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): February 2, 2009





EDCI
HOLDINGS, INC.


(Exact
name of registrant as specified in its charter)


Delaware
            
            001-34015
            
            26-2694280(State
      or other Jurisdiction of Incorporation)
            
            (Commission
      File Number)
            
            (IRS
      Employer Identification No.)1755
      Broadway, 4th
      Floor
              New
      York, New York
            
            10019(Address
      of Principal Executive Offices)
            
            (Zip
      Code)





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


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





Following
the  September 19, 2008, termination of Mr. Jordan M. Copland’s (“Mr.
Copland”) employment as Chief Executive Officer of Entertainment Distribution
Company, Inc., the wholly owned subsidiary of the Registrant, (the “Company”),
a)  Mr. Clarke H. Bailey (“Mr. Bailey”), already Chairman of the
Boards of Directors of both the Company and its operating subsidiary,
Entertainment Distribution Company, LLC (“EDC”), assumed the role of Interim CEO
of the Company and EDC; and b)  Mr. Robert L. Chapman, Jr. (“Mr.
Chapman”), already a member of the Company’s Board of Directors (the “Company
Board”) but not EDC’s Board of Directors (the “EDC Board”), and advisor to the
owner of the largest ownership block of the Company, became more actively
involved in the governance function embedded within their duties of loyalty and
due care to the Company.





Following
this elevation in oversight of EDC’s operations by Messrs. Bailey and Chapman,
Messrs. Bailey and Chapman became increasingly concerned regarding the
performance of Mr. Thomas Costabile (“Mr. Costabile”) in his role as EDC Chief
Operating Officer (or “principal operating officer” using Securities and
Exchange Commission parlance).  Such performance concerns were
conveyed to Mr. Costabile verbally (both telephonically and in person), and
documented in writing, by both Mr. Bailey and Mr. Chapman, including a November
20, 2008 written correspondence sent by Mr. Bailey to Mr. Costabile in which,
among other matters, Mr. Bailey responded to Mr. Costabile’s inquiry as to
whether Mr. Bailey “want[ed] [Mr. Costabile] to quit [his] job” by stating, “ I
[“Mr. Bailey”] need to know whether you can successfully and honestly discharge
your duties.”   Please see Exhibit 99.1 hereto.





Concerns
regarding Mr. Costabile’s performance were conveyed by Messrs. Bailey and
Chapman to the EDC Board, including a November 21, 2008 written correspondence
from Mr. Chapman to Mr. Bailey in which Mr. Chapman stated Mr. Chapman’s view
that Mr. Chapman was “confident that Mr. Costabile has been negligent (if not
patently fraudulent) in performing his assigned duties,” and asked the EDC Board
“to consider seriously whether Mr. Costabile’s termination is reasonable and
proper in light of the facts as we now know them..”  Please see
Exhibit 99.2 hereto.  All members of the EDC Board who responded to
Mr. Chapman’s November 21, 2008 written correspondence (cited above) concurred
with Mr. Chapman’s recommendation from such written correspondence.





On
November 25, 2008, Mr. Costabile sent written correspondence, in response to Mr.
Bailey’s November 20, 2008 written correspondence to Mr. Costabile (cited
above), in which, among other matters,  Mr. Costabile a) claimed to
confirm his “100% commit[ment] to EDC LLC ... and [his] working with the team to
ensure the successful completion of the [Sony DADC] transaction”; b) attempted
to explain a matter regarding claims for expense reimbursement that had been
questioned by Mr. Bailey, as Interim CEO supervising Mr. Costabile since
September 2008 (see above); c) claimed to be “ready to meet” Mr. Bailey the next
business day, November 26, 2008, to discuss related matters; and d) did not make
any reference to any potential diminution, material or otherwise, of
his functions, authority, duties, and responsibilites as EDC Chief
Operating Officer as a result of the prospective Sony DADC
transaction.  Please see Exhibit 99.3 hereto.





On
December 1, 2008, Mr. Bailey sent written correspondence, in response to Mr.
Costabile’s November 25, 2008 written correspondence to Mr. Bailey (cited
above), in which, among other matters, Mr. Bailey cited a) Mr. Baileys
views regarding various purported omissions and inaccuracies in Mr. Costabile’s
November 25, 2008 correspondence (cited above); and b) “numerous instances where
[Mr. Bailey believed that Mr. Costabile had] been negligent in completing [Mr.
Costabile’s] duties and/or mislead [Mr. Bailey] about the status of those
duties.”  Please see Exhibit 99.4 hereto.





