1

----

2

----

| I.   | Klinger Was Not the      Victim of Discrimination orRetaliation |
|----------------|-----------------------------------------------------------------|

| A.   | Klinger’s      Employment History with Respondents Demonstrates a Record of Promotions      and Increased Responsibility |
|----------------|--------------------------------------------------------------------------------------------------------------------------------|

| ●   | In      connection with the May      31, 2005 acquisition, Klinger became an employee of EDC USA with      the title of Director, Business Operations, reporting to the Chief      Operating Officer (“COO”) and CFO of EDC LLC.  Klinger’s annual salary at      that time (May 2005) was $109,600. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Effective September 5, 2005,      Klinger received a 7%      merit salary increase which brought his salary to $117,270. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------|

| ●   | Then,      effective October 31,      2005, Klinger received a further 28% salary increase,      to an annual salary of $150,000,      in connection with his promotion to Vice President of Finance of EDC      USA. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | On      December 28, 2008,      Klinger received a further 20% salary increase, which      brought his annual salary to $180,000.  At      the same time, Klinger      was provided the contractual right to a $60,000 “stay bonus” if he      remained an employee through October 31,2008. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Klinger was appointed Executive      Vice President, CFO and Treasurer of EDCI commencing on September 19,      2008.  His responsibilities included acting as the most      senior financial officer for all of EDCI’s wholly-owned and majority-owned      subsidiaries, including EDC LLC and EDCUSA. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | An      October 3, 2008      “Letter Agreement” between EDCI and Klinger (the “Klinger CFO Employment      Agreement”) provided Klinger with a further 39% increase in annual salary      to $250,000. A      copy of the Klinger CFO Employment Agreement is attached as Exhibit      C. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Klinger was also provided with      certain contractual severance rights.  The Klinger CFO      Employment Agreement provided that the termination of Klinger’s employment      by EDCI without Cause, or by Klinger with “Good Reason” (as defined      below), would entitle Klinger to contractual severance payments equal to      his base annual salary plus certain other benefits.  Conversely,      the termination of Klinger’s employment by EDCI with Cause, or his      resignation without Good Reason, would leave Klinger without any      entitlement to such payments. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

3

| B.   | Klinger’s      Employment Was Terminated by EDCI With Cause Based on a Variety of      Performance Deficiencies  Identified in Q1  2009 |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | As      a public company subject to disclosure requirements pursuant to the      Securities Exchange Act of 1934, EDCI publicly filed on April 22, 2009 a      comprehensive chronology of the events leading up to EDCI’s determination      to terminate Mr. Klinger’s employment with  Cause. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | The      initial filing was made in accordance with Item 5.02 of Form 8-K      (“Departure of Directors or Certain Officers; Election of Directors;      Appointment of Certain Officers; Compensatory Arrangements of Certain      Officers”). |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | As      EDCI received requests from various of its shareholders for updates on      discoveries obtained as a result of an ongoing investigation into      Klinger’s past employment (the "Klinger Investigation"), in order to      comply with SEC Regulation Fair Disclosure (“Regulation FD”), EDCI      responded to such inquiries via an additional Form 8-K on April 30,      2009. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | EDCI has invested significant      internal resources in the Klinger Investigation and communicating the      results of that investigation to its investors and the SEC, and      believes that the comprehensive summary of events will also provide the      EEOC with the information it requires in connection with its      investigation. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | A      copy of the body of the April 30, 2009 Form 8-K (which includes the text      of the April 23 filing) is attached as Exhibit D (the “Klinger Termination      With Cause 8-K”). |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Shortcut      Link: http://tinyurl.com/ce2bcs      (this link redirects directly to the SEC  website) |
|---------------------|-------------------------------------------------------------------------------------------------------|

| ●   | Alternatively,      the EEOC may access all of EDCI’s filingsat: |
|---------------------|------------------------------------------------------------------------|

