SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
QuesTech, Inc.
(Name of Issuer)
Common Stock, Par Value $.05 Per Share
(Title of Class of Securities)
74835710
(CUSIP Number)
David Gutridge
Modern Technologies Corporation
4032 Linden Avenue
Dayton, OH 45432
(937) 252-9199
--------------------------------------------------------
(Name, Address and Telephone Number of Persons Authorized
to Receive Notices and Communications)
March 20, 1998
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
[ ].
Note. Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP No. 74835710
Schedule 13D
1) Names of Reporting Persons/I.R.S. Identification Nos. of
Above Persons (Entities Only)
Modern Technologies Corporation - I.R.S. No. 31-1150875
2) Check the Appropriate Row if a Member of a Group (See
Instructions)
(a) X
(b)
3) SEC Use Only
4) Source of Funds (See Instructions)
WC
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(d)or 2(e)
6) Citizenship or Place of Organization Ohio
Number of 7) Sole Voting Power 0
Shares Bene-
ficially 8) Shared Voting Power 30,500
Owned by
Each 9) Sole Dispositive Power 0
Reporting
Person With 10) Shared Dispositive Power 30,500
11) Aggregate Amount Beneficially Owned by Each Reporting Person
30,500
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
13) Percent of Class Represented by Amount in Row (11)
1.9%
14) Type of Reporting Person (See Instructions)
CO
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CUSIP No. 74835710
Schedule 13D
1) Names of Reporting Persons/I.R.S. Identification Nos. of
Above Persons (Entities Only)
Rajesh K. Soin
2) Check the Appropriate Row if a Member of a Group (See
------------------------------------------------
Instructions)
(a) X
(b)
3) SEC Use Only
4) Source of Funds (See Instructions)
PF
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(d)or 2(e)
6) Citizenship or Place of Organization United States
Number of 7) Sole Voting Power 0
Shares Bene-
ficially 8) Shared Voting Power 85,400
Owned by
Each 9) Sole Dispositive Power 0
Reporting
Person With 10) Shared Dispositive Power 85,400
11) Aggregate Amount Beneficially Owned by Each Reporting Person
85,400
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
13) Percent of Class Represented by Amount in Row (11)
5.3%
14) Type of Reporting Person (See Instructions)
IN
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CUSIP No. 74835710
Schedule 13D
1) Names of Reporting Persons/I.R.S. Identification Nos. of
Above Persons (Entities Only)
Indu Soin
2) Check the Appropriate Row if a Member of a Group (See
Instructions)
(a) X
(b)
3) SEC Use Only
4) Source of Funds (See Instructions)
PF
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(d)or 2(e)
6) Citizenship or Place of Organization United States
Number of 7) Sole Voting Power 0
Shares Bene-
ficially 8) Shared Voting Power 48,900
Owned by
Each 9) Sole Dispositive Power 0
Reporting
Person With 10) Shared Dispositive Power 48,900
11) Aggregate Amount Beneficially Owned by Each Reporting Person
48,900
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
13) Percent of Class Represented by Amount in Row (11)
--------------------------------------------------
3.0%
14) Type of Reporting Person (See Instructions)
IN
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CUSIP No. 74835710
Schedule 13D
1) Names of Reporting Persons/I.R.S. Identification Nos. of
Above Persons (Entities Only)
Shiva Enterprise Family Partnership - I.R.S. No. 31-1440772
2) Check the Appropriate Row if a Member of a Group (See
Instructions)
(a) X
(b)
3) SEC Use Only
4) Source of Funds (See Instructions)
WC
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Item 2(d)or 2(e)
6) Citizenship or Place of Organization Ohio
Number of 7) Sole Voting Power 0
Shares Bene-
ficially 8) Shared Voting Power 6,000
Owned by
Each 9) Sole Dispositive Power 0
Reporting
Person With 10) Shared Dispositive Power 6,000
11) Aggregate Amount Beneficially Owned by Each Reporting Person
6,000
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
13) Percent of Class Represented by Amount in Row (11)
.4%
14) Type of Reporting Person (See Instructions)
PN
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SCHEDULE 13D
1. Security and Issuer.
This statement relates to the Common Stock, $.05 par value per share
(the "Common Stock"), of QuesTech, Inc., a Virginia corporation
("QuesTech"), which has its principal executive offices at 7600-W
Leesburg Pike, Falls Church, Virginia 22043.
