Document:

form10qexh104_121409.htm

     

    EXHIBIT
10.4

    
 

    BOND
PLEDGE AGREEMENT

     

    THIS BOND PLEDGE AGREEMENT
(“Agreement”), dated as of October 30, 2009 is between DCI, Inc., a Kansas
corporation (“Pledgor”), and UMB Bank, N.A., a national banking association (the
“Bank”).

     

    RECITALS:

     

    A.           The
City of Olathe, Kansas (the “Issuer”) issued an $820,000 aggregate maximum
principal amount of Taxable Subordinate Industrial Revenue Bonds (DCI, Inc.
Project) Series 2006D (the “Series 2006D Bond”), pursuant to that certain Trust
Indenture dated as of September 1, 2006 (the “Indenture”), between the
Issuer and UMB Bank, N.A., as Trustee.

     

    B.           Pledgor
purchased the Series 2006D Bond pursuant to a Bond Purchase Agreement dated
August 30, 2006, among Pledgor, as borrower, Pledgor, as purchaser, and the
Issuer.

     

    C.           Concurrently
herewith, the Bank is purchasing from Bank Midwest Issuer’s Tax Exempt
Industrial Revenue Bonds (DCI, Inc. Project) Series 2006A in the outstanding
principal amount of 3,333,997.52 (the “Series 2006A Bond”) issued pursuant to
the Indenture from Bank Midwest.

     

    D.           To
induce Bank to purchase the Series 2006A Bond, Pledgor has agreed to pledge the
Series 2006D Bond to Bank.

     

    NOW, THEREFORE, in
consideration of the premises and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereby agree as
follows:

     

    1.           Security
Interest.  To secure the payment and performance of Pledgor’s
obligations of every type and description arising under or related to the Series
2006A Bond (all such liabilities and obligations being herein collectively
referred to as the “Obligations”), Pledgor hereby grants, pledges, assigns,
hypothecates, transfers and delivers to Bank all of its right, title and
interest in and to the Series 2006D Bond and further grants Bank a security
interest in the Series 2006D Bond.  To perfect this security interest,
Pledgor agrees to deliver possession of the Series 2006D Bond to
Bank.

     

    2.           Representations, Warranties and
Covenants.  Pledgor represents, warrants and covenants
that:  (a) Pledgor will duly endorse, in blank, the Series 2006D Bond
by signing on the Series 2006D Bond or signing a separate Bond Power or other
document of assignment or transfer, if required by Bank, (b) Pledgor is the
owner of the Series 2006D Bond free and clear of all liens, encumbrances,
security interests and restrictions, (c) Pledgor will keep Series 2006D Bond
free and clear of all liens, encumbrances and security interests, except those
to Bank, and (d) Pledgor will not cause the Series 2006D Bond to be issued in
book-entry form while the Series 2006D Bond is subject to this
Agreement.

     

    3.           Default and
Remedies.  Each of the following occurrences shall constitute
an event of default under this Agreement (herein called an “Event of
Default”):  (i) Pledgor shall fail to pay any or all of the
Obligations when due or (if payable on demand) on demand or shall

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    default
under any material agreement governing the Obligations with Bank and the
expiration of any applicable cure periods without cure; (ii) an Event of Default
(as defined therein) shall occur under the Indenture; (iii) either Elecsys
Corporation, a Kansas corporation, or Pledgor shall voluntarily file or have
involuntarily filed against it a petition under the United States Bankruptcy
Code; or (iv) an Event of Default (as defined therein) shall have occurred and
is continuing under the Lease Agreement dated as of September 1, 2006 (the
“Lease Agreement”), between Pledgor, as lessee, and the Issuer, as
lessor.

     

    Upon the
occurrence of an Event of Default, the Pledgor agrees, upon the request of Bank,
to take all action necessary to transfer ownership of the Series 2006D Bond to
Bank without waiving any rights the Pledgor may have under the Uniform
Commercial Code, and Bank may collect, receive and realize upon the Series 2006
D Bond or any part thereof.  Additionally, Bank may exercise any and
all rights and remedies available against Pledgor upon default to a secured
party under Missouri law and the Uniform Commercial Code.

