10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended June 30, 2002

Commission File Number 0-7704

REFAC

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 13-1681234 (I.R.S. Employer Identification No.)

The Hudson River Pier

115 River Road, Edgewater, New Jersey 07020-1099

(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (201) 943-4400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ¨

The number of shares outstanding of the Registrant’s Common Stock, par value $.10 per share, as of August 14, 2002 was 3,796,511

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INDEX

		Page
Part I.	Financial Information
	Condensed Consolidated Balance Sheets June 30, 2002 (unaudited) and December 31, 2001	3
	Condensed Consolidated Statements of Operations Six and Three Months Ended June 30, 2002 and 2001 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2002 and 2001 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6-14
	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	15-22
Part II.	Other Information and Exhibit Index	23-24

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CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2002			December 31, 2001
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	3,168,000		$	8,690,000
Royalties receivable		700,000			754,000
Accounts receivable, net		1,464,000			2,890,000
Investments being held to maturity		6,646,000			200,000
Inventory		890,000			2,140,000
Prepaid expenses		208,000			419,000
Total current assets		13,076,000			15,093,000
Property and equipment, net		1,553,000			1,672,000
Investments being held to maturity		446,000			445,000
Deferred income taxes		2,601,000			114,000
Other assets		178,000			265,000
Assets being held for sale—Product Design Group		168,000			4,870,000
Assets being held for sale—Graphic Design Group		176,000			1,583,000
Assets being held for sale—Consumer Products Group		439,000			375,000
	$	18,637,000		$	24,417,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	25,000		$	293,000
Accrued expenses		450,000			670,000
Amounts payable under service agreements		66,000			253,000
Deferred revenue		39,000			315,000
Other liabilities		89,000			89,000
Liabilities being held for sale—Product Group		10,000			0
Total current liabilities		679,000			1,620,000
Other liabilities—deferred compensation		101,000			205,000
Stockholders’ Equity
Common stock, $.10 par value		545,000			545,000
Additional paid-in capital		9,987,000			9,984,000
Retained earnings		21,574,000			26,312,000
Treasury stock, at cost		(13,874,000	)		(13,874,000	)
Receivable from issuance of common stock		(375,000	)		(375,000	)
Total stockholders’ equity		17,857,000			22,592,000
	$	18,637,000		$	24,417,000

See accompanying notes to the unaudited condensed consolidated financial statements

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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	Six Months Ended June 30,						Three Months Ended June 30,
	2002			2001			2002			2001
Revenues
Licensing-related activities	$	1,250,000		$	1,635,000		$	671,000			894,000
Realized gains on licensing-related securities		—			1,813,000			—			580,000
Dividend income from licensing-related securities		—			15,000			—			8,000
Dividend and interest income		92,000			500,000			44,000			226,000
Total Revenues		1,342,000			3,963,000			715,000			1,708,000
Costs and Expenses
Licensing-related activities		216,000			324,000			111,000			279,000
Selling, general and administrative expenses		396,000			302,000			201,000			85,000
Total costs and expenses		612,000			626,000			312,000			364,000
Income before provision for taxes on income		730,000			3,337,000			403,000			1,344,000
Provision for taxes on income		248,000			1,132,000			137,000			390,000
Net income from continuing operations		482,000			2,205,000			266,000			954,000
Loss from discontinued operations—net of taxes		(3,137,000	)		(1,372,000	)		(2,786,000	)		(649,000	)
Cummulative effect of change in accounting principle—net of $1,073,000 tax benefit		(2,083,000	)		—			—			—
Net Income (loss)	$	(4,738,000	)	$	833,000		$	(2,520,000	)	$	305,000
Basic and diluted earnings (loss) per share:
From continuing operations	$	0.13		$	0.58		$	0.07		$	0.25
From discontinued operations	$	(0.83	)	$	(0.36	)	$	(0.73	)	$	(0.17	)
From cumulative effect of change in accounting principle	$	(0.55	)	$	0.00		$	0.00		$	0.00
Net income (loss)	$	(1.25	)	$	0.22		$	(0.66	)	$	0.08
Basic weighted average shares outstanding		3,795,469			3,795,261			3,795,769			3,795,261
Diluted weighted average shares outstanding		3,804,832			3,797,881			3,812,127			3,795,261

See accompanying notes to the unaudited condensed consolidated financial statements

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
	2002			2001
Cash Flows from Operating Activities
Net income (loss)	$	(4,738,000	)	$	833,000
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		102,000			457,000
Inventory Reserve		657,000			0
Loss on disposal of assets		27,000			0
Cumulative effect of changing method of accounting for goodwill		3,156,000			0
Additional impairment of goodwill		2,811,000			0
Impairment of long-lived assets		51,000			0
Realized gains on sale of licensing-related securities		0			(1,813,000	)
Deferred retirement		(104,000	)		(48,000	)
Deferred income taxes		(2,487,000	)		0
(Increase) decrease in assets:
Due from broker		0			(645,000	)
Royalties receivable		54,000			180,000
Accounts receivable		1,426,000			(336,000	)
Prepaid expenses and other current assets		211,000			428,000
Prepaid taxes		0			(78,000	)
Inventory		593,000			(2,735,000	)
Other assets		87,000			0
Assets held for sale		27,000			0
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(488,000	)		40,000
Amounts payable under service agreements		(187,000	)		(268,000	)
Deferred revenue		(276,000	)		0
Liabilities held for sale		10,000			0
Net cash provided by (used in) operating activities		932,000			(3,985,000	)
Cash Flows from Investing Activities
Proceeds from sales of licensing-related securities		0			2,020,000
Proceeds from (purchase of) investments being held to maturity		(6,447,000	)		1,893,000
Additions to property and equipment		(10,000	)		(221,000	)
Net cash (used in) provided by investing activities		(6,457,000	)		3,692,000
Cash Flows from Financing Activities
Proceeds from exercise of stock options		3,000			0
Net decrease in cash and cash equivalents		(5,522,000	)		(293,000	)
Cash and cash equivalents at beginning of period		8,690,000			5,678,000
Cash and cash equivalents at end of period	$	3,168,000		$	5,385,000

See accompanying notes to the unaudited condensed consolidated financial statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.  In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of Refac (the “Company”) at June 30, 2002, and the results of its operations, its cash flows and comprehensive losses for the six month interim periods presented.

The accounting policies followed by the Company are set forth in Note l to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, which is incorporated herein by reference.

2.  The results of operations for the three months ended June 30, 2002 are not indicative of the results to be expected for the full year.

3.  Certain reclassifications have been made to the prior period financial statements to conform them to the current presentation.

4.  The following table reconciles the numerators and denominators of the basic and diluted earnings per share computations pursuant to SFAS No. 128, “Earnings Per Share.”

	Six Months Ended June 30,				Three Months Ended June 30,
Description	2002		2001		2002		2001
Basic shares		3,795,469		3,795,261		3,795,769		3,795,261
Dilution: stock options and warrants		9,363		2,620		16,358		0
Diluted shares		3,804,832		3,797,881		3,812,127		3,795,261
Income from continuing operations	$	482,000	$	2,205,000	$	266,000	$	954,000
Basic earnings	$	0.13	$	0.58	$	0.07	$	0.25
Diluted earnings	$	0.13	$	0.58	$	0.07	$	0.25

5.  On March 21, 2002, the Company announced that it was repositioning itself for sale or liquidation. While no time limit has been set to complete the repositioning of the Company, the Company currently estimates that it can be completed by the end of the second quarter of fiscal 2003. Under SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, assets that are considered to be “held for sale” must be presented as discontinued operations if (i) the operations

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

and cash flows of the “component of the entity” will be eliminated from the ongoing operations of the entity as a result of a disposal transaction and (ii) there will be no significant continuing involvement in the operations of the component after the disposal transaction.

