<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
QUESTRON TECHNOLOGY, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
QUESTRON TECHNOLOGY, INC.
6400 Congress Avenue, Suite 200A
Boca Raton, Florida 33487
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of the
Shareholders of Questron Technology, Inc., which will be held on Thursday, June
11, 1998 at 11:00 a.m., at the Downtown Athletic Club, 19 West Street, 17th
floor (Gotham Room), New York, New York.
This booklet includes the notice of the meeting and the proxy
statement which contains information about the proposals to be considered and
acted upon at the meeting, your Board of Directors and information about each
of the nominees for the Board.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING
REGARDLESS OF THE SIZE OF YOUR HOLDINGS. I URGE YOU TO COMPLETE, SIGN, DATE,
AND RETURN YOUR PROXY CARD PROMPTLY.
If you are a shareholder of record and plan to attend the meeting,
please mark your proxy card in the space provided for that purpose. However, if
your shares are not registered in your own name, please advise the shareholder
of record (your bank, broker, etc.) that you wish to attend. Such shareholder
of record must provide you with evidence of your ownership which will enable
you to gain admittance to and to vote at the meeting.
Sincerely,
Dominic A. Polimeni
Chairman, President and
Chief Executive Officer of the Company
May 5, 1998
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY CARD IN THE ENCLOSED ENVELOPE
<PAGE>
NOTICE OF
ANNUAL MEETING
OF
SHAREHOLDERS
Dear Shareholder:
The 1998 Annual Meeting of Shareholders of Questron Technology, Inc.,
a Delaware corporation (the "Company"), will be held at the Downtown Athletic
Club, 19 West Street, 17th floor (Gotham Room), New York, New York on Thursday,
June 11, 1998, beginning at 11:00 a.m. (local time), for the following
purposes:
1. TO ELECT DIRECTORS.
2. TO CONSIDER AND ACT UPON A PROPOSAL TO AMEND THE CERTIFICATE OF
INCORPORATION OF THE COMPANY TO CHANGE THE AUTOMATIC DATE OF
CONVERSION OF THE OUTSTANDING SERIES B CONVERTIBLE PREFERRED STOCK
INTO COMMON STOCK, WHICH IS RECOMMENDED BY THE BOARD OF DIRECTORS.
3. TO CONSIDER AND ACT UPON A PROPOSAL TO AMEND THE 1996 STOCK OPTION
PLAN TO INCREASE THE NUMBER OF OPTIONS AVAILABLE FOR GRANT UNDER SUCH
PLAN, WHICH IS RECOMMENDED BY THE BOARD OF DIRECTORS.
4. TO CONSIDER AND ACT UPON A PROPOSAL TO AMEND THE 1994 DIRECTOR
NON-QUALIFIED STOCK OPTION PLAN TO INCREASE THE NUMBER OF OPTIONS
AVAILABLE FOR GRANT UNDER SUCH PLAN AND TO INCREASE THE NUMBER OF
OPTIONS TO BE GRANTED ANNUALLY TO NON-EMPLOYEE DIRECTORS, AND TO
RATIFY A GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS, EACH OF WHICH IS
RECOMMENDED BY THE BOARD OF DIRECTORS.
5. TO RATIFY THE APPOINTMENT BY THE BOARD OF DIRECTORS OF MOORE STEPHENS,
P.C. AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL
YEAR 1998, WHICH IS RECOMMENDED BY THE BOARD OF DIRECTORS.
6. TO TRANSACT ANY OTHER BUSINESS WHICH PROPERLY MAY BE BROUGHT BEFORE
THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Only holders of record of the Company's Common Stock and Series B
Preferred Stock as of the close of business on April 14, 1998 are entitled to
notice of and to vote at the meeting and any adjournments or postponements
thereof.
By Order of the Board of Directors,
Milton M. Adler
Secretary
QUESTRON TECHNOLOGY, INC.
6400 Congress Avenue, Suite 200A
Boca Raton, Florida 33487
May 5, 1998
<PAGE>
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Questron Technology, Inc., a Delaware
corporation (the "Company"), for use at the 1998 Annual Meeting of Shareholders
of the Company (the "Meeting") which will be held at 11:00 a.m. on Thursday,
June 11, 1998, at the Downtown Athletic Club, 19 West Street, 17th floor
(Gotham Room), New York, New York, and at any and all adjournments of the
Meeting for the purposes set forth in the accompanying Notice of Meeting of
Shareholders. This proxy statement and the enclosed proxy card will be mailed
to shareholders on or about May 5, 1998. The Company's principal executive
offices are located at 6400 Congress Avenue, Suite 200A, Boca Raton, Florida
33487.
The accompanying proxy card is designed to permit each shareholder of
record as of the close of business on April 14, 1998 (the "Record Date") to
vote at the Meeting. As of the Record Date, 2,127,934 shares of Common Stock,
par value $.001 per share ("Common Stock"), and 1,150,000 shares of Series B
Convertible Preferred Stock, par value $.01 per share ("Series B Preferred
Stock"), were issued and outstanding. Each holder of record will be entitled to
one vote for each share of Common Stock and to 1.4375 votes for each share of
Series B Preferred Stock held of record. Holders of shares of Common Stock and
of Series B Preferred Stock are entitled to vote on all matters and no shares
have cumulative voting rights. The presence of a majority of the shares
entitled to vote, present in person or by proxy at the Meeting, will constitute
a quorum.
