Document:

Table of Contents
TEAMSTAFF,
INC.
2000 DIRECTOR PLAN OPTION
NON-QUALIFIED STOCK OPTION
AGREEMENT

Name:
 Date of Grant:
9/1/06
Option No.:
 Number of Options:
 Exercise Price Per
Share: $1.29

	
				
	

We are pleased to
notify you that in accordance with the terms of the 2000 Non-Executive
Director Stock Option Plan (the ‘‘Plan’’)
of TEAMSTAFF, INC. (the ‘‘Company’’) a
stock option to purchase 5,000 shares of the Common Stock $.001 par
value per share of the Company has been granted to you under the Plan.
This option may be exercised only upon the terms and conditions set
forth below. The following is a brief summary of the Plan and this
Option is subject to all of the terms and conditions of the
Plan.

1.    Purpose of Option

The purpose of the
Plan under which this stock option has been granted is to enable the
Company to attract and retain the services of qualified independent
persons to serve on the Company’s Board of Directors by providing
an opportunity to acquire a proprietary interest in the
Company.

2.    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 in paragraph 4 hereof. 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.

3.    When Option May Be Exercised;
Vesting

Except as otherwise provided herein, this option
shall be exercisable at any time after the first anniversary of the
Date of Grant and prior to the Expiration Date, as hereafter
defined and except as provided in Sections 7 and 8 hereof. This option
may not be exercised for less than ten shares at any one time (or the
remaining shares then purchasable if less than ten) and expires at 5:00
pm (eastern standard time) on September  1,  2011 (the
‘‘Expiration Date’’) whether or not it has
been duly exercised, unless sooner terminated as provided in paragraphs
7, 9 or 13 hereof. This option does not vest, and therefore may not be
exercised (except as otherwise provided in Sections 7, 8 and 9 hereof)
until one year from the date of issuance.

4.    Exercise
Procedure

This option is exercisable by a written notice
signed by you and delivered to the Company at its executive offices,
signifying your election to exercise the option. The notice must state
the number of shares of Common Stock you are exercising under this
option and must contain a statement by you (in the form annexed to this
option) that such shares are being acquired by you for investment and
not with a view to their distribution or resale (unless a Registration
Statement covering the shares purchasable has been declared effective
by the Securities and Exchange Commission)..

Payment shall be
either (i) in cash, or by certified or bank cashier’s check
payable to the order of the Company, free from all collection charges;
(ii) by delivery of shares of Common Stock of the Company 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.

Table of Contents
For purposes of this Section 4, the fair
market value per share of Stock shall be: (i) if the Common Stock is
traded on a national securities exchange or on the NASDAQ National
Market System (‘‘NMS’’), the per share
closing price of the Common Stock on the principal securities exchange
on which they are listed or on NMS, 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 the NASDAQ quotation system (but
not on NMS), the closing bid price of the Common Stock on the date of
exercise as reported by NASDAQ (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 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.

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

5.    Issuance
of Shares

Certificate for shares of the Common Stock so
purchased will be issued as soon as practicable. The Company, 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, the Securities Exchange Act of 1934, any stock exchange on which
the Company’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 on said exchange.

6.    No
Rights as Shareholder.

Until the date that the conditions to
exercise are, in the Company’s sole determination, satisfied, you
(or such other person as may be entitled to exercise this option) shall
have none of the rights of a shareholder with respect to Common Stock
upon exercise of this option.

7.    Termination of
Directorship and Options

Nothing in this option agreement
shall entitle you to continue to serve as a director. If your service
as a member of the Board of Directors of the Company is terminated for
any reason other than by death or retirement, this option shall lapse
and expire the earlier of seven months from the date such termination
or the Expiration Date; provided, however, in the event that the
directorship is terminated prior to the date that the option may be
first exercised as set forth in Section 3 hereof, the option shall be
exercisable commencing on the date of termination until a date which is
seven months after termination.

