EXHIBIT 10(r)

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of March 28, 2003 by
and among REFAC, a Delaware corporation (the “Company”), and Palisade
Concentrated Equity Partnership, L.P., a Delaware limited partnership (the
“Purchaser”).

 

WHEREAS, on February 28, 2003, the Company and the Purchaser consummated a
transaction whereby a wholly-owned subsidiary of the Purchaser was merged with
and into the Company, pursuant to an Agreement and Plan of Merger, dated as of
August 19, 2002, by and among the Company, the Purchaser and such subsidiary
(the “Merger Agreement”);

 

WHEREAS, following the closing of such merger, the Purchaser owns approximately
80% of the Company’s outstanding shares of common stock, par value $0.001 per
share (the “Common Stock”);

 

WHEREAS, Purchaser has determined that it desires to purchase 3,469,387
additional shares of Common Stock from the Company (the “Shares”), at an
aggregate price of $17 million in immediately available funds (the “Purchase
Price”); and

 

WHEREAS, the Board of Directors has (i) formed a special committee to review the
proposed transaction and (ii) received the written opinion of Morgan Joseph &
Co., Inc. to the effect that the Purchase Price is fair from a financial point
of view to the Company and its stockholders;

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:

 

Section 1. Purchase and Sale of Stock. (a) Upon the terms and subject to the
conditions of this Agreement, on the Closing Date (as defined in Section 2.1),
the Purchaser shall purchase from the Company, and the Company shall issue and
sell to the Purchaser, 3,469,387 Shares for an aggregate price equal to the
Purchase Price.

 

(b) In connection with the payment of the Purchase Price, the Company shall
provide the Purchaser with written wire transfer instructions prior to the
Closing.

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Section 2. The Closing.

 

2.1. The Closing. (a) The purchase and sale of the Shares pursuant to this
Agreement will take place at a closing (the “Closing”) to be held at the offices
of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New
York 10036, at 10:00 a.m. New York time, on such date as shall be agreed upon by
the Company and the Purchaser (the “Closing Date”), which date shall be no later
than five (5) business days following the satisfaction or waiver of all the
conditions set forth in Section 2.2, unless otherwise agreed to by the Parties,
and no earlier than the twentieth calendar day following the mailing of the
information statement required by Section 6.1(a). At the Closing:

 

(i) the Purchaser shall deliver to the Company immediately available funds in
the full amount of the Purchase Price, in accordance with the wire transfer
instructions delivered by the Company pursuant to Section 1(b); and

 

(ii) the Company shall deliver to the Purchaser one or more certificates
representing 3,469,387 Shares, bearing a legend in accordance with Section 5.

 

2.2. Conditions to Closing.

 

(a) The Company’s obligation to complete the sale of the Shares is subject to:

 

(i) the accuracy in all material respects of the representations and warranties
made by the Purchaser in Section 4 as of the date hereof and as of the Closing
Date and the fulfillment in all material respects of those undertakings of the
Purchaser in this Agreement to be fulfilled on or prior to the Closing Date; and

 

(ii) the approval for listing the Shares, upon notice of issuance, by the
American Stock Exchange.

 

(b) The Purchaser’s obligation to complete the purchase of the Shares is subject
to the accuracy in all material respects of the representations and warranties
made by the Company in Section 3 as of the date hereof and as of the Closing
Date and the fulfillment in all material respects of those undertakings of the
Company in this Agreement to be fulfilled on or prior to the Closing Date.

 

Section 3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:

 

3.1. Organization, Authorization, Etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement and to issue the Shares in
accordance

 

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with the terms hereof. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by the Company’s Board of Directors and no further consent
or authorization thereof is required. Upon the satisfaction of the obligation
set forth in Section 6.1(a), this Agreement shall be duly authorized by the
Company’s stockholders and no further consent or authorization thereof shall be
required. This Agreement constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.

 

3.2. Issuance of Shares. The Shares to be issued to the Purchaser are duly
authorized and, upon issuance in accordance with the terms of this Agreement,
shall be validly issued, fully paid and non-assessable, and shall not be subject
to preemptive rights or other similar rights of any other person or entity.

 

Section 4. Representations and Warranties of The Purchaser.

 

The Purchaser hereby represents and warrants to the Company as of the Closing
Date as follows:

 

4.1. Organization, Authorization, Etc. The Purchaser is a limited partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization.

 

The Purchaser has the requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The general partners of
the Purchaser have taken all necessary action to authorize the execution,
delivery and performance of this Agreement. This Agreement constitutes the valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and remedies.

 

4.2. Sufficient Funds. The Purchaser will at the Closing have sufficient
immediately available funds in cash to pay the Purchase Price.

 

4.3. Investment Experience. The Purchaser is an accredited investor within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the “Securities Act”), is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in
the purchase of the Shares.

 

4.4. Investment Intent and Limitation On Dispositions. The Purchaser is
acquiring Shares for its own account for investment only and has no intention of
selling or distributing any of such Shares or any arrangement or understanding
with any other

 

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person or entity regarding the sale or distribution of such Shares except
pursuant to a registration, or an exemption from registration, under the
Securities Act.

 

4.5. Information And Risk.

 

(a) The Purchaser has requested, received, reviewed and considered all
information the Purchaser deems relevant in making an informed decision to
purchase the Shares. The Purchaser has had an opportunity to discuss the
Company’s business, management and financial affairs with its management and
also had an opportunity to ask questions of officers of the Company that were
answered to the Purchaser’s satisfaction, provided that such inquiries do not
impair the rights of the Purchaser to rely on the representations and warranties
of the Company as set forth in Section 3.