As a result of the actions taken to accomplish this repositioning, the creative consulting services and manufacture and marketing of consumer products groups are included in the income statement as discontinued operations, net of taxes, as they have been sold or are expected to be sold.

The Company’s operations in the licensing of intellectual property rights are not considered held for sale because of the Company’s intent to manage certain outstanding licensing-related agreements through their termination. While the Company’s licensing operations are still considered a continuing business, it has not undertaken any new technology licensing projects during the current or preceding three fiscal years and, given its decision to position itself for sale or liquidation, it is highly unlikely that it will undertake any such projects in the future. The income statement reflects the results of the licensing of intellectual property rights in its results of continuing operations.

6.  Comprehensive loss consists of net income or loss for the current period as well as income, expenses, gains, and losses arising during the period that are included in separate components of equity. It includes the unrealized gains and losses on the Company’s licensing-related securities, net of taxes and foreign currency translation adjustments.

The components of comprehensive loss, net of related tax, for the six and three month periods ended June 30, 2002 and 2001 are as follows:

	Six Months Ended June 30,						Three Months Ended June 30,
Description	2002			2001			2002			2001
Net income (loss)	$	(4,738,000	)	$	833,000		$	(2,520,000	)	$	305,000
Less: Comprehensive losses, net of tax
Unrealized holdings (losses), net		0			0			0			52,000
Reclassification adjustment, net		0		$	(1,197,000	)		0			(383,000	)
Comprehensive loss	$	(4,738,000	)	$	(364,000	)	$	(2,520,000	)	$	(26,000	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7.  As of June 30, 2002, the Company had open letters of credit to purchase goods for $134,000.

8.  Inventories consist primarily of finished goods and are valued at the lower of cost or market on a first in, first out (FIFO) basis. The Company recorded an inventory reserve of $657,000 in anticipation of liquidating its inventory below cost.

9.  Business Combinations and Intangible Assets—Accounting for Goodwill

In June 2001, the Financial Accounting Standards Board approved the issuance of SFAS No. 141, “Business Combinations” and in July 2001, SFAS 142, “Goodwill and Other Intangible Assets.” The new standards require that all business combinations initiated after June 30, 2001 must be accounted for under the purchase method. In addition, all intangible assets acquired that are obtained through contractual or legal right, or are capable of being separately sold, transferred, licensed, rented or exchanged shall be recognized as an asset apart from goodwill. Goodwill and intangibles with indefinite lives are no longer be subject to amortization, but are now subject to at least an annual assessment for impairment by applying a fair value based test. The Company adopted SFAS 142 as of January 1, 2002 and in compliance with this new standard has discontinued the amortization of goodwill.

During the quarter ended June 30, 2002 and prior to the issuance of these financial statements, the Company completed the steps required to value the carrying value of goodwill existing at January 1, 2002. As a result, a non-cash charge of $3,156,000, or ($0.83) per share was recorded as a cumulative effect of change in accounting principle in the six months ended June 30, 2002 statement of operations. At June 30, 2002, the Company designated the Creative Consulting Services and Manufacture and Marketing of Consumer Products segments as Assets held for Sale under provisions of SFAS 144. Based on actual terms of the sale of the Graphic Design Group, which took place on August 5, 2002, and terms under discussion with a nonaffiliated potential buyer of the Product Design Group, the Company determined the fair value of the reporting units were less than the book values and recorded a goodwill impairment charge of $2,811,000. The Company has recorded this impairment charge, net of tax benefits, in losses from discontinued operations. The carrying amount of goodwill at December 31, 2001 and the impairment losses under SFAS 142 as of January 1, 2002 and June 30, 2002, are as follows:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Reporting Units
	Graphic Design Group			Product Design Group			Consolidated
Balance as of December 31, 2001	$	1,473,000		$	4,582,000		$	6,055,000
Impairment loss under SFAS 142 as of January 1, 2002		(673,000	)		(2,483,000	)		(3,156,000	)
Additional impairment loss under SFAS 142 as of June 30, 2002		(712,000	)		(2,099,000	)		(2,811,000	)
Balance as of June 30, 2002	$	88,000		$	0		$	88,000

The Company engaged an independent valuation consultant to assist with the transitional goodwill impairment tests.

The fair value of each of the Graphic Design and Product Design Groups was calculated using two methodologies: (i) Discounted Cash Flow Analysis and (ii) Acquisition Analysis. Discounted Cash Flow Analysis calculates equity value by determining the present value of future after-tax cash flows of each business unit and the Acquisition Analysis considers multiples determined from information of relevant acquisitions of companies engaged in similar lines of business.

The forecast for the Graphic Design Group was given full weight in the determination of valuation because the Graphic Design Group forecast represented a gradual improvement over time and was therefore likely to form the basis for a transaction on its own merit. The forecast for the Product Design Group however represented a departure from historical results. Therefore, a 50% weight was given to the Product Design Group because the forecast was divergent from its historical performance.

In determining the fair value, the Guideline Public Company Analysis methodology, which considers multiples of the financial results of public companies engaged in similar lines of business, was not used because of the lack of public companies that provide the same services as the Graphic Design and Product Design Groups. In addition, those public companies found were more diverse than the Graphic Design and Product Design Groups.

The following pro forma table shows the effect of amortization expense and the cumulative effect of change in accounting principle on the Company’s net loss as follows:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Six Months Ended June 30,					Three Months Ended June 30,
	2002			2001		2002			2001
Reported Net Income (Loss)	$	(4,738,000	)	$	833,000	$	(2,520,000	)	$	305,000
Cumulative Effect of Change in accounting principle, net of tax		(2,083,000	)		0		0			0
Amortization Expense		0			143,000		0			72,000
Adjusted Net Income (Loss)	$	(2,655,000	)	$	976,000	$	(2,520,000	)	$	377,000
Reported Income (Loss) per Share:
Basic and Diluted	$	(1.25	)	$	0.22	$	(0.66	)	$	0.08
Adjustment for Amortization Expense:
Basic and Diluted		0		$	0.04		0		$	0.02
Adjustment for Cumulative Effect of Change in Accounting Principle:
Basic and Diluted	$	(0.55	)		0		0			0
Adjusted Net Income (Loss) per Share:
Basic and Diluted	$	(0.70	)	$	0.26	$	(0.66	)	$	0.10

10.    Accounting for the Impairment or Disposal of Long-lived Assets

The Company has historically estimated the recoverability of its long-term assets, including goodwill, by consideration of the estimated future undiscounted cash flow from the operations of the business segments to which those long-term assets relate. These estimates were based upon historical results adjusted for planned reductions in expenses, which have been implemented, and reasonable sales goals of the business segments. The Company’s goodwill primarily relates to its Creative Consulting Services segment.

As of January 1, 2002, the Company adopted the provisions of SFAS 144 , “Accounting for the Impairment or Disposal of Long-Lived Assets.”

The Company now evaluates the recoverability of its long-term assets under the provisions of SFAS 144. While such provisions retain the considerations the Company has previously made in evaluating the recoverability of its long-term assets as discussed above, SFAS 144 provides an

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

additional triggering event to require an impairment test—a current expectation that, more likely than not, a long-term asset or asset group will be sold or disposed of significantly before the end of its previously estimated useful life. Assets that are considered to be “held for sale” are now measured at the lower of carrying amount or fair value, less the costs to sell. Once an asset is determined to be “held for sale”, depreciation on such asset ceases. Long-term assets to be disposed of by sale may not be classified as held for sale, however, until the period in which all of the following criteria are met:

• management commits to a plan to sell the asset or group

• the asset or group is available for immediate sale in its present condition

• actions to complete the plan to sell have been initiated

• it is probable the sale will be completed within one year

• the asset or group is being actively marketed at a reasonable price

• it is unlikely that significant change will be made to the plan or that it will be withdrawn

Based upon the above criteria, the assets of the creative consulting services and the manufacture and marketing of consumer products groups are considered held for sale and have been evaluated under SFAS 144. In such valuation, the actual terms of the sale of the Graphic Design Group was used (see Note 12 below) and terms under discussion with a nonaffiliated potential purchaser for the Product Design Group was used.

