x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM __________ TO ________
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Delaware
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27-4757800
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification Number)
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6100 Center Drive, Suite 1020
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Los Angeles, California
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90045
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
Common Stock, $0.0001 par value
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Name of each exchange on which registered
The Nasdaq Stock Market LLC
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Securities registered pursuant to Section 12(g) of the Act:
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None
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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Item No.
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Description
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Page
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•
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Wi-Fi connectivity (utilizing specialized network equipment and technology) that enables access to the Internet, live television, texting services, e-commerce, on-demand content and travel-related information; and
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•
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Connectivity-enabled solutions for advertising, operational performance management and analytics that enable our customers to increase profitability through generation of new revenue streams and more efficient operations.
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•
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Connectivity Equipment
– We sell and lease equipment that enables our satellite-based services to operate on aircraft. Our equipment is generally shipped and sold as a single kit, with components of the kits separately priced for future ordering. Significant components of our equipment kits include the radome, antenna, modems, wireless access points and activation packages. Substantially all of our equipment is manufactured and warrantied by third-party manufacturers. Our antennas are proprietary to us in that we develop the specifications, and our third-party suppliers manufacture them exclusively for our use.
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•
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Regulatory Support
– We obtain Supplemental Type Certificates (“STCs”), which are certificates issued when an applicant has received Federal Aviation Administration (“FAA”), European Aviation Safety Agency (“EASA”) or similar international regulatory approval to modify an aircraft from its original type certificate approval. An STC on a particular aircraft type enables our equipment to be installed on that aircraft type. We have STCs for installation on the Boeing 737, 757, 767, 777 and Airbus A320 aircraft families. As an alternative to STC-based installation, we also offer our equipment for factory installation (Boeing Line-fit) on Boeing 737-700, 737-800, 737-900 and the Boeing 737 MAX family.
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•
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Post-Installation Support
– Once our equipment is installed and operational, we provide technical and network support and management services, including 24/7 operational assistance and monitoring of each aircraft’s connectivity performance and bandwidth of our satellite-based services.
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•
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Airconnect Global® Antenna
–
In partnership with Quantenelektronische Systeme GmbH (“QEST”), the Company continues to develop a satellite antenna that would enable global usage of our services, including equatorial regions of the world (the “Global Antenna”). The Global Antenna’s innovative design features a first-of-its-kind three-axis precision pointing mechanism capable of delivering superior satellite connectivity and continuous coverage, including during flights near or below the equator, at high latitudes or during banking maneuvers. It is optimized to deliver airlines a breakthrough mix of reliability, high connection speeds and global coverage. The Global Antenna utilizes a revolutionary steerable pointing system to optimize coverage anywhere a commercial aircraft flies. The Global Antenna is compatible with our current installation architecture and STCs, and is also intended to meet the requirements for future line-fit installations. We expect to begin our first installations of this equipment in early 2018.
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•
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In late 2015, Global Eagle entered into an agreement with Hughes, the world's leading provider of broadband satellite solutions and services, to utilize Hughes's JUPITER™ System HT Aero Modem to power Global Eagle’s next-generation, high-performance broadband aviation service. Hughes's HT Aero Modem, including the core router module and JUPITER mobility technology, features the JUPITER System second-generation SoC (System on a Chip) that supports over 200 Mbps of throughput, readily accommodating the highest demands for aviation broadband. Compared to Hughes's prior-generation mobility terminal, the new HT modem delivers more than 10 times the throughput performance to an individual aircraft. Designed for the aviation broadband industry, the HT Aero Modem technology also provides faster spot beam and satellite switchover times. The modem is compatible with our antenna system, enabling an easy and cost-effective upgrade to improve speeds for our current connected fleet. We expect to begin our first installations of this equipment in early 2018.
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•
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Airtime App
: Our
Airtime App
is an innovative application that allows passengers to personalize their entertainment directly on their mobile devices.
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•
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Airtime Content-to-Go
:
Airtime Content-to-Go
eliminates the need for airlines to install onboard hardware because it enables airlines to offer passengers a pre-flight download of digital media content. Passengers can download content as early as when they book a flight and the content remains locked until they board the plane, at which time they are able to view the purchased content.
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•
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Connectivity
– We provide global satellite bandwidth (C-Band, Ku-Band, and Ka-band), terrestrial broadband network, backhaul services, remote fiber network and fully meshed MPLS interconnected teleports. We provide capacity planning and management services and on-board revenue management.
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•
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Access
– We provide worldwide access to live television, video (on-demand and subscription), backhaul services, Internet, voice, data, high-definition video conferencing and universal portals, including through use of our proprietary
SpeedNet
product that improves the web-browsing experience over a satellite connection by proactively storing web content close to the user.
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•
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Support
– We have field support centers in several locations worldwide, several of which offer a spare parts inventory, a network operations center open 24/7, certified technicians, system integration and project management. These field centers provide third-party antenna and ship-based system integration, global installation support, and repair services.
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•
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acquiring non-theatrical licenses from major Hollywood, independent and international film and television producers and distributors, and marketing those rights to the airline, maritime and other non-theatrical markets;
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•
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making content available for non-theatrical systems and all associated services;
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•
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providing services ranging from the selection, purchase, post-production and technical adjustment of content to customer support in connection with the integration and servicing of non-theatrical programs;
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•
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providing ancillary revenue through advertising and sponsorship of airport lounge media, IFE, IFC and live broadcast insertion on multiple platforms; and
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•
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providing creative services such as user experience and user interface management on all IFE systems and the creation and production of special videos such as safety videos, destination guides and video promotions.
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•
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Our interests could diverge from our joint-venture partner’s interests or we may not agree with our joint-venture partner on ongoing activities or on the amount, timing or nature of further investments in WMS;
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•
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WMS profits and cash flows may prove inadequate to fund cash dividends or other distributions to us, or those amounts may be subject to reduction as noted above;
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•
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Our control over the operations of and other decisions relating to WMS is limited;
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•
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Due to differing business models or long term business goals, our joint-venture partner may decide not to fund capital investments in WMS, impairing the value of the WMS joint venture;
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•
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We may lose the rights to technology or products being developed by WMS, including if our joint-venture partner is acquired by another company, or experiences financial or other losses;
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•
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Many of the contractors on which WMS relies are with our joint-venture partner, and “seconded” to WMS from our joint-venture partner, such that WMS relies on these contractors, personnel and other resources provided to it by our joint-venture partner; and
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•
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We may experience difficulties or delays in collecting amounts due to us from WMS.
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•
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our ability to continue to develop leading technologies in existing and emerging broadband, advanced communications and secure networking markets;
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•
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our ability to successfully develop, introduce and sell new products and services on a timely and cost-effective basis that respond to ever-changing customer requirements;
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•
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our ability to enhance our product and service offerings by continuing to increase satellite capacity, bandwidth cost efficiencies and service quality and adding innovative features that differentiate our offerings from those of our competitors;
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•
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successful integration of various elements of our complex technologies and system architectures;
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•
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timely completion and introduction of new system and product designs;
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•
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achievement of acceptable product and service costs;
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•
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establishment of close working relationships with major customers for the design of their new communications and secure networking systems incorporating our products and services;
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•
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marketing and pricing strategies of our competitors with respect to competitive products and services; and
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•
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market acceptance of our new products and services.
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•
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potential impact on our ability to produce financial statements in a timely manner, such as with the EMC Acquisition and which acquisition in turn contributed to our material weaknesses in our internal controls in 2016;
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•
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potential distraction of management from our ongoing business and from the remediation of our material weaknesses;
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•
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difficulty integrating the operations and products of the acquired business, including specifically with respect to challenges and delays in timing that we face integrating the acquired EMC business (which could result in delays in the realization of acquisition synergies);
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use of cash to fund the acquisition or investment or for unanticipated expenses;
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•
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limited market experience in new businesses;
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exposure to unknown liabilities, including litigation against the companies that we acquire;
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•
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additional costs due to differences in culture, geographical locations and duplication of key talent;
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•
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delays associated with or resources being devoted to regulatory review and approval and other ongoing compliance matters;
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•
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acquisition-related accounting charges affecting our balance sheet and operations;
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difficulty integrating the financial results of the acquired business in our consolidated financial statements;
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controls in the acquired business;
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•
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impairment of goodwill, intangible and tangible assets, such as the goodwill impairments with respect to the EMC Acquisition that we recognized in 2016 and that we expect to recognize in the first quarter of 2017;
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dilution to our current stockholders from the potential issuance of equity securities to consummate a proposed acquisition or investment; and
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potential loss of key employees or customers of the acquired company.
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•
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If we fail to meet payment obligations or otherwise default under our debt, the lenders will have the right to accelerate the indebtedness and exercise other rights and remedies against us. We do not expect that we could repay all of our outstanding indebtedness if the repayment of such indebtedness was accelerated.
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•
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We are required to comply with financial covenants that require us to maintain maximum leverage ratios which decrease on a quarterly basis.
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•
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Our ability to obtain additional financing to fund future working capital needs, capital expenditures, acquisitions, and other general corporate requirements could be limited. If we are unable to raise additional capital if required, it could affect our liquidity, business, financial condition, results of operations, and cash flows. In addition, our ability to borrow additional amounts under our revolving credit facility, which is a significant source of liquidity, is subject to the absence of defaults and our ability to make certain representations and warranties. Failure to meet our borrowing conditions under our revolving credit facility could materially and adversely impact our liquidity.
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Our debt imposes operating and financial covenants and restrictions on us, and compliance with such covenants and restrictions may adversely affect our ability to adequately finance our operations or capital needs, pursue attractive
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•
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Our failure to comply with the covenants in our credit agreement, which include covenants requiring us to timely file our audited and unaudited financial statements, could result in an event of default on our debt. In May, June, September and October 2017, we entered into amendments and limited waivers to our credit agreement due to our inability to timely file this Annual Report on Form 10-K and our Q1 Form 10-Q, Q2 Form 10-Q and Q3 Form 10-Q, resulting in, among other things, additional financial and disclosure covenants under the credit agreement and increased interest costs and amendment fees associated with our debt. Upon an event of default, the lenders of that debt could elect to cause all amounts outstanding with respect to that debt to become immediately due and payable and we would be unable to access our revolving credit facility. An event of default could materially and adversely affect our operating results, financial condition and liquidity.
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•
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We could experience increased vulnerability to, and limited flexibility in planning for, or reacting to, changes in or challenges relating to our business and industry, creating competitive disadvantages compared to other competitors with lower debt levels and borrowing costs.
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•
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We could experience increased vulnerability to general adverse economic conditions, including increases in interest rates if our borrowings bear interest at variable rates or if such indebtedness is refinanced at a time when interest rates are higher.
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•
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our inability to timely file our SEC reports;
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•
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our material weaknesses in our internal controls;
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•
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actual or anticipated fluctuations in our financial results or the financial results of companies perceived to be similar to us;
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•
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changes in the market’s expectations about our operating results;
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•
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success of competitors;
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•
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our inability to consummate beneficial investment and M&A transactions, including due to our inability to obtain any required regulatory or national security approvals;
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•
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our operating results failing to meet the expectation of securities analysts or investors in a particular period;
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•
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changes in financial estimates and recommendations by securities analysts concerning the Company, the market for in-flight entertainment, the airline industry, or the travel market in general;
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•
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operating and stock price performance of other companies that investors deem comparable to us;
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•
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our ability to market new and enhanced products on a timely basis;
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•
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changes in laws and regulations affecting our business or our industry;
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•
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commencement of, or involvement in, litigation involving the Company;
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•
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changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
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•
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the volume of shares of our common stock available for public sale;
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•
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any major change in our Board or management; and
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•
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sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur.
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•
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a classified Board with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our Board;
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•
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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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•
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the exclusive right of our Board to elect a director to fill a vacancy created by the expansion of the Board or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our Board;
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•
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the ability of our Board to determine to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
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•
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a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
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•
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the requirement that an annual meeting of stockholders may be called only by the chairman of the Board, the chief executive officer, or the Board, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
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•
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limiting the liability of, and providing indemnification to, our directors and officers;
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•
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controlling the procedures for the conduct and scheduling of stockholder meetings;
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•
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providing the Board with the express power to postpone previously scheduled annual meetings of stockholders and to cancel previously scheduled annual meetings of stockholders;
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•
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providing that directors may be removed prior to the expiration of their terms by stockholders only for cause; and
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•
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advance notice procedures that stockholders must comply with in order to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
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Location
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Segment(s)
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Square Footage
|
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Description / Lease Expiration Date
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Los Angeles, CA, USA
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Corporate/Media & Content
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19,730
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Leased office space / May 31, 2017
(1)
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Lombard, IL, USA
|
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Connectivity
|
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23,320
|
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Leased office space / February 28, 2025
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Irvine, CA, USA
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Media & Content
|
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22,000
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Leased office space / June 30, 2020
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Montréal, QC, Canada
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Media & Content/Connectivity
|
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22,305
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Leased office space / June 30, 2025
|
London, United Kingdom
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Media & Content
|
|
14,500
|
|
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Leased office space / March 24, 2017
(2)
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Mumbai, India
|
|
Media & Content
|
|
13,278
|
|
|
Leased office space / 95 year lease, 85 years remaining
|
Knutsford, United Kingdom
|
|
Media & Content
|
|
13,533
|
|
|
Owned building / mortgage to be paid off in 2032
|
Raisting, Germany
|
|
Connectivity
|
|
120,000
|
|
|
Owned teleport facility / no mortgage
|
Kapolei, HI, USA
|
|
Connectivity
|
|
113,118
|
|
|
Leased teleport facility / July 31, 2019
|
Holmdel, NJ, USA
|
|
Connectivity
|
|
114,913
|
|
|
Leased teleport facility / December 31, 2023
|
Miramar, FL, USA
|
|
Connectivity
|
|
59,367
|
|
|
Leased office space / December 31, 2017
|
(1)
|
The Company exited this office space in May 2017, and signed a new lease agreement in April 2017 for a 21,312 square-foot office space in Los Angeles, CA expiring in July 2022.
|
(2)
|
The Company exited this office space in September 2016, and signed a new lease agreement in September 2016 for a 9,550 square-foot office space in London, United Kingdom, expiring in September 2026.
|
Year Ended December 31, 2016
|
High
|
|
Low
|
||||
Fourth Quarter
|
$
|
9.65
|
|
|
$
|
6.15
|
|
Third Quarter
|
$
|
9.13
|
|
|
$
|
6.61
|
|
Second Quarter
|
$
|
9.00
|
|
|
$
|
6.18
|
|
First Quarter
|
$
|
10.40
|
|
|
$
|
7.94
|
|
|
|
|
|
||||
Year Ended December 31, 2015
|
High
|
|
Low
|
||||
Fourth Quarter
|
$
|
13.74
|
|
|
$
|
9.70
|
|
Third Quarter
|
$
|
13.36
|
|
|
$
|
10.77
|
|
Second Quarter
|
$
|
14.23
|
|
|
$
|
12.26
|
|
First Quarter
|
$
|
15.74
|
|
|
$
|
12.95
|
|
|
December 31,
|
||||||||||||||||||||||
|
2011
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2012
|
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2013
|
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2014
|
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2015
|
|
2016
|
||||||||||||
Global Eagle Entertainment Inc.
|
$
|
100.00
|
|
|
$
|
103.64
|
|
|
$
|
154.57
|
|
|
$
|
141.48
|
|
|
$
|
102.60
|
|
|
$
|
67.15
|
|
Russell 2000 Index
|
$
|
100.00
|
|
|
$
|
114.63
|
|
|
$
|
157.05
|
|
|
$
|
162.60
|
|
|
$
|
153.31
|
|
|
$
|
183.17
|
|
S&P 500 Index
|
$
|
100.00
|
|
|
$
|
113.41
|
|
|
$
|
146.98
|
|
|
$
|
163.72
|
|
|
$
|
162.53
|
|
|
$
|
178.02
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
(1)
|
|
2015
(2)
|
|
2014
(3)
|
|
2013
(4)
|
|
2012
(5) (6)
|
||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
529,755
|
|
|
$
|
426,030
|
|
|
$
|
387,735
|
|
|
$
|
259,722
|
|
|
$
|
69,210
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
365,470
|
|
|
279,156
|
|
|
281,873
|
|
|
197,938
|
|
|
76,897
|
|
|||||
Sales and marketing expenses
|
30,941
|
|
|
17,705
|
|
|
13,287
|
|
|
10,330
|
|
|
3,935
|
|
|||||
Product development
|
37,718
|
|
|
28,610
|
|
|
23,010
|
|
|
9,068
|
|
|
2,646
|
|
|||||
General and administrative
(7)
|
115,195
|
|
|
77,715
|
|
|
69,743
|
|
|
70,629
|
|
|
14,534
|
|
|||||
Provision for legal settlements
(7)
|
43,446
|
|
|
4,250
|
|
|
8,030
|
|
|
—
|
|
|
—
|
|
|||||
Amortization of intangible assets
|
35,648
|
|
|
26,994
|
|
|
24,552
|
|
|
17,281
|
|
|
34
|
|
|||||
Goodwill impairment
(8)
|
64,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring charges
|
—
|
|
|
411
|
|
|
4,223
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
692,418
|
|
|
434,841
|
|
|
424,718
|
|
|
305,246
|
|
|
98,046
|
|
|||||
Loss from operations
|
(162,663
|
)
|
|
(8,811
|
)
|
|
(36,983
|
)
|
|
(45,524
|
)
|
|
(28,836
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest (expense) income, net
|
(18,198
|
)
|
|
(2,492
|
)
|
|
88
|
|
|
(2,417
|
)
|
|
(10,368
|
)
|
|||||
Income (loss) from equity method investments
(9)
|
3,829
|
|
|
—
|
|
|
(1,500
|
)
|
|
—
|
|
|
—
|
|
|||||
Change in fair value of derivatives
|
25,515
|
|
|
11,938
|
|
|
(6,955
|
)
|
|
(63,961
|
)
|
|
(3,576
|
)
|
|||||
Other expense, net
(9)
|
(6,326
|
)
|
|
(1,140
|
)
|
|
(1,270
|
)
|
|
(1,000
|
)
|
|
(23
|
)
|
|||||
Loss before income taxes
|
(157,843
|
)
|
|
(505
|
)
|
|
(46,620
|
)
|
|
(112,902
|
)
|
|
(42,803
|
)
|
|||||
Income tax (benefit) expense
|
(44,911
|
)
|
|
1,621
|
|
|
10,574
|
|
|
1,839
|
|
|
—
|
|
|||||
Net loss
|
(112,932
|
)
|
|
(2,126
|
)
|
|
(57,194
|
)
|
|
(114,741
|
)
|
|
(42,803
|
)
|
|||||
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
194
|
|
|
290
|
|
|
—
|
|
|||||
Net loss attributable to Global Eagle Entertainment Inc. common stockholders
|
$
|
(112,932
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(57,388
|
)
|
|
$
|
(115,031
|
)
|
|
$
|
(42,803
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(1.39
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(2.24
|
)
|
Diluted
|
$
|
(1.39
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.78
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(2.24
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
81,269
|
|
|
77,558
|
|
|
73,300
|
|
|
53,061
|
|
|
19,148
|
|
|||||
Diluted
|
81,269
|
|
|
78,394
|
|
|
73,300
|
|
|
53,061
|
|
|
19,148
|
|
|
December 31,
|
||||||||||||||||||
|
2016
(1)
|
|
2015
(2)
|
|
2014
(3)
|
|
2013
(4)
|
|
2012
(5) (6)
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents and marketable securities
|
$
|
50,686
|
|
|
$
|
223,552
|
|
|
$
|
197,648
|
|
|
$
|
258,796
|
|
|
$
|
2,088
|
|
Working capital
(10)
|
$
|
(7,537
|
)
|
|
$
|
193,293
|
|
|
$
|
146,028
|
|
|
$
|
169,558
|
|
|
$
|
(3,799
|
)
|
Total assets
(11)
|
$
|
1,099,435
|
|
|
$
|
637,861
|
|
|
$
|
533,595
|
|
|
$
|
578,883
|
|
|
$
|
29,437
|
|
Long term liabilities
(10)
|
$
|
539,301
|
|
|
$
|
118,185
|
|
|
$
|
46,654
|
|
|
$
|
39,577
|
|
|
$
|
3,111
|
|
Total stockholders' equity
|
$
|
298,997
|
|
|
$
|
353,761
|
|
|
$
|
312,629
|
|
|
$
|
356,184
|
|
|
$
|
1,417
|
|
(1)
|
The presented financial information as of and for the year ended December 31, 2016 includes the financial information and activities of EMC (Maritime & Land Connectivity segment) for the period July 27, 2016 to December 31, 2016.
|
(2)
|
The presented financial information as of and for the year ended December 31, 2015 includes the financial information and activities of Western Outdoor Interactive Private Limited (“WOI”) (now part of our Media & Content segment) and certain assets and assumed certain liabilities of RMG Networks Holding Corporation (“RMG”) (now part of our Media & Content segment) for the period July 1, 2015 to December 31, 2015 and Marks Systems, Inc. (or “masFlight”) and NavAero Holding AB (“navAero”) (now part of our Aviation Connectivity segment) for the period August 6, 2015 to December 31, 2015.
|
(3)
|
The presented financial information as of and for the year ended December 31, 2014 includes the financial information and activities of Purple Inflight Entertainment Private Ltd. (“Purple Inflight Entertainment” or “Purple”) (now part of our Media & Content segment) for the period from August 2, 2014 to December 31, 2014.
|
(4)
|
The presented financial information as of and for the year ended December 31, 2013 includes the financial information and activities of Row 44 (Aviation Connectivity segment) for the period January 1, 2013 to December 31, 2013 as well as the financial information and activities of the Company and AIA (Media & Content segment) for the period January 31, 2013 to December 31, 2013, Post Modern Edit, LLC and related entities (PMG) (now part of our Media & Content segment) for the period July 9, 2013 to December 31, 2013 and Travel Entertainment Group Equity Limited and subsidiaries (“IFES”) (now part of our Media & Content segment) for the period October 18, 2013 to December 31, 2013.
|
(5)
|
Row 44 was the accounting acquirer in our business combination with Row 44 and Advanced Inflight Alliance AG completed on January 31, 2013. As a result, the presented financial information as of and for the year ended December 31, 2012 reflects the financial information and activities only of Row 44.
|
(6)
|
On January 31, 2013 and in conjunction with our business combination with Row 44 and Advanced Inflight Alliance AG, Row 44 common stock $0.0001 par value per share was converted into Global Eagle Entertainment Inc. common stock par value $0.0001 per share. Immediately prior to that business combination, Row 44’s proportional adjustment to the existing conversion ratios for each series of preferred stock outstanding was effected in January 2009. Accordingly, the share and per share amounts for 2012 presented herein have been adjusted retrospectively to reflect the respective exchange ratios. For details on the Row 44 share conversion to Global Eagle common stock, refer to the Company’s definitive proxy statement on Schedule 14A filed with the SEC on January 17, 2013.
|
(7)
|
General and Administrative expenses for years preceding December 31, 2016, where applicable, have been adjusted to reflect the reclassification of the provision for legal settlements to a separate line item to conform to the presentation for the year ended December 31, 2016.
|
(8)
|
Subsequent to December 31, 2016, the Company recognized goodwill impairment preliminarily estimated between $75 million and $80 million during the quarter ended March 31, 2017.
|
(9)
|
Other expense, net for the year ended December 31, 2014 has been adjusted to reflect the reclassification of losses from an equity method investment to a separate line item to conform to the presentation for the year ended December 31, 2016.
|
(10)
|
During the fourth quarter of 2015, the Company elected to early-adopt the provision of ASU No. 2015-17,
Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes
, which simplified the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as non-current on the balance sheet. Since this standard was adopted prospectively, the working capital balances for year-end periods preceding December 31, 2015 include the current portion of deferred tax assets and liabilities. The net current deferred tax asset position included above was $4,639 and $2,060 as of December 31, 2014 and 2013, respectively. There was no deferred tax working capital balance as of December 31, 2012.
|
(11)
|
Total assets and total liabilities as of December 31, 2015 have been adjusted retrospectively to reflect our adoption of Financial Accounting Standards Board Accounting Standards Update (“ASU”) No. 2015-03,
Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs
, in the first quarter of 2016. This ASU requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the treatment of debt discount. The adoption of this standard did not affect year end periods presented above preceding December 31, 2015.
|
(1)
|
$2.7 million
total expenses relating to employee termination benefits, which primarily included severance and transitional-related expenses.
|
(2)
|
$0.4 million
of facilities disposal charges in connection with the closure of our German operation. Pursuant to the Restructuring Plan, we exited approximately
11,000
square feet of leased facilities in Duisburg and Munich, Germany, representing approximately
6%
of our global facilities square footage.
|
(3)
|
$1.5 million
of legal and professional fees.
|
•
|
Interest income expense (net) – interest expense on outstanding debt, net of interest earned on cash balances and short-term investments. We typically invest our available cash balances in money market funds and short-term United States Treasury obligations;
|
•
|
Income from equity method investments acquired in the 2016 EMC Acquisition;
|
•
|
Changes in the fair value of our derivative financial instruments; and
|
•
|
Other expense, net – primarily comprised of certain unrealized transaction gains and losses on foreign currency denominated assets and liabilities, which fluctuates depending upon movements in underlying currency exchange rates, primarily movement of the U.S. dollar against the Euro, Pound Sterling and Canadian dollar.
