<PAGE>
As filed with the Securities and Exchange Commission on November 21, 1997.
REGISTRATION NO.
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
QUESTRON TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 23-2257354
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
6400 CONGRESS AVENUE, SUITE 200A, BOCA RATON, FL 33487
(561) 241-5251
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
DOMINIC A. POLIMENI
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
6400 CONGRESS AVENUE, SUITE 200A, BOCA RATON, FL 33487
(561) 241-5251
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Title of each class of Proposed
securities to be Amount to be maximum offering Proposed maximum Amount of
registered registered price per unit aggregate offering price registration fee(1)
---------- ---------- -------------- ------------------------ -------------------
<S> <C> <C> <C> <C>
Common Stock, 125,912 shares $8.78125 $1,105,664.75 $335.05
$.001 par value
===============================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculation of the registration fee.
Pursuant to Rule 457(c), estimated on the basis of the average of the closing
bid and asked prices of the Common Stock on November 20, 1997.
===============================================================================
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION
NOVEMBER 21, 1997
QUESTRON TECHNOLOGY, INC
125,912 SHARES OF COMMON STOCK
($.001 PAR VALUE)
This Prospectus relates to the possible resale on a continuous basis
of up to 125,912 shares of Common Stock, $.001 par value, of Questron
Technology, Inc. (the "Shares"), a Delaware corporation ("Questron" or the
"Company"). These Shares were issued in September 1997 by the Company in
connection with the acquisition by the Company of the issued and outstanding
shares of California Fasteners, Inc., a California corporation ("Calfast"). The
Shares included in the Registration Statement are sometimes referred to as the
"Securities". The Securities may be offered from time to time by the selling
securityholders (the "Selling Securityholders"). THE COMPANY WILL NOT RECEIVE
ANY OF THE PROCEEDS FROM THE SALE OF THE SECURITIES BY THE SELLING
SECURITYHOLDERS. THE OBLIGATION OF THE COMPANY TO REPURCHASE THE SHARES WILL BE
REDUCED BY ANY SALE OF THE SHARES UNDER THIS REGISTRATION STATEMENT. SEE "USE
OF PROCEEDS."
The Securities will be offered for sale from time to time on terms to
be determined at the time of sale by the Selling Securityholders. The
Securities are listed on the Nasdaq SmallCap Market under the symbol "QUST." On
November 20, 1997, the closing bid price per share of the Common Stock as
reported by Nasdaq was $8.6875. The Securities are being registered pursuant to
an agreement entered into in connection with the Company's acquisition of
Calfast. The Company will pay certain expenses of this offering. See "USE OF
PROCEEDS" and "PLAN OF DISTRIBUTION."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
===================
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS," WHICH BEGINS ON PAGE 6, FOR
IMPORTANT INFORMATION WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
==================
Underwriting Discounts Proceeds to Selling
Price to Public(1) and Commissions Securityholders(3)
------------------ --------------- ------------------
Per Share $8.78125 (2) $1,105,664.75
Total $8.78125 (2) $1,105,664.75
===============================================================================
(1) Based upon the average of the closing reported bid and asked prices on
November 20, 1997.
(2) Not known at this time.
(3) The expenses of this offering, estimated at $10,245 will be borne by the
Company.
The Selling Securityholders, directly or through agents designated
from time to time, or through dealers or underwriters also to be designated,
may sell the Securities from time to time on terms to be determined at the time
of sale. To the extent required, the specific Securities to be sold, the
purchase price, the public offering price, the name of any such agent, dealer
or underwriter, and any applicable commission or discount with respect to a
particular offer will be set forth in a Prospectus Supplement. The aggregate
proceeds to the Selling Securityholders from the Securities will be the
purchase price of such Securities sold less the aggregate agents' commissions
and underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. Any such Prospectus Supplement will also
set forth any additional information regarding indemnification by the Company
of the Selling Securityholders or any underwriter, dealer or agent against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). The Selling Securityholders and any
broker-dealers, agents or underwriters that participate with the Selling
Securityholders in the distribution of any of the Securities may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Securities purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act. The Selling Securityholders may also from time to time dispose
of Securities pursuant to available exemptions under the Securities Act,
including sales under Rule 144 to the extent permitted under such rule. See
"PLAN OF DISTRIBUTION".
The date of this Prospectus is November ___, 1997.
<PAGE>
NOTE ON FORWARD LOOKING STATEMENTS
Certain information set forth or incorporated by reference herein
includes "forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and is subject to certain risks and
uncertainties including those identified in this Prospectus under the caption
"Risk Factors" and those included under the same caption in the Company's
reports filed pursuant to the Securities Exchange Act of 1934 ("Exchange Act").
Readers are cautioned not to place undue reliance on these statements, which
are made as of the date hereof. The Company undertakes no obligation to release
any revisions to these forward looking statements to reflect events or
circumstances after the date hereof or to reflect unanticipated events or
developments.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and, in accordance therewith, files periodic reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). As permitted by the rules and regulations of the
Commission, this Prospectus, which constitutes part of the Company's
Registration Statement on Form S-3 ("Registration Statement"), does not contain
all the information set forth in the Registration Statement and the exhibits
and undertakings contained therein, to which reference is hereby made.
