UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): May 24, 2019

 

TSR, Inc.

 

(Exact name of registrant as specified in charter)

 

Delaware   0-8656   13-2635899
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
Identification No.)

 

400 Oser Avenue, Suite 150, Hauppauge, NY   11788
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (631) 231-0333

 

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company   ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.01 per share   TSRI   NASDAQ Capital Market
Preferred Share Purchase Rights 1   --   --

 

1 Registered pursuant to Section 12(b) of the Act pursuant to a Form 8-A filed by the registrant on March 15, 2019. Until the Distribution Date (as defined in the registrant’s Rights Agreement dated as of August 29, 2018), the Preferred Share Purchase Rights will be transferred with and only with the shares of the registrant’s Common Stock to which the Preferred Share Purchase Rights are attached.

 

 

 

 

 

 

Section 1 – Registrant’s Business and Operations

 

Item 1.01 Entry into a Material Definitive Agreement

 

On May 24, 2019, TSR, Inc. (the “Company”) and John G. Sharkey, Vice President-Finance, Controller and Secretary of the Company, entered into an Amended and Restated Employment Agreement, which will become effective on June 1, 2019 (the “Amended and Restated Employment Agreement”). The Amended and Restated Employment Agreement amends and restates, and replaces in its entirety, the Employment Agreement between the Company and Mr. Sharkey that was effective as of June 1, 2015 and subsequently amended by Letter Amendment on November 16, 2018 (as so amended, the “Current Employment Agreement”). The Company’s Board of Directors (the “Board”) unanimously approved the Amended and Restated Employment Agreement upon the recommendation of the Compensation Committee of the Board (the “Compensation Committee”).

 

Under the Current Employment Agreement, as a result of the occurrence of a “Change in Control,” as defined in the Current Employment Agreement, on August 21, 2018 (the “August 21, 2018 Change in Control”), Mr. Sharkey had the right to provide written notice to the Company of the termination of his employment under the Current Employment Agreement in connection with the August 21, 2018 Change in Control, in which case he would have been entitled to receive certain benefits provided for by the Current Employment Agreement (the “Change in Control Benefits”), as described in the Form 8-K filed by the Company on November 16, 2018. The Current Employment Agreement provided that Mr. Sharkey had to give any such written notice to the Company by or before May 28, 2019. Mr. Sharkey has informed the Board that he will not be terminating his employment with the Company, and, accordingly, will not be entitled to receive the Change in Control Benefits.

 

The Amended and Restated Employment Agreement provides that Mr. Sharkey will, as of June 1, 2019, be promoted to, and hold the offices of, Senior Vice President and Chief Financial Officer, and provides for an initial term of one (1) year, from June 1, 2019 through May 31, 2020, which automatically renews for successive renewal terms of one (1) year each unless either party gives notice of non-renewal to the other party at least thirty (30) days prior to the expiration of the initial term or the then-current renewal term.

 

The Amended and Restated Employment Agreement provides for annualized base salary in the amount of $285,000 for the period from June 1, 2019 through December 31, 2019. Beginning January 1, 2020, the annualized base salary increases to the amount of $310,000. Thereafter, the Compensation Committee will review Mr. Sharkey’s base salary on an annual basis and the Board may increase his base salary, in its sole discretion.

 

In addition to base salary, the Amended and Restated Employment Agreement provides that Mr. Sharkey will be eligible to receive an annual cash bonus for each fiscal year in an amount determined by the Compensation Committee in its sole discretion and subject to the approval of the Board, which may be based upon standards that the Compensation Committee establishes with Mr. Sharkey, subject to the Board’s approval. The target amount of the annual bonus will not be less than $85,000, provided that the actual amount of the annual bonus may be higher or lower than the target amount. The Amended and Restated Employment Agreement further provides that the Company will pay Mr. Sharkey an annual bonus in the amount of $75,000 for the fiscal year ending May 31, 2019, which is the annual bonus that is to be paid to Mr. Sharkey under the terms of the Current Employment Agreement for the fiscal year ending May 31, 2019 and which the Company will pay in a lump sum no later than June 30, 2019.

 

The Amended and Restated Employment Agreement provides that Mr. Sharkey will (a) be entitled to continue to participate in any pension, profit-sharing, retirement, hospitalization, insurance, medical services or other employee benefit plan generally available to the Company’s executives that may be in effect from time to time during his employment, and to the extent he is eligible to participate in any such plans under the terms and conditions thereof, (b) continue to be entitled to a leased car comparable to the car which he is currently provided, and (c) continue to be entitled to four (4) weeks of paid vacation per year.

 

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In the event that either (a) the Company terminates Mr. Sharkey’s employment without “Cause,” (b) Mr. Sharkey terminates his employment for “Good Reason” or (c) Mr. Sharkey’s employment terminates upon the expiration of the term as a result of the Company providing a notice of non-renewal of the then-current term of the Amended and Restated Employment, then Mr. Sharkey will be entitled to receive the following: (i) a severance payment equal to the sum of (x) 1.5 times Mr. Sharkey’s annual base salary at the rate in effect on the date of termination, (y) 1.5 times Mr. Sharkey’s annual bonus based on the bonus awarded to him for the fiscal year prior to the fiscal year in which the date of termination occurred, and (z) in the case of a termination by the Company without “Cause” or a termination by Mr. Sharkey for “Good Reason,” the base salary that Mr. Sharkey would have received if he had remained employed from the date of termination through the last day of the initial term or then-current renewal term, which severance payment will be payable in a single lump sum on the Company’s first regular pay date following the date on which the General Release (as defined and described below) becomes effective; (ii) payment of the full bonus for the fiscal year in which the date of termination occurs (the “Termination Year Bonus”), which Termination Year Bonus will be based on the bonus awarded to Mr. Sharkey for the fiscal year prior to the fiscal year in which the date of termination occurred and will be payable within thirty (30) days following the date of termination; (iii) continued medical and dental insurance benefits for Mr. Sharkey and his family that are at least comparable to the benefits generally offered to all eligible Company employees until the earlier of (x) the two (2) year anniversary of Mr. Sharkey’s employment termination date, and (y) the date that Mr. Sharkey is eligible for comparable coverage under the group health insurance plans of another employer; and (iv) for two (2) years following the date of termination, the Company will reimburse Mr. Sharkey for the monthly cost of his car lease, subject to certain parameters described in the Amended and Restated Employment Agreement. In addition to the foregoing benefits, the Company will also pay Mr. Sharkey the Accrued Obligations (as defined and described below). With the exception of the Accrued Obligations and the Termination Year Bonus, the Company’s obligation to pay the foregoing benefits is subject to Mr. Sharkey’s execution and non-revocation of a general release of claims against the Company, the form of which is annexed to the Amended and Restated Employment Agreement (the “General Release”), and his continued compliance with all post-termination covenants.

 

In the event that either (a) the Company terminates Mr. Sharkey’s employment for “Cause,” (b) Mr. Sharkey terminates his employment without “Good Reason” or (c) Mr. Sharkey’s employment terminates due to his death, disability or the expiration of the then-current term of the Amended and Restated Employment Agreement as a result of Mr. Sharkey providing a notice of non-renewal, then the Company’s sole obligations to Mr. Sharkey shall be: (i) the payment of Mr. Sharkey’s accrued but unpaid base salary and business expenses incurred by Mr. Sharkey that had not yet been reimbursed (collectively, the “Accrued Obligations”); (ii) in the case of a termination by Mr. Sharkey without “Good Reason” or a termination due to Mr. Sharkey’s death or disability, a pro-rated bonus for the fiscal year in which the date of termination occurs (calculated based on the bonus awarded for the prior fiscal year and pro-rated based upon the number of days that Mr. Sharkey was employed in the fiscal year in which the date of termination occurs) (the “Pro-Rata Bonus”); and (iii) in the case of the expiration of the then-current term of the Amended and Restated Employment Agreement as a result of Mr. Sharkey providing a notice of non-renewal, his Termination Year Bonus (calculated based on the bonus awarded for the prior fiscal year). The Company will pay the Accrued Obligations, the Pro-Rata Bonus and the Termination Year Bonus in a single lump sum within thirty (30) days following the date of termination.

