8-K

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): December 31, 2008

EDCI HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction
of incorporation) 001-34015
(Commission
File Number) 26-2694280
(IRS Employer
Identification No.)

1755 Broadway, 4th Floor
New York, New York 10019
(Address of Principal
Executive Offices)

(212) 333-8400
(Registrant’s telephone number, including area code)

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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets.

As previously reported, on October 31, 2008, EDCI Holdings, Inc. (the “Company”) announced that its subsidiaries Entertainment Distribution Company, LLC (“EDC”) and Entertainment Distribution Company (USA), LLC (collectively, the “Sellers”) entered into an Asset Purchase Agreement (the “Agreement”) with Sony DADC US Inc. (the “Purchaser”) for the sale of Sellers’ distribution operations located in Fishers, Indiana, U.S. supply agreements with Universal Music Group, the equipment located in its Fishers, Indiana distribution facility and certain manufacturing equipment located in its Kings Mountain, North Carolina facility, as well as the transfer of U.S. customer relationships to the Purchaser (collectively, the “Sony Sale”).

On December 31, 2008, the parties closed the Sony Sale. In accordance with the Agreement, the Sellers received $26 million in cash at closing and will receive by the end of April 2009 an additional approximate $1.5 million for equipment sold to the Purchaser pursuant to the Agreement. The $26 million purchase price is subject to certain post-closing working capital adjustments, as provided in the Agreement. The Agreement also provides for up to $2.0 million as contingent consideration related to the transferred operations achieving additional criteria. In connection with the transaction, EDC and Purchaser have agreed to provide certain transition services following the closing.

A copy of the Agreement was previously filed as an exhibit to the Company’s Current Report on Form 8-K with the Securities and Exchange Commission on November 3, 2008 and is incorporated herein by reference. The foregoing description of the transaction and the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement.

As previously reported, on October 31, 2008, EDC entered into a Seventh Amendment to Credit Agreement (the “Seventh Amendment”) with Entertainment Distribution Company (USA), LLC (the “Guarantor”), Glenayre Electronics, Inc., the lenders party thereto (the “Lenders”) and Wachovia Bank, National Association, as administrative agent (the “Agent”) amending certain terms of the Credit Agreement dated as of May 31, 2005 by and among EDC, the Guarantor, Glenayre Electronics, Inc., the Lenders and the Agent. The Seventh Amendment became effective upon the consummation of the Sony Sale. Pursuant to the Seventh Amendment, (1) the Lenders consented to the Sony Sale, (2) the blanket lien on the remaining U.S. assets and pledge of 65% of the stock our EDC’s subsidiaries in Hannover, Germany and Blackburn, UK was continued, (3) the payment on the term loan was modified with $9.0 million due on December 31, 2008, $9.0 million due on closing of the Sony Sale, $2.0 million due on December 31 2009, $2.5 million due on June 30, 2010, and $4.5 million due on December 31, 2010 and (4) the existing revolving credit facility was repaid and eliminated and replaced with a new European revolving credit facility of up to $2.5 million, secured by the assets of the EDC subsidiaries in Hannover, Germany and Blackburn, UK. Upon closing of the Sony Sale, the parties to the Seventh Amendment entered into an Eighth Amendment to Credit Agreement (the “Eighth Amendment”). The Eighth Amendment clarified certain security provisions, modified certain of the requirements set forth in the Seventh Amendment relating to the Sony Sale and created two events of default related to EDC failing to own two-thirds or more of the outstanding voting stock of its Dutch holding company subsidiary or Sony taking enforcement action not terminated or rescinded within 30 days with respect its second lien security interest securing its indemnification rights unless permitted by the relevant documentation.

A copy of the Seventh Amendment was previously filed as an exhibit to the Company’s Current Report on Form 8-K with the Securities and Exchange Commission on November 3, 2008 and is incorporated herein by reference and a copy of the Eighth Amendment is filed as Exhibit 10.2 and is incorporated herein by reference. The foregoing description of the Seventh and Eighth Amendments does not purport to be complete and is qualified in its entirety by reference to the full text of such amendments.

A copy of the press release issued by the Company on January 5, 2009 announcing the completion of the transaction is filed as Exhibit 99.1 and is incorporated herein by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On January 5, 2009, the Company also announced the appointment of Robert L. Chapman, Jr. as Chief Executive Officer of the Company. Mr. Chapman replaced Interim Chief Executive Officer, Clarke H. Bailey, who will continue to serve as non-Executive Chairman of the Board of Directors of the Company, upon the terms that applied to this position prior to his serving as Interim Chief Executive Officer. Mr. Chapman’s employment was effective following Board approval on January 2, 2009. Mr. Chapman has served as a director of the Company since November 2007. Other than as described herein, there have been no changes to Mr. Chapman’s biography included in the proxy statement/prospectus filed with the Securities and Exchange Commission on June 23, 2008. Further,

there are no transactions in which Mr. Chapman has an interest requiring disclosure under Item 404(a) of Regulation S-K.