Statements made in this Prospectus or in any document incorporated or deemed to
be incorporated by reference herein as to the contents of any contract,
agreement or other document referred to are not necessarily complete and with
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. Any interested parties may
inspect the Registration Statement, the exhibits and schedules forming a part
thereof and the reports, proxy statements and other information referred to
above, without charge, at the public reference facilities of the Securities and
Exchange Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and may obtain copies of all or any part of such documents from the Commission
upon payment of the fees prescribed by the Commission. Such documents also are
available for inspection and copying at prescribed rates at the regional
offices of the Commission located at Seven World Trade Center, 13th Floor, New
York, New York 10048; and the Northwestern Atrium Center, 500 W. Madison, Suite
1400, Chicago, Illinois 60661-2511. Copies of such materials can also be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549 at prescribed rates. Registration statements and other documents and
reports that are filed electronically through the Electronic Data Gathering,
Analysis and Retrieval System (including the Registration Statement) are
publicly available through the Commission's web site on the Internet
(http://www.sec.gov).
- 2 -
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 0-13324), are hereby
incorporated by reference into the Registration Statement:
(a) the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996;
(b) the Company's Quarterly Reports on Form 10-QSB dated November 14,
1997, August 14, 1997 and May 15, 1997, which include unaudited
financial statements for the nine month period ended September
30, 1997, the six month period ended June 30, 1997 and the three
month period ended March 31, 1997, respectively; and
(c) Current Report on Form 8-K dated October 7, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus shall
be deemed to be incorporated by reference and a part of this Registration
Statement from the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus. The Company hereby undertakes to provide without charge to
each person to whom a copy of this Prospectus has been delivered, upon the
request of such person, a copy of any or all documents referred to above which
have been incorporated in this Prospectus by reference, other than exhibits to
such documents. Requests for such copies should be directed to Office of the
Secretary, Questron Technology, Inc., 6400 Congress Avenue, Suite 200A, Boca
Raton, FL 33487.
- 3 -
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information, including information contained under the caption "Risk
Factors," appearing elsewhere in this Prospectus or incorporated herein by
reference.
THE COMPANY
The Company is a specialized value-added distributor of fasteners,
electronic hardware and related products sold to high-technology electronic
equipment manufacturers and other businesses through its subsidiaries Quest
Electronic Hardware, Inc., Webb Distribution, Inc. and California Fasteners,
Inc., a master distributor of fasteners through its subsidiary Integrated
Material Systems, Inc. and a distributor of lithium batteries and customized
battery packs and assemblies through its subsidiary Power Components, Inc.
The Company serves more than 3,000 customers, including leading computer,
telecommunications, semiconductor manufacturing equipment, medical
instrumentation and other industrial equipment manufacturing companies.
In March 1995, the Company acquired the fastener and electronic
hardware distribution business of Arrow Electronics, Inc., which now operates
as Quest Electronic Hardware, Inc. ("Quest"), a wholly-owned subsidiary of the
Company. Through this acquisition, the Company established its presence as a
distributor in California, Texas and Colorado where Quest's business is
concentrated.
In March 1997, the Company acquired Comp Ware, Inc. d/b/a Webb
Distribution, a Delaware corporation ("Webb"). Webb distributes electronic
hardware, fasteners and components to customers in the high-technology
electronic equipment manufacturing industry and other businesses.
In June 1997, the Company acquired Integrated Material Systems, Inc.,
an Arizona corporation ("IMS"). IMS is a master distributor of fasteners, which
brought to the Company expertise in sourcing products on a worldwide basis and
additional materials-management skills.
In September 1997, the Company acquired Power Components, Inc., a
Pennsylvania corporation ("PCI"). PCI, based in Philadelphia, is a distributor
of lithium batteries and customized battery packs and assemblies.
In September 1997, The Company acquired California Fasteners, Inc., a
California corporation ("Calfast"). Calfast is a distributor of fasteners and
related products, with stocking locations in Anaheim, San Diego and Phoenix.
The Company was incorporated in Delaware in 1983. The name was changed
to Questron Technology, Inc. in 1996 to better reflect its principal business
of supplying low-technology products to high-technology industries and other
industrial businesses. The Company, with its subsidiaries, has approximately
120 employees. The principal executive offices of the Company are located at
6400 Congress Avenue, Suite 200A, Boca Raton, Florida 33487 and its telephone
number is (561) 241-5251.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE
CONSIDERED IN EVALUATING THE COMPANY AND ITS BUSINESS.
- 4 -
<PAGE>
THE OFFERING
Securities Offered by
Selling Securityholders............. 125,912 Shares. See "Selling
Securityholders"
Use of Net Proceeds................... The Company will not receive any of
the proceeds from the sale of the
Securities by the Selling
Securityholders. See "Use of Proceeds"
Nasdaq Symbols - Common Stock......... QUST
- Preferred Stock...... QUSTP
- Series IV Warrants... QUSTW
- 5 -
<PAGE>
RISK FACTORS
Investment in the Securities involves a substantial degree of risk.
Prospective investors should carefully consider, in addition to matters set
forth elsewhere in this Prospectus, the following factors relating to the
business of the Company and this Offering. Prospective investors should
carefully review all risk factors. Such information is presented as of the date
hereof and is subject to change, completion or amendment without notice.
NO ASSURANCES THAT RECENT OR POSSIBLE FUTURE ACQUISITIONS WILL BE PROFITABLE
Prior to March 1997, the Company derived its revenues primarily
through its wholly-owned subsidiary, Quest Electronic Hardware, Inc. ("Quest").
Subsequent to March 1997, the Company has acquired a number of companies
engaged in the distribution of fasteners, electronic hardware and related
items. The Company can make no assurances that this combination of businesses
will be as successful as each business was independently. In addition, the
Company may enter into additional agreements for future acquisitions. The
Company can make no assurances that any such acquisitions can be successfully
completed or that future acquisitions will be profitable.