On
December 12, 2008, Mr. Chapman sent Mr. Costabile written correspondence in
which Mr. Chapman, among other matters, conveyed a) a critical review of Mr.
Costabile’s performance at the December 9, 2008 meeting of the Company Board; b)
Mr. Chapman’s “strong view that [Mr. Costabile was] not performing [his] COO
duties satisfactorily, and this view appear[ed] to be shared by both [Mr.
Costabile’s] boss [Mr. Bailey] and [Mr. Costabile’s] peers (Michael W. Klinger,
Richard A. Friedman and Matthew K. Behrent)”; and c) Mr. Chapman’s advice to Mr.
Costabile to “rectify this situation immediately.”  Please see Exhibit
99.5 hereto.




On
December 15, 2008, Mr. Costabile sent written correspondence, in response to Mr.
Chapman’s December 12, 2008 written correspondence to Mr. Costabile (cited
above),  in which Mr. Costabile acknowledged receipt of Mr. Chapman’s
December 12, 2008 correspondence and conveyed Mr. Costabile’s intention to
“discuss a plan with [Mr. Bailey] tomorrow morning to rectify the
situation.”  Please see Exhibit 99.6 hereto.





On
December 16, 2008, Mr. Chapman sent Mr. Costabile written correspondence in
which Mr. Chapman, among other matters, conveyed Mr. Chapman’s a) understanding
“that [Mr. Costabile] met with [Mr. Bailey] today and suggested a ‘transition
plan’ involving the conclusion of [Mr. Costabile’s] employment with EDC, and
[Mr. Costabile’s] intent to communicate with EDC Board members about this matter
as well”; b) views that “neither a future transition plan nor [Mr. Costabile’s]
communicating with EDC’s Board directly addresses [Mr. Costabile’s] current
performance deficiencies while [Mr. Costabile] remains a highly compensated
executive of EDC”; and c) Mr. Chapman’s “opinion that [Mr. Costabile’s]
seemingly lax approach to fulfilling [Mr. Costabile’s] duties as EDC’s COO, a
highly compensated position, could be construed as negligent.”  Please
see Exhibit 99.7 hereto.





During
the balance of the 4Q2008, Mr. Bailey continued to engage in discussions with a)
Mr. Costabile regarding Mr. Costabile’s potential, prospective separation from
the Company, and b) Mr. Chapman regarding Mr. Chapman’s views that Mr. Costabile
should be terminated for “cause” in line with the terms of Mr. Costabile’s
employment contract.





On
December 31, 2008, on schedule in line with EDC’s internally and externally
communicated plans, EDC closed its definitive asset purchase agreement for the
sale of EDC’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 (the “Sony DADC Transaction.”)




On
January 2, 2009, despite Mr. Costabile’s a) written confirmation to Mr. Chapman
on December 31, 2008 of Mr. Costabile’s own travel arrangements for a January
2009 EDC business trip to Europe with Messrs. Bailey and Chapman, b) written
correspondence to Mr. Bailey on December 31, 2008 of Mr. Costabile’s self
defined “List of Tasks 2009” (please see Exhibit 99.8 hereto); and c) prior
to Janauary 2, 2009, failure to deliver any verbal or written communication to
Mr. Bailey, Mr. Chapman or any other member of the Company Board or EDC Board
that Mr. Costabile believed that the Sony DADC Transaction could result in a
diminution, material or otherwise, of Mr. Costabile’s functions, authority,
duties, and responsibilities as EDC Chief Operating Officer, Mr. Costabile
sent by certified USPS mail to Mr. Bailey a written correspondence (the
“Costabile Resignation Letter”) dated January 2, 2009 (and received by Mr.
Bailey on January 6, 2009) in which Mr. Costabile stated, among other matters,
a) “Pursuant to Sections 8, 2 (b) (3) and (3) (1) (2), [Mr. Costabile was]
terminating [his] employment with Glenayre and EDC immediately for “Good Reason”
due to the sale of certain US assets of EDC, LLC and EDC (USA) LLC to SonyDADC
[sic] effective December 31, 2008, said sale resulting in a material diminution
by Glenayre and EDC of [Mr. Costabile’s] functions, authority, duties and
responsibilities”; and b) Mr. Costabile’s intent to instruct his attorney to
contact Mr. Bailey directly to implement those payments and benefits purportedly
“due to Mr. Costabile as provided in Section 3 (l) of the Letter
Agreement.”  Please see Exhibit 99.9 hereto.








