<PAGE>
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
HADRON, INC.
(Name of Registrant as Specified In Its Charter)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
________________________________________________________________
2) Aggregate number of securities to which transaction
applies:
________________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________<PAGE>
5) Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________
3) Filing Party:
________________________________________________________________
4) Date Filed:
________________________________________________________________<PAGE>
HADRON, INC.
9990 Lee Highway
Fairfax, VA 22030
November 2, 1995
Dear Shareholder:
You are cordially invited to attend Hadron, Inc.'s Annual
Meeting of Shareholders to be held on December 8, 1995, at 10:00
a.m. local time at the Courtyard by Marriott at 3935 Centerview
Drive, Chantilly, Virginia.
This year, in addition to electing the Company's Board of
Directors, you are also being asked to approve an amendment to
the Company's 1994 Stock Option Plan to increase the number of
shares reserved for issuance by an additional 70,000 shares of
Common Stock and to ratify the appointment of Coopers & Lybrand,
L.L.P as accountants. We also will be pleased to report on the
affairs of the Company and a discussion period will be provided
for questions and comments of general interest to shareholders.
Whether or not you are able to attend, it is important that
your shares be represented and voted at this meeting.
Accordingly, please complete, sign and date the enclosed proxy
and mail it in the envelope provided at your earliest
convenience. If a second mailing were required in order to
obtain sufficient votes, it would be quite costly to the Company.
Your prompt response is very important and would be greatly
appreciated.
Sincerely,
C.W. Gilluly, Ed.D.
Chairman and
Chief Executive Officer
George E. Fowler
President and
Chief Operating Officer<PAGE>
YOUR VOTE IS IMPORTANT
Even if you plan to attend the meeting, please complete,
sign, and return promptly the enclosed proxy in the envelope
provided to ensure that your vote will be counted. You may
vote in person if you so desire even if you have previously
sent in your proxy.
If your shares are held in the name of a bank, brokerage
firm or other nominee, please contact the party responsible for
your account and direct him or her to vote your shares on the
enclosed card.<PAGE>
HADRON, INC.
Notice of Annual Meeting of Shareholders
December 8, 1995
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of Hadron, Inc., a New York corporation (the
"Company"), is scheduled to be held on December 8, 1995 at 10:00
a.m., local time, at the Courtyard by Marriott, located at 3935
Centerview Drive, Chantilly, Virginia for the following purposes:
1. To elect four directors to serve for the terms of
office specified in the accompanying proxy statement
and until their successors are duly elected and
qualified;
2. To approve an amendment to the Company's 1994 Stock
Option Plan to increase the number of shares of Common
Stock reserved for issuance by an additional 70,000
shares of Common Stock;
3. To ratify the selection of Coopers & Lybrand, L.L.P. as
independent accountants for the Company for fiscal year
1996; and
4. To transact such other business as may properly come
before the meeting and any adjournment thereof.
Only shareholders of record at the close of business on
October 27, 1995 are entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. All shareholders are
cordially invited to attend the Annual Meeting in person.
However, to assure your representation at the meeting, you are
urged to complete, sign and date the enclosed form of proxy and
return it promptly in the envelope provided. Shareholders
attending the meeting may revoke their proxy and vote in person.
FOR THE BOARD OF DIRECTORS
S. Amber Gordon
Secretary
Fairfax, Virginia
November 2, 1995 <PAGE>
HADRON, INC.
PROXY STATEMENT
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to the holders of Common
Stock, par value $.02 per share (the "Common Stock"), of Hadron,
Inc., a New York corporation (the "Company") in connection with
the solicitation by the Board of Directors of the Company of
proxies for use at the Annual Meeting of Shareholders to be held
on Friday, December 8, 1995, or at any adjournment thereof,
pursuant to the accompanying Notice of Annual Meeting of
Shareholders. The purposes of the meeting and the matters to be
acted upon are set forth in the accompanying Notice of Annual
Meeting of Shareholders. The Board of Directors is not currently
aware of any other matters that will come before the Annual
Meeting.
Proxies for use at the Annual Meeting are being solicited by
the Board of Directors of the Company. These proxy solicitation
materials are first being mailed on or about November 2, 1995 to
all shareholders entitled to vote at the Annual Meeting. Proxies
will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy material to the
beneficial owners of the shares and will reimburse them for their
expenses in so doing. Should it appear desirable to do so in
order to ensure adequate representation of shares at the Annual
Meeting, officers, agents and employees of the Company may
communicate with shareholders, banks, brokerage houses and others
by telephone, facsimile or in person to request that proxies be
furnished. All expenses incurred in connection with this
solicitation will be borne by the Company.
Revocability and Voting of Proxy
A form of proxy for use at the Annual Meeting and a return
envelope for the proxy are enclosed. Shareholders may revoke the
authority granted by their execution of proxies at any time
before their effective exercise by filing with the Secretary of
the Company a written notice of revocation or a duly executed
proxy bearing a later date, or by voting in person at the Annual
Meeting. Shares of the Company's Common Stock represented by
executed and unrevoked proxies will be voted in accordance with
the choice or instructions specified thereon. If no
specifications are given, the proxies intend to vote the shares
represented thereby to approve Proposals No. 1, 2 and 3 as set
forth in the accompanying Notice of Annual Meeting of
Shareholders and in accordance with their best judgment on any
other matters which may properly come before the Annual Meeting.<PAGE>
Record Date and Voting Rights
Only shareholders of record at the close of business on
October 27, 1995 are entitled to notice of and to vote at the
Annual Meeting. As of the record date, 1,503,685 shares of
Common Stock were issued and outstanding. Each share of Common
Stock is entitled to one vote on all matters that may properly
come before the Annual Meeting. The holders of a majority of
the outstanding shares of Common Stock, present in person or by
proxy, will constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum. "Broker non-
votes" are shares held by brokers or nominees which are present
in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received
from the beneficial owner.
