Document:

Exhibit 10.4

Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made on the 14th day of January, 2010 by and between Cheryl
Presuto (the “Employee”) and TEAMSTAFF, INC., a New Jersey corporation (the “Company”) and is
effective as of the 1st day of October, 2009. (Unless the context indicates otherwise,
the “Company” shall include the Company’s subsidiaries.)

W I T N E S S E T H:

WHEREAS, the Company and its subsidiaries are engaged in the business of providing Business
Outsourcing Services; and

WHEREAS, the Employee is currently employed by the Company and the Company desires to continue
the employment of the Employee and secure for the Company the experience, ability and services of
the Employee; and

WHEREAS, the Employee desires to continue her employment 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
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) conduct amounting to fraud, dishonesty, gross negligence, willful misconduct or recurring
insubordination; or (iv) excessive absences from work, other than for illness or Disability;
provided that the Company shall not have the right to terminate the employment of Employee pursuant
to the foregoing clauses (i), (iii), and (iv) 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 her receipt of
such notice.

1.3 Change in Control. “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 (27% if such Person is Wynnnefield Capital Inc. and
its affiliates); 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 indirectly by the Company (a “Subsidiary”), or (2) the Company
or any Subsidiary.

 

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(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 individual initially assumed office as a
result of either an actual “Election Contest” (as described in Rule 14a-11 promulgated under
the 1934 Act) or other solicitation of proxies or consents by or on behalf of a Person other than
the Board (a “Proxy Contest”); or

 

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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 (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 (27% if such Person is Wynnnefield Capital Inc. and its
affiliates), consolidation or reorganization, a transaction described in clauses (1) through (3)
shall herein be referred to as a “Non-Control Transaction”; or

 

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(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;

(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.

1.4 Continuation Benefits. Continuation Benefits shall be the continuation of the Benefits,
as defined in Section 5.1, for the period commencing on the Termination Date and terminating 12
months thereafter, 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 coverage and benefits of the combined
benefit plans is no less favorable to the Employee than the coverage 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, her 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. Notwithstanding the foregoing, Employee shall be entitled to take advantage of the COBRA
benefits to the maximum amount permitted by law.

1.5 Disability. Disability shall mean a physical or mental infirmity which impairs the
Employee’s ability to substantially perform her duties with the Company for a period of one hundred
eighty (180) consecutive days and the Employee has not returned to her full time employment prior
to the Termination Date as stated in the “Notice of Termination” (as defined below).

1.6 Good Reason. “Good Reason” shall mean without the written consent of the Employee: (A) a
material breach of any provision of this Agreement by the Company; (B) failure by the Company to
pay when due any compensation to the Employee; (C) a reduction in the Employee’s Base Salary; (D)
failure by the Company to maintain the Employee in the positions referred to in Section 2.1 of this
Agreement; (E) assignment to the Employee of any duties materially and adversely inconsistent with
the Employee’s positions, authority, duties, responsibilities, powers, functions, reporting
relationship or title as contemplated by Section 2.1 of this Agreement or any other action by the
Company that results in a material diminution of such positions, authority, duties,
responsibilities, powers, functions, reporting relationship or title; (F) relocation of the
Company’s accounting

 

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department or Employee’s principal place of employment to a location outside a
25 mile radius of the present location in Somerset, New Jersey, without the Employee’s written
consent; or (G) a Change in Control, provided the event on which the Change of Control is
predicated occurs within 90 days of the service of the Notice of Termination by the Employee, it
being understood that Employee shall have the right to terminate her employment under this Section
1.6 (G) for any reason or no reason within such 90 day period; and provided further, however, that
the Employee agrees not to terminate her employment for Good Reason pursuant to clauses (A) through
(F) unless (a) the Employee has given the Company at least 30 days’ prior written notice of her
intent to terminate her employment for Good Reason, which notice shall specify the facts and
circumstances constituting Good Reason; and (b) the Company has not remedied such facts and
circumstances constituting Good Reason to the reasonable and good faith satisfaction of the
Employee within a 30-day period after receipt of such notice.

1.7 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 and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee’s employment under the
provision so indicated. A Notice of Termination served by the Company shall specify the effective
date of termination.