The proxy card provides space for a shareholder to withhold voting for
any or all nominees for the Board of Directors or to abstain from voting for
any proposal if the shareholder chooses to do so. Shares represented by
properly executed proxy cards received by the Company at or prior to the
Meeting will be voted at the Meeting according to the instructions indicated
thereon or otherwise as provided therein. The Election of Directors shall be
decided by a plurality of the votes cast. The proposed amendment to the
Company's Certificate of Incorporation to change the conversion date of the
Series B Convertible Preferred Stock requires the affirmative vote of both the
holders of a majority of the outstanding shares of Common Stock and Series B
Preferred Stock, voting together, and the holders of a majority of the
outstanding shares of Series B Preferred Stock, voting separately as a class.
The proposed amendment to the 1996 Stock Option Plan (the "1996 Plan") and the
ratification of the appointment of auditors require the affirmative vote of a
majority of the votes cast at the Meeting, in person or by proxy. The proposed
amendments to and ratification concerning the 1994 Director Non-Qualified Stock
Option Plan (the "1994 Plan") require the affirmative vote of a majority of the
shares entitled to vote. For purposes of determining the number of votes cast
with respect to any matter, only those cast "FOR" or "AGAINST" are included.
Abstentions and broker non-votes are counted only for purposes of determining
whether a quorum is present at the Meeting.
Unless instructions to the contrary are indicated, the persons named
on the proxy card will vote the shares so represented "FOR" the election of
each of the nominated Directors, "FOR" the amendment to the Certificate of
Incorporation, "FOR" the amendment to the 1996 Plan, "FOR" the amendments to
and ratification concerning the 1994 Plan and "FOR" the ratification of the
appointment of auditors. As to any other business which may properly come
before the Meeting, the persons named on the proxy card will vote according to
their best judgment.
A proxy may be revoked at any time before it is voted at the Meeting
by filing with the Secretary of the Company an instrument revoking it, by a
duly executed proxy bearing a later date, or by voting in person at the
Meeting.
This proxy is solicited by the Board of Directors of the Company. The
cost of preparing, assembling and mailing the Notice of Meeting, proxy
statement and proxy will be borne by the Company. The Company does not
anticipate that such cost will exceed the amount normally expended in an
uncontested election of directors. In addition to solicitation of the proxies
by use of the mails, some of the officers, directors and regular employees of
the Company, without additional remuneration, may solicit proxies personally or
by telephone, telegraph, or cable. The Company may also request brokerage
firms, nominees, custodians and fiduciaries to forward soliciting material to
the beneficial owners of stock held of record. The Company will reimburse
<PAGE>
such persons for their reasonable expenses in forwarding soliciting material.
VOTING SECURITIES AND SECURITIES OWNERSHIP
VOTING SECURITIES
The Board of Directors has fixed the close of business on April 14,
1998 as the Record Date for the determination of shareholders entitled to
notice of, and to vote at, the Meeting and any adjournments thereof. Only
shareholders on the Record Date will be able to vote at the Meeting. The list
of shareholders entitled to vote at the Meeting will be available for the
examination of any shareholder for any purpose pertinent to the Meeting at the
offices of Gould & Wilkie, One Chase Manhattan Plaza, 58th Floor, New York, New
York, for ten days prior to the date of the Meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of April 14,
1998, known to the Company regarding beneficial ownership of the Company's
Common Stock and Series B Preferred Stock by (i) any person who is known by the
Company to own beneficially more than five percent of the outstanding shares of
the Company's Common Stock or Series B Preferred Stock; (ii) the Company's
Directors; and (iii) all executive officers and directors as a group. The
following percentage calculations were based upon 2,127,934 shares of the
Company's Common Stock and 1,150,000 shares of Series B Preferred Stock being
issued and outstanding as of the Record Date.
<TABLE>
<CAPTION>
Number of
Number of % of Shares of % of Series % of
Position With the Shares of Common Series B B Preferred Voting
Name & Address Company or a Subsidiary Common Stock Stock Preferred Stock Stock Power (1)
- ----------------------------- -------------------------- -------------- -------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Dominic A. Polimeni (2)(4) Chairman, President and 1,713,757 (3) 47.85 10,000 * 33.01
Chief Executive Officer
Milton M. Adler (2) Director, Secretary, 3,102 (5) * 100 * *
Treasurer and Controller
Robert V. Gubitosi (2) Director -- (6) * -- -- *
Mitchell Hymowitz (2)(7) Director 21,000 (7) -- -- -- --
Frederick W. London(2)(8) Director -- -- -- -- --
William J. McSherry, Jr. (2) Director 36,041 (9) 1.67 2,700 * 1.05
Gulfstream Financial Group, -- 1,713,606 (3) 47.85 -- -- 32.74
Inc.(4)
6400 Congress Ave., Suite
200A
Boca Raton, FL 33487
Joan R. Gubitosi(4) -- 1,713,606 (3) 47.85 -- -- 32.74
c/o Gulfstream Financial Group, Inc.