NO ASSURANCE OF FUTURE PROFITABILITY OR PAYMENT OF DIVIDENDS
No assurance can be given that the future operations of the Company or
its subsidiaries will be profitable. Should the operations of the Company or
its subsidiaries remain profitable, it is likely that the Company or its
subsidiaries would retain much or all of the earnings in order to finance
future growth and expansion. Therefore, the Company does not presently intend
to pay dividends on its Common Stock.
ECONOMIC FACTORS
The Company's business may be adversely affected by a downturn in the
economy as a whole or in the electronics industry in particular. The Company's
business would also be adversely affected in the event of a significant
increase in interest rates which would result in an increase in the Company's
borrowing costs.
DEPENDENCE UPON MAJOR CUSTOMERS
The Company has developed a customer base consisting of over 3,000
active customers. Over 95% of the Company's sales are recurring sales to
existing customers. For the fiscal year ended December 31, 1996 (on a pro forma
basis), the Company's 20 largest customers accounted for approximately 50% of
its sales, with no one customer contributing more than 14%.
These sales arrangements are terminable upon short notice and none of
these customers is obligated to continue to use the services of the Company at
all or at existing prices. The dependence on major customers subjects the
Company to significant financial risk in the operation of its business should a
major customer terminate, for any reason, its business relationship with the
Company. The continuing ability of the Company to maintain these customer
relationships and to build new relationships is dependent, among other things,
upon their ability to maintain the high quality standards demanded by its
customers.
- 6 -
<PAGE>
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company intends to fund its operations and other capital needs
substantially from operations and available borrowings under the Company's
credit agreement with a bank; however there can be no assurance that such funds
will be sufficient for these purposes. In the event that the Company needs
additional financing to fund its operations and capital needs or to finance
future acquisitions, there can be no assurance that such financing will be
available, or that it will be available on acceptable terms.
SUBSTANTIAL COMPETITION
The market for the Company's products is highly competitive, and the
Company encounters substantial competition from domestic businesses. Some of
the Company's competitors have substantially greater financial resources and
technical expertise than the Company and may offer lower prices on competing
products. In addition, such competitors may have substantially greater
managerial capabilities than the Company and, consequently, the Company may be
at a substantial competitive disadvantage in the conduct of its business.
Increased competition could result in product price reductions, reduced margins
and loss of market share, all of which could have a material adverse effect on
the Company's results of operations and financial condition.
THE COMPANY
OVERVIEW
The Company is a specialized value-added distributor of fasteners,
electronic hardware and related products sold to high-technology electronic
equipment manufacturers and other businesses through its subsidiaries Quest
Electronic Hardware, Inc., Webb Distribution, Inc. and California Fasteners,
Inc., a master distributor of fasteners through its subsidiary Integrated
Material Systems, Inc. and a distributor of lithium batteries and customized
battery packs and assemblies through its subsidiary, Power Components, Inc.
The Company serves more than 3,000 customers, including leading computer,
telecommunications, semiconductor manufacturing equipment, medical
instrumentation and other industrial equipment manufacturing companies.
BACKGROUND
In March 1995, the Company acquired the fastener and electronic
hardware distribution business of Arrow Electronics, Inc., which now operates
as Quest Electronic Hardware, Inc. ("Quest"), a wholly-owned subsidiary of the
Company. Through this acquisition, the Company established its presence as a
distributor in California, Texas and Colorado where Quest's business is
concentrated.
In March 1997, the Company acquired Comp Ware, Inc. d/b/a Webb
Distribution, a Delaware corporation ("Webb"). Webb distributes electronic
hardware, fasteners and components to customers in the high-technology
electronic equipment manufacturing industry and other businesses.
In June 1997, the Company acquired Integrated Material Systems, Inc.,
an Arizona corporation ("IMS"). IMS is a master distributor of fasteners, which
brought to the Company expertise in sourcing products on a worldwide basis and
additional materials-management skills.
- 7 -
<PAGE>
In September 1997, the Company acquired Power Components, Inc., a
Pennsylvania corporation ("PCI"). PCI, based in Philadelphia, is a distributor
of lithium batteries and customized battery packs and assemblies.
In September 1997, The Company acquired California Fasteners, Inc., a
California corporation ("Calfast"). Calfast is a distributor of fasteners and
related products, with stocking locations in Anaheim, San Diego and Phoenix.
The Company was incorporated in Delaware in 1983. The name was changed
to Questron Technology, Inc. in 1996 to better reflect its principal business
of supplying low-technology products to high-technology industries and other
industrial businesses. The Company, with its subsidiaries, has approximately
120 employees. The executive offices of the Company are located at 6400
Congress Avenue, Suite 200A, Boca Raton, Florida 33487 and its telephone
number is (561) 241-5251.
QUEST ELECTRONIC HARDWARE, INC. ("QUEST")
Quest is a specialized distributor of fasteners and electronic
hardware sold to electronic equipment manufacturers. The business serves
customers in the high-technology electronic equipment manufacturing industry,
including leading computer, telecommunications, semiconductor manufacturing
equipment and medical instrumentation companies. Prior to Quest's acquisition
from Arrow Electronics, Inc., the fasteners business had operated as a
distributor of fasteners and electronic hardware for more than twenty years.