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue
|
$
|
529,755
|
|
|
$
|
426,030
|
|
|
$
|
387,735
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
365,470
|
|
|
279,156
|
|
|
281,873
|
|
|||
Sales and marketing
|
30,941
|
|
|
17,705
|
|
|
13,287
|
|
|||
Product development
|
37,718
|
|
|
28,610
|
|
|
23,010
|
|
|||
General and administrative
|
115,195
|
|
|
77,715
|
|
|
69,743
|
|
|||
Provision for legal settlements
|
43,446
|
|
|
4,250
|
|
|
8,030
|
|
|||
Amortization of intangible assets
|
35,648
|
|
|
26,994
|
|
|
24,552
|
|
|||
Goodwill impairment
|
64,000
|
|
|
—
|
|
|
—
|
|
|||
Restructuring charges
|
—
|
|
|
411
|
|
|
4,223
|
|
|||
Total operating expenses
|
692,418
|
|
|
434,841
|
|
|
424,718
|
|
|||
Loss from operations
|
(162,663
|
)
|
|
(8,811
|
)
|
|
(36,983
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest (expense) income, net
|
(18,198
|
)
|
|
(2,492
|
)
|
|
88
|
|
|||
Income (loss) from equity method investments
|
3,829
|
|
|
—
|
|
|
(1,500
|
)
|
|||
Change in fair value of derivatives
|
25,515
|
|
|
11,938
|
|
|
(6,955
|
)
|
|||
Other expense, net
|
(6,326
|
)
|
|
(1,140
|
)
|
|
(1,270
|
)
|
|||
Loss before income taxes
|
(157,843
|
)
|
|
(505
|
)
|
|
(46,620
|
)
|
|||
Income tax (benefit) expense
|
(44,911
|
)
|
|
1,621
|
|
|
10,574
|
|
|||
Net loss
|
(112,932
|
)
|
|
(2,126
|
)
|
|
(57,194
|
)
|
|||
Net income attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
194
|
|
|||
Net loss attributable to Global Eagle Entertainment Inc. common stockholders
|
$
|
(112,932
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(57,388
|
)
|
|
|
|
|
|
|
||||||
Net loss per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.39
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.78
|
)
|
Diluted
|
$
|
(1.39
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.78
|
)
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
81,269
|
|
|
77,558
|
|
|
73,300
|
|
|||
Diluted
|
81,269
|
|
|
78,394
|
|
|
73,300
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Depreciation expense:
|
|
|
|
|
|
||||||
Cost of sales
|
$
|
10,855
|
|
|
$
|
2,957
|
|
|
$
|
2,820
|
|
Sales and marketing
|
1,793
|
|
|
893
|
|
|
471
|
|
|||
Product development
|
2,186
|
|
|
1,443
|
|
|
858
|
|
|||
General and administrative
|
6,677
|
|
|
4,154
|
|
|
3,030
|
|
|||
Total
|
$
|
21,511
|
|
|
$
|
9,447
|
|
|
$
|
7,179
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Stock-based compensation expense:
|
|
|
|
|
|
||||||
Cost of sales
|
$
|
313
|
|
|
$
|
322
|
|
|
$
|
36
|
|
Sales and marketing
|
629
|
|
|
701
|
|
|
46
|
|
|||
Product development
|
994
|
|
|
1,020
|
|
|
268
|
|
|||
General and administrative
|
8,811
|
|
|
6,192
|
|
|
7,717
|
|
|||
Total
|
$
|
10,747
|
|
|
$
|
8,235
|
|
|
$
|
8,067
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Operating expenses:
|
|
|
|
|
|
|||
Cost of sales
|
69
|
%
|
|
66
|
%
|
|
73
|
%
|
Sales and marketing
|
6
|
%
|
|
4
|
%
|
|
3
|
%
|
Product development
|
7
|
%
|
|
7
|
%
|
|
6
|
%
|
General and administrative
|
22
|
%
|
|
18
|
%
|
|
18
|
%
|
Provision for legal settlements
|
8
|
%
|
|
1
|
%
|
|
2
|
%
|
Amortization of intangible assets
|
7
|
%
|
|
6
|
%
|
|
6
|
%
|
Goodwill impairment
|
12
|
%
|
|
—
|
%
|
|
—
|
%
|
Restructuring charges
|
—
|
%
|
|
—
|
%
|
|
1
|
%
|
Total operating expenses
|
131
|
%
|
|
102
|
%
|
|
110
|
%
|
Loss from operations
|
(31
|
)%
|
|
(2
|
)%
|
|
(10
|
)%
|
Other expense, net
|
1
|
%
|
|
2
|
%
|
|
(2
|
)%
|
Loss before income taxes
|
(30
|
)%
|
|
—
|
%
|
|
(12
|
)%
|
Income tax (benefit) expense
|
(8
|
)%
|
|
—
|
%
|
|
3
|
%
|
Net loss
|
(21
|
)%
|
|
—
|
%
|
|
(15
|
)%
|
Net income attributable to non-controlling interest
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Net loss attributable to Global Eagle Entertainment Inc. common stockholders
|
(21
|
)%
|
|
—
|
%
|
|
(15
|
)%
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Media & Content
|
|
|
|
|
|
||||||
Licensing
|
$
|
261,912
|
|
|
$
|
252,775
|
|
|
$
|
231,521
|
|
Services
|
56,152
|
|
|
55,292
|
|
|
45,868
|
|
|||
Total
|
318,064
|
|
|
308,067
|
|
|
277,389
|
|
|||
Aviation Connectivity
|
|
|
|
|
|
||||||
Services
|
109,507
|
|
|
96,912
|
|
|
74,839
|
|
|||
Equipment
|
28,977
|
|
|
21,051
|
|
|
35,507
|
|
|||
Total
|
138,484
|
|
|
117,963
|
|
|
110,346
|
|
|||
Maritime & Land Connectivity
|
|
|
|
|
|
||||||
Services
|
68,964
|
|
|
—
|
|
|
—
|
|
|||
Equipment
|
4,243
|
|
|
—
|
|
|
—
|
|
|||
Total
|
73,207
|
|
|
—
|
|
|
—
|
|
|||
Total revenue
|
$
|
529,755
|
|
|
$
|
426,030
|
|
|
$
|
387,735
|
|
Cost of sales:
|
|
|
|
|
|
||||||
Media & Content
|
|
|
|
|
|
||||||
Licensing and services
|
$
|
214,028
|
|
|
$
|
203,693
|
|
|
$
|
194,996
|
|
Aviation Connectivity
|
|
|
|
|
|
||||||
Services
|
67,155
|
|
|
57,942
|
|
|
54,882
|
|
|||
Equipment
|
24,590
|
|
|
17,521
|
|
|
31,995
|
|
|||
Total
|
91,745
|
|
|
75,463
|
|
|
86,877
|
|
|||
Maritime & Land Connectivity
|
|
|
|
|
|
||||||
Services
|
55,519
|
|
|
—
|
|
|
—
|
|
|||
Equipment
|
4,178
|
|
|
—
|
|
|
—
|
|
|||
Total
|
59,697
|
|
|
—
|
|
|
—
|
|
|||
Total cost of sales
|
$
|
365,470
|
|
|
$
|
279,156
|
|
|
$
|
281,873
|
|
Contribution profit:
|
|
|
|
|
|
||||||
Media & Content
|
$
|
104,036
|
|
|
$
|
104,374
|
|
|
$
|
82,393
|
|
Aviation Connectivity
|
46,739
|
|
|
42,500
|
|
|
23,469
|
|
|||
Maritime & Land Connectivity
|
13,510
|
|
|
—
|
|
|
—
|
|
|||
Total contribution profit
|
164,285
|
|
|
146,874
|
|
|
105,862
|
|
|||
Other operating expenses
|
326,948
|
|
|
155,685
|
|
|
142,845
|
|
|||
Loss from operations
|
$
|
(162,663
|
)
|
|
$
|
(8,811
|
)
|
|
$
|
(36,983
|
)
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||
Licensing and services
|
$
|
318,064
|
|
|
$
|
308,067
|
|
|
$
|
277,389
|
|
|
3
|
%
|
|
11
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||
Services
|
$
|
109,507
|
|
|
$
|
96,912
|
|
|
$
|
74,839
|
|
|
13
|
%
|
|
29
|
%
|
Equipment
|
28,977
|
|
|
21,051
|
|
|
35,507
|
|
|
38
|
%
|
|
(41
|
)%
|
|||
Total
|
$
|
138,484
|
|
|
$
|
117,963
|
|
|
$
|
110,346
|
|
|
17
|
%
|
|
7
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||
Services
|
$
|
68,964
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Equipment
|
4,243
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Total
|
$
|
73,207
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||
Cost of sales
|
$
|
214,028
|
|
|
$
|
203,693
|
|
|
$
|
194,996
|
|
|
5
|
%
|
|
4
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||
Services
|
$
|
67,155
|
|
|
$
|
57,942
|
|
|
$
|
54,882
|
|
|
16
|
%
|
|
6
|
%
|
Equipment
|
24,590
|
|
|
17,521
|
|
|
31,995
|
|
|
40
|
%
|
|
(45
|
)%
|
|||
Total
|
$
|
91,745
|
|
|
$
|
75,463
|
|
|
$
|
86,877
|
|
|
22
|
%
|
|
(13
|
)%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||
Services
|
$
|
55,519
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Equipment
|
4,178
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Total
|
$
|
59,697
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||
Sales and marketing
|
$
|
30,941
|
|
|
$
|
17,705
|
|
|
$
|
13,287
|
|
|
75
|
%
|
|
33
|
%
|
Product development
|
37,718
|
|
|
28,610
|
|
|
23,010
|
|
|
32
|
%
|
|
24
|
%
|
|||
General and administrative
|
115,195
|
|
|
77,715
|
|
|
69,743
|
|
|
48
|
%
|
|
11
|
%
|
|||
Provision for legal settlements
|
43,446
|
|
|
4,250
|
|
|
8,030
|
|
|
922
|
%
|
|
(47
|
)%
|
|||
Amortization of intangible assets
|
35,648
|
|
|
26,994
|
|
|
24,552
|
|
|
32
|
%
|
|
10
|
%
|
|||
Goodwill impairment
|
64,000
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Restructuring charges
|
—
|
|
|
411
|
|
|
4,223
|
|
|
(100
|
)%
|
|
(90
|
)%
|
|||
Total
|
$
|
326,948
|
|
|
$
|
155,685
|
|
|
$
|
142,845
|
|
|
110
|
%
|
|
9
|
%
|
|
Year Ended December 31,
|
|
% Change
|
||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2015 to 2016
|
|
2014 to 2015
|
||||||||
Interest (expense) income, net
|
$
|
(18,198
|
)
|
|
$
|
(2,492
|
)
|
|
$
|
88
|
|
|
630
|
%
|
|
(2,932
|
)%
|
Income (loss) from equity method investments
|
3,829
|
|
|
—
|
|
|
(1,500
|
)
|
|
—
|
%
|
|
(100
|
)%
|
|||
Change in fair value of derivatives
|
25,515
|
|
|
11,938
|
|
|
(6,955
|
)
|
|
114
|
%
|
|
(272
|
)%
|
|||
Other expense, net
|
(6,326
|
)
|
|
(1,140
|
)
|
|
(1,270
|
)
|
|
455
|
%
|
|
(10
|
)%
|
|||
Total
|
$
|
4,820
|
|
|
$
|
8,306
|
|
|
$
|
(9,637
|
)
|
|
(42
|
)%
|
|
(186
|
)%
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash (used in) provided by operating activities
|
$
|
(36,600
|
)
|
|
$
|
21,855
|
|
|
$
|
(23,395
|
)
|
Net cash used in investing activities
|
(150,819
|
)
|
|
(80,895
|
)
|
|
(9,723
|
)
|
|||
Net cash provided by (used in) financing activities
|
13,898
|
|
|
84,558
|
|
|
(28,031
|
)
|
|||
Effects of exchange rate changes on cash and cash equivalents
|
655
|
|
|
386
|
|
|
1
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(172,866
|
)
|
|
25,904
|
|
|
(61,148
|
)
|
|||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
223,552
|
|
|
197,648
|
|
|
258,796
|
|
|||
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
50,686
|
|
|
$
|
223,552
|
|
|
$
|
197,648
|
|
|
2016
|
|
2015
|
||||
EMC Senior secured credit facility (refinanced in January 2017)
|
$
|
397,977
|
|
|
$
|
—
|
|
Convertible senior notes
|
69,024
|
|
|
68,335
|
|
||
Other debt
|
3,299
|
|
|
2,819
|
|
||
|
$
|
470,300
|
|
|
$
|
71,154
|
|
•
|
Failure to deliver the 2016 annual financial statements by March 31, 2017: the waiver was to remain effective so long as the Company issued an earnings release for the fiscal quarter ended December 31, 2016 (“Earnings Release”) on or prior to June 30, 2017 and delivered its 2016 audited consolidated financial statements by July 31, 2017. The June 2017 Amendment, September 2017 Extension, First October 2017 Amendment, October 2017 Extension and Second October 2017 Amendment further amended this waiver as described below.
|
•
|
Failure to deliver the quarterly financial statements for the quarter ended March 31, 2017 by May 15, 2017: the waiver was to remain effective so long as the Company issued the Earnings Release on or prior to June 30, 2017 and delivered the unaudited consolidated financial statements for the quarter ended March 31, 2017 on or prior to July 31, 2017. The June 2017 Amendment, September 2017 Extension, First October 2017 Amendment and Second October 2017 Amendment further amended this waiver as described below.
|
•
|
Failure to deliver the Company’s budget to the Administrative Agent by April 30, 2017: the waiver was to remain effective so long as the Company delivered certain 2017 financial projections by May 31, 2017. The Company delivered its budget to the Administrative Agent by the required deadline.
|
•
|
estimated consolidated adjusted EBITDA of the Company for the fiscal quarter ended December 31, 2016 with a range of no greater than $5,000,000; and
|
•
|
the current consolidated cash balance, current cash balance of the Company’s foreign subsidiaries, and the current outstanding balance under the 2017 Revolving Loans.
|
•
|
The Company was no longer required to deliver an earnings release for the fiscal quarter ended December 31, 2016 by June 30, 2017.
|
•
|
The Company had until September 15, 2017 (rather than July 31, 2017 as required under the May 2017 Amendment) to deliver its audited annual financial statements for the year ended December 31, 2016 (together with the related audit report and opinion from the Company’s independent accountants and the other items required by the Credit Agreement (as amended) to be delivered therewith, the “Annual Financial Statement Deliverables”). The September 2017 Extension, First October 2017 Amendment and Second October 2017 Amendment amended this requirement as described below.
|
•
|
The Company had up to 30 days following the date on which it delivers the Annual Financial Statement Deliverables to deliver its unaudited financial statements for both (i) the quarter ended March 31, 2017 (versus a required delivery date of July 31, 2017 under the 2017 Credit Agreement) and (ii) the quarter ended June 30, 2017. The September 2017 Extension, First October 2017 Amendment and Second October 2017 Amendment amended this requirement as described below.
|
•
|
The Company would have until September 30, 2017 (rather than September 15, 2017 as previously required under the June 2017 Amendment) to deliver the Annual Financial Statement Deliverables.
|
•
|
The Company would also continue to have up to 30 days (as provided for in the June 2017 Amendment) following the date on which it delivers the Annual Financial Statement Deliverables to deliver its unaudited financial statements for both the quarter ended March 31, 2017 and the quarter ended June 30, 2017.
|
•
|
The Company would have until October 31, 2017 (rather than September 30, 2017 as previously required under the September 2017 Extension) to deliver the Annual Financial Statement Deliverables. The Company would also continue to have up to 30 days following the date on which it delivers the Annual Financial Statement Deliverables to deliver its unaudited financial statements for both the quarter ended March 31, 2017 and the quarter ended June 30, 2017. The Second October 2017 Amendment amended this requirement as described below.
|
•
|
The Company would have up to 30 days following the date on which it delivers its unaudited financial statements for both the quarter ended March 31, 2017 and the quarter ended June 30, 2017 to deliver its unaudited financial statements for the quarter ended September 30, 2017. The Second October 2017 Amendment amended this requirement as described below.
|
•
|
Under the 2017 Credit Agreement (as amended by the First October 2017 Amendment), the Initial Term Loans (as defined) bear interest on the outstanding amount at a rate per annum equal to either (i) the Base Rate plus 6.25% or (ii) the Eurocurrency Rate for each Interest Period plus 7.25%. The Second October 2017 Amendment further amended these interest rates as described below.
|
•
|
Under the 2017 Credit Agreement, the 2017 Revolving Loans bear interest at a rate equal to either (i) the Base Rate plus 6.25% or (ii) the Eurocurrency Rate or EURIBOR plus 7.25% until the Company delivers its unaudited financial statements for the quarter ending March 31, 2018. After the delivery of those unaudited financial statements, the 2017 Revolving Loans will bear interest at a rate based on the Base Rate, Eurocurrency Rate or EURIBOR plus an interest-rate spread thereon that varies on the Consolidated First Lien Net Leverage Ratio. The spread thereon ranged from 5.75% to 6.25% for the Base Rate and 6.75% to 7.25% for the Eurocurrency Rate and EURIBOR. The Second October 2017 Amendment further amended these interest rates as described below.
|
•
|
The “non-call period” would now extend until: (i) if the Company prepays any Term Loans prior to the date that it delivers the Annual Financial Statement Deliverables, October 31, 2019; and (ii) if the Company prepays any Term Loans on or after the date that it delivers the Annual Financial Statement Deliverables, the earlier of (x) the second anniversary of the date of that delivery and (y) October 31, 2019. (The “non-call period” (as so extended) is referred to as the “Extended Non-Call Period.”) This period previously expired in May 2019 under the terms of the May 2017 Amendment. We remain subject to 2.0% and 1.0% prepayment premiums through the first and second anniversaries, respectively, of the end of the Extended Non-Call Period, which periods previously expired in May 2020 and May 2021, respectively.
|
•
|
The Company would issue on or prior to October 6, 2017 an earnings release for the fiscal quarter and fiscal year ended December 31, 2016, including a related balance sheet, statement of income and statement of cash flows. This is a new affirmative covenant under the 2017 Credit Agreement. The October 2017 Extension amended this requirement as described below.
|
•
|
The Company would furnish on a Current Report on Form 8-K on or prior to October 12, 2017: (i) the range of its (A) total estimated revenue and (B) estimated adjusted EBITDA, in each case for the fiscal quarters ended March 31, 2017 and June 30, 2017, with the difference between the high end and low end of the ranges to be no greater than $5.0 million; and (ii) a forecast of its consolidated cash balance as of December 31, 2017. This is a new affirmative covenant for the Company under the 2017 Credit Agreement. The Company complied with this affirmative covenant by the due date.
|
•
|
The Company will continue (on a bi-weekly basis commencing October 11, 2017 until it has delivered the Annual Financial Statement Deliverables) to furnish or file on a Current Report on Form 8-K its current consolidated cash balance, the current cash balance of its foreign subsidiaries and the current outstanding balance under the Revolving Credit Facility. The Company will also participate in one conference call with the Administrative Agent and the Lenders with respect to the information contained in that Current Report on Form 8-K.
|
•
|
The Company would have until November 15, 2017 (rather than October 31, 2017 as previously required under the First October 2017 Amendment) to deliver the Annual Financial Statement Deliverables. The November Extension Letter Agreement amended this requirement as described below.
|
•
|
The Company would have until January 2, 2018 to deliver its unaudited financial statements for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017.
|
•
|
Under the 2017 Credit Agreement (as amended by the Second October 2017 Amendment), the Initial Term Loans (as defined) bear interest on the outstanding amount at a rate per annum equal to either (i) the Base Rate plus 6.50% or (ii) the Eurocurrency Rate for each Interest Period plus 7.50%.
|
•
|
Under the 2017 Credit Agreement (as amended by the Second October 2017 Amendment), the 2017 Revolving Loans bear interest at a rate equal to either (i) the Base Rate plus 6.50% or (ii) the Eurocurrency Rate or EURIBOR plus 7.50% until the Company delivers its unaudited financial statements for the quarter ending March 31, 2018. After the delivery of those unaudited financial statements, the 2017 Revolving Loans will bear interest at a rate based on the Base Rate, Eurocurrency Rate or EURIBOR plus an interest-rate spread thereon that varies on the Consolidated First Lien Net Leverage Ratio. The spread thereon ranged from 6.00% to 6.50% for the Base Rate and 7.00% to 7.50% for the Eurocurrency Rate and EURIBOR.
|
|
Payments due by period
|
||||||||||||||||||
(in thousands, except as stated in footnotes to table)
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Operating lease obligations
|
$
|
23,840
|
|
|
$
|
5,407
|
|
|
$
|
6,267
|
|
|
$
|
5,124
|
|
|
$
|
7,042
|
|
Capital lease obligations
|
2,162
|
|
|
758
|
|
|
1,065
|
|
|
339
|
|
|
—
|
|
|||||
EMC deferred consideration
(1)
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Satellite commitments
(2)
|
447,518
|
|
|
94,269
|
|
|
139,924
|
|
|
78,635
|
|
|
134,690
|
|
|||||
Deferred revenue arrangements
(3)
|
8,506
|
|
|
6,970
|
|
|
1,032
|
|
|
362
|
|
|
142
|
|
|||||
Long-term debt obligations
(4), (5)
|
495,291
|
|
|
2,968
|
|
|
5,825
|
|
|
311,520
|
|
|
174,978
|
|
|||||
Contingent consideration obligations
(6)
|
1,988
|
|
|
1,883
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|||||
Content and television license fees and guarantees
(7)
|
69,062
|
|
|
46,207
|
|
|
20,804
|
|
|
1,901
|
|
|
150
|
|
|||||
Equipment and engineering purchase commitments
(8)
|
39,994
|
|
|
38,994
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
1,113,361
|
|
|
$
|
222,456
|
|
|
$
|
175,917
|
|
|
$
|
397,986
|
|
|
$
|
317,002
|
|
(1)
|
In connection with the EMC Acquisition, the Company was required to pay the former EMC equity holders up to an additional $25.0 million on July 27, 2017 in, at the Company’s option: cash, newly issued shares of the Company’s common stock or a combination of cash and newly issued shares of the Company’s common stock. The Company elected to pay such amounts in shares of common stock and issued 5,080,049 shares of common stock to the former EMC equity holders on July 27, 2017.
|
(2)
|
Amounts represent future satellite cost commitments to Intelsat Corporation, Hughes Network Systems and SES over the period January 1, 2017 through December 31, 2028.
|
(3)
|
Amounts represent obligations to provide service for which we have already received cash from our customers.
|
(4)
|
Includes amounts pertaining to the Convertible Senior Notes, debt assumed with the EMC Acquisition and related interest and other debts. The Company refinanced the debt assumed with the EMC Acquisition on January 6, 2017. The amounts included in the table above reflect the scheduled maturities without consideration of the refinancing. Interest payments were calculated based upon the interest rate in effect at December 31, 2016. See also
Note 10. Financing Arrangements
.
|
(5)
|
Includes amounts pertaining to a mortgage loan assumed for a building acquired in the IFES acquisition.
|
(6)
|
The amounts above include earn-out liabilities for business combinations. These amounts also include future obligations relating to employee compensation as part of the masFlight acquisition. Amounts above represent estimated payouts, while actual maximum payouts total
$13.5 million
.
|
(7)
|
Amounts represent minimum guarantees and contractual obligations associated with licensing and providing our content and Internet protocol television services to our customers.
|
(8)
|
Equipment and engineering purchase commitments represent purchase commitments for Connectivity equipment inventory and antenna and engineering development projects. The Company has purchase commitments with various providers of equipment for the Company’s connectivity services. As of December 31, 2016, the Company has committed to purchase
$36.5 million
of future products which it expects to purchase during the year ended December 31, 2017.
|
|
Expected Year of Maturity
|
||||||||||||||||||||||||||||||
(in millions)
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
||||||||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed rate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
82.5
|
|
|
$
|
82.5
|
|
|
$
|
67.4
|
|
Average interest rate
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.8
|
%
|
|
2.8
|
%
|
|
|
|||||||||
Variable rate
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
$
|
58.2
|
|
|
$
|
253.2
|
|
|
$
|
92.0
|
|
|
$
|
411.5
|
|
|
$
|
403.0
|
|
Average interest rate
|
6.8
|
%
|
|
6.8
|
%
|
|
6.8
|
%
|
|
5.9
|
%
|
|
6.8
|
%
|
|
10.6
|
%
|
|
7.5
|
%
|
|
|
•
|
Implementing an internal controls training program across our Company, especially in the areas of retaining evidence of the level of precision at which controls are executed, and of the testing of the completeness and accuracy of information produced by the entity, used in the performance of the controls;
|
•
|
Augmenting and hiring additional knowledgeable and qualified accounting and finance resources and professionals;
|
•
|
Enhancing the robustness and effectiveness of our IT systems and control environment;
|
•
|
Designing a remediation plan for each of the material weaknesses, specifically improving the related policies and procedures, implementing new and/or enhancing the existing controls, and assessing and improving the skills of the process owners;
|
•
|
Evaluating the completeness and appropriateness of the remediation plan, and specifically verifying it addresses all the material weaknesses, both at the entity- and at the transaction-level, across all material locations and across all relevant departments;
|
•
|
Implementing the remediation plan, and specifically training the process owners, evaluating the adoption of the revised policies and procedures, and monitoring the results;
|
•
|
Testing and assessing the design and operating effectiveness of the updated controls; and
|
•
|
Management review and acceptance of the remediation effort.
|
Name
|
|
Age
|
|
Title
|
Edward L. Shapiro
|
|
52
|
|
Director
|
Jeffrey E. Epstein
|
|
61
|
|
Director
|
Stephen Hasker
|
|
48
|
|
Director
|
Jeffrey A. Leddy
|
|
62
|
|
Chief Executive Officer and Director
|
Robert W. Reding
|
|
68
|
|
Director
|
Jeff Sagansky
|
|
65
|
|
Director
|
Harry E. Sloan
|
|
67
|
|
Director
|
Ronald Steger
|
|
63
|
|
Director
|
Paul Rainey
|
|
42
|
|
Chief Financial Officer
|
Sarlina See
|
|
47
|
|
Chief Accounting Officer
|
Joshua Marks
|
|
41
|
|
Executive Vice President, Connectivity
|
Walé Adepoju
|
|
46
|
|
Executive Vice President, Media & Content
|
Stephen Ballas
|
|
42
|
|
Executive Vice President, General Counsel and Corporate Secretary
|
Name
|
Audit
|
|
Compensation
|
|
Corporate Governance & Nominating
|
Edward L. Shapiro
|
|
|
|
|
X
|
Jeffrey E. Epstein
|
|
|
|
|
X
|
Stephen Hasker
|
X
|
|
X
|
|
|
Jeffrey A. Leddy
|
|
|
|
|
|
Robert W. Reding
|
|
|
X*
|
|
|
Jeff Sagansky
|
X
|
|
X
|
|
|
Harry E. Sloan
|
|
|
|
|
X*
|
Ronald Steger
|
X*
|
|
|
|
|
Total meetings in 2016
|
8
|
|
4
|
|
3
|
•
|
reviewing the Company’s audited annual financial statements and quarterly financial statements with management and our independent registered public accounting firm;
|
•
|
appointing our independent registered public accounting firm, determining the compensation of our independent registered public accounting firm and pre-approving our engagement of the independent registered public accounting firm for audit and non-audit services to be performed by our independent registered public accounting firm and the related fees for those services;
|
•
|
overseeing our independent registered public accounting firm;
|
•
|
meeting with our independent registered public accounting firm to discuss our audit;
|
•
|
reviewing with our independent registered public accounting firm and management the adequacy of our internal controls over financial reporting, and any significant findings and recommendations with respect to those controls;
|
•
|
establishing procedures for the receipt, retention and treatment of complaints regarding internal accounting controls or auditing matters and, if applicable, submissions by employees of concerns regarding questionable accounting or auditing matters;
|
•
|
meeting periodically with management to review and assess our major financial risk exposures and the manner in which such risks are being monitored and controlled; and
|
•
|
reviewing and approving all related party transactions.
|
•
|
determining and reviewing, on an annual basis, our compensation philosophy and policies;
|
•
|
determining the compensation of our Chief Executive Officer (who is not present during that determination) and our other executive officers;
|
•
|
determining, or recommending to the Board for determination, the compensation of members of the Board and other committees thereof in connection with Board and committee service;
|
•
|
reviewing and discussing the “Compensation Discussion and Analysis” disclosure with management, recommending to the Board its inclusion in our annual proxy statement and preparing a report for inclusion in such proxy statement that certifies that the committee has discharged this duty;
|
•
|
administering our severance and incentive-based compensation for our executive officers and our equity-based plans established or maintained by us from time-to-time; and
|
•
|
reviewing our compensation practices and the relationship among risk, risk management and compensation in light of our objectives, including the design of compensation practices that would avoid encouraging excessive risk-taking.
|
•
|
identifying and recommending to the Board individuals qualified to serve as directors of the Company;
|
•
|
advising our Board with respect to our Board’s composition, procedures and committees, including establishing criteria for annual performance evaluations of our Board committees and our Board;
|
•
|
advising our Board with respect to proposed changes to our certificate of incorporation, bylaws and corporate governance policies; and
|
•
|
advising our Board with respect to director communications with our stockholders.
|
•
|
a late Form 3 was filed on March 21, 2016 on behalf of Michael Zemetra, our former Chief Financial Officer and Treasurer, reporting prior grants to him of 54,054 stock options and 18,919 of our restricted stock units on March 10, 2016;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Harry Sloan reporting prior grants to him of 15,444 stock options and 5,405 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Walé Adepoju reporting prior grants to him of 63,012 stock options and 22,054 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of David M. Davis, our former Chief Executive Officer, reporting prior grants to him of 169,884 stock options and 59,459 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Stephen Hasker reporting prior grants to him of 15,444 stock options and 5,405 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Edward Shapiro reporting prior grants to him of 15,444 stock options and 5,405 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Jay Itzkowitz, our former General Counsel, reporting prior grants to him of 47,876 stock options and 16,757 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Jeffrey A. Leddy reporting prior grants to him of 15,444 stock options and 5,405 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Robert Reding reporting prior grants to him of 15,444 stock options and 5,405 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Jeffrey Epstein reporting prior grants to him of 15,444 stock options and 5,405 of our restricted stock units;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Jeffrey Sagansky reporting prior sales by him of 2,504 shares, 51 shares and 1,421 shares, and grants to him of 15,444 stock options and 5,405 of our restricted stock units on March 10, 2016;
|
•
|
a late Form 4 was filed on May 13, 2016 on behalf of Walé Adepoju reporting of 2,880 shares withheld for taxes due upon vest for one of his restricted stock unit grants and 1,429 shares withheld for taxes due upon vest for another of his restricted stock unit grants;
|
•
|
a late Form 4 was filed on May 13, 2016 on behalf of David M. Davis reporting 2,555 shares withheld for taxes due upon vest for one of his restricted stock unit grants;
|
•
|
a late Form 4 was filed on May 13, 2016 on behalf of Jay Itzkowitz reporting 524 shares withheld for taxes due upon vest for one of his restricted unit grants and 21,035 shares forfeited by him upon termination of his employment;
|
•
|
a late Form 4 was filed on March 21, 2016 on behalf of Michael Zemetra reporting 1,857 shares withheld for taxes due upon vest for one of his restricted unit grants and 535 shares withheld for taxes due upon vest for another one of his restricted stock unit grants; and
|
•
|
a late Form 4 was filed on May 13, 2016 on behalf of Aditya Chatterjee, our former Chief Technology Officer, reporting 1,227 shares withheld for taxes due upon vest for one of his restricted stock unit grants and 443 shares withheld for taxes due upon vest for another one of his restricted stock unit grants.
|
Name
|
|
Title
|
David M. Davis
|
|
Former Chief Executive Officer
|
Michael Zemetra
|
|
Former Chief Financial Officer and Treasurer
|
Thomas Severson
|
|
Former Executive Vice President and Chief Financial Officer
|
Abel Avellan
|
|
Former President and Chief Strategy Officer
|
Walé Adepoju
|
|
Executive Vice President, Media & Content
|
Stephen Ballas
|
|
Executive Vice President, General Counsel and Corporate Secretary
|
•
|
Mr. Davis separated from the Company effective February 20, 2017. Our current CEO Jeffrey Leddy became our CEO effective February 21, 2017 and as such is not a NEO for 2016.
|
•
|
Mr. Zemetra separated from the Company effective August 31, 2016. Thomas Severson became our Executive Vice President and CFO effective August 24, 2016.
|
•
|
Mr. Severson separated from the Company effective February 20, 2017. Our current CFO, Paul Rainey, joined as our Executive Vice President and CFO effective April 3, 2017 and as such is not a NEO for 2016.