In connection with his appointment as Chief Executive Officer, Mr. Chapman and the Company have entered into a letter agreement regarding the terms of his employment. Pursuant to the letter agreement, Mr. Chapman will receive base compensation of $37,500 per month, of which $18,750 will be paid in cash, and $18,750 will be paid through the issuance and delivery to him of shares of common stock of the Company issued in a valid private placement under federal securities laws. The number of shares issued for each monthly payment will be calculated by dividing $18,750 by the average daily closing price of the Company’s common stock on the Nasdaq Stock Market, or other primary market (e.g., Pink Sheets) should the Company’s common stock cease to trade on the Nasdaq Stock Market, during the calendar month immediately preceding the calendar monthly period in which issuance and delivery is being made. Mr. Chapman will also be eligible to participate in the Company’s bonus plans or programs as shall be established by the Board of Directors from time to time for senior executives. If Mr. Chapman’s employment is terminated for any reason, except as noted below, during the first six months of the term of the letter agreement, the Company shall pay to Mr. Chapman in one cash lump sum and one issuance and delivery of shares of the Company’s common stock, the remainder of his base salary through the six-month anniversary date of the agreement (the “Remainder Amount”). Notwithstanding the foregoing, Mr. Chapman’s employment is conditioned on the results of a background search to be completed on or before January 26, 2009. If the results of the background search are not reasonably acceptable to the Board of Directors, due to there being a material issue with his record discovered by the background search, his employment may be terminated by the board without payment of the Remainder Amount. After July 2, 2009, Mr. Chapman’s position shall be that of an at-will employee and his employment may be terminated at any time upon two weeks advance notice. The letter agreement also contains provisions that comply with Section 409A of the Internal Revenue Code, including a delay in payment in situations where payments would otherwise not be compliant with Section 409A.

A copy of Mr. Chapman’s letter agreement is filed with this report as Exhibit 10.1 and is hereby incorporated by reference. The foregoing description of such letter agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the letter agreement.

Item 9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

See Exhibit 99.2 for certain pro forma information assuming the completion of the Sony Sale at the beginning of certain specified fiscal periods.

(d) Exhibits

Exhibit No.		Description
	10.1	Letter Agreement between Robert L. Chapman, Jr. and EDCI Holdings, Inc. dated January 2, 2009.
	10.2	Eighth Amendment to Credit Agreement dated as of December 30, 2008 by and among Entertainment Distribution Company, LLC as borrower, Glenayre Electronics, Inc., the guarantors party thereto, the lenders party thereto and Wachovia Bank, National Association, as administrative agent.
	99.1	Company’s News Release dated January 5, 2009.
	99.2	Pro forma financial information.

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.

	EDCI HOLDINGS, INC.
Date: January 6, 2009	By:	/s/ Michael W. Klinger
		Michael W. Klinger
		Chief Financial Officer

  EX-10.1 2 g17204exv10w1.htm EX-10.1

Exhibit 10.1

January 2, 2009

Mr. Robert L. Chapman, Jr.
1007 Sepulveda Blvd. #129
Manhattan Beach, CA 90267
Office: (310) 373-0404

Dear Bob,

This letter confirms certain terms and conditions of your employment in the position of Chief Executive Officer (“CEO”) of EDCI Holdings, Inc. (the “Company” or “EDCI”) effective January 2, 2009 (the “Effective Date”), subject to a background search of you by the Company (the “Background Search”), with results reasonably satisfactory, due to no material issues with your record discovered by the Background Search, to the Board of Directors of the Company (the “Board of Directors”), all to be completed on or before January 26, 2009. You will perform your CEO duties primarily from your office in Los Angeles County, California, but will use reasonable efforts to spend one week per calendar month at the Company’s headquarters office (currently in New York, NY) and will make yourself available to spend approximately one day per calendar month at one of various subsidiary locations (currently expected during the first six months of 2009 to consist of Hannover, Germany and Blackburn, UK).

This position reports directly to the Board of Directors. In your capacity as CEO of the Company, all of the officers of the Company shall report directly to you or your designee.

You will: (1) devote substantially all of your business time (approximately 8-10 hours/weekday), attention and abilities to the Company’s business, except as provided herein and (2) faithfully serve the Company and use your best efforts to promote the interests of the Company and to enhance shareholder value. You are directly or indirectly responsible for all activities of the Company and are specifically responsible for merger and acquisition activities (supported by Matthew K. Behrent in his position of EVP — Corporate Development), external communications (supported by Michael W. Klinger in his position of EVP — Chief Financial Officer), and any other activities which may be assigned to you by the Board of Directors. You shall participate in quarterly and annual investor relations/communications as required.

The Company understands that you are currently serving as Managing Member of Chapman Capital L.L.C. (“CCLLC”). Subject to no conflict of interest between CCLLC and the Company, you shall be allowed to continue to serve in such capacity and conduct such duties for CCLLC as do not unreasonably interfere with your duties to the Company, provided that you will seek prior approval of the Board of Directors of any expansion or increase in your duties for CCLLC from where such duties existed in calendar year 2008.

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Your base compensation will be $37,500 per month (the “Base Salary”), of which $18,750 shall be paid in cash in bi-weekly installments (the “Cash Portion of Base Salary”) and $18,750 of which shall be paid monthly through the issuance and delivery to you, within five days of the second bi-weekly payment of the Cash Portion of Base Salary each calendar month, of shares of common stock of the Company (“EDCI Shares”), issued in a valid private placement under federal securities laws (the “Stock Portion of Base Salary”). The Stock Portion of Base Salary shall vest fully upon issuance and shall not be subject to forfeiture for any reason.

The number of EDCI Shares that shall be issued and delivered for each monthly payment of the Stock Portion of Base Salary shall be calculated by dividing $18,750 by the average daily closing price of EDCI Shares on the Nasdaq Stock Market, or other primary market (e.g., Pink Sheets) should EDCI Shares cease to trade on the Nasdaq Stock Market, during the calendar month immediately preceding the calendar monthly period in which issuance and delivery is being made. No particular calendar month’s average daily closing trading data for EDCI Shares shall be utilized for the calculation of more than one particular month’s Stock Portion of Base Salary. If EDCI Shares do not trade on any particular business day during which the Nasdaq Stock Market has been open for trading, the closing price of EDCI Shares on the most recent, prior trading day on which EDCI Shares traded shall be used for that current day’s pricing in performing the monthly average calculation described above.

