EXHIBIT 10.1

 

Settlement and Release Agreement

 

This Settlement and Release Agreement (this “Agreement”), dated as of August 30,
2019 (the “Effective Date”), is made and entered into by and between TSR, Inc.
(the “Company”), Zeff Capital, L.P. (“Zeff Capital”), Zeff Holding Company, LLC
(“Zeff Holding”) and Daniel Zeff (together with Zeff Capital and Zeff Holding,
the “Zeff Parties”), QAR Industries, Inc. (“QAR”) and Robert Fitzgerald
(together with QAR, the “QAR Parties”), and Fintech Consulting, LLC (“Fintech”)
and Tajuddin Haslani (together with Fintech, the “Fintech Parties”). Each of the
foregoing is referred to as a “Party” and they are collectively referred to as
the “Parties.” The Zeff Parties, the QAR Parties and the Fintech Parties are
collectively referred to as the “Investor Parties.” The Parties covenant and
agree as follows:

 

Recitals

 

This Agreement is entered into for the purpose of settling and forever resolving
any and all disputes between the Company and the Investor Parties, and any
entities owned, managed, operated, and/or controlled in the past, present, or
future by any of the Investor Parties, including but not limited to disputes
arising out of or relating to the following matters (the “Disputes”):

 

(i) A Complaint for Declaratory and Injunctive Relief for Violations of the
Federal Securities Laws filed on December 21, 2018 by the Company against the
Investor Parties in the United States District Court in the Southern District of
New York, Index No. 18-12124 (the “Federal Securities Action”). The Federal
Securities Action is currently pending.

 

(ii) A Complaint to Compel Annual Meeting of Stockholders filed on August 7,
2019 by Zeff Capital against the Company in the Delaware Court of Chancery, C.A.
No. 2019-0615-JTL (the “Zeff Delaware Action”). The Zeff Delaware Action is
currently pending.

 

(iii) Cross-Claims Relating to Alleged Breaches of Fiduciary Duties and for
Indemnification and Contribution filed on July 26, 2019 by the Company against
the Investor Parties in New York Supreme Court, Queens County, Index No.
715541/2018 (the “Queens County Action”). The Cross-Claims in the Queens County
Action are currently pending.

 

(iv) A Complaint Relating to Alleged Breaches of Fiduciary Duties filed on
November 1, 2018 by Fintech against the Company in the Delaware Court of
Chancery, C.A. No. 2018-0792-JTL (the “Fintech Delaware Action”). The Fintech
Delaware Action has been voluntarily dismissed without prejudice.

 

This Agreement is entered into for the purpose of forever and finally settling
and compromising any and all claims and controversies, including but not limited
to the Disputes, existing between and among the Parties as of the date of this
Agreement.

 

 

 

 

NOW THEREFORE, as consideration of the foregoing, the covenants and agreements
set forth in this Agreement, and other good and valuable consideration the
adequacy and receipt of which are hereby acknowledged, the Parties hereby agree
as follows:

 

Operative Provisions

 

1. Stock Repurchase. Concurrently with the execution of this Agreement, the
Parties have entered into the Share Repurchase Agreement, dated as of the date
hereof, attached as Exhibit A (the “Repurchase Agreement”), providing for the
purchase of the shares of common stock of the Company, par value $0.01 per share
(“Common Stock”), beneficially owned by the Investor Parties as of the date
hereof, by the Company and Christopher Hughes, subject to the terms and
conditions contained therein (the “Repurchase”).

 

2. Settlement Payment. Upon the terms set forth in this Agreement, and subject
to the execution of the Repurchase Agreement by the Parties, the Company hereby
agrees to pay the Investor Parties an amount of $1,543,287.50 at the closing of
the Repurchase for the settlement of the Disputes, dismissal of any and all
claims related thereto and the settlement and release of any and all matters
described herein (the “Settlement Payment”). The Investor Parties shall
determine in their sole discretion how the Settlement Payment is allocated among
the Investor Parties. For the avoidance of doubt, the payment of the Settlement
Payment shall not occur in the event that the Company and Christopher Hughes
fail to consummate the Repurchase for any reason. The Company shall pay the
Settlement Payment by wire transfer of immediately available funds to such
accounts as the Investor Parties shall have specified in writing at least one
business day in advance.

 

3. Actions with Respect to the Company.

 

(a) Governance Changes.

 

(i) The Board of Directors of the Company (the “Board”) shall, immediately
following the execution of this Agreement:

 

(1) amend the Company’s Bylaws (the “Bylaws”), in the form attached
as Exhibit B; and

 

(2) amend and restate the Rights Agreement, dated as of August 29, 2018, between
the Company and Continental Stock Transfer & Trust Company (the “Rights
Agreement”) in the form attached as Exhibit C.

 

(ii) The Investor Parties shall not take any action to call or otherwise cause a
special meeting of stockholders to occur prior to 5:00 p.m., Eastern Time, on
December 30, 2019 unless the Company fails to hold the 2018 Annual Meeting (as
defined herein) as provided in Section 3(b)(i) of this Agreement.

 

(iii) The Company agrees that prior to the earlier of (A) the completion of the
Repurchase and the payment of the Settlement Payment and (B) January 1, 2020,
the Board shall not consist of more than seven (7) directors.

 

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(b) 2018 Annual Meeting.

 

(i) The Company shall hold its next annual meeting following the date hereof on
October 22, 2019 (the “2018 Annual Meeting”). The Company will not adjourn,
delay or postpone the 2018 Annual Meeting.

 

(ii) The Company shall solicit proxies for two alternative Class I director
slates at the 2018 Annual Meeting. One slate shall consist of two directors
nominated by the Company, who shall be Ira Cohen and Raymond Roel (the “TSR
Slate”). The other slate shall consist of two directors nominated by Zeff
Capital, who shall be H. Timothy Erikson and Bradley M. Tirpak (or any other
individuals chosen by Zeff Capital in its sole discretion) (the “Zeff Slate”);
provided that no director nominated by Zeff Capital may join the Board until he
or she has executed and delivered a conditional resignation in the form attached
as Exhibit E. Pursuant to this Agreement, the Company waives any application of
its advance notice bylaw with respect to the Zeff Slate.

 

(iii) If the Repurchase and payment of the Settlement Payment are completed
prior to 5:00 p.m., Eastern Time, on October 21, 2019, then the TSR Slate shall
be the only slate of directors standing for election to the Board and the Zeff
Slate shall be withdrawn from consideration at the 2018 Annual Meeting. In such
event, the Zeff Parties hereby agree to take all actions reasonably necessary to
withdraw the Zeff Slate and to cause the nominees of the Zeff Slate to decline
to stand for election at the 2018 Annual Meeting. In such event, the Zeff
Parties, the QAR Parties and the Fintech Parties shall cause any shares of
Common Stock beneficially owned by them and their controlled affiliates as of
the record date for the 2018 Annual Meeting to be present for quorum purposes at
the 2018 Annual Meeting and to be voted in favor of the TSR Slate at the 2018
Annual Meeting.

 

(iv) If the Repurchase and payment of the Settlement Payment are not completed
prior to 5:00 p.m., Eastern Time, on October 21, 2019, then the Zeff Slate shall
be the only slate of directors standing for election to the Board and the TSR
Slate shall be withdrawn from consideration at the 2018 Annual Meeting. In such
event, TSR hereby agrees to take all actions reasonably necessary to withdraw
the TSR Slate and to cause the nominees of the TSR Slate to decline to stand for
election at the 2018 Annual Meeting. In such event, the Company shall cause its
directors and executive officers to cause any shares of Common Stock
beneficially owned by them as of the record date for the 2018 Annual Meeting to
be present for quorum purposes and to be voted in favor of the Zeff Slate at the
2018 Annual Meeting.

 

(v) The Company agrees to solicit proxies for the 2018 Annual Meeting for the
TSR Slate and the Zeff Slate and otherwise in a manner consistent with the
manner in which it has solicited proxies for its previous annual meetings. The
Company also agrees that it will bear all expenses incurred by it subsequent to
the date hereof related to the 2018 Annual Meeting.

 

(vi) The Parties agree that the election of two Class I directors and the
ratification of the Company’s auditors shall be the only matters considered at
the 2018 Annual Meeting (except for any matters properly brought before the 2018
Annual Meeting by any stockholder of the Company other than the Investor Parties
and controlled affiliates thereof), and the Investor Parties shall not take any
action designed to cause other matters to be brought for consideration at the
2018 Annual Meeting.

 

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(c) Conditional Resignations.

 

(i) Concurrently with the execution of this Agreement, each director of the
Board has executed and delivered, and shall not repudiate, a conditional
resignation, in the form attached as Exhibit D, effective at 5:00 p.m., Eastern
Time on December 30, 2019, if the Repurchase and payment of the Settlement
Payment are not completed by such time and date. For the avoidance of doubt,
such resignations will be void upon the closing of the Repurchase and payment of
the Settlement Payment if they both occur by 5:00 p.m., Eastern Time on December
30, 2019. The Company shall not elect or appoint any director after the date of
this Agreement (other than the members of the Zeff Slate) who does not deliver
such a conditional resignation at the time of such election or appointment.

 

(ii) Each member of the Zeff Slate shall execute and deliver, concurrently with
his or her appointment to the Board, and shall not repudiate, a conditional
resignation, in the form attached as Exhibit E, effective upon the closing of
the Repurchase and payment of the Settlement Payment if such closing occurs by
5:00 p.m., Eastern Time, on December 30, 2019. For the avoidance of doubt, such
resignations will be void after 5:00 p.m., Eastern Time, on December 30, 2019,
if the Repurchase and payment of the Settlement Payment have not occurred by
that time.

 

(d) Consequences of Failure to Consummate the Repurchase.

 

If the Repurchase and payment of the Settlement Payment are not consummated by
5:00 p.m., Eastern Time, on December 30, 2019, the following shall occur:

 

(i) the conditional resignations of the Company’s directors described in Section
3(c)(i) shall become effective immediately and the Zeff Slate will constitute
the only directors then-serving on the Board; and

 

(ii) The Company shall cause all directors and executive officers of the
Company, in their capacity as stockholders, to vote any shares of Common Stock
that they beneficially own in favor of any matters necessary to effectuate the
requirements of this Section 3(d) that shall require the approval of the
stockholders of the Company.

 

(e) Limitation on Remedies. The consequences set forth in Section 3(d) are the
sole remedies available to the Investors for the failure of the Company and/or
Christopher Hughes to comply with any of its or his obligations under the
Repurchase Agreement or Sections 1 or 2 of this Agreement. In no event shall the
Investor Parties be entitled to monetary damages or specific performance with
respect to any such failure of the Company and/or Christopher Hughes to perform
any of its or his obligations under the Repurchase Agreement or Sections 1 or 2
of this Agreement.

 

(f) Operation of the Company. Prior to the Repurchase and payment of the
Settlement Payment, the Company shall, and shall cause its subsidiaries to,
operate its and their respective businesses in the ordinary course of business
consistent with past practice.

 

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4. Standstill.

 

(a) Effective as of the execution of this Agreement, each Investor Party, on
behalf of itself and its controlled affiliates, hereby agrees that it shall not,
and that its controlled affiliates shall not, other than as expressly set forth
herein, directly or indirectly, in any manner (whether through or in concert
with third parties or otherwise): (i) except for the Zeff Slate, nominate or
recommend for nomination any person for election at the 2018 Annual Meeting;
(ii) submit any proposal for consideration at, or bring any other business
before, the 2018 Annual Meeting; (iii) initiate, encourage or participate in any
“withhold” or similar campaign with respect to the 2018 Annual Meeting; or (iv)
publicly or privately encourage or support any other stockholder to take, or
support in the taking of, any of the actions or matters described in this
Section 4(a). Effective as of the execution of this Agreement, Zeff Capital
hereby irrevocably withdraws the Notice of Nominations of Directors and
Stockholder Proposals submitted to the Company on August 1, 2019 and agrees to
inform the applicable examiner at the Securities and Exchange Commission that it
will not be pursuing its proxy statement.

 

(b) From the date of this Agreement until the Expiration Date or until such
earlier time as the restrictions in this Section 4(b) terminate as provided
herein, each Investor Party agrees that, unless consented to by the Company, as
permitted by Section 3(a)(ii) or as otherwise expressly permitted by this
Agreement, neither it nor any of its controlled affiliates will, directly or
indirectly, in any manner (whether through, or in concert with, third parties or
otherwise), other than in support of and in favor of the election of the TSR
Slate or Zeff Slate, as applicable:

 

(i) effect or seek to effect (including, without limitation, by entering into
any discussions, negotiations, agreements or understandings), offer or propose
(whether publicly or privately) to effect, or cause or participate in, or in way
knowingly assist, encourage, support or facilitate any other person to effect or
seek, offer or propose to effect any of the following involving the Company or
any of its subsidiaries or its or their securities or a material amount of
assets or businesses of the Company and its subsidiaries: any tender offer or
exchange offer, merger, acquisition, business combination, reorganization,
restructuring, recapitalization, sale or acquisition of material assets,
liquidation or dissolution (each and collectively, an “Extraordinary
Transaction”), or publicly comment, or privately comment in a manner reasonably
expected not to be held in confidence, on any third party proposal regarding any
Extraordinary Transaction by any third party prior to or following such proposal
becoming public; provided that the Investor Parties shall be permitted to (A)
publicly and privately disclose how they intend to vote or act with respect to
such Extraordinary Transaction; and (B) sell or tender their shares of Common
Stock, and otherwise receive consideration, pursuant to any Extraordinary
Transaction so long as no Investor Party has assisted, encouraged, supported or
facilitated (whether publicly or privately) such Extraordinary Transaction;

 

(ii) enter into, offer or propose to enter into any short sale or purchase, sale
or grant of any securities (or beneficial ownership thereof) of the Company or
any option, warrant, derivative, convertible security or stock appreciation
right (including without limitation, any put or call option or swap transaction)
with respect to or having any measurement relating to any securities (or
beneficial ownership thereof) of the Company;

 

(iii) solicit proxies or written consents of stockholders or conduct any other
type of referendum (binding or non-binding) with respect to, or from the holders
of, the Common Stock, or become a “participant” (as such term is defined in
Instruction 3 to Item 4 of Schedule 14A promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) in or assist any person
not a Party to this Agreement in any “solicitation” of any proxy, consent or
other authority (as such terms are defined under the Exchange Act) to vote any
shares of the Common Stock (other than such encouragement, advice or influence
that is consistent with Company management’s recommendation in connection with
such matter);

 

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(iv) advise or encourage any person with respect to the voting of any securities
of the Company at the 2018 Annual Meeting, any annual meeting held prior to the
Expiration Date or any special meeting of stockholders, or seek to do so (other
than such encouragement, advice or influence that is consistent with the
Company’s recommendation in connection with such matter);

 

(v) take any action challenging the validity or enforceability of this
Agreement;

 

(vi) seek or knowingly encourage any person to submit nominations in furtherance
of a “contested solicitation” for the election or removal of directors with
respect to the Company or seek, encourage or take any other action with respect
to the election or removal of any directors or with respect to the submission of
any stockholder proposal;

 

(vii) form, join in or in any way participate in a partnership, limited
partnership, syndicate or other group, including without limitation, a group
defined under Section 13(d) of the Exchange Act;

 

(viii) other than expressly permitted under this Agreement, seek, alone or in
concert with others, representation on the Board; and

 

(ix) seek or request permission to do any of the foregoing, make any request to
amend, waive or terminate any provision of this Section 4 (including, without
limitation, this Section 4(b)), or make or seek permission to make any public
announcement with respect to any of the foregoing; provided that an Investor
Party may make a confidential request to the Board that the Company amend or
waive the terms of this Agreement in a manner that would not be reasonably
likely to require public disclosure by the Company or such Investor Party. As
used in this Agreement, the term “affiliate” shall have the meaning set forth in
Rule 12b-2 promulgated by the SEC under the Exchange Act, and shall include all
persons or entities that, at any time during the term of this Agreement, become
an affiliate of any person or entity referred to in this Agreement. For the
purposes of this Section 4, the term “Expiration Date” shall mean 5:00 p.m.,
Eastern Time, on December 30, 2019, unless the Repurchase and payment of the
Settlement Payment are consummated prior to such time, in which case it shall
mean the opening of the Company’s advance notice period in respect of its annual
meeting occurring during the calendar year 2027.

 

5. Dismissal of All Pending Actions. Upon the execution of this Agreement, the
Parties will execute and deliver to each other’s counsel stipulations and/or
agreed motions of dismissal dismissing the following pending actions with
prejudice: (i) the Federal Securities Action; (ii) the Zeff Delaware Action; and
(iii) the Cross-Claims in the Queens Action. As soon as practicable after the
Effective Date, but in no event later than two (2) business days after the date
of this Agreement, the Company shall file the stipulations for the Federal
Securities Action and the Cross-Claim in the Queens Action with those respective
courts. As soon as practicable after the Effective Date, but in no event later
than two (2) business days after the date of this Agreement, Zeff shall file the
stipulations for the Zeff Delaware Action with the Delaware Court of Chancery.

 

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6. Release by the Company. As of the Effective Date, the Company, on behalf of
itself and its current and former corporate entities and controlled affiliates,
executors, heirs, devisees, estates, personal representatives, officers,
directors, successors, and assigns (the “Company Releasors”), in consideration
of this Agreement and the Repurchase and for good and valuable consideration,
the adequacy of which is hereby acknowledged, hereby releases and forever
discharges each of the Investor Parties and each of their current and former
corporate entities, controlled affiliates, partnerships, and joint venturers,
and any and all of their present and former principals, representatives, agents,
associates, controlled affiliates, partners, members, shareholders, directors,
officers, managing members, managers, employees, insurers, reinsurers,
lienholders, accountants, advisors, attorneys, estates, heirs, executors,
administrators, predecessors, successors, and/or assigns (the “Investor
Releasees”), from any and all claims, demands, rights, actions, causes of
action, suits, obligations, damages, judgments, contracts, decrees,
controversies, liabilities, rights of contribution and/or indemnification,
costs, expenses or attorneys’ fees, of whatever kind or nature, fixed or
contingent, liquidated or unliquidated, foreseen or unforeseen, accrued or not
accrued, at law or equity, whether individual, class or derivative in nature,
under any statutory, common law, contract, tort or other theory, or intentional
or negligent or other wrongdoing, for compensatory, consequential, punitive or
exemplary damages or any damages or relief whatsoever, from the beginning of the
world to the Effective Date, which the Company Releasors have, had, or can,
shall, or may hereafter have against any of the Investor Releasees by reason of
any matter, cause or thing whatsoever, including, but not limited to the
Disputes, matters, and agreements described in this Agreement (the “Company
Released Matters”); provided, however, that this paragraph 6 does not release
and shall not be construed to release any obligations under this Agreement or
the Repurchase Agreement. The Company Releasors acknowledge that they may, after
executing this Agreement, discover facts other than or different from those
which they know or believe to be true with respect to the Investor Releasees
relating to the Company Released Matters. Notwithstanding any such discovery of
facts, the Company Releasors waive and fully, finally, and forever settle and
release any known or unknown, suspected or unsuspected, contingent or
noncontingent claim that accrued prior to the execution of this Agreement
relating to the Company Released Matters whether or not concealed or hidden,
without regard to the subsequent discovery or existence of such other facts. The
Company Releasors expressly waive and release any and all provisions, rights,
and benefits conferred by §1542 of the California Civil Code, which provides:

 

Section 1542. Certain Claims Not Affected by General Release. A general release
does not extend to claims that the creditor or releasing party does not know or
suspect to exist in his or her favor at the time of executing the release and
that, if known by him or her, would have materially affected his or her
settlement with the debtor or released party;

 

or by any law of any state or territory of the United States, or principle of
common law, which is similar, comparable, or equivalent to Section 1542 of the
California Civil Code.

