SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 24, 1998
-------------------------
- --------------------------------------------------------------------------------
QUESTRON TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-13324 23-2257354
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission IRS Employer
of incorporation) File Number) Identification No.)
6400 Congress Avenue, Suite 200A, Boca Raton, Florida 33487
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 241-5251
---------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
761497.4
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On September 24, 1998, Questron Technology, Inc. (the "Company")
completed the acquisitions of Fas-Tronics, Inc., a Texas corporation
("Fas-Tronics"), and Fortune Industries, Inc., a Texas corporation ("Fortune").
Fas-Tronics is a value-added distributor of fasteners and other components
principally to the commercial aerospace industry. Fortune is a value-added
distributor of fasteners and other components principally to aerospace defense
contractors. Fas-Tronics and Fortune had revenues of $9 million and $13 million,
respectively, for the year ended December 31, 1997. Both of Fas-Tronics and
Fortune will operate as a wholly-owned subsidiary of the Company.
In connection with the acquisition of Fas-Tronics, the Company
paid an aggregate purchase price of approximately $9,700,000, consisting of
approximately $7,200,000 in cash, and the issuance of 421,941 shares of common
stock of the Company, valued at $2,500,000, subject to adjustment (the "Fas-
Tronics Consideration"). The Fas-Tronics Consideration is subject to further
adjustment based upon certain operating performance targets for the twelve month
period ending June 30, 1999.
In connection with the acquisition of Fortune, the Company paid a
total of approximately $13,100,000, consisting of $10,000,000 in cash and the
issuance of 518,102 shares of common stock of the Company, valued at $3,100,000,
subject to adjustment (the "Fortune Consideration"). The Fortune Consideration
is subject to further adjustment based upon certain operating performance
targets for the year ended December 31, 1998.
In connection with the closing of each of the Fas-Tronics and
Fortune transactions, the Company and each of its subsidiaries entered into a
new senior, secured credit facility of up to $45,000,000 with several lenders,
including Madeleine L.L.C., as collateral agent (an affiliate of ABLECO Finance,
L.L.C. and Cerberus Capital Management, L.P.), and Congress Financial
Corporation (Florida) (an affiliate of First Union Company), as administrative
agent. The total credit facility consists of a $25,000,000 five-year term loan,
a $5,000,000 five-year term loan and a $15 million revolving credit facility. A
portion of the funds from the credit facility was used to finance each of the
Fas-Tronics and the Fortune acquisitions.
Item 4. Changes In Registrant's Certifying Accountant.
(a) As of October 7, 1998, Moore Stephens, P.C. ("Moore
Stephens") was terminated as the Company's independent accountant. The Company's
new independent accountant is Ernst & Young LLP. The decision to change
independent accountants was approved by the Board of Directors on October 7,
1998.
Moore Stephens' report on the Company's financial statements for
each of the two most recent fiscal years did not contain an adverse opinion or a
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles. During the two most recent fiscal years
preceding Moore Stephens' termination, there were no disagreements with Moore
Stephens on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which would have caused it
to make a reference to the subject matter of the disagreement in connection with
its report. Furthermore, there were no reportable events during the two most
recent fiscal years preceding Moore Stephens' termination arising from Moore
Stephens having advised the Company (a) that the
761497.4
<PAGE>
internal controls necessary for the Company to develop reliable financial
statements do not exist; (b) that information has come to its attention that has
led it to no longer be able to rely on management's representations or that has
made it unwilling to be associated with financial statements prepared by
management; (c)(1) of the need to expand significantly the scope of its audit or
that information has come to its attention that if further investigated may
either (i) materially impact the fairness or reliability of a previously issued
audit report or underlying financial statements or the financial statements
issued or to be issued covering the fiscal period subsequent to the date of the
most recent financial statements covered by an audit report or (ii) cause it to
be unwilling to rely on management's representations or be associated with the
Company's financial statements and (2) due to Moore Stephens' termination, it
did not so expand the scope of its audit or conduct such further investigation;
and (d)(1) information has come to its attention that it has concluded
materially impacts the fairness or reliability of either (i) a previously issued
audit report or the underlying financial statements, or (ii) the financial
statements issued or to be issued covering the fiscal periods subsequent to the
date of the most recent financial statements covered by an audit report
(including information that, unless resolved to its satisfaction, would prevent
it from rendering an unqualified audit report on those financial statements) and
(2) due to Moore Stephens' termination, the issue has not been resolved to its
satisfaction prior to its termination.
(b) Ernst & Young LLP has been appointed by the Board of
Directors as the new independent accountant to the Company effective October 7,
1998. During the Company's two most recent fiscal years and the subsequent
interim period prior to Moore Stephens' termination, the Company did not consult
with Ernst & Young LLP regarding the application of accounting principles to a
specified transaction or the type of audit opinion that might be rendered on the
Company's financial statements.
(c) During the interim period from the date of the Company's last
audited financial statements to the date hereof, there were no procedures
performed by Moore Stephens and the Company is not aware of any disagreements
with Moore Stephens on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure.
Item 7. Financial Statements and Exhibits.
(a). and (b). The financial statements and pro-forma financial
information, required as part of this Current Report on Form 8-K will be filed
not later than 60 days from the date of this report as an amendment to this
report.
(c). Exhibits required by Item 601 of Regulation S-B.
See Exhibit Index immediately following the signature page below.
761497.4
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
QUESTRON TECHNOLOGY, INC.
