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): January 28,
1999
HADRON, INC.
(Exact name of the registrant as specified in its charter)
New York 0-5404 11-2120726
(state of incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
4900 Seminary Road, Suite 800 Alexandria, Virginia 22311
(Address of principal executive offices) (Zip Code)
(703) 824-0400
Registrant's telephone number, including area code
<PAGE>
Item 5. Other Events
On January 28, 1999, Hadron, Inc. (the "Company") announced
that it had engaged the firm of Boles Knop & Company, L.L.C.
("Boles Knop") in connection with an acceleration of the
Company's merger and acquisition program to enhance the growth of
the Company. The Company engaged Boles Knop pursuant to an
Investment Banking Agreement between the Company and Boles Knop
dated January 7, 1999, a copy of which is filed as Exhibit 99.1
hereto and incorporated herein by reference. A copy of the
Company's press release containing the announcement, dated
January 28, 1999, is filed as Exhibit 99.2 hereto and
incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
99.1 Investment Banking Agreement dated January 7, 1999
between Hadron, Inc. and Boles Knop & Company, L.L.C.
99.2 Press Release of Hadron, Inc. dated January 28, 1999
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 thereunto duly authorized.
Hadron, Inc.
Date: January 28, 1999 By: /S/ S. AMBER GORDON
S. Amber Gordon
Executive Vice President
January 7, 1999
Mr. C.W. Gilluly
Chairman
Hadron, Inc.
4900 Seminary Road, Ste. 800
Alexandria, VA 22311
INVESTMENT BANKING AGREEMENT
Dear Mr. Gilluly:
Following our recent conversations, you have requested
that Boles Knop & Company, L.L.C. ("BK") submit to you the
terms and conditions ("AGREEMENT"), under which BK is to
exclusively provide corporate finance and investment banking
services. Specifically, our assignment is to assist and
otherwise arrange for Hadron Inc., and its assigns
("HADRON") to secure capital to finance the growth of the
company, develop and implement a merger and acquisition
program, and perhaps to sell or merge the company when
growth objectives have been achieved.
1. Engagement: Effective upon the execution of this
Agreement and except as noted below, HADRON engages BK
for the term of this Agreement as HADRON's sole and
exclusive agent for the purpose of:
A. Arranging financings and consummating acquisitions
which include the following services:
(1) Providing financial advisory services to HADRON;
(2) arranging for additional capital facilities as may
be required by HADRON;
(3) identifying, contacting and pursuing acquisition
opportunities for HADRON;
(4) conducting relevant due diligence and providing
valuation guidelines on acquisition targets;
(5) assisting in the negotiation of financing and
acquisition transactions;
(6) assisting in the coordination of closing
documentation; and
(7) otherwise using its best efforts to assist HADRON
in executing its acquisition and financing
strategy.
"Exclusivity" for acquisitions and financings shall
apply to acquisitions and financings where the total
consideration is in excess of $5 million. Below that
amount, HADRON may elect to use the services of BK but
will not be obligated to pay any compensation to BK
unless BK services are used. "Exclusivity" also does
not apply to financings by Century National Bank.
B. If and when growth objectives have been achieved during
the term of this Agreement, and HADRON decides to be
acquired, arranging for the sale or merger of HADRON
which includes the following services:
(1) provide a general business and financial analysis
of HADRON, including transaction feasibility
analysis, and if HADRON requests, a valuation of
HADRON;
(2) assist in the preparation of a descriptive
memorandum concerning HADRON, which memorandum
shall not be made available to or used in
discussions with prospective acquirers until both
it and its use for the purpose have been approved
by HADRON;
(3) develop, update and review with HADRON on an on-
going basis a list of parties which might be
interested in acquiring HADRON ("List") and only
contact parties on the List as approved by HADRON;
and
(4) consult with and advise HADRON concerning
opportunities for the sale of HADRON which have
been identified by BK or others and, if so
requested by HADRON, participate on HADRON's
behalf in negotiations for such sale.
2. Compensation: As compensation for the services
rendered by BK hereunder, HADRON shall pay BK as
follows:
(A) Engagement fee of 150,000 shares of HADRON common
stock with 75,000 shares to be issued on the
effective date of this Agreement and the balance
to be issued on the date the first closing of any
transaction covered by this Agreement occurs. The
price per share for the balance of the 150,000
shares shall be at the same price per share as the
initial 75,000 shares.
(B) Completion Fees for Acquisitions:
(1) Completion Fees equal to three and one half
percent (3.5%) of the consideration paid by
HADRON to the shareholders of an acquisition
target identified by HADRON (in accordance
with the definition of "Consideration" in
paragraph 2(D) (3) below).
