UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 17, 2013
__________
SED INTERNATIONAL HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
| Georgia | 001-35094 | 22-2715444 |
| (State or Other Jurisdiction | (Commission | (IRS Employer |
| of Incorporation) | File Number) | Identification No.) |
| 3505 Newpoint Place, Suite 450 | |
| Lawrenceville, Georgia 30043 | 85020 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code (770) 491-8962
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. | Entry into a Material Definitive Agreement. |
On October 17, 2013, SED International Holdings, Inc. (the “Company”) and its then existing directors and Paragon Technologies, Inc. (“Paragon”) and its board designees entered into an Agreement of Compromise, Settlement and Release (the “Settlement Agreement”) to transition leadership of the Company’s Board of Directors (the “Board”). Under the terms of the Settlement Agreement, the following transitions became immediately effective: Executive Chairman Samuel A. Kidston and each of the other directors of the Company, J.D. Abouchar, Arthur Goldberg, J.K. Hage, Steven Metayer and Robert G. O’Malley (collectively, the “Former Directors”) resigned from the Board; and the following designees of Paragon were appointed to the Board: Dennis L. Chandler, Hesham M. Gad, Jack H. Jacobs and Samuel S. Weiser (collectively, the “New Directors”).
The Settlement Agreement included mutual releases between the Company and Paragon, the other parties to the agreement and certain of their affiliates. The Settlement Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 1.02. | Termination of a Material Definitive Agreement. |
Pursuant to the Settlement Agreement, as of October 17, 2013, the Stock Option Agreement, dated as of August 29, 2012, by and between the Company and Samuel A. Kidston, former Executive Chairman of the Company, was terminated and all options granted thereunder were terminated and forfeited.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Pursuant to the Settlement Agreement, on October 17, 2013, the following individuals were appointed to the Company’s board of directors: Dennis L. Chandler, Hesham M. Gad, Jack H. Jacobs and Samuel S. Weiser. Except for being nominated by Paragon and selected pursuant to the Settlement Agreement, none of the New Directors was selected as a Director pursuant to any arrangement or understanding with any other person, and none of them has any reportable transactions under Item 404(a) of Regulation S-K.
On October 22, 2013, the Board reconstituted its committees as follows: the Audit Committee consists of Messrs. Weiser (Chairman) and Jacobs; the Compensation Committee consists of Messrs. Chandler (Chairman) and Jacobs; and the Nominating and Corporate Governance Committee consists of Messrs. Jacobs (Chairman) and Chandler. Mr. Gad was elected as Executive Chairman of the Board. The New Directors also confirmed the size of the Board at four directors.
The Latin American and Legal Affairs Committee and the Special Committee formed to investigate alleged wrongdoing and negligent mismanagement by the Former Directors and respond to Paragon’s proxy contest were terminated and disbanded as of October 18, 2013.
The Board has determined that each of the New Directors is independent under the NYSE MKT’s listing standards and SEC rules for the purpose of service on the committees to which they have been appointed. Each of the New Directors was determined to qualify as an “audit committee financial expert” within the meaning of SEC rules.
In addition, the Board has established compensation for the Board that will apply on an interim basis through the end of December. Directors other than Mr. Gad will receive $1,000 for each in-person board meeting, plus any travel expenses, and $500 for each teleconference board meeting. As Executive Chairman, and in light of his other extraordinary efforts already underway at the Company, Mr. Gad will be paid $15,000 for the October-December period.
On October 22, 2013, the Company terminated the employment of Derrek Hallock, Senior Vice President and General Manager of the U.S. Commercial Division of the Company, effective immediately. Christopher R. Joe resigned as the Company’s Chief Financial Officer, effective as of October 25, 2013.