 

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7. Release by the Investor Parties. As of the Effective Date, the Investor
Parties, on behalf of themselves and their current and former corporate
entities, controlled affiliates, executors, heirs, devisees, estates, personal
representatives, officers, directors, successors, and assigns (the “Investor
Releasors”), in consideration of this Agreement and for good and valuable
consideration, the adequacy of which is hereby acknowledged, hereby release and
forever discharge the Company and its current and former corporate entities,
affiliates, partnerships, and joint venturers, and any and all of its and their
present and former principals, representatives, agents, associates, affiliates,
partners, members, shareholders, directors, officers, managing members,
managers, employees, insurers, reinsurers, lienholders, accountants, advisors,
attorneys, estates, heirs, executors, administrators, predecessors, successors,
and/or assigns (the “Company Releasees”) and each of the other Investor
Releasees, from any and all claims, demands, rights, actions, causes of action,
suits, obligations, damages, judgments, contracts, decrees, controversies,
liabilities, rights of contribution and/or indemnification, costs, expenses or
attorneys’ fees, of whatever kind or nature, fixed or contingent, liquidated or
unliquidated, foreseen or unforeseen, accrued or not accrued, at law or equity,
whether individual, class or derivative in nature, under any statutory, common
law, contract, tort or other theory, or intentional or negligent or other
wrongdoing, for compensatory, consequential, punitive or exemplary damages or
any damages or relief whatsoever, from the beginning of the world to the
Effective Date, which the Investor Releasors have, had, or can, shall, or may
hereafter have against any of the Company Releasees or the other Investor
Releasees by reason of any matter, cause or thing whatsoever, including, but not
limited to the Disputes, matters, and agreements described in this Agreement
(the “Investor Released Matters” and together with the Company Released Matters,
the “Released Matters”); provided, however, that this paragraph 7 does not
release and shall not be construed to release any obligations under this
Agreement or the Repurchase Agreement. The Investor Releasors acknowledge that
they may, after executing this Agreement, discover facts other than or different
from those which they know or believe to be true with respect to the Company
Releasees relating to the Investor Released Matters. Upon execution of a
reciprocal release by Joseph F. Hughes, Regina Dowd, Winifred Hughes, James
Hughes, Patrick Hughes and Lisa Bank (the “Hughes Family Members”) occurring
within seven (7) days of the date hereof, the Hughes Family Members shall become
Company Releasees hereunder; provided, however, that if the Hughes Family
Members do not execute a reciprocal release prior to such date, they shall not
be considered Company Releasees hereunder or beneficiaries of this paragraph 7.
Notwithstanding any such discovery of facts, the Investor Releasors waive and
fully, finally, and forever settle and release any known or unknown, suspected
or unsuspected, contingent or noncontingent claim that accrued prior to the
execution of this Agreement relating to the Investor Released Matters whether or
not concealed or hidden, without regard to the subsequent discovery or existence
of such other facts. The Investor Releasors expressly waive and release any and
all provisions, rights, and benefits conferred by §1542 of the California Civil
Code, which provides:

 

Section 1542. Certain Claims Not Affected by General Release. A general release
does not extend to claims that the creditor or releasing party does not know or
suspect to exist in his or her favor at the time of executing the release and
that, if known by him or her, would have materially affected his or her
settlement with the debtor or released party;

 

or by any law of any state or territory of the United States, or principle of
common law, which is similar, comparable, or equivalent to Section 1542 of the
California Civil Code.

 

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8. Forbearance from Suit. Except as otherwise permitted under this Agreement,
the Repurchase Agreement, or as required by operation of law or court order,
each of the Parties agrees that it will (and will cause its respective Company
Releasors and Investors Releasors, as applicable, to) forever refrain and
forbear from commencing, initiating, filing, instituting, financing, aiding,
prosecuting, encouraging, supporting, inducing, participating and/or otherwise
assisting in any lawsuit, action, and/or other proceeding and/or making any
claim against those persons and/or entities referred to in Sections 6 and 7 of
this Agreement, based upon or arising out of any claim, debt, liability, demand,
agreement, contract, right of contribution and/or indemnification, obligation,
statement, representation, guaranty, cost, expense, promise, action, omission
and/or cause of action that is released and discharged by reason of this
Agreement. Any Party that violates this Section 8 shall be liable for the
reasonable attorneys’ fees and costs incurred by any other Party in enforcing
its rights hereunder.

 

9. Covenants Not to Sue. Each of the Parties warrants, covenants and agrees that
it will not, individually or collectively, bring, maintain, or otherwise
institute or allow others within its control, including without limitation its
controlled affiliates, to bring, maintain, or otherwise institute any action in
any forum anywhere in the world against any Investor Releasee or any Company
Releasee or any other Person that challenges, in each case, to the extent
related to the Released Matters:

 

(a) the validity of legality of this Agreement or the authority of the Parties
to execute it; or

 

(b) the compliance on or prior to the date hereof by the members of the Board
and the officers of the Company with their fiduciary duties or contractual
obligations (if any) owed to the Company or its stockholders.

 

Each of the Parties further agrees that it will not knowingly encourage or
voluntarily assist any third party asserting any of the challenges set forth in
this Section 9, provided, however, that nothing contained herein shall prevent
or restrict any Party from providing truthful testimony or complying with any
applicable law, court order or legal process (including, without limitation,
subpoenas).

 

10. Stockholder Actions.

 

(a) Except as required by law or court order (in which case the Company agrees
to provide prompt notice to any of the Investor Parties that may be impacted by
such action), the Company agrees not to voluntarily assist or provide
cooperation to any stockholders of the Company in connection with any claim made
or action brought by any such stockholders against any of the Investor Parties
relating to the Investor Parties’ activities involving the Company, including
but not limited to in connection with the following lawsuits currently pending
in Queens County Supreme Court and the Federal District Court for the Southern
District of New York: (1) Susan Paskowitz v. James J. Hill, et al., No.
715541/2018 (Queens County) and (2) Paskowitz v. Zeff Capital, L.P. et al.,
1:19-cv-00167-KPF (S.D.N.Y). (the “Paskowitz Actions”).

 

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(b) The Company agrees not to settle the Pakowitz Actions without obtaining a
full release of the Investor Parties by Paskowitz and a dismissal with prejudice
of all claims against the Investor Parties.

 

11. No Admissions. This Agreement is entered into in the interests of avoiding
the expenses and uncertainties of litigation. Neither this Agreement, nor any of
its terms and provisions, shall be deemed an admission or concession of any
fact, legal theory, liability, incapacity, undue influence, fault or wrongdoing.

 

12. Non-Disparagement; Confidentiality.

 

(a) Each Party agrees that he, she or it shall not, directly or indirectly,
publicly criticize, ridicule or make any statement or announcement that
disparages or is derogatory of any other Party (including each such Party’s
officers, directors, employees, agents, attorneys and representatives), in each
case, with respect to the subject matter of the Released Matters or related
conduct prior to the date hereof. Notwithstanding the foregoing, no Party shall
be prohibited from complying with or responding to any subpoena, regulatory
inquiry or other legal process that is not initiated by such Party.

 

(b) Each Party agrees not to disclose any non-public information obtained by
such Party or its representatives in connection with the Disputes without the
prior written consent of the Company and Zeff Capital, except as required by
applicable law, rule, regulation or the requirements of any applicable stock
exchange or listing organization.

 

13. Representations and Warranties of the Company. The Company represents and
warrants to the Investor Parties as follows:

 

(a) the members of the Board other than Christopher Hughes, who abstained,
approved entering into this Agreement, and the Company has the corporate power
and authority to execute this Agreement and to bind it thereto;

 

(b) this Agreement has been duly and validly authorized, executed and delivered
by the Company, and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws generally
affecting the rights of creditors and subject to general equity principles;

 

(c) the execution, delivery and performance of this Agreement by the Company
does not and will not (i) violate or conflict with any law, rule, regulation,
order, judgment or decree applicable to the Company, or (ii) result in any
breach or violation of or constitute a default (or an event which with notice or
lapse of time or both could constitute such a breach, violation or default)
under or pursuant to, or result in the loss of a material benefit under, or give
any right of termination, amendment, acceleration or cancellation of, any
organizational document, agreement, contract, commitment, understanding or
arrangement to which the Company is a party or by which it is bound;

 

10

 

 

(d) as of the date hereof, there is no suit, action investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company,
that could materially impair the ability of the Company to perform its
obligations hereunder or to consummate the transactions contemplated hereby to
which it is a party; and

 

(e) no consent, approval, order authorization, registration or qualification of
or with any governmental or regulatory authority or organization having
jurisdiction over the Company or any third party is required in connection with
the execution, delivery and performance by the Company of this Agreement or the
consummation by the Company of any transactions contemplated hereby to which the
Company is a party.

 

14. Representations and Warranties of Investor Parties. Each Investor Party,
severally and not jointly, represents and warrants to the Company each of the
following:

 

(a) such Investor Party has the corporate, limited liability company or other
power and authority to execute this Agreement and to bind it thereto;

 

(b) this Agreement has been duly authorized, executed and delivered by such
Investor Party, and is a valid and binding obligation of such Investor Party,
enforceable against such Investor Party in accordance with its terms, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws generally
affecting the rights of creditors and subject to general equity principles;

 

(c) the execution, delivery and performance of this Agreement by such Investor
Party does not and will not (i) violate or conflict with any law, rule,
regulation, order, judgment or decree applicable to such Investor Party, or (ii)
result in any breach or violation of or constitute a default (or an event which
with notice or lapse of time or both could constitute such a breach, violation
or default) under or pursuant to, or result in the loss of a material benefit
under, or give any right of termination, amendment, acceleration or cancellation
of, any organizational document, agreement, contract, commitment, understanding
or arrangement to which such Investor Party is a party or by which it is bound;

 

(d) as of the date hereof, there is no suit, action investigation or proceeding
pending or, to the knowledge of such Investor Party, threatened against such
Investor Party, that could materially impair the ability of such Investor Party
to perform its obligations hereunder or to consummate the transactions
contemplated hereby to which it is a party; and

 

(e) no consent, approval, order authorization, registration or qualification of
or with any governmental or regulatory authority or organization having
jurisdiction over such Investor Party is required in connection with the
execution, delivery and performance by such Investor Party of this Agreement or
the consummation by such Investor Party of any transactions contemplated hereby
to which such Investor Party is a party.

 

15. Press Release. Promptly following the execution of this Agreement, the
Company will issue a press release in the form attached as Exhibit F hereto (the
“Agreed Press Release”) announcing this Agreement. The Parties shall not make
any public announcement or public statement that is inconsistent with or
contrary to the statements made in the Agreed Press Release.

 

11

 

 

16. Public Filing.

 

(a) As promptly as practicable following the execution of this Agreement, the
Zeff Parties shall file with the Securities and Exchange Commission an amendment
to their Schedule 13D initially filed on July 26, 2018, as amended prior to the
date hereof, disclosing, among other things, the Zeff Parties’ public and
irrevocable withdrawal and rescission of each proposal and director nomination
that the Zeff Parties have put forth for consideration at the 2018 Annual
Meeting, and prior to such filing shall provide Company and its outside counsel
with a reasonable opportunity to review and comment upon such amendment, and the
Zeff Parties shall consider any comments in good faith.

 

(b) As promptly as practicable following the execution of this Agreement, the
Company shall file with the Securities and Exchange Commission a Form 8-K
disclosing, among other things, this Agreement and the Repurchase Agreement, and
prior to such filing shall provide the Zeff Parties and their outside counsel
with a reasonable opportunity to review and comment upon such filing, and the
Company shall consider any comments in good faith.

 

17. Notices. All notices, demands, requests and other communications
(collectively “Notices”) given or served by any Party in connection with this
Agreement shall be in writing. Notices should be given (a) by mailing the same
by certified or registered mail, postage prepaid, return receipt requested; (b)
by hand delivery with receipt; or (c) by overnight courier with receipt,, as
follows:

 

Notices to the Company shall be sent to:

 

TSR, Inc.

Attn: Christopher Hughes

420 Lexington Avenue, Suite 835

New York, NY 10170

Chris.Hughes@tsrconsulting.com

 

- and -

 

Arnold & Porter Kaye Scholer LLP

Attn: Rory Greiss and Aaron Miner

250 West 55th Street

New York, NY 10019

(212) 836-8000

Rory.Greiss@arnoldporter.com

Aaron.Miner@arnoldporter.com

 

Notices to the Zeff Parties shall be sent to:

 

Zeff Holding Company, LLC

885 Sixth Avenue

New York, New York 10001

Attn: Daniel Zeff

 

12

 

 

- and -

 

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California 94063

Attn: Douglas K. Schnell and David J. Berger

 

Notices to the QAR Parties shall be sent to:

 

QAR Industries,

Att: Mr. Robert Fitzgerald

101 Southeast 25th Avenue

Mineral Wells, TX 76067

rob@qarllc.com

 

- and -

 

O’Hare Parnagian LLP

Att:  Robert A. O’Hare Jr., Esq.

20 Vesey Street, Suite 300

New York, NY  10007

(212) 425-1401

rohare@ohareparnagian.com

 

Notices to the Fintech Parties shall be sent to:

 

Robert J. Basil
The Basil Law Group, P.C.
1270 Broadway, Suite 305
New York, NY 10001
917-512-3066
831-536-1075 (fax)

 

Notices may also be provided to such other address or addresses subsequently
provided by a Party to the other Parties.

 

18. Representation by Counsel. The Parties separately acknowledge that they have
been afforded ample opportunity to review and evaluate this Agreement prior to
executing to it and that they have been represented and assisted by counsel for
that purpose. The Parties acknowledge and agree that they are entering into this
Agreement freely and voluntarily, without duress or coercion of any kind, and as
an informed and well-reasoned exercise of their respective business judgments.
Further, each Party shall be deemed the author of this Agreement for purposes of
the Agreement’s construction, and therefore any ambiguity in this Agreement
shall not be construed against any Party on the grounds that a particular Party
drafted the purportedly ambiguous term(s) or prepared this Agreement.

 

13

 

 

19. Integration/Modification. This Agreement, together with the Repurchase
Agreement, is completely integrated and contains the Parties’ entire agreement
and is intended to be enforceable according to its written terms. There are no
oral agreements, promises, covenants, warranties, or representations to the
contrary or beyond the written terms of this Agreement upon which any Party has
relied in entering into this Agreement other than those expressly contained in
this Agreement and the Repurchase Agreement. This Agreement may be modified only
by a writing signed by all of the Parties.

 

20. Further Cooperation. The Parties covenant and agree that, without expanding
their substantive obligations under this Agreement, they shall do all acts and
execute and obtain all documents, to the full extent necessary or appropriate,
to implement and enforce this Agreement according to its terms.

 

21. Applicable Law. This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of Delaware (without
giving effect to principles of conflicts of laws).  Any legal proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
shall be commenced in the Court of Chancery of the State of Delaware (or, if any
such court declines to accept jurisdiction over a particular matter, any state
or federal court located in Delaware).  Each Party: (i) expressly and
irrevocably consents and submits to the jurisdiction of each state and federal
court located in Delaware (and each appellate court related thereto) in
connection with any such legal proceeding; (ii) agrees that each state and
federal court located in Delaware shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or otherwise), in any
such legal proceeding commenced in any state or federal court located in
Delaware, any claim that such Party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in or by
such court.  EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
CLAIM, ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY (I) CERTIFIES THAT NO
REPRESENTATIVE OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY CLAIM, ACTION, SUIT OR
PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT
AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 21.

 

22. Equitable Relief. except as set forth in Section 3(e), if any Party breaches
any of the provisions of this Agreement, in addition to any other remedy that
the non-breaching Party may have at law or in equity, the breaching Party agrees
that the non-breaching Party would suffer irreparable harm which would not be
adequately compensated by monetary damages as a result of such breach and,
solely upon showing of a likelihood of success of establishing that such
material breach occurred, shall be entitled to a preliminary injunction to
prevent the continuance of such breach, without the requirement of the posting
of a bond.

 

14

 

 

23. Binding Effect. This Agreement shall be binding upon and/or inure to the
benefit of the Parties and their respective heirs, estates, executors,
administrators, personal representatives, successors, corporate parents and
assigns. This Agreement is not intended to and shall not confer any rights or
remedies upon any person other than the Parties and their respective successors
and permitted assigns; provided that to the extent not a Party to this
Agreement, each of the Investor Releasees shall be a third party beneficiary
of Section 6, each of the Company Releasees shall be a third party beneficiary
of Section 7 and each member of the Board and officer of the Company shall be a
third party beneficiary of Section 9.

 

24. Severability. In the event any provision of this Agreement is found to be
void and unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement shall nevertheless be binding upon the Parties with
the same effect as though the void or unenforceable part had been severed and
deleted.

 

25. Counterparts. This Agreement may be executed in separate counterparts, each
of which shall be deemed and considered an original, and all of which, when
fully executed, shall constitute one and the same instrument. A faxed or emailed
counterpart of this Agreement shall be deemed to be an original.

 

[Remainder of page intentionally left blank. Signature page follows.]

 

15

 

 

In Witness Whereof, the Company and the Investor Parties have caused this
Agreement to be duly executed and delivered on their respective behalf as of
August 30, 2019, and the persons signing below represent and warrant that they
have been duly authorized to execute this Agreement on behalf of their
respective entities.

 

  TSR, Inc.       By: /s/Christopher Hughes   Name: Christopher Hughes   Title:
CEO       Zeff Capital, L.P.       By: /s/Daniel Zeff   Name: Daniel Zeff  
Title: President       Daniel Zeff       /s/Daniel Zeff       QAR Industries,
Inc.       By: /s/Robert Fitzgerald   Name:  Robert Fitzgerald   Title:
President       Robert Fitzgerald       /s/Robert Fitzgerald

 

16

 

 

  Fintech Consulting, LLC       By: /s/Tajuddin Haslani   Name:  Tajuddin
Haslani   Title: Manager       Tajuddin Haslani       /s/Tajuddin Haslani

 

17

 

 

Exhibit A

 

Repurchase Agreement

 

SHARE REPURCHASE AGREEMENT

 

This Share Repurchase Agreement (this “Share Repurchase Agreement”) is made and
entered into as of August 30, 2019, by and between TSR, Inc. (the “Company”),
Christopher Hughes (together with the Company, the “Purchasers”), Zeff Capital,
L.P. (“Zeff Capital”), Zeff Holding Company, LLC (“Zeff Holding”) and Daniel
Zeff (together with Zeff Capital and Zeff Holding, the “Zeff Parties”), QAR
Industries, Inc. (“QAR”) and Robert Fitzgerald (together with QAR, the “QAR
Parties”), and Fintech Consulting, LLC (“Fintech”) and Tajuddin Haslani
(together with Fintech, the “Fintech Parties”). The Zeff Parties, the QAR
Parties and the Fintech Parties are collectively referred to herein as the
“Sellers.”

 

1. Purchase and Sale of Shares.

 

(a) Purchase and Sale. Upon the terms set forth in this Agreement and the
Settlement and Release Agreement executed by the Sellers and the Company
concurrently herewith (the “Settlement Agreement”), the Company and Christopher
Hughes hereby agree to purchase from the Sellers, and the Sellers hereby agree
to sell to the Company and Christopher Hughes, the number of shares of common
stock of the Company, par value $0.01 per share, owned by the Sellers (the
“Shares”) shown on Schedule A hereto at the purchase price specified in
paragraph 1(b) hereof.

 

(b) Purchase Price. The aggregate purchase price for the Shares to be purchased
by the Purchasers is $5,956,712.50 in cash or $6.25 per share (the “Share
Payment”).

 

(c) Expiration. This Agreement will automatically terminate if the purchase of
the Shares by the Purchasers has not occurred by 5:00 p.m., Eastern Time, on
December 30, 2019.

 

2. Settlement. Within three business days after the date on which the Purchasers
provide written notice to Zeff Capital that they are prepared to consummate the
purchase of all of the Shares (such notice, the “Closing Notice”), (i) the
Purchasers shall pay the Share Payment for all of the Shares purchased and sold
hereunder by wire transfer of immediately available funds to such accounts as
Sellers shall have specified in writing at least one business day in advance and
(ii) the Sellers shall transfer the number of Shares as specified on Schedule A
to the Company’s or Christopher Hughes’ account, as directed by the Purchasers,
at the Company’s transfer agent. The Sellers agree to take all actions and
execute all documents and instruments required to effect the transfer of such
Shares, including the execution of appropriate instruments of transfer as
reasonably requested by the Purchasers.

 

1

 

 

3. Representations and Warranties of Sellers. Each Seller, severally and not
jointly, represents and warrants to the Purchasers as follows as of the date
hereof and as of the date of the settlement of the transaction pursuant to
Section 2 of this Agreement:

 

(a) Such Seller owns the number of Shares set forth opposite its name on
Schedule A hereto free and clear of all liens, charges, pledges, encumbrances
and rights of third parties. Except for such Shares set forth on Schedule A,
such Seller does not own, beneficially or of record, or have the option or right
to acquire, any other shares of capital stock of the Company. No person or
entity has asserted any claim or commenced or threatened any litigation
concerning such Seller’s title to its Shares. Upon delivery of the Shares, such
Seller will convey to the Company or Christopher Hughes, as applicable, lawful
and valid title to its Shares, free and clear of any liens, pledges,
encumbrances, charges, agreements, restrictions, or claims of any kind, other
than those imposed by applicable securities laws.

 

(b) Such Seller has the corporate or limited liability company power and
authority to enter into this Agreement and the transactions contemplated hereby
have been duly authorized by all necessary corporate action of such Seller.

 

(c) This Agreement constitutes a legal, valid and binding obligation of such
Seller, enforceable against such Seller in accordance with its terms, except as
enforceability may be affected by bankruptcy, insolvency, moratorium or similar
laws or by legal or equitable principles related to or limiting creditors’
rights generally.