Date: October 8, 1998 By: /s/ Dominic A. Polimeni
-------------------------------
Dominic A. Polimeni
Chairman, President and Chief
Executive Officer
761497.4
-3-
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
2.1 Stock Purchase Agreement between Questron Technology, Inc.,
Gregory Fitzgerald, Valerie Fitzgerald and Fas-Tronics, Inc.,
dated as of June 12, 1998, incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
three-month period ended June 30, 1998 filed with the Securities
and Exchange Commission on August 14, 1998 (File No. 013324).
2.2 Stock Purchase Agreement between Questron Technology, Inc.,
Fortune Industries, Inc. and the Stockholders of Fortune
Industries, Inc. listed therein, dated as of June 12, 1998,
incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the three month period ended
June 30, 1998 filed with the Securities and Exchange Commission
on August 14, 1998 (File No. 013324).
2.3 Letter Agreement, dated July 29, 1998, by and between the
Company, Gregory Fitzgerald, Valerie Fitzgerald and Fas-Tronics,
Inc. incorporated by reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the three month period ended
June 30, 1998 filed with the Securities and Exchange Commission
on August 14, 1998 (File No. 013324).
2.4 Letter Agreement, dated July 29, 1998, by and between the
Company, Fortune Industries, Inc. and the stockholders listed on
Schedule 1.1 thereto, incorporated by reference to Exhibit 10.3
to the Company's Quarterly Report on Form 10-Q for the three
month period ended June 30, 1998 filed with the Securities and
Exchange Commission on August 14, 1998 (File No. 013324).
2.5 Amendment to the Fas-Tronics Stock Purchase Agreement
2.6 Amendment to the Fortune Stock Purchase Agreement
4.1 Registration Rights Agreement, dated as of September 24, 1998, by
and between Questron Technology, Inc. and the persons listed on
Schedule A thereto.
16.1 Letter from Moore Stephens, P.C., dated October 8, 1998.
761497.4
-4-
<PAGE>
AMENDMENT TO
STOCK PURCHASE AGREEMENT
Amendment to Stock Purchase Agreement (this "Amendment") dated as of
September 18, 1998, by and between Questron Technology, Inc., a Delaware
corporation ("Questron"), Fas-Tronics, Inc., a Texas corporation
("Fas-Tronics"), Gregory Fitzgerald and Valerie Fitzgerald amending the Stock
Purchase Agreement, dated as of June 12, 1998, and first amended on July 29,
1998 (the "First Amendment"), by and among Questron, Fas- Tronics, Gregory
Fitzgerald and Valerie Fitzgerald (the "Agreement").
RECITALS
WHEREAS, the parties have entered into the Agreement and the First
Amendment (the Agreement and the First Amendment, collectively, the "Stock
Purchase Agreement");
WHEREAS, the parties hereto desire to amend the Stock Purchase
Agreement in certain respects as set forth in this Amendment; and
WHEREAS, unless otherwise defined herein, capitalized terms shall have
the same meanings herein as in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree to amend the Stock Purchase Agreement as
follows:
1. The first sentence of Section 1.2 is hereby amended and restated in
its entirety to read as follows:
"Purchase Price Consideration and Payment for Shares. Questron shall
acquire 100% of the issued and outstanding stock of the Company for a total
purchase price up to $13,500,000, which will consist of the Initial Purchase
Price, and the 1999 Deferred Purchase Price, in each case, as defined below."
2. Section 1.2 (a) of the Stock Purchase Agreement is hereby amended
and restated in its entirety to read as follows:
"The "Initial Purchase Price" will equal $9,500,000 payable as
follows: (i) wire transfers (or certified checks) in an aggregate amount equal
to $7,000,000 (x) less the assumption of the net debt as of June 30, 1998
(stated debt net of cash and cash equivalents of the Company reflected on
Schedule 1.2(a) ("Net Debt")) (y) less any distributions made by the
757277.3
<PAGE>
Company to its shareholders from April 1, 1998 to the Closing Date (as
hereinafter defined) in excess of $100,000 and (z) plus interest on $7,000,000
less the Net Debt at an interest rate of 9.5% per annum from April 1, 1998 to
the Closing Date (said amount being hereinafter referred to as the "Initial Cash
Consideration"); and (ii) delivery of 421,941 shares of Questron's common stock,
par value $0.001 per share (the "Questron Common Stock"), which, based on an
assumed price per share of $5.925, has a value equal to $2,500,000 (the "Initial
Questron Common Stock"). On the one year anniversary of the Closing Date,
Questron shall calculate the price (the "Anniversary Date Price") of the
Questron Common Stock based on the average last reported sale price for the
Questron Common Stock for the five (5) trading days ending on the third trading
day immediately prior to the one year anniversary of the Closing Date. If the
Anniversary Date Price is $4.50 or less, Questron shall deliver to the Sellers
133,615 shares of Questron Common Stock. If the Anniversary Date Price is
greater than $4.50 and less than $5.925, Questron shall deliver to the Sellers
the number of shares of Questron Common Stock equal to the difference between
(i) the number of shares of Questron Common Stock having a value of $2,500,000
calculated on the basis of the Anniversary Date Price, and (ii) the Initial
Questron Common Stock, up to a maximum of 133,615 shares of Questron Common
Stock. If the Anniversary Date Price is $5.925 or greater, no additional shares
will be issued. Any shares of Questron Common Stock issued on the one year
anniversary of the Closing Date pursuant to this Section 1.2(a) are referred to
herein as "Additional Questron Common Stock".
