-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S99xqU8NRg22DuCLjNEmInhx3oUBJ01op/7pAuXnX5lTjLV65t8gmwHacqMvQCLW SwOfSnUO76ovr84bkbROeA== 0000950172-05-001086.txt : 20050406 0000950172-05-001086.hdr.sgml : 20050406 20050406171207 ACCESSION NUMBER: 0000950172-05-001086 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050401 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050406 DATE AS OF CHANGE: 20050406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REFAC CENTRAL INDEX KEY: 0000082788 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 131681234 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12776 FILM NUMBER: 05737579 BUSINESS ADDRESS: STREET 1: ONE BRIDGE PLAZA STREET 2: SUITE 550 CITY: FORT LEE STATE: NJ ZIP: 07024-7102 BUSINESS PHONE: 2015850600 MAIL ADDRESS: STREET 1: ONE BRIDGE PLAZA STREET 2: SUITE 550 CITY: FORT LEE STATE: NJ ZIP: 07024-7102 FORMER COMPANY: FORMER CONFORMED NAME: REFAC TECHNOLOGY DEVELOPMENT CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: RESOURCES & FACILITIES CORP DATE OF NAME CHANGE: 19740509 FORMER COMPANY: FORMER CONFORMED NAME: REFAC INC DATE OF NAME CHANGE: 19720628 8-K 1 refac8k_apr06-05.txt CURRENT REPORT UNDER '34 ACT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): April 1, 2005 REFAC (Exact name of registrant as specified in its charter) DELAWARE 001-12776 13-1681234 - ---------------------------------- ------------------- ----------------------- (State or other jurisdiction of (Commission I.R.S. Employer incorporation or organization) File Number) Identification No.) ONE BRIDGE PLAZA, FORT LEE, NEW JERSEY 07024 - ---------------------------------------------------------- --------------------- (Address of principal executive offices) (Zip Code) (201) 585-0600 ------------------------------------------------------------- (Registrant's telephone number, including area code) None ---------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. On April 1, 2005, the Registrant entered into Employment Agreements (together, the "Agreements") with each of Robert L. Tuchman, its chief executive officer, president and general counsel, and Raymond A. Cardonne. Jr., its senior vice president and chief financial officer (each, an "Executive"). Pursuant to the Agreements, Messrs. Tuchman and Cardonne will be paid base salaries of $325,000 and $200,000 per annum, respectively, throughout the term of the Agreements which in each case commenced on April 1, 2005 and will extend through December 31, 2006. In the event of a termination of employment by the Registrant without Cause (as defined in the Agreements) or by the Executive for Good Reason (as defined in the Agreements), the Executive will be entitled to receive a lump sum payment equal to the sum of his base salary through the end of the term plus any accrued or deferred compensation. In addition, the Registrant will provide the Executive with continued life, health and welfare benefits, and, in Mr. Tuchman's case, an automobile fringe benefit, until the earlier of the end the term or until the Executive receives similar benefits from a subsequent employer. Upon a termination of employment for Cause or as a result of the Executive's death, the Executive shall be entitled to receive any accrued or deferred compensation through the date of termination of employment. If, during the term, the Executive is unable to perform his duties as a result of a disability, then the Executive will continue to receive his full salary until his employment is terminated, provided that such payments will be reduced by the amounts, if any, paid to the Executive under any disability plan of the Registrant or Social Security disability insurance. Following the termination of the Executive's employment as a result of disability, the Executive shall be entitled to receive any accrued or deferred compensation through the date of termination of employment plus any benefits under the Registrant's disability policies. Concurrent with the execution of the Agreements, Messrs. Tuchman and Cardonne received options to purchase 100,000 and 50,000 shares of the Registrant's common stock, respectively, each of which was one-third vested on the date of grant with an additional one-third scheduled to vest on each of April 1, 2006 and April 1, 2007. Notwithstanding the vesting schedule, in the event that the Executive's employment terminates for Good Reason, without Cause, upon death or disability or on or after the expiration of the term of the Agreements, then the option shall immediately become fully vested and shall remain exercisable for the remainder of the term of the option (except that upon a termination for Good Reason solely as a result of a Change in Control, as defined in the Agreements, the option will remain exercisable for one year following the date of termination of employment). Upon a termination of the Executive's employment by the Registrant for Cause, the option will terminate immediately whether vested or unvested. The Agreements provide for a non-compete covenant that restricts each Executive from engaging in certain defined competitive activities for one year following the Executive's termination of employment irrespective of the reason for such termination. Copies of the Agreements and stock option agreements are filed herewith as exhibits. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. See Exhibit Index below. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. REFAC Dated: April 6, 2005 By: /s /Raymond A. Cardonne, Jr. ---------------------------------- Name: Raymond A. Cardonne, Jr. Title: Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit No. Description - ------- ----------- 10.1 Employment Agreement with Robert L. Tuchman, dated April 1, 2005 10.2 Employment Agreement with Raymond A. Cardonne, Jr., dated April 1, 2005 10.3 Stock Option Agreement with Robert L. Tuchman, dated April 1, 2005 10.4 Stock Option Agreement with Raymond A. Cardonne, Jr., dated April 1, 2005 EX-10 2 ny506702.txt EXHIBIT 10.1 - EMPLOYMENT AGREEMENT Exhibit 10.1 EMPLOYMENT AGREEMENT BETWEEN ROBERT L. TUCHMAN AND REFAC Dated as of April 1, 2005 THIS EMPLOYMENT AGREEMENT (the "Agreement") made as of April 1, 2005 (the "Effective Date") between REFAC, a Delaware corporation ("REFAC"), and Robert L. Tuchman ("TUCHMAN"). TUCHMAN was heretofore employed by REFAC under a Fifth Amended and Restated Employment Agreement dated as of November 7, 2003 (the "Prior Agreement") with an employment term that expired on March 31, 2005. The parties hereto desire enter into the contractual arrangement as set forth in this Agreement effective as of the Effective Date. In consideration of the premises and the respective agreements of the parties herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. Employment. Subject to the provisions hereof, following the Effective Date, REFAC shall continue to employ TUCHMAN and TUCHMAN shall continue to serve as the Chief Executive Officer, President, and General Counsel of REFAC with full responsibility for the supervision of all corporate affairs, provided that in the event that the Board of Directors of REFAC (the "Board") shall appoint a new Chief Executive Officer, then TUCHMAN shall remain employed with REFAC as its Senior Vice President and General Counsel or other senior executive level position. 2. Term. The employment of TUCHMAN by REFAC hereunder will continue from the Effective Date until December 31, 2006, (the "Employment Period") unless further extended by agreement of TUCHMAN and REFAC or until sooner terminated as hereinafter provided. 3. Duties. (a) Regular Duties. During the Employment Period, TUCHMAN will continue to perform such duties and have such powers as are customary for the chief executive officer, president and general counsel or other senior executive level position. (b) Responsible to the Board. As Chief Executive Officer, President and General Counsel, TUCHMAN will report and be directly responsible to the Board of Directors of REFAC (the "Board"). In the event that TUCHMAN is named Senior Vice President and General Counsel, TUCHMAN shall report to the individual then serving as the chief executive officer of REFAC. (c) Time Devoted to REFAC's Affairs. TUCHMAN will devote substantially all his working time and efforts to the business and affairs of REFAC and will not, without the prior authorization of the Board, have any active engagement in or responsibility with respect to any business or commercial enterprise other than REFAC or a subsidiary of REFAC; provided, however, TUCHMAN may enter into separate arrangements for his own account with Palisade Capital Management, L.L.C. ("Palisade") and/or any of its affiliated companies that are engaged in private equity or investment management pursuant to which he may become a member, partner, officer, director or stockholder of such entity or may provide consulting or professional services thereto provided that such activities do not materially interfere with the regular performance of his duties and responsibilities under this Agreement. 4. Place of Performance. In connection with TUCHMAN's employment by REFAC, TUCHMAN will be based in the New York City metropolitan area, except for required travel on REFAC's business to an extent consistent with REFAC's business requirements and his responsibilities hereunder. 5. Base Salary and Incentive Compensation. (a) Base Salary. During the Employment Period, TUCHMAN's salary will be $325,000 per annum ("Base Salary"). Payment of such salary will be made in accordance with REFAC's customary pay practices for senior officers and will be subject to such payroll deductions as are required by law or by the terms of any applicable benefit plan of REFAC. (b) Incentive Compensation. In addition to the Base Salary as set forth in Section 5(a) of this Agreement, REFAC may, in its sole discretion, pay to TUCHMAN additional incentive compensation in cash and/or equity upon the achievement of certain performance goals. (c) Stock Option. In connection with the entering into of this Agreement, REFAC shall grant TUCHMAN an option to purchase one hundred thousand (100,000) shares of REFAC common stock with an exercise price equal to the closing price of REFAC's common stock on the date immediately preceding the grant (the "Stock Option"). One-third of the Stock Option shall vest on the date of grant and one-third shall vest on each of the next two (2) anniversaries of the date of grant. Such Stock Option shall be subject to the terms and conditions as set forth in a stock option agreement to be entered into by and between REFAC and TUCHMAN. 