distributable upon Liquidation or
redemption in preference or priority with the holders of shares of Series B.

          9. Miscellaneous. The shares of Series B shall not have any
relative, participating, optional, conversion, voting or other special rights
and powers other than as set forth herein. In the event that the Corporation
shall at any time be party to a transaction or series of transactions that
constitute a sale of all or substantially all assets, a holding company
reorganization or any other merger or consolidation pursuant to which in each
case all of the Common Stock shall be exchanged for equity securities in
another entity, the Corporation agrees that the entity resulting from, or
issuing securities in, such transaction or series of transactions shall be
deemed the successor to the Corporation pursuant



                                      8
<PAGE>

to this instrument and shall assume all of the Corporation's rights and
obligations hereunder.

          10. Severability of Provisions. If any voting powers, preferences
and relative, participating, optional and other special rights of the Series B
and qualifications, limitations and restrictions thereof set forth in this
certificate of designation (as it may be amended from time to time) are
invalid, unlawful or incapable of being enforced by reason of any rule or law
or public policy, all other voting powers, preferences and relative,
participating, optional and other special rights of Series B and
qualifications, limitations and restrictions being given effect thereby set
forth in this certificate of designation (as so amended) which can be given
effect without the invalid, unlawful or unenforceable voting powers,
preferences and relative, participating, optional and other special rights to
Series B and qualifications, limitations and restrictions thereof shall,
nevertheless, remain in full force and effect, and no voting powers,
preferences and relative, participating, optional or other special rights of
Series B and qualifications, limitations and restrictions thereof herein set
forth shall be deemed dependent upon any other such voting powers, preferences
and relative, participating, optional or other special rights of Series B and
qualifications, limitations and restrictions thereof unless so expressed
herein.



                                      9
<PAGE>

          IN WITNESS WHEREOF, we have signed this certificate on the _____ day
of April, 2003, and affirm the statements contained herein as true under
penalties of perjury.



                               ---------------------------------
                               Larry L. Enterline
                               Chief Executive Officer



                               ---------------------------------
                               Ken R. Bramlett, Jr.
                                   Secretary



                                      10

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>6
<FILENAME>efc3-0670_ex13.txt
<TEXT>
                                                                    Exhibit 13



      THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES
      THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER
      THE SECURITIES LAWS OF ANY STATE. THIS COMMON STOCK
      PURCHASE WARRANT HAS BEEN ACQUIRED FOR INVESTMENT
      PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION, AND THIS
      COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT
      MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR
      OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
      1933, AND REGISTRATION OR QUALIFICATION UNDER
      APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
      COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
      THE PROPOSED TRANSACTION DOES NOT REQUIRE
      REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT
      OF 1933 OR APPLICABLE STATE SECURITIES LAWS.

                       PERSONNEL GROUP OF AMERICA, INC.

                         COMMON STOCK PURCHASE WARRANT

Date of Issuance:  April 11, 2003                        Certificate No. W-[_]

     THIS IS TO CERTIFY that [_________________________], and its transferees,
successors and assigns (the "Holder"), for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, is entitled to
purchase from PERSONNEL GROUP OF AMERICA, INC., a Delaware corporation (the
"Company"), at the price of $[______] per share (the "Exercise Price") (as
such price may be adjusted as provided herein), at any time after the date
hereof (the "Commencement Date") and expiring on April __, 2013 (the
"Expiration Date"), [10% of fully diluted] shares (the "Aggregate Number") of
the fully paid and nonassessable Common Stock, par value $0.001 per share
("Common Stock"), of the Company (as such number may be adjusted as provided
herein).

     Capitalized terms used herein shall have the meanings ascribed to such
terms in Section 13 hereof unless otherwise defined herein.

     SECTION 1. The Warrant; Transfer and Exchange.

     (a) The Warrant. This Common Stock Purchase Warrant (the "Warrant") is
issued under and pursuant to the Restructure Agreement. This Warrant and the
rights and privileges of the Holder and the Company hereunder may be exercised
by the Holder in whole or in part as provided herein; shall survive any
termination of the Restructure Agreement; and, as more fully set forth in
Sections 1(b) and 8 hereof, may be transferred by the Holder to any other
Person or



<PAGE>

Persons at any time or from time to time, in whole or in part, regardless of
whether the Holder retains any or all rights under the Restructure Agreement.

     (b) Transfer and Exchanges. The Company shall initially record this
Warrant on a register to be maintained by the Company with its other stock
books and subject to Section 8 hereof, from time to time thereafter shall
reflect the transfer of this Warrant on such register when surrendered for
transfer in accordance with the terms hereof and properly endorsed,
accompanied by appropriate instructions, and further accompanied by payment in
cash or by check, bank draft or money order payable to the order of the
Company, in United States currency, of an amount equal to any stamp or other
tax or governmental charge or fee required to be paid in connection with the
transfer thereof. Upon any such transfer, a new warrant or warrants shall be
issued to the transferee and the Holder (in the event the Warrant is only
partially transferred) and the surrendered warrant shall be canceled. Each
such transferee shall succeed to all of the rights of the Holder under the
Restructure Agreement; provided, that the Holder and such transferee may,
simultaneously, also hold rights under the Restructure Agreement in proportion
to their respective interests in this Warrant. This Warrant may be exchanged
at the option of the Holder, when surrendered at the Principal Office of the
Company, for another warrant or other warrants of like tenor and representing
in the aggregate the right to purchase a like number of shares of Common
Stock.

     SECTION 2. Exercise.

     (a) Right to Exercise. At any time after the Commencement Date and on or
before the Expiration Date, the Holder, in accordance with the terms hereof,
may exercise this Warrant, in whole at any time or in part from time to time,
by delivering this Warrant to the Company during normal business hours on any
Business Day at the Company's Principal Office, together with the Election to
Purchase, in the form attached hereto as Exhibit A and made a part hereof (the
"Election to Purchase"), duly executed, and payment of the Exercise Price per
share for the number of shares to be purchased (the "Exercise Amount"), as
specified in the Election to Purchase. If the Expiration Date is not a
Business Day, then this Warrant may be exercised on the next succeeding
Business Day.

     (b) Payment of Exercise Price. Payment of the Exercise Price shall be
made to the Company in cash or other immediately available funds or as
provided in Section 2(c), or a combination thereof. In the case of payment of
all or a portion of the Exercise Price pursuant to Section 2(c), the direction
by the Holder to make a "Cashless Exercise" shall serve as accompanying
payment for that portion of the Exercise Price. The amount of the Exercise
Price to be paid shall equal the product of (i) the Exercise Amount multiplied
by (ii) the Exercise Price per share.

     (c) Cashless Exercise. The Holder shall have the right to pay all or a
portion of the Exercise Price by making a "Cashless Exercise" pursuant to this
Section 2(c), in which case the portion of the Exercise Price to be so paid
shall be paid by (i) reducing the number of shares of Common Stock otherwise
issuable pursuant to the Election to Purchase or (ii) tendering shares of the
Common Stock held by the Holder as of the date of the Election to Purchase, by
an amount equal to (A) the Exercise Price to be so paid divided by (B) the
Fair Market Value Per Share.



                                      2
<PAGE>

The number of shares of Common Stock to be issued to the Holder as a result of
a Cashless Exercise will therefore be as follows:

<TABLE>
<CAPTION>
<S>                                                                  <C>    <C>
     (Fair Market Value Per Share - Exercise Price per share)        x      Cashless Exercise Amount*
     --------------------------------------------------------
            Fair Market Value Per Share
</TABLE>

*    The Cashless Exercise Amount in the above formula is that portion of the
     Exercise Amount (expressed as a number of shares of Common Stock) with
     respect to which the Exercise Price is being paid by Cashless Exercise
     pursuant to this Section 2(c).

     (d) Issuance of Shares of Common Stock. Upon receipt by the Company of
this Warrant at its Principal Office in proper form for exercise, and
accompanied by payment of the Exercise Price as aforesaid, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that certificates representing such shares of
Common Stock may not then be actually delivered. Upon such surrender of this
Warrant and payment of the Exercise Price as aforesaid, the Company shall
issue and cause to be delivered with all reasonable dispatch to, or upon the
written order of, the Holder (and in such name or names as the Holder may
designate) a certificate or certificates for the Exercise Amount, subject to
any reduction as provided in Section 2(c) for a Cashless Exercise.

     (e) Fractional Shares. The Company shall not be required to deliver
fractions of shares of Common Stock upon exercise of this Warrant. If any
fraction of a share of Common Stock would be deliverable upon an exercise of
this Warrant, the Company may, in lieu of delivering such fraction of a share
of Common Stock, make a cash payment to the Holder in an amount equal to the
same fraction of the Fair Market Value Per Share determined as of the Business
Day immediately preceding the date of exercise of this Warrant.

     (f) Partial Exercise. In the event of a partial exercise of this Warrant,
the Company shall issue to the Holder a Warrant in like form for the
unexercised portion thereof.

     (g) Exercise Price. Notwithstanding anything to the contrary contained in
this Warrant, the Exercise Price will not be adjusted below the amount equal
to the par value per share of the Common Stock.

     SECTION 3. Payment of Taxes. The Company shall pay all stamp taxes
attributable to the initial issuance of shares or other securities issuable
upon the exercise of this Warrant or issuable pursuant to Section 6 hereof,
excluding any tax or taxes which may be payable because of the transfer
involved in the issuance or delivery of any certificates for shares or other
securities in a name other than that of the Holder in respect of which such
shares or securities are issued.

     SECTION 4. Replacement Warrant. In case this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and in substitution for the Warrant lost, stolen or destroyed, a new Warrant
of like tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction of such Warrant and upon receipt of indemnity reasonably
satisfactory to the



                                      3
<PAGE>

Company provided that if the Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory).

     SECTION 5. Reservation of Common Stock; Other Covenants.

     (a) Reservation of Authorized Common Stock. The Company shall at all
times reserve and keep available out of the aggregate of its authorized but
unissued shares, free of preemptive rights, such number of its duly authorized
shares of Common Stock, or other stock or securities deliverable pursuant to
Section 6 hereof, as shall be sufficient to enable the Company at any time to
fulfill all of its obligations under this Warrant.

     (b) Affirmative Actions to Permit Exercise and Realization of Benefits.
If any shares of Common Stock reserved or to be reserved for the purpose of
the exercise of this Warrant, or any shares or other securities reserved or to
be reserved for the purpose of issuance pursuant to Section 6 hereof, require
registration with or approval of any governmental authority under any federal
or state law (other than securities laws) before such shares or other
securities may be validly delivered upon exercise of this Warrant, then the
Company covenants that it will, at its sole expense, use its commercially
reasonable best efforts to secure upon and after exercise of this Warrant such
registration or approval, as the case may be (including but not limited to
approvals or expirations of waiting periods required under the Hart Scott
Rodino Antitrust Improvements Act).

     (c) Regulatory Requirements and Restrictions. In the event of any
reasonable determination by the Holder that, by reason of any existing or
future federal or state law, statute, rule, regulation, guideline, order,
court or administrative ruling, request or directive (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) (collectively, a "Regulatory Requirement"), the Holder is
effectively restricted or prohibited from holding this Warrant or the Warrant
Shares (including any shares of capital stock or other securities
distributable to the Holder in any merger, reorganization, readjustment or
other reclassification), or otherwise realizing upon or receiving the benefits
intended under this Warrant, the Company shall use its reasonable best efforts
to take such action as the Holder and the Company shall jointly agree in good
faith to be reasonably necessary to permit the Holder to comply with such
Regulatory Requirement. The reasonable costs of taking such action, whether by
the Company, the Holder or otherwise, shall be borne by the Company.

     (d) Validly Issued Shares. The Company covenants that all shares of
Common Stock that may be delivered upon exercise of this Warrant, assuming
full payment of the Exercise Price, (including those issued pursuant to
Section 6 hereof) shall upon delivery by the Company be duly authorized and
validly issued, fully paid and nonassessable, free from all stamp taxes, liens
and charges with respect to the issue or delivery thereof and otherwise free
of all other security interests, encumbrances and claims of any nature
whatsoever.



                                      4
<PAGE>

     SECTION 6. Adjustments to Aggregate Number.

     Under certain conditions, the Aggregate Number is subject to adjustment
as set forth in this Section 6. No adjustments shall be made under this
Section 6 as a result of the issuance by the Company of (i) the Warrant Shares
upon exercise of this Warrant, (ii) Common Stock, or options therefore, issued
pursuant to bona fide employee or non-employee director benefit plans approved
by the Board of Directors, (iii) Common Stock in connection with the
acquisition of another Person (which is not a stockholder, or an Affiliate of
any stockholder, of the Company) by the Company by merger, purchase of all or
substantially all of such other Person's assets or by other reorganization
whereby the Company ends up owning, directly or indirectly, greater than 50%
of the voting power of such Person or (iv) Common Stock pursuant to a bona
fide underwritten public offering by the Company (collectively, the "Exempt
Issuances").

     (a) Adjustments. The Aggregate Number, after taking into consideration
any prior adjustments pursuant to this Section 6, shall be subject to
adjustment from time to time as follows and, thereafter, as adjusted, shall be
deemed to be the Aggregate Number hereunder.

          (i) Stock Dividends. Subdivisions and Combinations. In case at any
time or from time to time the Company shall:

               (A) issue to the holders of its Common Stock a dividend
          payable in, or other distribution of, Common Stock (a "Stock
          Dividend"),

               (B) subdivide its outstanding shares of Common Stock into a
          larger number of shares of Common Stock, including without
          limitation by means of a stock split (a "Stock Subdivision"), or

               (C) combine its outstanding shares of Common Stock into a
          smaller number of shares of Common Stock (a "Stock Combination"),

then the Aggregate Number in effect immediately prior thereto shall be (1)
proportionately increased in the case of a Stock Dividend or a Stock
Subdivision and (2) proportionately decreased in the case of a Stock
Combination. In the event the Company shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to
acquire Common Stock for no consideration, then the Company shall be deemed to
have made a Stock Dividend in an amount of shares equal to the maximum number
of shares issuable upon exercise of such rights to acquire Common Stock.

          (ii) Other Distributions. In case at any time or from time to time
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any dividend or other distribution
(collectively, a "Distribution") of:

               (A) cash,

               (B) any evidences of its indebtedness (other than Convertible
          Securities), any shares of its capital stock (other than additional
          shares of



                                      5
<PAGE>

          Common Stock or Convertible Securities) or any other securities or
          property of any nature whatsoever (other than cash), or

               (C) any options, warrants or other rights to subscribe for or
          purchase any of the following: any evidences of its indebtedness
          (other than Convertible Securities), any shares of its capital
          stock (other than additional shares of Common Stock or Convertible
          Securities) or any other securities or property of any nature
          whatsoever,

then the Holder shall be entitled to elect by written notice to the Company to
receive (1) immediately and without further payment the cash, evidences of
indebtedness, stock, securities, other property, options, warrants and/or
other rights (or any portion thereof) to which the Holder would have been
entitled by way of such Distribution as if the Holder had exercised this
Warrant immediately prior to such Distribution or (2) upon the exercise of
this Warrant at any time on or after the taking of such record, the number of
Warrant Shares to be received upon exercise of this Warrant determined as
stated herein and, in addition and without further payment, the cash,
evidences of indebtedness, stock, securities, other property, options,
warrants and/or other rights (or any portion thereof) to which the Holder
would have been entitled by way of such Distribution and subsequent dividends
and distributions through the date of exercise as if such Holder (x) had
exercised this Warrant immediately prior to such Distribution and (y) had
retained the Distribution in respect of the Common Stock and all subsequent
dividends and distributions of any nature whatsoever in respect of any stock
or securities paid as dividends and distributions and originating directly or
indirectly from such Common Stock.

     A reclassification of the Common Stock into shares of Common Stock and
shares of any other class of stock shall be deemed a Distribution by the
Company to the holders of its Common Stock of such shares of such other class
of stock and, if the outstanding shares of Common Stock shall be changed into
a larger or smaller number of shares of Common Stock as a part of such
reclassification, such event shall be deemed a Stock Subdivision or Stock
Combination, as the case may be, of the outstanding' shares of Common Stock
within the meaning of Section 6(a)(i) hereof.

          (iii) Issuance of Common Stock. If at any time or from time to time
the Company shall (except as hereinafter provided in this Section 6(a)(iii))
issue or sell any additional shares of Common Stock for a consideration per
share less than the Fair Market Value Per Share, then, effective on the date
specified below, the Aggregate Number shall be adjusted by multiplying (A) the
Aggregate Number immediately prior thereto by (B) a fraction, the numerator of
which shall be the sum of the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional shares of Common Stock,
the number of shares of Common Stock issuable upon the conversion or exercise
of options, warrants, rights or convertible securities (whether or not then
exercisable), and the number of such additional shares of Common Stock so
issued and the denominator of which shall be the sum of the number of shares
of Common Stock outstanding immediately prior to the issuance of such
additional shares of Common Stock, the number of shares of Common Stock
issuable upon the conversion or exercise of options, warrants, rights or
convertible securities (whether or not then exercisable), and the number of
shares of Common Stock which the aggregate consideration for the total



                                      6
<PAGE>

number of such additional shares of Common Stock so issued would purchase at
the Fair Market Value Per Share. The date as of which the Fair Market Value
Per Share shall be computed shall be the earlier of the date on which the
Company shall enter into a firm contract or commitment for the issuance of
such additional shares of Common Stock or the date of actual issuance of such
additional shares of Common Stock.

          The provisions of this Section 6(a)(iii) shall not apply to any
issuance of additional shares of Common Stock for which an adjustment is
otherwise provided under Section 6(a)(i) hereof. No adjustment of the
Aggregate Number shall be made under this Section 6(a)(iii) upon the issuance
of any additional shares of Common Stock which are issued pursuant to (1) the
exercise of this Warrant in whole or in part or pursuant to any other Exempt
Issuances, (2) the exercise of other subscription or purchase rights or (3)
the exercise of any conversion or exchange rights in any Convertible
Securities; provided that for purposes of clauses (2) or (3) an adjustment
shall previously have been made upon the issuance of such other rights or upon
the issuance of such Convertible Securities (or upon the issuance of any
warrants or other rights therefor) pursuant to Section 6(a)(iv) or (v) hereof.