Approximately 50% of Quest's sales are of industrial fasteners, 10%
are of "spacers" and "standoffs" (products used in conjunction with fasteners),
and the remaining sales are divided among a variety of products, including
plastic components, cable ties and accessories, drawer slides, connectors, and
design/prototype components. The demand for products offered by Quest is
relatively stable, with minimal technological change.
Quest has developed a customer base consisting of over 250 active
customers. These customers demand quality service and in many cases are willing
to pay premium prices. Over 95% of Quest's sales are recurring sales to
existing customers. Currently, the business is concentrated in California,
Texas and Colorado.
WEBB DISTRIBUTION, INC. ("WEBB")
Webb Distribution, Inc. was incorporated in the State of Connecticut
in May 1989 as a distributor of electronic hardware fasteners and components.
In February 1995, Webb Distribution, Inc. was merged into Comp Ware, Inc., a
newly created Delaware corporation, in a migratory merger and currently
conducts business under the name Webb Distribution. The business is
concentrated in the New England area. The Company's principal executive offices
are located in Winchester, Massachusetts.
The business of Webb is substantially similar to the business of
Quest, serving customers in the high-technology equipment manufacturing
industry. Webb serves a variety of different markets on both a direct order
basis and in providing services such as bin stock replenishment. Along with
serving original equipment manufacturers, Webb also serves more than 800 active
customers in the industrial, military, sheet metal and metal fabrication
industries.
- 8 -
<PAGE>
INTEGRATED MATERIAL SYSTEMS, INC. ("IMS")
Based in Scottsdale, Arizona, IMS is a wholly-owned subsidiary of the
Company. IMS is a master distributor of fasteners, which sources product on a
worldwide basis. The business supplements the skills and expertise of the
Company's fastener and electronic hardware distribution business.
POWER COMPONENTS, INC. ("PCI")
Power Components, Inc. is a wholly-owned subsidiary of the Company.
Based in Philadelphia, PCI distributes lithium batteries, and customized
battery packs and assemblies. PCI has grown its business by broadening its
customer base and expanding its value-added services.
CALIFORNIA FASTENERS, INC. ("CALFAST")
Calfast is a value-added distributor of fasteners and related
products, offering custom designed inventory management systems that conform to
an organization's needs, including in-plant bin-stock replenishment programs.
The business serves customers in the industrial, consumer and electronic
equipment manufacturing industries. The business is located in Anaheim,
California, Phoenix, Arizona and San Diego, California.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Securities
by the Selling Securityholders. The obligation of the Company to repurchase the
Shares, as referenced in Notes (3) and (4) under "Selling Securityholders",
will be reduced by any sale of the Shares under this registration statement.
- 9 -
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth certain information with respect to the
Selling Securityholders as of November 20, 1997. The Securities to which this
Prospectus relates may be sold from time to time in whole or in part by the
Selling Securityholders as described in and subject to the restrictions set
forth in the "PLAN OF DISTRIBUTION".
<TABLE>
<CAPTION>
Shares that Shares of
Shares of Common may be offered Common Stock % of Class
Selling Stock owned prior to pursuant to owned after owned after
Securityholders this offering this Prospectus offering(1) offering(2)
- --------------- ------------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Douglas D. Zadow(3) 361,065 95,678 265,387 12.57%
29 Trailridge Drive
Melissa, TX 75454
Terry Bastian(4) 114,041 30,234 83,807 3.97%
25101 Danacoral
Dana Point, CA 92629
</TABLE>
- --------------
(1) Assuming all shares being offered pursuant to this Prospectus are sold.
(2) Percentages are based upon there being 2,110,590 shares of Common Stock
issued and outstanding as of November 20, 1997.
(3) Mr. Zadow is President of Calfast, a subsidiary of the Company. Pursuant
to a Stock Purchase Agreement by and among the Company and the
shareholders of Calfast, dated as of August 29, 1997 (the "Agreement"),
Mr. Zadow was issued 361,065 shares of the Company's Common Stock. Of
these 361,065 shares, the 95,678 being offered pursuant to this
Registration Statement are subject to a Serial Put Agreement dated
September 22, 1997, whereby Mr. Zadow has the option to put the Shares
back to the Company on a monthly basis during the five year period
following September 22, 1997.
(4) Mr. Bastian is Purchasing Manager of Calfast, a subsidiary of the
Company, and General Manager of the San Diego branch of Calfast. Pursuant
to a Stock Purchase Agreement by and among the Company and the
shareholders of Calfast, dated as of August 29, 1997 (the "Agreement"),
Mr. Bastian was issued 114,041 shares of the Company's Common Stock. Of
these 114,041 shares, the 30,234 being offered pursuant to this
Registration Statement are subject to a Serial Put Agreement dated
September 22, 1997, whereby Mr. Bastian has the option to put the Shares
back to the Company on a monthly basis during the five year period
following September 22, 1997.
- 10 -
<PAGE>
PLAN OF DISTRIBUTION
The Securities offered hereby may be sold from time to time directly
by the Selling Securityholders. Alternatively, the Selling Securityholders may
from time to time offer such securities through underwriters, dealers or
agents. The distribution of Securities by the Selling Securityholders may be
effected in one or more transactions that may take place on the
over-the-counter market, including ordinary broker's transactions,
privately-negotiated transactions or through sales to one or more
broker-dealers for resale of such Securities as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by the Selling Securityholders in
connection with such sales of Securities. The Securities offered by the Selling
Securityholders may be sold by one or more of the following methods, without
limitations: (a) a block trade in which a broker or dealer so engaged will
attempt to sell the Securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction; and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers, and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Securityholders may
arrange for other brokers or dealers to participate. The Selling
Securityholders and intermediaries through whom such Securities are sold may be
deemed "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act") with respect to the securities offered, and any
profits realized or commissions received may be deemed underwriting
compensation.