8.    Acceleration of
Options

Notwithstanding any contrary installment period with
respect to this option and unless the Board of Directors determine
other wise, this outstanding option shall become exercisable in full
for the aggregate number of shares covered thereby in the event: (i)
the Board of Directors (or, if approval of the stockholders is required
as a matter of law, the stockholders of the Company) shall approve
(a)  any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to
which shares of Common Stock would be converted into cash, securities
or other property, other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (b) any sale, lease, exchange, or
other transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of the Company, or (c) the
adoption of any plan or proposal for the liquidation or dissolution of
the Company; or (ii) any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the ‘‘Exchange Act’’)),
corporation or other entity (other than the Company or any employee
benefit plan sponsored by the Company or any Subsidiary) (a) shall
purchase any Common Stock (or securities convertible into the
Company’s Common Stock) 

Table of Contents

for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the
prior consent of the Board of Directors, or (b) shall become the
‘‘beneficial owner’’ (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the then
outstanding securities of the Company ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the
election of Directors (calculated as provided in paragraph (d) of such
Rule 13(d)(3) in the case of rights to acquire the Company’s
Securities); or (iii) during any period of two consecutive years or
less, individuals who at the beginning of such period constitute the
entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by
the Company’s stockholders, of each new director was approved by
a vote of at least a majority of the directors then still in office.
Notwithstanding the foregoing, if the acceleration of this option,
either alone or together with other payments which the holder has the
right to receive from the Company, would constitute an
‘‘excess parachute payment’’ as defined in
Section 280G of the Code , such acceleration shall be reduced to the
largest amount as will result in no portion of the acceleration under
this Section 8 being subject to the excise tax imposed by Section 4999
of the Code.

9.    Death

If you die while
serving as a member of the Board of Directors of the Company, any
option which was exercisable by you at the date of your death may be
exercised by your legatee or legatees under your Will, or by your
personal representatives or distributees, within one year from the date
of your death, but in no event after the Expiration
Date.

10.    Non-Transferability of
Option

This option shall not be transferable except by will
or the laws of descent and distribution, and may be exercised during
your lifetime only by you. Notwithstanding the foregoing, any proposed
transfer shall be subject to the Internal Revenue Code, the rules and
regulations promulgated thereunder and the federal securities laws and
regulations.

11.    Adjustments Upon Changes in
Capitalization

If at any time after the date of grant of
this option, the Company shall, by stock dividend, split-up,
combination, reclassification or exchange, or through merger or
consolidation, or otherwise, change its shares of Common Stock into a
different number or kind or class of shares or other securities or
property, then the number of shares covered by this option and the
price of each such share shall be proportionately adjusted for any such
change by the Board of Directors whose determination shall be
conclusive. Any fraction of a share resulting from any adjustment shall
be eliminated through the payment of cash based upon the fair market
value (determined in accordance with the definition in Section 4) of
the Common Stock.

13.    Withholding.

The
Company shall have the power and the right to deduct or withhold, or
require an Optionee to remit to the Company 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 the exercise of Options. Whenever Shares are to
be issued or cash paid to a Optionee upon exercise of an Option, the
Company shall have the right to require the Optionee to remit to the
Company, 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.

Table of Contents
14.    Tax
Treatment.

This option is not intended to qualify for
‘‘incentive stock option’’ treatment under
the provisions of Section 422A of the Internal Revenue Code of 1986, as
amended. You are urged to consult with your individual tax advisor
prior to exercising this option. As a condition to the exercise of this
option, you agree to notify TeamStaff promptly upon the sale or other
disposition of the shares of Common Stock you received upon exercise of
this option.

		Sincerely
yours,

		TEAMSTAFF,
INC.

