-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FoNv+9NkSoj3RQb06CdZbprIJP4jpWWQ/DM7BAp2g+adfj8D4q0mWju5cbKsFi1U bovZb5uEeuwZ7y34UcOnSw== 0000903112-98-001734.txt : 19981009 0000903112-98-001734.hdr.sgml : 19981009 ACCESSION NUMBER: 0000903112-98-001734 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980924 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981008 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUESTRON TECHNOLOGY INC CENTRAL INDEX KEY: 0000732152 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063] IRS NUMBER: 232257354 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-13324 FILM NUMBER: 98722805 BUSINESS ADDRESS: STREET 1: 6400 CONGRESS AVENUE STREET 2: SUITE 200 CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 4072415251 MAIL ADDRESS: STREET 1: 6400 CONGRESS AVENUE STREET 2: SUITE 200 CITY: BOCA RATON STATE: FL ZIP: 33487 FORMER COMPANY: FORMER CONFORMED NAME: JUDICATE INC DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K 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 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 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- 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- 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- EX-2.5 2 AMENDMENT TO STOCK PURCHASE AGREEMENT 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 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- 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- 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- 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
Amount at Amount at December 31, 1997 June 30, 1998 ----------------- ------------- 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 ============== =============
758630.1 EX-2.6 3 AMENDMENT TO STOCK PURCHASE AGREEMENT 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- 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- 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- ------------------------------ MALCOLM TALLMON ------------------------------ FLOYD MCLERRAN ------------------------------ DEBORAH A. ALVIS ------------------------------ ROBERT JOHNSON, JR. ------------------------------ BARBARA J. WINDHAM 757678.2 -4- Fortune Industries, Inc. EXHIBIT A Schedule 1.2(a)(ii) Initial Purchase Price
Investor Shareholders % Status* Cash Shares - ------------------------------ -------------- --------------- -------------------- ------------------ 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 ==================== ==================
- --------------------- * A means that such Seller is an accredited investor as such term is defined in Regulation D under the Act. 758637.1 2 EX-4.1 4 REGISTRATION RIGHTS AGREEMENT 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 "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 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- 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- 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- (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- 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- 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 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- 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- 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- Schedule A KYLE G. CROWLEY RICHARD E. BURKHARDT KENDALL P. CRAIG DOC. H. LANKFORD MALCOLM TALLMON 721783.3 -12- EX-16.1 5 LETTER 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. -----END PRIVACY-ENHANCED MESSAGE-----