EMPLOYMENT AGREEMENT
AGREEMENT effective this 1st day of June, 1998 by and between TSR
Consulting Services, Inc., a Delaware corporation, with offices at 400 Oser
Avenue, Hauppauge, New York 11788 (hereinafter called the "Corporation") and
Ernest G. Bago, residing at 6 Greenbriar Lane, Montvale, New Jersey 07645
(hereinafter called "Executive").
W I T N E S S E T H :
WHEREAS, the Corporation desires to employ Executive and Executive is
willing to undertake such employment on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. The Corporation hereby employs Executive as President of the
Corporation or such other position as he may be elected or appointed
to by the Corporation's Board of Directors, to perform such
supervisory or executive duties on behalf of the Corporation as the
Board of Directors of the Corporation may from time to time determine.
2. Executive hereby accepts such employment and agrees that throughout
the period of his employment hereunder, he will devote his full time,
attention, knowledge and skills, faithfully, diligently and to the
best of his ability, in furtherance of the business of the Corporation
and to promote the interest of the Corporation, will perform the
duties assigned to him pursuant to Paragraph 1 hereof, subject, at all
times, to the direction and control of the Board of Directors of the
Corporation. Executive shall at all times be subject to, observe and
carry out such rules, and regulations as the Corporation from time to
time shall establish. During the period of Executive's employment
hereunder, Executive shall not be entitled to additional compensation
for serving in any office of the Corporation or any of its
subsidiaries or parent corporation to which he is elected, including
without limitation as a director of the Corporation or parent
corporation.
3. Executive shall be employed for a term of four (4) years commencing as
of the 1st day of June, 1998 and ending on the 31st day of May, 2002
(the "Term"), unless his employment is terminated prior to the
expiration of the Term pursuant to the provisions hereof.
4. As full compensation for his services hereunder, the Corporation will
pay to Executive a salary (the "Base Salary") at the rate of Two
Hundred Thousand ($200,000) Dollars per annum, payable in equal
installments in arrears no less frequently than semi-monthly. In
addition, the parent corporation's Board of Directors, shall in good
faith, prior to the end of each contract year consider and cause the
Corporation to grant to Executive a discretionary bonus, based upon
standards which the President of the parent corporation shall
establish with Executive at the beginning of the contract year and may
be modified thereafter. The bonus provided for hereunder shall be
payable by the Corporation to Executive within 120 days of the end of
the contract year, for the period to which such bonus relates. In
addition to such salary, Executive shall be entitled to participate,
to the extent he is eligible under the terms and conditions thereof,
in any pension, profit-sharing, retirement, hospitalization,
insurance, medical services, or other employee benefit plan generally
available to executives of the Corporation which may be in effect from
time to time during the period of his employment hereunder. The
Corporation shall be under no obligation to institute or continue the
existence of any such employee benefit plan. Executive also shall be
entitled to a leased car and payment or reimbursement of a country
club membership is such amounts for the car and the country club
membership as shall be determined by the Board of Directors of the
Corporation and executive medical benefits. Any or all of such
entitlements may be discontinued at the end of any contract year at
the discretion of the President of the parent corporation.
5. The Corporation shall reimburse Executive for all expenses reasonably
incurred by him in connection with the performance of his duties
hereunder and the business of the Corporation, upon the submission to
the Corporation of appropriate vouchers therefor and approval thereof
by the Treasurer of the Corporation. Such reimbursements shall be
subject to the expense reimbursement policies of the Corporation which
are in effect from time to time. Executive shall be entitled to three
(3) weeks vacation time per annum in accordance with the regular
procedures of the Corporation governing executive officers as
determined from time to time by the Corporation's Board of Directors.
6. (a) Notwithstanding any provision contained herein to the contrary, if
on or after the date hereof and prior to the end of the Term,
Executive is terminated for "Cause" (as defined below) then the
Corporation shall have the right to give notice of termination of
Executive's services hereunder as of a date to be specified in such
notice and this Agreement shall terminate as of the date so specified.
Termination for "Cause shall mean Executive shall (i) be charged with
a felony crime, (ii) commit any act or omit to take any action in bad
faith and to the detriment of the Corporation, (iii) commit an act of
fraud against the Corporation
or (iv) materially breach any term of this Agreement and fail to
correct such breach within ten days after written notice of commission
thereof.