6. Fringe Benefits, Expenses and Related Matters. (a) Expenses. During Employment Period, TUCHMAN will be entitled to receive prompt reimbursement for all reasonable expenses incurred by TUCHMAN in performing services hereunder, including all reasonable expenses of travel and living expenses while away from home on business or at the request of and in the service of REFAC, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by REFAC. (b) Automobile. During the Employment Period, REFAC will provide TUCHMAN with an automobile with a maximum monthly lease payment of $900. (c) Other Benefits. TUCHMAN will be entitled to participate in or receive benefits under any employee benefit plan or arrangement now or in the future made available by REFAC generally to its executive employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements, including health insurance and life insurance benefits. (d) Vacations. TUCHMAN will be entitled to four weeks of paid vacation per calendar year, prorated for any portion thereof and to all paid holidays given by REFAC in accordance with REFAC's regular paid holidays policy. 7. Facilities and Support Services Furnished. REFAC will furnish TUCHMAN with office space, secretarial assistance and such other facilities and services as shall be suitable to TUCHMAN's position and adequate for the performance of his duties as herein set forth. 8. Termination. TUCHMAN's employment hereunder may be terminated under the following circumstances: (a) Death. TUCHMAN's employment hereunder will terminate immediately upon his death. (b) Disability. REFAC may terminate TUCHMAN's employment hereunder if TUCHMAN should become permanently disabled. For the purposes of this Agreement, permanent disability ("Disability") means TUCHMAN's inability, by virtue of physical or mental illness or injury, to perform his regular duties on a full-time, continuous basis for 120 consecutive days. TUCHMAN's disability will be established if a qualified medical doctor selected by the parties so certifies in writing. If the parties are unable to agree on the selection of such a doctor, each party will designate a qualified medical doctor who together will select a third doctor who will make the determination. TUCHMAN will make himself available for an examination by a doctor selected in accordance with this paragraph (b). (c) Cause. REFAC may terminate TUCHMAN's employment hereunder for Cause at any time during the Employment Period hereof as hereinafter set forth. For purposes of this Agreement, REFAC will have "Cause" to terminate TUCHMAN's employment hereunder upon (i) the willful and continued failure, in the reasonable judgment of the Board, by TUCHMAN to perform substantially his duties with REFAC (other than any such failure resulting from his death or Disability) after a written demand for substantial performance is delivered to TUCHMAN by the Board which specifically identifies the manner in which it is believed that TUCHMAN has not substantially performed his duties or (ii) the conviction of TUCHMAN (or the entering by TUCHMAN of a plea of guilty or nolo contendere) for any felony or any lesser crime which involved REFAC or its property. For purposes of clause (i) of this definition, no act, or failure to act, on TUCHMAN's part shall be deemed "willful" unless done, or omitted to be done, by TUCHMAN not in good faith and without reasonable belief that his act, or failure to act, was in the best interest of REFAC. Notwithstanding the foregoing, TUCHMAN will not be deemed to have been terminated for Cause within the meaning of clause (i) without (1) reasonable notice to TUCHMAN setting forth the reasons for REFAC's intention to terminate for Cause, (2) an opportunity for TUCHMAN, together with his counsel, to be heard before the Board, and (3) delivery to TUCHMAN of a Notice of Termination, as defined in paragraph (e) of this Section 8, from the Board finding that, in the good faith opinion of the Board, clause (i) hereof may be invoked, and specifying the particulars thereof in detail. (d) Good Reason. TUCHMAN may terminate his employment with REFAC for Good Reason at any time during the Employment Period. For purposes of this Agreement, TUCHMAN will have "Good Reason" to terminate his employment with REFAC upon: (i) the assignment to TUCHMAN of any duties materially inconsistent with his status as Chief Executive Officer and General Counsel of REFAC or a substantial adverse alteration in the nature or status of his responsibilities; provided, that TUCHMAN shall not have Good Reason to terminate his employment if, following REFAC's appointment of a chief executive officer other than TUCHMAN, TUCHMAN continues as General Counsel of REFAC with the title of Senior Vice President and/or assumes another senior level executive position, (ii) a reduction by REFAC in TUCHMAN's Base Salary set forth in Section 5 hereof; (iii) the relocation of TUCHMAN's principal place of employment to a location more than thirty-five (35) miles from Fort Lee, New Jersey except where such relocation does not result in TUCHMAN'S commute from his principal residence to his principal place of employment being greater than such commute as of the Effective Date; (iv) the failure by REFAC to pay to TUCHMAN any portion of TUCHMAN's compensation hereunder or under the Prior Agreement within fourteen (14) days of the date such compensation is due; (v) a Change in Control of REFAC (as defined below) and (vi) any other material breach of this Agreement by REFAC which is not cured within ten (10) days of a written notice by TUCHMAN. TUCHMAN's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or mental illness. TUCHMAN's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. For purposes of this Agreement, a Change in Control shall be deemed to have occurred when (i) Palisade Concentrated Equity Partnership, L.P. and/or its affiliates cease(s) to own, in the aggregate, at least thirty-five percent (35%) of the outstanding common stock of REFAC or (ii) any person, entity or group (as defined in section 13(d)(3) of the Securities Exchange Act of 1934, as amended) that is not affiliated with Palisade acquires in one or a series of transaction(s) more than fifty percent (50%) of the outstanding common stock of REFAC. (e) Notice of Termination. Any termination of TUCHMAN's employment by REFAC or by TUCHMAN (other than termination pursuant to Section 8(a)) during the Employment Period will be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" means a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of TUCHMAN's employment under the provision so indicated. (f) Date of Termination. "Date of Termination" shall mean (i) if TUCHMAN's employment is terminated by his death, the date of his death, (ii) if TUCHMAN's employment is terminated pursuant to paragraph (b) of this Section 8, three weeks after Notice of Termination, (iii) if TUCHMAN's employment is terminated pursuant to paragraph (c) or (d) of this Section 8, the date specified in the Notice of Termination, and (iv) if TUCHMAN's employment is terminated for any other reason, the date specified in the Notice of Termination. (g) TUCHMAN Cooperation. From and after the earlier to occur of (i) delivery of a Notice of Termination and (ii) termination of TUCHMAN's employment hereunder (other than termination due to TUCHMAN's death) TUCHMAN will, to the best of his knowledge, disclose or provide for the disclosure to REFAC or any successor thereof, orally or in writing as appropriate, all information of a material nature relating to existing or prospective clients and licensees and as to any other matters in which TUCHMAN shall prior to his Date of Termination have been personally involved or as to which TUCHMAN will have acquired special knowledge, and TUCHMAN will thereafter answer to the best of his knowledge any questions that REFAC may from time to time submit with respect to any such aforesaid matters. 9. Compensation Upon Termination or During Disability. (a) Disability. During any period that TUCHMAN fails or is unable to perform his duties hereunder as a result of Disability, TUCHMAN will continue to receive his full salary at the rate then in effect for such period until his employment is terminated, provided that such payments will be reduced by the amounts, if any, paid to TUCHMAN under any disability benefit plans of REFAC or under the Social Security disability insurance program. Following the termination of his employment, TUCHMAN's benefits will be determined in accordance with REFAC's retirement, insurance, and other applicable programs and plans then in effect, if any. Following the termination of TUCHMAN's employment due to Disability, REFAC will pay TUCHMAN any compensation deferred in accordance with Section 11 hereof and the Stock Option shall become immediately vested and exercisable on the Date of Termination and shall remain exercisable as to all shares subject thereto (by TUCHMAN or his heirs, distributees or legal representatives, as applicable) for the remainder of the term of the Stock Option. (b) Death. If TUCHMAN's employment should be terminated by his death, REFAC will (i) pay any accrued salary and other compensation and benefits through the date of death to TUCHMAN's spouse, or, if he leaves no spouse, to his estate, (ii) pay or cause the payment to TUCHMAN's beneficiary, or if he specified no beneficiary, to his estate, the death benefits payable pursuant to REFAC's life insurance program in effect at the date of death, if any, (iii) pay any compensation deferred in accordance with Section 11 hereof, to TUCHMAN's spouse, or, if he leaves no spouse, to his estate, and (iv) the Stock Option shall become immediately vested and exercisable on the Date of Termination and shall remain exercisable as to all shares subject thereto (by TUCHMAN's heirs or distributees, as applicable) for the remainder of the term of the Stock Option. (c) Cause. If TUCHMAN's employment should be terminated by REFAC for Cause or by TUCHMAN during the Employment Period, REFAC will pay TUCHMAN his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus any compensation