Document:

EX-10.63 AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

Exhibit 10.63

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

     THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and entered as
of March 1, 2007, by and among SED INTERNATIONAL HOLDINGS, INC., a Georgia corporation (“Parent”),
SED INTERNATIONAL, INC., a Georgia corporation (“SED”), SED MAGNA (MIAMI), INC., a Delaware
corporation (“Magna”; Parent, SED and Magna are collectively referred to herein as “Borrowers” and
each individually as a “Borrower”), the parties to the Loan Agreement (as hereinafter defined) from
time to time as lenders (collectively, “Lenders” and each individually, a “Lender”) and WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent for Lenders
(in such capacity, “Agent”).

Recitals:

     Borrowers, Agent and Lenders are parties to that certain Loan and Security Agreement dated
September 21, 2005, as amended by that certain letter amendment dated January 24, 2006 and
that certain Second Amendment to Loan and Security Agreement dated May 12, 2006 (as at any
time amended, restated, modified or supplemented, the “Loan Agreement”), pursuant to which Lenders
have made certain revolving credit loans and other financial accommodations to Borrowers.

     The parties desire to amend the Loan Agreement as hereinafter set forth.

     NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable
consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:

     1. Definitions. All capitalized terms used in this Amendment, unless otherwise
defined herein, shall have the meaning ascribed to such terms in the Loan Agreement.

     2. Amendments to Loan Agreement. The Loan Agreement is hereby amended as follows:

     (a) By deleting the definitions of “Applicable Margin”, “Applicable Unused Line Fee Margin”,
“Financial Covenant Trigger Amount,” “Inventory Loan Limit” and “ Letter of Credit Limit” contained
in Section 1 of the Loan Agreement and by substituting the following new definitions, respectively,
in lieu thereof:

     1.9 “Applicable Margin” shall mean, effective as of March 1, 2007, a
percentage equal to zero with respect to Revolving Loans that are Prime
Rate Loans and 1.75% with respect to Revolving Loans that are Eurodollar
Rate Loans, provided that the Applicable Margin shall be increased
or (if no Default or Event of Default exists) decreased, on a monthly basis
as of the first day of each fiscal month (commencing with the fiscal
quarter ending on or about March 31, 2007), according to the performance of
Borrowers as measured by Average Excess Availability for the immediately
preceding fiscal month of Borrowers, as follows:

 

	 	 	 	 	 	 	 
	 	 	AVERAGE EXCESS	 	 
	LEVEL	 	AVAILABILITY	 	REVOLVING LOANS
	I

	 	> $8,000,000	 	Adjusted Eurodollar

Rate + 1.50%
	 	Prime Rate + zero
	 
	 	 	 	 	 	 
	II

	 	> $4,000,000

£ $8,000,000
	 	Adjusted Eurodollar

Rate + 1.75%
	 	Prime Rate + zero
	 
	 	 	 	 	 	 
	III

	 	£ $4,000,000
	 	Adjusted Eurodollar

Rate + 2.00%
	 	Prime Rate + zero

On the date of any adjustment, if the Fixed Charge Coverage Ratio (as
defined in Section 9.17 hereof) is greater than 2.0 to 1.0 based upon the
immediately preceding twelve month period, then the applicable percentage
referenced in the grid above shall be reduced by 0.25 until the next
adjustment date.

     1.10 “Applicable Unused Line Fee Margin” shall mean a percentage equal
to 0.25%.

     1.54 “Financial Covenant Trigger Amount” shall mean, on any date of
determination, an amount equal to $3,500,000, plus, in the event that
Borrowers request and receive any incremental Revolving Loan Line Increase,
an amount equal to 10% of each such Revolving Loan Line Increase.

     1.72 “Inventory Loan Limit” shall mean, at any time, the amount equal
to $20,000,000 minus Letters of Credit to the extent provided in the
definition of the term Borrowing Base.

     1.77 “Letter of Credit Limit” shall mean $7,500,000.

     (b) By deleting the definition of “Borrowing Base” contained in Section 1.19 of the Loan
Agreement and by substituting the following in lieu thereof:

     1.19 “Borrowing Base” shall mean, at any time, the amount equal to the
sum of:

(1) (a) eighty-five percent (85%) of the Eligible Accounts,
plus (b) the lesser of (i) the Foreign Accounts Loan Limit or (ii)
eighty-five percent (85%) of the Eligible Foreign Accounts, plus
(2) the lesser of (a) the Inventory Loan Limit or
(b) the sum of: (i) the lesser of (A) sixty percent
(60%) multiplied by the Value of the Eligible Inventory on hand 90 days or
less or (B) eighty-five percent (85%) of the Net Recovery Percentage of
such Eligible Inventory, plus (ii) the lesser of (A)
twenty-five percent (25%) multiplied by the Value of the Eligible Inventory
on hand more than 90 days but not more than 180 days or (B) eighty-five
percent (85%) of the Net Recovery Percentage of such Eligible Inventory,
plus (iii) the lesser of (A) the Westinghouse Inventory Loan Limit,
(B) 70% of the Value of Eligible Westinghouse Inventory, or (C) 115% of the
Net Recovery Percentage of such Eligible Westinghouse Inventory (using the
general

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television category on the Agent’s appraisal to determine the applicable
Net Recovery Percentage fraction), minus (3) Reserves.

          For purposes only of applying the Inventory Loan Limit, Agent may
treat the then undrawn amounts of outstanding Letters of Credit for the
purpose of purchasing Eligible Inventory as Revolving Loans to the extent
Agent is in effect basing the issuance of the Letter of Credit on the Value
of the Eligible Inventory being purchased with such Letter of Credit. In
determining the actual amounts of such Letter of Credit to be so treated
for purposes of the sublimit, the outstanding Revolving Loans and Reserves
shall be attributed first to any components of the lending formulas set
forth above that are not subject to such sublimit, before being attributed
to the components of the lending formulas subject to such sublimit. The
amounts of Eligible Inventory of any Borrower shall, at Agent’s option, be
determined based on the lesser of the amount of Inventory set forth in the
general ledger of such Borrower or the perpetual inventory record
maintained by such Borrower.