3. The first and second sentences of Section 1.2(b) of the Stock
Purchase Agreement is hereby amended and restated in its entirety to read as
follows:
"The "1999 Deferred Purchase Price" will be an amount, subject to the
limitations set forth below, equal to five (5) times the difference between EBIT
(as defined below) for the Company for the twelve month period ending June 30,
1999 and $1,700,000, provided that the maximum amount payable to Sellers
pursuant to this Section 1.2(b) (as adjusted for the items set forth in Schedule
1.2(b) and in accordance with Section 1.2(c) below) shall in no event exceed
$4,000,000 in the aggregate. The 1999 Deferred Purchase Price shall be payable
as follows: (i) delivery by wire transfers (or certified checks) of an aggregate
amount equal to 80% of the 1999 Deferred Purchase Price up to a maximum of
$3,200,000 (the "1999 Deferred Cash Consideration"); and (ii) delivery of shares
of Questron Common Stock (the "Deferred Questron Common Stock"), the value of
which shall equal 20% of the 1999 Deferred Purchase Price up to a maximum of
$800,000."
4. The first sentence of Section 1.4(a) of the Stock Purchase
Agreement is hereby amended and restated in its entirety to read as follows:
"Subject to the terms and conditions of Section 1.2(b) above, on or
before April 10, 1999, Questron will deliver to Sellers 50% of the estimated
1999 Deferred Cash Consideration (the "Prepaid 1999 Deferred Cash
Consideration") which shall be based on EBIT for the Company for the nine month
period ending March 31, 1999."
757277.3
-2-
<PAGE>
5. The first sentence of Section 1.4(b) of the Stock Purchase
Agreement is hereby amended and restated in its entirety to read as follows:
"Subject to the terms and conditions of Section 1.2(b) above, on or
before September 30, 1999, Questron will deliver to Sellers the following:"
6. Section 4.7 of the Stock Purchase Agreement is hereby amended and
restated in its entirety to read as follows:
"Questron Common Stock. All shares of Questron Common Stock delivered
to Sellers pursuant to this Agreement (which shall include all shares of Initial
Questron Common Stock, Deferred Questron Common Stock, Additional Questron
Common Stock and all shares of Questron Common Stock purchased upon exercise of
the Options), when issued as contemplated hereby, will be duly authorized, fully
paid and non-assessable."
7. Except to the extent each is expressly amended by the terms of this
Amendment, all terms and conditions of the Stock Purchase Agreement and all
other instruments and agreements executed thereunder or in connection therewith
shall remain in full force and effect in accordance with their terms. This
Amendment may be amended, supplemented or otherwise modified only by written
instrument executed by the parties hereto.
8. This Amendment may be executed in any number of counterparts, and
by the different parties hereto on separate counterparts, each of which shall
constitute one and the same agreement, fully effective upon the execution of at
least one counterpart by each party regardless of whether or not the execution
by all parties shall appear on any single counterpart.
9. This Amendment shall become effective on September 18, 1998
757277.3
-3-
<PAGE>
IN WITNESS WHEREOF, Questron, Fas-Tronics, Gregory Fitzgerald and
Valerie Fitzgerald have caused this Amendment to be signed as of the day and
year first above written.
QUESTRON TECHNOLOGY, INC. FAS-TRONICS, INC.
By: By:
Name: Name:
Title: Title:
------------------------------
VALERIE FITZGERALD
------------------------------
GREGORY FITZGERALD
757277.3
-4-
<PAGE>
Schedule 1.2(a)
Fas-Tronics, Inc.
Computation of Net Debt
At December 31, 1997
* This schedule will be revised to reflect the Net Debt at
March 31, 1998 as agreed to by the parties
<TABLE>
<CAPTION>
Amount at Amount at
December 31, 1997 June 30, 1998
----------------- -------------
<S> <C> <C>
Cash $218,623 ($270,979)
----------- ---------------
Current Debt:
Bank Mortgage - Landmark Bank 22,906 24,994
Note Payable - V. Fitzgerald 404,673 404,673
Loan Payable - Landmark Bank 79,600 83,652
Finance Company Motor Vehicle 7,833 8,130
Designation
Prior Shareholders N.L.B. Hutchins 170,867 179,613
Capital Lease Obligations 7,237 7,664
-------------- --------------
693,116 708,726
------------- --------------
Long-Term Debt:
Bank Mortgage - Landmark Bank 599,650 586,077
Loan Payable - Landmark Bank 129,182 93,004
Finance Company Motor Vehicle 6,243 2,130
Designation
Prior Shareholders N.L.B. Hutchins 282,862 200,208
Capital Lease Obligations 23,007 19,066
---------------- --------------
1,040,944 900,485
Less Capital Lease Obligations To Be
Retained by the Company (30,244) (26,730)
-------------- --------------
Net Debt $1,485,193 $1,311,502
============== =============
</TABLE>
758630.1
AMENDMENT TO
STOCK PURCHASE AGREEMENT
Amendment to Stock Purchase Agreement (this "Amendment") dated
as of September 24, 1998, by and between Questron Technology, Inc., a Delaware
corporation ("Questron"), Fortune Industries, Inc., a Texas corporation
("Fortune") and the stockholders of Fortune listed on the signature pages hereto
amending the Stock Purchase Agreement, dated as of June 12, 1998, and first
amended on July 29, 1998 (the "First Amendment"), by and among Questron, Fortune
and the stockholders of Fortune listed on Schedule 1.1 thereto (the
"Agreement").