In consideration of the issuance of such shares to you, upon execution of this letter, you shall be deemed to represent and warrant to the Company that (a) you understand that such shares are being issued in a private placement pursuant to federal securities laws, (b) such shares cannot be transferred other than pursuant to an exemption from registration under federal securities laws as confirmed to the Company by opinion of counsel reasonably acceptable to the Company and (c) you are acquiring such shares for your own account for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof. Your Base Salary may be increased (but not decreased) in the manner determined by the Company in consultation with the Board of Directors or the Compensation Committee of the Board or Directors.

You will be eligible to participate in the Company’s bonus plans or programs as shall be established by the Board of Directors upon recommendations from management of the Company from time to time for senior executives of the Company. In addition, you will be eligible to receive discretionary bonus awards as the Board of Directors may determine in its sole discretion from time to time.

It is understood that you will not participate in any retirement, life, medical/dental insurance or disability insurance plans maintained by the Company.

Notwithstanding the foregoing, if any benefit or amount payable to you under this letter on account of your termination of employment constitutes “nonqualified deferred compensation” (“Deferred Compensation”) within the meaning of Section 409A of the

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Internal Revenue Code (“409A”), payment of such Deferred Compensation shall commence when you incur a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (“Separation from Service”). However, if you are a “specified employee” within the meaning of 409A at the time of your Separation from Service, any Deferred Compensation payable to you under this letter on account of your termination of employment shall be delayed until the first day of the seventh month following your Separation from Service (the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension Period, the Company shall pay to you a lump sum payment in cash equal to any payments (including interest on any such payments, at an interest rate of not less than the average prime interest rate, as published in the Wall Street Journal, over the 409A Suspension Period) that the Company would otherwise have been required to provide under this letter but for the imposition of the 409A Suspension Period. Thereafter, you shall receive any remaining payments due under this letter in accordance with its terms as if there had not been any suspension period beforehand.

This agreement shall have a term of a minimum of six months from the Effective Date hereof. If your position as CEO of the Company is terminated by the Company prior to the six month anniversary of the Effective Date for any reason, including with or without cause, except as set forth in the last sentence of this paragraph, the Company shall pay you within one week of termination of such services, in one cash lump sum and one issuance and delivery of EDCI Shares, the remainder of your Base Salary (both the Cash Portion of Base Salary and the Stock Portion of Base Salary) through such six month anniversary date in accordance with the payment provisions provided above. The number of EDCI Shares to be delivered for this final payment shall be calculated by dividing the full calendar month and prorated/partial calendar monthly sums of all remaining $18,750 monthly EDCI Shares payments by the average daily closing price of EDCI Shares on the Nasdaq Stock Market, or other primary market (e.g., Pink Sheets) should EDCI Shares cease to trade on the Nasdaq Stock Market, during the calendar month immediately preceding the calendar month in which your position terminates. If EDCI Shares do not trade on any particular business day during which the Nasdaq Stock Market has been open for trading, the closing price of EDCI Shares on the most recent, prior trading day on which EDCI Shares traded shall be used for that current day’s pricing in performing the monthly average calculation described above. Notwithstanding the foregoing, if the results of the Background Search are not reasonably acceptable to the Board of Directors, due to there being a material issue with your record discovered by the Background Search, your employment with the Company and this letter agreement may be terminated upon notice from the Board of Directors to you and payment to you solely of that portion of your Base Salary that has accrued and remains unpaid from the Effective Date through the date of such termination; provided such termination occurs within five (5) days of the Board of Directors receipt of the results of the Background Search.

Following the six month anniversary of the Effective Date (July 2, 2009), your position with the Company shall become that of an at-will employee, so that following July 2, 2009 your employment with the Company and this letter agreement may be terminated at

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any time by the Company or you upon two weeks advance notice of the effective date of such termination.

In consideration of the Company’s employment of you upon the terms set forth herein, you hereby represent to the Company that you have not at any time been convicted of (or entered a plea of guilty or nolo contendere to) any crime or offense constituting a felony under applicable law or any crime or offense involving fraud or moral turpitude.

No representation, promise or inducement has been made by the Company or you that is not embodied in this letter agreement.

This letter agreement may not be modified or amended in any way unless in writing signed by each of the parties hereto.

Please confirm the terms and conditions set forth herein by countersigning this letter in the space provided below.

Sincerely,

/s/ Howard Speaks

Howard “Skip” Speaks
Lead Independent Director

Accepted by:	/s/ Robert L. Chapman, Jr.	Date: January 2, 2009
	Robert L. Chapman, Jr.

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EX-10.1

EX-10.1

EX-10.2

Exhibit 10.2

EIGHTH AMENDMENT TO CREDIT AGREEMENT

     THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of December 30, 2008 and effective as of the Seventh Amendment Effective Date, is by and among ENTERTAINMENT DISTRIBUTION COMPANY, LLC, a Delaware limited liability company (the “Borrower”), those Domestic Subsidiaries of the Borrower identified as a “Guarantor” on the signature pages hereto (individually a “Guarantor” and collectively the “Guarantors”), the financial institutions party hereto as lenders (the “Lenders”) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent under the Credit Agreement (defined below) (in such capacity, the “Administrative Agent”).