6400 Congress Ave., Suite 200A
Boca Raton, FL 33487
Phillip D. Schwiebert(4) President and Chief 570,006 (10) 22.13 12,500 1.09 13.48
c/o Quest Electronic Operating Officer of
Hardware, Inc. Quest Electronic
386 Railroad Court Hardware, Inc., a
Milpitas, CA 95035 subsidiary of the Company
<PAGE>
Douglas D. Zadow President of California 361,065 (11) 16.97 -- -- 9.55
c/o The Z Group, Inc. Fasteners, Inc., a
P.O. Box 1148 subsidiary of the Company
McKinney, TX 75070
Terry Bastian General Manager of San 114,041 (12) 5.36 -- -- 3.02
c/o California Fasteners, Inc. Diego and Purchasing
7076 Convoy Court Manager of California
San Diego, CA 92111 Fasteners, Inc. a
subsidiary of the Company
Bentley Capital Management, -- 115,000 5.4 -- 3.04
Inc.(13)
520 Madison Avenue, 41st Floor
New York, NY 10022
Gerald Levine(13) -- 115,000 5.4 -- -- 3.04
c/o Bentley Capital
Management, Inc.
520 Madison Avenue, 41st Floor
New York, NY 10022
Robert Sussman(13) -- 115,000 5.4 -- -- 3.04
c/o Bentley Capital
Management, Inc.
520 Madison Avenue, 41st Floor
New York, NY 10022
Debra L. Hagan(13)
c/o Bentley Capital -- 115,000 5.4 -- -- 3.04
Management, Inc.
520 Madison Avenue, 41st Floor
New York, NY 10022
Kennedy Capital Management (14) -- 4,373 (16) * 290,000 25.22 11.14
10829 Olive Blvd.
St. Louis, MO 63141
Gerald Kennedy(14) -- 4,373 (16) * 290,000 25.22 11.14
c/o Kennedy Capital Management
10829 Olive Blvd.
St. Louis, MO 63141
Jay R. Petschek(15) -- 2,262 (16) * 150,000 13.04 5.76
c/o Ladenburg Thalman & Co., Inc.
540 Madison Avenue
New York, NY 10022
All officers and directors as a group 1,773,900 48.74 25,300 2.20 34.17
as a group
- -----------------------------
* Less than 1 %
</TABLE>
(1) Percentage of Voting Power reflects combined votes of Common Stock and
Series B Preferred Stock.
(2) c/o Questron Technology, Inc., 6400 Congress Avenue, Suite 200A, Boca
Raton, FL 33487.
(3) Of these shares, 1,713,606 are owned by Gulfstream Financial Group,
Inc. ("Gulfstream"). Joan R. Gubitosi and Dominic A. Polimeni are
executive officers and the shareholders of Gulfstream and share voting
and investment power with respect to the shares owned by Gulfstream.
The shares reported above consist of 260,273 shares owned by
Gulfstream, options to purchase 453,333 shares, and Series IV Warrants
to purchase 1,000,000 shares of common stock. Mr. Polimeni also owns
151 shares of common stock which were issued as a dividend in respect
of his Series B Preferred Stock. These amounts do not include options
to purchase 40,500 shares of common stock granted effective
<PAGE>
September 22, 1997, which vest and become exercisable as to 13,500
shares on each of the nine month anniversary dates of the date of the
grant.
(4) Gulfstream and Mr. Schwiebert will be entitled to receive options to
acquire additional shares of common stock upon the attainment of
certain earnings targets for the Company in any fiscal year up to and
including fiscal year 2001 as follows:
No. of Additional No. of Additional
Gulfstream Shares Schwiebert Shares Pre-tax Income at Least
----------------- ----------------- -----------------------
333,333 166,667 $ 3,500,000
333,334 166,666 $ 4,500,000
(5) Includes options to purchase 3,000 shares of common stock.
(6) Mr. Gubitosi's wife, Joan R. Gubitosi, has shared beneficial ownership
with Mr. Polimeni of 1,713,606 shares of common stock (see Footnote
3). Mr. Gubitosi disclaims beneficial ownership of such shares.
(7) Consists of options to purchase 21,000 shares of Common Stock. On
April 24, 1998, Mr. Hymowitz resigned as a Director from the Board.
(8) On April 27, 1998, Frederick W. London was unanimously elected to the
Board. Mr. London has no present shareholdings in the Company.
(9) Includes 2,000 shares of common stock owned by Mr. McSherry, options
to purchase 18,000 shares of common stock, Series IV Warrants to
purchase 16,000 shares and 41 shares of common stock issued as a
dividend in respect of Mr. McSherry's Series B Preferred Stock. These
amounts do not include 7,000 Series IV Warrants and 609 shares of
Series B Preferred Stock, and 4,000 Series IV Warrants owned by his
two adult sons, respectively, as to which Mr. McSherry disclaims
beneficial ownership.
(10) The shares reported above consist of 113,339 shares owned by Mr.
Schwiebert, options to purchase 206,667 shares of common stock and
Series IV Warrants to purchase 250,000 shares of common stock. These
amounts do not include options to purchase 20,000 shares of common
stock granted effective May 31, 1997, which vest and become
exercisable as to 10,000 shares on each of May 31, 1999 and May 31,
2000. Also see footnote 4.
(11) The 361,065 shares reported above include 55,205 shares subject to a
serial put agreement dated September 22, 1997, which gives Mr. Zadow
the option to put the shares to the Company on a monthly basis during
the five year period ending September 22, 2002 for a price of $6.275
per share.
(12) The 114,041 shares reported above include 17,433 shares subject to a
serial put agreement dated September 22, 1997, which gives Mr. Bastian
the option to put the shares to the Company on a monthly basis during
the five year period ending September 22, 1997 for a price of $6.275
per share.
(13) Based on the Schedule 13G of Bentley Capital Management, Inc.
