Document:

Exhibit 10.33

Exhibit 10.33

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made on the 22nd day of September, 2010 by and between John E.
Kahn (the “Employee”) and TEAMSTAFF, INC., a New Jersey corporation (the “Company”) and is
effective as of the 17th day of September 17, 2010. (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 accept 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:

(a) willful disobedience by the Employee of a material and lawful instruction of the Board of
Directors of the Company;

(b) formal charge, indictment or conviction of the Employee of any misdemeanor involving fraud
or embezzlement or similar crime, or any felony;

(c) conduct amounting to fraud, dishonesty, gross negligence, willful misconduct or recurring
insubordination; or

(d) 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 (a), (c), and (d) 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 Change in Control. Change in Control shall mean any of the following events:

(a) 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.

(i) 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:

A. 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,

B. 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

C. 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 (A) through (C) 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;

(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

 

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extent that if the Employee obtains any such benefits pursuant to a subsequent
employer’s benefit plans, the 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 materially 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 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. 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 his duties with the Company for a period of sixty (60)
consecutive days and the Employee has not returned to his full time employment prior to the
Termination Date as stated in the “Notice of Termination” (as defined below).

1.6 Good Reason.

(a) Good Reason shall mean without the written consent of the Employee:

(i) a material breach of any provision of this Agreement by the Company;

(ii) failure by the Company to pay when due any compensation to the Employee;

(iii) a reduction in the Employee’s Base Salary or Bonus opportunity, or a material reduction
in benefits;

(iv) failure by the Company to maintain the Employee in the positions referred to in Section
2.1 of this Agreement;

(v) 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 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;

(vi) relocation of Employee’s principal place of employment, to a location outside a 25 mile
radius of Employee’s principal residence at the commencement of this agreement, without the written
consent of the Employee; or

(vii) 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; provided,
however, nothing herein shall limit the right of Employee to terminate his employment pursuant to
this Section 1.6 (a) (vii) for any reason or no reason within such 90 day period;

(b) Notwithstanding the foregoing, Employee shall not have the right to
terminate his employment for Good Reason pursuant to clauses 1.6 (a) (i) through (vi) unless

 

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(i) the Employee has given the Company at least 30 days’ prior written notice of his intent to
terminate his employment for Good Reason, which notice shall specify the facts and circumstances
constituting Good Reason; and

(ii) 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 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.

1.9 Termination Date. Termination Date shall mean:

(a) in the case of the Employee’s death, his date of death;

(b) 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;

(c) in the case of termination of employment on or after the Expiration Date, the last day of
employment; and

(d) 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 his 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 employ Employee, and Employee hereby accepts such
employment, as Chief Financial Officer of the Company reporting directly to the Chief Executive
Officer and the Audit Committee. 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 his employment with the Company, and subject to the
direction and control of the Chief Executive Officer, the Company’s Board of Directors and the
Audit Committee of the Board of Directors, perform such duties and functions as he 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 his position as Chief Financial Officer.

3.2 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):

(a) Those duties attendant to the position with the Company for which Employee is employed;

(b) 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;

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

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

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

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

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

(h) 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 his best efforts in the performance
of his 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
$190,000 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,
six months after the commencement of Employee’s employment and thereafter 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 will have an opportunity to earn a cash bonus (the “Bonus”) 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 Committee within sixty (60) days of the
Commencement Date for fiscal 2011, and thereafter at the commencement of each fiscal year, and the
determination of whether the performance criteria shall have been attained shall be solely in the
discretion of the Committee. Award and payment of the Bonus shall be made at the same time as that
of other members of the Company’s senior management, but in any event payment of the Bonus shall be
made within six months of the end of the Fiscal Year for which the Bonus is awarded.

(a) Targeted bonus will be reduced or increased by 2% of Base Salary for every 1% of variance
between the actual results and the targets.

(b) No bonus will be awarded if results are less than 90% of target and no bonus will exceed
70% of salary.

(c) For the fiscal year ended September 30, 2011, Employee shall be eligible for a Bonus of up
to $20,000 to be awarded and paid on or before January 31, 2011 based upon Employee’s contributions
to the successful, timely and accurate submission of the corporation’s 10-K in accordance with SEC
filing requirements, provided Employee has not voluntarily resigned, or been terminated for cause
prior to such date.

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.

 

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ARTICLE V

BENEFITS

5.1 During the term hereof, the Company shall provide Employee and his family 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. 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.

5.2 For the first year of this Agreement, Employee shall be entitled to paid vacation at the
rate of three weeks per annum, increasing to four weeks per annum for the second year under this
Agreement, plus two additional “floating days” for each year of employment.

ARTICLE VI

NON-DISCLOSURE

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,
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 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 termination of employment with the Company for any reason, 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) 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.