On October 21, 2013, the Company entered into a Consulting Agreement with Stephen M. Dexter to serve as the Company’s Interim Chief Financial Officer. Mr. Dexter has over 20 years of domestic and international finance and accounting experience. From September 2012 to May 2013, he provided financial support consulting services to CDC Corporation, a former holding company of CDC Software, and to CDC Software, a global software provider of on-premise and cloud deployments, from June 2010 to August 2012. Mr. Dexter served as Chief Financial Officer of CDC Software, in which role he was responsible for the company’s accounting, finance, tax, treasury and compliance functions, from September 2010 to August 2012, and as Chief Accounting Officer of CDC Software, overseeing the company’s accounting and compliance functions, from June 2010 to June 2011. From September 2009 to May 2010, Mr. Dexter provided consulting and controller services for audit, financial reporting, and other initiatives to Premier Exhibitions, Inc., a company presenting to the public museum-quality touring exhibitions. From August 2005 to August 2009, he served as Vice President, Corporate Controller and Principal Accounting Officer of S1 Corporation, a global provider of payments and financial services software solutions, in which role he was responsible for the company’s accounting organization. Prior to that, Mr. Dexter was Controller of American Tire Distributors from January 2004 to August 2005, interim Controller of Unitrends Software Corporation from March 2003 to August 2003, and in various positions with Safety-Kleen Corporation from January 2001 to February 2003. Mr. Dexter graduated from Clemson University with a B.S. in Accounting and is a Certified Public Accountant.
Pursuant to the Consulting Agreement, the Company will pay Mr. Dexter a fee of $10,000 per month for his services as Interim Chief Financial Officer. A copy of Mr. Dexter’s Consulting Agreement is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference. Mr. Dexter was not selected as the Company’s Interim Chief Financial Officer pursuant to any arrangement or understanding with any other person, and he has no reportable transactions under Item 404(a) of Regulation S-K.
On October 21, 2013, the Company and Mr. O’Malley entered into an Amendment to Mr. O’Malley’s Employment Agreement. Pursuant to the amendment, Mr. O’Malley resigned as the Company’s Chief Executive Officer effective as of the close of business on November 21, 2013. The amendment provides that, upon the Company’s engagement of a new Chief Executive Officer, Mr. O’Malley will thereafter serve as Advisor to the Board through November 21, 2013. Mr. O’Malley will receive a lump sum payment of $10,000 for his services to the Company from October 22, 2013 through November 21, 2013, in lieu of all other compensation. Mr. O’Malley will not be entitled to the payment of any further bonus compensation and will not receive any severance payment. A copy of the Amendment to Mr. O’Malley’s Employment Agreement is attached as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.
Prior to their resignations from the board, the Former Directors approved the execution of indemnification agreements between each of themselves and the Company, approved the execution of general releases from liability for each of themselves, and approved the execution of new employment agreements with Derrek Hallock, Senior Vice President and General Manager of the U.S. Commercial Division of the Company, and Ronell Rivera, Senior Vice President, Latin America, of the Company. The New Directors are in the process of reviewing these actions taken and agreements purported to be executed by the Former Directors.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 10.1 | Agreement of Compromise, Settlement and Release, dated October 17, 2013, by and among the Company and Paragon Technologies, Inc. and certain of their affiliates. |
| 10.2 | Consulting Agreement, dated October 21, 2013, by and between the Company and Stephen M. Dexter. |
| 10.3 | Amendment to Employment Agreement, dated October 21, 2013, by and between the Company and Robert G. O’Malley. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SED International Holdings, Inc. | ||
| By: | /s/ Hesham M. Gad | |
| Hesham M. Gad | ||
| Executive Chairman of the Board | ||
Date: October 23, 2013
Exhibit 10.1
IN THE
SUPERIOR COURT OF GWINNETT COUNTY
STATE OF GEORGIA
|
PARAGON TECHNOLOGIES, INC.,
Plaintiff, v.
SED INTERNATIONAL HOLDINGS, INC.,
Defendant.
|
CIVIL ACTION FILE NO.
|
AGREEMENT OF
COMPROMISE, SETTLEMENT AND RELEASE
The Parties to the above-captioned action (the “Action”), currently pending before the Superior Court of Gwinnett County (the “Court”), by and through their respective attorneys, have entered into the following Stipulation and Agreement of Compromise, Settlement and Release (the “Agreement” or “Settlement”).
WHEREAS, Paragon Technologies, Inc. (“Paragon”), Gad Partners Fund LP and Hesham M. Gad (collectively, the “Paragon Group”) have announced their intention (the “Proxy Effort”) to nominate five individuals to run for election as directors to replace the current Board of Directors (the “Directors”) of SED International Holdings, Inc. (“SED”).
WHEREAS, the Directors are Samuel Kidston, Steven Metayer, J.D. Abouchar, J.K. Hage, Robert G. O’Malley and Arthur Goldberg.
WHEREAS, on October 2, 2013, Paragon commenced this Action to seek to compel SED to set a date for the annual meeting of shareholders, the date for which was subsequently set by SED for December 11, 2013.