|
•
|
Mr. Avellan separated from the Company effective April 18, 2017.
|
•
|
Mr. Ballas joined as our Executive Vice President, General Counsel and Corporate Secretary effective April 11, 2016.
|
•
|
We recorded revenue of
$530 million
, net loss of
$113 million
and Adjusted EBITDA of
$58 million
, representing year-over-year increases of
24%
for revenue and
15%
for Adjusted EBITDA
(1)
.
|
•
|
We began the process to refinance our former credit facilities with a new $500 million senior-secured term loan and a new $85 million senior-secured revolving credit facility, which improved our balance sheet liquidity with a lower effective interest rate, and we closed on these new facilities in January 2017.
|
•
|
We acquired Emerging Markets Communications (“EMC”), a leading provider of connectivity to maritime and hard-to-reach land markets, in July 2016. The combination of our Company with EMC has created one of the largest providers of satellite-based connectivity in the world and enabled us to benefit from significant economies of scale and an enhanced global infrastructure covering the air, land and sea markets.
|
(1)
|
Adjusted EBITDA is a non-GAAP financial measure. See Exhibit 99.1 (“Reconciliation of GAAP Measure to Non-GAAP Measure”) to this Form 10-K for a discussion of how we calculate Adjusted EBITDA and a reconciliation of net loss computed in accordance with GAAP to Adjusted EBITDA.
|
•
|
Despite management achieving several strategic accomplishments that position the Company well for the future, our Compensation Committee determined in April 2017 that, based on information available at the time, our expected 2016 financial results fell short of our internal targets for 2016 that we had established in early 2016. As such, our Compensation Committee determined that none of our NEOs for 2016 would receive an Annual Incentive Plan (“AIP”) cash bonus for fiscal year 2016, irrespective of our Company’s actual financial performance relative to those internal targets.
|
•
|
In fiscal year 2016, we introduced performance-based restricted stock units (“PSUs”) as a third grant-type in addition to stock options and time-based restricted stock units (“RSUs”). Our PSUs are awards representing a right to receive a specified number of shares of our common stock after the grant date subject to the achievement of pre-determined performance conditions, as determined by the Compensation Committee.
|
Independence
|
|
Our Board has a Compensation Committee that is 100% independent under Nasdaq and SEC rules. The Compensation Committee engages its own independent compensation consultant (currently FW Cook) and confirms each year that the consultant has no conflicts of interest and is independent.
|
No Hedging
|
|
We have a policy prohibiting all directors and employees from engaging in any hedging transactions with respect to our securities. This policy prohibits purchases of any financial instrument designed to permit a director, officer or employee to own our securities but without the full risks and rewards of ownership.
|
Compensation Clawback Policy
|
|
We have a “compensation clawback policy” that permits the company, subject to the discretion and approval of our Board, to recover cash-based and performance-based-equity incentive compensation paid to any current or former “Section 16 officer” if there is a restatement of our financial results in certain circumstances.
|
Director Stock Ownership Guidelines
|
|
We have Stock Ownership Guidelines for Outside Directors that require our outside directors to retain shares valued at three times their annual cash retainer for director service until they meet the required stock ownership threshold.
|
CEO Stock Ownership Guidelines
|
|
We have Stock Ownership Guidelines for our Chief Executive Officer that require our CEO to retain shares valued at three times his or her annual base salary until our CEO meets the required stock ownership threshold.
|
Equity Award Policy
|
|
We have an Equity Award Policy that is designed to maintain the integrity of our equity award process, including for the timing and value of awards. The Equity Award Policy sets the general timing of our annual equity grants and imposes stringent controls around those grants and around any award made outside of the normal annual equity grant cycle.
|
No “Single Trigger” Change in Control Payments
|
|
None of our currently employed NEOs has “single trigger” change in control payments or benefits (including automatic accelerated vesting of equity awards upon a change in control only).
|
No Tax Gross-Ups
|
|
We do not provide tax gross-ups to any of our NEOs.
|
•
|
to provide a competitive compensation package to attract and retain talented executives to manage and operate all aspects of our business;
|
•
|
to reward the achievement of corporate and individual objectives that promote the growth and profitability of our business; and
|
•
|
to align the interests of our executive officers with those of our stockholders by providing both short-time incentive compensation (our AIP cash bonus program) and long-term incentive compensation (our equity program).
|
•
|
our financial condition and available resources;
|
•
|
an evaluation of the competitive market based on available data as well as the collective experience of the members of the Compensation Committee with other similar companies, as well as recommendations of the Committee’s independent compensation consultant, FW Cook;
|
•
|
the individual executive officer’s experience and expertise; and
|
•
|
the compensation levels of our other executive officers at that time.
|
Broadsoft, Inc.
|
|
Comserve, Inc.
|
Conversant, LLC
|
|
Dolby Laboratories, Inc.
|
DTS, Inc.
|
|
Gogo Inc.
|
Harmonic, Inc.
|
|
Iridium Communications Inc.
|
LogMeIn, Inc.
|
|
RealD Inc.
|
RLJ Entertainment, Inc.
|
|
TiVo Corporation
|
Synchronoss Technologies, Inc.
|
|
|
Avid Technologies, Inc.
|
|
Ixia
|
Calix Inc.
|
|
Netgear Inc.
|
CSG Systems, Inc.
|
|
ShoreTel, Inc.
|
Gogo Inc.
|
|
Silver Spring Networks, Inc.
|
GTT Communications, Inc.
|
|
Synchronoss Technologies, Inc. TiVo Corporation
|
Harmonic, Inc.
|
|
TiVo Corporation
|
IMAX Corporation
|
|
ViaSat Inc.
|
Infinera Corporation
|
|
Vonage Holdings Corp.
|
Iridium Communications Inc.
|
|
|
Compensation Element
|
|
Type
|
|
Primary Objective
|
Base salary
|
|
Fixed annual cash payment
|
|
Attract and retain high-performing and experienced leaders at a competitive level of salary.
|
Annual performance-based cash compensation (short-term “at-risk” cash incentive compensation) under our Annual Cash Incentive (AIP) Program
|
|
Variable annual cash bonus
|
|
Motivate and reward executives for achieving annual “Pre-Bonus Adjusted EBITDA” (described below) and/or revenue goals and the achievement of strategic goals at the Company, department and individual level
|
Long-term “at-risk” equity incentive compensation
|
|
Equity with multi-year vesting
|
|
Align the interests of our NEOs with stockholder interests, encourage the maximization of stockholder value and retain key executives over the long term.
|
(1)
|
For 2016, Messrs. Avellan and Severson—who were new hires for us in 2016 as part of the EMC Acquisition—received large, up front (“front loader”) long-term equity incentive grants upon their commencement of employment with us. This included an initial award of stock options and RSUs with the expectation that they would not receive any additional equity grants for the next several years. These charts reflect these “front loader” grants.
|
Name
|
|
Base Salary at Dec. 31, 2016 ($)
|
|
Changes to Base Salary (if any) during 2016
|
David M. Davis
|
|
625,000
|
|
Increased from $550,000 effective October 1, 2016.
|
Michael Zemetra
|
|
350,000
|
|
None.
|
Thomas Severson
|
|
350,000
|
|
Mr. Severson commenced employment with our company in July 2016 upon our acquisition of EMC and became our CFO on August 24, 2016. He did not receive any salary adjustment during the remainder of 2016.
|
Abel Avellan
|
|
350,000
|
|
Mr. Avellan commenced employment with our company in July 2016 upon our acquisition of EMC and did not receive any salary adjustment during the remainder of 2016.
|
Walé Adepoju
|
|
418,055
|
|
Increased from $408,000 effective April 1, 2016.
|
Stephen Ballas
|
|
335,000
|
|
Mr. Ballas commenced employment with our company on April 11, 2016 and did not receive any salary adjustment during the remainder of 2016.
|
Name
|
|
2016 AIP Bonus Target (% of Salary)
|
|
2016 AIP Bonus Target ($)
|
David M. Davis
|
|
100%
|
|
625,000
|
Michael Zemetra
|
|
75%
|
|
262,500
|
Thomas Severson
|
|
75%
|
|
262,500
|
Abel Avellan
|
|
75%
|
|
262,500
|
Walé Adepoju
|
|
75%
|
|
313,541
|
Stephen Ballas
|
|
50%
|
|
167,500
|
Performance Metric
|
|
Weighting
|
|
Target (millions) ($)
|
Pre-Bonus Adjusted EBITDA
|
|
40%
|
|
66.5
|
Consolidated Revenue
|
|
30%
|
|
478.0
|
Company and Individual Strategic Goals
|
|
30%
|
|
Described below for each NEO
|
Name
|
|
Strategic/Individual Goals
|
David M. Davis
|
|
• Onboard new clients, including major new connectivity customers
• Continue global integration and organizational alignment
• Pursue targeted M&A opportunities
• Hire and develop internal key talent
• Continue to enhance company-wide communication
|
Michael Zemetra
|
|
• Hire and develop key talent
• Improve internal financial information delivery processes
• Achieve cost reductions
• Implementation and continued development of finance-system applications
|
Thomas Severson
|
|
• Hire and develop internal key talent
• Achieve cost reductions
• Complete Finance department reorganization and development
|
Abel Avellan
|
|
• Execute on Maritime & Land Connectivity roadmap
• Meaningful progress on the integration of the EMC business into Global Eagle
• Implement a company-wide synergy program following the EMC acquisition
|
Walé Adepoju
|
|
• Retain key Media & Content customers and achieve new Media & Content customer wins
• Improve overall Media & Content customer satisfaction
• Streamline content purchasing processes and delivery
• Grow content distribution business
• Diversify lab services offerings
|
Stephen Ballas
|
|
• Strengthen corporate governance framework and policies
• Develop Legal and Compliance Department organization structure and processes
• Development and execution of Compliance program
|
Performance Metric
|
|
Weighting
|
|
Goal at Target (millions) ($)
|
|
Actual Performance (millions) ($)
|
|
Actual Payout as a % of Goal
|
|
Actual Payout as a % of Target
|
Pre-Bonus Adjusted EBITDA
|
|
40%
|
|
66.5
|
|
Not calculated
(1)
|
|
—%
(1)
|
|
—%
(1)
|
Consolidated Revenue
|
|
30%
|
|
478.0
|
|
Not calculated
(1)
|
|
—%
(1)
|
|
—%
(1)
|
Company and Individual Strategic Goals
|
|
30%
|
|
Described Above
|
|
Not calculated
(1)
|
|
(1)
|
|
(1)
|
Minimum Funding Threshold for AIP
|
|
$53.2 million (i.e., 80% of Pre-Bonus Adjusted EBITDA Target of $66.5 million)
|
|
|
|
|
|
|
|
|
(1)
|
Our Compensation Committee determined that none of our 2016 NEOs would receive an AIP cash bonus for fiscal year 2016, irrespective of our Company’s actual financial performance and the NEO’s performance against his Company and individual strategic goals.
|
TSR Percentile Ranking
|
|
Share Payout as a % of Target PSUs*
|
80
th
Percentile or Greater
|
|
150% (Maximum)
|
60
th
Percentile
|
|
100% (Target)
|
30
th
Percentile or Less
|
|
0%
|
Name
|
|
Restricted Stock Units ($)
|
|
Stock Options ($)
|
|
PSU (at Target) ($)
|
|
2016 Aggregate Long-Term Incentive Total ($)
|
||||
David M. Davis
|
|
550,000
|
|
|
550,000
|
|
|
462,500
|
|
|
1,562,500
|
|
Michael Zemetra
|
|
175,000
|
|
|
175,000
|
|
|
None
|
|
|
350,000
|
|
Thomas Severson
|
|
672,800
|
|
|
648,000
|
|
|
None
|
|
|
1,320,800
|
|
Abel Avellan
(1)
|
|
3,613,500
|
|
|
1,395,000
|
|
|
None
|
|
|
5,008,500
|
|
Walé Adepoju
|
|
204,000
|
|
|
517,000
(2)
|
|
|
167,500
|
|
|
888,500
|
|
Stephen Ballas
|
|
406,250
|
|
|
406,250
|
|
|
134,000
|
|
|
946,500
|
|
*
|
Dollar amounts in table above reflect grant-date fair value, except for the PSUs which reflect grant date value as determined by the Compensation Committee.
|
(1)
|
Mr. Avellan’s equity was granted pursuant to the Company’s 2016 Inducement and Retention Stock Plan for EMC Employees (the “EMC Inducement Equity Plan”) that the Board established in connection with the EMC Acquisition. The purpose of the EMC Inducement Equity Plan was to provide equity awards as an inducement to legacy EMC employees to enter into employment or continue their employment with the Company upon our consummation of the EMC Acquisition and to promote the success and enhance the value of the Company by linking the personal interests of those recipients to those of the Company’s stockholders.
|
(2)
|
Mr. Adepoju received two grants of stock options (to purchase our common stock) in 2016 (totaling $517,000 in aggregate grant-date fair value), consisting of (1) a grant in March 2016 with a grant date fair value equal to $204,000 and (2) a grant in October 2016 with a grant date fair value equal to $313,000.
|
•
|
No “Single Trigger” Change in Control Payments –
We do not have any agreements or plans with our currently employed executive officers that provide for “single trigger” change in control payments or benefits (
i.e.
, automatic accelerated vesting of equity awards upon a change of control only). In the event of a change of control of the Company prior to July 27, 2017, Mr. Avellan—our former President & Chief Strategy Officer—would have received automatic accelerated vesting of his equity awards upon a termination without cause or for good reason pursuant to this employment agreement, which he negotiated for as part of the Company’s acquisition of EMC. But Mr. Avellan separated from our company on April 18, 2017, so this provision is no longer applicable.
|
•
|
Executive Severance Plan –
In April 2017, the Compensation Committee approved a new Change in Control and Severance Plan for Senior Management (our “Executive Severance Plan”), in which all of our executive officers (including all currently employed 2016 NEOs) now participate. The Compensation Committee adopted the Executive Severance Plan because it believes that the Executive Severance Plan is reflective of current compensation practices and trends and will help ensure retention and continuity of our executive officers. The Compensation Committee further believes that the Executive Severance Plan is essential to recruiting, retaining and developing high-quality executive talent in a competitive job market because it provides protection to the executive officer if the Company does not retain him or her in certain circumstances. Participants
|
•
|
CEO Stock Ownership Guidelines
–
We have Stock Ownership Guidelines for our Chief Executive Officer that require that our CEO retain shares valued at three times his annual base salary. If the threshold is not met, then our CEO may not sell any of his or her “net” shares (
i.e.
, after permitted sales for tax withholdings) acquired upon the exercise of stock options or the settlement of vested RSUs.
|
•
|
No Tax Gross-Ups –
We do not provide tax gross-ups to our executive officers.
|
•
|
No Hedging Transactions –
We have a policy prohibiting all of our directors, officers and employees from engaging in hedging or monetization transactions that would permit the director, officer or employee to own Company securities but without the full risks and rewards of ownership. We adopted this policy because we believe that all of our directors, officers and employees should be aligned with our stockholders’ long-term interests, and we believe these sorts of hedging transactions would misalign their incentives in that regard.
|
•
|
Compensation Clawback Policy –
We have a “compensation clawback policy” that permits us, subject to the discretion and approval of the Board, to recover cash-based and performance-based-equity incentive compensation (
e.g.
, our AIP cash bonus awards) paid to any current or former “Section 16 officer” (as so designated by the Board or its Compensation Committee under Rule 16a-1(f) of the Exchange Act) in the event of a restatement of our financial results in certain circumstances. Specifically, the policy provides that (i) if we are required to restate our financial statements due to material non-compliance by us with any financial reporting requirement under securities laws, (ii) fraud or willful misconduct contributed to the restatement and (iii) any executive officer received a recoverable incentive-based compensation award in excess of the amount that he or she would have received had the restated financial statements been in effect for the period in which the incentive-based compensation amount was awarded, then we are entitled to recover the overpayment. The policy permits clawback from any executive who received an award overpayment, irrespective of whether the executive contributed to the fraud or willful misconduct. Awards are subject to clawback under the policy for up to three years after the award vests or is granted.
|
•
|
Deductibility of Executive Compensation; Internal Revenue Code Section 162(m) –
Section 162(m) of the Internal Revenue Code limits the amount that a public company may deduct from federal income taxes for remuneration paid to the chief executive officer and the three other most highly paid executive officers (other than the chief financial officer) to $1.0 million per executive per year, unless certain requirements are met. While the Compensation Committee is mindful of the benefit to us of the full deductibility of compensation, the Compensation Committee believes that it should not be constrained by the requirements of Section 162(m) where those requirements would impair flexibility in compensating our executive officers in a manner that can best promote our corporate objectives. We intend to continue to compensate our executive officers in a manner consistent with the best interests of the Company and our stockholders. We expect our new 2017 Omnibus Long Term Incentive Plan that we will propose at our next annual stockholders’ meeting to potentially qualify our future AIP cash awards and time-vesting RSUs for the exception to the compensation deductibility limits of Section 162(m).
|
Name and Current Principal Position (unless otherwise indicated)
|
|
Year
|
|
Salary
(1)
($)
|
|
Bonus ($)
|
|
Stock Awards
(2)
($)
|
|
Option Awards
(3)
($)
|
|
Non-Equity Incentive Plan Compensation
(4)
($)
|
|
All Other Compensation
(5)
($)
|
|
Total ($)
|
|||||||
David M. Davis
(6)
Former Chief Executive Officer
|
|
2016
|
|
562,625
|
|
|
—
|
|
|
1,058,192
|
|
|
562,316
|
|
|
—
|
|
|
54,300
|
|
|
2,237,433
|
|
|
2015
|
|
537,671
|
|
|
—
|
|
|
399,997
|
|
|
386,790
|
|
|
516,313
|
|
|
—
|
|
|
1,840,771
|
|
|
|
2014
|
|
427,869
|
|
|
—
|
|
|
—
|
|
|
673,000
|
|
|
—
|
|
|
—
|
|
|
1,100,869
|
|
|
Michael Zemetra
(7)
Former Chief Financial Officer and Treasurer
|
|
2016
|
|
266,814
|
|
|
—
|
|
|
175,001
|
|
|
178,919
|
|
|
—
|
|
|
362,296
|
|
|
983,030
|
|
|
2015
|
|
350,000
|
|
|
—
|
|
|
75,008
|
|
|
72,522
|
|
|
240,516
|
|
|
—
|
|
|
738,046
|
|
|
|
2014
|
|
261,818
|
|
|
75,000
|
|
|
63,752
|
|
|
365,250
|
|
|
—
|
|
|
—
|
|
|
765,820
|
|
|
Thomas Severson
(8)
Former Executive Vice President, Chief Financial Officer
|
|
2016
|
|
116,667
|
|
|
—
|
|
|
672,800
|
|
|
648,000
|
|
|
—
|
|
|
46,400
|
|
|
1,483,867
|
|
Abel Avellan
(9)
Former President and Chief Strategy Officer
|
|
2016
|
|
135,417
|
|
|
—
|
|
|
3,613,500
|
|
|
1,395,000
|
|
|
—
|
|
|
13,000
|
|
|
5,150,667
|
|
Walé Adepoju
Executive Vice President, Media & Content
|
|
2016
|
|
415,542
|
|
|
—
|
|
|
387,496
|
|
|
521,146
|
|
|
—
|
|
|
—
|
|
|
1,324,184
|
|
|
2015
|
|
406,027
|
|
|
—
|
|
|
199,998
|
|
|
193,395
|
|
|
280,373
|
|
|
—
|
|
|
1,079,793
|
|
|
Stephen Ballas
(10)
Executive Vice President, General Counsel, and Corporate Secretary
|
|
2016
|
|
243,734
|
|
|
50,000
(11)
|
|
|
553,487
|
|
|
407,605
|
|
|
—
|
|
|
—
|
|
|
1,253,916
|
|
*
|
The amounts in this table do not reflect any compensation that the NEO received at any predecessor company prior to the Company’s acquisition of that company.
|
(1)
|
Amounts set forth in this column reflect the amounts actually received by the NEO as salary payments during 2016, and therefore represent a blend of the salary rates applicable to the NEO throughout the year in the event that the NEO experienced a salary change mid-year.
|
(2)
|
Amounts set forth in this column represent the grant date fair value of stock-based awards granted during the year computed in accordance with Accounting Standards Codification Topic No. 718, “Compensation — Stock Compensation” (“ASC 718”). For 2016, the aggregate grant date fair value of the stock awards reflected in these columns was determined using the valuation methodology and assumptions set forth in
Note 13 Common Stock, Stock-Based Awards and Warrants
to our consolidated financial statements included in this Form 10-K.
|
(3)
|
Amounts set forth in this column represent the grant date fair value of stock-based awards granted during the year computed in accordance with ASC 718. For 2016, the aggregate grant date fair value of the stock option awards reflected in these columns was determined using the valuation methodology and assumptions set forth in
Note 13 Common Stock, Stock-Based Awards and Warrants
to our consolidated financial statements included in this Form 10-K.
|
(4)
|
Amounts disclosed under the “Non-Equity Incentive Plan Compensation” column reflect the amounts earned by the NEO during the applicable year under the AIP.
|
(5)
|
Amounts disclosed under “All Other Compensation” includes (1) for Mr. Davis, approximately $50,000 for commuting benefits for his travel to and from his principal residence in Minnesota and our Company’s headquarters in Los Angeles, California, and $4,300 for 401(k) employer matching contributions; (2) for Mr. Zemetra, $358,636 of income from severance and $3,660 for 401(k) employer matching contributions; (3) for Mr. Severson, $41,900 for housing cost benefits associated with his temporary relocation to Los Angeles during our CFO transition in late 2016, and $4,500 for 401(k) employer matching contributions; and (4) for Mr. Avellan, approximately $13,000 for commuting benefits for his travel to and from his principal residence in Florida and our Florida office. Perquisites whose aggregate value is less than $10,000 are not disclosed separately, as permitted under SEC rules. Messrs. Avellan and Adepoju had
de minimis
401(k) contributions (each less than $500) for the 2016 performance year.
|
(6)
|
Mr. Davis separated from the Company effective February 22, 2017.
|
(7)
|
Mr. Zemetra separated from the Company effective August 31, 2016.
|
(8)
|
Mr. Severson became the Company’s Chief Financial Officer effective August 31, 2016. Mr. Severson separated from the Company on February 20, 2017.
|
(9)
|
Mr. Avellan became our President and Chief Financial Officer effective July 27, 2016. He separated from the Company effective April 18, 2017.
|
(10)
|
Mr. Ballas joined the Company as its Executive Vice President, General Counsel and Corporate Secretary effective April 11, 2016.
|
(11)
|
Mr. Ballas received a $50,000 sign-on bonus when he joined the Company. This amount reflects that bonus.
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
(1)
|
|
Estimated Future Number of Shares Under Equity Incentive Plan Awards
(
2)
|
|
RSUs:
Number
of Shares
of Stock
or Units
(#)
(3)
|
|
Stock Option Awards:
Number of
Securities
Underlying
Options
(#)
(4)
|
|
Exercise
or Base
Price of
Option
Awards
($/sh)
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)
(5)
|
||||||||||||||||||
Name
|
|
Grant Date
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
Threshold (#)
|
|
Target (#)
|
|
Maximum (#)
|
|
|
|
|
||||||||||||||
David M. Davis
|
|
3/10/2016
|
|
156,250
|
|
|
625,000
|
|
|
937,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,459
|
|
|
—
|
|
|
—
|
|
|
549,996
|
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
169,884
|
|
|
9.25
|
|
|
550,000
|
|
|
|
10/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,507
|
|
|
50,217
|
|
|
75,244
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
508,196
|
|
|
Michael Zemetra
|
|
3/10/2016
|
|
65,625
|
|
|
262,500
|
|
|
393,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,919
|
|
|
—
|
|
|
—
|
|
|
175,001
|
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,054
|
|
|
9.25
|
|
|
175,000
|
|
|
Thomas Severson
|
|
8/25/2016
|
|
65,625
(9)
|
|
|
262,500
(9)
|
|
|
393,750
(9)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8/25/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,000
|
|
|
—
|
|
|
—
|
|
|
672,800
|
|
|
|
8/25/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200,000
|
|
|
8.41
|
|
|
648,000
|
|
|
Abel Avellan
|
|
7/27/2016
|
|
65,625
|
|
|
262,500
|
|
|
393,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7/27/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
175,000
(6)
|
|
|
—
|
|
|
—
|
|
|
1,405,250
|
|
|
|
7/27/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
275,000
(7)
|
|
|
—
|
|
|
—
|
|
|
2,208,250
|
|
|
|
7/27/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
450,000
(8)
|
|
|
8.03
|
|
|
1,395,000
|
|
|
Walé Adepoju
|
|
3/10/2016
|
|
78,385
|
|
|
313,541
|
|
|
470,312
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,054
|
|
|
—
|
|
|
—
|
|
|
204,000
|
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,312
|
|
|
9.25
|
|
|
204,000
|
|
|
|
10/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
544
|
|
|
18,132
|
|
|
27,198
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183,496
|
|
|
|
10/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,340
|
|
|
9.21
|
|
|
312,576
|
|
|
Stephen Ballas
|
|
4/11/2016
|
|
41,875
|
|
|
167,500
|
|
|
251,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,134
|
|
|
—
|
|
|
—
|
|
|
406,251
|
|
|
|
4/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
135,417
|
|
|
8.44
|
|
|
407,605
|
|
|
|
10/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
436
|
|
|
14,549
|
|
|
21,824
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
146,325
|
|
(1)
|
Represents potential AIP cash bonus payouts under the 2016 Annual Incentive Plan at threshold, target and maximum levels of performance. As previously noted, none of our 2016 NEOs received an AIP bonus payment for the 2016 performance year. The “Threshold” figure however assumes that the Company achieved the minimum level of performance necessary to fund the AIP in 2016 (80% of a Pre-Bonus Adjusted EBITDA target of $66.5 million, which equaled $53.2 million), and further assumes $430.2 million in consolidated revenue for 2016 and a “2” performance rating for strategic/individual goal achievement. The “Target” figure assumes that the Company achieved the target level of Pre-Bonus Adjusted EBITDA under the AIP for 2016, and further assumes the Company achieved its target of $478.0 million in consolidated revenue for 2016 and a “4” performance rating for strategic/individual goal achievement. The “Maximum” figure reflects the maximum bonus that the NEO could earn for 2016 under the terms of the AIP or his employment agreement.
|
(2)
|
Represents number of PSUs to be earned under the 2013 Equity Plan at threshold, target and maximum levels of performance. PSUs cliff vest on the third anniversary of the grant date, based on the Company’s relative total shareholder return (“TSR”) versus the constituents of the Russell 2000 index over a three-year performance period subject to continuous employment on the vesting date. In order for any of the PSUs to be earned, relative TSR achievement during the performance period must exceed the 30
th
percentile ranking amongst the Russell 2000 constituents. For purposes of calculating the threshold number of unvested PSUs outstanding under the award, we have assumed that PSUs (initially awarded as a “target” number of PSUs) will be awarded at the end of their three-year performance period at the minimum performance threshold for the awards to be granted (
i.e
., achievement at the 31st relative TSR percentile ranking). Under the terms of the PSUs awards, no PSUs will be awarded for relative TSR performance below this threshold.
|
(3)
|
Represents RSUs that generally vest in four equal annual installments beginning on the first anniversary of their grant date subject to continuous employment on each vesting date.
|
(4)
|
Represents stock options that (i) if granted prior to June 27, 2016 have a five-year term and (ii) if granted on or after that date have a seven-year term. Stock options generally vest and become exercisable with respect 25% of the underlying shares on the first anniversary of the grant date, and vest in 36 equal monthly annual installments thereafter, subject to continuous employment on each vesting date.
|
(5)
|
Amounts reflect the grant date fair value of equity awards (using a Monte-Carlo simulation for PSU awards), computed in accordance with ASC 718, rather than grant-date fair value or amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of the equity awards in
Note 13 Common Stock, Stock-Based Awards and Warrants
to the consolidated financial statements included in this Form 10-K.
|
(6)
|
Mr. Avellan’s inducement shares were awarded on July 27, 2016 as fully vested equity at grant.
|
(7)
|
This RSU grant to Mr. Avellan vests in three equal annual installments beginning on the first anniversary of the grant date, subject to continuous employment on each vesting date. On April 18, 2017, Mr. Avellan submitted notice of his resignation from the Company, effective that same date. On April 19, 2017, the Company and Mr. Avellan entered into a consulting agreement for automatically renewing 12 month terms, subject to either party’s right to earlier terminate on 15 days’ notice for any reason. We agreed with Mr. Avellan that any equity held by him will continue to vest until the termination date of his consulting agreement. As of the date of filing of this Form 10-K, Mr. Avellan ceased providing consulting services to us in November 2017.