     (c) By deleting subclause (f) of the definition of “Eligible Accounts” contained in Section
1.39 of the Loan Agreement and by substituting the following in lieu thereof:

     (f) the chief executive office of the account debtor with respect to
such Accounts is located in the United States of America (including Puerto
Rico) or Canada (provided, that, at any time promptly upon
Agent’s request, such Borrower shall execute and deliver, or cause to be
executed and delivered, such other agreements, documents and instruments as
may be required by Agent to perfect the security interests of Agent in
those Accounts of an account debtor with its chief executive office or
principal place of business in Puerto Rico or Canada in accordance with the
applicable laws of Puerto Rico or the Province of Canada, as applicable, in
which such chief executive office or principal place of business is located
and take or cause to be taken such other and further actions as Agent may
request to enable Agent as secured party with respect thereto to collect
such Accounts under the applicable laws of Puerto Rico or Canada);

     (d) By adding the following new sentence to the end of the definition of “Eligible Inventory”
contained in Section 1.40 of the Loan Agreement:

Any amount which is included as “Eligible Westinghouse Inventory” on any
Borrowing Base certificate shall not also be included as Eligible Inventory
on the same Borrowing Base certificate.

     (e) By adding the following new definitions of “Eligible Foreign Account”, “Eligible
Westinghouse Inventory,” “Foreign Accounts Loan Limit”, “Revolver Loan Increase Conditions” and
“Westinghouse Inventory Loan Limit”, respectively, as a new Section 1.127 of the Loan Agreement
immediately following Section 1.126 thereof:

          1.127 Additional Definitions (Third Amendment to Loan and Security Agreement):

     “Eligible Foreign Account” means an Account which satisfies all of the
criteria for an “Eligible Account” set forth in the definition thereof other
than

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clause (f) thereof and which arises from a sale or lease to an account
debtor with its chief executive office or principal place of business
outside the United States or the Commonwealth of Puerto Rico or Canada, if
either: (i) the account debtor has delivered to such Borrower an irrevocable
letter of credit issued or confirmed by a bank satisfactory to Agent and
payable only in the United States of America and in U.S. dollars, sufficient
to cover such Account, in form and substance satisfactory to Agent and if
required by Agent, the original of such letter of credit has been delivered
to Agent or Agent’s agent and the issuer thereof, and such Borrower has
complied with the terms of Section 5.3(f) hereof with respect to the
assignment of the proceeds of such letter of credit to Agent or naming Agent
as transferee beneficiary thereunder, as Agent may specify, or (ii) such
Account is subject to credit insurance payable to Agent issued by an insurer
and on terms and in an amount acceptable to Agent; provided,
that, any amount which is included as an “Eligible Foreign Account”
on any Borrowing Base certificate shall not also be included as an Eligible
Account on the same Borrowing Base certificate.

     “Eligible Westinghouse Inventory” means Inventory which satisfies all
of the criteria for “Eligible Inventory” set forth in the definition thereof
and which (i) consists of Westinghouse branded LCD, DLP or plasma television
inventory that is aged less than 45 days and (ii) is subject to a purchase
order worksheet that has been delivered to Borrower by the Home Shopping
Network and with respect to which an “air date” has been set by the Home
Shopping Network; and (iii) is subject to a letter agreement executed and
delivered by Westinghouse to Agent confirming Agent’s right to dispose of
such Inventory in connection with any enforcement action conducted by Agent
and containing such other terms as may be reasonably required by Agent.

     “Foreign Accounts Loan Limit” means an amount equal to $4,000,000.

     “Revolver Loan Limit Increase Conditions” shall mean each of the
following conditions, the satisfaction of which shall be determined by Agent
on the date of the proposed Revolver Loan Limit Increase: (A) the payment of
a fee equal to 0.15% of the amount of the proposed Revolver Loan Limit
Increase to Agent for the account of Lenders; (B) no Default or Event of
Default shall exist on such date, either before or after giving effect to
the Revolving Loan Limit Increase, (C) Borrowers are in compliance with the
Fixed Charge Coverage Ratio for the applicable period as set forth in
Section 9.17 hereof, (D) Borrowers shall have Excess Availability of not
less than $5,000,000 for 30 consecutive days prior to, at the time of, and
after giving effect to, the Revolving Loan Limit Increase, (E) Borrowers
shall have paid all costs and expenses of Agent in connection with the
Revolving Loan Limit Increase, and (F) Borrowers shall have delivered or
caused to be delivered to Agent such legal agreements, opinions,
certificates, financing statement amendments and other documents as Agent
may reasonably request.

     “Westinghouse Inventory Loan Limit” means an amount equal to
$4,500,000.

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     (f) By deleting Section 2.1(d) of the Loan Agreement in its entirety and by
substituting the following in lieu thereof:

     (d) Borrowers shall have the right to request a permanent increase in
the amount of the Revolving Loan Limit and the Commitments in an aggregate
amount not to exceed $15,000,000 (the “Revolving Loan Limit Increase”), in
minimum increments of $5,000,000, at any time and from time to time upon
written notice to Agent of such requested Revolving Loan Limit Increase,
subject to the satisfaction, as determined by Agent, of each of the
Revolving Loan Limit Increase Conditions. Upon the effectiveness of any
Revolving Loan Limited Increase, each Lender’s respective Commitment shall
be increased by the amount required to maintain such Lender’s pro rata share
of all of the Commitments immediately before and after giving effect such
Revolving Loan Limit Increase.

     (g) By deleting Section 9.10(l) of the Loan Agreement and by substituting the following
in lieu thereof:

     (l) one or more Parent Share Repurchases, provided that (i) the
aggregate Share Repurchase Amount for all Parent Share Repurchases
consummated during the Term shall not exceed $500,000, (ii) Parent and/or
SED shall pay no more than a commercially reasonable price for any Capital
Stock repurchased pursuant to a Parent Share Repurchase, which shall be
remitted to the applicable seller, in cash, on or about the date of such
Parent Share Repurchase, (iii) immediately prior to, and after giving effect
to, any Parent Share Repurchase, Excess Availability is not less than
$4,000,000, (iv) Parent or SED shall deliver written notice to Agent of any
Parent Share Repurchase at least five (5) Business Days prior to the
consummation of such Parent Share Repurchase, and (v) immediately prior to,
and after giving effect to, any Parent Share Repurchase, no Default or Event
of Default shall exist.