For financial reporting purposes, the assets and liabilities available for sale have been classified in the consolidated balance sheet as “Assets being held for sale” and “Liabilities being held for sale” and are included in the Creative Consulting Services and Manufacture of Consumer Products segments. Such net assets and liabilities consist of the following:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 2002	Graphic Design Group		Product Design Group		Consumer Product Group		Consolidated Group
Fixed Assets, net	$	88,000	$	168,000	$	423,000	$	679,000
Goodwill, net		88,000		—		16,000		104,000
Total Assets Held for Sale	$	176,000	$	168,000	$	439,000	$	783,000
Accrued Retention Pay		—	$	10,000		—	$	10,000
Total Liabilities Held for Sale		—	$	10,000		—	$	10,000

December 31, 2001	Graphic Design Group		Product Design Group		Consumer Products Group		Consolidated Group
Fixed Assets, net	$	110,000	$	288,000	$	359,000		757,000
Goodwill, net		1,473,000		4,582,000		16,000		6,071,000
Total Assets Held for Sale	$	1,583,000	$	4,870,000	$	375,000	$	6,828,000
Accrued Retention Pay		—		—		—		—
Total Liabilities Held for Sale		—		—		—		—

In connection with SFAS 144, the following table summarizes the revenues and pretax loss of the reported discontinued operations of the Assets held for Sale:

Six Months Ended June 30, 2002	Graphic Design Group			Product Design Group			Consumer Products Group			Total Discontinued Operations
Revenues	$	686,000		$	1,229,000		$	854,000		$	2,769,000
Pretax Loss		(1,009,000	)		(2,311,000	)		(1,433,000	)		(4,753,000	)

Six Months Ended June 30, 2001	Graphic Design Group		Product Design Group			Consumer Products Group			Total Discontinued Operations
Revenues	$	1,402,000	$	1,437,000		$	452,000		$	3,291,000
Pretax Income (Loss)		293,000		(1,066,000	)		(1,304,000	)		(2,077,000	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Three Months Ended June 30, 2002	Graphic Design Group			Product Design Group			Consumer Products Group			Total Discontinued Operations
Revenues	$	261,000		$	592,000		$	655,000		$	1,508,000
Pretax Loss		(850,000	)		(2,238,000	)		(1,130,000	)		(4,218,000	)

Three Months Ended June 30, 2001	Graphic Design Group		Product Design Group			Consumer Products Group			Total Discontinued Operations
Revenues	$	650,000	$	677,000		$	411,000		$	1,738,000
Pretax Income (Loss)		105,000		(461,000	)		(565,000	)		(921,000	)

Included in the pretax loss of discontinued operations at June 30, 2002 is an impairment charge to long-lived assets of approximately $51,000, as the carrying value of fixed assets of the Product Design Group was adjusted to fair value, based upon terms under discussion with a nonaffiliated potential buyer.

11.  Accounting for Costs Associated with Exit or Disposal Activities

In June 2002, the Financial Accounting Standards Board issued SFAS 146, “Accounting for Exit or Disposal Activities”. SFAS 146 addresses the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including costs related to termination of a contract that is not a capital lease and termination benefits that employees who are involuntarily terminated received under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS 146 requires liabilities associated with exit and disposal activities to be expensed as incurred. SFAS 146 is effective for exit or disposal activities of the Company that are initiated after December 31, 2002.

12.  Sale of the Graphic Design Group

The Company determined the value of the goodwill and long-term assets related to its Graphic Design Group at June 30, 2002 based upon the actual terms for the sale of that division, which took place on August 5, 2002. The Graphic Design Group was established when the Company acquired the assets, subject to the liabilities, of David Morris Creative and its affiliated companies in November 1999. In furtherance of its plan to reposition itself for sale or liquidation,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

the Company sold certain assets, including the customer lists and goodwill, subject to certain liabilities, of the Graphic Design Group to a company formed by its President and former owner. The transaction was effective as of August 1, 2002 and the purchase price was $371,360 consisting of a lump-sum payment due on or before August 31, 2002 of $54,180 and a 6% promissory note for $317,180, which is payable in sixty (60) equal consecutive monthly installments of $6,250 commencing January 1, 2003.

As part of this transaction, as of July 31, 2002, the employment agreement with the President of the Graphic Design Group and stock options granted to him to purchase 30,000 shares of the Company’s stock were terminated in consideration of a lump-sum payment of $96,097. The Company also entered into a sublease with the acquiring company for 3,492 square feet of commercial rentable space. The sublease expires on November 30, 2009 which is co-terminus with the Company’s master lease. The rent for the entire term of the sublease is $565,809.

13.  Refac Licensing

The Company formed Refac Licensing, Inc. (“RL”) in January 1998, in conjunction with Arlene Scanlan, to operate as a full service trademark licensing agency and consultant for brand and character licensing properties. In connection with such formation, Ms. Scanlan acquired a 19% interest in RL and entered into an employment agreement with RL, which had a term expiring on December 31, 2002. Given the Company’s change in direction and lack of operating success in this business, the Company and Ms. Scanlan have agreed to a termination of her employment agreement and stock option agreements to purchase 55,000 shares of the Company’s stock as of January 31, 2002 and to a conveyance of her 19% interest in RL to the Company. RL will be liquidated or merged into Refac International Ltd (“RIL”), which will assume responsibility for all of the Company’s licensing activities. Ms. Scanlan is serving as a consultant to the Company for the balance of 2002 under an agreement which requires her to devote up to two days per week to the Company’s licensing business.

14.  Stockholder Rights Plan

On April 26, 2002, the Company’s Board of Directors adopted a Stockholder Rights Plan in which rights will be distributed as a dividend at the rate of one Right for each share of common stock, par value $0.10 per share, of the Company held by stockholders of record as of the close of business on May 9, 2002. The Company believes that the adoption of the Rights Plan enhances its ability to carry out its plan in a manner that will be fair to all stockholders.

Each Right initially will entitle stockholders to buy one ten-thousandth of a share of preferred stock for $5.95. The Rights generally will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the Company’s common stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 15% or more of the Company’s common stock. Unless previously terminated in accordance with the Plan, the Rights expire on April 26, 2012.

* * * * *

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

RESULTS OF CONTINUING OPERATIONS

REVENUES from continuing operations for the six months ended June 30, 2002 were $1,342,000 as compared to $3,963,000 for the comparable period in 2001. The $2,621,000 revenue decrease was due to declines in realized gains and dividends on licensing-related securities ($1,828,000), recurring patent license fees ($303,000), trademark agency fees ($82,000) and interest and dividends ($408,000).

Revenues from continuing operations for the three months ended June 30, 2002 were $715,000 as compared to $1,708,000 for the comparable period in 2001. The $993,000 revenue decrease was due to declines in realized gains and dividends on licensing-related securities ($588,000), recurring patent license fees ($221,000), trademark agency fees ($2,000) and interest and dividends ($182,000).

As of March 31, 2001, licensing-related securities consisted of 25,000 shares of KeyCorp common stock, all of which was sold during the second quarter of 2001. Accordingly, as of June 30, 2001, the Company no longer owned any licensing-related securities.