		By:                                                            

		T.
Kent Smith
President and Chief Executive
Officer

Corporate
Seal

                                                                

Rick
J. Filippelli
Vice President, Finance and Chief Financial
Officer

Table of Contents
OPTION EXERCISE FORM

TO:     TeamStaff, Inc.
            300
Atrium Drive
            Somerset, NJ
08873
            Attn: Chief Financial
Officer

Gentlemen:

The undersigned holder
hereby irrevocably elects to exercise the right to purchase
                     shares of Common Stock covered
by this Option Agreement according to the conditions hereof and
herewith makes full payment of the Exercise Price of such shares as
follows (PLEASE CHOOSE FORM OF
PAYMENT).

        .    Cash Purchase.    The
undersigned hereby elects to pay the exercise price in cash, and
encloses a CERTIFIED CHECK OR BANK CASHIER’S CHECK (or has wired
payment) in the amount of
$                            .

        .    Cashless Exercise.    The
undersigned hereby delivers                     
shares of Common Stock of TeamStaff, Inc. in accordance with Section 4
of the Option Agreement. The undersigned represents that he/she has
owned the shares being delivered for at least six months prior to the
date of exercise.

        .    Combination of Cash
and Cashless.    The undersigned hereby elects to pay the
exercise price in cash and stock, and encloses a CERTIFIED CHECK BANK
CASHIER’S CHECK (or has wired payment) in the amount of
$                             and hereby
delivers                      shares of Common
Stock of TeamStaff, Inc. in accordance with Section 4 of the Option
Agreement. The undersigned represents that he/she has owned the shares
being delivered for at least six months prior to the date of
exercise.

The undersigned understands and agrees that the Company
shall have the power and the right to deduct or withhold, or require a
Optionee to remit to the Company 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 a Optionee upon exercise of an Option, the Company shall have
the right to require the Optionee to remit to the Company, 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.

Further, the undersigned hereby covenants and agrees to
promptly notify the Company of the sale of any Shares during the one
year period commencing on the date hereof.

The Shares are being
acquired by the undersigned for investment purposes, and not with a
view to their distribution or resale unless otherwise permitted under
law.

Kindly deliver to the undersigned a certificate representing
the Shares as follows.

INSTRUCTIONS FOR DELIVERY

Name:
                                                                                                                        

(please type or print in block letters)

		
	Address: 	                                                                            

                                                                            

                                                                            

Social
Security No.:
                                                              

Dated:
                                                

		Signature
                                                                

		Print Name:Table of Contents
CHANGE
IN CONTROL AGREEMENT

This Agreement is entered into this
         day of October  2006 by and between TeamStaff,
Inc., a New Jersey corporation (the
‘‘Company’’) and James D. Houston (the
‘‘Employee’’).

WHEREAS, 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 his assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change in
control of the Company in connection with any transaction therefore (a
‘‘Transaction’’); and.

WHEREAS, the
Company and Employee presently are parties to that certain Severance
Agreement dated October  11,  2005 (the
‘‘Severance Agreement’’).

NOW,
THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:

1.    Change
in Control.    For purposes of this Agreement, a ‘‘Change
in Control’’ means any of the following
events:

a.    (i)    An acquisition (other than directly from
the Company) after the date hereof 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 thirty percent (30%) or more of the
combined voting power of the Company’s then outstanding Voting
Securities; provided, however, that in determining whether a Change in
Control has occurred, Voting Securities which are acquired in a
‘‘Non-Control Acquisition’’ (as defined below)
shall not constitute an acquisition which would cause a Change in
Control. A ‘‘Non-Control Acquisition’’ shall
mean an acquisition by (1) an employee benefit plan (or a trust forming
a part thereof) maintained by (x) the Company or (y) any corporation or
other Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly by the
Company (a ‘‘Subsidiary’’), or (2) the Company
or any Subsidiary.