 

(d) The execution, delivery and performance of this Agreement by such Seller and
the consummation of the transactions contemplated hereby will not result in a
breach or violation by such Seller of, or constitute a default by such Seller
under, any judgment, decree, order, governmental permit, license, agreement,
indenture, instrument, statute, rule or regulation to which such Seller is a
party or by which Seller is bound, other than any breach, violation or default
that would not materially impair the ability of the Company to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby, and no authorization, approval or consent, except such as have been
obtained, is required in connection with the execution, delivery and performance
by such Seller of this Agreement or the consummation of the transactions
contemplated hereby.

 

(e) As of the date hereof, there is no suit, action investigation or proceeding
pending or, to the knowledge of such Seller, threatened against such Seller,
that could materially impair the ability of such Seller to perform its
obligations hereunder or to consummate the transactions contemplated hereby to
which it is a party.

 

4. Representations and Warranties of Purchasers. Each Purchaser, severally and
not jointly, represents and warrants to the Sellers as follows as of the date
hereof and as of the date of the settlement of the transaction pursuant to
Section 2 of this Agreement:

 

(a) This Agreement constitutes a legal, valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
except as enforceability may be affected by bankruptcy, insolvency, fraudulent
conveyance, moratorium or similar laws or by legal or equitable principles
related to or limiting creditors’ rights generally.

 

(b) Such Purchaser has the corporate or individual power and authority to enter
into this Agreement and the transactions contemplated hereby have been duly
authorized by all necessary corporate action of such Purchaser (including the
approval of each member of the Company’s board of directors other than
Christopher Hughes, who abstained).

 

2

 

 

(c) As of the date hereof, there is no suit, action investigation or proceeding
pending or, to the knowledge of such Purchaser, threatened against such
Purchaser, that could materially impair the ability of such Purchaser to perform
its obligations hereunder or to consummate the transactions contemplated hereby.

 

(d) The execution, delivery and performance of this Agreement by such Purchaser
and the consummation of the transactions contemplated hereby will not result in
a breach or violation by such Purchaser of, or constitute a default by such
Purchaser under, any judgment, decree, order, governmental permit, license,
agreement, indenture, instrument, statute, rule or regulation to which it is a
party or by which it is bound, other than any breach, violation or default that
would not materially impair the ability of the such Purchaser to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby, and no authorization, approval or consent, except such as have been
obtained, is required in connection with the execution, delivery and performance
by such Purchaser of this Agreement or the consummation of the transactions
contemplated hereby.

 

(e) The Company has received advice from an independent, third-party valuation
firm indicating that the price per share in Section 1(b) represents fair value.

 

5. Seller Acknowledgment. Each Seller acknowledges and understands that the
Purchasers may have confidential information that may constitute material
non-public information not known to such Seller that may impact the value of the
Shares. Notwithstanding this, such Seller has deemed it appropriate to sell the
Shares to the Purchasers. Each Seller agrees that the Purchasers shall have no
liability to such Seller whatsoever due to or in connection with the Purchasers’
use or non-disclosure of such information or otherwise as a result of the sale
of the Shares to the Purchasers, and such Seller hereby irrevocably waives any
claim that it might have based on the failure of the Purchasers to disclose any
such information.

 

6. Survival of Representations, Warranties and Covenants. The representations
and warranties contained in Section 3(a) of this Agreement and the Seller
acknowledgement in Section 5 shall survive the consummation of the transactions
contemplated hereby. All other representations, warranties and covenants
contained herein shall not survive the consummation of the transactions
contemplated hereby.

 

7. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns.

 

8. Severability. In the event that any portion of this Agreement may be held to
be invalid or unenforceable for any reason, it is hereby agreed that such
invalidity or unenforceability shall not affect the other portions of this
Agreement and that the remaining covenants, terms and conditions or portions
hereof shall remain in full force and effect, and any court of competent
jurisdiction may so modify the objectionable provision as to make it valid,
reasonable and enforceable.

 

9. Entire Agreement. This Agreement, together with the Settlement Agreement,
contains the complete agreement among the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior agreements and
understandings among the parties hereto with respect to such transactions.

 

3

 

 

10. Governing Law. This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of Delaware (without
giving effect to principles of conflicts of laws).  Any legal proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
shall be commenced in the Court of Chancery of the State of Delaware (or, if any
such court declines to accept jurisdiction over a particular matter, any state
or federal court located in Delaware).  Each Party: (i) expressly and
irrevocably consents and submits to the jurisdiction of each state and federal
court located in Delaware (and each appellate court related thereto) in
connection with any such legal proceeding; (ii) agrees that each state and
federal court located in Delaware shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or otherwise), in any
such legal proceeding commenced in any state or federal court located in
Delaware, any claim that such Party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in or by
such court.  EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
CLAIM, ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY (I) CERTIFIES THAT NO
REPRESENTATIVE OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY CLAIM, ACTION, SUIT OR
PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT
AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.

 

11. Counterparts. This Agreement may be executed by facsimile or electronic
signature and in two or more counterparts, each of which shall be deemed an
original but all of which shall constitute but one instrument.

 

12. Remedies. In the event that the Purchasers do not provide the Closing
Notice, the remedies available to Sellers hereunder shall be limited to those
remedies described in Section 3(e) of the Settlement Agreement being entered
into concurrently herewith.

 

[Remainder of page intentionally left blank. Signature page follows.]

 

4

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

  TSR, Inc.         By:           Name:           Title:           Christopher
Hughes                   Zeff Capital, L.P.         By:           Name:        
  Title:           Daniel Zeff                   QAR Industries, Inc.        
By:                             Name:           Title:           Robert
Fitzgerald          

 

[Signature Page to Share Repurchase Agreement]

 

 

 

 

  Fintech Consulting, LLC         By:                             Name:        
  Title:           Tajuddin Haslani          

 

[Signature Page to Share Repurchase Agreement]

 

 

 

 

Schedule A

 

Seller  Shares Sold      Zeff Capital, L.P.  437,774      QAR Industries, Inc. 
139,200      Fintech Consulting, LLC  376,000      Tajuddin Haslani  100

 

Purchaser  Shares Purchased      TSR, Inc.  633,074      Christopher Hughes 
320,000

 

 

 

 

Exhibit B

 

Bylaw Amendment

 

AMENDMENT NO. 2

TO AMENDED AND RESTATED BY-LAWS

OF TSR, INC.

 

The text of Article II, Section 5 of the Amended and Restated By-laws (as
amended by Amendment No. 1 to the Amended and Restated By-laws) of TSR, Inc.,
which had been previously stated as follows:

 

“Section 5. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called by the president and shall be called by the president or secretary
at the request in writing of a majority of the board of directors. Such request
shall state the purpose or purposes of the proposed meeting.”

 

was amended to read as follows:

 

“Section 5. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called by the president and shall be called by the president or secretary
at the request in writing of a majority of the board of directors, or at the
request in writing of stockholders owning at least forty percent (40%) in amount
of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.”

 

Approved: ______________________

 

 

 

 

Exhibit C

 

Rights Plan Amendment

 

 

 

AMENDED & RESTATED RIGHTS AGREEMENT

 

by and between

 

TSR, INC.

 

and

 

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

 

as Rights Agent

 

Dated as of

 

August 29, 2018

 

and Amended and Restated as of

 

________________, 2019

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page     Section 1. Certain Definitions. 2 Section 2. Appointment of Rights
Agent. 6 Section 3. Issuance of Rights Certificates. 7 Section 4. Form of Rights
Certificates. 9 Section 5. Countersignature and Registration. 10 Section 6.
Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates. 10 Section 7. Exercise of Rights;
Exercise Price; Expiration Date of Rights. 11 Section 8. Cancellation and
Destruction of Rights Certificates. 13 Section 9. Reservation and Availability
of Shares of Preferred Stock. 13 Section 10. Preferred Stock Record Date. 14
Section 11. Adjustment of Exercise Price, Number of Shares or Number of Rights.
14 Section 12. Certification of Adjusted Exercise Price or Number of Shares. 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. 21 Section 14. Fractional Rights and Fractional Shares. 23 Section 15.
Rights of Action. 25 Section 16. Agreement of Right Holders. 25 Section 17.
Rights Certificate Holder Not Deemed a Stockholder. 26 Section 18. Concerning
the Rights Agreement. 27 Section 19. Merger or Consolidation of, or Change in
Name of, the Rights Agent. 27 Section 20. Duties of Rights Agent. 28 Section 21.
Change of Rights Agent. 30 Section 22. Issuance of New Rights Certificates. 31
Section 23. Redemption. 31 Section 24. Notice of Proposed Actions. 32 Section
25. Notices. 33 Section 26. Supplements and Amendments. 34 Section 27. Exchange.
34 Section 28. Successors. 35 Section 29. Benefits of this Rights Agreement. 35
Section 30. Delaware Contract. 35 Section 31. Counterparts. 35 Section 32.
Descriptive Headings. 35 Section 33. Severability. 36 Section 34. Determinations
and Actions By the Board of Directors, Etc. 36

 

Exhibit A Summary of Rights     Exhibit B Form of Rights Certificate     Exhibit
C Form of Certificate of Designations Relating to the Terms of the Class A
Preferred Stock, Series One

 

 

 

 

AMENDED & RESTATED RIGHTS AGREEMENT

 

This AMENDED & RESTATED RIGHTS AGREEMENT (this “Rights Agreement”) is dated as
of August 29, 2018 and amended and restated as of September 3, 2019, by and
between TSR, INC., a Delaware corporation (the “Corporation”), and CONTINENTAL
STOCK TRANSFER & TRUST COMPANY (the “Rights Agent”).

 

W I T N E S S E T H:

 

WHEREAS, on August 29, 2018, the Board of Directors of the Corporation
authorized the issuance of, and declared a dividend payable in, one right (a
“Right”) for each share of Common Stock, $0.01 par value per share, of the
Corporation outstanding as of the close of business on August 29, 2018 (the
“Record Date”), each such Right representing the right to purchase one
one-hundredth of a share of Class A Preferred Stock, Series One of the
Corporation (the “Preferred Stock”) having the rights and preferences set forth
in the Certificate of Designations attached hereto as Exhibit C, authorized by
the Board of Directors on August 29, 2018, upon the terms and subject to the
conditions hereinafter set forth;

 

WHEREAS, the Board of Directors of the Corporation further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined); and

 

WHEREAS, on August 30, 2019, the Corporation entered into a Settlement and
Release Agreement (the “Settlement Agreement”) with Zeff Capital, L.P. (“Zeff
Capital”), Zeff Holding Company, LLC (“Zeff Holding”) and Daniel Zeff (together
with Zeff Capital and Zeff Holding, the “Zeff Parties”), QAR Industries, Inc.
(“QAR”) and Robert Fitzgerald (together with QAR, the “QAR Parties”), and
Fintech Consulting, LLC (“Fintech”) and Tajuddin Haslani (together with Fintech,
the “Fintech Parties” and the Fintech Parties together with the Zeff Parties and
the QAR Parties, the “Investor Parties”) pursuant to which the Corporation
agreed to amend and restate this Rights Agreement to confirm that a Distribution
Date shall not occur as a result of any request by any of the Investor Parties
calling for a special meeting pursuant to Article II, Section 5 of the Amended
and Restated By-Laws of the Corporation (as amended, including by Amendment No.
2 to the Amended and Restated By-Laws, the “By-Laws”) in accordance with the
Settlement Agreement;

 

1

 

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:

 

Section 1. Certain Definitions.

 

For purposes of this Agreement, the following terms shall have the meanings
indicated:

 

(a) “Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person and any other Person with whom such
Person is Acting in Concert, shall be the Beneficial Owner of 5% or more of the
Corporation’s Common Stock then outstanding, but shall not include (i) an Exempt
Person or (ii) any Person who or which, at the time of the first public
announcement of this Rights Agreement, is a Beneficial Owner of 5% or more of
the Corporation’s Common Stock then outstanding (a “Grandfathered Stockholder”);
provided, however, that if a Grandfathered Stockholder becomes, after such time,
the Beneficial Owner of any additional shares of the Corporation’s Common Stock
(regardless of whether, thereafter or as a result thereof, there is an increase,
decrease or no change in the percentage of shares of the Corporation’s Common
Stock then outstanding beneficially owned by such Grandfathered Stockholder)
then such Grandfathered Stockholder shall be deemed to be an Acquiring Person
unless, upon such acquisition of Beneficial Ownership of additional shares of
the Corporation’s Common Stock, such Person is not the Beneficial Owner of 5% or
more of the Corporation’s Common Stock then outstanding; provided, further, that
upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership
below 5%, such Grandfathered Stockholder shall cease to be a Grandfathered
Stockholder and this clause (ii) shall have no further force or effect with
respect to such Person. For the avoidance of doubt, in the event that after the
time of the first public announcement of this Rights Agreement, any agreement,
arrangement or understanding pursuant to which any Grandfathered Stockholder is
deemed to be the Beneficial Owner of shares of the Corporation’s Common Stock
expires, terminates or no longer confers any benefit to or imposes any
obligation on the Grandfathered Stockholder, any direct or indirect replacement,
extension or substitution of such agreement, arrangement or understanding with
respect to the same or different shares of the Corporation’s Common Stock that
confers Beneficial Ownership of shares of the Corporation’s Common Stock shall
be considered the acquisition of Beneficial Ownership of additional shares of
the Corporation’s Common Stock by the Grandfathered Stockholder and render such
Grandfathered Stockholder an Acquiring Person for purposes of this Rights
Agreement unless, upon such acquisition of Beneficial Ownership of additional
shares of the Corporation’s Common Stock, such Person is not the Beneficial
Owner of 5% or more of the Corporation’s Common Stock then outstanding.

 

Notwithstanding the foregoing, no Person shall become an Acquiring Person as the
result of an acquisition of shares of the Corporation’s Common Stock which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 5% (or such other percentage as
would otherwise result in such Person becoming an Acquiring Person) or more of
the Corporation’s Common Stock then outstanding; provided, however, that if a
Person would, but for the provisions of this paragraph, become an Acquiring
Person by reason of an acquisition of shares of the Corporation’s Common Stock
by the Corporation and shall, after such share purchases by the Corporation,
become the Beneficial Owner of any additional shares of the Corporation’s Common
Stock at any time such that the Person is or thereby becomes the Beneficial
Owner of 5% (or such other percentage as would otherwise result in such Person
becoming an Acquiring Person) or more of the Corporation’s Common Stock then
outstanding (other than shares of Common Stock acquired solely as a result of
corporate action of the Corporation not caused, directly or indirectly, by such
Person), then such Person shall be deemed to be an Acquiring Person.

 

2

 

 

Notwithstanding the foregoing paragraphs of this Section 1(a), if the Board of
Directors determines in good faith that a Person who would otherwise be an
Acquiring Person has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of the Corporation’s
Common Stock so that such Person would no longer be an Acquiring Person, then
such Person shall not be deemed to have become an Acquiring Person.
Notwithstanding the foregoing, if a bona fide swaps dealer who would otherwise
be an “Acquiring Person” has become so as a result of its actions in the
ordinary course of its business that the Board of Directors determines, in its
sole discretion, were taken without the intent or effect of evading or assisting
any other Person to evade the purposes and intent of this Rights Agreement, or
otherwise seeking to control or influence the management or policies of the
Corporation, then, and unless and until the Board of Directors shall otherwise
determine, such Person shall not be deemed to be an “Acquiring Person.”

 

(b) A Person shall be deemed to be “Acting in Concert” with another Person if
such Person knowingly acts (whether or not pursuant to an express agreement,
arrangement or understanding) in concert or in parallel with such other Person,
or towards a common goal with such other Person, relating to (i) acquiring,
holding, voting or disposing of voting securities of the Corporation or
(ii) changing or influencing the control of the Corporation or in connection
with or as a participant in any transaction having that purpose or effect, where
(A) each Person is conscious of the other Person’s conduct or intent and this
awareness is an element in their decision-making processes and (B) at least one
additional factor supports a determination by the Board of Directors that such
Persons intended to act in concert or in parallel, which such additional factors
may include, without limitation, exchanging information, attending meetings,
conducting discussions, or making or soliciting invitations to act in concert or
in parallel. A Person who is Acting in Concert with another Person shall also be
deemed to be Acting in Concert with any third Person who is also Acting in
Concert with such other Person.

 

(c) “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as in effect on the date of this Rights Agreement.

 

(d) “Associate” of a Person (as such term is hereinafter defined) shall mean (i)
with respect to a corporation, any officer or director thereof or of any
Subsidiary (as such term is hereinafter defined) thereof, or any Beneficial
Owner (as such term is hereinafter defined) of 10% or more of any class of
equity security thereof, (ii) with respect to an association, joint venture or
other unincorporated organization, any officer or director thereof or of a
Subsidiary thereof or any Beneficial Owner of 10% or more ownership interest
therein, (iii) with respect to a partnership, any general partner thereof or any
limited partner thereof who is, directly or indirectly, the Beneficial Owner of
a 10% or greater ownership interest therein, (iv) with respect to a limited
liability company, any officer, director or manager thereof or of a Subsidiary
thereof or any member thereof who is, directly or indirectly, the Beneficial
Owner of a 10% or greater ownership interest therein, (v) with respect to a
business trust, any officer or trustee thereof or of any Subsidiary thereof,
(vi) with respect to any other trust or an estate, any trustee, executor or
similar fiduciary or any Person who has a 10% or greater interest as a
beneficiary in the income from or principal of such trust or estate, (vii) with
respect to a natural person, any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person, and (viii) any
Affiliate of such Person.

 

3

 

 

(e) A Person shall be deemed the “Beneficial Owner” of, or to “Beneficially
Own,” any securities (and correlative terms shall have correlative meanings):

 

(i) which such Person or any of such Person’s Affiliates or Associates
beneficially owns, directly or indirectly, within the meaning of Rules 13d-3 or
13d-5 promulgated under the Exchange Act, as in effect on the date of this
Agreement;

 

(ii) which such Person or any of such Person’s Affiliates or Associates has
(A) the right or ability to vote, cause to be voted or control or direct the
voting of pursuant to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (x) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (y) is not also
then reportable on a statement on Schedule 13D under the Exchange Act (or any
comparable or successor report) or (B) the right or the obligation to become the
Beneficial Owner (whether such right is exercisable or such obligation is
required to be performed immediately or only after the passage of time, the
occurrence of conditions or the satisfaction of regulatory requirements)
pursuant to any agreement, arrangement or understanding, whether or not in
writing (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), written or otherwise, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise, through conversion of a security, pursuant to the power to revoke a
trust, discretionary account or similar arrangement, pursuant to the power to
terminate a repurchase or similar so-called “stock-borrowing” agreement or
arrangement, or pursuant to the automatic termination of a trust, discretionary
account or similar arrangement; provided, however, that a Person shall not be
deemed to be the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the
Exchange Act until such tendered securities are accepted for purchase or
exchange; or

 

(iii) which are beneficially owned (within the meaning of the preceding
subsections of this Section 1(e), directly or indirectly, by any other Person
with which such Person or any of such Person’s Affiliates or Associates (A) has
any agreement, arrangement or understanding, whether or not in writing, for the
purpose of acquiring, holding, voting or disposing of any securities of the
Corporation or cooperating in obtaining, changing or influencing the control of
the Corporation or (B) is Acting in Concert; or

 

(iv) which are the subject of, or the reference securities for, or that
underlie, any Derivative Position of such Person or any of such Person’s
Affiliates or Associates or any other Person with whom such Person is Acting in
Concert, with the number of shares of Common Stock deemed beneficially owned in
respect of a Derivative Position being the notional or other number of shares of
Common Stock in respect of such Derivative Position (without regard to any short
or similar position) that is specified in (A) one or more filings with the
Securities and Exchange Commission by such Person or any of such Person’s
Affiliates or Associates or any other Person with whom such Person is Acting in
Concert or (B) the documentation evidencing such Derivative Position as the
basis upon which the value or settlement amount of such Derivative Position, or
the opportunity of the holder of such Derivative Position to profit or share in
any profit, is to be calculated in whole or in part (whichever of (A) or (B) is
greater), or if no such number of shares of Common Stock is specified in such
filings or documentation (or such documentation is not available to the Board of
Directors ), as determined by the Board of Directors in its reasonable
discretion.

 

4

 

 

Notwithstanding anything in this paragraph (e) to the contrary, a Person engaged
in the business of underwriting securities shall not be deemed the “Beneficial
Owner” of, or to “Beneficially Own,” any securities acquired in good faith in a
firm commitment underwriting, until the expiration of forty days after the date
of such acquisition.

 

(f) “Book-Entry” shall mean an uncertificated book-entry for the Corporation's
Common Stock.

 

(g) “Business Day” shall mean any day other than a Saturday, Sunday, or day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.

 

(h) “Close of Business” on any given date shall mean 5:00 p.m., New York City
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 p.m., New York City time, on the next succeeding Business
Day.