W I T N E S S E T H

     WHEREAS, the Borrower, the Guarantors, Glenayre Electronics, Inc., a Colorado corporation, the Lenders and the Administrative Agent are parties to that certain Credit Agreement dated as of May 31, 2005 (as previously amended, modified or supplemented and as further amended, modified, supplemented, restated or amended and restated from time to time, the “Credit Agreement”; capitalized terms used herein shall have the meanings ascribed thereto in the Credit Agreement as amended hereby); and

     WHEREAS, the Borrower and the Lenders have agreed to amend the Credit Agreement on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
AMENDMENTS TO CREDIT AGREEMENT

     1.1 Amendment of Section 2.1(j). Section 2.1(j) of the Credit Agreement is hereby amended by deleting the last sentence of the section and inserting the following in lieu thereof:

     “The obligations of each Euro Borrower shall be secured solely by the Collateral pledged by such Euro Borrower and/or the Dutch Holding Company (and not by any Collateral pledged by any other Credit Party).”

     1.2 Amendment of Section 2.21(b). Section 2.21(b) of the Credit Agreement is hereby amended by deleting the reference therein to “$8,700,000” and inserting in its place “$5,400,000.”

     1.3 Amendment of Section 2.21(b)(ii). Section 2.21(b)(ii) of the Credit Agreement is hereby amended by deleting the reference therein to “September” and inserting in its place “December.”

     1.4 Amendment of Section 2.7(b)(vi). Section 2.7(b)(vi) of the Credit Agreement is hereby amended and restated in its entirety as follows:

     Section 2.7(b)(vi) Application of Mandatory Prepayments. All amounts required to be paid pursuant to this Section 2.7(b) shall be applied as follows: (A) with respect to all amounts prepaid pursuant to Sections 2.7(b)(ii) through (iv), to the Term Loan (on a pro rata basis across the remaining amortization payments set forth in Section 2.2(b)) provided, however, that any payment made in connection with the purchase by Sony of any equipment from Borrower after the payment required under Section 2.2(b) hereof to be made on the date of the Closing under the Sony Sale Agreement, shall be applied as follows: (i) the first $1,000,000 to the Term Loan (on a pro rata basis across the remaining amortization payments set forth in Section 2.2(b)), and (ii) any funds above $1,000,000 to the collateral account designated a Money Market Account as provided in Section 2.21(b) hereof; and (B) with respect to all amounts prepaid pursuant to Section 2.7(b)(v), with respect to each Excess Cash Flow prepayment for the twelve-month period ended December 31, 2008, and each Excess Cash Flow prepayment to be made thereafter (w) first, 50% of such amount to be applied to the amortization payment due hereunder pursuant to Section 2.2(b) on December 31, 2009, and (x) second, 50% of such amount to be applied to the remaining amortization payments due hereunder pursuant to Section 2.2(b) thereafter on a pro rata basis until the Term Loan is paid in full. Within the parameters of the applications set forth above, prepayments shall be applied first to Alternate Base Rate Loans and then to LIBOR Rate Loans in direct order of Interest Period maturities. Each Lender shall receive its pro rata share of any such prepayment based on its Term Loan Commitment Percentage. All prepayments under this Section 2.7(b) shall be subject to Section 2.17 and be accompanied by interest on the principal amount prepaid through the date of prepayment.

     1.5 New Section 7.1(m). A new Section 7.1(m) is hereby added to the Credit Agreement immediately following Section 7.1(l) thereof as follows:

     Section 7.1(m) Change of Control. The failure of the Borrower to own, directly or indirectly, two-thirds or more of the then outstanding Voting Stock of the Dutch Holing Company;

     1.6 New Section 7.1(n). A new Section 7.1(n) is hereby added to the Credit Agreement immediately following Section 7.1(m) thereof as follows:

     Section 7.1(n) Sony Enforcement Action. Sony or any Affiliate thereof takes any action which constitutes an Enforcement Action (as defined in the Sony Subordination Agreement) except as specifically permitted in Section 2.7(b) of the Sony Subordination Agreement, and any such Enforcement Action shall not have been terminated or rescinded within 30 days of its occurrence.

ARTICLE II
CONDITIONS TO EFFECTIVENESS

     2.1 Effective Date.

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     The matters set forth in Article I of this Amendment shall become effective upon the Seventh Amendment Effective Date.

ARTICLE III
MISCELLANEOUS

     3.1 Amended Terms.

     (a) Amended Terms. All references to the Credit Agreement in each of the Credit Documents shall hereafter mean the Credit Agreement as amended by this Amendment. Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.

     3.2 Representations and Warranties of Credit Parties. Each of the Credit Parties represents and warrants as follows as of the date hereof:

     (a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.

     (b) This Amendment has been duly executed and delivered by such Person and constitutes such Person’s valid and legally binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

     (c) No consent, approval, authorization or order of, or filing, registration or qualification with, any Governmental Authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment or the transaction contemplated herein.

     (d) The representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects as of the date hereof (except for those which expressly relate to an earlier date).

     3.3 Acknowledgment of Guarantors and Parent. The Guarantors and Parent acknowledge and consent to all of the terms and conditions of this Amendment and agree that this Amendment and all documents executed in connection herewith do not operate to reduce or discharge the Guarantors’ and Parent’s obligations under the Credit Documents.

     3.4 Credit Document. This Amendment shall constitute a Credit Document under the terms of the Credit Agreement.

     3.5 Entirety. This Amendment and the other Credit Documents embody the entire agreement between the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

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     3.6 Counterparts; Telecopy. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. Delivery of an executed counterpart to this Amendment by telecopy shall be effective as an original and shall constitute a representation that an original will be delivered.

     3.7 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     3.8 Consent to Jurisdiction; Service of Process; Waiver of Jury Trial. The jurisdiction, services of process and waiver of jury trial provisions set forth in Sections 9.14 and 9.17 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

     3.9 Fees. The Borrower agrees to pay all fees and expenses of the Administrative Agent and the Lenders in connection with the preparation, execution and delivery of this Amendment, the restructuring of the Loans as contemplated thereby, and in connection therewith, due diligence concerning the Credit Parties and the Collateral, including, without limitation, the fees and expenses of Reed Smith LLP and King & Spalding LLP.