WHEREAS, in a series of discussions between October 9 and October 16, 2013, the parties to the Action (the “Parties”), by and through their counsel, agreed to the terms of this Agreement through which the Parties, the Paragon Group and the Directors have resolved the Action and all the disputes between them, including as they relate to the Proxy Effort and to grant each other mutual general releases.
WHEREAS, the Parties, the Directors and the Paragon Group have denied, and continue to deny all allegations of wrongdoing, fault, liability or damage; desire to avoid the risk and uncertainty of litigation and the expense of the Proxy Effort; and, after engaging in extensive discussions, have concluded and agreed that the disputes between them should be fully and completely resolved according to the terms and conditions below.
NOW, THEREFORE, in consideration of the recitals hereto, the mutual covenants and promises contained herein and other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the Parties, the Directors, the Paragon Group, North & Webster, LLC, North & Webster Value Opportunities Fund, LP, North & Webster Fund II, LP and the other signatories to this Agreement (it being understood that Dennis L. Chandler, Jack H. Jacobs and Samuel S. Weiser are signatories to this Agreement for purposes of Section 4 only) agree as follows:
1. The Directors shall, on the date hereof, resign as directors and as Executive Board Chair, as the case may be, of SED. The Directors shall resign from any and all other positions that they may currently hold with SED and/or any of its subsidiaries (other than Robert G. O’Malley, who is not required to resign as SED’s Chief Executive Officer). Prior to resigning as directors, on the date hereof, one or more of the Directors shall appoint Messrs. Hesham M. Gad, Dennis L. Chandler, Jack H. Jacobs and Samuel S. Weiser (the “Paragon Nominees”) to the board of directors of SED pursuant to and in accordance with SED’s bylaws and applicable law. None of the Directors shall directly or indirectly nominate or make any attempt to nominate any candidates for election to the board of directors of SED at SED’s next annual meeting of shareholders.
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2. Paragon, Paragon Group, Hesham M. Gad and each of their respective heirs, employees, officers and directors, partners, agents, parents, affiliates, subsidiaries, attorneys, predecessors in interest, successors and assigns, (the “Paragon Releasors”) hereby irrevocably and unconditionally release, acquit and forever discharge SED and the Directors and each of them and their employees, officers and directors, partners, agents, parents, affiliates, subsidiaries, attorneys, predecessors in interest, successors and assigns (the “Director Releasees”) from all actions, causes of action, suits, debts, sums of money, covenants, contracts, agreements, promises, claims, and demands whatsoever, in law, admiralty, equity or under any legal, equitable or other theory, direct or derivative (on behalf of SED) which the Paragon Releasors ever had, now has or hereafter can, shall or may have against the Director Releasees, for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this Release, known and unknown, suspected or unsuspected; provided however, that nothing herein shall release SED or the Directors’ obligations under (1) this Agreement, (2) the contracts for indemnification entered into with SED as of September 30, 2013 (the “September 30, 2013 Indemnity Agreements”), true and complete copies of which SED represents and warrants have been provided to the Paragon Group, or (3) Employment Agreements with each of Robert O’Malley (dated September 7, 2012), Derrek Hallock (dated October 10, 2013) and Ronell Rivera (dated October 11, 2013), true and complete copies of which SED represents and warrants have been provided to the Paragon Group (the “Employment Agreements”).
3. SED and the Directors and each of their respective heirs, employees, officers and directors, partners, agents, parents, affiliates (including without limitation North & Webster, LLC, North & Webster Value Opportunities Fund, LP, North & Webster Fund II, LP and its affiliated funds), subsidiaries, attorneys, predecessors in interest, successors and assigns (the “Director Releasors”) hereby irrevocably and unconditionally release, acquit and forever discharge Paragon, Paragon Group, Hesham M. Gad, the Paragon Nominees and each of their employees, officers and directors, partners, agents, parents, affiliates, subsidiaries, attorneys, predecessors in interest, successors and assigns (the “Paragon Releasees”) from all actions, causes of action, suits, debts, sums of money, covenants, contracts, agreements, promises, claims, and demands whatsoever, in law, admiralty or equity, direct or derivative (on behalf of SED) which the Director Releasors ever had, now has or hereafter can, shall or may have against the Paragon Releasees, for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the day of the date of this Release, known and unknown, suspected or unsuspected; provided however, that nothing herein shall release Paragon’s, the Paragon Group’s or SED’s obligations under (1) this Agreement, (2) the September 30, 2013 Indemnity Agreements, or (3) the Employment Agreements.