 

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The Amended and Restated Employment Agreement defines “Cause” as (a) conviction of, or pleading of guilty or nolo contendere to, a felony; (b) engaging in willful misconduct that is materially injurious to the Company; (c) commission of an act of fraud against the Company; or (d) material breach of the Amended and Restated Employment Agreement that is not cured within thirty (30) days after written notice of such material breach.

 

The Amended and Restated Employment Agreement defines “Good Reason” as (a) material diminution in Mr. Sharkey’s base salary; (b) relocation by the Company of Mr. Sharkey’s principal place of business for the performance of his duties to a location that is either (i) more than twenty-five (25) miles from Mr. Sharkey’s current principal office location or (ii) outside of Suffolk or Nassau Counties in the State of New York; (c) Mr. Sharkey is removed from the position of Chief Financial Officer (other than temporarily while physically or mentally incapacitated or as required by applicable law); (d) material diminution in Mr. Sharkey’s duties, authorities or responsibilities (other than temporarily while physically or mentally incapacitated or as required by applicable law); (e) requiring Mr. Sharkey to report directly to an individual other than the Company’s Chief Executive Officer, provided that requiring Mr. Sharkey to report to the Board (or a member of the Board) shall not constitute “Good Reason”; or (f) the Company’s material breach of the Company’s obligations under the Amended and Restated Employment Agreement. Notwithstanding the foregoing, “Good Reason” shall not be deemed to exist unless (A) Mr. Sharkey gives written notice to the Company specifying in reasonable detail the Company’s acts or omissions that he alleges constitute “Good Reason” within ninety (90) days after the first occurrence of such circumstances and the Company shall have failed to cure any such act or omission within thirty (30) days, and (B) Mr. Sharkey actually terminates his employment within thirty (30) days following the expiration of the Company’s cure period.

 

The Amended and Restated Employment Agreement incorporates the terms and provisions of a Maintenance of Confidence and Non-Compete Agreement between the Company and Mr. Sharkey dated as of May 24, 2019. The Maintenance of Confidence and Non-Compete Agreement sets forth Mr. Sharkey’s covenants against the disclosure of confidential information, covenants against the solicitation of customers, employees and independent contractors and a covenant against competition (all in accordance with the terms set forth therein) and supersedes any prior agreements entered into by Mr. Sharkey pertaining to such covenants.

 

A copy of the Amended and Restated Employment Agreement is filed herewith as Exhibit 10.1. A copy of the Maintenance of Confidence and Non-Compete Agreement is filed herewith as Exhibit 10.2.

 

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Section 5 – Corporate Governance and Management

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

On May 24, 2019, the Company and John G. Sharkey, Vice President-Finance, Controller and Secretary of the Company, entered into the Amended and Restated Employment Agreement, which will become effective on June 1, 2019. The Amended and Restated Employment Agreement is described under Item 1.01 above.

 

In addition, in connection with the Board’s approval of the Amended and Restated Employment Agreement, the Board appointed Mr. Sharkey to the offices of Senior Vice President and Chief Financial Officer, effective June 1, 2019, to serve in such offices until his successor is appointed.

 

Section 9 – Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

10.1 Amended and Restated Employment Agreement, dated May 24, 2019 and effective as of June 1, 2019, between TSR, Inc. and John G. Sharkey
   
10.2 Maintenance of Confidence and Non-Compete Agreement, dated May 24, 2019 and effective June 1, 2019, between TSR, Inc. and John G. Sharkey

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  TSR, INC.
  (Registrant)
     
Date:  May 24, 2019 By: /s/ Christopher Hughes
    Christopher Hughes
    Chairman of the Board, Chief Executive Officer,
    President and Treasurer

 

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EXHIBIT INDEX

 

Exhibit
Number
  Description
10.1   Amended and Restated Employment Agreement, dated May 24, 2019 and effective as of June 1, 2019, between TSR, Inc. and John G. Sharkey
10.2   Maintenance of Confidence and Non-Compete Agreement, dated May 24, 2019 and effective June 1, 2019, between TSR, Inc. and John G. Sharkey

 

 

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Exhibit 10.1

 

EXECUTION VERSION

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”), dated this 24 th day of May, 2019 and effective as of the 1st day of June, 2019 (the “Effective Date”), is by and between TSR, Inc., a Delaware corporation, with offices at 400 Oser Avenue Suite 150, Hauppauge, New York 11788 (hereinafter called the “Corporation”), and John G. Sharkey, residing at XX XXX, XXX, New York 11747 (hereinafter called “Executive”).

 

WITNESSETH:

 

WHEREAS, Executive is employed by the Corporation pursuant to the terms of an Employment Agreement effective as of June 1, 2015 between Executive and the Corporation, as amended by the Amendment to Employment Agreement between the Corporation and Executive dated November 16, 2018 (the “Prior Employment Agreement”); and

 

WHEREAS, the Corporation and Executive wish to enter into a new employment agreement between the Corporation and Executive on the terms and conditions contained in this Agreement, which Agreement will supersede the Prior Employment Agreement and all prior agreements and understandings between the parties, oral or written, with respect to the subject matter of this Agreement and with respect to the subject matter of any other agreement incorporated herein by reference.

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

 

1. Title/Position; Reporting . As of the Effective Date, Executive shall be promoted from the position and title of Vice President, Finance to the positions and titles of Senior Vice President and Chief Financial Officer of the Corporation. The Corporation hereby continues to employ Executive in such new positions as (and with such new titles of) Senior Vice President and Chief Financial Officer of the Corporation or such other position as he may be elected or appointed to by the Corporation’s Board of Directors (the “Board”), to perform such supervisory or executive duties on behalf of the Corporation as the Board may from time to time determine. During the Term (as defined in Section 3 below), Executive will report to the Corporation’s Chief Executive Officer (the “CEO”).

 

2. Duties/ Responsibilities . Executive hereby accepts such continued employment and agrees that throughout the period of his employment hereunder, he will devote his full time, attention, knowledge and skills, faithfully, diligently and to the best of his ability, in furtherance of the business of the Corporation and to promote the interest of the Corporation, and will perform the duties assigned to him pursuant to Section 1 hereof, subject, at all times, to the direction and control of the Board and the CEO. Executive shall at all times be subject to, observe and carry out such rules and regulations as the Board or CEO may from time to time establish. During the period of Executive’s employment hereunder, Executive shall not be entitled to additional compensation for serving in any office of the Corporation or any of its subsidiaries to which he is elected, including without limitation as a director of the Corporation or any subsidiary thereof.

 

 

 

 

3. Term . Subject to earlier termination pursuant to the provisions of Section 6 of this Agreement, the term of Executive’s employment with the Corporation under this Agreement shall commence on the Effective Date and shall continue in effect through and including May 31, 2020 (the “Initial Term”); provided that the term of Executive’s employment hereunder shall be automatically extended for successive, additional one (1) year terms (each, a “Renewal Term”) commencing at the end of the Initial Term or the Renewal Term then in effect (as applicable), unless either party gives the other written notice of non-renewal (“Non-Renewal Notice”) at least thirty (30) days prior to the end of the Initial Term or the Renewal Term then in effect, as applicable. The Initial Term and any subsequent Renewal Term, as described in this Section 3 , shall collectively be referred to as the “Term” for purposes of this Agreement.