          (iv) Warrants and Options. If at any time or from time to time the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a distribution of, or shall in any manner
(whether directly, by assumption in a merger in which the Company is the
surviving corporation and in which the shareholders of the Company immediately
prior to the merger continue to own more than 50% of the Outstanding Common
Stock immediately after the merger and for a period of 180 days thereafter, or
otherwise) issue or sell any warrants, options or other rights to subscribe
for or purchase (A) any shares of Common Stock or (B) any Convertible
Securities, whether or not the rights to subscribe, purchase, exchange or
convert thereunder are immediately exercisable, and the consideration per
share for which additional shares of Common Stock may at any time thereafter
be issuable pursuant to such warrants, options or other rights or pursuant to
the terms of such Convertible Securities shall be less than the Fair Market
Value Per Share, then the Aggregate Number shall be adjusted as provided in
Section 6(a)(iii) hereof on the basis that (1) the maximum number of
additional shares of Common Stock issuable pursuant to all such warrants,
options or other rights or necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been issued as of the
date of the determination of the Fair Market Value Per Share as hereinafter
provided and (2) the aggregate consideration for such maximum number of
additional shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance of such
additional shares of Common Stock pursuant to the terms of such warrants,
options or other rights or such Convertible Securities. For purposes of this
Section 6(a)(iv), the effective date of such adjustment and the date as of
which the Fair Market Value Per Share shall be computed shall be the earliest
of (A) the date on which the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any such warrants,
options or other rights, (B) the date on which the Company shall enter into a
firm contract or commitment for the issuance of such warrants, options or
other rights and (C) the date of actual issuance of such warrants, options or
other rights.

          (v) Convertible Securities. If at any time or from time to time the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to



                                      7
<PAGE>

receive a distribution of or shall in any manner (whether directly, by
assumption in a merger in which the Company is the surviving corporation and
in which the shareholders of the Company immediately prior to the merger
continue to own more than 50% of the Outstanding Common Stock immediately
after the merger and for a period of 180 days thereafter, or otherwise) issue
or sell Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the consideration per
share for the additional shares of Common Stock which may at any time
thereafter be issuable pursuant to the terms of such Convertible Securities
shall be less than the Fair Market Value Per Share, then the Aggregate Number
shall be adjusted as provided in Section 6(a)(iii) hereof on the basis that
(A) the maximum number of additional shares of Common Stock necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued as of the date of the determination of the Fair
Market Value Per Share as herein provided and (B) the aggregate consideration
for such maximum number of additional shares of Common Stock shall be deemed
to be the minimum consideration received and receivable by the Company for the
issuance of such additional shares of Common Stock pursuant to the terms of
such Convertible Securities. For purposes of this Section 6(a)(v), the
effective date of such adjustment and the date as of which the Fair Market
Value Per Share shall be computed shall be the earliest of (1) the date on
which the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive any such Convertible Securities, (2)
the date on which the Company shall enter into a firm contract or commitment
for the issuance of such Convertible Securities and (3) the date of actual
issuance of such Convertible Securities.

          No adjustment of the Aggregate Number shall be made under this
Section 6(a)(v) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants, options or other subscription
or purchase rights if an adjustment shall previously have been made or if no
such adjustment shall have been required upon the issuance of such warrants,
options or other rights pursuant to Section 6(a)(iv) hereof.

          (vi) Subsequent Adjustments. If at any time after any adjustment of
the Aggregate Number shall have been made pursuant to Section 6(a)(iv) or (v)
hereof on the basis of the issuance of warrants, options or other rights or
the issuance of Convertible Securities, or after any new adjustments of the
Aggregate Number shall have been made pursuant to this Section 6(a)(vi),

               (A) such warrants, options or rights or the right of
     conversion or exchange in such Convertible Securities shall expire, and
     a portion of such warrants, options or rights, or the right of
     conversion or exchange in respect of a portion of such Convertible
     Securities, as the case may be, shall not have been exercised prior to
     such expiration, and/or

               (B) in the case of adjustments made pursuant to Section
     6(a)(iv) or (v), the consideration per share for which shares of Common
     Stock are issuable pursuant to such warrants, options or rights per the
     terms of such Convertible Securities shall be irrevocably increased
     solely by virtue of provisions therein contained for an automatic
     increase in such consideration per share upon the arrival of a specified
     date or the happening of a specified event,



                                      8
<PAGE>

such previous adjustment shall be rescinded and annulled and the additional
shares of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with such adjustment shall no longer be deemed
to have been issued by virtue of such computation. Simultaneously therewith, a
recomputation shall be made of the effect of such warrants, options or rights
or Convertible Securities on the determination of the Aggregate Number, which
shall be made on the basis of:

               (1) treating the number of additional shares of Common Stock,
          if any, theretofore actually issued pursuant to the previous
          exercise of such warrants, options or rights or such right of
          conversion or exchange as having been issued on the date or dates
          of such exercise and, in the case of a recomputation of a
          calculation originally made pursuant to Section 6(a)(iv) or (v),
          for the consideration actually received and receivable therefor,
          and

               (2) in the case of a recomputation of a calculation originally
          made pursuant to Section 6(a)(iv) or (v), treating any such
          warrants, options or rights or any such Convertible Securities
          which then remain outstanding as having been granted or issued
          immediately after the time of such irrevocable increase of the
          consideration per share for which shares of Common Stock are
          issuable under such warrants, options or rights or Convertible
          Securities;

     and, if and to the extent called for by the foregoing provisions of
     Section 6(a)(vi) on the basis aforesaid, a new adjustment of the
     Aggregate Number shall be made, such new adjustment shall supersede the
     previous adjustment so rescinded and annulled.

          (vii) Miscellaneous. The following provisions shall be applicable to
the making of adjustments of the Aggregate Number provided above in this
Section 6(a):

                (A) The sale or other disposition of any issued shares of
      Common Stock owned or held by or for the account of the Company or any
      of its Subsidiaries shall be deemed an issuance thereof for the purposes
      of this Section 6(a).

                (B) To the extent that any additional shares of Common Stock
      or any Convertible Securities or any warrants, options or other rights
      to subscribe for or purchase any additional shares of Common Stock or
      any Convertible Securities (1) are issued solely for cash consideration,
      the consideration received by the Company therefor shall be deemed to be
      the amount of the cash received by the Company therefor, (2) are offered
      by the Company for subscription, the consideration received by the
      Company shall be deemed to be the subscription price or (3) are sold to
      underwriters or dealers for public offering, the net consideration
      (after giving effect to underwriting discounts) received by the Company
      shall be deemed to be the consideration received by the Company
      therefor, in any such case excluding any amounts paid or receivable for
      accrued interest or accrued dividends. To the extent that such issuance
      shall be for a consideration other than cash, or partially for cash and
      partially for other consideration, then, except as otherwise expressly
      provided herein, the amount of such consideration



                                      9
<PAGE>

     shall be deemed to be the fair market value of such consideration plus,
     if applicable, the amount of such cash) at the time of such issuance,
     determined in the manner set forth in Section 6(d)(ii). In case any
     additional shares of Common Stock or any Convertible Securities or any
     warrants, options or other rights to subscribe for or purchase such
     additional shares of Common Stock or Convertible Securities shall be
     issued in connection with any merger in which the Company is the survivor
     and issues any securities, the amount of consideration therefor shall be
     deemed to be the fair market value of such additional shares of Common
     Stock, Convertible Securities, warrants, options or other rights, as the
     case may be, determined in the manner set forth in Section 6(d)(ii).

               The consideration for any shares of Common Stock issuable
     pursuant to the terms of any Convertible Securities shall be equal to
     (x) the consideration received by the Company for issuing any warrants,
     options or other rights to subscribe for or purchase such Convertible
     Securities, plus (y) the consideration paid or payable to the Company in
     respect of the subscription for or purchase of such Convertible
     Securities, plus (z) the consideration, if any, payable to the Company
     upon the exercise of the right of conversion or exchange of such
     Convertible Securities.

               In case of the issuance at any time of any additional shares
     of Common Stock or Convertible Securities in payment or satisfaction of
     any dividends upon any class of stock other than Common Stock, the
     Company shall, be deemed to have received for such additional shares of
     Common Stock or Convertible Securities a consideration equal to the
     amount of such dividend so paid or satisfied.

               (C) The adjustments required by the preceding paragraphs of
     this Section 6(a) shall be made whenever and as often as any specified
     event requiring an adjustment shall occur, except that no adjustment of
     the Aggregate Number that would otherwise be required shall be made
     (except in the case of a Stock Subdivision or Stock Combination, as
     provided for in Section 6(a)(i) hereof) unless and until such adjustment
     either by itself or with other adjustments not previously made adds or
     subtracts at least one one-hundredth of one share to or from the
     Aggregate Number immediately prior to the making of such adjustment. Any
     adjustment representing a change of less than such minimum amount
     (except as aforesaid) shall be carried forward and made as soon as such
     adjustment, together with other adjustments required by this Section
     6(a) and not previously made, would result in a minimum adjustment. For
     the purpose of any adjustment, any specified event shall be deemed to
     have occurred at the close of business on the date of its occurrence.

               (D) In computing adjustments under this Section 6(a),
     fractional interests in Common Stock shall be taken into account to the
     nearest one-thousandth of a share.

               (E) If the Company shall take a record of the holders of its
     Common Stock for the purpose of entitling them to receive a dividend or
     distribution or subscription or purchase rights and shall, thereafter
     and before the distribution to



                                      10
<PAGE>

     shareholders thereof, legally abandon its plan to pay or deliver such
     dividend, distribution, subscription or purchase rights, then no
     adjustment shall be required by reason of the taking of such record and
     any such adjustment previously made in respect thereof shall be rescinded
     and annulled.

     (b) Changes in Common Stock. In case at any time the Company shall
initiate any transaction or be a party to any transaction (including, without
limitation, a merger, consolidation, share exchange, sale, lease or other
disposition of all or substantially all of the Company's assets, liquidation,
recapitalization or reclassification of the Common Stock) in connection with
which the previous Outstanding Common Stock shall be changed into or exchanged
for different securities of the Company or capital stock or other securities
of another corporation or interests in a non-corporate entity or other
property (including cash) or any combination of the foregoing (each such
transaction being herein called a "Transaction"), then, as a condition of the
consummation of the Transaction, lawful, enforceable and adequate provision
shall be made so that the Holder shall be entitled to elect by written notice
to the Company to receive (i) a new warrant in form and substance similar to,
and in exchange for, this Warrant to purchase all or a portion of such
securities or other property or (ii) upon exercise of this Warrant at any time
on or after the consummation of the Transaction, in lieu of the Warrant Shares
issuable upon such exercise prior to such consummation, the securities or
other property (including cash) to which such Holder would have been entitled
upon consummation of the Transaction if such Holder had exercised this Warrant
immediately prior thereto (subject to adjustments from and after the
consummation date as nearly equivalent as possible to the adjustments provided
for in this Section 6). The Company will not effect any Transaction unless
prior to the consummation thereof each corporation or other entity (other than
the Company) which may be required to deliver any new warrant, securities or
other property as provided herein shall assume, by written instrument
delivered to the Holder, the obligation to deliver to such Holder such new
warrant, securities or other property as in accordance with the foregoing
provisions such Holder may be entitled to receive and such corporation or
entity shall have similarly delivered to the Holder an opinion of counsel for
such corporation or entity, satisfactory to the Holder, which opinion shall
state that all of the terms of the new warrant or this Warrant shall be
enforceable against the Company and such corporation or entity in accordance
with the terms hereof and thereof, together with such other matters as the
Holder may reasonably request. The foregoing provisions of this Section 6(b)
shall similarly apply to successive Transactions.

     (c) Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action of the type contemplated in
Section 6(a) or (b) hereof but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then, unless in
the opinion of the Company's board of directors such action will not have a
Material Adverse Effect upon the rights of the Holder (taking into
consideration, if necessary, any prior actions which the Board of Directors
deemed not to materially adversely affect the rights of the Holder), the
Aggregate Number shall be adjusted in such manner and at such time as the
Board of Directors of the Company may in good faith determine to be equitable
in the circumstances.



                                      11
<PAGE>

     (d)  Notices.

          (i) Notice of Proposed Actions. In case the Company shall propose
(A) to pay any dividend payable in stock of any class to the holders of its
Common Stock or to make any other distribution to the holders of its Common
Stock, (B) to offer to the holders of its Common Stock rights to subscribe for
or to purchase any Convertible Securities or additional shares of Common Stock
or shares of stock of any class or any other securities, warrants, rights or
options, (C) to effect any reclassification of its Common Stock, (D) to effect
any recapitalization, stock subdivision, stock combination or other capital
reorganization, (E) to effect any consolidation or merger, share exchange, or
sale, lease or other disposition of all or substantially all of its property,
assets or business, (F) to effect the liquidation, dissolution or winding up
of the Company or (G) to effect any other action which would require an
adjustment under this Section 6, then in each such case the Company shall give
to the Holder written notice of such proposed action, which shall specify the
date on which a record is to be taken for the purposes of such stock dividend,
distribution or rights, or the date on which such reclassification,
reorganization, consolidation, merger, share exchange, sale, transfer,
disposition, liquidation, dissolution, winding up or other transaction is to
take place and the date of participation therein by the holders of Common
Stock, if any such date is to be fixed, or the date on which the transfer of
Common Stock is to occur, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock and on the Aggregate Number after giving effect to any
adjustment which will be required as a result of such action. Such notice
shall be so given in the case of any action covered by clause (A) or (B) above
at least 30 days prior to the record date for determining holders of the
Common Stock for purposes of such action and, in the case of any other such
action, at least 30 days prior to the earlier of the date of the taking of
such proposed action or the date of participation therein by the holders of
Common Stock.

          (ii) Adjustment Notice. Whenever the Aggregate Number is to be
adjusted pursuant to this Section 6, unless otherwise agreed by the Holder,
the Company shall promptly (and in any event within 10 Business Days after the
event requiring the adjustment) prepare a certificate signed by the chief
financial officer of the Company, setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment is to
be calculated. The certificate shall set forth, if applicable, a description
of the basis on which the Board of Directors in good faith determined, as
applicable, the Fair Market Value Per Share, the fair market value of any
evidences of indebtedness, shares of stock, other securities, warrants, other
subscription or purchase rights, or other property or the equitable nature of
any adjustment under Section 6(b) or (c) hereof, the new Aggregate Number and,
if applicable, any new securities or property to which the Holder is entitled.
The Company shall promptly cause a copy of such certificate to be delivered to
the Holder. In the case of any determination of Fair Market Value Per Share,
such certificate shall be delivered to the Holder within the time period set
forth in the definition of Fair Market Value Per Share and the Holder may
object thereto as provided therein. Any other determination of fair market
value shall first be determined in good faith by the Board of Directors and be
based upon an arm's length sale of such indebtedness, shares of stock, other
securities, warrants, other subscription or purchase rights or other property,
such sale being between a willing buyer and a willing seller. In the case of
any such determination of fair market value, the Holder may object to the
determination in such certificate by giving written



                                      12
<PAGE>

notice within 10 Business Days of the receipt of such certificate and, if the
Holder and the Company cannot agree to the fair market value within 10
Business Days of the date of the Holder's objection, the fair market value
shall be determined by a national or regional investment bank or a national
accounting firm mutually selected by the Holder and the Company, the fees and
expenses of which shall be paid 50% by the Company and 50% by the Holder
unless such determination results in a fair market value more than 110% of the
fair market value determined by the Company in which case such fees and
expenses shall be paid by the Company. The Company shall keep at its Principal
Office copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by the Holder or any
prospective purchaser of the Warrant (in whole or in part) if so designated by
the Holder.

     SECTION 7. No Dilution or Impairment. The Company will not, by amendment
of its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, share exchange,
dissolution or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, including
without limitation the adjustments required under Section 6 hereof, and will
at all times in good faith assist in the carrying out of all such terms and in
taking of all such action as may be necessary or appropriate to protect the
rights of the Holder against dilution or other impairment. Without limiting
the generality of the foregoing and notwithstanding any other provision of
this Warrant to the contrary (including by way of implication), the Company
(a) will not increase the par value of any shares of Common Stock receivable
on the exercise of this Warrant above the amount payable therefor on such
exercise or (b) will take all such action as may be necessary or appropriate
so that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock on the exercise of this Warrant.

     SECTION 8. Transfers of the Warrant.

     (a) Generally. Subject to the restrictions set forth in this Section 8,
the Restructure Agreement, and the legend set forth on the face of this
Warrant, the Holder may at any time and from time to time freely transfer this
Warrant and the Warrant Shares in whole or in part. This Warrant has not been,
and the Warrant Shares at the time of their issuance may not be, registered
under the Securities Act and except as provided in the Registration Rights
Agreement, nothing herein contained shall be deemed to require the Company to
so register this Warrant and the Warrant Shares. This Warrant and the Warrant
Shares are issued or issuable subject to the provisions and conditions
contained herein, and every Holder hereof by accepting the same agrees with
the Company to such provisions and conditions, and represents to the Company
that this Warrant has been acquired and the Warrant Shares will be acquired
for the account of the Holder for investment and not with a view to or for
sale in connection with any distribution thereof.

     (b) Compliance with Securities Laws. The Holder agrees that the Warrant
and the Warrant Shares may not be sold or otherwise disposed of except
pursuant to an effective registration statement under the Securities Act and
applicable state securities laws or pursuant to an applicable exemption from
the registration requirements of the Securities Act and such state securities
laws. Notwithstanding the legend set forth on the face of this Warrant, in the
event



                                      13
<PAGE>

that the Holder transfers this Warrant or the Warrant Shares pursuant to an
applicable exemption from registration, the Company may request (other than
with respect to a transfer from lender or its affiliates to another lender or
its affiliates pursuant to the Restructure Agreement), at its expense, an
opinion of counsel reasonably satisfactory to the Company that the proposed
transfer does not require registration or qualification under the Securities
Act or applicable state securities laws.