----

| ●   | If      the EEOC would prefer a complete hard copy of the Klinger Termination With      Cause 8-K together with all exhibits, please contact Matthew Behrent,      (“Mr. Behrent”) Executive Vice President, Corporate Development and Legal      Counsel of EDCI and EDC LLC at 212.331.2762, or by email at matt.behrent@edcih.com      . |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Mr. Chapman discovers the      Double Severance Payments.  On March 14, 2009, Mr.      Chapman discovered that, on January 8, 2009, Klinger,      without proper authorization, had legally bound EDC USA to severance      payments in violation of the explicit financial limitations of EDC USA’s      Severance Pay Policy (the “Severance Pay Policy”) (See Klinger Termination      With Cause 8-K Exhibit 99.8) dated just three months earlier on October 3,      2008. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | The Double Severance Payments      violate the terms of the Severance Pay Policy.  The      Severance Pay Policy provides that eligible employees may receive      severance of one week of pay for each complete year of service, to a      maximum of 10 weeks’ pay.  Section 7.1      provides that modifications to the Severance Pay Policy may only be made      by a written instrument signed by the President of EDC USA, a requisite      that Klinger failed tosatisfy. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Klinger personally reviewed and      approved the Severance Pay Policy, in his capacity as the Respondents’      CFO, yet he nonetheless violated its express      terms.  Following the termination of Klinger’s      employment, Respondents discovered a series of written communications      confirming this.  See Klinger Termination      With Cause 8-K Exhibit 99.1 to 99.11, and the related body of the      8-K. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Respondents immediately and      thoroughly investigated Klinger’s actions.  In March and      April 2009, the Respondents thoroughly investigated Klinger’s actions (the      “Klinger Investigation”) in connection with the Double Severance Payments      and other matters. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | Respondents promptly      communicated the results of their investigation to      Klinger.  As part of the Klinger Investigation, on March      16, 2009, Mr. Chapman sent written correspondence to Klinger summarizing      the discoveries related to the Klinger Investigation into the Double      Severance Payments to that date, noting in      particular that the Double Severance Payments were a material breach of      the Severance Pay Policy Plan by Klinger.  See Klinger Termination      With Cause 8-K Exhibit 99.18. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | On March 17, 2009, Klinger sent      written correspondence to Mr. Chapman, in which he confirmed various      conclusions of the Klinger Investigation, and acknowledged that his own      “actions were wrong.”  See Klinger Termination With Cause      8-K Exhibit 99.19. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Six Month Review and      Commencement of Separation Negotiations.  On April 4,      2009, in line with the terms of the Klinger CFO Employment Agreement, Mr.      Chapman conducted a telephonic review of Klinger’s first six months’ pay      and performance as EDCI’s CFO (the “MWK Six Months      Review”).  During the MWK Six Months Review, Mr. Chapman      reiterated that EDCI had sufficient grounds to terminate Klinger’s      employment EDCI with Cause as a result of the Double Severance Payments,      and also identified other significant deficiencies in Klinger’s      performance.  Klinger and the Respondents thereafter began      negotiations for a separation of his employment from the      Respondents.  In      connection with such negotiations, Klinger explicitly requested, as      particular consideration to his benefit Respondents’ agreement not to      terminate his employment with Cause, based on the Double Severance      Payments. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Initial agreement is      Reached.  On April 9, 2009, Mr. Chapman sent Klinger      written correspondence defining key terms of a Separation Agreement (the      “Proposed Separation Agreement”) that had been negotiated and agreed to      verbally between the Respondents and Mr. Klinger on that      date.  A material term of the Proposed Separation Agreement, as      sought by Klinger, was the Respondents’ agreement not to terminate Mr.      Klinger’s employment with Cause, based on the Double Severance      Payments. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Klinger Confirms his Agreement      by Email.  On April 9, 2009, Mr. Klinger sent Mr. Chapman      written correspondence, in response to Mr. Chapman’s written      correspondence dated April 9, 2009, indicating that Mr. Klinger had      reviewed such written correspondence, and confirmed that the terms      detailed in the Proposed Separation Agreement were “as      agreed.”  See Klinger Termination      With Cause 8-K Exhibit 99.25. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| C.   | Klinger      Misstates the Facts in Claiming that Mr. Chapman Began to Curtail His      Responsibilities and Duties, Limited His Communications and Reorganized      the Office of the Chief Financial Officer In a Manner That Took Important      Responsibilities Away From Him |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | The Creation of an Office of      the CFO did not materially change any of Klinger’s      responsibilities.  On March 24, 2009, Mr. Chapman sent      written correspondence to Klinger, Michael D. Nixon, Corporate Controller      for EDCI and Kyle E. Blue, Senior Manager, External Reporting and Investor      Relations of EDCI, formalizing Mr. Chapman’s decision to create an Office      of the CFO comprised of those three individuals.  In the      email, Mr. Chapman stated that the duties of each member of the Office of      the CFO would be “nearly identical” to those each individual had been      performing prior the time of the creation of the      Office.  See Klinger Termination      With Cause 8-K Exhibit 99.23. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Mr. Chapman’s decision was made      after and subject to conversations with Klinger.  Mr. Chapman’s      email also stated that Mr. Chapman’s decision was made after      conversations with all three of the members of the Office of the CFO, and      further notes Mr. Chapman’s decision was “subject to those very      conversations with you three.” See Klinger      Termination With Cause 8-K Exhibit99.23. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | The email also specifically      stated that Klinger’s responsibilities would be as follows: “CFO of EDCI/EDC, and head of      the Office of the CFO:  oversee the entire finance group      as a coordinated team that has divided tasks and responsibilities to      ensure all internal and external financial and other related reporting,      capital markets/creditor matters, and financial analysis are conducted      expeditiously and correctly.” See Klinger      Termination With Cause 8-K Exhibit99.23. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | Mr. Klinger acknowledged and in      no way or form disputed the above assertions.  On March      24, 2009, Mr. Klinger sent written correspondence, in response to Mr.      Chapman’s March 24, 2009 written correspondence (see above), a)      acknowledging receipt of this correspondence and b) that in no      way or form disputed the assertion made by Mr. Chapman regarding these      “nearly identical duties.”  See Klinger Termination      With Cause 8-K Exhibit 99.23 |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| II.   | During His Employment,      Klinger Never Complained About  Discrimination |
|-----------------|----------------------------------------------------------------------------|