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

b.    The
individuals who, as of the date this Agreement is approved by the
Board, are members of the Board (the ‘‘Incumbent
Board’’), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or
nomination for election by the Company’s stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement, be
considered and defined as a member of the Incumbent Board; and
provided, further, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened ‘‘Election
Contest’’ (as described in Rule 14a-11 promulgated under
the 1934  Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a
‘‘Proxy Contest’’), including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest; or

c.    Approval by stockholders of the Company
of:

(i)    A merger, consolidation or
reorganization involving the Company, unless: (1) the stockholders of
the Company, immediately before such merger, consolidation or
reorganization, 

Table of Contents

own, directly or indirectly immediately
following such merger, consolidation or reorganization, at least
50.1percent 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 30
percent or more of the combined voting power of the Surviving
Corporation’s then outstanding voting securities as a result of
such merger, consolidation or reorganization, a transaction described
in clauses (1) through (3) shall herein be referred to as a
‘‘Non-Control Transaction’’;
or

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

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

d.    Notwithstanding anything contained in this
Agreement to the contrary, if the Employee’s employment is
terminated prior to a Change in Control and such termination either (i)
was at the request of any third party who has indicated an intention or
taken steps reasonably calculated to effect a Change in Control (a
‘‘Third Party’’); (ii) was without Cause (as
defined in the Severance Agreement); or (iii) 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.

2.    In the event of a Change of Control, the
Company shall pay and/or provide to the Employee, the following
compensation and benefits on the date such Change in Control is
effective:

a.    In addition to the Severance
Payment (as defined in the Severance Agreement), the Company shall pay
the Employee an amount equal to 100% of Employee’s then
current annual Base Salary ($180,000.00 as of the date of this
Agreement). Employee shall be entitled to such payment whether or not
his employment with the Company or a successor in interest to the
Company continues after the Change of Control, and whether or not
Employee declines an offer of continued employment with the Company or
a successor in interest.

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.

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 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.

Table of Contents
4.    Efforts
Required:    Employee will use reasonable business efforts to
assist the Company in bringing about the closing of a Transaction, and
Employee will follow all the directions of the Company in that
respect.

5.    Confidentiality of this
Agreement:    Employee agrees not to reveal the terms of this
agreement or the fact that such agreement exists, except: (i) to
Employee’s immediate family, tax advisors and attorneys; (ii) as
required by applicable law, regulation, or legal process; and (iii) for
the purpose of enforcing this agreement, should that ever be
necessary.

6.    Non-Waiver:    Employee The parties
agree the failure of either of them to seek redress for violation or
insist upon strict performance of any provision of this Agreement shall
not constitute a waiver thereof and shall not prevent the Company or
the Employee from seeking redress for any subsequent
violation.

7.    Entire Agreement; Governing Law;
Attorneys’ Fees:    When signed by Employee, on
Employee’s own behalf and on behalf of Employee’s heirs,
executors, successors, agents, assigns and representatives, and the
Company on its own behalf and on behalf its parent, subsidiary and
affiliated corporations and their respective successors, assigns,
representatives, agents, shareholders, officers, directors and
employees, this Agreement constitutes the full and entire agreement
between the parties, other than as set forth in the Severance
Agreement, which shall remain in full force and effect. The laws of the
State of New Jersey, other than that state’s conflicts of law
rules, which are deemed to be inapplicable herein, will apply to any
dispute concerning this Agreement. Employee and Company agree to submit
any disputes concerning the interpretations or enforceability of this
Agreement to the courts of the State of New Jersey serving Somerset
County, and Employee consents to the personal jurisdiction of those
courts. The court shall award the prevailing party in any such
litigation their reasonable attorneys’ fees and costs of
suit.

8.    Severability:    Employee and Company
agree that in the event that any of the provisions of this Agreement
are determined by a court of competent jurisdiction to be contrary to
any applicable statute, law, rule, or policy or for any reason
unenforceable as written, then such court may modify any of such
provisions so as to permit enforcement thereof to the maximum extent
permissible as thus modified. Further, the parties agree that any
finding by a court of competent jurisdiction that any provision of this
Agreement is contrary to any applicable statute, law, rule or policy or
for any reason unenforceable as written shall have no effect upon any
other provision and all other provisions shall remain in full force and
effect.