|
(8)
|
Mr. Avellan’s stock option grant vests as follows: 150,000 options vested on July 27, 2017, which was the first anniversary of their grant, and then 12,500 options vest on the 27
th
of each month from August 2017 through July 2019. On April 18, 2017, Mr. Avellan submitted notice of his resignation from the Company, effective that same date. On April 19, 2017, the Company and Mr. Avellan entered into a consulting agreement for automatically renewing 12 month terms, subject to either party’s right to earlier terminate on 15 days’ notice for any reason. We agreed with Mr. Avellan that any equity held by him will continue to vest until the termination date of his consulting agreement. As of the date of filing of this Form 10-K, Mr. Avellan ceased providing consulting services to us in November 2017.
|
(9)
|
Mr. Severson’s target AIP bonus was 75% of his annual base salary, and the payouts at threshold, target and maximum levels of performance in this table reflect the full year’s target payment amount, without proration for his partial year of service in 2016. However, under the terms of his employment agreement Mr. Severson’s target AIP bonus for the 2016 performance year was to be pro-rated based on the number of days elapsed during the 2016 performance period after August 24, 2016 (the commencement date of his employment as the Company’s Chief Financial Officer). As noted under footnote 1 to this table, none of our 2016 NEOs (including Mr. Severson) received an AIP bonus payment for the 2016 performance year.
|
|
|
|
|
Option/Stock Appreciation Awards
|
|
Stock Awards
|
||||||||||||||||||||
Name
|
|
Grant Date
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Equity Incentive Awards:
Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
(4)(7)
|
|
Equity Incentive Awards:
Market Value of Unearned Shares, Units or Other Rights Not Vested
($)
(5)
|
|
RSUs:
Number
of Shares
or Units
of Stock
That Have
Not Vested
(#)
(6)
|
|
RSUs:
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
(5)
|
||||||||
David M. Davis
|
|
1/31/2013
|
|
675,000
(1)
|
|
|
—
|
|
|
10.00
|
|
|
1/31/2018
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1/13/2014
|
|
18,229
(1)
|
|
|
6,771
(1)
|
|
|
16.70
|
|
|
1/13/2019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
7/9/2014
|
|
60,417
(1)
|
|
|
39,583
(1)
|
|
|
11.43
|
|
|
7/9/2019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3/16/2015
|
|
36,867
(1)
|
|
|
47,401
(1)
|
|
|
13.15
|
|
|
3/16/2020
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3/16/2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,813
|
|
|
147,372
|
|
|
|
3/16/2016
|
|
—
|
|
|
169,884
(2)
|
|
|
9.25
|
|
|
3/10/2021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,459
|
|
|
384,105
|
|
|
|
10/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,507
|
|
|
9,732
|
|
|
—
|
|
|
—
|
|
|
Michael Zemetra
|
|
6/25/2013
|
|
217,709
(1)
|
|
|
—
|
|
|
9.87
|
|
|
6/25/2018
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10/31/2014
|
|
34,375
(1)
|
|
|
—
|
|
|
12.23
|
|
|
10/30/2019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3/16/2015
|
|
5,596
|
|
|
—
|
|
|
13.15
|
|
|
3/16/2020
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
9.25
|
|
|
3/10/2021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Thomas Severson
|
|
8/25/2016
|
|
—
|
|
|
200,000
(1)
|
|
|
8.41
|
|
|
8/25/2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8/25/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,000
|
|
|
516,800
|
|
|
Walé Adepoju
|
|
9/16/2013
|
|
440,883
(1)
|
|
|
19,167
(1)
|
|
|
10.00
|
|
|
9/16/2018
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9/16/2013
|
|
7,072
(1)
|
|
|
—
|
|
|
10.00
|
|
|
9/16/2018
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
9/16/2013
|
|
31,261
(1)
|
|
|
1,667
(1)
|
|
|
10.00
|
|
|
9/16/2018
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
6/5/2014
|
|
62,500
(1)
|
|
|
37,500
(1)
|
|
|
10.57
|
|
|
6/5/2019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3/16/2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,406
|
|
|
73,683
|
|
|
|
3/16/2015
|
|
18,434
(1)
|
|
|
23,700
(1)
|
|
|
13.15
|
|
|
3/16/2020
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3/10/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,054
|
|
|
142,469
|
|
|
|
3/10/2016
|
|
—
|
|
|
63,012
(2)
|
|
|
9.25
|
|
|
3/10/2021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
10/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
544
|
|
|
3,514
|
|
|
—
|
|
|
—
|
|
|
|
10/11/2016
|
|
—
|
|
|
90,340
(2)
|
|
|
9.21
|
|
|
10/11/2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Abel Avellan
|
|
7/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
275,000
|
|
|
1,776,500
|
|
|
7/11/2016
|
|
—
|
|
|
450,000
(3)
|
|
|
8.03
|
|
|
7/27/2021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Stephen Ballas
|
|
4/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48,134
|
|
|
310,946
|
|
|
4/11/2016
|
|
—
|
|
|
135,417
(1)
|
|
|
8.44
|
|
|
4/11/2021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
10/11/2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
436
|
|
|
2,816
|
|
|
—
|
|
|
—
|
|
*
|
The closing price of a share of our common stock on December 30, 2016 (the last Nasdaq trading day in 2016) was $6.46, and we have used that per-share price for purposes of determining market values in this table.
|
(1)
|
Represents stock options that vest and become exercisable with respect to 25% of their underlying shares on the first anniversary of their grant date and vest with respect to the remaining 75% of their underlying shares on a monthly basis over the following three years until fully vested, subject to continuous employment on each vesting date.
|
(2)
|
Represents stock options that vest and become exercisable in four equal annual installments beginning on the first anniversary of their grant date, subject to continuous employment on each vesting date.
|
(3)
|
Mr. Avellan’s stock options vest and become exercisable with respect to 1/3 of their underlying shares on the first anniversary of their grant date and vest with respect to the remaining 2/3 of their underlying shares on a monthly basis over the following two years until fully vested, subject to continuous employment on each vesting date.
|
(4)
|
Represents PSUs that cliff vest on the third anniversary of the grant date, based on the Company’s relative total shareholder return versus the constituents of the Russell 2000 index over a three-year performance period, and subject to continuous employment on the vesting date.
|
(5)
|
The market values of both the RSUs and PSUs were calculated by multiplying $6.46 (the closing price of a share of our common stock on December 30, 2016) by the number of unvested RSUs and unearned PSUs. In respect of the PSUs, see also footnote 7 to this table.
|
(6)
|
Other than with respect to Mr. Avellan’s awards, these awards represent RSUs that vest in four equal annual installments beginning on the first anniversary of their grant date, subject to continuous employment on each vesting date. Mr. Avellan’s awards vest in three equal annual installments on each anniversary of their grant date, subject to continuous employment on each vesting date.
|
(7)
|
This column includes the number of unvested PSUs assuming actual performance for the performance period is achieved at the “Threshold” level as indicated in the table under “Grants of Plan-Based Awards for 2016” above. For purposes of calculating the threshold number of unvested PSUs outstanding under the award, we have assumed that PSUs (initially awarded as a “target” number of PSUs) will be awarded at the end of their three-year performance period at the minimum performance threshold for the awards to be granted (i.e., achievement at the 31st relative TSR percentile ranking). Under the terms of the PSUs awards, no PSUs will be awarded for relative TSR performance below this threshold.
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||
Name
|
|
Number of Shares Acquired on Exercise (#)
|
|
Value Realized on Exercise
(1)
($)
|
|
Number of Shares Acquired on Vesting (#)
|
|
Value Realized on Vesting
(2)
($)
|
||||
David M. Davis
|
|
—
|
|
|
—
|
|
|
7,605
|
|
|
62,817
|
|
Michael Zemetra
|
|
—
|
|
|
—
|
|
|
1,426
|
|
|
11,779
|
|
Thomas Severson
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Walé Adepoju
|
|
—
|
|
|
—
|
|
|
3,803
|
|
|
31,413
|
|
Abel Avellan
|
|
—
|
|
|
—
|
|
|
175,000
|
|
|
1,405,250
|
|
Stephen Ballas
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Value Realized on Exercise would represent the difference between the market price of the underlying common stock on the exercise date and the exercise price of the options. However, none of the NEOs exercised options in 2016.
|
(2)
|
Value Realized on Vesting is based on the closing price of the Company’s common stock on the vest date.
|
•
|
Regarding Messrs. Davis, Zemetra, Severson and Avellan
. As previously noted, Messrs. Davis, Zemetra, Severson and Avellan are no longer employed by us, with Messrs. Davis, Severson and Avellan having separated from our employ in early 2017 and with Mr. Zemetra having separated in mid-2016. The actual severance payments and agreements related to their employment termination are described under “2017 Events and Compensation Decisions Regarding 2016 NEOs.”
|
•
|
Regarding Messrs. Adepoju and Ballas
. Messrs. Adepoju and Ballas would not have received any cash benefits upon death, disability or retirement but our RSU and option award agreements, including for the equity grants made in 2016 to Messrs. Adepoju and Ballas, provide for continued or accelerated vesting of the unvested portion of those awards in the event of termination of employment due to death or disability. Under the equity award agreement for the PSUs (including for those grants made to Messrs. Adepoju and Ballas), if a PSU recipient dies or becomes disabled prior to the end of the performance period, the Company would waive the continuous-employment vesting requirement, and the PSU award would vest at the applicable TSR performance level as measured at the end of the three-year performance period.
|
•
|
Regarding Messrs. Davis, Zemetra, Severson and Avellan
. As previously noted, Messrs. Davis, Zemetra, Severson and Avellan are no longer employed by us, with Messrs. Davis, Severson and Avellan having separated from our employ in early 2017 and with Mr. Zemetra having separated in mid-2016. The actual severance payments and agreements related to their employment termination are described under “2017 Events and Compensation Decisions Regarding 2016 NEOs.”
|
•
|
Regarding Mr. Adepoju
. If Mr. Adepoju’s employment had been terminated by the Company without “cause” or by Mr. Adepoju for “good reason,” then Mr. Adepoju would have been (as of December 31, 2016) entitled to receive continuation of his then existing health and welfare benefits and his base salary for a period of six months following his termination, subject to his execution of a general release in favor of the Company. Additionally, he would have remained eligible to vest in a pro-rata portion of his PSU award based on the applicable relative TSR performance level as measured at the end of the three-year performance period, prorated based on the portion of the performance period that he had remained employed (
e.g.
, if terminated on December 31, 2016, approximately three-months into the 36-month performance period for the PSUs granted in October 2016, then he would have remained eligible for 3/36ths of that PSU award), subject to his compliance with confidentiality, non-competition and non-solicitation restrictive conditions through the end of the performance period.
|
•
|
Regarding Mr. Ballas
. If Mr. Ballas’s employment had been terminated by the Company without “cause,” then Mr. Ballas would have been (as of December 31, 2016) entitled to receive continuation of his then existing health and welfare benefits and his base salary for a period of 12 months following his termination, subject to his execution of a general release in favor of the Company. Additionally, including if he had terminated his employment for “good reason,” he would have remained eligible to vest in a pro-rata portion of his PSU award based on the applicable relative TSR performance level as measured at the end of the three-year performance period, prorated based on the portion of the
|
•
|
Regarding Messrs. Davis, Zemetra, Severson and Avellan
. As previously noted, Messrs. Davis, Zemetra, Severson and Avellan are no longer employed by us, with Messrs. Davis, Severson and Avellan having separated from our employ in early 2017 and with Mr. Zemetra having separated in mid-2016. The actual severance payments and agreements related to their employment termination are described under “2017 Events and Compensation Decisions Regarding 2016 NEOs.”
|
•
|
Regarding Messrs. Adepoju and Ballas
. If we had experienced a “change in control” (as defined in the 2013 Equity Plan) and if Messrs. Adepoju and Ballas were terminated without “cause” within one year following the change in control, then in addition to the severance entitlements described above under “Termination without a Change in Control,” Messrs. Adepoju and Ballas would also have been (as of December 31, 2016) entitled to accelerated vesting of all outstanding and unvested stock option and RSU awards previously granted to them and held by them upon their termination. In addition, if we had experienced a “change in control” as of December 31, 2016, but Messrs. Adepoju and Ballas continued in employment following such “change in control,” then with respect to their PSUs, our relative TSR performance level would have been measured as of the change-in-control date, and the resulting PSUs would have then been converted to “time-vesting” RSUs without any remaining performance condition. In this case, if the successor entity had assumed, converted or replaced the RSUs with publicly-traded equity (having an equivalent value and vesting schedule), then the resulting “time vesting” RSUs would have vested on their original vesting date (
i.e
., the third anniversary of the October 2016 grant date), subject to continuous employment through that date. If the successor entity did not so assume, convert or replace the PSUs with publicly-traded equity (having an equivalent value and vesting schedule), then the PSUs would have vested on the date of the change of control based on relative TSR performance as measured on the date of the change of control. In addition, vesting would have accelerated for the PSUs if the Company terminated Messrs. Adepoju’s or Ballas’s employment without cause or if they had resigned for good reason within four months prior to or within 24 months following the change of control, using relative TSR performance as measured on the change-of-control date.
|
•
|
As previously noted, Messrs. Davis, Zemetra, Severson and Avellan are no longer employed by us, with Messrs. Davis, Severson and Avellan having separated from our employ in early 2017 and with Mr. Zemetra having separated in mid-2016. The actual severance payments and agreements related to their employment termination are described above under “2017 Events and Compensation Decisions Regarding 2016 NEOs.”
|
•
|
As previously noted, we adopted a new Executive Severance Plan in 2017 in which all of our current executive officers now participate. See “Additional Elements of Our Compensation Program.” The figures in the table below disregard the Executive Severance Plan because the Plan was not in effect as of December 31, 2016. But, our Executive Severance Plan has since superseded the termination and change in control benefits previously in effect on December 31, 2016.
|
•
|
Amounts shown do not include (i) accrued but unpaid salary through the date of termination, and (ii) other benefits earned or accrued by the NEO during his employment that are available to all salaried employees, such as accrued vacation.
|
•
|
Because Messrs. Davis, Severson and Avellan terminated employment after December 31, 2016, the table below shows the payments and benefits that Messrs. Davis, Severson and Avellan—who were employed on December 31, 2016—would have been entitled to on December 31, 2016 had they been terminated on that date. But, we have not presented similar information for Mr. Zemetra because his termination occurred prior to December 31, 2016.
|
Name
|
|
Benefit
|
|
Termination
for Cause or
without
Good Reason
($)
|
|
Termination
without
Cause or for
Good Reason, without a Change of Control
($)
|
|
Termination for
Good Reason or
Without Cause
with a
Change in Control
($)
|
|||
David M. Davis
(7)
|
|
Severance
(1)
|
|
—
|
|
|
1,093,750
(6)
|
|
|
2,187,500
|
|
|
Benefit continuation
(2)
|
|
—
|
|
|
6,540
|
|
|
6,540
|
|
|
|
Accelerated equity awards
(3)
|
|
—
|
|
|
—
|
|
|
435,449
|
|
|
|
Total
|
|
—
|
|
|
1,100,290
|
|
|
2,629,489
(4)
|
|
|
Michael Zemetra
(5)
|
|
Severance
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Benefit continuation
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Accelerated equity awards
(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Thomas Severson
(7)
|
|
Severance
(1)
|
|
—
|
|
|
350,000
(6)
|
|
|
533,200
(6)
|
|
|
Benefit continuation
(2)
|
|
—
|
|
|
6,540
|
|
|
6,540
|
|
|
|
Accelerated equity awards
(3)
|
|
—
|
|
|
|
|
516,800
|
|
||
|
Total
|
|
—
|
|
|
356,540
(6)
|
|
|
1,056,540
(4)
|
|
|
Walé Adepoju
|
|
Severance
(1)
|
|
—
|
|
|
209,028
|
|
|
209,028
|
|
|
Benefit continuation
(2)
|
|
—
|
|
|
3,270
|
|
|
3,720
|
|
|
|
Accelerated equity awards
(3)
|
|
—
|
|
|
—
|
|
|
216,158
|
|
|
|
Total
|
|
—
|
|
|
212,298
|
|
|
428,456
(4)
|
|
|
Abel Avellan
(8)
|
|
Severance
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Benefit continuation
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Accelerated equity awards
(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Stephen Ballas
|
|
Severance
(1)
|
|
—
|
|
|
335,000
|
|
|
335,000
|
|
|
Benefit continuation
(2)
|
|
—
|
|
|
6,540
|
|
|
6,540
|
|
|
|
Accelerated equity awards
(3)
|
|
—
|
|
|
|
|
310,946
(10)
|
|
||
|
Total
|
|
—
|
|
|
341,540
|
|
|
652,486
(4)
|
|
(1)
|
Represents cash severance provided under each NEO’s employment agreement as in effect on December 31, 2016.
|
(2)
|
Represents the cost of Company-subsidized continued health and welfare benefits for the payout period provided under each NEO’s employment agreement as in effect on December 31, 2016, based on our then-applicable costs to provide such coverage as of December 31, 2016. We anticipate that we would have provided COBRA benefits to Mr. Severson, if a termination without cause or for good reason had occurred even though his employment agreement did not provide for this benefit, and so the figure for Mr. Severson in this table reflects that COBRA benefit.
|
(3)
|
Represents the aggregate value of the NEO’s unvested stock options, PSUs and RSUs that would have vested (partially or in full, as described in the narrative preceding this table) on an accelerated basis, determined by multiplying the number of accelerating option shares, RSUs and PSUs by the Nasdaq trading price of our common stock on December 30, 2016 ($6.46), which was the last Nasdaq trading day in 2016, and subtracting any applicable exercise prices for the options. As noted in the narrative above this table, the NEOs would only have been entitled to payments on any accelerated PSUs based on actual relative-TSR performance. Therefore, we have not ascribed any value to the PSUs in the table above because, as of December 31, 2016, the minimum relative-TSR performance criteria would not have been achieved and as such the “actual” number of PSUs awarded would have been zero. Similarly, because the closing price of our stock on December 30, 2016 was greater than the exercise price of any applicable accelerated options, no value is reported in the table above with respect to any options.
|
(4)
|
These severance amounts disregard any potential consequence of a “parachute payment” and related exercise tax under Internal Revenue Code Sections 280G and 4999 upon a change in control. Some of our 2016 NEOs’ employment agreements provided that in the event that a change in control of the Company occurred and any severance payment to the NEO constituted a “parachute payment” under Section 280G, then the Company was to either (a) reduce the amount of the payment so that the payment would not be subject to the excise tax under Section 4999, or alternatively (b) pay the full amount of such payment to the NEO (with such executive being personally responsible for payment of any associated excise taxes), whichever produced the better after-tax result for the NEO.
|
(5)
|
Pursuant to a release and transition services agreement dated August 25, 2016, Mr. Zemetra’s employment with the Company terminated effective August 31, 2016. For the terms of Mr. Zemetra’s severance package, see “2017 Events and Compensation Decisions Regarding 2016 NEOs” and “Employment and Other Compensatory Agreements for Our 2016 NEOs.” Pursuant to applicable SEC guidance, the potential payments regarding a hypothetical termination for Mr. Zemetra on December 31, 2016 are not required to be disclosed because he was not employed on that date.
|
(6)
|
As previously discussed under “2017 Events and Compensation Decisions Regarding 2016 NEOs,” we did not pay any AIP cash bonuses to our executive officers for the 2016 performance year, and so the severance amount reflected in this table for Messrs. Davis and Severson does not include any amount for their 2016 AIP cash bonuses.
|
(7)
|
Amounts listed for Messrs. Davis and Severson in this table disregard the actual benefits paid to them upon their actual termination because this table represents benefit amounts as of December 31, 2016, which was before they terminated employment with the Company. For a description of the agreements (and related actual severance benefits) that we entered into with Messrs. Davis and Severson upon their separation from us, see “2017 Events and Compensation Decisions Regarding 2016 NEOs” and “Employment and Other Compensatory Agreements for Our 2016 NEOs.”
|
(8)
|
On April 18, 2017, Mr. Avellan delivered notice of his resignation and his employment with us terminated on that same day. For a description of the agreement (and related actual severance benefits) that we entered into with Mr. Avellan upon his separation from us, see “2017 Events and Compensation Decisions Regarding 2016 NEOs.” Pursuant to applicable SEC guidance, the potential payments regarding a hypothetical termination for Mr. Avellan on December 31, 2016 are not required to be disclosed.
|
(9)
|
On December 31, 2016, other than in connection with a change in control, Mr. Ballas would only have been entitled to cash severance in the event of a termination of his employment by the Company without cause.
|
(10)
|
On December 31, 2016, Mr. Ballas would have been entitled to accelerated vesting of stock options, PSUs and RSUs granted in 2016 if his employment had been terminated in connection with a change in control. As noted under footnote (3) above, however, we have assumed for purposes of this table that the actual number of PSUs awarded would have been zero.
|
Name
|
Cash Compensation ($)
|
|
Stock Option Awards ($)
|
|
RSU Awards ($)
|
|
Other Compensation ($)
|
|
Total ($)
|
|||||
Louis Bélanger-Martin
(1)
|
18,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,750
|
|
Robert W. Reding
|
75,000
|
|
|
50,000
|
|
|
50,000
|
|
|
—
|
|
|
175,000
|
|
Jeffrey A. Leddy
(2)
|
85,000
|
|
|
50,000
|
|
|
50,000
|
|
|
—
|
|
|
185,000
|
|
Jeffrey E. Epstein
|
100,000
|
|
|
50,000
|
|
|
50,000
|
|
|
—
|
|
|
200,000
|
|
Harry E. Sloan
|
75,000
|
|
|
50,000
|
|
|
50,000
|
|
|
—
|
|
|
175,000
|
|
Jeff Sagansky
|
75,000
|
|
|
50,000
|
|
|
50,000
|
|
|
—
|
|
|
175,000
|
|
Edward L. Shapiro
|
100,000
|
|
|
50,000
|
|
|
50,000
|
|
|
—
|
|
|
200,000
|
|
Stephen Hasker
|
75,000
|
|
|
50,000
|
|
|
50,000
|
|
|
—
|
|
|
175,000
|
|
(1)
|
Louis Bélanger-Martin resigned from our Board effective March 11, 2016.
|
(2)
|
Jeffrey Leddy was an outside director during 2016. He became our CEO in February 2017.
|
•
|
each person who is known to us to be the beneficial owner of more than 5% of the outstanding shares of the Company’s common stock;
|
•
|
each NEO for 2016;
|
•
|
each current director;
|
•
|
our current CEO and CFO; and
|
•
|
all of the Company’s current executive officers and directors as a group.
|
Name and Address of Beneficial Owner
|
|
Number of Shares of Common Stock
(1)
|
|
Percent of Outstanding Common Stock
|
||
PAR Investment Partners, L.P.
(2)
|
|
28,971,072
|
|
|
31.9
|
%
|
ABRY Partners, LLC
(3)
|
|
9,637,955
|
|
|
10.6
|
%
|
Frontier Capital Management Co., LLC
(4)
|
|
7,534,133
|
|
|
8.3
|
%
|
Nantahala Capital Management, LLC
(5)
|
|
7,405,166
|
|
|
8.1
|
%
|
Putnam Investment Management, LLC
(6)
|
|
5,989,860
|
|
|
6.6
|
%
|
Abrams Capital Management, LLC
(7)
|
|
5,000,000
|
|
|
5.5
|
%
|
Franklin Advisors, Inc.
(8)
|
|
4,711,097
|
|
|
5.1
|
%
|
Walé Adepoju
(9)
|
|
682,897
|
|
|
*
|
|
Abel Avellan
(10)
|
|
873,592
|
|
|
*
|
|
Stephen Ballas
(11)
|
|
63,218
|
|
|
*
|
|
David M. Davis
(12)
|
|
905,954
|
|
|
*
|
|
Jeffrey E. Epstein
(13)
|
|
72,044
|
|
|
*
|
|
Stephen Hasker
(14)
|
|
23,344
|
|
|
*
|
|
Jeffrey A. Leddy
(15)
|
|
72,044
|
|
|
*
|
|
Robert W. Reding
(16)
|
|
72,044
|
|
|
*
|
|
Jeff Sagansky
(17)
|
|
812,884
|
|
|
*
|
|
Edward L. Shapiro
(18)
|
|
77,449
|
|
|
*
|
|
Harry E. Sloan
(19)
|
|
172,043
|
|
|
*
|
|
Michael Zemetra
|
|
22,907
|
|
|
*
|
|
Paul Rainey
|
|
—
|
|
|
*
|
|
Thomas Severson
|
|
—
|
|
|
*
|
|
Ronald Steger
|
|
—
|
|
|
*
|
|
All current executive officers and directors as a group (13 individuals)
|
|
2,182,430
|
|
|
2.4
|
%
|
(1)
|
Represents shares of the Company’s common stock held, options and warrants held that were vested and/or exercisable at the Beneficial Ownership Table Date and any such securities that will vest and/or become exercisable within 60 days thereafter (disregarding any shares that we may later “withhold to cover” for tax purposes).
|
(2)
|
According to a Schedule 13D/A filed with the SEC on January 5, 2017 and its “5%+ Stockholder Questionnaire” submitted to the Company on January 18, 2017, all shares are held directly by PAR Investment Partners, L.P. (“PIP”). PAR Capital Management, Inc. (“PCM”), as the general partner of PAR Group, L.P., which is the general partner of PAR, has investment discretion and voting control over shares held by PIP. No stockholder, director, officer or employee of PCM has beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of any shares held by PIP. The business address of PAR Capital Management, Inc. is 200 Clarendon Street, 48
th
Floor, Boston, MA 02116.
|
(3)
|
According to a Schedule 13G/A filed with the SEC on August 8, 2017 on behalf of ABRY Partners VII, L.P., a Delaware corporation (“ABRY Partners”), ABRY Partners VII Co-Investment Fund, L.P., a Delaware corporation (“ABRY Fund”), ABRY Investment Partnership, L.P., a Delaware corporation (“ABRY Partnership”), EMC Holdco 2 B.V., a Netherlands company (“EMC Holdco 2”), Jay Grossman, an individual and a U.S. Citizen, and Peggy Koenig, an individual and a U.S. citizen. ABRY Partners, ABRY Fund, ABRY Partnership, EMC, Jay Grossman and Peggy Koenig hold shared voting and shared dispositive power with respect to 9,637,955 shares of the Company’s common stock, and EMC Acquisition Holdings LLC (“EMC Acquisition Holdings”) hold shared voting and shared dispositive power with respect to 5,080,049 shares of the Company’s common stock. EMC Holdco 2 is the direct owner of 83.3% of the common stock of EMC Acquisition Holdings and may be deemed to share and may be deemed to share voting and dispositive power with respect to any shares beneficially owned by EMC Acquisition Holdings. EMC Holdco 1 Coöperatief U.A., a cooperative entity organized and existing under the laws of the Netherlands (“EMC Holdco 1”), is the sole owner of EMC Holdco 2 and may be deemed to share voting and dispositive power with respect to any of our shares beneficially owned by EMC Holdco 2. EMC Aggregator, LLC, a Delaware limited liability company, is the direct owner of 99.0% of the common stock of EMC Holdco 1, and EMC Aggregator Sub, LLC, a wholly owned subsidiary of EMC Aggregator, LLC and a Delaware limited liability company, is the direct owner of 1.0% of the common stock of EMC Holdco 1. Each of EMC Aggregator, LLC and EMC Aggregator Sub, LLC may be deemed to share voting and dispositive power with respect to any of our shares beneficially owned by EMC Holdco 1. As the direct owner of 96.72429% of the equity interests of EMC Aggregator, LLC, ABRY Partners also may be deemed to share voting and dispositive power with respect to any of our shares beneficially owned by EMC Holdco 2. As the direct owner of 3.19196% of the equity interests of EMC Aggregator, LLC, ABRY Fund also may be deemed to share voting and dispositive power with respect to any of our shares beneficially owned by EMC Holdco 2. As the direct owner of 0.08375% of the equity interests of EMC Aggregator, ABRY Partnership also may be deemed to share voting and dispositive power with respect to any of our shares beneficially owned by EMC Holdco 2. Each of C.J. Brucato, Tomer Yosef-Or, and James Scola are members of the board of directors of each of EMC Aggregator, LLC and EMC Aggregator Sub, LLC and may be deemed to share voting and dispositive power with respect to any of our shares beneficially owned by EMC Holdco 2, but disclaims beneficial ownership of such shares. EMC Holdco 1, EMC Aggregator, LLC, EMC Aggregator Sub,
|
(4)
|
According to a Schedule 13G/A filed with the SEC on February 10, 2017, Frontier Capital Management Co., LLC holds sole voting power with respect to 4,344,099 shares of the Company’s common stock and sole dispositive power with respect to 7,534,133 shares of the Company’s common stock. The business address of Frontier Capital Management Co., LLC is 99 Summer Street, Boston, MA 02110.
|
(5)
|
According to its “5%+ Stockholder Questionnaire” submitted to the Company on August 28, 2017 (providing information as of August 25, 2017), Nantahala Capital Management, LLC may be deemed the beneficial owner of 7,405,166 shares of the Company’s common stock held by funds and separately managed accounts under its control. Messrs. Wilmot B. Harvey and Daniel Mack are control persons in respect of shares beneficially by Nantahala Capital Management, LLC. As managing members of Nantahala Capital Management, LLC, each of Messrs. Harvey and Mack may be deemed a beneficial owner of these shares. Nantahala Capital Partners SI, LP, a fund advised by Nantahala Capital Management, LLC, has delegated voting and investment power for its shares to Nantahala Capital Management, LLC, but has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, approximately 4.8 million shares of the Company’s common stock. The business address of Nantahala Capital Management, LLC is 19 Old Kings Highway S, Suite 200, Darien, CT 06820.