RECITALS
WHEREAS, the parties have entered into the Agreement and the
First Amendment (the Agreement and the First Amendment, collectively, the "Stock
Purchase Agreement");
WHEREAS, the parties hereto desire to amend the Stock Purchase
Agreement in certain respects as set forth in this Amendment; and
WHEREAS, unless otherwise defined herein, capitalized terms
shall have the same meanings herein as in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree to amend the Stock Purchase
Agreement as follows:
1. Section 1.2 (a) of the Stock Purchase Agreement is hereby
amended and restated in its entirety to read as follows:
The "Initial Purchase Price" will equal $13,014,174 payable as
follows: (i) wire transfers (or certified checks) in an aggregate amount equal
to $9,944,419 (which includes an adjustment of $523,614 for the Company's net
profit as of March 31, 1998) plus the Initial Purchase Price Adjustment (as
defined below) (said amount being hereinafter referred to as the "Initial Cash
Consideration"); and (ii) delivery of 518,102 shares of Questron's common stock,
par value $0.001 per share (the "Questron Common Stock"), which, based on an
assumed price per share of $5.925, has a value equal to $3,069,754 (the "Initial
Questron Common Stock"). The "Initial Purchase Price Adjustment" shall equal
ninety percent (90%) of the Company's income before taxes (as determined in
accordance with generally accepted accounting principles, consistently applied
to the Company prior to Closing ("GAAP")) for the period from April 1, 1998
through the last day of the full calendar month preceding the
757678.2
-1-
<PAGE>
Closing (as hereinafter defined) (the "Adjustment Period") less (i) all
distributions declared and paid by the Company to any of its stockholders during
such period, and (ii) as set forth on Schedule 1.2(a)(i), accruals for the
employee bonuses to certain of the Company's employees and accruals for certain
other expenses to be paid by the Company. On the one year anniversary of the
Closing Date, Questron shall calculate the price (the "Anniversary Date Price")
of the Questron Common Stock based on the average last reported sale price for
the Questron Common Stock for the five (5) trading days ending on the third
trading day immediately prior to the one year anniversary of the Closing Date.
If the Anniversary Date Price is $4.50 or less, Questron shall deliver to the
Sellers 164,065 shares of Questron Common Stock. If the Anniversary Date Price
is greater than $4.50 and less than $5.925, Questron shall deliver to the
Sellers the number of shares of Questron Common Stock equal to the difference
between (i) the number of shares of Questron Common Stock having a value of
$3,069,754 calculated on the basis of the Anniversary Date Price, and (ii) the
Initial Questron Common Stock, up to a maximum of 164,065 shares of Questron
Common Stock. If the Anniversary Date Price is $5.925 or greater, no additional
shares will be issued. Any shares of Questron Common Stock issued on the one
year anniversary of the Closing Date pursuant to this Section 1.2(a) are
referred to herein as "Additional Questron Common Stock". The shares of
Additional Questron Common Stock shall be allocated among the Accredited
Investor Sellers in the same proportion as the shares of Initial Questron Common
Stock are allocated among the Accredited Investor Sellers. The Initial Cash
Consideration and the Initial Questron Common Stock shall be allocated among the
Sellers as provided on Schedule 1.2(a)(ii). Only the Sellers who are identified
on Schedule 1.2(a)(ii) as accredited investors (the "Accredited Investor
Sellers") shall receive shares of the Initial Questron Common Stock and
Additional Questron Common Stock."
2. Schedule 1.2(a)(ii) is amended and restated in its entirety
as set forth on Exhibit A hereto.
3. Except to the extent each is expressly amended by the terms
of this Amendment, all terms and conditions of the Stock Purchase Agreement and
all other instruments and agreements executed thereunder or in connection
therewith shall remain in full force and effect in accordance with their terms.
This Amendment may be amended, supplemented or otherwise modified only by
written instrument executed by the parties hereto.
4. This Amendment may be executed in any number of
counterparts, and by the different parties hereto on separate counterparts, each
of which shall constitute one and the same agreement, fully effective upon the
execution of at least one counterpart by each party regardless of whether or not
the execution by all parties shall appear on any single counterpart.
5. This Amendment shall become effective on September __, 1998
757678.2
-2-
<PAGE>
IN WITNESS WHEREOF, Questron, Fortune and the stockholder of
Fortune have caused this Amendment to be signed as of the day and year first
above written.
QUESTRON TECHNOLOGY, INC. FORTUNE INDUSTRIES, INC.
By: By:
Name: Name:
Title: Title:
------------------------------
RICHARD E. HIX
------------------------------
KYLE G. CROWLEY
------------------------------
RICHARD E. BURKHARDT
------------------------------
KENDALL P. CRAIG
------------------------------
DOC. H. LANKFORD
------------------------------
CHARLES E. GRALAPP
------------------------------
GARY W. DRECHSEL
757678.2
-3-
<PAGE>
------------------------------
MALCOLM TALLMON
------------------------------
FLOYD MCLERRAN
------------------------------
DEBORAH A. ALVIS
------------------------------
ROBERT JOHNSON, JR.
------------------------------
BARBARA J. WINDHAM
757678.2
-4-
<PAGE>
Fortune Industries, Inc.