1.8 Pro Rata Bonus. “Pro Rata Bonus” shall mean an amount equal to the maximum bonus Employee
had an opportunity to earn pursuant to section 4.2 multiplied by a fraction, the numerator of which
shall be the number of days from the commencement of the fiscal year to the Termination Date, and
the denominator of which shall be the number of days in the fiscal year in which Employee was
terminated.

 

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1.9 Severance Payment. “Severance Payment” shall mean an amount equal to the sum of 12 months
of Employee’s Base Salary in effect on the Termination Date. The Severance Payment shall be
payable in equal installments on each of the Company’s regular pay dates for executives during the
twelve months commencing on the first regular executive pay date following the Termination Date.
The Severance Payment is conditioned on the Employee executing a termination agreement and release
in a form reasonably acceptable to the Employee and the Company.

1.10 Termination Date. Termination Date shall mean (i) in the case of the Employee’s death,
her date of death; (ii) in the case of Good Reason, 30 days from the date the Notice of Termination
is given to the Company, provided the Company has not remedied such facts and circumstances
constituting Good Reason to the reasonable and good faith satisfaction of the Employee; (iii) in
the case of termination of employment on or after the Expiration Date, the last day of employment;
and (iv) in all other cases, the date specified in the Notice of Termination; provided, however, if
the Employee’s employment is terminated by the Company for any reason except Cause, the date
specified in the Notice of Termination shall be at least 30 days from the date the Notice of
Termination is given to the Employee, and provided further that in the case of Disability, the
Employee shall not have returned to the full-time performance of her duties during such period of
at least 30 days.

 

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ARTICLE II

EMPLOYMENT

2.1 Subject to and upon the terms and conditions of this Agreement, the Company hereby agrees
to continue the employment of the Employee, and the Employee hereby accepts such employment, as
Chief Financial 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.

ARTICLE III

DUTIES

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

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

(i) Those duties attendant to the position with the Company for which she is hired;

(ii) Establish and implement current and long range objectives, plans, and policies, subject
to the approval of the Chief Executive Officer and the Board of Directors;

 

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(iii) Financial planning including the development of, liaison with, financing sources and
investment bankers;

(iv) Managerial oversight of the Company’s accounting department;

(v) Primary responsibility for the preparation and filing of all financial activity reports
with federal and state regulatory authorities;

(vi) Acquiring appropriate insurance coverage to safeguard Company’s assets (excluding
workers’ compensation coverage and medical benefits);

(vii) Evaluation and integration of acquisitions, joint ventures, and other
opportunities; and

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

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

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 shall be at the sole cost
and expense of the Company and shall include reasonable lodging and food costs incurred by Employee
while traveling.

 

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ARTICLE IV

COMPENSATION

4.1 During the term of this Agreement, Employee shall be compensated initially at the rate of
$181,000 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 of up to 50% of Employee’s Base
Salary for each fiscal year of employment. The Bonus will be based on performance targets and
other key objectives established by the Management Resources and Compensation Committee.

4.3 The Company shall deduct from Employee’s compensation all federal, state, and local taxes
which it may now or 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.

 

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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 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
five (5) weeks per annum.

ARTICLE VI

NON-DISCLOSURE

6.1 The Employee shall not, at any time during or after the termination of her 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,
accounting, personnel and/or staffing business of the Company and its subsidiaries, including
information relating to any customer of the Company or pool of temporary or permanent employees,
governmental customer 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 her 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.

 

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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.

ARTICLE VII

RESTRICTIVE COVENANT

7.1 In the event of the termination of employment with the Company for any reason, Employee
agrees that she 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) temporary and/or permanent staffing of governmental employees, and
(ii) medical and office administration/technical professionals through Federal Supply Schedule
(“FSS”) contracts with both the United States General Services Administration (“GSA”), United
States Department of Veterans Affairs (“DVA”), United States Department of Defense (“DOD”) or other
federal, state and local entities, or (iii) 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. In furtherance of, and in
addition to, the foregoing, Employee shall not during the aforesaid period of non-competition, directly or indirectly, in connection with any
temporary or permanent employee placement, governmental staffing or any other 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, 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 her employment.

 

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7.2 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
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 October 1, 2009 (the
“Commencement Date”) and terminating on September 30, 2010 (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. Upon termination
of the Employee’s employment on or after the Expiration Date for any reason except Cause, the
Company shall pay Employee the Severance Payment.