Revenues from continuing operations for the six and three months are summarized as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
Description	2002		2001		2002		2001
Revenues from licensing-related activities	93	%	41	%	94	%	52	%
Realized gains on sales and dividends from licensing-related securities	0	%	46	%	0	%	35	%
Dividends and interest	7	%	13	%	6	%	13	%
Total	100	%	100	%	100	%	100	%

Expenses from the licensing of intellectual property rights consist principally of amounts paid to licensors at contractually stipulated percentages of the Company’s specific patent and product revenues and, in addition, includes expenses related to the administration, enforcement, maintenance

Page 15

REFAC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

and prosecution of patent, trademarks and license rights and related licenses. These expenses decreased by $108,000 for the six months ended June 30, 2002, due to a decrease in revenues. As a percentage of licensing revenues, these expenses were 17% and 20% in 2002 and 2001, respectively. Expenses related to the licensing of intellectual property rights decreased $168,000 for the three months ended June 30, 2002. The expense decrease is primarily due to the decrease in revenue related expenses.

Selling, General and Administrative Expenses increased by $94,000 in the six month period ended June 30, 2002 as compared to the previous year. The increase is primarily due to legal expenses associated with the repositioning of the Company, which totaled approximately $90,000.

Selling, General and Administrative Expenses increased by $116,000 in the three month period ended June 30, 2002 as compared to the previous year. The increase in primarily due to legal expenses associated with the repositioning of the Company, which totaled approximately $47,000.

Income Tax Provision.    The Company’s income tax provision of $248,000 on continuing operations for the six months ended June 30, 2002 reflects an effective tax rate of 34%. The effective tax rate for the same period of 2001 was 34%.

Inflation.     The Company’s income from licensing operations has not in the past been materially affected by inflation. Likewise, while currency fluctuations can influence licensing-related revenues, the diversity of foreign income sources tends to offset individual changes in currency valuations.

RESULTS OF DISCONTINUED OPERATIONS

The Company has reported the results of operations for the Creative Consulting Services and Refac Consumer Products Groups as discontinued operations, net of taxes. Also included in discontinued operations is the goodwill impairment loss related to the Groups under SFAS 142 in the amount of $2,811,000 ($1,855,000 net of taxes). The following table summarizes the revenues and pretax losses of the reported discontinued operations for the six and three month periods ended June 30, 2002 and June 30, 2001:

Page 16

REFAC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Six Months Ended June 30, 2002	Graphic Design Group			Product Design Group			Consumer Products Group			Total Discontinued Operations
Revenues	$	686,000		$	1,229,000		$	854,000		$	2,769,000
Pretax Loss		(1,009,000	)		(2,311,000	)		(1,433,000	)		(4,753,000	)
Six Months Ended June 30, 2001	Graphic Design Group			Product Design Group			Consumer Products Group			Total Discontinued Operations
Revenues	$	1,402,000		$	1,437,000		$	452,000		$	3,291,000
Pretax Income (Loss)		293,000			(1,066,000	)		(1,304,000	)		(2,077,000	)
Three Months Ended June 30, 2002	Graphic Design Group			Product Design Group			Consumer Products Group			Total Discontinued Operations
Revenues	$	261,000		$	592,000		$	655,000		$	1,508,000
Pretax Loss		(850,000	)		(2,238,000	)		(1,130,000	)		(4,218,000	)
Three Months Ended June 30, 2001	Graphic Design Group			Product Design Group			Consumer Products Group			Total Discontinued Operations
Revenues	$	650,000		$	677,000		$	411,000		$	1,738,000
Pretax Income (Loss)		105,000			(461,000	)		(565,000	)		(921,000	)

Creative Consulting Services consist of product development and graphic design services provided by the Product Design Group and the Graphic Design Group. Total creative consulting services revenue decreased $924,000 for the six months ended June 30, 2002 versus the comparable period in 2001. The decrease is a result of a decline in revenues derived by the Product Design and the Graphic Design Groups of $208,000 and $716,000, respectively. The Company attributes the decrease to prevailing economic conditions and client reluctance to commit to new projects given the Company’s announced plans to reposition itself for sale or liquidation.

Page 17

REFAC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Expenses for the creative consulting services group decreased by $735,000 for the six month period ended June 30, 2002 versus the comparable period in 2001. This decline is a result of decreased expenses for the Product Design and Graphic Design Groups of $389,000 and $346,000, respectively, and is primarily attributable to lower direct payroll and related payroll costs.

Total creative consulting services revenue decreased $474,000 for the three months ended June, 30, 2002 compared to the same period in 2001. The decrease is a result of a decline in revenues derived by the Product Design and Graphic Design Groups of $85,000 and $389,000, respectively.

Expenses for the creative consulting services group decreased $464,000 for the three month period ended June 30, 2002 versus the comparable period in 2001. The decline is a result of decreased expenses for the Product Design and Graphic Design Groups of $256,000 and $208,000, respectively.

Manufacturing and Marketing of Consumer Products increased sales by $402,000 and $244,000 for the six and three month periods ended June 30, 2002, respectively, versus the comparable periods in 2001. This increase is attributable to the sale of merchandise below list prices in order to liquidate inventory. Refac Consumer Products, Inc. (“RCP”) had a negative gross margin during the six month period ending June 30, 2002 when cost of sales exceeded sales by $605,000 as compared to a positive gross margin of 23% during the same period in 2001. Cost of sales in the three month period ended June 30, 2002 exceeded sales resulting in a negative gross profit during the quarter. This decline is attributable to the sale of merchandise at or below cost, write-off of advertising and markdown allowances to customers for discontinued programs and a $657,000 reserve in the value of the inventory as RCP seeks distribution sources outside its normal sales channels, including wholesalers and close-out firms.

The Company is continuing to operate RCP while looking for a buyer. During this period, in order to limit its investment and risk, RCP has changed its marketing approach and is closing out its domestic inventory position, and as soon as this liquidation is completed, it will no longer warehouse goods in the United States. RCP also terminated its sales management and consulting agreement with Griffin International, Inc. and wrote off $155,000, which represented the balance of the related prepaid consulting fees due thereunder. In the future, RCP will manufacture goods only against customer orders and will seek to sell such products on a letter of credit basis, FOB Hong Kong or China under which the goods are delivered to the customer in Hong Kong or China.

Goodwill relates to the excess of the purchase price paid over the fair market value of the tangible assets acquired in the Company’s acquisitions. After December 31, 2001, the Company no longer amortizes goodwill. Pursuant to SFAS 142, the Company engaged an independent valuation

Page 18

REFAC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

consultant to perform a transitional fair value based impairment test and recorded an impairment loss of $2,083,000, net of expected tax benefit, in the June 30, 2002 quarter as a cumulative effect of change in accounting principle. Pursuant to SFAS 142, the Company evaluated the impairment of the remaining goodwill and recorded an additional impairment loss of $1,855,000, net of expected tax benefit, in the June 30, 2002 quarter which is reflected in the results of the discontinued operations. The following table reflects the changes in the carrying value of goodwill by operating group where goodwill was impaired:

Description	Graphic Design Group			Product Design Group
Balance as of December 31, 2001	$	1,473,000		$	4,582,000
Impairment loss measured at January 1, 2002		(673,000	)		(2,483,000	)
Impairment loss measured at June 30, 2002		(712,000	)		(2,099,000	)
Balance as of June 30, 2002	$	88,000		$	0

LIQUIDITY AND CAPITAL RESOURCES

Cash and the current portion of cash equivalents, corporate bonds and U.S. Treasury Notes increased $924,000 from $8,890,000 at December 31, 2001 to $9,814,000 at June 30, 2002. The Company believes its liquidity position is adequate to meet all current and projected financial needs.