 

(i) “Common Stock,” when used with reference to the Corporation, shall mean the
common stock, $0.01 par value, of the Corporation. “Common Stock,” when used
with reference to any Person other than the Corporation which shall be organized
in corporate form, shall mean the capital stock or other equity security with
the greatest voting power of such Person. “Common Stock,” when used with
reference to any Person other than the Corporation which shall not be organized
in corporate form, shall mean units of beneficial interest which shall represent
the right to participate in profits, losses, deductions and credits of such
Person and which shall be entitled to exercise the greatest voting power of such
Person.

 

(j) “Derivative Position” shall mean any option, warrant, convertible security,
stock appreciation right, or other security, contract right or derivative
position or similar right (including any “swap” transaction with respect to any
security, other than a broad based market basket or index), whether or not
presently exercisable, that has an exercise or conversion privilege or a
settlement payment or mechanism at a price related to the value of the Common
Stock or a value determined in whole or in part with reference to, or derived in
whole or in part from, the value of the Common Stock and that increases in value
as the market price or value of the Common Stock increases or that provides an
opportunity, directly or indirectly, to profit or share in any profit derived
from any increase in the value of the Common Stock, in each case regardless of
whether (i) it conveys any voting rights in such Common Stock to any Person,
(ii) it is required to be, or capable of being, settled through delivery of
Common Stock or (iii) any Person (including the holder of such Derivative
Position) may have entered into other transactions that hedge its economic
effect.

 

(k) “Distribution Date” shall have the meaning set forth in Section 3(b) hereof.

 

(l) “Exchange Act” shall have the meaning set forth in Section 1(b) hereof.

 

(m) “Exempt Person” shall mean (i) the Corporation, (ii) any Subsidiary of the
Corporation, or (iii) any employee benefit plan or employee stock plan of the
Corporation or any Subsidiary of the Corporation, or any trust or other entity
organized, appointed, established or holding Common Stock for or pursuant to the
terms of any such plan.

 

5

 

 

(n) “Exercise Price” shall have the meaning set forth in Section 4 and Section
7(b) hereof.

 

(o) “Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

 

(p) “Fair Market Value” of any property shall mean the fair market value of such
property as determined in accordance with Section 11(b) hereof.

 

(q) “Person” shall mean any individual, firm, corporation or other entity.

 

(r) “Principal Party” shall have the meaning set forth in Section 13(b) hereof.

 

(s) “Record Date” shall have the meaning set forth in the first Recital hereof.

 

(t) “Redemption Price” shall have the meaning set forth in Section 23(a) hereof.

 

(u) “Rights Certificate” shall have the meaning set forth in Section 3(d)
hereof.

 

(v) “Stock Acquisition Date” shall mean the first date on which there shall be a
public announcement by the Corporation or an Acquiring Person that an Acquiring
Person has become such (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) or such earlier date as a majority of the Board of Directors shall become
aware of the existence of an Acquiring Person.

 

(w) “Subsidiary” of a Person shall mean any corporation or other entity of which
such Person Beneficially Owns at least 50% of the outstanding voting securities.

 

(x) “Summary of Rights” shall have the meaning set forth in Section 3(a) hereof.

 

(y) “Trading Day” shall have the meaning set forth in Section 11(b) hereof.

 

(z) “Transfer Tax” shall mean any tax or charge, including any documentary stamp
tax, imposed or collected by any governmental or regulatory authority, in
respect of any transfer of any security, instrument or right, including Rights,
shares of Common Stock and shares of Preferred Stock.

 

Any determination required to be made by the Board of Directors of the
Corporation for purposes of applying the definitions contained in this Section 1
shall be made by the Board of Directors in its good faith judgment, and such
determination shall be binding on the Rights Agent and the holders of the
Rights.

 

Section 2. Appointment of Rights Agent.

 

The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of the Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable, upon ten (10) days’ prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such co-rights agent. In the event
the Corporation appoints one or more Co-Rights Agents, the respective duties of
the Rights Agent and any Co-Rights Agent shall be as the Corporation shall
reasonably determine, provided that such duties and determination are consistent
with the terms and provisions of this Agreement and that contemporaneously with
such appointment, if any, the Corporation shall notify the Rights Agent in
writing thereof.

 

6

 

 

Section 3. Issuance of Rights Certificates.

 

(a) On the Record Date (or as soon as practicable thereafter), the Corporation
or the Rights Agent shall send a copy of a Summary of Rights, in substantially
the form attached hereto as Exhibit A (the “Summary of Rights”), by first class
mail, postage prepaid, to each record holder of the Common Stock as of the Close
of Business on the Record Date, at the address of such holder shown on the
records of the Corporation.

 

(b) Until the Close of Business on the day which is the earlier of (i) the tenth
day after the Stock Acquisition Date or such earlier or later date (not beyond
the thirtieth day after the Stock Acquisition Date) as the Board of Directors
may from time to time fix by resolution adopted prior to the Distribution Date
that otherwise would have occurred or (ii) the tenth business day (or such later
date as may be determined by action of the Board of Directors prior to such time
as any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than an Exempt Person) of, or the first public announcement of
the intent of any Person (other than an Exempt Person) to commence, a tender or
exchange offer upon the successful consummation of which such Person, together
with its Affiliates and Associates and Persons with whom such Person is Acting
in Concert, would be the Beneficial Owner of 5% or more of the then-outstanding
shares of the Corporation’s Common Stock (irrespective of whether any shares are
actually purchased pursuant to any such offer) (the earlier of such dates being
herein referred to as the “Distribution Date”); provided, however, that if such
tender or exchange offer is terminated prior to the occurrence of a Distribution
Date, then no Distribution Date shall occur as a result of such tender or
exchange offer, (x) the Rights shall be evidenced by the Book-Entries, or
certificates for, Common Stock registered in the name of the holders of Common
Stock (together with, in the case of Book-Entries representing, or the
certificates for, Common Stock outstanding as of the Record Date, the Summary of
Rights) and not by separate Book-Entries or Rights Certificates and the record
holders of the Common Stock represented by such Book-Entries or certificates
shall be the record holders of the Rights represented thereby and (y) each Right
shall be transferable only simultaneously and together with the transfer of
shares of Common Stock (subject to adjustment as hereinafter provided).
Notwithstanding the foregoing, a Distribution Date shall not occur solely as a
result of any request by any of the Investor Parties calling for a special
meeting pursuant to the By-Laws in accordance with the Settlement Agreement.
Until the Distribution Date (or, if earlier, the Expiration Date), transfer on
the Corporation’s direct registration system of any Common Stock represented by
a Book-Entry or the surrender for transfer of any certificate for Common Stock
shall constitute the surrender for transfer of the Right or Rights associated
with the Common Stock evidenced thereby, whether or not accompanied by a copy of
the Summary of Rights.

 

7

 

 

(c) Rights shall be issued in respect of all shares of Common Stock that become
outstanding after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date and, in certain circumstances provided in Section 22
hereof, may be issued in respect of shares of Common Stock that become
outstanding after the Distribution Date. Certificates for Common Stock
(including, without limitation, certificates issued upon original issuance,
dispensation from the Corporation’s treasury or transfer or exchange of Common
Stock) after the Record Date but prior to the earliest of the Distribution Date
or the Expiration Date (or, in certain circumstances as provided in Section 22
hereof, after the Distribution Date) shall have impressed, printed, written or
stamped thereon or otherwise affixed thereto the following legend:

 

This certificate also evidences and entitles the holder hereof to the same
number of Rights (subject to adjustment) as the number of shares of Common Stock
represented by this certificate, such Rights being on the terms provided under
the Rights Agreement between TSR, Inc. (the “Corporation”) and Continental Stock
Transfer & Trust Company (the “Rights Agent”), dated as of August 29, 2018, as
it may be amended from time to time (the “Rights Agreement”), the terms of which
are incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Corporation. Under certain circumstances, as
set forth in the Rights Agreement, such Rights shall be evidenced by separate
certificates and shall no longer be evidenced by this certificate. The
Corporation shall mail to the registered holder of this certificate a copy of
the Rights Agreement without charge within five days after receipt of a written
request therefor. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN SECTION 11(a)(ii)
OF THE RIGHTS AGREEMENT, RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES OR PERSONS WITH WHOM SUCH PERSONS ARE
ACTING IN CONCERT (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE
TRANSFERRED TO ANY PERSON.

 

(d) As soon as practicable after the Distribution Date, the Corporation will
prepare and execute, the Rights Agent will countersign, and the Corporation will
send or cause to be sent (and the Rights Agent will, if requested, send), by
first class mail, postage prepaid, to each record holder of the Common Stock as
of the Close of Business on the Distribution Date, as shown by the records of
the Corporation, at the address of such holder shown on such records, a
certificate in the form provided by Section 4 hereof (a “Rights Certificate”),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held; provided, however, that the Rights may instead be
recorded in Book-Entry or other uncertificated form, in which case such
Book-Entries or other evidence of ownership shall be deemed to be Rights
Certificates for all purposes of this Rights Agreement ; provided, further, that
all procedures relating to actions to be taken or information to be provided
with respect to such Rights recorded in Book-Entry or other uncertificated
forms, and all requirements with respect to the form of any Rights Certificate
set forth in this Rights Agreement, may be modified as necessary or appropriate
to reflect Book-Entry or other uncertificated ownership. As of and after the
Distribution Date, the Rights shall be evidenced solely by such Rights
Certificates and may be transferred by the transfer of the Rights Certificate as
permitted hereby, separately and apart from any transfer of one or more shares
of Common Stock.

 

8

 

 

(e) In addition, in connection with the issuance or sale of shares of Common
Stock following the Distribution Date and prior to the Expiration Date, the
Corporation (i) shall, with respect to shares of Common Stock so issued or sold
(x) pursuant to the exercise of stock options or under any employee plan or
arrangement or (y) upon the exercise, conversion or exchange of other securities
issued by the Corporation prior to the Distribution Date and (ii) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Corporation, issue Rights certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided that no such Rights
Certificate shall be issued if, and to the extent that, (i) the Corporation
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Corporation or the Person to whom
such Rights Certificate would be issued or (ii) appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.

 

Section 4. Form of Rights Certificates.

 

(a) The Rights Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof), when, as and if issued, shall
be substantially in the form set forth in Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as may be required to comply with any law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Common Stock or the Rights may from time to time
be listed or as the Corporation may deem appropriate to conform to usage or
otherwise and as are not inconsistent with the provisions of this Rights
Agreement (but which do not affect the rights, duties, liabilities or
responsibilities of the Rights Agent). Subject to the provisions of Section 22
hereof, Rights Certificates evidencing Rights whenever issued, (i) shall be
dated as of the date of issuance of the Rights they represent and (ii) subject
to adjustment from time to time as provided herein, on their face shall entitle
the holders thereof to purchase such number of shares (including fractional
shares which are integral multiples of one one-hundredth of a share) of
Preferred Stock as shall be set forth therein at the price payable upon exercise
of a Right provided by Section 7(b) hereof as the same may from time to time be
adjusted as provided herein (the “Exercise Price”).

 

(b) Notwithstanding any other provision of this Rights Agreement, any Rights
Certificate that represents Rights Beneficially Owned by an Acquiring Person or
any Affiliate or Associate thereof or any other Person whose Rights shall become
void pursuant to Section 11(a)(ii) shall have impressed on, printed on, written
on or otherwise affixed to it (if the Corporation or the Rights Agent has
knowledge that such Person is an Acquiring Person or an Associate or Affiliate
or a nominee of any of the foregoing) the following legend:

 

The Beneficial Owner of the Rights represented by this Rights Certificate is an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person.
Accordingly, this Rights Certificate and the Rights represented hereby shall
become void in the circumstances specified in Section 11(a)(ii) of the Rights
Agreement.

 

9

 

 

Section 5. Countersignature and Registration.

 

(a) Each Rights Certificate shall be executed on behalf of the Corporation by
its Chairman of the Board, Chef Executive Officer, President or any Vice
President, either manually or by facsimile signature, and have affixed thereto
the Corporation’s seal or a facsimile thereof which shall be attested to by the
Secretary or an Assistant Secretary of the Corporation, either manually or by
facsimile signature. Each Rights Certificate shall be countersigned by the
Rights Agent either manually or by facsimile signature and shall not be valid
for any purpose unless so countersigned. In case any officer of the Corporation
who shall have signed any Rights Certificate shall cease to be such officer of
the Corporation before countersignature by the Rights Agent and issuance and
delivery of the certificate by the Corporation, such Rights Certificate,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
with the same force and effect as though the person who signed such Rights
Certificate had not ceased to be such officer of the Corporation. Any Rights
Certificate may be signed on behalf of the Corporation by any person who, on the
date of the execution of such Rights Certificate, shall be a proper officer of
the Corporation to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.

 

(b) Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office or one or more offices designated as the
appropriate place for the surrender of Rights Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates and any Rights
Certificates that have a legend printed thereon pursuant to Section 4(b).

 

Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.

 

(a) Subject to the provisions of Section 11(a)(ii), Section 7(e) and Section
14(b) hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the Expiration Date, any Rights
Certificate (other than a Rights Certificate representing Rights that have
become void pursuant to Section 11(a)(ii) or that have been exchanged pursuant
to Section 27) may be (i) transferred or (ii) split up, combined or exchanged
for one or more other Rights Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock as the Rights Certificate or
Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer any Rights Certificate shall surrender
the Rights Certificate at the office of the Rights Agent designated for the
surrender of Rights Certificates with the form of certificate and assignment on
the reverse side thereof duly endorsed (or, enclosed with such Rights
Certificate, a written instrument of transfer in a form satisfactory to the
Corporation and the Rights Agent), duly executed by the registered holder
thereof or his attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or exchange any
Rights Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate to be split up, combined or
exchanged at the office of the Rights Agent. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Corporation or the
Rights Agent may require payment from the holders of the Rights Certificates of
a sum sufficient to cover any Transfer Tax that may be imposed in connection
with any transfer, split up, combination or exchange of any Rights Certificates.
The Rights Agent shall not have any duty or obligation to take any action under
any section of this Rights Agreement that requires payment of taxes and/or
charges unless and until it is satisfied that all such payments have been made.

 

10

 

 

(b) Subject to the provisions of Section 11(a)(ii), Section 7(e) and Section
14(b) hereof, upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate and the identity of the Beneficial Owner (or former
Beneficial Owner) thereof including a signature guarantee and such other
documentation as the Rights Agent may reasonably request), and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them
and, if requested by the Corporation, reimbursement to the Corporation and the
Rights Agent of all reasonable expenses incidental thereto, or upon surrender to
the Rights Agent and cancellation of the Rights Certificate if mutilated, the
Corporation shall issue and deliver a new Rights Certificate of like tenor to
the Rights Agent for delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.

 

Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.

 

(a) The Rights shall not be exercisable until, and shall become exercisable on,
the Distribution Date (unless otherwise provided herein, including, without
limitation, the restrictions on exercisability set forth in Section 11(a)(ii)
and Section 23(a) hereof). Except as otherwise provided herein, the Rights may
be exercised, in whole or in part, at any time commencing with the Distribution
Date upon surrender of the Rights Certificate, with the form of election to
purchase and certificate on the reverse side thereof duly executed (with
signatures duly guaranteed), to the Rights Agent at the principal office of the
Rights Agent in New York, New York together with payment of the Exercise Price
for each Right exercised, subject to adjustment as hereinafter provided, at or
prior to the Close of Business on the earlier of (i) August 29, 2021 (or if the
Distribution Date shall have occurred before August 29, 2021, at the Close of
Business on the 90th day following the Distribution Date) or (ii) the date on
which the Rights are redeemed as provided in Section 23 hereof (such earlier
date being herein referred to as the “Expiration Date”).

 

(b) The Exercise Price shall initially be $24.78 for each one one-hundredth
(1/100th) of a share of Preferred Stock issued pursuant to the exercise of a
Right. The Exercise Price and the number of shares of Preferred Stock or other
securities to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Section 11 and Section 13 hereof.
The Exercise Price shall be payable in lawful money of the United States of
America, in accordance with paragraph (c) below.

 

11

 

 

(c) Except as otherwise provided herein, upon receipt of a Rights Certificate
representing exercisable Rights with the form of election to purchase duly
executed, accompanied by payment by certified check, cashier’s check, bank draft
or money order payable to the Corporation or the Rights Agent of the Exercise
Price for the shares to be purchased and an amount equal to any applicable
Transfer Tax required to be paid by the holder of the Rights Certificate in
accordance with Section 9(e) hereof, the Rights Agent shall thereupon promptly
(i)(A) requisition from any registrar or transfer agent (as may be appropriate)
of the Preferred Stock of the Corporation one or more certificates representing
the number of shares of Preferred Stock to be so purchased, and the Corporation
hereby authorizes and directs such registrar or transfer agent (as may be
appropriate) to comply with all such requests or (B) requisition from any
depositary agent for the Preferred Stock of the Corporation depositary receipts
representing such number of shares of Preferred Stock to be so purchased (in
which case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent),
and the Corporation hereby directs any such depositary agent to comply with such
request, (ii) as provided in Section 14(b), at the election of the Corporation,
cause depositary receipts to be issued in lieu of fractional shares of Preferred
Stock, (iii) if the election provided for in the immediately preceding clause
(ii) has not been made, requisition from the Corporation the amount of cash to
be paid in lieu of the issuance of fractional shares in accordance with Section
14(b) hereof, (iv) after receipt of such Preferred Stock certificates and, if
applicable, depositary receipts, cause the same to be delivered to or upon the
order of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder and (v) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Rights Certificate; provided, however, that in the case of a
purchase of securities, other than Preferred Stock, pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding in such case to that referred to in the foregoing clauses (i)
through (v) of this Section 7(c). Notwithstanding the foregoing provisions of
this Section 7(c), the Corporation may suspend the issuance of shares of
Preferred Stock upon exercise of a Right for a reasonable period, not in excess
of 120 days, during which the Corporation seeks to register under the Securities
Act of 1933, as amended (the “Act”), and any applicable securities law of any
other jurisdiction, the shares of Preferred Stock to be issued pursuant to the
Rights; provided, however, that nothing contained in this Section 7(c) shall
relieve the Corporation of its obligations under Section 9(c) hereof.

 

(d) In case the registered holder of any Rights Certificate shall exercise less
than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Rights Certificate or his
assignee, subject to the provisions of Section 14(b) hereof.

 

(e) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Corporation shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate following the form of election to purchase
set forth on the reverse side of the Rights Certificate surrendered for such
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof or a Person referred to in clause (y) or (z) of Section 11(a)(ii) and
such other information as the Corporation shall reasonably request.

 

12

 

 

Section 8. Cancellation and Destruction of Rights Certificates.

 

All Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Corporation or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Corporation
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall cancel and retire, any Rights Certificate purchased or
acquired by the Corporation otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Corporation, or
shall, at the written request of the Corporation, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Corporation.

 

Section 9. Reservation and Availability of Shares of Preferred Stock.

 

(a) The Corporation covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
out of authorized and issued shares of Preferred Stock held in its treasury,
such number of shares of Preferred Stock as will from time to time be sufficient
to permit the exercise in full of all outstanding Rights. The Corporation shall
take such action as may be required for it to comply with the foregoing sentence
of this Section 9(a).

 

(b) The Corporation shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares of Preferred Stock issued or
reserved for issuance in accordance with this Rights Agreement to be listed,
upon official notice of issuance, on the NASDAQ Capital Market or successor
thereto or, if the principal market for the Common Stock is not the NASDAQ
Capital Market, to be eligible for quotation on any other national securities
exchange or other comparable quotation system.

 

(c) The Corporation covenants and agrees that it will take all such actions as
may be necessary to insure that all shares of Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates, for such
shares (subject to payment of the Exercise Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable shares.

 

(d) The Corporation shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for Preferred Stock, or (B) the Expiration
Date. The Corporation may temporarily suspend, for a period of time not to
exceed 120 days, the issuance of shares of Preferred Stock upon exercise of a
Right in order to prepare and file a registration statement under the Act and
permit it to become effective. The Corporation will also take such action as may
be appropriate under, or to ensure compliance with, the securities or “blue sky”
laws of the various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
under the Act (if required) shall have been declared effective.

 

13

 

 

(e) The Corporation covenants and agrees that it will pay when due and payable
any and all federal and state Transfer Taxes which may be payable in respect of
the issuance or delivery of the Rights Certificates or of any shares of
Preferred Stock issued or delivered upon the exercise of Rights. The Corporation
shall not, however, be required to pay any Transfer Tax which may be payable in
respect of any transfer or delivery of a Rights Certificate to a Person other
than, or the issuance or delivery of certificates or depositary receipts for
Preferred Stock upon exercise of Rights in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise, and the Corporation shall not be required to or issue or deliver a
Rights Certificate or certificate or depositary receipt for Preferred Stock to a
Person other than such registered holder until any such Transfer Tax shall have
been paid (any such Transfer Tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Corporation’s satisfaction that no such Transfer Tax is due.