     3.10 Release. The Credit Parties hereby release and forever discharge Administrative Agent, the Lenders and their agents, employees, attorneys, professionals, and representatives from any and all claims, counterclaims, liabilities, and causes of action existing on the date of execution of this Amendment and effective as of the Seventh Amendment Effective Date (collectively, the “Claims”) of every nature and description, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, actual or potential, and whether arising at law or in equity, under the common law, state law, federal law, or any other law, in connection with the Credit Agreement or any other Credit Document, or arising out of or relating to Administrative Agent’s or any Lender’s administration of or conduct in connection with the Credit Agreement or another Credit Document, or otherwise, it being the Credit Parties’ intention to effect a general release of all such Claims.

[remainder of page intentionally left blank]

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     IN WITNESS WHEREOF the Borrower, the Guarantors, the Parent, the Lenders, and the Administrative Agent have caused this Amendment to be duly executed on the date first above written.

BORROWER:	ENTERTAINMENT DISTRIBUTION COMPANY,
	LLC, a Delaware limited liability company
	By:	/s/ Thomas Costabile
	Name:	Thomas Costabile
	Title:	President & COO
GUARANTORS:	ENTERTAINMENT DISTRIBUTION COMPANY (USA), LLC, a Delaware limited liability company
	By:	/s/ Thomas Costabile
	Name:	Thomas Costabile
	Title:	President & COO
PARENT:	GLENAYRE ELECTRONICS, INC., a Colorado corporation
	By:	/s/ Matt Behrent
	Name:	Matt Behrent
	Title:	EVP Corporate Development

ADMINISTRATIVE AGENT AND LENDERS:	WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender
	By:	/s/ Elaine Eaton
	Name:	Elaine Eaton
	Title:	Senior Vice President
	Euro Revolving Commitment Percentage:      100%
	Euro Revolving Committed Amount:      2 million Euros
	ING CAPITAL LLC, as a Lender
	By:	/s/ Andrew C. Sepe
	Name:	Andrew C. Sepe
	Title:	Vice President

EX-99.1

Exhibit 99.1

Contact: Brainerd Communicators, Inc.
Jennifer Gery/Scott Cianciulli (media)
Mike Smargiassi/Dianne Pascarella (investors)
212-986-6667

EDCI Holdings, Inc. Announces Appointment of Robert L. Chapman, Jr. to Chief Executive Officer

— Closes Sale of Entertainment Distribution Company, LLC U.S. Distribution Operations to
Sony DADC US Inc. for $26.0 million —

NEW YORK — January 5, 2009 — EDCI Holdings, Inc. (NASDAQ: EDCI) (“EDCI”), the holding company for Entertainment Distribution Company, Inc., the majority shareholder of Entertainment Distribution Company, LLC (“EDC, LLC”), an independent provider of supply chain services to the home entertainment market, today announced the appointment of Robert L. Chapman, Jr. to Chief Executive Officer. Mr. Chapman replaces Interim Chief Executive Officer Clarke H. Bailey, who will continue to serve as non-Executive Chairman of the Board.

EDCI also announced that on December 31, 2008 it closed its definitive asset purchase agreement for the sale of EDC, LLC’s distribution operations located in Fishers, Indiana, U.S. supply agreements with Universal Music Group, the equipment located in its Fishers, Indiana distribution facility and certain manufacturing equipment located in its Kings Mountain, North Carolina facility, as well as the transfer of U.S. customer relationships to Sony DADC US Inc. (“Sony DADC”) for $26.0 million in cash and other consideration.

Clarke Bailey, non-Executive Chairman of EDCI, commented, “As a Board member, Bob has been an invaluable resource to the Company and has played an active role in the execution of EDCI’s and EDC, LLC’s strategic plan. He has a successful track record of identifying undervalued assets and we are excited to have him lead our acquisition efforts as CEO.”

Mr. Chapman commented, “With Chapman Capital advising investment funds that own approximately 14% of EDCI, my interests are indisputably and uniquely aligned with all of EDCI’s owners. As CEO, my primary goal is to lead EDCI’s transition into a respected, fairly valued public company by prudently and diligently applying all or part of its approximately $50 million in holding company cash towards the equity component of a small capitalization acquisition. EDCI’s nearly $280 million, or approximately $14/share based on a 33% corporate tax rate, in unrestricted tax loss carry forwards provides a means for EDCI to maximize its post-acquisition after tax cash flow and related returns to EDCI’s owners. While EDCI has been disciplined in its pursuit of acquisition targets, this past year’s bear market environment, particularly for micro capitalization public shares, has discounted prospective targets to more realistic private market valuations. I shall

be pursuing acquisitions immediately, using aggressive timelines with Matthew Behrent, EDCI’s EVP of Corporate Development, and encourage portfolio managers seeking liquidity for their significant (~ 10%) stakes in suitable public company targets to contact Mr. Behrent directly.”

Mr. Chapman joined EDCI’s Board of Directors as an independent director in November 2007. Mr. Chapman is Managing Member of Los Angeles, CA-based Chapman Capital L.L.C., an investment advisor focusing on activist and turnaround investing. Prior to founding Chapman Capital in 1996, Mr. Chapman co-managed the Value Group within Scudder Stevens & Clark, which followed employment with NatWest Securities USA and Goldman, Sachs & Co.