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4. (a) Paragon Group, each Paragon Releasor and each Paragon Nominee hereby covenants not to (i) make, assert, or maintain in any forum against any of the Director Releasees any claim, demand, action, suit or proceeding or (ii) in any way encourage, support or assist any other person or company, including SED, from making, asserting or maintaining any such claim, demand, action, suit or proceeding, directly or derivatively, against any of the Director Releasees or any of their (or SED’s) employees, agents, attorneys, affiliates for any or all released claims, including without limitation participating directly or indirectly as an adverse party in a class action lawsuit. The Director Releasors hereby covenant not to (i) make, assert, or maintain in any forum against any of the Paragon Releasees or Paragon Nominees any claim, demand, action, suit or proceeding or (ii) in any way encourage, support or assist any other person or company, including SED, from making, asserting or maintaining any such claim, demand, action, suit or proceeding, directly or derivatively, against any of the Paragon Releasees or Paragon Nominees or any of their employees, agents, attorneys, affiliates for any or all released claims, including without limitation participating directly or indirectly as an adverse party in a class action lawsuit. Nothing in this Agreement shall prevent any party from cooperating in any manner with any investigation, inquiry, lawsuit or other action initiated by any governmental body relating to any matter included in this Agreement or the releases provided hereunder.
(b) These covenants not to sue are material terms of this Agreement without which SED and the Directors would not have entered into the Agreement. Any breach of this section constitutes a material breach of the Agreement and shall entitle any non-breaching party to damages in the amount of any judgments, damages, costs, or attorneys’ fees such non-breaching party pays as a result of a suit or action that breaches this provision.
5. SED shall not cancel or terminate the current Directors & Officers liability insurance policy —National Union Policy No. 08-189-41-13 — in place (“D&O Insurance”) at any time prior to the time it expires on July 1, 2014. Upon the expiration or termination of such policy, SED shall use commercially reasonable efforts to obtain and maintain, through June 30, 2020, D&O Insurance with at least as great and favorable policy limits and other substantive terms with the Directors named as beneficiaries and insureds under such policy, provided that SED is able to obtain such coverage at a cost not greater than the cost of the D&O Insurance (the “Current Cost”), and in the event that SED is not able to obtain such coverage at a cost not greater than the Current Cost, it shall use commercially reasonable efforts to obtain the maximum amount of Directors & Officers liability coverage that it can obtain for the Current Cost; in no event, however, will the Directors and Officers liability coverage provided to the present Directors be less than the coverage provided to the then members of the Board of Directors of SED or any successor thereof. In addition, if one or more Directors decide to acquire and pay for a tail or run-off coverage, SED will cooperate with the Director(s) to allow the Directors to acquire and pay for a six-year extension of D&O Coverage at existing levels, covering the Directors for acts prior to the change of control contemplated herein. SED shall keep in place until June 30, 2020 and honor to the extent required by applicable law all charter provisions, by-laws and the September 30, 2013 Indemnity Agreements and any other contractual indemnity agreements filed by SED with the Securities and Exchange Commission prior to the date hereof providing a right to indemnification to the Directors (“Indemnification”). None of SED, Paragon or the Paragon Group shall take any actions to deny or otherwise limit the Directors’ ability to make valid and lawful claims and receive payment or coverage for valid and lawful claims under the D&O Policy or to Indemnification by SED.
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6. Upon the written request of a Director to SED’s transfer agent, SED shall, within 15 days after any such request, take any and all steps reasonably necessary to remove from any shares of SED held by such Director any and all restrictive legends and notations reflecting restrictions on transfer, to the extent permissible under applicable law and any applicable contract in the reasonable opinion of counsel to SED; it being understood that (i) no such legends may be removed for an individual until such time as the individual has not been a director, officer or affiliate for a period of at least 90 days and (ii) any person who beneficially owns 10% or more of SED’s common stock shall be presumed to be an affiliate of SED; provided however that, with respect to foregoing clauses (i) and (ii), any restricted securities legends relating to resale restrictions under the Securities Act of 1933, as amended (the "Securities Act"), shall be removed in accordance with the foregoing if a Director shall have delivered a legal opinion of experienced securities counsel, who shall be reasonably acceptable to SED, addressed to SED and its transfer agent to the effect that the sale and transfer of the Director's shares of SED do not require registration under the Securities Act.