 

Section 10. Preferred Stock Record Date.

 

Each Person in whose name any certificate for shares of Preferred Stock is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Stock represented thereby on, and
such certificate shall be dated as of, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price (and any applicable Transfer Taxes) was made; provided, however,
that, if the date of such surrender and payment is a date upon which the
Preferred Stock transfer books of the Corporation are closed, such Person shall
be deemed to have become the record holder of such shares on, and such
certificate shall be dated as of, the next succeeding Business Day on which the
Preferred Stock transfer books of the Corporation are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate, as
such, shall not be entitled to any rights of a stockholder of the Corporation
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Corporation, except as provided
herein.

 

Section 11. Adjustment of Exercise Price, Number of Shares or Number of Rights.

 

The Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.

 

(a) (i) In the event the Corporation shall at any time after the date of this
Rights Agreement (i) declare a dividend on the shares of Preferred Stock payable
in shares of Preferred Stock, (ii) subdivide the outstanding shares of Preferred
Stock, (iii) combine the outstanding shares of Preferred Stock into a smaller
number of shares of Preferred Stock or (iv) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Exercise Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date, the holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Corporation
issuable upon exercise of one Right.

 

14

 

 

(ii) Subject to the second paragraph of this Section 11(a)(ii) and to
Section 27, from and after the Stock Acquisition Date, each holder of a Right
shall have a right to receive, upon exercise of each Right, in accordance with
the terms of this Rights Agreement and in lieu of shares of Preferred Stock,
such number of shares of the Corporation’s Common Stock as shall equal the
result obtained by dividing the current Exercise Price by 50% of the then
Current Per Share Market Price of the Corporation’s Common Stock (determined
pursuant to Section 11(d)) on the Stock Acquisition Date.

 

From and after the Stock Acquisition Date, any Rights that are or were acquired
or beneficially owned by (1) an Acquiring Person (or any Associate or Affiliate
of such Acquiring Person or any other Person with whom such Person is Acting in
Concert), (2) a transferee of any Acquiring Person (or of any such Associate or
Affiliate or any other Person with whom such Person is Acting in Concert) who
becomes such a transferee after the Acquiring Person becomes an Acquiring Person
or (3) a transferee of an Acquiring Person (or of any such Associate or
Affiliate or any other Person with whom such Person is Acting in Concert) who
becomes such a transferee prior to or concurrently with the Acquiring Person
becoming an Acquiring Person and who receives such Rights (I) with actual
knowledge that the transferor is or was an Acquiring Person or (II) pursuant to
either (x) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate or any other Person with whom such
Person is Acting in Concert) to holders of equity interests in such Acquiring
Person (or any such Associate or Affiliate or any other Person with whom such
Person is Acting in Concert) or to any Person with whom the Acquiring Person (or
such Associate or Affiliate or any other Person with whom such Person is Acting
in Concert) has any continuing agreement, arrangement, understanding or
relationship (whether or not in writing) regarding the transferred Rights or
(y) a transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding (whether or not in writing) which has as a primary
purpose or effect of the avoidance of this Section 11(a)(ii), (each such Person
described in (1)-(3) above, an “Excluded Person”) shall, in each such case, be
null and void, and any holder of such Rights (whether or not such holder is an
Acquiring Person or an Associate or Affiliate of an Acquiring Person or any
other Person with whom such Person is Acting in Concert) shall thereafter have
no right to exercise such Rights under any provision of this Rights Agreement.
No Rights Certificates shall be issued pursuant to Section 3, Section 6, Section
7(d) or Section 11 or otherwise hereof that represents Rights that are or have
become null and void pursuant to the provisions of this paragraph and any Rights
Certificate delivered to the Rights Agent that represents Rights that are or
have become null and void pursuant to the provisions of this paragraph shall,
upon receipt of written notice directing it to do so, be canceled by the Rights
Agent.

 

15

 

 

(iii) If there are not sufficient authorized but unissued shares of the
Corporation’s Common Stock to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), or should the Board of Directors so elect,
the Corporation shall with respect to such deficiency, to the extent permitted
by applicable law and any material agreements to which the Corporation is a
party, (i) determine the excess (the “Spread”) of (A) the value of the shares of
the Corporation’s Common Stock issuable upon the exercise of a Right as provided
in Section 11(a)(ii) (the “Current Value”) over (B) the Exercise Price, and
(ii) with respect to each Right, make adequate provision to substitute for such
shares of Common Stock, upon payment of the applicable Exercise Price, any one
or more of the following having an aggregate value determined by the Board of
Directors to be equal to the Current Value: (A) cash, (B) a reduction in the
Exercise Price, (C) shares of the Corporation’s Common Stock or other equity
securities of the Corporation (including, without limitation, shares, or units
of shares, of preferred stock which the Board of Directors has determined to
have the same value as the Corporation’s Common Stock (“Common Stock
Equivalents”)), (D) debt securities of the Corporation or (E) other assets;
provided, however, that if the Corporation shall not have made adequate
provision to deliver value pursuant to clause (ii) above within thirty days
following the Stock Acquisition Date, then the Corporation shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Exercise Price, shares of the Corporation’s Common Stock (to the
extent available) and then, if necessary, cash, which shares and cash shall have
an aggregate value equal to the Spread.

 

(b) If the Board of Directors shall determine in good faith that it is likely
that sufficient additional shares of the Corporation’s Common Stock could be
authorized for issuance upon exercise in full of the Rights, the 30-day period
set forth above may be extended to the extent necessary, but not more than
180 days after the Stock Acquisition Date, in order that the Corporation may
seek stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the “Substitution Period”). If the Corporation
determines that action need be taken pursuant to this Section 11(a)(iii), the
Corporation (x) shall provide, subject to Section 7(f) and the last paragraph of
Section 11(a)(ii), that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares, decide the appropriate form of distribution to be made and
determine the value thereof. If the exercisability of the Rights is suspended
pursuant to this Section 11(a)(iii), the Corporation shall make a public
announcement, and shall deliver to the Rights Agent a statement, stating that
the exercisability of the Rights has been temporarily suspended. When the
suspension is no longer in effect, the Corporation shall make another public
announcement, and deliver to the Rights Agent a statement, so stating. For
purposes of this Section 11(a)(iii), the value of the Corporation’s Common Stock
shall be the Current Per Share Market Price (as determined pursuant to
Section 11(d)(i)) of the Corporation’s Common Stock as of the Stock Acquisition
Date, and the value of any Common Stock Equivalent shall be deemed to have the
same value as the Corporation’s Common Stock on such date.

 

16

 

 

(c) If the Corporation fixes a record date for the making of a distribution to
all holders of the Preferred Stock (including any distribution made in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in shares of
Preferred Stock ) or subscription rights or warrants (excluding those referred
to in Section 11(b)), the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, (i) the numerator of which shall be the
then Current Per Share Market Price of the Preferred Stock on such record date,
less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness to be
distributed or of such subscription rights or warrants applicable to one share
of Preferred Stock and (ii) the denominator of which shall be the then Current
Per Share Market Price of the Preferred Stock; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of Preferred Stock to be issued upon
exercise of one Right. Such adjustments shall be made successively whenever such
a record date is fixed. If such distribution is not so made, the Exercise Price
shall again be adjusted to be the Exercise Price that would then be in effect if
such record date had not been fixed.

 

(d) Current Per Share Market Price.

 

(i) For the purpose of any computation hereunder, the “Current Per Share Market
Price” of any security on any date shall be deemed to be the average of the
daily closing prices per share of such security for the thirty consecutive
Trading Days immediately prior to such date; provided, however, that if the
Current Per Share Market Price of the security is determined during a period
(i) following the announcement by the issuer of such security of (A) a dividend
or distribution on such security payable in shares of such security or other
securities convertible into such shares, or (B) any subdivision, combination or
reclassification of such security, and (ii) prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the Current Per Share Market Price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
security. The closing price for each day shall be the last sale price or, if no
such sale takes place on such day, the average of the closing bid and asked
prices, in either case as reported by NASDAQ, or, if on any such date the
security is not listed on NASDAQ, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
security selected by the Board of Directors. If on any such date no such market
maker is making a market in the security, the fair value of the security on such
date as determined in good faith by the Board of Directors shall be used.

 

(ii) For the purpose of any computation hereunder, the “Current Per Share Market
Price” of the Preferred Stock shall be determined in accordance with the method
set forth in Section 11(d)(i). If the Preferred Stock is not publicly traded,
the “Current Per Share Market Price” of the Preferred Stock shall be
conclusively deemed to be the Current Per Share Market Price of the
Corporation’s Common Stock as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof) multiplied by one hundred. If
neither the Common Stock nor the Preferred Stock is publicly held or so listed
or traded, “Current Per Share Market Price” means the fair value per share as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent.

 

17

 

 

(e) No adjustment in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Exercise Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one ten-thousandth of a share of Preferred
Stock or one ten-thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than three years from the
date of the transaction which requires such adjustment.

 

(f) If, as a result of an adjustment made pursuant to Section 11(a), the holder
of any Right thereafter exercised shall become entitled to receive any shares of
capital stock of the Corporation other than Preferred Stock, the number of such
other shares so receivable upon exercise of any Right shall thereafter be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Stock
contained in Section 11(a)-(c), inclusive, and the provisions of Section 7,
Section 9, Section 10 and Section 13 with respect to the Preferred Stock shall
apply on like terms to any such other shares.

 

(g) All Rights originally issued by the Corporation subsequent to any adjustment
made to the Exercise Price hereunder shall evidence the right to purchase, at
the adjusted Exercise Price, the number of shares of Preferred Stock purchasable
from time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.

 

(h) Unless the Corporation exercises its election as provided in Section 11(i),
upon each adjustment of the Exercise Price as a result of the calculations made
in Section 11(b) and Section 11(c), each Right outstanding immediately prior to
the making of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Exercise Price, that number of one one-hundredth of a share of
Preferred Stock (calculated to the nearest one one-thousandth of a share of
Preferred Stock) obtained by (i) multiplying the number of one one-hundredth of
a shares of Preferred Stock covered by a Right immediately prior to this
adjustment by the Exercise Price in effect immediately prior to such adjustment
of the Exercise Price and (ii) dividing the product by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.

 

(i) The Corporation may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Rights in substitution for any adjustment
in the number of shares of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of shares of Preferred Stock for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one hundred-thousandth)
obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Corporation shall make a public
announcement (with prompt written notice thereof to the Rights Agent) of its
election to adjust the number of Rights, indicating the record date for the
adjustment and, if known at the time, the amount of the adjustment to be made.
The record date may be the date on which the Exercise Price is adjusted or any
day thereafter but, if the Rights Certificates have been distributed, shall be
at least 10 days after the date of the public announcement. If Rights
Certificates have been distributed, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Corporation shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates
on such record date Rights Certificates evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such
adjustment or, at the option of the Corporation, shall cause to be distributed
to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof if required by the Corporation, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.

 

18

 

 

(j) Irrespective of any adjustment or change in the Exercise Price or the number
of shares of Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Exercise Price and the number of shares of Preferred Stock which were
expressed in the initial Rights Certificates issued hereunder.

 

(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below the then par value of the Preferred Stock issuable upon
exercise of the Rights, the Corporation shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and non-assessable shares of Preferred
Stock at such adjusted Exercise Price.

 

(l) If this Section 11 requires that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Corporation may defer,
until the occurrence of such event, issuing to the holder of any Right exercised
after such record date shares of Preferred Stock and other capital stock or
securities of the Corporation, if any, issuable upon such exercise over and
above the Preferred Stock and other capital stock or securities of the
Corporation, if any, issuable upon such exercise on the basis of the Exercise
Price in effect prior to such adjustment; provided, however, that the
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder’s right to receive such additional shares upon
the occurrence of the event requiring adjustment.

 

(m) Anything in this Section 11 to the contrary notwithstanding, the Corporation
shall be entitled to make such reductions in the Exercise Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent
that it in its sole discretion shall determine to be advisable in order that any
(i) combination or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the Current Per Share Market
Price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) dividends on the Preferred Stock payable in shares of
Preferred Stock, or (v) issuance of any rights, options or warrants referred to
in Section 11(b) made by the Corporation after the date of this Rights Agreement
to holders of its Preferred Stock shall not be taxable to such stockholders.

 

19

 

 

(n) If, at any time after the date of this Rights Agreement and prior to the
Distribution Date, the Corporation (i) declares or pays any dividend on the
Corporation’s Common Stock payable in shares of Common Stock or (ii) effects a
subdivision, combination or consolidation of the Corporation’s Common Stock (by
reclassification or otherwise other than by payment of dividends in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in
any such case (x) the number of one one-hundredths of a share of Preferred Stock
purchasable after such event upon exercise of each Right shall be determined by
multiplying the number of one one-thousandths of a share of Preferred Stock so
purchasable immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately before
such event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event, and (y) each share of the
Corporation’s Common Stock outstanding immediately after such event shall have
issued with respect to it that number of Rights which each share of Common Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.

 

Section 12. Certification of Adjusted Exercise Price or Number of Shares.

 

Whenever an adjustment is made as provided in Section 11, Section 13 or Section
23(c), the Corporation shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts giving rise to such
adjustment and the computation, methodology and accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Corporation to make
such certification or give such notice shall not affect the validity of or the
force or effect of the requirement for such adjustment. Any adjustment to be
made pursuant to Section 11, Section 13 or Section 23(c) of this Rights
Agreement shall be effective as of the date of the event giving rise to such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of any adjustment unless and until it shall have received such
certificate.

 

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Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.

 

(a) In the event that, at any time after the time that any Person becomes an
Acquiring Person, (x) the Corporation shall, directly or indirectly, consolidate
with, or merge with and into, any other Person or Persons (other than an Exempt
Person or Persons) and the Corporation shall not be the surviving or continuing
corporation of such consolidation or merger, or (y) any Person or Persons (other
than an Exempt Person) shall, directly or indirectly, consolidate with, or merge
with and into, the Corporation, and the Corporation shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of any
other Person (other than an Exempt Person) or of the Corporation or cash or any
other property, or (z) the Corporation or one or more of its Subsidiaries shall,
directly or indirectly, sell or otherwise transfer to any other Person or any
Affiliate or Associate of such Person, in one or more transactions, or the
Corporation or one or more of its Subsidiaries shall sell or otherwise transfer
to any Persons in one or a series of related transactions, assets or Earning
Power (as defined herein) aggregating more than 50% of the assets or Earning
Power of the Corporation and its Subsidiaries (taken as a whole), then, on the
first occurrence of any such event, proper provision shall be made so that (i)
each holder of record of a Right, except as provided in Section 11(a)(ii)
hereof, shall thereafter have the right to receive, upon the exercise thereof
and payment of the Exercise Price in accordance with the terms of this Rights
Agreement and in lieu of shares of Preferred Stock, such number of shares of
validly issued, fully paid, non-assessable and freely tradable Common Stock of
the Principal Party (as defined herein), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall equal the result
obtained by dividing the Exercise Price by 50% of the Fair Market Value of the
Common Stock of the Principal Party on the date of the consummation of such
consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Corporation
pursuant to this Rights Agreement; (iii) the term “Corporation” for all purposes
of this Rights Agreement shall thereafter be deemed to refer to such Principal
Party; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with the provisions of Section 9 hereof applicable to the
reservation of Preferred Stock) in connection with such consummation as may be
necessary to insure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; provided, however, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Section
11 (a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).

 

(b) “Earning Power” of the Corporation and its Subsidiaries shall be determined
in good faith by the Corporation’s Board of Directors on the basis of the
operating earnings of each business operated by the Corporation and its
Subsidiaries during the three fiscal years preceding the date of such
determination (or, in the case of any business not operated by the Corporation
or any Subsidiary during three full fiscal years preceding such date, during the
period such business was operated by the Corporation or any Subsidiary).

 

21

 

 

(c) “Principal Party” shall mean:

 

(i) in the case of any transaction described in (x) or (y) of the first sentence
of Section 13(a) hereof: (A) the Person that is the issuer of the securities
into which shares of Common Stock of the Corporation are changed or otherwise
exchanged or converted in such merger or consolidation, or, if there is more
than one such issuer, the issuer of the Common Stock of which has the greatest
market value or (B) if no securities are so issued, (x) the Person that is the
other party to the merger or consolidation and that survives such merger or
consolidation, or, if there is more than one such Person, the Person the Common
Stock of which has the greatest market value or (y) if the Person that is the
other party to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or consolidation
(including the Corporation if it survives); and

 

(ii) in the case of any transaction described in (z) of the first sentence in
Section 13(a), the Person that is the party receiving the greatest portion of
the assets or Earning Power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or Earning Power so
transferred or if the Person receiving the greatest portion of the assets or
Earning Power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest market value of shares outstanding;

 

provided, however, that in any case, (1) if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, the term “Principal Party” shall refer to such other
Person; (3) if such Person is a Subsidiary, directly or indirectly, or Affiliate
of more than one Person, the Common Stock of two or more of which are and have
been so registered, the term “Principal Party” shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest market value of
shares outstanding; and (3) if such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2) above shall
apply to each of the chains of ownership having an interest in such joint
venture as if such party were a “Subsidiary” of both or all of such joint
venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.

 

(d) The Corporation shall not consummate any consolidation, merger or sale or
transfer of assets or Earning Power referred to in Section 13(a) unless the
Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Corporation and each Principal Party and each other Person
that may become a Principal Party as a result of such consolidation, merger,
sale or transfer shall have executed and delivered to the Rights Agent an
agreement confirming that the Principal Party shall, upon consummation of such
consolidation, merger or sale or transfer of assets or Earning Power, assume
this Rights Agreement in accordance with Section 13(a) hereof and that all
rights of first refusal or preemptive rights in respect of the issuance of
shares of Common Stock of the Principal Party upon exercise of outstanding
Rights have been waived and that such transaction shall not result in a default
by the Principal Party under this Rights Agreement, and further providing that,
as soon as practicable after the date of any consolidation, merger or sale or a
transfer of assets or Earning Power referred to in Section 13(a) hereof, the
Principal Party will:

 

(i) prepare and file a registration statement under the Act with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the date of
expiration of the Rights, and similarly comply with applicable state securities
laws;

 

22

 

 

(ii) use its best efforts to (1) list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for quotation on the
NASDAQ Capital Market, and (2) qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate; and

 

(iii) deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act. In the event that any of the transactions described in Section
13(a) hereof shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have not theretofore
been exercised shall, subject to the provisions of Section 11(a)(ii) hereof,
thereafter be exercisable in the manner described in Section 13(a).

 

(e) In case the Principal Party which is to be a party to a transaction referred
to in this Section 13 has a provision in any of its authorized securities or in
its Certificate of Incorporation, as amended, or Amended and Restated By-laws,
as amended, or other instrument governing its corporate affairs, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of Common Stock of such Principal Party
at less than the then Fair Market Value per share (determined pursuant to
Section 11(b) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then Fair Market Value (other
than to holders of Rights pursuant to this Section 13) or (ii) providing for any
special or similar payment in connection with the issuance to any holder of a
Right of Common Stock of such Principal Party pursuant to the provisions of this
Section 13, then, in such event, the Corporation shall not consummate any such
transaction unless prior thereto the Corporation and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have been
canceled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.

 

Section 14. Fractional Rights and Fractional Shares.

 

(a) The Corporation shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights (i.e., Rights to
acquire less than one one-hundredth of a share of Preferred Stock). If the
Corporation shall determine not to issue such fractional Rights, then, in lieu
of such fractional Rights, there shall be paid to the holders of record of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the Fair Market
Value of a whole Right. For the purposes of this Section 14(a), the Fair Market
Value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable.  The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on NASDAQ, or, if the Rights are not
listed or admitted to trading on NASDAQ, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by such other system then in use, or, if on any such date the Rights
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors, or, if on any such date no
professional market maker is making a market in the Rights, the Fair Market
Value of a whole Right shall be determined by an independent investment banking
firm experienced in the valuation of securities selected in good faith by the
Board of Directors of the Corporation, or, if no such investment banking firm
is, in the good faith judgment of the Board of Directors, available to make such
determination, the Fair Market Value of a whole Right on such date shall be
determined in good faith by the Board of Directors.

 

23

 

 

(b) The Corporation shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of
one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-hundredth of a share). In lieu of issuing fractions of
shares of Preferred Stock, the Corporation may, at its election, issue
depositary receipts evidencing fractions of shares pursuant to an appropriate
agreement between the Corporation and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all of the rights, privileges and preferences to which they would be
entitled as owners of the Preferred Stock. With respect to fractional shares
that are not integral multiples of one-hundredth of a share, if the Corporation
does not issue such fractional shares or depositary receipts in lieu thereof,
there shall be paid to the holders of record of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Fair Market Value of a share of Preferred Stock.