In order to comply with the securities laws of certain states, if
applicable, the Securities will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with by the Company and
the Selling Securityholders.
The Selling Securityholders and any broker-dealers, agents or
underwriters that participate with the Selling Securityholders in the
distribution of the shares may be deemed to be the "underwriters" within the
meaning of Section 2(11) of the Securities Act and any securities purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.
Pursuant to the requirements of Regulation M of the Exchange Act, any
person engaged in the distribution of the securities may not simultaneously
engage in market-making-activities with respect to the securities during such
solicitation and for a period of up to five days preceding such solicitation.
The Company has agreed to pay all fees and expenses incident to the
registration of the Shares, except selling commissions and fees and expenses of
counsel or any other professionals or other advisors, if any, to the Selling
Securityholders.
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<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The authorized Common Stock of the Company consists of 20,000,000
shares of Common Stock, $.001 par value per share, of which 2,110,590 shares
were issued and outstanding as of November 20, 1997. Holders of the Common
Stock do not have preemptive rights to purchase additional shares of Common
Stock or other subscription rights. The Common Stock carries no conversion
rights and is not subject to redemption or to any sinking fund provisions. All
shares of Common Stock are entitled to share equally in dividends from sources
legally available therefor when, as and if declared by the Board of Directors
and, upon liquidation or dissolution of the Company, whether voluntary or
involuntary, to share equally in the assets of the Company available for
distribution to stockholders. All outstanding shares of Common Stock are
validly authorized and issued, fully paid and nonassessable, and all shares to
be sold and issued as contemplated hereby, will be validly authorized and
issued, fully paid and nonassessable. The Board of Directors is authorized to
issue additional shares of Common Stock, not to exceed the amount authorized by
the Company's Certificate of Incorporation, and to issue options and warrants
for the purchase of such shares, on such terms and conditions and for such
consideration as the Board may deem appropriate without further stockholder
action. The above description concerning the Common Stock of the Company does
not purport to be complete. Reference is made to the Company's Certificate of
Incorporation and By-laws which are available for inspection upon proper notice
at the Company's offices, as well as to the applicable statutes of the State of
Delaware for a more complete description concerning the rights and liabilities
of stockholders.
Each holder of Common Stock is entitled to one vote per share on all
matters on which such stockholders are entitled to vote. Since the shares of
Common Stock do not have cumulative voting rights, the holders of more than
fifty percent (50%) of the shares voting for the election of directors can
elect all the directors if they choose to do so and, in such event, the holders
of the remaining shares will not be able to elect any person to the Board of
Directors.
PREFERRED STOCK
The authorized Preferred Stock of the Company consists of 10,000,000
shares of Preferred Stock, $.01 par value per share of which 1,150,000 shares
of Series B Convertible Preferred Stock were issued and outstanding as of
November 20, 1997.
Each share of Series B Preferred Stock shall be automatically
converted without any action on the part of the Company or the holder thereof
into 1.4375 shares of Common Stock on March 4, 1999. Annual dividends on the
Series B Preferred Stock will be paid in respect of the two year period prior
to conversion at the rate of $0.115 per share. Holders of Series B Preferred
Stock will be entitled to one vote for each share of Common Stock into which
such Preferred Stock is convertible. Each share of Series B Preferred Stock
will be entitled to a liquidation preference equal to $0.01 per share.
Up to 7,950,000 additional shares of Preferred Stock may be issued
from time to time in one or more series and the Board of Directors, without
further approval of the stockholders, is authorized to fix the dividend rights
and terms, conversion rights, voting rights, redemption rights, liquidation
preferences and other rights and restrictions relating to any such series.
- 12 -
<PAGE>
SERIES IV WARRANTS
The Company currently has 3,900,000 Series IV Warrants outstanding.
Each Series IV Warrant entitles the holder to purchase one share of Common
Stock at an exercise price of $5.75 per share during the four year period
commencing March 4, 1998. The Series IV Warrants are redeemable by the Company
for $.05 per Series IV Warrant, at any time after March 4, 1998, upon 30 days'
prior notice, if the closing bid price of the Common Stock, as reported by the
Nasdaq SmallCap Market exceeds $8.50 per share, for any 20 consecutive trading
days ending within ten days of the notice of redemption.
The transfer agent and registrar for the Company is American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005, telephone
number (212) 936-5100.
LEGAL MATTERS
The legality of the Securities will be passed upon for the Company by
Gould & Wilkie, One Chase Manhattan Plaza, New York, New York 10005.
EXPERTS
The Company's Consolidated Financial Statements as of December 31,
1996 and 1995 and for the years then ended incorporated by reference in this
Prospectus and the Registration Statement have been incorporated herein in
reliance on the report of Moore Stephens, P.C., independent certified public
accountants, given on the authority of such firm as experts in accounting and
auditing.
- 13 -
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of the registration of the Common Stock
concerned herein which are payable by the Registrant are as follows:
SEC Registration Fee $ 335
Legal Expenses 8,000
Accounting Expenses 250
Miscellaneous Expenses 1,660
-------
Total $10,245
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and By-laws contain
provisions which reduce the potential personal liability of directors for
certain monetary damages and provide for indemnity of directors and other
persons. The Company is unaware of any pending or threatened litigation against
the Company or its directors that would result in any liability for which such
director would seek indemnification or similar protection.