deferred in accordance with Section 11 hereof and all other amounts to which TUCHMAN is entitled as of the Date of Termination under any benefit plan of REFAC at the time such payments are due, and REFAC will have no further obligations to TUCHMAN under this Agreement. (d) Without Cause. TUCHMAN's employment with REFAC may not be terminated by REFAC during the Employment Period for reasons other than those described in Section 8(a), 8(b) or 8(c) unless, prior to such termination TUCHMAN has together with his counsel had an opportunity to appear and be heard at a meeting of the Board which was called and held (after reasonable notice to TUCHMAN) for the purpose of considering such a termination. In the event that TUCHMAN's employment is terminated by REFAC during the Employment Period for reasons other than those described in Section 8(a), 8(b) or 8(c), REFAC will (i) pay TUCHMAN a lump sum equal to the sum of (A) his full salary that would have been payable for the remainder of the Employment Period absent such termination at the rate in effect at the time Notice of Termination is given and (B) any compensation deferred in accordance with Section 11 hereof, (ii) provide, except to the extent that TUCHMAN shall receive similar benefits from a subsequent employer, the auto, life, health and similar welfare benefits which TUCHMAN would have been entitled to during the remainder of the Employment Period absent such termination under any such benefit plan of REFAC, and (iii) the Stock Option shall become immediately vested and exercisable on the Date of Termination and shall remain exercisable as to all shares subject thereto (by TUCHMAN or his heirs, distributees or legal representatives, as applicable) for the remainder of the term of the Stock Option. (e) Good Reason. In the event that TUCHMAN's employment is terminated by TUCHMAN during the Employment Period for Good Reason, REFAC will (i) pay TUCHMAN a lump sum equal to the sum of (A) his full Base Salary that would have been payable for the remainder of the Employment Period absent such termination at the rate in effect at the time Notice of Termination is given and (B) any compensation deferred in accordance with Section 11 hereof, (ii) provide, except to the extent that TUCHMAN shall receive similar benefits from a subsequent employer, the auto, life, health and similar welfare benefits which TUCHMAN would have been entitled to during the remainder of the Employment Period absent such termination under any such benefit plan of REFAC, and (iii) the Stock Option shall become immediately vested and exercisable on the Date of Termination and shall remain exercisable as to all shares subject thereto (by TUCHMAN or his heirs, distributees or legal representatives, as applicable) for the remainder of the term of the Stock Option; provided; however, that in the event that TUCHMAN terminates employment for Good Reason solely as a result of a Change in Control, then such Stock Option shall remain exercisable for a period of one (1) year following the Date of Termination and shall thereafter expire. (f) Mitigation of Payments. TUCHMAN will not be required to mitigate the amount of any lump sum payment or bonus entitlement provided for in this Section 9 by reducing it by the amount of any compensation earned by TUCHMAN as the result of employment by another employer after the Date of Termination, or otherwise. However, he will be required to mitigate the costs of the other benefits provided for in this Section. 10. Noncompetition. TUCHMAN will not, except as hereinafter set forth, engage in any Competitive Activity (as hereinafter defined) during the Employment Period or for a period of one year following the termination of TUCHMAN's employment for any reason. For purposes of this Section, "Competitive Activity" will mean directly or indirectly: owning, managing, controlling, investing in, or otherwise being connected with, in any manner, whether as an officer, director, employee, partner, investor, consultant, lender or otherwise, any business entity or activity which is engaged in, or is in any way related to, any business conducted by REFAC or any subsidiary companies that it may own during the Employment Period other than businesses that are being wound down from prior activities of REFAC. Notwithstanding the above, nothing herein contained will prohibit TUCHMAN from investing in securities of a business entity if the securities of such entity are listed for trading on a national securities exchange or traded in the over-the-counter market and TUCHMAN's holdings therein represent less than five (5%) percent of the total number of shares or principal amount of other securities of such entity outstanding. 11. Section 162 (m). In the event that any payment or benefit received or to be received by TUCHMAN in connection with his employment by REFAC would otherwise not be deductible (in whole or part), by REFAC as a result of the operation of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), the delivery of the non-deductible portion of such payment or benefit to TUCHMAN by REFAC shall be deferred until the earliest date on which it may be delivered to TUCHMAN without being subject to the limit on deductibility imposed by Section 162(m) of the Code. TUCHMAN will be paid any amount deferred pursuant to the Prior Agreement in accordance with the terms of this Section 11. 12. Successors; Binding Agreement. (a) Should any entity succeed (whether by purchase, merger, consolidation or similar transaction) to all or substantially all of the business and/or assets of REFAC, TUCHMAN shall continue to perform all of his duties and obligations hereunder. (b) REFAC will require any successor (whether by purchase, merger, consolidation or similar transaction) to all or substantially all of the business and/or assets of REFAC, by agreement in form and substance reasonably satisfactory to TUCHMAN, to expressly assume and agree to perform this Agreement in substantially the same manner and to substantially the same extent that REFAC would be required to perform it if no such succession had taken place. (c) This Agreement and all rights of TUCHMAN hereunder shall inure to the benefit of and be enforceable by TUCHMAN's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If TUCHMAN should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to TUCHMAN's devisee, legatee, or other designee or, if there be no such designee, to TUCHMAN's estate. 13. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows: If to TUCHMAN: Robert L. Tuchman 1 Vultee Drive Florham Park, New Jersey 07932 If to REFAC: REFAC 1 Bridge Plaza - Suite 550 Fort Lee , New Jersey 07024 Copy to: Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, New York 10036 Attention: Stephen Banker, Esq. or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 14. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by TUCHMAN and such other officer of REFAC as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York without regard to its conflicts of law principles. All compensation payable to TUCHMAN pursuant to this Agreement shall be subject to all applicable withholding taxes, normal payroll withholding and any other amounts required by law to be withheld. 15. Validity. If any term or provision of this Agreement or the application thereof to any person, entity or circumstance should to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to any person, entity or circumstance other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement (including, to the extent permitted by law, any such term or provision which has been held to be otherwise invalid or unenforceable) shall be deemed valid and enforceable to the fullest extent permitted by law. 16. Counterparts and Facsimile Signature. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. In the event that any signature is delivered via facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original signature. 17. Arbitration. Any dispute or controversy arising under or in connection with this Agreement will be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. 18. Confidentiality. As an officer and director of REFAC, TUCHMAN is privy to information generally regarded as confidential and often proprietary with respect to REFAC, its business relationships, negotiations and activities. Such information may include details of REFAC's business and client relationships (past, present and prospective) and related REFAC and client plans, products, property rights, technical and market data. By reason of the foregoing: (a) TUCHMAN will not at any time divulge or negligently permit the communication of any of the foregoing types of information in any way that could conflict with the interests of REFAC, any subsidiary companies it may own during the Employment Period or any of their respective clients, customers or business associates. (b) For a period of two (2) years after any Date of Termination, neither TUCHMAN nor any company which TUCHMAN directly or indirectly owns, controls or manages shall employ or solicit the employment of any present or future employee of REFAC or any subsidiary company that it may own during the Employment Period. 19. Breach of Noncompetition and/or Confidentiality Covenant. Each of the parties hereto acknowledges that in the event of any breach of Sections 10 and/or 18 of this Agreement by TUCHMAN, REFAC would be irreparably harmed and could not be made whole by monetary damages. Therefore REFAC, in addition to any other remedy to which it may be entitled at law or in equity, may compel specific performance of Sections and/or 18 of this Agreement, as the case may be. TUCHMAN hereby acknowledges and agrees that the covenants contained in Sections 10 and 18 of this Agreement are reasonable and fully necessary for the protection of the legitimate interests of REFAC and are not oppressive to the interest of TUCHMAN. 20. Entire Agreement. (a) Except as otherwise provided in Section 20(b), as of the Effective Date, this Agreement shall supersede the Prior Agreement in its entirety and the Prior Agreement shall be of no further force or effect. Subject to the foregoing, this Agreement together with the stock option agreement set forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, agreements, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto. (b) Notwithstanding the provisions of Section 20(a) or anything contained herein to the contrary, it is expressly understood and agreed that TUCHMAN is entitled to the Success Bonus (as defined in the Prior Agreement) earned by him under the Prior Agreement and that same shall be payable at the time and in the amount specified therein. 