7.2 In furtherance of, and in addition to, the foregoing section 7.1, 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 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
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 September 17, 2010
(the “Commencement Date”) and terminating on September 30, 2012 (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 and
Employee shall each use their best efforts to notify the other party whether such party intends to
negotiate a renewal this Agreement by written notice ninety (90) days 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 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 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:

(a) for Cause;

(b) without Cause;

(c) 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:

(a) if the Employee was terminated by the Company for Cause, or the Employee terminates
without Good Reason,

(i) the Accrued Compensation;

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

(i) the Continuation Benefits,

(ii) the Accrued Compensation; and

(iii) the Severance Payment;

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

(i) the Accrued Compensation; and

(ii) the Continuation Benefits;

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

(i) the Accrued Compensation;

(ii) the Severance Payment; 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);

 

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(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 1.4.

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.

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 150,000 shares of the Company’s Common Stock, $.001 par value (the
“Options”), subject to the terms and conditions of this Agreement, and the terms and conditions of
the Company’s 2006 Long Term Incentive Plan (the “Plan”), and the Stock Option Agreement, which are
incorporated herein by reference. The Options shall be qualified as incentive stock options to the
extent permitted by law.

11.2 Provided Employee is an employee of the Company on the vesting date, and unless otherwise
provided by this Agreement, the Options shall vest as follows:

(a) 50,000 Options on the Commencement Date;

(b) 50,000 Options if the closing price of the Company’s Common Stock equals or exceeds $3.00
per share for ten consecutive trading days;

(c) 50,000 Options if the closing price of the Company’s Common Stock equals or exceeds $5.00
per share for ten consecutive trading days;

11.3 The Options, to the extent vested, shall be exercisable for a period of ten years from
the date of this Agreement (the “Exercise Period”).

 

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11.4 The Closing Price of a share of Common Stock shall mean (i) if the Common Stock is traded
on a national securities exchange or on the Nasdaq Stock Market (“Nasdaq”), the per share closing
price of the Common Stock shall be the reported closing price the principal securities exchange on
which they are listed or on Nasdaq, as the case may be, on the date of determination (or if there
is no closing price for such date of determination, 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
but bid quotations are not published on Nasdaq, 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; provided, however, that in the event of a Change in Control, the closing price shall be the
“Change in Control Price” as defined in the Plan.

11.5 The exercise price of the Options shall be equal to Fair Market Value of the Company’s
Common Stock on the date this Agreement is fully executed as determined under the Plan, 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.

11.6 In the event of a termination of Employee’s employment with the Company:

(a) pursuant to Section 9.1(a), options granted and not exercised as of the Termination Date
shall terminate immediately and be null and void;

(b) 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 in accordance with the Plan;

(c) by the Employee other than for Good Reason, 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 in accordance with the Plan, but in no event after
the expiration of the exercise period;

(d) In the event of Employee’s termination by the Company without cause or by Employee for
Good Reason, vested options shall remain exercisable in accordance with the Plan; and

(e) In the event of a Change of Control, as defined in Section 1.3, all unvested options shall
vest and all options shall remain exercisable in accordance with the Plan.

 

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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 In the event that within one hundred eighty days (180) days of a Change of Control, (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:

(a) The Company shall pay the Employee, in lieu of any other payments due hereunder including
the Severance Payment, (i) the Accrued Compensation; (ii) the Continuation Benefits; and (iii) as
severance, Base Salary for a period of twelve (12) months payable in one lump sum within ten (10)
of the Termination Date; and

(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.

12.3 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 12.3 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.

 

13

 

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 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 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 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

14.1 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

15.1 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.

15.2 Notwithstanding the foregoing, any 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.
	 

	 	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:

	 	John E. Kahn

 

14

 

ARTICLE XVI

BENEFIT

16.1 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

17.1 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

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

ARTICLE XIX

JURISDICTION

19.1 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

20.1 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.

 

15

 

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/ John E. Kahn	 	 
	 	 	 
	John E. Kahn	 	 
	Employee	 	 

 

16Exhibit 10.34

Exhibit 10.34

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made on the 7th day of February, 2011 by and between John F.
Armstrong (the “Employee”) and TEAMSTAFF, INC., a New Jersey corporation (the
“Company”) and is effective as of the 1st day of December, 2010. 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 accept 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:

(a) willful disobedience by the Employee of a material and lawful instruction of the Board of
Directors of the Company;

(b) formal charge, indictment or conviction of the Employee of any misdemeanor involving fraud
or embezzlement or similar crime, or any felony;

(c) conduct amounting to fraud, dishonesty, gross negligence, willful misconduct or recurring
insubordination; or

(d) 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 (a), (c), and (d) 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 Change in Control. Change in Control shall mean any of the following events:

(a) 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.

(i) 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

 

2

 

(c) Approval by stockholders of the Company of:

(i) A merger, consolidation or reorganization involving the Company, unless:

A. 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,

B. 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, an

C. 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 (A) through (C) 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;

(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.