The provisions affecting personal liability do not abrogate a
director's fiduciary duty to the Company and its shareholders, but eliminate
personal liability for monetary damages for breach of that duty. The provisions
do not, however, eliminate or limit the liability of a director for failing to
act in good faith, for engaging in intentional misconduct or knowingly
violating a law, for authorizing the illegal payment of a dividend or
repurchase of stock, for obtaining an improper personal benefit, for breaching
a director's duty of loyalty (which is generally described as the duty not to
engage in any transaction which involves a conflict between the interests of
the Company and those of the director) or for violations of the federal
securities laws. The provisions also limit liability resulting from grossly
negligent decisions, including grossly negligent business decisions relating to
attempts to change control of the Company.
The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). In the opinion of
the Securities and Exchange Commission, indemnification for liabilities arising
under the Securities Act of 1933 is contrary to public policy and, therefore,
is unenforceable.
The Company also maintains directors and officers liability insurance
for the benefit of its officers and directors.
-II-1-
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.0 Certificate of Incorporation of the Registrant, incorporated by
reference to Exhibit 3(i) to the Registrant's Form 10-KSB filed
with the Securities and Exchange Commission for the fiscal year
ended December 31, 1987 (File No. 0-13324).
3.1 Certificate of Amendment, dated March 20, 1985, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 4.1 to Amendment No. 1 of the Registrant's Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on March 9, 1995 (File No. 33-44331).
3.2 Certificate of Amendment, dated June 9, 1989, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 4.1 to Amendment No. 1 of the Registrant's Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on March 9, 1995 (File No. 33-44331).
3.3 Certificate of Correction, dated May 17, 1991, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 4.1 to Amendment No. 1 of the Registrant's Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on March 9, 1995 (File No. 33-44331).
3.4 Certificate of Amendment, dated December 20, 1993, to Certificate
of Incorporation of the Registrant, incorporated by reference to
Exhibit 3(i) to the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1993 (File No. 0-13324).
3.5 Certificate of Amendment, dated December 22, 1993, to Certificate
of Incorporation of the Registrant, incorporated by reference to
Exhibit 3.3 to the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1993 (File No. 0-13324).
3.6 Certificate of Correction, dated July 19, 1994, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 4.1 to Amendment No. 1 to the Registrant's Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on March 9, 1995 (File No. 33-44331).
3.7 Certificate of Amendment, dated April 2, 1996, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 3.5 to the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1995 (File No. 0-13324).
3.8 Certificate of Amendment, dated December 31, 1996, to Certificate
of Incorporation of the Registrant, incorporated by reference to
Exhibit 3.10 of the Registrant's Registration Statement on Form
SB-2 filed with the Securities and Exchange Commission on March
4, 1997 (File No. 333-18243).
3.9 By-Laws of the Registrant, incorporated by reference to Exhibit
3b(ii) to the Registrant's Form 10-KSB filed with the Securities
and Exchange Commission for the fiscal year ended December 31,
1987 (File No. 0-13324).
3.10 Amendment to By-Laws of the Registrant, incorporated by reference
to Exhibit 3.4 of the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1992 (File No. 0-13324).
5.0 Opinion of Gould & Wilkie.
10.0 Serial Put Agreement dated as of September 22, 1997.
24.1 Consent of Moore Stephens, P.C.
24.2 Consent of Gould & Wilkie (see Exhibit 5.0).
-II-2-
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement to include material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference into the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
-II-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in Boca Raton, Florida on November 21, 1997.
QUESTRON TECHNOLOGY, INC.
By: /s/ Dominic A. Polimeni
-------------------------------
Dominic A. Polimeni
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Dominic A. Polimeni Chairman, President, November 21, 1997
- ------------------------------ Chief Executive Officer
Dominic A. Polimeni and Director (Principal
Executive Officer)
/s/ Milton M. Adler Treasurer, Secretary, November 21, 1997
- ------------------------------ Controller and Director
Milton M. Adler (Principal Financial and
Accounting Officer)
/s/ Robert V. Gubitosi Director November 21, 1997
- ------------------------------
Robert V. Gubitosi
Director
- ------------------------------
Mitchell Hymowitz
/s/ William J. McSherry, Jr. Director November 21, 1997
- -----------------------------
William J. McSherry, Jr.
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.0 Certificate of Incorporation of the Registrant, incorporated by
reference to Exhibit 3(i) to the Registrant's Form 10-KSB filed
with the Securities and Exchange Commission for the fiscal year
ended December 31, 1987 (File No. 0-13324).
3.1 Certificate of Amendment, dated March 20, 1985, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 4.1 to Amendment No. 1 of the Registrant's Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on March 9, 1995 (File No. 33-44331).
3.2 Certificate of Amendment, dated June 9, 1989, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 4.1 to Amendment No. 1 of the Registrant's Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on March 9, 1995 (File No. 33-44331).
3.3 Certificate of Correction, dated May 17, 1991, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 4.1 to Amendment No. 1 of the Registrant's Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on March 9, 1995 (File No. 33-44331).
3.4 Certificate of Amendment, dated December 20, 1993, to Certificate
of Incorporation of the Registrant, incorporated by reference to
Exhibit 3(i) to the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1993 (File No. 0-13324).
3.5 Certificate of Amendment, dated December 22, 1993, to Certificate
of Incorporation of the Registrant, incorporated by reference to
Exhibit 3.3 to the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1993 (File No. 0-13324).