Application of the proceeds from the transaction with Sony DADC to repay debt of EDC, LLC resulted in a reduction of its debt position by $25.5 million. The Company expects to receive additional proceeds for certain equipment transferred to Sony DADC by the end of April, at which time EDC, LLC’s debt position is expected to be less than $10 million. EDC, LLC’s debt position was $38.8 million at September 30, 2008. EDC, LLC’s management team is focused on maximizing cash flow from its remaining international operations. EDCI remains open to additional strategic alternatives for the remaining EDC, LLC assets.

Matthew K. Behrent, EDCI’s Executive Vice President of Corporate Development, may be reached at 212-331-2762.

Michael W. Klinger, EDCI’s Executive Vice President/Chief Financial Officer, may be reached at 317-596-0410.

Robert L. Chapman, Jr., EDCI’s Chief Executive Officer, may be reached at 310-373-0404 x 200.

###

About EDCI Holdings, Inc.

EDCI Holdings, Inc. (Nasdaq: EDCI) is the holding company of Entertainment Distribution Company, Inc., which is the majority shareholder of Entertainment Distribution Company, LLC (“EDC, LLC”), an independent provider of supply chain services to the home entertainment market. EDC, LLC serves every aspect of the manufacturing and distribution process and is one of the largest providers in the industry. Its clients include some of the world’s best-known music, movies and gaming companies. Headquartered in New York, EDC, LLC’s operations include manufacturing and distribution facilities in Hannover, Germany, and a manufacturing facility in Blackburn, UK. For more information, please visit www.edcllc.com.

Safe Harbor Statement

This news release contains statements that may be forward looking within the meaning of applicable securities laws. The statements may include projections regarding future revenues and earnings results, and are based upon the Company’s current forecasts, expectations and assumptions, which are subject to a number of risks and uncertainties that could cause the actual outcomes and results to differ materially. Some of these results and uncertainties are discussed in the Company’s most recently filed Annual Report on Form 10-K, as amended. These factors include, but are not limited to restructuring activities; potential intellectual property infringement claims; potential acquisitions and strategic investments; volatility of stock price; ability to attract and retain key personnel; competition; variability of quarterly results and dependence on key customers; potential market changes resulting from rapid technological advances; proprietary technology; potential changes in government regulation; international business risks; continuation and expansion of third party agreements; sensitivity to economic trends and customer preferences; increased costs or shortages of raw materials or energy; dependence on Universal Music Group; potential inability to manage successful production; advances in technology and changes in customer demands; variability in production levels; and development of digital distribution alternatives including copying and distribution of music and video files. The Company assumes no obligation to update any forward-looking statements and does not intend to do so except where legally required.

EX-99.2

Exhibit 99.2

EDCI HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)

	September 30, 2008
				Disposition of
				EDC US			Pro Forma,
	As Reported			Operations (a)			as Adjusted
ASSETS
Current Assets:
Cash and cash equivalents	$	77,594		$	27,704	(b)
					(19,900	)(h)	$	85,398
Restricted cash		1,770			—			1,770
Short-term investments		3,417			—			3,417
Accounts receivable, net of allowances for doubtful accounts		29,592			(1,106	)(c)
					(3,438	)(d)		25,048
Current portion of long-term receivable		474			—			474
Inventories, net		9,553			(1,358	)(d)
					(993	)(c)		7,202
Prepaid expenses and other current assets		20,740			(281	)(c)
					(1,505	)(d)		18,954
Deferred income taxes		244			—			244
Current assets, discontinued operations		—			6,301	(d)		6,301
Assets held for sale		—			7,110	(f)		7,110
Total Current Assets		143,384			12,534			155,918
Restricted cash		26,088			—			26,088
Property, plant and equipment, net		46,543			(6,439	)(c)
					(16,758	)(f)		23,346
Long-term receivable		3,799			—			3,799
Intangible assets		36,961			(7,164	)(f)		29,797
Deferred income taxes		1,482			—			1,482
Other assets		6,366			(1,952	)(f)		4,414
TOTAL ASSETS	$	264,623		$	(19,779	)	$	244,844
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	31,353		$	(166	)(c)
					(7,249	)(e)	$	23,938
Accrued expenses and other liabilities		34,773			(892	)(c)
					649	(g)
					(4,957	)(e)		29,573
Income taxes payable		128			—			128
Loans from employees		1,170			—			1,170
Current portion of long-term debt		18,546			(8,900	)(h)		9,646
Accrued liabilities, discontinued operations		—			12,206	(e)		12,206
Total Current Liabilities		85,970			(9,309	)		76,661
Other non-current liabilities		10,148			(563	)(f)		9,585
Loans from employees		2,394			—			2,394
Long-term debt		20,222			(11,000	)(h)		9,222
Pension and other defined benefit obligations		37,323			—			37,323
Deferred income taxes		9,473			—			9,473
Total Liabilities		165,530			(20,872	)		144,658
Minority interest in subsidiary company		5,514			—			5,514
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, $.01 par value		—			—			—
Common stock, $.02 par value		140			—			140
Additional paid in capital		371,046			—			371,046
Accumulated deficit		(284,025	)		1,093	(i)		(282,932	)
Accumulated other comprehensive income		7,845			—			7,845
Treasury Stock		(1,427	)		—			(1,427	)
Total Stockholders’ Equity		93,579			1,093			94,672
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	264,623		$	(19,779	)	$	244,844

See accompanying notes

EDCI HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2008
(In thousands, except per share amounts)