 

(c) Following the occurrence of one of the transactions or events specified in
Section 11 hereof giving rise to the right to receive shares of Common Stock,
capital stock equivalents (other than shares of Preferred Stock) or other
securities upon the exercise of a Right, the Corporation shall not be required
to issue fractions of shares of Common Stock or units of such Common Stock,
capital stock equivalents or other securities upon exercise of the Rights or to
distribute certificates that evidence fractional shares of Common Stock, capital
stock equivalents or other securities.  In lieu of fractional shares of Common
Stock, capital stock equivalents or other securities, the Corporation shall pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one share of Common Stock or unit of such Common Stock,
capital stock equivalents or other securities.  For purposes of this
Section 14(c), the Fair Market Value shall be the current closing price for the
Trading Day immediately prior to the date of such exercise and, if such capital
stock equivalent is not traded, each such capital stock equivalent shall have
the value of one one-hundredth of a share of Preferred Stock.

 

24

 

 

(d) Whenever a payment for fractional Rights or fractional shares is to be made
by the Rights Agent under any section of this Rights Agreement, the Corporation
shall (i) promptly prepare and deliver to the Rights Agent a certificate setting
forth in reasonable detail the facts related to such payments and the prices and
formulas utilized in calculating such payments, and (ii) provide sufficient
monies to the Rights Agent in the form of fully collected funds to make such
payments. The Rights Agent shall be fully protected in relying upon such a
certificate and shall have no duty with respect to, and shall not be deemed to
have knowledge of, any payment for fractional Rights or fractional shares under
any section of this Rights Agreement relating to the payment of fractional
Rights or fractional shares unless and until the Rights Agent shall have
received such a certificate and sufficient monies.

 

(e) The holder of a Right by the acceptance of a Right expressly waives his, her
or its right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share) upon exercise of a Right.

 

Section 15. Rights of Action.

 

All rights of action in respect of this Rights Agreement, except the rights of
action given to the Rights Agent in Section 18 and Section 20 hereof, are vested
in the respective registered holders of the Rights Certificates (and, prior to
the Distribution Date, the holders of record of the Common Stock); and any
holder of record of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Corporation to
enforce, or otherwise act in respect of, his, her or its right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Rights Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights
Agreement.

 

Section 16. Agreement of Right Holders.

 

Each holder of a Right, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and with every other holder of a Right that:

 

(a) Prior to the Distribution Date, the Rights shall be evidenced by the
Book-Entries representing, or the certificates for, Common Stock registered in
the name of the holders of Common Stock (together, as applicable, with the
Summary of Rights), which Book Entries representing, or the certificates for,
Common Stock shall also constitute certificates for Rights, and not by separate
Rights Certificates, and each Right shall be transferable only simultaneously
and together with the transfer of shares of Common Stock;

 

25

 

 

(b) After the Distribution Date, the Rights Certificates are transferable
(subject to the provisions of this Rights Agreement) only on the registry books
of the Rights Agent if surrendered at the office of the Rights Agent designated
for such purpose, duly endorsed or accompanied by a proper instrument of
transfer;

 

(c) The Corporation and the Rights Agent may deem and treat the person in whose
name the Rights Certificate (or, prior to the Distribution Date, the associated
Book Entry representing, or certificate for, Common Stock) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the Corporation or the Rights
Agent) for all purposes whatsoever, and neither the Corporation nor the Rights
Agent shall be affected by any notice to the contrary;

 

(d) Notwithstanding anything in this Rights Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder of a
Right or a beneficial interest in a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Corporation must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible; and

 

(e) Rights Beneficially Owned by certain persons will under certain
circumstances set forth in this Rights Agreement become null and void pursuant
to Section 11(a)(ii) hereof; and

 

(f) This Rights Agreement may be supplemented or amended from time to time
pursuant to Section 26 hereof.

 

Section 17. Rights Certificate Holder Not Deemed a Stockholder.

 

No holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Corporation or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 26 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.

 

26

 

 

Section 18. Concerning the Rights Agreement.

 

(a) The Corporation agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The
Corporation also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense (including, without
limitation, the reasonable fees and expenses of legal counsel) incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or failed to be done by the Rights Agent in connection
with the acceptance and administration of this Rights Agreement, including the
costs and expenses of defending against any claim of liability relating to the
Rights or this Rights Agreement. The provisions under this Section 18 and
Section 20 below shall survive the expiration of the Rights and the termination
of this Agreement and the resignation, replacement or removal of the Rights
Agent. The reasonable costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Corporation to the extent that the Rights
Agent is successful in so enforcing its right of indemnification.

 

(b) The Rights Agent shall be protected against, and shall incur no liability
for or in respect of, any action taken, suffered or omitted by it in connection
with its administration of this Rights Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock or for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.  In no case will the Rights Agent be liable for special,
indirect, incidental or consequential or consequential loss or damage at any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of such loss or damage.

 

Section 19. Merger or Consolidation of, or Change in Name of, the Rights Agent.

 

(a) Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the corporate trust or stock
transfer business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Rights Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Rights Agreement any of the Rights Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Rights Agreement.

 

(b) In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; in case at that time any of
the Rights Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its changed
name; in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Rights Agreement.

 

27

 

 

Section 20. Duties of Rights Agent.

 

The Rights Agent undertakes to perform only the duties and obligations expressly
set forth in this Rights Agreement and no implied duties or obligations shall be
read into this Rights Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions, by all of which the Corporation and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:

 

(a) The Rights Agent may consult with legal counsel (who may be legal counsel
for the Corporation), and the advice or opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.

 

(b) Whenever in the performance of its duties under this Rights Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, Chief
Executive Officer, President or any Vice President and by the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent. Any such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Rights Agreement in
reliance upon such certificate.

 

(c) The Rights Agent shall be liable hereunder to the Corporation and any other
Person only for its own gross negligence, bad faith or willful misconduct.

 

(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Corporation only.

 

(e) The Rights Agent shall not be under any responsibility in respect of the
validity of this Rights Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Corporation of any covenant or
condition contained in this Rights Agreement or in any Rights Certificate; nor
shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment required under the provisions of Section 11 or Section 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after receipt of a certificate describing any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock to be issued
pursuant to this Rights Agreement or any Rights Certificate or as to whether any
shares of Preferred Stock will, when issued, be validly authorized and issued,
fully paid and nonassessable.

 

28

 

 

(f) The Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of the Rights Agreement.

 

(g) The Rights Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from the Chairman of the
Board, Chief Executive Officer, President or any Vice President or the Secretary
or the Treasurer of the Corporation, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Corporation may, at the option of the Rights Agent, set forth in
writing any action proposed to be taken or omitted by the Rights Agent with
respect to its duties or obligations under this Rights Agreement and the date on
and/or after which such action shall be taken or omitted and the Rights Agent
shall not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the date specified therein
(which date shall not be less than three Business Days after the date indicated
in such application unless any such officer shall have consented in writing to
an earlier date) unless, prior to taking or omitting any such action, the Rights
Agent has received written instructions in response to such application
specifying the action to be taken or omitted.

 

(h) The Rights Agent and any stockholder, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of
the Corporation or become financially interested in any transaction in which the
Corporation may be interested, or contract with or lend money to the Corporation
or otherwise act as fully and freely as though it were not the Rights Agent
under this Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Corporation or for any other legal entity.

 

(i) The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Corporation resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.

 

(j) No provision of this Rights Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
the Rights Agent believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.

 

(k) The Rights Agent shall not be required to take notice or be deemed to have
notice of any fact, event or determination (including, without limitation, any
dates or events defined in this Rights Agreement or the designation of any
Person as an Acquiring Person, Affiliate or Associate or Person with whom
another Person is Acting in Concert) under this Rights Agreement unless and
until the Rights Agent shall be specifically notified in writing by the
Corporation of such fact, event or determination.

 

29

 

 

(l) If, with respect to any Rights Certificate surrendered to the Rights Agent
for exercise or transfer, the certificate attached to the form of assignment or
form of election to purchase, as the case may be, has not been executed, the
Rights Agent shall not take any further action with respect to such requested
exercise of transfer without first consulting with the Corporation.

 

Section 21. Change of Rights Agent.

 

The Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Rights Agreement upon 30 days notice in writing mailed to
the Corporation and to each transfer agent of the Common Stock and the Preferred
Stock by registered or certified mail. The Corporation may remove the Rights
Agent or any successor Rights Agent (with or without cause) upon 30 days notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock and the Preferred Stock
by registered or certified mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Corporation shall appoint a
successor to the Rights Agent. Notwithstanding the foregoing provisions of this
Section 21, in no event shall the resignation or removal of a Rights Agent be
effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Corporation shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the
Corporation), then the incumbent Rights Agent or the holder of record of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, shall be (a) a Person organized and doing
business under the laws of the United States or of any state thereof, in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination in the
conduct of its corporate trust or stock transfer business by federal or state
authorities and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an Affiliate
controlled by a Person described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed, but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Corporation shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be. Notwithstanding the foregoing
provisions, in the event of resignation, removal or incapacity of the Rights
Agent, the Corporation shall have the authority to act as the Rights Agent until
a successor Rights Agent shall have assumed the duties of the Rights Agent
hereunder.

 

30

 

 

Section 22. Issuance of New Rights Certificates.

 

Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Exercise Price per share
and the number or kind or class of shares of stock or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following the Distribution Date and
prior to the earlier of the Redemption Date (as defined herein) and the Close of
Business on the Expiration Date, the Corporation may, with respect to shares of
Common Stock so issued or sold (a) pursuant to the exercise of stock options;
(b) under any employment plan or arrangement; (c) upon the exercise, conversion
or exchange of securities, notes or debentures issued by the Corporation; or
(d) pursuant to a contractual obligation of the Corporation, in each case
existing prior to the Distribution Date, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) the Corporation shall not be obligated to issue any
such Rights Certificates if, and to the extent that, the Corporation shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Corporation or the Person to whom such
Rights Certificate would be issued, and (ii) no Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.

 

Section 23. Redemption.

 

(a) The Corporation may, at its option, but only by the vote of a majority of
the Board of Directors, redeem all but not less than all of the then outstanding
Rights, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Stock Acquisition Date (subject to extension by the
Corporation as provided in Section 26 hereof) or (ii) the Expiration Date, at a
redemption price of $0.01 per Right, subject to adjustments as provided in
subsection (c) below (the “Redemption Price”). The redemption of the Rights by
the Board of Directors may be made effective at such time, on such basis and
subject to such conditions as the Board of Directors in its sole discretion may
establish.

 

(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 23(a) hereof, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price.  The Corporation shall promptly give public notice
of any such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after the effective time of the action of the Board of Directors
ordering the redemption of the Rights, the Corporation shall give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock; provided, however, that
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
notice of redemption will state the method by which the payment of the
Redemption Price will be made. At the option of the Board of Directors, the
Redemption Price may be paid in cash to each Rights holder or by the issuance of
shares (and, at the Corporation’s election pursuant to Section 14(b) hereof,
cash or depositary receipts in lieu of fractions of shares other than fractions
which are integral multiples of one one-hundredth (1/100th) of a share) of
Preferred Stock or Common Stock having a Fair Market Value equal to such cash
payment.

 

31

 

 

(c) In the event the Corporation shall at any time after the date of this Rights
Agreement (i) pay any dividend on Common Stock in shares of Common Stock; (ii)
subdivide or split the outstanding shares of Common Stock into a greater number
of shares; (iii) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the outstanding
shares of Common Stock; or (iv) combine or consolidate the outstanding shares of
Common Stock into a smaller number of shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), then, and in each such event, the
Redemption Price shall be appropriately adjusted to reflect the foregoing.

 

(d) The Corporation may, at its option, discharge all of its obligations with
respect to any redemption of the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights and (ii) mailing payment of
the Redemption Price to the registered holders of the Rights at their last
addresses as they appear on the registry books of the Rights Agent or, prior to
the Distribution Date , on the registry books of the transfer agent for the
Common Stock, and upon such action, all outstanding Rights Certificates shall be
null and void without any further action by the Corporation.

 

Section 24. Notice of Proposed Actions.

 

(a) If the Corporation shall after the Distribution Date propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Stock or
to make any other distribution to the holders of its Preferred Stock (other than
a regular quarterly cash dividend); (ii) to offer to the holders of its
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options; (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock ); (iv) to effect any consolidation or merger into
or with any other Person, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or Earning Power of the
Corporation and its Subsidiaries (taken as a whole) to any other Person; (v) to
effect the liquidation, dissolution or winding-up of the Corporation; or (vi) to
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in shares
of Common Stock), then, in each such case, the Corporation shall give to each
holder of a Rights Certificate and the Rights Agent, in accordance with
Section 25, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding-up is to take place and the
date of participation therein by the holders of the Common Stock or Preferred
Stock or both, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least ten
days prior to the record date for determining holders of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Stock or Preferred Stock or
both, whichever shall be the earlier. The failure to give notice required by
this Section 24 or any defect therein shall not affect the legality or validity
of the action taken by the Corporation or the vote upon any such action.

 

32

 

 

(b) The Corporation shall, as soon as practicable after a Stock Acquisition
Date, give to each holder of a Rights Certificate, in accordance with
Section 25, a notice that describes the transaction in which the a Person became
an Acquiring Person and the consequences of the transaction to holders of Rights
under Section 11(a)(ii).

 

Section 25. Notices.

 

Notices or demands authorized by this Rights Agreement to be given or made by
the Rights Agent or by the holder of record of any Rights Certificate or Right
to or on the Corporation shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:

 

TSR, Inc.
400 Oser Avenue, Suite 150
Hauppauge, NY 11788
(631) 231-0333
Attention: Christopher Hughes

 

Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Corporation or by the holder of
record of any Rights Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Corporation) as
follows:

 

Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
(212) 845-3218

Attention: Erika Young, Vice President & Account Administrator

 

Notices or demands authorized by this Rights Agreement to be given or made by
the Corporation or the Rights Agent to the holder of record of any Rights
Certificate or Right shall be sufficiently given or made if sent by first class
mail, postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Corporation.

 

33

 

 

Section 26. Supplements and Amendments.

 

For as long as the Rights are then redeemable, the Corporation may in its sole
and absolute discretion, and the Rights Agent shall if the Corporation so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of the Rights. At any time when the Rights are not then
redeemable, the Corporation may, and the Rights Agent shall if the Corporation
so directs, supplement or amend this Rights Agreement without the approval of
any holders of Rights Certificates (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained, herein which may be defective or
inconsistent with any other provisions herein or (iii) to change or supplement
the provisions hereunder in any manner which the Corporation may deem necessary
or desirable, provided that no such supplement or amendment pursuant to this
clause (iv) shall materially adversely affect the interest of the holders of
Rights Certificates. Upon the delivery of a certificate from an appropriate
officer of the Corporation which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment.

 

Section 27. Exchange.

 

(a) The Board of Directors of the Corporation may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii) hereof) for shares
of Common Stock at an exchange ratio of one share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Corporation’s Common Stock then-outstanding.

 

(b) Immediately upon the action of the Board of Directors of the Corporation
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 27
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Corporation shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Corporation promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.

 

34

 

 

(c) In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 27, the Corporation shall
take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.

 

(d) The Corporation shall not be required to issue fractions of shares of Common
Stock or to distribute certificates which evidence fractional shares. In lieu of
such fractional shares, the Corporation shall pay to the registered holders of
the Rights Certificates with regard to which such fractional shares of Common
Stock would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole share of Common Stock. For the purposes
of this paragraph (d), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock for the Trading Day
immediately prior to the date of exchange pursuant to this Section 27.

 

Section 28. Successors.

 

All of the covenants and provisions of this Rights Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.

 

Section 29. Benefits of this Rights Agreement.

 

Nothing in this Rights Agreement shall be construed to give to any Person or
corporation other than the Corporation, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights) any legal or
equitable right, remedy or claim under this Rights Agreement; but this Rights
Agreement shall be for the sole and exclusive benefit of the Corporation, the
Rights Agent and the holders of record of the Rights Certificates (and, prior to
the Distribution Date, the holders of Common Stock in their capacity as holders
of the Rights).

 

Section 30. Delaware Contract.

 

This Rights Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed and enforced in accordance with the
laws of such state applicable to contracts to be made and performed entirely
within such state.

 

Section 31. Counterparts.

 

This Rights Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.

 

Section 32. Descriptive Headings.

 

Descriptive headings of the several Sections of this Rights Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

 

35

 

 

Section 33. Severability.

 

If any term, provision, covenant or restriction of this Rights Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

 

Section 34. Determinations and Actions By the Board of Directors, Etc.

 

The Board of Directors of the Corporation shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Corporation, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Rights Agreement and (ii) make all determinations deemed necessary or advisable
for the administration of this Rights Agreement (including a determination to
redeem or not redeem the Rights or to amend this Rights Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith shall (x) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board of Directors to any
liability to the holders of the Rights.

 

36

 

 

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

 

  TSR, INC.       By:     Name: Christopher Hughes   Title: Chief Executive
Officer       CONTINENTAL STOCK TRANSFER & TRUST COMPANY       By:     Name: 
Erika Young   Title: Vice President & Account Administrator

 

37

 

 

EXHIBIT A

 

TO RIGHTS AGREEMENT

 

UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO
BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE
TRANSFERRED TO ANY PERSON.

 

TSR, INC.

 

SUMMARY OF RIGHTS TO PURCHASE CLASS A PREFERRED STOCK, SERIES ONE

 

On August 29, 2018, the Board of Directors of TSR, INC. (the “Corporation”)
declared a dividend distribution of one preferred stock purchase right for each
outstanding share of Common Stock, par value $0.01 per share (the “Common
Stock”), of the Corporation held by stockholders of record on August 29, 2018
(the “Record Date”). Each Right entities the registered holder to purchase from
the Corporation one one-hundredth (1/100th) of a share of preferred stock of the
Corporation, designated as Class A Preferred Stock, Series One (the “Preferred
Stock”) at a price of $24.78 per one one-hundredth (1/100th) of a share (the
“Exercise Price”). The description and terms of the Rights are set forth in a
Rights Agreement (the “Rights Agreement”), dated as of August 29, 2018, between
the Corporation and Continental Stock Transfer & Trust Company, as Rights Agent
(the “Rights Agent”).

 

As discussed below, initially the Rights will not be exercisable, certificates
will not be sent to stockholders and the Rights will automatically trade with
the Common Stock.

 

The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the “Distribution Date”)
which is the earlier of (i) the tenth day following the first date (the “Stock
Acquisition Date”) on which there is a public announcement that a person or
group of affiliated or associated persons, with certain exceptions set forth
below, has acquired beneficial ownership of 5% or more of the Corporation’s
outstanding Common Stock (an “Acquiring Person”) or such earlier or later date
(not beyond the thirtieth day after the Stock Acquisition Date) as the Board of
Directors may determine or (ii) the tenth business day (or such later date as
may be determined by the Board of Directors prior to such time as any person or
group of affiliated or associated persons becomes an Acquiring Person) after the
date of the commencement or announcement of a person’s or group’s intention to
commence a tender or exchange offer the consummation of which would result in
the ownership of 5% or more of the Corporation’s outstanding Common Stock (even
if no shares are actually purchased pursuant to such offer); prior thereto, the
Rights will not be exercisable, will not be represented by a separate
certificate, and will not be transferable apart from the Common Stock, but will
instead be evidenced, (i) with respect to any of the shares of Common Stock held
in uncertificated book-entry form (a “Book-Entry”) outstanding as of the Record
Date, by such Book-Entry and (ii) with respect to the shares of Common Stock
evidenced by Common Stock certificates outstanding as of the Record Date, by
such Common Stock certificate, together with a copy of this Summary of Rights.