 

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ARTICLE IX

TERMINATION

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

(i) for Cause;

(ii) without Cause;

(iii) for Disability.

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:

(i) if the Employee was terminated by the Company for Cause, or the Employee terminates
without Good Reason, the Accrued Compensation;

 

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(ii) if the Employee was terminated by the Company for Disability,

	 	(a)	 	the Continuation Benefits;

	 
	 	(b)	 	the Accrued Compensation;

	 
	 	(c)	 	the Pro-Rata Bonus; and

	 
	 	(d)	 	the Severance Payment; or

(iii) if termination was due to the Employee’s death,

	 	(a)	 	the Accrued Compensation;

	 
	 	(b)	 	the Continuation Benefits;

	 
	 	(c)	 	and the Pro Rata Bonus; or

(iv) if the Employee was terminated by the Company without cause, or the Employee terminates
this Agreement for Good Reason,

	 	(a)	 	the Accrued Compensation;

	 
	 	(b)	 	the Severance Payment; and

	 
	 	(c)	 	the Continuation Benefits.

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

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

(ii) 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).

(iii) 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).

 

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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 1.4.

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 except for the terms of employee stock option plans,
restricted stock grants and option certificates.

ARTICLE XI

STOCK OPTIONS AND

RESTRICTED STOCK AWARDS

(i) As an inducement to Employee to enter into this Agreement, the Company hereby grants to
Employee options to purchase 75,000 shares of the Company’s Common Stock, $.001 par value (the
“Options”), subject to the terms and conditions of the Company’s 2006 Long Term Incentive Plan (the
“Plan”), and the terms and conditions set forth in the Stock Option
Agreement which are incorporated herein by reference. Fifty percent of the options shall vest
upon issuance and the balance shall vest on September 30, 2010, provided Employee is an employee of
the Company on the vesting date, unless otherwise provided by this Agreement. The Options, to the
extent vested, shall be exercisable for a period of five years from the date of this Agreement (the
“Exercise Period”).

 

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11.2 The exercise price of the Options shall be equal to the closing price of the Company’s
Common Stock as reported by Nasdaq on the date of final execution of this Agreement and shall
contain such other terms and conditions as set forth in the stock option agreement. 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 Options shall terminate as
provided in the Plan, except as otherwise modified by this Agreement or the stock option agreement.

11.3 In the event of a termination of Employee’s employment with the Company pursuant to
Section 9.1(i), options granted and not exercised as of the Termination Date shall terminate
immediately and be null and void. In the event of a termination of Employee’s employment with the
Company due to the Employee’s death, or Disability, the Employee’s (or his estate’s or legal
representative’s) right to purchase shares of Common Stock of the Company pursuant to any stock
option or stock option plan to the extent vested as of the Termination Date shall remain
exercisable for a period of twelve (12) months following the Termination Date, but in no event
after the expiration of the Exercise Period. In the event of a termination of Employee’s employment
with the Company by the Employee other than for Good Reason, the Employee’s right to purchase
shares of Common Stock of the Company pursuant to any stock option or stock option plan to the
extent vested as of the Termination Date shall remain exercisable for a period of three months
following the
Termination Date, but in no event after the expiration of the exercise period.

 

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11.4 In the event of a Change of Control, as defined in Section 1.3, or Employee’s termination
by the Company without cause or by Employee for Good Reason, the conditions to the vesting of any
outstanding Restricted Stock Awards or Employee Stock Options granted to the Employee shall be
deemed void and (i) all such Shares and Options shall be immediately and fully vested and delivered
to the Employee, and (ii) all outstanding Options shall remain exercisable for a period of
twenty-four (24) months following the Termination Date, but in no event after the expiration of the
Exercise Period.

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.

In the event that within one hundred eighty days (180) 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 her Employment, the Company
shall pay and/or provide to the Employee, the following compensation and benefits:

	 	a.	 	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 twelve (12)
months payable in equal installments on each of the Company’s regular pay dates
for executives
during the twelve months commencing on the first regular executive pay date
following the termination Date; and

 

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	 	b.	 	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.