3.6 Certificate of Correction, dated July 19, 1994, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 4.1 to Amendment No. 1 to the Registrant's Registration
Statement on Form S-3 filed with the Securities and Exchange
Commission on March 9, 1995 (File No. 33-44331).
3.7 Certificate of Amendment, dated April 2, 1996, to Certificate of
Incorporation of the Registrant, incorporated by reference to
Exhibit 3.5 to the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1995 (File No. 0-13324).
3.8 Certificate of Amendment, dated December 31, 1996, to Certificate
of Incorporation of the Registrant, incorporated by reference to
Exhibit 3.10 of the Registrant's Registration Statement on Form
SB-2 filed with the Securities and Exchange Commission on March
4, 1997 (File No. 333-18243).
3.9 By-Laws of the Registrant, incorporated by reference to Exhibit
3b(ii) to the Registrant's Form 10-KSB filed with the Securities
and Exchange Commission for the fiscal year ended December 31,
1987 (File No. 0-13324).
3.10 Amendment to By-Laws of the Registrant, incorporated by reference
to Exhibit 3.4 of the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission for the fiscal year ended
December 31, 1992 (File No. 0-13324).
5.0 Opinion of Gould & Wilkie.
10.0 Serial Put Agreement dated as of September 22, 1997.
24.1 Consent of Moore Stephens, P.C.
24.2 Consent of Gould & Wilkie (see Exhibit 5.0).
<PAGE>
November 21, 1997
Questron Technology, Inc.
6400 Congress Avenue
Suite 200A
Boca Raton, Florida 33487
Re: QUESTRON TECHNOLOGY, INC.
REGISTRATION STATEMENT ON FORM S-3
----------------------------------
Ladies and Gentlemen:
We are counsel to Questron Technology, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with the
Registration Statement on Form S-3 (the "Registration Statement") being filed
by the Company with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Securities Act") with respect to the offer and
sale of 125,912 shares of common stock of the Company, par value $.001 per
share (the "Shares").
We have acted as securities counsel for the Company in connection with the
transaction which is the subject matter of the Registration Statement and are
familiar with the various corporate proceedings related thereto. In rendering
this opinion, we have examined a copy of the Registration Statement, such
corporate records of the Company and such other instruments, documents and
certificates as we have deemed necessary as a basis for our opinion. For
purposes of this opinion, we have assumed (i) the accuracy and completeness of
all information supplied by the Company, its officers, directors, or agents,
(ii) that the transactions set forth in the Registration Statement are
consummated as set forth therein, (iii) that the Commission shall have issued
an order under the Securities Act of 1933, as amended, declaring the
Registration Statement effective, and (iv) that all requisite authorizations,
approvals, consents or exemptions under the securities laws of the various
states and other jurisdictions of the United States of America shall have been
obtained.
Based on the foregoing, we are of the opinion that the Shares to be sold
in accordance with the Registration Statement are duly authorized and upon
issuance, delivery and sale thereof, for the consideration specified in the
Registration Statement, will be legally issued, fully paid and non-assessable.
<PAGE>
Questron Technology, Inc. - 2 - November 21, 1997
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and as a part of, or an exhibit to, any document which
may be filed with respect to the proposed transactions under the securities
laws of the various states and other jurisdictions of the United States of
America. We also consent to be named in the Registration Statement and in the
Prospectus which constitutes a legal part thereof as the counsel that will pass
upon certain legal matters for the Company in connection with the sale of the
Company's securities.
Very truly yours,
GOULD & WILKIE
Enclosures
<PAGE>
SERIAL PUT AGREEMENT
THIS SERIAL PUT AGREEMENT ("Agreement") is entered into as of
September 22, 1997 between Questron Technology, Inc., a Delaware corporation
(the "Company"), and Doug Zadow, an individual, and Terry Bastian, an
individual (collectively, the "Sellers").
WHEREAS, the Company and the Sellers have entered into the Stock
Purchase Agreement dated as of August 29, 1997 (the "Purchase Agreement") which
provides for the issuance and sale to the Sellers of 475,106 shares of the
Company's Common Stock.
WHEREAS, the Company is granting Sellers the rights set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
provisions hereof, the parties agree as follows:
1. Defined Terms. All terms that are not otherwise defined herein
shall have the meaning assigned to such terms in the Purchase Agreement.
2. Serial Put Option.
2.1. Grant of Serial Put. The Company hereby grants to the Sellers an
option to sell 125,912 shares (the "Shares") of the Company's Common Stock
issued to Sellers pursuant to the Purchase Agreement on a monthly basis in the
following manner (the "Put Option"). Each of the Sellers hereby, in the absence
of written notice to the Company given in accordance with Section 2.2,
exercises his option to sell to the Company that number of Shares set forth
opposite his name on Schedule A-1 for each of the seven months during the
period October 1997 through April 1998 and that number of Shares set forth
opposite his name on Schedule A-2 for each of the 53 months during the period
May 1998 through September 2002. The 15th day of each of the foregoing months
shall constitute a "Put Date." Each such sale shall be at a "Deemed Value" of
$6.275 per share. Shares sold or to be sold pursuant to this Section 2.1 shall
be referred to hereinafter as "Put Securities."
