Execution Copy


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                           SOS STAFFING SERVICES, INC.




        $5,000,000 - 6.72% Senior Notes, Series A, due September 1, 2003

        $30,000,000 - 6.95% Senior Notes, Series B, due September 1, 2008

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


                             NOTE PURCHASE AGREEMENT

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

                             Dated September 1, 1998


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<PAGE>

<TABLE>
                                TABLE OF CONTENTS
                          (Not a part of the Agreement)
<CAPTION>
 SECTION                                    HEADING                                     PAGE
 -------                                    -------                                     ----
<S>               <C>                                                                                           <C>
SECTION 1.        AUTHORIZATION OF NOTES; GUARANTIES............................................................-1-
         Section 1.1.      The Notes. ..........................................................................-1-
         Section 1.2.      Subsidiary Guaranty..................................................................-2-

SECTION 2.        SALE AND PURCHASE OF NOTES....................................................................-2-

SECTION 3.        CLOSING.......................................................................................-2-

SECTION 4.        CONDITIONS TO CLOSING.........................................................................-2-
         Section 4.1.      Representations and Warranties.......................................................-3-
         Section 4.2.      Performance; No Default..............................................................-3-
         Section 4.3.      Compliance Certificates..............................................................-3-
         Section 4.4.      Opinions of Counsel..................................................................-3-
         Section 4.5.      Delivery of Documents................................................................-3-
         Section 4.6.      Purchase Permitted By Applicable Law, etc............................................-3-
         Section 4.7.      Sale of Other Notes..................................................................-4-
         Section 4.8.      Payment of Special Counsel Fees......................................................-4-
         Section 4.9.      Private Placement Number.............................................................-4-
         Section 4.10.     Changes in Corporate Structure.......................................................-4-
         Section 4.11.     Proceedings and Documents............................................................-4-

SECTION 5.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................-4-
         Section 5.1.      Organization; Power and Authority....................................................-4-
         Section 5.2.      Authorization, etc...................................................................-5-
         Section 5.3.      Disclosure...........................................................................-5-
         Section 5.4.      Organization and Ownership of Shares of Subsidiaries; Affiliates.....................-5-
         Section 5.5.      Financial Statements.................................................................-6-
         Section 5.6.      Compliance with Laws, Other Instruments, etc.........................................-6-
         Section 5.7.      Governmental Authorizations, etc.....................................................-7-
         Section 5.8.      Litigation; Observance of Agreements, Statutes and Orders............................-7-
         Section 5.9.      Taxes................................................................................-7-
         Section 5.10.     Title to Property; Leases............................................................-8-
         Section 5.11.     Licenses, Permits, etc...............................................................-8-
         Section 5.12.     Compliance with ERISA................................................................-8-
         Section 5.13.     Private Offering by the Company......................................................-9-
         Section 5.14.     Use of Proceeds; Margin Regulations..................................................-9-
         Section 5.15.     Existing Indebtedness; Future Liens.................................................-10-
         Section 5.16.     Foreign Assets Control Regulations, etc.............................................-10-
         Section 5.17.     Status under Certain Statutes.......................................................-10-
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

<S>      <C>               <C>                                                                                 <C>
         Section 5.18.     Environmental Matters...............................................................-10-
         Section 5.19.     Solvency............................................................................-11-

SECTION 6.        REPRESENTATIONS OF THE PURCHASER.............................................................-11-
         Section 6.1.      Purchase for Investment.............................................................-11-
         Section 6.2.      Source of Funds.....................................................................-12-

SECTION 7.        INFORMATION AS TO COMPANY....................................................................-13-
         Section 7.1.      Financial and Business Information..................................................-13-
         Section 7.2.      Officer's Certificate...............................................................-16-
         Section 7.3.      Inspection..........................................................................-16-

SECTION 8.        PREPAYMENT OF THE NOTES......................................................................-17-
         Section 8.1.      Required Prepayments................................................................-17-
         Section 8.2.      Optional Prepayments with Make-Whole Amount.........................................-17-
         Section 8.3.      Allocation of Partial Prepayments...................................................-18-
         Section 8.4.      Maturity; Surrender, etc............................................................-18-
         Section 8.5.      Purchase of Notes...................................................................-18-
         Section 8.6.      Make-Whole Amount...................................................................-18-

SECTION 9.        AFFIRMATIVE COVENANTS........................................................................-20-
         Section 9.1.      Compliance with Law.................................................................-20-
         Section 9.2.      Insurance...........................................................................-20-
         Section 9.3.      Maintenance of Properties...........................................................-20-
         Section 9.4.      Payment of Taxes and Claims.........................................................-20-
         Section 9.5.      Corporate Existence, etc............................................................-21-
         Section 9.6.      New Subsidiaries....................................................................-21-

SECTION 10.       NEGATIVE COVENANTS...........................................................................-21-
         Section 10.1.     Transactions with Affiliates........................................................-21-
         Section 10.2.     Merger, Consolidation, etc..........................................................-21-
         Section 10.3.     Liens...............................................................................-22-
         Section 10.4.     Limitation on Total Indebtedness....................................................-24-
         Section 10.5.     Limitation on Subsidiary Indebtedness...............................................-24-
         Section 10.6.     Sale of Assets......................................................................-24-
         Section 10.7.     Minimum Consolidated Net Worth......................................................-25-
         Section 10.8.     Minimum Fixed Charge Coverage.......................................................-25-
         Section 10.9.     Line of Business....................................................................-25-
         Section 10.10.    Loans and Investments...............................................................-25-

SECTION 11.       EVENTS OF DEFAULT............................................................................-26-

SECTION 12.       REMEDIES ON DEFAULT, ETC.....................................................................-28-
         Section 12.1.     Acceleration........................................................................-28-
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>      <C>               <C>                                                                                 <C>
         Section 12.2.     Other Remedies......................................................................-29-
         Section 12.3.     Rescission..........................................................................-29-
         Section 12.4.     No Waivers or Election of Remedies, Expenses, etc...................................-30-

SECTION 13.       REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES................................................-30-
         Section 13.1.     Registration of Notes...............................................................-30-
         Section 13.2.     Transfer and Exchange of Notes......................................................-30-
         Section 13.3.     Replacement of Notes................................................................-31-

SECTION 14.       PAYMENTS ON NOTES............................................................................-31-
         Section 14.1.     Place of Payment....................................................................-31-
         Section 14.2.     Home Office Payment.................................................................-31-

SECTION 15.       EXPENSES, ETC................................................................................-32-
         Section 15.1.     Transaction Expenses................................................................-32-
         Section 15.2.     Survival............................................................................-32-

SECTION 16.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.................................-32-

SECTION 17.       AMENDMENT AND WAIVER.........................................................................-33-
         Section 17.1.     Requirements........................................................................-33-
         Section 17.2.     Solicitation of Holders of Notes....................................................-33-
         Section 17.3.     Binding Effect, etc.................................................................-33-
         Section 17.4.     Notes Held by Company, etc..........................................................-34-

SECTION 18.       NOTICES......................................................................................-34-

SECTION 19.       REPRODUCTION OF DOCUMENTS....................................................................-34-

SECTION 20.       CONFIDENTIAL INFORMATION.....................................................................-35-

SECTION 21.       SUBSTITUTION OF PURCHASER....................................................................-36-

SECTION 22.       MISCELLANEOUS................................................................................-36-
         Section 22.1.     Successors and Assigns..............................................................-36-
         Section 22.2.     Payments Due on Non-Business Days...................................................-36-
         Section 22.3.     Severability........................................................................-36-
         Section 22.4.     Construction........................................................................-36-
         Section 22.5.     Counterparts........................................................................-36-
         Section 22.6.     Governing Law.......................................................................-37-
</TABLE>

<PAGE>

         SCHEDULE A            --   INFORMATION RELATING TO PURCHASERs

         SCHEDULE B            --   DEFINED TERMs

         SCHEDULE 4.10         --   Changes in Corporate Structure

         SCHEDULE 5.3          --   Disclosure Materials

         SCHEDULE 5.4          --   Subsidiaries of the Company and Ownership of
                                    Subsidiary Stock

         SCHEDULE 5.5          --   Financial Statements

         SCHEDULE 5.8          --   Certain Litigation

         SCHEDULE 5.11         --   Patents, etc.

         SCHEDULE 5.12         --   ERISA Affiliates, etc.

         SCHEDULE 5.14         --   Use of Proceeds

         SCHEDULE 5.15         --   Existing Indebtedness

         EXHIBIT 1(a)          --   Form of 6.72%  Senior  Note,  Series  A, Due
                                    September 1, 2003

         EXHIBIT 1(b)          --   Form of 6.95%  Senior  Note,  Series  B, Due
                                    September 1, 2008

         EXHIBIT 1.2           --   Form of Subsidiary  Guaranty

         EXHIBIT  4.4(a)       --   Form of Opinion of Special  Counsel  for the
                                    Company

         EXHIBIT  4.4(b)       --   Form of Opinion of Special  Counsel  for the
                                    Purchasers

<PAGE>

                           SOS STAFFING SERVICES, INC.
                             1415 SOUTH MAIN STREET
                           SALT LAKE CITY, UTAH 84115


               6.72% Senior Notes, Series A, due September 1, 2003

               6.95% Senior Notes, Series B, due September 1, 2008


                                                               September 1, 1998


TO EACH OF THE PURCHASERS LISTED IN
 THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

         SOS Staffing Services, Inc., a Utah corporation (the "Company"), agrees
with you as follows:

SECTION 1.        AUTHORIZATION OF NOTES; GUARANTIES.

         Section 1.1.     The Notes.  The Company will  authorize  the issue and
sale of $5,000,000  aggregate principal amount of its 6.72% Senior Notes, Series
A, due  September  1, 2003 (the "Series A Notes") and  $30,000,000  of its 6.95%
Senior Notes, Series B, due September 1, 2008 (the "Series B Notes") (the Series
A Notes and the Series B Notes  hereinafter  are referred to collectively as the
"Notes,"  such term to include any such notes  issued in  substitution  therefor
pursuant to Section 13 of this Agreement or the Other Agreements (as hereinafter
defined).  Each of the Series A Notes shall bear  interest from the date thereof
until  such Note  shall  become due and  payable  in  accordance  with the terms
thereof and hereof  (whether at maturity,  by  acceleration or otherwise) at the
rate of 6.72% per annum. Each of the Series B Notes shall bear interest from the
date thereof until such Note shall become due and payable in accordance with the
terms thereof and hereof (whether at maturity,  by acceleration or otherwise) at
the rate of 6.95% per  annum.  Interest  on each Note shall be  computed  on the
basis of a 360 day year of twelve 30 day months.  Notwithstanding the foregoing,
the Company  shall pay interest on any overdue  payment  (including  any overdue
prepayment)  of  principal,  any  overdue  payment of  interest  and any overdue
payment of any  Make-Whole  Amount at the Default  Rate in  accordance  with the
Notes.  The Series A Notes shall be substantially in the form set out in Exhibit
1(a)  and the  Series  B Notes  shall  be  substantially  in the form set out in
Exhibit 1(b), with such changes therefrom, if any, as may be approved by you and
the Company.  Certain  capitalized  terms used in this  Agreement are defined in
Schedule B;  references to a "Schedule" or an "Exhibit"  are,  unless  otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.


<PAGE>

         Section 1.2.     Subsidiary    Guaranty.    The    Notes    shall    be
unconditionally  guaranteed by the Guarantors  pursuant to a Subsidiary Guaranty
dated as of the date  hereof made by the  Guarantors  in favor of the holders of
the Notes substantially in the form of Exhibit 1.2 hereto (as amended,  modified
and supplemented from time to time, the "Subsidiary Guaranty").

SECTION 2.        SALE AND PURCHASE OF NOTES.

         Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will  purchase  from the  Company,  at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in  Schedule  A at the  purchase  price  of 100%  of the  principal  amount
thereof.  Contemporaneously  with entering into this  Agreement,  the Company is
entering  into  separate  Note  Purchase  Agreements  (the  "Other  Agreements")
identical  with  this  Agreement  with  each of the  other  purchasers  named in
Schedule A (the "Other  Purchasers"),  providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified opposite
its name in Schedule A. Your  obligation  hereunder,  and the obligations of the
Other  Purchasers  under  the  Other  Agreements,  are  several  and  not  joint
obligations,  and you shall have no obligation  under any Other Agreement and no
liability  to any  Person for the  performance  or  nonperformance  by any Other
Purchaser thereunder.

SECTION 3.        CLOSING.

         The sale and purchase of the Notes to be purchased by you and the Other
Purchasers  shall occur at the  offices of  Altheimer  & Gray,  10 South  Wacker
Drive,  Chicago,  Illinois  60606 at 9:00 a.m.,  Chicago time, at a closing (the
"Closing") on September 1, 1998 or on such other  Business Day  thereafter on or
prior to  September 4, 1998 as may be agreed upon by the Company and you and the
Other Purchasers. At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such  greater  number of Notes
in  denominations of at least $100,000 as you may request) dated the date of the
Closing and  registered in your name (or in the name of your  nominee),  against
delivery by you to the Company or its order of  immediately  available  funds in
the amount of the  purchase  price  therefor  by wire  transfer  of  immediately
available funds for the account of the Company to account number 054 004 2249 at
First Security Bank,  N.A., 15 East 100 South,  2nd Floor,  Salt Lake City, Utah
84111,  ABA No. 124 000012.  If at the Closing the Company  shall fail to tender
such Notes to you as provided  above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to your  satisfaction,  you
shall,  at your  election,  be relieved of all  further  obligations  under this
Agreement,  without  thereby  waiving  any rights you may have by reason of such
failure or such nonfulfillment.

SECTION 4.        CONDITIONS TO CLOSING.

         Your  obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your  satisfaction,  prior to or at
the Closing, of the following conditions:



<PAGE>

         Section 4.1.     Representations  and Warranties.  The  representations
and warranties of the Company in this  Agreement,  the Other  Agreements and the
Subsidiary Guaranty shall be correct when made and at the time of the Closing.

         Section 4.2.     Performance;   No  Default.  The  Company  shall  have
performed  and complied with all  agreements  and  conditions  contained in this
Agreement  required to be  performed  or complied  with by it prior to or at the
Closing,  and after  giving  effect to the issue and sale of the Notes  (and the
application  of the  proceeds  thereof as  contemplated  by Schedule  5.14),  no
Default or Event of Default shall have occurred and be  continuing.  Neither the
Company nor any  Subsidiary  shall have entered into any  transaction  since the
date of the Memorandum that would have been  prohibited by Sections 10.1,  10.3,
10.4, 10.5 or 10.6 hereof had such Sections applied since such date.

         Section 4.3.     Compliance Certificates.

                  (a) Officer's Certificate. The Company shall have delivered to
         you an Officer's Certificate, dated the date of the Closing, certifying
         that the  conditions  specified in Sections 4.1, 4.2 and 4.10 have been
         fulfilled.

                  (b) Secretary's  Certificate.  The Company  and each Guarantor
         shall  have  delivered  to  you a  certificate  certifying  as  to  the
         resolutions  attached thereto and other corporate  proceedings relating
         to  the  authorization,  execution  and  delivery  of the  Notes,  this
         Agreement,  the Other  Agreements and the Subsidiary  Guaranty to which
         such person is a party.

         Section 4.4.     Opinions of Counsel.  You shall have received opinions
in form and  substance  satisfactory  to you,  dated the date of the Closing (a)
from (1)  John K.  Morrison,  Esq.,  General  Counsel  for the  Company  and the
Guarantors,  covering  matters 1 through 6 set forth in Exhibit  4.4(a) and (ii)
Parsons, Behle & Latimer,  counsel for the Company and the Guarantors,  covering
the  matters 3 and 7 through 9 set forth in  Exhibit  4.4(a) and  covering  such
other matters  incident to the transactions  contemplated  hereby as you or your
counsel  may  reasonably  request  (and the Company  and the  Guarantors  hereby
instruct its counsel to deliver  such  opinion to you) and (b) from  Altheimer &
Gray, your special counsel in connection with such  transactions,  substantially
in the form set forth in Exhibit 4.4(b) and covering such other matters incident
to such transactions as you may reasonably request.

         Section  4.5.    Delivery  of  Documents.  This  Agreement,  the  Other
Agreements  and the  Subsidiary  Guaranty  shall  have  been duly  executed  and
delivered in the respective forms hereinabove recited and shall be in full force
and effect.

         Section 4.6.     Purchase Permitted By Applicable Law, etc. On the date
of the Closing  your  purchase of Notes shall (i) be  permitted  by the laws and
regulations of each  jurisdiction to which you are subject,  without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to the

<PAGE>

character of the particular  investment,  (ii) not violate any applicable law or
regulation (including, without limitation,  Regulation G, T or X of the Board of
Governors of the Federal  Reserve  System) and (iii) not subject you to any tax,
penalty or  liability  under or pursuant to any  applicable  law or  regulation,
which law or  regulation  was not in effect on the date hereof.  If requested by
you, you shall have  received an  Officer's  Certificate  certifying  as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.

         Section 4.7.     Sale  of  Other  Notes.   Contemporaneously  with  the
Closing,  the  Company  shall  sell  to the  Other  Purchasers,  and  the  Other
Purchasers  shall  purchase  the Notes to be purchased by them at the Closing as
specified in Schedule A.

         Section 4.8.     Payment of Special Counsel Fees.  Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the fees,  charges and  disbursements  of your  special  counsel  referred to in
Section 4.4 to the extent  reflected in a statement of such counsel  rendered to
the Company at least one Business Day prior to the Closing.

         Section 4.9.     Private  Placement  Number. A Private Placement number
issued by  Standard  & Poor's  CUSIP  Service  Bureau (in  cooperation  with the
Securities   Valuation   Office  of  the  National   Association   of  Insurance
Commissioners) shall have been obtained for the Notes.

         Section 4.10.    Changes in Corporate Structure. Except as specified in
Schedule  4.10,  the  Company  shall  not  have  changed  its   jurisdiction  of
incorporation or been a party to any merger or consolidation  and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial  statements referred
to in Schedule 5.5.

         Section 4.11.    Proceedings  and  Documents.  All  corporate and other
proceedings in connection with the  transactions  contemplated by this Agreement
and all  documents  and  instruments  incident  to such  transactions  shall  be
satisfactory to you and your special  counsel,  and you and your special counsel
shall have received all such counterpart  originals or certified or other copies
of such documents as you or they may reasonably request.

SECTION 5.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to you that:

         Section 5.1.     Organization;  Power and  Authority.  The  Company and
each Guarantor is a corporation  duly  organized,  validly  existing and in good
standing  under  the  laws of its  jurisdiction  of  incorporation,  and is duly
qualified as a foreign  corporation and is in good standing in each jurisdiction
in which such  qualification is required by law, other than those  jurisdictions
as to which the  failure  to be so  qualified  or in good  standing  could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect. The Company and each Guarantor has all requisite corporate power
and  authority to own or hold under lease the  properties  it purports to own or
hold under  lease,  to  transact  the  business  it  transacts  and  proposes to

<PAGE>

transact, to execute and deliver this Agreement, the Other Agreements, the Notes
and the Subsidiary Guaranty and to perform the provisions hereof and thereof.

