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                                                                   EXHIBIT 10.16

                              EMPLOYMENT AGREEMENT

         AGREEMENT made as of the 18th day of June, 2003 by and between T. Kent
Smith, residing at 137 W. Wesley Road, Atlanta, Georgia 30303 (hereinafter
referred to as the "Employee") and TEAMSTAFF, INC., a New Jersey corporation
with principal offices located at 300 Atrium Drive, Somerset, New Jersey.

                              W I T N E S S E T H:

         WHEREAS, TeamStaff, Inc. and its subsidiaries (the "Company") are
engaged in the business of providing Business Outsource Services; and

         WHEREAS, the Company desires to employ the Employee for the purpose of
securing for the Company the experience, ability and services of the Employee;
and

         WHEREAS, the Employee desires to be employed with the Company, pursuant
to the terms and conditions herein set forth, superseding all prior oral and
written employment agreements, and term sheets and letters between the Company,
its subsidiaries and/or predecessors and Employee;

         NOW, THEREFORE, it is mutually agreed by and between the parties hereto
as follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.1      Accrued Compensation. Accrued Compensation shall mean an
amount which shall include all amounts earned or accrued through the
"Termination Date" (as defined below) but not paid as of the Termination Date,
including (i) Base Salary, (ii) reimbursement for business expenses incurred by
the Employee on behalf of the Company, pursuant to the Company's expense

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reimbursement policy in effect at such time, (iii) vacation pay, and (iv) unpaid
bonuses and incentive compensation earned and awarded prior to the Termination
Date.

         1.2      Cause. Cause shall mean: (i) willful disobedience by the
Employee of a material and lawful instruction of the Board of Directors of the
Company; (ii) formal charge, indictment or conviction of the Employee of any
misdemeanor involving fraud or embezzlement or similar crime, or any felony;
(iii) breach by the Employee of any material provision of this Agreement; (iv)
conduct amounting to fraud, dishonesty, gross negligence, willful misconduct or
recurring insubordination; (v) excessive absences from work, other than for
illness or Disability; or (vi) unsatisfactory performance of duties; provided
that the Company shall not have the right to terminate the employment of
Employee pursuant to the foregoing clauses (i), (iii), (iv), (v) and (vi) above
unless written notice specifying such breach shall have been given to the
Employee and, in the case of breach which is capable of being cured, the
Employee shall have failed to cure such breach within thirty (30) days after his
receipt of such notice.

         1.3      Continuation Benefits. Continuation Benefits shall be the
continuation of the Benefits, as defined in Section 5.1, for the period from the
Termination Date to the Expiration Date, or such other period as specifically
stated by this agreement (the "Continuation Period") at the Company's expense on
behalf of the Employee and his dependents; provided, however, that (i) in no
event shall the Continuation Period exceed 18 months from the Termination Date;
and (ii) the level and availability of benefits provided during the Continuation
Period shall at all times be subject to the post-employment conversion or
portability provisions of the benefit plans. The Company's obligation hereunder
with respect to the foregoing benefits shall also be limited to the extent that
if the Employee obtains any such benefits pursuant to a subsequent employer's
benefit plans, the

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Company may reduce the coverage of any benefits it is required to provide the
Employee hereunder as long as the aggregate coverages and benefits of the
combined benefit plans is no less favorable to the Employee than the coverages
and benefits required to be provided hereunder. This definition of Continuation
Benefits shall not be interpreted so as to limit any benefits to which the
Employee, his dependents or beneficiaries may be entitled under any of the
Company's employee benefit plans, programs or practices following the Employee's
termination of employment, including, without limitation, retiree medical and
life insurance benefits.

         1.4      Disability. Disability shall mean a physical or mental
infirmity which impairs the Employee's ability to substantially perform his
duties with the Company for a period of ninety (90) consecutive days.

         1.5      Notice of Termination. Notice of Termination shall mean a
written notice from the Company, or the Employee, of termination of the
Employee's employment which indicates the provision in this Agreement relied
upon, if any. A Notice of Termination served by the Company shall specify the
effective date of termination.