("Bentley"), dated February 18, 1998. The 115,000 shares reported
above are owned by Bentley. Gerald Levine, Robert M. Sussman and Debra
L. Hagan are beneficial owners and share voting and investment power
with respect to the 115,000 shares reported above.
(14) Based on the Schedule 13G of Kennedy Capital Management, Inc.
("Kennedy"), dated February 10, 1998. The 290,000 shares of Series B
Preferred Stock reported above are owned by Kennedy.
(15) Based on the Schedule 13G of Jay R. Petschek, dated October 1, 1997.
Mr. Petschek, Corsair
<PAGE>
Management Company, Inc. ("CMC") and Corsair Managing Partners ("CMP")
expressly disclaim beneficial ownership of any shares of Series B
Preferred Stock not directly held for the accounts of CMC and CMP. Mr.
Petschek beneficially owns the 150,000 shares reported above, which
consists of 117,350 shares held for the account of Corsair Capital
Partners, L.P. and 32,650 shares beneficially owned by CMC and CMP.
(16) Represents shares issued as a dividend in respect of the Series B
Preferred Stock.
<PAGE>
ELECTION OF DIRECTORS
At the Meeting, shareholders will elect five (5) Directors to hold
office until the 1999 Annual Meeting of Shareholders or until their respective
successors have been duly elected and qualified. Unless contrary instructions
are given, the shares represented by a properly executed proxy will be voted
"FOR" the election of the following nominees: Milton M. Adler, Robert V.
Gubitosi, Frederick W. London, William J. McSherry, Jr. and Dominic A.
Polimeni. All of the nominees presently comprise the entire Board of Directors
of the Company. If at any time prior to or during the Meeting any of the
nominees becomes unavailable to serve as a Director, the persons named in the
enclosed proxy will vote the shares represented by the proxy for the election
of such person as the Board of Directors may recommend.
Set forth below is certain information concerning the nominees for
election as directors:
<TABLE>
<CAPTION>
Name Age Position
- ---- ---- --------
<S> <C> <C>
Dominic A. Polimeni 51 Chairman, President and Chief Executive Officer
Milton M. Adler 70 Secretary, Treasurer, Controller and Director
Robert V. Gubitosi 50 Director
Frederick W. London 46 Director
William J. McSherry, Jr. 50 Director
</TABLE>
DOMINIC A. POLIMENI has been President, Chief Operating Officer and a
Director of the Company since March 1995, and Chairman and Chief Executive
Officer of the Company since February 1996. Since September 1997, Mr. Polimeni
has been a Director of Nu Horizons, Inc., a publicly held company based in
Melville, New York, which is a distributor of electronic components. Mr.
Polimeni has been a Managing Director of Gulfstream Financial Group, Inc., a
privately held financial consulting and investment banking firm since August
1990. Prior to that he held the position of Chief Financial Officer of Arrow
Electronics, Inc. ("Arrow") for four years. He also held several other
positions, including general management positions, with Arrow over an
eight-year period. Prior to that he practiced as a Certified Public Accountant
for more than 12 years and was a Partner in the New York office of Arthur Young
& Company. He has also held the position of Chief Operating Officer of Fugazy
Express, Inc., a New York based transportation company in its start-up phase.
He holds a bachelor of business administration degree from Hofstra University.
Mr. Polimeni is the brother-in-law of Mr. Gubitosi.
MILTON M. ADLER has been a Director of the Company since February
1996, Secretary of the Company since October 1993, Treasurer of the Company
since February 1992, and Controller of the Company since January 1992. Since
July 1997, he has been President, Secretary, and Treasurer of Judicate, Inc.
(formerly Judicate of Philadelphia, Inc.), a former subsidiary of the Company.
Prior to October 1993, Mr. Adler was employed by Travelco, a travel consulting
firm, for more than 18 years in various capacities, the most recent of which
was Vice President of Administration. Mr. Adler is a Certified Public
Accountant.
ROBERT V. GUBITOSI has been a Director of the Company since February
1996. Mr. Gubitosi has been a Managing Director of Gulfstream Financial Group,
Inc., a privately held financial consulting and investment banking firm since
August 1990. Prior to that he held the position of General Partner and Chief
Financial Officer of The Securities Groups, a New York investment
<PAGE>
banking firm and primary dealer of U.S. government securities, with
responsibility for the investment banking activities of the firm. In addition,
he has held managerial positions at Goldman Sachs & Company and Oppenheimer &
Company, and specialized in brokerage accounting and auditing at Haskins &
Sells and Touche Ross & Company. He holds a bachelor of business administration
degree from Hofstra University. Mr. Gubitosi is the brother-in-law of Mr.
Polimeni.
FREDERICK W. LONDON has been a Director of the Company since April
1998. Mr. London has been Vice President and Deputy General Counsel of
Pinkerton's, Inc., a provider of global security solutions based in Los
Angeles, California, since February 1998. During the period January 1995
through February 1998, Mr. London was a partner of Gould & Wilkie, a law firm
based in New York City. Prior to that, he was a partner of the law firm of
Dunnington, Bartholow & Miller, also based in New York City. Mr. London holds
an undergraduate degree from Princeton University and a law degree from
Georgetown University.
WILLIAM J. MCSHERRY, JR. has been a Director of the Company since
February 1996. Mr. McSherry has been a partner of the law firm of Battle Fowler
LLP, with offices in New York City and Los Angeles, since July 1991. Prior to
July 1991, Mr. McSherry was a partner in the law firm of Bryan Cave LLP. Mr.