Directors will be elected by a plurality of the votes cast
at the Annual Meeting. Accordingly, abstentions or non-votes
will not affect the election of candidates receiving the
plurality of votes. All other matters to come before the Annual
Meeting require the approval of the holders of a majority of the
votes cast at the Annual Meeting. For this purpose, abstentions
and non-votes will be deemed shares not voted on such matters,
will not count as votes for or against the proposals, and will
not be included in calculating the number of votes necessary for
the approval of such matters.
Votes at the Annual Meeting will be tabulated by Inspectors
of Election appointed by the Company.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of October 27,
1995 regarding the beneficial ownership of the Company's Common
Stock of (i) each person known to the Company to be the
beneficial owner, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
of more than 5% of the outstanding shares of Common Stock, (ii)
each director of the Company, (iii) each executive officer or
former executive officer of the Company named in the Summary
Compensation Table (see "Executive Compensation") and (iv) all
executive officers and directors of the Company as a group.
Unless otherwise indicated, the address of each named beneficial
owner is c/o Hadron, Inc., 9990 Lee Highway, Fairfax, Virginia
22030. Except to the extent indicated in the footnotes, each of
the beneficial owners named below has sole voting and investment
power with respect to the shares listed.
2<PAGE>
<TABLE>
<CAPTION>
Number of Percent
Name and Address Shares of Class
<S> <C> <C>
Infotechnology, Inc. 202,739<F2> 13.5%
4900 Seminary Road, St. 800
Alexandria, VA 22311
Joseph S. Bracewell 2,500<F3> <F1>
Dwight M. Geduldig 3,000<F3> <F1>
C.W. Gilluly, Ed.D. 1,230,000<F4> 45.1
William J. Howard 8,160<F3> <F1>
Robert J. Lynch, Jr. 10,000<F3> <F1>
William Mayer, M.D. 3,000<F3> <F1>
George E. Fowler 25,000<F5> 1.6
All directors and executive
officers as a group
(9 persons) 1,319,993<F6> 47.1%
_____________________________
<FN>
<F1> Less than 1%
<F2> Includes 50,000 shares held indirectly by Infotechnology,
Inc.
<F3> Includes 2,500 shares which may be acquired upon the
exercise of vested options granted under the Company's 1994
Stock Option Plan.
<F4> Includes 1,200,000 shares of Common Stock which Dr. Gilluly
has the right to acquire pursuant to a convertible
promissory note. Exercise of the conversion rights at a
subsequent date may result in a change in control of the
Company. See "Certain Relationships and Related
Transactions." Also includes 25,000 shares which may be
acquired upon the exercise of vested options granted under
the Company's 1994 Stock Option Plan; options with respect
to 5,000 of such shares are subject to shareholder approval
of the proposed amendment to the Company's 1994 Stock Option
Plan. See "Proposal No. 2 - Amendment to 1994 Stock Option
Plan."
3<PAGE>
<F5> Includes 25,000 shares which may be acquired upon the
exercise of vested options granted under the Company's 1994
Stock Option Plan; options with respect to 5,000 of such
shares are subject to shareholder approval of the proposed
amendment to the Company's 1994 Stock Option Plan. See
"Proposal No. 2 - Amendment to 1994 Stock Option Plan."
<F6> Includes shares referred to in Notes 2 through 4, above.
</FN>
</TABLE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Four directors, constituting the entire Board of Directors,
are to be elected at the Annual Meeting. Unless otherwise
specified, the enclosed proxy will be voted in favor of the
persons named below to serve until the next Annual Meeting and
until their successors are elected and qualified. Each person
named below is now a director of the Company. In the event any
of these nominees shall be unable to serve as a director, the
shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the
nominee. All nominees have consented to be named and have
indicated their intent to serve if elected. The Board of
Directors has no reason to believe that any of the nominees will
be unable to serve or that any vacancy on the Board of Directors
will occur.
Mr. Geduldig and Dr. Mayer, directors of the Company since
1991, will not stand for re-election this year. The Board of
Directors, on behalf of the Company, gratefully acknowledges the
advice and counsel provided by Mr. Geduldig and Dr. Mayer, and
the important role they have played in the Company's development.
The names of the nominees and certain other information
about them are set forth below:
4<PAGE>
<TABLE>
<CAPTION>
Nominee Age Director Since Office Held with Company
<S> <C> <C> <C>
Joseph S. Bracewell 48 1993 Director
C.W. Gilluly, Ed.D. 49 1992 Chairman of the Board and
Chief Executive Officer
William J. Howard 48 1989 Director
Robert J. Lynch, Jr. 62 1991 Director
</TABLE>
JOSEPH S. BRACEWELL has been the Chairman of Century
National Bank in Washington, D.C. since 1985. Mr. Bracewell is
a founder of the bank, and has served as its Chief Executive
Officer since its inception in 1982. Mr. Bracewell has had
twenty years of business experience, primarily in the
organization, ownership and management of financial institutions
including the West University Bank, N.A. (Houston), of which he
is currently Vice Chairman. Mr. Bracewell also served as a
Presidential appointee from 1980 to 1981 as the President of the
Solar Energy and Energy Conservation Bank.
C.W. GILLULY, Ed.D. was appointed Chief Executive Officer of
the Company in October 1994, having served as Acting President
and Acting Chief Executive Officer of the Company since May 1993.