         1.6      Termination Date. Termination Date shall mean (i) in the case
of the Employee's death, his date of death; and (ii) in all other cases, the
date specified in the Notice of Termination.

                                   ARTICLE II

                                   EMPLOYMENT

         2.1      Subject to and upon the terms and conditions of this
Agreement, the Company hereby employs, and the Employee hereby accepts such
employment, as President and Chief Executive Officer of the Company. The
Employee's position includes acting as an officer and/or director of any of the
Company's subsidiaries as determined by the Board of Directors.

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                                   ARTICLE III

                                     DUTIES

         3.1      The Employee shall, during the term of his employment with the
Company, and subject to the direction and control of the Company's Board of
Directors, perform such duties and functions as he may be called upon to perform
by the Company's Board of Directors during the term of this Agreement,
consistent with his position as President and Chief Executive Officer.

         3.2      The Employee agrees to devote full business time and his best
efforts in the performance of his duties for the Company and any subsidiary
corporation of the Company.

         3.3      The Employee shall perform, in conjunction with the Company's
Executive Management, to the best of his ability the following services and
duties for the Company and its subsidiary corporations (by way of example, and
not by way of limitation):

                  1.       Those duties attendant to the position with the
                           Company for which he is hired;

                  2.       Establish and implement current and long range
                           objectives, plans, and policies, subject to the
                           approval of the Board of Directors;

                  3.       Financial planning including the development of,
                           liaison with, financing sources and investment
                           bankers;

                  4.       Managerial oversight of the Company's business;

                  5.       Shareholder relations;

                  6.       Ensure that all Company activities and operations are
                           carried out in compliance with local, state and
                           federal regulations and laws governing business
                           operations;

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                  7.       Business expansion of the Company including
                           acquisitions, joint ventures, and other
                           opportunities; and

                  8.       Promotion of the relationships of the Company and its
                           subsidiaries with their respective employees,
                           customers, suppliers and others in the business
                           community.

         3.4      Employee shall undertake regular travel to the Company's
executive and operational offices, and such other occasional travel within or
outside the United States as is or may be reasonably necessary in the interests
of the Company. All such travel including travel from Atlanta, Georgia to the
Company's executive offices shall be at the sole cost and expense of the
Company. All lodging and food costs incurred by Employee while traveling and/or
conducting business at the Company's operational offices (outside the Atlanta,
Georgia area) shall be paid by the Company.

                                   ARTICLE IV

                                  COMPENSATION

         4.1      During the term of this Agreement, Employee shall be
compensated initially at the rate of $250,000 per annum, subject to such
increases, if any, as determined by the Board of Directors, or if the Board so
designates, the Management Resources and Compensation Committee, in its
discretion, at the commencement of each of the Company's fiscal years during the
term of this Agreement (the "Base Salary"). The base salary shall be paid to the
Employee in accordance with the Company's regular executive payroll periods.

         4.2      Employee may receive a bonus (the "Bonus") in the sole
discretion of the Management Resources and Compensation Committee of the Board
of Directors. Employee will have an opportunity to earn a Bonus of up to 50% of
Employee's Base Salary for each fiscal year of

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employment. For the interim period from the commencement of employment to the
end of Fiscal 2003, the Bonus awarded will be on a pro rata basis and determined
by the Management Resources and Compensation Committee in its discretion.
Thereafter, it is anticipated that the Bonus will be based 70% on revenue and
income targets and 30% on other key objectives established by the Management
Resources and Compensation Committee at the commencement of each fiscal year.

         4.3      The Company shall deduct from Employee's compensation all
federal, state, and local taxes which it may now or may hereafter be required to
deduct.

         4.4      Employee may receive such other additional compensation as may
be determined from time to time by the Board of Directors including bonuses and
other long term compensation plans. Nothing herein shall be deemed or construed
to require the Board to award any bonus or additional compensation.