     

    5.           Waivers by
Pledgor.  None of the following acts or things (which Bank is
authorized to do or not to do with or without notice to Pledgor) shall in any
way affect or impair the security interest herein granted or Pledgor’s
liabilities and obligations hereunder:  (a) any extension or renewal
(whether or not for longer than the original period) of any or all of the
Obligations; (b) any change in the terms of payment or other terms of any
or all of the Obligations, or any substitution or exchange of any evidence of
any or all of the Obligations or collateral therefore, or any release of any
collateral for any or all of the Obligations; (c) the failure or neglect to
protect or preserve any Obligation or any collateral therefore, or to exercise
any right which may be available to Bank by law or agreement prior to or after
an Event of Default or any delay in doing any of the foregoing; (d) the failure
or neglect to ascertain or assure that the proceeds of any loan to Borrower are
used in any particular manner; and (e) the application or failure to apply in
any particular manner any payments or credits upon the Obligations.

     

    6.           Miscellaneous.  (a)
This Agreement can be waived, modified, amended, terminated or discharged, and
the Series 2006D Bond can be released only explicitly in a writing signed by
Bank.  (b) This Agreement shall terminate upon payment in full of the
Obligations or cancellation of the Series 2006D Bond.  Upon the
payment in full of the Obligations, Pledgor shall be entitled to the return,
upon its request and at its expense, of such of the Series 2006D Bond as shall
not have been sold or otherwise applied pursuant to the terms
hereof.  (c) Pledgor will reimburse Bank for all expenses, including
legal fees, incurred by Bank in the protection, defense or enforcement of this
Agreement, including expenses incurred in any litigation or bankruptcy or
insolvency proceedings of Pledgor.  (d) This Agreement shall be
binding upon and inure to the benefit of Pledgor and Bank and their respective
representatives, successors and assigns and shall take effect when signed by
Pledgor and delivered to Bank.  (e) THIS AGREEMENT SHALL BE GOVERNED
BY, AND BE CONSTRUED, ENFORCED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF MISSOURI (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING
TO CONFLICTS OF LAW).

     

    7.           Severability.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such

     

    
      
         

      

      
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    prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.

     

    8.           Time of the
Essence.  Time is of the essence in the interpretation of this
Agreement.

     

    9.           Bank Appointed
Attorney-in-Fact.  Pledgor hereby appoints Bank Pledgor’s
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor or otherwise, from time to time during the pendency of an
Event of Default in Bank’s discretion to take any action and to execute any
instrument which Bank may deem necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to Pledgor representing any interest
payment or other distribution in respect of the Series 2006D Bond or any part
thereof and to give full discharge for the same.

     

    10.           Counterparts/Facsimile.  This
Agreement may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.  The exchange of copies of this Agreement and
of signature pages by facsimile transmission shall constitute effective
execution and delivery of this Agreement as to the parties and may be used in
lieu of the original Agreement for all purposes.  Signatures of the
parties transmitted by facsimile shall be deemed to be their original signatures
for all purposes.

     

    [SIGNATURE
PAGE TO FOLLOW]

     

    
      
         

      

      
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    Agreed to
this 30th day
of October, 2009.

     

    

    
      	 
      	
              DCI,
      INC.

              By: 
      _________________________________                                                                

              Name: 
      _______________________________                                                                

              Title: 
      ________________________________                                                                

               

            
	 
      	 
      
	 
      	
              UMB
      BANK, N.A.

                    
                By: 
      _________________________________                                                                

                Name: 
      _______________________________                                                                

                Title: 
      ________________________________                                                           

              

               

            

    

    

    

    
      
         

      

      
        4SETTLEMENT
AGREEMENT AND AMENDMENT TO EMPLOYMENT AGREEMENT

             This
Settlement Agreement and Amendment to Employment Agreement (the “Agreement”) is
entered into as of December 9, 2009 between SED INTERNATIONAL HOLDINGS, INC., a
Georgia corporation (“SED”) and Jean Diamond, an individual resident of the
State of Georgia (the “Employee”). Defined terms used herein and not otherwise
defined have the meanings ascribed to them in the Amended and Restated
Employment Agreement, dated January 15, 2008, between SED and the Employee (the
“Employment Agreement”).