9.    Counterparts; Execution.    This
Agreement may be executed in counterparts and by facsimile by the
parties, which together shall constitute one
agreement.

				
	TEAMSTAFF,
INC.			AGREED AND
ACCEPTED:
	 			 
	By:    Steve
Johnson
Its:    Chairman of the Board			James D.
Houston
	

Table of Contents
ADDENDUM TO CHANGE IN CONTROL
AGREEMENT

This Addendum to Change in Control Agreement is
entered into as of the 31st day of October  2006 by
and between TeamStaff, Inc., a New Jersey corporation (the
‘‘Company’’) and James D. Houston (the
‘‘Employee’’).

WHEREAS, the Company
and Employee presently are parties to that certain Change in Control
Agreement dated October  31,  2006 (the
‘‘Agreement’’).

NOW, THEREFORE, for
good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as
follows:

1.    Term.    The term of the Agreement will
commence on October  31,  2006, and remain in effect
concurrently with that certain Severance Agreement dated October
11,  2005 between the Company and the Employee, and subject to
the term and termination provisions set forth in Article VI of the
Severance Agreement.

				
	TEAMSTAFF,
INC.			AGREED AND
ACCEPTED:
	 			 
	By:    T.
Stephen Johnson
Its:    Chairman of the Board			James D.
Houston
	

Table of Contents
SEVERANCE AGREEMENT

AGREEMENT made
as of the 11th day of October, 2005 by and between James D.
Houston, residing at 158 West 81st Street, New York, NY
10024 (hereinafter referred to as the
‘‘Employee’’) and TEAMSTAFF, INC., a New Jersey
corporation with principal offices located at 300 Atrium Drive,
Somerset, New Jersey (the ‘‘Company.’’)

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    Base Salary.    Base Salary
shall mean the highest annualized rate of Employee’s base
compensation in effect at any time during the ninety (90) day period
prior to the Date of Termination of Employment, and shall include all
amounts of Employee’s base compensation that are reported as
income, provided however, that Base Salary shall not include any bonus
or any other payment contingent on
performance.

1.3    Bonus Amount.    Bonus Amount
shall mean the greater of the most recent annual bonus paid or payable
to the Employee, or, if greater, the annual bonus paid or payable for
the full fiscal year ended prior to the fiscal year during which a
Termination Date or a Change in Control
occurred.

1.4    Cause.    Cause shall mean: (i)
willful disobedience by the Employee of a material and lawful
instruction of the Board of Directors or the Chief Executive Officer of
the Company; (ii) formal charge, indictment or conviction of the
Employee of any misdemeanor involving fraud or embezzlement or similar
crime, or any felony; (iii) breach by the Employee of any material
provision of this Agreement; (iv) conduct amounting to fraud,
dishonesty, gross negligence, willful misconduct or recurring
insubordination; or (v) 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), (iv), and (v) 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.

1.5    Continuation
Benefits.    Continuation Benefits shall be the continuation of
the Employee’s Standard Benefits provided by the Company for a
period of six (6) months from the Termination Date, or such other
period as specifically stated by this agreement (the
‘‘Continuation Period’’) at the Company’s
expense on behalf of the Employee and his dependents; provided,
however, that (i) in no event shall the Continuation Period exceed 6
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 coverages and benefits of the combined benefit plans
is no less favorable to the Employee than the coverages and benefits
required to be provided hereunder. This definition of Continuation
Benefits shall not be interpreted so as to limit any benefits to which
the Employee, his dependents or beneficiaries may be entitled under any
of the Company’s employee benefit plans, programs or practices
following the Employee’s termination of employment, including,
without limitation, retiree medical and life insurance benefits.