                                    ARTICLE V

                                    BENEFITS

         5.1      During the term hereof, the Company shall provide Employee
with the following benefits (the "Benefits"): (i) group health care and
insurance benefits as generally made available to the Company's senior
management; and (ii) such other insurance benefits obtained by the Company and
made generally available to the Company's senior management. The Company shall
reimburse Employee, upon presentation of appropriate vouchers, for all
reasonable business expenses incurred by Employee on behalf of the Company upon
presentation of suitable documentation.

         5.2      In the event the Company wishes to obtain Key Man life
insurance on the life of Employee, Employee agrees to cooperate with the Company
in completing any applications necessary

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to obtain such insurance and promptly submit to such physical examinations and
furnish such information as any proposed insurance carrier may request.

         5.3      For the term of this Agreement, Employee shall be entitled to
paid vacation at the rate of four (4) weeks per annum.

                                   ARTICLE VI

                                 NON-DISCLOSURE

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         6.1      The Employee shall not, at any time during or after the
termination of his employment hereunder, except when acting on behalf of and
with the authorization of the Company, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Company's business, finances,
marketing, computerized payroll, accounting and information business, personnel
and/or employee leasing business of the Company and its subsidiaries, including
information relating to any customer of the Company or pool of temporary
employees, or any other nonpublic business information of the Company and/or its
subsidiaries learned as a consequence of Employee's employment with the Company
(collectively referred to as the "Proprietary Information"). For the purposes of
this Agreement, trade secrets and confidential information shall mean
information disclosed to the Employee or known by him as a consequence of his
employment by the Company, whether or not pursuant to this Agreement, and not
generally known in the industry. The Employee acknowledges that trade secrets
and other items of confidential information, as they may exist from time to
time, are valuable and unique assets of the Company, and that disclosure of any
such information would cause substantial injury to the Company. Trade secrets
and confidential information shall cease to be trade secrets or confidential
information, as applicable, at such time as such information becomes public
other than through disclosure, directly or indirectly, by Employee in violation
of this Agreement.

         6.2      If Employee is requested or required (by oral questions,
interrogatories, requests for information or document subpoenas, civil
investigative demands, or similar process) to disclose any Proprietary
Information, Employee shall, unless prohibited by law, promptly notify the
Company of such request(s) so that the Company may seek an appropriate
protective order.

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                                   ARTICLE VII

                              RESTRICTIVE COVENANT

         7.1      In the event of the voluntary termination of employment with
the Company prior to the expiration of the term hereof, or Employee's discharge
in accordance with Article IX, or the expiration of the term hereof without
renewal, Employee agrees that he will not, for a period of one (1) year
following such termination, directly or indirectly, enter into or become
associated with or engage in any other business (whether as a partner, officer,
director, shareholder, employee, consultant, or otherwise), which is involved in
the business of providing (i) professional employer organization services, (ii)
temporary and/or permanent staffing of travel health professionals and travel
nurses, and (iii) payroll processing, or is otherwise engaged in the same or
similar business as the Company in direct competition with the Company, or which
the Company was in the process of developing, during the tenure of Employee's
employment by the Company. Notwithstanding the foregoing, the ownership by
Employee of less than five percent of the shares of any publicly held
corporation shall not violate the provisions of this Article VII.

         7.2      In furtherance of the foregoing, Employee shall not during the
aforesaid period of non-competition, directly or indirectly, in connection with
any computerized payroll, employee leasing, or permanent or temporary personnel
business, or any business similar to the business in which the Company was
engaged, or in the process of developing during Employee's tenure with the
Company, solicit any customer or employee of the Company who was a customer or
employee of the Company during the tenure of his employment.

         7.3      If any court shall hold that the duration of non-competition
or any other restriction contained in this Article VII is unenforceable, it is
our intention that same shall not thereby be

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terminated but shall be deemed amended to delete therefrom such provision or
portion adjudicated to be invalid or unenforceable or, in the alternative, such
judicially substituted term may be substituted therefor.

                                  ARTICLE VIII

                                      TERM

         8.1      This Agreement shall be for a term (the "Initial Term")
commencing on June 18, 2003 (the "Commencement Date") and terminating on
September 30, 2005 (the "Expiration Date"), unless sooner terminated upon the
death of the Employee, or as otherwise provided herein.