 

4. Compensation and Benefits .

 

(a) Base Salary . During the Term, the Corporation will pay to Executive a base salary (the “Base Salary”). For the period beginning on the Effective Date and ending on December 31, 2019, Executive’s Base Salary shall be at the rate of Two Hundred Eighty-Five Thousand Dollars ($285,000) per annum. On January 1, 2020, Executive’s Base Salary shall increase to the rate of Three Hundred Ten Thousand ($310,000) per annum. Thereafter, the Compensation Committee of the Board (the “Compensation Committee”) will review Executive’s Base Salary on an annual basis and the Board may, in its sole discretion, increase Executive’s Base Salary. Base Salary shall be payable in equal installments in arrears no less frequently than semi-monthly.

 

(b) Annual Bonus . In addition to Base Salary, the Compensation Committee shall in good faith, after the end of each fiscal year (commencing with the fiscal year ending May 31, 2020) consider and cause the Corporation to grant to Executive a discretionary bonus (each, an “Annual Bonus”), which may be based upon standards which the Compensation Committee, subject to the approval of the Board, shall establish with Executive at the beginning of each fiscal year (or as soon thereafter as reasonably practicable) and which standards may be modified thereafter with the approval of the Compensation Committee and the Board. The target amount of Executive’s Annual Bonus shall be not less than $85,000; provided, however , it is understood and agreed that the actual amount of Executive’s Annual Bonus may be higher or lower than such target amount. The Corporation and Executive acknowledge and agree that: (a) the Prior Employment Agreement contemplated an annual discretionary bonus for each fiscal year; (b) the amount of such bonus pursuant to the Prior Employment Agreement for the fiscal year ended May 31, 2019 is $75,000 (the “FYE 5/31/19 Bonus”); and (c) the Corporation shall pay the FYE 5/31/19 Bonus to Executive in a single lump sum by not later than June 30, 2019.

 

(c) Benefits; Leased Automobile; Vacation Time . In addition, Executive shall be entitled to continue to participate, to the extent he is eligible under the terms and conditions thereof, in any pension, profit-sharing, retirement, hospitalization, insurance, medical services, or other employee benefit plan generally available to executives of the Corporation which may be in effect from time to time during the period of his employment hereunder. The Corporation shall be under no obligation to institute or continue the existence of any such employee benefit plan. Executive shall also continue to be entitled to a leased car comparable to the car which he is currently provided. Executive also shall continue to be entitled to four (4) weeks of paid vacation time for each year.

 

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5. Expense Reimbursement . The Corporation shall reimburse Executive for all expenses reasonably incurred by him in connection with the performance of his duties hereunder and in connection with the business of the Corporation, upon the submission to the Corporation of appropriate vouchers therefore and approval thereof by the CEO. Such reimbursements shall be subject to the expense reimbursement policies of the Corporation, which are in effect from time to time.

 

6. Termination .

 

(a) Termination for Cause .

 

(i) Notwithstanding any provision contained herein to the contrary, the Corporation may terminate this Agreement and Executive’s employment hereunder at any time for Cause (as defined below) upon written notice to Executive. As used in this Agreement, “Cause” shall mean Executive’s: (i) conviction of, or plea of guilty or nolo contendere to, any crime constituting a felony; (ii) engaging in willful misconduct that is materially injurious to the Corporation; (iii) commission of an act of fraud against the Corporation; or (iv) material breach of any term of this Agreement and failure to correct such breach within thirty (30) days after written notice to Executive of such breach.

 

(ii) If this Agreement and Executive’s employment hereunder is terminated for Cause pursuant to Section 6(a)(i) above, then the Corporation’s sole obligation to Executive shall be to pay to Executive: (A) Executive’s earned, but unpaid, Base salary, through the final date of Executive’s employment by the Corporation (the “ Termination Date ”); and (B) subject to the terms and conditions set forth in Section 5 above, any reasonable business expenses incurred by Executive through and including the Termination Date, which have not yet been reimbursed (clauses (A) and (B) of this sentence, the “Accrued Obligations”). The Corporation shall pay the Accrued Obligations to Executive within thirty (30) days following the Termination Date.

 

(b) Termination due to Disability .

 

(i) If, during the Term, Executive is unable to perform his duties hereunder on account of illness, accident or other physical or mental incapacity and such illness or other incapacity shall continue for a period of six (6) consecutive months or an aggregate of one hundred and eighty (180) days in any consecutive twelve (12) month period, the Corporation shall have the right, on fifteen (15) days written notice (given after such period) to Executive, to terminate this Agreement and Executive’s employment hereunder; provided, however , if prior to the date specified in such notice, Executive’s illness or incapacity shall have terminated and he shall have taken up the performance of his duties hereunder, Executive shall be entitled to resume his employment hereunder, as though such notice had not been given.

 

(ii) In the event this Agreement and Executive’s employment hereunder terminates due to Executive’s illness, accident or incapacity pursuant to Section 6(b)(i) above, Executive shall be entitled to receive (and the Corporation’s sole obligation shall be to pay to Executive): (A) the Accrued Obligations, and (B) the Pro-Rata Bonus (as defined below), which Accrued Obligations and Pro-Rata Bonus shall be paid to Executive within thirty (30) days following the Termination Date. As used in this Agreement, “ Pro-Rata Bonus ” means an amount equal to the product of (1) the Annual Bonus awarded to Executive for the fiscal year prior to the fiscal year in which the Termination Date occurs, and (2) a fraction, the numerator of which is the number of days that Executive was employed during the fiscal year in which the Termination Date occurs, and the denominator of which is 365. For purposes of illustration, if the Termination Date occurred on September 30, 2021 and the Annual Bonus awarded to Executive for the fiscal year ending May 31, 2021 was $85,000, then the Pro-Rata Bonus would be $28,410.96 ($85,000 x 122/365).

 

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(c) Termination due to Death .

 

(i) In the event of Executive’s death during the Term, this Agreement shall terminate immediately.

 

(ii) In the event of the termination of this Agreement due to Executive’s death as set forth in Section 6(c)(i) above, Executive’s legal representatives shall be entitled to receive (and the Corporation’s sole obligations shall be to pay): (A) the Accrued Obligations, and (B) the Pro-Rata Bonus (as defined in Section 6(b)(ii) above), which Accrued Obligations and Pro-Rata Bonus shall be paid to Executive’s legal representatives within thirty (30) days following the Termination Date. Further, nothing in this Section 6(c) or otherwise in this Agreement shall be deemed to limit any amounts that may otherwise be payable by the insurer under any life insurance policy or similar instrument (if any), subject to the terms and conditions of any such policy or instrument.

 

(d) Resignation by Executive without Good Reason .

 

(i) Executive may voluntarily resign from his employment hereunder without Good Reason (as defined in Section 6(h) below) upon not less than sixty (60) days prior written notice to the Corporation; provided, however , if Executive provides more than sixty (60) days prior written notice to the Corporation, the Corporation reserves the right, upon written notice to Executive, to accept Executive’s notice of voluntary resignation without Good Reason and to accelerate such notice and make Executive’s voluntary resignation without Good Reason effective on such other date prior to Executive’s intended last day of work, but not prior to the sixtieth (60th) day following Executive’s notice of voluntary resignation without Good Reason, as the Corporation deems appropriate. It is understood and agreed that the Corporation’s election to accelerate Executive’s notice of voluntary resignation without Good Reason shall not be deemed a termination by the Corporation without Cause or constitute Good Reason for purposes of Section 6(g) of this Agreement, Section 6(h) of this Agreement, or otherwise. Further, it is understood and agreed that, during all or a portion of the period beginning on the date of Executive’s notice of resignation without Good Reason and the Termination Date (the “ Resignation Without Good Reason Notice Period ”), the Corporation, in its discretion, may remove Executive from his position as Chief Financial Officer and/or diminish his duties and, notwithstanding the definition of Good Reason set forth in Section 6(h) below, neither such removal nor diminution during the Resignation Without Good Reason Notice Period shall constitute Good Reason for purposes of Section 6(h) of this Agreement.