7. SED represents and warrants that it has provided to the Paragon Group true and complete copies of all minutes from any and all meetings of the board of directors of SED held, and copies of any and all actions by written consent taken by the SED board, during the months of September and October 2013 up to and including the date of this Agreement.
8. The Stock Option Agreement between SED and Samuel A. Kidston, dated August 29, 2012, is hereby terminated effective as of the date hereof, such agreement shall have no further force or effect, and any and all options granted thereunder are hereby forever forfeited and cancelled.
9. Upon execution hereof, counsel for the Parties shall execute a Stipulation of Dismissal in the form of Exhibit A hereto, dismissing the action with prejudice, with all Parties to bear their own costs and fees. Paragon’s attorneys shall promptly file the Stipulation of Dismissal with the Court and provide file stamped copies of the Stipulation of Dismissal to SED’s counsel.
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10. The Parties agree that promptly after the execution of this Agreement SED shall issue the press release attached hereto as Exhibit B announcing the substantive terms of this Agreement.
11. The Parties warrant and represent that each of them has reviewed this Agreement independently, has had the opportunity to consult counsel and has been represented by counsel during the negotiation and execution of this Agreement, is fully informed of the terms and effect of this Agreement, and has not relied in any way on any inducement, representation, or advice of any other Party in deciding to enter this Agreement.
12. This Agreement and terms of the Offer and Compromise embodied in this Agreement represent a compromise of disputed claims, and the negotiations, discussions and communications in connection with or leading up to and including this Agreement (the “Communications”) are agreed to be within the protection of the Federal Rule of Evidence 408 and corresponding state statutes including O.C.G.A. § 24-4-408, and shall not be construed as admissions or concessions by the Parties, or any of them, either as to any liability or wrongdoing or as to the merits of any claim or defense. Neither the existence of this Agreement nor any of its provisions shall be offered into evidence by any Party hereto or its agents in any action, arbitration or proceeding as admissions or concessions of liability or wrongdoing of any nature on the part of another Party hereto, or as admissions or concessions concerning the merits of any claim or defense, provided that nothing precludes the offering into evidence of this Agreement for the purpose of enforcing its terms or relying on the releases contained herein as a defense to any claims.
13. Miscellaneous:
(a) The terms of this Agreement shall be binding upon the successors or permitted assigns of the signatories hereto and thereto, as the case may be.
(b) This Agreement may not be changed, modified or terminated, nor any provision hereof by waived, except by an agreement in writing executed by the signatories to this Agreement to be charged thereby.
(c) The Parties shall be deemed to have all prepared this Agreement and it shall not be construed in favor of any Party based upon rules of construction.
(d) This Agreement may be executed in counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement.
(e) The validity, interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Georgia. The Parties hereby irrevocably and unconditionally: (a) agree that any action or proceeding arising out of or in connection with this Agreement between the Parties shall be brought only in the United States District Court for the Northern District of Georgia or, if such court does not have jurisdiction, then in the Superior Court of Gwinnett County, Georgia, and not in any other state or federal court in the United States of America or any court in any other country; (b) consent to submit to the exclusive jurisdiction of the United States District Court for the Northern District of Georgia or, if such court does not have jurisdiction, the Superior Court of Gwinnett County, Georgia for purposes of any action or proceeding arising out of or in connection with this Agreement; (c) waive any objection to the laying of venue of any such action or proceeding in the United States District Court for the Northern District of Georgia or, if such court does not have jurisdiction, the Superior Court of Gwinnett County, Georgia; and (d) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the United States District Court for the Northern District of Georgia or, if such court does not have jurisdiction, in the Superior Court of Gwinnett County, Georgia, has been brought in an improper or inconvenient forum. The losing party in any such action or proceeding, as determined by the relevant court, shall pay the legal fees and costs of the prevailing party incurred in connection with such action or proceeding.