|
(6)
|
According to Schedules 13G/A filed with the SEC on February 14, 2017 on behalf of Putnam Investments, LLC d/b/a Putnam Investments (“PI”), Putnam Investment Management, LLC (“PIM”) and The Putnam Advisory Company, LLC (“PAC”), PIM and PI hold sole dispositive power with respect to 5,989,860 shares of the Company’s common stock. PI wholly owns two registered investment advisers, PIM, which is the investment adviser to the PI family of mutual funds and PAC, which is the investment adviser to PI’s institutional clients. Both PIM and PAC have dispositive power over the shares as investment managers. In the case of shares held by the PI mutual funds managed by PIM, the mutual funds, through their boards of trustees, have voting power. PAC has sole voting power over the shares held by its institutional clients. The Company has entered into a Voting Rights Waiver Agreement (the “Voting Rights Waiver Agreement”) with PIM pursuant to which PIM and certain other entities and individuals affiliated with PIM and other PI companies (the “Other Putnam Investors”) agreed to waive all voting rights that they may have in respect of any voting securities issued by the Company that exceed, in the aggregate, 4.99% of the total voting rights exercisable by the Company’s outstanding voting securities. The Voting Rights Waiver Agreement provides that any voting rights waived by PI, PIM or the Other Putnam Investors will be apportioned among those parties on a pro rata basis based upon their relative holdings of the Company’s voting securities. The Voting Rights Waiver Agreement will expire at the time that the Other Putnam Investors that are investment companies registered under the Investment Company Act of 1940, as amended, no longer own any of the Company’s voting common stock, at which time the remaining Other Putnam Investors will be entitled to any and all voting rights pertaining to their voting securities. The business address of PIM, PAC and PI is One Post Office Square, Boston, MA 02109.
|
(7)
|
According to a Schedule 13G/A filed with the SEC on February 13, 2015 on behalf of Abrams Capital Partners II, L.P., a Delaware limited partnership (“Abrams II”); Abrams Capital, LLC, a Delaware limited liability company (“Abrams Capital”); Abrams Capital Management, LLC, a Delaware limited liability company (“Abrams CM LLC”); Abrams Capital Management, L.P., a Delaware limited partnership (“Abrams CM LP”); and David Abrams, an individual and a U.S. citizen, Abrams II holds shared voting and shared dispositive power with respect to 4,022,990 shares of the Company’s common stock, Abrams Capital holds shared voting and shared dispositive power with respect to 4,732,160 shares of the Company’s common stock, and each of Abrams CM LLC, Abrams CM LP and Mr. Abrams holds shared voting and shared dispositive power with respect to 5,000,000 shares of the Company’s common stock. The shares of the Company’s common stock over which Abrams Capital holds shared voting and shared dispositive power are beneficially owned by Abrams II and other private investment funds for which Abrams Capital serves as general partner. The shares of the Company’s common stock over which Abrams CM LLC and Abrams CM LP hold shared voting and shared dispositive power include the shares that are beneficially owned by Abrams Capital and shares beneficially owned by another private investment fund for which Abrams CM LP serves as investment manager. Abrams CM LLC is the general partner of Abrams CM LP. The shares of the Company’s common stock over which Mr. Abrams holds shared voting and shared dispositive power include the shares that are beneficially owned by Abrams Capital and Abrams CM LLC. Mr. Abrams is the managing member of Abrams Capital and Abrams CM LLC. The address of this stockholder is c/o Abrams Capital Management, L.P., 222 Berkeley Street, 21st Floor, Boston, MA 02116.
|
(8)
|
According to a Schedule 13G/A filed with the SEC on February 7, 2017 on behalf of Franklin Resources, Inc., a Delaware corporation (“Franklin Resources”), Franklin Advisers, Inc., a California corporation (“Franklin Advisers”), Charles B. Johnson, an individual and a U.S. Citizen, and Rupert H. Johnson, Jr., an individual and a U.S. citizen, Franklin Advisers holds sole voting and sole dispositive power with respect to 4,711,097 shares of the Company’s common stock, and Fiduciary Trust Company International holds sole voting power with respect to 41,200 shares of the Company’s common stock. The 4,752,297 shares of the Company’s common stock reported on the Schedule 13G are beneficially owned by one or more open- or closed-end investment companies or other managed accounts that are investment management clients of investment managers that are direct and indirect subsidiaries of Franklin Resources (the “investment management subsidiaries”). Charles B. Johnson and Rupert H. Johnson, Jr. each own in excess of 10% of the outstanding common stock of Franklin Resources and are the principal stockholders of Franklin Resources. Franklin Resources, Charles B. Johnson and Rupert H. Johnson, Jr. may be deemed to be the beneficial owners of shares of the Company’s common stock held by persons and entities for whom or for which Franklin Resources’ subsidiaries provide investment management services. Franklin Resources, Charles B. Johnson, Rupert H. Johnson, Jr. and the investment management subsidiaries disclaim beneficial ownership of the shares of the Company’s common stock. The business address of Franklin Resources, Franklin Advisers, Charles B. Johnson and Rupert H. Johnson, Jr. is One Franklin Parkway, San Mateo, CA 94403.
|
(9)
|
Includes 658,072 shares of the Company’s common stock that Mr. Adepoju has the right to acquire by exercise of vested stock options and 12,312 shares of the Company’s common stock that Mr. Adepoju will have the right to acquire by exercise of stock options which are scheduled to vest within 60 days of the Beneficial Ownership Table Date. The remaining amount in the table above for Mr. Adepoju represents shares of our common stock held by him.
|
(10)
|
Includes 186,188 shares of the Company’s common stock that Mr. Avellan has the right to acquire by exercise of vested stock options. The remaining amount in the table above for Mr. Avellan represents shares of our common stock held by him.
|
(11)
|
Includes 50,782 shares of the Company’s common stock that Mr. Ballas has the right to acquire by exercise of vested stock options and 5,642 shares of the Company’s common stock that Mr. Ballas will have the right to acquire by exercise of stock options which are scheduled to vest within 60 days of the Beneficial Ownership Table Date. The remaining amount in the table above for Mr. Ballas represents shares of our common stock held by him.
|
(12)
|
Includes 861,861 shares of the Company’s common stock that Mr. Davis has the right to acquire by exercise of vested stock options. The remaining amount in the table above for Mr. Davis represents shares of our common stock held by him.
|
(13)
|
Includes 72,044 shares of the Company’s common stock that Mr. Epstein has the right to acquire by exercise of vested stock options, but excludes (x) 3,685 RSUs that are vested but for which he has deferred the receipt until May 2046 and (y) 5,405 RSUs that are vested but for which Mr. Epstein has deferred the receipt until April 2046.
|
(14)
|
Includes 23,344 shares of the Company’s common stock that Mr. Hasker has the right to acquire by exercise of vested stock options, but excludes (x) 2,764 RSUs that are vested but for which he has deferred the receipt until May 2021 and (y) 5,405 RSUs that are vested but for which he has deferred the receipt until April 2022.
|
(15)
|
Includes 72,044 shares of the Company’s common stock that Mr. Leddy has the right to acquire by exercise of vested stock options, but excludes (x) 3,685 RSUs that are vested but for which he has deferred the receipt until May 2021 and (y) 5,405 RSUs that are vested but for which he has deferred the receipt until April 2022.
|
(16)
|
Includes 72,044 shares of the Company’s common stock that Mr. Reding has the right to acquire by exercise of vested stock options, but excludes (x) 3,685 RSUs that are vested but for which he has deferred the receipt until May 2021 and (y) 5,405 RSUs that are vested but for which he has deferred the receipt until April 2022.
|
(17)
|
Includes 72,044 shares of the Company’s common stock that Mr. Sagansky has the right to acquire by exercise of vested stock options, but excludes (x) 3,685 RSUs that are vested but for which he has deferred the receipt until May 2021 and (y) 5,405 RSUs that are vested but for which he has deferred the receipt until April 2022. The remaining amount in the table above for Mr. Sagansky represents shares of our common stock held by him.
|
(18)
|
Includes 72,044 shares of the Company’s common stock that Mr. Shapiro has the right to acquire by exercise of vested stock options, but excludes 3,685 RSUs that are vested but for which he has deferred the receipt until May 2021. The remaining amount in the table above for Mr. Shapiro represents shares of our common stock held by him.
|
(19)
|
Includes 72,044 shares of the Company’s common stock that Mr. Sloan has the right to acquire by exercise of vested stock options, but excludes (x) 3,685 RSUs that are vested but for which he has deferred the receipt until May 2021 and (y) 5,405 RSUs that are vested but for which he has deferred the receipt until April 2022. The remaining amount in the table above for Mr. Sloan represents shares of our common stock held by him.
|
Benefit
|
|
Number of
securities to be
issued upon exercise
of outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options
|
|
Number of
securities remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected
in first column)
|
|
Equity Compensation Plans Approved by Stockholders
(1)
|
|
8,602,906
(3)
|
|
$10.37
(4)
|
|
1,795,449
|
|
Equity Compensation Plans Not Approved by Stockholders
(2)
|
|
823,700
(5)
|
|
8.03
(6)
|
|
—
|
|
(1)
|
Consists of the Global Eagle Entertainment Inc. Amended and Restated 2013 Equity Incentive Plan.
|
(2)
|
Consists of the Global Eagle Entertainment Inc. 2016 Inducement and Retention Stock Plan for EMC Employees. See
Note 13. Common Stock, Stock-Based Awards and Warrants
to our consolidated financial statements in this Form 10-K for more information regarding this plan. We do not plan to issue any further shares under this plan.
|
(3)
|
Consists of 1,880,256 unvested RSU awards (of which 235,188 constitute PSU awards) and 6,722,650 stock option awards outstanding as of December 31, 2016.
|
(4)
|
Based on 6,722,650 stock option awards outstanding as of December 31, 2016.
|
(5)
|
Consists of 331,650 RSU awards and 492,050 stock option awards outstanding as of December 31, 2016.
|
(6)
|
All stock options under the Global Eagle Entertainment Inc. 2016 Inducement and Retention Stock Plan for EMC Employees were granted at this exercise price.
|
|
|
Year Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Audit fees
(1)
|
|
$
|
18,685,000
|
|
|
$
|
3,886,000
|
|
Audit-related fees
(2)
|
|
1,166,000
|
|
|
—
|
|
||
Tax fees
(3)
|
|
438,000
|
|
|
353,000
|
|
||
All other fees
(4)
|
|
2,000
|
|
|
2,000
|
|
||
Total fees
|
|
$
|
20,291,000
|
|
|
$
|
4,241,000
|
|
(1)
|
Audit fees consist of fees associated with the annual audit, the reviews of our quarterly reports on Form 10-Q, statutory audits required internationally and fees related to registration statements.
|
(2)
|
Audit-related fees consist of fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.” These services include accounting consultations concerning financial accounting and reporting standards.
|
(3)
|
Tax fees consist of fees for tax compliance, tax advice and tax planning.
|
(4)
|
All other fees consist of permitted services other than those that meet the criteria described above and are related to risk management advisory services and the Company’s subscription to an EY online service used for accounting research purposes.
|
|
|
|
|
Incorporated by Reference
|
||||||||
Exhibit No.
|
|
Exhibit Index
|
|
Form
|
|
SEC File No.
|
|
Exhibit
|
|
Filing Date
|
|
Filed Herewith
|
2.1
|
|
|
10-Q
|
|
001-35176
|
|
10.2
|
|
11/14/2012
|
|
|
|
2.2
|
|
|
8-K
|
|
001-35176
|
|
10.2
|
|
11/14/2012
|
|
|
|
2.3
|
|
|
8-K
|
|
001-35176
|
|
2.1
|
|
7/10/2013
|
|
|
|
2.4
|
|
|
8-K
|
|
001-35176
|
|
2.2
|
|
7/10/2013
|
|
|
|
2.5
|
|
|
8-K
|
|
001-35176
|
|
2.1
|
|
10/18/2013
|
|
|
|
2.6
|
|
|
8-K
|
|
001-35176
|
|
2.1
|
|
5/13/2016
|
|
|
|
2.7
|
|
|
8-K
|
|
001-35176
|
|
2.1
|
|
11/14/2016
|
|
|
|
2.8
|
|
|
8-K
|
|
001-35176
|
|
2.2
|
|
11/14/2016
|
|
|
|
2.9
|
|
|
8-K
|
|
001-35176
|
|
2.3
|
|
11/14/2016
|
|
|
|
3.1
|
|
|
8-K
|
|
001-35176
|
|
3.1
|
|
2/6/2013
|
|
|
|
3.2
|
|
|
8-K
|
|
001-35176
|
|
3.1
|
|
9/23/2016
|
|
|
|
4.1
|
|
|
S-1/A#4
|
|
333-172267
|
|
4.2
|
|
5/11/2011
|
|
|
|
4.2
|
|
|
S-1/A#2
|
|
333-172267
|
|
4.4
|
|
4/6/2011
|
|
|
|
4.3
|
|
|
S-1/A
|
|
333-172267
|
|
4.3
|
|
4/6/2011
|
|
|
|
4.4
|
|
|
8-K
|
|
001-35176
|
|
4.1
|
|
2/19/2015
|
|
|
|
4.5
|
|
|
S-3
|
|
333-214065
|
|
4.5
|
|
10/11/2016
|
|
|
|
4.6
|
|
|
S-3
|
|
333-214065
|
|
4.5(B)
|
|
10/11/2016
|
|
|
|
10.1
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
1/12/2017
|
|
|
|
10.2
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
5/5/2017
|
|
|
|
10.3
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
6/30/2017
|
|
|
|
10.4
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
9/14/17
|
|
|
|
10.5
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
10/3/2017
|
|
|
|
10.6
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
10/12/2017
|
|
|
|
10.7
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
11/1/2017
|
|
|
|
10.8
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
11/16/2017
|
|
|
|
10.9
|
|
|
8-K
|
|
001-35176
|
|
10.2
|
|
1/12/2017
|
|
|
|
10.10
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
8/2/2016
|
|
|
|
10.11
|
|
|
8-K
|
|
001-35176
|
|
10.2
|
|
8/2/2016
|
|
|
|
10.12
|
|
|
8-K
|
|
001-35176
|
|
10.3
|
|
8/2/2016
|
|
|
|
10.13
|
|
|
10-Q
|
|
001-35176
|
|
10.4
|
|
8/9/2016
|
|
|
|
10.14
|
|
|
10-Q
|
|
001-35176
|
|
10.5
|
|
8/9/2016
|
|
|
|
10.15
|
|
|
8-K
|
|
001-35176
|
|
10.6
|
|
8/2/2016
|
|
|
|
10.16
|
|
|
8-K
|
|
001-35176
|
|
10.7
|
|
8/2/2016
|
|
|
|
10.17
|
|
|
10-Q
|
|
001-35176
|
|
10.8
|
|
8/9/2016
|
|
|
|
10.18
|
|
|
8-K
|
|
001-35176
|
|
10.9
|
|
8/2/2016
|
|
|
|
10.19
|
|
|
8-K
|
|
001-35176
|
|
10.10
|
|
8/2/2016
|
|
|
|
10.20+
|
|
|
8-K/A#2
|
|
001-35176
|
|
10.8
|
|
5/16/2013
|
|
|
|
10.21+
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
12/13/2016
|
|
|
|
10.22
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
2/6/2013
|
|
|
|
10.23
|
|
|
8-K
|
|
001-35176
|
|
10.4
|
|
10/21/2013
|
|
|
|
10.24
|
|
|
8-K
|
|
001-35176
|
|
10.11
|
|
8/2/2016
|
|
|
|
10.25
|
|
|
8-K
|
|
001-35176
|
|
10.5
|
|
10/21/2013
|
|
|
|
10.26
|
|
|
8-K/A
|
|
001-35176
|
|
10.1
|
|
5/16/2016
|
|
|
|
10.27*+
|
|
|
10-Q
|
|
001-35176
|
|
10.8
|
|
5/8/2015
|
|
|
|
10.28*
|
|
|
DEF-14A
|
|
001-35176
|
|
Annex A
|
|
4/29/2016
|
|
|
|
10.29*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.30*
|
|
|
8-K
|
|
001-35176
|
|
10.13
|
|
8/2/2016
|
|
|
|
10.31*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.32*
|
|
|
8-K
|
|
001-35176
|
|
10.2
|
|
12/24/2013
|
|
|
|
10.33*
|
|
|
8-K
|
|
001-35176
|
|
10.3
|
|
12/24/2013
|
|
|
|
10.34*
|
|
|
8-K
|
|
001-35176
|
|
10.4
|
|
12/24/2013
|
|
|
|
10.35*
|
|
|
10-Q
|
|
001-35176
|
|
10.6
|
|
5/8/2015
|
|
|
|
10.36*
|
|
|
10-Q
|
|
001-35176
|
|
10.7
|
|
5/8/2015
|
|
|
|
10.37*
|
|
|
8-K
|
|
001-35176
|
|
10.14
|
|
8/2/2016
|
|
|
|
10.38*
|
|
|
8-K
|
|
001-35176
|
|
10.15
|
|
8/2/2016
|
|
|
|
10.39*
|
|
|
8-K
|
|
001-35176
|
|
10.16
|
|
8/2/2016
|
|
|
|
10.40*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
10/17/2016
|
|
|
|
10.41*
|
|
|
10-Q
|
|
001-35176
|
|
10.5
|
|
11/9/2016
|
|
|
|
10.42*
|
|
|
10-Q
|
|
001-35176
|
|
10.6
|
|
11/9/2016
|
|
|
|
10.43*
|
|
|
8-K
|
|
001-35176
|
|
10.3
|
|
7/15/2014
|
|
|
|
10.44*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
4/16/2015
|
|
|
|
10.45*
|
|
|
10-K
|
|
001-35176
|
|
10.30
|
|
3/17/2016
|
|
|
|
10.46*
|
|
|
8-K
|
|
001-35176
|
|
10.2
|
|
2/21/2017
|
|
|
|
10.47*
|
|
|
8-K
|
|
001-35176
|
|
10.3
|
|
2/21/2017
|
|
|
|
10.48*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
11/6/2014
|
|
|
|
10.49*
|
|
|
10-Q
|
|
001-35176
|
|
10.5
|
|
5/8/2015
|
|
|
|
10.50*
|
|
|
10-K
|
|
001-35176
|
|
10.41
|
|
3/17/2016
|
|
|
|
10.51*
|
|
|
10-K
|
|
001-35176
|
|
10.42
|
|
3/17/2016
|
|
|
|
10.52*
|
|
|
10-K
|
|
001-35176
|
|
10.43
|
|
3/17/2016
|
|
|
|
10.53*
|
|
|
10-Q
|
|
001-35176
|
|
10.1
|
|
5/9/2016
|
|
|
|
10.54*
|
|
|
10-Q
|
|
001-35176
|
|
10.2
|
|
5/9/2016
|
|
|
|
10.55*
|
|
|
8-K
|
|
001-35176
|
|
10.12
|
|
8/2/2016
|
|
|
|
10.56*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
4/24/2017
|
|
|
|
10.57*
|
|
|
10-Q
|
|
001-35176
|
|
10.17
|
|
8/9/2016
|
|
|
|
10.58*
|
|
|
10-Q
|
|
001-35176
|
|
10.18
|
|
8/9/2016
|
|
|
|
10.59*
|
|
|
10-Q
|
|
001-35176
|
|
10.19
|
|
8/9/2016
|
|
|
|
10.60*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.61*
|
|
|
10-Q
|
|
001-35176
|
|
10.20
|
|
8/9/2016
|
|
|
|
10.62*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
8/26/2016
|
|
|
|
10.63*
|
|
|
8-K
|
|
001-35176
|
|
10.4
|
|
2/21/2017
|
|
|
|
10.64*
|
|
|
8-K
|
|
001-35176
|
|
10.1(C)
|
|
8/26/2016
|
|
|
|
10.65*
|
|
|
8-K
|
|
001-35176
|
|
10.3
|
|
8/26/2016
|
|
|
|
10.66*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
11/3/2016
|
|
|
|
10.67*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
10.68*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
11/16/2016
|
|
|
|
10.69*
|
|
|
8-K
|
|
001-35176
|
|
10.2
|
|
11/16/2016
|
|
|
|
10.70*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
5/2/2017
|
|
|
|
10.71*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
2/21/2017
|
|
|
|
10.72*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
4/7/2017
|
|
|
|
10.73*
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
5/11/2017
|
|
|
|
10.74*
|
|
|
10-Q
|
|
001-35176
|
|
10.8
|
|
11/9/2016
|
|
|
|
10.75*
|
|
|
8-K
|
|
001-35176
|
|
10.2
|
|
4/7/2017
|
|
|
|
10.76*
|
|
|
8-K
|
|
001-35176
|
|
10.3
|
|
4/7/2017
|
|
|
|
10.77+
|
|
|
|
|
|
|
|
|
|
|
X
|
|
21
|
|
|
|
|
|
|
|
|
|
|
X
|
|
23.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
24
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
99.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
*
|
|
Management contract or compensatory plan or arrangement.
|
|
|
|
|
|
|
|
|
|
|
+
|
|
Confidential treatment has been requested or granted for certain portions omitted from this Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
|
|
|
|
|
|
|
|
|
|
|
|
GLOBAL EAGLE ENTERTAINMENT INC.