(b) If, during the Term, Executive is unable to perform his duties
hereunder on account of illness, accident or other physical or mental
incapacity and such illness or other incapacity shall continue for a
period of six (6) consecutive months or an aggregate of one hundred
and eighty (180) days in any consecutive twelve (12) month period, the
Corporation shall have the right, on fifteen (15) days written notice
(given after such period) to Executive, to terminate this Agreement.
In such event, the Corporation shall be obligated to pay to Executive
his Base Salary to the end of the calendar month in which such
termination occurs. However, if prior to the date specified in such
notice, Executive's illness or incapacity shall have terminated and he
shall have taken up the performance of his duties hereunder, Executive
shall be entitled to resume his employment hereunder, as though such
notice had not been given.
(c) In the event of Executive's death during the Term, this Agreement
shall terminate immediately, and Executive's legal representatives
shall be entitled to receive the Base Salary due Executive through the
last day of the calendar month during which his death shall have
occurred together with any approved expenses as contemplated under
Section 5 and as may otherwise be provided under any insurance policy
or similar instrument.
(d) In the event that this Agreement is terminated for "Cause"
pursuant to Section 6(a), then Executive shall be entitled to receive
only the Base Salary to the date on which such termination shall take
effect.
(e) In the event the Corporation terminates Executive for any reason
other than as provided under Section 6(a), (b), or (c), then this
Agreement shall terminate upon thirty (30) days' written notice to
Executive and the Corporation shall be obligated to pay to Executive
an amount equal to any unpaid, approved expenses as contemplated under
Section 5 and a severance payment equal to twelve (12) months' salary
at the Base Salary, payable in twelve (12) equal monthly installments.
Notwithstanding the foregoing, if Executive obtains employment within
the one (1) year period following termination, the severance payment
payable by the Corporation hereunder shall be reduced to the extent of
the compensation received by Executive from such employment. Executive
shall use best efforts to obtain substitute employment in a timely
manner following termination.
In the event the Corporation terminates Executive for any reason other
than as provided under Section 6(a), (b), or (c), Executive will
remain eligible for a period of one year after termination to
participate in the health benefit program provided to all employees of
the Corporation which may then be in effect. The health benefit
program will be paid by the Corporation.
7. In the event of a "Change in Control of the Corporation" whereas (a)
the shareholders of the Corporation approve a merger or consolidation
involving the Corporation resulting in a change of ownership of a
majority of the outstanding shares of capital stock of the
Corporation, or (b) the shareholders of the Corporation approve a plan
of liquidation or dissolution of the Corporation or the sale or
disposition by the Corporation of all or substantially all the
Corporation's assets (c) or there has been a public announcement of a
Change in Control of the Corporation (provided, however, that
consummation of the Change in Control of the Corporation shall be a
condition precedent to the effectiveness of this provision) and the
acquiring or surviving corporation does not assume all of the
Corporation's rights and obligations under this Agreement, then:
(i) the Corporation shall pay to Executive his full salary through
the date of termination at the Base Salary in effect at the time
notice of termination is given plus his bonus prorated through
the date of termination; and
(ii) in lieu of any further salary or bonus payments to Executive for
periods subsequent to the date of termination, the Corporation
shall pay on the date of termination as severance pay to
Executive an amount equal to 2.99 times the average annual total
compensation (cash plus the cash value of all benefits not
generally provided to all employees of the Corporation) paid to
Executive over the Corporation's last three fiscal years prior to
the date of termination up to a maximum of One Million
($1,000,000) Dollars in the event of a Change in Control of the
Corporation prior to June 1, 1999, up to a maximum of Seven
Hundred Fifty Thousand ($750,000) Dollars in the event of a
Change in Control of the Corporation on or after June 1, 1999 and
prior to June 1, 2000, up to a maximum of Five Hundred Thousand
($500,000) Dollars in the event of the Change in Control of the
Corporation on or after June 1, 2000 and prior to June 1, 2001
and up to a maximum of Two Hundred Fifty Thousand ($250,000)
Dollars in the event of a Change in Control of the Corporation on
or after June 1, 2001.