 

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(ii) In the event of a termination of this Agreement and Executive’s employment hereunder due to Executive’s resignation without Good Reason pursuant to Section 6(d)(i) above, Executive shall be entitled to receive (and the Corporation’s sole obligation to Executive shall be to pay): (A) the Accrued Obligations; and (B) the Pro-Rata Bonus, which Accrued Obligations and Pro-Rata Bonus shall be paid to Executive within thirty (30) days following the Termination Date.

 

(e) Termination due to Non-Renewal by Executive .

 

(i) If Executive provides a Non-Renewal Notice pursuant to Section 3 above, this Agreement and Executive’s employment hereunder will terminate on the last day of the Initial Term or the Renewal Term then in effect, as applicable, in which such Non-Renewal Notice was provided by Executive.

 

(ii) If this Agreement and Executive’s employment hereunder terminates as a result of Executive providing the Non-Renewal Notice, Executive shall be entitled to receive (and the Corporation’s sole obligation shall be to pay) the following: (A) the Accrued Obligations; and (B) the Termination Year Annual Bonus (as defined below). The Accrued Obligations and the Termination Year Annual Bonus shall be paid to Executive within thirty (30) days following the Termination Date. As used in this Agreement, the “Termination Year Annual Bonus” means the Annual Bonus for the fiscal year ending on the Termination Date, which shall be in an amount equal to the Annual Bonus awarded to Executive for the prior fiscal year.

 

(f) Termination due to Non-Renewal by the Corporation .

 

(i) If the Corporation provides a Non-Renewal Notice pursuant to Section 3 above, this Agreement and Executive’s employment hereunder will terminate on the last day of the Initial Term or Renewal Term then in effect, as applicable, in which the Non-Renewal Notice was provided by the Corporation.

 

(ii) If this Agreement and Executive’s employment hereunder terminates as a result of the Corporation providing the Non-Renewal Notice, Executive shall be entitled to receive (and the Corporation’s sole obligation shall be to pay) the following:

 

 

(A) the Accrued Obligations and the Termination Year Annual Bonus, which Accrued Obligations and Termination Year Annual Bonus will be paid to Executive within thirty (30) days following the Termination Date; and

 

(B) subject to Section 6(i) below:

 

(1) a severance payment (the “ Corporation Non-Renewal Severance Payment ”) in an amount equal to the sum of (x) 1.5 times Executive’s annual Base Salary (at the rate in effect on the Termination Date, but in no event less than the rate of $310,000 per annum), and (y) 1.5 times Executive’s Annual Bonus (based on the Annual Bonus awarded to Executive for the fiscal year prior to the fiscal year in which the Termination Date occurred), which Corporation Non-Renewal Severance Payment shall be paid to Executive in a single lump sum on the Corporation’s first regular pay date following the date that the Release (as defined in Section 6(i) below) becomes effective and is no longer subject to revocation;

 

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(2) continued medical and dental insurance benefits for Executive and his family that are at least comparable to the benefits generally offered to all eligible Corporation employees until the earlier of the second anniversary of the Termination Date or the date Executive is eligible for comparable coverage under the group health insurance plans of another employer (the “Continued Health Insurance Coverage Period”); provided, that , if and to the extent such continued group health insurance coverage is not permissible either by law or the applicable insurance plan or such coverage would cause the Corporation to incur any excise tax, then (x) the Corporation shall reimburse Executive on the first business day of every month during the first eighteen (18) months of the Continued Health Insurance Coverage Period for the health insurance continuation premiums under COBRA incurred by Executive for the continuation of such medical and dental coverage for Executive and his family, and (y) the Corporation shall reimburse Executive on the first day of every month during the remainder of the Continued Health Insurance Coverage Period for the premium costs incurred by Executive for comparable medical and dental insurance coverage for Executive and his family; and

 

(3) for the two (2) year period following Termination Date, reimburse Executive on the first day of the month for the monthly cost of Executive’s car lease during such two (2) year period; provided that such reimbursement shall not be less than the monthly amount paid by the Corporation for Executive’s automobile lease as of June 1, 2019 or exceed the monthly amount paid by the Corporation for Executive’s automobile lease immediately prior to the Termination Date.

 

Executive shall promptly notify the Corporation if he becomes eligible for coverage under the group health insurance plan(s) of another employer.

 

 

(g) Termination without Cause .

 

(i) The Board may, on behalf of the Corporation, terminate this Agreement and Executive’s employment hereunder Without Cause (as defined below) upon thirty (30) days’ written notice from the Board (on behalf of the Corporation) to Executive. “Without Cause” means a termination by the Corporation of this Agreement and Executive’s employment hereunder for any reason or no reason, other than (A) for Cause pursuant to Section 6(a) above, (B) due to Executive’s disability or death pursuant to Section 6(b) or Section 6(c) , respectively, or (C) as a result of the Corporation providing a Non-Renewal Notice pursuant to Section 3(c) .

 

(ii) In the event this Agreement and Executive’s employment hereunder is terminated by the Corporation Without Cause pursuant to Section 6(g)(i) above, Executive shall be entitled to receive (and the Corporation’s sole obligation shall be to pay):

 

(A) the Accrued Obligations and the Termination Year Annual Bonus, which Accrued Obligations and Termination Year Annual Bonus will be paid to Executive within thirty (30) days following the Termination Date; and

6

 

 

(B) subject to Section 6(i) below:

 

(1) a severance payment (the “Termination Without Cause Severance Payment”) in an amount equal to the sum of (I) 1.5 times Executive’s annual Base Salary (at the rate in effect on the Termination Date, but in no event less than the rate of $310,000 per annum), (II) 1.5 times Executive’s Annual Bonus (based on the amount Annual Bonus awarded to Executive for the fiscal year prior to the fiscal year in which the Termination Date occurred), and (III) Executive’s Base Salary (at the rate in effect on the Termination Date, but in no event less than the rate of $310,000 per annum) that he would have earned had he remained employed during the period beginning on the Termination Date and ending on the last day of the fiscal year in which the Termination Date occurred, which Termination Without Cause Severance Payment shall be paid to Executive in a single lump sum on the Corporation’s first regular pay date following the date that the Release becomes effective and is no longer subject to revocation;

 

(2) continued medical and dental insurance benefits for Executive and his family that are at least comparable to the benefits generally offered to all eligible Corporation employees until the last day of the Continued Health Insurance Coverage Period; provided, that , if and to the extent such continued group health insurance coverage is not permissible either by law or the applicable insurance plan or such coverage would cause the Corporation to incur any excise tax, then (x) the Corporation shall reimburse Executive on the first business day of every month during the first eighteen (18) months of the Continued Health Insurance Coverage Period for the health insurance continuation premiums under COBRA incurred by Executive for the continuation of such medical and dental coverage for Executive and his family, and (y) the Corporation shall reimburse Executive on the first day of every month during the remainder of the Continued Health Insurance Coverage Period for the premium costs incurred by Executive for comparable medical and dental insurance coverage for Executive and his family; and

 

(3) for the two (2) year period following Termination Date, reimburse Executive on the first day of the month for the monthly cost of Executive’s car lease during such two (2) year period; provided that such reimbursement shall not be less than the monthly amount paid by the Corporation for Executive’s automobile lease as of June 1, 2019 or exceed the monthly amount paid by the Corporation for Executive’s automobile lease immediately prior to the Termination Date.

