SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 Section 240.14a-11(c) or Section 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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / 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:
4) Date Filed:
<PAGE>
QUESTRON TECHNOLOGY, INC.
6400 Congress Avenue, Suite 2000
Boca Raton, Florida 33487
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the
Stockholders of Questron Technology, Inc., which will be held on Thursday,
October 28, 1999 at 11:00 a.m., local time, at the New York Friars Club, 57 East
55th Street, New York, New York.
This booklet includes the notice of the meeting and the proxy
statement which contains information about proposals to be considered and acted
upon at the meeting, your Board of Directors and information about each of the
nominees to 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 Stockholder 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
Stockholder of record (your bank, broker, etc.) that you wish to attend. Such
Stockholder 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,
/s/ Dominic A. Polimeni
Dominic A. Polimeni
Chairman and Chief Executive Officer
October 1, 1999
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE.
2
<PAGE>
QUESTRON TECHNOLOGY, INC.
6400 Congress Avenue, Suite 2000
Boca Raton, Florida 33487
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
The Annual Meeting of Stockholders of Questron Technology, Inc.,
a Delaware corporation (the "Company"), will be held at the New York Friars
Club, 57 East 55th Street, New York, New York beginning at 11:00 a.m. (local
time), for the following purposes:
(1) To elect six Directors to serve until the next Annual Meeting
of Stockholders.
(2) 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.
(3) To ratify the appointment by the Board of Directors of
Ernst & Young LLP as the Company's Independent Public Accountants for the fiscal
year 1999.
(4) 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 on September
29, 1999 are entitled to notice of and to vote at the meeting and any
adjournments or postponements thereof.
By Order of the Board of Directors
/s/ Ann Bastis
Ann Bastis
Secretary
October 1, 1999
3
<PAGE>
QUESTRON TECHNOLOGY, INC.
6400 Congress Avenue, Suite 2000
Boca Raton, Florida 33487
PROXY STATEMENT FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
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 Annual Meeting of
Stockholders of the Company (the "Meeting"), which will be held at 11:00 a.m.,
local time, on Thursday, October 28, 1999 at the New York Friars Club, 57 East
55th Street, 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
Stockholders. This proxy statement and the enclosed proxy card will be mailed to
Stockholders on or about October 1, 1999. The Company's principal executive
offices are located at 6400 Congress Avenue, Suite 2000, Boca Raton, Florida
33487.
The accompanying proxy card is designed to permit each
Stockholder of record as of the close of business on September 29, 1999 (the
"Record Date") to vote at the Meeting. As of the Record Date, 7,026,771 shares
of Common Stock, par value $.001 per share (the "Common Stock"), were issued and
outstanding. Each holder of record will be entitled to one vote for each share
of Common Stock. Holders of shares of Common 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 Stockholder to withhold
voting for an individual nominee or all nominees for the Board of Directors or
to abstain from voting for any proposal if the Stockholder 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 plurality of the votes cast. 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 on each matter at the Meeting, in person or by proxy. 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 1996 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
4
<PAGE>
uncontested election of directors. In addition to the 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 such persons for the reasonable expenses in forwarding soliciting
material.
VOTING SECURITIES AND SECURITIES OWNERSHIP
Voting Securities
The Board of Directors has fixed the close of business on
September 29, 1999 as the Record Date for the determination of Stockholders
entitled to notice of, and to vote at, the Meeting and any adjournments thereof.
Only Stockholders of record on the Record Date will be able to vote at the
Meeting. The list of Stockholders entitled to vote at the Meeting will be
available for the examination of any Stockholder for any purpose pertinent to
the Meeting at the offices of Battle Fowler LLP, 75 East 55th Street, New York,
New York, for ten days prior to the date of the Meeting.
Security Ownership of Management and Principal Stockholders
The following table sets forth certain information, as of August
30, 1999, known to the Company regarding beneficial ownership of the Company's
Common Stock by (i) any holder of more than five percent of the outstanding
shares; (ii) the Company's directors; and (iii) all executive officers and
directors as a group:
<TABLE>
<CAPTION>
% of
Number of Shares of Common Common
Name and Address Position with the Company Stock Stock
- ------------------------------------------ -------------------------------------------------------------------- ------------
<S> <C> <C> <C>
Dominic A. Polimeni (1) Chairman and Chief Executive 2,374,957(2) 29.90
Officer
Robert V. Gubitosi (1) Director, President and Chief ---(3) ---
Financial Officer
Douglas D. Zadow (1) Director, Vice President and 872,176(4) 12.41
President of Questron Distribution
Logistics, Inc. ("QDL"), a
subsidiary of the Company
Milton M. Adler (1) Director 3,247(5) *
Frederick W. London (1) Director 9,000(6) *
William J. McSherry, Jr. (1) Director 90,384(7) 1.28
Phillip D. Schwiebert (8) Vice President and Regional Vice 913,339(9) 11.50
c/o Questron Distribution President of QDL
Logistics, Inc.
386 Railroad Court
Milpitas, CA 95035
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
% of
Number of Shares of Common Common
Name and Address Position with the Company Stock Stock
- ------------------------------------------ -------------------------------------------------------------------- ------------
<S> <C> <C> <C>
Gulfstream Financial Group, Inc. --- 1,260,273(10) 16.31
6400 Congress Avenue, Suite 2000
Boca Raton, FL 33487
Joan R. Gubitosi --- 2,360,273(11) 26.73
c/o Gulfstream Financial Group, Inc.
6400 Congress Ave.,
Suite 2000
Boca Raton, FL 33487
Malcolm A. Tallmon Vice President - Aerospace 489,078(12) 7.27
c/o Fortune Industries, Inc. Business Development
3408 S. Jones
Fort Worth, TX 76110
Gregory S. Fitzgerald President of Questron Aerospace 476,475(13) 7.04
c/o Fas-Tronics, Inc. Logistics, a division of QDL
4324 Garland Drive
Fort Worth, TX 76117
Valerie L. Fitzgerald Operations Manager of Fas- 476,475(13) 7.04
c/o Fas-Tronics, Inc. Tronics, Inc., a subsidiary of the
4324 Garland Drive Company
Fort Worth, TX 76117
All officers and directors as a group 4,990,226 49.06
(8 persons)
</TABLE>
- ---------------------
* Less than 1%
(1) c/o Questron Technology, Inc., 6400 Congress Avenue, Suite 2000, Boca
Raton, FL 33487
(2) Consists of 260,273 shares of Common Stock and Series IV Warrants to
purchase 1,000,000 shares of Common Stock owned by Gulfstream Financial
Group, Inc. ("Gulfstream"), and 14,684 shares of Common Stock owned by
Mr. Polimeni and options to purchase 1,100,000 shares of Common Stock at
an exercise price of $4.50 per share that were awarded to Mr. Polimeni
pursuant to the terms of his employment agreement. Pursuant to the terms
of a Gulfstream Stockholder agreement, beneficial interest in such
options is shared equally by Mr. Polimeni and Mrs. Gubitosi.
(3) Mr. Gubitosi's wife, Joan R. Gubitosi, has shared beneficial ownership
with Mr. Polimeni of 2,360,273 shares of Common Stock (see Footnote 11).
Mr. Gubitosi disclaims beneficial ownership of such shares.
(4) The 872,176 shares reported above include 36,571 shares subject to a
serial put agreement dated September 22, 1997, which gives Mr. Zadow the
option to sell 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, and options to purchase 300,000 shares of Common Stock at an
exercise price of $4.50 per share that were awarded to Mr. Zadow
effective March 31, 1999 pursuant to the terms of his employment
agreement.
(5) Includes options to purchase 3,000 shares of Common Stock.