12.4 Upon the effective date of an event constituting a Change of Control, the Company shall
pay Employee, in one lump sum within five (5) upon the first day of the month immediately following
such event, an amount equal to Employee’s then current Base Salary. Employee shall be entitled to
such payment whether or not her employment with the Company continues after the Change of Control.

12.5 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 her 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.

 

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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 New Jersey 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 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 her 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 willfulness. 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 her
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.

 

21

 

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.

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 (a) personally
delivered or (b) sent by (i) a nationally recognized overnight courier service or (ii) certified
mail, return receipt requested, postage prepaid and in each case 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 (A) if delivered by personal service, the date of delivery
thereof; (B) if delivered by a nationally recognized overnight courier service, on the first
business day following deposit with such courier service; or (C) on the third business day after
the mailing thereof via certified mail. Notwithstanding the foregoing, any notice of change of
address shall be effective only upon receipt.

 

22

 

The current addresses of the parties are as follows:

	 	 	 	 	 
	 

	 	IF TO THE COMPANY:
	 	TeamStaff, Inc.
	 

	 	 	 	1 Executive Drive
	 

	 	 	 	Somerset, NJ 08873
	 
	 	 	 	 
	 

	 	WITH A COPY TO:
	 	Victor J. DiGioia
	 

	 	 	 	Becker & Poliakoff, LLP
	 

	 	 	 	45 Broadway
	 

	 	 	 	New York, NY 10006
	 
	 	 	 	 
	 

	 	IF TO THE EMPLOYEE:	 	 

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.

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 New Jersey, and
Employee and the Company each hereby consent to the jurisdiction of any local, state, or
federal court located within the State of New Jersey.

 

23

 

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.

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:  	/s/ Peter Black
 	 
	 	 	Peter Black 	 
	 	 	Chairman of the Management Resources and

Compensation Committee 	 
	 	 	 
	 	
/s/ Cheryl Presuto
 	 
	 	Cheryl Presuto 	 
	 	Employee 	 

 

24Exhibit 10.6

Exhibit 10.6

TEAMSTAFF, INC.

EMPLOYEE STOCK OPTION CERTIFICATE

AND AGREEMENT

	 	 	 
	Date of Grant:

	 	Option No.:
	 
	 	 
	Name of Optionee:
	 	 
	 
	 	 
	Number of Shares:
	 	 
	 
	 	 
	Exercise Price Per Share:
	 	 
	 
	 	 
	Expiration Date:
	 	 

Effective on the date of grant specified above, TEAMSTAFF, INC. (the “Company”) has granted to
the above-named Optionee under the Company’s 2006 Long Term Incentive Plan (the “Plan”), an option
to purchase from TeamStaff the number of shares of Common Stock of TeamStaff set forth above. This
option is subject to all the terms and conditions of the Plan which is incorporated in this option
as though set forth in full.

The terms and conditions of this option are as follows:

1. Number and Price of Options. The number and price of the shares subject to this
option shall be the number and price set forth above, subject to any adjustments which may be made
under Section 11 below.

2. Vesting. This option may not be exercised until it is vested. Portions of this
option become vested if you continue to be employed by TeamStaff until after the expiration of the
time periods stated below:

a.                     

b.                     

Except as otherwise set forth herein, this option shall terminate and no shares may be
purchased after the expiration date. This option may also terminate sooner as provided below if
your employment is terminated for any reason. This option expires at 5:00 pm (eastern standard
time) on the Expiration Date as stated above whether or not it has been duly exercised, unless
sooner terminated as provided below.

3. Acceptance of Option Agreement. Your acceptance of this stock option agreement will
indicate your acceptance of and your agreement to be bound by its terms and the terms of the Plan.
It imposes no obligation upon you to purchase any of the shares subject to the option. Your
obligation to purchase shares can arise only upon your exercise of the option in the manner set
forth herein. This stock option agreement shall be subject in all respects to the terms and
conditions of the Plan and in the event of any question or controversy relating to the terms of the
Plan, the decision of the Board of Directors shall be final.

4. Condition of Employment. Except as provided in Section 8, this option may not be
exercised unless the Optionee is employed by TeamStaff or one of its parent or subsidiary
corporations on the date of such exercise and shall have been an employee continuously since the
date of grant.