McSherry is also the President and a director of Playtex Marketing Corporation,
a privately-owned corporation. From January 1992 through April 1998, Mr.
McSherry served as a trustee and as Deputy Mayor of the Village of Larchmont,
State of New York. Since January 1998, Mr. McSherry has been a member of the
Board of Directors of the Larchmont Shore Club, a private club. Mr. McSherry
holds an undergraduate degree from Fordham University and a law degree from
Harvard Law School.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held four (4) meetings during the fiscal year
ended December 31, 1997. All Directors participated in all of the meetings of
the Board of Directors. The Board of Directors also acted by unanimous written
consent six (6) times during such year.
The members of the Audit Committee of the Board of Directors are
Messrs. McSherry and London. The Audit Committee, which was established by the
Board of Directors on July 10, 1997, is responsible for considering
management's recommendation of independent certified public accountants for
each fiscal year, recommending to the Board of Directors the appointment or
discharge of independent accountants and confirming the independence of the
accountants. It is also responsible for reviewing and approving the scope of
the planned audit, the results of the audit and the accountants' compensation
for performing such audit; reviewing the Company's audited financial
statements; and reviewing and approving the Company's internal accounting
controls and discussing such controls with the independent accountants. The
Audit Committee met twice during 1997. The Company has neither a compensation
committee nor a nominating committee.
Election of Directors of the Company requires a plurality of the votes
represented at the meeting in person or by proxy. In case any of the nominees
should become unavailable for election for any reason not presently known or
contemplated, the persons named on the proxy will have discretionary authority
to vote pursuant to the proxy for a substitute.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE-NAMED NOMINEES.
<PAGE>
PROPOSAL NO. 1
APPROVAL OF AN AMENDMENT TO
THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CONVERT THE COMPANY'S SERIES B PREFERRED STOCK
INTO COMMON STOCK ON THE CONVERSION DATE
Shareholders are being asked to approve an amendment to the Company's
Certificate of Incorporation for the purpose of accelerating the conversion
date of the Series B Convertible Preferred Stock into Common Stock. The
Certificate of Incorporation of the Company currently provides that the Series
B Preferred Stock shall automatically be converted into shares of Common Stock,
at the ratio of 1.4375 shares of Common Stock for each outstanding share of
Series B Preferred Stock, on March 4, 1999. The Board of Directors unanimously
recommends that the shareholders approve an amendment to the Certificate of
Incorporation to change the date of such automatic conversion of Series B
Preferred Stock into Common Stock from March 4, 1999 to an earlier date (the
"Conversion Date"), which shall be as soon as practicable following the
adoption of this amendment, which the Company anticipates shall be within 20
days thereafter.
The holders of Series B Preferred Stock are entitled to receive annual
dividends with respect to such shares equal to $ 0.115 per share, which was
paid on March 4, 1998 in stock and is payable on March 4, 1999 in cash or
stock. The proposed amendment will provide that the annual dividend that
otherwise would have been payable on March 4, 1999 will be payable in full
(with respect to a full year) on the Conversion Date.
The Board of Directors believes that it is advisable and in the best
interests of the Company for the outstanding Series B Preferred Stock to be
converted before March 4, 1999 to simplify the Company=s capital structure.
Since all outstanding shares of Series B Preferred Stock will presently be
converted into Common Stock, no additional shares of Series B Convertible
Preferred Stock will be issued. The Certificate of Incorporation authorizes the
issuance of up to 7,950,000 additional shares of Preferred Stock. Although the
Company has no present plans or undertakings for the issuance of any other
shares of stock, shares of any new series of preferred stock up to the amount
authorized by the Certificate of Incorporation could be issued in the future if
deemed advisable by the Board of Directors.
The text of the proposed amendment is set forth in Appendix A attached
hereto.
Approval of the proposed amendment to the Certificate of Incorporation
requires the affirmative vote of both the holders of a majority of the
outstanding shares of Common Stock and Series B Preferred Stock, voting
together, and the holders of a majority of the outstanding shares of Series B
Preferred Stock, voting separately as a class.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE FOREGOING
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO
THE COMPANY'S 1996 STOCK OPTION PLAN
Shareholders are being asked to approve an amendment to the Company's
1996 Stock Option Plan for the purpose of increasing the number of shares
available for grant under the 1996 Plan. The 1996 Plan, as amended, provides
for 250,000 shares of the Company's Common Stock to be reserved and available
for distributions as grants. The amendment will increase that number to
500,000. The Board of Directors believes that it is advisable and in the best
interests of the Company to increase the number of shares available for grant
because the Company desires to continue to use stock grants to enable the
Company to attract and retain qualified personnel by offering them proprietary
interests in the Company.
The text of the proposed amendment is set forth in Appendix B attached
hereto.
Approval of the proposed amendment to the 1996 Plan requires the
affirmative vote of a majority of votes cast at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE FOREGOING
AMENDMENT TO THE 1996 STOCK OPTION PLAN.
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO
THE COMPANY'S 1994 DIRECTOR NON-QUALIFIED
STOCK OPTION PLAN AND RATIFICATION
OF OPTIONS GRANTED
Shareholders are being asked to approve an amendment to the Company's
1994 Director Non-Qualified Stock Option Plan, increasing the number of
available options from an aggregate of 30,000 shares to an aggregate of 150,000
shares of the Company's Common Stock. Shareholders are also being asked to
approve an increase in the number of options to be awarded all non-employee
Directors each year, from an option to purchase 1,500 shares to an option to
purchase 5,000 shares, and to authorize the Board of Directors or Committee
administering the Plan in its discretion to grant additional options to
non-employee Directors from time to time. Shareholders are also being asked to
ratify the grant of options to purchase a total of 20,000 shares to Messrs.