Cash provided by operations was $932,000 as compared to cash used in operations of $3,985,000 for the same period of 2001, reflecting an increase of $4,917,000. Principal sources of net cash flows from operating activities for the six months ended June 30, 2002 were accounts receivable and inventory. Most of the cash used during the three months ended June 30, 2002 were applied to reductions in accounts payable, accrued expenses and amounts payable under service agreements.

Net cash used in investing activities was $6,457,000; an increase of $10,149,000 from cash provided by investment activities of $3,692,000 for the same period of 2001. For the period ended

Page 19

REFAC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

June 30, 2002 there were no proceeds from the sales of licensing-related securities or from investments being held to maturity.

Net cash provided from financing activities was $3,000 for the exercise of 1,250 stock options in the quarter ended June 30, 2002. There was no cash provided or used for financing activities for the same period 2001.

As of June 30, 2002, the Company had open letters of credit to purchase goods for $134,000.

The Company has commitments under leases covering its facilities and under a Retirement Agreement with its founder and former Chief Executive Officer (which has been provided for in the financial statements). The following table represents the Company’s future material, long-term contractual obligations:

	Payments Due By Period
Contractual Obligations	Total		Less than one year		1-3 years		4-5 years		After 5 years
Operating Lease Obligations	$	4,596,000	$	352,000	$	1,929,000	$	1,266,000	$	1,049,000
Other Long-Term Obligations	$	165,000	$	54,000	$	111,000	$	0	$	0

The Company’s long-term investments being held to maturity consist of corporate bonds that mature in November 2003. The Company’s investment in long-term marketable securities is subject to interest rate risk. Historically, the Company has not experienced material gains or losses due to interest rate changes when selling long-term investments.

CRITICAL ACCOUNTING POLICIES

The Company has historically estimated the recoverability of its long-term assets, including goodwill, by consideration of the estimated future undiscounted cash flow from the operations of the business segments from which those long-term assets relate to, which is principally Creative Consulting Services. These estimates were based upon historical results adjusted for planned reductions in expenses, which have been implemented, and reasonable sales goals of the business segments.

Page 20

REFAC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

As of January 1, 2002, the Company adopted the provisions of SFAS 142 “Goodwill and Other Intangible Assets” and SFAS 144, “ Accounting for the Impairment or Disposal of Long-Lived Assets.”

In June 2001, the Financial Accounting Standards Board approved the issuance of SFAS No. 141, “Business Combinations” and in July 2001, SFAS 142, “Goodwill and Other Intangible Assets.” The new standards require that all business combinations initiated after June 30, 2001 must be accounted for under the purchase method. In addition, all intangible assets acquired that are obtained through contractual or legal right, or are capable of being separately sold, transferred, licensed, rented or exchanged must be recognized as an asset apart from goodwill. Goodwill and intangibles with indefinite lives are no longer be subject to amortization, but now are subject to at least an annual assessment for impairment by applying a fair value based test. The Company adopted SFAS 142 as of January 1, 2002 and in compliance with this new standard has discontinued the amortization of goodwill.

The Company now evaluates the recoverability of its long-term assets under the provisions of SFAS 142 and 144. While such provisions retain the considerations the Company has previously made in evaluating the recoverability of its long-term assets as discussed above, SFAS 144 provides an additional triggering event to require an impairment test - - - - a current expectation that, more likely than not, a long-term asset or asset group will be sold or disposed of significantly before the end of its previously estimated useful life. Assets that are considered to be held for sale will be measured at the lower of carrying amount or fair value less cost to sell, and depreciation on these assets will cease. Long-term assets to be disposed of by sale may not be classified as held for sale, however, until the period in which all of the following criteria are met:

• management commits to a plan to sell the asset or group

• the asset or group is available for immediate sale in its present condition

• actions to complete the plan to sell have been initiated

• it is probable the sale will be completed within one year

• the asset or group is being actively marketed at a reasonable price

Page 21

REFAC

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

• it is unlikely that significant change will be made to the plan or that it will be withdrawn

Based upon the above criteria, the assets of the creative consulting services and the manufacture and marketing of consumer products groups are considered held for sale and have been evaluated under SFAS 144. In such valuation, the actual terms of the sale of the Graphic Design Group was used and terms under discussion with a nonaffiliated potential purchaser of the Product Design Group was used.

In June 2002, the Financial Accounting Standards Board issued SFAS 146, “Accounting for Exit or Disposal Activities”. SFAS 146 addresses the recognition, measurement, and reporting of costs that are associated with exit and disposal activities, including costs related to termination of a contract that is not a capital lease and termination benefits that employees who are involuntarily terminated received under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. SFAS 146 requires liabilities associated with exit and disposal activities to be expensed as incurred. SFAS 146 is effective for exit or disposal activities of the Company that are initiated after December 31, 2002.

FORWARD LOOKING STATEMENTS

Statements about the Company’s future expectations and all other statements in this document other than historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Securities Litigation Reform Act of 1995. The Company intends that the “forward-looking statements” contained herein are subject to the above-mentioned statutory safe harbors. Since these statements involve risks and uncertainties and are subject to change at any time, the Company’s actual results could differ materially from expected or inferred results.

The Company’s future expectations, including, but not limited to its expectations in connection with a sale or liquidation transaction, are affected by factors beyond the Company’s control, including worldwide competitive and market conditions, costs of labor, raw materials and marketing, spending patterns and demographic trends, litigation and the availability of financing. Some of the aforementioned risks are further described in reports that the Company files with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.

Page 22

PART II.     OTHER INFORMATION

Item 6.    Exhibit and Reports on Form 8-K

(a)  See Exhibit Index attached hereto.

(b)  Current Report on Form 8-K filed on April 26, 2002 announcing the adoption of a Stockholder Rights Plan.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

REFAC
By:	/s/    ROBERT L. TUCHMAN
	Robert L. Tuchman, President and Chief Executive Officer

August 19, 2002

By:	/s/    RAYMOND A. CARDONNE, JR
	Raymond A. Cardonne, Jr, CFO (Principal Financial Officer

August 19, 2002

Page 23

EXHIBIT INDEX

Exhibit No.
3(i)a	Certificate of Amendment to the Certificate of Incorporation of the Company.
3(i)b	Corrected Certificate of Amendment to the Restated Certificate of Incorporation of the Company.
3(ii)	The By-laws of the Company.
27	Note 1 to the Company’s Consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 is incorporated herein by reference.
99	Certification of CEO and CFO.

Page 24

EX-3.(I)(A)

EXHIBIT 3(i)a

CERTIFICATE OF AMENDMENT

TO THE

CERTIFICATE OF INCORPORATION

OF

REFAC TECHNOLOGY DEVELOPMENT CORPORATION

Pursuant to Section 242 of the General

Corporation Law of the State of Delaware

REFAC Technology Development Corporation, a Delaware corporation (hereinafter called the “Corporation”), does hereby certify as follows:

FIRST:    Article FIRST of the Corporation’s Certificate of Incorporation is hereby amended to read in its entirety as set forth below:

FIRST:    The name of the corporation is REFAC (hereinafter the “Corporation”).

SECOND:    The foregoing amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed in its corporate name this 4^th day of May, 1999.