2. Identity and Background.
This statement is filed on behalf of (i) Modern Technologies
Corporation, an Ohio corporation ("Modern Technologies") whose business
address is 4032 Linden Avenue, Dayton, Ohio 45432 and whose principal
business is engineering and technical consulting, (ii) Rajesh K. Soin
("Mr. Soin"), who is chief executive officer of Modern Technologies and
whose business address is 4032 Linden Avenue, Dayton, Ohio 45432, (iii)
Indu Soin ("Mrs. Soin"), who is Mr. Soin's wife, general manager of
Beavercreek Properties Limited, a real estate management company, and
whose business address is 4032 Linden Avenue, Dayton, Ohio 45432 and
(iv) the Shiva Enterprise Family Partnership, a limited partnership
organized under the laws of the State of Ohio (the "Partnership") whose
business address is 4032 Linden Avenue, Dayton, Ohio 45432, whose sole
general partner is Mr. Soin and whose principal business is investing.
Modern Technologies, Mr. Soin, Mrs. Soin, and the Partnership are
hereafter collectively referred to as the "Reporting Persons."
The name, residence or business address, principal occupation or
employment, and the name, principal business, and address of any
corporation or other organization in which such employment is
conducted, with respect to each director and executive officer of
Modern Technologies is set forth in Schedule 1 attached hereto, which
is incorporated herein by reference. To the knowledge of Modern
Technologies, each of the persons named on Schedule 1 is a United
States citizen.
None of the Reporting Persons and to the best of the knowledge of
Modern Technologies, no director or executive officer of Modern
Technologies, has been within the last five years (i) convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to any civil proceeding of a judicial or
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administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation
with respect to such laws.
3. Source and Amount of Funds or Other Consideration.
Modern Technologies used $ 234,223 in funds from working capital to
purchase its shares of Common Stock.
Mr. Soin and Mrs. Soin, whose shares of Common Stock are
held as joint tenant, used $ 398,275 in personal funds to
purchase their shares of Common Stock.
The Partnership used $ 49,125 in funds from working capital to purchase
its shares of Common Stock.
4. Purpose of the Transaction.
The Reporting Persons acquired the Common Stock owned by them in order
to obtain a significant equity position in QuesTech. The Reporting
Persons have been evaluating a possible negotiated acquisition
transaction between Modern Technologies and QuesTech. In correspondence
dated January 21, 1998 and in a meeting with the chief executive office
of QuesTech, Mr. Soin has indicated Modern Technologies' interest in
making a cash offer as part of a negotiated transaction to acquire a
minimum of 55% of the outstanding Common Stock and a maximum of 100% of
the outstanding Common Stock for $11.00 per share.
In a letter dated February 3, 1998 addressed to Mr. Soin, Michael P.
Rivera, the Vice President and General Counsel of QuesTech indicted
that QuesTech was engaged in a process of evaluating strategic
alternatives and that the Modern Technologies expression of interest
had been forwarded to QuesTech's financial advisors. Mr. Rivera's
letter stated that while the evaluation process is continuing, QuesTech
intends to maintain its independence and is not for sale. Modern
Technologies remains interested in pursuing a negotiated transaction
with QuesTech and the Reporting Persons may consider acquiring
additional shares in open market transactions, privately negotiated
transactions or otherwise. In the event Modern Technologies and
QuesTech pursue a negotiated transaction, Modern Technologies may
consider changes to the directors and management of QuesTech after such
a transaction, although Modern Technologies presently anticipates that
the QuesTech management team would continue managing QuesTech after any
acquisition by Modern Technologies. After any such transaction, the
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registration of the Common Stock pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, may be terminated and the
Common Stock may cease to be quoted on NASDAQ.
In the event QuesTech does not indicate a timely interest in pursuing a
negotiated transaction with Modern Technologies, the Reporting Persons
may sell all or part of their shares of Common Stock, in one or more
transactions, at prices they consider attractive in open market
transactions, in privately negotiated transactions, or a combination of
such transactions.
Except as discussed above, the Reporting Persons do not presently have
any plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the
issuer, or the disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of
its subsidiaries;
(c) A sale or transfer of a material amount of assets of the
issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the issuer, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the board;
(e) Any material change in the present capitalization or dividend
policy of the issuer;
(f) Any other material change in the issuer's business or
corporate structure;
(g) Changes in the issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the issuer by any person;
(h) Causing a class of securities of the issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) A class of equity securities of the issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4)
of the Act; or
(j) Any action similar to any of those enumerated above.