         Section 5.2.     Authorization,   etc.   This   Agreement,   the  Other
Agreements,  the Notes and the Subsidiary  Guaranty have been duly authorized by
all  necessary  corporate  action on the part of the Company and each  Guarantor
that is a party  thereto,  and this  Agreement,  the  Other  Agreements  and the
Subsidiary  Guaranty  constitute,  and upon execution and delivery  thereof each
Note will constitute,  a legal,  valid and binding obligation of the Company and
each Guarantor that is a party thereto  enforceable against the Company and such
Guarantor in accordance  with its terms,  except as such  enforceability  may be
limited by (i) applicable bankruptcy, insolvency, reorganization,  moratorium or
other similar laws affecting the enforcement of creditors'  rights generally and
(ii) general principles of equity (regardless of whether such  enforceability is
considered in a proceeding in equity or at law).

         Section 5.3.     Disclosure.  The  Company,  through  its agent,  First
Chicago  Capital  Markets,  Inc. has delivered to you and each Other Purchaser a
copy of a Confidential Offering Memorandum, dated July, 1998 (the "Memorandum"),
relating  to  the  transactions   contemplated  hereby.  The  Memorandum  fairly
describes,  in all  material  respects,  the general  nature of the business and
principal properties of the Company and its Subsidiaries. Except as disclosed in
Schedule 5.3, this  Agreement,  the Memorandum,  the documents,  certificates or
other  writings  delivered  to you by or on behalf of the  Company or any of its
Subsidiaries in connection  with the  transactions  contemplated  hereby and the
financial  statements  listed in Schedule 5.5, taken as a whole,  do not contain
any untrue  statement  of a  material  fact or omit to state any  material  fact
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances  under which they were made. Except as disclosed in the Memorandum
or as  expressly  described  in  Schedule  5.3,  or in  one  of  the  documents,
certificates  or  other  writings   identified  therein,  or  in  the  financial
statements listed in Schedule 5.5, since March 29, 1998 there has been no change
in the financial condition, operations, business, properties or prospects of the
Company or any of its  Subsidiaries  except changes that  individually or in the
aggregate  could not reasonably be expected to have a Material  Adverse  Effect.
There is no fact  known to the  Company  or any of its  Subsidiaries  that could
reasonably be expected to have a Material  Adverse  Effect that has not been set
forth herein or in the Memorandum or in the other  documents,  certificates  and
other  writings  delivered  to you by or on behalf of the  Company or any of its
Subsidiaries   specifically   for  use  in  connection  with  the   transactions
contemplated hereby.

         Section 5.4.     Organization  and Ownership of Shares of Subsidiaries;
Affiliates.

                  (a) Schedule 5.4 contains  (except as noted therein)  complete
         and correct lists (i) of the  Company's  Subsidiaries,  showing,  as to
         each  Subsidiary,  the correct name thereof,  the  jurisdiction  of its
         organization, and the percentage of shares of each class of its capital
         stock or similar equity interests  outstanding owned by the Company and
         each other  Subsidiary,  (ii) of the Company's  Affiliates,  other than
         Subsidiaries, and (iii) of the Company's directors and senior officers.

<PAGE>

                  (b) All of the outstanding  shares of capital stock or similar
         equity  interests  of each  Subsidiary  shown in Schedule  5.4 as being
         owned by the Company and its Subsidiaries have been validly issued, are
         fully paid and  nonassessable  and are owned by the  Company or another
         Subsidiary free and clear of any Lien (except as otherwise disclosed in
         Schedule 5.4).

                  (c) Each   Subsidiary   identified   in   Schedule  5.4  is  a
         corporation or other legal entity duly organized,  validly existing and
         in good standing under the laws of its  jurisdiction  of  organization,
         and is duly  qualified as a foreign  corporation  or other legal entity
         and  is  in  good   standing  in  each   jurisdiction   in  which  such
         qualification is required by law, other than those  jurisdictions as to
         which the failure to be so  qualified  or in good  standing  could not,
         individually  or in  the  aggregate,  reasonably  be  expected  have  a
         Material  Adverse  Effect.  Each such  Subsidiary  has the corporate or
         other power and authority to own or hold under lease the  properties it
         purports  to own or hold under lease and to  transact  the  business it
         transacts and proposes to transact.

                  (d) No Subsidiary  is a party to, or otherwise  subject to any
         legal  restriction  or any agreement  (other than this  Agreement,  the
         agreements listed on Schedule 5.4 and customary  limitations imposed by
         corporate law statutes)  restricting  the ability of such Subsidiary to
         pay dividends out of profits or make any other similar distributions of
         profits to the Company or any of its Subsidiaries that owns outstanding
         shares of capital stock or similar equity interests of such Subsidiary.

         Section 5.5.     Financial  Statements.  The Company has  delivered  to
each  Purchaser  copies  of the  financial  statements  of the  Company  and its
Subsidiaries listed on Schedule 5.5. All of said financial statements (including
in each case the related  schedules  and notes)  fairly  present in all material
respects the consolidated financial position of the Company and its Subsidiaries
as of the  respective  dates  specified in such  Schedule  and the  consolidated
results  of their  operations  and cash  flows  for the  respective  periods  so
specified and have been prepared in accordance  with GAAP  consistently  applied
throughout  the  periods  involved  except  as set  forth in the  notes  thereto
(subject,  in the case of any interim financial  statements,  to normal year-end
adjustments).

         Section  5.6.    Compliance  with Laws,  Other  Instruments,  etc.  The
execution,  delivery and  performance  by the Company and each Guarantor of this
Agreement, the Other Agreements,  the Notes and the Subsidiary Guaranty will not
(i)  contravene,  result in any breach of, or  constitute  a default  under,  or
result in the  creation of any Lien in respect of any property of the Company or
any of its Subsidiaries  under, any indenture,  mortgage,  deed of trust,  loan,
purchase or credit agreement,  lease, corporate charter or by-laws, or any other
agreement or instrument to which the Company or any of its Subsidiaries is bound
or by which the Company or any of its  Subsidiaries  or any of their  respective
properties may be bound or affected, (ii) conflict with or result in a breach of
any of the terms,  conditions or provisions of any order,  judgment,  decree, or
ruling of any court,  arbitrator  or  Governmental  Authority  applicable to the
Company or any of its Subsidiaries or (iii) violate any provision of any statute
or other rule or  regulation  of any  Governmental  Authority  applicable to the
Company or any of its Subsidiaries.

<PAGE>

         Section 5.7.     Governmental Authorizations, etc. No consent, approval
or  authorization   of,  or  registration,   filing  or  declaration  with,  any
Governmental Authority is required in connection with the execution, delivery or
performance  by the  Company  or any  Guarantor  of this  Agreement,  the  Other
Agreements, the Notes or the Subsidiary Guaranty.

         Section 5.8.     Litigation;  Observance  of  Agreements,  Statutes and
Orders.

                  (a) Except as disclosed in Schedule 5.8, there are no actions,
         suits or  proceedings  pending  or, to the  knowledge  of the  Company,
         threatened  against or affecting the Company or any of its Subsidiaries
         or any property of the Company or any of its  Subsidiaries in any court
         or before any  arbitrator of any kind or before or by any  Governmental
         Authority that,  individually or in the aggregate,  could reasonably be
         expected to have a Material Adverse Effect.

                  (b) Neither  the  Company  nor any of its  Subsidiaries  is in
         default  under any term of any agreement or instrument to which it is a
         party or by which it is bound, or any order, judgment, decree or ruling
         of any court,  arbitrator or Governmental  Authority or is in violation
         of any applicable law, ordinance, rule or regulation (including without
         limitation  Environmental  Laws) of any Governmental  Authority,  which
         default  or  violation,   individually  or  in  the  aggregate,   could
         reasonably be expected to have a Material Adverse Effect.

         Section 5.9.     Taxes. The Company and its Subsidiaries have filed all
tax returns that are required to have been filed in any  jurisdiction,  and have
paid all taxes shown to be due and  payable on such  returns and all other taxes
and  assessments  levied  upon  them or  their  properties,  assets,  income  or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any taxes and assessments (i)
the amount of which is not individually or in the aggregate Material or (ii) the
amount,  applicability or validity of which is currently being contested in good
faith by  appropriate  proceedings  and with  respect to which the  Company or a
Subsidiary,  as the case may be, has established adequate reserves in accordance
with GAAP.  The Company knows of no basis for any other tax or  assessment  that
could  reasonably be expected to have a Material  Adverse  Effect.  The charges,
accruals  and  reserves  on the books of the  Company  and its  Subsidiaries  in
respect of Federal,  state or other taxes for all fiscal  periods are  adequate.
The Company and its Subsidiaries have paid all Federal income tax liabilities of
the Company and its  Subsidiaries  for all fiscal years up to and  including the
fiscal year ended December 31, 1997.

         Section 5.10.    Title to Property; Leases. The Company and each of its
Subsidiaries has good and sufficient  title to their respective  properties that
individually  or in the aggregate are  Material,  including all such  properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any of its Subsidiaries  after
said date  (except as sold or otherwise  disposed of in the  ordinary  course of

<PAGE>

business),  in each case free and clear of Liens  prohibited by this  Agreement.
All leases that  individually  or in the  aggregate  are  Material are valid and
subsisting and are in full force and effect in all material respects.

         Section 5.11.    Licenses,   Permits,   etc.  Except  as  disclosed  in
Schedule 5.11,

                  (a) the  Company and each of its  Subsidiaries  own or possess
         all licenses, permits, franchises, authorizations, patents, copyrights,
         service marks,  trademarks  and trade names,  or rights  thereto,  that
         individually  or in the aggregate are Material,  without known conflict
         with the rights of others;

                  (b) to the  best  knowledge  of the  Company,  no  product  or
         practice of the  Company or any of its  Subsidiaries  infringes  in any
         material respect any license, permit, franchise, authorization, patent,
         copyright,  service mark, trademark, trade name or other right owned by
         any other Person; and

                  (c) to the best knowledge of the Company, there is no Material
         violation  by any  Person  of any  right of the  Company  or any of its
         Subsidiaries  with  respect to any  patent,  copyright,  service  mark,
         trademark,  trade name or other  right  owned or used by the Company or
         any of its Subsidiaries.

         Section 5.12.    Compliance with ERISA.

                  (a) Neither  the   Company  nor  any  ERISA   Affiliate   has
         maintained,  contributed  or  participated  in a plan that is a defined
         benefit plan (as defined in Section 3(35) of ERISA) or a  Multiemployer
         Plan at any time.

                  (b) The Company and each ERISA  Affiliate  have  operated  and
         administered  each Plan in compliance  with all applicable  laws except
         for such instances of  noncompliance  as have not resulted in and could
         not  reasonably  be  expected to result in a Material  Adverse  Effect.
         Neither the Company nor any ERISA  Affiliate has incurred any liability
         pursuant  to  Title I or IV of  ERISA  or the  penalty  or  excise  tax
         provisions of the Code  relating to employee  benefit plans (as defined
         in Section 3 of ERISA),  and no event,  transaction  or  condition  has
         occurred or exists that could  reasonably  be expected to result in the
         incurrence of any such liability by the Company or any ERISA Affiliate,
         or in the  imposition  of any Lien on any of the rights,  properties or
         assets of the Company or any ERISA  Affiliate,  in either case pursuant
         to Title I or IV of ERISA or to such  penalty or excise tax  provisions
         or  to  Section  401(a)(29)  or  412  of  the  Code,  other  than  such
         liabilities or Liens as would not be  individually  or in the aggregate
         Material.

                  (c) The   expected    post-retirement    benefit    obligation
(determined  as of the last day of the Company's most recently ended fiscal year
in accordance  with  Financial  Accounting  Standards  Board  Statement No. 106,
without regard to liabilities  attributable to continuation coverage mandated by
section  4980B of the Code) of the Company and each of its  Subsidiaries  is not
Material.

<PAGE>

                  (d) The  execution  and  delivery  of this  Agreement  and the
         issuance  and  sale  of  the  Notes  hereunder  will  not  involve  any
         transaction that is subject to the prohibitions of section 406 of ERISA
         or in connection with which a tax could be imposed  pursuant to section
         4975(c)(1)(A)-(D) of the Code. The representation by the Company in the
         first  sentence of this  Section  5.12(d) is made in reliance  upon and
         subject to the accuracy of your representation in Section 6.2 as to the
         sources of the funds used to pay the purchase  price of the Notes to be
         purchased by you. Schedule 5.12 contains a complete and correct list of
         all ERISA Affiliates and all Plans with respect to which the Company or
         any  Affiliate  is a party in interest or in respect of which the Notes
         could  constitute an employer  security.  For purposes of this Section,
         the term "party in interest" has the meaning  specified in section 3 of
         ERISA  and the  terms  "affiliate"  and  "employer  security"  have the
         meaning  specified in section  V(a)(1) and V(c),  respectively,  of PTE
         95-60.

         Section 5.13.    Private  Offering by the Company.  Neither the Company
nor anyone acting on its behalf has offered the Notes or any similar  securities
for sale to, or  solicited  any offer to buy any of the same from,  or otherwise
approached or negotiated in respect thereof with, any person other than you, the
Other  Purchasers and not more than 33 other  Institutional  Investors,  each of
which has been offered the Notes at a private sale for  investment.  Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the registration requirements
of Section 5 of the Securities Act.

         Section 5.14.    Use of Proceeds; Margin Regulations.  The Company will
apply the  proceeds of the sale of the Notes as set forth in Schedule  5.14.  No
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal  Reserve System
(12 CFR 207),  or for the  purpose  of  buying or  carrying  or  trading  in any
securities under such  circumstances as to involve the Company in a violation of
Regulation  X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation  of  Regulation  T of said Board (12 CFR 220).  Margin  stock does not
constitute more than 0% of the value of the  consolidated  assets of the Company
and its  Subsidiaries  and the Company does not have any present  intention that
margin stock will constitute  more than 5% of the value of such assets.  As used
in this Section,  the terms  "margin  stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation G.

         Section 5.15.    Existing Indebtedness; Future Liens.

                  (a) Except as described  therein,  Schedule  5.15 sets forth a
         complete  and  correct  list  of all  outstanding  Indebtedness  of the
         Company and its  Subsidiaries  as of August 27, 1998,  since which date
         there has been no  Material  change  in the  amounts,  interest  rates,
         sinking funds,  installment  payments or maturities of the Indebtedness
         of the  Company  or its  Subsidiaries.  Neither  the  Company  nor  any
         Subsidiary  is in  default  and no waiver of default  is  currently  in
         effect, in the payment of any principal or interest on any Indebtedness
         of the Company or such Subsidiary and no event or condition exists with
         respect to any Indebtedness of the Company or any Subsidiary that would

<PAGE>

         permit  (or that  with  notice  or the  lapse of time,  or both,  would
         permit) one or more  Persons to cause such  Indebtedness  to become due
         and  payable  before  its  stated  maturity  or  before  its  regularly
         scheduled dates of payment.

                  (b) Except as disclosed in Schedule 5.15,  neither the Company
         nor any of its  Subsidiaries has agreed or consented to cause or permit
         in the future (upon the happening of a contingency or otherwise) any of
         its property, whether now owned or hereafter acquired, to be subject to
         a Lien not permitted by Section 10.3.

         Section 5.16.    Foreign Assets Control  Regulations,  etc. Neither the
sale of the Notes by the Company  hereunder nor its use of the proceeds  thereof
will violate the Trading  with the Enemy Act, as amended,  or any of the foreign
assets  control  regulations of the United States  Treasury  Department (31 CFR,
Subtitle B,  Chapter V, as amended) or any  enabling  legislation  or  executive
order relating thereto.

         Section 5.17.    Status under Certain Statutes. Neither the Company nor
any of its  Subsidiaries is subject to regulation  under the Investment  Company
Act of 1940,  as amended,  the Public  Utility  Holding  Company Act of 1935, as
amended,  the Transportation  Acts (49 U.S.C.), as amended, or the Federal Power
Act, as amended.

         Section 5.18.    Environmental Matters.  Neither the Company nor any of
its Subsidiaries has knowledge of any claim or has received any notice of claim,
and no proceeding has been  instituted  raising any claim against the Company or
any of its  Subsidiaries  or any of  their  respective  real  properties  now or
formerly owned, leased or operated by any of them or other assets,  alleging any
damage to the environment or violation of any  Environmental  Laws,  except,  in
each case,  such as could not  reasonably  be  expected  to result in a Material
Adverse Effect. Except as otherwise disclosed to you in writing:

                  (a) neither  the  Company  nor  any  of its  Subsidiaries  has
         knowledge  of any facts which  would give rise to any claim,  public or
         private,   of  violation  of  Environmental   Laws  or  damage  to  the
         environment  emanating from, occurring on or in any way related to real
         properties now or formerly owned,  leased or operated by any of them or
         to other assets or their use,  except,  in each case, such as could not
         reasonably be expected to result in a Material Adverse Effect;

                  (b) neither the Company nor any of its Subsidiaries has stored
         any  Hazardous  Materials  on real  properties  now or formerly  owned,
         leased or operated by any of them and has not disposed of any Hazardous
         Materials in a manner contrary to any  Environmental  Laws in each case
         in any manner that could reasonably be expected to result in a Material
         Adverse Effect; and

                  (c) all buildings on all real properties now owned,  leased or
         operated by the Company or any of its  Subsidiaries  are in  compliance

<PAGE>

         with  applicable  Environmental  Laws,  except where  failure to comply
         could not  reasonably  be  expected  to result  in a  Material  Adverse
         Effect.

         Section 5.19.    Solvency.  The Company and each  Guarantor  is Solvent
and,  immediately after giving effect to the issue and sale of the Notes and the
consummation  of the other  transactions  contemplated  by this  Agreement,  the
Company and each Guarantor  will be Solvent.  For purposes of this Section 5.19,
the term "Solvent" shall mean, with respect to any Person, that:

                  (a) the assets of such Person,  at a fair valuation  (assuming
         that, in each case, legally permissible capital contributions have been
         made whether or not such  contributions are actually made),  exceed the
         total liabilities  (including contingent,  subordinated,  unmatured and
         unliquidated liabilities) of such Person;

                  (b) such Person believes it has sufficient cash flow to enable
it to pay its debts as they mature; and

                  (c) such Person does not have unreasonably  small capital with
which to engage in its anticipated business.

SECTION 6.        REPRESENTATIONS OF THE PURCHASER.

         Section  6.1.    Purchase for  Investment.  You represent  that you are
purchasing  the Notes for your own account or for one or more separate  accounts
maintained  by you or for the account of one or more  pension or trust funds and
not with a view to the  distribution  thereof,  provided that the disposition of
your or their property  shall at all times be within your or their control.  You
understand that the Notes have not been registered  under the Securities Act and
may be resold only if registered  pursuant to the  provisions of the  Securities
Act  or  if  an  exemption  from   registration   is  available,   except  under
circumstances  where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.