 

Executive shall promptly notify the Corporation if he becomes eligible for coverage under the group health insurance plan(s) of another employer.

 

7

 

 

(h) Resignation for Good Reason .

 

(i) Executive may resign from his employment for Good Reason by providing notice to the Corporation in accordance with the definition of Good Reason. As used in this Agreement, “Good Reason” means the occurrence of any of the following, in each case, without Executive’s prior consent: (A) a material diminution in Executive’s Base Salary; (B) a relocation by the Corporation of Executive’s principal place of business for the performance of his duties under this Agreement to a location that is either (x) more than 25 miles from Executive’s current principal office location, or (y) outside of Suffolk or Nassau counties; (C) Executive is removed by the Corporation from the position of Chief Financial Officer (other than temporarily while physically or mentally incapacitated or as required by applicable law); (D) a material diminution in Executive’s authority, duties or responsibilities (other than temporarily while physically or mentally incapacitated or as required by applicable law); (E) requiring Executive to report directly to an individual other than the CEO; provided, that , requiring Executive to report to the Board (or a member of the Board) shall not constitute “Good Reason”; or (F) the Corporation’s material breach of its obligations under this Agreement. “Good Reason” shall not be deemed to exist, however, unless (x) Executive shall have given written notice to the Corporation specifying in reasonable detail the Corporation’s acts or omissions that Executive alleges constitute “Good Reason” within ninety (90) days after the first occurrence of such circumstance (or, if later, the date on which Executive knows or reasonably should have known of the occurrence of such circumstance) and the Corporation shall have failed to cure any such act or omission within thirty (30) days of receipt of such written notice, and (y) Executive actually terminates employment within thirty (30) days following the expiration of the Corporation’s cure period as set forth above. Otherwise, any claim of such circumstance as “Good Reason” shall be deemed irrevocably waived by Executive for that specific circumstance only.

 

(ii) In the event of Executive’s resignation for Good Reason in accordance with Section 6(h)(i) above, Executive shall be entitled to receive (and the Corporation’s sole obligation shall be to pay):

 

(A) the Accrued Obligations and the Termination Year Annual Bonus, which Accrued Obligations and Termination Year Annual Bonus will be paid to Executive within thirty (30) days following the Termination Date; and

 

(B) subject to Section 6(i) below:

 

(1) a severance payment (the “Good Reason Severance Payment”) in an amount equal to the sum of: (I) 1.5 times Executive’s annual Base Salary (at the rate in effect on the Termination Date, but in no event less than the rate of $310,000 per annum), (II) 1.5 times Executive’s Annual Bonus (based on the Annual Bonus awarded to Executive for the fiscal year prior to the fiscal year in which the Termination Date occurred), and (III) Executive’s Base Salary (at the rate in effect on the Termination Date, but in no event less than the rate of $310,000 per annum) that he would have earned had he remained employment during the period beginning on the Termination Date and ending on the last day of the fiscal year in which the Termination Date occurred, which Good Reason Severance Payment shall be paid to Executive in a single lump sum on the Corporation’s first regular pay date following the date that the Release becomes effective and is no longer subject to revocation;

 

(2) continued medical and dental insurance benefits for Executive and his family that are at least comparable to the benefits generally offered to all eligible Corporation employees until the last day of the Continued Health Insurance Coverage Period; provided, that , if and to the extent such continued group health insurance coverage is not permissible either by law or the applicable insurance plan or such coverage would cause the Corporation to incur any excise tax, then (x) the Corporation shall reimburse Executive on the first business day of every month during the first eighteen (18) months of the Continued Health Insurance Coverage Period for the health insurance continuation premiums under COBRA incurred by Executive for the continuation of such medical and dental coverage for Executive and his family, and (y) the Corporation shall reimburse Executive on the first day of every month during the remainder of the Continued Health Insurance Coverage Period for the premium costs incurred by Executive for comparable medical and dental insurance coverage for Executive and his family; and

 

8

 

 

(3) for the two (2) year period following Termination Date, reimburse Executive on the first day of the month for the monthly cost of Executive’s car lease during such two (2) year period; provided that such reimbursement shall not be less than the monthly amount paid by the Corporation for Executive’s automobile lease as of June 1, 2019 or exceed the monthly amount paid by the Corporation for Executive’s automobile lease immediately prior to the Termination Date.

 

Executive shall promptly notify the Corporation if he becomes eligible for coverage under the group health insurance plan(s) of another employer.

 

(i) Release Agreement . With the exception of the Accrued Obligations and the Termination Year Annual Bonus, any payments and benefits to be made or provided to Executive pursuant to Section 6(f) , Section 6(g) or Section 6(h) shall be contingent upon Executive executing a release of claims against the Corporation and related parties in the form annexed hereto as Exhibit A (the “Release”) and the Release becoming effective (and no longer subject to revocation) within sixty (60) days following the Termination Date.

 

7. Maintenance of Confidence and Non-Compete Agreement . The Corporation and Executive entered into a Maintenance of Confidence and Non-Compete Agreement on the date of this Agreement (“Maintenance of Confidence and Non-Compete Agreement”), the terms of which are hereby expressly incorporated into this Agreement, provided, however , that the Maintenance of Confidence and Non-Compete Agreement shall continue to be effective notwithstanding the expiration or termination of Executive’s employment hereunder and shall continue in effect upon expiration or earlier termination of this Agreement, in each case, pursuant to the terms of the Maintenance of Confidence and Non-Compete Agreement.

 

8. Key Man Life Insurance

 

(a) The Corporation shall have the right from time to time to purchase, increase, modify or terminate insurance policies on the life of Executive for the benefit of the Corporation, in such amounts as the Corporation shall determine in its sole discretion.

 

(b) In connection with Section 8(a ) above, Executive shall, at such time or times and at such place or places as the Corporation may reasonably direct, submit himself to such physical examinations and Executive shall deliver such documents as the Corporation may deem necessary or desirable.

 

9

 

 

9. Confidential Information . Executive shall hold in a fiduciary capacity for the benefit of the Corporation all information, knowledge and data relating to or concerned with its operations, sales, business and affairs, and he shall not, at any time hereafter, use, disclose or divulge any such information, knowledge or data to any person, firm or corporation other than the Corporation or its designees or except as may otherwise be required in connection with the business and affairs of the Corporation.

 

10. Remedies . The parties hereto acknowledge that Executive’s services are unique and that, in the event of a breach by Executive of any of his obligations under this Agreement, the Corporation may not have an adequate remedy at law. Accordingly, in the event of any such breach or threatened breach by Executive, the Corporation shall be entitled to seek such equitable and injunctive relief as may be available to restrain Executive from the violation of the provisions thereof. Nothing herein shall be construed as prohibiting the Corporation from pursuing any other remedies at law or in equity for such breach or threatened breach, including the recovery of damages and the immediate termination of the employment of Executive hereunder.

 

11. Entire Agreement . This Agreement, together with the Maintenance of Confidence and Non-Compete Agreement, constitute the entire agreement of the parties hereto with respect to the subject matter hereof (including, without limitation, the Prior Employment Agreement and any other agreements pertaining to confidentiality, non-solicitation, non-competition or the like) and no amendment or modification hereof shall be valid or binding unless made in writing and signed by the party against whom enforcement thereof is sought.

