UMG and Global Eagle Entertainment Reach Settlement
Global Eagle Entertainment Inc. (the “Company” or “we”) and certain of its subsidiaries entered into a Settlement Agreement (“Settlement Agreement”), dated as of August 9, 2016 (the “Settlement Date”), with UMG Recordings, Inc., Capitol Records, LLC, Universal Music Corp. and entities affiliated with them (collectively, “UMG”) resolving all claims relating to the previously disclosed lawsuit filed by UMG against the Company and certain of its subsidiaries for music copyright infringement and related claims. UMG and the Company have agreed to dismiss the lawsuit with prejudice and have further agreed that the Settlement Agreement does not constitute any admission of liability, wrongdoing or responsibility by any party to it.
The Settlement Agreement contains a mutual release between the Company and UMG and, subject to certain exceptions, their respective subsidiaries and affiliates, and a release by UMG of the Company’s customers and of the Company’s and its customers’ authorized integrators and other vendors of all claims under foreign or U.S. law relating to any alleged infringing use of “UMG Content” (as defined below) prior to the Settlement Date. The Settlement Agreement defines “UMG Content” as original works of authorship owned or controlled by UMG or its affiliates, and including but not limited to sound recordings, musical compositions, music videos and related artwork, logos, artist name, voice, likeness and similar rights and metadata.
In addition, the Settlement Agreement provides that the Company and UMG will use their best efforts to negotiate and execute within 60 days of the Settlement Date a license agreement for the Company’s use of certain UMG Content. And, UMG agreed that, to the extent the Company uses (until February 1, 2017) any UMG Content that it used on or prior to the Settlement Date, UMG will refrain from initiating any legal or other proceedings asserting any claim against the Company, its customers and their authorized vendors arising from any alleged infringing use of UMG Content.
As part of the settlement, the Company agreed to compensate UMG and/or its designees as follows: (1) within two business days of the Settlement Date, a cash payment of $15,000,000 plus the issuance by the Company of 1,360,544 shares of its common stock (the “Initial Shares”); (2) on or prior to March 31, 2017, a cash payment of $5,000,000; (3) if at any time the closing price of the Company’s common stock on the Nasdaq Capital Market (“Closing Price”) exceeds $10.00 per share, the issuance by the Company of 500,000 shares of its common stock; and (4) if at any time the Closing Price exceeds $12.00 per share, the issuance by the Company of 400,000 shares of its common stock. We refer to the shares issuable pursuant to the foregoing clauses (3) and (4) as the “Supplemental Shares.” The Company may satisfy all or part of any Supplemental Share obligations in cash at its election.
Source: https://www.sec.gov
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