THIRD AMENDMENT TO EMPLOYMENT AGREEMENT

      THIS THIRD AMENDMENT TO EMPLOYMENT AGREEMENT is made this 7th
day of June, 1999, effective as of July 1, 1999, between SED
INTERNATIONAL, INC., a Georgia corporation (the "Subsidiary") and a
wholly-owned subsidiary of SED INTERNATIONAL HOLDINGS, INC., a Georgia
corporation, and Gerald Diamond, an individual resident of the State
of Georgia (the "Employee").

                              W I T N E S S E T H:

      WHEREAS, on November 7, 1989, Employee and the Subsidiary
entered into an Employment Agreement (the "Agreement") setting forth
the terms and conditions of Employee's employment with the Subsidiary;
and

      WHEREAS, effective July 1, 1991, Employee and the Subsidiary
entered into the First Amendment to the Employment Agreement,
modifying certain terms and conditions of Employee's employment with
the Subsidiary; and

      WHEREAS, effective July 1, 1998, Employee and the Subsidiary
entered into the Second Amendment to the Employment Agreement,
modifying certain terms and conditions of Employee's employment with
the Subsidiary; and

      WHEREAS, the Subsidiary and Employee agree that it is in the
best interest of both parties to make certain further modifications to
the terms and conditions of Employee's employment with the Subsidiary.

      NOW, THEREFORE, in consideration of the foregoing, the continued
employment of the Employee, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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      1. AMENDMENT TO SECTION 3(H) OF THE AGREEMENT. Pursuant to
Section 15(d) of the Agreement, Section 3(h) is hereby deleted in its
entirety and replaced by the following paragraphs:

          (h)  If a Change of Control occurs while the Employee is
     employed by the Subsidiary during the term of this Agreement, or
     during any extension thereof, and:

          (1)  the Employee's employment is terminated involuntarily,
               or voluntarily by the Employee based on (i) material
               changes in the nature or scope of the Employee's duties
               or employment, (ii) a reduction in compensation of the
               Employee made without the Employee's consent, (iii) a
               relocation of the Subsidiary's executive offices other
               than in compliance with the provisions of Section 2(b)
               of this Agreement, or (iv) a good faith determination
               made by the Employee, upon consultation with the Board
               of Directors of the Subsidiary, that it is necessary or
               appropriate for the Employee to relocate from the
               Atlanta, Georgia Metropolitan Area to enable Employee
               to perform his duties hereunder, the Employee may, in
               his sole discretion, give written notice within thirty
               (30) days after the date of termination of employment
               to the Secretary or Assistant Secretary of the
               Subsidiary that he is exercising his rights hereunder
               and requests payment of the amounts provided for under
               this Section 3(h); or

          (2)  the Employee gives written notice of his termination of
               employment for any reason concurrently with the time a
               Change of Control occurs or any time within thirty (30)
               days after the date the Change of Control becomes
               effective to the Secretary or Assistant Secretary of
               the Subsidiary, he may exercise his rights hereunder
               and request payment of the amounts provided for under
               this Section 3(h) (the notice provided pursuant to
               Subsection 3(h)(1) or Subsection 3(h)(2) is referred to
               as the "Notice of Exercise").

          If the Employee gives a Notice of Exercise to receive the
          payments provided for hereunder, the Subsidiary shall pay to
          or for the benefit of the Employee, immediately upon the
          Subsidiary's receipt of the Notice of Exercise, a single
          cash


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          payment for damages suffered by the Employee by reason of
          the Change in Control (the "Executive Payment") in an amount
          equal to (as determined in accordance with Section 280G(d)
          (4) of the Code) all annual salary, Bonuses and other
          benefits owing to Employee for the period from Employee's
          date of termination hereunder through the remainder of the
          Initial Term of this Agreement, as may be extended;
          provided, however, in the event the period from the date of
          Employee's termination hereunder through the remainder of
          the Initial Term of this Agreement, as may be extended, is
          less than twelve (12) months, then the Employee shall
          receive an Executive Payment equal to the sum of (as
          determined in accordance with Section 280G(d)(4) of the
          Code) (i) the current annual salary and the value of all
          other benefits payable to the Employee annualized for a
          twelve (12) month period, and (ii) an amount equal to any
          Bonus that would have been paid for such period of less than
          twelve (12) months based on an extrapolation of SEC's Pretax
          Adjusted Annual Income for the full quarterly periods from
          the end of the most recent fiscal year to the date of
          termination; and further provided, however, if Employee's
          termination of employment hereunder occurs in the first
          fiscal quarter of a fiscal year, then the Bonus shall be
          based on SEC's Pretax Adjusted Annual Income for the
          immediately preceding fiscal year.

          The Executive Payment shall be in addition to and shall not
          be offset or reduced by (i) any other amounts that have been
          earned or accrued or that have otherwise become payable or
          will become payable to the Employee or his beneficiaries,
          but have not been paid by SEC or the Subsidiary at the time
          the Employee gives the Notice of Exercise including, without
          limitation, salary, bonuses, severance pay, consulting fees,
          disability benefits, termination benefits, retirement
          benefits, life and health insurance benefits or any other
          compensation or benefit payment that is part of any
          previous, current or future contract, plan or agreement,
          written or oral, and (ii) any indemnification payments that
          may have accrued but not paid or that may thereafter become
          payable to the Employee pursuant to the provisions of SEC's
          and the Subsidiary's Articles of Incorporation, Bylaws or
          similar policies, plans or agreements relating to
          indemnification of directors and officers of SEC and the
          Subsidiary under certain circumstances. The Executive
          Payment shall not be reduced by any present value
          calculations.

          In the event the Employee dies during the term of this
          Agreement, the Employee's legal representative shall be
          entitled to receive the
<PAGE>

          Executive Payment, provided that the Notice of Exercise has
          been or is given either by the Employee or his legal
          representative, as the case may be.

      2. OTHER PROVISIONS OF THE AGREEMENT. Except as otherwise
provided herein,  all other provisions of the Agreement shall remain
in full force and effect and  Employee's employment thereunder shall
continue on the terms described therein  throughout the term of the
Agreement, as amended hereby.

      IN WITNESS WHEREOF, the parties have duly executed and delivered
this  Third Amendment to Employment Agreement as of the day and year
first indicated  above.

                        SED INTERNATIONAL, INC.

                        By:  _______________________________________

                                Name: RAY D. RISNER
                                Title:  PRESIDENT AND COO

                        _____________________________________(SEAL)
                            Gerald Diamond (Employee)


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