| A.   | EDCI      Has Affidavits from the “Person Responsible for Human Resources Functions”      Cited By Mr. Klinger and the 12 other Most Senior Management Level      Employees of the Respondents Denying any Knowledge of the Above      Claim |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | i. | Clarke      H. Bailey, Chairman of the Board of Directors of EDCI and EDC LLC and the      Chairman and Interim Chief Executive Officer of EDC  USA |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii. | Robert      L. Chapman, Jr., Chief Executive Officer of EDCI and EDC    LLC |
|--------|-----|-----------------------------------------------------------------------------|

|   | iii. | Matthew      K. Behrent, EVP Corporate Development and Legal Counsel for EDCI and EDC      LLC |
|--------|------|------------------------------------------------------------------------------------------------|

|   | iv. | Roger      J. Morgan, Executive Vice President of International Operations of EDC LLC      (employed directly by EDC LLC’s Glenayre Electronics (UK) Ltd.      Subsidiary) |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | v. | Richard      A. Friedman, EDCI’s Vice President for Audit and Compliance, who also was      responsible for human resources functions in the US for the Respondents      since 4Q2009 |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | vi. | Michael      D. Nixon, Corporate Controller forEDCI |
|--------|-----|-----------------------------------------------------|

|   | vii. | Kyle      E. Blue, Senior Manager, External Reporting and Investor Relations of      EDCI |
|--------|------|-------------------------------------------------------------------------------------------|

|   | viii. | Michael      Kosemund, Managing Director Finance & Administration for Entertainment      Distribution Company GmbH, EDC LLC's Germany  subsidiary |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ix. | Dr. Bodo      Wiechmann, Managing Director Factory for Entertainment Distribution      Company GmbH, EDC LLC's German subsidiary |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------|

|   | x. | Yorck      Köhn, Managing Director Logistics for Entertainment Distribution Company      GmbH, EDC LLC’s German subsidiary |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------|

|   | xi. | Uwe      Ilgenfritz-Donné, Managing Director Human Resources and Business and Legal      Affairs for Entertainment Distribution Company GmbH, EDC LLC’s German      subsidiary |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | xii. | Andrew      Mark Lloyd Jones, Managing Director of EDC Blackburn Limited, EDC LLC’s      U.K. Subsidiary |
|--------|------|----------------------------------------------------------------------------------------------------------------|