         Section 6.2.  Source of Funds.  You represent  that at least one of the
following statements is an accurate representation as to each source of funds (a
"Source")  to be  used by you to pay  the  purchase  price  of the  Notes  to be
purchased by you hereunder:

                  (a) the Source is an "insurance  company  general  account" as
         defined in the United States Department of Labor Prohibited Transaction
         Exemption  ("PTE")  95-60 (60 FR 35925,  July 12,  1995) and in respect
         thereof you  represent  that there is no  "employee  benefit  plan" (as
         defined in Section  3(3) of ERISA and Section  4975(e)(1)  of the Code)
         established  or maintained by you,  treating as a single plan all plans
         maintained by the same employer or employee  organization  or affiliate
         thereof,  with  respect  to which  the  amount of the  general  account
         reserves and  liabilities of all contracts held by or on behalf of such
         plan exceeds 10% of the total reserves and  liabilities of such general
         account  (exclusive of separate account  liabilities) PLUS surplus,  as
         set  forth in the  National  Association  of  Insurance  Commissioners'
         Annual Statement filed with your state of domicile; or

<PAGE>

                  (b) if you are an  insurance  company,  the  Source  does  not
         include assets allocated to any separate  account  maintained by you in
         which  any  employee  benefit  plan  (or  its  related  trust)  has any
         interest,  other than a separate  account that is maintained  solely in
         connection  with your fixed  contractual  obligations  under  which the
         amounts  payable,  or credited,  to such plan and to any participant or
         beneficiary of such plan  (including any annuitant) are not affected in
         any manner by the investment performance of the separate account; or

                  (c) the  Source  is either  (i) an  insurance  company  pooled
         separate  account,  within the meaning of PTE 90-1 (issued  January 29,
         1990), or (ii) a bank collective investment fund, within the meaning of
         the PTE 91-38 (issued July 12, 1991) and,  except as you have disclosed
         to the Company in writing  pursuant to this  paragraph (c), no employee
         benefit  plan or group  of plans  maintained  by the same  employer  or
         employee  organization  beneficially  owns more than 10% of all  assets
         allocated  to such pooled  separate  account or  collective  investment
         fund; or

                  (d) the  Source  constitutes  assets of an  "investment  fund"
         (within  the  meaning of Part V of PTE 84-14  (the  "QPAM  Exemption"))
         managed by a "qualified  professional  asset manager" or "QPAM" (within
         the  meaning  of Part V of the QPAM  Exemption),  no  employee  benefit
         plan's assets that are included in such investment  fund, when combined
         with the assets of all other  employee  benefit  plans  established  or
         maintained by the same employer or by an affiliate  (within the meaning
         of Section  V(c)(1) of the QPAM  Exemption)  of such employer or by the
         same employee  organization and managed by such QPAM, exceed 20% of the
         total client assets  managed by such QPAM,  the conditions of Part I(c)
         and (g) of the QPAM  Exemption  are  satisfied,  neither the QPAM nor a
         person  controlling  or controlled by the QPAM (applying the definition
         of "control" in Section V(e) of the QPAM  Exemption)  owns a 5% or more
         interest in the Company and (i) the  identity of such QPAM and (ii) the
         names of all employee  benefit  plans whose assets are included in such
         investment fund have been disclosed to the Company in writing  pursuant
         to this paragraph (d); or

                  (e) the Source is a governmental plan; or

                  (f) the Source is one or more  employee  benefit  plans,  or a
         separate  account  or  trust  fund  comprised  of one or more  employee
         benefit  plans,  each of which has been  identified  to the  Company in
         writing pursuant to this paragraph (f); or

                  (g) the Source does not include assets of any employee benefit
         plan,  other  than a plan  exempt  from the  coverage  of ERISA and the
         provisions of Section 4975 of the Code.

         As used  in this  Section  6.2,  the  terms  "employee  benefit  plan,"
         "governmental  plan," "party in interest" and "separate  account" shall
         have the  respective  meanings  assigned  to such terms in Section 3 of
         ERISA.

<PAGE>

SECTION 7.        INFORMATION AS TO COMPANY.,

         Section 7.1.     Financial and Business Information.  The Company shall
deliver to each holder of Notes that is an Institutional Investor:

                  (a) Quarterly  Statements  -- within 60  days after the end of
         each quarterly  fiscal period in each fiscal year of the Company (other
         than the last  quarterly  fiscal  period  of each  such  fiscal  year),
         duplicate copies of:

                           (i)    the consolidated  balance sheet of the Company
                  and its Subsidiaries as at the end of such quarter,

                           (ii)   the  consolidated  statements of income of the
                  Company  and its  Subsidiaries  for such  quarter  and for the
                  portion of the fiscal year ending with such quarter, and

                           (iii)  changes in cash flows of the  Company  and its
                  Subsidiaries  for the  portion of the fiscal  year ending with
                  such quarter,

         setting  forth in each case in  comparative  form the  figures  for the
         corresponding  periods in the previous  fiscal year,  all in reasonable
         detail,  prepared  in  accordance  with GAAP  applicable  to  quarterly
         financial  statements  generally,  and certified by a Senior  Financial
         Officer as fairly presenting,  in all material respects,  the financial
         position  of the  companies  being  reported  on and their  results  of
         operations and cash flows,  subject to changes  resulting from year-end
         adjustments,  provided that delivery  within the time period  specified
         above of copies of the Company's Quarterly Report on Form 10-Q prepared
         in  compliance  with  the  requirements  therefor  and  filed  with the
         Securities  and  Exchange  Commission  shall be deemed to  satisfy  the
         requirements of this Section 7.1(a);

                  (b) Annual  Statements-- within 105 days after the end of each
          fiscal year of the Company, duplicate copies of,

                           (i)    the consolidated  balance sheet of the Company
                  and its Subsidiaries, as at the end of such year, and

                           (ii)   the consolidated statements of income, changes
                  in shareholders'  equity and cash flows of the Company and its
                  Subsidiaries, for such year,

         setting  forth in each case in  comparative  form the  figures  for the
         previous fiscal year, all in reasonable detail,  prepared in accordance
         with GAAP, and accompanied

                                 (A) by  an  opinion   thereon  of   independent
                           certified public  accountants of recognized  national
                           standing,   which   opinion  shall  state  that  such
                           financial  statements present fairly, in all material
                           respects,  the  financial  position of the  companies
                           being  reported  upon and their results of operations
                           and cash flows and have been  prepared in  conformity

<PAGE>

                           with  GAAP,   and  that  the   examination   of  such
                           accountants   in  connection   with  such   financial
                           statements has been made in accordance with generally
                           accepted  auditing  standards,  and that  such  audit
                           provides a  reasonable  basis for such opinion in the
                           circumstances, and

                                 (B) a certificate of such  accountants  stating
                           that they have  reviewed  this  Agreement and stating
                           further  whether,  in making their  audit,  they have
                           become  aware of any  condition  or event  that  then
                           constitutes a Default or an Event of Default  insofar
                           as it relates to accounting matters, and, if they are
                           aware that any such  condition  or event then exists,
                           specifying  the nature  and  period of the  existence
                           thereof,

         provided that the delivery  within the time period  specified  above of
         the Company's Annual Report on Form 10-K for such fiscal year (together
         with the Company's  annual  report to  shareholders,  if any,  prepared
         pursuant to Rule 14a-3 under the Exchange  Act)  prepared in accordance
         with the  requirements  therefor  and  filed  with the  Securities  and
         Exchange  Commission,   together  with  the  accountant's   certificate
         described  in  clause  (B)  above,  shall  be  deemed  to  satisfy  the
         requirements of this Section 7.1(b);

                  (c) SEC and Other  Reports --  promptly  upon  their  becoming
         available, one copy of (i) each financial statement,  report, notice or
         proxy  statement  sent by the  Company  or any of its  Subsidiaries  to
         public securities holders generally,  and (ii) each regular or periodic
         report,  each  registration   statement  (without  exhibits  except  as
         expressly  requested  by such  holder),  and  each  prospectus  and all
         amendments thereto filed by the Company or any of its Subsidiaries with
         the  Securities  and Exchange  Commission and of all press releases and
         other statements made available  generally by the Company or any of its
         Subsidiaries to the public concerning developments that are Material;

                  (d) Notice of Default or Event of Default -- promptly,  and in
         any event within five days after a Responsible  Officer  becoming aware
         of the  existence of any Default or Event of Default or that any Person
         has given any  notice or taken any  action  with  respect  to a claimed
         default  hereunder or that any Person has given any notice or taken any
         action  with  respect to a claimed  default of the type  referred to in
         Section  11(f),  a written  notice  specifying the nature and period of
         existence  thereof and what action the Company is taking or proposes to
         take with respect thereto;

                  (e) ERISA  Matters --  promptly,  and in any event within five
         days  after  a  Responsible  Officer  becoming  aware  of  any  of  the
         following,  a written  notice  setting forth the nature thereof and the
         action, if any, that the Company or an ERISA Affiliate proposes to take
         with respect thereto:

                           (i) with respect to any Plan, any  reportable  event,
                  as  defined in  section  4043(b) of ERISA and the  regulations
                  thereunder,  for  which  notice  thereof  has not been  waived
                  pursuant to such  regulations as in effect on the date hereof;
                  or

<PAGE>

                           (ii)   the taking by the PBGC of steps to  institute,
                  or  the  threatening  by  the  PBGC  of  the  institution  of,
                  proceedings  under  section 4042 of ERISA for the  termination
                  of, or the  appointment of a trustee to administer,  any Plan,
                  or the  receipt  by the  Company or any ERISA  Affiliate  of a
                  notice  from a  Multiemployer  Plan that such  action has been
                  taken by the PBGC with respect to such Multiemployer Plan;

                           (iii)  any event, transaction or condition that could
                  result in the  incurrence  of any  liability by the Company or
                  any ERISA Affiliate  pursuant to Title I or IV of ERISA or the
                  penalty  or excise  tax  provisions  of the Code  relating  to
                  employee  benefit  plans,  or in the imposition of any Lien on
                  any of the rights,  properties or assets of the Company or any
                  ERISA  Affiliate  pursuant  to  Title I or IV of ERISA or such
                  penalty or excise tax  provisions,  if such liability or Lien,
                  taken  together with any other such  liabilities or Liens then
                  existing,  could  reasonably  be  expected  to have a Material
                  Adverse Effect; or

                           (iv)   any  change  in the  parties  which,  upon the
                  occurrence  of such  event,  would be required to be listed on
                  Schedule  5.12 after  Closing and before the later of (A) full
                  prepayment (including any Make-Whole Amount) of or (B) sale of
                  the Notes by the initial holder of the Notes;

                  (f) Notices from  Governmental  Authority -- promptly,  and in
         any event  within 30 days of receipt  thereof,  copies of any notice to
         the Company or any  Subsidiary  from any Federal or state  Governmental
         Authority  relating  to any  order,  ruling,  statute  or other  law or
         regulation that could reasonably be expected to have a Material Adverse
         Effect; and

                  (g) Requested Information -- with reasonable promptness,  such
         other  data  and  information  relating  to the  business,  operations,
         affairs,  financial  condition,  assets or properties of the Company or
         any of its  Subsidiaries  or  relating to the ability of the Company to
         perform  its  obligations  hereunder  and under the Notes and the Other
         Agreements or the ability of any  Guarantor to perform its  obligations
         under the  Subsidiary  Guaranty as from time to time may be  reasonably
         requested by any such holder of Notes.

         Section 7.2.     Officer's   Certificate.   Each   set   of   financial
statements  delivered to a holder of Notes pursuant to Section 7.1(a) or Section
7.1(b)  hereof  shall be  accompanied  by a  certificate  of a Senior  Financial
Officer setting forth:

                  (a) Covenant Compliance -- the information (including detailed
         calculations) required in order to establish whether the Company was in
         compliance  with the  requirements of Section 10.3 through Section 10.8
         and Section  10.10  hereof,  inclusive,  during the quarterly or annual
         period covered by the statements then being  furnished  (including with
         respect to each such Section, where applicable, the calculations of the
         maximum or minimum  amount,  ratio or  percentage,  as the case may be,
         permissible  under the terms of such Sections,  and the  calculation of
         the amount, ratio or percentage then in existence); and

<PAGE>

                  (b) Event of  Default -- a  statement  that such  officer  has
         reviewed the relevant  terms hereof and has made, or caused to be made,
         under  his  or her  supervision,  a  review  of  the  transactions  and
         conditions  of the Company and its  Subsidiaries  from the beginning of
         the quarterly or annual  period  covered by the  statements  then being
         furnished to the date of the certificate and that such review shall not
         have  disclosed  the  existence  during such period of any condition or
         event that constitutes a Default or an Event of Default or, if any such
         condition or event existed or exists  (including,  without  limitation,
         any such event or condition  resulting  from the failure of the Company
         or any of its  Subsidiaries  to  comply  with any  Environmental  Law),
         specifying  the nature and period of existence  thereof and what action
         the Company shall have taken or proposes to take with respect thereto.

         Section 7.3.     Inspection.  The  Company  shall,  and shall cause its
Subsidiaries to, permit the  representatives  of each holder of Notes that is an
Institutional Investor:

                  (a) No  Default  -- if no  Default  or Event of  Default  then
         exists,  at the expense of such holder and upon reasonable prior notice
         to the Company,  to visit the principal executive office of the Company
         or any of its  Subsidiaries,  to  discuss  the  affairs,  finances  and
         accounts of the Company and each of its Subsidiaries with such Person's
         officers,  and (with the consent of such Person, which consent will not
         be unreasonably withheld) its independent public accountants, and (with
         the consent of the  Company,  which  consent  will not be  unreasonably
         withheld) to visit the other offices and  properties of the Company and
         any of its  Subsidiaries,  all at such reasonable times and as often as
         may be reasonably requested in writing; and

                  (b) Default -- if a Default or Event of Default  then  exists,
         at the  expense of the  Company to visit and inspect any of the offices
         or properties of the Company or any of its Subsidiaries, to examine all
         their respective books of account,  records,  reports and other papers,
         to make copies and extracts therefrom,  and to discuss their respective
         affairs,  finances  and  accounts  with their  respective  officers and
         independent  public  accountants  (and by this  provision  the  Company
         authorizes (and shall cause each of its Subsidiaries to authorize) said
         accountants  to discuss  the  affairs,  finances  and  accounts  of the
         Company and its Subsidiaries), all at such times and as often as may be
         requested.

SECTION 8.        PREPAYMENT OF THE NOTES.

         Section 8.1.     Required Prepayments.

                  (a) Scheduled  Prepayments.  On September 1, 2003, the Company
         will pay all of the principal  amount of the Series A Notes  remaining,
         if any. On September 1, 2002 and on each  September 1 thereafter to and
         including  September 1, 2008 the Company will pay  $4,285,714.29 of the
         principal  amount  (or such  lesser  principal  amount as shall then be
         outstanding)  of the Series B Notes at par and  without  payment of the
         Make-Whole  Amount  or any  premium.  The  Company  will pay all of the
         principal amount of the Series B Notes remaining,  if any, on September

<PAGE>

         1,  2008.  Upon any  partial  prepayment  of any  series  of the  Notes
         pursuant to Section  8.1(b) or Section 8.2 or purchase of any series of
         the  Notes  permitted  by  Section  8.5 the  principal  amount  of each
         required  prepayment of any series of the Notes becoming due under this
         Section 8.1 on and after the date of such  prepayment or purchase shall
         be reduced in the same  proportion  as the aggregate  unpaid  principal
         amount  of any  series  of the  Notes is  reduced  as a result  of such
         prepayment or purchase.

                  (b) Change  of  Control.  Upon the  occurrence  of a Change of
         Control, any holder, by written notice to the Company, may require, and
         upon  receipt of such written  notice,  the Company  shall,  prepay the
         entire outstanding principal amount of the Notes held by such holder at
         par and  without  payment  of the  Make-Whole  Amount  or any  premium,
         together with all accrued and unpaid interest on such principal  amount
         and all other  sums  which then are due and  payable  pursuant  to this
         Agreement, the Other Agreements and the Subsidiary Guaranty.

         Section 8.2.     Optional   Prepayments  with  Make-Whole  Amount.  The
Company may, at its option,  upon notice as provided  below,  prepay at any time
all, or from time to time any part of, the Notes, in an amount not less than 10%
of the aggregate principal amount of the Notes then outstanding in the case of a
partial  prepayment,  at 100% of the  principal  amount  so  prepaid,  plus  the
Make-Whole  Amount  determined  for the  prepayment  date with  respect  to such
principal  amount.  The Company will give each holder of Notes written notice of
each  optional  prepayment  under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment.  Each such notice
shall  specify  such date,  the  aggregate  principal  amount of the Notes to be
prepaid on such date,  the principal  amount of each Note held by such holder to
be prepaid  (determined in accordance  with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate  of a Senior  Financial  Officer as to
the  estimated   Make-Whole  Amount  due  in  connection  with  such  prepayment
(calculated  as if the date of such  notice  were  the date of the  prepayment),
setting forth the details of such  computation.  Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified preparation date.

         Section 8.3.     Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes, the principal amount of the Notes to be prepaid
shall be allocated among all of the Notes at the time outstanding in proportion,
as nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.

         Section 8.4.     Maturity;   Surrender,   etc.  In  the  case  of  each
prepayment  of Notes  pursuant to this Section 8, the  principal  amount of each
Note to be prepaid shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount accrued to such
date and the  applicable  Make-Whole  Amount,  if any. From and after such date,
unless the  Company  shall  fail to pay such  principal  amount  when so due and
payable, together with the interest and Make-Whole Amount, if any, as aforesaid,
interest  on such  principal  amount  shall  cease to  accrue.  Any Note paid or

<PAGE>

prepaid in full shall be  surrendered  to the Company and canceled and shall not
be reissued, and no Note shall be issued in lieu of any prepaid principal amount
of any Note.

         Section  8.5.    Purchase of Notes.  The Company  will not and will not
permit any Affiliate to purchase,  redeem, prepay or otherwise acquire, directly
or  indirectly,  any of  the  outstanding  Notes  except  upon  the  payment  or
prepayment of the Notes in accordance with the terms of this Agreement,  and the
Notes.  The  Company  will  promptly  cancel  all  Notes  acquired  by it or any
Affiliate  pursuant to any payment,  prepayment or purchase of Notes pursuant to
any provision of this  Agreement and no Notes may be issued in  substitution  or
exchange for any such Notes.

         Section 8.6.     Make-Whole Amount. The term "Make-Whole Amount" means,
with  respect  to any  Note,  an  amount  equal to the  excess,  if any,  of the
Discounted Value of the Remaining  Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called  Principal,  provided that
the  Make-Whole  Amount may in no event be less than zero.  For the  purposes of
determining  the  Make-Whole  Amount,  the  following  terms have the  following
meanings:

                  "Called  Principal"  means,  with  respect  to any  Note,  the
         principal of such Note that is to be prepaid pursuant to Section 8.2 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "Discounted Value" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called  Principal  from their  respective
         scheduled due dates to the Settlement  Date with respect to such Called
         Principal,  in  accordance  with accepted  financial  practice and at a
         discount  factor  (applied on the same periodic  basis as that on which
         interest on the Notes is payable) equal to the Reinvestment  Yield with
         respect to such Called Principal.