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5. Interest in Securities of the Issuer.
Modern Technologies is beneficial owner of 30,500 (or 1.9% of the
outstanding) shares of Common Stock. As chief executive officer and
controlling shareholder of Modern Technologies, Mr. Soin may be deemed
to share voting and dispositive power with respect to such shares.
Mr. Soin may be deemed to be beneficial owner of 85,400 (or 5.3% of the
outstanding) shares of Common Stock, 30,500 shares of which he may be
deemed to share voting and dispositive power with Modern Technologies
of which he is chief executive officer and controlling stockholder,
48,900 shares of which he may be deemed to share voting and dispositive
power with his wife with whom he holds such shares as joint tenant, and
6,000 shares of which he may be deemed to share voting and dispositive
power with the Partnership of which he is sole general partner.
Mrs. Soin is beneficial owner of 48,900 (or 3.0% of the outstanding)
shares of Common Stock, and may be deemed to share voting and
dispositive power with respect to such shares which are held as joint
tenant with Mr. Soin.
The Partnership is beneficial owner of 6,000 (or .4% of the
outstanding) shares of Common Stock. Mr. Soin who is sole general
partner of the Partnership may be deemed to share voting and
dispositive power with respect to such shares.
To the knowledge of Modern Technologies, none of the directors or
executive officers of Modern Technologies other than Mr. Soin and Mrs.
Soin beneficially owns any shares of Common Stock. Modern Technologies
disclaims beneficial ownership of any shares of Common Stock owned by
its directors and executive officers.
The Reporting Persons have had no transactions in the Common Stock in
the sixty days before the date hereof, except for purchases in the open
market transactions set forth below:
<TABLE>
<CAPTION>
<S> <C>
Reporting Person Number of
effecting the shares Price per
Date transaction purchased share
- ---- ----------- --------- -----
3/12/98 Modern Technologies 3,000 $ 7.5000
3/17/98 Modern Technologies 2,000 $ 7.0625
5,000 $ 7.5000
3/18/98 Modern Technologies 500 $ 6.8125
1,000 $ 6.9375
3/19/98 Modern Technologies 3,000 $ 7.8125
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3/19/98 Mr. Soin and Mrs. Soin 4,000 $ 7.0625
3/25/98 Modern Technologies 3,500 $ 8.0625
</TABLE>
None of the directors or executive officers of Modern Technologies
other than Mr. Soin and Mrs. Soin has had any transaction in the Common
Stock in the sixty days before the date hereof.
6. Contracts, Arrangements, Understandings or Relationships with respect
to Securities of the Issuer.
None of Modern Technologies, its directors or executive officers, Mr.
Soin, Mrs. Soin or the Partnership has any contracts, arrangements,
understandings or relationships with respect to securities of QuesTech.
7. Material to be Filed as Exhibits.
1. Letter, dated January 21, 1998, from Rajesh K. Soin to
Vincent L. Salvatori.
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Signature
After reasonable inquiry and to the best of knowledge and belief of
each of the undersigned, such person certifies that the information set forth in
this Statement is true, complete and correct.
Dated: March 30, 1998 MODERN TECHNOLOGIES CORPORATION
By: s/Rajesh K. Soin
-------------------------
Rajesh K. Soin
Chairman, President and
Chief Executive Officer
s/Rajesh K. Soin
-------------------------
Rajesh K. Soin
s/Indu Soin
-------------------------
Indu Soin
Shiva Enterprises Limited
Partnership
By: s/Rajesh K. Soin
-------------------------
Rajesh K. Soin
General Partner
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SCHEDULE 1
Board of Directors and Executive Officers
of Modern Technologies Corporation
The business address of each of the following persons except Lawrence
A. Skantze is 4032 Linden Avenue, Dayton, Ohio 45432.
Principal Occupation and
Name Business Address
- ---- ----------------
Rajesh K. Soin Chairman, President, Chief Executive
Officer, Treasurer and Director of
Modern Technologies
Thomas M. McCann Vice President and Secretary of Modern
Technologies
Indu Soin Director of Modern Technologies, general
manager of Beavercreek Properties
Limited, a real estate management
company
David S. Gutridge Vice President of Modern Technologies
Larry A. Skantze Retired United States Air Force General
and Director of Modern Technologies
1703 Chesterbrook Vale Court
McLean, Virginia 22101
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Exhibit 1
Sent by Telecopier
January 21, 1998
Mr. Vincent L. Salvatori
Chairman and Chief Executive Officer
QuesTech, Inc.