     (h) By deleting Section 9.17(b) of the Loan Agreement in its entirety and by substituting the
following in lieu thereof:

     (b) The financial covenants set forth in subsection (a) of this Section
9.17 shall be effective only if Excess Availability is, at the close of
business on any Business Day, less than the Financial Covenant Trigger
Amount and, from and after such date, the provisions of subsection (a) of
this Section 9.17 shall be effective at all times thereafter unless
subsequently, Excess Availability exceeds $6,000,000 for sixty (60)
consecutive days and no Default or Event of Default occurs or exists during
such 60-day period, in which event the financial covenants set forth in
subsection (a) of this Section 9.17 shall cease to be effective until Excess
Availability is less than the Financial Covenant Trigger Amount on any
Business Day thereafter. Within one (1) Business Day after the date on
which Excess Availability is less than the Financial Covenant Trigger
Amount, Borrowers shall deliver to Agent a Compliance Certificate which
reflects Borrowers’ compliance or non-compliance with the provisions of
Section 9.17. Notwithstanding the foregoing, for purposes of computing
Excess Availability for purposes of this Section 9.17 only, the Minimum
Reserve shall not be deducted as a Reserve.

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     (i) By deleting subclause (f) of Section 9.22 of the Loan Agreement and by substituting in
lieu thereof the following:

(f) all out-of-pocket expenses and costs heretofore and from time to time
hereafter incurred by Agent during the course of periodic field examinations
or appraisals of the Collateral and such Borrower’s operations, plus a per
diem charge at Agent’s then standard rate for Agent’s examiners in the field
and office (which rate as of the date hereof is $850 per person per day),
which out-of-pocket expenses, costs and per-diem charges shall not exceed
$12,500 per field examination; provided, that, so long as Excess
Availability is not less than $4,000,000 for any period of 5 consecutive
days during the immediately preceding 12-month period, Borrower shall not be
required to pay to Agent or reimburse Agent for the expenses, costs and
charges for any more than three (3) field examinations and two (2) inventory
appraisals during such 12-month period; provided, further, that if at any
time after Excess Availability has fallen below $4,000,000 for 5 consecutive
days, Borrowers subsequently maintain Excess Availability of at least
$6,000,000 for at least 60 consecutive days and no Default or Event of
Default occurs or exists during such 60-day period, then Borrower shall once
again not be required to pay to Agent or reimburse Agent for the expenses,
costs and charges for any more than three (3) field examinations and two (2)
inventory appraisals during the applicable 12-month period; provided,
further, that the foregoing limitations on payment and reimbursement of
expenses, costs and charges shall not be construed to limit Agent’s or any
Lender’s right to conduct field examinations and appraisals of the
Collateral as otherwise permitted under this Agreement; Agent and Lenders
acknowledge and agree that, so long as no Default or Event of Default
exists, no separate appraisal of Eligible Westinghouse Inventory will be
required and Agent shall use the general television category net orderly
liquidation value percentage for purposes of determining the Net Recovery
Percentage of Eligible Westinghouse Inventory; and

     (j) By deleting the first sentence of Section 13.1(a) of the Loan Agreement and by
substituting the following in lieu thereof:

This Agreement and the other Financing Agreements shall become effective as
of the date set forth on the first page hereof and shall continue in full
force and effect for a term ending on the date September 21, 2011 (the
“Renewal Date”), and from year to year thereafter, unless sooner terminated
pursuant to the terms hereof.

     (k) By deleting the early termination fee grid contained in Section 13.1(c) of the Loan
Agreement and by substituting the following in lieu thereof:

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	               Amount	 	Period
	.50% of Maximum Credit

	 	From and after March 1, 2007 to and
including September 21, 2007
	 
	 	 
	.25% of Maximum Credit

	 	From and after September 22, 2007 to
and including September 23, 2008
	 
	 	 
	0.00% ($-0-)

	 	After September 23, 2008

     (l) By deleting Section 9.18 of the Loan Agreement and by substituting in lieu thereof
the following (in order to reflect Agent’s and Lenders’ agreement that there shall no
longer be an Excess Availability covenant in Section 9.18 of the Loan Agreement or in
Section 3 of the Second Amendment thereto):

          9.18 Reserved.

     4. Ratification and Reaffirmation. Each Borrower hereby ratifies and reaffirms the
Obligations, each of the Financing Agreements and all of such Borrower’s covenants, duties,
indebtedness and liabilities under the Financing Agreements.

     5. Acknowledgments and Stipulations. Each Borrower acknowledges and stipulates that
the Loan Agreement and the other Financing Agreements executed by such Borrower are legal, valid
and binding obligations of such Borrower that are enforceable against such Borrower in accordance
with the terms thereof; all of the Obligations are owing and payable without defense, offset or
counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by such Borrower); and the security interests and liens granted
by Borrowers in favor of Agent are duly perfected, first priority security interests and liens,
subject only to liens and other encumbrances permitted under the Loan Agreement.

     6. Representations and Warranties. Each Borrower represent and warrant to Agent and
Lenders, to induce Agent and Lenders to enter into this Amendment, that no Default or Event of
Default exists on the date hereof; delivery and performance of this Amendment have been duly
authorized by all requisite corporate action on the part of each Borrower and this Amendment has
been duly executed and delivered by each Borrower; and all of the representations and warranties
made by each Borrower in the Loan Agreement are true and correct in all material respects on and as
of the date hereof, except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties shall have been true, correct
and complete in all material respects on and as of such earlier date.

     7. Reference to Loan Agreement. Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to “this Agreement,” “hereunder,” or words of like import shall
mean and be a reference to the Loan Agreement, as amended by this Amendment.