2.2. Cancellation of Exercise of Put Option. Either Seller may, at his
option, by written notice given to the Company at any time on or before the
first day of the month in which a Put Date relating to any Put Securities is
scheduled to occur, cancel his exercise with respect to all or a portion of the
Shares to be sold on that month's Put Date or on any subsequent Put Date. Such
notice shall specify the number of Shares and the Put Date(s) with respect to
which the exercise of the Put Option is being cancelled. Once a notice of
cancellation has been given to the Company with respect to any Shares or once
any Shares have been sold to any person or entity other than the Company, the
Seller's Put Option with respect to such Shares shall terminate and be of no
further force or effect.
2.3. Binding Obligation; Delivery of Share Certificates. In the
absence of notice by Sellers pursuant to Section 2.2, each Seller shall be
obligated to sell to the Company the Put Securities in accordance with this
Agreement. On or before the first day of each month in which a Put Date is
scheduled to occur, each Seller shall deliver to the Company a certificate
evidencing a number of shares equal to or greater than the number of Put
Securities for that Put Date together with a duly executed stock power relating
thereto. The Company shall be obligated
<PAGE>
to purchase the Put Securities and to pay for such Put Securities in accordance
with Section 2.4.
2.4. Payment. In the absence of a notice pursuant to Section 2.2, on
or before each Put Date, the Company shall purchase the Put Securities at the
purchase price set forth in Section 2.1 by payment in Federal or other
immediately available funds by bank check or, if requested by Sellers, by wire
transfer to an account of Sellers at any bank or trust company in the United
States of America.
2.5. Legal Restrictions. If the Company is not permitted by law on the
Put Date to purchase all of the Put Securities pursuant to this Section 2, the
amount of Put Securities to be purchased by the Company from Sellers shall be
the maximum amount that can be legally purchased by the Company.
2.6. Corrective Action. The Company shall take whatever reasonable
actions are within its power to prevent (or to remedy, as the case may be) any
condition or circumstance that may limit the amount of Put Securities that may
be purchased by it.
2.7. Registration of Put Securities. The Company shall file a
registration statement under the Securities Act of 1933 on an appropriate form
relating to the resale of the Shares within 60 days following the date hereof
and shall use its best efforts to cause such registration statement to be
declared effective under said Act.
In the absence of a default within the meaning of Section 2.8, a
Seller may not resell any Shares under the foregoing registration statement or
otherwise prior to the Put Date relating to such Shares in the absence of the
written consent of the Company.
2.8. Default in Company's Obligations. In the event that the Company
fails to make full payment for any Put Securities within five (5) business days
of its receipt of written notice of such default from either Seller (including
without limitation, a failure by reason of applicable legal restrictions):
(a) the Company's obligations to purchase from such Seller any
remaining Shares shall immediately accelerate; and
(b) such Seller shall be entitled to resell (subject to compliance
with applicable securities laws) any Shares, including without limitation, any
Shares covered by future Put Dates.
3. Notices. Unless otherwise expressly specified or permitted by the
terms hereof, all notices, requests, demands, consents and other communications
hereunder shall be in writing and shall be delivered to any party in the names
and at the addresses as set forth in the Purchase Agreement, or at such other
address as may have been furnished to the other party in writing. Whenever any
notice is required to be given hereunder, such notice shall be deemed given and
such requirement satisfied only when such notice is delivered or, if sent by
facsimile, when received, unless otherwise expressly specified or permitted by
the terms hereof.
4. Changes in Common Stock. If, and as often as, there are any changes
in the Company's Common Stock by way of stock split, stock dividend,
combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof, as may be required,
- 2 -
<PAGE>
so that the rights and privileges granted hereby shall continue with respect to
the Common Stock as so changed.
5. Miscellaneous.
5.1. Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with relation to the subject matter hereof, and no party
shall be liable or bound to the other in any manner with respect to the subject
matter hereof except as specifically set forth herein.
5.2. Headings. The headings and captions in the agreement are for
convenience of reference only and shall not define, limit or otherwise affect
any of the terms or provisions hereof.
5.3. Binding Effect. The terms of this agreement shall be binding
upon, and inure to the benefit of, the parties and their respective successors
and permitted assigns whether so expressed or not. Neither party may assign any
of its obligations, duties or rights under this agreement, except with the
other party's written consent; provided, however, that the Company may
designate a third party to purchase the Put Securities the Company is obligated
to purchase hereunder, and provided further that such designation shall not act
as a novation or relieve the Company of its obligations hereunder, except only
to the extent that such designee actually purchases the Put Securities.
5.4. Amendment. No amendment, modification or waiver of this Agreement
shall be effective unless in writing and signed by the parties hereto.
5.5. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first set forth above.
QUESTRON TECHNOLOGY, INC.
By: /s/ Dominic A. Polimeni /s/ Doug Zadow
----------------------- --------------
Name: Dominic A. Polimeni Doug Zadow
Title: Chairman, President and
Chief Executive Office
/s/ Terry Bastian
-----------------
Terry Bastian
- 3 -
<PAGE>
SCHEDULE A-1
Sellers Shares
------- ------
Doug Zadow 6,748
Terry Bastian 2,131
-----
8,879
- 4 -
<PAGE>
SCHEDULE A-2
Sellers Shares
------- ------
Doug Zadow 914
Terry Bastian 289
-----
1,203
- 5 -
<PAGE>
EXHIBIT 24.1
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-3 of our report dated March 19, 1997 on our
audit of the consolidated financial statements of Questron Technology, Inc.
(the "Company") and its subsidiaries, for the year ended December 31, 1996
included in the Company's Annual Report on Form 10-KSB. We also consent to the
reference to our firm under the caption "Experts."
MOORE STEPHENS, P.C.
Certified Public Accountants
Cranford, New Jersey
November 21, 1997