(2) Completion Fees equal to four and one half
percent (4.5%) of the consideration paid by
HADRON to the shareholders of an acquisition
target identified by BK to HADRON (in
accordance with the definition of
"Consideration" in paragraph 2(D) (3)
below).
(C) Completion Fees for Financings:
(1) A fee of five percent (5%) of equity and
asset financings with such equity and asset
financings being defined as the net proceeds
to HADRON from the sale of common stock,
preferred stock, or other equity instruments
including convertible into equity and the
assumption of HADRON debt and/or the sale of
assets, technology and/or business of HADRON
by way of a merger or consolidation of the
business of HADRON into another entity.
(2) A fee of four percent (4%) of all
subordinated debt financings with such
subordinated debt financings being defined as
the total face amount of non-convertible into
equity credit facilities, guarantees or any
debt instruments subordinated, or capable of
being subordinated, to any secured or
unsecured creditors of HADRON.
(3) A fee of two percent (2%) of all senior debt
and non-subordinated debt financings with
such senior debt and non-subordinated debt
financings being defined as the total face
amount of credit facilities, guarantees or
debt instruments not subordinated to any
secured or unsecured creditors of HADRON.
(4) Financing Other: In the event that a
financing includes instruments or
arrangements not contemplated herein, then BK
and HADRON agree to negotiate in good faith
the amount of Completion Fees due BK under
those circumstances as and when they arise
but only to the extent that BK has arranged
for such financing consistent with its duties
and obligations hereunder.
(5) Secondary Public Offering (SPO): Upon the
successful completion of an SPO with a
securities institution or underwriter which
was introduced, arranged or facilitated by
BK, HADRON shall pay to BK certain Completion
Fees as follows:
A fee of 2.5% of the net cash proceeds to
HADRON pursuant to the SPO. In the event
that BK receives any compensation from the
lead or managing underwriters of an SPO, then
such amount will be credited to fees owned by
HADRON.
(6) Warrants to Participate (only applicable to
equity financings):
HADRON shall issue to BK no cost detachable
warrants to purchase 10% of the same
securities purchased by investors
participating in the financing at a price
equal to the price per share (or equivalent
security) paid by an investor participating
in such financing. If not exercised within a
sixty-month period following the closing of a
financing, the warrants shall expire.
(7) Overall fees paid to BK for one acquisition
that involves arranging financing for said
transaction will not exceed eight percent
(8%).
(D) Completion Fees for the sale or merger of HADRON:
(1) A fee of five percent (5%) of the total
consideration involved in such a sale or
merger.
(2) A "sale" of HADRON shall mean any
transaction or series or combination of
transactions, other than in the ordinary
course of business, and other than an SPO,
whereby directly or indirectly, control of or
a majority interest in HADRON or
substantially all of its assets, is
transferred for consideration, including,
without limitation, a sale or exchange of
capital stock or assets, a merger or
consolidation, a tender or exchange offer, a
leveraged buy-out, the formation of a joint
venture or partnership, or any similar
transaction.
(3) "Consideration" shall mean the gross value
of all cash, securities and other property
paid directly or indirectly, by an acquirer
to HADRON or any shareholder(s) of HADRON for
the sale of assets or sale of stock of HADRON
and excludes consideration paid for
employment, consulting and other similar
fees. The value of any such securities
(whether debt or equity), or other property
shall be determined as follows: (i) the
value of securities that are freely tradable
in an established public market will be
determined on the basis of the closing market
price on the last trading day prior to the
public announcement of such sale; and (ii)
the value of securities that are not freely
tradable or have no established public
market, and the value of consideration that
consists of other property, shall be the fair
market value thereof. If the consideration
to be paid is computed in any foreign
currency, the value of such foreign currency
shall, for purposes hereof, be converted into
U.S. dollars at the prevailing exchange rate
on the date or dates on which such
consideration is paid.
(E) Completion Fees shall be due and payable upon
closing of any financing or sale concluded by
HADRON: (i) during the term of this AGREEMENT, or
(ii) within twelve (12) months of the date of the
termination of this AGREEMENT, with any
institution, individual or other party identified
in writing by BK to HADRON and with whom HADRON
has authorized discussions. Any such Completion
Fees may be taken by BK in an equivalent number of
shares of stock in HADRON, if mutually agreed to.
3. HADRON may refuse to discuss or negotiate a financing,
acquisition, or sale of HADRON with any party for any
reason whatsoever and may terminate negotiations with
any party at any time.
4. Expenses: Upon the receipt of invoices, BK shall
promptly be reimbursed for all out of pocket expenses
incurred by BK in connection with its duties hereunder.
BK will not incur any single item of expense in excess
of $500 or total aggregate expenses in excess of $5,000
without prior approval.
5. Term: This AGREEMENT shall commence on the date hereof
and shall have an initial term of twelve (12) months.