     8. Breach of Amendment. This Amendment shall be part of the Loan Agreement and a
breach of any representation, warranty or covenant herein shall constitute an Event of Default.

     9. Condition Precedent. The effectiveness of the amendments contained in Section 2
hereof is subject to the delivery to Agent of (a) an original counterpart of this Amendment
executed by each Borrower, (b) an updated Certificate Regarding Distribution Agreements executed by
each

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Borrower and (c) such other documents, instruments and agreements as the Agent may require, in
each case in form and substance satisfactory to Agent.

     10. Amendment Fee; Expenses of Agent. In consideration of Agent’s and Lenders’
willingness to enter into this Amendment as set forth herein, Borrowers jointly and severally agree
to pay to Lenders an amendment fee in the amount of $42,750 in immediately available funds on the
date hereof. Additionally, Borrowers jointly and severally agree to pay, on demand, all costs and
expenses incurred by Agent in connection with the preparation, negotiation and execution of this
Amendment and any other Financing Agreements executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including, without limitation, the costs and fees of
Agent’s legal counsel and any taxes or expenses associated with or incurred in connection with any
instrument or agreement referred to herein or contemplated hereby.

     11. Effectiveness; Governing Law. This Amendment shall be effective upon acceptance
by Agent and Lenders (notice of which acceptance is hereby waived), whereupon the same shall be
governed by and construed in accordance with the internal laws of the State of Georgia.

     12. Successors and Assigns. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.

     13. No Novation, etc.. Except as otherwise expressly provided in this Amendment,
nothing herein shall be deemed to amend or modify any provision of the Loan Agreement or any of the
other Financing Agreements, each of which shall remain in full force and effect. This Amendment is
not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and
the Loan Agreement as herein modified shall continue in full force and effect.

     14. Counterparts; Telecopied Signatures. This Amendment may be executed in any number
of counterparts and by different parties to this Amendment on separate counterparts, each of
which, when so executed, shall be deemed an original, but all such counterparts shall constitute
one and the same agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.

     15. Further Assurances. Each Borrower agrees to take such further actions as Agent
shall reasonably request from time to time in connection herewith to evidence or give effect to the
amendments set forth herein or any of the transactions contemplated hereby.

     16. Section Titles. Section titles and references used in this Amendment shall be
without substantive meaning or content of any kind whatsoever and are not a part of the agreements
among the parties hereto.

     17. Release of Claims. To induce Agent and Lenders to enter into this Amendment, each
Borrower hereby releases, acquits and forever discharges Agent and each Lender, and all officers,
directors, agents, employees, successors and assigns of Agent and each Lender, from any and all
liabilities, claims, demands, actions or causes of action of any kind or nature (if there be any),
whether absolute or contingent, disputed or undisputed, at law or in equity, which are known to
Borrowers, that each Borrower now has or ever had against Agent and any Lender arising under or in
connection with any of the Financing Agreements or otherwise. Each Borrower represents and
warrants to Agent and Lenders that such Borrower has not transferred or assigned

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to any Person any claim that such Borrower ever had or claimed to have against Agent or any
Lender.

     18. Waiver of Jury Trial. To the fullest extent permitted by applicable law, the
parties hereto each hereby waives the right to trial by jury in any action, suit, counterclaim or
proceeding arising out of or related to this Amendment.

[This space intentionally left blank; signatures on following page]

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     IN WITNESS WHEREOF, the Borrowers have caused this Amendment to be duly executed under seal
and delivered in Atlanta, Georgia by their respective duly authorized officers on the date first
written above.

	 	 	 	 	 	 	 
	 	 	SED INTERNATIONAL HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ M. Darby	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jean A. Diamond	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	CEO	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 
	 
	 	 	 	 	 	 
	 	 	SED INTERNATIONAL, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ M. Darby	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jean A. Diamond	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	CEO	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 
	 
	 	 	 	 	 	 
	 	 	SED MAGNA (MIAMI), INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ M. Darby	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jean A. Diamond	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	CEO	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 
	 
	 	 	 	 	 	 
	 	 	Accepted and agreed:	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL

ASSOCIATION, as Agent and sole Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Luce	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	Director	 	 

Third Amendment to Loan and Security Agreement

 

CONSENT IN LIEU OF SPECIAL MEETING

OF THE BOARD OF DIRECTORS OF

SED INTERNATIONAL HOLDINGS, INC.

     The undersigned, constituting all the members of the Board of Directors of SED International
Holdings, Inc. (the “Corporation”) do hereby give their written consent (a) to the dispensation of
a special meeting of the Board of Directors of the Corporation and (b) to the taking of the
following actions, which actions could have been taken by said Board of Directors had said meeting
been held:

     RESOLVED, that the Chairman of the Board, President, any Vice President, or any other officer
or board member of this Corporation (or the designee of any of them), each be, and each hereby is,
authorized and empowered (either alone or in conjunction with any one or more of the other
officers of the Corporation) to take, from time to time, all or any part of the following actions
on or in behalf of the Corporation: (i) to make, execute and deliver to WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, in its capacity as agent (together with its
successors in such capacity, “Agent”) for various financial institutions (“Lenders”) and such
Lenders, (1) a Third Amendment to Loan and Security Agreement (the “Amendment”) providing for the
amendment of certain terms of that certain Loan and Security Agreement dated September 21, 2005,
among the Corporation, the other borrowers named therein, Agent and Lenders (as at any time
amended, restated, modified or supplemented, the “Loan Agreement”), and (2) all other agreements,
documents and instruments contemplated by or referred to in the Amendment or executed by the
Corporation in connection therewith; said Amendment and other agreements, documents and
instruments to be substantially in the form presented by Agent with such additional, modified or
revised terms as may be acceptable to any officer or director of the Corporation, as conclusively
evidenced by his or her execution thereof; and (ii) to carry out, modify, amend or terminate any
arrangements or agreements at any time existing among the Corporation, Lenders and Agent.