     (c) Restrictive Securities Legend. The certificate representing the
shares of Common Stock issued upon the exercise of the Warrant shall bear the
restrictive legends set forth below:

     "The shares represented by this certificate have not been registered
     under the Securities Act of 1933, or the securities laws of any State
     and may not be sold or otherwise disposed of in the absence of an
     effective registration statement under such Act and applicable State
     securities laws or an opinion of counsel reasonably satisfactory to the
     issuer that the proposed transaction does not require registration or
     qualification under such Act and such laws."

     SECTION 9. Covenants.

     The Company hereby represents, warrants and covenants to the Holder that
so long as Holder holds the Warrant or any Warrant Shares:

     (a) Certain Amendments. The Company will not, and will not permit or
cause any of its Subsidiaries to, amend, modify or change any provision of its
articles or certificate of incorporation, bylaws, or the terms of any class or
series of its Capital Stock to the extent such amendment, modification or
change would have an adverse effect on the Holder.

     (b) Limitation on Certain Restrictions. The Company will not, and will
not permit or cause any of its Subsidiaries (to the extent the Company has any
Subsidiaries after the Closing Date) to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any restriction or
encumbrance on the ability of the Company and any such Subsidiaries to perform
and comply with their respective obligations under this Warrant.

      SECTION 10.Events of Non-Compliance and Remedies.

      (a) Events of Non-Compliance. If the Company fails to keep and fully and
promptly perform and observe in all material respects any of the terms,
covenants or representations contained or referenced herein within 30 days
from the earlier to occur of (A) written notice from the Holder specifying
what failure has occurred, or requesting that a specified failure be remedied
or (B) an executive officer of the Company becoming aware of such failure (an
"Event of Non-Compliance"), the Holder shall be entitled to the remedies set
forth in subsection (b) hereof.

      (b) Remedies. On the occurrence of an Event of Non-Compliance, in
addition to any remedies the Holder may have under applicable law, the Holder
may bring any action for injunctive relief or specific performance of any term
or covenant contained herein or in the



                                      14
<PAGE>

Restructure Agreement, the Company hereby acknowledging that an action for
money damages may not be adequate to protect the interests of the Holder
hereunder.

     SECTION 11. Option to Put.

     (a) Put Rights. Notwithstanding any other provision of this Warrant, the
Required Holders may elect by giving the Company written notice thereof
pursuant to Section 12(a) hereof, from time to time, at any time specified in
Section 11(b) hereof and prior to the Expiration Date, to sell to the Company
(at a price established pursuant to Section 12(c) hereof) this Warrant, the
Warrant Shares or any portion thereof (collectively, the "Warrant Securities")
and the Company shall be required to purchase such Warrant Securities or
portion thereof in accordance with the terms hereof and Section 12 hereof.

     (b) Put Events. The right of the Required Holders to require the Company
to purchase the Warrant Securities or any portion thereof under Section 11(a)
hereof shall be exercisable at any time ninety (90) days after the date of
this Warrant other than (A) such time during which the Company maintains an
effective registration statement with respect to the resale of all shares of
common stock of the Company acquired or acquirable upon exercise of the
Warrants held by the Holder or (B) all shares of common stock of the Company
acquired or acquirable upon exercise of the Warrants are eligible for resale,
without registration, in any three-month period under Rule 144 of the
Securities Act (including Rule 144(k)) or any similar rule or regulation
hereinafter adopted by the Commission; provided, however, resales of such
shares under the registration statement may be blocked by the Company to
prevent premature disclosure of nonpublic information by the Company pursuant
to Section 2(f) of that certain Registration Rights Agreement dated as of the
date hereof by and among the Company and the investors listed on the signature
pages thereto.

     SECTION 12. Manner of Put Redemption.

     (a) Put Notice. The Required Holders shall give notice of exercise (the
"Put Notice") of the option under Section 11 hereof to put the Warrant
Securities to the Company by hand delivery, receipt requested, by overnight
delivery service, or by registered first-class mail, postage prepaid. Such
notice shall be mailed or, in the case of hand delivery or overnight delivery
service, delivered (such date of mailing or delivery being the "Put Exercise
Date") not less than 30 nor more than 60 days prior to the date set forth in
the notice as the date fixed for redemption (the "Put Redemption Date"), to
the Company at its Principal Office. All redemption notices shall set forth
the Put Redemption Date and the Warrant Securities to be redeemed.

     (b) Exercise Notice. Within five Business Days after receipt of a Put
Notice from the Required Holders, the Company shall give written notice of
such exercise (the "Exercise Notice") to each other holder of Warrant
Securities (such other holders being referred to herein collectively as the
"Other Holders"). Each Other Holder will have the right to participate in the
redemption and require the Company to redeem all or any portion of such Other
Holder's Warrant Securities by delivering written notice thereof to the
Company within 10 Business Days following receipt of the Exercise Notice. All
such notices delivered by such Other Holders will be deemed to have been
delivered as of the date of the initial Put Notice and taken together will



                                      15
<PAGE>

be deemed to be one exercise of the rights of such Required Holders and Other
Holders to put all or a portion of their Warrant Securities as provided
hereunder.

     (c) Put Redemption Price. The purchase price (the "Put Redemption
Price") of the Warrant Securities or any part thereof to be redeemed by the
Company hereunder shall be calculated (for the purposes of a redemption under
this Section 12 as of the Put Exercise Date (the "Put Redemption Price
Calculation Date") and shall be equal to (i) in the case of this Warrant, the
product of (A) the difference of (1) the Put Price Per Share minus (2) the
Exercise Price per share then in effect multiplied by (B) that portion of this
Warrant (expressed in Warrant Shares) to be redeemed and (ii) in the case of
any Warrant Shares issued upon exercise of this Warrant, the product of (A)
the Put Price Per Share multiplied by (B) that number of Warrant Shares to be
redeemed.

     The "Put Price Per Share" shall mean an amount equal to the Fair Market
Value Per Share determined as of the date of the Company's receipt of the Put
Notice (and if such date is not a Business Day, then as of the immediately
preceding Business Day).

     (d) Closing. On the Put Redemption Date, the holders of the Warrant
Securities to be redeemed shall surrender such Warrant Securities to the
Company at its Principal Office or such other place as may be set forth in the
Put Notice on tender by the Company of the Put Redemption Price in cash or
other immediately available funds. Payment of the Put Redemption Price shall
only be out of Legally Available Funds.

     (e) Partial Exercise. If this Warrant is redeemed only in part, the
Company shall issue a new warrant or warrants for the remaining portion of the
warrant, which warrant shall be registered in the name of and delivered to the
appropriate holder.

     (f) No Restrictive Agreements: Legally Available Funds.

          (i) Covenant Not to Impair Put Rights. The Company covenants and
agrees that, after the date hereof, it shall not, without the prior written
consent of the Required Holders, enter into or agree to become subject to any
term, condition, provision or agreement that would restrict in any way the
performance of the Company's obligations under this Section 12 or the
availability of Legally Available Funds with which to perform such
obligations.

          (ii) Restrictions on Purchase. Notwithstanding anything in the
Warrant to the contrary, the Company shall not be required to redeem any
portion of the Warrant Securities to the extent that at the time of the Put
Redemption Date there exist any Restrictions on Purchase.

          (iii) Remedial Action. Upon receipt of a Put Notice, if the Company
believes that at the time of the Put Redemption Date, the Company would not
have sufficient Legally Available Funds to perform its obligations under this
Section 12, then the Company shall promptly use all reasonable efforts to
cause such Legally Available Funds to become available in any manner permitted
or contemplated by the General Corporation Law of the State of Delaware, as
amended, or any comparable provision of any succeeding law. If,
notwithstanding the Company's reasonable efforts pursuant hereto, the Company
is unable to fulfill its obligations



                                      16
<PAGE>

under this Section 12 because of insufficient Legally Available Funds or due
to the existence of one or more Restrictions on Purchase, the Company shall
give prompt written notice thereof to each holder of Warrant Securities
specifying in reasonable detail the nature thereof and the extent, if any, to
which the Company would be able to fulfill its obligations under this Section
12.

          (iv) Holder Options. If any Restrictions on Purchase exist on the
proposed Put Redemption Date, the Required Holders may elect pursuant to
written notice given by the Required Holders to the Company: (A) that each
holder's put rights pursuant to the Put Notice shall remain exercised and the
Put Redemption Date shall be deferred until any of the first five Business
Days after all such Restrictions on Purchase cease to exist; provided, that,
as and to the extent that such Restrictions on Purchase cease to exist, the
Company shall promptly make partial payments of the Put Redemption Price to
the holders of Warrant Securities to be redeemed, in which case there shall be
a series of redemptions, each of which shall take place not more than five
Business Days after such Restrictions on Purchase have ceased to exist to an
extent that would permit such partial payments of the Put Redemption Price in
increments of not less than $25,000; (B) the exercise of the put rights
pursuant to Section 11(a) shall be rescinded in whole or in part at the option
of the Required Holders (with the result that the Required Holders may require
the Company to redeem the Warrant Securities at any time thereafter until the
later of 18 months after the date the Required Holders give notice to rescind
the exercise of such put rights); or (C) to the extent the Company is unable
to pay the Put Redemption Price in compliance with the terms of this Section
12(f), such Put Redemption Price shall be paid by delivery to the Holder
hereof of a promissory note of the Company dated the date of the applicable
Put Redemption Date, having a term of one year from the date thereof,
providing for a single payment of principal at the end of its term, bearing
interest at a rate per annum (computed for the actual number of days elapsed
on the basis of a 360-day year) equal to 15% with quarterly interest payments
payable in cash or in kind and allowing for prepayment at any time without
premium or penalty.

     SECTION 13. Definitions.

     As used herein, in addition to the terms defined elsewhere herein, the
following terms shall have the following meanings. Capitalized terms not
appearing below and not otherwise defined herein shall have the meaning
ascribed to them in the Restructure Agreement.

     "Affiliate" means, with respect to a Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such Person. The term "control" means (a) the power to vote more than
50% of the securities or other equity interests of a Person having ordinary
voting power (on a fully diluted basis), or (b) the possession, directly or
indirectly, of any other power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.

     "Aggregate Number" has the meaning set forth in the Preamble.



                                      17
<PAGE>

     "Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banking institutions in Charlotte, North Carolina or New
York, New York are authorized or required by law or executive order to be
closed.

     "Certificate of Incorporation" means the Certificate of Incorporation of
the Company, as in effect on the date hereof.

     "Commencement Date" has the meaning set forth in the Preamble.

     "Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act or the Exchange
Act.

     "Common Stock" means, collectively, the Common Stock and any other class
of capital stock of the Company hereafter authorized having the right to share
in distributions either of earnings or assets without limit as to amount or
percentage.

     "Company" has the meaning set forth in the Preamble.

     "Convertible Securities" means evidences of indebtedness, shares of
stock or other securities (including, but not limited to options and warrants)
which are directly or indirectly convertible, exercisable or exchangeable,
with or without payment of additional consideration in cash or property, for
shares of Common Stock, either immediately or upon the onset of a specified
date or the happening of a specified event.

     "Distribution" has the meaning set forth in Section 6(a)(i).

     "Election to Purchase" has the meaning set forth in Section 2(a).

     "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.

     "Exempt Issuances" has the meaning set forth in Section 6.

     "Exercise Amount" has the meaning set forth in Section 2(a).

     "Exercise Price" has the meaning set forth in the Preamble.

     "Expiration Date" has the meaning set forth in the Preamble.

     "Fair Market Value Per Share" means as of a particular date the average
(weighted by daily trading volume) of the closing prices of the Common Stock
on all securities exchanges on which such security may be listed at the time,
or, if there has been no sales on any such exchange on any day, or, if on any
day such security is not so listed, the average of the representative bid and
asked prices quoted in the NASDAQ System as of 4:00 P.M., New York Time, or,
if on any day such security is not quoted in the NASDAQ System, the average of
the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the



                                      18
<PAGE>

National Quotation Bureau, Incorporated or any similar successor organization,
in each such case averaged over a period of 20 days consisting of the day as
of which the "Fair Market Value Per Share" is being determined and the 19
consecutive Business Days prior to such day. If at any time the Common Stock
is not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the "Fair Market Value Per Share" shall be (a) the
fair market value of the Outstanding Common Stock based upon an arm's length
sale of the Company on such date (including its ownership interest in all
Persons) as an entirety, such sale being between a willing buyer and a willing
seller and determined without reference to any discount for minority interest,
restrictions on transfer, disparate voting rights among classes of capital
stock or lack of marketability with respect to capital stock divided by (b)
the aggregate number of shares of Outstanding Common Stock; provided, however,
that in no event shall "Fair Market Value Per Share be deemed to be less than
the applicable Exercise Price per share subject to proportional adjustment
upon the occurrence of an event specified in Section 6(a)(i). The Fair Market
Value Per Share shall be determined by members of the Board of Directors of
the Company in good faith within 10 days of any event for which such
determination is required and such determination (including the basis
therefor) shall be promptly provided to the Holder. Such determination shall
be binding on the Holder unless the Holder objects thereto in writing within
10 Business Days of receipt. In the event the Company and the Holder cannot
agree on the Fair Market Value Per Share within 10 Business Days of the date
of the Holder's objection, the Fair Market Value Per Share shall be determined
by a disinterested appraiser (which may be a national or regional investment
bank or national accounting firm) mutually selected by the Company and the
Holder, the fees and expenses of which shall be paid 50% by the Company and
50% by the Holder unless such determination results in a Fair Market Value Per
Share more than 110% of the Fair Market Value Per Share initially determined
by the Company in which case such fees and expenses shall be borne by the
Company. Any selection of a disinterested appraiser shall be made in good
faith within seven Business Days after the end of the last 10 Business Day
period referred to above and any determination of Fair Market Value Per Share
by a disinterested appraiser shall be made within 30 days of the date of
selection.

     "Fully Diluted" means, with respect to the Common Stock, as of a
particular time the total outstanding shares of Common Stock as of such time,
determined by treating all warrants and options for Common Stock as having
been exercised and by treating all outstanding Convertible Securities as
having been so converted.

     "Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any
of the foregoing.

      "Holder" means [_________________________] and its successors and
assigns.

     "Legally Available Funds" means, with respect to any redemption of the
Warrant Securities pursuant to Section 11 hereof, the amount of funds of the
Company legally available for such redemption as required under the General
Corporation Law of the State of Delaware, as amended, or any comparable
provision of any succeeding law.



                                      19
<PAGE>

     "Material Adverse Effect" means a material adverse effect upon the
business, assets or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.

     "Outstanding Common Stock" of the Company means, as of the date of
determination, the sum (without duplication) of the following: (a) the number
of shares of Common Stock then outstanding at the date of determination, (b)
the number of shares of Common Stock then issuable upon the exercise of the
Warrant (as such number of shares may be adjusted pursuant to the terms
hereof) and (c) the number of shares of Common Stock then issuable upon the
exercise or conversion of Convertible Securities and any warrants, options or
other rights to subscribe for or purchase Common Stock or Convertible
Securities (but excluding any unvested options and securities not then
exercisable for or convertible into Common Stock).

     "Person" means any individual, firm, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof, or other entity of any kind and includes any successor
(by merger or otherwise) of such entity.

     "Principal Office" means the Company's principal office as set forth in
Section 18 hereof or such other principal office of the Company in the United
States of America the address of which first shall have been set forth in a
notice to the Holder.

     "Put Notice" has the meaning set forth in Section 12(a).

     "Put Price Per Share" has the meaning set forth in Section 12(c).

     "Put Redemption Date" has the meaning set forth in Section 12(a).

     "Put Redemption Price" has the meaning set forth in Section 12(c).

     "Put Redemption Price Calculation Date" has the meaning set forth in
Section 12(c).

     "Registration Rights Agreement" means the Registration Rights Agreement
of even date between the Company, the Holder and the other investors listed on
the signature pages thereto, as amended, modified or supplemented from time to
time.

     "Regulatory Requirement" has the meaning set forth in Section 5(c).

     "Required Holders" means the holders of at least 51% of the Warrant
Securities then outstanding determined on a Fully Diluted basis.

     "Restrictions on Purchase" means the occurrence of any of the following
at the time of the closing of a redemption under Section 12: (i) the purchase
of the Warrant Securities is prohibited by the Restructure Agreement (unless
such prohibition has been expressly waived by the requisite lenders
thereunder) or (ii) the Borrower would not have sufficient Legally Available
Funds to redeem the Warrant Securities.



                                      20
<PAGE>

     "Restructure Agreement" means the Restructure Agreement dated as of
April 11, 2003 between the Company as borrower, certain subsidiaries as
guarantors, Bank of America, N.A. as agent and the lenders listed on the
signature pages thereto, and as amended, modified or supplemented from time to
time.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.

     "Stock Combination" has the meaning set forth in Section 6(a)(i)(C).

     "Stock Dividend" has the meaning set forth in Section 6(a)(i)(A).

     "Stock Option Plan" means the Stock Option Plan of the Company as in
effect on the date hereof, and any and all stock options issued pursuant
thereto.

     "Stock Subdivision" has the meaning set forth in Section 6(a)(i)(B).

     "Subsidiary" means, as to a Person, any corporation, partnership or
other entity of which more than 50% of the outstanding capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other managers of such corporation, partnership or other
entity is at the time, directly or indirectly, owned by or otherwise
controlled by such Person.

     "Warrant" has the meaning set forth in Section 1(a).

     "Warrant Securities" means the Warrant and the Warrant Shares,
collectively.

     "Warrant Shares" means (a) the shares of Common Stock issued or issuable
upon exercise of this Warrant in accordance with its terms and (b) all other
shares of the Company's capital stock issued with respect to such shares by
way of stock dividend, stock split or other reclassification or in connection
with any merger, consolidation, recapitalization or other reorganization
affecting the Company's capital stock.