21. Survival. The obligations of the parties set forth in Sections 8(g) and 9 through 19 of this Agreement shall survive the expiration of the Employment Period. IN WITNESS WHEREOF, the parties have executed this Agreement as of April 1, 2005. /s/ Robert L. Tuchman --------------------------- Robert L. Tuchman REFAC By: /s/ Jeffrey D. Serkes ------------------------ Name: Jeffrey D. Serkes Title: Director EX-10 3 refac8k_ex10-2.txt EXHIBIT 10.2 - EMPLOYMENT AGREEMENT Exhibit 10.2 ------------ EMPLOYMENT AGREEMENT BETWEEN RAYMOND A. CARDONNE, JR. AND REFAC Dated as of April 1, 2005 THIS EMPLOYMENT AGREEMENT (the "Agreement") made as of April 1, 2005 (the "Effective Date") between REFAC, a Delaware corporation ("REFAC"), and Raymond A. Cardonne ("CARDONNE"). CARDONNE was heretofore employed by REFAC pursuant to the terms of an employment agreement dated November 7, 2003 (the "Prior Agreement") with an employment term that expired on March 31, 2005. The parties hereto desire enter into the contractual arrangement as set forth in this Agreement effective as of the Effective Date. The parties hereto desire to modify the contractual arrangements between them and replace them with this Agreement effective as of the Effective Date. In consideration of the premises and the respective agreements of the parties herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. Employment. Subject to the provisions hereof, REFAC shall continue to employ CARDONNE and CARDONNE shall continue to serve as Senior Vice President and Chief Financial Officer of REFAC. 2. Term. The employment of CARDONNE by REFAC hereunder will continue until December 31, 2006, unless further extended by agreement of CARDONNE and REFAC or until sooner terminated as hereinafter provided. 3. Duties. (a) Regular Duties. CARDONNE will continue to perform such duties and have such powers as are customary for the chief financial officer of a publicly-held corporation of a size and engaging in a business comparable to the business that REFAC is then conducting. (b) Responsible to the Board. CARDONNE will report and be directly responsible to the Board of Directors of REFAC (the "Board") or the Chief Executive Officer of REFAC. (c) Time Devoted to REFAC's Affairs. CARDONNE will devote substantially all his working time and efforts to the business and affairs of REFAC and will not, without the prior authorization of the Board, have any active engagement in or responsibility with respect to any business or commercial enterprise other than REFAC or a subsidiary of REFAC; provided, however, CARDONNE may enter into separate arrangements for his own account with Palisade Capital Management, L.L.C. ("Palisade") and/or any of its affiliated companies that are engaged in private equity or investment management pursuant to which he may become a member, partner, officer, director or stockholder of such entity or may provide consulting or professional services thereto provided that such activities do not materially interfere with the regular performance of his duties and responsibilities under this Agreement. 4. Place of Performance. In connection with CARDONNE's employment by REFAC, CARDONNE will be based in the New York City metropolitan area, except for required travel on REFAC's business to an extent consistent with REFAC's business requirements and his responsibilities hereunder. 5. Base Salary and Incentive Compensation. (a) Base Salary. During the Employment Period, CARDONNE's salary will be $200,000 per annum ("Base Salary"). Payment of such salary will be made in accordance with REFAC's customary pay practices for senior officers and will be subject to such payroll deductions as are required by law or by the terms of any applicable benefit plan of REFAC. (b) Incentive Compensation. In addition to the Base Salary as set forth in Section 5(a) of this Agreement, the Company may, in its sole discretion, pay to CARDONNE additional incentive compensation in cash and/or equity upon the achievement of certain performance goals. (c) Stock Option. In connection with the entering into of this Agreement, REFAC shall grant CARDONNE an option to purchase fifty thousand (50,000) shares of REFAC common stock with an exercise price equal to the closing price of REFAC's common stock on the date immediately preceding the grant (the "Stock Option"). One-third of the Stock Option shall vest on the date of grant and one-third shall vest on each of the next two (2) anniversaries of the date of grant. Such Stock Option shall be subject to the terms and conditions as set forth in a stock option agreement entered into by and between REFAC and CARDONNE. 6. Fringe Benefits, Expenses and Related Matters. (a) Expenses. During the term of CARDONNE's employment hereunder, CARDONNE will be entitled to receive prompt reimbursement for all reasonable expenses incurred by CARDONNE in performing services hereunder, including all reasonable expenses of travel and living expenses while away from home on business or at the request of and in the service of REFAC, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by REFAC. (b) Other Benefits. CARDONNE will be entitled to participate in or receive benefits under any employee benefit plan or arrangement now or in the future made available by REFAC generally to its executive employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangement, including health insurance and life insurance benefits. (c) Vacations. CARDONNE will be entitled to four weeks of paid vacation per calendar year, prorated for any portion thereof and to all paid holidays given by REFAC in accordance with REFAC's regular paid holidays policy. 7. Facilities and Support Services Furnished. REFAC will furnish CARDONNE with office space, secretarial assistance and such other facilities and services as shall be suitable to CARDONNE's position and adequate for the performance of his duties as herein set forth. 8. Termination. CARDONNE's employment hereunder may be terminated under the following circumstances: (a) Death. CARDONNE's employment hereunder will terminate immediately upon his death. (b) Disability. REFAC may terminate CARDONNE's employment hereunder if CARDONNE should become permanently disabled. For the purposes of this Agreement, permanent disability ("Disability") means CARDONNE's inability, by virtue of physical or mental illness or injury, to perform his regular duties on a full-time, continuous basis for 120 consecutive days. CARDONNE's disability will be established if a qualified medical doctor selected by the parties so certifies in writing. If the parties are unable to agree on the selection of such a doctor, each party will designate a qualified medical doctor who together will select a third doctor who will make the determination. CARDONNE will make himself available for an examination by a doctor selected in accordance with this paragraph (b). (c) Cause. REFAC may terminate CARDONNE's employment hereunder for Cause at any time during the Employment Period hereof as hereinafter set forth. For purposes of this Agreement, REFAC will have "Cause" to terminate CARDONNE's employment hereunder upon (i) the willful and continued failure, in the reasonable judgment of the Board, by CARDONNE to perform substantially his duties with REFAC (other than any such failure resulting from his death or Disability) after a written demand for substantial performance is delivered to CARDONNE by the Board which specifically identifies the manner in which it is believed that CARDONNE has not substantially performed his duties, or (ii) the conviction of CARDONNE (or the entering by CARDONNE of a plea of guilty or nolo contendere) for any felony or any lesser crime which involved REFAC or its property. For purposes of clause (i) of this definition, no act, or failure to act, on CARDONNE's part shall be deemed "willful" unless done, or omitted to be done, by CARDONNE not in good faith and without reasonable belief that this act, or failure to act, was in the best interest of REFAC. Notwithstanding the foregoing, CARDONNE will not be deemed to have been terminated for Cause within the meaning of clauses (i) and (ii) without (1) reasonable notice to CARDONNE setting forth the reasons for REFAC's intention to terminate for Cause, (2) an opportunity for CARDONNE, together with his counsel, to be heard before the Board, and (3) delivery to CARDONNE of a Notice of Termination, as defined in paragraph (e) of this Section 8, from the Board finding that, in the good faith opinion of the Board, clause (i) or (ii) hereof may be invoked, and specifying the particulars thereof in detail. (d) Good Reason. CARDONNE may terminate his employment with REFAC for Good Reason at any time during the Employment Period. For purposes of this Agreement, CARDONNE will have "Good Reason" to terminate his employment with REFAC upon: (i) the assignment to CARDONNE of any duties materially inconsistent with his status as Chief Financial Officer of REFAC (or such other comparable senior level executive position that is acceptable to CARDONNE) or a substantial adverse alteration in the nature or status of his responsibilities; (ii) a reduction by REFAC in CARDONNE 's Base Salary set forth in Section 5 hereof; (iii) the relocation of CARDONNE 's principal place of employment to a location more than thirty-five (35) miles from Fort Lee, New Jersey except where such relocation does not result in CARDONNE 'S commute from his principal residence to his principal place of employment being greater than such commute as of the Effective Date; (iv) the failure by REFAC to pay to CARDONNE any portion of CARDONNE 's compensation hereunder or under the Prior Agreement within fourteen (14) days of the date such compensation is due; (v) a Change in Control of REFAC (as defined in below) and (vi) any other material breach of this Agreement by REFAC which is not cured within ten (10) days of a written notice by CARDONNE. CARDONNE 's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or mental illness. CARDONNE 