 

3

 

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 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 materially 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 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. 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 his duties with the Company for a period of sixty (60)
consecutive days and the Employee has not returned to his full time employment prior to the
Termination Date as stated in the “Notice of Termination” (as defined below).

1.6 Good Reason.

(a) Good Reason shall mean without the written consent of the Employee:

(i) a material breach of any provision of this Agreement by the Company;

(ii) failure by the Company to pay when due any compensation to the Employee;

(iii) a reduction in the Employee’s Base Salary or Bonus opportunity, or a material reduction
in benefits;

(iv) failure by the Company to maintain the Employee in the positions referred to in Section
2.1 of this Agreement;

(v) 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 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; or

(vi) 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; provided,
however, nothing herein shall limit the right of Employee to terminate his employment pursuant to
this Section 1.6 (a) (vi) for any reason or no reason within such 90 day period;

 

4

 

(b) Notwithstanding the foregoing, Employee shall not have the right to terminate his
employment for Good Reason pursuant to clauses 1.6 (a) (i) through (v) unless

(i) the Employee has given the Company at least 30 days’ prior written notice of his intent to
terminate his employment for Good Reason, which notice shall specify the facts and circumstances
constituting Good Reason; and

(ii) the Company has not remedied such facts and circumstances constituting Good Reason to the
reasonable and good faith satisfaction of the Employee within a 10-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 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.

1.9 Termination Date. Termination Date shall mean:

(a) in the case of the Employee’s death, his date of death;

(b) 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;

(c) in the case of termination of employment on or after the Expiration Date, the last day of
employment; and

(d) 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 his duties during
such period of at least 30 days.

 

5

 

ARTICLE II

EMPLOYMENT

2.1 Subject to and upon the terms and conditions of this Agreement, the Company hereby agrees
to employ Employee, and Employee hereby accepts such employment, as Executive Vice President for
Business Development of the Company reporting directly to the Chief Executive Officer of the
Company.

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 Chief Executive Officer perform such duties and functions as he may be
called upon to perform by the Chief Executive Officer and/or the Company’s Board of Directors
during the term of this Agreement, consistent with his position as Executive Vice President for
Business Development.

3.2 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):

(a) Those duties attendant to the position with the Company for which Employee is employed;

(b) Assist in the establishment and implementation of the Company’s current and long range
objectives, plans, and policies, subject to the approval of the Chief Executive Officer and the
Board of Directors;

(c) Identify, evaluate and manage the Company’s business development initiatives, including
without limitation, developing opportunities for sales and strategic relationships, defining
marketing strategies and leading negotiations relating to business opportunities;

(d) Managerial oversight of the Company’s business development and sales activities; and

(e) 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 use his best efforts in the
performance of his 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.

 

6

 

ARTICLE IV

COMPENSATION

4.1 During the term of this Agreement, Employee shall be compensated initially at the rate of
$215,000 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 of the Board (the
“Committee”), in its discretion, on an annual basis 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 will have an opportunity to earn a cash bonus (the “Bonus”) of up to 50%
of Employee’s Base Salary for each fiscal year of employment. The Bonus will be based on
achievement of revenue, gross margin and EBITDA performance targets and other key objectives
established by the Committee within sixty (60) days of the Commencement Date for fiscal 2011, and
thereafter at the commencement of each fiscal year, and the determination of whether the
performance criteria shall have been attained shall be solely in the discretion of the Committee.
Award and payment of the Bonus shall be made at the same time as that of other members of the
Company’s senior management, but in any event payment of the Bonus shall be made within six months
of the end of the Fiscal Year for which the Bonus is awarded.

(a) Targeted bonus will be reduced or increased by 2% of Base Salary for every 1% of variance
between the actual results and the targets.

(b) No bonus will be awarded if results are less than 90% of target and no bonus will exceed
70% of salary.

(c) For the fiscal year ended September 30, 2011, $40,000 of the Employee’s Bonus for such
fiscal year shall be guaranteed and $25,000 of such guaranteed amount shall be payable on March 1,
2011 and $15,000 shall be payable on June 1, 2011, provided Employee has not voluntarily resigned,
or been terminated for Cause prior to each such date.

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.

 

7

 

ARTICLE V

BENEFITS

5.1 During the term hereof, the Company shall provide Employee and his family 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. 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.

5.2 For the first year of this Agreement, Employee shall be entitled to paid vacation at the
rate of three weeks per annum, increasing to four weeks per annum for the second year under this
Agreement, plus two additional “floating days” for each year of employment.

ARTICLE VI

NON-DISCLOSURE

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,
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 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.

 

8

 

ARTICLE VII

RESTRICTIVE COVENANT

7.1 In the event of the termination of employment with the Company for any reason, 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) 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.