             WHEREAS, SED and Employee are parties to
the Employment Agreement which provides for the terms of Employee’s employment
with SED; and

             WHEREAS, Employee desires to resign and, in
connection with such resignation, to amend the Employment Agreement; and

             WHEREAS, SED and Employee wish to settle,
compromise, and resolve any and all disputes relating to Employee’s resignation
and her employment with SED and to amend the Employment Agreement
correspondingly.

NOW,
THEREFORE, in consideration of the above recitals and of the
promises, agreements and conditions hereof, and further good and valuable
consideration the receipt and legal sufficiency of which are hereby
acknowledged, Employee and SED agree as follows:

1.          Employee
hereby resigns as Chief Executive Officer of SED (including any applicable
subsidiaries of SED) effective on December 9, 2009 (the “Effective Date”).
However, Employee will provide services to SED as a senior management
consultant until June 21, 2010 to assist and consult with Jonathan Elster,
and/or such other person who is designated by the Board, who assumes the
responsibilities of Chief Executive Officer of SED (the “New CEO”), all as
requested by the Board of Directors of SED (the “Board”). During the period
from December 9, 2009 to June 21, 2010, the New CEO will be responsible for and
have full authority relating to SED’s operational decisions. SED and Employee
anticipate that Employee’s non-director services performed for SED pursuant to
this paragraph, if any, will be in an amount that is less than twenty percent
of the average time that Employee devoted to performing non-director services
for SED during the thirty-six months preceding the Effective Date.

2.          Employee
shall have the use of her current office from the Effective Date through and
including June 21, 2010. On a part-time basis (a maximum of 10 hours weekly),
Employee shall be entitled to utilize the secretarial and administrative services
of Barbara Gay from the Effective Date through June 21, 2010, subject to Ms.
Gay’s other corporate duties. If Ms. Gay departs SED during that time period,
Employee shall be entitled to utilize the secretarial and administrative
services of another suitable SED employee. SED will not deny to Employee the
use of her office or Barbara Gay until June 21, 2010 for any reason except if
the Board and the New CEO determine that Employee is disrupting the day-to-day
operations of SED. Notwithstanding anything to the contrary herein, SED’s
obligations under this paragraph 2 shall be subject to the Employee’s continued
and binding obligation under the Agreement and General Release, dated an even
date, attached as Exhibit B hereto (the “Agreement and General Release”).

3.          On
June 21, 2010, SED shall pay to Employee the lump sum payment required by
Section 4(c) of the Employment Agreement in the amount of U.S. One Million Six
Hundred Thousand dollars and no cents ($1,600,000.00)(the “Termination
Amount”), subject to a reduction in the amount of U.S. Sixty Four Thousand
Eight Hundred dollars ($64,800.00) pursuant to paragraph 5 of this Agreement.
SED may not avoid paying the Termination Amount to Employee for “Cause” as that
term is defined in the Employment Agreement, or for any other reason. The
Termination Amount is not subject to forfeiture, and Employee shall not have
any obligation to re-pay any portion of the Termination Amount to SED with
respect to director’s compensation, in whatever form received, earned by her
subsequent to the Effective Date.

4.          Employee
will remain a member of the Board through her current term which expires at the
annual 

1

meeting of stockholders
for the fiscal year ending June 30, 2011. Beginning on the Effective Date, SED
shall pay a director’s fee to the Employee in a pro-rated amount equivalent to
the annual fees and benefits that SED provides to its other outside directors.
For subsequent years that Employee remains on the Board, SED shall pay a
director’s fee to Employee that is equal to the annual fees and benefits that
SED pays to its other outside directors.

5.          SED
shall allow Employee to have continued use of the 2008 Mercedes-Benz S550
automobile provided to Employee pursuant to Section 3(c) of the Employment
Agreement until such time that it transfers title to such vehicle, on June 21,
2010, to Employee. The Kelly Bluebook value of such vehicle as of the Effective
Date, using the private party pricing report and assuming that the vehicle is
in “good condition,” as indicated in the latest edition of the Kelly Bluebook
prior to such date, shall be deducted from the Termination Amount when paid in
accordance with paragraph 3 of this Agreement.

6.          SED
shall continue to lease the building located at 4916 North Royal Atlanta Drive,
Tucker, Georgia 30084 through its current term expiring on September 30, 2011
pursuant to the terms of the existing lease.