EXHIBIT A
Schedule 1.2(a)(ii)
Initial Purchase Price
<TABLE>
<CAPTION>
Investor
Shareholders % Status* Cash Shares
- ------------------------------ -------------- --------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Crowley 2.4153 A $235,834 13,249
Burchardt 6.4926 A 633,949 35,613
Craig 1.0388 A 101,430 5,698
Lankford 4.9344 A 481,803 27,066
Gralapp 1.9218 250,109
Tallmon 79.573 A 7,769,646 436,476
Drechel 0.7661 99,702
McLerran 0.7531 98,010
Windham 0.4415 57,458
Hix 1.0129 131,821
Alvis 0.5012 65,227
Johnson 0.1493 19,430
-------------------- ------------------
$9,944,419 518,102
==================== ==================
</TABLE>
- ---------------------
* A means that such Seller is an accredited investor as such term is
defined in Regulation D under the Act.
758637.1
2
Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of September __,
1998, by and between Questron Technology, Inc., a Delaware corporation (the
"Company"), and the persons listed on Schedule A hereto (each a "Seller" and
collectively, the "Sellers").
PRELIMINARY STATEMENT
---------------------
WHEREAS, the Company, Sellers and Fortune Industries, Inc., a Texas
corporation ("Fortune"), have entered into a Stock Purchase Agreement, dated as
of June 12, 1998 and amended as of July 29, 1998, (the "Stock Purchase
Agreement"), pursuant to which Sellers are selling to the Company, and the
Company is purchasing from Sellers, all of the issued and outstanding shares of
capital stock of Fortune (the "Fortune Shares");
WHEREAS, as consideration for the Sellers' sale of the Fortune Shares to
the Company, the Company shall issue to the Sellers the Initial Questron Common
Stock and the Deferred Questron Common Stock (as such terms are defined in the
Stock Purchase Agreement), which consist of shares of Questron's common stock,
par value $.001 per share (the "Common Stock");
WHEREAS, Sellers are requiring the Company to enter into this Agreement in
connection with the Stock Purchase Agreement and as a condition to the purchase
of the Fortune Shares by the Company;
NOW THEREFORE, in consideration of these premises, and the respective
promises and covenants contained herein, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1 Certain Definitions. Any capitalized terms not otherwise
defined herein shall have the meaning given such terms in the Stock Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"Act" means the United States Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under the Act, as they each may, from time to time, be in effect.
"Commission" means the United States Securities and Exchange Commission,
or any other Federal agency at the time administering the Act.
721783.3
<PAGE>
"Common Stock" means the shares of common stock, par value $0.001 per
share, of the Company.
"Convertible Securities" means any option, warrant, share of capital stock
or securities of the Company which is convertible into or exchangeable for
Common Stock.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under the Exchange Act, as they each may, from time to time,
be in effect.
"Holders" means each Seller, and any assignee who becomes a party to this
Agreement as provided in Section 2.9, in each case in its capacity as a holder
of Registrable Securities. For purposes of this Agreement, the Company may deem
and treat the registered holder of a Registrable Security as the Holder and
absolute owner thereof, and the Company shall not be affected by any notice to
the contrary.
"Indemnified Party" has the meaning described in Section 2.4(c) below.
"Indemnifying Party" has the meaning described in Section 2.4(c) below.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of its Common Stock
or Convertible Securities (other than a registration statement on Form S-8 or
Form S-4, or their successors, or any other form for a limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another entity).
"Registration Expenses" means all expenses incurred by the Company in
complying with Section 2.1, including, without limitation, all registration and
filing fees, exchange listing fees, printing expenses, fees and disbursements of
counsel for the Company, state Blue Sky fees and expenses, and the expense of
any special audits incident to or required by any such registration, but
excluding underwriting discounts on the Registrable Securities, selling
commissions on the Registrable Securities, transfer taxes, and the fees and
expenses of any selling Holders', which shall be borne by the participating
Holders in proportion to the number of Registrable Securities offered by each.
"Registrable Securities" means each of the following securities: (i) the
Shares of the Initial Questron Common Stock and the Deferred Questron Common
Stock, and (ii) any other securities issued in exchange for, upon conversion of,
as a dividend on or otherwise in respect of any of such securities. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when (a) a Registration Statement with respect to the sale of such
securities shall have become effective under the Act and such securities shall
have been sold, transferred, disposed of or exchanged in accordance with such
Registration Statement; (b) such securities are eligible for resale pursuant to
Rule 144(k) (or any successor rule or regulation) or in a single transaction
pursuant to Rule 144(e) (or any successor rule or regulation) promulgated under
the Act, (c) such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Act, (d) such securities shall have
ceased to be outstanding or (e) upon any sale, transfer or other disposition in
any manner to a person or entity which, by virtue of Section 2.9 hereof, is not
entitled to the rights provided by this Agreement.
-2-
721783.3
<PAGE>
ARTICLE 2.
REGISTRATION RIGHTS
Section 2.1 Incidental Registration.
-----------------------
(a) Subject to Section 2.1(c) below, whenever the Company proposes to file
a Registration Statement at any time and from time to time hereafter (a
"Registration"), it will, prior to such filing, give written notice to all
Holders of its intention to do so and, upon the written request of a Holder or
Holders given within 20 days after the Company provides such notice (which
request shall state the number of Registrable Securities to be registered and
the intended method of distribution of such Registrable Securities), the Company
shall, subject to Section 2.1(b) below, cause all Registrable Securities which
the Company has been requested by such Holder or Holders to be included in the
Registration Statement; provided that the Company shall have the right to
postpone or withdraw any registration effected pursuant to this Section 2.1
without obligation or liability to any Holder.
