MODIFICATION TO EMPLOYMENT AGREEMENT AND

RETENTION AGREEMENT

 

THIS MODIFICATION TO EMPLOYMENT AGREEMENT AND RETENTION AGREEMENT (“Modification
Agreement”) is made this 28th day of August, 2012 between SED INTERNATIONAL
HOLDINGS, INC., a Georgia corporation (the “Company”) and Jonathan Elster, an
individual resident of the State of Georgia (the “Executive”). Collectively, the
Company and the Executive may be referred to hereinafter as the “parties.”

 

WITNESSETH:

 

WHEREAS, on July 1, 2010, the Executive and the Company entered into an
Employment Agreement (the “Employment Agreement”) setting forth the terms and
conditions of the Executive’s employment with the Company; and

 

WHEREAS, the Company has informed the Executive it desires to employ the
Executive in a position other than as its Chief Executive Officer and President
of the Company, in anticipatory violation of Section 1 of the Employment
Agreement; and

 

WHEREAS, in connection therewith, the Executive and the Company desire to amend
and modify the Employment Agreement, as well as to enter into an employment
retention agreement, to reinforce and encourage the continued attention and
dedication of the Executive.

 

NOW, THEREFORE, in consideration of the foregoing, the continued employment of
the Executive and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1. The Executive shall remain employed by the Company as its Chief Executive
Officer and President until such time as the Company names an Interim Chief
Executive Officer or hires a new Chief Executive Officer or President, at which
time the Executive shall transfer to the position of Chief Strategy, and shall
report to the Chief Executive or Interim Chief Executive Officer, or as he or
she directs, and perform such other duties as the Chief Executive Officer or
Interim Chief Executive Officer may direct.

 

2. The Executive shall resign as a Director of the Company as of the date this
agreement.

 

3. The Executive shall continue to receive the compensation and benefits set
forth in Section 2 of the Agreement while the Executive remains employed by the
Company.

 

4. Immediately upon the expiration of the Term of the Employment Agreement, and
unless the parties enter into a written agreement otherwise, the parties’
employment relationship shall become one with no defined term that can be
terminated by either of them “at will,” (subject to the terms of this
Modification Agreement) provided that if the Company desires to terminate the
Executive’s employment following the Term, other than for Good Cause, it must
first provide the Executive at least 3 weeks advance written notice of such a
termination and if the Executive desires to terminate his employment with the
Company following the Term, he shall provide the Company with at least 3 weeks
advance written notice of such termination.

 

 

 

 

 

5. If during or after the Term (i) the Company terminates the Executive, other
than for Good Cause, or (ii) the Executive terminates his employment after
providing the Company at least 3 weeks advance written notice of such
termination and such termination occurs no earlier than the expiration of the
60-day period beginning on the new Chief Executive Officer’s first day of work,
the Executive shall receive $340,000.00 as a Severance Payment in a single lump
sum, and all restricted shares of common stock of the Company which had been
granted to the Executive shall vest immediately on the effective date of such
termination. The Executive’s receipt of severance under this Paragraph 4 shall
be subject to the Employment Agreement’s provisions regarding the Executive’s
execution of a release of claims as a condition precedent to receiving
severance; the timing of the payment of severance to the Executive; and
restrictions imposed under Code Section 409A (regardless of whether the
Employment Agreement is otherwise then in effect). For the avoidance of doubt,
the Executive’s right to severance under this Paragraph 4 shall replace and be
in lieu of the Severance Payment to which the Executive is otherwise entitled
under the Section 3(d)(i) of the Employment Agreement, and shall remain in
effect following the Term of the Employment Agreement. Anything contained
elsewhere in this Modification Agreement or the Employment Agreement to the
contrary notwithstanding, the aggregate amount payable to the Executive as a
Severance Payment upon the termination of Executive’s employment with the
Company, including termination following a breach by the Company of the
Employment Agreement or termination of the Executive by the Company without Good
Cause, shall not exceed $340,000, and shall be deemed liquidated damages and
shall be contingent on the Executive delivering to the Company an executed
Agreement and General Release in the form made a part of the Employment
Agreement. No Severance Payment shall be payable by the Company upon termination
of the Executive by the Company for Good Cause.

 

6. Except as otherwise modified hereby, all other provisions of the Employment
Agreement shall remain in full force and effect during the Term. Capitalized
terms used but not defined herein shall have the meanings ascribed in the
Employment Agreement, whether or not the Employment Agreement is otherwise in
effect. Any terms or provisions of the Employment Agreement covering the same
subject matter that are in conflict with this Modification Agreement are hereby
merged into and superseded by the provisions of this Modification Agreement.

 

IN WITNESS WHEREOF, the parties have duly executed and delivered this
Modification Agreement as of the date first indicated above.

 

EXECUTIVE   SED INTERNATIONAL HOLDINGS, INC.,     a Georgia corporation        
    /s/ Jonathan Elster   /s/ Samuel A. Kidston Jonathan Elster   Name:  Samuel
A. Kidston     Title: Chairman