                  "Reinvestment   Yield"  means,  with  respect  to  the  Called
         Principal  of any  Note,  0.50% per  annum  over the yield to  maturity
         implied by (i) the  yields  reported,  as of 10:00 A.M.  (New York City
         time) on the second  Business Day  preceding the  Settlement  Date with
         respect to such Called  Principal,  on the display  designated as "Page
         USD" on the Bloomberg  Financial  Market Service (or such other display
         as may replace Page USD on the Bloomberg  Financial Market Service) for
         actively traded U.S. Treasury securities having a maturity equal to the
         Remaining  Average Life of such Called  Principal as of such Settlement
         Date,  or (ii) if such  yields are not  reported as of such time or the
         yields  reported as of such time are not  ascertainable,  the  Treasury
         Constant Maturity Series Yields reported,  for the latest day for which
         such  yields  have  been so  reported  as of the  second  Business  Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal  Reserve  Statistical  Release  H. 15 (519) (or any  comparable
         successor  publication)  for actively traded U.S.  Treasury  securities
         having a constant  maturity equal to the Remaining Average Life of such
         Called Principal as of such Settlement Date. Such implied yield will be
         determined,   if  necessary,  by  (a)  converting  U.S.  Treasury  bill
         quotations  to  bond-equivalent  yields  in  accordance  with  accepted
         financial  practice  and (b)  interpolating  linearly  between  (1) the
         actively traded U.S. Treasury security with the maturity closest to and

<PAGE>

         greater than the  Remaining  Average  Life and (2) the actively  traded
         U.S.  Treasury  security with the maturity closest to and less than the
         Remaining Average Life.

                  "Remaining  Average  Life"  means,  with respect to any Called
         Principal,  the number of years (calculated to the nearest  one-twelfth
         year) obtained by dividing (i) such Called  Principal into (ii) the sum
         of the products obtained by multiplying (a) the principal  component of
         each Remaining  Scheduled Payment with respect to such Called Principal
         by (b) the number of years (calculated to the nearest one-twelfth year)
         that will  elapse  between  the  Settlement  Date with  respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "Remaining  Scheduled  Payments"  means,  with  respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest  thereon  that  would be due  after the  Settlement  Date with
         respect to such Called Principal if no payment of such Called Principal
         were  made  prior to its  scheduled  due  date,  provided  that if such
         Settlement Date is not a date on which interest  payments are due to be
         made  under  the  terms  of the  Notes,  then  the  amount  of the next
         succeeding  scheduled interest payment will be reduced by the amount of
         interest  accrued to such  Settlement  Date and  required to be paid on
         such Settlement Date pursuant to Section 8.2 or 12.1.

                  "Settlement  Date" means, with respect to the Called Principal
         of any Note,  the date on which such Called  Principal is to be prepaid
         pursuant to Section 8.2 or has become or is declared to be  immediately
         due and payable pursuant to Section 12.1, as the context requires.

SECTION 9.        AFFIRMATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are outstanding:

         Section 9.1.     Compliance  with Law.  The Company will and will cause
each of its  Subsidiaries  to comply with all laws,  ordinances or  governmental
rules  or  regulations  to which  each of them is  subject,  including,  without
limitation,  Environmental  Laws,  and will  obtain and  maintain  in effect all
licenses,    certificates,    permits,   franchises   and   other   governmental
authorizations  necessary to the ownership of their respective  properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance  with such laws,  ordinances or governmental rules
or  regulations  or failures  to obtain or  maintain  in effect  such  licenses,
certificates,  permits,  franchises and other governmental  authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

         Section  9.2.    Insurance. The Company will and will cause each of its
Subsidiaries  to  maintain,  with  financially  sound  and  reputable  insurers,
insurance with respect to their  respective  properties  and businesses  against
such  casualties  and  contingencies,  of such types,  on such terms and in such
amounts (including  deductibles,  co-insurance and  self-insurance,  if adequate
reserves are  maintained  with  respect  thereto) as is customary in the case of
entities of established  reputations  engaged in the same or a similar  business
and similarly situated.

<PAGE>

         Section 9.3.     Maintenance of  Properties.  The Company will and will
cause each of its  Subsidiaries  to maintain and keep, or cause to be maintained
and  kept,  their  respective  properties  in good  repair,  working  order  and
condition  (other than ordinary wear and tear), so that the business  carried on
in connection  therewith may be properly  conducted at all times,  provided that
this Section shall not prevent the Company or any Subsidiary from  discontinuing
the  operation  and  the   maintenance   of  any  of  its   properties  if  such
discontinuance  is  desirable in the conduct of its business and the Company has
concluded that such discontinuance could not,  individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

         Section  9.4.    Payment of Taxes and Claims. The Company will and will
cause each of its  Subsidiaries to file all tax returns  required to be filed in
any  jurisdiction and to pay and discharge all taxes shown to be due and payable
on such  returns and all other  taxes,  assessments,  governmental  charges,  or
levies imposed on them or any of their properties, assets, income or franchises,
to the extent such taxes and assessments  have become due and payable and before
they have  become  delinquent  and all claims for which sums have become due and
payable that have or might become a Lien on  properties or assets of the Company
or any Subsidiary, provided that neither the Company nor any Subsidiary need pay
any such  tax or  assessment  or  claims  if (i) the  amount,  applicability  or
validity  thereof is  contested  by the Company or such  Subsidiary  on a timely
basis  in good  faith  and in  appropriate  proceedings,  and the  Company  or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such  Subsidiary or (ii) the  nonpayment of all such
taxes and  assessments in the aggregate could not reasonably be expected to have
a Material Adverse Effect.

         Section 9.5.     Corporate Existence, etc. Subject to Sections 10.2 and
10.6,  the  Company  will,  and will  cause  its  Subsidiaries  to, at all times
preserve and keep in full force and effect the corporate existence of itself and
each of its  Subsidiaries  (unless  merged  into the  Company or a  Wholly-Owned
Subsidiary)  and all rights and  franchises of the Company and its  Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or
franchise could not,  individually or in the aggregate,  have a Material Adverse
Effect.

         Section 9.6.     New Subsidiaries. The Company will

                  (a) cause any Subsidiary acquired or established subsequent to
         the date of this Agreement to deliver a Subsidiary Guaranty in favor of
         the  holders  of the  Notes  and  such  other  documentation  as may be
         requested by the holders of the Notes, in form and substance acceptable
         to the holders of the Notes; and

                  (b) deliver to each holder of the Notes a revised Schedule 5.4
          reflecting the changes referred to in subsection (a) of this Section.

SECTION 10.       NEGATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are outstanding:

<PAGE>

         Section 10.1.    Transactions with Affiliates. The Company will not and
will not  permit  any  Subsidiary  to enter  into  directly  or  indirectly  any
transaction  or  Material  group  of  related  transactions  (including  without
limitation  the purchase,  lease,  sale or exchange of properties of any kind or
the  rendering of any  service)  with any  Affiliate  (other than the Company or
another  Subsidiary),  except  in  the  ordinary  course  and  pursuant  to  the
reasonable  requirements of the Company's or such Subsidiary's business and upon
fair and reasonable  terms no less  favorable to the Company or such  Subsidiary
than would be obtainable in a comparable arm's-length  transaction with a Person
not an Affiliate.

         Section 10.2.    Merger, Consolidation, etc. The Company shall not, and
will not permit any of its Subsidiaries  to,  consolidate with or merge with any
other corporation or convey,  transfer or lease  substantially all of its assets
in a single transaction or series of transactions to any Person unless:

                  (a) the   merger  is  a  merger   of  any  of  the   Company's
          Subsidiaries with the Company or another Wholly-Owned Subsidiary;

                  (b) the successor formed by such consolidation or the survivor
         of such merger or the Person that acquires by  conveyance,  transfer or
         lease substantially all of the assets of the Company as an entirety, as
         the case may be, shall be a solvent corporation  organized and existing
         under the laws of the United States or any State thereof (including the
         District of Columbia), and, if the Company is not such corporation, (i)
         such  corporation  shall have  executed and delivered to each holder of
         any  Notes  its  assumption  of the due and  punctual  performance  and
         observance of each covenant and condition of this Agreement,  the Other
         Agreements and the Notes and (ii) such corporation shall have caused to
         be  delivered  to each  holder of any Notes an  opinion  of  nationally
         recognized independent counsel, or other independent counsel reasonably
         satisfactory to the Required Holders, to the effect that all agreements
         or instruments  effecting such assumption are enforceable in accordance
         with their terms and comply with the terms hereof; and

                  (c) immediately   after  giving  effect  to  such  transaction
          (calculated  on a pro forma basis as of the  beginning  of the testing
          period to include the effect of any such  transaction),  no Default or
          Event of Default shall have occurred and be continuing;

provided,  however, any foregoing  transaction which would result in a Change of
Control  shall give rise to the right of each  holder to require  the Company to
prepay  such  holder's  Notes  in  accordance  with  Section  8.1(b).   No  such
conveyance,  transfer or lease of substantially all of the assets of the Company
shall have the effect of releasing the Company or any successor corporation that
shall theretofore have become such in the manner prescribed in this Section 10.2
from its liability under this Agreement or the Notes.

         Section 10.3.    Liens.  The Company  will not, and will not permit any
of its  Subsidiaries  to, incur,  assume or suffer to exist any Lien upon any of
its assets now or hereafter owned, or upon the income or profits thereof,  other
than:

<PAGE>

                  (a) Liens   for   property   taxes,   assessments   or   other
          governmental  charges  which are not yet due and  payable or are being
          contested  in  good  faith  by  appropriate   proceedings   diligently
          conducted;

                  (b) Liens  resulting from any  litigation or legal  proceeding
         incurred in the ordinary course which are being contested in good faith
         by appropriate proceedings diligently conducted;

                  (c) Liens   securing   landlords,   carriers,    warehousemen,
         mechanics,  materialmen  and other such Liens  incurred in the ordinary
         course for sums not yet due and payable or are being  contested in good
         faith by appropriate proceedings diligently conducted;

                  (d) Liens incidental to the normal conduct of the Company's or
         any Subsidiary's  business  incurred in the ordinary course,  excluding
         Liens  incurred  for the  borrowing  of  money,  which  do not,  in the
         aggregate,  materially  impair the use of the  Company's  or any of its
         Subsidiaries  property in the  operation of the business of the Company
         and its Subsidiaries taken as a whole or the value of such property for
         the purpose of such business;

                  (e) leases, subleases, easements, rights-of-way,  restrictions
         and other similar  charges or  encumbrances  incidental to the ordinary
         conduct  of the  Company's  or any  of  its  Subsidiaries'  businesses,
         provided  that the  aggregate of such Liens do not  materially  detract
         from the value of such property;

                  (f) Liens securing Indebtedness of the Company to a Subsidiary
         or Liens  securing  Indebtedness  of a Subsidiary  to the Company or to
         another Subsidiary;

                  (g) Liens in existence at Closing;

                  (h) any Lien,  other than in a Sale and Leaseback  Transaction
         (i) in property or rights relating thereto to secure any rights granted
         with respect to such property in  connection  with the provision of all
         or a part of the  purchase  price or cost of the  construction  of such
         property created contemporaneously with, or within 180 days after, such
         acquisition  or the completion of such  construction,  (ii) existing in
         property  at the  time  of  acquisition  thereof,  whether  or not  the
         Indebtedness  secured  thereby is assumed by the  Company or any of its
         Subsidiaries so long as such Lien was not incurred in  contemplation of
         the  acquisition of such property or (iii) in the property of an entity
         at the time such entity is merged into or consolidated with the Company
         or any of its  Subsidiaries  or at the  time of a sale,  lease or other
         disposition   of  the  properties  of  an  entity  as  an  entirety  or
         substantially  as an entirety to the Company or any of its Subsidiaries
         so  long as such  Lien  was not  incurred  in  contemplation  of  such;
         provided,  however,  that in the case of each of clauses (i),  (ii) and
         (iii), the principal  amount of the  Indebtedness  secured by such Lien
         shall  not  exceed  the  lesser of (a) the cost to the  Company  or the

<PAGE>

         Subsidiary of such property or (b) the fair market value (as determined
         in good  faith  by the  board  of  directors  of the  Company)  of such
         property;

                  (i) any  Lien  renewing,  extending   or  refunding  any  Lien
         permitted  by sections  (a) through  (h) above,  provided  that (i) the
         principal  amount  of the  Indebtedness  secured  by  such  Lien is not
         increased, (ii) the maturity of such Indebtedness is not reduced, (iii)
         such Lien is not extended to any other property,  and (iv)  immediately
         after  such  renewal,  extension  or  refunding  no Default or Event of
         Default would exist;

                  (j) for a period of 360 days following the  acquisition by the
         Company or any of its  Subsidiaries  of any entity  which has granted a
         Lien in such entity's  accounts  receivable or the  acquisition  of any
         accounts  receivable,  any Lien in existence  when  acquired  upon such
         entity's accounts receivable or the accounts receivable acquired by the
         Company or any of its Subsidiaries; and

                  (k) Liens which would not  otherwise  be  permitted by clauses
         (a) through (j) above,  securing  Indebtedness of either the Company or
         any of its  Subsidiaries,  so long as all Priority Debt does not exceed
         15% of Consolidated Net Worth.

Notwithstanding the foregoing provisions of this Section 10.3 other than Section
10.3(j),  the Company will not, and will not permit any of its  Subsidiaries  to
grant or allow the continuance of any Lien upon its accounts receivable.

         Section 10.4.    Limitation on Total Indebtedness. The Company will not
permit  the  ratio  of  Consolidated  Total  Debt  (i) as of the last day of any
quarter or (ii) at any time which there has been a draw under a letter of credit
or an  instrument  serving a similar  function,  on a pro forma basis as if such
draw had occurred on the first day of the quarter to Consolidated EBITDA for the
four quarter period ending on such last day to exceed 3.25 to 1.

         Section 10.5.    Limitation  on  Subsidiary  Indebtedness.  The Company
will not permit  any of its  Subsidiaries  to incur,  assume or permit to exist,
directly or indirectly, any Indebtedness, except:

                  (a  Indebtedness  created  as a  guarantor  of  the  Company's
                      obligations hereunder and under the Notes;

                  (b  Indebtedness  created  as a  guarantor  of  the  Company's
                      obligations under the Existing Bank Credit Facility;

                  (c  all renewals, extensions,  substitutions,  refinancings or
          replacements,  in an amount not to exceed the amount so refinanced, of
          any Indebtedness  described in clauses (a) and (b) above provided that
          the terms,  covenants and  restrictions  in respect of such  renewals,
          extensions,  substitutions,   refinancings  or  replacements  are  not
          materially  more  onerous  than  the  existing  terms,  covenants  and
          restrictions of such Indebtedness;

<PAGE>

                  (d  unsecured  Indebtedness  owing to the  Company  or another
          Wholly-Owned Subsidiary of the Company; and

                  (e  Indebtedness  which would not  otherwise  be  permitted by
         clauses (a) through (d) above,  provided that the sum of (i) such other
         Indebtedness  plus  (ii)  the  aggregate  unpaid  principal  amount  of
         Indebtedness of the Company and its  Subsidiaries  secured by Liens not
         permitted  by clauses (a)  through  (h) of Section  10.3 plus (iii) the
         present  value of all lease  obligations  arising as a result of a Sale
         and Leaseback  Transaction (the sum of the foregoing  clauses (i), (ii)
         and (iii) being referred to herein as "Priority Debt"), does not exceed
         15% of Consolidated Net Worth.

         Section  10.6.   Sale of Assets.  Other than in the ordinary  course of
business or in  connection  with a Sale and Leaseback  Transaction,  the Company
will  not,  and  will  not  permit  any  of its  Subsidiaries  to,  directly  or
indirectly,  in a single  transaction or a series of transactions,  sell, lease,
transfer,  abandon  or  otherwise  dispose  of or  suffer  to be  sold,  leased,
transferred, abandoned or otherwise disposed of (collectively, "Transfer"):

                   (a) assets in any fiscal  year having an  aggregate  value in
         excess of 10% of the value of Total Assets  determined as of the end of
         the immediately preceding fiscal year; or

                  (b) assets in the period  starting on the Closing Date through
         the  determination  date having an aggregate  value in excess of 25% of
         the  value  of Total  Assets  determined  as of the end of most  recent
         fiscal quarter prior to the date the Notes are paid in full;

provided, however, that (i) any Subsidiary of the Company may Transfer assets to
the  Company  or any  Wholly-Owned  Subsidiary  and  (ii)  the  Company  and its
Subsidiaries may Transfer assets in excess of the limitations set forth above if
the  proceeds of such asset sales are used within 360 days to (A) acquire  other
property of a similar nature or (B) reduce Senior Indebtedness.  Notwithstanding
the foregoing provisions of this Section 10.6 or the provisions of Section 10.3:
(i) neither the Company nor any of its  Subsidiaries  may  Transfer any accounts
receivable;  (ii)  the  Company  will  not,  and  will  not  permit  any  of its
Subsidiaries  to grant or allow the  continuance  of any Lien upon its  accounts
receivable;  and  (iii) in the  event  the  Company  or any of its  Subsidiaries
acquires an entity which has granted a Lien in such entity's accounts receivable
or acquires  any  accounts  receivable,  the Company  will cause such Lien to be
released  within 360 days after the date of  acquisition  of such entity or such
accounts receivable, as applicable.

         Section  10.7.   Minimum  Consolidated  Net Worth. The Company will not
permit  Consolidated  Net  Worth  at any  time  to be less  than  the sum of (i)
$95,000,000 and (ii) 50% of the  Consolidated  Net Income earned for each fiscal
quarter beginning with the quarter ending September 30, 1998, to the extent such
Consolidated Net Income for such quarter is a positive number.

<PAGE>

         Section  10.8.   Minimum  Fixed Charge  Coverage.  The Company will not
permit the ratio,  as calculated on the last day of each fiscal  quarter for the
four fiscal  quarters then ended,  of (i)  Consolidated  Earnings  Available for
Fixed Charges for such period to (ii) Consolidated Fixed Charges for such period
to be less than 2.0 to 1.0. With respect to  acquisitions  and  dispositions  of
property,  the  limitation  of this section  shall be  calculated on a pro forma
basis as of the  beginning  of the  testing  period to include the effect of any
acquired entity or the disposal of any entity.

         Section  10.9.   Line of  Business. The Company  will not, and will not
permit any of its Subsidiaries  to, engage in any business if, as a result,  the
general  nature  of the  business  would  be  substantially  changed  from  that
described in the Memorandum and businesses reasonably related thereto.