(b) In connection with any registration under this Section 2.1 involving
an underwritten offering, the Company shall not be required to include any
Registrable Securities in such Registration Statement unless the Holders thereof
accept the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it. If in the opinion of the managing underwriter
employed by the Company for the distribution of equity securities it shall
determine, in its sole discretion, that the registration of all, or part of, the
Registrable Securities which the Holders have requested to be included would
interfere with the successful marketing of the proposed public offering, then
the Company shall be required to include in the Registration Statement only that
number of Registrable Securities, if any, which the managing underwriter
believes may be sold without interfering with the successful marketing of the
proposed public offering. If the number of Registrable Securities to be included
in the Registration Statement in accordance with the foregoing is less than the
total number of shares which the holders of Registrable Securities have
requested to be included, then the holders of Registrable Securities who have
requested registration and other holders of securities of the Company entitled
to include them in such Registration Statement shall participate in the
underwritten offering pro rata based upon their total ownership of shares of
Common Stock of the Company. If any holder would thus be entitled to include
more shares than such holder requested to be registered, the excess shall be
allocated among other requesting holders pro rata based upon their total
ownership of shares of Common Stock and/or Convertible Securities, as the case
may be, of the Company.
(c) The Company shall not be required to provide and effect more than two
(2) registrations in the aggregate for all Holders pursuant to Section 2.1(a)
above.
Section 2.2 Registration Procedures.
(a) If and whenever the Company is required by the provisions of this
Agreement to effect the registration of any of the Registrable Securities under
the Act, the Company shall:
(i) file with the Commission within 90 days a Registration Statement
with respect to such Registrable Securities and use its best efforts to
cause that Registration Statement to become and remain effective for such
period of time (not exceeding three months) as may be necessary to effect
the sale or other disposition of all Registrable Securities covered by
such Registration
721783.3
-3-
<PAGE>
Statement or until the Registrable Securities covered thereby cease to be
Registrable Securities, whichever is sooner;
(ii) prepare and file with the Commission any amendments and
supplements to the Registration Statement and the prospectus included in
the Registration Statement as may be necessary to keep the Registration
Statement effective for the period described in Section 2.2(a)(i) above;
(iii) furnish to each selling Holder such reasonable numbers of copies
of the prospectus, including a preliminary prospectus, and such other
documents as each selling Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable
Securities owned by such selling Holder; and
(iv) register or qualify the Registrable Securities covered by the
Registration Statement under the securities or Blue Sky laws of such
states (including, but not limited to, the securities laws of the State of
Texas) as the selling Holder shall reasonably request; provided, however,
that (x) the Company shall not for any purpose be required to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not
so qualified or execute a general consent to service of process in any
jurisdiction and (y) if the Company is offering securities for its own
account, it need not register or qualify under the securities or Blue Sky
laws of any jurisdiction in which the managing underwriter has no
intention of offering or selling securities for the account of the Company
(except that the Company will use its best efforts to register or qualify
Registrable Securities in such additional jurisdiction as any Holder may
request subject to the limitation of this clause (iv) and at such Holder's
expense).
(b) Each selling Holder of Registrable Securities agrees that, upon
receipt of any notice from the Company of (i) any request by the Commission for
amendments or supplements to a Registration Statement or related prospectus
covering any of such selling Holder's Registrable Securities, (ii) the issuance
by the Commission of any stop order suspending the effectiveness of a
Registration Statement covering any of such selling Holder's Registrable
Securities or the initiation of any proceedings for that purpose, (iii) the
receipt by the Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (iv) the happening
of any event that requires the making of any changes in the Registration
Statement covering any of such selling Holder's Registrable Securities so that
it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that any related prospectus will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (v) the Company's reasonable
determination that a post-effective amendment to a Registration Statement
covering any of such selling Holder's Registrable Securities or a supplement to
any related prospectus is required under the Act; such selling Holder will
forthwith discontinue disposition of such Registrable Securities until it is
advised in writing by the Company that the use of the applicable prospectus (as
amended or supplemented, as the case may be) and disposition of the Registrable
Securities covered thereby pursuant thereto may be resumed provided, however,
(x) that such selling Holder shall not resume its disposition of Registrable
Securities pursuant to such Registration Statement or related prospectus unless
it has received notice from the Company that such Registration Statement or
amendment has become effective under the Act and has received a copy or copies
of the related prospectus (as then amended or
721783.3
-4-
<PAGE>
supplemented, as the case may be) unless the Registrable Securities are then
listed on a national securities exchange and the Company has advised such
selling Holder that the Company has delivered copies of the related prospectus,
as then amended or supplemented, in transactions effected upon such exchange,
subject to any subsequent receipt by such selling Holder from the Company of
notice of any of the events contemplated by Stock clauses (i) through (v) of
this paragraph, and, (y) if so directed by the Company, such holder will deliver
to the Company all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
Section 2.3 Allocation of Expenses. The Company will pay all Registration
Expenses of all Registrations under this Agreement.
Section 2.4 Indemnification.
---------------
(a) In the event of any registration of any of the Registrable Securities
under the Act pursuant to this Agreement, the Company will indemnify and hold
harmless the seller of such Registrable Securities, and each other person, if
any, who controls such seller within the meaning of the Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
such seller or controlling person may become subject under the Act, the Exchange
Act, state securities or Blue Sky laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement of any material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and, subject to Section 2.4(c) below, the Company will reimburse
such seller and each such controlling person for any legal or any other expenses
reasonably incurred by such seller or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus or final prospectus, or any such amendment or supplement,
in conformity with information furnished to the Company, in writing, by or on
behalf of such seller or controlling person for use in the preparation thereof
or inclusion therein.