 

A-1

 

 

An Acquiring Person does not include (A) the Corporation, (B) any Subsidiary of
the Corporation, (C) any employee benefit plan or employee stock plan of the
Corporation or any Subsidiary of the Corporation, or any trust or other entity
organized, appointed, established or holding Common Stock for or pursuant to the
terms of any such plan, (D) any person or group whose ownership of 5% or more of
the Corporation’s then-outstanding shares of Common Stock results solely from
(i) any action or transaction or transactions approved by the Corporation’s
Board of Directors before such person or group became an Acquiring Person or
(ii) a reduction in the number of issued and outstanding shares of the
Corporation’s Common Stock pursuant to a transaction or transactions approved by
the Corporation’s Board of Directors (provided that any person or group that
does not become an Acquiring Person by reason of clause (i) or (ii) above shall
become an Acquiring Person upon acquisition of any additional shares of the
Corporation’s Common Stock unless such acquisition of additional Common Stock
will not result in such person or group becoming an Acquiring Person by reason
of such clause (i) or (ii)), (E) any Person that the Board of Directors
determines is exempt from the Rights Agreement, which determination shall be
made in the sole and absolute discretion of the Board of Directors, or (F) any
Person who or which, at the time of the first public announcement of the Rights
Agreement, is a Beneficial Owner of 5% or more of the Corporation’s Common Stock
then outstanding (a “Grandfathered Stockholder”); provided, however, that if a
Grandfathered Stockholder becomes, after such time, the Beneficial Owner of any
additional shares of the Corporation’s Common Stock (regardless of whether,
thereafter or as a result thereof, there is an increase, decrease or no change
in the percentage of shares of the Corporation’s Common Stock then outstanding
beneficially owned by such Grandfathered Stockholder) then such Grandfathered
Stockholder shall be deemed to be an Acquiring Person unless, upon such
acquisition of Beneficial Ownership of additional shares of the Corporation’s
Common Stock, such Person is not the Beneficial Owner of 5% or more of the
Corporation’s Common Stock then outstanding; provided, further, that upon the
first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 5%,
such Grandfathered Stockholder shall cease to be a Grandfathered Stockholder and
this clause (ii) shall have no further force or effect with respect to such
Person. For the avoidance of doubt, in the event that after the time of the
first public announcement of this Rights Agreement, any agreement, arrangement
or understanding pursuant to which any Grandfathered Stockholder is deemed to be
the Beneficial Owner of shares of the Corporation’s Common Stock expires,
terminates or no longer confers any benefit to or imposes any obligation on the
Grandfathered Stockholder, any direct or indirect replacement, extension or
substitution of such agreement, arrangement or understanding with respect to the
same or different shares of the Corporation’s Common Stock that confers
Beneficial Ownership of shares of the Corporation’s Common Stock shall be
considered the acquisition of Beneficial Ownership of additional shares of the
Corporation’s Common Stock by the Grandfathered Stockholder and render such
Grandfathered Stockholder an Acquiring Person for purposes of this Rights
Agreement unless, upon such acquisition of Beneficial Ownership of additional
shares of the Corporation’s Common Stock, such Person is not the Beneficial
Owner of 5% or more of the Corporation’s Common Stock then outstanding.

 

A-2

 

 

“Beneficial Ownership” shall include any securities such Person or any of such
Person’s Affiliates or Associates (a) beneficially owns, directly or indirectly,
within the meaning of Rules 13d-3 or 13d-5 promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), (b) has the right to
acquire or vote pursuant to any agreement, arrangement or understanding (except
under limited circumstances), (c) which are directly or indirectly beneficially
owned by any other Person with which such Person has any agreement, arrangement
or understanding for the purpose of acquiring, holding or voting such
securities, or obtaining, changing or influencing control of the Company, or
with whom such Person is acting in concert or (d) in respect of which such
Person has a derivative position.

 

Until the Distribution Date (or earlier redemption or expiration of the Rights),
new Common Stock certificates issued after August 29, 2018 will contain a legend
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), transfer on the Corporation’s
direct registration system of any Common Stock represented by a Book-Entry or a
certificate outstanding as of August 29, 2018, and, in each case, with or
without a copy of this Summary of Rights attached thereto, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
Book-Entry or certificate. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights (“Rights Certificates”) will
be mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date and such separate Rights Certificates alone will
evidence the Rights from and after the Distribution Date.

 

The Rights are not exercisable until the Distribution Date. Unless earlier
redeemed by the Corporation as described below, the Rights will expire at the
close of business on August 29, 2021 (the “Expiration Date”) (or, if the
Distribution Date shall have occurred before August 29, 2021, at the close of
business on the 90th day following the Distribution Date).

 

The Preferred Stock is non-redeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock (i)
subordinate to any other series of the Corporation’s preferred stock and (ii)
senior to the Common Stock. The Preferred Stock may not be issued except upon
exercise of Rights. Each outstanding share of Preferred Stock will be entitled
to receive when, as and if declared, a quarterly dividend in an amount equal to
(i) 100 times the cash dividends declared on the Corporation’s Common Stock, and
(ii) a preferential cash dividend, if any, in preference to holders of Common
Stock in an amount equal to $50.00 per share of Preferred Stock less the per
share amount of all cash dividends declared on the Preferred Stock pursuant to
clause (i) since the immediately preceding quarterly dividend payment date. In
addition, Preferred Stock is entitled to 100 times any noncash dividends (other
than dividends payable in equity securities) declared on the Common Stock, in
like kind. In the event of the liquidation of the Corporation, the holders of
Preferred Stock will be entitled to receive, for each share of Preferred Stock,
a payment in an amount equal to the greater of $1.00 per one one-hundredth of a
share plus accrued and unpaid dividends and distributions thereon or 100 times
the payment made per share of Common Stock. Each share of Preferred Stock will
have 100 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. The rights of Preferred Stock as to
dividends, liquidation and voting are protected by anti-dilution provisions. If
the dividends accrued on the Preferred Stock for four or more quarterly dividend
periods, whether consecutive or not, shall not have been declared and paid or
irrevocably set aside for payment, the holder of record of the Preferred Stock
of the Corporation of all series (including the Preferred Stock) will have the
right to elect two members to the Corporation’s Board of Directors.

 

A-3

 

 

The number of shares of Preferred Stock issuable upon exercise of the Rights is
subject to certain adjustments from time to time in the event of a stock
dividend on, or a subdivision or combination of, the Common Stock. The Exercise
Price for the Rights is subject to adjustment in the event of extraordinary
distributions of cash or other property to holders of Common Stock.

 

Unless the Rights are earlier redeemed, in the event that, after the time that a
Person becomes an Acquiring Person, the Corporation were to be acquired in a
merger or other business combination (in which any shares of Common Stock are
changed into or exchanged for other securities or assets) or more than 50% of
the assets or Earning Power (as defined in the Rights Agreement) of the
Corporation and its subsidiaries (taken as a whole) were to be sold or
transferred in one or a series of related transactions, the Rights Agreement
provides that proper provision will be made so that each holder of record, other
than the Acquiring Person, of a Right will from and after such date have the
right to receive, upon payment of the Exercise Price, that number of shares of
common stock of the acquiring company having a market value at the time of such
transaction equal to two times the Exercise Price.

 

In addition, unless the Rights are earlier redeemed, in the event that a person
or group becomes an Acquiring Person, the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right, other than the
Acquiring Person (whose Rights will thereupon become null and void), will
thereafter have the right to receive, upon payment of the Exercise Price, that
number of one one-hundredths of a share of Preferred Stock having a market value
at the time of the transaction equal to two times the Exercise Price (such
market value to be determined with reference to the market value of the
Corporation’s Common Stock as provided in the Rights Agreement).

 

At any time after any person or group becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding voting
stock, the Board of Directors of the Corporation may exchange the Rights (other
than Rights owned by such person or group which will have become void), in whole
or in part, at an exchange ratio of one share of Common Stock per Right (subject
to adjustment).

 

Fractions of shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share) may, at the election of the
Corporation, be evidenced by depositary receipts. The Corporation may also issue
cash in lieu of fractional shares which are not integral multiples of one
one-hundredth of a share.

 

At any time on or prior to the close of business on the earlier of (i) the tenth
day after the Stock Acquisition Date (or such later date as a majority of the
Board of Directors may determine) or (ii) the Expiration Date, the Corporation
may redeem the Rights in whole, but not in part, at a price of $0.01 per Right
(the “Redemption Price”). Immediately upon the effective time of the action of
the Board of Directors of the Corporation authorizing redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.

 

A-4

 

 

For as long as the Rights are then redeemable, the Corporation may, amend the
Rights in any manner, including an amendment to extend the time period in which
the Rights may be redeemed. At any time when the Rights are not then redeemable,
the Corporation may amend the Rights in any manner that does not materially
adversely affect the interests of holders of the Rights as such.

 

Until a Right is exercised, the holder, as such, will have no rights as a
stockholder of the Corporation, including, without limitation, the right to vote
or to receive dividends.

 

A copy of the Rights Agreement will be filed with the Securities and Exchange
Commission as an exhibit to a current report on Form 8-K. A copy of the Rights
Agreement is available free of charge from the Corporation. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement which is incorporated in this
summary description herein by reference.

 

A-5

 

 

EXHIBIT B

 

TO RIGHTS AGREEMENT

 

[Form of Rights Certificate]

 

Certificate No. W _________Rights

 

NOT EXERCISABLE AFTER (I) ___________, 2021, OR (II) IF THE DISTRIBUTION DATE
(AS DEFINED BELOW) SHALL HAVE OCCURRED BEFORE THE DATE SPECIFIED IN CLAUSE (I),
THE DATE WHICH IS NINETY (90) DAYS AFTER ______________, 2021, OR EARLIER IF
REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND
UNDER CERTAIN OTHER CIRCUMSTANCES, AT $0.01 PER RIGHT (SUBJECT TO ADJUSTMENT),
ON THE TERMS SET FORTH OR REFERRED TO IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY
PERSON.

 

Rights Certificate

 

This certifies that _______________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of August 29, 2018 (the “Rights Agreement”) between TSR, Inc. (the
“Corporation”) and Continental Stock Transfer & Trust Company, (the “Rights
Agent”), to purchase from the Corporation at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 p.m.
(New York City time) on August 29, 2021 (or if the Distribution Date shall have
occurred before August 29, 2021, at the close of business on the 90th day
following the Distribution Date) at the office of the Rights Agent designated in
the Rights Agreement for such purpose, or its successor as Rights Agent, in New
York, New York, one one-hundredth (1/100th) of a fully paid nonassessable share
of Class A Preferred Stock, Series One, $1.00 par value per share, of the
Corporation (the “Preferred Stock”) at a purchase price of $24.78, as the same
may from time to time be adjusted in accordance with the Rights Agreement (the
“Exercise Price”), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase attached hereto duly executed.

 

As provided in the Rights Agreement, the Exercise Price and the number of shares
of Preferred Stock which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain events,
securities other than shares of Preferred Stock, or other property, may be
acquired upon exercise of the Rights evidenced by this Rights Certificate, as
provided in the Rights Agreement.

 

B-1

 

 

This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Corporation and the holders of record of Rights Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the
Corporation.

 

This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Rights Certificate, or, Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.

 

Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Corporation at its option or under certain
other circumstances at a redemption price of $0.01 per Right. No fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth (1/100th) of a share) are required to be issued upon the
exercise of any Right or Rights evidenced hereby, and in lieu thereof the
Corporation may cause depositary receipts to be issued and/or a cash payment may
be made, as provided in the Rights Agreement.

 

No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities of the Corporation which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to stockholders at a meeting thereof, or
to give or withhold consent to any corporate action or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement. This Rights Certificate shall not
be valid or obligatory for any purpose until it shall have been countersigned by
the Rights Agent.

 

B-2

 

 

WITNESS the facsimile signature of the proper officers of the Corporation and
its corporate seal. Dated as of _____________________.

 

ATTEST:

 

    By:   Secretary   Title:  

 

Countersigned:

 

[RIGHTS AGENT]

 

By:    

 

B-3

 

 

[Form of Reverse Side of Rights Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such holder desires to transfer the
Rights Certificates.)

 

FOR VALUE RECEIVED ________________________________hereby sells, assigns and
transfers unto _________________________(Please print name and address of
transferee) _____________________________________Rights evidenced by this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ______________________________
Attorney to transfer the within Rights Certificate on the books of the
within-named Corporation, with full power of substitution.

 

Dated:

 

        Signature

 

Signature Guaranteed:

 

B-4

 

 

Certificate

 

The undersigned hereby certifies by checking the appropriate boxes that:

 

(1) this Rights Certificate [___] is [___] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and

 

(2) after due inquiry and to the best knowledge of the undersigned, it [___] did
[___] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).

 

Dated:              Signature

 

NOTICE

 

The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.

 

B-5

 

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if registered holder
desires to exercise the Rights Certificate.)

 

TO: ___________________

 

The undersigned hereby irrevocably elects to exercise Rights represented by this
Rights Certificate to purchase the shares of Preferred Stock issuable upon the
exercise of such Rights and requests that certificates for such share(s) be
issued in the following name:

 

Please insert social security or other identifying number:
_____________________________________________
_______________________________________________________________________________________________
(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

 

Please insert social security or other identifying number:
_____________________________________________
_______________________________________________________________________________________________
(Please print name and address)

 

Dated: _______________________

 

      Signature       (Signature must conform in all respects to name of holder
as specified on the face of this Rights Certificate)

 

Signature Guaranteed

 

B-6

 

 

EXHIBIT C

 

TO RIGHTS AGREEMENT

 

FORM OF CERTIFICATE OF DESIGNATIONS
OF
CLASS A PREFERRED STOCK, SERIES ONE
OF
TSR, INC.

 

I, Christopher Hughes, President and Chief Executive Officer of TSR, Inc. (the
“Corporation”), a corporation organized and existing under the General
Corporation Law of the State of Delaware (the “Act”), in accordance with
provision 103 of the Act, DO HEREBY CERTIFY that: pursuant to the authority
conferred upon the Board of Directors by the Certificate of Incorporation of the
Corporation, as amended, and pursuant to the Act the Board of Directors on
August 29, 2018 adopted the following resolution which creates a series of
thirty thousand (30,000) shares of Preferred Stock designated as Class A
Preferred Stock, Series One.

 

RESOLVED, that pursuant to the authority vested in the Board of Directors of the
Corporation in accordance with the provisions of its Certificate of
Incorporation, as amended, a series of Preferred Stock of the Corporation be,
and hereby is, created and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional or other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:

 

Section 1.   Designation and Amount. The shares of such series shall be
designated as “Class A Preferred Stock, Series One” (the “Series One Preferred
Stock”) and the number of shares constituting such series shall be thirty
thousand (30,000).

 

C-1

 

 

Section 2.   Dividends and Distributions.

 

(A) Subject to the provisions for adjustment hereinafter set forth, the holders
of shares of Series One Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for the
purpose, (i) cash dividends in an amount per share (rounded to the nearest cent)
equal to 100 times the aggregate per share amount of all cash dividends declared
or paid on the Common Stock, $0.01 par value per share, of the Corporation (the
“Common Stock”) and (ii) a preferential cash dividend (the “Preferential
Dividends”), if any, on the first day of March, June, September and December of
each year (each a “Quarterly Dividend Payment Date”), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series One Preferred Stock, in an amount (except in the case of
the first Quarterly Dividend Payment Date if the date of the first issuance of
Series One Preferred Stock is a date other than a Quarterly Dividend Payment
Date, in which case such payment shall be a prorated amount of such amount)
equal to $50.00 per share of Series One Preferred Stock less the per share
amount of all cash dividends declared on the Series One Preferred Stock pursuant
to clause (i) of this sentence since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series One
Preferred Stock. In the event the Corporation shall, at any time after the
issuance of any share or fraction of a share of Series One Preferred Stock, make
any distribution on the shares of Common Stock of the Corporation, whether by
way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Corporation or otherwise, which is
payable in cash or any debt security, debt instrument, real or personal property
or any other property (other than cash dividends subject to the immediately
preceding sentence, a distribution of shares of Common Stock or other capital
stock of the Corporation or a distribution of rights or warrants to acquire any
such share, including any debt security convertible into or exchangeable for any
such share, at a price less than the Fair Market Value (as hereinafter defined)
of such share), then, and in each such event the Corporation shall
simultaneously pay on each then outstanding share of Series One Preferred Stock
of the Corporation a distribution, in like kind, of 100 times such distribution
paid on a share of Common Stock (subject to the provisions for adjustment
hereinafter set forth). The dividends and distributions on the Series One
Preferred Stock to which holders thereof are entitled pursuant to clause (i) of
the first sentence of this paragraph and pursuant to the second sentence of this
paragraph are hereinafter referred to as “Participating Dividends” and the
multiple of such cash and noncash dividends on the Common Stock applicable to
the determination of the Participating Dividends, which shall be 100 initially
but shall be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the “Dividend Multiple.” In the event the Corporation shall at
any time after August 29, 2018 (the “Effective Date”) declare or pay any
dividend or make any distribution on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, or issue any of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), then in each such case the Dividend
Multiple thereafter applicable to the determination of the amount of
Participating Dividends which holders of shares of Series One Preferred Stock
shall be entitled to receive shall be the Dividend Multiple applicable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

(B) The Corporation shall declare each Participating Dividend at the same time
it declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required to be paid. No cash or
noncash dividend or distribution on the Common Stock in respect of which a
Participating Dividend is required to be paid shall be paid or set aside for
payment on the Common Stock unless a Participating Dividend in respect of such
dividend or distribution on the Common Stock shall be simultaneously paid, or
set aside for payment, on the Series One Preferred Stock.

 

C-2

 

 

(C) Preferential Dividends shall begin to accrue on outstanding shares of Series
One Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issuance of any shares of Series One Preferred Stock. Accrued but unpaid
Preferential Dividends shall cumulate but shall not bear interest. Preferential
Dividends paid on the shares of Series One Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.

 

Section 3.   Voting Rights. The holders of shares of Series One Preferred Stock
shall have the following voting rights:

 

(A) Subject to the provisions for adjustment hereinafter set forth, each share
of Series One Preferred Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of the Corporation. The
number of votes which a holder of Series One Preferred Stock is entitled to
cast, as the same may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the “Vote Multiple.” In the event the Corporation
shall at any time after the Effective Date declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, or issue any of
its capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then in each such case
the Vote Multiple thereafter applicable to the determination of the number of
votes per share to which holders of shares of Series One Preferred Stock shall
be entitled after such event shall be the Vote Multiple immediately prior to
such event multiplied by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

(B) Except as otherwise provided herein, in the Certificate of Incorporation, as
amended, or Amended and Restated By-Laws, as amended, the holders of shares of
Series One Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.

 

(C) In the event that the Preferential Dividends accrued on the Series One
Preferred Stock for four or more quarterly dividend periods, whether consecutive
or not, shall not have been declared and paid or set apart for payment, the
holders of record of Preferred Stock of the Corporation of all series (including
the Series One Preferred Stock), other than any series in respect of which such
right is expressly withheld by the Certificate of Incorporation, as amended, or
the authorizing resolutions included in the Certificate of Designations
therefor, shall have the right, at the next meeting of stockholders called for
the election of directors, to elect two members to the Board of Directors, which
directors shall be in addition to the number required by the Amended and
Restated By-Laws prior to such event, to serve until the next Annual Meeting and
until their successors are elected and qualified or their earlier resignation,
removal or incapacity or until such earlier time as all accrued and unpaid
Preferential Dividends upon the outstanding shares of Series One Preferred Stock
shall have been paid (or irrevocably set aside for payment) in full. The holders
of shares of Series One Preferred Stock shall continue to have the right to
elect directors as provided by the immediately preceding sentence until all
accrued and unpaid Preferential Dividends upon the outstanding shares of Series
One Preferred Stock shall have been paid (or set aside for payment) in full.
Such directors may be removed and replaced by such stockholders, and vacancies
in such directorships may be filled only by such stockholders (or by the
remaining directors elected by such stockholders, if there be any) in the manner
permitted by law; provided, however, that any such action by stockholders shall
be taken at a meeting of stockholders and shall not be taken by written consent
thereto.

 

C-3

 

 

(D) Except as otherwise required by the Certificate of Incorporation, as
amended, or the Amended and Restated By-laws, as amended, or set forth herein,
holders of Series One Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action.

 

Section 4.   Certain Restrictions.

 

(A) Whenever Preferential Dividends or Participating Dividends are in arrears or
the Corporation shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Participating Dividends, whether
or not declared, on shares of Series One Preferred Stock outstanding shall have
been paid or set aside for payment in full, and in addition to any and all other
rights which any holder of shares of Series One Preferred Stock may have in such
circumstances, the Corporation shall not:

 

(i) declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration, any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series One Preferred Stock;

 

(ii) declare or pay dividends on or make any other distributions on any shares
of stock ranking on a parity as to dividends with the Series One Preferred
Stock, unless dividends are paid ratably on the Series One Preferred Stock and
all such parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then entitled
if the full dividends accrued thereon were to be paid;

 

(iii) except as permitted by subparagraph (iv) of this paragraph 4(A), redeem or
purchase or otherwise acquire for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series One Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (both as to
dividends and upon liquidation, dissolution or winding up) to the Series One
Preferred Stock; or

 

(iv) purchase or otherwise acquire for consideration any shares of Series One
Preferred Stock, or any shares of stock ranking on a parity with the Series One
Preferred Stock (either as to dividends or upon liquidation, dissolution or
winding up), except in accordance with a purchase offer made to all holders of
such shares upon such terms as the Board of Directors, after consideration of
the respective annual dividend rates and other relative rights and preferences
of the respective series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or classes.

 

(B) The Corporation shall not permit any Subsidiary (as hereinafter defined) of
the Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner. A “Subsidiary” of the Corporation shall mean any corporation or
other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the Board of Directors or other
persons performing similar functions are Beneficially Owned, directly or
indirectly, by the Corporation or by any corporation or other entity that is
otherwise controlled by the Corporation.