REFAC Technology Development Corporation

 /S/    ROBERT L. TUCHMAN

Name:    Robert L. Tuchman

Title:      President

EX-3.(I)(B)

EXHIBIT 3(i)b

CORRECTED

CERTIFICATE OF AMENDMENT

TO THE

RESTATED CERTIFICATE OF INCORPORATION

OF

REFAC TECHNOLOGY DEVELOPMENT CORPORATION

Pursuant to Section 103(f) of the General

Corporation Law of Delaware

REFAC Technology Development Corporation, a Delaware corporation (the “Corporation”), does hereby certify as follows:

The Corporation filed a Certificate of Amendment (the “Certificate”) to the Restated Certificate of Incorporation with the State of Delaware on May 25, 1988. That Certificate contained an omission in paragraph b of Article EIGHTH set forth in Section FIRST thereof. The text of the Certificate is hereby corrected to read in its entirety as herein set forth:

FIRST:    The Corporation’s Restated Certificate of Incorporation, as amended or supplemented heretofore, is hereby further amended to include a new Article Eighth which shall read in its entirety as set forth below:

EIGHTH:    a.  No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stock holders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this paragraph a. of Article EIGHTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

b.    The Corporation shall indemnify its directors and officers to the fullest extent authorized or permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended, and such right TO indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated but such person unless such proceeding (or part thereof) was authorized but the Board of Directors of the Corporation. The right to indemnification conferred by this paragraph b. shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition.

The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation who are not directors or officers similar to those conferred in this paragraph b. to directors and officers of the Corporation.

The rights to indemnification and to the advance of expenses conferred in this paragraph b. shall not be exclusive of any other right which any person may have or hereafter acquire under this Certificate of Incorporation, the By-Laws, any statute, agreement, vote of stock holders or disinterested directors or otherwise.

Any repeal or modification of this paragraph b. of Article EIGHTH by the stockholders of the Corporation shall not adversely affect any rights to indemnification and advancement of expenses of a director or officer of the Corporation existing pursuant to this paragraph b. with respect to any acts of omissions occurring prior to such repeal or modification.

SECOND:    The foregoing amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of Delaware.

IN WITNESS WHEREOF, REFAC Technology Development Corporation has caused this Corrected Certificate of Amendment to be executed in its corporate name this 8^th day of April, 1999.

REFAC Technology Development Corporation

/s/    ROBERT L. TUCHMAN

By:  Robert L. Tuchman

        President

ATTEST:

/S/    RAYMOND A. CARDONNE, JR.

Raymond A. Cardonne, Jr.

Secretary

EX-3.(II)

EXHIBIT 3(ii)

BY-LAWS OF

REFAC TECHNOLOGY DEVELOPMENT CORPORATION

(a Delaware Corporation)

ARTICLE I

MEETING OF STOCKHOLDERS

Section 1.    Annual Meeting.    The Annual Meeting of Stockholders for the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors.

Section 2.    Special Meetings.    Special meetings of the stockholders, unless otherwise prescribed by statute, may be called at any time by the Board or the President.

Section 3.    Notice of Meetings.    Notice of the place, date and time of the holding of each annual and special meeting of the stockholders and, in the case of a special meeting, the purpose or purposes thereof, shall be given personally or by mail in a postage prepaid envelope to each stockholder of record entitled to vote at such meeting, not less than ten nor more than fifty days before the date of such meeting. If mailed, it shall be deposited in the mails within the above mentioned period and directed to such stockholder at his address as it appears on the records of the Corporation, unless he shall have filed with the Secretary of the Corporation a written request that notices to him be mailed to some other address, in which case it shall be directed to him at such other address. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy and shall not, at the beginning of such meeting, object to the transaction of any business because the meeting is not lawfully called or convened, or who shall, either before or after the meeting, submit a signed waiver of notice, in person or by proxy. Unless the Board, after the adjournment of any meetings, shall fix after the adjournment a new record date for an adjourned meeting, notice of such adjourned meeting need not be given if the time and place to which the meeting shall be adjourned were announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting.

Section 4.    Place of Meetings.    Meetings of the stockholders may be held at such place, within or without the State of Delaware, as the Board or the officer

calling the same shall specify in the notice of such meeting, or as shall be specified in a duly executed waiver of notice thereof.

Section 5.    Quorum.    At all meetings of the stockholders the holders of a majority of the votes of the shares of stock of the Corporation issued and outstanding and entitled to vote shall be present in person or by proxy to constitute a quorum for the transaction of any business, except when stockholders are required to vote by class, in which event a majority of the issued and outstanding shares of the appropriate class shall be present in person or by proxy, or except as otherwise provided by statute or in the Certificate of Incorporation. In the absence of a quorum, the holders of a majority of the votes of the shares of stock present in person or by proxy and entitled to vote, or, if no stockholder entitled to vote is present, any officer of the Corporation may adjourn the meeting from time to time. At any such adjourned meeting at which a quorum may be present any business may be transacted which might have been transacted at the meeting as originally called.

Section 6.    Organization.    At each meeting of the stockholders the President, or in his absence or inability to act, a Vice President, or in the absence of any Vice President, any person chosen by a majority of those stockholders entitled to vote who are present, shall act as chairman of the meeting. The Secretary, or, in his absence or inability to act, an Assistant Secretary or any person appointed by the chairman of the meeting, shall act as secretary of the meeting and keep the minutes thereof.

Section 7.    Order of Business.    The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting.

Section 8.    Voting.    Except as otherwise provided by statute, the Certificate of Incorporation, or any certificate duly filed in the State of Delaware pursuant to Section 151 of the Delaware General Corporation law, each holder of record shares of stock of the Corporation having voting power shall be entitled to one vote for every share of such stock standing in his name on the record of stockholders of the Corporation on the date fixed by the Board as the record date for the determination of the stockholders who shall be entitled to notice of and to vote at such meeting; or if such record date shall not have been so fixed, then at the close of business on the day next preceding the day on which notice thereof shall be given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons (not reasonable in number, as shall be determined by the Chairman of such meetings) to act for him by a proxy signed by such stockholder or his attorney-in-fact. Any such proxy shall be delivered to the secretary of such meeting at or prior to the time designated in the order of business for so delivering such proxies. No proxy shall be valid after the expiration of three years from the date thereof, unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases where an irrevocable proxy is given and is permitted by law. Except as

otherwise provided by statute, these By-Laws, or the Certificate of Incorporation, any corporate action to be taken by vote of the stockholders shall be authorized by a majority of the total votes, or when stockholders are required to vote by class by a majority of the votes of the appropriate class, cast at a meeting of stockholders by the holders of shares present in person or represented by proxy and entitled to vote on such action. Unless required by statute, or determined by the chairman of the meeting to be advisable, the vote on any question need not be by written ballot. On a vote by written ballot, each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted.

Section 9.    List of Stockholders.    The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 10.    Inspectors.    The Board may, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If the inspectors shall not be so appointed or if any of them shall fail to appear or act, the chairman of the meeting may, and on the request of any stockholder entitled to vote thereat shall, appoint inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting or any stockholder entitled to vote thereat, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as inspector of an election of directors. Inspectors may, but need not be, stockholders.

Section 11.    Consent of Stockholders in Lieu of Meeting.    In order that the corporation may determine the stockholders entitled to consent to corporate action

in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of stockholders meetings are recorded, to the attention of the Secretary of the corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

Section 12.    Nature of Business at Meetings of Stockholders.    No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section.

In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in

the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

To be in proper written form, a stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

ARTICLE II

BOARD OF DIRECTORS

Section 1.    General Powers.    The business and affairs of the Corporation shall be managed by the Board. The Board may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the Certificate of Incorporation directed or required to be exercised or done by the stockholders.

Section 2.    Number, Qualifications, Election and Term of Office.    The number of directors of the Corporation shall be not less than 3 nor more than 11 directors, subject to the provisions of Section 11 of Article II. All of the directors shall be of full age. Directors need not be stockholders. Except as otherwise provided by statute or these By-Laws, the directors shall be elected at the annual meeting

of stockholders for the election of directors, or a special meeting of the Stockholders called for the purpose of election of directors, and the persons receiving a plurality of the votes cast at such election shall be elected provided that a quorum is present. Each director shall hold office until the next annual meeting of the stockholders and until his successor shall have been duly elected and qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these By-Laws, or as otherwise provided by statute or the Certificate of Incorporation.