|
|
|
|
|
|
By:
|
/s/ PAUL RAINEY
|
|
|
Paul Rainey
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ JEFFREY A. LEDDY
|
|
Chief Executive Officer and Director
|
|
November 17, 2017
|
Jeffrey A. Leddy
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ PAUL RAINEY
|
|
Chief Financial Officer
|
|
November 17, 2017
|
Paul Rainey
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ SARLINA SEE
|
|
Chief Accounting Officer
|
|
November 17, 2017
|
Sarlina See
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ EDWARD L. SHAPIRO
|
|
Chairman of the Board of Directors
|
|
November 17, 2017
|
Edward L. Shapiro
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN HASKER
|
|
Director
|
|
November 17, 2017
|
Stephen Hasker
|
|
|
|
|
|
|
|
|
|
/s/ HARRY E. SLOAN
|
|
Director
|
|
November 17, 2017
|
Harry E. Sloan
|
|
|
|
|
|
|
|
|
|
/s/ JEFF SAGANSKY
|
|
Director
|
|
November 17, 2017
|
Jeff Sagansky
|
|
|
|
|
|
|
|
|
|
/s/ JEFFREY E. EPSTEIN
|
|
Director
|
|
November 17, 2017
|
Jeffrey E. Epstein
|
|
|
|
|
|
|
|
|
|
/s/ ROBERT W. REDING
|
|
Director
|
|
November 17, 2017
|
Robert W. Reding
|
|
|
|
|
|
|
|
|
|
/s/ RONALD STEGER
|
|
Director
|
|
November 17, 2017
|
Ronald Steger
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Licensing
|
$
|
261,912
|
|
|
$
|
252,775
|
|
|
$
|
231,521
|
|
Services
|
234,623
|
|
|
152,204
|
|
|
120,707
|
|
|||
Equipment
|
33,220
|
|
|
21,051
|
|
|
35,507
|
|
|||
Total revenue
|
529,755
|
|
|
426,030
|
|
|
387,735
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Cost of sales:
|
|
|
|
|
|
||||||
Licensing and services
|
336,702
|
|
|
261,635
|
|
|
249,878
|
|
|||
Equipment
|
28,768
|
|
|
17,521
|
|
|
31,995
|
|
|||
Total cost of sales
|
365,470
|
|
|
279,156
|
|
|
281,873
|
|
|||
Sales and marketing
|
30,941
|
|
|
17,705
|
|
|
13,287
|
|
|||
Product development
|
37,718
|
|
|
28,610
|
|
|
23,010
|
|
|||
General and administrative
|
115,195
|
|
|
77,715
|
|
|
69,743
|
|
|||
Provision for legal settlements
|
43,446
|
|
|
4,250
|
|
|
8,030
|
|
|||
Amortization of intangible assets
|
35,648
|
|
|
26,994
|
|
|
24,552
|
|
|||
Goodwill impairment
|
64,000
|
|
|
—
|
|
|
—
|
|
|||
Restructuring charges
|
—
|
|
|
411
|
|
|
4,223
|
|
|||
Total operating expenses
|
692,418
|
|
|
434,841
|
|
|
424,718
|
|
|||
Loss from operations
|
(162,663
|
)
|
|
(8,811
|
)
|
|
(36,983
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest (expense) income, net
|
(18,198
|
)
|
|
(2,492
|
)
|
|
88
|
|
|||
Income (loss) from equity method investments
|
3,829
|
|
|
—
|
|
|
(1,500
|
)
|
|||
Change in fair value of derivatives
|
25,515
|
|
|
11,938
|
|
|
(6,955
|
)
|
|||
Other expense, net
|
(6,326
|
)
|
|
(1,140
|
)
|
|
(1,270
|
)
|
|||
Loss before income taxes
|
(157,843
|
)
|
|
(505
|
)
|
|
(46,620
|
)
|
|||
Income tax (benefit) expense
|
(44,911
|
)
|
|
1,621
|
|
|
10,574
|
|
|||
Net loss
|
(112,932
|
)
|
|
(2,126
|
)
|
|
(57,194
|
)
|
|||
Net income attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
194
|
|
|||
Net loss attributable to Global Eagle Entertainment Inc. common stockholders
|
$
|
(112,932
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(57,388
|
)
|
|
|
|
|
|
|
||||||
Net loss per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.39
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.78
|
)
|
Diluted
|
$
|
(1.39
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.78
|
)
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
81,269
|
|
|
77,558
|
|
|
73,300
|
|
|||
Diluted
|
81,269
|
|
|
78,394
|
|
|
73,300
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
$
|
(112,932
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(57,194
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Unrealized foreign currency translation adjustments
|
(117
|
)
|
|
(303
|
)
|
|
4
|
|
|||
Unrealized gain on available for sale securities
|
—
|
|
|
—
|
|
|
112
|
|
|||
Less: reclassification adjustments for recognized gains included in net loss
|
—
|
|
|
—
|
|
|
(112
|
)
|
|||
Total unrealized gain on available for sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive (loss) income
|
(117
|
)
|
|
(303
|
)
|
|
4
|
|
|||
Comprehensive loss
|
(113,049
|
)
|
|
(2,429
|
)
|
|
(57,190
|
)
|
|||
Comprehensive income attributable to non-controlling interests
|
—
|
|
|
—
|
|
|
194
|
|
|||
Comprehensive loss attributable to Global Eagle Entertainment Inc. common stockholders
|
$
|
(113,049
|
)
|
|
$
|
(2,429
|
)
|
|
$
|
(57,384
|
)
|
|
Common Stock
|
|
Common Stock Non-Voting
|
|
Treasury Stock
|
|
Additional Paid-in
|
|
Subscriptions
|
|
Accumulated
|
|
Accumulated Other Comprehensive
|
|
Total
Global Eagle Entertainment Inc. Stockholders’
|
|
Non-Controlling
|
|
Total
|
|||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Receivable
|
|
Deficit
|
|
Income (Loss)
|
|
Equity
|
|
Interest
|
|
Equity
|
|||||||||||||||||||||||
Balance, December 31, 2013
|
55,902
|
|
|
$
|
5
|
|
|
19,118
|
|
|
$
|
2
|
|
|
(3,054
|
)
|
|
$
|
(30,659
|
)
|
|
$
|
620,862
|
|
|
$
|
(478
|
)
|
|
$
|
(243,943
|
)
|
|
$
|
—
|
|
|
$
|
345,789
|
|
|
$
|
10,395
|
|
|
$
|
356,184
|
|
Conversion of non-voting common stock
|
19,118
|
|
|
2
|
|
|
(19,118
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Exercise of common stock options and warrants, net
|
351
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,942
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,942
|
|
|
—
|
|
|
2,942
|
|
||||||||||
Issuance of common stock to former Row 44 stockholders
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
345
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
345
|
|
|
—
|
|
|
345
|
|
||||||||||
Issuance of common stock in exchange for warrants, net of transaction fees of $362
|
4,227
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,046
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,047
|
|
|
—
|
|
|
24,047
|
|
||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,067
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,067
|
|
|
—
|
|
|
8,067
|
|
||||||||||
Interest income on subscription receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
||||||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57,388
|
)
|
|
—
|
|
|
(57,388
|
)
|
|
194
|
|
|
(57,194
|
)
|
||||||||||
Purchase of subsidiary share from a non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,152
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,152
|
)
|
|
(10,589
|
)
|
|
(21,741
|
)
|
||||||||||
Balance, December 31, 2014
|
79,626
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
(3,054
|
)
|
|
(30,659
|
)
|
|
645,110
|
|
|
(503
|
)
|
|
(301,331
|
)
|
|
4
|
|
|
312,629
|
|
|
—
|
|
|
312,629
|
|
||||||||||
Convertible note conversion option fair value
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,674
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,674
|
|
|
—
|
|
|
12,674
|
|
||||||||||
Exercise of common stock options and warrants, net
|
607
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,006
|
|
|
—
|
|
|
6,006
|
|
||||||||||
Restricted stock units vested and distributed, net of tax
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(208
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(208
|
)
|
|
—
|
|
|
(208
|
)
|
||||||||||
Issuance of common stock in exchange for warrants
|
1,412
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,600
|
|
|
—
|
|
|
16,600
|
|
||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,235
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,235
|
|
|
—
|
|
|
8,235
|
|
||||||||||
Tax benefit on stock options exercise
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
279
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
279
|
|
|
—
|
|
|
279
|
|
||||||||||
Interest income on subscription receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
||||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(303
|
)
|
|
(303
|
)
|
|
—
|
|
|
(303
|
)
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,126
|
)
|
|
—
|
|
|
(2,126
|
)
|
|
—
|
|
|
(2,126
|
)
|
||||||||||
Balance, December 31, 2015
|
81,676
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
(3,054
|
)
|
|
(30,659
|
)
|
|
688,696
|
|
|
(528
|
)
|
|
(303,457
|
)
|
|
(299
|
)
|
|
353,761
|
|
|
—
|
|
|
353,761
|
|
|
Common Stock
|
|
Common Stock Non-Voting
|
|
Treasury Stock
|
|
Additional Paid-in
|
|
Subscriptions
|
|
Accumulated
|
|
Accumulated Other Comprehensive
|
|
Total
Global Eagle Entertainment Inc. Stockholders’
|
|
Non-Controlling
|
|
Total
|
|||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Receivable
|
|
Deficit
|
|
Income (Loss)
|
|
Equity
|
|
Interest
|
|
Equity
|
|||||||||||||||||||||||
Issuance of common stock for Emerging Markets Communication Acquisition
|
5,467
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,606
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,607
|
|
|
—
|
|
|
40,607
|
|
||||||||||
Issuance of common stock for legal settlements
|
1,751
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,705
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,705
|
|
|
—
|
|
|
13,705
|
|
||||||||||
Repurchase and retirement of common stock
|
(614
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,219
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,219
|
)
|
|
—
|
|
|
(5,219
|
)
|
||||||||||
Exercise of common stock options
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
255
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
255
|
|
|
—
|
|
|
255
|
|
||||||||||
Restricted stock units vested and distributed, net of tax
|
177
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(705
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(705
|
)
|
|
—
|
|
|
(705
|
)
|
||||||||||
Purchase of subsidiary shares from non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(876
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(876
|
)
|
|
—
|
|
|
(876
|
)
|
||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,747
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,747
|
|
|
—
|
|
|
10,747
|
|
||||||||||
Tax deficiency on stock options exercise
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(204
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(204
|
)
|
|
—
|
|
|
(204
|
)
|
||||||||||
Interest income on subscription receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
||||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(117
|
)
|
|
(117
|
)
|
|
—
|
|
|
(117
|
)
|
||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112,932
|
)
|
|
—
|
|
|
(112,932
|
)
|
|
—
|
|
|
(112,932
|
)
|
||||||||||
Balance, December 31, 2016
|
88,483
|
|
|
$
|
9
|
|
|
—
|
|
|
$
|
—
|
|
|
(3,054
|
)
|
|
$
|
(30,659
|
)
|
|
$
|
747,005
|
|
|
$
|
(553
|
)
|
|
$
|
(416,389
|
)
|
|
$
|
(416
|
)
|
|
$
|
298,997
|
|
|
$
|
—
|
|
|
$
|
298,997
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(112,932
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(57,194
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization of property, equipment and intangibles
|
57,158
|
|
|
36,592
|
|
|
34,422
|
|
|||
Amortization of content library
|
14,932
|
|
|
14,929
|
|
|
15,022
|
|
|||
Non-cash interest expense, net
|
1,916
|
|
|
903
|
|
|
23
|
|
|||
Stock-based compensation
|
10,747
|
|
|
8,235
|
|
|
8,067
|
|
|||
Issuance of shares for working capital settlement
|
—
|
|
|
—
|
|
|
345
|
|
|||
Issuance of common stock for legal settlements
|
13,705
|
|
|
—
|
|
|
—
|
|
|||
Impairment of goodwill
|
64,000
|
|
|
—
|
|
|
—
|
|
|||
Impairment of internally developed software
|
4,069
|
|
|
—
|
|
|
—
|
|
|||
Impairment of related party loan
|
4,353
|
|
|
—
|
|
|
—
|
|
|||
(Income) loss from equity method investments
|
(3,829
|
)
|
|
—
|
|
|
1,500
|
|
|||
Change in fair value of derivatives
|
(25,515
|
)
|
|
(11,938
|
)
|
|
6,955
|
|
|||
Provision for bad debt
|
2,624
|
|
|
797
|
|
|
5,539
|
|
|||
Deferred income taxes
|
(60,369
|
)
|
|
(6,452
|
)
|
|
(5,068
|
)
|
|||
Other
|
(1,488
|
)
|
|
96
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Restricted cash
|
2,700
|
|
|
(722
|
)
|
|
(767
|
)
|
|||
Accounts receivable
|
(8,032
|
)
|
|
(5,879
|
)
|
|
(26,386
|
)
|
|||
Inventories
|
2,123
|
|
|
(1,580
|
)
|
|
(3,557
|
)
|
|||
Prepaid expenses
|
(4,382
|
)
|
|
(1,272
|
)
|
|
(449
|
)
|
|||
Other current assets
|
16,366
|
|
|
(1,252
|
)
|
|
(5,493
|
)
|
|||
Content library
|
(18,614
|
)
|
|
(15,406
|
)
|
|
(16,765
|
)
|
|||
Other non-current assets
|
2,695
|
|
|
2,814
|
|
|
(2,703
|
)
|
|||
Accounts payable and accrued liabilities
|
14,854
|
|
|
4,183
|
|
|
19,641
|
|
|||
Deferred revenue
|
(12,891
|
)
|
|
(3,134
|
)
|
|
3,151
|
|
|||
Other current liabilities
|
(790
|
)
|
|
3,067
|
|
|
322
|
|
|||
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
(36,600
|
)
|
|
21,855
|
|
|
(23,395
|
)
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Acquisitions of businesses, net of cash acquired
|
(92,246
|
)
|
|
(60,242
|
)
|
|
(500
|
)
|
|||
Purchases of property and equipment
|
(54,173
|
)
|
|
(20,653
|
)
|
|
(9,074
|
)
|
|||
Issuance of loan to related party
|
(4,400
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of investment
|
—
|
|
|
—
|
|
|
583
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(732
|
)
|
|||
NET CASH USED IN INVESTING ACTIVITIES
|
(150,819
|
)
|
|
(80,895
|
)
|
|
(9,723
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Acquisition of non-controlling interest
|
—
|
|
|
—
|
|
|
(21,741
|
)
|
|||
Proceeds from borrowings
|
27,500
|
|
|
81,250
|
|
|
2,047
|
|
|||
Repayment of debt
|
(3,806
|
)
|
|
(1,126
|
)
|
|
(9,669
|
)
|
|||
Repurchase of common stock warrants
|
(5,219
|
)
|
|
—
|
|
|
(1,406
|
)
|
|||
Proceeds from exercise of common stock options and warrants
|
(450
|
)
|
|
5,604
|
|
|
3,100
|
|
|||
Convertible senior note issuance fees
|
—
|
|
|
(831
|
)
|
|
—
|
|
|||
Other financing activities, net
|
(4,127
|
)
|
|
(339
|
)
|
|
(362
|
)
|
|||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
13,898
|
|
|
84,558
|
|
|
(28,031
|
)
|
|||
Effects of exchange rate changes on cash and cash equivalents
|
655
|
|
|
386
|
|
|
1
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
(172,866
|
)
|
|
25,904
|
|
|
(61,148
|
)
|
|||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
223,552
|
|
|
197,648
|
|
|
258,796
|
|
|||
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
50,686
|
|
|
$
|
223,552
|
|
|
$
|
197,648
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for:
|
|
|
|
|
|
||||||
Taxes
|
$
|
12,562
|
|
|
$
|
5,435
|
|
|
$
|
4,203
|
|
Interest
|
$
|
19,249
|
|
|
$
|
1,161
|
|
|
$
|
447
|
|
SIGNIFICANT NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Issuance of common stock in connection with acquisition of business
|
$
|
40,607
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred consideration liabilities incurred in connection with acquisition of business
|
$
|
25,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Issuance of common stock to repurchase Global Eagle public company warrants
|
$
|
—
|
|
|
$
|
16,600
|
|
|
$
|
24,448
|
|
Purchase consideration for equipment included in accounts payable
|
$
|
13,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Connectivity – EMC provides global satellite bandwidth (C-Band, Ku-Band, Ka-Band), terrestrial broadband network, cellular and 3G services, remote fiber network and fully meshed MPLS interconnected teleports;
|
•
|
Access – EMC provides access to live television worldwide, video (on demand and subscription), 3G cellular services, Internet, voice, data, high-definition video conferencing and universal portals, including through its proprietary
SpeedNet
product; and
|
•
|
Support – EMC has field support centers worldwide, each of which has a spare parts inventory, a 24 hour/7 days network operations center, certified technicians, system integration and project management.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Accounts receivable, gross
|
$
|
130,583
|
|
|
$
|
102,089
|
|
Less: Allowance for doubtful accounts
|
(10,091
|
)
|
|
(8,640
|
)
|
||
Accounts receivable, net
|
$
|
120,492
|
|
|
$
|
93,449
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Beginning balance
|
$
|
8,640
|
|
|
$
|
7,468
|
|
|
$
|
1,929
|
|
Additions charged to statements of operations
|
2,624
|
|
|
1,172
|
|
|
5,539
|
|
|||
Less: Bad debt write offs
|
(1,173
|
)
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
$
|
10,091
|
|
|
$
|
8,640
|
|
|
$
|
7,468
|
|
•
|
Level 1: Observable quoted prices in active markets for identical assets and liabilities.
|
•
|
Level 2: Observable quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
|
•
|
Level 3: Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques.
|
|
December 31, 2016
|
|
Quotes Prices in Active Markets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Other Unobservable Inputs
(Level 3)
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Earn-out liability
(1)
|
$
|
1,987
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,987
|
|
Liability warrants
(2)
|
433
|
|
|
—
|
|
|
—
|
|
|
433
|
|
||||
Contingently issuable shares
(3)
|
4,545
|
|
|
—
|
|
|
—
|
|
|
4,545
|
|
||||
Total
|
$
|
6,965
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,965
|
|
|
December 31, 2015
|
|
Quotes Prices in Active Markets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Other Unobservable Inputs
(Level 3)
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Earn-out liability
(1)
|
$
|
9,652
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,652
|
|
Liability warrants
(2)
|
24,076
|
|
|
24,076
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
33,728
|
|
|
$
|
24,076
|
|
|
$
|
—
|
|
|
$
|
9,652
|
|
(1)
|
Represents aggregate earn-out liabilities for the Company’s acquisitions of WOI, RMG, navAero and masFlight assumed in business combinations for the year ended December 31, 2015.
|
(2)
|
Includes
6,173,228
Public SPAC Warrants at
December 31, 2016
and
2015
.
|
(3)
|
In connection with the Sound-Recording Settlements, the Company is obligated to issue to UMG up to
0.5 million
shares of its common stock when and if he closing price of the Company's common stock exceeds
$10.00
per share and
0.4 million
shares of common stock when and if the closing price of the Company’s common stock exceeds
$12.00
per share. Based on conditions of the award, such contingently issuable shares are classified as liabilities and are remeasured to fair value each reporting period.
|
|
Liability Warrants (Level 1)
|
|
Liability Warrants (Level 3)
|
|
Contingently Issuable Shares
(Level 3)
|
|
Earn-Out Liabilities (Level 3)
|
||||||||
Balance, December 31, 2015
|
$
|
24,076
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,652
|
|
Fair value of contingently issuable shares associated with Sound-Recording Settlement
|
—
|
|
|
—
|
|
|
6,417
|
|
|
—
|
|
||||
Payments of earn-out liability
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,127
|
)
|
||||
Transfer-in
|
—
|
|
|
6,235
|
|
|
—
|
|
|
—
|
|
||||
Transfer-out
|
(6,235
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Change in value
|
(17,841
|
)
|
|
(5,802
|
)
|
|
(1,872
|
)
|
|
(3,538
|
)
|
||||
Balance, December 31, 2016
|
$
|
—
|
|
|
$
|
433
|
|
|
$
|
4,545
|
|
|
$
|
1,987
|
|
|
Earn-Out Liabilities (Level 3)
|
||
Balance, December 31, 2014
|
$
|
1,710
|
|
Fair value of earn-out liability assumed in 2015 acquisitions
|
9,652
|
|
|
Payments of earn-out liability
|
(1,519
|
)
|
|
Non-cash adjustment to 2014 earn-out liability
|
(191
|
)
|
|
Balance, December 31, 2015
|
$
|
9,652
|
|
|
Liability Warrants
|
|
Contingently Issuable Shares
|
||||||||
Assumed liquidation company share price
|
N/A
|
|
|
$
|
10.00
|
|
|
$
|
12.00
|
|
|
Common stock price at December 31, 2016
|
$
|
6.46
|
|
|
$
|
6.46
|
|
|
$
|
6.46
|
|
Exercise price
|
$
|
11.50
|
|
|
N/A
|
|
|
N/A
|
|
||
Estimated term (in years)
|
1.09
|
|
|
4.54
|
|
|
6.44
|
|
|||
Expected stock volatility
|
34.0
|
%
|
|
46.0
|
%
|
|
46.0
|
%
|
|||
Risk free rate
|
0.9
|
%
|
|
N/A
|
|
|
N/A
|
|
|||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Implied discount for lack of marketability
(1)
|
—
|
%
|
|
20.5
|
%
|
|
23.5
|
%
|
(1)
|
A discount for lack of marketability was applied to the resulting values as the shares, when issued, may not initially be registered with the SEC.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Senior secured term loan facility, due July 2021
|
$
|
256,004
|
|
|
$
|
260,020
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior secured revolving credit facility, due July 2020
|
53,891
|
|
|
52,932
|
|
|
—
|
|
|
—
|
|
||||
Senior secured term loan facility, due July 2022
|
88,082
|
|
|
88,780
|
|
|
—
|
|
|
—
|
|
||||
2.75% convertible senior notes, due February 2035
(1)
|
69,024
|
|
|
67,444
|
|
|
68,335
|
|
|
78,557
|
|
||||
Other debts
|
3,299
|
|
|
3,299
|
|
|
2,819
|
|
|
2,819
|
|
(1)
|
The fair value of the convertible senior notes is exclusive of the conversion feature, which was originally valued for reporting purposes at
$13.0 million
, and is included in Additional paid-in capital in the Consolidated Balance Sheets (see
Note 13. Common Stock, Stock-Based Awards and Warrants
).
|
|
As Reported
|
|
Reclassifications
|
|
As Reclassified
|
||||||||||
|
December 31, 2015
|
|
Capital Lease Obligation
|
|
Unamortized Debt Issuance Costs
|
|
December 31, 2015
|
||||||||
Other non-current assets
|
$
|
13,702
|
|
|
$
|
—
|
|
|
$
|
(1,678
|
)
|
|
$
|
12,024
|
|
Long-term debt
|
71,493
|
|
|
284
|
|
|
(1,678
|
)
|
|
70,099
|
|
|
Amount
|
||
Cash consideration paid to seller
(1)
|
$
|
100,454
|
|
Issuance of 5,466,886 shares of Company common stock
(2)
|
40,607
|
|
|
Deferred consideration
(3)
|
25,000
|
|
|
Settlement of pre-existing relationship
|
228
|
|
|
Total
|
$
|
166,289
|
|
(1)
|
In June 2017, the Company settled the working capital adjustments with the seller resulting in the release of
$1.3 million
from the adjustment escrow to the Company.
|
(2)
|
The fair value of the Company’s common stock issued as consideration was measured based on the stock price upon closing of the transaction on July 27, 2016, less a
7.5%
discount for restriction on transferability.
|
(3)
|
On July 27, 2017, the Company elected to pay such amount in
5,080,049
newly issued shares of its common stock to the former unit holder of EMC.
|
|
Weighted Average Useful Life (Years)
(4)
|
|
Preliminary
|
|
Adjustments
|
|
Final
|
||||||
Cash and cash equivalents
|
|
|
$
|
9,032
|
|
|
$
|
(824
|
)
|
|
$
|
8,208
|
|
Restricted cash
(1)
|
|
|
17,802
|
|
|
(1,545
|
)
|
|
16,257
|
|
|||
Other current assets
(1)
|
|
|
58,220
|
|
|
2,405
|
|
|
60,625
|
|
|||
Property, plant and equipment
(2)
|
|
|
94,321
|
|
|
(12,101
|
)
|
|
82,220
|
|
|||
Equity method investments
(2)(3)
|
|
|
102,719
|
|
|
49,981
|
|
|
152,700
|
|
|||
Intangible assets
(2)
:
|
|
|
|
|
|
|
|
||||||
Completed technology
|
3.4
|
|
21,800
|
|
|
(3,300
|
)
|
|
18,500
|
|
|||
Customer relationships
|
8.0
|
|
19,100
|
|
|
28,600
|
|
|
47,700
|
|
|||
Backlog
|
3.0
|
|
—
|
|
|
18,300
|
|
|
18,300
|
|
|||
Favorable vendor agreements
|
9.0
|
|
91,800
|
|
|
(91,800
|
)
|
|
—
|
|
|||
Trademarks
|
5.0
|
|
2,200
|
|
|
(1,200
|
)
|
|
1,000
|
|
|||
Other non-current assets
(1)
|
|
|
1,074
|
|
|
1,247
|
|
|
2,321
|
|
|||
Accounts payable and accrued liabilities
(1)
|
|
|
(47,067
|
)
|
|
(21,797
|
)
|
|
(68,864
|
)
|
|||
Debt, including current
(1)
|
|
|
(370,845
|
)
|
|
(1,145
|
)
|
|
(371,990
|
)
|
|||
Deferred tax liabilities, net
(1)
|
|
|
(74,082
|
)
|
|
2,128
|
|
|
(71,954
|
)
|
|||
Unfavorable vendor contracts, including current
(2)
|
|
|
—
|
|
|
(13,500
|
)
|
|
(13,500
|
)
|
|||
Deferred revenue, including current
(1)(2)
|
|
|
(8,930
|
)
|
|
4,328
|
|
|
(4,602
|
)
|
|||
Other non-current liabilities
(1)(2)
|
|
|
(22,170
|
)
|
|
12,691
|
|
|
(9,479
|
)
|
|||
Fair value of net assets acquired
|
|
|
(105,026
|
)
|
|
(27,532
|
)
|
|
(132,558
|
)
|
|||
Consideration transferred
|
|
|
166,493
|
|
|
(204
|
)
|
|
166,289
|
|
|||
Goodwill
|
|
|
$
|
271,519
|
|
|
$
|
27,328
|
|
|
$
|
298,847
|
|
(1)
|
The amounts represent reclassifications to conform with the year-end presentation.
|
(2)
|
The amounts represent measurement period adjustments that were recorded as a result of further validating the fair value of acquired assets and assumed liabilities based on obtaining new facts and circumstances that existed as of the acquisition date.
|
(3)
|
Represents
49%
investments in WMS and Santander.
|
(4)
|
The weighted average useful life in total is
5.9
years.
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
Revenue
|
$
|
634,649
|
|
|
$
|
631,552
|
|
Net loss
|
(168,497
|
)
|
|
(1,310
|
)
|
|
Weighted Average Useful Life (Years)
(1)
|
|
(Final)
December 31, 2016 |
||
Goodwill
|
|
|
$
|
40,281
|
|
Customer relationships
|
7.6
|
|
14,000
|
|
|
Developed technology
|
5.7
|
|
21,900
|
|
|
Trade name
|
5.0
|
|
200
|
|
|
Accounts receivable
|
|
|
6,450
|
|
|
Property and equipment
|
|
|
1,783
|
|
|
Deferred tax liability
|
|
|
(11,047
|
)
|
|
Accrued expenses
|
|
|
(4,379
|
)
|
|
Other liabilities assumed, net of assets acquired
|
|
|
(857
|
)
|
|
Total consideration transferred
|
|
|
$
|
68,331
|
|
(1)
|
The weighted average useful life in total is
6.4
years.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Leasehold improvements
|
$
|
5,737
|
|
|
$
|
3,886
|
|
Furniture and fixtures
|
1,332
|
|
|
2,154
|
|
||
Equipment
(3)
|
86,339
|
|
|
21,043
|
|
||
Computer equipment
|
8,002
|
|
|
6,967
|
|
||
Computer software
(1)
|
18,207
|
|
|
8,677
|
|
||
Automobiles
|
325
|
|
|
255
|
|
||
Buildings
|
7,039
|
|
|
2,649
|
|
||
Albatross (aircraft)
|
425
|
|
|
425
|
|
||
Satellite transponder
(2)
|
62,131
|
|
|
6,700
|
|
||
Construction in-progress
(3)
|
8,380
|
|
|
6,319
|
|
||
Total property, plant, and equipment
|
197,917
|
|
|
59,075
|
|
||
Accumulated depreciation
(1) (2) (3)
|
(31,868
|
)
|
|
(20,009
|
)
|
||
Property, plant and equipment, net
|
$
|
166,049
|
|
|
$
|
39,066
|
|
(1)
|
Includes computer software acquired under capital leases of
$1.0 million
and
$0.9 million
and related accumulated amortization of
$0.4 million
and
$0.1 million
as of
December 31, 2016
and
2015
.
|
(2)
|
Includes satellite transponders acquired under capital leases of
$2.0 million
and the related accumulated depreciation of
$0.6 million
as of
December 31, 2016
. There was
no
satellite transponders acquired under capital leases as of
December 31, 2015
.
|
(3)
|
Includes internally developed software of
$10.7 million
and
$7.6 million
and related accumulated amortization of
$6.3 million
and
$2.7 million
as of
December 31, 2016
and
2015
, respectively. Amortization expense for the years ended
December 31, 2016
,
2015
and
2014
was
$3.6 million
,
$1.7 million
and
$0.8 million
, respectively. Impairment loss for the year ended
December 31, 2016
was
$4.1 million
included in the Consolidated Statements of Operations. There were
no
impairment losses during the years ended
December 31, 2015
and
2014
. During the years ended
December 31, 2016
,
2015
and
2014
, the Company capitalized software development costs totaling
$5.0 million
,
$3.3 million
and
$3.3 million
, respectively.
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Consolidated Statement of Operations Classification:
|
|
|
|
|
|
||||||
Cost of sales
|
$
|
10,855
|
|
|
$
|
2,957
|
|
|
$
|
2,820
|
|
Sales and marketing
|
1,793
|
|
|
893
|
|
|
471
|
|
|||
Product development
|
2,186
|
|
|
1,443
|
|
|
858
|
|
|||
General and administrative
|
6,677
|
|
|
4,154
|
|
|
3,030
|
|
|||
Total
|
$
|
21,511
|
|
|
$
|
9,447
|
|
|
$
|
7,179
|
|
|
Aviation Connectivity
|
|
Maritime & Land Connectivity
|
|
Media & Content
|
|
Total
|
||||||||
Balance as of December 31, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
53,014
|
|
|
$
|
53,014
|
|
Goodwill related to acquisitions
|
19,298
|
|
|
—
|
|
|
21,795
|
|
|
41,093
|
|
||||
Foreign currency translation and other
|
(25
|
)
|
|
—
|
|
|
(286
|
)
|
|
(311
|
)
|
||||
Balance as of December 31, 2015
|
19,273
|
|
|
—
|
|
|
74,523
|
|
|
93,796
|
|
||||
Goodwill related to the EMC acquisition
|
78,764
|
|
|
210,380
|
|
|
9,703
|
|
|
298,847
|
|
||||
Impairment loss
|
—
|
|
|
(64,000
|
)
|
|
—
|
|
|
(64,000
|
)
|
||||
Adjustment to RMG goodwill
|
—
|
|
|
—
|
|
|
(812
|
)
|
|
(812
|
)
|
||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||
Balance as of December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross carrying amount
|
98,037
|
|
|
210,380
|
|
|
83,419
|
|
|
391,836
|
|
||||
Accumulated impairment loss
|
—
|
|
|
(64,000
|
)
|
|
—
|
|
|
(64,000
|
)
|
||||
Balance as of December 31, 2016, net
|
$
|
98,037
|
|
|
$
|
146,380
|
|
|
$
|
83,419
|
|
|
$
|
327,836
|
|
|
|
|
December 31, 2016
|
||||||||||
|
Weighted Average Useful Lives
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Existing technology - software
|
4.8 years
|
|
$
|
43,019
|
|
|
$
|
9,842
|
|
|
$
|
33,177
|
|
Existing technology - games
|
5.0 years
|
|
12,331
|
|
|
9,659
|
|
|
2,672
|
|
|||
Developed technology
|
8.0 years
|
|
7,317
|
|
|
2,973
|
|
|
4,344
|
|
|||
Customer relationships
|
7.9 years
|
|
170,716
|
|
|
61,579
|
|
|
109,137
|
|
|||
Backlog
|
3.0 years
|
|
18,300
|
|
|
2,542
|
|
|
15,758
|
|
|||
Other
|
4.5 years
|
|
3,702
|
|
|
2,070
|
|
|
1,632
|
|
|||
Total
|
|
|
$
|
255,385
|
|
|
$
|
88,665
|
|
|
$
|
166,720
|
|
|
|
|
December 31, 2015
|
||||||||||
|
Weighted Average Useful Lives
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Existing technology - software
|
5.8 years
|
|
$
|
24,474
|
|
|
$
|
2,978
|
|
|
$
|
21,496
|
|
Existing technology - games
|
5.0 years
|
|
12,331
|
|
|
7,193
|
|
|
5,138
|
|
|||
Developed technology
|
8.0 years
|
|
7,317
|
|
|
2,058
|
|
|
5,259
|
|
|||
Customer relationships
|
7.5 years
|
|
133,566
|
|
|
50,184
|
|
|
83,382
|
|
|||
Other
|
3.7 years
|
|
7,399
|
|
|
4,990
|
|
|
2,409
|
|
|||
Total
|
|
|
$
|
185,087
|
|
|
$
|
67,403
|
|
|
$
|
117,684
|
|
Year Ending December 31,
|
Amount
|
||
2017
|
$
|
44,001
|
|
2018
|
38,486
|
|
|
2019
|
28,691
|
|
|
2020
|
22,307
|
|
|
2021
|
13,826
|
|
|
Thereafter
|
19,409
|
|
|
Total
|
$
|
166,720
|
|
|
December 31, 2016
|
||
Current assets
|
$
|
30,837
|
|
Non-current assets
|
21,822
|
|
|
Current liabilities
|
20,455
|
|
|
Non-current liabilities
|
1,307
|
|
|
Year Ended
|
||
|
December 31, 2016
|
||
Revenue
|
$
|
64,637
|
|
Operating expenses
|
51,240
|
|
|
Net income
|
13,397
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Accounts payable
|
$
|
67,562
|
|
|
$
|
27,622
|
|
Content license and royalties
|
53,008
|
|
|
57,143
|
|
||
Deferred consideration for EMC Acquisition
|
25,000
|
|
|
—
|
|
||
Accrued legal settlements
|
17,291
|
|
|
6,200
|
|
||
Accrued payroll obligations
|
12,251
|
|
|
9,492
|
|
||
Deferred acquisition earn-out liability
|
1,883
|
|
|
5,105
|
|
||
Other accrued expenses
|
63,349
|
|
|
12,662
|
|
||
Total
|
$
|
240,344
|
|
|
$
|
118,224
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Senior secured term loan facility, due July 2021
|
$
|
263,980
|
|
|
$
|
—
|
|
Senior secured revolving credit facility, due July 2020
|
55,500
|
|
|
—
|
|
||
Senior secured term loan facility, due July 2022
|
92,000
|
|
|
—
|
|
||
2.75% convertible senior notes, due February 2035
|
82,500
|
|
|
82,500
|
|
||
Other debts
|
3,299
|
|
|
2,819
|
|
||
Unamortized bond discounts, fair value adjustments and issue costs, net
|
(26,979
|
)
|
|
(14,165
|
)
|
||
Total carrying value of debt
|
470,300
|
|
|
71,154
|
|
||
Less: current portion, net
|
(2,069
|
)
|
|
(1,055
|
)
|
||
Total noncurrent debt
|
$
|
468,231
|
|
|
$
|
70,099
|
|
Year Ending December 31,
|
Amount
|
||
2017
|
$
|
3,638
|
|
2018
|
3,485
|
|
|
2019
|
3,326
|
|
|
2020
|
58,552
|
|
|
2021
|
253,300
|
|
|
Thereafter
|
174,978
|
|
|
Total
|
$
|
497,279
|
|
Year Ending December 31,
|
Amount
|
||
2017
|
$
|
46,207
|
|
2018
|
15,662
|
|
|
2019
|
5,142
|
|
|
2020
|
1,251
|
|
|
2021
|
650
|
|
|
Thereafter
|
150
|
|
|
Total minimum payments
|
$
|
69,062
|
|
Year Ending December 31,
|
Amount
|
||
2017
|
$
|
5,407
|
|
2018
|
3,312
|
|
|
2019
|
2,955
|
|
|
2020
|
2,585
|
|
|
2021
|
2,539
|
|
|
Thereafter
|
7,042
|
|
|
Total minimum lease payments
|
$
|
23,840
|
|
Year Ending December 31,
|
Amount
|
||
2017
|
$
|
758
|
|
2018
|
579
|
|
|
2019
|
486
|
|
|
2020
|
339
|
|
|
Total minimum lease payments
|
2,162
|
|
|
Less: amount representing interest
|
(174
|
)
|
|
Present value of net minimum lease payments
|
1,988
|
|
|
Less current portion
|
(670
|
)
|
|
Capital lease obligation, non-current
|
$
|
1,318
|
|
Year Ending December 31,
|
Amount
|
||
2017
|
$
|
94,269
|
|
2018
|
76,028
|
|
|
2019
|
63,896
|
|
|
2020
|
49,209
|
|
|
2021
|
29,426
|
|
|
Thereafter
|
134,690
|
|
|
Total minimum payments
|
$
|
447,518
|
|
•
|
Music Infringement and Related Claims
. On May 6, 2014, UMG Recordings, Inc., Capitol Records, Universal Music Corp. and entities affiliated with the foregoing (collectively, “UMG”) filed suit in the United States District Court for the Central District of California against the Company and Inflight Productions Ltd. (“IFP”) for copyright infringement and related claims and unspecified money damages. IFP is a direct subsidiary of Global Entertainment AG (formally AIA) and an indirect subsidiary of the Company. In August 2016, the Company entered into settlement agreements with major record labels and publishers, including UMG, to settle music copyright infringement and related claims (the “Sound-Recording Settlements”). As a result of the Sound-Recording Settlements, the Company paid approximately
$18.0 million
in cash and issued approximately
1.8 million
shares of its common stock to settle lawsuits and other claims. Under the settlement agreement with UMG, the Company paid UMG an additional
$5.0 million
in cash in March 2017 and agreed to issue
500,000
additional shares of its common stock when and if the closing price of its common stock exceeds
$10.00
per share and
400,000
additional shares of its common stock when and if the closing price of its common stock exceeds
$12.00
per share.