 

 

 

5. Exercise Procedure. This option is exercisable by a written notice signed by you
and delivered to TeamStaff at its executive offices, signifying your election to exercise the
option. A form of the notice is attached to this option certificate. The notice must state the
number of shares of Common Stock for which your option is being exercised and must be accompanied
by the full purchase price of the shares being purchased. Payment shall be either (i) in cash, or
by certified or bank cashier’s check payable to the order of TeamStaff, free from all collection
charges; (ii) by delivery of shares of Common Stock of TeamStaff already owned by the Optionee
for at least six months prior to the date of exercise, which Common Stock shall be valued at Fair
Market Value on the date of exercise; or (iii) by a combination of the methods of payment specified
in (i) and (ii) above.

For these purposes, the market value per share of Common Stock shall be: (i) if the Common
Stock is traded on a national securities exchange or on the NASDAQ Stock Market System (“Nasdaq”),
the per share closing price of the Common Stock on the principal securities exchange on which they
are listed or on Nasdaq, as the case may be, on the date of exercise (or if there is no closing
price for such date of exercise, then the last preceding business day on which there was a closing
price); or (ii) if the Common Stock is traded in the over-the-counter market and quotations are
published on and inter-dealer quotation system (but not on Nasdaq), the closing bid price of the
Common Stock on the date of exercise as reported by thereon (or if there are no closing bid prices
for such date of exercise, then the last preceding business day on which there was a closing bid
price); or (iii) if the Common Stock is traded in the over-the-counter market but bid quotations
are not published on an inter-dealer quotation system, the closing bid price per share for the
Common Stock as furnished by a broker-dealer which regularly furnishes price quotations for the
Common Stock.

If notice of the exercise of this option is given by the person or persons other than you,
TeamStaff may require, as a condition to the exercise of this option, the submission to TeamStaff
of appropriate proof of the right of such person or person to exercise this option.

5. Issuance of Shares. Certificate for the shares purchased will be issued as soon as
practicable. TeamStaff, however, shall not be required to issue or deliver a certificate for any
shares until it has complied with all requirements of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, any stock exchange on which TeamStaff’s Common Stock
may then be listed and all applicable state laws in connection with the issuance or sale of such
shares or the listing of such shares.

6. No Rights Until Exercise. Until the issuance of the certificate for the shares, you
or such other person as may be entitled to exercise this option, shall have none of the rights of a
stockholder with respect to shares issuable upon exercise of this option.

7. Transferability. This option is personal to the Optionee and during the Optionee’s
lifetime may be exercised only by the Optionee. This option shall not be transferable other than by
will or the laws of descent and distribution, and as may be permitted under the Internal Revenue
Code, the federal securities laws and the rules and regulations promulgated thereunder. If notice
of the exercise of this option is given by the person or persons other than you, TeamStaff may
require, as a condition to the exercise of this option, the submission to TeamStaff of appropriate
proof of the right of such person or person to exercise this option.

 

2

 

8. Termination of Employment. Unless otherwise provided in an employment agreement
between the Company and the Optionee, in the event that an option holder ceases to be an employee
of TeamStaff or of any subsidiary for any reason other than permanent disability (as determined by
the
Board of Directors, or a committee of the board or as provided for in an employment agreement
between the Company and the Optionee) or death, this option shall automatically terminate.
Notwithstanding the foregoing, however, unless otherwise provided in an employment agreement
between the Company and the Optionee, upon termination of employment the Optionee shall continue to
have the right to exercise any unexercised portion of this option, which was otherwise exercisable
on the date of termination, for a period of three months from the date on which the Optionee ceased
to be so employed, but in no event after the Expiration Date, unless the employment of the Optionee
was determined to be for cause, in which event this Option will terminate on the date of that the
Optionee ceases to be an employee of the Company or a subsidiary. Unless otherwise provided in an
employment agreement between the Company and the Optionee, in the event of the death of Optionee
during this three month period, this option shall be exercisable by his or her personal
representatives, heirs or legatees to the same extent that the Optionee could have exercised this
option if he or she had not died, for three months from the date of death, but in no event after
the Expiration Date. Unless otherwise provided in an employment agreement between the Company and
the Optionee, in the event of the permanent disability of Optionee while an employee of TeamStaff
or of any subsidiary, this option shall be exercisable for 365 days after the date of permanent
disability, but in no event after the Expiration Date. In the event of the death of the Optionee
while an employee of TeamStaff or any Subsidiary, or during the 365 day period after the date of
permanent disability of the Optionee, that portion of the option which had become exercisable on
the date of death shall be exercisable by his or her personal representatives, heir or legatees at
any time prior to the expiration of 365 days months from the date of the death of Optionee, but in
no event after the Expiration Date.