         8.2      Unless this Agreement is earlier terminated pursuant to the
terms hereof, the Company agrees to use its best efforts to notify Employee in
writing whether it intends to negotiate a renewal of this Agreement by notice
four (4) months prior to the Expiration Date. In the event (i) the Company shall
have failed to notify the Employee of its intention to renew as provided by this
Section 8.2, or (ii) the Company fails to reach agreement with Employee as to
the terms of a new employment agreement prior to the Expiration Date after
providing such notice, in addition to any other payments due hereunder, upon
termination of the Employee's employment on or after the Expiration Date for any
reason except Cause, the Company shall pay Employee a severance payment equal to
three months of Employee's Base Salary ("Severance Payments") payable in equal
installments on each of the Company's regular pay dates for executives during
the three months commencing on the first regular executive pay date following
the date of such termination.

                                   ARTICLE IX

                                   TERMINATION

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         9.1      The Company may terminate this Agreement by giving a Notice of
Termination to the Employee in accordance with this Agreement:

                  a.       For Disability;

                  b.       For Cause.

                  c.       Without Cause.

         9.2      Employee may terminate this Agreement by giving a Notice of
Termination to the Company in accordance with this Agreement, at any time, with
or without good reason.

         9.3      If the Employee's employment with the Company shall be
terminated, the Company shall pay and/or provide to the Employee the following
compensation and benefits in lieu of any other compensation or benefits arising
under this Agreement or otherwise:

                  a.       if the Employee was terminated by the Company for
                           Cause, or the Employee terminates, the Accrued
                           Compensation; provided, however, in the event the
                           termination for Cause was based on Section 1.2 (vi)
                           (unsatisfactory performance), in addition to the
                           foregoing, Employee shall be entitled to receive his
                           Base Salary for the lesser of the balance of the term
                           of this agreement or one year.

                  b.       if the Employee was terminated by the Company for
                           Disability, the Accrued Compensation, and Base Salary
                           and Continuation Benefits from the Termination Date
                           through the period ending three (3) months
                           thereafter; or

                  c.       if termination was due to the Employee's death, the
                           Accrued Compensation; and Employee's pro rata bonus
                           for the fiscal year in which the date of death
                           occurred; or

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                  d.       if the Employee was terminated by the Company without
                           cause, (i) the Accrued Compensation; (ii) the
                           Employee's Base Salary to the Expiration Date; and
                           (iii) the Continuation Benefits.

         9.4      The amounts payable under this Section 9, shall be paid as
follows:

                  a.       Accrued Compensation shall be paid within five (5)
                           business days after the Employee's Termination Date
                           (or earlier, if required by applicable law).

                  b.       If the Continuation Benefits are paid in cash, the
                           payments shall be made on the first day of each month
                           during the Continuation Period (or earlier, if
                           required by applicable law).

                  c.       The Base Salary through the Expiration Date shall be
                           paid in accordance with the Company's regular pay
                           periods (or earlier, if required by applicable law).

         9.5      Notwithstanding the foregoing, in the event Employee is a
member of the Board of Directors on the Termination Date, the payment of any and
all compensation due hereunder, except Accrued Compensation, and Employee's
right to exercise any Employee Stock Option after the Termination Date, is
expressly conditioned on Employee's resignation from the Board of Directors
within five (5) business days of notice by the Company requesting such
resignation. .

         9.6      The Employee shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment
except as provided in Sections 1.3.

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                                    ARTICLE X

                         TERMINATION OF PRIOR AGREEMENTS

         10.1     This Agreement sets forth the entire agreement between the
parties and supersedes all prior agreements, letters and understandings between
the parties, whether oral or written prior to the effective date of this
Agreement.