(6) Consists of 500 shares of Common Stock, Series IV Warrants to purchase
500 shares of Common Stock and options to purchase 8,000 shares of Common
Stock.
6
<PAGE>
(7) Includes 5,984 shares of Common Stock owned by Mr. McSherry, options to
purchase 43,000 shares of Common Stock and Series IV Warrants to purchase
41,400 shares of Common Stock. These amounts do not include 886 shares of
Common Stock owned by one of his adult sons, as to which Mr. McSherry
disclaims beneficial ownership.
(8) Pursuant to the terms of the Exchange Agreement, Mr. Schwiebert was
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: options to
purchase 166,667 shares of Common Stock if pre-tax income is at least
$2,500,000, options to purchase an additional 166,667 shares of Common
Stock if pre-tax income is at least $3,500,000, and options to purchase
an additional 166,667 shares of Common Stock if pre-tax income is at
least $4,500,000. On March 31, 1998, options to purchase 166,667 shares
of Common Stock of the Company at an exercise price of $7.75 per share
were awarded to Mr. Schwiebert and options to purchase 333,333 shares of
Common Stock at an exercise price of $4.50 per share were awarded
effective March 31, 1998 to Mr. Schwiebert pursuant to the terms of the
Exchange Agreement.
(9) The shares reported above consist of 113,339 shares owned by Mr.
Schwiebert, options to purchase 550,000 shares of Common Stock and Series
IV Warrants to purchase 250,000 shares of Common Stock. These amounts do
not include options to purchase 10,000 shares of Common Stock at $6.00
per share granted effective May 31, 1997, which vest and become
exercisable on the third anniversary date of the date of the grant. Also
see footnote 8.
(10) Consists of 260,273 shares of Common Stock and Series IV Warrants to
purchase 1,000,000 shares of Common Stock. Joan R. Gubitosi and Dominic
A. Polimeni are executive officers and the stockholders of Gulfstream and
share voting and investment power with respect to the shares owned by
Gulfstream.
(11) Consists of 260,273 shares of Series IV Warrants to purchase 1,000,000
shares of Common Stock owned by Gulfstream, and options to purchase
1,100,000 shares of Common Stock, at an exercise price of $4.50 per
share, in which beneficial interest is shared equally by Mrs. Gubitosi
and Mr. Polimeni pursuant to a Gulfstream Stockholder agreement.
(12) The 489,078 shares of Common Stock owned by Mr. Tallmon were issued by
the Company as partial consideration in connection with the acquisition
of Fortune Industries, Inc.
(13) Of the 476,475 shares of Common Stock owned jointly by Mr. and Mrs.
Fitzgerald, 421,941 shares and options to purchase 40,000 shares of
Common Stock were issued by the Company as partial consideration in
connection with the acquisition of Fas-Tronics, Inc. In addition, Mr. and
Mrs. Fitzgerald purchased 14,534 shares of Common Stock in open market
transactions.
7
<PAGE>
ELECTION OF DIRECTORS
At the Meeting, Stockholders will elect six Directors to hold
office until the next Annual Meeting of Stockholders 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., Dominic A. Polimeni and
Douglas D. Zadow. 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................ 53 Chairman and Chief Executive Officer
Robert V. Gubitosi................. 52 Director, President and Chief Financial Officer
Douglas D. Zadow................... 42 Director, Vice President and President QDL
Milton M. Adler.................... 71 Director
Frederick W. London................ 47 Director
William J. McSherry, Jr............ 51 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, he 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 (4) years. He also held several other positions, including
general management positions, with Arrow over an eight-year period. Mr. Polimeni
has also practiced as a Certified Public Accountant for more than 12 years and
was a Partner in the New York office of Arthur Young & Company. Mr. Polimeni is
the brother-in-law of Mr. Gubitosi.
Robert V. Gubitosi has been a Director of the Company since
February 1996 and President and Chief Financial Officer since May 1999. 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 banking firm and primary
dealer of U.S. government securities, with responsibility for the investment
banking activities of the firm. In addition, Mr. Gubitosi 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. Mr. Gubitosi is the brother-in-law of Mr. Polimeni.
Douglas D. Zadow has been the Vice President of the Company and
President of QDL since May 1998, a Director of the Company since September 1999
and President of California Fasteners, Inc.
8
<PAGE>
("Calfast"), which was acquired by the Company in 1997, since May 1995. From
1987 to 1996, he was owner and President of All-Spec Sales, Inc., a
manufacturers representative of fastener products. From 1984 to 1986, Mr. Zadow
served on the Board of the Southwestern Fastener Association as
Secretary/Treasurer for two years and President for one year.
Milton M. Adler has been a Director of the Company since February
1996. Until September 1999, Mr. Adler was Secretary of the Company from October
1993 and Treasurer of the Company from February 1992. Since July 1997, he has
been President, Secretary, and Treasurer of 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.
Frederick W. London has been a Director of the Company since
April 1998. Mr. London has been a partner in the Westlake Village, California,
office of Dunnington, Bartholow & Miller LLP since September 1999 and was a
partner in that firm's New York office during the period 1983 to 1994. Mr.
London was Vice President and Deputy General Counsel of Pinkerton's, Inc., a
provider of global security solutions based in Westlake Village, California,
from February 1998 through May 1999. During the period January 1995 through
February 1998, Mr. London was a partner of Gould & Wilkie, a law firm based in
New York City.
William J. McSherry, Jr. has been a Director of the Company since
February 1996. Mr. McSherry has been a partner of Battle Fowler LLP, a law firm
with offices in New York City and Los Angeles, since July 1991. Battle Fowler is
legal counsel to the Company. Prior to July 1991, Mr. McSherry was a partner in
the law firm of Bryan Cave. He is also President and a director of Playtex
Marketing Corporation, a privately-owned corporation, and, up to April 1998,
served as a trustee and as Deputy Mayor of the Village of Larchmont, State of
New York.
The Board of Directors and its Committees
The Board of Directors held three meetings during the fiscal year
ended December 31, 1998. All Directors participated in all of the meetings of
the Board of Directors. The Board of Directors also acted by unanimous written
consent seven times during such year.
The members of the Audit Committee of the Board of Directors are
Messrs. London and Adler. The Audit Committee 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
1998. 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.
9
<PAGE>
PROPOSAL
APPROVAL OF AN AMENDMENT TO
THE COMPANY'S 1996 STOCK OPTION PLAN
Stockholders are being asked to approve an amendment to the
Company's 1996 Stock Option Plan (the "1996 Plan") for the purpose of increasing
the number of shares available for grant under the 1996 Plan. The 1996 Plan,
currently, provides for 500,000 shares of the Company's Common Stock to be
reserved and available for distribution as grants. The proposed amendment will
increase that number to be equal to the greater of (i) 1,000,000 shares of
Common Stock or (ii) 14% of the total number of shares of Common Stock
outstanding on December 31 of the immediately preceding calendar year. The
proposed amendment incorporates a so-called "evergreen" limitation on the number
of shares of Common Stock that can be granted in respect of awards made under
the 1996 Plan. This type of limitation will set the shares of Common Stock
available under the 1996 Plan without the need for further amendment. 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 in view of the
growth of the Company and 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 A
attached hereto.
CERTAIN ASPECTS OF THIS PROPOSAL ARE SUMMARIZED BELOW. THIS
SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE COMPLETE TEXT OF THE 1996 STOCK
OPTION PLAN ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS AS
APPENDIX B. SHAREHOLDERS ARE URGED TO READ THE ANNEXES TO THIS
PROXY STATEMENT/PROSPECTUS IN THEIR ENTIRETY. ALL CAPITALIZED
TERMS WHICH ARE NOT DEFINED HEREIN ARE DEFINED IN THE 1996 STOCK
OPTION PLAN.
