IT staffing provider TSR Inc. (NASDAQ: TSRI) agreed to buy back nearly $6.0 million in common stock and pay $1.5 million to dismiss litigation and settle disputes with an investor group.

Hauppauge, New York-based TSR reported the settlement agreement on Aug. 30; it was made with Zeff Capital LP, Zeff Holding Co. LLC and Daniel Zeff, QAR Industries Inc. and Robert Fitzgerald, and Fintech Consulting LLC and Tajuddin Haslani.

The share repurchase agreement calls for the company and Christopher Hughes — president, CEO and board chairman at TSR — to purchase the investor parties’ shares of common stock in TRS, for an aggregate purchase price of $5.96 million in cash or $6.25 per share.

“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,” Hughes said.

TSR will also pay $1.5 million to the investor parties to settle the pending litigation.

“While we continue to believe that the company has great growth potential, we recognize the costs to the company and its stockholders from the ongoing litigation and business disruptions, as well as the risks going forward if the proxy contest continues,” said Daniel Zeff, president and managing member of Zeff Capital. “In light of this we are pleased with the terms of the settlement agreement.”

The agreement also calls for TSR to adopt an amendment to its by-laws and an amended and restated rights agreement. TSR agreed to hold its 2018 annual meeting on Oct. 22, 2019, and solicit proxies for two alternative Class I director slates for election at meeting: one slate for the company’s nominees, and one slate for nominees selected by Zeff Capital.

If the company completes the repurchase and makes the settlement payment prior to the 2018 annual meeting, Zeff Capital will withdraw its director slate from consideration; If not, TSR will withdraw its slate and support the one proposed by Zeff Capital.

Both sides further agreed that if the repurchase is not completed or the settlement payment is not made before 5 p.m. EST on Dec. 30, all of the then-current members of TSR’s board (other than the directors elected at the annual meeting who were proposed by Zeff Capital) will resign from the board. If the repurchase is completed after the annual meeting and prior to Dec. 30, the two directors nominated by Zeff Capital will resign from the board.

TSR will seek financing in connection with the settlement payment and the repurchase.

The settlement does not resolve two pending litigations filed by TSR stockholder Susan Paskowitz.