On
January 5, 2009, before Mr. Bailey had received on January 6, 2009 Mr.
Costabile’s January 2, 2009 mailed letter terminating immediately his own
employment with EDC, but following Mr. Costabile’s failure to meet with Mr.
Bailey on January 5, 2009 to continue to engage in discussions with Mr. Bailey
regarding Mr. Costabile’s potential, prospective separation from the Company,
Mr. Chapman sent Mr. Costabile written correspondence in which Mr. Chapman,
among other matters, conveyed Mr. Chapman’s a) being “astounded by [Mr.
Costabile’s] seeming lack of commitment to [Mr. Costabile’s] employer, EDC, and
as collateral damage [Mr. Costabile’s] co-workers and EDCI’s owners”; and b)
view “that it would be adjudicated that [Mr. Costabile has] been negligent in
performing [aforementioned] duties, and that certain other actions by “Mr.
Costabile] would be construed as clear violations of code and
conduct.”  Please see Exhibit 99.10 hereto.





On
January 6, 2009, before Mr. Bailey had received the Costabile Resignation
Letter, a) Mr. Costabile participated in several proprietary EDC conference
calls unrelated to Mr. Costabile’s employment status, and b) Messrs. Costabile,
Bailey and Chapman subsequently engaged in discussions and detailed negotiations
regarding Mr. Costabile’s potential, prospective separation from the
Company.  However, following Mr. Bailey’s receipt of the Costabile
Resignation Letter, Mr. Chapman, who had been appointed Chief Executive Officer
of both the Company and EDC, sent and immediately thereafter read verbatim to
Mr. Costabile written correspondence, written by Mr. Chapman, in which Mr.
Chapman, among other matters, cited a) EDC’s views that Mr. Costabile had
“engaged in gross negligence and by doing so have breached [Mr. Costabile’s]
employment agreement dated May 9, 2005”; b) Mr. Costabile’s utilization on
January 6, 2009, of “EDC’s corporate offices and particip[ation] in several
proprietary corporate conference calls despite having sent a letter dated
January 2, 2009 resigning “immediately”; and c) orders to Mr. Costabile to
“cease and desist in unlawful acts and remove [himself] from EDC’s offices
immediately.”  Please see Exhibit 99.11 hereto.




On
January 7, 2009, Serling Rooks & Ferrara LLP (“SRF”), legal counsel to Mr.
Costabile, sent written correspondence dated January 6, 2009 to Mr. Chapman in
which SRF, among other matters, a) disputed various of Mr. Chapman’s claims made
in Mr. Chapman’s January 6, 2009 correspondence to Mr. Costabile (cited above);
and b) stated “it is obvious that the parties wish to terminate this
relationship.”  Please see Exhibit 99.12 hereto.





On
January 9, 2009, Littler Mendelson P.C. (“Littler”), outside counsel to the
Company and EDC, sent written correspondence to SRF in which Littler, among
other matters, a) disputed various claims made by SRF in its January 6, 2009
correspondence to Mr. Chapman (cited above); b) disputed Mr. Costabile’s claim
to  having contractually provided “good reason” to terminate his own
employment immediately on January 2, 2009; c) stated “EDC has additional Cause
to terminate Mr. Costabile’s employment under the Agreement,” warning that “if
this untenable situation is not resolved shortly, it is anticipated that the
Company’s Board will inform Mr. Costabile that he will be terminated for Cause
pursuant to subparagraphs (1) (2) and/or (4) of  Section 3(l) of the
Agreement.”  Please see Exhibit 99.13 hereto.





On
January 12, 2009, SRF sent written correspondence to Littler that, among other
matters, disputed various claims made in Littler’s January 9, 2009
correspondence to SRF (cited above).  Please see Exhibit 99.14
hereto.