     SECTION 14. Survival of Provisions. Notwithstanding the full exercise by
the Holder of its rights to purchase Common Stock hereunder, the provisions of
Sections 5(c), 5(d) and 9 through 23 of this Warrant shall survive such
exercise and the Expiration Date until such time as the rights of the Required
Holders to have the Company redeem all Warrant Securities held by the Holder
have expired or been fully exercised.

     SECTION 15. Delays, Omissions and Indulgences. It is agreed that no delay
or omission to exercise any right, power or remedy accruing to the Holder upon
any breach or default of the Company under this Warrant shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter



                                      21
<PAGE>

occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. It
is further agreed that any waiver, permit, consent or approval of any kind or
character on the Holder's part of any breach or default under this Warrant, or
any waiver on the Holder's part of any provisions or conditions of this
Warrant must be in writing and that all remedies, either under this Warrant,
or by law or otherwise afforded to the Holder, shall be cumulative and not
alternative.

     SECTION 16. Rights of Transferees. Subject to Section 8, the rights
granted to the Holder hereunder of this Warrant shall pass to and inure to the
benefit of all subsequent transferees of all or any portion of the Warrant
(provided that the Holder and any transferee shall hold such rights in
proportion to their respective ownership of the Warrant and Warrant Shares)
until extinguished pursuant to the terms hereof.

     SECTION 17. Captions. The titles and captions of the Sections and other
provisions of this Warrant are for convenience of reference only and are not
to be considered in construing this Warrant.

     SECTION 18. Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopy,
overnight courier service or personal delivery:



                                      22
<PAGE>

     (a)  if to the Company:

          Personnel Group of America, Inc.
          2709 Water Ridge Parkway
          Charlotte, North Carolina  28217
          Attn: James C. Hunt, Chief Financial Officer
          Telephone: (704) 442-5105
          Telecopy: (704) 442-5138

          with a copy to:

          with a copy to:

          Robinson Bradshaw & Hinson
          101 North Tryon Street, Suite 1900
          Charlotte, North Carolina 28246
          Attn: Stokely G. Caldwell
          Telephone: (704) 377-2536
          Telecopy: (704) 378-4000

     (b)  if to the Holder:

          ____________________________________
          ____________________________________
          ____________________________________
          Attn:_______________________________
          Telecopy:___________________________


          with a copy to:

          Moore & Van Allen PLLC
          100 North Tryon Street, Floor 47
          Charlotte, NC 28202-4003
          Attention: C. Wayne McKinzie, Esq.
          Telecopy: 704-378-2061


     All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.

     SECTION 19. Successors and Assigns. This Warrant shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided that the



                                      23
<PAGE>

Company shall have no right to assign its rights, or to delegate its
obligations, hereunder without the prior written consent of the Holder.

     SECTION 20. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.

     SECTION 21. Governing Law. This Warrant is to be construed and enforced
in accordance with and governed by the laws of the State of Delaware and
without regard to the principles of conflicts of law of such state.

     SECTION 22. Entire Agreement. This Warrant, the Registration Rights
Agreement and the Restructure Agreement are intended by the parties as a final
expression of their agreement and are intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein.

     SECTION 23. Rules of Construction. Unless the context otherwise requires
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Warrant. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.


                  [Remainder of Page Intentionally Omitted.]



                                      24
<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Warrant to be issued and
executed in its corporate name by its duly authorized officers and its
corporate seal to be affixed hereto as of the date below written.

DATED:__________________       PERSONNEL GROUP OF AMERICA, INC.




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



                                      25
<PAGE>

                                                                     EXHIBIT A
                                                                     ---------

                              NOTICE OF EXERCISE

      To: _____________________
          _____________________
          _____________________


      1. The undersigned, pursuant to the provisions of the attached Warrant,
hereby elects to exercise this Warrant with respect to ________ shares of
Common Stock (the "Exercise Amount"). Capitalized terms used but not otherwise
defined herein have the meanings ascribed thereto in the attached Warrant.

      2. The undersigned herewith tenders payment for such shares in the
following manner (please check type, or types, of payment and indicate the
portion of the Exercise Price to be paid by each type of payment):

                ______  Exercise for Cash
                ______  Exercise for Common Stock
                ______  Cashless Exercise

      3. Please issue a certificate or certificates representing the shares
issuable in respect hereof under the terms of the attached Warrant, as
follows:


                                    ___________________________________________
                                    (Name of Record Holder/Transferee)

and deliver such certificate or certificates to the following address:



                                    ___________________________________________
                                    (Address of Record Holder/Transferee)

      4. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.

      5. If the Exercise Amount is less than all of the shares of Common Stock
purchasable hereunder, please issue a new warrant representing the remaining
balance of such shares, as follows:



                                    ___________________________________________
                                    (Name of Record Holder/Transferee)

<PAGE>

and deliver such warrant to the following address:



                                    ___________________________________________
                                    (Address of Record Holder/Transferee)



                                    ___________________________________________
                                    (Signature)

__________________________
(Date)

<PAGE>

                                  Schedule 1
                                  ----------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14
<SEQUENCE>7
<FILENAME>efc3-0670_ex14.txt
<TEXT>
                                                                    Exhibit 14



                             RESTRUCTURE AGREEMENT
                             ---------------------

     THIS RESTRUCTURE AGREEMENT (this "Agreement") executed as of April 14,
2003 is entered into by and among PERSONNEL GROUP OF AMERICA, INC. (the
"Borrower"), certain subsidiaries of the Borrower identified on the signatures
pages hereto (the "Guarantors"), 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 expressly defined or otherwise referenced herein, capitalized terms
used herein shall have the meanings set forth in the Credit Agreement (defined
below).

                                   RECITALS:
                                   --------

     A. The Borrower, the Agent, the Guarantors and the financial institutions
from time to time party thereto (the "Lenders") are parties to that certain
Amended and Restated Credit Agreement, dated as of June 23, 1997 (as from time
to time amended, restated, supplemented or otherwise modified and in effect,
the "Credit Agreement"), pursuant to which the Agent and Lenders made
available Loans to the Borrower with such loans guaranteed by the Guarantors.

     B. Certain Defaults and Events of Default are expected to exist under the
Credit Agreement as a result of the Borrower's failure to comply with the
financial covenants set forth in Sections 7.11(e) of the Credit Agreement for
the fiscal month ending nearest March 31, 2003.

     C. As of the Amendment Date (defined below), there remains due and owing
$103,000,000 in Revolving Loans (the "Pre-Restructure Principal"), $7,975,000
in undrawn Letters of Credit (the "Pre-Restructure Letters of Credit") and a
total of $225,047.94 in accrued and unpaid interest thereon (the
"Pre-Restructure Interest").

     D. The Borrower and the Guarantors have requested that the Lenders agree
to restructure the Loans, including (i) the forgiveness of significant
portions of the Pre-Restructure Principal and (ii) the extension of the
Termination Date.

     E. The Lenders have agreed to do so, upon the terms and conditions set
forth herein.

     NOW, THEREFORE, for valuable consideration, the mutual receipt of which
is hereby acknowledged, the parties hereto hereby agree as follows:

     1. Definitions.

          In addition to the definitions set forth or incorporated elsewhere
     herein, the following terms used herein shall have the following meanings
     (such definitions to be equally applicable to both the singular and the
     plural forms of the defined terms):

          "Amendment Date" means the date of this Agreement.

<PAGE>

          "Contractual Obligation" means with respect to a Person, any
     provision of (i) any security issued by such Person, including provisions
     contained in the articles or certificate of incorporation or bylaws or
     other organizational or governing documents of such Person, or (ii) any
     agreement, franchise, license, lease, permit, undertaking, contract,
     indenture, mortgage, deed of trust or other instrument or understanding
     to which such Person is a party.

          "Forgiven Balance" shall have the meaning set forth in Section 3(a).

          "Lender Warrants" shall have the meaning set forth in Section 5.

          "Mutual Release" shall have the meaning set forth in Section 8.

          "Prepayment" shall have the meaning set forth in Section 3(b).

          "Pre-Restructure Indebtedness" means a collective reference to the
     Borrower's Obligations as of the Amendment Date, including without
     limitation, the Pre-Restructure Principal and the Pre-Restructure
     Interest but excluding the Pre-Restructure Letters of Credit.

          "Proceeding" means any insolvency, bankruptcy, receivership,
     dissolution, reorganization or similar proceeding, whether federal or
     state, voluntary or involuntary, under any present or future law or act.

          "Restructure Credit Agreement" shall have the meaning set forth in
     Section 4(a).

          "Restructure Credit Documents" shall mean the "Credit Documents" as
     defined in the Restructure Credit Agreement.

          "Restructuring Agreement" shall have the meaning set forth in
     Section 6(a).

          "Revolving Restructure Notes" shall have the meaning set forth in
     Section 3(b).

          "Securities Act" means the Securities Act of 1933, as amended, and
     the rules and regulations of the Securities and Exchange Commission and
     any successor Person thereof.

     2. Conditions Precedent.

     As conditions precedent to the effectiveness of this Agreement:

          (a) The Borrower and the Guarantors shall have (or, where
     applicable, caused to have been) executed and delivered to the Agent, for
     the benefit of the Lenders, each of the documents referred to in Sections
     4(a) and (b) below;



                                      2
<PAGE>

          (b) The Borrower and the Guarantors shall have (or, where
     applicable, caused to have been) executed and delivered to the Agent, for
     the benefit of the Lenders, each of the documents referred to in Section
     5.1 of the Restructure Credit Agreement and have otherwise satisfied all
     conditions precedent to the effectiveness of the Restructure Credit
     Agreement as set forth in Section 5.1 thereof;

          (c) The parties hereto each shall have executed the Mutual Release;

          (d) The Borrower shall have executed and delivered to the Agent, for
     the benefit of the Lenders, the Lender Warrants; and

          (e) The Borrower shall have executed and delivered to the Agent the
     Registration Rights Agreement.

     3. Restructure of Pre-Restructure Indebtedness.

     The Pre-Restructure Indebtedness is hereby restructured as follows:

          (a) Partial Forgiveness. $10,300,000 of the Pre-Restructure
     Indebtedness (the "Forgiven Balance"), shall be forgiven and discharged,
     provided, however, that it is understood and agreed that none of the
     Pre-Restructure Letters of Credit shall be forgiven or discharged and
     that such Letters of Credit shall remain outstanding as Borrower's
     Obligations under the Restructure Credit Agreement.

          (b) Revolving Restructure Loans. The Borrower shall prepay
     $37,985,000 of the Pre-Restructure Principal (the "Prepayment"). The
     Pre-Restructure Indebtedness (other than the Forgiven Balance and after
     giving effect to the Prepayment) and all of the Pre-Restructure Letters
     of Credit shall remain outstanding as part of a $70,700,000 revolving
     credit facility evidenced by amended and restated promissory notes dated
     as of the Amendment Date (the "Revolving Restructure Notes") and governed
     in accordance with the terms and conditions of the Restructure Credit
     Agreement and the other Restructure Credit Documents.

          The restructuring of the Pre-Restructure Indebtedness is not
     intended by the parties hereto to be and should not be construed as a
     novation.

     4. Restructure Documents.

     Contemporaneously with the effectiveness of this Agreement:

          (a) The Credit Agreement shall be amended and restated by an Amended
     and Restated Credit Agreement (the "Restructure Credit Agreement") among
     the Borrower, the Guarantors, the Lenders and the Agent dated as of the
     Amendment Date;



                                      3
<PAGE>

          (b) The Notes shall be amended and restated by the Revolving
     Restructure Notes; and

          (c) The Equity Appreciation Rights Agreement and the Purchase Option
     Agreement shall be, and each such agreement hereby is, terminated and of
     no further force and effect.

     5. Lender Warrants.

     As a condition to the effectiveness of this Agreement, the Borrower shall
deliver to the Agent, for the benefit of the Lenders, common stock purchase
warrants entitling each Lender to purchase its ratable share of 10.0% of the
fully diluted equity of the Borrower, subject to adjustment pursuant to the
terms and conditions set forth therein (the "Lender Warrants").
Notwithstanding anything to the contrary in the Lender Warrants, the Lender
Warrants may only be transferred by a Lender in connection with a transfer of
the Note of such Lender (or part thereof), such transfer of the Lender
Warrants to be on a pro rata basis calculated based upon the ratio of the
number of shares of common stock referenced in such Lender Warrant to the
Commitment of such Lender on the date the Lender Warrants were issued.

     6. Representations and Warranties of Borrower.

     The Borrower represents and warrants as follows:

          (a) Authorized and Issued Capital. The authorized capitalization of
     the Borrower and its Subsidiaries is set forth on Schedule 6(a). The
     authorized capitalization of the Borrower and its Subsidiaries, which
     reflects the note exchange transactions contemplated by the Restructuring
     Agreement (the "Restructuring Agreement") dated as of March 14, 2003
     among the Borrower, certain of its subsidiaries and certain holders of
     the Borrower's 5 3/4% convertible subordinated notes due 2004 and the
     Participation Agreement dated March 14, 2003 between the Borrower and LC
     Capital Master Fund, Ltd., is set forth on Schedule 6(a). Except as set
     forth on Schedule 6(a), the Borrower and its Subsidiaries have not issued
     any other shares of their capital stock and there are no further
     subscriptions, contracts or agreements for the issuance or purchase of
     any other or additional equity interest in the Borrower or any of its
     Subsidiaries, either in the form of options, agreements, warrants, calls,
     convertible securities or other similar rights, other than the Lender
     Warrants. All the outstanding shares of capital stock have been duly and
     validly authorized and issued and are fully paid and nonassessable and
     have been offered, issued, sold and delivered in compliance with
     applicable federal and state securities laws. The number of shares of the
     Borrower's capital stock reserved for issuance as set forth on Schedule
     6(a) is not subject to adjustment by reason of the issuance of the Lender
     Warrants or the common stock issuable upon the exercise thereof. Neither
     the Borrower nor any of its Subsidiaries is a party to any "phantom
     stock" employee stock option plan, other equity-based incentive plan or
     similar agreement, other than as specifically disclosed on Schedule 6(a).
     Except as set forth on Schedule 6(a), (i) there are no preemptive or
     similar rights to purchase or otherwise acquire equity securities of, or



                                      4
<PAGE>

     interests in, the Borrower or any of its Subsidiaries pursuant to any
     Requirement of Law or Contractual Obligation applicable to the Borrower
     or any of its Subsidiaries and (ii) no registration rights under the
     Securities Act have been granted by the Borrower or any of its
     Subsidiaries with respect to its equity securities or interest, other
     than the Registration Rights Agreement and the Registration Rights
     Agreement delivered pursuant to the Restructuring Agreement.

          (b) Authorization. The execution and delivery by the Borrower and
     the Guarantors of this Agreement and each of the Restructure Credit
     Documents to which they are a party, the performance of such parties of
     their obligations hereunder and thereunder, and the issuance to the
     Lenders of the Revolving Restructure Notes and the Lender Warrants as
     herein provided, have been duly authorized by all necessary actions of
     such parties so that when issued and delivered (i) the Revolving
     Restructure Notes and the Lender Warrants will each constitute the legal,
     valid and binding obligations of the appropriate party, enforceable in
     accordance with their terms, except as enforceability may be limited by
     applicable bankruptcy, insolvency, reorganization, arrangement,
     moratorium, fraudulent conveyance or other similar law of general
     applicability, relating to or affecting the enforcement of creditors'
     rights generally or by general equitable principles; (ii) the common
     stock to be issued upon the exercise of the Lender Warrants will be
     validly authorized and, when issued upon due exercise of the Lender
     Warrants, will be fully paid and nonassessable; (iii) this Agreement and
     each of the Restructure Credit Documents to which they are a party will
     each constitute the legal, valid and binding obligations of the
     appropriate party, enforceable in accordance with its terms, except as
     enforceability may be limited by applicable bankruptcy, insolvency,
     reorganization, arrangement, moratorium, fraudulent conveyance or other
     similar law of general applicability, relating to or affecting the
     enforcement of creditors' rights generally or by general equitable
     principle and (iv) neither the execution and delivery of this Agreement
     and each of the Restructure Credit Documents to which they are a party,
     and the performance by such parties of its obligations hereunder and
     thereunder, nor the issuance of the Revolving Restructure Notes or the
     Lender Warrants, will be in contravention of any Requirement of Law
     applicable to such party or any of its Subsidiaries to which such party
     or its Subsidiaries may be subject.

          (c) Compliance with Securities Laws. Based in part upon the
     representations of the Lenders set forth in Section 7, (i) the offer and
     sale of the Lender Warrants is not required to be registered pursuant to
     Section 5 of the Securities Act or any state securities laws and (ii)
     assuming the representations of the Lenders set forth in Section 7 are
     true at the time the Lender Warrants are exercised as if such
     representations were made at that time, the common stock to be issued
     upon exercise of the Lender Warrants is not required to be registered
     pursuant to Section 5 of the Securities Act or any state securities laws.
     All prior offerings and sales of securities of the Borrower and its
     Subsidiaries were in compliance with all applicable federal and state
     securities laws.



                                      5
<PAGE>

     7. Representations and Warranties of the Lenders.

     Each Lender, severally and not jointly, hereby represents and warrants,
as to itself only, as follows:

          (a) It is an "accredited investor" as that term is defined in Rule
     501 of the Securities Act, and that, in making the purchases contemplated
     herein, it is specifically understood and agreed that such Lender is
     acquiring the Lender Warrants for the purpose of investment and not with
     a view towards the sale or distribution thereof within the meaning of the
     Securities Act; provided, however, that the disposition of such Lender's
     property shall at all times be and remain within its control. With
     respect to the Lender Warrants, it has had an opportunity to discuss the
     Borrower's business, management, and financial affairs with the
     Borrower's management and the opportunity to review the Borrower's
     business plan, it has had an opportunity to ask questions of and receive
     answers from officers of the Borrower, and it acknowledges that it has
     had an opportunity to conduct its own independent due diligence
     investigation of the Borrower.