         Section 10.10.   Loans and  Investments. The Company will not, and will
not permit any of its Subsidiaries to, make or commit to make any advance, loan,
extension of credit or capital  contribution  to or any other  investment in any
Person, except for:

                  (a  loans  to or  investments  in  one  or  more  wholly-owned
          Subsidiaries  or any entity  which  become a  Wholly-Owned  Subsidiary
          concurrently with such loan or investment;

                  (b  investments existing on the date of Closing;

                  (c  investments  in (i)  certificates  of deposit  issued by a
         Canadian  bank  having  a  combined  capital  and  surplus  of at least
         $100,000,000,  (ii)  certificates of deposit issued by a member bank of
         the Federal Reserve System having a combined  capital and surplus of at
         least $100,000,000 and (iii) banker's  acceptances,  which, at the time
         of investment,  is rated "A3" or better by Moody's  Investors  Service,
         Inc. or "A-" or better by Standard & Poor's Corporation;

                  (d  investments  in commercial or finance paper which,  at the
         time of investment,  is rated "A2," "P2" or better by Moody's Investors
         Service,  Inc., or Standard & Poor's Corporation,  respectively,  or at
         the equivalent rate by any of their respective successors;

                  (e  investments  in  direct  obligations  of,  or  instruments
          unconditionally  guaranteed  by, the United States of America,  with a
          maturity not exceeding one year;

                  (f  any  interests in any money  market  funds  organized  and
         existing  under  the laws of and  doing  business  in any  state of the
         United  State of  America,  the  investments  of which,  at the time of
         investment,  are restricted to the types  specified in clauses (c), (d)
         and (e) above;

                  (g  investments  held for the  benefit  of  employees  under a
          Plan;

                  (h  extensions of credit to customers of the Company or any of
          its  Subsidiaries  made in the  ordinary  course of trade or  business
          consistent with prior practice; and

<PAGE>

                  (i  loans to and  investments  not  included  in  clauses  (a)
          through  (h)  above  in an  aggregate  amount  not  exceeding  10%  of
          Consolidated Net Worth.

SECTION 11.       EVENTS OF DEFAULT.

         An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:

                  (a  the Company or any Subsidiary fails to make any payment of
          any principal or Make-Whole  Amount, if any, on any Note when the same
          becomes  due and  payable,  whether at maturity or at a date fixed for
          prepayment or by declaration or otherwise; or

                  (b  the Company or any Subsidiary fails to make any payment of
          any  interest on any Note for more than five  Business  Days after the
          same becomes due and payable; or

                  (c  the Company  defaults in the  performance of or compliance
          with any term  contained  in Sections  7.1(d) or in  Sections  10.1 to
          10.10, inclusive; or

                  (d  the Company  defaults in the  performance of or compliance
          with any term  contained  herein  (other  than  those  referred  to in
          paragraphs  (a),  (b) and (c) of this  Section 11) and such default is
          not  remedied  within 30 days after the  earlier of (i) a  Responsible
          Officer  obtaining  actual  knowledge  of such  default  and  (ii) the
          Company  receiving written notice of such default from any holder of a
          Note  (any  such  written  notice to be  identified  as a  "notice  of
          default" and to refer  specifically  to this  paragraph (d) of Section
          11); or

                  (e  any  representation  or warranty  made in writing by or on
          behalf  of the  Company  or by any  officer  of the  Company  in  this
          Agreement  or  in  any  writing   furnished  in  connection  with  the
          transactions   contemplated  hereby  proves  to  have  been  false  or
          incorrect in any Material respect on the date as of which made; or

                  (f  (i)  the  Company  or any  Subsidiary  is in  default  (as
         principal  or as  guarantor  or other  surety)  in the  payment  of any
         principal  of or  premium  or  make-whole  amount  or  interest  on any
         Indebtedness that is outstanding in an aggregate principal amount of at
         least  $5,000,000  beyond any  period of grace  provided  with  respect
         thereto,  or (ii) the  Company or any  Subsidiary  is in default in the
         performance  of or  compliance  with  any term of any  evidence  of any
         Indebtedness in an aggregate  outstanding  principal amount of at least
         $5,000,000 or of any mortgage,  indenture or other  agreement  relating
         thereto or any other  condition  exists,  and as a consequence  of such
         default or condition such Indebtedness has become, or has been declared
         due and  payable  before its stated  maturity  or before its  regularly
         scheduled dates of payment, or (iii) as a consequence of the occurrence
         or  continuation  of any event or condition  (other than the passage of
         time or the  right  of the  holder  of  Indebtedness  to  convert  such
         Indebtedness into equity interests),  the Company or any Subsidiary has
         become obligated to purchase or repay  Indebtedness  before its regular


                                      -32-
<PAGE>

         maturity  or before  its  regularly  scheduled  dates of  payment in an
         aggregate outstanding principal amount of at least $5,000,000; or

                  (g  the Company or any  Material  Subsidiary  (i) is generally
          not paying,  or admits in writing its  inability  to pay, its debts as
          they become due, (ii) files, or consents by answer or otherwise to the
          filing  against it of, a  petition  for  relief or  reorganization  or
          arrangement or any other petition in bankruptcy, for liquidation or to
          take  advantage  of  any   bankruptcy,   insolvency,   reorganization,
          moratorium  or other similar law of any  jurisdiction,  (iii) makes an
          assignment  for the  benefit of its  creditors,  (iv)  consents to the
          appointment  of a custodian,  receiver,  trustee or other officer with
          similar  powers with respect to it or with respect to any  substantial
          part  of  its  property,  (v) is  adjudicated  as  insolvent  or to be
          liquidated,  or (vi) takes corporate  action for the purpose of any of
          the foregoing; or

                  (h  a   court   or   governmental   authority   of   competent
          jurisdiction  enters  an  order  appointing,  without  consent  by the
          Company or any of its Material  Subsidiaries,  a custodian,  receiver,
          trustee or other  officer  with  similar  powers with respect to it or
          with respect to any substantial part of its property,  or constituting
          an  order  for  relief  or   approving   a  petition   for  relief  or
          reorganization  or any other petition in bankruptcy or for liquidation
          or to  take  advantage  of any  bankruptcy  or  insolvency  law of any
          jurisdiction,  or ordering the dissolution,  winding-up or liquidation
          of  the  Company  or any of its  Material  Subsidiaries,  or any  such
          petition  shall be filed  against the  Company or any of its  Material
          Subsidiaries  and such petition shall not be dismissed within 60 days;
          or

                  (i  a final  judgment  or  judgments  for the payment of money
          aggregating in excess of $5,000,000  are rendered  against one or more
          of the  Company  and its  Subsidiaries  and which  judgments  are not,
          within 90 days  after  entry  thereof,  bonded,  discharged  or stayed
          pending  appeal,  or are  not  discharged  within  90 days  after  the
          expiration of such stay; or

                  (j  if (i) any Plan shall fail to satisfy the minimum  funding
          standards  of ERISA or the Code for any plan year or part thereof or a
          waiver of such  standards or extension of any  amortization  period is
          sought or  granted  under  section  412 of the Code,  (ii) a notice of
          intent to terminate any Plan shall have been or is reasonably expected
          to  be  filed  with  the  PBGC  or  the  PBGC  shall  have  instituted
          proceedings under ERISA section 4042 to terminate or appoint a trustee
          to administer  any Plan or the PBGC shall have notified the Company or
          any  ERISA  Affiliate  that a Plan may  become a  subject  of any such
          proceedings,   (iii)  the  aggregate   "amount  of  unfunded   benefit
          liabilities"  (within  the  meaning of section  4001(a)(18)  of ERISA)
          under all  Plans,  determined  in  accordance  with Title IV of ERISA,
          shall exceed $1,000,000, (iv) the Company or any ERISA Affiliate shall
          have  incurred  or is  reasonably  expected  to  incur  any  liability
          pursuant  to Title I or IV of  ERISA  or the  penalty  or  excise  tax
          provisions of the Code  relating to employee  benefit  plans,  (v) the
          Company or any ERISA Affiliate  withdraws from any Multiemployer Plan,
          or (vi) the  Company  or any  Subsidiary  establishes  or  amends  any
          employee  welfare benefit plan that provides  post-employment  welfare
          benefits in a manner that would  increase the liability of the Company


                                      -33-
<PAGE>

          or any Subsidiary  thereunder;  and any such event or events described
          in clauses (i) through  (vi) above,  either  individually  or together
          with any other such event or events,  could  reasonably be expected to
          have a Material Adverse Effect.

As used in  Section  11(j),  the terms  "employee  benefit  plan" and  "employee
welfare benefit plan" shall have the respective  meanings assigned to such terms
in Section 3 of ERISA.

SECTION 12.       REMEDIES ON DEFAULT, ETC.

         Section 12.1.    Acceleration.

                  (a  If an Event of Default  with respect to the Company or any
         Subsidiary  described in paragraph (g) or (h) of Section 11 (other than
         an Event  of  Default  described  in  clause  (i) of  paragraph  (g) or
         described  in clause (vi) of  paragraph  (g) by virtue of the fact that
         such clause encompasses clause (i) of paragraph (g)) has occurred,  all
         the Notes then outstanding shall  automatically  become immediately due
         and payable.

                  (b  If  any  other  Event  of  Default  has  occurred  and  is
         continuing,  any holder or holders of more than 50% in principal amount
         of the  Notes at the time  outstanding  may at any time at its or their
         option, by notice or notices to the Company, declare all the Notes then
         outstanding to be immediately due and payable.

                  (c  If any Event of Default  described in paragraph (a) or (b)
         of Section 11 has occurred and is continuing,  any holder or holders of
         Notes at the time outstanding  affected by such Event of Default may at
         any time, at its or their option,  by notice or notices to the Company,
         declare  all the  Notes  held by it or them to be  immediately  due and
         payable.

         Upon any Notes  becoming  due and  payable  under  this  Section  12.1,
         whether  automatically  or by  declaration,  such Notes will  forthwith
         mature and the entire unpaid principal  amount of such Notes,  plus (x)
         all accrued and unpaid interest  thereon and (y) the Make-Whole  Amount
         determined  in respect  of such  principal  amount (to the full  extent
         permitted by applicable law), shall all be immediately due and payable,
         in each and every case without presentment,  demand, protest or further
         notice, all of which are hereby waived. The Company  acknowledges,  and
         the parties  hereto agree,  that each holder of a Note has the right to
         maintain its investment in the Notes free from repayment by the Company
         (except as herein  specifically  provided  for), and that the provision
         for payment of a Make-Whole Amount by the Company in the event that the
         Notes  are  prepaid  or are  accelerated  as a  result  of an  Event of
         Default,  is intended to provide  compensation  for the  deprivation of
         such right under such circumstances.

         Section 12.2.    Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time  outstanding  may proceed to protect and enforce the rights
of such  holder  by an  action  at law,  suit in  equity  or  other  appropriate

<PAGE>

proceeding,  whether for the specific  performance  of any  agreement  contained
herein or in any Note,  or for an  injunction  against a violation of any of the
terms hereof or thereof,  or in aid of the exercise of any power granted  hereby
or thereby or by law or otherwise.

         Section 12.3.    Rescission. At any time  after  any  Notes  have  been
declared  due and  payable  pursuant to clause (b) or (c) of Section  12.1,  the
holders  of not  less  than  66-2/3%  in  principal  amount  of the  Notes  then
outstanding,  by written  notice to the Company,  may rescind and annul any such
declaration  and its  consequences  if (a) the  Company  has  paid  all  overdue
interest on the Notes,  all principal of and Make-Whole  Amount,  if any, on any
Notes  that are due and  payable  and are  unpaid  other  than by reason of such
declaration,  and all interest on such overdue principal and Make-Whole  Amount,
if any, and (to the extent  permitted by applicable law) any overdue interest in
respect of the  Notes,  at the  Default  Rate,  (b) all  Events of  Default  and
Defaults,  other  than  non-payment  of amounts  that have  become due solely by
reason of such  declaration,  have been cured or have been  waived  pursuant  to
Section 17, and (c) no  judgment  or decree has been  entered for the payment of
any monies due pursuant  hereto or to the Notes.  No  rescission  and  annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.

         Section  12.4.   No Waivers or Election of Remedies, Expenses,  etc. No
course  of  dealing  and no  delay  on the  part of any  holder  of any  Note in
exercising  any right,  power or remedy  shall  operate  as a waiver  thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy  conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right,  power or remedy  referred to herein or therein
or now or  hereafter  available  at law,  in equity,  by  statute or  otherwise.
Without  limiting the  obligations  of the Company under Section 15, the Company
will pay to the holder of each Note on demand  such  further  amount as shall be
sufficient  to cover all costs  and  expenses  of such  holder  incurred  in any
enforcement or collection under this Section 12, including,  without limitation,
reasonable attorneys' fees, expenses and disbursements.

SECTION 13.       REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

         Section  13.1.   Registration of Notes.  The Company  shall keep at its
principal  executive  office a register for the registration and registration of
transfers  of Notes.  The name and  address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes  shall  be  registered  in such  register.  Prior to due  presentment  for
registration of transfer,  the Person in whose name any Note shall be registered
shall be deemed and  treated as the owner and holder  thereof  for all  purposes
hereof, and the Company shall not be affected, by any notice or knowledge to the
contrary.  The Company shall give any holder of a Note that is an  Institutional
Investor  promptly  upon  request  therefor,  a complete and correct copy of the
names and addresses of all registered holders of Notes.

         Section  13.2.   Transfer and Exchange of Notes. Upon  surrender of any
Note at the  principal  executive  office of the  Company  for  registration  of
transfer  or  exchange  (and in the  case of a  surrender  for  registration  of

<PAGE>

transfer,  duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered  holder of such Note or his attorney duly  authorized
in writing and accompanied by the address for notices of each transferee of such
Note or part thereof),  the Company shall execute and deliver,  at the Company's
expense (except as provided  below),  one or more new Notes (as requested by the
holder thereof) in exchange therefor,  in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be  substantially in
the form of Exhibit 1(a) or 1(b),  as  appropriate.  Each such new Note shall be
dated and bear interest from the date to which  interest shall have been paid on
the surrendered  Note or dated the date of the  surrendered  Note if no interest
shall  have  been  paid  thereon.  The  Company  may  require  payment  of a sum
sufficient to cover any stamp tax or  governmental  charge imposed in respect of
any such transfer of Notes.  Notes shall not be transferred in  denominations of
less than  $100,000,  provided that if necessary to enable the  registration  of
transfer  by a holder  of its  entire  holding  of  Notes,  one Note may be in a
denomination of less than $100,000. Any transferee,  by its acceptance of a Note
registered  in its name (or the name of its  nominee),  shall be  deemed to have
made the representation set forth in Section 6.2.

         Section  13.3.   Replacement of Notes.  Upon  receipt by the Company of
evidence reasonably  satisfactory to it of the ownership of and the loss, theft,
destruction  or mutilation of any Note (which  evidence shall be, in the case of
an  Institutional  Investor,  notice  from such  Institutional  Investor of such
ownership and such loss, theft, destruction or mutilation), and

                  (a  in the case of loss, theft or  destruction,  of  indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original  Purchaser or another  holder of a
         Note with a minimum net worth of at least  $10,000,000,  such  Person's
         own   unsecured   agreement  of   indemnity   shall  be  deemed  to  be
         satisfactory), or

                  (b  in the case of mutilation, upon surrender and cancellation
          thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost,  stolen,  destroyed or mutilated  Note if no interest shall have been paid
thereon.

SECTION 14.       PAYMENTS ON NOTES.

         Section 14.1.  Place of Payment.  Subject to Section 14.2,  payments of
principal,  Make-Whole  Amount, if any, and interest becoming due and payable on
the Notes shall be made in Salt Lake City,  Utah at the principal  office of the
Company in such  jurisdiction.  The Company  may at any time,  by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of  payment  shall  be  either  the  principal  office  of the  Company  in such
jurisdiction  or the  principal  office  of a bank  or  trust  company  in  such
jurisdiction.

         Section 14.2. Home Office Payment. So long as you or your nominee shall
be the holder of any Note,  and  notwithstanding  anything  contained in Section

<PAGE>

14.1 or in such Note to the contrary, the Company will pay all sums becoming due
on such Note for  principal,  Make-Whole  Amount,  if any,  and  interest by the
method and at the address specified for such purpose below your name in Schedule
A, or by such other method or at such other  address as you shall have from time
to time  specified  to the  Company in writing  for such  purpose,  without  the
presentation  or surrender  of such Note or the making of any notation  thereon,
except  that upon  written  request of the  Company  made  concurrently  with or
reasonably  promptly  after payment or prepayment in full of any Note, you shall
surrender  such  Note  for  cancellation,  reasonably  promptly  after  any such
request,  to the Company at its  principal  executive  office or at the place of
payment most recently  designated by the Company pursuant to Section 14.1. Prior
to any sale or other  disposition  of any Note held by you or your  nominee  you
will, at your  election,  either  endorse  thereon the amount of principal  paid
thereon and the last date to which  interest  has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2.  The  Company  will  afford  the  benefits  of  this  Section  14.2 to any
Institutional  Investor  that is the direct or indirect  transferee  of any Note
purchased  by you  under  this  Agreement  and that has made the same  agreement
relating to such Note as you have made in this Section 14.2.

SECTION 15.       EXPENSES, ETC.

         Section 15.1.    Transaction Expenses.  Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including  reasonable  attorneys'  fees of a special counsel and, if reasonably
required,  local or other counsel)  incurred by you and each Other  Purchaser or
holder of a Note in connection with such transactions and in connection with any
amendments,  waivers or consents  under or in respect of this  Agreement  or the
Notes  (whether or not such  amendment,  waiver or consent  becomes  effective),
including,  without limitation: (a) the costs and expenses incurred in enforcing
or  defending  (or  determining  whether or how to enforce or defend) any rights
under this  Agreement  or the Notes or in  responding  to any  subpoena or other
legal process or informal  investigative  demand issued in connection  with this
Agreement or the Notes,  or by reason of being a holder of any Note, and (b) the
costs and expenses,  including  financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company or any of its  Subsidiaries  or
in  connection  with  any  work-out  or   restructuring   of  the   transactions
contemplated  hereby and by the Notes.  The Company  will pay, and will save you
and each  other  holder of a Note  harmless  from,  all claims in respect of any
fees,  costs or  expenses,  if any,  of brokers  and  finders  (other than those
retained by you).

         Section  15.2.  Survival.  The  obligations  of the Company  under this
Section 15 will  survive the payment or transfer of any Note,  the  enforcement,
amendment  or waiver of any  provision of this  Agreement or the Notes,  and the
termination of this Agreement.

SECTION 16.       SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

         All representations  and warranties  contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent  holder of a Note,  regardless of

<PAGE>

any investigation made at any time by or on behalf of you or any other holder of
a  Note.  All  statements  contained  in any  certificate  or  other  instrument
delivered  by or on behalf of the Company  pursuant to this  Agreement  shall be
deemed  representations  and  warranties  of the Company  under this  Agreement.
Subject to the  preceding  sentence,  this  Agreement  and the Notes  embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.

SECTION 17.       AMENDMENT AND WAIVER.

         Section  17.1.   Requirements.  This  Agreement  and the  Notes  may be
amended,  and the  observance  of any term  hereof or of the Notes may be waived
(either  retroactively  or  prospectively),  with  (and only  with) the  written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined  term  (as it is used  therein),  will  be  effective  as to you  unless
consented to by you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time outstanding  affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission,  change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole  Amount on, the Notes,  (ii) change the percentage
of the  principal  amount of the  Notes the  holders  of which are  required  to
consent to any such  amendment  or waiver,  or (iii)  amend any of  Sections  8,
11(a), 11(b), 12, 17 or 20.

         Section 17.2.    Solicitation of Holders of Notes.