's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. For purposes of this Agreement, a Change in Control shall be deemed to have occurred when (i) Palisade Concentrated Equity Partnership, L.P. and/or its affiliates cease(s) to own, in the aggregate, at least thirty-five percent (35%) of the outstanding common stock of REFAC or (ii) any person, entity or group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) that is not affiliated with Palisade acquires in one or a series of transaction(s) more than fifty percent (50%) of the outstanding common stock of REFAC. (e) Notice of Termination. Any termination of CARDONNE's employment by REFAC or by CARDONNE (other than termination pursuant to Section 8(a)) during the Employment Period will be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" means a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of CARDONNE's employment under the provision so indicated. (f) Date of Termination. "Date of Termination" shall mean (i) if CARDONNE's employment is terminated by his death, the date of his death, (ii) if CARDONNE's employment is terminated pursuant to paragraph (b) of this Section 8, three weeks after Notice of Termination, (iii) if CARDONNE's employment is terminated pursuant to paragraph (c) or (d) of this Section 8, the date specified in the Notice of Termination, and (iv) if CARDONNE's employment is terminated for any other reason, the date specified in the Notice of Termination. (g) CARDONNE Cooperation. From and after the earlier to occur of (i) delivery of a Notice of Termination and (ii) termination of CARDONNE's employment hereunder (other than termination due to CARDONNE's death) CARDONNE will, to the best of his knowledge, disclose or provide for the disclosure to REFAC or any successor thereof, orally or in writing as appropriate, all information of a material nature relating to existing or prospective clients and licensees and as to any other matters in which CARDONNE shall prior to his Date of Termination have been personally involved or as to which CARDONNE will have acquired special knowledge, and CARDONNE will thereafter answer to the best of his knowledge any questions that REFAC may from time to time submit with respect to any such aforesaid matters. 9. Compensation Upon Termination or During Disability. (a) Disability. During any period that CARDONNE fails or is unable to perform his duties hereunder as a result of Disability, CARDONNE will continue to receive his full salary at the rate then in effect for such period until his employment is terminated, provided that such payments will be reduced by the amounts, if any, paid to CARDONNE under any disability benefit plans of REFAC or under the Social Security disability insurance program. Following the termination of his employment, CARDONNE's benefits will be determined in accordance with REFAC's retirement, insurance, and other applicable programs and plans then in effect, if any. Following the termination of CARDONNE's employment due to Disability, REFAC will pay CARDONNE any compensation deferred in accordance with Section 11 hereof and the Stock Option shall become immediately vested and exercisable on the Date of Termination and shall remain exercisable as to all shares subject thereto (by CARDONNE or his heirs, distributees or legal representatives, as applicable) for the remainder of the term of the Stock Option. (b) Death. If CARDONNE 's employment should be terminated by his death, REFAC will (i) pay any accrued salary and other compensation and benefits through the date of death to CARDONNE 's spouse, or, if he leaves no spouse, to his estate, (ii) pay or cause the payment to CARDONNE's beneficiary, or if he specified no beneficiary, to his estate, the death benefits payable pursuant to REFAC's life insurance program in effect at the date of death, if any, (iii) pay any compensation deferred in accordance with Section 11 hereof, to CARDONNE's spouse, or, if he leaves no spouse, to his estate, and (iv) the Stock Option shall become immediately vested and exercisable on the Date of Termination and shall remain exercisable as to all shares subject thereto (by CARDONNE's heirs, distributees or legal representatives, as applicable) for the remainder of the term of the Stock Option. (c) Cause. If CARDONNE's employment should be terminated by REFAC for Cause or by CARDONNE during the Employment Period, REFAC will pay CARDONNE his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus any compensation deferred in accordance with Section 11 hereof and all other amounts to which CARDONNE is entitled as of the Date of Termination under any benefit plan of REFAC at the time such payments are due, and REFAC will have no further obligations to CARDONNE under this Agreement. (d) Without Cause. CARDONNE's employment with REFAC may not be terminated by REFAC during the Employment Period for reasons other than those described in Section 8(a), 8(b) or 8(c) unless, prior to such termination CARDONNE has together with his counsel had an opportunity to appear and be heard at a meeting of the Board which was called and held (after reasonable notice to CARDONNE) for the purpose of considering such a termination. In the event that CARDONNE's employment is terminated by REFAC during the Employment Period for reasons other than those described in Section 8(a), 8(b) or 8(c), REFAC will (i) pay CARDONNE a lump sum equal to the sum of (A) his full salary that would have been payable for the remainder of the Employment Period absent such termination at the rate in effect at the time Notice of Termination is given and (B) any compensation deferred in accordance with Section 11 hereof, (ii) provide, except to the extent that CARDONNE shall receive similar benefits from a subsequent employer, the life, health and similar welfare benefits which CARDONNE would have been entitled to during the remainder of the Employment Period absent such termination and (iii) the Stock Option shall become immediately vested and exercisable on the Date of Termination and shall remain exercisable as to all shares subject thereto (by CARDONNE or his heirs, distributees or legal representatives, as applicable) for the remainder of the term of the Stock Option. (e) Good Reason. In the event that CARDONNE's employment is terminated by CARDONNE during the Employment Period for Good Reason, REFAC will (i) pay CARDONNE a lump sum equal to the sum of (A) his full Base Salary that would have been payable for the remainder of the Employment Period absent such termination at the rate in effect at the time Notice of Termination is given, and (B) any compensation deferred in accordance with Section 11 hereof (ii) provide, except to the extent that CARDONNE shall receive similar benefits from a subsequent employer, the life, health and similar welfare benefits which CARDONNE would have been entitled to during the remainder of the Employment Period absent such termination under any such benefit plan of REFAC, and (iii) the Stock Option shall become immediately vested and exercisable on the Date of Termination and shall remain exercisable as to all shares subject thereto (by CARDONNE or his heirs, distributees or legal representatives, as applicable) for the remainder of the term of the Stock Option; provided, however, that in the event that CARDONNE terminates employment for Good Reason solely as a result of a Change in Control, then such Stock Option shall remain exercisable for a period of one (1) year following the Date of Termination and shall thereafter expire. (f) Mitigation of Payments. CARDONNE will not be required to mitigate the amount of any lump sum payment or bonus entitlement provided for in this Section 9 by reducing it by the amount of any compensation earned by CARDONNE as the result of employment by another employer after the Date of Termination, or otherwise. However, he will be required to mitigate the costs of the other benefits provided for in this Section 9. 10. Noncompetition. CARDONNE will not, except as hereinafter set forth, engage in any Competitive Activity (as hereinafter defined) during the Employment Period or for a period of one year following the termination of CARDONNE 's employment for any reason. For purposes of this Section, "Competitive Activity" will mean directly or indirectly: owning, managing, controlling, investing in, or otherwise being connected with, in any manner, whether as an officer, director, employee, partner, investor, consultant, lender or otherwise, any business entity or activity which is engaged in, or is in any way related to, any business conducted by REFAC or any subsidiary companies that it may own during the Employment Period other than businesses that are being wound down from prior activities of REFAC. Notwithstanding the above, nothing herein contained will prohibit CARDONNE from investing in securities of a business entity if the securities of such entity are listed for trading on a national securities exchange or traded in the over-the-counter market and CARDONNE 's holdings therein represent less than five (5%) percent of the total number of shares or principal amount of other securities of such entity outstanding. 11. Section 162 (m). In the event that any payment or benefit received or to be received by CARDONNE in connection with his employment by REFAC would otherwise not be deductible (in whole or part), by REFAC as a result of the operation of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), the delivery of the non-deductible portion of such payment or benefit to CARDONNE by REFAC shall be deferred until the earliest date on which it may be delivered to CARDONNE without being subject to the limit on deductibility imposed by Section 162(m) of the Code. CARDONNE will be paid any amount deferred pursuant to the Prior Agreement in accordance with the terms of this Section 11. 12. Successors; Binding Agreement. (a) Should any entity succeed (whether by purchase, merger, consolidation or similar transaction) to all or substantially all of the business and/or assets of REFAC, CARDONNE shall continue to perform all of his duties and obligations hereunder. (b) REFAC will require any successor (whether by purchase, merger, consolidation or similar transaction) to all or substantially all of the business and/or assets of REFAC, by agreement in form and substance reasonably satisfactory to CARDONNE, to expressly assume and agree to perform this Agreement in substantially the same manner and to substantially the same extent that REFAC would be required to perform it if no such succession had taken place. (c) This Agreement and all rights of CARDONNE hereunder shall inure to the benefit of and be enforceable by CARDONNE's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If CARDONNE should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to CARDONNE's devisee, legatee, or other designee or, if there be no such designee, to CARDONNE's estate. 13. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows: If to CARDONNE: Raymond A. Cardonne 81 Katydid Drive Branchburg, New Jersey 08876 If to REFAC: REFAC 1 Bridge Plaza - Suite 550 Fort Lee, New Jersey 07024 Copy to: Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, New York 10036 Attention: Stephen Banker, Esq. or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 14. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by CARDONNE and such other officer of REFAC as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York without regard to its conflicts of law principles. All compensation payable to CARDONNE pursuant to this Agreement shall be subject to all applicable withholding taxes, normal payroll withholding and any other amounts required by law to be withheld. 15. Validity. If any term or provision of this Agreement or the application thereof to any person, entity or circumstance should to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to any person, entity or circumstance other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement (including, to the extent permitted by law, any such term or provision which has been held to be otherwise invalid or unenforceable) shall be deemed valid and enforceable to the fullest extent permitted by law. 16. Counterparts and Facsimile Signature. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. In the event that any signature is delivered via facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original signature. 17. Arbitration. Any dispute or controversy arising under or in connection with this Agreement will be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. 18. Confidentiality. As an officer and director of REFAC, CARDONNE is privy to information generally regarded as confidential and often proprietary with respect to REFAC, its business relationships, negotiations and activities. Such information may include details of REFAC's business and client relationships (past, present and prospective) and related REFAC and client plans, products, property rights, technical and market data. By reason of the foregoing: (a) CARDONNE will not at any time divulge or negligently permit the communication of any of the foregoing types of information in any way that could conflict with the interests of REFAC, any subsidiary companies it may own during the Employment Period or any of their respective clients, customers or business associates. (b) For a period of two (2) years after the Date of Termination, neither CARDONNE nor any company which CARDONNE directly or indirectly owns, controls or manages shall employ or solicit the employment of any present or future employee of REFAC or any subsidiary company it may own during the Employment Period. 19. Breach of Noncompetition and/or Confidentiality Covenant. Each of the parties hereto acknowledges that in the event of any breach of Section 10 and/or 18 of this Agreement by CARDONNE, REFAC would be irreparably harmed and could not be made whole by monetary damages. Therefore REFAC, in addition to any other remedy to which it may be entitled at law or in equity, may compel specific performance of such Sections 10 and/or 18 of this Agreement, as the case may be. CARDONNE hereby acknowledges and agrees that the covenants contained in Sections 10 and 18 of this Agreement are reasonable and fully necessary for the protection of the legitimate interests of REFAC and are not oppressive to the interest of CARDONNE. 20. Entire Agreement. (a) Except as otherwise provided in Section 20(b), as of the Effective Date, this Agreement shall supersede the Prior Agreement in its entirety and the Prior Agreement shall be of no further force or effect. Subject to the foregoing, this Agreement together with the stock option agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, agreements, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto. (b) Notwithstanding the provisions of Section 20(a) or anything contained herein to the contrary, it is expressly understood and agreed that CARDONNE is entitled to the Success Bonus (as defined in the Prior Agreement) earned by him under the Prior Agreement and that same shall be payable at the time and in the amount specified therein. 21. Survival. The obligations of the parties set forth in Sections 8(g) and 9 through 19 of this Agreement shall survive the expiration of the Employment Period of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of April 1, 2005. /s/ Raymond A. Cardonne, Jr. ------------------------------- Raymond A. Cardonne, Jr. REFAC By: /s/ Jeffrey D. Serkes ------------------------------- Name: Jeffrey D. Serkes Title: Director EX-10 4 ny506704.txt EXHIBIT 10.3 - STOCK OPTION AGREEMENT Exhibit 10.3 STOCK OPTION AGREEMENT UNDER REFAC'S 2003 STOCK INCENTIVE PLAN STOCK OPTION AGREEMENT (this "Agreement") entered into as of April 1, 2005, pursuant to the REFAC 2003 Stock Incentive Plan (the "Plan"), by and between REFAC, a Delaware corporation, and Robert L. Tuchman (the "Optionee"). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan. WHEREAS, the Optionee is currently employed by REFAC subject to an employment agreement to be entered into by and between Optionee and REFAC dated as of April 1, 2005 (the "Employment Agreement"); and WHEREAS, REFAC desires, by affording the Optionee an opportunity to purchase shares of its Stock as hereinafter provided and subject to the terms and conditions hereof, to carry out the purpose of the Plan; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto have agreed and do hereby agree as follows: 1. Number of Shares. REFAC hereby grants to the Optionee an Incentive Stock Option (the "Option") to purchase an aggregate of 100,000 shares of Stock, subject to adjustment as provided in Section 2 hereof, on the terms and conditions herein set forth. To the extent the Option does not qualify as an Incentive Stock Option under the Code, it shall be treated as a Nonqualified Stock Option. 2. Adjustments. In the event that the Board shall determine that any dividend or other distribution (whether in the form of cash, Stock or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, affects the Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of the Optionee hereunder, then the Board shall make such equitable changes or adjustments as it deems necessary or appropriate to any or all of (i) the number and kind of shares of stock issued or issuable in respect of the Option, and (ii) the Exercise Price (as defined below) of the Option. 3. Option Price. The purchase price of the Stock subject to the Option shall be $4.12 per share (the "Exercise Price"), subject to adjustment as provided in Section 2 hereof. 4. Term and Exercisability of Option. (a) Unless the Option is previously cancelled pursuant to this Agreement, the Option Term shall commence on the date hereof (the "Date of Grant") and terminate on the tenth anniversary of the Date of Grant. Upon the termination of the Option, all rights of the Optionee hereunder shall cease. (b) Exercisability of Option. The Option shall be exercisable as to 33?% of the aggregate number of shares covered hereby upon the Date of Grant. Subject to Section 6 hereof, the Option will become exercisable in cumulative fashion as to 33? of the aggregate number of shares of Stock covered hereby on the first and second anniversaries of the Date of Grant. Subject to Section 6 hereof, the right of the Optionee to purchase shares with respect to which this Option has become exercisable as herein provided may be exercised in whole or in part at any time or from time to time, prior to the tenth anniversary of the Date of Grant. 5. Payment. Upon the exercise of all or any portion of the Option, the Exercise Price of the shares being purchased shall be paid in full either (a) in cash or by check, (b) by tendering previously acquired shares of Stock, that if acquired from REFAC has been held by the Optionee for at least six months, having an aggregate fair market value at the time of exercise equal to the total Exercise Price, (c) by a combination of (a) and (b), or (d) with approval by the Board, through a broker cashless exercise procedure, if such procedure has been established by REFAC at the time of exercise. 6. Termination. (a) In the event that the Optionee's employment with REFAC is terminated (i) by the Optionee for Good Reason (as defined in the Employment Agreement), (ii) by the Company without Cause (as defined in the Employment Agreement), (iii) due to the Optionee's death or disability, or (iv) on or after the expiration of the term of the Employment Agreement, then the Option shall immediately become exercisable as to all shares subject thereto and shall remain exercisable by the Optionee (or his heirs, distributees, or legal representatives, as applicable) for the remainder of the term of the Option and shall thereafter expire; provided, however, that in the event of a termination for Good Reason solely as a result of a Change in Control (as defined in the Employment Agreement), the Option shall remain exercisable for a period of one year following the date of such termination and shall thereafter expire. (b) In the event that the Optionee's employment with REFAC shall be terminated by REFAC for Cause (as defined in the Employment Agreement) prior to the expiration of the term of the Employment Agreement, then the Option shall immediately terminate as to any shares subject thereto. (c) In the event that the Optionee's employment with REFAC is terminated for any reason other than those described in (a) and (b), then the Option shall immediately terminate as to any shares that have not previously become exercisable as of the date of the Optionee's termination of employment. Any portion of the Option that is exercisable as of the date of the Optionee's termination of employment may be exercised by the Optionee for ninety days following the termination of his employment. Upon expiration of such ninety-day period, any unexercised portion of the Option shall terminate in full. (d) Notwithstanding anything to the contrary in this Section 6, the Option shall not be exercisable later than the date of its termination as set forth in Section 4(a) hereof. 