 

C-4

 

 

(C) The Corporation shall not issue any shares of Series One Preferred Stock
except upon exercise of Rights issued pursuant to that certain Rights Agreement
dated as of August 29, 2018 between the Corporation and Continental Stock
Transfer & Trust Company, a copy of which is on file with the Secretary of the
Corporation at its principal executive office and shall be made available to
stockholders of record without charge upon written request therefor addressed to
said Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions hereof shall prohibit or restrict the Corporation from issuing for
any purpose, any series of Preferred Stock with rights and privileges similar
to, different from, or greater than, those of the Series One Preferred Stock.

 

Section 5.   Reacquired Shares. Any shares of Series One Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares upon their retirement and cancellation shall become authorized but
unissued shares of Preferred Stock, without designation as to series, and such
shares may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors.

 

Section 6.   Liquidation, Dissolution or Winding Up. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series One Preferred Stock unless the holders of shares of Series One Preferred
Stock shall have received, subject to adjustment as hereinafter provided, (A)
$100 ($1.00 per one one-hundredth of a share) plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, or (B) if greater than the amount specified in clause
(i)(A) of this sentence, an amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, as the same may be adjusted as
hereinafter provided, and (ii) to the holders of stock ranking on a parity upon
liquidation, dissolution or winding up with the Series One Preferred Stock,
unless simultaneously therewith distributions are made ratably on the Series One
Preferred Stock and all other shares of such parity stock in proportion to the
total amounts to which the holders of shares of Series One Preferred Stock are
entitled under clause (i)(A) of this sentence and to which the holders of such
parity shares are entitled, in each case upon such liquidation, dissolution or
winding up. The amount to which holders of Series One Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Corporation pursuant
to clause (i)(B) of the foregoing sentence is hereinafter referred to as the
“Participating Liquidation Amount” and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Corporation applicable pursuant to said clause
to the determination of the Participating Liquidation Amount, as said multiple
may be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the “Liquidation Multiple.” In this event the Corporation shall
at any time after the Effective Date declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, or issue any of
its capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation, then in each such case
the Liquidation Multiple thereafter applicable to the determination of the
Participating Liquidation Amount to which holders of Series One Preferred Stock
shall be entitled after such event shall be the Liquidation Multiple applicable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

C-5

 

 

Section 7. Certain Reclassifications and Other Events.

 

(A) In the event that holders of shares of Common Stock of the Corporation
receive after the Effective Date, in respect of their shares of Common Stock any
share of capital stock of the Corporation (other than any share of Common Stock
of the Corporation), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a “Transaction”),
then, and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Corporation of the shares of
Series One Preferred Stock shall be adjusted so that after such event the
holders of Series One Preferred Stock shall be entitled, in respect of each
share of Series One Preferred Stock held, in addition to such rights in respect
thereof to which such holder was entitled immediately prior to such adjustment,
to (i) such additional dividends as equal the Dividend Multiple in effect
immediately prior to such Transaction multiplied by the additional dividends
which the holder of a share of Common Stock shall be entitled to receive by
virtue of the receipt in the Transaction of such capital stock, (ii) such
additional voting rights as equal the Vote Multiple in effect immediately prior
to such Transaction multiplied by the additional voting rights which the holder
of a share of Common Stock shall be entitled to receive by virtue of the receipt
in the Transaction of such capital stock and (iii) such additional distributions
upon liquidation, dissolution or winding up of the Corporation as equal the
Liquidation Multiple in effect immediately prior to such Transaction multiplied
by the additional amount which the holder of a share of Common Stock shall be
entitled to receive upon liquidation, dissolution or winding up of the
Corporation by virtue of the receipt in the Transaction of such capital stock,
as the case may be, all as provided by the terms of such capital stock.

 

(B) In the event that holders of shares of Common Stock of the Corporation
receive after the Effective Date, in respect of their shares of Common Stock any
right or warrant to purchase Common Stock (including as such a right, for all
purposes of this paragraph, any security convertible into or exchangeable for
Common Stock) at a purchase price per share less than the Fair Market Value (as
hereinafter defined) of a share of Common Stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights, voting rights
and rights upon the liquidation, dissolution or winding up of the Corporation of
the shares of Series One Preferred Stock shall each be adjusted so that after
such event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple
shall each be the product of the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Fair Market Value of the Common
Stock at the time of such issuance, by the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants.

 

C-6

 

 

(C) In the event that holders of shares of Common Stock of the Corporation
receive after the Effective Date in respect of their shares of Common Stock any
right or warrant to purchase capital stock of the Corporation (other than shares
of Common Stock), including as such a right, for all purposes of this paragraph,
any security convertible into or exchangeable for capital stock of the
Corporation, (other than Common Stock), at a purchase price per share less than
the Fair Market Value of such shares of capital stock on the date of issuance of
such right or warrant, then and in each such event the dividend rights, voting
rights and rights upon liquidation, dissolution or winding up of the Corporation
of the shares of Series One Preferred Stock shall each be adjusted so that after
such event each holder of a share of Series One Preferred Stock shall be
entitled, in respect of each share of Series One Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the holder of a share of
Common Stock shall be entitled upon exercise of such right or warrant by virtue
of the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction (as hereinafter defined) and (ii) such additional
voting rights as equal the Vote Multiple in effect immediately prior to such
event multiplied, first, by the additional voting rights to which the holder of
a share of Common Stock shall be entitled upon exercise of such right or warrant
by virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction and (iii) such additional distribution
upon liquidation, dissolution or winding up of the Corporation as equal the
Liquidation Multiple in effect immediately prior to such event multiplied,
first, by the additional amount which the holder of a share of Common Stock
shall be entitled to receive upon liquidation, dissolution or winding up of the
Corporation upon exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise and multiplied again by the
Discount Fraction. For purposes of this paragraph, the “Discount Fraction” shall
be a fraction the numerator of which shall be the difference between the Fair
Market Value of a share of the capital stock subject to a right or wan-ant
distributed to holders of shares of Common Stock of the Corporation as
contemplated by this paragraph immediately after the distribution thereof and
the purchase price per share for such share of capital stock pursuant to such
right or warrant and the denominator of which shall be the Fair Market Value of
a share of such capital stock immediately after the distribution of such right
or warrant.

 

(D) For purposes of this Certificate of Designations, the “Fair Market Value” of
a share of capital stock of the Corporation (including a share of Common Stock)
on any date shall be deemed to be the average of the daily closing price per
share thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that, in the event
that such Fair Market Value of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading Days after (i)
the ex-dividend date for a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock, or (ii) the
effective date of any subdivision, split, combination, consolidation, reverse
stock split or reclassification of such stock, then, and in each such case, the
Fair Market Value shall be appropriately adjusted by the Board of Directors of
the Corporation to take into account ex-dividend or post-effective date trading.
The closing price for any day shall be the last sale price, regular way, or, in
case, no such sale takes place on such day, the average of the closing bid and
asked prices, regular way as reported in the applicable transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the shares are listed or admitted to trading or, if the shares
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the., over-the counter market, as reported by the NASDAQ Capital
Market or such other system then in use, or if on any such date the shares are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the shares
selected by the Board of Directors of the Corporation. The term “Trading Day”
shall mean a day in which the principal national securities exchange on which
the shares are listed or admitted to trading is open for the transaction of
business or, if the shares are not listed or admitted to trading on any national
securities exchange, on which the any such national securities exchange as may
be selected by the Board of Directors of the Corporation is open. If the shares
are not publicly held or not so listed or traded on any day within the period of
30 Trading Days applicable to the determination of Fair Market Value thereof as
aforesaid, “Fair Market Value” shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Corporation.
In either case referred to in the foregoing sentence, the determination of Fair
Market Value shall be described in a statement filed with the Secretary of the
Corporation.

 

C-7

 

 

Section 8.   Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series One Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.

 

Section 9.   Effective Time of Adjustments.

 

(A) Adjustments to the Series One Preferred Stock required by the provisions
hereof shall be effective as of the time at which the event requiring such
adjustments occurs.

 

(B) The Corporation shall give prompt written notice to each holder of a share
of Series One Preferred Stock of the effect of any adjustment to the voting
rights, dividend rights or rights upon liquidation, dissolution or winding up of
the Corporation of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Corporation to give
such notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.

 

C-8

 

 

Section 10. No Redemption. The shares of Series One Preferred Stock shall not be
redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire shares of Series One Preferred Stock in any other manner permitted by
law, the provisions hereof and the Certificate of Incorporation, as amended, of
the Corporation.

 

Section 11. Ranking. Unless otherwise provided in the Certificate of
Incorporation, as amended, of the Corporation or a Certificate of Designations
relating to a series of preferred stock of the Corporation established after the
issuance of any share of Series One Preferred Stock or any right, warrant, or
option providing for the issuance thereof, the Series One Preferred Stock shall
rank, as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up, (i) junior to all other series of the
Corporation's Preferred Stock and (iv) senior to the Common Stock.

 

Section 12. Amendment. The provisions hereof and the Certificate of
Incorporation, as amended, of the Corporation shall not be amended in any manner
which would adversely affect the rights, privileges or powers of the Series One
Preferred Stock without, in addition to any other vote of stockholders required
by law, the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series One Preferred Stock, voting together as a single
class.

 

Section 13. Fractional Shares. Series One Preferred Stock may be issued in
fractions of a share (in one one-hundredths (1/100th) of a share and integral
multiples thereof) that shall entitle the holder thereof, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of shares of Series One Preferred Stock.

 

IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Designations and do affirm the foregoing as true under the penalties of perjury
this 29th day of August, 2018.

 

        Name:  Christopher Hughes   Title: Chief Executive Officer

 

C-9

 

 

Exhibit D

 

Conditional Resignation

 

FORM OF

 

CONDITIONAL LETTER OF RESIGNATION OF

MEMBER OF THE BOARD OF DIRECTORS OF TSR, INC.

 

Dated: _________, 2019

 

The undersigned, a member of the Board of Directors (the “Board”) of TSR, Inc.,
a Delaware corporation (the “Corporation”), does hereby resign as a member of
the Board, effective immediately upon, and conditioned upon, the satisfaction of
the “Condition” set forth below.

 

This letter of resignation is executed and delivered to the Corporation in
connection with the Corporation’s entry into the Settlement and Release
Agreement (the “Settlement Agreement”), dated as of August 30, 2019, made and
entered into by and between the Corporation, Zeff Capital, L.P., Zeff Holding
Company, LLC and Daniel Zeff, QAR Industries, Inc. and Robert Fitzgerald, and
Fintech Consulting, LLC and Tajuddin Haslani. This letter of resignation is
irrevocable and shall be held in escrow by the Corporation. As provided in
Section 3(c)(i) of the Settlement Agreement, this conditional resignation shall
become effective as of 5:00 p.m., Eastern Time, on December 30, 2019 (the
“Effective Time”) if and only if the Repurchase and the payment of the
Settlement Payment (each as defined in the Settlement Agreement) are not
completed by the Effective Time (the “Condition”). If the Repurchase and the
payment of the Settlement Payment are completed prior to the Effective Time,
this conditional letter of resignation shall not become effective, and the
Corporation shall deem it null and void and of no further effect. If the
Condition is satisfied at the Effective Time, the Corporation shall insert
December 30, 2019 as the effective date on the following page, release this
conditional letter of resignation from escrow and deliver it to the Board
without any further action, including, without limitation, notice to any person
or entity, at which point this letter of resignation shall become effective.

 

[Signatures continue on following page] 

 

 

 

 

EFFECTIVE DATE: __________________   MEMBER OF THE BOARD OF DIRECTORS OF TSR,
INC.                 Name:

 

The undersigned hereby consents to the foregoing:

 

TSR, INC.   By:_______________________________ Name:  Christopher Hughes
Title:    Chief Executive Officer

 

 

 

 

Exhibit E

 

Conditional Resignation

 

FORM OF

 

CONDITIONAL LETTER OF RESIGNATION OF

MEMBER OF THE BOARD OF DIRECTORS OF TSR, INC.

 

Dated: __________, 2019

 

The undersigned, a member of the Board of Directors (the “Board”) of TSR, Inc.,
a Delaware corporation (the “Corporation”) included on the Zeff Slate (as
defined in the Settlement Agreement, which is defined herein), does hereby
resign as a member of the Board, effective immediately upon, and conditioned
upon, the occurrence of, the “Effective Time” set forth below.

 

This letter of resignation is executed and delivered to the Corporation in
connection with the Corporation’s entry into the Settlement and Release
Agreement (the “Settlement Agreement”), dated as of August 30, 2019, made and
entered into by and between the Corporation, Zeff Capital, L.P., Zeff Holding
Company, LLC and Daniel Zeff, QAR Industries, Inc. and Robert Fitzgerald, and
Fintech Consulting, LLC and Tajuddin Haslani. This letter of resignation is
irrevocable and shall be held in escrow by the Corporation. As provided in
Section 3(c)(ii) of the Settlement Agreement, this conditional resignation shall
become effective as of the closing of the Repurchase and the payment of the
Settlement Payment (each as defined in the Settlement Agreement), if such
closing and payment occur by 5:00 p.m., Eastern Time, on December 30, 2019 (the
“Condition”). The time and date upon which the Condition is satisfied shall be
the “Effective Time”. If the Condition is not satisfied at 5:00 p.m., Eastern
Time, on December 30, 2019, this conditional letter of resignation shall not
become effective, and the Corporation shall deem it null and void and of no
further effect. If the Condition is satisfied, the Corporation shall insert the
date upon which the Condition is satisfied as the effective date on the
following page, release this conditional letter of resignation from escrow and
deliver it to the Board without any further action, including, without
limitation, notice to any person or entity, at which point this letter of
resignation shall become effective.

 

[Signatures continue on following page] 

 

 

 

 

EFFECTIVE DATE: __________________   MEMBER OF THE BOARD OF DIRECTORS OF TSR,
INC.                 Name:

 

The undersigned hereby consents to the foregoing:

 

TSR, INC.   By:_______________________________ Name:  Christopher Hughes
Title:    Chief Executive Officer

 

 

 

 

Exhibit F

 

Press Release

 

TSR, Inc. Enters into Settlement Agreement with Investor Parties

 

Parties Agree to Dismiss Pending Litigation and Settle All Disputes

 

Parties Enter into Plan to Resolve Proxy Contest

 

Zeff Capital, L.P. to Withdraw Its Nomination of Directors and Stockholder
Proposals in Connection with TSR’s Commitments  

 

Hauppauge, NY (August 30, 2019) – TSR, Inc. (Nasdaq: TSRI), a provider of
computer programming consulting services (“TSR” or the “Company”), today
announced that it has entered into a settlement and release agreement (the
“Settlement Agreement”) with certain investor parties including Zeff Capital,
L.P., Zeff Holding Company, LLC and Daniel Zeff, QAR Industries, Inc. and Robert
Fitzgerald, and Fintech Consulting, LLC and Tajuddin Haslani (collectively, the
“Investor Parties”) with respect to the previous proxy contest and all disputes
and pending litigation between the Company and the Investor Parties, including,
without limitation:

 

(i) A complaint for declaratory and injunctive relief for violations of the
federal securities laws filed on December 21, 2018 by the Company against the
Investor Parties in the United States District Court in the Southern District of
New York;

 

(ii) A complaint to compel annual meeting of stockholders filed on August 7,
2019 by Zeff Capital, L.P. against the Company in the Delaware Court of
Chancery;

 

(iii) Cross-claims relating to alleged breaches of fiduciary duties and for
indemnification and contribution filed on July 26, 2019 by the Company against
the Investor Parties in New York Supreme Court, Queens County; and

 

(iv) A complaint relating to alleged breaches of fiduciary duties filed on
November 1, 2018 by Fintech Consulting, LLC against the Company in the Delaware
Court of Chancery, which was previously dismissed voluntarily.

 

The Settlement Agreement does not resolve the two pending litigations previously
disclosed by the Company filed by TSR stockholder Susan Paskowitz.

 

Pursuant to the Settlement Agreement, the Parties concurrently entered into a
share repurchase agreement (the “Repurchase Agreement”) providing for the
purchase of the shares of common stock of the Company, par value $0.01 per share
(“Common Stock”), beneficially owned by the Investor Parties as of the date of
the Settlement Agreement, by the Company and Christopher Hughes, the Chairman of
the Board of Directors of the Company (the “Board”), President and Chief
Executive Officer of the Company, for an aggregate purchase price of
$5,956,712.50 in cash or $6.25 per share, subject to the terms and conditions
contained in the Repurchase Agreement (the “Repurchase”). In addition, the
Company has agreed to make a payment of $1,543,287.50 to the Investor Parties
for the settlement of the pending litigation (the “Settlement Payment”).

 

 

 

  

In addition, pursuant to the Settlement Agreement, TSR and the Investor Parties
have agreed to take certain actions with respect to the governance of the
Company and the upcoming 2018 Annual Meeting. To reflect the governance terms of
the Settlement Agreement, TSR will adopt an amendment to its by-laws (the
“By-Laws Amendment”) and an amended and restated Rights Agreement (the “Amended
Rights Agreement”).

 

TSR and the Investor Parties have also agreed that the Company shall hold its
2018 Annual Meeting on October 22, 2019. In connection with the 2018 Annual
Meeting, the Company will solicit proxies for two alternative Class I director
slates for election at the 2018 Annual Meeting: one slate for the Company’s
nominees, and one slate for nominees selected by Zeff Capital, L.P. If the
Company completes the Repurchase and makes the Settlement Payment prior to the
2018 Annual Meeting, Zeff Capital, L.P. will withdraw its director slate from
consideration at the 2018 Annual Meeting. If the Repurchase is not completed or
the Settlement Payment is not made prior to the 2018 Annual Meeting, then the
Company will withdraw its director slate and will support the slate proposed by
Zeff Capital, L.P.

 

TSR and the Investor Parties have further agreed that if the Repurchase is not
completed or the Settlement Payment is not made as of 5:00 pm, Eastern Time, on
December 30, 2019, all of the then-current members of the board of directors of
the Company (other than the directors from elected at the 2018 annual meeting
who were proposed by Zeff Capital, L.P.) will resign from the Company’s board of
directors. If the Repurchase is completed after the 2018 Annual Meeting and
prior to December 30, 2019, the two directors nominated by Zeff Capital, L.P.
will resign from the Company’s board of directors.

 

The Company will seek financing in connection with the Settlement Payment and
the Repurchase. The complete Settlement Agreement, Repurchase Agreement, By-Laws
Amendment and Amended Rights Agreement will be included as exhibits to a Current
Report on Form 8-K, which will be filed with the Securities and Exchange
Commission.

 

Christopher Hughes, Chairman of the Board, President and Chief Executive Officer
of TSR, said:

 

“The Board considered the significant cost and uncertainty of prolonged
litigation, as well as the continued instability and business disruption during
the proxy contest, and as a result, determined that an immediate resolution of
the pending litigation and proxy contest is in the best interest of our Company
and all stakeholders. This Settlement Agreement will help ensure that TSR and
its employees will be able to continue to focus on serving customers and
building on the Company’s financial and operational performance.”

 

Daniel Zeff, President and Managing Member of Zeff Capital, L.P., said:

 

“We are glad to see an end to this long-running dispute. We believe we have
created significant value for all stockholders, and in particular are pleased
with the governance changes that the Board has adopted, which benefit all
stockholders. While we continue to believe that the Company has great growth
potential, we recognize the costs to the Company and its stockholders from the
on-going litigation and business disruptions, as well as the risks going forward
if the proxy contest continues. In light of this we are pleased with the terms
of the Settlement Agreement.”

 

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Forward-Looking Statements

 

Certain statements in this press release which are not historical facts may
constitute “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended. Words such as
“anticipate,” “believe,” “demonstrate,” “estimate,” “expect,” “forecast,”
“intend,” “likely,” “may,” “plan,” “should,” and “will,” and similar expressions
identify forward-looking statements. Such forward-looking statements are based
upon the Company’s current plans, estimates and expectations and are not a
representation that such plans, estimates, or expectations will be achieved.
Specifically, forward-looking statements in this document may include, but are
not limited to, the statements regarding the occurrence of the events
contemplated under the Settlement Agreement and Repurchase Agreement. These and
other forward-looking statements involve known and unknown risks, uncertainties
and other factors that are difficult to predict and which may cause the actual
events to differ materially from the expectations, intentions, beliefs, plans or
predictions of the future expressed or implied by such forward-looking
statements. These risks, uncertainties and other factors include, among others,
the factors and matters described in the Company’s filings with the SEC,
including, but not limited to, the Company’s most recent Form 10-K, Forms 10-Q
and Forms 8-K, which are available at www.sec.gov. The forward-looking
statements included in this press release are made only as of the date of this
press release and we do not undertake any obligation to publicly update any
forward-looking statements to reflect subsequent events or circumstances, except
as required by law. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date hereof.

 

 

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