|
•
|
In 2016, the Company received notices from several music rights holders and associations acting on their behalf regarding potential claims that the Company infringed their music rights and the rights of artists that they represent. To date, none of these rights holders or associations has initiated litigation against the Company. The Company has not accrued a reserve for these loss contingencies at this time because the Company does not currently believe that a material loss relating to these matters is probable. Based on the Company’s previous music litigation experience, the Company believes that a material loss relating to these matters is reasonably possible, but is currently unable to estimate the amount of such loss at this time due to the preliminary nature of the potential claims. The Company intends to vigorously defend itself against these claims.
|
•
|
SwiftAir Litigation
. On August 14, 2014, SwiftAir, LLC filed suit against the Company’s wholly owned subsidiary Row 44 and
one
of its airline customers for breach of contract, quantum meruit, unjust enrichment and similar claims and money damages in the Superior Court of California for the County of Los Angeles. SwiftAir and Row 44 had a
|
•
|
AMN Litigation
. On March 4, 2016, Advanced Media Networks (“AMN”) filed suit against EMC (which is a wholly owned subsidiary of the Company) and Maritime Telecommunications Network, Inc., a wholly-owned indirect subsidiary of EMC (“MTN”) in U.S. District Court for the Southern District of Florida, for allegedly infringing
two
of AMN’s patents and seeking injunctive relief and unspecified monetary damages. The Company had recorded a loss contingency and indemnification receivable due from the seller of EMC for this matter in the purchase price accounting and as of December 31, 2016. In June 2017 however, EMC and MTN settled the lawsuit with AMN, and pursuant to the purchase agreement whereby EMC purchased the MTN business, the sellers of the MTN business indemnified EMC and MTN for the full settlement amount and all related legal expenses.
|
•
|
STM Litigation
. On April 12, 2016, STM Atlantic N.V. and STM Group, Inc. (jointly, the “STM Sellers”) filed a breach-of-contract action in Delaware Superior Court against EMC relating to EMC’s 2013 acquisition of STM Norway AS, STMEA (FZE), Vodanet Telecomuniçacões Ltda. and STM Networks from the STM Sellers. The STM Sellers allege, among other things, that EMC breached earnout provisions in the purchase agreement by failing to develop and sell sat-link technology following the acquisition closing. The STM Sellers seek
$20 million
in damages. The Court has currently scheduled the trial for this matter in December 2017. The Company has not accrued a reserve for these loss contingencies at this time because the Company does not currently believe that a material loss relating to these matters is probable. The Company believes that a material loss relating to these matters is reasonably possible, but is currently unable to estimate the amount of such loss at this time due to the preliminary nature of the potential claims. Additionally, pursuant to the purchase agreement whereby the Company purchased the EMC business, the sellers of the EMC business agreed to indemnify the Company in full for this claim and assumed the defense of this matter. The Company intends to vigorously defend itself against this claim.
|
•
|
Securities Class Action Litigation
. On February 23, 2017 and on March 17, 2017, following the Company’s announcement that it anticipated a delay in its 2016 Form 10-K filing and that its former CEO and former CFO would separate from the Company, three putative securities class action lawsuits were filed in United States District Court for the Central District of California. These lawsuits alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act against the Company, its former CEO and two of its former CFOs. The plaintiffs voluntarily dismissed two of these lawsuits. The third lawsuit, brought by putative stockholder M&M Hart Living Trust and Randi Williams (the “
Hart
complaint”), alleged that the Company and the other Defendants made misrepresentations and/or omitted material information about the EMC Acquisition in July 2016, the Company’s projected financial performance and synergies following that acquisition, and the impact of that acquisition on the Company’s internal controls over financial reporting. Plaintiffs sought unspecified damages, attorneys’ fees and costs. On November 2, 2017, the Court granted the Company’s and the other defendants’ motion to dismiss the
Hart
complaint, and dismissed the action with prejudice. The plaintiffs may appeal that ruling, and their period in which to appeal has not yet expired. The Company has not accrued a reserve for this loss contingency at this time because the Company currently believes that a material loss relating to this matter is remote. If appealed, the Company intends to vigorously defend itself against this claim.
|
|
2016
|
|
2015
|
|
2014
|
||||||
Common stock price on grant date
|
$
|
8.34
|
|
|
$
|
12.91
|
|
|
$
|
11.53
|
|
Expected life (in years)
|
3.91
|
|
|
3.77
|
|
|
4.00
|
|
|||
Risk-free interest rate
|
1.15
|
%
|
|
1.28
|
%
|
|
1.52
|
%
|
|||
Expected stock volatility
|
44
|
%
|
|
43
|
%
|
|
58
|
%
|
|||
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|||
Fair value of stock options granted
|
$
|
2.93
|
|
|
$
|
4.41
|
|
|
$
|
5.14
|
|
|
Shares
(in thousands)
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value
(in thousands)
|
|||||
Balance unexercised at January 1, 2016
|
5,625
|
|
|
$
|
11.20
|
|
|
3.18
|
|
$
|
204
|
|
Granted
|
1,927
|
|
|
$
|
8.34
|
|
|
|
|
|
|
|
Exercised
|
(26
|
)
|
|
$
|
9.87
|
|
|
|
|
|
||
Forfeited
|
(780
|
)
|
|
$
|
11.42
|
|
|
|
|
|
||
Balance unexercised at December 31, 2016
|
6,746
|
|
|
$
|
10.36
|
|
|
2.70
|
|
$
|
59
|
|
Exercisable at December 31, 2016
|
3,837
|
|
|
$
|
10.81
|
|
|
1.82
|
|
$
|
—
|
|
Vested and expected to vest after December 31, 2016
|
6,121
|
|
|
$
|
10.45
|
|
|
2.55
|
|
$
|
43
|
|
Range of Exercise Price
|
Number Outstanding
(in thousands)
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Weighted Average Exercise Price
|
|
Number Exercisable
(in thousands)
|
|
Weighted Average Exercise Price
|
||||||
$12.90 - $16.70
|
1,215
|
|
|
2.87
|
|
$
|
13.38
|
|
|
745
|
|
|
$
|
13.44
|
|
$10.57 - $12.51
|
1,436
|
|
|
2.56
|
|
$
|
11.24
|
|
|
860
|
|
|
$
|
11.04
|
|
$10.00 - $10.00
|
1,380
|
|
|
1.34
|
|
$
|
10.00
|
|
|
1,342
|
|
|
$
|
10.00
|
|
$9.25 - $9.87
|
1,286
|
|
|
2.28
|
|
$
|
9.54
|
|
|
801
|
|
|
$
|
9.70
|
|
$6.18 - $9.21
|
1,429
|
|
|
4.40
|
|
$
|
8.01
|
|
|
89
|
|
|
$
|
8.72
|
|
|
6,746
|
|
|
2.70
|
|
$
|
10.36
|
|
|
3,837
|
|
|
$
|
10.81
|
|
|
Shares (in thousands)
|
|
Weighted Average Grant Date Fair Value
|
|
Aggregate Intrinsic Value (in thousands)
|
|||||
Balance nonvested at January 1, 2016
|
408
|
|
|
$
|
12.71
|
|
|
|
||
Granted
|
1,618
|
|
|
$
|
7.91
|
|
|
|
||
Vested
|
(264
|
)
|
|
$
|
9.62
|
|
|
|
||
Forfeited
|
(124
|
)
|
|
$
|
10.98
|
|
|
|
||
Balance nonvested at December 31, 2016
|
1,638
|
|
|
$
|
8.60
|
|
|
$
|
10,579
|
|
Vested and expected to vest at December 31, 2016
|
1,068
|
|
|
$
|
8.48
|
|
|
$
|
6,899
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Consolidated Statement of Operations Classification:
|
|
|
|
|
|
||||||
Cost of sales
|
$
|
313
|
|
|
$
|
322
|
|
|
$
|
36
|
|
Sales and marketing
|
629
|
|
|
701
|
|
|
46
|
|
|||
Product development
|
994
|
|
|
1,020
|
|
|
268
|
|
|||
General and administrative
|
8,811
|
|
|
6,192
|
|
|
7,717
|
|
|||
Total
|
$
|
10,747
|
|
|
$
|
8,235
|
|
|
$
|
8,067
|
|
|
Weighted Average Exercise Price per Warrant
|
|
Number of Warrants (in thousands)
|
|
Weighted Average Remaining Life (in years)
|
|||
Legacy Row 44 Warrants
(1)
|
$
|
8.79
|
|
|
689
|
|
|
0.21
|
Legacy Row 44 Warrants
(2)
|
$
|
8.62
|
|
|
477
|
|
|
0.43
|
(1)
|
Originally issuable for Row 44 common stock, and now issuable for Company common stock. The exercise period for these Legacy Row 44 Warrants expired on March 20, 2017.
|
(2)
|
Originally issuable for Row 44’s Series C preferred stock and now issuable for Company common stock. The exercise period for these Legacy Row 44 Warrants expired on June 7, 2017.
|
|
Number of Warrants (in thousands)
|
|
Weighted Average Exercise price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|||
Outstanding at January 1, 2016
|
6,173
|
|
|
$
|
11.50
|
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
|
|
Purchased
|
—
|
|
|
—
|
|
|
|
|
Exchanged for Global Eagle common stock
|
—
|
|
|
—
|
|
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
|
|
Outstanding and exercisable at December 31, 2016
|
6,173
|
|
|
$
|
11.50
|
|
|
1.08
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
United States
|
$
|
(119,549
|
)
|
|
$
|
(9,949
|
)
|
|
$
|
(51,809
|
)
|
Foreign
|
(38,294
|
)
|
|
9,444
|
|
|
5,189
|
|
|||
Loss before income taxes
|
$
|
(157,843
|
)
|
|
$
|
(505
|
)
|
|
$
|
(46,620
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Current provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
47
|
|
|
$
|
932
|
|
|
$
|
2,724
|
|
State
|
227
|
|
|
355
|
|
|
114
|
|
|||
Foreign
|
15,184
|
|
|
6,786
|
|
|
12,804
|
|
|||
Total current provision
|
15,458
|
|
|
8,073
|
|
|
15,642
|
|
|||
Deferred provision (benefit):
|
|
|
|
|
|
||||||
Federal
|
(53,395
|
)
|
|
(2,691
|
)
|
|
(451
|
)
|
|||
State
|
(2,070
|
)
|
|
—
|
|
|
37
|
|
|||
Foreign
|
(4,904
|
)
|
|
(3,761
|
)
|
|
(4,654
|
)
|
|||
Total deferred provision (benefit)
|
(60,369
|
)
|
|
(6,452
|
)
|
|
(5,068
|
)
|
|||
Total income tax provision (benefit)
|
$
|
(44,911
|
)
|
|
$
|
1,621
|
|
|
$
|
10,574
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Income tax benefit at federal statutory rate
|
$
|
(55,245
|
)
|
|
$
|
(177
|
)
|
|
$
|
(16,317
|
)
|
State income tax, net of federal benefit
|
(1,898
|
)
|
|
418
|
|
|
4
|
|
|||
Permanent items
|
1,781
|
|
|
9,123
|
|
|
(153
|
)
|
|||
Change in fair value of financial instruments
|
(8,836
|
)
|
|
(3,847
|
)
|
|
3,374
|
|
|||
Goodwill impairment
|
12,321
|
|
|
—
|
|
|
—
|
|
|||
Sound-recording settlements
|
8,556
|
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation
|
229
|
|
|
375
|
|
|
1,575
|
|
|||
Tax credits
|
(590
|
)
|
|
(586
|
)
|
|
(626
|
)
|
|||
Other
|
2,977
|
|
|
746
|
|
|
(1,376
|
)
|
|||
Uncertain tax positions
|
3,858
|
|
|
708
|
|
|
2,597
|
|
|||
Withholding taxes
|
4,732
|
|
|
3,431
|
|
|
3,386
|
|
|||
Rate differential
|
(2,158
|
)
|
|
(3,200
|
)
|
|
(2,050
|
)
|
|||
Change in enacted tax rate
|
173
|
|
|
(1,371
|
)
|
|
—
|
|
|||
Change in valuation allowance
|
(10,811
|
)
|
|
(3,999
|
)
|
|
20,160
|
|
|||
Income tax provision (benefit)
|
$
|
(44,911
|
)
|
|
$
|
1,621
|
|
|
$
|
10,574
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Intangible assets and goodwill
|
$
|
20,196
|
|
|
$
|
7,624
|
|
Allowances and reserves
|
5,816
|
|
|
2,925
|
|
||
Accrued liabilities
|
8,793
|
|
|
8,398
|
|
||
Inventories
|
1,066
|
|
|
567
|
|
||
Investments in affiliates
|
—
|
|
|
443
|
|
||
Stock-based compensation
|
6,977
|
|
|
4,527
|
|
||
Tax credits
|
4,006
|
|
|
4,714
|
|
||
Net operating losses
|
68,489
|
|
|
38,923
|
|
||
Other
|
3,304
|
|
|
2,589
|
|
||
Total deferred tax assets
|
118,647
|
|
|
70,710
|
|
||
Less: valuation allowance
|
(43,269
|
)
|
|
(53,199
|
)
|
||
Net deferred tax assets
|
$
|
75,378
|
|
|
$
|
17,511
|
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment
|
$
|
(14,972
|
)
|
|
$
|
(2,756
|
)
|
Intangible assets
|
(37,590
|
)
|
|
(28,240
|
)
|
||
Investments in affiliates
|
(50,831
|
)
|
|
—
|
|
||
Debt costs
|
(4,288
|
)
|
|
(4,421
|
)
|
||
Other
|
(854
|
)
|
|
(3,715
|
)
|
||
Total deferred tax liabilities
|
(108,535
|
)
|
|
(39,132
|
)
|
||
Net deferred tax liabilities
|
$
|
(33,157
|
)
|
|
$
|
(21,621
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of year
|
$
|
4,637
|
|
|
$
|
4,237
|
|
|
$
|
2,831
|
|
Additions from business combinations
|
3,492
|
|
|
—
|
|
|
—
|
|
|||
Increase to prior year positions
|
(34
|
)
|
|
—
|
|
|
—
|
|
|||
Reversal of prior tax positions
|
(147
|
)
|
|
—
|
|
|
(1,795
|
)
|
|||
Additions based on tax positions related to current year
|
3,100
|
|
|
400
|
|
|
3,201
|
|
|||
Balance at end of year
|
$
|
11,048
|
|
|
$
|
4,637
|
|
|
$
|
4,237
|
|
|
Amount
|
||
Balance at December 31, 2013
|
$
|
50,782
|
|
Increase in valuation allowance
|
22,877
|
|
|
Balance at December 31, 2014
|
73,659
|
|
|
Acquired valuation allowance from business combination
|
(1,400
|
)
|
|
Decrease in valuation allowance
|
(19,060
|
)
|
|
Balance at December 31, 2015
|
53,199
|
|
|
Decrease in valuation allowance
|
(9,930
|
)
|
|
Balance at December 31, 2016
|
$
|
43,269
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Media & Content
|
|
|
|
|
|
||||||
Licensing
|
$
|
261,912
|
|
|
$
|
252,775
|
|
|
$
|
231,521
|
|
Services
|
56,152
|
|
|
55,292
|
|
|
45,868
|
|
|||
Total
|
318,064
|
|
|
308,067
|
|
|
277,389
|
|
|||
Aviation Connectivity
|
|
|
|
|
|
||||||
Services
|
109,507
|
|
|
96,912
|
|
|
74,839
|
|
|||
Equipment
|
28,977
|
|
|
21,051
|
|
|
35,507
|
|
|||
Total
|
138,484
|
|
|
117,963
|
|
|
110,346
|
|
|||
Maritime & Land Connectivity
|
|
|
|
|
|
||||||
Services
|
68,964
|
|
|
—
|
|
|
—
|
|
|||
Equipment
|
4,243
|
|
|
—
|
|
|
—
|
|
|||
Total
|
73,207
|
|
|
—
|
|
|
—
|
|
|||
Total revenue
|
$
|
529,755
|
|
|
$
|
426,030
|
|
|
$
|
387,735
|
|
Contribution profit
(1)
:
|
|
|
|
|
|
||||||
Media & Content
|
$
|
104,036
|
|
|
$
|
104,374
|
|
|
$
|
82,393
|
|
Aviation Connectivity
|
46,739
|
|
|
42,500
|
|
|
23,469
|
|
|||
Maritime & Land Connectivity
|
13,510
|
|
|
—
|
|
|
—
|
|
|||
Total contribution profit
|
164,285
|
|
|
146,874
|
|
|
105,862
|
|
|||
Other operating expenses
|
326,948
|
|
|
155,685
|
|
|
142,845
|
|
|||
Loss from operations
|
$
|
(162,663
|
)
|
|
$
|
(8,811
|
)
|
|
$
|
(36,983
|
)
|
(1)
|
Includes depreciation expense of
$0.7 million
(Media & Content),
$4.5 million
(Aviation Connectivity) and
$5.6 million
(Maritime & Land Connectivity),
$0.7 million
(Media & Content) and
$2.2 million
(Aviation Connectivity), and
$1.2 million
(Media & Content) and
$1.7 million
(Aviation Connectivity) for the years ended
December 31, 2016
,
2015
, and
2014
, respectively. Also includes amortization expense of
$0.2 million
(Media & Content) and
$2.7 million
(Media & Content) for the years ended
December 31, 2015
and
2014
, respectively.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Segment assets:
|
|
|
|
||||
Media & Content
|
$
|
391,668
|
|
|
$
|
432,250
|
|
Aviation Connectivity
|
151,136
|
|
|
95,379
|
|
||
Maritime & Land Connectivity
|
539,327
|
|
|
—
|
|
||
Total segment assets
|
1,082,131
|
|
|
527,629
|
|
||
Corporate assets
|
17,304
|
|
|
110,232
|
|
||
Total assets
|
$
|
1,099,435
|
|
|
$
|
637,861
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Media & Content:
|
|
|
|
|
|
||||||
United States and Canada
|
$
|
80,765
|
|
|
$
|
78,662
|
|
|
$
|
59,317
|
|
Europe
|
48,527
|
|
|
39,738
|
|
|
47,917
|
|
|||
Asia and Middle East
|
152,758
|
|
|
155,818
|
|
|
114,886
|
|
|||
Other
|
36,014
|
|
|
33,849
|
|
|
55,269
|
|
|||
Total
|
$
|
318,064
|
|
|
$
|
308,067
|
|
|
$
|
277,389
|
|
Aviation Connectivity:
|
|
|
|
|
|
||||||
United States
|
$
|
119,198
|
|
|
$
|
102,598
|
|
|
$
|
92,914
|
|
Europe
|
15,231
|
|
|
14,833
|
|
|
13,807
|
|
|||
Other
|
4,055
|
|
|
532
|
|
|
3,625
|
|
|||
Total
|
$
|
138,484
|
|
|
$
|
117,963
|
|
|
$
|
110,346
|
|
Maritime & Land Connectivity:
|
|
|
|
|
|
||||||
United States
|
$
|
31,334
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Europe
|
22,088
|
|
|
—
|
|
|
—
|
|
|||
Africa, Middle East and Asia
|
13,759
|
|
|
—
|
|
|
—
|
|
|||
Other
|
6,026
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
73,207
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
529,755
|
|
|
$
|
426,030
|
|
|
$
|
387,735
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Media & Content:
|
|
|
|
||||
United States and Canada
|
$
|
2,803
|
|
|
$
|
5,081
|
|
United Kingdom
|
3,023
|
|
|
3,192
|
|
||
India
|
2,013
|
|
|
1,828
|
|
||
Other
|
1,338
|
|
|
552
|
|
||
Total
|
$
|
9,177
|
|
|
$
|
10,653
|
|
Aviation Connectivity:
|
|
|
|
||||
United States
|
$
|
64,800
|
|
|
$
|
23,638
|
|
Total
|
$
|
64,800
|
|
|
$
|
23,638
|
|
Maritime & Land Connectivity:
|
|
|
|
||||
United States
|
$
|
66,124
|
|
|
$
|
—
|
|
Germany
|
16,321
|
|
|
—
|
|
||
Other
|
4,139
|
|
|
—
|
|
||
Total
|
$
|
86,584
|
|
|
$
|
—
|
|
Corporate
|
|
|
|
||||
United States
|
$
|
5,488
|
|
|
$
|
4,775
|
|
Total
|
$
|
5,488
|
|
|
$
|
4,775
|
|
|
$
|
166,049
|
|
|
$
|
39,066
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Media & Content
|
|
|
|
|
|
||||||
Licensing
|
$
|
261,912
|
|
|
$
|
252,775
|
|
|
$
|
231,521
|
|
Services
|
56,152
|
|
|
55,292
|
|
|
45,868
|
|
|||
Total
|
318,064
|
|
|
308,067
|
|
|
277,389
|
|
|||
Connectivity
|
|
|
|
|
|
||||||
Services
|
178,471
|
|
|
96,912
|
|
|
74,839
|
|
|||
Equipment
|
33,220
|
|
|
21,051
|
|
|
35,507
|
|
|||
Total
|
211,691
|
|
|
117,963
|
|
|
110,346
|
|
|||
Total revenue
|
$
|
529,755
|
|
|
$
|
426,030
|
|
|
$
|
387,735
|
|
Contribution profit
(1)
:
|
|
|
|
|
|
||||||
Media & Content
|
$
|
104,036
|
|
|
$
|
104,374
|
|
|
$
|
82,393
|
|
Connectivity
|
60,249
|
|
|
42,500
|
|
|
23,469
|
|
|||
Total contribution profit
|
164,285
|
|
|
146,874
|
|
|
105,862
|
|
|||
Other operating expenses
|
326,948
|
|
|
155,685
|
|
|
142,845
|
|
|||
Loss from operations
|
$
|
(162,663
|
)
|
|
$
|
(8,811
|
)
|
|
$
|
(36,983
|
)
|
(1)
|
Includes depreciation expense of
$0.7 million
(Media & Content) and
$10.2 million
(Connectivity),
$0.7 million
(Media & Content) and
$2.2 million
(Connectivity), and
$1.2 million
(Media & Content) and
$1.7 million
(Connectivity) for the years ended
December 31, 2016
,
2015
, and
2014
, respectively. Also includes amortization expense of
$0.2 million
(Media & Content) and
$2.7 million
(Media & Content) for the years ended
December 31, 2015
and
2014
, respectively.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Segment assets:
|
|
|
|
||||
Media & Content
|
$
|
391,668
|
|
|
$
|
432,250
|
|
Connectivity
|
690,463
|
|
|
95,379
|
|
||
Total segment assets
|
1,082,131
|
|
|
527,629
|
|
||
Corporate assets
|
17,304
|
|
|
110,232
|
|
||
Total assets
|
$
|
1,099,435
|
|
|
$
|
637,861
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Media & Content:
|
|
|
|
|
|
||||||
United States and Canada
|
$
|
80,765
|
|
|
$
|
78,662
|
|
|
$
|
59,317
|
|
Europe
|
48,527
|
|
|
39,738
|
|
|
47,917
|
|
|||
Asia and the Middle East
|
152,758
|
|
|
155,818
|
|
|
114,886
|
|
|||
Other
|
36,014
|
|
|
33,849
|
|
|
55,269
|
|
|||
Total
|
$
|
318,064
|
|
|
$
|
308,067
|
|
|
$
|
277,389
|
|
Connectivity:
|
|
|
|
|
|
||||||
United States
|
$
|
150,532
|
|
|
$
|
102,598
|
|
|
$
|
92,914
|
|
Europe
|
37,319
|
|
|
14,833
|
|
|
13,807
|
|
|||
Other
|
23,840
|
|
|
532
|
|
|
3,625
|
|
|||
Total
|
$
|
211,691
|
|
|
$
|
117,963
|
|
|
$
|
110,346
|
|
|
$
|
529,755
|
|
|
$
|
426,030
|
|
|
$
|
387,735
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Media & Content:
|
|
|
|
||||
United States and Canada
|
$
|
2,803
|
|
|
$
|
5,081
|
|
United Kingdom
|
3,023
|
|
|
3,192
|
|
||
India
|
2,013
|
|
|
1,828
|
|
||
Other
|
1,338
|
|
|
552
|
|
||
Total
|
$
|
9,177
|
|
|
$
|
10,653
|
|
Connectivity:
|
|
|
|
||||
United States
|
$
|
130,924
|
|
|
$
|
23,638
|
|
Germany
|
16,321
|
|
|
—
|
|
||
Other
|
4,139
|
|
|
—
|
|
||
Total
|
$
|
151,384
|
|
|
$
|
23,638
|
|
Corporate
|
|
|
|
||||
United States
|
$
|
5,488
|
|
|
$
|
4,775
|
|
Total
|
$
|
5,488
|
|
|
$
|
4,775
|
|
|
$
|
166,049
|
|
|
$
|
39,066
|
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Southwest Airlines as percentage of total revenue
|
22
|
%
|
|
23
|
%
|
|
24
|
%
|
Southwest Airlines as percentage of total Aviation Connectivity revenue
|
83
|
%
|
|
85
|
%
|
|
83
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income (loss) (Numerator):
|
|
|
|
|
|
||||||
Net loss
|
$
|
(112,932
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(57,194
|
)
|
Net income attributable to non-controlling interest
|
—
|
|
|
—
|
|
|
194
|
|
|||
Net loss attributable to Global Eagle Entertainment, Inc. common stockholders for basic and diluted EPS
|
$
|
(112,932
|
)
|
|
$
|
(2,126
|
)
|
|
$
|
(57,388
|
)
|
|
|
|
|
|
|
||||||
Less: adjustment for change in fair value on warrants liability for diluted EPS after assumed exercise of warrants liability
|
—
|
|
|
11,938
|
|
|
—
|
|
|||
Net loss for dilutive EPS
|
$
|
(112,932
|
)
|
|
$
|
(14,064
|
)
|
|
$
|
(57,388
|
)
|
|
|
|
|
|
|
||||||
Shares (Denominator):
|
|
|
|
|
|
||||||
Weighted average common shares outstanding - basic
|
81,269
|
|
|
77,558
|
|
|
73,300
|
|
|||
Dilutive effect of stock options and warrants
|
—
|
|
|
836
|
|
|
—
|
|
|||
Weighted average common shares outstanding - diluted
|
81,269
|
|
|
78,394
|
|
|
73,300
|
|
|||
|
|
|
|
|
|
||||||
Net loss per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.39
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.78
|
)
|
Diluted
|
$
|
(1.39
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.78
|
)
|
|
Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Employee stock options
|
6,203
|
|
|
3,200
|
|
|
2,025
|
|
Restricted stock units (including performance stock units)
|
306
|
|
|
44
|
|
|
3
|
|
Non-employees stock options
|
—
|
|
|
1
|
|
|
5
|
|
Equity warrants
(1)
|
1,165
|
|
|
430
|
|
|
1,101
|
|
Public SPAC Warrants
(2)
|
6,173
|
|
|
—
|
|
|
1,356
|
|
Convertible notes
|
4,447
|
|
|
3,850
|
|
|
—
|
|
EMC deferred consideration
(3)
|
1,428
|
|
|
—
|
|
|
—
|
|
Contingently issuable shares
(4)
|
354
|
|
|
—
|
|
|
—
|
|
(1)
|
Legacy Row 44 Warrants originally issuable for Row 44 common stock and Row 44 Series C preferred stock, and later issuable for the Company’s Common Stock. The exercise period for these Legacy Row 44 Warrants has now expired.
