EXHIBIT
99.11 October
3, 2008
 
 
 Mr.
Michael W. Klinger
 22420
Crooked Creek Road
 Cicero,
IN  46034
 
 
 Dear
Mike,
 
 This
letter confirms certain terms and conditions of your continued employment in
consideration of your new title and duties effective September 19, 2008, in the
position of Executive Vice President and Chief Financial Officer and Treasurer
of EDCI Holdings, Inc. (The “Company”) and supersedes any prior offer letter or
other agreement regarding your employment by the Company or any of its
subsidiaries. This position is located in or near Fishers, Indiana and reports
directly to the Chief Executive Officer and/or Chairman of the Board of
Directors of the Company.  You are responsible for financial planning
and analysis, accounting, SEC reporting and matters related to treasury, tax,
information technology, risk management, procurement, payroll and investor
relations, as well as such duties and services as normally are associated with
such position, which may be assigned to you from time to time.
 
 Your base
compensation will be $20,800 per month (the “Base Salary”), which shall be paid
in bi-weekly installments in accordance with the Company’s normal payroll
practices.  Your Base Salary and performance will be reviewed after
your initial six months in this position and thereafter on an annual basis each
year.  Your Base Salary may be increased (but not decreased) in the
manner determined by the Company in consultation with the Company’s Board of
Directors (the “Board”) or the Compensation Committee of the Board.
 
 You will
be eligible to participate in the Company’s bonus plans or programs as shall be
established by the Board 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 may
determine in its sole discretion from time to time.
 
 During
the term of your employment, you will be entitled to four (4) weeks of vacation
in each calendar year at such times as shall be mutually convenient to you and
the Company.  Your vacation will be prorated for each partial calendar
year during the term of your employment.
 
 During
the term of your employment, you will receive a monthly car allowance of $400,
which will cover local driving and parking expenses incurred in connection with
the performance of your duties hereunder.
 
 During
the term of your employment, you may participate in all retirement plans, life,
medical/dental insurance plans and disability insurance plans of the Company, as
in effect from time to time, to the extent that you qualify under the
eligibility requirements of each plan or program.  Details of our
current benefits plan have previously been provided to you.
  You will
continue to be entitled to a “stay bonus”, previously provided in your letter
agreement dated November 26, 2007, of $60,000 payable in a lump sum if you
remain employed by the Company through October 31, 2008 or, in the event a
Change in Control (as defined below) occurs prior to October 31, 2008, you
remain employed by the Company or any successor to the Company following a
Change in Control, through the 90 day anniversary of any such Change in
Control.  If earned, the Company will pay you the stay bonus within
two days after October 31, 2008 or two days after the 90 day anniversary of a
Change in Control, as applicable.
 
 In the
event your employment is terminated by the Company without Cause (as defined
below) or by you with Good Reason (as defined below), the Company will pay you,
subject to the limitations set forth below, a lump sum severance payment equal
to the amount of your Base Salary in effect on such termination date multiplied
by 12.   You also shall be entitled to receive the sum of (1)
your accrued but unpaid Base Salary through the date of
such termination, plus (2) your accrued but unpaid vacation pay
through such date of termination, plus (3) if you are then participating in
the Company’s annual bonus plan, a pro-rated annual bonus for the bonus year in
which you are terminated, which shall be calculated and paid in accordance with
the Company’s normal practices at the end of such bonus
year,  provided  that you have been employed by the Company
for at least six months of such bonus year, plus (4) any other compensation
payments or benefits which have accrued and are payable in connection with
such termination. In addition, the Company shall continue to provide
medical and dental benefits to you and your dependents for a period of 12 months
following such date of termination at the same levels of coverage and
in the same manner as such benefits are available to you and your dependents
immediately prior to such Change in Control.  Your right to continue
medical and dental coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1995 (“COBRA”) shall begin after the expiration of the
one-year period described in the foregoing sentence.
    