                  (a  Solicitation.  The Company will provide each holder of the
         Notes  (irrespective  of the  amount  of Notes  then  owned by it) with
         sufficient  information,  sufficiently  far in  advance  of the  date a
         decision is  required,  to enable  such holder to make an informed  and
         considered decision with respect to any proposed  amendment,  waiver or
         consent in respect of any of the provisions hereof or of the Notes. The
         Company  will  deliver  executed  or true and  correct  copies  of each
         amendment,  waiver or consent  effected  pursuant to the  provisions of
         this Section 17 to each holder of outstanding Notes promptly  following
         the date on which it is executed  and  delivered  by, or  receives  the
         consent or approval of, the requisite holders of Notes.

                  (b  Payment.  The Company will not directly or indirectly  pay
          or cause to be paid any  remuneration,  whether by way of supplemental
          or additional interest,  fee or otherwise,  or grant any security,  to
          any holder of Notes as  consideration  for or as an  inducement to the
          entering into by any holder of Notes or any waiver or amendment of any
          of the  terms  and  provisions  hereof  unless  such  remuneration  is
          concurrently  paid, or security is concurrently  granted,  on the same
          terms,  ratably to each holder of Notes then  outstanding even if such
          holder did not consent to such waiver or amendment.

         Section 17.3.    Binding Effect, etc. Any amendment or waiver consented
to as provided in this Section 17 applies equally to all holders of Notes and is
binding  upon them and upon each future  holder of any Note and upon the Company

<PAGE>

without  regard to whether such Note has been marked to indicate such  amendment
or waiver.  No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising  any rights  hereunder or
under any Note  shall  operate  as a waiver of any  rights of any holder of such
Note. As used herein,  the term "this  Agreement" and  references  thereto shall
mean this Agreement as it may from time to time be amended or supplemented.

         Section  17.4.   Notes Held by Company,  etc. Solely for the purpose of
determining  whether the holders of the  requisite  percentage  of the aggregate
principal  amount  of  Notes  then  outstanding  approved  or  consented  to any
amendment,  waiver or consent to be given under this Agreement or the Notes,  or
have  directed  the taking of any action  provided  herein or in the Notes to be
taken  upon the  direction  of the  holders  of a  specified  percentage  of the
aggregate  principal  amount  of  Notes  then  outstanding,  Notes  directly  or
indirectly  owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.

SECTION 18.       NOTICES.

         All notices  and  communications  provided  for  hereunder  shall be in
writing  and  sent  (a) by  telecopy  if the  sender  on the  same  day  sends a
confirming  copy of such  notice  by a  recognized  overnight  delivery  service
(charges  prepaid),  or (b) by registered or certified  mail with return receipt
requested (postage prepaid),  or (c) by a recognized  overnight delivery service
(with charges prepaid). Any such notice must be sent:

                  (i      if to you or your nominee, to you or it at the address
          specified  for such  communications  in  Schedule  A, or at such other
          address as you or it shall have specified to the Company in writing,

                  (ii     if to any other holder of any Note,  to such holder at
          such address as such other holder shall have  specified to the Company
          in writing, or

                  (iii    if to the  Company,  to the Company at its address set
          forth at the beginning hereof to the attention of the Treasurer, or at
          such other address as the Company  shall have  specified to the holder
          of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

SECTION 19.       REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating thereto,  including,  without
limitation,  (a)  consents,  waivers and  modifications  that may  hereafter  be
executed,  (b)  documents  received  by you at the  Closing  (except  the  Notes
themselves),  and (c) financial  statements,  certificates and other information
previously  or  hereafter  furnished  to you,  may be  reproduced  by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other

<PAGE>

similar  process and you may destroy any original  document so  reproduced.  The
Company agrees and stipulates  that, to the extent  permitted by applicable law,
any such reproduction  shall be admissible in evidence as the original itself in
any  judicial or  administrative  proceeding  (whether or not the original is in
existence  and whether or not such  reproduction  was made by you in the regular
course of business) and any  enlargement,  facsimile or further  reproduction of
such  reproduction  shall  likewise be admissible  in evidence.  This Section 19
shall not prohibit the Company or any other holder of Notes from  contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

SECTION 20.       CONFIDENTIAL INFORMATION.

         For the purposes of this Section 20,  "Confidential  Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions  contemplated by or otherwise  pursuant to this
Agreement  that is  proprietary in nature and that was clearly marked or labeled
or otherwise  adequately  identified when received by you as being  confidential
information of the Company or such Subsidiary,  provided that such term does not
include  information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure,  (b) subsequently becomes publicly known through
no act or omission by you or any person  acting on your  behalf,  (c)  otherwise
becomes  known to you  other  than  through  disclosure  by the  Company  or any
Subsidiary  or (d)  constitutes  financial  statements  delivered  to you  under
Section  7.1 that are  otherwise  publicly  available.  You  will  maintain  the
confidentiality  of such Confidential  Information in accordance with procedures
adopted  by you in good  faith  to  protect  confidential  information  of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors,  officers,  employees,  agents, attorneys and
affiliates   (to  the  extent  such   disclosure   reasonably   relates  to  the
administration of the investment represented by your Notes), (ii) your financial
advisors  and other  professional  advisors who agree to hold  confidential  the
Confidential  Information  substantially  in  accordance  with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Institutional  Investor
to  which  you  sell or  offer to sell  such  Note or any  part  thereof  or any
participation therein (if such Person has agreed in writing prior to its receipt
of such  Confidential  Information to be bound by the provisions of this Section
20), (v) any Person from which you offer to purchase any security of the Company
(if such Person has agreed in writing prior to its receipt of such  Confidential
Information  to be bound by the provisions of this Section 20), (vi) any federal
or state regulatory  authority having  jurisdiction over you, (vii) the National
Association  of  Insurance  Commissioners  or any similar  organization,  or any
nationally  recognized  rating agency that requires access to information  about
your  investment  portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or  appropriate  (w) to effect  compliance  with any
law,  rule,  regulation  or order  applicable  to you,  (x) in  response  to any
subpoena or other legal process,  (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may  reasonably  determine  such  delivery and  disclosure  to be
necessary or appropriate in the  enforcement or for the protection of the rights
and remedies under your Notes and this Agreement.  Each holder of a Note, by its
acceptance  of a Note,  will be deemed  to have  agreed to be bound by and to be
entitled to the  benefits  of this  Section 20 as though it were a party to this
Agreement.  On reasonable request by the Company in connection with the delivery

<PAGE>

to any holder of a Note of  information  required to be delivered to such holder
under this  Agreement or requested by such holder (other than a holder that is a
party  to this  Agreement  or its  nominee),  such  holder  will  enter  into an
agreement with the Company embodying the provisions of this Section 20.

SECTION 21.       SUBSTITUTION OF PURCHASER.

         You shall have the right to  substitute  any one of your  Affiliates as
the  purchaser  of the Notes  that you have  agreed to  purchase  hereunder,  by
written notice to the Company, which notice shall be signed by both you and such
Affiliate,  shall  contain  such  Affiliate's  agreement  to be  bound  by  this
Agreement and shall  contain a  confirmation  by such  Affiliate of the accuracy
with respect to it of the  representations  set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21),  such word shall be deemed to refer to such  Affiliate in lieu
of you.  In the event  that such  Affiliate  is so  substituted  as a  purchaser
hereunder and such Affiliate  thereafter  transfers to you all of the Notes then
held by such Affiliate,  upon receipt by the Company of notice of such transfer,
wherever the word '"you" is used in this  Agreement  (other than in this Section
21), such word shall no longer be deemed to refer to such  Affiliate,  but shall
refer to you,  and you shall  have all the rights of an  original  holder of the
Notes under this Agreement.

SECTION 22.       MISCELLANEOUS.

         Section  22.1.   Successors  and  Assigns.   All  covenants  and  other
agreements  contained  in this  Agreement  by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective  successors and assigns
(including,  without  limitation,  any  subsequent  holder of a Note) whether so
expressed or not.

         Section  22.2.   Payments  Due on  Non-Business Days.  Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a  Business  Day  shall  be made on the next  succeeding  Business  Day  without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.

         Section 22.3.    Severability. Any provision of this  Agreement that is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

         Section 22.4.    Construction. Each covenant contained  herein shall be
construed  (absent  express  provision to the contrary) as being  independent of
each other covenant  contained  herein, so that compliance with any one covenant
shall  not  (absent  such an  express  contrary  provision)  be deemed to excuse
compliance with any other covenant.  Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking,  such
provision  shall  be  applicable  whether  such  action  is  taken  directly  or
indirectly by such Person.

<PAGE>

         Section  22.5.   Counterparts. This  Agreement  may be  executed in any
number of  counterparts,  each of which  shall be an  original  but all of which
together shall  constitute one  instrument.  Each  counterpart  may consist of a
number of copies  hereof,  each signed by less than all, but together  signed by
all, of the parties hereto.

         Section  22.6.   Governing Law. This  Agreement  shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York excluding  choice-of-law  principles of the law
of such State that would require the  application  of the laws of a jurisdiction
other than such State.

                      *       *       *       *       *


<PAGE>

         If you are in  agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement  between you
and the Company.

                                      Very truly yours,

                                      SOS STAFFING SERVICES, INC.

                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------


The foregoing is hereby agreed
to as of the date thereof.

PPM AMERICA, INC., AS ATTORNEY IN FACT,
ON BEHALF OF JACKsON NATIONAL LIFE
INSURANCE COMPANY

By
  --------------------------------------
         James D. Young
         Managing Director

<PAGE>

         If you are in  agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement  between you
and the Company.

                                      Very truly yours,

                                      SOS STAFFING SERVICES, INC.

                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------


The foregoing is hereby agreed
to as of the date thereof.

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

By
  -------------------------------------
  Its
     ----------------------------------

By
  -------------------------------------
  Its
     ----------------------------------

<PAGE>

         If you are in  agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement  between you
and the Company.

                                      Very truly yours,

                                      SOS STAFFING SERVICES, INC.

                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------


The foregoing is hereby agreed
to as of the date thereof.

FARM BUREAU LIFE INSURAnCE COMPANY OF MICHIGAN

By
  -------------------------------------
  Its
     ----------------------------------

<PAGE>

         If you are in  agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement  between you
and the Company.

                                      Very truly yours,

                                      SOS STAFFING SERVICES, INC.

                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------


The foregoing is hereby agreed
to as of the date thereof.

FARM BUREAU MUTUAL INSURaNCE COMPANY OF MICHIGAN

By
  -------------------------------------
  Its
     ----------------------------------

<PAGE>

         If you are in  agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement  between you
and the Company.

                                      Very truly yours,

                                      SOS STAFFING SERVICES, INC.

                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------

The foregoing is hereby agreed
to as of the date thereof.

THE CANADA LIFE ASSURANCE COMPANY

By
  -------------------------------------
  Its
     ----------------------------------

<PAGE>

         If you are in  agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement  between you
and the Company.

                                      Very truly yours,

                                      SOS STAFFING SERVICES, INC.

                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------

The foregoing is hereby agreed
to as of the date thereof.

CANADA LIFE INSURANCE COMPANY OF NEW YORK

By
  -------------------------------------
  Its
     ----------------------------------

<PAGE>



         If you are in  agreement  with the  foregoing,  please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company,  whereupon the foregoing shall become a binding  agreement  between you
and the Company.

                                      Very truly yours,

                                      SOS STAFFING SERVICES, INC.

                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------


The foregoing is hereby agreed
to as of the date thereof.

CANADA LIFE INSURANCe COMPANY OF AMERICA

By
  -------------------------------------
  Its
     ----------------------------------

<PAGE>

                       INFORMATION RELATING TO PURCHASERS

<TABLE>
<CAPTION>
-------------------------------------------------------------------- ---- ------------------------------------------
<S>                <C>                                                              <C>
                                                                                     PRINCIPAL AMOUNT OF
                   NAME AND ADDRESS OF PURCHASER                                    NOTES TO BE PURCHASED
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

JACKSON NATIONAL LIFE INSURANCE COMPANY                                            $15,000,000 (Series B)
5901 EXECUtIVE DRIVE
LANSING, MICHIGAN 48909
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------


(1)      All  payments  on or in respect of the Notes to
         be by bank wire  transfer  of  Federal or other
         immediately  available funds  (identifying each
         payment as "SOS Staffing  Services 6.95% Senior
         Note,  Series B, due  September  1,  2008,  PPN
         ___________,  principal  premium or  interest")
         to:

                  NORTHERN  TRUST CHGO ABA  #0710-0015-2
                  Credit  Account  #5186041000  (General
                  Ledger  for all  clients  of  Northern
                  Trust)   For   Further    Credit   to:
                  26-91241/Jackson     National     Life
                  Insurance   Company   Ref:   (Name  of
                  Company)   PVTPL,   date  of  payment,
                  principal   and   interest   breakdown
                  Attention: Oscell Owens/Sharon Stifter

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

         with  sufficient  information  to identify  the source and
         application of such funds.
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(2)      All notices  and  communications,  including  notices  with  respect to
         payment and written  confirmation  of each such payment,  and copies of
         documents, notes and/or certificates, waivers, amendments, consents and
         financial information should be sent to:

                  PPM AMERICA, INC.
                  225 West Wacker Drive, Suite 1200
                  Chicago, Illinois 60606-1228
                  Attention:  Private Placements/
                                 Joseph Dimberio
                  Phone:  (312) 634-2500
                  Fax:  (312) 634-0054
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

         Interest and principal payment notices should also be faxed to:

                  Oscell Owens, Northern Trust
                  802 South Canal, Floor CIN
                  Chicago, Illinois 60607
                  Phone: (312) 444-5754
                  Fax: (312) 630-8179

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

                  and

                  Claudia Baron, PPM America
                  225 West Wacker Drive, Suite 1200
                  Chicago, Illinois 60606
                  Phone: (312) 634-2504
                  Fax: (312) 634-0054

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

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY                                        $10,000,000 (Series B)
8515 East Orchard Road
3rd Floor, Tower 2
Englewood, Colorado 80111
Tax I.D. #84-0467907

(1)      All payments by wire transfer of immediately available
         funds to:

                  ABA #091-000-019 NW MPLS/TRUST CLEARING
                  ACCT #08-40-245 ATTN: Acct #12468800

                  Special Instructions:
                  1) security description (PPN#)
                  2) allocation of payment between
                       principal and interest, and
                  3) confirmation of principal balance
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(2)      All  notices  of  payments  and  written   confirmation  of  such  wire
         transfers:

                  NORWEST BANK MINNESOTA, N.A.
                  733 Marquette Avenue, Investors Bldg., 5th floor
                  Minneapolis, Minnesota 55479-0047
                  Attention:  Income Collections
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(3)      All other communications/financial statements, trustee reports, etc.:

                  GREAT-WEST LIFE &ANNUITY INSURANCE COMPANY
                  8515 East Orchard Road
                  3rd Floor, Tower 2
                  Englewood, Colorado 80111
                  Attention: Corporate Finance Investments
                  Telecopier: (303) 689-6193
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(4) Physical delivery of securities - new issue:

                  NORWEST BANK MINNESOTA, N.A.
                  733 Marquette Avenue, Investors Bldg.,
                  5th floor
                  Minneapolis, Minnesota 55479-0047
                  Attention: Security Clearance
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN                                         $3,000,000 (Series B)
7373 West Saginaw
Lansing, Michigan 48917
Tax I.D. #38-6056370

(1)      Wire instructions for income:

                  COMERICA BANK
                  ABA #072000096
                  Credit Trust Operations
                  Fixed Income Unit
                  Account #21585-98530
                  (Security Name)
                  (Principal __________ Interest__________)
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(2)      Delivery instructions for the securities:

                  COMERICA BANK
                  411 West Lafayette Street
                  Detroit, Michigan 48226
                  Attention: Daniel J. Molnar - MC3462
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(3)      Address to use for any notices, etc.

                  FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN
                  P. O. Box 30400
                  Lansing, Michigan 48909
                  Attention: Steven R. Harkness -
                  Investment Division

                  Overnight address:
                  7373 West Saginaw
                  Lansing, Michigan 48917
                  Telephone: (517) 323-6670
                  Facsimile: (517) 323-6554

                  with copies to:

                  COMERICA BANK
                  Trust Operations
                  P. O. Box 75000
                  Detroit, Michigan 48275-3454

                  and

                  GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
                  8515 East Orchard Road
                  3rd Floor, Tower 2
                  Englewood, Colorado 80111
                  Attention: Corporate Finance Investments
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN                                       $2,000,000 (Series B)
7373 West Saginaw
Lansing, Michigan 48917
Tax I.D. #38-1316179

(1)      Wire instructions for income:

                  COMERICA BANK
                  ABA #072000096
                  Credit Trust Operations
                  Fixed Income Unit
                  Account #21585-98530
                  (Security Name)
                  (Principal __________ Interest__________)
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(2)      Delivery instructions for the securities:

                  COMERICA BANK
                  411 West Lafayette Street
                  Detroit, Michigan 48226
                  Attention: Daniel J. Molnar - MC3462
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(3)      Address to use for any notices, etc.

                  FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN
                  c/o Farm Bureau Life Insurance Company of
                  Michigan
                  P. O. Box 30400
                  Lansing, Michigan 48909
                  Attention: Steven R. Harkness -
                  Investment Division

                  Overnight address:
                  7373 West Saginaw
                  Lansing, Michigan 48917
                  Telephone: (517) 323-6670
                  Facsimile: (517) 323-6554

                  with copies to:

                  COMERICA BANK
                  Trust Operations
                  P. O. Box 75000
                  Detroit, Michigan 48275-3454

                  and

                  GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
                  8515 East Orchard Road
                  3rd Floor, Tower 2
                  Englewood, Colorado 80111
                  Attention: Corporate Finance Investments
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

THE CANADA LIFE ASSURANCE COMPANY                                                   $2,000,000 (Series A)
Investment Division
330 University Avenue
Toronto, Ontario M5G 1R8
Tax I.D. #38-0397420

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

Register Notes in the name of J. Romeo & Co.:

(1)      Courier/Uniformed Messengers:

                  CHASE MANHATTAN BANK
                  4 New York Plaza - 11th floor
                  Receive Window
                  New York, New York 10004-2477
                  Attention: Larry Zimmer
                  Telephone:  (212) 623-0987

                  for:
                  THE CANADA LIFE ASSURANCE COMPANY
                  Trust Account No. G52708
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(2)      Make all  payments  regarding  the  Note(s)  by bank wire  transfer  of
         Federal or other immediately available funds:

         For regular principal and interest:

                  CHASE MANHATTAN BANK
                  ABA 021-000-021
                  A/C #900-9-000200
                  Trust Account No. G52708, The Canada Life
                  Assurance Company
                  Attention: Bond Interest

         Refer  to  CUSIP  #,  name of  issuer,  rate,  maturity  date,  type of
         security, whether principal and/or interest and due date.