                                   ARTICLE XI

                                 STOCK OPTIONS

         11.1     As an inducement to Employee to enter into this Agreement the
Company hereby grants to Employee options to purchase shares of the Company's
Common Stock, $.001 par value, as follows:

                  Subject to the terms and conditions of the Company's 2000
Employees' Stock Option Plan (the "Plan"), and the terms and conditions set
forth in the Stock Option Certificate which are incorporated herein by
reference, the Employee is hereby granted options to purchase 400,000 shares of
the Company's Common Stock, of which options to purchase 100,000 shares shall
vest on June 18, 2003, 100,000 shall vest on June 18, 2004, and the balance
shall vest on June 18, 2005. The exercise price of the option shall be $3.00 per
share and shall contain such other terms and conditions as set forth in the
stock option agreement. The foregoing options shall be qualified as incentive
stock options to the maximum as allowed by law. The Options provided for herein
are not transferable by Employee and shall be exercised only by Employee, or by
his legal representative or executor, as provided in the Plan. Such Option shall
terminate as provided in the Plan, except as otherwise modified by this
Agreement.

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                                   ARTICLE XII

                           EXTRAORDINARY TRANSACTIONS

         12.1     The Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Employee, to their assigned
duties without distraction in potentially disturbing circumstances arising from
the possibility of a change in control of the Company.

         12.2     Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following events:

                  a.       (i) An acquisition (other than directly from the
                           Company) of any voting securities of the Company (the
                           "Voting Securities") by any "Person" (as the term
                           person is used for purposes of Section 13(d) or 14(d)
                           of the Securities Exchange Act of 1934, as amended
                           (the "1934 Act")) immediately after which such Person
                           has "Beneficial Ownership" (within the meaning of
                           Rule 13d-3 promulgated under the 1934 Act) of twenty
                           percent (20%) or more of the combined voting power of
                           the Company's then outstanding Voting Securities;
                           provided, however, that in determining whether a
                           Change in Control has occurred, Voting Securities
                           which are acquired in a "Non-Control Acquisition" (as
                           defined below) shall not constitute an acquisition
                           which would cause a Change in Control. A "Non-Control
                           Acquisition" shall mean an acquisition by (1) an
                           employee benefit plan (or a trust forming a part
                           thereof) maintained by (x) the Company or (y) any
                           corporation or other Person of which a majority of
                           its voting power or its equity securities or equity
                           interest is owned directly or

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                           indirectly by the Company (a "Subsidiary"), or (2)
                           the Company or any Subsidiary.

                           (ii)Notwithstanding the foregoing, a Change in
                           Control shall not be deemed to occur solely because a
                           Person (the "Subject Person") gained Beneficial
                           Ownership of more than the permitted amount of the
                           outstanding Voting Securities as a result of the
                           acquisition of Voting Securities by the Company
                           which, by reducing the number of Voting Securities
                           outstanding, increases the proportional number of
                           shares Beneficially Owned by the Subject Person,
                           provided that if a Change in Control would occur (but
                           for the operation of this sentence) as a result of
                           the acquisition of Voting Securities by the Company,
                           and after such share acquisition by the Company, the
                           Subject Person becomes the Beneficial Owner of any
                           additional Voting Securities which increases the
                           percentage of the then outstanding Voting Securities
                           Beneficially Owned by the Subject Person, then a
                           Change in Control shall occur.

                  b.       The individuals who, as of the date this Agreement is
                           approved by the Board, are members of the Board (the
                           "Incumbent Board"), cease for any reason to
                           constitute at least two-thirds of the Board;
                           provided, however, that if the election, or
                           nomination for election by the Company's
                           stockholders, of any new director was approved by a
                           vote of at least two-thirds of the Incumbent Board,
                           such new director shall, for purposes of this
                           Agreement, be considered and defined as a member of
                           the Incumbent Board; and provided, further, that no
                           individual shall be considered a member of the
                           Incumbent Board if such

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                           individual initially assumed office as a result of
                           either an actual or threatened "Election Contest" (as
                           described in Rule 14a-11 promulgated under the 1934
                           Act) or other actual or threatened solicitation of
                           proxies or consents by or on behalf of a Person other
                           than the Board (a "Proxy Contest"), including by
                           reason of any agreement intended to avoid or settle
                           any Election Contest or Proxy Contest; or

                  c.       Approval by stockholders of the Company of:

                           (i)      A merger, consolidation or reorganization
                                    involving the Company, unless: (1) the
                                    stockholders of the Company, immediately
                                    before such merger, consolidation or
                                    reorganization, own, directly or indirectly
                                    immediately following such merger,
                                    consolidation or reorganization, at least
                                    sixty percent (60%) of the combined voting
                                    power of the outstanding voting securities
                                    of the corporation resulting from such
                                    merger or consolidation or reorganization
                                    (the "Surviving Corporation") in
                                    substantially the same proportion as their
                                    ownership of the Voting Securities
                                    immediately before such merger,
                                    consolidation or reorganization, (2) the
                                    individuals who were members of the
                                    Incumbent Board immediately prior to the
                                    execution of the agreement providing for
                                    such merger, consolidation or reorganization
                                    constitute at least two-thirds of the
                                    members of the board of directors of the
                                    Surviving Corporation, and (3) no Person
                                    (other than the Company, any Subsidiary, any
                                    employee benefit plan

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                                    (or any trust forming a part thereof)
                                    maintained by the Company, the Surviving
                                    Corporation or any Subsidiary) becomes
                                    Beneficial Owner of twenty percent (20%) or
                                    more of the combined voting power of the
                                    Surviving Corporation's then outstanding
                                    voting securities as a result of such
                                    merger, consolidation or reorganization, a
                                    transaction described in clauses (1) through
                                    (3) shall herein be referred to as a
                                    "Non-Control Transaction"; or

                           (ii)     An agreement for the sale or other
                                    disposition of all or substantially all of
                                    the assets of the Company, to any Person,
                                    other than a transfer to a Subsidiary, in
                                    one transaction or a series of related
                                    transactions; or

                           (iii)    The stockholders of the Company approve any
                                    plan or proposal for the liquidation or
                                    dissolution of the Company.

                  d.       Notwithstanding anything contained in this Agreement
                           to the contrary, if the Employee's employment is
                           terminated prior to a Change in Control and the
                           Employee reasonably demonstrates that such
                           termination (i) was at the request of a third party
                           who has indicated an intention or taken steps
                           reasonably calculated to effect a Change in Control
                           (a "Third Party") or (ii) otherwise occurred in
                           connection with, or in anticipation of, a Change in
                           Control, then for all purposes of this Agreement, the
                           date of a Change in Control with respect to the
                           Employee shall mean the date immediately prior to the
                           date of such termination of the Employee's
                           employment.

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                  e.       For the purposes of this Agreement, an agreement for
                           the sale of the PEO and/or payroll division shall not
                           constitute an agreement for the sale or other
                           disposition of all or substantially all of the assets
                           of the Company.

                  a.       12.3 In the event that within ninety (90) days of a
                           Change of Control as described in Section 12.2, (i)
                           Employee is terminated, or (ii) Employee's status,
                           title, position or responsibilities are materially
                           reduced and Employee terminates his Employment, the
                           Company shall pay and/or provide to the Employee, the
                           following compensation and benefits: The Company
                           shall pay the Employee, in lieu of any other payments
                           due hereunder, (i) the Accrued Compensation; (ii) the
                           Continuation Benefits; and (iii) as severance, Base
                           Salary for a period of nine (9) months payable in
                           equal installments on each of the Company's regular
                           pay dates for executives during the nine months
                           commencing on the first regular executive pay date
                           following the termination Date; and The conditions to
                           the vesting of any outstanding incentive awards
                           (including restricted stock, stock options and
                           granted performance shares or units) granted to the
                           Employee under any of the Company's plans, or under
                           any other incentive plan or arrangement, shall be
                           deemed void and all such incentive awards shall be
                           immediately and fully vested and exercisable.
                           Further, the options shall be deemed amended to
                           provide that in the event of termination after an
                           event enumerated in this Article XII, the options
                           shall remain exercisable for the duration of their
                           term.