Section 3.    Place of Meetings.    Meetings of the Board may be held at such place, within or without the State of Delaware, as the Board may from time to time determine or as shall be specified in the notice or waiver of notice of such meeting.

Section 4.    First Meeting.    The Board shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of the stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. Such meeting may be held at any other time or place (within or without the State of Delaware) which shall be specified in a notice thereof given as hereinafter provided in Section 7 of this Article II.

Section 5.    Regular Meetings.    Regular meetings of the Board shall be held at such time and place as the Board may from time to time determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. Notice of regular meetings of the Board need not be given except as otherwise required by statute or these By-Laws.

Section 6.    Special Meetings.    Special meetings of the Board may be called by two or more directors of the Corporation or by the President.

Section 7.    Notice of Meetings.    Notice of each special meeting of the Board (and of each regular meeting for which notice shall be required) shall be given by the Secretary as hereinafter provided in this Section 7, in which notice shall be stated the time and place (within or without the State of Delaware) of the meeting. Notice of each such meeting shall be delivered to each director either personally or by telephone, telegraph, cable or wireless, at least twenty-four hours before the time at which such meeting is to be held or by first-class mail, postage prepaid, addressed to him at his residence, or usual place of business, deposited in the mails at least three days before the day on which such meeting is to be held. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of notice to him. Except as otherwise specifically required by these By-Laws, a notice or waiver of notice of any regular or special meeting need not state the purposes of such meeting.

Section 8.    Quorum and Manner of Acting.    A majority of the entire Board shall be present in person at any meeting of the Board in order to constitute a quorum for the transaction of business at such meeting, and, except as otherwise expressly required by statute or the Certificate of Incorporation, the act of a majority of the directors present at any meeting at which a quorumis present shall be the act of the Board. In the absence of a quorum at any meeting of the Board, a majority of the directors present thereat, or if no director be present, the Secretary may adjourn such meeting to another time and place, or such meeting, unless it be the first meeting of the Board, need not be held. Notice of such adjourned meeting need not be given if the time and place to which the meeting is to be adjourned were announced at the meeting at which the adjournment is taken. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Except as provided in Article III of these By-Laws, the directors shall act only as a Board and the individual directors shall have no power as such.

Section 9.    Organization.    At each meeting of the Board, the President (or, in his absence or inability, a director chosen by a majority of the directors present) shall act as chairman of the meeting and preside thereat. The Secretary (or, in his absence or inability to act, any person appointed by the chairman) shall act as secretary of the meeting and keep the minutes thereof.

Section 10.    Resignations.    Any director of the Corporation may resign at any time by giving written notice of his resignation to the Board, the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 11.    Vacancies.    Vacancies may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any holder or holders of at least ten percent of the votes of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Except as otherwise provided in these By-Laws, when one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations

shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

Section 12.    Removal of Directors.    Except as otherwise provided in the Certificate of Incorporation or in these By-Laws, any director may be removed, either with or without cause, at any time, by the affirmative vote of [            ]% of the votes of the issued and outstanding stock entitled to vote for the election of directors of the Corporation given at a special meeting of the stockholders called and held for the purpose; and the vacancy in the Board caused by any such removal may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. The provisions in this Section 12 may not be repealed or amended in any respect or in any manner except by the affirmative vote of the holders of not less than [            ]% of the outstanding shares of common stock of the corporation.

Section 13.    Compensation.    The Board shall have authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity, provided no such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 14.    Action Without Meeting.    Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

Section 15.    Action by Conference Telephone.    Members of the Board or any committee may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in such meeting may hear each other, and such participation shall constitute presence in person at such meeting.

Section 16.    Nomination of Directors.    Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice

procedures set forth in this Section.

In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than sixty (60) days nor more than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs.

To be in proper written form, a stockholder’s notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

ARTICLE III

EXECUTIVE AND OTHER COMMITTEES

Section 1.    Executive and Other Committees.    The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution creating the same, shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no committee shall have power or authority to amend the Certificate of Incorporation, adopt an agreement of merger or consolidation, recommend to the stockholders the dissolution of the Corporation or a revocation of a dissolution, or amend these By-Laws. Any committee shall have the power and authority to declare a dividend or authorize the issuance of stock of the Corporation. Each committee shall keep written minutes of its proceedings and shall report such minutes to the Board when required. All such proceedings shall be subject to revision or alteration by the Board; provided, however, that third parties shall not be prejudiced by such revision or alteration.

Section 2.    General.    A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Article II, Section 7. The Board shall have any power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Nothing herein shall be deemed to prevent the Board from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided, however, that no such committee shall have or exercise any authority of the Board.

ARTICLE IV

OFFICERS

Section 1.    Number and Qualifications.    The officers of the Corporation shall include the President, one or more Vice Presidents (one or more of whom may be designated Executive Vice President or Senior Vice President), the Treasurer, Controller and the Secretary. Any two or more offices may be held by the same person.

Such officers shall be elected from time to time by the Board, each to hold office until the meeting of the Board following the next annual meeting of the stockholders, or until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall have resigned, or have been removed, as hereinafter provided in these By-Laws. The Board may from time to time elect, or the President may appoint, such other officers (including one or more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers), and such agents, as may be necessary or desirable for the business of the Corporation. Such other officers and agents shall have such duties and shall hold their offices for such terms as may be prescribed by the Board or by the appointing authority.

Section 2.    Resignations.    Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Board, the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 3.    Removal.    Any officer or agent of the Corporation may be removed, either with or without cause, at any time, by the vote of the majority of the entire Board at any meeting of the Board or, except in the case of an officer or agent elected or appointed by the Board, by the President. Such removal shall be without prejudice of the contractual rights, if any, of the person so removed.

Section 4.    Vacancies.    A vacancy in any office, whether arising from death, resignation, removal or any other cause, may be filled for the unexpired portion of the term of the office which shall be vacant, in the manner prescribed in these By-Laws for the regular election or appointment to such office.

Section 5.    The President.    The President shall be the chief executive officer of the Corporation and shall have the general and active management of the business of the Corporation and general and active supervision and direction over the other officers, agents and employees and shall see that their duties are properly performed. He shall, if present, preside at each meeting of the stockholders and of the Board and shall be an ex officio member of all committees of the Board. He shall perform all duties incident to the office of President and chief executive officer and such other duties as may from time to time be assigned to him by the Board.

Section 6.    Vice Presidents.    Each Executive Vice President, each Senior Vice President and each Vice President shall have such powers and perform all such duties as from time to time may be assigned to him by the President or the Board of Directors.

Section 7.    The Treasurer.    The Treasurer shall be the chief financial officer of the Corporation and shall exercise general supervision over the receipt,

custody and disbursement of corporate funds. He shall have such further powers and duties as may be conferred upon him from time to time by the President or the Board of Directors.

Section 8.    The Controller.    The Controller shall be the chief accounting officer of the Corporation and shall maintain adequate records of all assets, liabilities and transactions of the Corporation; he shall establish and maintain internal accounting control and, in cooperation with the independent public accountants selected by the Board, shall supervise internal auditing. He shall have such further powers and duties as may be conferred upon him from time to time by the President or the Board of Directors.

Section 9.    The Secretary.    The Secretary shall (a) record and keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board, the committees of the Board and the stockholders;

(b)  see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law;

(c)  be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal;

(d)  see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and

(e)  in general, perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board or the President.