Description of the Plan
Set forth herein is a description of the terms of the 1996 Stock
Option Plan (the "Plan"). The amendment is effective upon shareholder approval.
Administration
The Plan shall be administered by a Stock Award Committee (the
"Committee"), which would be composed of not less than two directors of the
Company all of whom shall be Non-Employee Directors, as that term is defined in
the Plan. Each member of the Committee will be appointed by the Board. In the
absence of such a committee, the Plan shall be administered by the entire Board.
The Committee shall have the authority to adopt, alter and repeal
administrative rules, guidelines and practices governing the Plan as it, from
time to time, deems advisable to supervise the administration of the Plan.
However, no amendment to the Plan shall be made without the approval of the
Company's stockholders to the extent such approval is required by law or
agreement, except that the Board of the
10
<PAGE>
Company shall have the authority to amend the Plan to take into account changes
in law and tax and accounting rules, as well as other developments and to grant
Awards which qualify for beneficial treatment under such rules without
stockholder approval The Committee may act only by a majority of its members
then in office. The duration of the Plan shall be ten years from the date upon
which the Plan is approved by the stockholders of the Company.
Eligibility
Officers, employees and directors of the Company and its
Affiliates who are responsible for or contribute to the management growth and
profitability of management, the business of the Company and its Affiliates are
eligible to be granted Awards under the Plan. The Company estimates the
approximate number of officers, employees and directors eligible to participate
in the Plan as of August 30, 1999 to be 7, 454 and 3, respectively.
Types of Awards
The Committee will have the plenary authority to grant Awards to
officers, employees and directors of the Company or its Affiliates. Awards
granted to participants of the Plan include Stock Options, Stock Appreciation
Rights, Restricted Stock, or any combination of the foregoing, as these terms
are defined and regulated under the Plan. The Committee shall have the authority
to grant either Incentive Stock Options or Non-Qualified Stock Options under the
Plan; however, the former may be granted only to employees of the Company and
its subsidiaries. The Awards are subject to such terms and conditions as
determined by the Committee and which may differ from Award to Award.
Number of Shares
The maximum number of shares of Common Stock that may be made the
subject of Awards under the Plan shall be equal to the greater of (i) 1,000,000
shares of Common Stock or (ii) 14% of the total number of shares of Common Stock
outstanding on December 31 of the immediately preceding calendar year.
Description of Awards
Share Options. The Plan permits the award of ISOs and NQSOs. Each
Stock Option granted under the plan must be evidenced by an agreement, the terms
and provisions of which may differ. The Stock Option agreement shall indicate on
its face whether it is an agreement for an ISO or a NQSO. The grant of a Stock
Option shall occur on the date the Committee by resolution selects an individual
and specifies the terms and provisions of the Stock Option agreement. The
purchase price per share of Common Shares covered by an Option shall be
determined by the Committee, but may not be less than the Fair Market Value of
the Common Stock subject to the Stock Option on the date of grant in the case of
ISOs, and not less than 50% of the Fair Market Value of the Common Stock subject
to the Stock Option on the date of grant in the case of NQSOs. ISOs may only be
granted to employees of the Company or its Affiliates. The term of each Stock
Option will be fixed by the Committee, but no ISO shall be exercisable more than
ten years after the date of grant, and no NQSO shall be exercisable more than
ten years and one day after the date of grant. Payment of a Stock Option may be
made by certified or bank check or such other instrument as the Company may
accept. If approved by the Committee, payment in full or in part may also be
made in the form of unrestricted Common Stock already owned by the optionee of
the same class as the Common Stock subject to the Stock Option; provided,
however, in the case of an
11
<PAGE>
ISO, the right to make a payment in the form of already owned shares of Common
Stock of the same class of Common Stock subject to the Stock Option shall be
authorized only at the time the Stock Option is granted.
On receipt of written notice of exercise, the Committee may, in
its sole discretion, elect to cash out all or part of any Stock Option to be
exercised by paying the optionee an amount, in cash or Common Stock, equal to
the excess of the Fair Market Value of the Common Stock that is the subject of
the Stock Option over the option price times the number of shares of Common
Stock subject to the option on the effective date of such cash out.
Share Appreciation Rights. The Plan authorizes the Committee to
grant SARs in conjunction with all or part of any Stock Option. In the case of a
NQSO, such rights may be granted either at or after the time of grant of such
Stock Option, but in the case of an ISO, such rights may be granted only at the
time of grant of such Stock Option. A SAR shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option. A
holder of a SAR is entitled upon exercise to receive an amount in cash, shares
of Common Stock or both equal in value to the excess of the Fair Market Value of
one share of Common Stock over the option price per share specified in the
related Stock Option multiplied by the number of shares of Common Stock in
respect of which the SAR shall have been exercised, with the Committee having
the right, in its sole discretion, to determine the form of payment.
Restricted Shares. The Plan authorizes the Committee to grant
Restricted Shares to Participants on terms and conditions that the Committee
shall determine; provided, however, that such terms and conditions are subject
to and consistent with the provisions of the Plan. Upon an award of Restricted
Stock to a Participant, the stock certificate representing the Restricted Stock
shall be issued and transferred to and in the name of the Participant, whereupon
the Participant shall become a stockholder of the Company with respect to such
Restricted Stock and shall be entitled to vote the Common Stock. Such stock
certificates shall be held in custody by the Company, together with stock powers
executed by the Participant in favor of the Company, until the Restricted Period
expires and the Restrictions imposed on the Restricted Stock are satisfied.
Summary of Certain Federal Income Tax Consequences of the Plan
The following is a brief discussion of the relevant federal
income tax rules. The rules are highly technical and are subject to change.
NQSOs and SARs. Upon the grant of a NQSO (with or without an
SAR), the optionee will not recognize any taxable income and the Company will
not be required to record an expense. Upon the exercise of a NQSO or an SAR, the
excess of the fair market value of the shares acquired on the exercise of the
NQSO over the purchase price (the "spread"), or the consideration paid to the
optionee upon the exercise of the SAR, will constitute compensation taxable to
the optionee as ordinary income. In determining the amount of the spread or the
amount of consideration paid to the optionee, the fair market value of the
shares on the date of exercise is used, except that special timing rules may
apply in the case of an optionee subject to the six month short-swing profit
recovery provisions of Section 16(b) of the Exchange Act. The Company, in
computing its federal income tax, will generally be entitled to a deduction in
an amount equal to the compensation taxable to the optionee in the Company's
taxable year in which the amount is included as income to the optionee. The
optionee's tax basis in an Award paid in Common Stock is equal to the amount of
ordinary income recognized, plus any amount paid (such as the option exercise
price), and the holding period commences as of the date that income is
recognized. Upon
12
<PAGE>
a subsequent sale or exchange of the Common Stock acquired, the optionee will
have capital gain or loss measured by the difference between the amount realized
on the disposition and his or her tax basis in the shares.
ISOs. An optionee will not recognize taxable income on the grant
or exercise of an ISO. However, the spread at exercise will constitute an item
includible in alternative minimum tax. Such alternative minimum tax may be
payable even though the optionee receives no cash upon the exercise of his ISO
with which to pay such tax. Upon the disposition of shares acquired pursuant to
the exercise of an ISO after the later of (i) two years from the date of grant
of the ISO and (ii) one year after the transfer of the shares to the optionee
(the "ISO Holding Period"), the optionee will recognize capital gain or loss, as
the case may be, measured by the difference between the sale price and the
exercise price. The Company is not entitled to any tax deduction by reason of
the grant or exercise of an ISO, or by reason of a disposition of shares
received upon exercise of an ISO if the ISO Holding Period is satisfied.