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IN WITNESS WHEREOF, the parties whose names are set forth below have duly executed this Agreement as of the day and year first above written.
| Dated: October 17, 2013 | ||||
| SED International Holdings, Inc. | Paragon Technologies, Inc. | |||
| By: | /s/ Samuel A. Kidston | By: | /s/ Hesham M. Gad | |
| Name: Samuel A. Kidston | Name: Hesham M. Gad | |||
| Title: Executive Chairman | Title: Chairman | |||
| Gad Partners Fund LP, | ||||
| /s/ JD Abouchar | By Gad Capital Management LLC, | |||
| JD Abouchar | its General Partner | |||
| /s/ Arthur Goldberg | By: | /s/ Hesham M. Gad | ||
| Arthur Goldberg | Hesham M. Gad | |||
| /s/ JK Hage, III | /s/ Dennis L. Chandler | |||
| JK Hage, III | Dennis L. Chandler (for purposes of Section 4 only) | |||
| /s/ Samuel Kidston | /s/ Hesham M. Gad | |||
| Samuel Kidston | Hesham M. Gad | |||
| /s/ Steven Metayer | /s/ Jack H. Jacobs | |||
| Steven Metayer | Jack H. Jacobs (for purposes of Section 4 only) | |||
| /s/ Robert G. O’Malley | /s/ Samuel S. Weiser | |||
| Robert G. O’Malley | Samuel S. Weiser (for purposes of Section 4 only) | |||
| North & Webster, LLC | ||||
| By: | /s/ Samuel A. Kidston | |||
| Name: Samuel A. Kidston | ||||
| Title: Managing Member | ||||
North & Webster Value Opportunities Fund, LP, by North & Webster, LLC, its General Partner |
||||
| By: | /s/ Samuel A. Kidston | |||
| Name: Samuel A. Kidston | ||||
| Title: Managing Member | ||||
North & Webster Fund II, LP, by North & Webster, LLC, its General Partner |
||||
| By: | /s/ Samuel A. Kidston | |||
| Name: Samuel A. Kidston | ||||
| Title: Managing Member | ||||
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Exhibit 10.2
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this “Agreement”) is made as of October 21, 2013 by and between SED International Holdings, Inc. a Georgia corporation (the “Company”), and Stephen Dexter, an individual (the “Consultant”).
NOW, THEREFORE, the parties hereby agree as follows:
1. Services. The Company hereby engages Consultant for the performance of, and Consultant hereby agrees to perform for the Company, consulting and advisory services (the “Services”) on a full-time basis in accordance with the terms and conditions of this Agreement. As part of the Services, Consultant shall serve as the Company’s Interim Chief Financial Officer and shall perform for the Company all of the services and functions that are customarily performed by the chief financial officer of a public company in the Company’s industry. Consultant shall perform the Services in a competent and workmanlike manner and at such places and times as the Company may reasonably request. Consultant shall from time to time furnish to the Company reports as necessary regarding the performance of the Services, in such form as may be reasonably requested by the Company.
2. Compensation and Expenses.
2.1 For the performance of the Services during the term of this Agreement, the Company shall provide Consultant, as compensation for the Services, payment at the rate of $10,000 per month, pro rated for any partial month (the “Consulting Fee”). The Company shall pay Consultant in the manner required by applicable law.
2.2 The Company shall reimburse Consultant for all reasonable and necessary business expenses incurred by Consultant in connection with the performance of the Services, provided that such expenses are pre-approved by the Company, documented and accounted for in accordance with the Company’s policies and the requirements of the Internal Revenue Service.
3. Term. Either party may terminate this Agreement at any time upon prior written notice of at least ten (10) days provided to the other party.
4. Independent Contractor. During the term of this Agreement, Consultant’s relationship to the Company will be that of an independent contractor. Neither this Agreement nor the performance of the Services shall for any purpose whatsoever or in any way or manner create any employer-employee relationship between the parties. Accordingly, to the extent determined by the Company to be permissible under applicable law and upon notice by the Company to Consultant, Consultant shall have sole and exclusive responsibility for the payment of all federal, state and local income taxes and for all employment and disability insurance, social security and other similar taxes with respect to any compensation provided by the Company hereunder. Consultant is not authorized to bind the Company except as expressly authorized in writing by the board of directors of the Company.
5. Confidential Information. During the term of this Agreement and for a period a five (5) years following the termination of this Agreement for any reason, Consultant shall (a) maintain in strict confidence all business and financial information of the Company disclosed by the Company to the Consultant that is non-public, confidential and/or proprietary in nature (“Confidential Information”) and (b) not use any of the Confidential Information except for the limited purposes for which the disclosure of such Confidential Information is originally made. All Confidential Information is and shall at all times be the exclusive property of the Company.