Dr. Gilluly has served as President of Telecommunications
Industries, Inc. ("TII"), a provider of office automation systems
to the U.S. Congress since 1989 and from 1985 until 1989 he
served as a Vice President of TII. He has served as a director
of TII since 1986. Dr. Gilluly has served as President of TII's
parent company, Infotechnology, Inc. ("Infotech"), since June
1992. Since February 1992, Dr. Gilluly has served as Chairman
and Chief Executive Officer of Comtex Scientific Corporation, a
provider of electronic news and business information.
WILLIAM J. HOWARD since 1973, has served as President of
Howard Equities Co., Inc., a real estate development company, and
since 1986, has been a majority shareholder thereof. Since 1988,
Mr. Howard has been the managing partner of Asbury General
Partnership, a real estate partnership focusing on the
development of waterfront land located in Caroline County,
Maryland. Mr. Howard is also a realtor for Meredith Real Estate,
Inc., a real estate brokerage firm. Mr. Howard was appointed by
the Governor of Maryland, and approved by the Maryland Senate, in
1993 to serve on the three member Subsequent Injury Fund Board
which supervises the $12 million dollar fund.
5<PAGE>
ROBERT J. LYNCH, Jr. is the President, Chief Executive
Officer and a director of American and Foreign Enterprises, Inc.,
a company with which he has been associated for 28 years.
American and Foreign Enterprises is engaged in industrial and
real estate acquisitions for domestic and international
investors. He also serves as a director of Infotech and Data
Broadcasting Corporation, a provider of stock market quotation
and other specialized market data services.
Executive Officers
The following table contains information as of October 27,
1995 as to the executive officers of the Company who are not also
directors of the Company:
<TABLE>
<CAPTION>
Officer Office Held
Name Since With Company
<S> <C> <C>
George E. Fowler 1993 President and Chief
Operating Officer
S. Amber Gordon 1991 Executive Vice
President,
Secretary and
Treasurer
J. Anthony Vidal 1995 Vice President
</TABLE>
GEORGE E. FOWLER (56) was appointed President and Chief
Operating Officer of the Company in October 1994. Mr. Fowler has
also served as Acting President of the Company's subsidiary,
Acumenics Research & Technology, Inc. ("Acumenics") since April
1994. Mr. Fowler joined the Company as Vice President and
President of its Aerospace Sciences subsidiary in October 1993.
Mr. Fowler has held senior management positions within the
government contracting industry for more than a decade. Between
May 1992 and September 1993, he was Senior Vice President of
Business Operations for Ellsworth Associates, Inc. From January
1991 until May 1992, he was Director of Operations for McDonald
Bradley, Inc. From August 1987 until December 1990, he was a
Vice President of the Orkand Corporation. He was Vice President
of Computer Data Systems, Inc. from 1983 until 1987. Mr. Fowler
served as an officer in the U.S. Navy from 1962 until 1983.
6<PAGE>
S. AMBER GORDON (41) was appointed Executive Vice President
of the Company in July 1995. Ms. Gordon was named Treasurer in
April 1994, Corporate Secretary in December 1993, and served as
Vice President responsible for Corporate Relations and Strategic
Planning, since May 1991. She served as Chairman of the Quest
Business Agency, Inc., a Houston-based marketing communications
firm and advertising agency, from 1985 to 1991. Ms. Gordon has
served as President of S.A. Gordon Enterprises, Inc., a
consulting firm specializing in financial and corporate
relations, since 1985.
J. ANTHONY VIDAL (36) was appointed Vice President of the
Company in September 1995, and continues to serve as President of
the Company's SyCom Services, Inc. subsidiary, a position he has
held since 1993. Mr. Vidal joined the Company in 1992 as Program
Manager for the Company's Engineering and Information Services,
Inc. subsidiary. From 1983 until 1992, Mr. Vidal held various
engineering positions at Westinghouse Electric Corporation, where
his last title was manager of the Equipment Design Engineering
Support Software group.
There are no family relationships among the directors or
executive officers of the Company.
Meetings of the Board of Directors and Committees
The Board of Directors held a total of six meetings during
the Company's fiscal year ended June 30, 1995. Each director
attended in person or telephonically at least 75% of the meetings
held by the Board of Directors and all committees thereof on
which he served.
During fiscal year 1995, the Board of Directors' Audit
Committee was comprised of Messrs. Bracewell, Howard and Lynch.
The Audit Committee recommends engagement of the Company's
independent auditors, is primarily responsible for approving the
services performed by the Company's independent auditors and for
reviewing and evaluating the Company's accounting principles and
its system of internal accounting controls and has general
responsibility in connection with related matters. The Audit
Committee met one time during fiscal year 1995.
The Compensation and Employee Benefits Committee of the
Board of Directors (the "Compensation Committee"), which held
five meetings in fiscal year 1995, is comprised of Messrs. Howard
and Lynch. The Compensation Committee evaluates management's
recommendations and makes its own recommendations to the Board of
Directors concerning the compensation of the Company's executive
officers. It is also responsible for the formulation of the
Company's executive compensation policy and the research,
analysis and subsequent recommendation regarding the
establishment and administration of the Company's 1994 Stock
Option Plan.
7<PAGE>
The Executive Committee of the Board of Directors is
comprised of Messrs. Bracewell, Geduldig, Gilluly and Lynch. The
Executive Committee meets "as needed" to exercise the power of
the Board of Directors on matters of a routine nature between
Board of Directors meetings. All actions of the Executive
Committee are reviewed and ratified by the full Board of
Directors. The Executive Committee did not meet during fiscal
year 1995.
The Board of Directors does not have a Nominating Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
THE DIRECTORS NAMED ON THE ENCLOSED PROXY.