          (b) It understands that the Lender Warrants will not be registered
     under the Securities Act, by reason of their issuance by the Borrower in
     a transaction exempt from the registration requirements of the Securities
     Act, and that it must hold the Lender Warrants indefinitely unless a
     subsequent disposition thereof is registered under the Securities Act and
     applicable state securities laws or is exempt from registration. It
     further understands that the Lender Warrants and the certificates
     evidencing the shares of common stock issued upon exercise of the Lender
     Warrants shall bear the following legend: THIS COMMON STOCK PURCHASE
     WARRANT AND THE SHARES THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS
     OF ANY STATE. THIS COMMON STOCK PURCHASE WARRANT HAS BEEN ACQUIRED FOR
     INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION, AND THIS COMMON
     STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED HEREUNDER MAY
     NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
     REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AND REGISTRATION
     OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
     COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED
     TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER THE
     SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.

     8. Mutual Releases.

     Contemporaneously with the execution of this Agreement the parties hereto
shall execute a mutual release (the "Mutual Release") in the form of that
attached hereto as Exhibit A.



                                      6
<PAGE>

     9. Authority.

     Each party to this Agreement represents and warrants to the other parties
that it has full power and authority to enter into and perform this Agreement,
and that this Agreement has been duly authorized by such party, is legal,
valid and binding and enforceable against such party in accordance with its
terms, and is not in contravention of any law, order or agreement by which
such party is bound or of such party's organizational documents.

     10. Captions.

     Underlined captions used in this Agreement are for ease of reference only
and shall not be used in the interpretation of this Agreement.

     11. Credit Document.

     This Agreement is a Credit Document and shall be construed, administered
and applied in accordance with the terms and provisions of the Restructure
Credit Agreement.

     12. Jointly Drafted Agreements.

     The parties hereto hereby acknowledge and agree that each of them is
jointly responsible for the drafting and negotiation of all the terms and
provisions contained in this Agreement and in all the schedules, exhibits and
other agreements delivered in connection herewith, and that no such terms and
provisions should as a result of such negotiation and drafting be strictly
construed against any such party.

     13. Severability.

     If any provision of this Agreement 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.

     14. Entire Agreement.

     This Agreement, together with the other Restructure Credit Documents,
constitutes the complete and final agreement by and among the parties hereto.
No prior understandings or agreements with respect to the subject matter
hereof shall survive execution and delivery of this Agreement.

     15. Governing Law; Jurisdiction and Venue.

          (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
     NORTH CAROLINA.



                                      7
<PAGE>

          (b) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY:

               (i) SUBMITS FOR ITSELF AND ITS PROPERTY, IN ANY LEGAL ACTION OR
          PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY SECURITY
          DOCUMENT OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
          RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
          COURTS OF THE STATE OF NORTH CAROLINA, THE COURTS OF THE UNITED
          STATES OF AMERICA FOR THE WESTERN DISTRICT OF NORTH CAROLINA, AND
          APPELLATE COURTS FROM ANY THEREOF;

               (ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
          IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
          HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
          SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
          INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

               (iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
          PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED
          OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
          POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SPECIFIED HEREIN AND,
          IF APPLICABLE, TO THE AGENT, THE ISSUING BANK AND THE LENDERS AT
          THEIR RESPECTIVE ADDRESSES SPECIFIED HEREIN OR AT SUCH OTHER ADDRESS
          OF WHICH THE AGENT OR THE BORROWER, IF APPLICABLE, SHALL HAVE BEEN
          NOTIFIED PURSUANT HERETO; AND

               (iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
          EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
          SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

          (c) EACH OF PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES
     TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO OR ARISING
     OUT OF THIS AGREEMENT, THE NOTES OR ANY SECURITY DOCUMENT AND FOR ANY
     COUNTERCLAIM THEREUNDER.

     16. Counterparts; Telecopy Signatures.

     This Agreement may be executed in one or more counterparts, each of which
shall constitute an executed original of this Agreement and which together
shall constitute only one and the same executed original hereof. This
Agreement shall be deemed fully executed and



                                      8
<PAGE>

delivered, and enforceable according to its terms, upon the receipt of
telecopy signatures of the parties hereto. Notwithstanding the foregoing, the
parties shall promptly provide the Agent with an executed original of this
Agreement after delivery of an executed copy hereof by telecopy.



             [the remainder of this page intentionally left blank]



                                      9
<PAGE>

     Each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.

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

                             By:
                               -----------------------------------------
                             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
                             VENTURI STAFFING PARTNERS, LLC,
                             a California limited liability company

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

                             PERSONNEL GROUP HOLDINGS, INC.,
                             a Florida corporation
                             PFI CORP.,
                             a Delaware corporation

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

                             VENTURI TEXAS STAFFING PARTNERS, LP,
                             a Texas limited partnership

                             By:   StaffPLUS, Inc.
                             Its:  General Partner

                             By:
                                --------------------------------
                                Name:   James C. Hunt
                                Title:  Senior Vice President

<PAGE>

                             BANK OF AMERICA, N.A., formerly known as
                             NationsBank, N.A. and Bank of America Illinois,
                             as Agent


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

<PAGE>

                             BANC OF AMERICA STRATEGIC SOLUTIONS, INC.


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

<PAGE>

                             BNP PARIBAS


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

<PAGE>

                             BANK ONE, NA


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

<PAGE>

                             HBV CAPITAL MANAGEMENT LLC


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

<PAGE>

                             INLAND PARTNERS L.P.


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

<PAGE>

                             LINKS PARTNERS L.P.


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

<PAGE>

                             MATLIN PATTERSON GLOBAL OPPORTUNITIES
                             PARTNERS L.P.
                             By:  Matlin Patterson Global Advisers LLC


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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-15
<SEQUENCE>8
<FILENAME>efc3-0670_exh15.txt
<TEXT>
                                                                    Exhibit 15



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


                         REGISTRATION RIGHTS AGREEMENT





                          Dated as of April 14, 2003





                                     among





                       PERSONNEL GROUP OF AMERICA, INC.





                                      and





                           THE PARTIES NAMED HEREIN


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







<PAGE>



                               TABLE OF CONTENTS

                                                                         PAGE

Section 1.     Definitions..................................................1


Section 2.     Demand Registrations.........................................3

        (a)    Right to Demand..............................................3
        (b)    Number of Demand Registrations...............................4
        (c)    Registration Statement.......................................4
        (d)    Amendments; Supplements......................................4
        (e)    Effectiveness................................................5
        (f)    Holders Withdrawal...........................................5
        (g)    Preemption of Demand Registration............................5
        (h)    Priority on Demand Registrations.............................5

Section 3.     Piggyback Registrations......................................6

        (a)    Right to Piggyback Registrations.............................6
        (b)    Priority on Piggyback Registrations..........................6

Section 4.     Shelf Registration...........................................6

        (a)    Right to Shelf Registration..................................6
        (b)    Number of Shelf Registrations................................7

Section 5.     Obligations of the Company...................................7

        (a)    Delay Period.................................................7
        (b)    Shelf Registrations After Other Registrations................7
        (c)    Registration Procedures......................................7

Section 6.     Registration Expenses.......................................11

        (a)    Expenses Payable by the Company.............................11
        (b)    Expenses Payable by the Holders.............................12

Section 7.     Indemnification.............................................12

        (a)    Indemnification by the Company..............................12
        (b)    Indemnification by the Holders..............................13
        (c)    Conduct of Indemnification Proceedings......................13
        (d)    Survival....................................................14
        (e)    Right to Contribution.......................................14


                                      i

<PAGE>

Section 8.     Rules 144 and 144A..........................................15


Section 9.     Underwritten Registrations..................................15


Section 10.    Covenants of Holders........................................16


Section 11.    Miscellaneous...............................................16

        (a)    No Inconsistent Agreements..................................16
        (b)    Remedies....................................................16
        (c)    Amendments and Waivers......................................16
        (d)    Successors and Assigns......................................16
        (e)    Termination of Registration Rights..........................17
        (f)    Severability................................................17
        (g)    Counterparts................................................17
        (h)    Descriptive Headings:  Interpretation.......................17
        (i)    Notices.....................................................17
        (j)    GOVERNING LAW; SUBMISSION TO JURISDICTION...................18
        (k)    Entire Agreement............................................18



                                      ii


<PAGE>

                         REGISTRATION RIGHTS AGREEMENT


               THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of April 14, 2003, by and among Personnel Group of
America, Inc. (to be renamed "Venturi Partners, Inc."), a company incorporated
in Delaware, the United States of America (the "Company"), and the parties
identified as "Investors" on the signature pages hereto (each an "Investor"
and together the "Investors").

               WHEREAS, pursuant to the terms of the Restructuring Agreement
(the "Restructuring Agreement"), dated March 14, 2003, among the Company and
certain Investors, and a Participation Agreement, dated March 14, 2003,
between the Company and an Investor, the Company will issue shares of its
Common Stock (as defined below) and preferred stock convertible into Common
Stock to certain of the Investors;

               WHEREAS, pursuant to the terms of the Restructure Agreement
(the "Credit Restructure Agreement"), dated April 14, 2003, among the Company
and certain Investors, the Company will issue to such Investors Warrants (as
defined below) to purchase Common Stock; and

               WHEREAS, in the Restructuring Agreement and in the Credit
Restructure Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement.

               NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:

               Section 1.  Definitions.

               As used in this Agreement, the following terms shall have the
meanings set forth below:

               "Charter" means the Restated Certificate of Incorporation of
the Company, as amended from time to time.

               "Commission" means the United States Securities and Exchange
Commission or any other United States federal agency at the time administering
the Securities Act.

               "Common Stock" means the Company's common stock, par value
$0.01 per share, or any other shares of capital stock or other securities of
the Company into which such shares of Common Stock shall be reclassified or
changed, including, by reason of a merger, consolidation, reorganization or
recapitalization. If the Common Stock has been so reclassified or changed, or
if the Company pays a dividend or makes a distribution on the Common Stock in


<PAGE>

shares of capital stock, or subdivides (or combines) its outstanding shares of
Common Stock into a greater (or smaller) number of shares of Common Stock, a
share of Common Stock shall be deemed to be such number of shares of stock and
amount of other securities to which a holder of a share of Common Stock
outstanding immediately prior to such change, reclassification, exchange,
dividend, distribution, subdivision or combination would be entitled.

               "Delay Period" has the meaning set forth in Section 5(a) of
this Agreement.

               "Demand Notice" has the meaning set forth in Section 2(a) of
this Agreement.

               "Demand Registration" has the meaning set forth in Section 2(a)
of this Agreement.

               "Exchange Act" means the U.S. Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder.

               "Holder" means a person who owns Registrable Securities and is
either (i) an Investor or a Permitted Transferee of an Investor that has
agreed to be bound by the terms of this Agreement as if such Person were an
Investor, (ii) upon the death of any Holder, the executor of the estate of
such Holder or such Holder's heirs, devisees, legatees or assigns or (iii)
upon the disability of any Holder, any guardian or conservator of such Holder.

               "Interruption Period" has the meaning set forth in the last
paragraph in Section 5(c).

               "Losses" has the meaning set forth in Section 7(a) of this
Agreement.

               "Misstatement/Omission" has the meaning set forth in Section
7(a) of this Agreement.

               "Permitted Transferee" means any Person to whom the rights
under this Agreement have been assigned in accordance with the provisions of
Section 11(d) hereof.

               "Person" means any natural person, corporation, partnership,
firm, association, trust, government, governmental agency, limited liability
company or any other entity, whether acting in an individual, fiduciary or
other capacity.

               "Piggyback Registration" has the meaning set forth in Section
3(a) of this Agreement.

               "Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference in such prospectus.




                                      2
<PAGE>


               "Registrable Securities" means (i) the shares of Common Stock
issued to the Investors pursuant to the Restructuring Agreement, (ii) any
shares of Common Stock issued or issuable upon the conversion of the Series B
Preferred Stock and (iii) any shares of Common Stock issued or issuable upon
the exercise of any of the Warrants. If as a result of any reclassification,
stock dividends or stock splits or in connection with a combination of shares,
recapitalization, merger, consolidation, or other reorganization or other
transaction or event, any capital stock, evidence of indebtedness, warrants,
options, rights or other securities (collectively "Other Securities") are
issued or transferred to a Holder in respect of Registrable Securities held by
the Holder, references herein to Registrable Securities shall be deemed to
include such Other Securities. As to any particular Registrable Securities,
such securities will cease to be Registrable Securities when (i) they have
been distributed to the public pursuant to an offering registered under the
Securities Act, (ii) they have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (iii) they are
eligible for immediate sale pursuant to Rule 144(k) under the Securities Act
or (iv) they have been sold to any Person to whom the rights under this
Agreement are not assigned in accordance with this Agreement.

               "Registration Statement" means any registration statement under
the Securities Act of the Company that covers any of the Registrable
Securities, including the related Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits, and all materials incorporated by reference or
deemed to be incorporated by reference in such registration statement or
Prospectus.

               "Required Holders" means Holders of at least a majority of the
aggregate amount of all Registrable Securities outstanding.

               "S-3 Registration" has the meaning set forth in Section 4(a) of
this Agreement.

               "Securities Act" means the United States Securities Act of
1933, as amended, or any similar United States federal statute, and the rules
and regulations of the Commission promulgated thereunder.

               "Warrants" means the common stock purchase warrants issued by
the Company pursuant to the Credit Restructure Agreement.

               Section 2.  Demand Registrations.

                    (a) Right to Demand. The Holders shall have the right, by
written notice (the "Demand Notice") given to the Company, to request the
Company to register under and in accordance with the provisions of the
Securities Act all or part of the Registrable Securities designated by such
Holders (a "Demand Registration"). Upon receipt of any such Demand Notice from
any Holder, the Company will promptly notify all other Holders of the receipt
of such Demand Notice and allow them the opportunity to include Registrable
Securities held by them in the proposed registration by submitting their own
Demand Notice. Notwithstanding anything herein to the contrary, the Company
shall not be required to honor a request for a Demand Registration if the
Company has not received Demand Notices from the Required Holders. The Company
shall not be required to register any Registrable Securities under this
Section 2 unless the anticipated aggregate offering price to the public for
any such




                                      3
<PAGE>

offering of the Registrable Securities included in such Demand Notices is
expected to be at least $20 million.

                    (b) Number of Demand Registrations. The Holders shall be
entitled to have two (2) Demand Registrations effected. A Demand Registration
shall not be deemed to be effected (i) if a Registration Statement with
respect thereto shall not have become effective under the Securities Act and
remained effective for at least 180 days or until the completion of the
distribution of the Registrable Securities thereunder, whichever is earlier
(including, without limitation, because of withdrawal of such Registration
Statement by the Holders pursuant to Section 2(f) hereunder, (ii) if, after it
has become effective, such registration is interefered with for any reason by
any stop order, injunction or other order or requirement of the Commission or
any governmental authority, or as a result of the initiation of any proceeding
for such stop order by the Commission through no fault of the Holders and the
result of such interference is to prevent the Holders from disposing of such
Registrable Securities proposed to be sold in accordance with the intended
methods of disposition, (iii) the Company exercises its rights with respect to
a Delay Period under Section 5(a) and the result is a delay in the proposed
distribution of any Registrable Securities and the Holders determine not to
sell such Registrable Securities pursuant to such registration as a result of
such delay, or (iv) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with any
underwritten offering shall not be satisfied or waived with the consent of the
Required Holders, other than as a result of any breach by the Holders or any
underwriter of its obligations thereunder or hereunder.

                    (c) Registration Statement. Subject to paragraph (a)
above, as soon as practicable, but in any event within 30 days of the date on
which the Company first receives one or more Demand Notices from the Required
Holders pursuant to Section 2(a) hereof, the Company shall file with the
Commission a Registration Statement on the appropriate form for the
registration and sale of the total number of Registrable Securities specified
in such Demand Notice in accordance with the intended method or methods of
distribution specified by the Holders in such Demand Notice. The Company shall
use reasonable best efforts to cause such Registration Statement to be
declared effective by the Commission as soon as reasonably practicable.
Notwithstanding the foregoing, the Company shall not be obligated to file a
Registration Statement pursuant to this Section 2(c) if (i) the offering
requested to be registered is a delayed or continuous offering under Rule 415
under the Securities Act is available for such offering by the Holders, in
which case the registration shall be made by the Company pursuant to Section 4
hereof; or (ii) if the Company has, within the six month period preceding the
date of such request, already effected a registration under the Securities
Act, other than a registration from which Registrable Securities of Holders
have been excluded (with respect to all or any portion of the Registrable
Securities requested by included in such registration) pursuant to the
provisions of Section 3 hereof.

                    (d) Amendments; Supplements. Subject to Section 5(a), upon
the occurrence of any event that would cause the Registration Statement (A) to
contain a material misstatement or omission or (B) to be not effective and
usable for resale of Registrable Securities during the period that such
Registration Statement is required to be effective and usable, the Company
shall file an amendment to the Registration Statement as soon as reasonably
practicable, in the case of clause (A), correcting any such misstatement or
omission and, in the




                                      4
<PAGE>

case of either clause (A) or (B), use reasonable best efforts to cause such
amendment to be declared effective and such Registration Statement to become
usable as soon as reasonably practicable thereafter.

                    (e) Effectiveness. The Company agrees to use reasonable
best efforts to keep any Registration Statement filed pursuant to this Section
2 continuously effective and usable for the sale of Registrable Securities
until the earlier of (i) 180 days from the date on which the Commission
declares such Registration Statement effective, or (ii) the date on which all
the Registrable Securities covered by such Registration Statement have been
sold pursuant to such Registration Statement.

                    (f) Holders Withdrawal. Holders of a majority in number of
the Registrable Securities to be included in a Demand Registration pursuant to
this Section 2 may, at any time prior to the effective date of the
Registration Statement in respect thereof, revoke such request by providing a
written notice to the Company to such effect.