1.6    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 (30)

Table of Contents

consecutive days, and Employee has not
returned to his full time employment prior to the Employment
Termination Date as stated in the ‘‘Notice of Termination
of Employment’’ (as defined below).

1.7    Employment Termination Date.    Employment
Termination Date shall mean (i) in the case of the Employee’s
death, his date of death; (ii) in all other cases, the date specified
in the Notice of Termination of Employment; provided, however, if the
Employee’s employment is terminated by the Company due to
Disability, the date specified in the Notice of Termination of
Employment shall be at least 30 days from the date the Notice of
Termination of Employment 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.

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

1.9    Pro Rata
Bonus.    Pro Rata Bonus shall mean an amount equal to the
greater of (i) the Bonus Amount or (ii) an amount equal to the bonus
objective or target established by the Board for the Employee for the
fiscal year in which the termination occurs, in each case, multiplied
by a fraction the numerator of which is the number of days in the
fiscal year through the Termination Date and the denominator of which
is 365.

1.10    Severance Payment.    Severance
Payment shall mean (i) the Accrued Compensation; (ii) the Continuation
Benefits; (iii) a cash payment equal to six (6) months Base Salary,
payable in accordance with the Company’s regular payroll
periods, commencing on the first day of the first payroll period
following the Employment Termination Date; and (iv) a Pro Rata
Bonus.

1.11    Termination Agreement.    Termination
Agreement shall mean the Company’s form of Termination Agreement
to be signed by Employee at the time of termination of employment, in
form reasonably requested by the Company. The Termination Agreement
shall contain, among other terms, a general release and a
non-disparagement clause and shall be delivered to Employee for
Employee’ consideration in accordance with applicable
law.

ARTICLE
II

EMPLOYMENT

2.1    Employee’s employment is
at-will and nothing in this Agreement is intended, or shall be
construed, to limit the right of the Company to terminate
Employee’s employment at any time in its sole
discretion.

ARTICLE
III

NON-DISCLOSURE

3.1    The Employee shall not, at
any time during or after the termination of his employment hereunder,
except when acting on behalf of and with the authorization of the
Company, make use of or disclose to any person, corporation, or other
entity, for any purpose whatsoever, any trade secret or other
confidential information concerning the Company’s business,
finances, marketing, computerized payroll, accounting and information
business, personnel and/or employee leasing business of the Company and
its subsidiaries, including information relating to any customer of the
Company or pool of temporary employees, or any other nonpublic business
information of the Company and/or its subsidiaries learned as a
consequence of Employee’s employment with the Company
(collectively referred to as the ‘‘Proprietary
Information’’). For the purposes of this Agreement, trade
secrets and confidential information shall mean information disclosed
to the Employee or known by him as a 

Table of Contents

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.

3.2    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.

3.3    Employee further
agrees to keep the terms and of this Agreement, and the existing of a
severance arrangement with the Company confidential, and will not
disclose any information concerning this Agreement except to
Employee’s attorneys, accountants or immediate family members
provided they are made aware of and agree to the confidentiality
provisions.

ARTICLE IV

RESTRICTIVE
COVENANT

4.1    In the event of the termination of
employment with the Company for any reason, Employee agrees that he
will not, for a period of six (6) months 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
healthcare personnel, and/or (ii) payroll processing, or is otherwise
engaged in the same or similar business as the Company in direct
competition with the Company, or which the Company was in the process
of developing, during the tenure of Employee’s employment by the
Company. Notwithstanding the foregoing, the ownership by Employee of
less than 5 percent of the shares of any publicly held corporation
shall not violate the provisions of this Article
IV.

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

4.3    If any court shall hold that the duration
of non-competition or any other restriction contained in this Article
IV 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 V

SEVERANCE PAYMENT; TERMINATION OF
OPTIONS

5.1    In the event (1) the Company terminates
Employee’s employment without Cause, or (2)  Employee
voluntarily resigns within thirty (30) days after notice of termination
of this Agreement is given by the Company in accordance with Section
6.2, and, in either case, Employee does not violate the provisions of
Articles III and IV and signs a Termination Agreement, Employee shall
be paid a Severance Payment.