PROPOSAL NO. 2
AMENDMENT TO THE 1994 STOCK OPTION PLAN
In September 1995, the Board of Directors adopted, subject
to shareholder approval, an amendment to the Hadron, Inc. 1994
Stock Option Plan to increase the number of shares reserved for
issuance thereunder from 220,000 to 290,000. At the Annual
Meeting, the shareholders are being asked to approve this
amendment to the 1994 Stock Option Plan.
Description of the 1994 Stock Option Plan
The 1994 Stock Option Plan provides for the issuance of
incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended and non-qualified stock
options, to purchase (as proposed to be amended) an aggregate of
up to 290,000 shares of Common Stock. The 1994 Stock Option Plan
permits the grant of options to key employees, consultants and
directors of the Company.
The 1994 Stock Option Plan is administered by the
Compensation Committee consisting of directors Howard and Lynch.
Each of the members of the Committee is a "disinterested" person
for purposes of Rule 16b-3. Subject to the provisions of the
1994 Stock Option Plan, the Compensation Committee has full and
final authority to select the participants to whom awards are to
be granted thereunder, to grant such awards and to determine the
terms and conditions of such awards, including vesting and
exercise price. The 1994 Stock Option Plan also provides that
the Compensation Committee may accelerate the time at which all
or a portion of an optionee's options may be exercised in the
event of a change in control of the Company.
8<PAGE>
Each option is evidenced by a written agreement in a form
approved by the Compensation Committee. Options granted under
the 1994 Stock Option Plan generally are not transferable by the
optionee other than by will or by the laws of descent and
distribution and each option is exercisable, during the lifetime
of the optionee, only by the optionee. Key employees, including
employee directors, and consultants of the Company or any of its
subsidiaries are eligible to be considered for the grant of
awards under the 1994 Stock Option Plan.
Under the 1994 Stock Option Plan, the exercise price of an
incentive stock option must be at least equal to 100% of the fair
market value of the Common Stock on the date of grant (110% of
the fair market value in the case of options granted to employees
who are 10% shareholders). The exercise price of a non-qualified
stock option must be not less than the par value of a share of
the Common Stock on the date of grant. The term of an incentive
or non-qualified stock option may not exceed ten years (five
years in the case of an incentive stock option granted to a 10%
shareholder).
Each non-employee director elected or appointed to the Board
of Directors automatically receives on the date of his or her
first initial appointment to the Company's Board of Directors, an
option to purchase 2,500 shares of the Company's Common Stock
(the "Initial Option") at a per share exercise price equal to the
fair market value of the Common Stock on the initial grant date.
Furthermore, each non-employee Director automatically receives on
each anniversary of his initial election or appointment to the
Company's Board of Directors or, in the case of current directors
each anniversary of the date the 1994 Stock Option Plan was
adopted by the Board of Directors, an option to purchase 2,500
shares of the Company's Common Stock exercisable at a per share
value equal to the fair market value for the Common Stock on the
applicable additional grant date to the extent that options
remain available under the 1994 Stock Option Plan. Subject to
acceleration upon the occurrence of certain prescribed events,
such options become exercisable as to one-third upon the date of
grant, one-third upon the first anniversary of the date of grant
and one-third upon the second anniversary of the date of grant.
Each option terminates, to the extent not exercised prior
thereto, upon the earlier to occur of (i) the tenth anniversary
of grant and (ii) ninety days after the cessation of the
optionee's service as a member of the Board of Directors (to the
extent vested upon the date of such cessation).
The Board of Directors may alter, amend, suspend or
terminate the 1994 Stock Option Plan, provided that no such
action shall deprive an optionee, without his consent, of any
option granted to the optionee pursuant to the 1994 Stock Option
Plan or of any of his rights under such option. Provisions
related to automatic grants of options to non-employee directors
9<PAGE>
may not (with limited exceptions) be amended more frequently than
once every six months and no amendment to such provisions, unless
approved by the shareholders of the Company, shall become
effective earlier than six months after Board of Directors'
approval. Except as provided in the 1994 Stock Option Plan, no
amendment by the Board of Directors, unless taken with the
approval of the shareholders may (i) materially increase the
benefits accruing to participants under the 1994 Stock Option
Plan, (ii) materially increase the number of securities which may
be issued under the 1994 Stock Option Plan or (iii) materially
modify the requirements as to eligibility for participation in
the 1994 Stock Option Plan.
As all of the directors and executive officers of the
Company are eligible for grants of options under the 1994 Stock
Option Plan, each such person has a personal interest in the
approval of the proposed amendment. On September 18, 1995, the
Compensation Committee approved the grant, to 11 employees of the
Company, of options to acquire up to 102,000 shares of Common
Stock; included in these awards were grants, to Dr. Gilluly and
Mr. Fowler, of options to acquire 15,000 shares at an exercise
price of $.50 per share. All of such grants were made subject to
shareholder approval of the amendment proposed hereby; in the
event the shareholders do not approve the proposed amendment, all
such grants will be void.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT
TO THE HADRON, INC. 1994 STOCK OPTION PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Board of Directors has appointed the firm of Coopers &
Lybrand, L.L.P. as the Company's independent accountants for
fiscal year 1996. Although action by the shareholders in this
matter is not required, the Board of Directors believes that it
is appropriate to seek shareholder ratification of this
appointment in light of the critical role played by independent
accountants in maintaining the integrity of Company financial
controls and reporting.
A representative of Coopers & Lybrand, L.L.P. is expected to
attend the Annual Meeting. The representative will have the
opportunity to make a statement, if he or she so desires, and
will be available to respond to appropriate questions from
shareholders.