On
January 14, 2009, the EDC Board sent written correspondence to Mr. Costabile
that, among other matters, a) disputed various claims made in SRF’s January 12,
2009 correspondence to Littler (cited above); b) provided Mr. Costabile until
the close of business on January 20, 2009 to “provide written evidence of
remedy” for asserted Costabile contractual employment breaches as follows
-- “resignation without good reason,” “acts of dishonesty and fraud,” and
“material violation of responsibilities.”  Please see Exhibit 99.15
hereto.





On
January 19, 2009, Mr. Costabile met with Mr. Matthew K. Behrent, the Company’s
Executive Vice President of Corporate Development, to engage in discussions
related to prior negotiations between the Company and Mr. Costabile regarding a
potential settlement agreement between the parties.





On
January 20, 2009, Mr. Costabile sent written correspondence to the EDC Board
that, among other matters, a) disputed various claims made in the EDC Board’s
January 14, 2009 correspondence to Mr. Costabile (cited above), b) provided no
written evidence of remedy for asserted Costabile employment contract breaches
(cited above).  Please see Exhibit 99.16 hereto.





On
January 20, 2009, the EDC Board met to consider any and all possible and
prospective efforts by Mr. Costabile to remedy causes for his termination
asserted by EDC Board's January 14, 2009 correspondence to Mr.
Costabile (cited above).  At the conclusion of such board
meeting, the EDC board passed a resolution to terminate Mr. Costabile for
“cause” following, and subject to, the passing of an unspecified, reasonable
period of time during which EDC was unsuccessful in reaching a definitive
settlement agreement with Mr. Costabile.  As of the date of this
filing, the EDC Board has not terminated Mr. Costabile for “cause” as such
settlement discussions and negotiations remain ongoing.





During
January 2009, Littler and SRF engaged in discussions and detailed negotiations
towards reaching a settlement agreement between the parties.  However,
given a) the entire month of January 2009 had passed without reaching such
settlement agreement; b) the requirements of Item 5.02 (b) of Form 8-K (http://www.sec.gov/divisions/corpfin/form8kfaq.htm),
and c) continuing inquiries regarding uncertainty underlying Mr. Costabile’s
absence from his Chief Operating Officer duties, the Company determined
that full disclosure of the circumstances surrounding Mr. Costabile’s employment
status should be made no later than the first business day of February
2009.








Item 9.01.
Financial Statements and Exhibits.





(d) Exhibits


Exhibit
      No.
            
            Description99.1
            
            November
      20, 2008, written correspondence from Clarke H. Bailey to Thomas
      Costabile99.2
            
            November
      21, 2008, written correspondence from Robert L. Chapman, Jr. to Thomas
      Costabile99.3
            
            November
      25, 2008, written correspondence from Thomas Costabile to Clarke H.
      Bailey99.4
            
            December
      1, 2008, written correspondence from Clarke H. Bailey to Thomas
      Costabile99.5
            
            December
      12, 2008 written correspondence from Robert L. Chapman, Jr. to Thomas
      Costabile99.6
            
            December
      15, 2008, written correspondence from Thomas Costabile to Robert L.
      Chapman, Jr.99.7
            
            December
      16, 2008, written correspondence from Robert L. Chapman, Jr. to Thomas
      Costabile99.8
            
            December
      31, 2008 written correspondence from Thomas Costabile to Clarke H.
      Bailey99.9
            
            January
      2, 2009, Thomas Costabile Letter of Resignation99.10
            
            January
      5, 2009, written correspondence from Robert L. Chapman, Jr. to Thomas
      Costabile99.11
            
            January
      6, 2009, written correspondence from Robert L. Chapman, Jr. to Thomas
      Costabile99.12
            
            January
      6, 2009, written correspondence from Serling Rooks & Ferrara LLP to
      Robert L. Chapman, Jr.99.13
            
            January
      9, 2009, written correspondence from Littler Mendelson P.C. to Serling
      Rooks & Ferrara LLP99.14
            
            January
      12, 2009, written correspondence from Serling Rooks & Ferrara LLP to
      Littler Mendelson P.C.99.15
            
            January
      14, 2009, written correspondence from EDC Board to Thomas
      Costabile99.16
            
            January
      20, 2009, written correspondence from Thomas Costabile to EDC
      Board
















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:
      February 2, 2009
            
            By:
            
            /s/
      Robert L. Chapman, Jr.Robert
      L. Chapman, Jr.
              Chief
      Executive Officer