Different rules apply if the optionee disposes of the shares acquired pursuant
to the exercise of an ISO before the expiration of the ISO Holding Period.
Option grants for shares which are exercisable for the first time by an optionee
during any calendar year (under all plans of the Company and any parent
corporation or Affiliate of the Company), which have a fair market value in
excess of $100,000, shall be treated as options which are not ISOs, and will be
subject to the same tax treatment as the grant of NQSOs discussed above.
Restricted Shares. A Participant who is granted Restricted Shares
may make a Section 83(b) election to have the grant taxed as ordinary income at
the date of receipt, with the result that any future appreciation (or
depreciation) in the value of the shares shall be taxed as capital gain (or
loss) upon a subsequent sale. However, if the Participant does not make a
Section 83(b) election, the grant will be compensation taxed as ordinary income
at the full fair market value on the date that the restrictions imposed on the
shares expire. Unless a Participant makes a Section 83(b) election, any
dividends paid on shares subject to the restrictions is compensation taxed as
ordinary income to the Participant and a deduction expense to the Company. The
Company is generally entitled to a tax deduction for any ordinary income taxed
to the Participant with respect to the shares. Upon a subsequent sale or
exchange of the Common Shares acquired, the Participant will have capital gain
or loss measured by the difference between the amount realized on the
disposition and his or her tax basis in the shares.
Approval of the proposed amendment to the 1996 Plan required the
affirmative vote of a majority of votes cast on this matter at the Meeting.
The Board of Directors recommends that Stockholders vote "FOR"
the foregoing amendment to the 1996 Stock Option Plan.
13
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the
compensation of the named executive for the periods indicated. No other
executive officer of the Company received total annual salary and bonus greater
than $100,000 during the periods indicated. The base salaries of the Named
Executive Officers have been set by reviewing compensation for competitive
positions in the market and the historical compensation levels of such
executives.
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------------------------
(a) (b) (c) (d) (e)
Name and Other Annual
Principal Position Year Salary Bonus Compensation ($)
- ------------------ ---- ------ ----- ----------------
<S> <C> <C> <C> <C>
Dominic A. Polimeni 1998 $182,800 -- --
Chairman and 1997 $100,000 -- --
Chief Executive Officer (1) 1996 $100,000 -- --
Robert V. Gubitosi 1998 $45,000 -- --
President and 1997 $45,000 -- --
Chief Financial Officer (2) 1996 $45,000 -- --
Douglas D. Zadow 1998 $198,000 -- --
Vice President and 1997 $60,000 -- --
President of Questron 1996 -- -- --
Distribution Logistics, Inc.
Phillip D. Schwiebert 1998 $106,000 $62,050 --
Vice President and 1997 $106,000 $63,578 --
Western Regional Vice 1996 $106,000 $56,760 --
President of Questron
Distribution Logistics, Inc.
James W. Taylor 1998 $156,000 -- --
Vice President and 1997 $91,000 -- --
President of Integrated 1996 -- -- --
Material Systems, Inc.
</TABLE>
- ------------------
(1) During the years 1996, 1997 and 1998, Mr. Polimeni also held the position
of President of the Company. In May 1999, Mr. Gubitosi was appointed
President and Chief Financial Officer of the Company.
(2) Mr. Gubitosi was not an Officer of the Company during the years
1996-1998.
14
<PAGE>
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------------------------------------
Awards Payouts
----------------------------------------- --------------
(a) (b) (f) (g) (h) (i)
Restricted Securities
Name and Stock Underlying LTIP All other
Principal Position Year Awards ($) Options/SARs(#) Payouts ($) Compensation ($)
- ------------------ ---- ---------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Dominic A. Polimeni 1998 -- 1,100,000 -- --
Chairman and 1997 -- -- -- --
Chief Executive Officer 1996 -- -- -- --
Robert V. Gubitosi 1998 -- -- -- --
President and 1997 -- -- -- --
Chief Financial Officer 1996 -- -- -- --
Douglas D. Zadow 1998 -- 300,000 -- --
Vice President and 1997 -- -- -- --
President of Questron 1996 -- -- -- --
Distribution Logistics, Inc.
Phillip D. Schwiebert 1998 -- 333,333 -- --
Vice President and 1997 -- 196,667 -- --
Western Regional Vice 1996 -- 30,000 -- --
President of Questron
Distribution Logistics, Inc.
James W. Taylor 1998 -- 90,000 -- --
Vice President and 1997 -- 90,000 -- --
President of Integrated 1996 -- -- -- --
Material Systems, Inc.
</TABLE>
Option/SAR Grants
Effective March 29, 1999, pursuant to the terms of the Company's
employment agreement with Mr. Polimeni, options to purchase 1,100,000 shares of
Common Stock at an exercise price of $4.50 per share were awarded to Mr.
Polimeni. Effective March 31, 1999, pursuant to the terms of the Company's
employment agreement with Mr. Zadow, options to purchase 300,000 shares of
Common Stock at an exercise price of $4.50 per share were awarded to Mr. Zadow.
Pursuant to the terms of the Exchange Agreement dated November 8, 1996, Mr.
Schwiebert was granted options to purchase 30,000 shares of Common Stock at
$3.75 per share. Effective May 31, 1997, Mr. Schwiebert was granted options to
purchase 30,000 shares of Common Stock at $6.00 per share, such options vest and
become exercisable as to 10,000 shares on each of the first three anniversary
dates of the date of the grant. Pursuant to the terms of the Exchange Agreement,
on February 24, 1998, options to purchase 166,667 shares of Common Stock of the
Company at an exercise price of $7.75 per share were awarded to Mr. Schwiebert
and effective March 31, 1999, options to purchase 333,333 shares of Common Stock
at an exercise price of $4.50 per share were awarded to Mr. Schwiebert.
Effective March 31, 1999, pursuant to the terms of the Company's employment
agreement with Mr. Taylor, options to purchase 90,000 shares of Common Stock at
an exercise price of $4.50 per share were awarded to Mr. Taylor.
For information relating to warrants issued to Gulfstream (a
company owned by Dominic A. Polimeni and Joan R. Gubitosi) and to Mr.
Schwiebert, see "Voting Securities and Securities Ownership" and footnotes
thereto.
15
<PAGE>
Option/SAR Exercises
Set forth below is information concerning exercises of options
during 1998 and the year-end value of unexercised options for the persons named
in the Summary Compensation Table:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities
Shares Underlying Unexercised Value of Unexercisable In-the-
Acquired Options/SARs at Fiscal Money Options/SARs at Fiscal
on Value Year End (#) Year End ($)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Dominic A. Polimeni
Chairman and
Chief Executive Officer -- -- 1,100,000/-- --
Douglas D. Zadow
Vice President and
President of Questron
Distribution Logistics, Inc. -- -- 300,000/-- --
Phillip D. Schwiebert
Vice President and
Western Regional Vice
President of Questron
Distribution Logistics, Inc. -- -- 550,000/10,000 $22,500
James W. Taylor
Vice President and
President of Integrated
Material Systems, Inc. -- -- 126,000/54,000 --
</TABLE>
Employment Agreements
Dominic A. Polimeni, Chairman and Chief Executive Officer of the
Company, is a party to a five-year employment agreement with the Company
effective July 1, 1998. Under the terms of such employment agreement, the
Company has agreed to compensate Mr. Polimeni a regular salary at the rate of
$250,000 per annum and incentive compensation of up to $100,000 based upon the
attainment of certain operating and earnings targets. Effective March 29, 1999,
options to purchase 1,100,000 shares of Common Stock of the Company at an
exercise price of $4.50 per share were awarded to Mr. Polimeni pursuant to the
terms of the agreement.