McSherry and Hymowitz, non-employee Directors, on September 22, 1997 at an
exercise price of $6.625 representing fair market value at the date of such
grant.
The Board of Directors believes that the aforementioned changes are
advisable and in the best interests of the Company insofar as they will permit
the Company to continue to retain and compensate a high caliber of non-employee
Director.
The text of the proposed amendments and ratification are set forth in
Appendix C attached hereto.
Approval of the proposed amendments to the 1994 Plan and ratification
of options granted requires the affirmative vote of a majority of the shares
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE FOREGOING
AMENDMENTS TO AND RATIFICATION CONCERNING THE 1994 DIRECTOR NON-QUALIFIED STOCK
OPTION PLAN.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of Dominic Polimeni
for the periods indicated. No other executive officer of the Company had total
annual salary and bonus during any such period equal to or greater than
$100,000.
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------
Annual Compensation Awards Payouts
--------------------------------- ---------- -----------
(a) (b) (c) (d) (e) (f) (g)
Restricted Securities
Name and Other Annual Stock Underlying
Principal Position Year Salary Bonus Compensation Awards ($) Options/SARs(#)
- ------------------ ---- ------ ----- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Dominic A. Polimeni 1997 $100,000 -- -- -- --
Chairman, President and 1996 $100,000 -- -- -- --
Chief Executive Officer 1995 $ 75,000 -- -- -- --
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
(h) (i)
Name and LTIP All other
Principal Position Payouts Compensation
- ------------------ ------- ------------
<S> <C> <C>
Dominic A. Polimeni -- --
Chairman, President and -- --
Chief Executive Officer -- --
</TABLE>
OPTION/SAR GRANTS
There were no grants during 1997 of stock options or stock
appreciation rights ("SARs") to Mr. Polimeni. For information relating to
warrants and rights granted to Gulfstream, a company owned by Dominic A.
Polimeni and Joan R. Gubitosi, see "Voting Securities and Securities Ownership"
and footnotes thereto.
OPTION/SAR EXERCISES
There were no exercises of options during 1997.
EMPLOYMENT AGREEMENT
Dominic A. Polimeni has an employment agreement with Quest Electronic
Hardware, Inc., a subsidiary of the Company. This agreement, which expires on
March 31, 2000, provides for a base salary of $100,000 per annum and requires
Mr. Polimeni to devote such portion of his business time and energies to the
business and affairs of the Company as is needed to perform his duties under
the agreement. See also "Related Party Transactions" with respect to a
Management Advisory and Consulting Agreement between the Company and
Gulfstream, a company owned by Mr. Polimeni and Joan R. Gubitosi.
COMPENSATION OF DIRECTORS
Other than stock options as described below, the Company does not have
a policy regarding compensation of members of the Board of Directors. Other
than grants of options to non-employee Directors described below, the members
of the Board of Directors did not receive compensation for their services as
such during the year ended December 31, 1997.
<PAGE>
THE 1994 DIRECTOR NON-QUALIFIED STOCK OPTION PLAN
On January 26, 1994, the Board of Directors adopted, and the
shareholders subsequently approved, the above captioned Plan (the "1994 Plan")
and, in February 1996, changed the annual date of the grant of options
thereunder to the first Wednesday of each February. If Proposal No. 3 is
adopted by the shareholders, pursuant to the terms of the 1994 Plan, options
for an aggregate of 150,000 shares of the Company's Common Stock may be granted
to eligible non-employee Directors.
All non-employee Directors are presently entitled to receive an option
to purchase 1,500 shares of Common Stock of the Company on the first Wednesday
of February in each calendar year at an exercise price equal to the fair market
value per share of the Common Stock on that date. Such options shall be
exercisable immediately for a period of 10 years from date of grant unless
terminated earlier pursuant to the terms of the 1994 Plan. If Proposal No. 3 is
adopted by the shareholders, options for an aggregate of 5,000 shares of Common
Stock will be granted annually to eligible non-employee Directors under the
1994 Plan.
Under the 1994 Plan, 39,000 options have been granted to date at
exercise prices ranging from $3.875 to $24.08 per share. (All numbers have been
adjusted to reflect a one-for-ten reverse split of the issued and outstanding
Common Stock which was approved by the shareholders at the 1996 Annual Meeting
and became effective on January 2, 1997.)
THE 1996 STOCK OPTION PLAN
At the 1996 Annual Meeting of Shareholders, the shareholders approved
the 1996 Stock Option Plan (the "1996 Plan") pursuant to which officers,
directors and employees of the Company and its Affiliates are eligible to be
granted stock option awards. The 1996 Plan is currently being administered by
the Board of Directors which has the authority to grant awards including Stock
Options, Stock Appreciation Rights, Restricted Stock, or any combination of the
foregoing, and to determine the terms and conditions of the Awards.
Such options shall be exercisable immediately for a period of 10 years
from date of grant unless terminated earlier pursuant to the terms of the 1996
Plan.