Section 10.    Officers’ Bonds or Other Security.    If required by the Board, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety or sureties as the Board may require.

Section 11.    Compensation.    The compensation of the officers of the Corporation for their services as such officers shall be fixed from time to time by the Board; provided, however, that the Board may delegate to the President the power to fix the compensation of officers and agents appointed by the President, as the case may be. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation, but

any such officer who shall also be a director shall not have any vote in the determination of the amount of compensation paid to him.

ARTICLE V

INDEMNIFICATION

The Corporation shall, to the fullest extent permitted by the General Corporation Law of the State of Delaware, indemnify, members of the Board and may, if authorized by the Board, indemnify its officers and any and all persons whom it shall have power to indemnify against any and all expenses, liabilities or other matters.

ARTICLE VI

CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.

Section 1.    Execution of Contracts.    Except as otherwise required by statute, the Certificate of Incorporation or these By-Laws, any contracts or other instruments may be executed and delivered in the name and on behalf of the Corporation by such officer or officers (including any assistant officer) of the Corporation as the Board may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. Unless authorized by the Board or expressly permitted by these By-Laws, an officer or agent or employee shall not have any power or authority to bind the Corporation by and contract or engagement or to pledge its credit or to render it pecuniarily liable for any purpose or to any amount.

Section 2.    Loans.    Unless the Board shall otherwise determine, either (a) the President, singly, or (b) any two Vice Presidents, jointly, or (c) a Vice President, together with the Treasurer, may effect loans and advances at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other certificates or evidences of indebtedness of the Corporation, but no officer or officers shall mortgage, pledge, hypothecate or transfer any securities or other property of the Corporation, except when authorized by the Board.

Section 3.    Checks, Drafts, etc.    All checks, drafts, bills of exchange or other orders for the payment of money out of the funds of the Corporation, and all notes or other evidences of indebtedness of the Corporation, shall be signed in the name and on behalf of the Corporation by such persons and in such manner as shall from time to time be authorized by the Board.

Section 4.    Deposits.    All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board may from time to time designate or as may be designated by any officer or Officers of the Corporation to whom such power of designation may from time to time be delegated by the Board. For the purpose of deposit and for the purpose of collection for the account of the Corporation, checks, drafts and other orders for the payment of money which are payable to the order of the Corporation may be endorsed, assigned and delivered by any officer or agent of the Corporation, or in such other manner as the Board may determine by resolution.

Section 5.    General and Special Bank Accounts.    The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositaries as the Board may designate or as may be designated by any officer or officers of the Corporation to whom such power of designation may from time to time be delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these By-Laws, as it may deem expedient:

Section 6.    Proxies in Respect of Securities of Other Corporations.    Unless otherwise provided by resolution adopted by the Board of Directors, the President, or a Vice President may, from time to time, in the name and on behalf of the Corporation (a) cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises, and (b) appoint an attorney or attorneys or agent or agents, of the Corporation, to take any of such actions and instruct the person or persons so appointed as to the manner of casting such votes or giving such consent.

ARTICLE VII

SHARES, ETC.

Section 1.    Stock Certificates.    Each holder of stock of the Corporation shall be entitled to have a certificate, in such form as shall be approved by The Board, certifying the number of shares of stock of the Corporation owned by him. The certificates representing shares of stock shall be signed in the name of the Corporation by the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be sealed with the seal of the Corporation (which seal may be a facsimile, engraved or printed). Any

signature on such certificates may be facsimile, engraved or printed. In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature shall have been placed upon such certificates no longer holds such office, the shares represented thereby may nevertheless be issued by the Corporation with the same effect as if such officer were still in office at the date of their issue.

Section 2.    Books of Account and Record of Stockholders.    The books and records of the Corporation may be kept at such places, within or without the State of Delaware, as the Board may from time to time determine. The stock record books and the blank stock certificate books shall be kept by the Secretary or by any other officer or agent designated by the Board.

Section 3.    Transfers of Shares.    Transfers of shares of stock of the Corporation shall be made on the stock records of the Corporation only upon authorization by the registered holder thereof, or by his attorney “hereunto authorized by power of attorney duly executed and filed with the Secretary or with a transfer agent or transfer clerk, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person in whose name any share or shares stand on the record of stockholders as the owner of such share or shares for all purposes, including, without limitation, the rights to receive dividends or other distributions, and to vote as such owner, and the Corporation may hold any such stockholder of record liable for calls and assessments and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in any such share or shares on the part of any other person whether or not it shall have express or other notice thereof. Whenever any transfers of shares shall be made for collateral security and not absolutely, and both the transferor and transferee request the Corporation to do so, such fact shall be stated in the entry of the transfer.

Section 4.    Regulations.    The Board may make such additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer agents or one or more transfer clerks and one or more registrars and may require all certificates for shares of stock to bear the signature or signatures of any of them.

Section 5.    Lost, Destroyed or Mutilated Certificates.    The holder of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of such certificate, and the Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it which the owner thereof shall allege to have been lost, stolen or destroyed, or which shall have been mutilated, and the Board may, in its discretion, require such owner or his legal representatives to give to the Corporation

a bond in such sum, limited or unlimited, and in such form and with such surety or sureties as the Board in its absolute discretion shall determine, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate, or the issuance of a new certificate. Anything herein to the contrary notwithstanding, the Board, in its absolute discretion, may refuse to issue any such new certificate, except pursuant to legal proceedings under the laws of the State of Delaware.

Section 6.    Stockholder’s Right of Inspection.    Any stockholder of record of the Corporation, in person or by attorney or other agent, shall upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in the State of Delaware or at its principal place of business.

Section 7.    Fixing of Record Date.    In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

ARTICLE VIII

OFFICES

Section 1.    Registered Office and Registered Agent.    The registered office of the Corporation in the State of Delaware shall be at No. 100 West Tenth Street, in the City of Wilmington, in the County of New Castle. The name of the resident agent at such address shall be The Corporation Trust Company.

Section 2.    Other Offices.    The Corporation may also have an office or offices other than said registered office at such place or places, either within or without the

State of Delaware, as the Board shall from time to time determine or the business of the Corporation may require.

ARTICLE IX

FISCAL YEAR

The fiscal year of the Corporation shall be determined by the Board.

ARTICLE X

SEAL

The Board shall provide a corporate seal, which shall be in the form of the name of the Corporation, the year of its incorporation, and the words Corporate Seal, Delaware.

ARTICLE XI

AMENDMENTS

These By-Laws may be amended or repealed, or new By-Laws may be adopted, at any annual or special meeting of the stockholders, by a majority of the total votes of the stockholders or when stockholders are required to vote by class by a majority of the appropriate class, present in person or by proxy and entitled to vote on such action; provided, however, that the notice of such meeting shall have been given as provided in these By-Laws, which notice shall mention that amendment or repeal of these By-Laws, or the adoption of new By-Laws, is one of the purposes of such meeting. These By-Laws may also be amended or repealed, or new By-Laws may be adopted, by the Board at any meeting thereof provided that By-Laws adopted by the Board may be amended or repealed by the stockholders as hereinabove provided.

EX-99

EXHIBIT 99

CERTIFICATION OF CEO AND CFO PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Refac, a Delaware corporation (the “Company”), for the quarterly period ended June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of Robert L. Tuchman, as Chief Executive Officer of the Company, and Raymond A. Cardonne, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/    ROBERT L. TUCHMAN        

Robert L. Tuchman

Chief Executive Officer

August 19, 2002

/s/    RAYMOND A. CARDONNE, JR.        

Raymond A. Cardonne, Jr.

Vice President, Secretary and

Chief Financial Officer

August 19, 2002

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sabarnes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.