9. Not an Employment Agreement. This option does not confer on the Optionee any right
to continue in the employ of TeamStaff or interfere in any way with the right of TeamStaff to
determine the terms of the Optionee’s employment.

10. Corporate Transactions. Subject to the terms and conditions which may be provided
in an employment agreement between the Company and the Optionee, in the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights
offering, or any other change in the corporate structure or stock of TeamStaff, the Board shall
make such adjustments, if any, as it deems appropriate in the number and kind of shares covered by
this option, or in the option price, or both. Notwithstanding any provision to the contrary, the
Committee or the Board may cancel, amend, alter or supplement any term or provision of this option
to avoid the penalty provisions of Section 4999 of the Code, subject to the terms of an employment
agreement between the Company and the Optionee. Subject to the terms and conditions which may be
set forth in an employment agreement between the Company and the Optionee, in the event of a merger
of one or more corporations with and into Company or any consolidation of the Company and one or
more corporations, or any other Change in Control (as defined in the Plan), the treatment of this
Option will be subject in all respects to the terms and conditions of the Plan, including
provisions which set forth the ability of the Company to determine the rights of the Optionee with
respect to this Option.

11. Capital Adjustments. The existence of the Option shall not affect in any way the
right or power of Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in Company’s capital structure or its
business, or any merger or consolidation of Company or any issue of bonds, debentures, preferred
stock having a preference to or affecting Company’s common stock or of any rights thereof, or the
issuance of any securities convertible into any such common stock or of any rights, options, or
warrants to purchase any common stock, or the dissolution or liquidation of Company, any sale or
transfer of all or any part of its assets or business, or any other act or proceeding of Company,
whether of a similar character or otherwise. The securities with respect to which the Option is
granted are shares of common stock of the Company as presently
constituted, but if and whenever, prior to the delivery by Company of all the shares with respect
to which the Option is granted, the Company shall effect a subdivision or consolidation of shares
of its common stock or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of such common stock outstanding, the number of
shares subject to the Option and the applicable Exercise Price shall be adjusted as provided for in
the Plan.

 

3

 

12. Securities Law Compliance. This option shall be subject to the requirement that if
at any time the Board shall determine that the registration, listing or qualification of the shares
covered hereby upon any securities exchange or under any federal or state law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the granting of this option or the purchase of the shares, this option may not be
exercised unless and until such registration, listing, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the Board. The Board may
require that the person exercising this option shall make such representations and agreements and
furnish such information as it deems appropriate to assure compliance with the foregoing or any
other applicable legal requirements.

13. Tax Matters. To the maximum extent permissible under the Code, this Option is
intended to qualify for “incentive stock option” treatment under the provisions of Section 422 of
the Code. It is understood and acknowledged by Optionee, however, that all of the options
represented by this Option Certificate may not qualify as Incentive Stock Options. You are
therefore urged to consult with your individual tax advisor prior to exercising this Option since
the exercise of this Option may result in adverse tax consequences including the payment of
additional federal and/or state income taxes.

14. Withholding Tax. TeamStaff shall have the power and the right to deduct or
withhold, or require a Optionee to remit to TeamStaff as a condition precedent for the fulfillment
of any option exercise, an amount sufficient to satisfy Federal, state, and local taxes, domestic
or foreign, required by law or regulation to be withheld with respect to any taxable event arising
as a result of this option. Whenever Shares are to be issued or cash paid to an Optionee upon
exercise of an option, TeamStaff shall have the right to require the Optionee to remit to
TeamStaff, as a condition of exercise of the option, an amount sufficient to satisfy federal, state
and local withholding tax requirements at the time of exercise. However, notwithstanding the
foregoing, to the extent that a Optionee is an insider (as determined by the Board of Directors),
satisfaction of withholding requirements by having TeamStaff withhold Shares may only be made to
the extent that such withholding of Shares (1) has met the requirements of an exemption under Rule
16b-3 promulgated under the Exchange Act, or (2) is a subsequent transaction the terms of which
were provided for in a transaction initially meeting the requirements of an exemption under Rule
16b-3 promulgated under the Exchange Act.

