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                                                                   Exhibit 10.38


                              SETTLEMENT AGREEMENT

                  This Settlement Agreement (this "Settlement Agreement" or this
"Agreement") dated as of March 7, 2000, is entered into by and among (i)
Questron Finance Corp., a Delaware corporation (the "Maker"), (ii) Questron
Technology, Inc., a Delaware corporation ("Questron") and (iii) Robert A. Lehman
(the "Holder").

                                    RECITALS

                  WHEREAS, the Holder is the holder of that certain Senior A
Note of the Maker, in the principal amount of $27,900, dated June 30, 1999 (the
"Note");

                  WHEREAS, Questron is a signatory to the Note; and

                  WHEREAS, pursuant to the terms and conditions set forth below,
the parties hereto wish to settle, fully and finally, all obligations of
Questron and the Maker to the Holder under the Note.

                  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 as follows:

         1. SETTLEMENT. (a) At the Settlement Closing, Questron agrees to issue
and deliver 2,511 shares of Questron's common stock, par value $0.001 per share,
to the Holder (the "Settlement Shares"). The Settlement Shares shall be
restricted securities under Rule 144 of the Act of 1933, as amended (the "Act"),
will not have been registered under the Act and may not be sold or transferred
absent such registration or unless an exception from registration is available
and the certificates evidencing such shares shall bear an appropriate legend
restricting transfers under the Act. (b) The Holder agrees to accept the
Settlement Shares issued and delivered to him/her in full and final settlement
and satisfaction of all obligations of Questron and Maker arising under of in
connection with the Note, including all unpaid principal and accrued interest
thereon, and such acceptance shall constitute the release, cancellation,
discharge and relinquishment of any and all obligations, judgments, liens,
claims, debts, demands, causes of action, rights and interests (whether known or
unknown, choate or inchoate), that are now owned, claimed or held or which may
hereafter be owned, claimed or held by the Holder against Questron or Maker, as
a result of, in connection with, or otherwise relating to the Note. (c) At the
Settlement Closing, Holder shall deliver to the Maker, the original Note, marked
"Paid In Full," and such other instruments, certificates and documents as the
Maker may reasonably request to evidence the full payment and satisfaction of
such obligations. (d) "Settlement Closing" means the closing of the transactions
contemplated by this paragraph 1. The Settlement Closing shall take place on
March 7, 2000 at 12:00 p.m. Eastern Time, at the offices of Questron located at
6400 Congress Avenue, Suite 2000,



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Boca Raton, Florida 33487, or at such other time and place as the parties may
mutually agree.

         2. REGISTRATION OF SETTLEMENT SHARES. (a) Within 90 days of the
Settlement Closing, Questron shall prepare and file under the Act with the
Securities and Exchange Commission a registration statement with respect to the
Settlement Shares, plus an additional 2,511 shares of Common Stock held by the
Holder (together the "Registrable Shares") and use its reasonable best efforts
to cause such registration statement to become effective. (b) Questron shall
notify the Holder of the effectiveness of the registration statement filed
hereunder and prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 180 days and comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement during such period in accordance with the
intended methods of disposition by the Holder set forth in such registration
statement. (c) Questron will use its reasonable best efforts to register or
qualify such Registrable Shares under such other securities or blue sky laws of
such jurisdictions as Holder reasonably requests (provided Questron shall not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction). (d) Questron shall notify the
Holder at any time when a prospectus relating thereto is required to be
delivered under the Act as amended, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and, at the request of the Holder, Questron shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Shares, such prospectus shall
not contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading. (e) Questron shall
cause the Registrable Shares to be listed on each securities exchange on which
similar securities issued by Questron are then listed. (f) Questron may postpone
or suspend for up to 180 days the filing or the effectiveness of a registration
statement if the Questron's board of directors determines in its reasonable good
faith judgment that such filing or effectiveness would reasonably be expected to
have a material adverse effect on any proposal or plan by Questron or any of its
subsidiaries to engage in any acquisition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer, reorganization
or similar transaction or any financing transaction.

         3. REGISTRATION EXPENSES. All expenses incident to the Questron's
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses,
fees and disbursements of custodians, and fees and disbursements of counsel for
Questron and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by Questron,
shall be borne by Questron. All brokerage



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commissions or similar selling expenses in connection with the sale by the
Holder of the Registrable Shares shall be borne by the Holder.