10<PAGE>
On May 23, 1994, Ernst & Young resigned as auditors of the
Company. The reports of Ernst & Young did not contain an
adverse opinion or a disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting
principles, except that the audit report in the Company's Annual
Report on Form 10-K for the year ended June 30, 1993 referred to
an uncertainty as to the Company's ability to continue as a going
concern.
In connection with the audits for the fiscal years ended
June 30, 1993, 1992, and 1991 and the subsequent interim period,
there were no disagreements with Ernst & Young on any matter of
accounting principles or practices, financial statement
disclosure or auditing scope or procedure which, if not resolved
to the satisfaction of Ernst & Young, would have caused them to
make reference to the matter in connection with its reports.
On July 5, 1994, the Company engaged Coopers & Lybrand,
L.L.P. as the Company's independent accountants to audit the
Company's financial statements for its fiscal year ended June 30,
1994. The determination to engage Coopers & Lybrand, L.L.P. was
approved by the Audit Committee of the Board of Directors and by
the Board of Directors. The Company did not contact Coopers &
Lybrand, L.L.P. during the Company's two most recent fiscal
years, or any subsequent interim period, regarding (i) any
disagreement with Ernst & Young or (ii) the application of
accounting principles to a specified transaction or the type of
audit opinion that might be rendered on the Company's financial
statements. Prior to its engagement, Coopers & Lybrand, L.L.P.
was neither asked for, nor has it expressed any opinion of any
accounting issues concerning the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
COOPERS & LYBRAND, L.L.P. AS INDEPENDENT ACCOUNTANTS FOR FISCAL
YEAR 1996.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning all
compensation paid by the Company to the Chairman and Chief
Executive Officer and to the President and Chief Operating
Officer of the Company. No other executive officer of the
Company received total salary and bonus in excess of $100,000
during the fiscal year ended June 30, 1995.
11<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
Name and Fiscal Stock Options All Other
Principal Position Year Salary($) Bonus($) Granted Compensation
<S> <C> <C> <C> <C> <C>
C.W. Gilluly, 1995 $ 80,009 0<F1> 30,000<F2> $125<F3>
Chairman and 1994 84,112 0 0 125<F3>
Chief Executive Officer 1993 0 0 0 0
George E. Fowler, 1995 115,003 0<F1> 30,000<F2> 125<F3>
President and 1994 70,931 0 0 0
Chief Operating Officer 1993 <F4>
_____________________________
<FN>
<F1> The Company has awarded an $8,000 bonus to Dr. Gilluly and a
$16,000 bonus to Mr. Fowler. Such bonuses have not been
paid as of the date of this Proxy Statement, and the Company
has determined not to pay such bonuses until arrearages in
directors' fees are paid in full. See "Executive
Compensation - Compensation of Directors."
<F2> Options granted pursuant to the Company's 1994 Stock Option
Plan. See "Executive Compensation - Stock Option Grants."
<F3> Contributions made by the Company under its 401(k) plan.
<F4> Mr. Fowler joined the Company during fiscal year 1994.
</FN>
</TABLE>
12<PAGE>
Stock Option Grants
The following table sets forth the stock options granted to
the Chairman and Chief Executive Officer and to the President and
Chief Operating Officer of the Company under the Company's 1994
Stock Option Plan during the fiscal year ended June 30, 1995.
<TABLE>
<CAPTION>
Option Grants in Fiscal Year 1995
Potential
Realizable Value at Assumed
Number of % of Total Options Annual Rates of Stock Price
Shares Granted to Employees Exercise Expiration Appreciation for Option Term
Name Underlying in Fiscal Year Price Date <F1>
Options Granted 5% 10%
(#)
--------------- ------------------- ------ ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
C.W. Gilluly 30,000<F2> 15.3% $.25 9/22/2004 $4,717 $11,953
George E. Fowler 30,000<F2> 15.3% $.25 9/22/2004 $4,717 $11,953
________________________________
<FN>
<F1> Amounts represent hypothetical gains that could be achieved if
exercised at end of the option term. The dollar amounts under
these columns assume 5% and 10% compounded annual appreciation in
the Common Stock from the date the respective options were granted.
These calculations and assumed realizable values are required to be
disclosed under Securities and Exchange Commission rules and,
therefore, are not intended to forecast possible future
appreciation of Common Stock or amounts that may be ultimately
realized upon exercise.
<F2> Options vest one-third upon the date of grant, and one-third each
on the first and second anniversaries of the date of grant, and
expire 10 years after the grant date. The option exercise price is
100% of the fair market value on the date of grant. Options are
exercisable for a period of 90 days after a voluntary termination
of employment to the extent vested at that time.
</FN>
</TABLE>
13<PAGE>
On September 18, 1995, the Compensation Committee approved
the grant, to 11 employees of the Company, of options to acquire
up to 102,000 shares of Common Stock. All of such grants were
made subject to shareholder approval of the amendment to the 1994
Stock Option Plan proposed hereby; in the event the shareholder
do not approve the proposed amendment, all such grants will be
void. See "Proposal No. 2 - Amendment to the 1994 Stock Option
Plan."
Year-End Option Values
The following table sets forth certain information
regarding the value of unexercised options held by the Chairman
and Chief Executive Officer and the President and Chief Operating
Officer of the Company as of June 30, 1995.
<TABLE>
<CAPTION>
Fiscal Year-End Option Values
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at June 30, 1995 at June 30, 1995 <F1>
Name Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
C.W. Gilluly 10,000 20,000 $ 1,250 $ 2,500
George E. Fowler 10,000 20,000 $ 1,250 $ 2,500
__________________________
<FN>
<F1> Represents the difference between the exercise price of
the outstanding options and the closing bid price of the
Common Stock on June 30, 1995, which was $0.375 per share.