The indemnity provisions in this Section 2.4(a) are subject to the
condition that, insofar as they related to any untrue statement or omission made
in a preliminary prospectus or prospectus but eliminated or remedied in a final
prospectus or an amended or supplemented prospectus on file with the Commission
at the time the Registration Statement becomes effective or any amended or
supplemented prospectus filed with the Commission pursuant to Rule 424 or any
successor provision under the Act (the "Final Prospectus"), such indemnity
provisions shall not inure to the benefit of any selling Holder of Registrable
Securities (x) if such selling Holder is not selling Registrable Securities
through an underwriter, if the Company has previously delivered copies of such
Final Prospectus to such selling Holder of Registrable Securities or, if
Registrable Securities are then listed on a national securities exchange, if the
Company has previously delivered copies of such Final Prospectus to such
national securities exchange in accordance with Rule 153 or any successor rule
under the Act, or (y) if such selling Holder is selling Registrable Securities
through an underwriter or underwriters, the Company has previously delivered
copies of such Final Prospectus to such underwriter or underwriters.
721783.3
-5-
<PAGE>
(b) In the event of any registration of any of the Registrable Securities
under the Act pursuant to this Agreement, each seller of Registrable Securities,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors and officers and each underwriter (if any), and each person, if
any, who controls the Company or any such underwriter within the meaning of the
Act or the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which the Company, such directors and officers, underwriter
or controlling person may become subject under the Act, Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in any Registration
Statement under which such Registrable Securities were registered under the Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission to state a material fact required to
be stated therein or necessary to make the statement therein not misleading, if
the statement or omission was made in conformity with information furnished in
writing to the Company by or on behalf of such seller, specifically for use in
connection with the preparation of or inclusion in such Registration Statement,
prospectus, amendment or supplement; and shall reimburse the Company, its
directors and officers, and each such controlling person for any legal or other
expenses reasonably incurred by any of them in connection with investigation or
defending any such loss, claim, damage, liability or action. This indemnity
shall remain in full force and effect for the applicable statute of limitation
period regardless of any investigation made by or on behalf of the Company or
such controlling person and shall survive the transfer of shares.
(c) Each party entitled to indemnification under this Section 2.4 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any loss, claim, action, damage or liability as to which
indemnity may be sought, and shall permit the Indemnified Party to assume the
defense of any such claim or any litigation resulting therefrom; provided, that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnified Party of its obligations under this Section 2.4, except to the
extent that such failure to give notice prejudices the Indemnifying Party or
such Indemnifying Party is damaged by such delay. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense (but in no event shall the
Indemnifying Party be obligated to pay the fees and expenses of more than one
counsel for the Indemnified Party or Parties) if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential conflict of interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
(d) If the indemnification provided for in this Section 2.4 is finally
determined by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or expense
referred to therein or contribution is required under the Act in circumstances
for which indemnification is provided under this Section 2, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such
721783.3
-6-
<PAGE>
Indemnified Party as a result of such loss, liability, claim, damage, or expense
(i) in such proportion as is in appropriate to reflect the relative benefits
received by the Indemnifying Party on the one hand and the Indemnified Party on
the other or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits received by the Indemnifying Party on the one hand
and the Indemnified Party on the other but also the relative fault of the
Indemnifying Party and the Indemnified Party as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact related to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such case, (A) no Holder
will be required to contribute any amount in excess of the gross proceeds of all
Registrable Securities sold by it pursuant to such Registration Statement, and
(B) no person or entity guilty of fraudulent misrepresentation, within the
meaning of Section 11(f) of the Act, shall be entitled to contribution from any
person or entity who is not guilty of such fraudulent misrepresentation.
(e) The obligations under this Section 2.4 shall survive the completion of
any offering of Registrable Securities in a Registration Statement.
Section 2.5 Indemnification with Respect to Underwritten Offering. (a) In
the event that Registrable Securities are sold pursuant to a Registration
Statement in an underwritten offering pursuant to Section 2.1, the Company
agrees to enter into an underwriting agreement containing customary
representations and warranties with respect to the business and operations of
the Company and customary covenants and agreements to be performed by the
Company, including without limitation customary provisions with respect to
indemnification by the Company of the underwriters of such offering.
(b) No Holder may participate in any underwritten registration pursuant to
Section 2 hereunder unless such Holder (i) agrees to sell the Registrable
Securities which it proposes to sell in such underwritten registration on the
basis provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, reasonable and customary indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements and provides such other information and documentation
as the Company or the underwriters may reasonably request in connection with
such underwritten registration.
Section 2.6 Information by Holder. Each holder of Registrable Securities
included in any Registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Article 2.
Section 2.7 "Stand-Off" Agreement. Each Holder, if requested by the
Company and an underwriter of Common Stock or other securities of the Company,
shall agree not to sell or otherwise transfer or dispose of any Registrable
Securities or other securities of the Company held by such Holder for a
specified period of time (not to exceed 180 days) following the effective date
of a Registration Statement; provided, that all officers and directors of the
Company enter into similar agreements. Such agreement shall be in writing in a
form satisfactory to the Company and such underwriter. The Company
721783.3
-7-
<PAGE>
may impose stop-transfer instructions with respect to the Registrable Securities
or other securities subject to the foregoing restriction until the end of the
stand-off period.