|   | xiii. | Ian      Kenneth Sumner Clark, Finance Director of EDC Blackburn Limited, EDC LLC’s      U.K. Subsidiary |
|--------|-------|----------------------------------------------------------------------------------------------------------------|

| B.   | Klinger’s      Failure to Avail Himself Of EDCI’s Complaint Procedures, At Any Time      During His Employment, Casts Serious Doubt On The Truthfulness of His      Claims, and Defeats Them As A Matter OfLaw |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | The      policy, entitled “Positive Work Environment,” is contained within EDCI’s      employee handbook, “Standards of Business Conduct.”  Relevant      excerpts are attached as Exhibit F.  The Positive Work      Environment policy prohibits, among other things, discrimination on the      basis of race, national origin, color, religion, sex, sexual preference,      marital status, disability, veteran status, age, or any other protected      category.  Exhibit F at 15, 19.  The policy also      strictly prohibits unlawful harassment of any kind, including sexual      harassment and slurs or jokes based on any protected      class.  Id. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | The      policy establishes a complaint and investigation procedure, and makes      clear that the Respondents will investigate all complaints promptly and      confidentially, and take all appropriate responsive measures, up to and      including the termination of the employment of the      perpetrator.  Id at 18-19. Finally, the      policy prohibits retaliation against any employee who complains about      discrimination, harassment or retaliation.  Id. At    19. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| III.   | There      is No Evidence of Any Age Based Discrimination (Recent or Otherwise) by      the Respondents – Respondents’ Decisions to Terminate or Reward Employees      Are Based Solely      on Performance and Other Legitimate Business  Reasons |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Cause      or other performance deficiencies; |
|---------------------|-----------------------------------------------|

| ●   | the      closure of facilities or the elimination of positions;  AND |
|---------------------|----------------------------------------------------------------------|