 

12. Notices . Any notice required, permitted or desired to be given pursuant to any of the provisions of this Agreement shall be deemed to have been sufficiently given or served for all purposes if delivered in person or sent by certified mail, return receipt requested, postage and fees prepaid as follows:

 

If to the Corporation at:

 

TSR, Inc.

400 Oser Avenue Suite 150

Hauppauge, New York 11788

Attn:  Mr. Christopher Hughes,

    President and Chief Executive Officer

 

If to Executive at:

 

Mr. John G. Sharkey

XX XXXX XX

Melville, New York 11747

 

Either of the parties hereto may at any time and from time to time change the address to which notice shall be sent hereunder by notice to the other party given under this Section 12. The date of the giving of any notice sent by mail shall be the date of the posting of the mail.

 

10

 

 

13. Section 409A.

 

(a) If at the time of any separation from service, Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986 (as amended) (the “Code”) and regulations thereunder, to the minimum extent required to satisfy Section 409A(a)(2)(B)(i) of the Code and regulations thereunder, any payment or provision of benefits to Executive in connection with his separation from service (as determined for purposes of Section 409A of the Code) shall be postponed and paid in a lump sum on the first business day following the date that is six months after Executive’s separation from service (or the date of Executive’s death if earlier) (the “409A Deferral Period”), and the remaining payments due to be made in installments or periodically after the 409A Deferral Period shall be made as otherwise scheduled. Further, notwithstanding anything set forth in Section 6 above to the contrary, to the extent required by Section 409A of the Code, if the 60 day period in which the Release must become effective (and no longer subject to revocation) covers more than one calendar year, then the Corporation Non-Renewal Severance Payment, the Termination Without Cause Severance Payment or the Good Reason Severance Payment, as applicable, will be paid in the second calendar year (on the first regular pay date of such calendar year following the date that Release becomes effective is no longer subject to revocation), in each case, unless such later date is required by this Section 13(a) above, regardless of whether the Release becomes effective in the first or second calendar year.

 

(b) References under this Agreement to Executive’s termination of employment shall be deemed to refer to the date upon which Executive has experienced a “separation from service” within the meaning of Section 409A of the Code. All payments made under this Agreement shall constitute “separate payments” for purposes of Section 409A of the Code. To the extent any reimbursements or in-kind benefits due to Executive under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(l)(iv).

 

14. Assignment . Neither this Agreement nor the right to receive any payments hereunder may be assigned by Executive. This Agreement shall be binding upon Executive, his heirs, executors and administrators and upon the Corporation, its successors and assigns.

 

15. No Waiver . No course of dealing nor any delay on the part of the Corporation in exercising any rights hereunder shall operate as a waiver of any such rights. No waiver of any default or breach of this Agreement shall be deemed a continuing waiver or a waiver of any other breach or default.

 

16. Governing Law . This Agreement shall be governed, interpreted and construed in accordance with the laws of the State of New York applicable to agreements entered into and to be performed entirely therein.

 

11

 

 

17. Severability . If any clause, paragraph, section or part of this Agreement shall be held or declared to be void, invalid or illegal, for any reason, by any court of competent jurisdiction, such provisions shall be ineffective but shall not in any way invalidate or affect any other clause, paragraph, section or part of this Agreement.

 

18. Withholdings . Notwithstanding any other provision of this Agreement, the Corporation may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations.

 

19. No Conflicting Agreements . Executive acknowledges that he is not subject to any agreement, which would in any way restrict him from carrying out his employment as contemplated hereunder.

 

20. Amendment and Restatement . Effective as of the Effective Date, this Agreement supersedes, amends and restates that the Prior Employment Agreement in its entirety.

 

[Signatures appear on the following page]

 

12

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day in year first above written.

 

Executive  
     
/s/ John G. Sharkey  
John G. Sharkey  
     
TSR, Inc.  
     
By: /s/ Christopher Hughes  
Name:  Christopher Hughes  
Title: President and Chief Executive Officer  

 

13

 

 

EXHIBIT A

 

FORM OF RELEASE

 

Release of Claims

 

(Subject to change by the Company based only upon changes in applicable law in order to obtain a valid general release of all Claims in favor of the Released Parties and/or to reflect a change in the name or form of the Company)

 

WHEREAS , TSR, Inc., a Delaware corporation (the “ Company ”) and John G. Sharkey (the “ Executive ”) entered into an amended and restated employment agreement dated as of May 24, 2019 and effective as of June 1, 2019 (the “ Employment Agreement ”). Capitalized terms used in this Release of Claims (“ Release ”), and not otherwise defined herein, shall have the meanings ascribed to them in the Employment Agreement;

 

WHEREAS , the Executive’s employment with the Company terminated pursuant to [ Section 6(f) [ Section 6(g) ] [ Section 6(h)] 1 of the Employment Agreement, which termination was effective as of [____ __, ___] 2 ;

 

WHEREAS , Section 6(i) of the Employment Agreement provides that, with the exception of the Accrued Obligations and the Termination Year Annual Bonus, the Company’s payment and benefit obligations set forth in [ Section 6(f) ] [ Section 6(g) ] [ Section 6(h) ] 3 of the Employment Agreement shall be contingent upon the Executive executing, and not revoking, a release of claims against the Company and related parties in the form annexed as Exhibit A to the Employment Agreement and this Release is the “Release” referred to in the Employment Agreement; and

 

WHEREAS , the Executive desires to execute this Release in order to receive the payments and/or benefits (other than the Accrued Obligations and the Termination Year Annual Bonus) set forth in [ Section 6(f) ] [ Section 6(g) ] Section 6(h) ] 4 of the Employment Agreement.

 

 

 

 

1 Select applicable Section #

2 Insert Termination Date

3 Select applicable Section #

4 Select applicable Section #

 

14

 

 

 

NOW THEREFORE , the Executive hereby delivers this Release, intending to be legally bound hereby:

 

1. Release of Claims

 

The Executive (on his own behalf and on behalf of his heirs, executors, administrators, beneficiaries, personal representatives and assigns), hereby completely, forever, irrevocably and unconditionally, waives, discharges and releases, to the maximum extent permitted by law , any common law, statutory or other complaints, claims, charges or causes of action of any kind whatsoever, both known and unknown, in law or in equity, which the Executive ever had, now has or may have against the Company, the Company’s past, present and future subsidiaries and other affiliated entities and each of their respective past, present and future officers, directors, employees, shareholders, trustees, members, partners, attorneys and agents (in each case, individually and in their official capacities) and each of their respective employee benefit plans (and such plans’ fiduciaries, agents, administrators and insurers, individually and in their official capacities), as well as any predecessors, future successors or assigns or estates of any of the foregoing (the “ Released Parties ”) by reason of facts or omissions which have occurred on or prior to the date the that the Executive signs and returns this Release, including, without limitation, any complaint, charge or cause of action arising out of the Executive’s employment, the termination of the Executive’s employment or any term or condition of that employment, or arising under Federal, state or local laws pertaining to employment, including without limitation, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act of 1990, Title VII of the Civil Rights Act of 1964, the Civil Rights Acts of 1991, the Americans with Disabilities Act, the Fair Labor Standards Act, the Equal Pay Act, the Lilly Ledbetter Fair Pay Act, the Fair Credit Reporting Act, the Worker Adjustment and Retraining Notification Act, the Family & Medical Leave Act, the Sarbanes-Oxley Act of 2002, the federal False Claims Act, the New York False Claims Act, the New York wage and hour laws, the New York Human Rights Act, and the New York City Human Rights Law, in each case, as such laws have been or may be amended, and any other Federal, state and local laws relating to discrimination on the basis of age, sex or other protected class, all claims under Federal, state or local laws for express or implied breach of contract, wrongful discharge, defamation, intentional infliction of emotional distress, and any related claims for attorneys’ fees and costs, except for the Unreleased Claims (as defined below). By signing this Release, the Executive acknowledges that the Executive intends to waive and release any rights known or unknown that the Executive may have against the Released Parties under these and any other laws; provided that the Executive does not waive or release claims with respect to the Executive’s (or the Executive’s heirs’, executors’, administrators’, legal representatives’, and assigns’) rights with respect to: (a) payment of the Accrued Obligations and the Termination Year Annual Bonus; (b) amounts payable and/or benefits to be provided pursuant to [ Section 6(f)] , ] Section 6(g) ], [ Section 6(h) ] 5 of the Employment Agreement; (c) indemnification pursuant to the Company’s organizational documents and/or any other agreement between the Company and the Executive; (d) amounts due to the Executive from the TSR Employee’s 401K Savings Plan in accordance with the terms of such Plan; (e) claims that arise after the date Executive signs this Agreement, and/or (f) claims that cannot be released as a matter of law (collectively, the “ Unreleased Claims ”).