The total number of shares of Common Stock presently reserved for such
Awards and available for distribution under the 1996 Plan is 250,000. Under the
1996 Plan, 159,450 options have been granted to date at exercise prices ranging
from $6.00 to $6.625 per share. If Proposal No.2 is adopted by the
shareholders, the total number of shares of Common Stock available for
distribution as Awards under the 1996 Plan will be 500,000.
RELATED PARTY TRANSACTIONS
In 1995, the Company acquired from Gulfstream Financial Group, Inc.
("Gulfstream"), a Florida corporation owned by Dominic A. Polimeni, the
Chairman, President and Chief Executive Officer of The Company, and Chairman
and Chief Executive Officer of Gulfstream, and Joan R. Gubitosi, and from
Phillip D. Schwiebert all of the outstanding capital stock of Quest Electronic
Hardware, Inc. ("Quest"). In connection with the acquisition, the Company
entered into a Management Advisory and Consulting Agreement with Gulfstream
whereby Gulfstream acts as an advisor and consultant to the Company and is paid
a fee of $150,000 per year. This agreement expires on March 31, 2000 and can be
terminated by either party on 90 days notice. In addition, upon the attainment
of certain earnings targets for the Company, Gulfstream will be entitled to
receive options to acquire additional shares of Common Stock of the Company at
an exercise price equal to the fair market value at the date of grant. See
"Voting Securities and Securities Ownership - Security Ownership of Management
and Principal Shareholders," note 4.
<PAGE>
Gould & Wilkie, the law firm to which Mr. London, a director of the
Company, is counsel, provided legal services to the Company during the year
ended December 31, 1997. It is expected that such firm will continue to provide
legal services to the Company in the future.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership of equity securities of the Company with the Securities and Exchange
Commission. Officers, directors and such shareholders are required by SEC
regulations to furnish the Company with copies of all such reports that they
file.
Based solely on a review of such reports and amendments thereto
furnished to the Company, and written representations from certain reporting
persons that such persons have filed on a timely basis all reports required by
Section 16(a), the Company believes that, during the fiscal year ended December
31, 1997, all such reports were filed on a timely basis except for a Form 5
filed by Mr. McSherry, a Form 5 filed by Mr. Adler, and except for reports by
Gulfstream and Mr. Schweibert with respect to options granted to them which
were reported on a Form 5 rather than on Forms 4.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Moore Stephens, P.C. as
independent public accountants of the Company for the fiscal year ending
December 31, 1998. The Board of Directors is submitting the appointment of
Moore Stephens, P.C. for ratification at the Annual Meeting. Moore Stephens,
P.C. audited the Company's financial statements for the fiscal years ended
December 31, 1997, 1996, 1995 and 1994, and the Board believes that this firm
has demonstrated that it is well qualified to make an independent examination
of the accounts of the Company. If the appointment is not approved, the Board
will consider the appointment of other independent auditors. Representatives of
Moore Stephens, P.C. will be present at the meeting, and will have the
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.
Ratification of the appointment of auditors requires the affirmative
vote of a majority of the votes represented at the meeting in person or by
proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOREGOING RATIFICATION.
<PAGE>
OTHER BUSINESS
It is not expected that any business other than that set forth in the
Notice of Annual Meeting of Shareholders will be brought before the Meeting.
However, if any other business should properly come before the Meeting, it is
the intention of the persons named on the enclosed proxy card to vote the
signed proxies received by them in accordance with their best judgment on such
business and any matters dealing with the conduct of the Meeting.
1999 SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Company's Proxy Statement for the
1999 Annual Meeting of Shareholders, expected to be held on or about May 20,
1999, shareholder proposals must be received by the Company at its principal
executive office, Questron Technology, Inc., 6400 Congress Avenue, Suite 200A,
Boca Raton, FL 33487, on or before January 19, 1999.
ANNUAL REPORT
The Securities and Exchange Commission rules require that an annual
report precede or accompany proxy material. Copies of the Company's Annual
Report for the fiscal year ended December 31, 1997 accompany this proxy
statement. More than one annual report need not be sent to the same address, if
the recipient agrees. If more than one annual report is being sent to your
address, mailing of the duplicate copy to the account you select will be
discontinued upon your request.
By Order of the Board of Directors,
Milton M. Adler
Secretary
Date: May 5, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE FILL IN, SIGN
AND DATE THE PROXY SUBMITTED HEREWITH AND RETURN IT IN THE ENCLOSED STAMPED
ENVELOPE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH
PROXY IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE ANNUAL MEETING. THE
ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS.
<PAGE>
APPENDIX A
PROPOSAL NO. 1
The Certificate of Incorporation is proposed to be amended by
deleting paragraph 3(a) to the Certificate of Designation of
the Board of Directors, dated February 3, 1997, which is part
of the Certificate of Incorporation, and substituting the
following:
Each share of the Series B Preferred Stock shall
automatically convert, on a date determined by the
Board of Directors, which date shall not be later
than March 4, 1999 (the "Conversion Date"), without
any action on the part of the holder thereof or the
Corporation, into 1.4375 shares of Common Stock.
Holders of the Series B Preferred Stock will be
entitled, when and as declared by the Board of
Directors, to receive an annual dividend per share
equal to $0.115 per share. Such dividends shall
accrue from March 4, 1997 and shall be payable on
March 4, 1998 and on the Conversion Date (payable
with respect to a full year), in cash or shares of
Common Stock at the option of the Corporation. The
aforementioned dividends shall be cumulative and no
dividends shall be paid or set apart in respect of
the Common Stock or any other class of securities
which ranks junior to the Series B Preferred Stock
unless and until all accrued and unpaid dividends
upon such Series B Preferred Stock have been paid or
set apart in full. No interest shall accrue with
respect to dividends in arrears.