     RESOLVED, that any arrangements, agreements, security agreements, or other instruments or
documents referred to or executed pursuant to the Amendment by any officer or director of the
Corporation, or by an employee of the Corporation acting pursuant to delegation of authority, may
be attested by such person and may contain such terms and provisions as such person shall, in his
or her sole discretion, determine.

     RESOLVED, that the Loan Agreement and each amendment to the Loan Agreement heretofore
executed by any officer or director of the Corporation and any actions taken under the Loan
Agreement as thereby amended are hereby ratified and approved.

	 	 	 	 	 	 	 
	 

	 	 	 	/s/ Jean A. Diamond	 	 
	 

	 	 	 	 	 	 
	Dated: February 27, 2007
	 	 	 	Jean A. Diamond 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Melvyn Cohen
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Melvyn Cohen
	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	/s/ Stewart Aaron 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Stewart Aaron	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Joseph Segal	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Joseph Segal	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	CONSTITUTING ALL THE MEMBERS OF THE BOARD OF
DIRECTORS OF SED INTERNATIONAL HOLDINGS, INC.	 	 

 

 

CONSENT IN LIEU OF A SPECIAL MEETING

OF THE BOARD OF DIRECTORS OF

SED INTERNATIONAL, INC.

     The undersigned, constituting all the members of the Board of Directors of SED International,
Inc. (the “Corporation”) do hereby give their written consent (a) to the dispensation of a special
meeting of the Board of Directors of the Corporation and (b) to the taking of the following
actions, which actions could have been taken by said Board of Directors had said meeting been
held:

     RESOLVED, that the Chairman of the Board, President, any Vice President, or any other officer
or board member of this Corporation (or the designee of any of them), each be, and each hereby is,
authorized and empowered (either alone or in conjunction with any one or more of the other
officers of the Corporation) to take, from time to time, all or any part of the following actions
on or in behalf of the Corporation: (i) to make, execute and deliver to WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, in its capacity as agent (together with its
successors in such capacity, “Agent”) for various financial institutions (“Lenders”) and such
Lenders, (1) a Third Amendment to Loan and Security Agreement (the “Amendment”) providing for the
amendment of certain terms of that certain Loan and Security Agreement dated September 21, 2005,
among the Corporation, the other borrowers named therein, Agent and Lenders (as at any time
amended, restated, modified or supplemented, the “Loan Agreement”), and (2) all other agreements,
documents and instruments contemplated by or referred to in the Amendment or executed by the
Corporation in connection therewith; said Amendment and other agreements, documents and
instruments to be substantially in the form presented by Agent with such additional, modified or
revised terms as may be acceptable to any officer or director of the Corporation, as conclusively
evidenced by his or her execution thereof; and (ii) to carry out, modify, amend or terminate any
arrangements or agreements at any time existing among the Corporation, Lenders and Agent.

     RESOLVED, that any arrangements, agreements, security agreements, or other instruments or
documents referred to or executed pursuant to the Amendment by any officer or director of the
Corporation, or by an employee of the Corporation acting pursuant to delegation of authority, may
be attested by such person and may contain such terms and provisions as such person shall, in his
or her sole discretion, determine.

     RESOLVED, that the Loan Agreement and each amendment to the Loan Agreement heretofore
executed by any officer or director of the Corporation and any actions taken under the Loan
Agreement as thereby amended are hereby ratified and approved.

	 	 	 	 	 	 	 
	 

	 	 	 	/s/ Jean A. Diamond	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Jean A. Diamond	 	 
	Dated: February 27, 2007
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Melvyn Cohen
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Melvyn Cohen
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Stewart Aaron	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Stewart Aaron	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	CONSTITUTING ALL THE MEMBERS OF THE BOARD OF
DIRECTORS OF SED INTERNATIONAL, INC.	 	 

 

 

CONSENT IN LIEU OF SPECIAL MEETING

OF THE BOARD OF DIRECTORS OF

SED MAGNA (MIAMI), INC.

     The undersigned, constituting all the members of the Board of Directors of SED Magna
(Miami), Inc. (the “Corporation”) do hereby give their written consent (a) to the dispensation of
a special meeting of the Board of Directors of the Corporation and (b) to the taking of the
following actions, which actions could have been taken by said Board of Directors had said meeting
been held:

     RESOLVED, that the Chairman of the Board, Chief Executive Officer, President, any Vice
President, or any other officer or board member of this Corporation (or the designee of any of
them), each be, and each hereby is, authorized and empowered (either alone or in conjunction with
any one or more of the other officers of the Corporation) to take, from time to time, all or any
part of the following actions on or in behalf of the Corporation: (i) to make, execute and deliver
to WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, in its capacity as agent
(together with its successors in such capacity, “Agent”) for various financial institutions
(“Lenders”) and such Lenders, (1) a Third Amendment to Loan and Security Agreement (the
“Amendment”) providing for the amendment of certain terms of that certain Loan and Security
Agreement dated September 21, 2005, among the Corporation, the other borrowers named therein,
Agent and Lenders (as at any time amended, restated, modified or supplemented, the “Loan
Agreement”), and (2) all other agreements, documents and instruments contemplated by or referred
to in the Amendment or executed by the Corporation in connection therewith; said Amendment and
other agreements, documents and instruments to be substantially in the form presented by Agent
with such additional, modified or revised terms as may be acceptable to any officer or director of
the Corporation, as conclusively evidenced by his or her execution thereof; and (ii) to carry out,
modify, amend or terminate any arrangements or agreements at any time existing among the
Corporation, Lenders and Agent.

     RESOLVED, that any arrangements, agreements, security agreements, or other instruments or
documents referred to or executed pursuant to the Amendment by any officer or director of the
Corporation, or by an employee of the Corporation acting pursuant to delegation of authority, may
be attested by such person and may contain such terms and provisions as such person shall, in his
or her sole discretion, determine.

     RESOLVED, that the Loan Agreement and each amendment to the Loan Agreement heretofore executed
by any officer or director of the Corporation and any actions taken under the Loan Agreement as
thereby amended are hereby ratified and approved.