  If a
Change in Control (as defined below) occurs and if your employment is terminated
within six months after such Change in Control for any reason other than
Cause (as defined below), the Company shall pay you, within 10 days
after such termination, in cash or equivalent, a lump sum severance
benefit equal to your Base Salary in effect on such termination date multiplied
by 12.  You also shall be entitled to receive the sum of (1) your accrued
but unpaid Base Salary through the date of such termination, plus (2)
your accrued but unpaid vacation pay through such date of termination, plus
(3) if you are then participating in the Company’s annual bonus plan, a
pro-rated annual bonus for the bonus year in which you are terminated, which
shall be calculated and paid in accordance with the Company’s normal practices
at the end of such bonus year,  provided  that you have been
employed by the Company for at least six months of such bonus year, plus (4) any
other compensation payments or benefits which have accrued and are payable
in connection with such termination.  In addition, the Company shall
continue to provide medical and dental benefits to you and your dependents for a
period of 12 months following such date of termination at the
same levels of coverage and in the same manner as such benefits are
available to you and your dependents immediately prior to such Change in
Control.  Your right to continue medical and dental coverage under
COBRA shall begin after the expiration of the one-year period described in the
foregoing sentence.
  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 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.
 
 For
purposes of this letter agreement:
 
 (1)           “Cause”
means (1) your resignation, except for Good Reason, from the office of Chief
Financial Officer of the Company; (2) dishonesty or fraud on the part of the
employee which is intended to result in the employee’s substantial
personal enrichment at the expense of the Company or its affiliates;
(3) a material violation of the employee’s responsibilities as an executive of
the Company or its subsidiaries which is willful and deliberate; or
(4) the conviction (after the exhaustion of all appeals) of the
employee of a felony involving moral turpitude or the entry of a plea
of nolo contendere for such a felony;  provided , that in no event
shall “Cause” include (i) any personal or policy disagreement between the
employee and the Company or any member of the board of directors of
the Company or (ii) any action taken by the employee in connection with the
employee’s duties if the employee acted in good faith and in a manner
the employee reasonably believed to be in the best interest
of the Company and had no reasonable cause to believe the employee’s
conduct was unlawful.
 
 (2)           “Change
in Control” means any of the following: (a) the acquisition, directly or
indirectly after the date of this letter agreement, in one or a series of
transactions, of 25% or more of the Company’s common stock by any “person” as
that term is defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; (b) the consummation of a merger, consolidation,
share exchange or similar transaction of the Company with any
other corporation, entity or group, as a result of which the holders of
the voting capital stock of the Company immediately prior to such merger,
consolidation, share exchange or similar transaction, as a group, would receive
less than 50% of the voting capital stock of the surviving or
resulting corporation; (c) the consummation of an agreement providing
for the sale or transfer (other than as security for obligations of the Company)
of all or substantially all of the assets of the Company; or (d) individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board or pursuant to a negotiated settlement with any such
Person to avoid the threat of any such contest or
solicitation.  Notwithstanding the above, in no event shall the
liquidation of the Company or declaration or payment by the Company of a
material dividend be deemed to constitute a Change in Control.
  (3)           “Good
Reason” means the occurrence of any of the following events provided you (A)
notify the Board in writing within 90 days following the initial occurrence of
the events that are alleged to constitute good reason and specifying the events
that are alleged to constitute good reason and (B) terminate your employment
within 90 days of the date of your notice if the Company does not cure said
events within 30 days after the date of your notice: (i) any material breach by
the Company of the terms of this letter agreement or any material diminution by
the Company of your authority, duties or responsibilities with the Company as
specified in the first paragraph of this letter agreement; (ii) any relocation
of your principal office to a location which is more than 25 miles from the
Company’s Fishers, Indiana facility; or (iii) any request by the Company for you
to report to someone other than the Company’s Chief Executive Officer or the
Chairman of the Company’s Board of Directors, except where such request is
specifically approved by you.
  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/ Clarke
Bailey
 Clarke
Bailey
 Chairman
of the Board
  
  Accepted
      by:
                /s/ Michael W.
      Klinger
                Date:  October
      3, 2008Michael
      W. Klinger