         4. INDEMNIFICATION. (a) Questron agrees to indemnify, to the extent
permitted by law, the Holder against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to Questron by the Holder
expressly for use therein or by the Holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after Questron has furnished the Holder with a sufficient number of copies of
the same. (b) the Holder shall furnish to Questron in writing such information
and affidavits as Questron reasonably requests for use in connection with the
registration statement or prospectus and, to the extent permitted by law, shall
indemnify the Questron, its directors and officers and each person who controls
the Questron (within the meaning of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged untrue
statement of material fact contained in the registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by the Holder; provided that the obligation to
indemnify shall be limited to the net amount of proceeds received by the Holder
from the sale of Registrable Shares pursuant to such registration statement. (c)
Any party entitled to indemnification hereunder shall (i) give prompt written
notice to the indemnifying party of any claim with respect to which it seeks
indemnification (provided that the failure to give prompt notice shall not
impair any party's right to indemnification hereunder to the extent such failure
has not prejudiced the indemnifying party) and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party shall not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim.

         5. REPRESENTATIONS AND WARRANTIES.

                  (A) The Holder,


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                            (i) represents and warrants that the Settlement
         Shares to be issued to him/her are being acquired as an investment and
         not with a view to the distribution thereof;

                           (ii) understands that none of the Settlement Shares
         have been registered under the Act, in reliance on an exemption
         therefrom, and that none of the Settlement Shares have been approved or
         disapproved by the United States Securities and Exchange Commission or
         by any other Federal or state agency;

                           (iii) understands that none of the Settlement Shares
         can be sold, transferred or assigned unless registered by pursuant to
         the Act and any applicable state securities laws, or unless an
         exemption therefrom is available, and, accordingly, it may not be
         possible for any Seller to liquidate its investment in the Settlement
         Shares, and agrees not to sell, assign or otherwise transfer or dispose
         of the Settlement Shares unless such securities have been so registered
         or an exemption from registration is available;

                           (iv) acknowledges that all documents, records and
         books pertaining to Questron and its business, including, but not
         limited to, the following documents which have been provided to, and
         reviewed by, each of Sellers: (a) Questron's Annual Reports on Form
         10-KSB for the fiscal years ended December 31, 1997 and 1998, (b)
         Questron's Quarterly Reports on Form 10-QSB for the quarterly periods
         ended March 31, 1999, June 30, 1999 and September 30, 1999, (c)
         Questron's Proxy Statement, dated October 1, 1999, relating to its
         Annual Meeting of Shareholders, and (d) Questron's Form 8-K and Form
         8-K/A dated July 14, 1999 and August 13, 1999, respectively, have been
         made available to the Holder and the Holder's attorney and/or
         accountant and/or representative. The Holder has had an opportunity to
         ask questions and receive answers from Questron concerning the business
         and assets of Questron and all such questions have been answered to the
         full satisfaction of the Holder;

                           (v) represents and warrants that the Holder is an
accredited investor, as that term is defined in Regulation D under the Act; and

                           (vi) represent and warrants that the Holder has not
assigned, transferred or conveyed any of its rights under the Note.

                  (B) Questron represents and warrants to the Holder that all
Settlement Shares delivered to the Holder pursuant to this Settlement Agreement,
when issued as contemplated hereby, will be duly authorized, fully paid and
non-assessable.


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         6. NOTICES . All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given: (i) if to Questron and the
Maker upon receipt of hand delivery; certified or registered mail, return
receipt requested or telecopy transmission with confirmation of receipt
addressed to Questron Technology, Inc., 6400 Congress Avenue, Suite 2000, Boca
Raton, Florida 33487, telecopier (561) 241-2866, telephone (561) 241-5251,
attention: Dominic A. Polimeni, with copy to Arent Fox Kintner Plotkin & Kahn,
PLLC, 1675 Broadway, 25th Floor, New York, New York 10019, Telecopier: (212)
484-3900, Telephone: (212) 484-3944, attention: William J. McSherry, Esq.; and
(ii) if to the Holder, in the manner and to the address set forth in the Note.

         7. ENTIRE AGREEMENT. This Agreement and the documents referred to
herein, embodies the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.

         8. AMENDMENT AND MODIFICATION . This Agreement may be amended or
modified only by written agreement of the parties hereto.

         9. BINDING EFFECT; BENEFITS . This Agreement shall inure to the benefit
of and be binding upon the parties hereto; nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto.

         10. CHOICE OF LAW. This Agreement shall be governed by the laws of the
State of New York, exclusive of its principles concerning conflicts of law.

         11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

                     [Remainder of Page Intentionally Blank]



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         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.

                                            QUESTRON TECHNOLOGY, INC.

                                            By  ______________________________
                                                Dominic A. Polimeni
                                                Chairman and
                                                Chief Executive Officer

                                            QUESTRON FINANCE CORP.

                                            By  ______________________________
                                                Dominic A. Polimeni
                                                Chairman and
                                                Chief Executive Officer

                                                HOLDER:


                                                ______________________________
                                                Robert A. Lehman



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