Mr. Polimeni is a 50% stockholder of Gulfstream Financial Group,
Inc. ("Gulfstream"), and shares voting and investment power with respect to the
shares of the Company's Common Stock owned by Gulfstream. Pursuant to a
Management Advisory and Consulting Agreement, dated as of November 29, 1994,
between the Company and Gulfstream, Gulfstream acted as an advisor and
consultant to the Company. Such advisory and consulting services were directed
principally at the expansion of the Company's business through the
identification of potential acquisition candidates. The agreement was terminated
effective March 1, 1999, more than one year prior to its stated expiration and
options to purchase 1,160,500 shares of Common Stock at an average exercise
price of $5.43 were canceled. Fees paid to Gulfstream in connection with the
agreement and the termination thereof amounted to $305,000 in 1998 and $105,000
in 1997. Pursuant to a Stockholders' agreement, Mr. Polimeni has agreed to share
his beneficial ownership of the options received under his employment agreement
with the other 50% Stockholder of Gulfstream.
16
<PAGE>
In connection with the acquisition of Calfast, the Company
entered into a five-year employment agreement with Douglas D. Zadow, a former
Stockholder and President of Calfast, effective September 1, 1997. Under the
terms of such employment agreement, the Company has agreed to compensate Mr.
Zadow with a regular salary at the rate of $200,000 per year and incentive
compensation of up to $100,000 based on the attainment of certain operating
goals. In addition, upon the attainment of certain earnings targets for the
Company, Mr. Zadow was entitled to receive options to purchase up to 300,000
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock at the date of grant. Effective March 31, 1999, options to
purchase 300,000 shares of Common Stock at an exercise price of $4.50 per share
were awarded to Mr. Zadow pursuant to the terms of the agreement.
QDL entered into a five-year employment agreement with Phillip D.
Schwiebert, its Western Regional Vice President, effective March 31, 1995. Under
the terms of such employment agreement, QDL has agreed to compensate Mr.
Schwiebert with a regular salary at the rate of $106,000 per year, plus bonus
compensation based on the attainment of certain operating goals at the rate of
$15,000 per quarter. In addition, pursuant to an Exchange Agreement dated
November 8, 1996, upon the attainment of certain earnings targets for the
Company, Mr. Schwiebert was entitled to receive options to purchase up to
500,000 additional shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock at the date of grant (See Item 11 - "Exchange
Agreement"). On February 24, 1998, options to purchase 166,667 shares of Common
Stock of the Company at an exercise price of $7.75 per share were awarded to Mr.
Schwiebert. Effective March 31, 1999, options to purchase 333,333 shares of
Common Stock at an exercise price of $4.50 per share were awarded to Mr.
Schwiebert pursuant to the terms of the Exchange Agreement.
In connection with the acquisition of IMS, the Company entered
into a five-year employment agreement with James W. Taylor, the former
Stockholder and President of IMS, effective June 1, 1997. Under the terms of
such employment agreement, the Company has agreed to compensate Mr. Taylor with
regular salary at the rate of $144,000 per year, plus bonus compensation based
on the attainment of certain operating goals at the rate of $14,400 per year. In
addition, upon the attainment of certain earnings targets for the Company, Mr.
Taylor was entitled to receive options to purchase up to 90,000 shares of Common
Stock at an exercise price equal to the fair market value of the Common Stock at
the date of grant. Effective March 31, 1999, options to purchase 90,000 shares
of Common Stock at an exercise price of $4.50 per share were awarded to Mr.
Taylor pursuant to the terms of the agreement.
Compensation of Directors
Other than the 1994 Director Non-Qualified Stock Option Plan
described below, the Company does not have a standard policy regarding
compensation of members of the Board of Directors. Other than as reported below,
the members of the board of directors did not receive compensation for their
services as such during the year ended December 31, 1998.
The 1994 Director Non-Qualified Stock Option Plan
The 1994 Director Non-Qualified Stock Option Plan, as amended
(the "1994 Plan"), was approved by Stockholders at the annual meeting held June
11, 1998. The 1994 Plan provides for options to purchase an aggregate of 150,000
shares of the Company's Common Stock that may be granted to non-employee
directors of the Company.
All non-employee directors shall receive an option to purchase
5,000 shares of the Common Stock of the Company on the first Wednesday of
February in each calendar year at an exercise price equal to the
17
<PAGE>
fair market value per share of the Common Stock on that date. In addition, on
September 8, 1998 Mr. McSherry was awarded options to purchase 20,000 shares of
the Common Stock of the Company at an exercise price equal to the fair market
value per share of the Common Stock on that date and Mr. London was awarded
options to purchase 3,000 shares of Common Stock of the Company at an exercise
price equal to the fair market value per share of the Common Stock on that date.
Such options are exercisable immediately for a period of 10 years from date of
grant unless terminated earlier pursuant to the terms of the Plan. Under the
1994 Plan, 62,000 options have been granted to date at exercise prices ranging
from $3.88 per share to $24.06 per share.
1996 Stock Option Plan
The 1996 Stock Option Plan, as amended (the "1996 Plan"), was
approved by Stockholders at the annual meeting held June 11, 1998. Under the
1996 Plan, either Incentive Stock Options or Non-Qualified Stock Options may be
granted; however, the former may be granted only to employees of the Company and
its subsidiaries. The 1996 Plan provides for options to purchase an aggregate of
500,000 shares of the Company's Common Stock that may be granted to employees of
the Company and its subsidiaries. The Company's Board of Directors has submitted
for stockholder approval, as set forth herein, a proposed amendment to the 1996
Stock Option Plan to increase the number of options available for grants
thereunder.
In 1998 and 1997, the Company granted to its employees options to
purchase 10,300 and 159,450 shares of the Company's Common Stock, respectively.
In 1998, options to purchase 46,500 shares of the Company's Common Stock were
cancelled. Options granted were issued with an exercise price equal to the fair
market value of the Common Stock on the date of grant. The options have terms of
ten years and become exercisable in three equal nine-month installments, three
equal annual installments or three years from date of grant. Accordingly,
pursuant to the terms of the 1996 Plan, a total of 376,750 shares of the
Company's Common Stock are reserved and available for distribution as awards
under the 1996 Plan.
RELATED PARTY TRANSACTIONS
In 1995, the Company entered into a five-year management advisory
and consulting agreement with Gulfstream, of which the chairman and chief
executive officer of the Company is a 50% owner. Under the terms of such
agreement, Gulfstream acted as an advisor and consultant to the Company
principally concerning the expansion of the Company's business through the
identification of potential acquisition candidates. This agreement was
terminated effective March 1, 1999, more than one year prior to its stated
expiration. Fees paid to Gulfstream in connection with the agreement amounted to
$305,000 and $105,000 for the years ended December 31, 1998 and 1997,
respectively. Such fees have been included in the costs of the Company's
acquisitions in 1998 and 1997. Gulfstream presently owns 3.7% of the Company's
outstanding Common Stock.
The Company leases three of its facilities from entities owned by
former stockholders of acquired businesses who are now employees of the Company.
Rent expense of $153,436 associated with these facilities have been charged to
selling, general & administrative expenses for the year ended December 31, 1998.
Management believes that the terms of such leases are no less favorable than
those which otherwise are available in the market for those facilities.
Battle Fowler LLP, the law firm in which Mr. McSherry, a director
of the Company, is a partner, provided legal services to the Company during the
year ended December 31, 1998 and is expected to
18
<PAGE>
continue to provide legal services to the Company in the future. Fees paid to
Battle Fowler LLP amounted to $301,582 for the year ended December 31, 1998.
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 and the National Association of Securities Dealers. Officers,
directors and greater-than-ten percent Stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms that
they file.