 

Without limitation of anything set forth in this Section 1 above, the Executive acknowledges, understands and agrees that the general release of claims in this Section 1 above includes, but is not limited to, a waiver and release of all claims that he may have under the Age Discrimination in Employment Act of 1967, as amended (the “ADEA”) arising up to and including the date that the Executive signs this Release. The Executive understands, however, that nothing in this Agreement shall be deemed to limit his right to challenge the validity of the ADEA waiver.

 

Nothing is this Agreement shall limit the Executive’s right to file a charge with a governmental agency (such as the United States Equal Employment Opportunity Commission (“EEOC”)), participate in any governmental agency investigation or proceeding, or communicate and cooperate with any such agency. The Executive is waiving, however, (1) any right to recover money in connection with such a charge or investigation (except that the Executive does not waive any right to receive money properly awarded by the U.S. Securities and Exchange Commission (“ SEC ”) as a securities whistleblower incentive, if applicable) and (2) any right to recover money in connection with a charge filed by any other individual, by the EEOC, or by any other city, local, state, or federal agency (other than the SEC).

 

 

 

 

5 Select applicable Section #

 

15

 

 

Notwithstanding anything set forth in this Section 1 to the contrary, in the event of a Material Severance Default (as defined below), then, without limiting Executive’s rights and remedies with respect to the Material Severance Default, the release of claims by Executive set forth in this Section 1 above shall be void and of no further effect as of the expiration of the cure period described in the definition of Material Severance Default below. “Material Severance Default” means (1) the Company fails to comply with its post-termination obligations to Executive pursuant to Section 6(f)(ii)(B), Section 6(g)(ii)(B) or Section 6(h)(ii)(B) of the Employment Agreement (as applicable) and (B) such failure is not cured by the Company within thirty (30) days following Employee’s written notice to the Company describing such failure in reasonable detail.

 

2. ADEA; Time to Consider; Revocation Right

 

The Executive acknowledges that the Executive has been advised that he has twenty-one (21) 6 days from the date of receipt of this Release to consider all the provisions of this Release. This Release shall be effective and enforceable as of the eighth day after execution and delivery of this Release to Company by the Executive (the “ Effective Date ”), as long as the Executive has not revoked this Release in accordance with the following sentence. At any time within seven (7) days after signing this Release, the Executive may revoke this Release by advising the Company of such revocation, in writing (Attn: Chief Executive Officer) within the seven (7) day period.

 

THE EXECUTIVE FURTHER ACKNOWLEDGES THAT THE EXECUTIVE HAS READ THIS RELEASE CAREFULLY, HAS BEEN ADVISED BY THE COMPANY TO CONSULT AN ATTORNEY, AND FULLY UNDERSTANDS THAT BY SIGNING BELOW THE EXECUTIVE IS GIVING UP CERTAIN RIGHTS WHICH HE MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE RELEASED PARTIES, AS DESCRIBED IN SECTION 1 OF THIS RELEASE AND THE OTHER PROVISIONS HEREOF. THE EXECUTIVE ACKNOWLEDGES THAT HE HAS NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS RELEASE, AND THE EXECUTIVE AGREES TO ALL OF ITS TERMS VOLUNTARILY.

 

3. General Provisions

 

(a) The provisions of this Release will be binding upon the Executive and the Executive’s heirs, executors, administrators, legal representatives and assigns.

 

 

 

 

6 NTD : Substitute 45 days for 21 days, if applicable, in accordance with the ADEA or OWBPA. OWBPA chart also to be attached, if applicable.

 

16

 

 

(b) A failure of any of the Released Parties to insist on strict compliance with any provision of this Release shall not be deemed a waiver of such provision or any other provision hereof.

 

(c) If any provision of this Release is determined to be so broad as to be unenforceable, such provision shall be deemed severable, such that all other provisions of this Release shall remain valid and binding upon the Executive.

 

 

(d) The validity, interpretations, construction and performance of this Release shall be governed by the laws of the State of New York without giving effect to conflict of laws principles.

 

(e) The headings in this Agreement are for convenience of identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Release or any provision hereof.

 

(f) The Executive acknowledges that his obligation to comply with the terms of Maintenance of Confidence and Non-Compete Agreement survives the Termination Date for the applicable periods set forth therein.

 

[Signature page follows]

  

17

 

 

IN WITNESS WHEREOF, the Executive has executed this Release as of the date written below.

 

   
  John G. Sharkey
   
   
  Date

 

 

18

 

Exhibit 10.2

 

EXECUTION VERSION

 

MAINTENANCE OF CONFIDENCE AND NON-COMPETE AGREEMENT

 

This Maintenance of Confidence and Non-Compete Agreement (“Agreement”), made this 24th day of May, 2019 and effective as of June 1, 2019 (the “Effective Date”), is by and between TSR, Inc. (the “Corporation”) and the undersigned (the “Employee”). As used in this Agreement, the “Company” shall mean the Corporation, its subsidiaries (including, without limitation, TSR Consulting Services, Inc.) and their respective successors and assigns.

 

WHEREAS, pursuant to the terms of a separate amended and restated employment agreement between the Employee and the Corporation dated as of May 24, 2019 and effective as of the Effective Date (the “Amended and Restated Employment Agreement”), the Corporation has agreed to continue to employ the Employee, and the Employee has agreed to continue to be employed by the Corporation, on the terms and conditions therein set forth; and

 

WHEREAS, in it is an essential and continuing condition of the Company’s business that certain terms and conditions be agreed to by all individuals who have access to trade secrets and other confidential information.

 

NOW, THEREFORE, in consideration of the Employee’s continued employment by the Corporation pursuant to the terms of the Amended and Restated Employment Agreement and being granted continued access to trade secrets and confidential information, it is agreed as follows:

 

1. The Employee acknowledges that:

 

(a) the business in which the Company is engaged is one in which data processing services, computer software and other technical information, which are of a secret and confidential nature and in which the Company has the sole proprietary interest, has been and will be created and used in furtherance of the business of persons and entities, including Company customers (persons, entities and corporations along with their parents, subsidiaries or affiliates, regardless of location, which during Employee’s employment have been, which are now or which hereafter become, users of the Company’s services) (hereinafter “Customers”), by those individuals employed by the Company (the “Full-Time Employees”) and by programmers and analysts who, as independent contractors, have agreed to be represented by the Company for the purpose of obtaining temporary computer programming and/or analysis positions with third parties (the “Independent Contractors”);

 

(b) the Company has expended substantial time, effort and money in culling from the general public the identity of those individuals and entities who are and will be in need of or be receptive to the computer programming services provided by the Company and of those persons who have the technical ability and availability to serve as Independent Contractors;

 

(c) the relative competitive advantage or disadvantage of the Company in obtaining customers for its services and in obtaining temporary programming positions for its Full-Time Employees and/or Independent Contractors is determined not only by the good will of the Company’s customers, but also by the ability of the Company to develop and maintain lists of Independent Contractors; and

 

(d) the preservation of a continuing relationship between the Company and its Customers (as defined above) and the preservation of a continuing relationship between the Company and those persons which are now or hereafter become Full-Time Employees or Independent Contractors are of critical importance to the continued business success of the Company.