	 	 	 	 	 	 	 
	 

	 	 	 	/s/ Jean A. Diamond	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Jean A. Diamond	 	 
	Dated: February 27, 2007
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Melvyn Cohen
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Melvyn Cohen
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Stewart Aaron	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Stewart Aaron	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	CONSTITUTING ALL THE MEMBERS OF THE BOARD OF
DIRECTORS OF SED MAGNA (MIAMI), INC.	 	 

 

 

SED MAGNA (MIAMI), INC.

SECRETARY’S CERTIFICATE

OF

BOARD OF DIRECTORS RESOLUTIONS

     I,
LYLE DICKLER, DO HEREBY CERTIFY, that I am the Secretary and
Treasurer of SED MAGNA (MIAMI), INC. (the “Corporation”), a corporation duly
organized and existing under and by virtue of the laws of the State of
Delaware and am keeper of the records and seal thereof; that the following is
a true, correct and compared copy of the resolutions duly adopted by the
unanimous consent of all members of the Board of Directors of said
Corporation effective as of February 27, 2007; and that said resolutions are
still in full force and effect:

     RESOLVED, that the Chairman of the Board, President, any Vice President,
or any other officer or board member of this Corporation (or the designee of
any of them), each be, and each hereby is, authorized and empowered (either
alone or in conjunction with any one or more of the other officers of the
Corporation) to take, from time to time, all or any part of the following
actions on or in behalf of the Corporation: (i) to make, execute and deliver
to WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, in its
capacity as agent (together with its successors in such capacity, “Agent”) for
various financial institutions (“Lenders”) and such Lenders, (1) a Third
Amendment to Loan and Security Agreement (the “Amendment”) providing for the
amendment of certain terms of that certain Loan and Security Agreement dated
September 21, 2005, among the Corporation, the other borrowers named therein,
Agent and Lenders (as at any time amended, restated, modified or supplemented,
the “Loan Agreement”), and (2) all other agreements, documents and instruments
contemplated by or referred to in the Amendment or executed by the Corporation
in connection therewith; said Amendment and other agreements, documents and
instruments to be substantially in the form presented by Agent with such
additional, modified or revised terms as may be acceptable to any officer or
director of the Corporation, as conclusively evidenced by his or her execution
thereof; and (ii) to carry out, modify, amend or terminate any arrangements or
agreements at any time existing among the Corporation, Lenders and Agent.

     RESOLVED, that any arrangements, agreements, security agreements, or
other instruments or documents referred to or executed pursuant to the
Amendment by any officer or director of the Corporation, or by an employee of
the Corporation acting pursuant to delegation of authority, may be attested
by such person and may contain such terms and provisions as such person
shall, in his or her sole discretion, determine.

     RESOLVED, that the Loan Agreement and each amendment to the Loan
Agreement heretofore executed by any officer or director of the Corporation
and any actions taken under the Loan Agreement as thereby amended are hereby
ratified and approved.

 

 

     I DO FURTHER CERTIFY that Jean A. Diamond is the Chief Executive
Officer of the Corporation and is duly elected, qualified and acting as such.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Seal of the
Corporation, this 28 day of February, 2007.

	 	 	 	 	 
	 	 	 
	 	By:  	            /s/ Lyle Dickler
 	 
	 	 	Lyle Dickler, Secretary and Treasurer  	 
	 
	 	[CORPORATE SEAL] 	 
	 

     I, Jean A. Diamond, Chief Executive Officer of said Corporation,
do hereby certify that the foregoing is a correct copy of the resolutions
passed by the Board of Directors of the Corporation and that Lyle Dickler is
Secretary and Treasurer of the Corporation and is duly authorized to attest
to the passage of said resolutions.

	 	 	 	 	 
	 	 	 
	 	By:  	      /s/ Jean A. Diamond
 	 
	 	 	Jean A. Diamond, Chief Executive Officer 	 
	 	 	 	 
	 

4

 

SED INTERNATIONAL, INC.

SECRETARY’S CERTIFICATE

OF

BOARD OF DIRECTORS RESOLUTIONS

     I, LYLE DICKLER, DO HEREBY CERTIFY, that I am the Secretary and
Treasurer of SED INTERNATIONAL, INC. (the “Corporation”), a corporation duly
organized and existing under and by virtue of the laws of the State of
Georgia and am keeper of the records and seal thereof; that the following is
a true, correct and compared copy of the resolutions duly adopted by the
unanimous consent of all members of the Board of Directors of said
Corporation effective as of February 27, 2007; and that said resolutions are
still in full force and effect:

     RESOLVED, that the Chairman of the Board, President, any Vice President,
or any other officer or board member of this Corporation (or the designee of
any of them), each be, and each hereby is, authorized and empowered (either
alone or in conjunction with any one or more of the other officers of the
Corporation) to take, from time to time, all or any part of the following
actions on or in behalf of the Corporation: (i) to make, execute and deliver
to WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, in its
capacity as agent (together with its successors in such capacity, “Agent”) for
various financial institutions (“Lenders”) and such Lenders, (1) a Third
Amendment to Loan and Security Agreement (the “Amendment”) providing for the
amendment of certain terms of that certain Loan and Security Agreement dated
September 21, 2005, among the Corporation, the other borrowers named therein,
Agent and Lenders (as at any time amended, restated, modified or supplemented,
the “Loan Agreement”), and (2) all other agreements, documents and instruments
contemplated by or referred to in the Amendment or executed by the Corporation
in connection therewith; said Amendment and other agreements, documents and
instruments to be substantially in the form presented by Agent with such
additional, modified or revised terms as may be acceptable to any officer or
director of the Corporation, as conclusively evidenced by his or her execution
thereof; and (ii) to carry out, modify, amend or terminate any arrangements or
agreements at any time existing among the Corporation, Lenders and Agent.

     RESOLVED, that any arrangements, agreements, security agreements, or
other instruments or documents referred to or executed pursuant to the
Amendment by any officer or director of the Corporation, or by an employee of
the Corporation acting pursuant to delegation of authority, may be attested
by such person and may contain such terms and provisions as such person
shall, in his or her sole discretion, determine.