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         12.4     Notwithstanding the foregoing, if the payment under this
Article XII, either alone or together with other payments which the Employee has
the right to receive from the Company, would constitute an "excess parachute
payment" as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), the aggregate of such credits or payments under this
Agreement and other agreements shall be reduced to the largest amount as will
result in no portion of such aggregate payments being subject to the excise tax
imposed by Section 4999 of the Code. The priority of the reduction of excess
parachute payments shall be in the discretion of the Employee. The Company shall
give notice to the Employee as soon as practicable after its determination that
Change of Control payments and benefits are subject to the excise tax, but no
later than ten (10) days in advance of the due date of such Change of Control
payments and benefits, specifying the proposed date of payment and the Change of
Control benefits and payments subject to the excise tax. Employee shall exercise
his option under this paragraph 12.4 by written notice to the Company within
five (5) days in advance of the due date of the Change of Control payments and
benefits specifying the priority of reduction of the excess parachute payments.

                                  ARTICLE XIII

                         ARBITRATION AND INDEMNIFICATION

         13.1     Any dispute arising out of the interpretation, application,
and/or performance of this Agreement with the sole exception of any claim,
breach, or violation arising under Articles VI or VII hereof shall be settled
through final and binding arbitration before a single arbitrator in the State of
Georgia in accordance with the Rules of the American Arbitration Association.
The arbitrator shall be selected by the Association and shall be an
attorney-at-law experienced in the field of corporate

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law. Any judgment upon any arbitration award may be entered in any court,
federal or state, having competent jurisdiction of the parties.

         13.2     The Company hereby agrees to indemnify, defend, and hold
harmless the Employee for any and all claims arising from or related to his
employment by the Company at any time asserted, at any place asserted, to the
fullest extent permitted by law, except for claims based on Employee's fraud,
deceit or wilfulness. The Company shall maintain such insurance as is necessary
and reasonable to protect the Employee from any and all claims arising from or
in connection with his employment by the Company during the term of Employee's
employment with the Company and for a period of six (6) years after the date of
termination of employment for any reason. The provisions of this Section 13.2
are in addition to and not in lieu of any indemnification, defense or other
benefit to which Employee may be entitled by statute, regulation, common law or
otherwise.

                                   ARTICLE XIV

                                  SEVERABILITY

         If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall remain in full force and effect in all other
circumstances.

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                                   ARTICLE XV

                                     NOTICE

                  For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses as set forth below or to any such other address as the party to
receive the notice shall advise by due notice given in accordance with this
paragraph . All notices and communications shall be deemed to have been received
on the date of delivery thereof or on the third business day after the mailing
thereof, except that notice of change of address shall be effective only upon
receipt.

         The current addresses of the parties are as follows:

                  IF TO THE COMPANY:  TeamStaff, Inc.
                                      300 Atrium Drive
                                      Somerset, NJ 08873

                  IF TO THE EMPLOYEE: T. Kent Smith
                                      137 W. Wesley Road
                                      Atlanta, Georgia 30303

                                   ARTICLE XVI

                                     BENEFIT

         This Agreement shall inure to, and shall be binding upon, the parties
hereto, the successors and assigns of the Company, and the heirs and personal
representatives of the Employee.

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                                  ARTICLE XVII

                                     WAIVER

         The waiver by either party of any breach or violation of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of construction and validity.

                                  ARTICLE XVIII

                                  GOVERNING LAW

         This Agreement has been negotiated and executed in the State of New
Jersey which shall govern its construction and validity.

                                   ARTICLE XIX

                                  JURISDICTION

         Any or all actions or proceedings which may be brought by the Company
or Employee under this Agreement shall be brought in courts having a situs
within the State of Georgia, and Employee and the Company each hereby consent to
the jurisdiction of any local, state, or federal court located within the State
of Georgia.

                                   ARTICLE XX

                                ENTIRE AGREEMENT

         This Agreement contains the entire agreement between the parties
hereto. No change, addition, or amendment shall be made hereto, except by
written agreement signed by the parties hereto.

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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed their hands and seals the day and year first above written.

                                          TEAMSTAFF, INC.

                                          By: __________________________________

                                                  T. Stephen Johnson
                                                  Chairman of the Board

                                              __________________________________
                                                  T. Kent Smith
                                                  Employee

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