<PAGE>
APPENDIX B
PROPOSAL NO. 2
The 1996 Stock Option Plan is proposed to be amended by deleting the
first paragraph of Section 4, and substituting the following:
The total number of shares of Stock reserved and available for
distribution pursuant to Awards under the Plan shall be
500,000 shares of Common Stock. Such shares may consist, in
whole or in part, of unauthorized and unissued shares or
treasury shares.
<PAGE>
APPENDIX C
PROPOSAL NO. 3
The 1994 Director Non-Qualified Stock Option Plan is proposed to be
amended by deleting Section 2.4 and Section 3.1 and substituting the
following Sections 2.4 and 3.1 in their place, and further amended by
adding a new Section 2.5 to read as follows:
Section 2.4 Non-Employee Directors shall participate
in the Plan to the extent that they shall be granted options
on a non-discretionary basis in accordance with the following
formula. On the first Wednesday in February of each calendar
year, each member of the Company's Board of Directors then in
such office shall receive an option to purchase 5,000 shares
of the Company's common stock at an exercise price equal to
the fair market value per share of such Common Stock on that
date. Each such option shall be exercisable immediately and
for ten years from the date of grant unless sooner terminated
under the terms of this Plan. Each such option shall be
subject to the restrictions upon transfer, limitations on
exercise, and restrictions upon transfer of the Common Stock
to be issued upon exercise of the option, as are set forth
elsewhere herein or as are imposed by applicable law,
including without limitation applicable federal and state
securities laws. This Section 2.4 shall not be amended more
than one time in any consecutive six (6) month period, other
than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the regulations
thereunder.
Section 2.5 The Board of Directors or Committee
administering this Plan in accordance with the terms hereof
may, from time to time, grant to Non-Employee Directors
additional options on the terms and conditions of this Plan.
Section 3.1 Options for an aggregate of 150,000
shares of common stock ($.001 par value) of the Company
(subject to adjustment as provided in article VIII hereof)
may be granted under the Plan. The shares sold under the Plan
may be either issued shares that have been reacquired by the
Company at any time or authorized but unissued shares, as the
Board may from time to time determine.
It is proposed that the following resolution be adopted by the
shareholders:
RESOLVED, that the grant on September 22, 1997 to
Non-Employee Directors of options to purchase a total of
20,000 shares of the common stock of the Company at an
exercise price of $6.625 per share pursuant to the 1994
Director Non-Qualified Stock Option Plan, as amended, is
hereby ratified and approved.
<PAGE>
QUESTRON TECHNOLOGY, INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Milton M. Adler and Dominic A. Polimeni as
Proxies, each with the full power of substitution, and hereby authorizes each
of them to represent and vote, as designated on the reverse hereof, all shares
of Common Stock of Questron Technology, Inc. (the "Company") held of record by
the undersigned on April 14, 1998 at the Annual Meeting of Stockholders to be
held on June 11, 1998, or at any adjournment thereof, upon all such matters as
may properly come before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE
VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED "FOR"
THE ELECTION OF EACH OF THE NOMINATED DIRECTORS, "FOR" THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION, "FOR" THE AMENDMENT TO THE 1996 PLAN, "FOR" THE
AMENDMENTS TO AND RATIFICATION CONCERNING THE 1994 PLAN AND "FOR" THE
RATIFICATION OF THE APPOINTMENT OF AUDITORS. STOCKHOLDERS ARE URGED TO DATE,
MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
(THE PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE.)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES.
1. ELECTION OF DIRECTORS
Dominic A. Polimeni, Milton M. Adler, Robert V. Gubitosi, Frederick W. London,
William J. McSherry, Jr.
<TABLE>
<CAPTION>
<S> <C> <C>
FOR all nominees listed above WITHHOLD AUTHORITY INSTRUCTION to withhold authority to vote
(except as marked to the contrary to vote for all nominees listed for any individual nominee. Write that
to the right) above name in the space provided below.
</TABLE>
2. Proposal to amend the Certificate of Incorporation as described in the
proxy statement dated May 5, 1998.
FOR ________ AGAINST ________ ABSTAIN ________
(THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL. )
3. Proposal to amend the 1996 Plan as described in the proxy statement dated
May 5, 1998.
FOR ________ AGAINST ________ ABSTAIN ________ (THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" APPROVAL.)
4. Proposal to amend the 1994 Plan and ratification of options granted as
described in the proxy statement dated May 5, 1998.
FOR ________ AGAINST ________ ABSTAIN ________ (THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" APPROVAL.)
5. Ratification of appointment of Moore Stephens, P.C. as the Company's
independent public accountants for the fiscal year ending December 31,
1998.
FOR ________ AGAINST ________ ABSTAIN ________ (THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" APPROVAL.)
6. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment
thereof.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted "FOR" the nominees listed.
NOTE: Please sign exactly as name or names appears on stock certificate. Each
joint owner must sign. When signing as an attorney, executor, administrator or
guardian, please give full title as such.
Dated: ___________________________________________1998
- -------------------------------------------------------------------------------
Signature
- -------------------------------------------------------------------------------
Signature if held jointly
Please mark, sign and return this Proxy promptly using the enclosed envelope.