     RESOLVED, that the Loan Agreement and each amendment to the Loan
Agreement heretofore executed by any officer or director of the Corporation
and any actions taken under the Loan Agreement as thereby amended are hereby
ratified and approved.

 

 

     I DO FURTHER CERTIFY that Jean A. Diamond is the Chairman of the
Board and the Chief Executive Officer of the Corporation and is duly elected,
qualified and acting as such.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Seal of
the Corporation, this 28 day of February, 2007.

	 	 	 	 	 
	 	 	 
	 	By:  	                                    /s/ Lyle Dickler
 	 
	 	 	Lyle Dickler, Secretary and Treasurer  	 
	 
	 	[CORPORATE SEAL] 	 
	 

     I, Jean A. Diamond, Chairman of the Board and Chief Executive Officer
of said Corporation, do hereby certify that the foregoing is a correct copy
of the resolutions passed by the Board of Directors of the Corporation and
that Lyle Dickler is Secretary and Treasurer of the Corporation and is duly
authorized to attest to the passage of said resolutions.

	 	 	 	 	 
	 	 	 
	 	By:  	            /s/ Jean A. Diamond
 	 
	 	 	Jean A. Diamond, Chairman of the Board and Chief Executive Officer      	 
	 	 	 	 
	 

- 2 -

 

SED INTERNATIONAL HOLDINGS, INC.

SECRETARY’S CERTIFICATE

OF

BOARD OF DIRECTORS RESOLUTIONS

     I, LYLE DICKLER, DO HEREBY CERTIFY, that I am the Secretary and
Treasurer of SED INTERNATIONAL HOLDINGS, INC. (the “Corporation”), a
corporation duly organized and existing under and by virtue of the laws of the
State of Georgia and am keeper of the records and seal thereof; that the
following is a true, correct and compared copy of the resolutions duly adopted
by the unanimous consent of all members of the Board of Directors of said
Corporation effective as of February 27, 2007; and that said resolutions are
still in full force and effect:

     RESOLVED, that the Chairman of the Board, President, any Vice President,
or any other officer or board member of this Corporation (or the designee of
any of them), each be, and each hereby is, authorized and empowered (either
alone or in conjunction with any one or more of the other officers of the
Corporation) to take, from time to time, all or any part of the following
actions on or in behalf of the Corporation: (i) to make, execute and deliver
to WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, in its
capacity as agent (together with its successors in such capacity, “Agent”) for
various financial institutions (“Lenders”) and such Lenders, (1) a Third
Amendment to Loan and Security Agreement (the “Amendment”) providing for the
amendment of certain terms of that certain Loan and Security Agreement dated
September 21, 2005, among the Corporation, the other borrowers named therein,
Agent and Lenders (as at any time amended, restated, modified or supplemented,
the “Loan Agreement”), and (2) all other agreements, documents and instruments
contemplated by or referred to in the Amendment or executed by the Corporation
in connection therewith; said Amendment and other agreements, documents and
instruments to be substantially in the form presented by Agent with such
additional, modified or revised terms as may be acceptable to any officer or
director of the Corporation, as conclusively evidenced by his or her execution
thereof; and (ii) to carry out, modify, amend or terminate any arrangements or
agreements at any time existing among the Corporation, Lenders and Agent.

     RESOLVED, that any arrangements, agreements, security agreements, or
other instruments or documents referred to or executed pursuant to the
Amendment by any officer or director of the Corporation, or by an employee of
the Corporation acting pursuant to delegation of authority, may be attested
by such person and may contain such terms and provisions as such person
shall, in his or her sole discretion, determine.

     RESOLVED, that the Loan Agreement and each amendment to the Loan
Agreement heretofore executed by any officer or director of the Corporation
and any actions taken under the Loan Agreement as thereby amended are hereby
ratified and approved.

 

 

     I DO FURTHER CERTIFY that Jean A. Diamond is the Chairman of the Board
of the Corporation and is duly elected, qualified and acting as such.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Seal of the
Corporation, this 28 day of February, 2007.

	 	 	 	 	 
	 	 	 
	 	By:  	            /s/ Lyle Dickler
 	 
	 	 	Lyle Dickler, Secretary and Treasurer  	 
	 
	 	[CORPORATE SEAL] 	 
	 

     I, Jean A. Diamond, Chairman of the Board of said Corporation, do
hereby certify that the foregoing is a correct copy of the resolutions passed
by the Board of Directors of the Corporation and that Lyle Dickler is
Secretary and Treasurer of the Corporation and is duly authorized to attest
to the passage of said resolutions.

	 	 	 	 	 
	 	 	 
	 	By:  	      /s/ Jean A. Diamond
 	 
	 	 	Jean A. Diamond, Chairman of the Board 	 
	 	 	 	 
	 

- 2 -EX-10.5 TERMS OF EMPLOYMENT AGREEMENT

 

Exhibit 10.5

March 26, 2007

Mr. Dennis Replogle

2542 Royal Palm Way

Weston, FL 33327

RE: President & Chief Executive Officer

Dear Dennis:

I am very pleased to offer you the regular full-time position of President & Chief Executive
Officer of Broadspire, a Crawford Company (the “Company) * reporting directly to me, President &
Chief Executive Officer of Crawford & Company. The following will outline the specifics of the
position:

	 	•	 	Effective Date: January 22, 2007
	 
	 	•	 	Base Salary: $400,000 per year ($15,384.61 per pay period)
	 
	 	•	 	Incentive Plan: Target bonus of 50% of annual salary. (See attached Executive Incentive
compensation Plan)
	 
	 	•	 	Vacation: 4 Weeks per year
	 
	 	•	 	Benefits: Those extended to full-time employees
	 
	 	•	 	SERP: Participation in Crawford & Company Supplemental Retirement Plan*
	 
	 	•	 	Perquisites: Those extended to a Senior Vice President of Crawford & Company,
including company automobile (See Attachment)
	 
	 	•	 	Restricted Stock: 10,000 Shares with accelerated vesting at 100% on December 31, 2008,
issued under and subject to the terms and conditions of the Crawford & Company Executive
Stock Bonus Plan*
	 
	 	•	 	Severance: In the event your employment with Crawford should be terminated for reasons
other than “cause”, or in the event of a “change-in-control” of the company, both as
solely defined by the Chief Executive Officer, and in exchange for a signed release
agreement provided by the Company, you will be paid a lump sum amount as severance
compensation equal to one year of your then current base salary, subject to all
appropriate taxes, payable as soon as is practicable following the termination of
employment or change in controls.