 

(b) The Purchaser recognizes that an investment in the Shares involves a high
degree of risk, including a risk of total loss of the Purchaser’s investment.
The Purchaser is able to bear the economic risk of holding the Shares for an
indefinite period, and has knowledge and experience in the financial and
business matters such that it is capable of evaluating the risks of the
investment in the Shares.

 

(c) The Purchaser has, in connection with the Purchaser’s decision to purchase
Shares, not relied upon any representations or other information (whether oral
or written) with respect to the Company other than as set forth in Section 3
hereof, and the Purchaser has, with respect to all matters relating to this
Agreement and the sale of the Shares, relied solely upon the advice of the
Purchaser’s own counsel and has not relied upon or consulted counsel to the
Company.

 

4.6. Disclosures to the Company. The Purchaser understands that the Company is
relying on the statements contained herein to establish an exemption from
registration under federal and state securities laws.

 

4.7. Brokers or Finders. No broker, investment banker, financial advisor or
other person or entity is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission from the Company in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of the Purchaser.

 

Section 5. Legends. The Purchaser understands and agrees that each certificate
or other document evidencing any of the Shares shall be endorsed with the legend
in the form set forth below, and the Purchaser covenants that the Purchaser will
not transfer the shares represented by any such certificate without complying
with the restrictions on transfer described in the legend endorsed on such
certificate and understands that the Company will refuse to register a transfer
of any Shares unless the conditions specified in the following legend are
satisfied:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SUCH SHARES
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, OR OTHERWISE
TRANSFERRED IN THE

 

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ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH
ACT UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT OR UNLESS SUCH SALE, PLEDGE,
HYPOTHECATION OR TRANSFER IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE COMPANY MAY REQUEST
A WRITTEN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH SALE OR OTHER
TRANSFER.”

 

Section 6. Covenants.

 

6.1. Covenants of the Company.

 

(a) As soon as practicable following the date hereof, the Company shall mail to
its stockholders an information statement in connection with this Agreement and
the transactions contemplated hereby, in accordance with Regulation 14C under
the Securities Exchange Act of 1934, as amended.

 

(b) The Company shall use commercially reasonable efforts to as soon as
practicable cause the Shares to be listed on the American Stock Exchange, upon
notice of issuance.

 

6.2. Covenants of Purchaser.

 

(a) Simultaneously herewith, the Purchaser is executing and delivering to the
Company an action by written consent in the form attached hereto as Exhibit A.
Such consent shall be effective no earlier than the twentieth calendar day
following the mailing of the information statement pursuant to Section 6.1(a).

 

(b) The Purchaser shall not directly or indirectly cause a merger between the
Company and the Purchaser (or any subsidiary or affiliate thereof) pursuant to
Section 253 or any other provision of the Delaware General Corporation Law until
the one hundred and twentieth day following the date on which instructions in
connection with the Payment Right (as defined in the Merger Agreement) were
first mailed by the Company to holders of Common Stock pursuant to Sections
2.01(d) and (f) of the Merger Agreement.

 

Section 7. Notices.

 

(a) All notices, requests, consents and other communications hereunder shall be
in writing, shall be mailed by first-class registered or certified airmail,
confirmed facsimile or nationally recognized overnight express courier postage
prepaid, and shall be as addressed as follows:

 

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If to the Purchaser, to:

 

Palisade Capital

One Bridge Plaza

Fort Lee, NJ 07024

Telephone: (201) 585-7733

Facsimile: (201) 585-9798

Attention: Steven E. Berman

 

If to the Company, to:

 

Refac

115 River Road

Edgewater, NJ 07020

Telephone: (201) 943-4400

Facsimile: (201) 943-7400

Attention: Robert L. Tuchman, President and CEO

 

with a copy to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Telephone: (212) 735-2760

Facsimile: (917) 777-2760 Attention:

Stephen M. Banker, Esq.

 

(b) Such notices or other communications shall be deemed delivered upon receipt,
in the case of overnight delivery, personal delivery, facsimile transmission (as
evidenced by the confirmation thereof), or mail.

 

Section 8. Miscellaneous.

 

8.1. Amendments. Any term of this Agreement may be amended only with the written
consent of the Company and the Purchaser.

 

8.2. Headings. The headings of the various sections of this Agreement are for
convenience of reference only and shall not be deemed to be part of this
Agreement.

 

8.3. Severability. In the event that any provision in this Agreement is held to
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

 

8.4. Governing Law And Forum. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect

 

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to any choice of law provisions thereof, and the federal law of the United
States of America. The parties hereto agree to submit to the exclusive
jurisdiction of the federal and state courts of the State of Delaware with
respect to the interpretation of this Agreement or for the purposes of any
action arising out of or related to this Agreement.

 

8.5. Counterparts. This Agreement may be executed in two counterparts, each of
which shall constitute an original, and both of which together shall 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) the same with the same force and effect as if such facsimile signature
page were an original hereof.

 

8.6. Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the matters covered herein and supersedes all prior
agreements and understandings with respect to such matters. Except as
specifically set forth herein or therein, neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.

 

8.7. Expenses. Each party hereto shall pay all costs and expenses incurred by it
in connection with the execution, delivery and performance of this Agreement,
including, but not limited to, fees of legal counsel.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized representatives as of the day and year
first above written.

 

REFAC

 

By:

 

/S/    ROBERT L. TUCHMAN         

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Name:

 

Robert L. Tuchman

   

Title:

 

Chief Executive Officer

PALISADE CONCENTRATED EQUITY PARTNERSHIP, L.P.

 

By:

 

/S/    STEVEN E. BERMAN        

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Name:

 

Steven E. Berman

   

Title:

 

Member

 

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