Based solely on a review of the copies of Forms 3, 4 and 5 and
amendments thereto furnished to the Company, or written representations from
certain reporting persons that such persons have filed on a timely basis all
reports required by Section 16(a), and without researching or making any inquiry
regarding delinquent Section 16(a) filings, the Company believes that, during
the fiscal year ended December 31, 1998, all such reports were filed on a timely
basis, other than with respect to Douglas D. Zadow, a Vice President of the
Company and President of QDL, who has filed a corrective Form 5 in March 1999
reflecting sales to the Company of 4,570 shares of Common Stock from October
1998 through December 1998, pursuant to a serial-put agreement dated September
22, 1997, by and between the Company and Mr. Zadow.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Ernst & Young LLP as
independent public accountants of the Company for the fiscal year ending
December 31, 1999. The Board of Directors is submitting the appointment of Ernst
& Young LLP for ratification at the Annual Meeting. Ernst & Young LLP audited
the Company's financial statements for the fiscal year ended December 31, 1998
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 Ernst & Young LLP will be present at
the meeting with the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
Although the Company is not required to submit the ratification
of the selection of its independent auditors to a vote of stockholders, the
Board of Directors believes that it is a sound policy to do so. 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.
OTHER BUSINESS
It is not expected that any business other than that set forth in
the Notice of Annual Meeting of Stockholders 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
19
<PAGE>
proxies received by them in accordance with their best judgment on such business
and any matters dealing with the conduct of the Meeting.
2000 Stockholder Proposals
To be eligible for inclusion in the Company's Proxy Statement for
the 2000 Annual Meeting of Stockholders, expected to be held on or about May 25,
2000, Stockholder proposals must be received by the Company at its principal
executive office, Questron Technology, Inc., 6400 Congress Avenue, Suite 2000,
Boca Raton, FL 33487, on or before January 20, 2000.
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, 1998 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
/s/ Anne Bastis
----------------------------------
Ann Bastis
Secretary
Date: October 1, 1999
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.
20
<PAGE>
Appendix A
The 1996 Stock Option Plan is proposed to be amended by deleting the
first paragraph of Section 4, and substituting the following:
The maximum number of shares of Common Stock that may be made the subject of
Awards under the Plan shall be equal to the greater of (i) 1,000,000 shares
of Common Stock or (ii) 14% of the total number of shares of Common Stock
outstanding on December 31 of the immediately preceding calendar year. Such
shares may consist, in whole or in part, of authorized and unissued shares
or treasury shares.
21
<PAGE>
Appendix B
QUESTRON TECHNOLOGY, INC.
1996 STOCK OPTION PLAN
SECTION 1. Purpose. The purpose of the Questron Technology, Inc. 1996 Stock
Option Plan is to advance the interests of Questron Technology, Inc. (the
"Company") by enabling officers, employees and directors of the Company and its
Affiliates to participate in the Company's future and to enable the Company to
attract and retain such persons by offering them proprietary interests in the
Company.
SECTION 2. Definitions. For purposes of the Plan, the following terms are
defined as set forth below:
a. "Affiliate" means a corporation or other entity controlled
directly, or indirectly through one or more intermediaries, by the Company and
designated by the Committee as such.
b. "Award" means an award granted to a Participant in the form of a
Stock Appreciation Right, Stock Option, or Restricted Stock, or any combination
of the foregoing.
c. "Board" means the Board of Directors of the Company.
d. "Cause" shall have the meaning set forth in Section 8.
e. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
f. "Commission" means the Securities and Exchange Commission or any
successor agency.
g. "Committee" means the Committee referred to in Section 5.
h. "Common Stock" means common stock, $.001 per share par value, of
the Company.
i. "Company" means Questron Technology, Inc., a Delaware
corporation.
j. "Disability" means permanent and total disability as determined
under procedures established by the Committee for purposes of the Plan.
k. "Non-Employee Director" shall mean a director who qualifies as
such under Rule 16b-3(b)(3), as promulgated under the Exchange Act, or as such
term is defined under any successor rule adopted by the Commission.
l. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
m. "Fair Market Value" means the average, as of any given date,
between the highest and lowest reported closing bid and asked prices of the
Stock on NASDAQ or the closing sale price as of
22
<PAGE>
any given date if the Stock is listed on a national securities exchange or the
NASDAQ National Market System. If there is no regular public trading-market for
such Stock under circumstances specified above, the Fair Market Value of the
Stock shall be determined by the Committee in good faith.
n. "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of Section 422
of the Code.
o. "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
p. "Normal Retirement" means retirement from active employment with
the Company or an Affiliate at or after age 65 or at such other age as may be
specified by the Committee.
q. "Participant" means an officer, employee or director of the
Company or of an Affiliate to whom an Award has been granted which has not
terminated, expired or been fully exercised.
r. "Plan" means the Questron Technology, Inc. 1996 Stock Option
Plan, as set forth herein and as hereinafter amended from time to time.
s. "Restricted Period" means the period of time, which may be a
single period or multiple periods, during which Restricted Stock awarded to a
Participant remains subject to the restrictions imposed on such Stock, as
determined by the Committee.
t. "Restrictions" means the restrictions and conditions imposed on
Restricted Stock awarded to a Participant, as determined by the Committee, which
must be satisfied in order for the Restricted Stock to vest, in whole or in
part, in the Participant.
u. "Restricted Stock" means an Award of Stock on which are imposed
Restriction Period(s) and Restrictions whereby the Participant's rights to full
enjoyment of the stock are conditioned upon the future performance of
substantial services by any individual or are otherwise subject to a
"substantial risk of forfeiture within the meaning of Section 83 of the Code, as
amended.
v. "Restricted Stock Agreement" means a written agreement between a
Participant and the Company evidencing an award of Restricted Stock.
w. "Restricted Stock Award Date" means the date on which the
Committee awarded Restricted Shares to the Participant.
x. "Retirement" means Normal Retirement or early retirement if a
defined benefit or 401(k) retirement plan of the Company provides for same.
y. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
granted under Section 16(b) of the Exchange Act, as amended from time to time.
z. "Stock" means the Common Stock.
aa. "Stock Appreciation Right" means a right granted under Section
9.
bb. "Stock Option" or "Option" means an option granted under
Section 8.
23
<PAGE>
cc. "Termination of Employment" means the termination of the
Participant's employment with the Company and any Affiliate. A Participant
employed by an Affiliate shall also be deemed to incur a Termination of
Employment if the Affiliate ceases to be an Affiliate and the Participant does
not immediately thereafter become an employee of the Company or another
Affiliate.
In addition, certain other terms used herein have definitions given
to them in the first place in which they are used.
SECTION 3. Effective Date.
The effective date of the Plan shall be the date upon which the
Plan is approved by the stockholders of the Company.
SECTION 4. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution pursuant to Awards under the Plan shall be 500,000 shares of Stock.
Such shares may consist, in whole or in part, of authorized and unissued shares
or treasury shares.
If any shares of Stock that have been Optioned cease to be subject
to a Stock Option, if any shares of Stock that are subject to any Award are
forfeited or if any Award otherwise terminates without a distribution being made
to the Participant in the form of Stock, such shares shall again be available
for distribution in connection with Awards under the Plan. In addition, any
stock purchased by a Participant upon exercise of an Option under the Plan which
is subsequently repurchased by the Company pursuant to the terms of such Option
may again be the subject of an Option under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization (including but not limited to the issuance of Stock or any
securities convertible into Stock in exchange for securities of the Company),
stock dividend, stock split or reverse stock split, extraordinary distribution
with respect to the Stock or other similar change in corporate structure
affecting the Stock, such substitution or adjustments shall be made in the
aggregate number of shares reserved for issuance under the Plan, in the number
and Option price of shares subject to outstanding Stock Options and Stock
Appreciation Rights, and in the number of shares subject to other outstanding
Awards granted under the Plan as may be determined to be appropriate by the
Committee, in its sole discretion; provided, however, that the number of shares
subject to any Award shall always be a whole number and further provided that no
adjustment shall be made by reason of the one-for-ten reverse split of the
outstanding Stock proposed in the proxy statement relating to the Company's 1996
Annual Meeting of Stockholders. Such adjusted Option price shall also be used to
determine the amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
SECTION 5. Administration.