Options that have an exercise price greater than the
fiscal year-end market value are not included in the value
calculation.
</FN>
</TABLE>
14<PAGE>
Employment Agreements, Termination of Employment and Change of
Control Arrangements
The Company renewed its agreement with Mr. Fowler, to serve
as President and Chief Operating Officer, on October 1, 1995 at a
base salary of $115,000. His employment agreement with the
Company further provides for the grant to Mr. Fowler of options
to purchase Common Stock of the Company. Mr. Fowler's employment
agreement provides for bonus compensation of up to 50% of his
base salary based upon his performance and the Company's
financial performance. If Mr. Fowler is constructively
discharged, the Company must continue to pay his base salary for
six months after the term of the agreement. In no case, however,
will the Company pay Mr. Fowler severance benefits if he is
terminated for cause, as defined in the employment agreement, or
if he leaves the employ of the Company voluntarily.
Dr. Gilluly has the right to acquire beneficial ownership of
1,200,000 shares of Common Stock pursuant to a convertible
promissory note which gives rise to such acquisition rights.
Exercise of the conversion rights at a subsequent date may result
in a change in control of the Company. See "Certain
Relationships and Related Transactions."
Compensation of Directors
Directors receive a quarterly cash fee of $1,250 for their
services. In addition, directors receive $500 per Board of
Directors' meeting attended, and $250 per committee meeting
attended in person (unless such meeting is combined with a full
Board of Directors' meeting), or $125 per committee meeting
attended telephonically. Directors who are employees do not
receive any additional compensation for their service as
directors. Directors are reimbursed for out-of-pocket expenses
associated with their attendance at Board of Directors' meetings.
As of June 30, 1995, payments of directors' fees were $51,520 in
arrears.
In addition to the amounts described above, the Company paid
to Joseph S. Bracewell, a member of the Board of Directors,
$18,000 for the fiscal year ended June 30, 1995, for financial
consulting services.
15<PAGE>
Compensation and Employee Benefits Committee Report
on Executive Compensation
The responsibility of the Compensation Committee is to
administer the Company's executive compensation programs, to
monitor corporate performance and its relationship to
compensation of executive officers and to make appropriate
recommendations concerning matters of executive compensation.
The Compensation Committee is comprised of two independent non-
employee directors. This report sets forth the major components
of executive compensation and the basis by which fiscal year 1995
compensation determinations were made with respect to the
executive officers of the Company.
Compensation Policy and Guidelines
The main objective of the Company is to return to profitable
operations and to maximize value for shareholders, employees and
clients. The goals of the Company's compensation policy are to
align executive compensation with the Company's long-term
business objectives and performance, to enable the Company to
attract and retain high-quality executive officers and employees
who will contribute to the long-term success of the Company and
to reward such executive officers and employees for their
successful efforts in attaining objectives beneficial to the
growth and profitability of the Company.
In order to achieve the Company's goals, the Compensation
Committee has developed the following principles that serve as
guidance for compensation decisions for all employees: (i) to
attract and retain the most highly qualified management and
employee team, (ii) to pay competitively with prevailing industry
standards, (iii) to emphasize sustained performance by aligning
rewards with shareholder interests, especially through the use of
equity participation programs and (iv) to emphasize performance-
related contributions as the basis of pay decisions by providing
incentive bonus awards based upon the Company's profitability.
To implement these policies, the Compensation Committee has
designed a compensation program consisting of base salary, an
annual incentive plan, stock options and other employment
benefits.
Compensation Program Elements
The Company's compensation levels and benefits are reviewed
on an annual basis to determine whether they are competitive and
reasonable in light of the overall performance of the Company and
the Company's ability to attract and retain talented executives.
Due to the lack of profitability in the past fiscal year, the
focus has been on the Company's progress in achieving milestones
in its turnaround plan.
16<PAGE>
Base Salary. Salary levels are primarily determined by the
Compensation Committee in consideration of the performance
of the individual executive, the financial performance of
the Company and the prevailing industry standards for
similar executives of similar companies. The Company's
philosophy regarding base salaries is conservative, using
published industry reports and surveys on executive
compensation. The Company compares itself for this purpose
with other technological service providers and/or government
contracting firms that face similar challenges in their
market. Periodic increases in base salary relate to
individual contribution evaluated against established
objectives and length of service.
Stock Options. The Company believes that the compensation
program should provide employees with an opportunity to
increase their ownership and potentially gain financially
from Company stock price increases. By this approach, the
best interests of shareholders, executives and employees are
closely aligned. Through the Company's Stock Option Plan,
executives and employees are eligible to receive stock
options, giving them the right to purchase shares of Common
Stock of the Company at a specified price in the future.
The Compensation Committee believes that the use of stock
options as the basis for long-term incentive compensation
meets the Compensation Committee's defined compensation
strategy and the team-based operations approach that the
Company has adopted.
Incentive Program. The Company's executive officers and
operating managers participate in an incentive compensation
program which awards cash bonuses based on the attainment of
corporate earnings per share goals, as well as divisional
and individual performance objectives. For 1995, certain
incentive awards were paid to executive officers and
operating managers based upon the Company's and the
operating manager meeting or exceeding the foregoing goals.
Severance Compensation. To retain highly qualified executive
officers, the Company from time to time enters into
severance agreements with certain of its officers. The
determination of whether the Company would benefit from a
severance agreement with a particular officer is subjective,
based upon such officer's experience and value to the
Company.
Other Benefits. The Company's philosophy is to provide
adequate health and welfare oriented benefits to executives
and employees, but to maintain a highly conservative posture
relative to executive benefits.