				Disposition of
				EDC US			Pro Forma,
	As Reported			Operations (a)			as Adjusted
REVENUES:
Product revenues	$	190,964		$	(62,489	)	$	128,475
Service revenues		59,393			(15,260	)		44,133
Total Revenues		250,357			(77,749	)		172,608
COST OF REVENUES:
Cost of product revenues		171,741			(60,473	)		111,268
Cost of service revenues		44,425			(14,422	)		30,003
Total Cost of Revenues		216,166			(74,895	)		141,271
GROSS PROFIT		34,191			(2,854	)		31,337
OPERATING EXPENSES:
Selling, general and administrative expense		36,705			(9,656	)		27,049
Amortization of intangible assets		7,231			(2,388	)		4,843
Total Operating Expenses		43,936			(12,044	)		31,892
OPERATING LOSS		(9,745	)		9,190			(555	)
OTHER INCOME (EXPENSES):
Interest income		2,893			—			2,893
Interest expense		(2,932	)		1,173	(b)		(1,759	)
Gain on currency swap, net		881			—			881
Loss on currency transaction, net		(1,965	)		—			(1,965	)
Other expense, net		(344	)		—			(344	)
Total Other Income (Expenses)		(1,467	)		1,173			(294	)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST		(11,212	)		10,363			(849	)
Provision for income taxes		852			—			852
Minority interest		(203	)		209			6
LOSS FROM CONTINUING OPERATIONS	$	(11,861	)	$	10,154		$	(1,707	)
LOSS PER WEIGHTED AVERAGE COMMON SHARE:
Loss from continuing operations	$	(1.72	)				$	(0.25	)
LOSS PER COMMON SHARE — ASSUMING DILUTION:
Loss from continuing operations	$	(1.72	)				$	(0.25	)

See accompanying notes

EDCI HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2007
(In thousands, except per share amounts)

				Disposition of
				EDC US			Pro Forma,
	As Reported			Operations (a)			as Adjusted
REVENUES:
Product revenues	$	302,682		$	(107,394	)	$	195,288
Service revenues		81,875			(23,720	)		58,155
Total Revenues		384,557			(131,114	)		253,443
COST OF REVENUES:
Cost of product revenues		263,708			(99,158	)		164,550
Cost of service revenues		60,275			(21,093	)		39,182
Total Cost of Revenues		323,983			(120,251	)		203,732
GROSS PROFIT		60,574			(10,863	)		49,711
OPERATING EXPENSES:
Selling, general and administrative expense		52,318			(14,344	)		37,974
Impairment of long-lived assets		9,782			(9,782	)		—
Amortization of intangible assets		8,331			(2,485	)		5,846
Total Operating Expenses		70,431			(26,611	)		43,820
OPERATING INCOME (LOSS)		(9,857	)		15,748			5,891
OTHER INCOME (EXPENSES):
Interest income		4,496			—			4,496
Interest expense		(4,844	)		2,422	(b)		(2,422	)
Loss on currency swap, net		(3,152	)		—			(3,152	)
Gain on currency transaction, net		761			—			761
Other income, net		234			—			234
Total Other Income (Expenses)		(2,505	)		2,422			(83	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST		(12,362	)		18,170			5,808
Provision for income taxes		3,400			—			3,400
Minority interest		(126	)		367			241
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	(15,636	)	$	17,803		$	2,167
INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE:
Income (loss) from continuing operations	$	(2.24	)				$	0.31
INCOME (LOSS) PER COMMON SHARE — ASSUMING DILUTION:
Income (loss) from continuing operations	$	(2.24	)				$	0.31

See accompanying notes

EDCI HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2006
(In thousands, except per share amounts)

				Disposition of
				EDC US			Pro Forma,
	As Reported			Operations (a)			as Adjusted
REVENUES:
Product revenues	$	267,067		$	(112,449	)	$	154,618
Service revenues		81,461			(27,868	)		53,593
Total Revenues		348,528			(140,317	)		208,211
COST OF REVENUES:
Cost of product revenues		222,159			(102,689	)		119,470
Cost of service revenues		60,811			(23,056	)		37,755
Total Cost of Revenues		282,970			(125,745	)		157,225
GROSS PROFIT		65,558			(14,572	)		50,986
OPERATING EXPENSES:
Selling, general and administrative expense		48,270			(14,887	)		33,383
Amortization of intangible assets		7,860			(2,638	)		5,222
Total Operating Expenses		56,130			(17,525	)		38,605
OPERATING INCOME		9,428			2,953			12,381
OTHER INCOME (EXPENSES):
Interest income		4,187			—			4,187
Interest expense		(6,045	)		2,957	(b)		(3,088	)
Loss on currency swap, net		(3,211	)		—			(3,211	)
Gain on currency transaction, net		2,143			—			2,143
Other expense, net		(37	)		—			(37	)
Total Other Income (Expenses)		(2,963	)		2,957			(6	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST		6,465			5,910			12,375
Provision for income taxes		7,921			—			7,921
Minority interest		94			119			213
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	(1,550	)	$	5,791		$	4,241
INCOME (LOSS) PER WEIGHTED AVERAGE COMMON SHARE:
Income (loss) from continuing operations	$	(0.23	)				$	0.62
INCOME (LOSS) PER COMMON SHARE — ASSUMING DILUTION:
Income (loss) from continuing operations	$	(0.23	)				$	0.60

See accompanying notes

EDCI HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2005
(In thousands, except per share amounts)