                    (g) Preemption of Demand Registration. Notwithstanding
anything to the contrary contained herein, after receiving a written request
for a Demand Registration, the Company may elect to effect an underwritten
primary registration in lieu of the Demand Registration if the Company's Board
of Directors believes that such primary registration would be in the best
interests of the Company. If the Company so elects to effect a primary
registration, the Company shall give prompt written notice (which shall be
given not later than 20 days after the date of the Demand Notice) to all
holders of the Registrable Securities of its intention to effect such a
registration and shall afford the holders of the Registrable Securities the
rights contained in Section 3 with respect to Piggyback Registrations. In the
event that the Company so elects to effect a primary registration after
receiving a request for a Demand Registration, the Company shall use
reasonable best efforts to have the Registration Statement declared effective
by the Commission as soon as reasonably practicable. In addition, the request
for a Demand Registration shall be deemed to have been withdrawn and such
primary registration shall not be deemed to be a Demand Registration.

                    (h) Priority on Demand Registrations. If a Demand
Registration is an underwritten offering and includes securities for sale by
the Company, and the managing underwriter (such underwriter to be chosen by
the Holders of a majority of the Registrable Securities included in such
registration, subject to the Company's reasonable approval) advises the
Company, in writing, that, in its good faith judgment, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without materially and adversely affecting
the marketability of the offering, then the Company will include in any such
registration the maximum number of shares which the managing underwriter
advises the Company can be sold in such offering allocated as follows: (i)
first, the Registrable Securities requested to be included in such
registration by the Holders on a pro rata basis, based on the number of
Registrable Securities requested to be included by such Holders and (ii)
second, to the extent that any other securities may be included without
exceeding the limitations recommended by the underwriter as aforesaid, the
securities that the Company proposes to sell.




                                      5
<PAGE>

               Section 3.  Piggyback Registrations.

                    (a) Right to Piggyback Registrations. Whenever the Company
proposes to register any of its equity securities under the Securities Act
(other than a registration on Form S-4 relating solely to a transaction
described in Rule 145 of the Securities Act or a registration on Form S-8 or
any successor forms thereto), whether or not for sale for its own account, the
Company will give prompt written notice of such proposed filing to all Holders
at least 30 days before the anticipated filing date. Such notice shall offer
such Holders the opportunity to register such amount of Registrable Securities
as they shall request (a "Piggyback Registration"). Subject to Sections 3(b)
and 3(c) hereof, the Company shall include in each such Piggyback Registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 20 days after such notice has
been given by the Holders to the Company. If the Registration Statement
relating to the Piggyback Registration is to cover an underwritten offering,
such Registrable Securities shall be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. Each Holder shall be permitted to withdraw all or part of the
Registrable Securities from a Piggyback Registration at any time prior to the
effective time of such Piggyback Registration.

                    (b) Priority on Piggyback Registrations. If a Piggyback
Registration is an underwritten offering on behalf of the Company, by or
through one or more underwriters of recognized standing and the managing
underwriters advise the Company in writing (a copy of which writing shall be
provided by the Company to the Holders) that in their good faith judgment the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without materially and adversely
affecting the marketability of the offering, then the Company will include in
any such registration the maximum number of shares which such managing
underwriters advise the Company can be sold in such offering allocated as
follows: (i) first, the securities the Company proposes to sell, and (ii)
second, to the extent that any other securities may be included without
exceeding the limitations recommended by the underwriter as aforesaid, the
Registrable Securities requested to be included in such registration by the
Holders on a pro rata basis, based on the amount of Registrable Securities
requested to be included therein (or in such other proportion mutually agreed
among such Holders).

               Section 4.  Shelf Registration.

                    (a) Right to Shelf Registration. The Company shall use its
reasonable best efforts to file and cause to be declared effective as promptly
as practicable following the Agreement a registration ("Shelf Registration")
for delayed or continuous offerings of Registrable Securities in the market
transactions on any appropriate form pursuant to Rule 415 under the Securities
Act (or similar rule that may be adopted by the Commission), which form shall
be available for the sale of the Registrable Securities in accordance with the
intended methods of distribution thereof. The Company agrees to use its
reasonable best efforts to keep such Shelf Registration continuously effective
and usable for resale of Registrable Securities until the second anniversary
of the date of this Agreement or such shorter period which will terminate at
such time as the Holders have sold all the Registrable Securities covered by
such Registration Statement. At any time thereafter, Holders holding in the
aggregate at least 5% of




                                      6
<PAGE>

the outstanding shares of Common Stock may request that the Company file and
cause to be declared effective a Shelf Registration.

                    (b) Number of Shelf Registrations. The Holders shall be
entitled to an unlimited number of Shelf Registrations and no Shelf
Registration shall be counted as a Demand Registration for purposes of Section
2(a) hereof.

               Section 5.  Obligations of the Company.

                    (a) Delay Period. Notwithstanding the foregoing, the
Company shall have the right to delay the filing of any Registration Statement
otherwise required to be prepared and filed by the Company pursuant Sections
2, 3 or 4, or to suspend the use of any Registration Statement, for a period
not in excess of 60 consecutive calendar days (a "Delay Period") if (i) the
Board of Directors of the Company determines that filing or maintaining the
effectiveness of such Registration Statement would have a material adverse
effect on the Company or the holders of its capital stock in relation to any
material acquisition or disposition, financing or other corporate transaction
and the Board of Directors of the Company has determined in good faith that
disclosure thereof would not be in the best interests of the Company and its
holders of capital stock at the time or (ii) the Board of Directors of the
Company has determined in good faith that the filing of a Registration
Statement or maintaining the effectiveness of a current Registration Statement
would require disclosure of material information that the Company has a valid
business purpose for retaining as confidential at such time. The Company shall
be entitled to exercise a Delay Period more than one time in any calendar year
so long as such exercise does not prevent the Holders from being entitled to
at least 240 days of effective registration rights per calendar year and that
no Delay Period may commence if it is less than 30 days from the end of the
previous Delay Period.

                    (b) Shelf Registrations After Other Registrations. Other
than the initial Shelf Registration discussed in Section 4(a) above, the
Company shall not be obligated to effect any Shelf Registration within 120
days after the effective date of a previous Registration Statement filed by
the Company (except for registrations on Form S-4 or Form S-8, or other forms
prescribed under the Securities Act for the same purpose or for an exchange
offer).

                    (c) Registration Procedures. Whenever the Company is
required to register Registrable Securities pursuant to Sections 2, 3 or 4
hereof, the Company will use reasonable best efforts to effect the
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:

                         (1) prepare and file with the Commission a
     Registration Statement with respect to such Registrable Securities as
     prescribed by Sections 2, 3 or 4 on a form available for the sale of the
     Registrable Securities by the holders thereof in accordance with the
     intended method or methods of distribution thereof and use reasonable
     best efforts to cause each such Registration Statement to become and
     remain effective within the time periods and otherwise as provided
     herein;




                                      7
<PAGE>

                         (2) prepare and file with the Commission such
     amendments, (including post-effective amendments) to the Registration
     Statement and such supplements to the Prospectus as may be necessary to
     keep such Registration Statement effective and to comply with the
     provisions of the Securities Act with respect to the disposition of all
     securities covered by such Registration Statement until such time as all
     of such securities have been disposed of in accordance with the intended
     methods of disposition by the seller or sellers thereof set forth in such
     Registration Statement;

                         (3) furnish to each selling Holder of Registrable
     Securities covered by a Registration Statement and to each underwriter,
     if any, such number of copies of such Registration Statement, each
     amendment and post-effective amendment thereto, the Prospectus included
     in such Registration Statement (including each preliminary prospectus and
     any supplement to such Prospectus and any other prospectus filed under
     Rule 424 of the Securities Act), in each case including all exhibits, and
     such other documents as such Holder may reasonably request in order to
     facilitate the disposition of the Registrable Securities owned by such
     Holder or to be disposed of by such underwriter (the Company hereby
     consenting to the use in accordance with all applicable law of each such
     Registration Statement (or amendment or post-effective amendment thereto)
     and each such Prospectus (or preliminary prospectus or supplement
     thereto) by each such Holder and the underwriters, if any, in connection
     with the offering and sale of the Registrable Securities covered by such
     Registration Statement or Prospectus);

                         (4) use reasonable best efforts to register or
     qualify and, if applicable, to cooperate with the selling Holders, the
     underwriters, if any, and their respective counsel in connection with the
     registration or qualification (or exemption from such registration or
     qualification) of, the Registrable Securities for offer and sale under
     the securities or blue sky laws of such jurisdictions as any selling
     Holder or managing underwriters (if any) shall reasonably request, to
     keep each such registration or qualification (or exemption therefrom)
     effective during the period such Registration Statement is required to be
     kept effective and to do any and all other acts or things necessary or
     advisable to enable the disposition in such jurisdictions of the
     Securities covered by the applicable Registration Statement; provided,
     that, the Company will not be required to (i) qualify generally to do
     business in any jurisdiction where it would not otherwise be required to
     qualify but for this paragraph or (ii) consent to general service of
     process or taxation in any such jurisdiction where it is not so subject;

                         (5) cause all such Registrable Securities to be
     listed or quoted (as the case may be) on each national securities
     exchange or other securities market on which securities of the same class
     as the Registrable Securities are then listed or quoted;

                         (6) provide a transfer agent and registrar for all
     such Registrable Securities and a CUSIP number for all such Registrable
     Securities not later than the effective date of such Registration
     Statement;

                         (7) comply with all applicable rules and regulations
     of the Commission, and make available to its security holders an earnings
     statement satisfying



                                      8
<PAGE>

     the provisions of Section 11(a) of the Securities Act and Rule 158
     thereunder (or any similar rule promulgated under the Securities Act) no
     later than 45 days after the end of any 12-month period (or 90 days after
     the end of any 12-month period if such period is a fiscal year) (or in
     each case within such extended period of time as may be permitted by the
     Commission for filing the applicable report with the Commission) (i)
     commencing at the end of any fiscal quarter in which Registrable
     Securities are sold to underwriters in an underwritten offering or (ii)
     if not sold to underwriters in such an offering, commencing on the first
     day of the first fiscal quarter of the Company after the effective date
     of a Registration Statement;

                         (8) use reasonable best efforts to prevent the
     issuance of any order suspending the effectiveness of a Registration
     Statement or suspending the qualification (or exemption from
     qualification) of any of the Registrable Securities included therein for
     sale in any jurisdiction, and, in the event of the issuance of any stop
     order suspending the effectiveness of a Registration Statement, or of any
     order suspending the qualification of any Registrable Securities included
     in such Registration Statement for sale in any jurisdiction, the Company
     will use reasonable best efforts promptly to obtain the withdrawal of
     such order at the earliest possible moment;

                         (9) obtain "cold comfort" letters and updates thereof
     (which letters and updates (in form, scope and substance) shall be
     reasonably satisfactory to the managing underwriters, if any, and the
     Holders) from the independent certified public accountants of the Company
     (and, if necessary, any other independent certified public accountants of
     any subsidiary of the Company or of any business acquired by the Company
     for which financial statements and financial data are, or are required to
     be, included in the Registration Statement), addressed to each of the
     underwriters, if any, and each selling Holder of Registrable Securities,
     such letters to be in customary form and covering matters of the type
     customarily covered in "cold comfort" letters in connection with
     underwritten offerings and such other matters as the underwriters, if
     any, or the Holders of a majority of the Registrable Securities being
     included in the registration may reasonably request;

                         (10) obtain opinions of independent counsel to the
     Company and updates thereof (which counsel and opinions (in form, scope
     and substance) shall be reasonably satisfactory to the managing
     underwriters, if any, and the Holders of a majority of the Registrable
     Securities being included in the registration), addressed to each selling
     Holder and each of the underwriters, if any, covering the matters
     customarily covered in opinions of issuer's counsel requested in
     underwritten offerings, such as the effectiveness of the Registration
     Statement and such other matters as may be requested by such counsel and
     underwriters, if any;

                         (11) promptly notify the selling Holders and the
     managing underwriters, if any, and confirm such notice in writing,

               when a Prospectus or any supplement or post-effective amendment
               to such Prospectus has been filed, and, with respect to a
               Registration Statement or



                                      9
<PAGE>

               any post-effective amendment thereto, when the same has become
               effective,

               of any request by the Commission or any other federal or state
               governmental authority for amendments or supplements to a
               Registration Statement or related Prospectus or for additional
               information,

               of the issuance by the Commission of any stop order suspending
               the effectiveness of a Registration Statement or of any order
               preventing or suspending the use of any Prospectus or the
               initiation of any proceedings by any Person for that purpose,

               of the receipt by the Company of any notification with respect
               to the suspension of the qualification or exemption from
               qualification of a Registration Statement or any of the
               Registrable Securities for offer or sale under the securities
               or blue sky laws of any jurisdiction, or the contemplation,
               initiation or threatening, of any proceeding for such purpose,
               and

               of the happening of any event or the existence of any facts
               that make any statement made in such Registration Statement or
               Prospectus untrue in any material respect or that require the
               making of any changes in such Registration Statement or
               Prospectus so that it will not contain any untrue statement of
               a material fact or omit to state any material fact required to
               be stated therein or necessary to make the statements therein,
               in light of the circumstances under which they were made (in
               the case of any Prospectus), not misleading (which notice shall
               be accompanied by an instruction to the selling Holders and the
               managing underwriters, if any, to suspend the use of the
               Prospectus until the requisite changes have been made);

                         (12) if requested by the managing underwriters, if
     any, or a Holder of Registrable Securities being sold, promptly
     incorporate in a prospectus, supplement or post-effective amendment such
     information as the managing underwriters, if any, and the Holders of a
     majority of the Registrable Securities being sold reasonably request to
     be included therein relating to the sale of the Registrable Securities,
     including, without limitation, information with respect to the number of
     shares of Registrable Securities being sold to underwriters, the purchase
     price being paid therefor by such underwriters and with respect to any
     other terms of the underwritten offering of the Registrable Securities to
     be sold in such offering, and make all required filings of such
     prospectus, supplement or post-effective amendment promptly following
     notification of the matters to be incorporated in such supplement or
     post-effective amendment;

                         (13) if requested, furnish to each selling Holder of
     Registrable Securities and the managing underwriter, without charge, at
     least one signed copy of the Registration Statement;



                                      10
<PAGE>

                         (14) as promptly as practicable upon the occurrence
     of any event contemplated by Section 5(c)(14)e) above, prepare a
     supplement or post-effective amendment to the Registration Statement or
     the Prospectus, or any document incorporated therein by reference, or
     file any other required document so that, as thereafter delivered to the
     purchasers of the Registrable Securities being sold hereunder, the
     Prospectus will not contain an untrue statement of a material fact or an
     omission to state a material fact required to be stated in a Registration
     Statement or Prospectus or necessary to make the statements therein, in
     light of the circumstances under which they were made, not misleading;
     and

                         (15) if such offering is an underwritten offering,
     enter into such agreements (including an underwriting agreement in form,
     scope and substance as is customary in underwritten offerings) and take
     all such other appropriate and reasonable actions requested by the
     Holders owning a majority of the Registrable Securities being sold in
     connection therewith or by the managing underwriters (including
     cooperating in reasonable marketing efforts, including in connection with
     any Demand Registration, participation by senior executives of the
     Company in any "roadshow" or similar meeting with potential investors) in
     order to expedite or facilitate the disposition of such Registrable
     Securities, and in such connection, provide indemnification provisions
     and procedures substantially to the effect set forth in Section 7 hereof
     with respect to all parties to be indemnified pursuant to said Section.
     The above shall be done at each closing under such underwriting or
     similar agreement, or as and to the extent required thereunder.

                    Each Holder agrees by acquisition of such Registrable
Securities that, upon receipt of written notice from the Company of the
happening of any event of the kind described in Section 5(c)(11), such Holder
will forthwith discontinue disposition of such Registrable Securities covered
by such Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Registration Statement contemplated by Section
5(c)(14), or until it is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such prospectus (such period during which
disposition is discontinued being an "Interruption Period"), and, if so
directed by the Company, such Holder will deliver to the Company all copies of
the Prospectus covering such Registrable Securities current at the time of
receipt of such notice.

               Section 6. Registration Expenses.

                    (a) Expenses Payable by the Company. The Company shall
bear all expenses incurred with respect to the registration or attempted
registration of the Registrable Securities pursuant to Sections 2, 3 and 4 of
this Agreement as provided herein. Such expenses shall include, without
limitation, (i) all registration, qualification and filing fees (including,
without limitation, (A) fees with respect to compliance with the Commission,
(B) fees with respect to filings required to be made with the national
securities exchange or national market system on which the Common Stock is
then traded or quoted and (C) fees and expenses of compliance with state
securities or blue sky laws (including, without limitation, fees and
disbursements of counsel for the Company or the underwriters, or both, in
connection with blue



                                      11
<PAGE>

sky qualifications of Registrable Securities)), (ii) messenger and delivery
expenses, word processing, duplicating and printing expenses (including
without limitation, expenses of printing certificates for Registrable
Securities in a form eligible for deposit with The Depository Trust Company,
printing preliminary prospectuses, prospectuses, prospectus supplements,
including those delivered to or for the account of the Holders and provided in
this Agreement, and blue sky memoranda), (iii) fees and disbursements of
counsel for the Company, (iv) fees and disbursements of all independent
certificated public accountants for the Company (including, without
limitation, the expense of any "comfort letters" required by or incident to
such performance), (v) all out-of-pocket expenses of the Company (including
without limitation, expenses incurred by the Company, its officers, directors,
and employees performing legal or accounting duties or preparing or
participating in "roadshow" presentations or of any public relations, investor
relations or other consultants or advisors retained by the Company in
connection with any roadshow, including travel and lodging expenses of such
roadshows), (vi) fees and expenses incurred in connection with the quotation
or listing of shares of Common Stock on any national securities exchange or
other securities market, and (vii) reasonable fees and expenses of one firm of
counsel for all selling Holders.