	*	 	Note: Indicates items subject to approval of the Company’s Board of Directors

These terms supersede all previous agreements, letters of employment, or incentive com- pensation
arrangements between you and the Company or any subsidiary or affiliate of the Company.

Your employment with the Company is at-will, which means that either you or the Company may
terminate your employment at any time, with or without cause. Your job duties, title,

 

 

Page 2

Dennis Replogle

compensation and benefits as well as the Company’s policies and procedures may change from time to
time during your employment with the Company, except that the at-will nature of your employment may
only be changed in a written document signed by you and the Chief Executive Officer of the Company.

I look forward to your leadership and success in fulfilling this most important role for the
Company. I request that you confirm these terms and conditions with your signature.

Sincerely,

/s/ Thomas W. Crawford

Thomas W. Crawford

President & CEO

I have reviewed and accept the terms and conditions as offered.

	 	 	 
	/s/ Dennis Replogle

	 	April 3, 2007
	 

	 	 
	Dennis Replogle

	 	Date

 

 

2007 Executive Incentive Compensation Plan (EICP)

(Chief Executive Officer)

Eligibility 

Employee must meet the following criteria to be eligible for the Plan:

	•	 	Employee must be approved prior to the start of the plan
year or at time of hire into an incentive eligible position.

	•	 	Be in the EICP eligible position until the end of the plan
year and a Full Time Active team member on payroll at time
of Performance Incentive Plan payment date, which generally
takes place in March following the plan year.

	•	 	Employees who are on Probationary “P” status or on a
performance improvement plan on the date the Performance
Incentive Plan payment is made are ineligible for such
payment.

Basis for Incentive Awards

	•	 	Bonus target payment is tied to the achievement of company
goal according to the following table:

	 	 	 	 	 	 
	 
	 	Level	 	 	Operating Earnings	 
	 	CEO
	 	 	100%	 
	 

	•	 	None of the target bonus will be guaranteed for 2007.

	•	 	Minimum corporate threshold targets for Operating Earnings must be
met in order to fund a payout for department objectives. Target
Operating Earnings Goals must be achieved before departmental
objectives are measured and rewarded. The Company performance
payout 80% (Operating Earnings) will be used to fund the overall
objectives pool. In no case will the aggregate company-wide
funding for department/team goal payout exceed the company
performance payout funding 80%. The table below provides the
Operating Earnings and the funding/Payout schedule at each level
of achievement.

CEO EXECUTIVE COMPENSATION PLAN

2007

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Operating Earnings	 	 	% of Plan	 	 	Target Bonus % of Annual Salary	 	 	 	 
	 	2.18
	 	 	80%
	 	 	40%
	 	 	$160	 
	 	2.45
	 	 	90%
	 	 	45%
	 	 	$180	 
	 	2.73
	 	 	100%
	 	 	50%
	 	 	$200	 
	 	3.41
	 	 	125%
	 	 	62.5%
	 	 	$250	 
	 	4.09
	 	 	150%
	 	 	75%
	 	 	$300	 
	 	4.77
	 	 	175%
	 	 	87.5%
	 	 	$350	 
	 	5.46
	 	 	200%
	 	 	100%
	 	 	$400	 
	 

2007 Executive Incentive Compensation Plan (EICP)

PROPRIETARY AND CONFIDENTIAL

1 of 2

 

Performance Incentive Plan Opportunities 

	•	 	A range of Plan opportunities is established for each incentive
eligible position. The “EICP Target” is stated as a fixed dollar
amount. The target amount is determined by multiplying the
participant’s annualized salary (at the time of eligibility) times
the EICP percentage participation level.

	•	 	“Salary” is the annualized base rate of pay at the time of
eligibility in the Plan and does not include other income such as
bonus, commissions, disability benefits, etc.

Performance Incentive Plan Payments

	•	 	Minimum threshold target must be achieved for the combined
department objectives before departmental objectives are measured
and rewarded.

	•	 	No payout will be made to a participant unless the minimum
threshold Department performance has been met AND minimum
threshold Company performance has been met.

	•	 	EICP payout will be paid to eligible Plan participants in a lump
sum cash payment via the Company’s regular payroll targeted for
the first regular payroll in March.

	•	 	All EICP payments are subject to applicable federal, state, local,
and FICA withholdings and taxes.

	•	 	All EICP payments are subject to 401K treatments and are not
included in the computation of benefits such as sickness,
accident, disability (short and long term), life insurance, etc.

	•	 	If a participant dies on or after December 31, but prior to the
EICP payment, their beneficiary is eligible for a payout from the
Plan based on actual Company and Department Performance. However,
if the participant dies before the end of the calendar year, then
their beneficiary would be eligible for a prorated payout. The
payout will be made to the beneficiary Broadspire has on file.
Payouts will be made as a lump sum cash payment via the Company’s
regular payroll targeted for the first regular payroll in March.

	•	 	Within two weeks of a participant’s position or assignment change
into an EICP eligible position, the supervisor of that team member
must define/change the objective(s) or weighting to reflect the
new responsibilities and submit an “EICP change” form to Total
Rewards. Team members promoted into new roles will not automatically have their
EICP bonus target % changed by Human Resources. All nominations and changes must be submitted
to Human Resources using the “New nomination” or “EICP change” forms. The forms must contain
all required signatures before being considered.

Plan Administration 

	•	 	The Crawford & Company President and CEO, and Human Resources administers the Plan and has
full discretion to interpret, amend or modify the plan at their sole discretion including the
modification of individual payouts.

2007 Executive Incentive Compensation Plan (EICP)

PROPRIETARY AND CONFIDENTIAL

2 of 2

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