         For call or maturity:

                  CHASE MANHATTAN BANK
                  ABA 021-000-021
                  A/C #900-9-000192
                  Trust Account No. G52708, The Canada Life
                  Assurance Company
                  Attention: Doll Balbadar

         Refer to CUSIP #, name of issuer, rate, maturity date,
         whether principal and/or interest and effective date of
         call or maturity.
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(3)      send notices of payments and written confirmation of wire transfers:

                  CHASE MANHATTAN BANK
                  North America Insurance
                  3 Chase MetroTech Centre - 6th floor
                  Brooklyn, New York 11245
                  Attention: Doll Balbadar

                  copy to:

                  THE CANADA LIFE ASSURANCE COMPANY
                  330 University Avenue, SP-12
                  Toronto, Ontario, Canada M5G 1R8
                  Attention: Supervisor, Securities Accounting
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(4) Send financial statements and all other communications:

                  THE CANADA LIFE ASSURANCE COMPANY
                  Corporate Treasury, SP-11
                  330 University Avenue
                  Toronto, Ontario, Canada M5G 1R8
                  Attention: Brian Lynch, Associate, Treasurer,
                  U.S. Private Placements
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

CANADA LIFE INSURANCE COMPANY OF NEW YORK                                           $1,000,000 (Series A)
Investment Division
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Tax I.D. #13-2690792

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

Register Notes in the name of J. Romeo & Co.:

(1)      Courier/Uniformed Messengers:

                  CHASE MANHATTAN BANK
                  4 New York Plaza - 11th floor
                  Receive Window
                  New York, New York 10004-2477
                  Attention: Larry Zimmer
                  Telephone:  (212) 623-0987

                  for:
                  CANADA LIFE INSURANCE COMPANY OF NEW YORK
                  Trust Account No. G52685
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(2)      Make all  payments  regarding  the  Note(s)  by bank wire  transfer  of
         Federal or other immediately available funds:

         For regular principal and interest:

                  CHASE MANHATTAN BANK
                  ABA 021-000-021
                  A/C #900-9-000200
                  For A/C #G52685, Canada Life Insurance Company
                  of New York
                  Attention: Bond Interest

         Refer to CUSIP #, name of issuer, rate, maturity date,
         type of security, whether principal and/or interest and
         due date.
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

         For call or maturity:

                  CHASE MANHATTAN BANK
                  ABA 021-000-021
                  A/C #900-9-000192
                  Trust Account #G52685, Canada Life Insurance
                  Company of New York
                  Attention: Doll Balbadar

         Refer  to  CUSIP  #,  name of  issuer,  rate,  maturity  date,  whether
         principal and/or interest and effective date of call or maturity.

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

(3)      send notices of payments and written confirmation of wire transfers:

                  CHASE MANHATTAN BANK
                  North America Insurance
                  3 Chase MetroTech Centre - 6th floor
                  Brooklyn, New York 11245
                  Attention: Doll Balbadar

                  copy to:

                  THE CANADA LIFE ASSURANCE COMPANY
                  330 University Avenue, SP-12
                  Toronto, Ontario, Canada M5G 1R8
                  Attention: Supervisor, Securities Accounting
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(4) Send financial statements and all other communications:

                  THE CANADA LIFE ASSURANCE COMPANY
                  Corporate Treasury, SP-11
                  330 University Avenue
                  Toronto, Ontario, Canada M5G 1R8
                  Attention: Brian Lynch, Associate, Treasurer,
                  U.S. Private Placements
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

CANADA LIFE INSURANCE COMPANY OF AMERICA                                            $2,000,000 (Series A)
Investment Division
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Tax I.D. #38-2816473

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

Register Notes in the name of J. Romeo & Co.:

(1)      Courier/Uniformed Messengers:

                  CHASE MANHATTAN BANK
                  4 New York Plaza - 11th floor
                  Receive Window
                  New York, New York 10004-2477
                  Attention: Larry Zimmer
                  Telephone:  (212) 623-0987

                  for:
                  CANADA LIFE INSURANCE COMPANY OF AMERICA
                  Trust Account No. G52709
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(2)      Make all  payments  regarding  the  Note(s)  by bank wire  transfer  of
         Federal or other immediately available funds:

         For regular principal and interest:

                  CHASE MANHATTAN BANK
                  ABA 021-000-021
                  A/C #900-9-000200
                  Trust Account No. G52709, Canada Life Insurance
                  Company of America
                  Attention:  Doll Balbadar

         Refer to  CUSIP  #,  name  of  issuer,  rate,  maturity  date,  type of
          security, whether principal and/or interest and due date.

         For call or maturity:

                  CHASE MANHATTAN BANK
                  ABA 021-000-021
                  A/C #900-9-000192
                  Trust Account No. G52709, Canada Life Insurance
                  Company of America
                  Attention:  Doll Balbadar

Refer to CUSIP #, name of issuer, rate, maturity date, whether
         principal and/or interest and effective date of call or
         maturity.
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(3)      send notices of payments and written confirmation of wire transfers:

                  CHASE MANHATTAN BANK
                  North America Insurance
                  3 Chase MetroTech Centre - 6th floor
                  Brooklyn, New York 11245
                  Attention:  Doll Balbadar

         copy to:

                  THE CANADA LIFE ASSURANCE COMPANY
                  330 University Avenue, SP-12
                  Toronto, Ontario, Canada M5G 1R8
                  Attention:  Supervisor, Securities Accounting
-------------------------------------------------------------------- ---- ------------------------------------------
-------------------------------------------------------------------- ---- ------------------------------------------

(4) Send financial statements and all other communications:

                  THE CANADA LIFE ASSURANCE COMPANY
                  Corporate Treasury, SP-11
                  330 University Avenue
                  Toronto, Ontario, Canada M5G 1R8
                  Attention:  Brian Lynch, Associate, Treasurer,
                  U.S. Private Placements
-------------------------------------------------------------------- ---- ------------------------------------------
</TABLE>


<PAGE>

                       SCHEDULE B
              (to Note Purchase Agreement)

                      DEFINED TERMS

         As used herein,  the following  terms have the respective  meanings set
forth below or set forth in the Section hereof following such term:

         "Affiliate"  means any Person  (other than a Subsidiary of the Company)
which (a) directly or indirectly through one or more intermediaries  controls or
is  controlled  by, or is under common  control  with,  the  Company,  (b) which
beneficially  owns or holds 10% or more of any class of the Voting  Stock of the
Company,  or (c) of which 10% or more of the  Voting  Stock (or in the case of a
Person  which  is not a  corporation,  10% or more of the  equity  interest)  is
beneficially  owned or held by the Company,  a  Subsidiary  of the Company or an
Affiliate of the Company or a Subsidiary of the Company.

         "Business  Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday,  a Sunday or a day on which  commercial banks in New York
City are required or  authorized  to be closed,  and (b) for the purposes of any
other provision of this Agreement,  any day other than a Saturday, a Sunday or a
day on which commercial  banks in Chicago,  Illinois or Salt Lake City, Utah are
required or authorized to be closed.

         "Capital  Lease" means,  at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

         "Change  of  Control"  occurs  when any  Person or any  Persons  acting
together which would  constitute a Group together with any Affiliates or Related
Persons  thereof  shall  at any  time  Beneficially  Own  more  than  35% of the
aggregate  voting power of all classes of Voting  Stock of the Company.  As used
herein (a) "Beneficially  Own" shall mean  "beneficially own" as defined in Rule
13d-3 of the  Securities  Exchange  Act of 1934,  as amended,  or any  successor
provision thereto;  provided,  however, that, for purposes of this definition, a
Person shall not be deemed to Beneficially Own securities tendered pursuant to a
tender or  exchange  offer  made by or on  behalf of such  Person or any of such
Person's  Affiliates until such tendered securities are accepted for purchase or
exchange;  (b) "Group" shall mean a "group" for purposes of Section 13(d) of the
Securities  Exchange Act of 1934,  as amended;  and (c) "Related  Person" of any
Person  shall mean any other  Person  owning  (1) 5% or more of the  outstanding
common  stock  of such  Person  or (2) 5% or more of the  Voting  Stock  of such
Person.

         "Closing" is defined in Section 3.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

         "Company" means SOS Staffing Services, Inc., a Utah corporation.

<PAGE>

                                  6 SCHEDULE B
                          (to Note Purchase Agreement)
                                       B-8


         "Confidential Information" is defined in Section 20.

         "Consolidated Earnings Available for Fixed Charges" means, with respect
to any  period,  Consolidated  Net  Income for such  period,  as  determined  in
accordance  with GAAP,  plus the sum of all amounts  deducted in the computation
thereof on account of (a) Consolidated Fixed Charges;  (b) income taxes; and (c)
depreciation  and  amortization  for the most  recently  completed  four  fiscal
quarters. With respect to the acquisition or disposition of property, the effect
of such  acquisition  or  disposition  shall be  calculated on a pro forma basis
giving  effect solely to the actual  historical  results of the assets or entity
acquired or disposed of and  adjustments  for  discontinued  compensation of the
principals  of the  entity  acquired  in the form of salary,  commission,  bonus
and/or any other  employment  related  personal  expense  or other  discontinued
expenses  directly  related to the  principals  as of the  beginning of the four
quarter testing period to determine Consolidated EBITDA.

         "Consolidated   EBITDA"  means  for  any  four  quarter   period,   the
Consolidated Net Income for such period plus (i) Federal, state and local income
tax  expense  paid  or  accrued  for  as  a  liability  for  such  period,  (ii)
depreciation  and  amortization  expenses  and (iii)  Interest  Expense  for the
Company and its Subsidiaries.  With respect to the acquisition or disposition of
property, the effect of such acquisition or disposition shall be calculated on a
pro forma basis giving  effect  solely to the actual  historical  results of the
assets or entity  acquired  or  disposed  of and  adjustments  for  discontinued
compensation  of the  principals  of the entity  acquired in the form of salary,
commission,  bonus and/or any other employment related personal expense or other
discontinued  expenses directly related to the principals as of the beginning of
the four quarter testing period to determine Consolidated EBITDA.

         "Consolidated  Fixed  Charges" for any period shall mean the sum of (i)
Interest Expense for such period and (ii) operating lease expense of the Company
and its Subsidiaries for such period.

         "Consolidated Net Income" means the net earnings of the Company and its
Subsidiaries  determined on a consolidated basis in accordance with GAAP for the
most recently completed four quarters.

         "Consolidated  Net Worth" means for any Person,  the sum of all capital
stock,  including preferred stock,  paid-in-capital and retained earnings as set
forth in the audited financial statements according to GAAP.

         "Consolidated  Total Debt" shall mean as of the date of  determination,
the  sum  of  all  Indebtedness  of  the  Company  and  its  Subsidiaries  after
eliminations determined on a consolidated basis in accordance with GAAP.

         "Default"  means an event or condition  the  occurrence or existence of
which would,  with the lapse of time or the giving of notice or both,  become an
Event of Default.

<PAGE>

         "Default  Rate" means that rate of interest  that is the greater of (i)
2% per annum  above  the rate of  interest  stated  in  clause  (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest  publicly  announced
by The First  National  Bank of Chicago in  Chicago,  Illinois  as its "base" or
"prime" rate.

         "Environmental  Laws"  means any and all  Federal,  state,  local,  and
foreign statutes,  laws,  regulations,  ordinances,  rules,  judgments,  orders,
decrees,  permits,  concessions,  grants,  franchises,  licenses,  agreements or
governmental  restrictions  relating  to  pollution  and the  protection  of the
environment or the release of any materials into the environment,  including but
not limited to those related to hazardous  substances  or wastes,  air emissions
and discharges to waste or public systems.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time, and the rules and regulations  promulgated thereunder
from time to time in effect.

         "ERISA   Affiliate"  means  any  trade  or  business  (whether  or  not
incorporated)  that is treated as a single  employer  together  with the Company
under section 414 of the Code.

         "Event of Default" is defined in Section 11.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Existing Bank Credit  Facility" means the Credit Agreement dated as of
July 11, 1996 among the Company,  First  Security  Bank,  N.A. and NBD Bank,  as
amended, modified, supplemented or restated from time to time.

         "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

         "Governmental Authority" means

                  (a) the government of

                           (i)    the  United  States of America or any State or
                  other political subdivision thereof, or

                           (ii)   any  jurisdiction  in which the Company or any
                  Subsidiary conducts all or any part of its business,  or which
                  asserts jurisdiction over any properties of the Company or any
                  Subsidiary, or

                  (b) any entity exercising  executive,  legislative,  judicial,
         regulatory or  administrative  functions of, or pertaining to, any such
         government.

<PAGE>

         "Guarantors"  means,   collectively,   Bedford  Consultants,   Inc.,  a
California  corporation,   Computer  Professional  Resources,   Inc.,  a  Kansas
corporation,  ServCom Staff Management, Inc., a Utah corporation, SOS Collection
Services,  Inc., an Arizona corporation,  SOS Information  Technology Company, a
Utah corporation,  and Wolfe & Associates,  Inc., a New Mexico corporation,  and
any other Person that may, after the date hereof, execute a Subsidiary Guaranty.

         "Guaranty"  means, with respect to any Person,  any obligation  (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness,  dividend or other  obligation  of any other Person in any manner,
whether  directly or  indirectly,  including  (without  limitation)  obligations
incurred through an agreement, contingent or otherwise, by such Person:

                  (a) to  purchase  such   indebtedness  or  obligation  or  any
          property constituting security therefor;

                  (b) to advance or supply funds (i) for the purchase or payment
          of such  indebtedness  or obligation,  or (ii) to maintain any working
          capital or other  balance  sheet  condition  or any  income  statement
          condition  of any  other  Person  or  otherwise  to  advance  or  make
          available  funds for the purchase or payment of such  indebtedness  or
          obligation;

                  (c) to lease properties or to purchase  properties or services
          primarily  for the purpose of assuring the owner of such  indebtedness
          or  obligation  of the ability of any other  Person to make payment of
          the indebtedness or obligation; or

                  (d) otherwise  to  assure  the owner of such  indebtedness  or
          obligation against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

         "Hazardous  Material" means any and all pollutants,  toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal  of which may be  required  or the  generation,  manufacture,  refining,
production, processing, treatment, storage, handling, transportation,  transfer,
use, disposal, release, discharge,  spillage, seepage, or filtration of which is
or  shall  be  restricted,   prohibited  or  penalized  by  any  applicable  law
(including, without limitation,  asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

         "Holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.

         "Indebtedness"  with respect to any Person means, at any time,  without
duplication,

<PAGE>

                  (a) its  liabilities  for borrowed money  (including,  without
          limitation,  under the Notes and the Existing  Bank Credit  Agreement)
          and its redemption  obligations  in respect of mandatorily  redeemable
          Preferred Stock;

                  (b) its  liabilities  for  the  deferred   purchase  price  of
          property acquired by such Person to the extent such liabilities should
          be recorded on such Person's  balance  sheet in  accordance  with GAAP
          (excluding accounts payable arising in the ordinary course of business
          but including all liabilities created or arising under any conditional
          sale or other  title  retention  agreement  with  respect  to any such
          property);

                  (c) all   liabilities   appearing  on  its  balance  sheet  in
          accordance with GAAP in respect of Capital Leases;

                  (d) all  liabilities  for borrowed  money  secured by any Lien
         with  respect to any property  owned by such Person  (whether or not it
         has assumed or otherwise become liable for such liabilities);

                  (e) all its  liabilities  in  respect  of letters of credit or
         instruments  serving a similar  function  issued  or  accepted  for its
         account  by banks  and other  financial  institutions  (whether  or not
         representing  obligations  for  borrowed  money) to the extent that any
         amounts have been drawn thereunder; and

                  (f) any Guaranty of such Person with respect to liabilities of
         a type described in any of clauses (a) through (e) hereof.

Indebtedness  of any Person shall include all  obligations of such Person of the
character described in clauses (a) through (f) to the extent such Person remains
legally liable in respect  thereof  notwithstanding  that any such obligation is
deemed to be extinguished under GAAP.

         "Institutional  Investor"  means (a) any original  purchaser of a Note,
(b) any  holder of a Note  holding  more than  5.0% of the  aggregate  principal
amount of the Notes then outstanding,  and (c) any bank, trust company,  savings
and loan  association  or other  financial  institution,  any pension plan,  any
investment  company,  any insurance company,  any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.

         "Interest  Expense" for any period shall mean  interest  expense of the
Company and its Subsidiaries for such period, as defined according to GAAP.

         "Lien" means, with respect to any Person,  any mortgage,  lien, pledge,
charge, security interest or other encumbrance,  or any interest or title of any
vendor,  lessor,  lender or other  secured  party to or of such Person under any

<PAGE>

conditional  sale or other title retention  agreement or Capital Lease,  upon or
with respect to any property or asset of such Person  (including  in the case of
stock,   stockholder  agreements,   voting  trust  agreements  and  all  similar
arrangements).

         "Make-Whole Amount" is defined in Section 8.6.

         "Material"  means  material in relation  to the  business,  operations,
affairs,  financial condition,  assets,  properties, or prospects of the Company
and its Subsidiaries taken as a whole.

         "Material  Adverse  Effect" means a material  adverse effect on (a) the
business, operations,  affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform  its  obligations  under  this  Agreement  and the Notes,  or (c) the
validity or enforceability of this Agreement or the Notes.

         "Material  Subsidiary"  means  any one or  more  Subsidiary,  alone  or
together,  (a) with a Consolidated  Net Worth of 5% or more of the Company's and
all Subsidiaries'  aggregate Consolidated Net Worth or (b) which generated 5% or
more of the Company's and all Subsidiaries' Consolidated EBITDA.

         "Memorandum" is defined in Section 5.3.

         "Multiemployer  Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).

         "Notes" is defined in Section 1.

         "Officer's  Certificate"  means a  certificate  of a  Senior  Financial
Officer or of any other officer of the Company whose responsibilities  extend to
the subject matter of such certificate.

         "Other Agreements" is defined in Section 2.

         "Other Purchasers" is defined in Section 2.

         "PBGC" means the Pension Benefit Guaranty  Corporation  referred to and
defined in ERISA or any successor thereto.

         "Person"  means  an  individual,   partnership,   corporation,  limited
liability  company,  association,   trust,  unincorporated  organization,  or  a
government or agency or political subdivision thereof.

         "Plan" means an "employee  benefit plan" (as defined in section 3(3) of
ERISA) that is or,  within the preceding  five years,  has been  established  or
maintained,  or to which  contributions are or, within the preceding five years,

<PAGE>

have been made or required to be made, by the Company or any ERISA  Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

         "Preferred  Stock"  means any class of capital  stock of a  corporation
that is preferred  over any other class of capital stock of such  corporation as
to the payment of  dividends  or the payment of any amount upon  liquidation  or
dissolution of such corporation.

         "Priority Debt" is defined in Section 10.5.

         "Property"  or  "Properties"  means,   unless  otherwise   specifically
limited,  real or personal property of any kind, tangible or intangible,  choate
or inchoate.

         "QPAM  Exemption" means  Prohibited  Transaction  Class Exemption 84-14
issued by the United States Department of Labor.

         "Required  Holders" means, at any time, the holders of at least 66-2/3%
in principal  amount of the Notes at the time  outstanding  (exclusive  of Notes
then owned by the Company or any of its Affiliates).

         "Responsible  Officer" means any Senior Financial Officer and any other
officer  of the  Company  with  responsibility  for  the  administration  of the
relevant portion of this agreement.