                    (b) Expenses Payable by the Holders. The Holders shall pay
all underwriting discounts and commisions or placement fees of underwriters or
broker's commissions incurred in connection with the sale or other disposition
of Registrable Securities for or on behalf of a Holder's account.

               Section 7. Indemnification.

                    (a) Indemnification by the Company. The Company agrees to
indemnify, to the fullest extent permitted by law, each Holder, each affiliate
of a Holder and each director, officer, employee, manager, partner, member,
counsel, agent or representative of such Holder and its affiliates and each
Person who controls any such Person (within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act) (collectively,
"Holder Indemnified Parties") against, and hold it and them harmless from, all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and attorneys' fees and disbursements) and expenses,
including expenses of investigation and amounts paid in settlement
(collectively, "Losses") arising out of, caused by or based upon any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, or any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading
(a "Misstatement/Omission"), or any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law, or
any rule or regulation promulgated under the Securities Act, the Exchange Act
or any state securities law, except that the Company shall not be liable
insofar as such Misstatement/Omission or violation is made in reliance upon
and in conformity with information furnished in writing to the Company by such
Holder expressly for use therein; provided, further, that the Company shall
not be liable for a Holder's failure to deliver or cause to be delivered (to
the extent such delivery is required under the Securities Act) the Prospectus
contained in the Registration Statement, furnished to it by the Company at or
prior to the time such action is required by the Securities Act to the person
claiming a Misstatement/Omission if such Misstatement/Omission was
corrected in such Registration Statement. In connection with an underwritten
offering, the Company will indemnify such underwriters, selling brokers,
dealer managers and similar



                                      12
<PAGE>

securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such underwriters (within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act) to the same extent as provided above with respect to the
indemnification of the Holders. This indemnity shall be in addition to any
other indemnification arrangements to which the Company may otherwise be
party. Notwithstanding the foregoing, the indemnity contained in this section
shall not apply to amounts paid in settlement of any such Losses if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such
case for any such Losses to the extent that they arise out of or are based
upon a Misstatement/Omission included in reliance upon and in conformity with
written information furnished expressly for use in connection with such
Registration Statement by such Holder (or any partner, officer, director,
underwriter or controlling person of such Holder).

                    (b) Indemnification by the Holders. In connection with any
Registration Statement in which a Holder is participating, each such Holder
agrees to indemnify, to the fullest extent permitted by law the Company and
each affiliate, director, officer, employee, counsel, agent or representative
of the Company and each Person who controls the Company (within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act)
against, and hold it harmless from, any Losses arising out of or based upon
(i) any Misstatement/Omission contained in the Registration Statement, if and
to the extent that such Misstatement/Omission arose out of or was based upon
information furnished in writing by such Holder for use therein, or (ii) the
failure by such Holder to deliver or cause to be delivered (to the extent such
delivery is required under the Securities Act) the Prospectus contained in the
Registration Statement, furnished to it by the Company at or prior to the time
such action is required by the Securities Act to the person claiming a
Misstatement/Omission if such Misstatement/Omission was corrected in such
Registration Statement. Notwithstanding the foregoing, the obligation to
indemnify will be individual (several and not joint) to each Holder and will
be limited to the net amount of proceeds (net of payment of all expenses)
received by such Holder from the sale of Registrable Securities pursuant to
such Registration Statement giving rise to such indemnification obligation.

                    (c) Conduct of Indemnification Proceedings. In case any
action, claim or proceeding shall be brought against any Person entitled to
indemnification hereunder, such indemnified party shall promptly notify each
indemnifying party in writing, and such indemnifying party shall assume the
defense thereof, including the employment of one counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses
incurred in connection with the defense thereof. The failure to so notify such
indemnifying party shall relieve such indemnifying party of its
indemnification obligations to such indemnified party to the extent that such
failure to notify prejudiced such indemnifying party. Each indemnified party
shall have the right to employ separate counsel in such action, claim or
proceeding and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of each indemnified party unless: (i)
such indemnifying party has agreed to pay such expenses; (ii) such
indemnifying party has failed promptly to assume the defense and employ
counsel reasonably satisfactory to such indemnified party; or (iii) the named
parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and such indemnifying party or an
affiliate or controlling person of such indemnifying party, and such
indemnified party shall have been advised in writing by counsel that either
(x)


                                      13


<PAGE>


there may be one or more legal defenses available to it which are different
from or in addition to those available to such indemnifying party or such
affiliate or controlling person or (y) a conflict of interest may exist if
such counsel represents such indemnified party and such indemnifying party or
its affiliate or controlling person; provided, however, that such indemnifying
party shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be responsible hereunder for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel), which
counsel shall be designated by such indemnified party or, in the event that
such indemnified party is a Holder Indemnified Party, by the Holders of a
majority of the Registrable Securities included in the subject Registration
Statement.

               No indemnifying party shall be liable for any settlement
effected without its written consent (which consent may not be unreasonably
withheld). Each indemnifying party agrees, jointly and severally, that it will
not, without the indemnified party's prior written consent, consent to entry
of any judgment or settle or compromise any pending or threatened claim,
action or proceeding in respect of which indemnification or contribution may
be sought hereunder unless the foregoing contains an unconditional release, in
form and substance reasonably satisfactory to the indemnified parties, of the
indemnified parties from all liability and obligation arising therefrom. The
indemnifying party's liability to any such indemnified party hereunder shall
not be extinguished solely because any other indemnified party is not entitled
to indemnity hereunder.

                    (d) Survival. The indemnification provided for under this
Agreement will (i) remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party, (ii) survive the
transfer of securities and (iii) survive the termination of this Agreement.

                    (e) Right to Contribution. If the indemnification provided
for in this Section 7 is unavailable to, or insufficient to hold harmless, an
indemnified party under Section 7(a) or Section 7(b) above in respect of any
Losses referred to in such Sections, then each applicable indemnifying party
shall have an obligation to contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Company, on the one hand, and
of the Holder, on the other, in connection with the Misstatement/Omission
which resulted in such Losses, taking into account any other relevant
equitable considerations. The amount paid or payable by a party as a result of
the Losses referred to above shall be deemed to include, subject to the
limitations set forth in Section 8(c) above, any legal or other fees or
expenses reasonably incurred by such party in connection with any
investigation, lawsuit or legal or administrative action or proceeding.

               The relative fault of the Company, on the one hand, and of the
Holder, on the other, shall be determined by reference to, among other things,
whether the relevant Misstatement/Omission relates to information supplied by
the Company or by the Holder and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
Misstatement/Omission.


                                      14


<PAGE>


               The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 7(e) were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7(e), a Holder shall not be required to contribute
any amount in excess of the amount by which (i) the amount (net of payment of
all expenses) at which the securities that were sold by such Holder and
distributed to the public were offered to the public exceeds (ii) the amount
of any damages which such Holder has otherwise been required to pay by reason
of such Misstatement/Omission.

               No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

               Section 8. Rules 144 and 144A.

               The Company shall timely file the reports required to be filed
by it under the Securities Act and the Exchange Act (including but not limited
to the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 adopted by the Commission under the Securities
Act) and the rules and regulations adopted by the Commission thereunder (or,
if the Company is not required to file such reports, it will; upon the request
of any holder of Registrable Securities, make publicly available other
information) and will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 and Rule 144A under the Securities Act, as such Rules may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission.

               Section 9. Underwritten Registrations.

                    (a) No Person may participate in any registration
hereunder which is underwritten unless such Person (i) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved by the Person or Persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, customary indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided, that, no
Holder included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters other than
representations and warranties regarding such Holder and such Holder's
intended method of distribution.

                    (b) In order to participate in a registration hereunder
which is underwritten, to the extent not inconsistent with applicable law,
each Holder of Registrable Securities agrees not to effect any public sale or
distribution of any Registrable Securities being registered or of any
securities convertible into or exchangeable or exercisable for such
Registrable Securities, including a sale pursuant to Rule 144 under the
Securities Act, during the period beginning on the effective date of such
registration statement and ending on the expiration of any lock-up period
reasonably required by the underwriters, provided such period shall not


                                      15


<PAGE>


exceed 180 days from and including the date of pricing of the securities being
offered in such registration.

               Section 10. Covenants of Holders.

               Each of the Holders hereby agrees (a) to cooperate with the
Company and to furnish to the Company all such information in connection with
the preparation of the Registration Statement and any filings with any state
securities commissions as the Company may reasonably request, (b) to the
extent required by the Securities Act, to deliver or cause delivery of the
prospectus contained in the Registration Statement, any amendment or
supplement thereto, to any purchaser of the Registrable Securities covered by
the Registration Statement from the Holder and (c) to notify the Company
within three months after any sale of Registrable Securities by such Holder
or, in the case of a sale of all or substantially all of the Registrable
Securities owned by a Holder, within ten days after such sale.

               Section 11. Miscellaneous.

                    (a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with, adversely effects or violates the rights granted to the
Holders in this Agreement; it being understood that the granting of additional
demand or piggyback registration rights with respect to capital stock of the
Company shall not be deemed inconsistent with or adverse to the rights granted
to Holders hereunder, and the rights of the Holders shall be subject to any
such additional grants.

                    (b) Remedies. Any Person having rights under any provision
of this Agreement will be entitled to enforce such rights specifically to
recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and hereby agree to waive the
defense in any action for specific performance or injunctive relief that a
remedy at law would be adequate. Accordingly, any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.

                    (c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement, including the provisions of this
sentence, may be amended, modified, supplemented or waived only upon the prior
written consent of the Company and Holders of a majority of the outstanding
Registrable Securities.

                    (d) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. The Holders may assign all rights under
this agreement; provided, however, that no Investor or Holder may transfer or
assign its rights hereunder unless such transferring Investor or Holder shall,
prior to any such transfer, obtain from the transferee a joinder agreement in
a form reasonably satisfactory to the Company and the Holders and deliver a
copy of such joinder agreement to the Company and to the Holders; provided,
also, that no assignment of rights under


                                      16


<PAGE>


this Agreement by any Investor or Holder will be valid unless made in
connection with a transfer of Registrable Securities that complies with the
provisions of the Amended and Restated Rights Agreement of the Company or the
Charter. Only persons (other than the initial Investors hereto) that execute a
joinder agreement shall be deemed to be Holders. The Company shall be given
written notice by the transferring Holder at the time of the transfer stating
the name and address of the transferee and identifying the Registrable
Securities transferred, provided, that, failure to give such notice shall not
affect the validity of such transfer or assignment.

                    (e) Termination of Registration Rights. The rights of any
Holder to cause the Company to register Registrable Securities under this
Agreement shall terminate with respect to such Holder as soon as such Holder
is legally able to dispose of all of its Registrable Securities in one
transaction pursuant to Rule 144 under the Securities Act.

                    (f) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired or affected, it being intended that the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.

                    (g) Counterparts. This Agreement may be executed in any
number of counterparts, any one of which need not contain the signatures of
more than one party, but each of which when so executed shall be deemed to be
an original and all such counterparts taken together shall constitute one and
the same Agreement.

                    (h) Descriptive Headings: Interpretation. The descriptive
headings of this Agreement are inserted for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. The use of the word
"including" in this Agreement shall be by way of example rather than by
limitation.

                    (i) Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party at its address, facsimile
number or e-mail address set forth beneath the party's name on the signature
pages hereof, or, if not the signature pages hereof, on the signature pages of
any joinder agreement executed and delivered pursuant to Section 11(d) of this
Agreement, or such other person or address or facsimile number as may be
designated in writing by the party to receive such notice and provided to the
Company in accordance with this Section. Each such notice, request or other
communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section and
receipt is confirmed, (b) if given by mail, three business days after such
communication is deposited in the mail registered or certified, return receipt
requested, with postage prepaid, addressed as aforesaid, (c) if given by an
overnight delivery service, one business day after such communication is
deposited with a reputable, overnight delivery service, postage or delivery
charges prepaid, addressed as aforesaid, or (d) if given by any other means,
when delivered, physically or electronically, at the address as specified in
this Section.


                                      17


<PAGE>


                    (j) GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
The parties hereby irrevocably submit to the jurisdiction of the courts of the
State and County of New York and the Federal courts of the United States of
America located in the Southern District of the State of New York solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in respect
of the transactions contemplated hereby, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement hereof or of any such document, that it is not subject thereto
or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect
to such action or proceeding shall be heard and determined in such a New York
State or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of
such dispute and agree that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in the Section on
notices below or in such other manner as may be permitted by law shall be
valid and sufficient service thereof.

     EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES,
AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

                    (k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.


                                      18


<PAGE>


     IN WITNESS WHEREOF the parties hereto have or have caused this
Registration Rights Agreement to be duly executed as of the date first above
written


                           The Company:
                           -----------

                    PERSONNEL GROUP OF AMERICA, INC.

                    By:
                                  -------------------------------------
                                  Name:  Larry L. Enterline
                                  Title: Chief Executive Officer

                    Address:      Personnel Group of America, Inc.
                                  2709 Water Ridge Parkway, 2nd Floor
                                  Charlotte, North Carolina  28217-4538
                                  Attention:  Ken Bramlett, Jr.

                    E-mail:       kbramlett@pga-inc.com

                    Facsimile:    (704) 442-5137

                    with a copy
                    to:           Robinson, Bradshaw & Hinson, P.A.
                                  101 North Tryon Street, Suite 1900
                                  Charlotte, North Carolina  28246
                                  Attention:  Peter C. Buck
                                  Facsimile:  (704) 373-3936
                                  Email:  pbuck@rbn.com


                                     S-1
                       [Registration Rights Agreement]


<PAGE>


                    The Investors:
                    -------------


                    INLAND PARTNERS, L.P.



                    By:
                            -------------------------------------
                            Name:  Elias J. Sabo
                            Title: Attorney-in-Fact

                    LINKS PARTNERS, L.P.



                    By:
                            -------------------------------------
                            Name:  Elias J. Sabo
                            Title: Attorney-in-Fact

                    Address:       Inland Partners, L.P. and Links Partners L.P.
                                   c/o Elias J. Sabo
                                   The Compass Group
                                   2 Park Plaza, Suite 1020
                                   Irvine, California  92614

                    E-mail:        elias@compassequity.com

                    Facsimile:     (949) 296-2407

                    with a copy
                    to:            Stroock & Stroock & Lavan LLP
                                   180 Maiden Lane
                                   New York, New York  10038
                                   Attention:  Mark E. Palmer, Esq.
                                   Facsimile:  (212) 806-6006
                                   Email: mpalmer@Stroock.com
                    and to:
                                   I. Joseph Massoud
                                   The Compass Group
                                   61 Wilton Road,
                                   Second Floor
                                   Westport,
                                   Connecticut 06880
                                   Facsimile: (203) 221-8253
                                   Email: joe@compassequity.com


                                     S-2
                       [Registration Rights Agreement]


<PAGE>



                    ATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.

                    By:     MatlinPatterson Global Advisers LLC, its Investment
                            Advisor


                    By:     ----------------------------------------
                            Name:  Mark Patterson
                            Title: Chairman

                    Address:      MatlinPatterson Global Advisers LLC
                                  520 Madison Avenue
                                  New York, New York  10022-4213
                                  Attention:  Christopher R. Pechock

                    E-mail:       pechock@mpasset.com

                    Facsimile:    (212) 651-4010

                    with a copy
                    to:           Stroock & Stroock & Lavan LLP
                                  180 Maiden Lane
                                  New York, New York  10038
                                  Attention:  Mark E. Palmer, Esq.
                                  Facsimile:  (212) 806-6006
                                  Email: mpalmer@Stroock.com


                                     S-3
                       (Registration Rights Agreement)


<PAGE>


                    ZAZOVE ASSOCIATES, LLC, for and on behalf of:
                    Century National Insurance Company,
                    National Union Fire Insurance Company of
                         Pittsburgh, PA,
                    SDCERA High Yield,
                    Zazove Convertible Securities Fund, Inc.,
                    Qwest Occupational Health Trust,
                    Qwest Pension Trust,
                    HFR CA Select Fund,
                    Zurich Institutional Benchmarks Master Fund Ltd.,
                    Zazove High Yield Convertible Securities Fund, L.P.,
                    Zazove Aggressive Growth Fund,
                    Zazove Global Convertible Fund, L.P.,
                    Zazove Income Fund, L.P.,
                    San Diego County Employees Retirement Association,
                    Zazove Hedged Convertible Fund, L.P.



                    By:    -----------------------------------------
                           Name:  Christopher C. Cook
                           Title: Portfolio Manager

                    Address:      Zazove Associates, LLC
                                  1033 Skokie Blvd.
                                  Suite 310n
                                  Northbrook, Illinois 60062
                                  Attention: Chris Cook
                                             Gene Pretti
                                             Steve Kleiman

                    E-mail:       cbcook@zazove.com

                    Facsimile:    (847) 239-7101


                                     S-4
                       (Registration Rights Agreement)


<PAGE>


                    R2 INVESTMENTS, LDC

                    By:           Amalgamated Gadget, L.P., its Investment
                                  Manager
                    By:           Scepter Holdings, Inc. its General Partner

                                  --------------------------------------
                    By:           Name:  Geoffrey Raynor
                                  Title: President

                    Address:      R2 Investments, LDC
                                  c/o Amalgamated Gadget, L.P., its Investment
                                  Manager
                                  301 Commerce Street, Suite 2975
                                  Fort Worth, Texas 76102
                                  Attention: General Counsel

                    E-mail:       kdaum@acmewidget.com
                                  toconnor@acmewidget.com
                                  copy:  mkerr@Kirkland.com

                    Facsimile:    (817) 332-9606


                                     S-5
                       (Registration Rights Agreement)


<PAGE>


                    JAMES E. LINKENAUGER


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

                    Address:      James E. Linkenauger
                                  10176 Deerwood Club Road
                                  Jacksonville, FL 32256

                    E-mail:       jlink0@aol.com

                    Facsimile:    (904) 733-0591


                                     S-6
                       (Registration Rights Agreement)


<PAGE>


                    SALOMON SMITH BARNEY

                    By:   ------------------------------------------
                          Name:  Mark Hunt
                          Title: Managing Director

                    Address:      Salomon Smith Barney Inc.
                                  390 Greenwich St., 3rd Floor
                                  New York, NY  10013
                                  Attn:  David House

                    E-mail:       david.c.house@citigroup.com

                    Facsimile:    (212) 723-8881


                                     S-7
                       (Registration Rights Agreement)
<PAGE>


                    SC FUNDAMENTAL VALUE FUND, L.P.