17<PAGE>
1995 Compensation for the Chairman and Chief Executive
Officer
Dr. Gilluly receives an annual salary of $80,000. During
fiscal year 1995, Dr. Gilluly also was awarded a bonus of $8,000;
however, the Company has determined not to pay such bonus until
arrearages in directors' fees are paid in full. See "Executive
Compensation - Compensation of Directors." Dr. Gilluly's salary
is based upon his management skills, particularly in the areas of
turnaround, refinancing and diversification. Dr. Gilluly does
not have an employment agreement or severance agreement with the
Company.
Under the Company's executive compensation philosophy and
program, the total compensation mix for senior executives will
emphasize longer-term rewards in the form of stock options. On
September 22, 1994, Dr. Gilluly was granted an option to purchase
30,000 shares of Common Stock at an exercise price of $.25 which
was equal to the market value of the Common Stock on the date of
grant. This option will become fully exercisable over a period
of three years, with one-third being immediately exercisable upon
the date of grant, and one-third becoming exercisable on each of
the second and third anniversaries of the date of grant.
Summary
The Compensation Committee believes that the total
compensation program for executives of the Company is appropriate
and competitive with the total compensation programs provided by
similar companies in the industry with which the Company
competes. The Compensation Committee believes its compensation
practices are directly tied to shareholder returns and linked to
the achievement of annual and longer-term financial and operating
results of the Company on behalf of the Company's shareholders.
Submitted by the Compensation and Employee Benefits
Committee
William J. Howard
Robert J. Lynch, Jr.
18<PAGE>
Performance Graph
The following graph compares the cumulative, five-year
shareholder returns on the Company's Common Stock with the
cumulative returns of the NASDAQ Market Index and Media General's
Other Business Services Index, comprised of the common stock of
approximately 200 companies in diversified business service
industries, excluding the Company. The graph assumes that the
value of the investment in the Company's Common Stock and each
index was $100 on June 30, 1990.
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
COMPANY 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Hadron, Inc. 100.00 113.63 100.00 86.36 12.73 16.82
MG-Bus Serv Index 100.00 92.33 103.44 103.37 113.71 126.17
NASDAQ Market Index 100.00 94.22 101.52 124.62 136.66 160.27
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's
officers, directors and persons who own more than 10% of a
registered class of the Company's equity securities to file
reports of ownership and changes in ownership with the Securities
and Exchange Commission. Officers, directors and greater than
10% shareholders are required by the regulation to furnish the
Company with copies of the Section 16(a) forms which they file.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company, and written
representations that no other reports were required during the
fiscal year beginning July 1, 1994 and ended June 30, 1995, all
Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten percent beneficial
owners were complied with.
19<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended June 30, 1995, Infotech, owner
of approximately 13.5% of the Common Stock of the Company,
charged the Company approximately $8,000 for legal consulting
services. Also during the fiscal year ended June 30, 1995, the
Company charged Infotech $12,000 for corporate relations and
administrative services provided by the Company to Infotech. At
June 30, 1995, the Company had a net payable balance to Infotech
of approximately $53,000. The Company believes that its
contractual relationships with Infotech are on terms
substantially equivalent to terms which could have been obtained
from non-affiliated parties. Dr. Gilluly, Chairman of the Board
and Chief Executive Officer of the Company, is Chairman of the
Board and a principal shareholder of Infotech. Messrs. Lynch and
Mayer, directors of the Company, are also directors of Infotech.
The Company, in October 1993, settled a dispute with its
landlord, Equitable Variable Life Insurance Company
("Equitable"), concerning the Company's principal executive
offices in Fairfax, Virginia. One of the conditions of the
Company's settlement with Equitable was that the Company provide
Equitable with an irrevocable letter of credit ("Letter of
Credit") in the amount of $320,000 to collateralize certain
payments due Equitable pursuant to a lease amendment entered into
at that time. The Company was not able to fully satisfy this
condition using internally generated or bank-borrowed funds. Dr.
Gilluly agreed personally to make a loan in the principal amount
of $300,000 (the "Gilluly Loan") to collateralize the Letter of
Credit.
The Gilluly Loan is evidenced by a Convertible Promissory
Note (the "Note") dated October 21, 1993, executed by Engineering
and Information Services, Inc. ("EISI") and SyCom Services, Inc.
("SyCom"), two wholly owned subsidiaries of the Company, and
payable to the order of Dr. Gilluly. Interest at the rate of
three percent per annum over the prime rate per annum published
from time to time in The Wall Street Journal accrues and is
payable quarterly; the entire principal balance of the Note is
due and payable on October 21, 1996. At the option of Dr.
Gilluly, the Note may be converted into 1,200,000 restricted
shares (the "Hadron Shares") of the Company's Common Stock. Dr.
Gilluly may convert the Note into Hadron Shares at any time prior
to maturity of the Note, except that Dr. Gilluly is not permitted
to convert the Note within ten trading days prior to a date on
which the Company is required to make any filing with the
Securities and Exchange Commission.
20<PAGE>
On September 13, 1994, in conjunction with a settlement by
the Company with the Federal Deposit Insurance Corporation, Dr.
Gilluly was required to subordinate all rights in the Assignment
and Security Agreement, described below, until such time as
Commerce Funding Corporation ("CFC") received either a minimum of
$140,000 from a specific Acumenics' customer account receivable,
which was collateralized in CFC's credit facility, or the Company
provided alternative or substitute receivables in an equivalent
amount and satisfactory to CFC. On September 13, 1994, the
Conversion Price was amended to the market value of $.25 per
share (as represented by the average of the Company's Common
Stock bid and ask price on the ten days prior to September 13,
1994) and the option to convert was extended for a period of two
years from October 21, 1996. The Company reserved the right to
re-adjust upward, but not to exceed the high-end price of $.96
per share, the fair market valuation and Conversion Price for a
period of thirty calendar days following public release of (a)
all information regarding the Company's settlement with the FDIC
and (b) financial results for the fiscal year ended June 30,
1995. On September 23, 1994, CFC received funds in excess of
$140,000 from the specific Acumenics' customer and released CFC's
security interests in EISI and SyCom.