Thereafter, this AGREEMENT will continue in force
unless terminated by either party by the provision of
thirty days prior written notice from one to other of
such termination. However, after the expiration of
four (4) months from execution of this Agreement,
HADRON may upon 60 days written notice, terminate this
Agreement if it is dissatisfied with the performance of
BK. Upon termination, all liabilities and continuing
obligations of each party to the other shall cease with
the exception of those provisions covering compensation
due BK and the treatment of each party's confidential
information.
6. Indemnification: HADRON shall indemnify BK and hold it
harmless against any and all losses, claims, damages,
judgements, or liabilities to which BK may become
subject arising in any manner out of or in connection
with the rendering of services by BK hereunder, unless
such losses, claims, damages or liabilities resulted
from the negligence or willful misconduct of BK.
7. Information: HADRON shall provide all financial,
promotional, market and other relevant information
requested by BK and BK may rely without independent
verification on all such information furnished by
HADRON. However, in the event that BK requests
independent verification of any information provided by
HADRON, HADRON shall use its best efforts to provide
and otherwise assist BK in procuring such independent
verification. All non-public confidential information
provided by HADRON will be treated as confidential by
BK provided that HADRON advised BK of the confidential
nature of such information; and pursuant thereto, BK
will not disclose such information to any third party
without first receiving written authorization from
HADRON to make such disclosure.
8. Advertisement: HADRON agrees that BK has the right
following the closing of a sale of HADRON to place
advertisements in financial and other newspapers and
journals at its own expense describing its services to
HADRON hereunder, provided that BK will submit a copy
of any such advertisements to HADRON for its approval,
which approval shall not be unreasonably withheld.
9. Governance and Arbitration: This Agreement may not be
amended or modified except in writing signed by each of
the parties and shall be governed by and construed and
enforced in accordance with the laws of the
Commonwealth of Virginia. However, either party shall
have the right to require that any dispute hereunder be
submitted to binding arbitration in accordance with the
rules of the American Arbitration Association then
pertaining at the time of such dispute or such other
venue of alternative resolution as HADRON and BK may
mutually agree.
10. Counterparts: This Agreement may be executed in two
counterparts, and both such counterparts shall
constitute one and the same instrument. If the above
conforms to your understanding, kindly confirm your
acceptance and agreement by signing and returning a
copy of this AGREEMENT to the undersigned.
Sincerely,
/S/ J. RICHARD KNOP
J. Richard Knop
Partner
AGREED & ACCEPTED BY:
HADRON CORPORATION.
By: /S/ C.W. GILLULY
Mr. C.W. Gilluly
Chairman
Release: IMMEDIATE For: HADRON, INC.
(OTC BB: HDRN)
Contact: Amber Gordon
Executive Vice President
(703) 824-0400
HADRON EXPANDS ACQUISITION PROGRAM;
BOLES KNOP TO PROVIDE INVESTMENT BANKING EXPERTISE
Alexandria, VA, January 28, 1999 -- HADRON, INC. (OTC BB: HDRN)
today announced its intention to accelerate its merger and
acquisition program to enhance the growth of the Company. As an
integral component of this program, Hadron has engaged the firm
of Boles Knop & Company, L.L.C. (Boles Knop) to provide
investment banking services.
"Hadron and Boles Knop share the commitment to locate and
structure strategic partnerships, acquisitions and/or mergers
that will significantly strengthen shareholder value," said C.W.
Gilluly, Chairman and Chief Executive Officer of Hadron.
"Today's business environment in the information technology,
computer services and government contracting industries requires
a company to aggressively grow, capture market share and
accommodate change. Hadron's acquisition program is intended to
expand its position as a premier provider of high level, high
quality technical professionals," he added.
Boles Knop & Company, a private investment banking firm
based in Middleburg, Virginia, has been providing corporate
finance and merger and acquisition services for more than twenty-
five years. Boles Knop & Company specializes in communications,
information technology, government contracting, and healthcare
technology industries.
"Boles Knop is pleased to have the opportunity to
professionally assist Hadron with its growth strategies.
Hadron's management team has, in a short time, totally
repositioned and restructured Hadron, and the firm is now poised
for significant expansion in the information technology services
industry," said J. Richard Knop, Partner, Boles Knop & Company.
Consistent with the Company's acquisition program, in
December, 1998, Hadron acquired Vail Research and Technology
Corporation, a privately-held information technology firm based
in Northern Virginia. John D. Sanders, a director of the
Company, initiated this transaction and served as an advisor.
Dr. Sanders will continue as an advisor to the Company's
acquisition program.
Hadron is a leading information, management and technical
services corporation, providing a broad range of technical
services to businesses and federal government agencies.
Hadronspecializes in the areas of trusted/secure computer systems,
computer systems support and intelligent weapons systems.
Hadron can be found on the Internet at www.hadron.com.
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