5.2    In the event Employee is
terminated for Cause any and all employment stock options held by
Employee, whether vested or unvested, shall immediately terminate and
Employee shall not be entitled to exercise such
options.

Table of Contents
ARTICLE VI

TERM AND
TERMINATION

6.1    This Agreement shall commence as of the
date set forth in the first paragraph of this agreement, and shall
continue in effect until terminated by the Company or the Employee in
accordance with this Agreement.

6.2    The Company may
terminate this Agreement at any time upon written notice to Employee
specifying the effective date of termination of this Agreement, which
date shall not be earlier than thirty (30) days from the date such
notice is given; provided however, that Employee shall have the right
to resign within thirty (30) days after such notice is given by the
Company, and such resignation, solely for purposes of this Agreement,
shall be deemed a termination of Employee’s employment without
Cause.

6.3    This Agreement shall automatically terminate
upon the voluntary resignation of Employee.

ARTICLE
VII

TERMINATION OF PRIOR AGREEMENTS

7.1    This
Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements between the parties regarding severance
payments or benefits, whether oral or written prior to the effective
date of this Agreement.

ARTICLE VIII

ARBITRATION, COSTS
AND INDEMNIFICATION; COOPERATION

8.1    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 III or IV 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 or fields involved
in the dispute (e.g., corporate, employment, trade secret,
non-competition, or securities law). Any judgment upon any arbitration
award may be entered in any court, federal or state, having competent
jurisdiction of the parties. Whether in arbitration or in any
litigation between the parties in federal or state court relating to or
concerning this Agreement, it is agreed that the losing shall pay the
prevailing party’s reasonable attorney’s fees and
costs.

8.2    The Company hereby agrees to indemnify, defend,
and hold harmless Employee for any and all claims arising from or
related to his employment by the Company at any time asserted, at any
place asserted, and to the fullest extent permitted by law, except for
any claims arising out of a breach of any restrictive covenant,
non-solicitation agreement or similar arrangement between Employee and
an entity other than the Company.

8.3    Employee shall
cooperate fully with the Company in the prosecution or defense, as the
case may be, of any and all actions, governmental inquiries or other
legal or regulatory proceedings in which Employee’s assistance
may be reasonably requested by the Company. Reasonable expenses arising
from the cooperation will be reimbursed within the Company’s
guidelines.

ARTICLE IX

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.

Table of Contents
ARTICLE X

NOTICE

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

The
current addresses of the parties are as follows:

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

IF TO THE
EMPLOYEE:           James D.
Houston
                                                           158
West 81st
Street
                                                           New
York, NY 10024

ARTICLE XI

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
XII

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 XIII

GOVERNING LAW

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

ARTICLE
XIV

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.

ARTICLE XV

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.

Table of Contents
ARTICLE XVI

RIGHT TO
ATTORNEY

Employee is hereby advised of Employee’s rights
to review this Agreement with counsel of Employee’s choice.
Employee has had the opportunity to consult with an attorney and/or
other advisor of Employee’s choosing before signing the
Agreement, and was given a period of twenty-one (21) days to consider
the Agreement. Employee is permitted, at his discretion, to return the
Agreement prior to the expiration of this 21-day period. Employee
acknowledges that in signing this Agreement, Employee has relied only
on the promises written in this Agreement, and not on any other promise
made by the Company or any other entity or person.

ARTICLE
XVII

SURVIVAL

Articles III, IV, VIII, X, XIII and XIV
shall survive the termination of this Agreement.

Table of Contents

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

		TEAMSTAFF,
INC.

		By:
                                                                                

        T.
Kent Smith
        Chief Executive
Officer

		                                                                                        

        James
Houston
         Employee

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]