7. Rights of Optionee. (a) The Optionee shall have none of the rights of a stockholder with respect to the shares covered by the Option until the shares are issued or transferred to such Optionee upon exercise of the Option. (b) The Option shall not interfere with or limit in any way the right the Board may have to terminate the employment of the Optionee with REFAC nor confer upon the Optionee any right to continue to be employed by REFAC. 8. Nontransferability of Option. The Option shall not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution and shall be exercisable during the Optionee's lifetime only by the Optionee. 9. Notification. (a) The Option shall be exercised by written notification of exercise substantially in the form of Exhibit A hereto and delivered to the Secretary of REFAC in accordance with subsection (c) of this Section 9. Such notification shall specify the number of shares of Stock to be purchased and the manner in which payment is to be made. (b) The Optionee shall notify the Company promptly following any sale of shares of Stock purchased pursuant to the exercise of the Option that is a "disqualifying disposition" within the meaning of section 421(b) of the Code. (c) Any notification required or permitted hereunder shall be addressed to REFAC, to the attention of the Secretary, One Bridge Plaza, Suite 550, Fort Lee, New Jersey 07024 or to the Optionee at the address set forth below, as the case may be, and deposited, postage prepaid, in the United States mail; provided, however, that a notification of exercise pursuant to subsection (a) of this Section 9 shall be effective only upon receipt by the Secretary of REFAC of such notification and all necessary documentation, including full payment for the shares. Either party may, by notification to the other given in the manner aforesaid, change the address for future notices. 10. Tax Withholding. REFAC shall have the power and the right to require the Optionee to remit to it an amount sufficient to satisfy any Federal, state, local, employment and other taxes required by law to be withheld as a result of any taxable event arising in connection with the Option in accordance with the terms of the Plan. 11. Conditions to Issuance. The Option and exercise of the Option, and the other obligations of REFAC under the Plan and the Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required. REFAC, in its discretion, may postpone the issuance or delivery of Stock under the Option as REFAC may consider appropriate and may require the Optionee to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Stock in compliance with applicable laws, rules and regulations. 12. Incorporation of Plan; Governing Law; Interpretation. (a) The Plan is hereby incorporated by reference and made a part hereof, and the Option and this Agreement are subject to all terms and conditions of the Plan. To the extent that any provision in this Agreement is inconsistent with the Plan, the provisions of the Plan shall control. (b) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its principles of conflicts of laws. (c) The Board shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its determination and decisions shall be final, conclusive and binding upon the Optionee and his legal representative in respect of any questions arising under the Plan or this Agreement. 13. Miscellaneous. (a) This Agreement shall bind and inure to the benefit of REFAC, its successors and assigns, and the Optionee and his personal representatives and assigns. (b) The failure of REFAC to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. (c) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. In the event that any signature is delivered via facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original signature. 14. Amendment. This Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto. IN WITNESS WHEREOF, REFAC has caused this Agreement to be duly executed by its officer thereunder duly authorized and the Optionee has hereunto set his hand, all as of the day and year set forth above. REFAC By: /s/ Jeffrey D. Serkes Name: Jeffrey D. Serkes Title: Director ACCEPTED: /s/ Robert L. Tuchman - --------------------- Robert L. Tuchman Exhibit A Page 1 INSERT DATE NAME OF OPTIONEE ADDRESS OF OPTIONEE ________________ _______ NOTICE OF EXERCISE OF STOCK OPTION PURSUANT TO 2003 STOCK INCENTIVE PLAN DATE REFAC One Bridge Plaza Fort Lee, New Jersey 07024 Attn: Secretary Gentlemen: Reference is made to the stock option that REFAC (the "Company") granted to me by Agreement dated __________. Let this letter serve as my Notice of Exercise of such option with respect to __________ shares of the Company's Common Stock at the exercise price of $__________ per share. I wish to make payment of the exercise price for the shares as indicated below (check one or more boxes): ____ Cash; my check in the amount of $_________ is enclosed herewith. ____ Previously acquired shares of Stock; __________ such shares with a total fair market value of $__________ are enclosed herewith. ____ ["Broker cashless exercise"; I understand that of the __________ shares I am purchasing by this method, the net number that I will receive is _________. Note: This method of exercise may not be permitted by the Board.] In exercising this stock option, if the option shares are not registered under the Securities Act of 1933, as amended, I hereby agree, warrant and represent to the Company that: 1. The certificate evidencing said shares will bear the following legend in conspicuous type: "The shares represented by this certificate have not been registered under the Securities Act of 1933 and may not be sold, transferred, pledged, hypothecated or offered for sale in the absence of an effective registration statement relating to such shares under such Act or a written opinion of counsel to REFAC that such registration is not required." 2. I am acquiring said shares for my investment account and do not have the present intention of reselling or distributing any of said shares. 3. I have no contract, understanding, agreement, or arrangement with any person to sell or transfer to such person or to any third person any of said shares, and I have no present plan to enter into any such contract, understanding, agreement or arrangement. 4. I do not presently have in mind any future sale or other disposition of any of said shares, upon the occurrence or nonoccurrence of any predetermined event or circumstance. 5. I have had access to the Company's reports as filed with the Securities and Exchange Commission and to its press releases. 6. I have sufficient knowledge and experience in financial and business matters to be able to evaluate the merits and risks of this investment and to bear the economic risks of this investment. 7. I acknowledge that the Company has no obligation to issue a certificate evidencing any shares owned by me until the purchase price of said shares is fully paid as set forth herein. 8 I am enclosing cash and/or a certified or bank check payable to the Company in an amount equal to the sum of any local, state and federal withholding taxes due. Sincerely, NAME OF OPTIONEE REQUIRED INFORMATION Name and Address ____________________ Lane ____________________ ____________________ Telephone Number ____________________ Social Security Number ____________________ EX-10 5 ny506705a.txt EXHIBIT 10.4 - STOCK OPTION AGMT. Exhibit 10.4 STOCK OPTION AGREEMENT UNDER REFAC'S 2003 STOCK INCENTIVE PLAN STOCK OPTION AGREEMENT (this "Agreement") entered into as of April 1, 2005, pursuant to the REFAC 2003 Stock Incentive Plan (the "Plan"), by and between REFAC, a Delaware corporation, and Raymond A. Cardonne, Jr. (the "Optionee"). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan. WHEREAS, the Optionee is currently employed by REFAC subject to an employment agreement to be entered into by and between Optionee and REFAC dated as of April 1, 2005 (the "Employment Agreement"); and WHEREAS, REFAC desires, by affording the Optionee an opportunity to purchase shares of its Stock as hereinafter provided and subject to the terms and conditions hereof, to carry out the purpose of the Plan; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto have agreed and do hereby agree as follows: 1. Number of Shares. REFAC hereby grants to the Optionee an Incentive Stock Option (the "Option") to purchase an aggregate of 50,000 shares of Stock, subject to adjustment as provided in Section 2 hereof, on the terms and conditions herein set forth. To the extent the Option does not qualify as an Incentive Stock Option under the Code, it shall be treated as a Nonqualified Stock Option. 2. Adjustments. In the event that the Board shall determine that any dividend or other distribution (whether in the form of cash, Stock or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, affects the Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of the Optionee hereunder, then the Board shall make such equitable changes or adjustments as it deems necessary or appropriate to any or all of (i) the number and kind of shares of stock issued or issuable in respect of the Option, and (ii) the Exercise Price (as defined below) of the Option. 3. Option Price. The purchase price of the Stock subject to the Option shall be $4.12 per share (the "Exercise Price"), subject to adjustment as provided in Section 2 hereof. 4. Term and Exercisability of Option. (a) Unless the Option is previously cancelled pursuant to this Agreement, the Option Term shall commence on the date hereof (the "Date of Grant") and terminate on the tenth anniversary of the Date of Grant. Upon the termination of the Option, all rights of the Optionee hereunder shall cease. (b) Exercisability of Option. The Option shall be exercisable as to 33?