6. Company Materials. Upon the termination of this Agreement, Consultant shall immediately return to the Company all proprietary information and Company property and materials, including, but not limited to, computers, printers, cell phones, fax machines, scanners, memoranda, sales brochures, credit cards, telephone charge cards, manuals, building keys and passes, courtesy parking passes, names and addresses of all Company vendors, suppliers, customers and potential vendors, suppliers and customers, customer lists, customer contacts, sales information, diskettes, intangible information stored on diskettes, business or marketing plans, reports, projections, software programs and data compiled with the use of those programs, tangible copies of trade secrets and Confidential Information, and any and all other information or property previously or currently held or used by Consultant that is or was related to the Services. Consultant further agrees that in the event he discovers any other Company or proprietary materials in his possession after the date hereof, he will immediately return such materials to the Company.
7. General.
7.1 This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof, and such agreement supersedes all proposals or agreements, written or oral, and all other communications between the parties relating to the subject matter of this Agreement.
7.2 No provision of this Agreement may be waived, amended, modified, superseded, canceled, renewed or extended except in a written instrument signed by the party against whom any of the foregoing actions is asserted. Any waiver shall be limited to the particular instance and for the particular purpose when and for which it is given.
7.3 If for any reason a court of competent jurisdiction finds any provision of this Agreement, or any portion thereof, to be unenforceable, that provision of this Agreement shall be enforced to the maximum extent permissible so as to affect the intent of the parties, and the remainder of this Agreement shall continue in full force and effect.
7.4 This Agreement, the Services to be performed and all rights hereunder are personal to Consultant and may not be transferred or assigned by Consultant at any time.
7.5 This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the internal laws of the State of Georgia, notwithstanding any conflict of law provision to the contrary.
7.6 This Agreement may be executed in multiple counterparts, which, when taken together, shall constitute one and the same instrument.
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7.7 Consultant recognizes that any breach of this Agreement by Consultant will cause irreparable injury to Company, inadequately compensable with monetary damages. Accordingly, in addition to any other legal or equitable remedies that may be available to the Company, Consultant agrees that the Company shall be entitled to seek and obtain injunctive relief in the form of a temporary restraining order, preliminary injunction, or permanent injunction, in each case without notice or bond, against Consultant to enforce this Agreement. The Company will not be required to demonstrate actual injury or damage to obtain injunctive relief from the courts. To the extent that any damages resulting from a breach of this Agreement are calculable, the Company will also be entitled to recover monetary damages. Any recovery of damages by the Company will be in addition to and not in lieu of the injunctive relief to which Company is entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
| SED INTERNATIONAL HOLDINGS, INC. | STEPHEN DEXTER | ||
| By: | /s/ Hesham M. Gad | /s/ Stephen Dexter | |
| Name: Hesham M. Gad | |||
| Title: Executive Chairman | |||
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Exhibit 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”), dated as of October 21, 2013, is made and entered into by and between SED International Holdings, Inc., a Georgia corporation (the “Company”), and Robert G. O’Malley, an individual (“Executive”).
The parties hereby agree as follows:
1. This Amendment amends the Letter Agreement (the “Letter Agreement”), dated September 7, 2012, and signed by Executive on September 15, 2012, by and between the Company and Executive. Except as amended hereby, the Letter Agreement shall remain in full force and effect in accordance with its terms.
2. Executive shall be paid base salary at his current rate of pay through the date hereof. Effective as of October 22, 2013, Executive shall be paid a lump sum payment of $10,000 for his services to the Company from October 22, 2013 through the Effective Resignation Date, in lieu of all other compensation.
3. Effective as of the date hereof, Executive shall not be entitled to the payment of any further bonus compensation in connection with Executive’s employment with the Company, whether for past, present or future services to the Company.
4. Executive hereby resigns from his employment with the Company effective as of the close of business on November 21, 2013 (the “Effective Resignation Date”). Between the date hereof and the Effective Resignation Date, Executive will continue to serve as Chief Executive Officer of the Company; provided that, in the event that the Company engages a new Chief Executive Officer prior to the Effective Resignation Date, Executive shall serve as Advisor to the Board from and after such date and through the date of the Effective Resignation Date. Executive shall work a full-time basis between the date hereof and the Effective Resignation Date.
5. Executive shall not be entitled to the payment of any severance under the Letter Agreement as a result of his resignation hereunder or upon any other basis.
6. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, notwithstanding any conflict of law provision to the contrary.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.
| SED INTERNATIONAL HOLDINGS, INC. | ROBERT G. O’MALLEY | ||
| By: | /s/ Hesham M. Gad | /s/ Robert G. O’Malley | |
| Name: Hesham M. Gad | |||
| Title: Executive Chairman | |||