The Note is prepayable at any time, in full or in part. In
the event the Note is prepaid, Dr. Gilluly is entitled to receive
a warrant ("Warrant") issued in respect to the number of Hadron
Shares determined as hereinafter provided, as amended September
13, 1994. Each Warrant (a) will expire on October 21, 1998, (b)
will entitle Dr. Gilluly to purchase, in accordance with the
terms thereof, the number of Hadron Shares equal to the quotient
obtained by dividing (i) the principal amount of the Note
together with all interest thereon which is prepaid by (ii) the
Conversion Price that would result if Dr. Gilluly had elected to
convert and the date of his election to convert had been the date
of the prepayment which entitles Dr. Gilluly to receive such
Warrant and (c) may be exercised in full or in part during its
term at the price per Hadron Share equal to the Conversion Price
that would result if Dr. Gilluly had elected to convert and the
date of his election to convert had been the date of the
prepayment which entitles him to receive such Warrant.
The Note is collateralized by an Assignment and Security
Agreement dated October 21, 1993 assigning and granting a
security interest in the accounts receivable, contract rights and
certain other assets of EISI and SyCom in favor of Dr. Gilluly.
Pursuant to an Indemnity Agreement of even date therewith, the
Company agreed to indemnify Dr. Gilluly with respect to all
claims, demands, losses, damages, liabilities, costs and expenses
that he may sustain or incur by reason of the Gilluly Loan. With
the proceeds of the Gilluly Loan, and an additional $20,000
provided by the Company, EISI and SyCom collateralized the Letter
of Credit on behalf of the Company in favor of Equitable.
21<PAGE>
To make the loan evidenced by the Note, Dr. Gilluly borrowed
$300,000 from a commercial bank. To collateralize his loan, Dr.
Gilluly pledged personal collateral and granted a security
interest in the Note in favor of such bank pursuant to a pledge
agreement that contains standard default and similar provisions.
SHAREHOLDER PROPOSALS
Proposals of Shareholders of the Company that are intended to be
presented at the Company's 1996 Annual Meeting of Shareholders
must be received by the Company no later than July 6, 1996 in
order that they may be included in the proxy statement and form
of proxy relating to that meeting.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1995 including the financial statements and
notes thereto is being mailed to the shareholders of record along
with this Proxy Statement. The Annual Report on Form 10-K is not
incorporated by reference in this Proxy Statement and is not
considered to be part of the proxy material.
The Company will furnish any exhibit described in the list
accompanying the 1995 Form 10-K upon the payment, in advance, of
the specified reasonable fees related to the Company's furnishing
of such exhibit(s). Requests for copies of such report and/or
exhibit(s) should be directed to the Company at its principal
executive offices, 9990 Lee Highway, Fairfax, Virginia 22030,
attention Corporate Secretary.
OTHER MATTERS
The Board of Directors knows of no other business to be acted
upon at the Annual Meeting matters other than those referred to
in this Proxy Statement. If any other matters properly come
before the Annual Meeting, it is the intention of the persons
named in the enclosed proxy to vote the shares they represent as
the Board of Directors may recommend.
By Order of the Board of Directors
S. Amber Gordon
Secretary
Date: November 2, 1995
22<PAGE>
APPENDEX A
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HADRON, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
DECEMBER 8, 1995
The undersigned appoints George E. Fowler and S. Amber
Gordon, or either of them, with full power of substitution, to
attend the Annual Meeting of Shareholders of Hadron, Inc. on
December 8, 1995, and any adjournments thereof, and to vote all
shares which the undersigned would be entitled to vote if
personally present upon the following matters set forth in the
Notice of Annual Meeting and Proxy Statement:
1. ELECTION OF DIRECTORS
[ ] FOR the FOUR nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for the FOUR nominees
listed below
Joseph S. Bracewell, C.W. Gilluly, William J. Howard
and Robert J. Lynch, Jr.
INSTRUCTION: To withhold authority for any individual nominee,
write that nominee's name in the space provided below:
_________________________________________________________________
2. Proposal to amend the Hadron, Inc. 1994 Stock Option Plan to
increase the number of shares reserved for issuance
thereunder.
[ ] FOR this proposal
[ ] AGAINST this proposal
[ ] ABSTAIN
3. Proposal to ratify the selection of Coopers & Lybrand,
L.L.P. as independent accountants for the Company for fiscal
year 1996.
[ ] FOR this proposal
[ ] AGAINST this proposal
[ ] ABSTAIN
4. In their discretion, upon such other business as may
properly come before the meeting and any adjournments
thereof.
23<PAGE>
PLEASE DATE, SIGN AND RETURN
PROXY PROMPTLY
Receipt of Notice of Annual
Meeting and Proxy Statement
is hereby acknowledged
----------------------------------------
Shareholder's Signature
----------------------------------------
Joint Holder's Signature (If applicable)
Date: __________________________________
When properly executed, this proxy will be voted in the
manner directed herein. If no direction is made, this proxy will
be voted FOR proposals 2 and 3 and FOR the election of the
nominees of the Board of Directors in the election of directors
and in accordance with the judgment of the person(s) voting the
proxy upon such other matters properly coming before the meeting
and any adjournments thereof. Please sign exactly as name(s)
appear above.
24<PAGE>