15. Notices. All notices hereunder to TeamStaff shall be delivered or mailed to the
following address:

TEAMSTAFF, INC.

One Executive Drive, Suite 130

Somerset, New Jersey 08873

Attention: Chief Financial Officer

Such address for the service of notices may be changed at any time provided notice of such
change is furnished in advance to the Optionee.

16. Governing Law. This Agreement is granted and delivered in the State of New Jersey
and is intended to be construed and enforced under the laws thereof. The Holder submits to the
exclusive
jurisdiction and venue of the federal or state courts of New Jersey, to resolve any and all issues
that may arise out of or relate to this Option Agreement.

 

4

 

17. Certain Definitions. Capitalized terms used herein, to the extent not defined in
this Stock Option Agreement shall have the meanings ascribed to such term in the Plan.

18. General Provisions. This Option constitutes the entire agreement of the parties
and supersede all prior undertakings and agreements with respect to the subject matter
hereof. Except where otherwise indicated by the context, any masculine term used herein also shall
include the feminine, the plural shall include the singular, and the singular shall include the
plural. In the event any provision of this Agreement shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of this Agreement and
this Agreement shall be construed and enforced as if the illegal or invalid provision had not been
included. No fractional shares of Common Stock shall be issued or delivered pursuant to this
Option. The Company shall determine whether cash or other property shall be issued or paid in lieu
of fractional shares of Common Stock or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.

	 	 	 	 	 
	 	TEAMSTAFF, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Secretary:

	 	 	 
	 

Secretary

	 	 

 

5

 

OPTION EXERCISE FORM

	 	 	 
	TO:

	 	TeamStaff, Inc. 

One Executive Drive, Suite 130

Somerset, NJ 08873

Attn: Chief Financial Officer

Ladies/Gentlemen:

I irrevocably elect to exercise my right to purchase                      shares of Common Stock covered
by this Option Agreement and make full payment of the Exercise Price of such shares as follows
(PLEASE CHOOSE FORM OF PAYMENT).

o. Cash Purchase. I hereby elect to pay the exercise price in cash, and enclose a CERTIFIED
CHECK (or has wired payment) in the amount of $                    .

o. Cashless Exercise. I have enclosed                      shares of Common Stock of TeamStaff, Inc.
in accordance with the Option Agreement. I represent that I have owned the shares being delivered
for at least six months prior to the date of exercise.

o. Combination of Cash and Cashless. I elect to pay the exercise price in cash and stock,
and encloses a CERTIFIED CHECK (or has wired payment) in the amount of $                     and have
enclosed                      shares of Common Stock of TeamStaff, Inc. in accordance with the Option
Agreement. I represent that I have owned the shares being delivered for at least six months prior
to the date of exercise.

I understand and agree that TeamStaff shall have the power and the right to deduct or
withhold, or require me to remit to TeamStaff as a condition precedent for the fulfillment of any
option exercise, an amount sufficient to satisfy Federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any taxable event arising as
a result of this option. Further, I acknowledge that TeamStaff shall have the right to require me
to remit to TeamStaff, as a condition of exercise of the option, an amount sufficient to satisfy
federal, state and local withholding tax requirements at the time of exercise. However,
notwithstanding the foregoing, to the extent that a Optionee is an insider ( as determined by the
Board of Directors), satisfaction of withholding requirements by having TeamStaff withhold Shares
may only be made to the extent that such withholding of Shares (1) has met the requirements of an
exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) is a subsequent transaction
the terms of which were provided for in a transaction initially meeting the requirements of an
exemption under Rule 16b-3 promulgated under the Exchange Act.

Further, I agree to promptly notify TeamStaff of the sale of any of the shares I received upon
exercise of this option during the one year period commencing on the date I receive the
certificate for the shares.

 

6

 

Kindly deliver to me a certificate representing the shares as follows:

INSTRUCTIONS FOR DELIVERY

	 	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	(please typewrite or print in block letters)	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 

	 	 	 	 	 	 	 
	 

	 	Signature
	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Print Name:	 	 	 	 
	 

	 	 	 	 

	 	 

 

7

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