| ●   | To      realign extended notice provisions in certain executive contracts based on      the declining nature of EDC LLC’sbusiness |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ●   | EDC      LLC is in the business of manufacturing and distributing compact discs –      primarily for music customers – an industry that has been facing serious      economic challenges since early 2007.  Many of EDC LLC’s peers      have gone out of business.  As a result, Respondents have spent      two years struggling to find solutions that best benefit their employees,      customers and shareholders.  The result of this was that, in a      transaction that closed on December 31, 2008, EDC LLC and EDC USA sold      substantially all of their assets to Sony DADC (the “Sony      Transaction”).  While the Sony Transaction regrettably led to      the loss of approximately 420 jobs, it also meant the continuation of      approximately 300 jobs assumed by Sony DADC as a result of the sale and      the ability of EDC USA to pay severance above and beyond the WARN Act      notice provisions for those employees who did lose their      jobs.  As a result of the Sony Transaction, EDC USA has no      further operations, closed its North Carolina manufacturing facility, and      laid off all of that facilities’ employees.  Out of      approximately 420 employees provided notice of termination in connection      with the Sony Transaction, EDC USA paid severance to all of the      approximately 418 employees who met the conditions for receiving the      severance, with an average age of 46 years, in accordance with the      Severance Pay Policy describedabove. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | Out of the 420 employees      terminated in accordance with the Sony      Transaction,  19 were      employees with ages of 29 or lower, including four with ages 21 or      lower. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Out of the 420 employees      terminated in accordance with the Sony Transaction, the average age of the      12 employees who received the Double Severance Payments to which Klinger      had legally bound EDC USA without proper authorization were older than the      overall average. The average age of the 12 employees that received      the Double Severance Payments was 54years. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Out of the 420 employees      terminated in accordance with the Sony Transaction, one employee did not      receive his contractual severance payments as his employment was      terminated prior to his scheduled layoff.  The grounds      for termination, as communicated by Mr. Chapman to this employee in an      email dated February 26, 2009 (see Exhibit I, hereto),      was breach of due care related to this employee’s reckless and false      communications to certain employees of EDC LLC’s United Kingdom      operations.  Mr. Lewis F. Whiteside, EDC Kings Mountain Director      of Human Resources, agreed with the termination.  This employee      was 46.  Again,      performance, not age, was the sole factor considered by Respondents in      that termination |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Out of the 420 employees      terminated in accordance with the Sony Transaction, one employee did not      receive her contractual severance payments as she sought, without any      right, additional severance payments above those provided for in the      Severance Pay Policy. This employee was 48.  After EDC      USA refused her request for additional severance this employee then filed,      in December 2008, an EEOC charge for discrimination alleging that EDC USA      discriminated and retaliated against her because of her sex in violation      of Title VII of the Civil Rights Act of 1964 and New York State      law.  It is      interesting to note that her charge made no mention of any age-related      discrimination.  EDC USA has      filed a position statement in response to that charge, and believes that      charge is wholly without merit, as her position was simply eliminated in      connection with the SonyTransaction. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | Respondents present the above      facts specifically to refute Klinger’s claims that “while the company has      been firing older workers and withholding severance pay and benefits,      younger workers subject to termination have received severance pay and      benefits.”  The facts of the layoffs resulting from the      Sony Transaction show that Respondents honored their contractual severance      obligations to all of the affected employees, regardless of age, who met      the conditions for receiving the severance.  Further,      Respondents complied with the obligations Klinger had legally bound them      to (albeit without proper authorization), without regard to      age.  It is particularly ironic, in light of Klinger’s      allegations, that the average age of the employees who so benefited is      older than the overall averages.. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | In January 2009, Respondents      provided such notice of termination to Mr. Roger J. Morgan, (“Mr.      Morgan”), EDC LLC’s Executive Vice President of International      Operations.  Mr. Morgan is 44.  As described      above, Respondents provided such notice to maintain its flexibility in      responding to future industry decline rates, not based on      age.  Respondents further note that, in Mr. Morgan’s affidavit      (See Exhibit E above), Mr. Morgan specifically notes that while Mr.      Klinger “did converse with me regarding the notices of termination of      employment issued to the four EDC GmbH Managing Directors [Described      below] and myself”, “Age was not      mentioned in the discussions that took place.” (emphasis      added) |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | In March 2009, Respondents      provided similar notices of termination to the four most senior employees      (the “Managing Directors”) of EDC LLC’s German      operations.  In considering these notices, EDCI’s      Compensation Committee expressly considered a) the fact that such      employees’ salaries had been increasing while core measures of      profitability of the operations they manage had been decreasing and b) the      disparity between the salaries of the Managing Directors and the salaries      of their top managers in their departments. See Exhibit J      hereto.  One of the      four Managing Directors is 46, the other three are 54.  Again,      Respondents made decisions on compensation and continued employment based      on performance and the need to maintain flexibility in a declining      industry, not age, and clearly abided by their contractual commitments in      doing so. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | On December 15, 2008, Mr.      Friedman, age 55, received a 10% raise, from $156,000 to $172,000 per      year.  The increase was provided in connection with his      prior work and taking on newresponsibilities. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | On March 10, 2009, Mr. Bailey’s      2009 salary was set at $250,000 per year, a decrease from his salary as      Interim Chief Executive Officer of EDCI, but a 9% increase from his prior      salary as non-executive Chairman.  The increase was      provided in connection with Mr. Bailey returning to his position as      non-executive Chairman of EDCI, EDC LLC and EDC USA, and in recognition of      his continued involvement. Mr. Bailey is54. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ●   | In April, 2009, Mr. Friedman      and Mr. Bailey were also the only recipients of performance bonuses for      their efforts in connection with the Sony      Transaction.  Mr. Friedman received $10,000, and Mr.      Bailey received $50,000.  Mr. Behrent, who was also heavily      involved in the Sony Transaction, age 38, did not receive any such      bonus. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| IV.   | Conclusion |
|-----------------|------------|

| ●   | Respondents      had legitimate, non-discriminatory grounds for terminating Mr. Klinger’s      employment, including with Cause in connection with the Double Severance      Payments and other identified deficiencies in Mr. Klinger’s work      performance. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | Respondents      have no knowledge of any complaints made by Mr. Klinger related to age      discrimination. |
|---------------------|--------------------------------------------------------------------------------------------------------------|

| ●   | Klinger’s      failure to avail himself of EDCI’s complaint procedures (which he      acknowledged in writing) at any time during his employment, casts serious      doubt on the truthfulness of his claims, and defeats them as a matter of      law |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | There      is no evidence of any age based discrimination (recent or otherwise) by      the Respondents – respondents decisions to terminate or reward employees      are based solely on performance and other legitimate business      reasons |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----