Section 2.8 Termination. All of the Company's obligations to register
Registrable Securities under this Agreement pursuant to Sections 2 hereof shall
terminate on the earlier of (x) when there are no Registrable Securities as
defined herein and (y) five years from the date hereof.
Section 2.9 Transfer of Rights.
(a) The rights and obligations of Sellers under this Agreement may be
transferred by Sellers to another person or entity that is then a Holder of the
Company, to any affiliate of the Company or to any person or entity acquiring at
least 5,000 Registrable Securities (as adjusted for stock splits, stock
dividends, recapitalization or similar events).
(b) Any transferee (other than a Holder who is already a party to an
agreement in form and substance similar to this Agreement) to whom rights under
this Agreement are transferred shall, as a condition to such transfer, deliver
to the Company a written instrument by which such transferee identifies itself,
gives the Company notice of the transfer of such rights, indicates the
Registrable Securities owned by it and agrees to be bound by the obligations
imposed upon Sellers under this Agreement.
(c) A transferee to whom rights are transferred pursuant to this Section
2.9 may not again transfer such rights to any other person or entity, other than
as provided in this Section 2.9.
ARTICLE 3.
MISCELLANEOUS
Section 3.1 Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing delivered to the parties at the addresses set forth
below (or such other address as may be provided by one party in a notice to the
other):
If to Sellers, to it at:
[To Come] c/o Fortune Industries, Inc.
3408 South Jones
Fort Worth, Texas 76110
Facsimile No. (817)926-1074
with a copy to:
Ramsey & Dismuke, P.C.
2005 E. Lamar Blvd.
Suite 100
Arlington, Texas 76006
Facsimile No. (817) 265-7264
-8-
721783.3
<PAGE>
If to the Company, to it at:
Questron Technology
6400 Congress Avenue, Suite 200A
Boca Raton, FL 33487
Facsimile No. (561) 241-2866
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Luke P. Iovine, III, Esq.
Facsimile No. 212-856-7816
Notice delivered in accordance with the foregoing shall be effective (i)
when delivered, if delivered personally or by facsimile transmission, (ii) two
days after being delivered in the United States (properly addressed and all fees
paid) for overnight delivery service to a courier (such as Federal Express)
which regularly provides such service and regularly obtains executed receipts
evidencing delivery or (iii) five days after being deposited (properly addressed
and stamped for first-class delivery) in a daily serviced United States mail
box.
Section 3.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and permitted
assigns of the parties hereto.
Section 3.3 Headings. Article and Section headings used in this Agreement
are for convenience of reference only and shall not constitute a part of this
Agreement for any purpose or affect the construction of this Agreement.
Section 3.4 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
one and the same Agreement. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
Section 3.5 Governing Law. This Agreement shall be deemed to have been
made in the State of New York and the validity of this Agreement, the
construction, interpretation and enforcement thereof, and the rights of the
parties thereto shall be determined under, governed by, and construed in
accordance with the internal laws of the State of New York, without regard to
principles of conflicts of law.
Section 3.6 Survival of Agreements, Representations and Warranties. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement.
721783.3
-9-
<PAGE>
Section 3.7 Arbitration. Any dispute or controversy arising under, out of,
in connection with, or in relation to this Agreement shall be determined and
settled by arbitration in New York by a panel of three members in accordance
with the commercial rules of the American Arbitration Association. Any award
rendered therein shall be final and binding upon the parties and their legal
representatives and judgment may be entered in any court having jurisdiction
thereof.
Section 3.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least 51% of the Registrable Securities; provided, that this Agreement may be
amended with the consent of the holders of less than all Registrable Securities
(but not less than 51% of such shares) only in a manner which affects all
Registrable Securities in the same fashion. No waivers of or exceptions to any
term, condition or provision of this Agreement, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
721783.3
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
QUESTRON TECHNOLOGY, INC.
By: /s/ Dominic A. Polimeni
-------------------------------------
Name: Dominic A. Polimeni
Title: Chairman, President and Chief
Executive Officer
/s/ Kyle G. Crowley
------------------------------
KYLE G. CROWLEY
/s/ Richard E. Burkhardt
------------------------------
RICHARD E. BURKHARDT
/s/ Kendall P. Craig
------------------------------
KENDALL P. CRAIG
/s/ Doc. H. Lankford
------------------------------
DOC. H. LANKFORD
/s/ Malcolm Tallmon
------------------------------
MALCOLM TALLMON
721783.3
-11-
<PAGE>
Schedule A
KYLE G. CROWLEY
RICHARD E. BURKHARDT
KENDALL P. CRAIG
DOC. H. LANKFORD
MALCOLM TALLMON
721783.3
-12-
Exhibit 16.1
[Moore Stephens, P.C. Letterhead]
October 8, 1998
Securities and Exchange Commission 450 5th Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We have read the statements made by Questron Technology, Inc. (the
"Company") (File No. 0-13324) which we understand will be filed with the
Securities and Exchange Commission (the "Commission"), pursuant to the
requirements of Item 4 of Form 8-K, as part of the Company's Current Report on
Form 8-K, filed with the Commission on October 8, 1998. We agree with the
statements made concerning Moore Stephens, P.C. in such Form 8-K.
Sincerely,
Moore Stephens, P.C.