         "Sale and Leaseback  Transaction" shall mean a transaction or series of
transactions  pursuant  to which the  Company  or any  Subsidiary  shall sell or
transfer to any Person  (other than the Company or a  Subsidiary)  any  Property
within 180 days after the  acquisition  of such  Property or the  completion  of
construction of improvements  thereon,  and, as part of the same  transaction or
series of transactions,  such Person shall rent or lease as lessee, or similarly
acquire the right to possession or use of, such Property.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time.

         "Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

         "Senior  Indebtedness"  all Indebtedness owed by the Company and any of
its Subsidiaries pursuant to the Existing Bank Credit Facility and the Notes.

         "Subsidiary"  means, as to any Person, any corporation,  association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests  to  enable  it or them (as a group)  ordinarily,  in the  absence  of
contingencies,  to elect a majority  of the  directors  (or  Persons  performing
similar  functions) of such entity, and any partnership or joint venture if more

<PAGE>

than a 50% interest in the profits or capital thereof is owned by such Person or
one or  more  of its  Subsidiaries  or  such  Person  and  one  or  more  of its
Subsidiaries  (unless  such  partnership  can and  does  ordinarily  take  major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.

         "Subsidiary Guaranty" is defined in Section 1.

         "Swaps" means,  with respect to any Person,  payment  obligations  with
respect  to  interest  rate  swaps,   currency  swaps  and  similar  obligations
obligating  such  Person  to make  payments,  whether  periodically  or upon the
happening of a contingency.  For the purposes of this  Agreement,  the amount of
the obligation under any Swap shall be the amount  determined in respect thereof
as of the end of the then most  recently  ended  fiscal  quarter of such Person,
based on the assumption  that such Swap had terminated at the end of such fiscal
quarter,  and in making such  determination,  if any agreement  relating to such
Swap  provides  for  the  netting  of  amounts  payable  by and to  such  Person
thereunder or if any such  agreement  provides for the  simultaneous  payment of
amounts  by and to such  Person,  then in each  such  case,  the  amount of such
obligation shall be the net amount so determined.

         "Total  Assets"  means,  as of any date of  determination,  all amounts
which  would,  in  accordance  with GAAP,  be included  under total  assets on a
consolidated balance sheet of the Company and its Subsidiaries.

         "Voting  Stock"  means  capital  stock  of any  class or  classes  of a
corporation  having power under ordinary  circumstances to vote for the election
of members of the board of directors of such  corporation  or Person  performing
similar  functions  (irrespective  of whether or not at the time stock of any of
the class or classes shall have or might have special  voting power or rights by
reason of the happening of any contingency).

         "Wholly-Owned  Subsidiary"  means,  at any  time,  any  Subsidiary  one
hundred  percent  (100%)  of all  of the  equity  interests  (except  directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.


<PAGE>

                              FORM OF SERIES A NOTE

                           SOS STAFFING SERVICES, INC.

                     6.72% SENIOR NOTE DUE SEPTEMBER 1, 2003

No.  [________]                                                September 1, 1998
$[_______]                                                     PNN[____________]

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws of the  State of Utah,  hereby  promises  to pay to  [_______________],  or
registered  assigns,  the principal sum of FIVE MILLION  DOLLARS on September 1,
2003,  with  interest  (computed on the basis of a 360-day year of twelve 30-day
months)  (a) on the unpaid  balance  thereof at the rate of 6.72% per annum from
the date hereof, payable semiannually,  on the 1st day of March and September in
each year,  commencing with March 1, 1999, until the principal hereof shall have
become due and  payable,  and (b) to the extent  permitted by law on any overdue
payment (including any overdue prepayment) of principal,  any overdue payment of
interest  and any overdue  payment of any  Make-Whole  Amount (as defined in the
Note Purchase Agreements referred to below),  payable  semiannually as aforesaid
(or, at the option of the registered  holder hereof,  on demand),  at a rate per
annum from time to time equal to the  greater of (i) 8.72% or (ii) 2.0% over the
rate of interest  publicly  announced by The First National Bank of Chicago from
time to time in Chicago, Illinois as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at The First  National  Bank of Chicago in Chicago,  Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.




                                  EXHIBIT 1(a)
                          (to Note Purchase Agreement)

<PAGE>

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.

                                      SOS STAFFING SERVICES, INC.



                                      By
                                        ----------------------------------------
                                        [Title]




                                 EXHIBIT 1(a)
                          (to Note Purchase Agreement)
                                     1(a)-2

<PAGE>



                              FORM OF SERIES B NOTE

                           SOS STAFFING SERVICES, INC.

               6.95% SENIOR NOTE, SERIES B, DUE SEPTEMBER 1, 2008

No.  [________]                                                September 1, 1998
$[_________________]                                           PNN[____________]

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws of the  State of Utah,  hereby  promises  to pay to  [_______________],  or
registered assigns, the principal sum of FIFTEEN MILLION DOLLARS on September 1,
2008,  with  interest  (computed on the basis of a 360-day year of twelve 30-day
months)  (a) on the unpaid  balance  thereof at the rate of 6.95% per annum from
the date hereof, payable semiannually,  on the 1st day of March and September in
each year,  commencing with March 1, 1999, until the principal hereof shall have
become due and  payable,  and (b) to the extent  permitted by law on any overdue
payment (including any overdue prepayment) of principal,  any overdue payment of
interest  and any overdue  payment of any  Make-Whole  Amount (as defined in the
Note Purchase Agreements referred to below),  payable  semiannually as aforesaid
(or, at the option of the registered  holder hereof,  on demand),  at a rate per
annum from time to time equal to the  greater of (i) 8.95% or (ii) 2.0% over the
rate of interest  publicly  announced by The First National Bank of Chicago from
time to time in Chicago, Illinois as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America  at the  principal  office  of The First  National  Bank of  Chicago  in
Chicago, Illinois or at such other place as the Company shall have designated by
written  notice  to the  holder of this Note as  provided  in the Note  Purchase
Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.




                                  EXHIBIT 1(b)
                          (to Note Purchase Agreement)

<PAGE>

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.

                                      SOS STAFFING SERVICES, INC.



                                      By
                                        ----------------------------------------
                                        [Title]




                                 EXHIBIT 4.4(b)
                          (to Note Purchase Agreement)

<PAGE>

                       FORM OF OPINION OF SPECIAL COUNSEL
                                 TO THE COMPANY

                            Matters to Be Covered in
                    Opinion of Special Counsel to the Company
                    -----------------------------------------


         1. Each of the Company and its  Subsidiaries  being duly  incorporated,
validly existing and in good standing and having  requisite  corporate power and
authority to issue and sell the Notes and to execute and deliver the documents.

         2. Each of the Company and its Subsidiaries being duly qualified and in
good standing as a foreign corporation in appropriate jurisdictions.

         3. Due  authorization and execution of the documents and such documents
being legal, valid, binding and enforceable.

         4. No conflicts with charter documents, laws or other agreements.

         5. All consents required to issue and sell the Notes and to execute and
deliver the documents having been obtained.

         6. No litigation questioning validity of documents.

         7. The Notes not requiring  registration  under the  Securities  Act of
1933, as amended;  no need to qualify an indenture under the Trust Indenture Act
of 1939, as amended.

         8. No violation of Regulations G, T or X of the Federal Reserve Board.

         9. Company not an "investment company," or a company "controlled" by an
"investment company," under the Investment Company Act of 1940, as amended.




                                 EXHIBIT 4.4(b)
                          (to Note Purchase Agreement)

<PAGE>

                       FORM OF OPINION OF SPECIAL COUNSEL
                                TO THE PURCHASERS

                    [TO BE PROVIDED ON A CASE BY CASE BASIS]




                                 EXHIBIT 4.4(b)
                          (to Note Purchase Agreement)
<PAGE>


                           SOS STAFFING SERVICES, INC.

               6.72% SENIOR NOTE, SERIES A, DUE SEPTEMBER 1, 2003

                                                               September 1, 1998
$2,000,000                                                         PNN 78462XA*5

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws of the State of Utah,  hereby  promises to pay to The Canada Life Assurance
Company,  or registered  assigns,  the  principal sum of TWO MILLION  DOLLARS on
September  1, 2003,  with  interest  (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.72% per
annum from the date hereof,  payable  semiannually,  on the 1st day of March and
September  in each year,  commencing  with March 1,  1999,  until the  principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue  payment  (including any overdue  prepayment)  of principal,  any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below), payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand),  at
a rate per annum  from time to time  equal to the  greater  of (i) 8.72% or (ii)
2.0% over the rate of interest publicly  announced by The First National Bank of
Chicago from time to time in Chicago, Illinois as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at The First  National  Bank of Chicago in Chicago,  Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

(393284.1)
<PAGE>

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.

                                      SOS STAFFING SERVICES, INC.


                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------

<PAGE>

                           SOS STAFFING SERVICES, INC.

               6.72% SENIOR NOTE, SERIES A, DUE SEPTEMBER 1, 2003

                                                               September 1, 1998
$2,000,000                                                         PNN 78462XA*5

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws of the State of Utah,  hereby  promises to pay to the Canada Life Insurance
Company of America,  or  registered  assigns,  the  principal sum of TWO MILLION
DOLLARS on September 1, 2003, with interest  (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid  balance  thereof at the rate of
6.72% per annum from the date hereof,  payable  semiannually,  on the 1st day of
March and  September  in each year,  commencing  with  March 1, 1999,  until the
principal  hereof  shall  have  become  due and  payable,  and (b) to the extent
permitted by law on any overdue  payment  (including any overdue  prepayment) of
principal,  any  overdue  payment of  interest  and any  overdue  payment of any
Make-Whole  Amount  (as  defined in the Note  Purchase  Agreements  referred  to
below),  payable  semiannually as aforesaid (or, at the option of the registered
holder  hereof,  on demand),  at a rate per annum from time to time equal to the
greater of (i) 8.72% or (ii) 2.0% over the rate of interest  publicly  announced
by The First National Bank of Chicago from time to time in Chicago,  Illinois as
its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at The First  National  Bank of Chicago in Chicago,  Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

<PAGE>

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.

                                      STAFFING SERVICES, INC.


                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------

<PAGE>

                           SOS STAFFING SERVICES, INC.

               6.72% SENIOR NOTE, SERIES A, DUE SEPTEMBER 1, 2003

                                                               September 1, 1998
$1,000,000                                                         PNN 78462XA*5

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws of the State of Utah,  hereby  promises to pay to the Canada Life Insurance
Company of New York,  or  registered  assigns,  the principal sum of ONE MILLION
DOLLARS on September 1, 2003, with interest  (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid  balance  thereof at the rate of
6.72% per annum from the date hereof,  payable  semiannually,  on the 1st day of
March and  September  in each year,  commencing  with  March 1, 1999,  until the
principal  hereof  shall  have  become  due and  payable,  and (b) to the extent
permitted by law on any overdue  payment  (including any overdue  prepayment) of
principal,  any  overdue  payment of  interest  and any  overdue  payment of any
Make-Whole  Amount  (as  defined in the Note  Purchase  Agreements  referred  to
below),  payable  semiannually as aforesaid (or, at the option of the registered
holder  hereof,  on demand),  at a rate per annum from time to time equal to the
greater of (i) 8.72% or (ii) 2.0% over the rate of interest  publicly  announced
by The First National Bank of Chicago from time to time in Chicago,  Illinois as
its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America at The First  National  Bank of Chicago in Chicago,  Illinois or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

<PAGE>

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.

                                      SOS STAFFING SERVICES, INC.


                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------

<PAGE>


                           SOS STAFFING SERVICES, INC.

               6.95% SENIOR NOTE, SERIES B, DUE SEPTEMBER 1, 2008

                                                               September 1, 1998
$15,000,000                                                        PNN 78462XA@3

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws of the State of Utah,  hereby  promises  to pay to  Jackson  National  Life
Insurance Company, or registered  assigns,  the principal sum of FIFTEEN MILLION
DOLLARS on September 1, 2008, with interest  (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid  balance  thereof at the rate of
6.95% per annum from the date hereof,  payable  semiannually,  on the 1st day of
March and  September  in each year,  commencing  with  March 1, 1999,  until the
principal  hereof  shall  have  become  due and  payable,  and (b) to the extent
permitted by law on any overdue  payment  (including any overdue  prepayment) of
principal,  any  overdue  payment of  interest  and any  overdue  payment of any
Make-Whole  Amount  (as  defined in the Note  Purchase  Agreements  referred  to
below),  payable  semiannually as aforesaid (or, at the option of the registered
holder  hereof,  on demand),  at a rate per annum from time to time equal to the
greater of (i) 8.95% or (ii) 2.0% over the rate of interest  publicly  announced
by The First National Bank of Chicago from time to time in Chicago,  Illinois as
its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America  at the  principal  office  of The First  National  Bank of  Chicago  in
Chicago, Illinois or at such other place as the Company shall have designated by
written  notice  to the  holder of this Note as  provided  in the Note  Purchase
Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

<PAGE>

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.

                                      SOS STAFFING SERVICES, INC.


                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------

<PAGE>

                           SOS STAFFING SERVICES, INC.

               6.95% SENIOR NOTE, SERIES B, DUE SEPTEMBER 1, 2008

                                                               September 1, 1998
$10,000,000                                                        PNN 78462XA@3

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws of the  State of Utah,  hereby  promises  to pay to The  Great-West  Life &
Annuity Company, or registered assigns, the principal sum of TEN MILLION DOLLARS
on September 1, 2008, with interest  (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.95% per
annum from the date hereof,  payable  semiannually,  on the 1st day of March and
September  in each year,  commencing  with March 1,  1999,  until the  principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue  payment  (including any overdue  prepayment)  of principal,  any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below), payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand),  at
a rate per annum  from time to time  equal to the  greater  of (i) 8.95% or (ii)
2.0% over the rate of interest publicly  announced by The First National Bank of
Chicago from time to time in Chicago, Illinois as its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America  at the  principal  office  of The First  National  Bank of  Chicago  in
Chicago, Illinois or at such other place as the Company shall have designated by
written  notice  to the  holder of this Note as  provided  in the Note  Purchase
Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

<PAGE>

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.


                                      SOS STAFFING SERVICES, INC.


                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------


<PAGE>

                           SOS STAFFING SERVICES, INC.

               6.95% SENIOR NOTE, SERIES B, DUE SEPTEMBER 1, 2008

                                                               September 1, 1998
$3,000,000                                                         PNN 78462XA@3

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws of the State of Utah,  hereby promises to pay to Farm Bureau Life Insurance
Company of Michigan,  or registered assigns,  the principal sum of THREE MILLION
DOLLARS on September 1, 2008, with interest  (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid  balance  thereof at the rate of
6.95% per annum from the date hereof,  payable  semiannually,  on the 1st day of
March and  September  in each year,  commencing  with  March 1, 1999,  until the
principal  hereof  shall  have  become  due and  payable,  and (b) to the extent
permitted by law on any overdue  payment  (including any overdue  prepayment) of
principal,  any  overdue  payment of  interest  and any  overdue  payment of any
Make-Whole  Amount  (as  defined in the Note  Purchase  Agreements  referred  to
below),  payable  semiannually as aforesaid (or, at the option of the registered
holder  hereof,  on demand),  at a rate per annum from time to time equal to the
greater of (i) 8.95% or (ii) 2.0% over the rate of interest  publicly  announced
by The First National Bank of Chicago from time to time in Chicago,  Illinois as
its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America  at the  principal  office  of The First  National  Bank of  Chicago  in
Chicago, Illinois or at such other place as the Company shall have designated by
written  notice  to the  holder of this Note as  provided  in the Note  Purchase
Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

<PAGE>

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.


                                      SOS STAFFING SERVICES, INC.


                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------

<PAGE>

                           SOS STAFFING SERVICES, INC.

               6.95% SENIOR NOTE, SERIES B, DUE SEPTEMBER 1, 2008

                                                               September 1, 1998
$2,000,000                                                         PNN 78462XA@3

         FOR VALUE  RECEIVED,  the  Undersigned,  SOS  STAFFING  SERVICES,  INC.
(herein called the  "Company"),  a corporation  organized and existing under the
laws  of the  State  of  Utah,  hereby  promises  to pay to Farm  Bureau  Mutual
Insurance Company of Michigan,  or registered assigns,  the principal sum of TWO
MILLION DOLLARS on September 1, 2008, with interest  (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid  balance  thereof at the
rate of 6.95% per annum from the date hereof,  payable semiannually,  on the 1st
day of March and September in each year,  commencing  with March 1, 1999,  until
the  principal  hereof shall have become due and payable,  and (b) to the extent
permitted by law on any overdue  payment  (including any overdue  prepayment) of
principal,  any  overdue  payment of  interest  and any  overdue  payment of any
Make-Whole  Amount  (as  defined in the Note  Purchase  Agreements  referred  to
below),  payable  semiannually as aforesaid (or, at the option of the registered
holder  hereof,  on demand),  at a rate per annum from time to time equal to the
greater of (i) 8.95% or (ii) 2.0% over the rate of interest  publicly  announced
by The First National Bank of Chicago from time to time in Chicago,  Illinois as
its "base" or "prime" rate.

         Payments of principal of,  interest on and any  Make-Whole  Amount with
respect  to this Note are to be made in  lawful  money of the  United  States of
America  at the  principal  office  of The First  National  Bank of  Chicago  in
Chicago, Illinois or at such other place as the Company shall have designated by
written  notice  to the  holder of this Note as  provided  in the Note  Purchase
Agreements referred to below.

         This  Note is one of a  series  of  Senior  Notes  (herein  called  the
"Notes")  issued  pursuant to separate  Note  Purchase  Agreements,  dated as of
September  1,  1998  (as  from  time  to  time  amended,   the  "Note   Purchase
Agreements"),  between the Company and the respective  Purchasers  named therein
and is  entitled  to the  benefits  thereof.  Each  holder  of this Note will be
deemed,  by its  acceptance  hereof,  (i) to have agreed to the  confidentiality
provisions  set forth in Section 20 of the Note Purchase  Agreements and (ii) to
have made the  representation  set  forth in  Section  6.2 of the Note  Purchase
Agreements.

         This Note is a  registered  Note and, as provided in the Note  Purchase
Agreements,  upon  surrender of this Note for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Note  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving  payment and
for all other  purposes,  and the Company  will not be affected by any notice to
the contrary.

<PAGE>

         The Company will make  required  prepayments  of principal on the dates
and in the amounts specified in the Note Purchase Agreements.  This Note is also
subject to optional  prepayment,  in whole or from time to time in part,  at the
times  and on the  terms  specified  in the Note  Purchase  Agreements,  but not
otherwise. This Note is subject to prepayment.

         If an Event of  Default,  as defined in the Note  Purchase  Agreements,
occurs  and is  continuing,  the  principal  of this  Note  may be  declared  or
otherwise  become due and payable in the  manner,  at the price  (including  any
applicable  Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be governed by, and construed in accordance  with,  the
laws of the State of New York.


                                      SOS STAFFING SERVICES, INC.


                                      By
                                        ----------------------------------------

                                      Its
                                         ---------------------------------------