ex10-1.htm


    
      

    

    Exhibit
10.1

    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,
      2008     	 
	 	Michael W.
      Klinger