				Disposition of
				EDC US			Pro Forma,
	As Reported			Operations (a)			as Adjusted
REVENUES:
Product revenues	$	137,838		$	(76,516	)	$	61,322
Service revenues		51,750			(17,633	)		34,117
Total Revenues		189,588			(94,149	)		95,439
COST OF REVENUES:
Cost of product revenues		114,843			(72,468	)		42,375
Cost of service revenues		36,443			(15,437	)		21,006
Total Cost of Revenues		151,286			(87,905	)		63,381
GROSS PROFIT		38,302			(6,244	)		32,058
OPERATING EXPENSES:
Selling, general and administrative expense		27,461			(2,449	)		25,012
Amortization of intangible assets		3,729			(1,448	)		2,281
Total Operating Expenses		31,190			(3,897	)		27,293
OPERATING INCOME		7,112			(2,347	)		4,765
OTHER INCOME (EXPENSES):
Interest income		2,914			—			2,914
Interest expense		(3,631	)		1,635	(b)		(1,996	)
Gain on currency swap, net		789			—			789
Loss on currency transaction, net		(1,857	)		—			(1,857	)
Other income, net		76			—			76
Total Other Income (Expenses)		(1,709	)		1,635			(74	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST		5,403			(712	)		4,691
Provision for income taxes		3,504			—			3,504
Minority interest		114			(16	)		98
INCOME FROM CONTINUING OPERATIONS	$	1,785		$	(696	)	$	1,089
INCOME PER WEIGHTED AVERAGE COMMON SHARE:
Income from continuing operations	$	0.27					$	0.16
INCOME PER COMMON SHARE — ASSUMING DILUTION:
Income from continuing operations	$	0.26					$	0.16

See accompanying notes

EDCI HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

     The following unaudited pro forma condensed consolidated balance sheet and statements of operations are presented to illustrate the estimated effects of the Sony Sale as well as the repayment of debt. The unaudited pro forma condensed consolidated balance sheet is presented as if the Sony Sale that occurred on December 31, 2008 had occurred on September 30, 2008. The unaudited pro forma condensed consolidated statements of operations are presented as if the Sony Sale had occurred on January 1, 2005. The unaudited pro forma condensed consolidated financial information should be read in conjunction with our historical consolidated financial statements and notes thereto appearing in our annual report on form 10-K for the year ended December 31, 2007, and our unaudited condensed consolidated financial statements and notes thereto appearing in our quarterly report on Form 10-Q for the nine months ended September 30, 2008.

     The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and does not purport to be indicative of the financial condition and results of operations that would have been achieved after the Sony Sale and repayment of debt for which we are giving pro forma effect actually occurred on the dates referred to above or the financial condition and results of operations that may be expected in the future. Such information has been prepared based upon currently available information and assumptions that the Company’s management believes are reasonable. Such currently available information and assumptions may prove to be inaccurate over time.

2. Adjustments to Pro Forma Condensed Consolidated Balance Sheet

     The pro forma adjustments related to the unaudited pro forma condensed consolidated balance sheet as of September 30, 2008 are as follows:

(a)

On October 31, 2008, the Company entered into an Asset Purchase Agreement to sell certain assets and liabilities to Sony DADC US Inc. (Sony) with closing anticipated for December 31, 2008. In connection with this sale, the Company agreed to cease all CD manufacturing and distribution operations in the United States and transferred its contractual supply and distribution agreement with Universal Music Group (UMG) to Sony.

(b)

Assumes pro-form cash proceeds of $28.5 million, including amounts set aside under escrow agreements for use in the wind-down of our U.S. operations and net of approximately $0.8 million in transaction costs.

Sale Price	$	28,504
Less transaction costs		(800	)
Net Cash Proceeds	$	27,704

(c) Adjustment for assets acquired and liabilities assumed by Sony.

Accounts receivable	$	(1,106	)
Inventory		(993	)
Prepaids and other current assets		(281	)
Property, plant and equipment		(6,439	)
Accounts payable		166
Accrued expenses and other liabilities		892
	$	(7,761	)

(d) Reclassification of US current assets not acquired by Sony to discontinued operations.

Inventory	$	(1,358	)
Accounts receivable		(3,438	)
Prepaids and other current assets		(1,505	)
	$	(6,301	)

(e) Reclassification of US current liabilities not assumed by Sony to discontinued operations.

Accounts payable	$	(7,249	)
Accrued expenses and other liabilities		(4,957	)
	$	(12,206	)

(f) Adjustment to reflect U.S. CD manufacturing and distribution assets to be disposed of to fair value and the reclassification of said amount to held for sale.

Book value of property, plant and equipment	$	(16,758	)
Book value of other long term assets		(1,952	)
Deferred rent		563
Fair value of property, plant and equipment		7,110
Write down of property, plant and equipment	$	(11,037	)
Intangible assets related to US manufacturing and distribution		(7,164	)
Write down of long lived assets	$	(18,201	)

(g)	Adjustment represents the accrual for severance benefits due to employees.
(h)	Adjustment represents the repayment of debt under the Company’s Senior Credit facility and UMG Rebate Obligations.

Repayment of current portion of long-term debt	$	(8,900	)
Repayment of noncurrent portion of long-term debt		(11,000	)
Cash repayment of debt	$	(19,900	)

(i) Represents net gain on disposition of EDC US operations.

Net cash proceeds	$	27,704	(b)
Assets acquired and liabilities assumed by Sony		(7,761	)(c)
Loss on impairment of long lived assets		(18,201	)(f)
Accrual for severance		(649	)(g)
Net gain on disposal	$	1,093

3. Adjustments to Pro Forma Condensed Consolidated Statement of Operations

     The pro forma adjustments related to the unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2008 and for the years ended December 31, 2007, 2006 and 2005 are as follows:

(a) Reflects the reclassification of EDC’s US operations from continuing operations.

(b) Interest expense directly related to a portion of the Company’s term debt which was historically allocated to EDC US operations and was repaid with the proceeds from the transaction plus the revolving line of credit which was utilized solely by EDC US operations were appropriately reclassified to discontinued operations.

     Severance and other costs directly related to the disposition of the EDC US operations of approximately between $2.0 million and $3.0 million will be reflected in discontinued operations in future periods.