SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): December 10, 1997
(November 26, 1997)
REFAC TECHNOLOGY DEVELOPMENT CORPORATION
Exact Name of Registrant as Specified in Charter
DELAWARE 0-7704 13-1681234
(State or Other (Commission (IRS
Jurisdiction File Number) Employer
of Incorporation) Identifica
tion No.)
122 EAST 42ND STREET, NEW YORK, NEW YORK 10168
Address of Principal Executive Offices (Zip Code
212-687-4741
Registrant's telephone number, including area code
N/A
Former Name or Former Address, if Changed Since Last Report
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 26, 1997, pursuant to an Agreement and
Plan of Merger, dated as of November 25, 1997, by and
among REFAC Technology Development Corporation (the
"Company"), HFID Acquisition Corporation ("Merger Sub"),
Human Factors/Industrial Design, Inc. ("Human Factors")
and Douglas M. Spranger, Werner R. Kamuf, Bert D.
Heinzelman and Paul J. Mulhauser, stockholders of Human
Factors (the "Principal Stockholders"), Merger Sub, a
New York corporation and a wholly owned subsidiary of the
Company, was merged with and into Human Factors, a New
York corporation (the "Merger"). Human Factors continued
as the surviving corporation in the Merger (the
"Surviving Corporation") and became a wholly owned
subsidiary of the Company. Pursuant to the Merger
Agreement, the Principal Stockholders of Human Factors
will continue as members of the board and officers of the
Surviving Corporation and the employees of Human Factors
will continue as employees of the Surviving Corporation.
Douglas M. Spranger, the President of the Surviving
Corporation, will become a member of the board of
directors of the Company.
As a result of the Merger, the common stock, without
par value, of Human Factors, was converted into the right
to receive aggregate merger consideration of $6,000,000,
consisting of shares of common stock, par value $.10, of
the Company (the "Company Stock"), and cash.
Stockholders of Human Factors received aggregate merger
consideration of 12,000 shares of Company Stock and
$450,000 in cash upon the effectiveness of the Merger,
and will receive an additional 107,374 shares of Company
Stock and $4,050,000 in cash in a subsequent payment on
January 5, 1998. For purposes of the Merger, the Company
Stock was valued at $12.565051 per share, which was the
average of the daily closing prices per share reported on
the American Stock Exchange from the period beginning
September 17, 1997 and ending on November 24, 1997. In
addition, the Principal Stockholders and the other former
stockholders (together with the Principal Stockholders,
the "Stockholders") of Human Factors are eligible to
receive contingent payments ("Contingent Payments") after
the first five fiscal years of operation of the Surviving
Corporation, based upon the performance of the Surviving
Corporation during those five fiscal years. The
aggregate of these Contingent Payments shall equal (i)
the excess, if any, in the Average EBITDA (As defined in
the Merger Agreement), over $891,000 multiplied by (ii)
3.366, which amount shall then be reduced by (iii)
certain amounts payable under employment agreements
between the Surviving Corporation and the Human Factors
Stockholders and other employees of the Surviving
Corporation. Under the Merger Agreement, the Company is
obligated to contribute $1,000,000 in additional capital
to the Surviving Corporation within 90 days of the
closing of the Merger. The Merger Agreement contains
certain provisions regarding non-competition, non-
solicitation and confidentiality with respect to the
Principal Stockholders.
Pursuant to the Merger Agreement, the Surviving
Corporation has entered into employment agreements (the
"Employment Agreements") with each of the Stockholders,
and the Company has issued Guarantees to the Stockholders
with respect to the Surviving Corporation's obligations
under the Employment Agreements. The Company entered
into stock option agreements with each of the
Stockholders and with certain other key employees of
Human Factors, pursuant to which an aggregate of 165,000
shares of the Company Stock, subject to adjustments for
extraordinary dividends, stock dividends,
recapitalization, stock splits, or combinations or
exchanges of such shares, or other similar transactions,
can be issued. The Company also entered into a
Management Agreement with the Surviving Corporation and
the Principal Stockholders, dated as of November 25,
1997, which provides, among other things, that each of
the Principal Stockholders and a designee of the Company
shall be on the board of directors of the Surviving
Corporation. The Management Agreement also gives the
Principal Stockholders a right of first negotiation for
shares of the Surviving Corporation's stock, in the event
that the Company desires to make a disposition of such
stock.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
2.1 Agreement and Plan of Merger By and Among REFAC
Technology Development Corporation, Human
Factors Industrial Design, Inc. and The
Principal Stockholders of Human Factors
Industrial Design, Inc., dated as of November
25, 1997, with exhibits thereto.
SIGNATURE
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.
Date: December 10, 1997
REFAC TECHNOLOGY
DEVELOPMENT CORPORATION
(Registrant)
By: /s/ Robert L. Tuchman
---------------------
Name: Robert L. Tuchman
Title: President
EXHIBITS
2.1 Agreement and Plan of Merger By and Among REFAC
Technology Development Corporation, Human Factors
Industrial Design, Inc. and The Principal
Stockholders of Human Factors Industrial Design,
Inc., dated as of November 25, 1997, with exhibits
thereto.