7600-W Leesburg Pike
Falls Church, VA 22043
Dear Mr. Salvatori:
I have your letter of January 5, 1998. As you and I have discussed, Modern
Technologies Corporation ("MTC") believes that now is an ideal time for your
stockholders to realize the tangible benefits of a combination with MTC, on the
very favorable terms described below.
As I indicated at our meeting on November 24, 1997, MTC is prepared to make an
offer of $11.00 per share for a minimum of 55% and a maximum of 100% of the
outstanding stock of QuesTech, Inc. ("QT"). As you may recall, this offer would
represent a premium of 47% over the November 20, closing price of $7.50, and a
premium of 63% over the December 31, closing price. It is also a 26% premium to
the high close during 1997, and equates to a P/E of nearly 31 based on
annualized, 1997 third-quarter EPS.
Our proposed price of $11.00 per share compares favorably to 1996 averages as
reported by Coopers & Lybrand (average P/E paid for all mergers of 26, compared
to 31 for our offer; average premium to market of 27%, compared to 47%-63% for
our offer).
Further, this transaction would provide instant liquidity to QT shareholders at
an extremely attractive price. It should be very favorably received by all QT
shareholders. In addition, this transaction would provide an ideal sale
mechanism for those shareholders with large blocks who are currently unable to
sell at favorable prices.
Our proposal is only contingent upon satisfactory completion of due diligence,
the compliance with any necessary regulatory filing requirements and receipt of
applicable regulatory approvals, and the negotiation and execution of a
definitive agreement containing terms and conditions customary for this type of
transaction.
Your letter of January 5, 1998 indicates that you felt that this transaction
would not be viable because QT wishes to pursue a long-term strategy to
"maximize its participation in the 'high end' information technology field" in
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which it currently operates. This strategy is precisely why a combination of our
two companies does make sense and is one of the main reasons for MTC's interest
in QT. I apologize for not making this clear before. MTC has long pursued a
similar strategy and sees it as a major growth area for years to come. Consider:
a. Our Global Technologies Division is involved with numerous
Fortune 500, government and other clients in the design and
development of custom software. Their work is augmented by our
Indian, off-shore affiliate which employs over 140 software
engineers and is performing high end software development
around the globe.
b. Several of our divisions design, develop, sell and service
proprietary software packages for a wide variety of
environmental and defense applications.
c. Our Internet Business Services division is aggressively
pursuing the latest in internet technologies and services.
d. Our Information Technologies Division continues its long
history of pursuing high-end information technology solutions
with the Department of Defense.
Upon a business combination with MTC, we would envision the QT management team
working as a division within the MTC family of companies, having extremely
attractive opportunities to continue aggressively pursuing their IT growth
strategy, with the combined resources of both companies to back them up.
Obviously, retention of that management team is key, and it is essential that
one of our first priorities be the negotiation of mutually satisfactory
arrangements with the members of the QT management team.
As you and I have discussed, MTC would prefer to pursue a negotiated
transaction. For that reason, we believe it would be mutually desirable and
advantageous if you would give us the opportunity to negotiate, with you and
your Board of Directors, a definitive agreement embodying the terms of this
proposal. We are prepared to negotiate in good faith and to conclude a
transaction which we believe will be enthusiastically supported by your Board
and stockholders, as well as your management and employees.
We believe our proposal is in the best interests of QT and its shareholders and
as such, should be shared with our fellow shareholders. Under existing case law,
you will most likely determine that shareholder disclosure is necessary, in any
case.
It is our belief that this transaction deserves careful and formal consideration
by the QT Board of Directors. Consequently, we request that our proposal be
considered at the next QT board meeting and we request an opportunity to have
representatives of MTC present our proposal to your Board. We are prepared to
meet with QT's directors and management at their convenience, in order to
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explain our proposal, the benefits of our proposal to QT and its shareholders,
the ability of QT to continue to pursue its business strategy as a part of MTC,
to answer any questions about this transaction, and to negotiate a mutually
satisfactory agreement.
I will be out of town for the next few days, but will call you by the first of
February to get an update on your discussions with your directors.
Sincerely,
s\Rajesh K. Soin
Rajesh K. Soin
Chairman and Chief Executive
Officer