7.          On
June 21, 2010, SED shall pay all legal fees in connection with the preparation
of this Agreement, the Agreement and General Release and related documents
including, a fee to Caldwell & Watson, LLP, up to a maximum of $15,000. 

8.          Employee
shall take any and all actions necessary or requested by SED to convey her
shares of SED International de Colombia Ltda and Intermaco S.R.L. without
receiving any additional consideration.

9.          Except
as may be required by law, neither Employee nor SED, including its officers,
directors, affiliated entities, successors or assigns, shall make any
untruthful, derogatory, disparaging or defamatory statement about the other
party, or about SED’s products or services, to any third party; provided,
however, that SED shall neither be prohibited from disclosing the fact of
Employee’s resignation so long as such disclosure is factual and not materially
beyond, or materially inconsistent with, the disclosure in the press release,
in the form attached hereto as Exhibit A, nor shall SED be prohibited from
providing factually accurate information to its employees that in good faith is
necessary for the proper conduct of operations. On or after December 11, 2009,
SED will issue a press release in the form attached hereto as Exhibit A. 

10.          (a)
Subject to the terms of this Agreement, SED, on behalf of itself and on behalf
of its agents, officers, directors, employees, shareholders, successors,
assigns, and other legal representatives, releases and forever discharges
Employee (individually and in any other capacity), as well as her agents,
attorneys, assigns, and other legal representatives (collectively the “SED
Releasees”), from any and all debts, claims, demands, liabilities, assessments,
actions or causes of action, whether in law or in equity, whether direct or
indirect, whether presently known or unknown, which SED had, now has, may have
had, or may claim to have against the SED Releasees, prior to and as of the
Effective Date of this Agreement. 

               (b)
Subject to the terms of this Agreement, Employee, on behalf of herself and on
behalf of her agents, assigns, and other legal representatives, releases and
forever discharges SED, as well as its directors, officers, affiliated
entities, agents, attorneys, successors, assigns, and other legal
representatives (collectively the “Employee Releasees”), from any and all
debts, claims, demands, liabilities, assessments, actions or causes of action,
whether in law or in equity, whether direct or indirect, whether presently
known or unknown, which Employee had, now has, may have had, or may claim to have
against the Employee Releasees, prior to and as of the Effective Date of this
Agreement. 

11.          Neither
SED, nor any of its officers or directors, nor Employee shall (a) be plaintiffs
in any class or derivative actions against the other party, or pay for or
otherwise support the bringing of any such litigation arising out of any
action, inaction, or event occurring on or before the Effective Date, or (b)
cause the U.S. Securities & Exchange Commission or other administrative
agency to take any action against the Employee, SED, or any of its other
directors or affiliates arising out of any action, inaction, or event occurring
on or before the Effective Date.

2

12.          This
Agreement shall be governed in all respects, including as to validity,
interpretation and effect, by the laws of the State of Georgia.

13.          Except
as amended by this Agreement, the terms and provisions of the Employment
Agreement shall continue in full force and effect.

14.          On
the Effective Date, Employee shall deliver to SED an executed copy of the
Agreement and General Release. 

15.          This
Agreement contains a release of claims for damages which may not be known by
the parties. Each party hereto is represented by counsel, has fully read and
understands this Agreement, and consents to it. By executing this Agreement,
each party acknowledges that it fully understands and voluntarily accepts the
benefits, risks, and obligations of this Agreement and waives any future claim
based on an assertion that it has not fully read or completely understood this
Agreement.

               IN WITNESS WHEREOF, the Agreement has been
executed by the parties on the dates set forth below.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Dated: as of December 9, 2009

 	
  

 	
 SED INTERNATIONAL HOLDINGS, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By: 

 	
 /s/ Jonathan Elster

 
	
  

 	
  

 	
  

 	 

 	
  

 
	
  

 	
  

 	
  

 	
     Jonathan Elster, President

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 Dated: as of December 9, 2009

 	
  

 	
 EMPLOYEE:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 /s/ Jean A. Diamond

 
	
  

 	
  

 	 

 	
  

 
	
  

 	
  

 	
      Jean A. Diamond

 

3

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