                    By:   SC Fundamental LLC, its General Partner


                    By:   -------------------------------------------
                          Name:  Neil H. Koffler
                          Title: Member

                    SC FUNDAMENTAL VALUE BVI, LTD.

                    By:   SC Fundamental Value BVI, Inc., as Managing
                          General Partner of its Investment Manager

                          --------------------------------------------
                          Name:  Neil H. Koffler
                    By:   Title: Vice President

                    Address:      SC Fundamental Value Value Fund, L.P. and
                                  SC Fundamental Value BVI, Ltd.
                                  c/o SC Fundamental LLC
                                  420 Lexington Avenue
                                  New York, NY  10170
                                  Attn:   Peter Collery
                                          Neil H. Koffler

                    E-mail:       peterc@scfundamental.com
                                  neilk@scfundamental.com

                    Facsimile:    (212) 813-3420


                                     S-8
                       (Registration Rights Agreement)


<PAGE>


                    BENSON ASSOCIATES, LLC



                    By:   --------------------------------------------
                          Name:  Dale Benson
                          Title:

                    Address:      Benson Associates LLC
                                  111 SW Fifth Ave., Suite 2130
                                  Portland, OR 97204
                                  Attn: Dale Benson

                    E-mail:       dbenson@benson-associates.com

                    Facsimile:    (503) 916-8170


                                     S-9
                       (Registration Rights Agreement)


<PAGE>


                                  HIGHBRIDGE CAPITAL MANAGEMENT LLC


                                  By:   Highbridge Capital Management


                                  By:   ---------------------------------
                                        Name:  Andrew Martin
                                        Title:

                                  Address:      HighBridge International LLC
                                                9 West 57th Street, 27th Floor
                                                New York, NY  10019
                                                Attn:  Andrew Martin

                                  E-mail:       Andrew.martin@hcmny.com

                                  Facsimile:    (212) 755-4250


                                     S-10
                       (Registration Rights Agreement)


<PAGE>


                                  GENE PRETTI


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

                                  GENE PRETTI, on behalf of Louis F. Pretti
                                  & Mary Kay Pretti JTWROS


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

                                  Address:      Mr. Gene Pretti
                                                Zazove Associates, LLC
                                                1033 Skokie Blvd.
                                                Suite 310n
                                                Northbrook, Illinois 60062

                                  E-mail:

                                  Facsimile:     (847) 239-7101


                                     S-11
                       (Registration Rights Agreement)


<PAGE>


                                  LC CAPITAL MASTER FUND, LTD.


                                  By:   ---------------------------------
                                        Name:  Steven Lampe
                                        Title:    Managing Member

                                  Address:      L.C. Capital Master Fund, Ltd.
                                                730 Fifth Avenue, Suite 1002
                                                Name:  Steven Lampe
                                                New York, NY  10019
                                                Attention:  Steven Lampe

                                  E-mail:       lampe@lampeconway.com

                                  Facsimile:    (212) 581-8999


                                     S-12
                       (Registration Rights Agreement)


<PAGE>


                                  BNP PARIBAS


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


                               Signature Page to Registration Rights Agreement
                                              Personnel Group of America, Inc.
                                                                    April 2003


<PAGE>


                                  BANK ONE, NA


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


                               Signature Page to Registration Rights Agreement
                                              Personnel Group of America, Inc.
                                                                    April 2003


<PAGE>


                                  HBV CAPITAL MANAGEMENT LLC


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


                               Signature Page to Registration Rights Agreement
                                              Personnel Group of America, Inc.
                                                                    April 2003


<PAGE>


                                  INLAND PARTNERS L.P.


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


<PAGE>



                                  LINKS PARTNERS L.P.


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


<PAGE>



                                  MATLINPATTERSON GLOBAL OPPORTUNITIES
                                  PARTNERS L.P.

                                  By:  MatlinPatterson Global Advisers LLC


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


<PAGE>


BNP Paribas
Justine Dupont-Nivet
787 Seventh Avenue
New York, NY 10019
Fax Phone: 212-841-3049
Office Phone: 212-841-3892
Work Email: justine.dupont-nivet@americas.bnpparibas.com

BNP Paribas
Joseph Egan
787 Seventh Avenue, 3rd Floor
New York, NY 10019
Fax Phone: 212-841-3565
Office Phone: 212-841-2562
Work Email: joseph.egan@americas.bnpparibas.com

Bank One, NA
Diane  M. Stark
Suite 0631
One Bank One Plaze
Chicago, IL 60670
Fax Phone: 312-732-1775
Office Phone: 312-732-8251
Work Email: diane_m_stark@bankone.com

Bank of America, N.A.
Len Norman
Corporate Center 100 N. Tryon St.
Charlotte, NC 28255
Fax Phone: 704-386-7515
Office Phone: 704-387-3262
Work Email: leonard.norman@bankofamerica.com

Bank of America, N.A., as Agent
SuzieAnna Wan
CA5-701-12-09
1455 Market Street
San Francisco, CA 94103
Fax Phone: 415-503-5015
Office Phone: 415-436-2772
Work Email: Suzieanna.Wan@BankofAmerica.com


HBV Capital Management LLC
George Konomos


<PAGE>


Suite 3300
200 Park Avenue
New York, NY 10166-3399
Fax Phone: 212-808-3955
Office Phone: 212-808-3973
Work Email: gkonomos@HBVLLC.com


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-16
<SEQUENCE>9
<FILENAME>efc3-0670_ex16.txt
<TEXT>

                                                                    Exhibit 16


                              R(2) INVESTMENTS, LDC
               C/O AMALGAMATED GADGET, L.P., INVESTMENT MANAGER
                        301 COMMERCE STREET, SUITE 2975
                            FORT WORTH, TEXAS 76102
                                (817) 332-9500
                              FAX: (817) 332-9606

                                April 11, 2003



Inland Partners, L.P.
c/o Compass Group International LLC
2 Park Plaza, Suite 1020
Irvine, CA 92614

Links Partners, L.P.
c/o Compass Group International LLC
2 Park Plaza, Suite 1020
Irvine, CA 92614

     Re:  Option

Gentlemen:

     The purpose of this letter is to confirm and memorialize the
understandings between R(2) Investments, LDC ("R2") and Inland Partners, L.P.
("Inland") and Links Partners, L.P. (together with Inland, "Compass") relating
to the granting of options between R2 and Compass upon the terms and
conditions set forth herein. R2 and Compass are sometimes herein collectively
referred to as the "Parties" and each a "Party".

     1. Compass' Grant of Option to R2. Compass hereby grants to R2, a fully
vested and immediately exercisable option (the "R2 Option") to purchase from
Compass fifty percent (50%) of the aggregate amount of any debt under the
Second Amended and Restated Credit Agreement dated April 2003 among Personnel
Group America, Inc., as borrower, the subsidiaries of the borrower from time
to time party thereto, as guarantors, the several lenders from time to time
specified therein, and Bank of America, N.A. (formerly NationsBank, N.A.), as
agent (the "Debt") purchased or acquired by Compass, or any of its related,
associated, and affiliated persons and entities, from time to time after the
date of this letter until the termination hereof.

     2. R2's Grant of Option to Compass. R2 hereby grants to Compass, a fully
vested and immediately exercisable option (the "Compass Option") to purchase
from R2 twenty-five percent (25%) of the aggregate amount of any Debt
purchased or acquired by R2, or any of its related, associated, and affiliated
persons and entities, from time to time after the date of this letter until
the termination hereof.


<PAGE>


     3. Exercise of Compass Option. R2 shall give written notice (by fax to
949-296-2407, Attention of Elias Sabo and by fax to 203-221-8253, Attention of
J. Joseph Massoud) of any purchase or acquisition of Debt by R2, or any of its
related, associated, and affiliated persons and entities, together with a copy
of the LSTA Trade Confirmation that R2 entered into with respect to such
purchase or acquisition of Debt (collectively, the "R2 Purchase Notice")
within three business days after the trade date for such purchase or
acquisition of Debt. Compass may thereafter exercise the Compass Option by
giving written notice of its exorcise to R2 within three business days after
Compass' receipt of the R2 Purchase Notice. Any purchase by Compass affected
pursuant to the exercise of the Compass Option shall be by assignment (and not
by participation) of the Debt and shall otherwise be on the identical terms
and conditions, and close at the same time, as R2's 75% share of the Debt
purchase in question. Whenever a Compass Option is exercised, Compass can
designate any of its related, associated, and affiliated persons and entities,
as the purchaser of such Debt.

     4. Exercise of R2 Option. Compass shall give written notice (by fax to
817-332-9606, Attention of Geoffrey Raynor or Robert McCormack) of any
purchase or acquisition of Debt by Compass, or any of its related, associated,
and affiliated persons and entities, together with a copy of the LSTA Trade
Confirmation that Compass entered into with respect to such purchase or
acquisition of Debt (collectively, the "Compass Purchase Notice") within three
business days after the trade date for such purchase or acquisition of Debt.
R2 may thereafter exercise the R2 Option by giving written notice of its
exercise to Compass within three business days after R2's receipt of the
Compass Purchase Notice. Any purchase by R2 affected pursuant to the exercise
of the R2 Option shall be by assignment (and not by participation) of the Debt
and shall otherwise be on the identical terms and conditions, and close at the
same time, as Compass' 50% share of the Debt purchase in question. Whenever a
R2 Option is exercised, R2 can designate any of its related, associated, and
affiliated persons and entities, as the purchaser of such Debt.

     5. Termination. This letter agreement shall terminate on the earlier of
(a) May 1, 2005 or (b) the termination of the Second Amended anal Restated
Credit Agreement dated April 2003 among Personnel Group America, Inc., as
borrower, the subsidiaries of the borrower from time to time party thereto, as
guarantors, the several lenders from time to time specified therein, and Bank
of America, N.A. (formerly NationsBank, N.A.), as agent, unless the Parties
mutually agree in writing to (i) extend this letter agreement beyond such
date, or (ii) terminate this letter agreement at an earlier date.

     6. Governing Law. This letter of intent shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
without regard to its conflicts of law principles. If any provision of this
letter agreement shall be held to be invalid, the remainder of this letter
agreement shall not be affected thereby.

     7. Counterparts. This letter agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument. Facsimile signatures shall
constitute original signatures.


                                      2


<PAGE>


     8. Assignment. This letter agreement is binding on the Parties hereto,
and their successors and permitted assigns, together with their related,
associated and affiliated persons and entities. Neither this letter agreement
nor any of the rights, interests or obligations of any Party hereunder shall
be assignable by such Party without the prior written consent of the other
Parties.

     9. Entire Agreement; Amendment. This letter agreement supercedes all
prior discussions and agreements among the Parties and contains the sole and
entire agreement between the Parties hereto with respect to the subject matter
hereof. This letter agreement may be modified or waived only by a separate
writing executed by the Parties expressly so modifying or waiving this letter
agreement.


                                      3


<PAGE>


     Please evidence your agreement with the foregoing by executing and
returning a duplicate of this letter agreement.

                                   Sincerely,

                                   R(2) INVESTMENTS, LDC

                                   By: Amalgamated Gadget, L.P.,
                                       as Investment Manager,

                                       By:  Scepter Holdings, Inc.,
                                            its general partner

                                            By: ______________________________
                                                Name:
                                                Title:





Accepted and agreed to, as of the date
first above written:

INLAND PARTNERS, L.P.

By:__________________________
   Name:
   Title:


LINKS PARTNERS, L.P.

By:__________________________
   Name:
   Title:


                                      4


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-17
<SEQUENCE>10
<FILENAME>efc3-0670_ex17.txt
<TEXT>

                                                                    Exhibit 17


                             R(2) INVESTMENTS, LDC
               C/O AMALGAMATED GADGET, L.P., INVESTMENT MANAGER
                        301 COMMERCE STREET, SUITE 2975
                            FORT WORTH, TEXAS 76102
                                (817) 332-9500
                              FAX: (817) 332-9606

                                April 11, 2003


MatlinPatterson Global Opportunities Fund, L.P.
510 Madison Avenue
New York, NY 10022-4213

          Re:  Option

Gentlemen:

     The purpose of this letter is to confirm and memorialize the
understandings between R(2) Investments, LDC ("R2") and MatlinPatterson Global
Opportunities Fund, L.P. ("MatlinPatterson") relating to the granting of
options between R2 and MatlinPatterson upon the terms and conditions set forth
herein. R2 and MatlinPatterson are sometimes herein collectively referred to
as the "Parties" and each a "Party".

     1. MatlinPatterson's Grant of Option to R2. MatlinPatterson hereby grants
to R2, a fully vested and immediately exercisable option (the "R2 Option") to
purchase from MatlinPatterson fifty percent (50%) of the aggregate amount of
any debt under the Second Amended and Restated Credit Agreement dated April
2003 among Personnel Group America, Inc., as borrower, the subsidiaries of the
borrower from time to time party thereto, as guarantors, the several lenders
from time to time specified therein, and Bank of America, N.A. (formerly
NationsBank, N.A.), as agent (the "Debt") purchased or acquired by
MatlinPatterson, or any of its related, associated, and affiliated persons and
entities, from time to time after the date of this letter until the
termination hereof.

     2. R2's Grant of Option to MatlinPatterson. R2 hereby grants to
MatlinPatterson, a fully vested and immediately exercisable option (the
"MatlinPatterson Option") to purchase from R2 twenty-five percent (25%) of the
aggregate amount of any Debt purchased or acquired by R2, or any of its
related, associated, and affiliated persons and entities, from time to time
after the date of this letter until the termination hereof.

     3. Exercise of MatlinPatterson Option. R2 shall give written notice (by
fax to 212-651-4010, Attention of Chris Pechock) of any purchase or
acquisition of Debt by R2, or any of its related, associated, and affiliated
persons and entities, together with a copy of the LSTA Trade Confirmation that
R2 entered into with respect to such purchase or acquisition of Debt
(collectively, the "R2 Purchase Notice") within three business days after the
trade date for such purchase or acquisition of Debt. MatlinPatterson may
thereafter exercise the MatlinPatterson Option by giving written notice of its
exercise to R2 within three business days after MatlinPatterson's receipt of
the R2 Purchase Notice. Any purchase by MatlinPatterson affected


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pursuant to the exercise of the MatlinPatterson Option shall be by assignment
(and not by participation) of the Debt and shall otherwise be on the identical
terms and conditions, and close at the same time, as R2's 75% share of the
Debt purchase in question. Whenever a MatlinPatterson Option is exercised,
MatlinPatterson can designate any of its related, associated, and affiliated
persons and entities, as the purchaser of such Debt.

     4. Exercise of R2 Option. MatlinPatterson shall give written notice (by
fax to 817-332-9606, Attention of Geoffrey Raynor or Robert McCormick) of any
purchase or acquisition of Debt by MatlinPatterson, or any of its related,
associated, and affiliated persons and entities, together with a copy of the
LSTA Trade Confirmation that MatlinPatterson entered into with respect to such
purchase or acquisition of Debt (collectively, the "MatlinPatterson Purchase
Notice") within three business days after the trade date far such purchase or
acquisition of Debt. R2 may thereafter exercise the R2 Option by giving
written notice of its exercise to MatlinPatterson within three business days
after R2's receipt of the MatlinPatterson Purchase Notice. Any purchase by R2
affected pursuant to the exercise of the R2 Option shall be by assignment (and
not by participation) of the Debt and shall otherwise be on the identical
terms and conditions, and close at the same time, as MatlinPatterson's 50%
share of the Debt purchase in question. Whenever a R2 Option is exercised, R2
can designate any of its related, associated, and affiliated persons and
entities, as the purchaser of such Debt.

     5. Termination. This letter agreement shall terminate on the earlier of
(a) May l, 2005 or (b) the termination of the Second Amended and Restated
Credit Agreement dated April 2003 among Personnel Group America, Inc., as
borrower, the subsidiaries of the borrower from time to time party thereto, as
guarantors, the several lenders from time to time specified therein, and Bank
of America, N.A. (formerly NationsBank, N.A.), as agent, unless the Parties
mutually agree in writing to (i) extend this letter agreement beyond such
date, or (ii) terminate this letter agreement at an earlier date.

     6. Governing Law. This letter of intent shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
without regard to its conflicts of law principles. If any provision of this
letter agreement shall be held to be invalid, the remainder of this letter
agreement shall not be affected thereby.

     7. Counterparts. This letter agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument. Facsimile signatures shall
constitute original signatures.

     8. Assignment. This letter agreement is binding on the Parties hereto,
and their successors and permitted assigns, together with their related,
associated and affiliated persons and entities. Neither this letter agreement
nor any of the rights, interests or obligations of any Party hereunder shall
be assignable by such Party without the prior written consent of the other
Parties.

     9. Entire Agreement; Amendment. This letter agreement supercedes all
prior discussions and agreements among the Parties and contains the sole and
entire agreement between the Parties hereto with respect to the subject matter
hereof. This letter agreement may


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be modified or waived only by a separate writing executed by the Patties
expressly so modifying or waiving this letter agreement.

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     Please evidence your agreement with the foregoing by executing and
returning a duplicate of this letter agreement.

                              Sincerely,

                              R(2) INVESTMENTS, LDC

                              By: Amalgamated Gadget, L.P.,
                                  as Investment Manager,

                                  By:  Scepter Holdings, Inc.,
                                       its general partner

                                       By: __________________________________
                                           Name:
                                           Title:




Accepted and agreed to, as of the date
first above written:

MATTLINPATTERSON GLOBAL
OPPORTUNITIES FUND, L.P.

By:__________________________
Name:
Title:



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