The Plan shall be administered by the Stock Award Committee
("Committee") of the Board or such other committee of the Board, composed of not
less than two directors all of whom shall be Non-Employee Directors unless
otherwise determined by the Board. Each member of the Committee shall be
appointed by and serve at the pleasure of the Board. If at any time no Committee
shall be in place, the functions of the Committee specified in the Plan shall be
exercised by the Board.
24
<PAGE>
The Committee shall have plenary authority to grant Awards to
officers, employees and directors of the Company or an Affiliate. Among other
things, the Committee shall have the authority, subject to the terms of the
Plan:
a. to select the officers, employees and directors to whom Awards
may from time to time be granted;
b. to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights and Restricted Stock, or
any combination thereof are to be granted hereunder;
c. to determine the number of shares of Stock to be covered by each
Award granted hereunder;
d. to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the Option price, any vesting
restrictions or limitation, any repurchase rights in favor of the Company and
any vesting acceleration or forfeiture waiver regarding any Award and the shares
of Stock relating thereto, based on such factors as the Committee shall
determine);
e. to adjust the terms and conditions, at any time or from time to
time, of any Award, including with respect to performance goals and measurements
applicable to performance-based Awards pursuant to the terms of the Plan;
f. to determine under what circumstances an Award may be settled in
cash or Stock;
g. if appropriate, to determine Fair Market Value; and
h. to substitute new Stock Options for previously granted Stock
Options, including previously granted Stock Options having higher Option prices.
The Committee shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable, to interpret the terms and provisions
of the Plan and any Award issued under the Plan (and any agreement relating
thereto) and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in
office, except that the members thereof may authorize any one or more of their
number or any officer of the Company to execute and deliver documents on behalf
of the Committee.
Any determination made by the Committee pursuant to the provisions
of the Plan with respect to any Award shall be made in its sole discretion at
the time of the grant of the Award or, unless in contravention of any express
term of the Plan, at any time thereafter. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Participants.
SECTION 6. Eligibility.
Officers, employees and directors of the Company and its Affiliates
who are responsible for or contribute to the management, growth and
profitability of the business of the Company and its
25
<PAGE>
Affiliates are eligible to be granted Awards under the Plan. Any person who
files with the Committee, in a form satisfactory to the Committee, a written
waiver of eligibility to receive any Award under the Plan shall not be eligible
to receive an Award under the Plan for the duration of the waiver.
SECTION 7. Duration of the Plan.
The Plan shall terminate ten (10) years from the effective date
specified in Section 3 of the Plan, unless terminated earlier pursuant to
Section 11 hereto, and no Awards may be granted thereafter.
SECTION 8. Stock Options.
Stock Options granted under the Plan may be of two types: Incentive
Stock Options and Non-Qualified Stock Options. Any Stock Option granted under
the Plan shall be in such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee
Incentive Stock Options, Non-Qualified Stock Options or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Incentive
Stock Options may be granted only to employees of the Company and its
subsidiaries (within the meaning of Section 424(f) of the Code). To the extent
that any Stock Option is not designated as an Incentive Stock Option or even if
so designated does not qualify as an Incentive Stock Option, it shall constitute
a Non-Qualified Stock Option.
Stock Options shall be evidenced by Option agreements, the terms
and provisions of which may differ. An Option agreement shall indicate on its
face whether it is an agreement for an Incentive Stock Option or a Non-Qualified
Stock Option. The grant of a Stock Option shall occur on the date the Committee
by resolution selects an individual to be a participant in any grant of a Stock
Option, determines the number of shares of Stock to be subject to such Stock
Option to be granted to such individual and specifies the terms and provisions
of the Option agreement. The Company shall notify a Participant of any grant of
a Stock Option, and a written Option agreement or agreements shall be duly
executed and delivered by the Company to the Participant, which among other
things, will make appropriate arrangements with respect to the Company's tax
withholding obligations. Such agreement or agreements shall become effective
upon execution by the Participant.
Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive Stock Options shall be interpreted, amended or
altered nor shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of the Code or, without
the consent of the optionee affected, to disqualify any Incentive Stock Option
under such Section 422.
Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
a. Option Price. The Option price per share of Stock purchasable
under an Option shall be determined by the Committee and set forth in the Option
agreement, and shall not be less than the Fair Market Value of the Stock subject
to the Option on the date of grant in the case of Incentive Stock Options and
not less than 50% of the Fair Market Value of the Stock subject to the Option on
the date of grant in the case of Non-Qualified Stock Options.
26
<PAGE>
b. Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than 10 years
after the date of grant; and no Non-Qualified Stock Option shall be exercisable
more than 10 years and one day after the date the Stock Option is granted.
c. Exercisability. Subject to Section 11, Stock Options shall
otherwise be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may at
any time waive such installment exercise provisions, in whole or in part, based
on such factors as the Committee may determine. In addition, the Committee may
at any time accelerate the exercisability of any Stock Option.
d. Methods of Exercise. Subject to the provisions of this Section
8, Stock Options may be exercised, in whole or in part, at any time during the
Option period by giving written notice of exercise to the Company specifying the
number of shares of Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept. If approved by the Committee, payment in full or in part may also be
made in the form of unrestricted Stock already owned by the optionee of the same
class as the Stock subject to the Stock Option provided, however, that, in the
case of an Incentive Stock Option, the right to make a payment in the form of
already owned shares of Stock of the same class as the Stock subject to the
Stock option shall be authorized only at the time the Stock Option is granted.
An optionee shall have all of the rights of a stockholder of the
Company holding the class or series of Stock that is subject to such Stock
Option (including, if applicable, the right to vote the shares and the right to
receive dividends), when the optionee has given written notice of exercise, and
has paid in full for such shares. In the discretion of the Committee, payment
for any Stock subject to an option may also be made by delivering a properly
executed exercise notice to the Company together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds to pay the purchase price. To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms. The value of previously owned Stock exchanged in full or
partial payment for the shares purchased upon the exercise of an Option shall be
equal to the aggregate Fair Market Value of such shares on the date of the
exercise of such Option.
e. Non-transferability of Options. Except as may otherwise be
determined by the Committee, no Stock Option shall be transferable by the
optionee other than by will or by the laws of descent and distribution, and all
Stock Options shall be exercisable, during the optionee's lifetime, only by the
optionee or by the guardian or legal representative of the optionee, it being
understood that the terms "holder" and "optionee" include the guardian and legal
representative of the optionee named in the Option agreement and any person to
whom an Option is transferred by will or the laws of descent and distribution.
f. Termination by Death. If an optionee's employment terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent then exercisable or on such accelerated basis as the
Committee may determine, for a period of one year and one day (or such other
period as the Committee may specify) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
27
<PAGE>
g. Termination by Reason of Disability. If any optionee's
employment terminates by reason of Disability, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or on such accelerated basis as the
Committee may determine, for a period or one year and one day (or such shorter
period as the Committee may specify at grant) from the date of such termination
of employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee dies
within such one year and one day period (or such shorter period ending upon the
expiration of the stated term of the Stock Option), any unexercised Stock Option
held by such optionee shall, notwithstanding the expiration of such one year and
one day period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of one year and one day from the
date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter. In the event of termination of
employment by reason of disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified
Stock Option.
h. Other Termination. Unless otherwise determined by the Committee,
if an optionee incurs a Termination of Employment for any reason other than
death or Disability, any Stock Option held by such optionee shall thereupon
terminate, except that such Stock Option, to the extent then exercisable, may be
exercised for the lesser of three months and one day from the date of such
Termination of Employment or the balance of such Stock option's term if such
Termination of Employment of the optionee is involuntary and without Cause.