7.2 In furtherance of, and in addition to, the foregoing section 7.1, 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 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
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 December 1,
2010 (the “Commencement Date”) and terminating on November 30, 2013 (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 and
Employee shall each use their best efforts to notify the other party whether such party intends to
negotiate a renewal this Agreement by written notice ninety (90) days 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 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 the Severance Payment.

 

9

 

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:

(a) for Cause;

(b) without Cause;

(c) 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:

(a) if the Employee was terminated by the Company for Cause, or the Employee terminates
without Good Reason,

(i) the Accrued Compensation;

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

(i) the Continuation Benefits, and

(ii) the Accrued Compensation;

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

(i) the Accrued Compensation; and

(ii) the Continuation Benefits;

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

(i) the Accrued Compensation;

(ii) the Severance Payment; and

(iii) the Continuation Benefits.

 

10

 

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 1.4.

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.

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 250,000 shares of the Company’s Common Stock, $.001 par value (the
“Options”), subject to the terms and conditions of this Agreement, and the terms and
conditions of the Company’s 2006 Long Term Incentive Plan (the “Plan”), and the Stock
Option Agreement, which are incorporated herein by reference. The Options shall be qualified as
incentive stock options to the extent permitted by law.

11.2 Provided Employee is an employee of the Company on the vesting date, and unless otherwise
provided by this Agreement, the Options shall vest as follows:

(a) 50,000 Options on the Commencement Date;

(b) 100,000 Options if the closing price of the Company’s Common Stock equals or exceeds $3.00
per share for ten consecutive trading days;

(c) 50,000 Options if the closing price of the Company’s Common Stock equals or exceeds $5.00
per share for ten consecutive trading days; and

(d) 50,000 Options if the closing price of the Company’s Common Stock equals or exceeds $7.00 per share for ten consecutive trading days.

 

11

 

11.3 The Options, to the extent vested, shall be exercisable for a period of ten years from
the date of this Agreement (the “Exercise Period”).

11.4 The Closing Price of a share of Common Stock shall mean (i) if the Common Stock is traded
on a national securities exchange or on the Nasdaq Stock Market (“Nasdaq”), the per share
closing price of the Common Stock shall be the reported closing price the principal securities
exchange on which they are listed or on Nasdaq, as the case may be, on the date of determination
(or if there is no closing price for such date of determination, 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 but bid quotations are not published on Nasdaq, 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; provided, however, that in the event of a Change in Control, the
closing price shall be the “Change in Control Price” as defined in the Plan.

11.5 The exercise price of the Options shall be equal to Fair Market Value of the Company’s
Common Stock on the Commencement Date, as determined under the Plan, 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.

11.6 In the event of a termination of Employee’s employment with the Company:

(a) pursuant to Section 9.1(a), options granted and not exercised as of the Termination Date
shall terminate immediately and be null and void;

(b) 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 in accordance with the Plan, but in no event after the expiration of the Exercise
Period;

(c) by the Employee other than for Good Reason, 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 in accordance with the Plan, but in no event after
the expiration of the Exercise Period; and

(d) In the event of Employee’s termination by the Company without Cause or by Employee for
Good Reason, options vested as of the Termination Date shall remain exercisable in accordance with
the Plan, but in no event after the expiration of the Exercise Period (it being agreed and
acknowledged that unvested options shall be void immediately upon the occurrence of such a
termination event).

 

12

 

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 In the event that within one hundred eighty days (180) days of a Change of Control, (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:

(a) The Company shall pay the Employee, in lieu of any other payments due hereunder including
the Severance Payment, (i) the Accrued Compensation; (ii) the Continuation Benefits; and (iii) as
severance, Base Salary for a period of six (6) months payable in one lump sum within ten (10) of
the Termination Date; and

(b) Option awards granted to Employee under any of the Company’s plans, which are vested as of
the effective date of the termination of Employee’s employment pursuant to Section 12.2 shall
remain exercisable in accordance with the Plan, but in no event after the expiration of the
Exercise Period.

12.3 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 12.3 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 law. Any judgment upon any arbitration award may be entered in any court,
federal or state, having competent jurisdiction of the parties.

 

13

 

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 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 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

14.1 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

15.1 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.

15.2 Notwithstanding the foregoing, any 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.

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:
	 	John F. Armstrong
	 
	 	 	 	 
	 

	 	 	 	[INSERT]

 

14

 

ARTICLE XVI

BENEFIT

16.1 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

17.1 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

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

ARTICLE XIX

JURISDICTION

19.1 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

20.1 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.

 

15

 

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/ Zachary C. Parker
 

Zachary C. Parker,
	 	 
	 

	 	President and Chief Executive Officer	 	 

	 	 	 
	/s/ John F. Armstrong
 

John F. Armstrong

	 	 
	Employee
	 	 

 

16

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