% of the aggregate number of shares covered hereby upon the Date of Grant. Subject to Section 6 hereof, the Option will become exercisable in cumulative fashion as to 33? of the aggregate number of shares of Stock covered hereby on the first and second anniversaries of the Date of Grant. Subject to Section 6 hereof, the right of the Optionee to purchase shares with respect to which this Option has become exercisable as herein provided may be exercised in whole or in part at any time or from time to time, prior to the tenth anniversary of the Date of Grant. 5. Payment. Upon the exercise of all or any portion of the Option, the Exercise Price of the shares being purchased shall be paid in full either (a) in cash or by check, (b) by tendering previously acquired shares of Stock, that if acquired from REFAC has been held by the Optionee for at least six months, having an aggregate fair market value at the time of exercise equal to the total Exercise Price, (c) by a combination of (a) and (b), or (d) with approval by the Board, through a broker cashless exercise procedure, if such procedure has been established by REFAC at the time of exercise. 6. Termination. (a) In the event that the Optionee's employment with REFAC is terminated (i) by the Optionee for Good Reason (as defined in the Employment Agreement), (ii) by the Company without Cause (as defined in the Employment Agreement), (iii) due to the Optionee's death or disability, or (iv) on or after the expiration of the term of the Employment Agreement, then the Option shall immediately become exercisable as to all shares subject thereto and shall remain exercisable by the Optionee (or his heirs, distributees, or legal representatives, as applicable) for the remainder of the term of the Option and shall thereafter expire; provided, however, that in the event of a termination for Good Reason solely as a result of a Change in Control (as defined in the Employment Agreement), the Option shall remain exercisable for a period of one year following such termination of employment and shall thereafter expire. (b) In the event that the Optionee's employment with REFAC shall be terminated by REFAC for Cause (as defined in the Employment Agreement) prior to the expiration of the term of the Employment Agreement, then the Option shall immediately terminate as to any shares subject thereto. (c) In the event that the Optionee's employment with REFAC is terminated for any reason other than those described in (a) and (b), then the Option shall immediately terminate as to any shares that have not previously become exercisable as of the date of the Optionee's termination of employment. Any portion of the Option that is exercisable as of the date of the Optionee's termination of employment may be exercised by the Optionee for ninety days following the termination of his employment. Upon expiration of such ninety-day period, any unexercised portion of the Option shall terminate in full. (d) Notwithstanding anything to the contrary in this Section 6, the Option shall not be exercisable later than the date of its termination as set forth in Section 4(a) hereof. 7. Rights of Optionee. (a) The Optionee shall have none of the rights of a stockholder with respect to the shares covered by the Option until the shares are issued or transferred to such Optionee upon exercise of the Option. (b) The Option shall not interfere with or limit in any way the right the Board may have to terminate the employment of the Optionee with REFAC nor confer upon the Optionee any right to continue to be employed by REFAC. 8. Nontransferability of Option. The Option shall not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution and shall be exercisable during the Optionee's lifetime only by the Optionee. 9. Notification. (a) The Option shall be exercised by written notification of exercise substantially in the form of Exhibit A hereto and delivered to the Secretary of REFAC in accordance with subsection (c) of this Section 9. Such notification shall specify the number of shares of Stock to be purchased and the manner in which payment is to be made. (b) The Optionee shall notify the Company promptly following any sale of shares of Stock purchased pursuant to the exercise of the Option that is a "disqualifying disposition" within the meaning of section 421(b) of the Code. (c) Any notification required or permitted hereunder shall be addressed to REFAC, to the attention of the Secretary, One Bridge Plaza, Suite 550, Fort Lee, New Jersey 07024 or to the Optionee at the address set forth below, as the case may be, and deposited, postage prepaid, in the United States mail; provided, however, that a notification of exercise pursuant to subsection (a) of this Section 9 shall be effective only upon receipt by the Secretary of REFAC of such notification and all necessary documentation, including full payment for the shares. Either party may, by notification to the other given in the manner aforesaid, change the address for future notices. 10. Tax Withholding. REFAC shall have the power and the right to require the Optionee to remit to it an amount sufficient to satisfy any Federal, state, local, employment and other taxes required by law to be withheld as a result of any taxable event arising in connection with the Option in accordance with the terms of the Plan. 11. Conditions to Issuance. The Option and exercise of the Option, and the other obligations of REFAC under the Plan and the Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required. REFAC, in its discretion, may postpone the issuance or delivery of Stock under the Option as REFAC may consider appropriate and may require the Optionee to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Stock in compliance with applicable laws, rules and regulations. 12. Incorporation of Plan; Governing Law; Interpretation. (a) The Plan is hereby incorporated by reference and made a part hereof, and the Option and this Agreement are subject to all terms and conditions of the Plan. To the extent that any provision in this Agreement is inconsistent with the Plan, the provisions of the Plan shall control. (b) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its principles of conflicts of laws. (c) The Board shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its determination and decisions shall be final, conclusive and binding upon the Optionee and his legal representative in respect of any questions arising under the Plan or this Agreement. 13. Miscellaneous. (a) This Agreement shall bind and inure to the benefit of REFAC, its successors and assigns, and the Optionee and his personal representatives and assigns. (b) The failure of REFAC to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. (c) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. In the event that any signature is delivered via facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original signature. 14. Amendment. This Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto. IN WITNESS WHEREOF, REFAC has caused this Agreement to be duly executed by its officer thereunder duly authorized and the Optionee has hereunto set his hand, all as of the day and year set forth above. REFAC By: /s/ Jeffrey D. Serkes ---------------------------- Name: Jeffrey D. Serkes Title: Director ACCEPTED: /s/ Raymond A. Cardonne, Jr. - ---------------------------- Raymond A. Cardonne, Jr. Exhibit A Page 1 INSERT DATE NAME OF OPTIONEE ADDRESS OF OPTIONEE ________________ _______ NOTICE OF EXERCISE OF STOCK OPTION PURSUANT TO 2003 STOCK INCENTIVE PLAN DATE REFAC One Bridge Plaza Fort Lee, New Jersey 07024 Attn: Secretary Gentlemen: Reference is made to the stock option that REFAC (the "Company") granted to me by Agreement dated __________. Let this letter serve as my Notice of Exercise of such option with respect to __________ shares of the Company's Common Stock at the exercise price of $__________ per share. I wish to make payment of the exercise price for the shares as indicated below (check one or more boxes): ____ Cash; my check in the amount of $_________ is enclosed herewith. ____ Previously acquired shares of Stock; __________ such shares with a total fair market value of $__________ are enclosed herewith. ____ ["Broker cashless exercise"; I understand that of the __________ shares I am purchasing by this method, the net number that I will receive is __________. Note: This method of exercise may not be permitted by the Board.] In exercising this stock option, if the option shares are not registered under the Securities Act of 1933, as amended, I hereby agree, warrant and represent to the Company that: 1. The certificate evidencing said shares will bear the following legend in conspicuous type: "The shares represented by this certificate have not been registered under the Securities Act of 1933 and may not be sold, transferred, pledged, hypothecated or offered for sale in the absence of an effective registration statement relating to such shares under such Act or a written opinion of counsel to REFAC that such registration is not required." 2. I am acquiring said shares for my investment account and do not have the present intention of reselling or distributing any of said shares. 3. I have no contract, understanding, agreement, or arrangement with any person to sell or transfer to such person or to any third person any of said shares, and I have no present plan to enter into any such contract, understanding, agreement or arrangement. 4. I do not presently have in mind any future sale or other disposition of any of said shares, upon the occurrence or nonoccurrence of any predetermined event or circumstance. 5. I have had access to the Company's reports as filed with the Securities and Exchange Commission and to its press releases. 6. I have sufficient knowledge and experience in financial and business matters to be able to evaluate the merits and risks of this investment and to bear the economic risks of this investment. 7. I acknowledge that the Company has no obligation to issue a certificate evidencing any shares owned by me until the purchase price of said shares is fully paid as set forth herein. 8 I am enclosing cash and/or a certified or bank check payable to the Company in an amount equal to the sum of any local, state and federal withholding taxes due. Sincerely, NAME OF OPTIONEE REQUIRED INFORMATION -------------------- Name and Address ____________________ Lane ____________________ ____________________ Telephone Number ____________________ Social Security Number ____________________ -----END PRIVACY-ENHANCED MESSAGE-----