Unless otherwise determined by the Committee, for the purposes of the Plan
"Cause" shall have the same meaning as that set forth in any employment or
severance agreement, in effect between the Company and the Participant.
Otherwise, it shall mean (1) the conviction of the optionee for committing a
felony under Federal law or the law of the state in which such action occurred,
(2) dishonesty in the course of fulfilling the optionee's employment duties or
(3) willful and deliberate failure on the part of the optionee to perform his or
her employment duties in any material respect.
i. Cashing Out of Option. On receipt of written notice of exercise,
the Committee may, in its sole discretion, elect to cash out all or part of any
Stock Option to be exercised by paying the optionee an amount, in cash or Stock,
equal to the excess of the Fair Market Value of the Stock that is the subject of
the Option over the Option price times the number of shares of Stock subject to
the option on the effective date of such cash out.
SECTION 9. Stock Appreciation Rights.
a. Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 9(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 9(b). Stock Options which
have been so surrendered shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised.
28
<PAGE>
b. Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions as shall be determined by the Committee,
including the following:
i. Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Stock Options to which they relate
are exercisable in accordance with the provisions of Section 8 and this Section
9 or as may otherwise be determined by the Committee.
ii. Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash, shares of Stock or both
equal in value to the excess of the Fair Market Value of one share of Stock over
the option price per share specified in the related Stock Option multiplied by
the number of shares in respect of which the Stock Appreciation Right shall have
been exercised, with the Committee having the right, in its sole discretion, to
determine the form of payment.
iii. Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be transferable
under Section 8(e).
iv. Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of determining the number
of shares of Stock available for issuance under the Plan in accordance with
Section 5 of the Plan, but only to the extent of the number of shares resulting
from dividing the value of the Stock Appreciation Right at the time of exercise
by the Fair Market Value of one share of Stock determined in accordance with
this Section 9.
SECTION 10. Terms of Restricted Stock Awards.
Subject to and consistent with the provisions of the Plan, with
respect to each Award of Restricted Stock to a Participant, the Committee shall
determine:
a. the terms and conditions of the Restricted Stock Agreement
between the Company and the Participant evidencing the Award;
b. the Restricted Period for all or a portion of the Award;
c. the Restrictions applicable to the Award, including, but not
limited to, continuous employment with the Company for a specified term or the
attainment of specific corporate, divisional or individual performance standards
or goals, which Restricted Period and Restrictions may differ with respect to
each Participant;
d. whether the Participant shall receive the dividends and other
distributions paid with respect to an award of the Restricted Stock as declared
and paid to the holders of Stock during the Restricted Period or shall be
withheld by the Company for the account of the Participant until the Restricted
Periods have expired or the Restrictions have been satisfied, and whether
interest shall be paid on such dividends and other distributions withheld, and
if so, the rate of interest to be paid;
e. the percentage of the Award which shall vest in the Participant
in the event of death, Disability or Retirement prior to the expiration of the
Restricted Period or the satisfaction of the Restrictions applicable to an award
of Restricted Stock; and
29
<PAGE>
f. notwithstanding the Restricted Period and the Restrictions
imposed on the Restricted Shares, as set forth in a Restricted Stock Agreement,
whether to shorten the Restricted Period or waive any Restrictions, if the
Committee concludes that it is in the best interests of the Company to do so.
Upon an award of Restricted Stock to a Participant, the stock
certificate representing the Restricted Stock shall be issued and transferred to
and in the name of the Participant, whereupon the Participant shall become a
stockholder of the Company with respect to such Restricted Stock and shall be
entitled to vote the Stock. Such stock certificates shall be held in custody by
the Company, together with stock powers executed by the Participant in favor of
the Company, until the Restricted Period expires and the Restrictions imposed on
the Restricted Stock are satisfied.
SECTION 11. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would (i) impair
the rights of an Award theretofore granted without the Participant's consent,
except such an amendment made to cause the Plan to qualify for the exemption
provided by Rule 16b-3, or (ii) disqualify the Plan from the exemption provided
by Rule 16b-3. In addition, no such amendment shall be made without the approval
of the Company's stockholders to the extent such approval is required by law or
agreement.
The Committee may amend the terms of any Stock Option or other
Award theretofore granted, prospectively or retroactively, but no such amendment
shall impair the rights of any holder without the holder's consent except such
an amendment made to cause the Plan or Award to qualify for the exemption
provided by Rule 16b-3. The Committee may also substitute new Stock Options for
previously granted Stock Options, including previously granted Stock Options
having higher option prices.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules,
as well as other developments and to grant Awards which qualify for beneficial
treatment under such rules without shareholder approval.
SECTION 12. General Provisions.
a. Nothing contained in the Plan shall prevent the Company or an
Affiliate from adopting other or additional compensation arrangements for its
employees.
b. The Plan shall not confer upon any employee any right to
continued employment nor shall it interfere in any way with the right of the
Company or an Affiliate to terminate the employment of any employee at any time.
c. No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal income tax
purposes with respect to any Award under the Plan, the Participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Stock, including Stock
that is part of the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the participant.
30
<PAGE>
d. The Committee shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid.
e. Agreements entered into by the Company and Participants relating
to Awards under the Plan, in such form as may be approved by the Committee from
time to time, to the extent consistent with or permitted by the Plan shall
control with respect to the terms and conditions of the subject Award. If any
provisions of the Plan or any agreement entered into pursuant to the Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan or the subject agreement.
f. The Plan and all Awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of
Delaware.
31
<PAGE>
QUESTRON TECHNOLOGY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Robert V. Gubitosi and Dominic A.
Polimeni as Proxies, each with the full power of substitution, and hereby
authorized 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 September 29, 1999, at the Annual Meeting
of Stockholders to be held on October 28, 1999, or any adjournment, thereof,
upon all such matters as may properly came 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 1996
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)
878368.1
<PAGE>
____ Please mark your vote
as in this example
The Board of Directors Recommends a Vote "FOR" All Nominees
And For Approval of Proposals 2 and 3
For all nominees listed at right WITHHOLD
except as marked to the AUTHORITY
contrary below to vote for all nominees
listed at right
------- ------
1. Election of Directors
Instructions to withhold authority to vote for Nominees:
any individual nominee, write that name in Dominic A. Polimeni
in the space provided below Robert V. Gubitosi
Douglas D. Zadow
Michael M. Adler
Frederick W. London
William J. McSherry, Jr.
For Against Abstain
2. Proposal to amend the 1996 Plan ----- ------- -------
as described in the proxy statement
dated October 1, 1999
3. Ratification of appointment of
Ernst & Young LLP as the Company's
independent public accountants for the
fiscal year ending December 31, 1999
4. 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 stated, this proxy will be
voted "FOR" the nominees listed
Please mark, sign and return this Proxy promptly using the enclosed envelope.
<TABLE>
<S> <C> <C> <C>
Signature__________________ Date:_______________, 1999 Signature ____________________________ Date:_______________, 1999
(signature (if held jointly)
</TABLE>
NOTE: Please sign exactly as name or names appear on stock certificates. Each
joint owner must sign. When signing as an attorney, executor,
administrator or guardian, please give full title as such.
878368.1
<PAGE>