 

 

 

 

2. In view of the foregoing, the Employee agrees that he shall not at any time (whether during or subsequent to his employment by the Company), except as required and as authorized by the Company in the conduct of its business, directly or indirectly, publish, use or disclose, or authorize anyone else to publish, use or disclose:

 

(a) any and all lists of Customers maintained by the Company, or any parts thereof, or the information contained therein, including but not limited to, (i) the identity, location and requirements of the Customers, and (ii) the identity of those representatives or employees of such Customers who have been instrumental in the determination to employ the Company’s services and/or to retain or otherwise utilize the services of the Company’s Full-Time Employees and/or Independent Contractors;

 

(b) the identity, location and potential requirements of any Customers who have been contacted by the Company as of the date the Employee shall cease to be employed by the Company and the identity of those representatives or employees of such Customers or potential Customers;

 

(c) the identity, address, telephone number or other information contained in a resume of any person who was or is a Full-Time Employee or an Independent Contractor of the Company or who shall be so at the time the Employee shall cease to be employed by the Company; and

 

(d) any other trade secrets or other confidential information of the Company or of the Company’s Customers divulged to the Employee in confidence during the course of his employment by the Company,

 

3. The Employee shall not during the term of Employee’s employment with the Company and for a period of nine (9) months thereafter, directly or indirectly on his own behalf or on behalf of others:

 

(a) contact, solicit or do business with any Customer for any purpose relating to providing services that may be competitive with services provided by the Company; or

 

(b) place, offer to place or respond to any requests to place any programmers, analysts, or other IT personnel or consultants with any Customers.

 

4. The Employee shall not during the term of Employee’s employment with the Company and for a period of nine (9) months thereafter, directly or indirectly on his own behalf or on behalf of others:

 

(a) solicit, contact, represent, or offer to represent the Company’s Full-Time Employees and/or Independent Contractors, whether or not such solicitation, contact or offer was initiated, prompted or in any other way developed by the Employee or by the other Full-Time Employee or Independent Contractor; or

 

(b) employ or contract with Full-Time Employees or Independent Contractors of the Company.

 

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5. The Employee shall not during the term of his employment by the Company and for a period of nine (9) months following the termination of his employment with the Company, directly or indirectly on his own behalf or on behalf of others, engage in the business of providing, or be employed by a company that provides, IT staffing services (or other services similar to, or competitive with, the Company’s services) to business enterprises with locations in the New York Metropolitan Area (a “Competitive Business”). As used in this Section 5, “New York Metropolitan Area” shall be deemed to include: (i) New York City, (ii) Long Island, (iii) the Mid and Lower Hudson Valley in the State of New York (i.e., Putnam, Rockland, Westchester, Duchess, Orange, Sullivan and Ulster Counties), (iv) Northern and Central New Jersey (i.e., all of the State of New Jersey other than the counties that are South of the New Jersey counties of Monmouth and Mercer), (v) the Connecticut counties of Fairfield, New Haven, and Litchfield and (vi) the Pennsylvania counties of Pike and Monroe.

 

Notwithstanding anything set forth in this Section 5 to the contrary, if (A) the Amended and Restated Employment Agreement and Employee’s employment thereunder terminates (x) pursuant to Section 6(f) as a result of the Company providing the Non-Renewal Notice (as defined in the Amended and Restated Employment Agreement), (y) pursuant to Section 6(g) of the Employment Agreement as a result of a termination by the Company Without Cause (as defined in the Amended and Restated Employment Agreement) or (z) pursuant to Section 6(h) of the Amended and Restated Employment Agreement as a result of Employee’s resignation from his employment for Good Reason (as defined in the Amended and Restated Employment Agreement) and (B) there is a Material Severance Default (as defined below), then Employee shall automatically be relieved of his obligations set forth in this Section 5 effective as of the expiration of the cure period described in the definition of Material Severance Default below. For the avoidance of doubt, the relief of Employee’s obligations set forth in this Section 5 shall not limit any of Employee’s rights or remedies with respect to the Material Severance Default. “Material Severance Default” means (1) the Company fails to comply with its post-termination obligations to Employee pursuant to Section 6(f)(ii)(B), Section 6(g)(ii)(B) or Section 6(h)(ii)(B) of the Amended and Restated Employment Agreement (as applicable) and (B) such failure is not cured by the Company within thirty (30) days following Employee’s written notice to the Company describing such failure in reasonable detail.

 

6. Upon the date the Employee shall cease to be employed by the Company, he shall deliver to the Company all property of the Company and/or its Customers and all documents, records, notebooks, and similar repositories of or containing trade secrets or other confidential information, including copies thereof, which may then be in the Employee’s possession, whether prepared by the Employee or by others.

 

7. The parties hereto acknowledge that in the event of a breach or a threatened breach by Employee of any of his obligations under this Agreement, the Company will not have an adequate remedy at law. Accordingly, in the event of any such breach or threatened breach by Employee of Sections 1, 2, 3, 4, 5 or 6 hereof, the Company shall be entitled to such equitable and injunctive relief as may be available to restrain the Employee and any business, firm, partnership, individual, corporation or entity participating in such breach or threatened breach. Nothing herein shall prohibit the Company from pursuing any other remedies available at law or in equity for such breach or threatened breach.

 

8. The Employee expressly acknowledges that the restrictions set forth herein are essential to the preservation of the Company’s business and that, in the event of Employee’s termination of employment with the Company, the enforcement thereof will not in any manner preclude Employee from maintaining a standard of living for himself, the members of his family and those dependent upon him of at least the sort and fashion to which he and they have become accustomed.

 

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9. In the event Employee violates any provision of this Agreement as to which there is a specific time period during which Employee is prohibited from taking certain actions or from engaging in certain activities, then such violation shall toll the running of such time period from the date of such violation until such violation shall cease and shall extend the time period set forth in this Agreement so long as Employee remains in violation.

 

10. If any legal action or other proceeding is brought by the Company for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation by Employee in connection with any provision of this Agreement, the Company shall be entitled to recover from the Employee reasonable attorneys’ fees, court costs and all expenses incurred in that action or proceeding, in addition to any other relief, if and only if the Company is the prevailing party in any such legal action or proceeding.

 

11. This Agreement is determinative only of the matters expressly contained herein.

 

12. This Agreement shall inure to the benefit of the Company and its successors, administrators, legal representatives and assigns, including any receiver or trustee in bankruptcy or other insolvency proceeding.

 

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

 

14. Should any provision, or portion of any provision, of this Agreement be invalid for any reason, the validity of the remaining provisions, or of the other portions of the provision in question, shall not be affected thereby.

 

15. The Agreement may be amended only by writing signed by the parties hereto and no waiver of a breach of any provision hereof shall be effective unless in writing signed by the party to be charged. No such waiver shall operate or be construed as a waiver of any subsequent breach of such provision.

 

IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date first above written.

 

EMPLOYEE:   FOR TSR, INC.:
     
/s/ John G. Sharkey   /s/ Christopher Hughes
John G. Sharkey   Christopher J. Hughes
    President and Chief Executive Officer
   
May 24, 2019   May 24, 2019
Date   Date

 

 

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