8. The Corporation and Executive are on this day entering into a
Maintenance of Confidence and Non-Compete Agreement, the terms of
which are hereby expressly incorporated into this Agreement, provided,
however, that the
Maintenance of Confidence and Non-Compete Agreement shall continue to
be effective notwithstanding any termination of Executive's employment
hereunder and shall continue in effect upon expiration of this
Agreement pursuant to the terms of the Maintenance of Confidence and
Non-Compete Agreement.
9. (a) The Corporation shall have the right from time to time to
purchase, increase, modify or terminate insurance policies on the life
of Executive for the benefit of the Corporation, in such amounts as
the Corporation shall determine in its sole discretion.
(b) In connection with paragraph 9(a) above, Executive shall, at such
time or times and at such place or places as the Corporation may
reasonably direct, submit himself to such physical examinations and
Executive shall deliver such documents as the Corporation may deem
necessary or desirable.
10. Executive shall hold in a fiduciary capacity for the benefit of the
Corporation all information, knowledge and data relating to or
concerned with its operations, sales, business and affairs, and he
shall not, at any time hereafter, use, disclose or divulge any such
information, knowledge or data to any person, firm or corporation
other than the Corporation or its designees or except as may otherwise
be required in connection with the business and affairs to the
Corporation.
11. The parties hereto acknowledge that Executive's services are unique
and that, in the event of a breach by Executive of any of his
obligations under this Agreement, the Corporation will not have an
adequate remedy at law. Accordingly, in the event of any such breach
or threatened breach by Executive, the Corporation shall be entitled
to such equitable and injunctive relief as may be available to
restrain Executive from the violation of the provisions thereof.
Nothing herein shall be construed as prohibiting the Corporation from
pursuing any other remedies at law or in equity for such breach or
threatened breach, including the recovery of damages and the immediate
termination of the employment of Executive hereunder.
12. This Agreement together with the Maintenance of Confidence and
Non-Compete Agreement executed on the same date hereof, constitute the
entire agreement of the parties hereto with respect to the subject
matter hereof and no amendment or modification hereof shall be valid
or binding unless made in writing and signed by the party against whom
enforcement thereof is sought.
13. Any notice required, permitted or desired to be given pursuant to any
of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if delivered in person
or sent by certified mail, return receipt requested, postage and fees
prepaid as follows:
If to the Corporation at:
Chairman of the Board
TSR Consulting Services, Inc.
400 Oser Avenue
Hauppauge, New York 11788
With a copy to:
Mr. John Sharkey
Vice President of Finance
TSR Consulting Services, Inc.
400 Oser Avenue
Hauppauge, New York 11788
If to the Executive at:
Mr. Ernest G. Bago
6 Greenbriar Lane
Montvale, New Jersey 07645
Either of the parties hereto may at any time and from time to time
change the address to which notice shall be sent hereunder by notice
to the other party given under this paragraph 13. The date of the
giving of any notice sent by mail shall be the date of the posting of
the mail
14. Neither this Agreement nor the right to receive any payments hereunder
may be assigned by Executive. This Agreement shall be binding upon
Executive, his heirs, executors and administrators and upon the
Corporation, its successors and assigns.
15. No course of dealing nor any delay on the part of the Corporation in
exercising any rights hereunder shall operate as a waiver of any such
rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
16. This shall be governed, interpreted and construed in accordance with
the laws of the State of New York applicable to agreements entered
into and to be performed entirely therein.
17. If any clause, paragraph, section or part of this Agreement shall be
held or declared to be void, invalid or illegal, for any reason, by
any court of competent jurisdiction, such provisions shall be
ineffective but shall not in any way invalidate or affect any other
clause, paragraph, section or part of this Agreement.
18. Executive acknowledges that he is not subject to any agreement which
would in any way restrict him from carrying out his employment as
contemplated hereunder.
19. This Agreement supersedes any prior employment agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day in year first above written.
/s/ ERNEST G. BAGO
------------------------
Ernest G. Bago
Executive
TSR CONSULTING SERVICES, INC.
By: /s/ J.F. HUGHES
------------------------
Name: J.F. Hughes
Title: Chairman
Solely for purposes of Section 4 only
TSR, Inc.
By: /s/ J.F. HUGHES
------------------------
Name: J.F. Hughes
Title: Chairman