|
(2)
|
Warrants issued in the Company’s initial public offering to non-sponsor stockholders.
|
(3)
|
The Company elected to pay
$25.0 million
in newly issued shares of Company’s common stock at the Company's option on July 27, 2017 (one year after the EMC Acquisition Date).
|
(4)
|
In connection with the Sound-Recording Settlement, the Company is obligated to issue to UMG
0.5 million
shares of common stock when and if the closing price of the Company's common stock exceeds
$10.00
per share and
0.4 million
shares of common stock when and if the closing price of the Company’s common stock exceeds
$12.00
per share.
|
(1)
|
$2.7 million
relating to employee termination benefits, which primarily included severance and transitional-related expenses.
|
(2)
|
$0.4 million
of facilities disposal charges in connection with the closure of its German operation. Pursuant to the Restructuring Plan, the Company exited approximately
11,000
square feet of leased facilities in Duisburg and Munich, Germany, representing approximately
6%
of its global facilities square footage.
|
(3)
|
$1.5 million
of legal and professional fees.
|
|
2015
|
|
2014
|
||||
Termination benefits
|
$
|
238
|
|
|
$
|
2,489
|
|
Leases and other contractual obligations
|
107
|
|
|
322
|
|
||
Other
|
66
|
|
|
1,412
|
|
||
Total
|
$
|
411
|
|
|
$
|
4,223
|
|
|
Termination Costs
|
|
Leases and Other Contractual Obligations
|
|
Other
|
|
Total
|
||||||||
Restructuring reserves as of January 1, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Expense
|
2,489
|
|
|
322
|
|
|
1,412
|
|
|
4,223
|
|
||||
Payments
|
(1,680
|
)
|
|
(283
|
)
|
|
(336
|
)
|
|
(2,299
|
)
|
||||
Restructuring reserves as of December 31, 2014
|
809
|
|
|
39
|
|
|
1,076
|
|
|
1,924
|
|
||||
Expense
|
238
|
|
|
107
|
|
|
66
|
|
|
411
|
|
||||
Payments
|
(1,047
|
)
|
|
(146
|
)
|
|
(1,142
|
)
|
|
(2,335
|
)
|
||||
Restructuring reserves as of December 31, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
Mar. 31, 2015
|
|
June 30, 2015
|
|
Sept. 30, 2015
(1)
|
|
Dec. 31, 2015
|
|
Mar. 31, 2016
|
|
June 30, 2016
|
|
Sept. 30, 2016
(2)
|
|
Dec. 31, 2016
|
||||||||||||||||
Revenue
|
$
|
100,305
|
|
|
$
|
102,376
|
|
|
$
|
110,114
|
|
|
$
|
113,235
|
|
|
$
|
113,817
|
|
|
$
|
112,265
|
|
|
$
|
146,909
|
|
|
$
|
156,764
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of sales
|
69,426
|
|
|
66,083
|
|
|
71,456
|
|
|
72,191
|
|
|
76,768
|
|
|
75,086
|
|
|
103,348
|
|
|
110,268
|
|
||||||||
Sales and marketing
|
3,275
|
|
|
4,964
|
|
|
4,819
|
|
|
4,647
|
|
|
4,672
|
|
|
6,491
|
|
|
8,390
|
|
|
11,388
|
|
||||||||
Product development
(7)
|
7,230
|
|
|
6,451
|
|
|
7,766
|
|
|
7,163
|
|
|
8,746
|
|
|
8,416
|
|
|
7,916
|
|
|
12,640
|
|
||||||||
General and administrative
(1) (2)
(3)
|
18,119
|
|
|
17,576
|
|
|
18,602
|
|
|
23,418
|
|
|
19,220
|
|
|
18,447
|
|
|
44,728
|
|
|
32,800
|
|
||||||||
Provision for legal settlements
(3)
|
—
|
|
|
750
|
|
|
3,500
|
|
|
—
|
|
|
2,001
|
|
|
38,142
|
|
|
1,545
|
|
|
1,758
|
|
||||||||
Amortization of intangible assets
|
5,983
|
|
|
6,005
|
|
|
7,286
|
|
|
7,720
|
|
|
7,403
|
|
|
7,486
|
|
|
9,166
|
|
|
11,593
|
|
||||||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64,000
|
|
||||||||
Restructuring charges
|
302
|
|
|
—
|
|
|
66
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total operating expenses
|
104,335
|
|
|
101,829
|
|
|
113,495
|
|
|
115,182
|
|
|
118,810
|
|
|
154,068
|
|
|
175,093
|
|
|
244,447
|
|
||||||||
Income (loss) from operations
|
(4,030
|
)
|
|
547
|
|
|
(3,381
|
)
|
|
(1,947
|
)
|
|
(4,993
|
)
|
|
(41,803
|
)
|
|
(28,184
|
)
|
|
(87,683
|
)
|
||||||||
Interest expense, net
|
(245
|
)
|
|
(583
|
)
|
|
(803
|
)
|
|
(861
|
)
|
|
(804
|
)
|
|
(613
|
)
|
|
(6,412
|
)
|
|
(10,369
|
)
|
||||||||
Income from equity method investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,065
|
|
|
1,764
|
|
||||||||
Change in fair value of derivatives
|
954
|
|
|
14,789
|
|
|
(1,877
|
)
|
|
(1,928
|
)
|
|
5,865
|
|
|
10,926
|
|
|
1,191
|
|
|
7,533
|
|
||||||||
Other income (expense), net
(4)
|
(796
|
)
|
|
(443
|
)
|
|
(576
|
)
|
|
675
|
|
|
680
|
|
|
(5,934
|
)
|
|
631
|
|
|
(1,703
|
)
|
||||||||
Income (loss) before income taxes
|
(4,117
|
)
|
|
14,310
|
|
|
(6,637
|
)
|
|
(4,061
|
)
|
|
748
|
|
|
(37,424
|
)
|
|
(30,709
|
)
|
|
(90,458
|
)
|
||||||||
Income tax expense (benefit)
(2)
|
(686
|
)
|
|
1,323
|
|
|
235
|
|
|
749
|
|
|
3,160
|
|
|
736
|
|
|
(50,063
|
)
|
|
1,256
|
|
||||||||
Net income (loss)
|
$
|
(3,431
|
)
|
|
$
|
12,987
|
|
|
$
|
(6,872
|
)
|
|
$
|
(4,810
|
)
|
|
$
|
(2,412
|
)
|
|
$
|
(38,160
|
)
|
|
$
|
19,354
|
|
|
$
|
(91,714
|
)
|
Net income (loss) per share
(5)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
(0.04
|
)
|
|
$
|
0.17
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.23
|
|
|
$
|
(1.07
|
)
|
Diluted
|
$
|
(0.06
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.23
|
|
|
$
|
(1.07
|
)
|
Weighted average shares outstanding
(6)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
76,874
|
|
|
77,111
|
|
|
77,753
|
|
|
78,476
|
|
|
78,643
|
|
|
78,127
|
|
|
82,874
|
|
|
85,369
|
|
||||||||
Diluted
|
78,725
|
|
|
78,518
|
|
|
77,753
|
|
|
78,476
|
|
|
78,643
|
|
|
78,127
|
|
|
85,081
|
|
|
85,369
|
|
(1)
|
The Company acquired WOI (Media & Content segment) and RMG (Media & Content segment) on July 1, 2015 and masFlight (Aviation Connectivity segment) and navAero (Aviation Connectivity segment) on August 6, 2015. The financial data from the quarter ended September 30, 2015 includes the operating results of these acquired businesses for the periods beginning on their respective acquisition dates through September 30, 2015. The Company reported transaction expenses related to these acquisitions totaling
$1.3 million
during the quarter ended September 30, 2015 in General and administrative in the above quarterly Consolidated Statement of Operations.
|
(2)
|
On July 27, 2016, the Company acquired EMC (Maritime & Land Connectivity segment). The financial data for the quarter ended September 30, 2016 includes the operating results of EMC from the acquisition date through September 30, 2016. In connection with this acquisition, the Company released the valuation allowance due to the deferred tax liabilities created of
$53.9 million
, offset by foreign income taxes of
$4.8 million
resulting from the foreign subsidiaries’ contribution to pretax income, withholding taxes of
$2.7 million
and effects of permanent differences. Also, in connection with this acquisition, the Company acquired interests in two equity method investments. The related transaction and integration expenses of
$12.7 million
,
$1.9 million
and
$0.8 million
were incurred during the quarters ended September 30, 2016, June 30, 2016 and March 31, 2016, respectively, and
$1.8 million
was incurred during the quarter ended December 31, 2015, in General and administrative in the quarterly Consolidated Statements of Operations.
|
(3)
|
During the quarter ended June 30, 2016, the Company recorded a one-time charge of
$38.1 million
to settle sound-recording liabilities under the Sound-Recording Settlements. The Company also engaged in settlement negotiations with airlines regarding related liabilities. The presentation of the Provision for legal settlements for applicable prior quarters have been reclassified from General and administrative to conform with this presentation.
|
(4)
|
Other income (expense), net, for the quarter ended June 30, 2016 includes a one-time
$4.4 million
write-off of a related party note receivable and accrued interest and a
$0.9 million
impairment of internally developed software.
|
(5)
|
Quarterly and year-to-date computations of net income (loss) per common share amounts are calculated independently. Therefore, the sum of the per share amounts for the quarters may not agree with the per share amounts for the year.
|
(6)
|
During the quarter ended June 30, 2016, the Company repurchased
0.6 million
shares of its common stock for consideration of
$5.2 million
in the aggregate under the stock repurchase program authorized by the Board of Directors in March 2016. In connection with the EMC Acquisition on July 27, 2016, the Company issued approximately
5.5 million
shares of its common stock at the closing as part of the purchase price. In addition, as a result of the Sound-Recording Settlements entered into with major record labels and publishers in 2016, including UMG, the Company issued
1.8 million
shares of its common stock during the quarter ended September 30, 2016 as part of the settlement payments.
|
(7)
|
Product development for the quarter ended December 31, 2016 includes an impairment of internally developed software of
$3.2 million
.
|
•
|
failure to deliver the 2016 annual financial statements by March 31, 2017: the waiver was to remain effective so long as the Company issued an earnings release for the fiscal quarter ended December 31, 2016 (“Earnings Release”) on or prior to June 30, 2017 and delivered its 2016 audited consolidated financial statements by July 31, 2017. The June 2017 Amendment, September 2017 Extension, First October 2017 Amendment, October 2017 Extension and Second October 2017 Amendment further amended this waiver as described below.
|
•
|
failure to deliver the quarterly financial statements for the quarter ended March 31, 2017 by May 15, 2017: the waiver was to remain effective so long as the Company issued the Earnings Release on or prior to June 30, 2017 and delivered the unaudited consolidated financial statements for the quarter ended March 31, 2017 on or prior to July 31, 2017. The June 2017 Amendment, September 2017 Extension, First October 2017 Amendment and Second October 2017 Amendment further amended this waiver as described below.
|
•
|
failure to deliver the Company’s budget to the Administrative Agent by April 30, 2017: the waiver was to remain effective so long as the Company delivered certain 2017 financial projections by May 31, 2017. The Company delivered its budget to the Administrative Agent by the required deadline.
|
•
|
estimated consolidated adjusted EBITDA of the Company for the fiscal quarter ended December 31, 2016 with a range of no greater than
$5,000,000
and,
|
•
|
the current consolidated cash balance, current cash balance of the Company’s foreign subsidiaries, and the current outstanding balance under the 2017 Revolving Loans
|
•
|
The Company was no longer required to deliver an earnings release for the fiscal quarter ended December 31, 2016 by June 30, 2017.
|
•
|
The Company had until September 15, 2017 (rather than July 31, 2017 as required under the May 2017 Amendment) to deliver its audited annual financial statements for the year ended December 31, 2016 (together with the related audit report and opinion from the Company’s independent accountants and the other items required by the 2017 Credit Agreement (as amended) to be delivered therewith, the “Annual Financial Statement Deliverables”). The September
|
•
|
The Company had up to 30 days following the date on which it delivers the Annual Financial Statement Deliverables to deliver its unaudited financial statements for both (i) the quarter ended March 31, 2017 (versus a required delivery date of July 31, 2017 under the 2017 First Amended Credit Agreement) and (ii) the quarter ended June 30, 2017. The September 2017 Extension, First October 2017 Amendment and Second October 2017 Amendment amended this requirement as described below.
|
•
|
The Company would have until September 30, 2017 (rather than September 15, 2017 as previously required under the June 2017 Amendment) to deliver the Annual Financial Statement Deliverables.
|
•
|
The Company would also continue to have up to 30 days (as provided for in the June 2017 Amendment) following the date on which it delivers the Annual Financial Statement Deliverables to deliver its unaudited financial statements for both the quarter ended March 31, 2017 and the quarter ended June 30, 2017.
|
•
|
The Company would have until October 31, 2017 (rather than September 30, 2017 as previously required under the September 2017 Extension) to deliver the Annual Financial Statement Deliverables. The Company would also continue to have up to 30 days following the date on which it delivers the Annual Financial Statement Deliverables to deliver its unaudited financial statements for both the quarter ended March 31, 2017 and the quarter ended June 30, 2017. The Second October 2017 Amendment amended this requirement as described below.
|
•
|
The Company would have up to 30 days following the date on which it delivers its unaudited financial statements for both the quarter ended March 31, 2017 and the quarter ended June 30, 2017 to deliver its unaudited financial statements for the quarter ended September 30, 2017. The Second October 2017 Amendment amended this requirement as described below.
|
•
|
Under the 2017 Credit Agreement (as amended by the First October 2017 Amendment), the Initial Term Loans (as defined) bear interest on the outstanding amount at a rate per annum equal to either (i) the Base Rate plus
6.25%
or (ii) the Eurocurrency Rate for each Interest Period plus
7.25%
. The Second October 2017 Amendment further amended these interest rates as described below.
|
•
|
Under the 2017 Credit Agreement, the 2017 Revolving Loans bear interest at a rate equal to either (i) the Base Rate plus
6.25%
or (ii) the Eurocurrency Rate or EURIBOR plus
7.25%
until the Company delivers its unaudited financial statements for the quarter ending March 31, 2018. After the delivery of those unaudited financial statements, the 2017 Revolving Loans will bear interest at a rate based on the Base Rate, Eurocurrency Rate or EURIBOR plus an interest-rate spread thereon that varies on the Consolidated First Lien Net Leverage Ratio. The spread thereon ranged from
5.75%
to
6.25%
for the Base Rate and
6.75%
to
7.25%
for the Eurocurrency Rate and EURIBOR. The Second October 2017 Amendment further amended these interest rates as described below.
|
•
|
The “non-call period” will now extend until: (i) if the Company prepays any Term Loans prior to the date that it delivers the Annual Financial Statement Deliverables, October 31, 2019; and (ii) if the Company prepays any Term Loans on or after the date that it delivers the Annual Financial Statement Deliverables, the earlier of (x) the second anniversary of the date of that delivery and (y) October 31, 2019. (The “non-call period” (as so extended) is referred to as the “Extended Non-Call Period.”) This period previously expired in May 2019 under the terms of the May 2017 Amendment. The Company remains subject to
2.0%
and
1.0%
prepayment premiums through the first and second anniversaries, respectively, of the end of the Extended Non-Call Period, which periods previously expired in May 2020 and May 2021, respectively.
|
•
|
The Company would issue on or prior to October 6, 2017 an earnings release for the fiscal quarter and fiscal year ended December 31, 2016, including a related balance sheet, statement of income and statement of cash flows. This was a new affirmative covenant under the 2017 Credit Agreement. The October 2017 Extension amended this requirement as described below.
|
•
|
The Company would furnish on a Current Report on Form 8-K on or prior to October 12, 2017: (i) the range of its (A) total estimated revenue and (B) estimated adjusted EBITDA, in each case for the fiscal quarters ended March 31, 2017 and June 30, 2017, with the difference between the high end and low end of the ranges to be no greater than
$5.0 million
; and (ii) a forecast of its consolidated cash balance as of December 31, 2017. This is a new affirmative covenant for the Company under the 2017 Credit Agreement. The Company complied with this affirmative covenant by the due date.
|
•
|
The Company will continue (on a bi-weekly basis commencing October 11, 2017 until it has delivered the Annual Financial Statement Deliverables) to furnish or file on a Current Report on Form 8-K its current consolidated cash balance, the current cash balance of its foreign subsidiaries and the current outstanding balance under the Revolving Credit Facility. The Company will also participate in one conference call with the Administrative Agent and the Lenders with respect to the information contained in that Current Report on Form 8-K.
|
•
|
The Company would have until November 15, 2017 (rather than October 31, 2017 as previously required under the First October 2017 Amendment) to deliver the Annual Financial Statement Deliverables. The November Extension Letter Agreement amended this requirement as described below.
|
•
|
The Company would have until January 2, 2018 to deliver its unaudited financial statements for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017.
|
•
|
Under the 2017 Credit Agreement (as amended by the Second October 2017 Amendment), the Initial Term Loans (as defined) bear interest on the outstanding amount at a rate per annum equal to either (i) the Base Rate plus
6.50%
or (ii) the Eurocurrency Rate for each Interest Period plus
7.50%
.
|
•
|
Under the 2017 Credit Agreement (as amended by the Second October 2017 Amendment), the 2017 Revolving Loans bear interest at a rate equal to either (i) the Base Rate plus
6.50%
or (ii) the Eurocurrency Rate or EURIBOR plus
7.50%
until the Company delivers its unaudited financial statements for the quarter ending March 31, 2018. After the delivery of those unaudited financial statements, the 2017 Revolving Loans will bear interest at a rate based on the Base Rate, Eurocurrency Rate or EURIBOR plus an interest-rate spread thereon that varies on the Consolidated First Lien Net Leverage Ratio. The spread thereon ranged from
6.00%
to
6.50%
for the Base Rate and
7.00%
to
7.50%
for the Eurocurrency Rate and EURIBOR.
|
|
GLOBAL EAGLE ENTERTAINMENT INC.
|
|
|
|
|
|
By:
|
/s/ Stephen Ballas
|
|
|
|
|
Name:
|
Stephen Ballas
|
|
|
|
|
Title:
|
Executive Vice President and General Counsel
|
|
GLOBAL EAGLE ENTERTAINMENT INC.
|
|
|
|
|
|
By:
|
/s/ Stephen Ballas
|
|
|
|
|
Name:
|
Stephen Ballas
|
|
|
|
|
Title:
|
Executive Vice President and General Counsel
|
1.
|
Engagement; Term.
|
2.
|
Compensation and Expense Reimbursement.
|
3.
|
Representations and Warranties.
|
4.
|
Independent Contractor Status.
|
5.
|
Confidential Information.
|
6.
|
Securities Laws.
|
7.
|
Cooperation in Litigation.
|
8.
|
General.
|
9.
|
Governing Law; Arbitration.
|
|
CONSULTANT:
|
|
|
|
Kevin Trosian
|
|
|
|
|
|
Signature: /s/ Kevin Trosian
|
|
|
|
Address:
|
|
c/o Global Eagle Entertainment Inc.
|
|
6100 Center Drive, Suite 1020
|
|
Los Angeles, CA 90045
|
|
|
|
THE COMPANY:
|
|
|
|
GLOBAL EAGLE ENTERTAINMENT INC.
|
|
|
|
BY: /s/ Stephen Ballas
|
|
Name: Stephen Ballas
|
|
Title: General Counsel
|
|
|
|
Address:
|
|
c/o Global Eagle Entertainment Inc.
|
|
6100 Center Drive, Suite 1020
|
|
Los Angeles, CA 90045
|
|
EMPLOYEE:
|
|
|
|
|
|
/s/ Frank Mullen
|
|
Name: Frank Mullen
|
|
Dated: March 13, 2017
|
|
|
|
THE COMPANY
|
|
|
|
GLOBAL EAGLE ENTERTAINMENT INC.
|
|
|
|
|
|
BY: /s/ Stephen Ballas
|
|
Name: Stephen Ballas
|
|
Title: EVP & General Counsel
|
|
Dated: March 13, 2017
|
|
|
|
|
Page
|
ARTICLE 1: DEFINITIONS; INTERPRETATION
|
1
|
|||
|
1.1
|
Definitions
|
1
|
|
|
1.2
|
Interpretation
|
7
|
|
ARTICLE 2: GENERAL PROVISIONS
|
8
|
|||
|
2.1
|
Name
|
8
|
|
|
2.2
|
Principal Place of Business; Registered Office and Agent
|
8
|
|
|
2.3
|
Formation of Company; Certificate
|
8
|
|
|
2.4
|
Term
|
8
|
|
|
2.5
|
Purpose
|
8
|
|
|
|
2.5.1
|
General
|
8
|
|
|
2.5.2
|
Activities
|
8
|
|
2.6
|
Title to Company Property
|
9
|
|
|
2.7
|
Publicity
|
9
|
|
|
2.8
|
Non-Compete and Non-Solicitation
|
9
|
|
|
|
2.8.1
|
Non-Compete
|
9
|
|
|
2.8.2
|
Non-Solicitation
|
9
|
|
|
2.8.3
|
AWS Services
|
10
|
|
2.9
|
Confidentiality
|
10
|
|
|
2.10
|
Liability of Members, Manager and Board to Third Parties
|
11
|
|
ARTICLE 3: CAPITAL
|
11
|
|||
|
3.1
|
Initial Capital Contributions; Percentage Interests
|
11
|
|
|
3.2
|
Additional Capital Contributions; Consequence of Failure to Make Additional Capital Contributions
|
11
|
|
|
|
3.2.1
|
Additional Capital Contributions
|
11
|
|
|
3.2.2
|
Consequences of Failure to Make Additional Capital Contributions
|
11
|
|
3.3
|
No Withdrawal of Capital; No Interest on Capital
|
12
|
|
|
3.4
|
Maintenance of Capital Accounts
|
13
|
|
|
|
3.4.1
|
Increases
|
13
|
|
|
3.4.2
|
Decreases
|
13
|
|
|
3.4.3
|
Modification and Adjustments
|
13
|
|
3.5
|
Additional Members
|
13
|
|
|
3.6
|
Loans
|
|
13
|
ARTICLE 4: ALLOCATIONS
|
14
|
|||
|
4.1
|
General
|
14
|
|
|
4.2
|
Loss Limitation
|
14
|
|
|
4.3
|
Special Allocations
|
14
|
|
|
|
4.3.1
|
Minimum Gain Chargeback
|
14
|
|
|
4.3.2
|
Member Minimum Gain Chargeback
|
15
|
|
|
4.3.3
|
Qualified Income Offset
|
15
|
|
|
4.3.4
|
Nonrecourse Deductions
|
15
|
|
|
4.3.5
|
Member Nonrecourse Deductions
|
15
|
|
|
4.3.6
|
Curative Allocations
|
15
|
|
4.4
|
Code Section 704(c) Allocations
|
16
|
|
|
|
4.4.1
|
Contributed Property
|
16
|
|
|
4.4.2
|
Reverse 704(c) Allocations
|
16
|
|
4.5
|
Other Allocation Rules
|
16
|
|
ARTICLE 5: DISTRIBUTIONS
|
16
|
|||
|
5.1
|
Discretionary Distributions
|
16
|
|
|
5.2
|
Mandatory Distributions
|
17
|
|
|
|
5.2.1
|
Tax Distributions
|
17
|
|
|
5.2.2
|
Other Distributions
|
17
|
|
5.3
|
Distributions in Liquidation
|
17
|
|
|
|
5.3.1
|
Priority
|
17
|
|
|
5.3.2
|
Distributions In Kind; Procedures
|
18
|
|
5.4
|
Deficit Capital Accounts
|
18
|
|
|
5.5
|
Waiver of Partition
|
18
|
|
ARTICLE 6: MANAGEMENT
|
19
|
|||
|
6.1
|
The Manager
|
19
|
|
|
|
6.1.1
|
Appointment of Manager
|
19
|
|
|
6.1.2
|
Authority of Manager
|
19
|
|
6.2
|
Limitations on the Authority of the Manager
|
19
|
|
|
|
6.2.1
|
Matters Requiring Board Approval
|
19
|
|
|
6.2.2
|
Matters Requiring Member Approval
|
20
|
|
6.3
|
Steering Committee
|
21
|
|
|
|
6.3.1
|
Appointment and Scope
|
21
|
|
|
6.3.2
|
Composition
|
21
|
|
|
6.3.3
|
Meetings of Steering Committee
|
21
|
|
6.4
|
Information
|
22
|
|
|
|
6.4.1
|
Expenses
|
22
|
|
6.5
|
The Board of Directors
|
22
|
|
|
|
6.5.1
|
Constitution of the Board
|
22
|
|
|
6.5.2
|
Meetings of the Board
|
23
|
|
6.6
|
Voting
|
|
23
|
|
|
6.6.1
|
Action Without a Meeting
|
23
|
|
|
6.6.2
|
Authority of the Board
|
23
|
|
6.7
|
Officers
|
23
|
|
|
6.7.1
|
Appointment
|
24
|
|
|
6.7.2
|
Powers and Duties
|
24
|
|
6.8
|
Related Party Transactions
|
24
|
|
ARTICLE 7: RIGHTS, OBLIGATIONS AND POWERS OF THE MEMBERS
|
25
|
|||
|
7.1
|
Voting Rights of Members
|
25
|
|
|
7.2
|
Compensation of Members
|
25
|
|
ARTICLE 8: INDEMNIFICATION
|
25
|
|||
|
8.1
|
Limitation on Liability
|
25
|
|
|
8.2
|
Indemnification
|
25
|
|
|
8.3
|
Indemnification Procedures
|
26
|
|
|
8.4
|
Advancement Of Expenses
|
26
|
|
ARTICLE 9: TRIAL; OPERATIONS
|
26
|
|||
|
9.1
|
Pre-Trial
|
26
|
|
|
9.2
|
Trial
|
|
27
|
|
9.3
|
Post-Trial
|
27
|
|
|
9.4
|
Withdrawal Procedures
|
28
|
|
|
|
9.4.1
|
Withdrawal Notice
|
28
|
|
|
9.4.2
|
Purchase Election
|
28
|
|
|
9.4.3
|
Withdrawal Election
|
28
|
|
9.5
|
Business Plans
|
28
|
|
|
|
9.5.1
|
Adoption
|
28
|
|
|
9.5.2
|
Implementation
|
29
|
|
9.6
|
Provision of Services; Failure to Provide Services
|
29
|
|
|
|
9.6.1
|
Provision of Services
|
29
|
|
|
9.6.2
|
Failure to Provide Certain Services
|
29
|
ARTICLE 10: REPRESENTATIONS AND WARRANTIES
|
30
|
|||
|
10.1
|
In General
|
30
|
|
|
10.2
|
Representations and Warranties
|
30
|
|
|
|
10.2.1
|
Organization and Existence
|
30
|
|
|
10.2.2
|
Power and Authority
|
30
|
|
|
10.2.3
|
Authorization and Enforceability
|
30
|
|
|
10.2.4
|
No Governmental Consents
|
30
|
|
|
10.2.5
|
No Conflict or Breach
|
31
|
|
|
10.2.6
|
No Proceedings
|
31
|
ARTICLE 11: TRANSFERS OF COMPANY INTERESTS
|
31
|
|||
|
11.1
|
Restrictions on Transfer
|
31
|
|
|
11.2
|
Permitted Transfers
|
31
|
|
|
|
11.2.1
|
Trial Period and Decision Period
|
31
|
|
|
11.2.2
|
After the First Contribution Date
|
32
|
|
11.3
|
Continuing Liability; Conditions to Permitted Transfers
|
32
|
|
|
|
11.3.1
|
Required Documentation
|
32
|
|
|
11.3.2
|
Reimbursement of Costs
|
33
|
|
|
11.3.3
|
Legal Opinions
|
33
|
|
|
11.3.4
|
Tax Information
|
33
|
|
11.4
|
Prohibited Transfers
|
33
|
|
|
11.5
|
Rights of Unadmitted Assignees and Transferor
|
34
|
|
|
11.6
|
Admission of Substituted Members
|
34
|
|
|
11.7
|
Specific Performance
|
34
|
|
|
11.8
|
Right of First Offer
|
35
|
|
|
|
11.8.1
|
Offer
|
35
|
|
|
11.8.2
|
Exercise
|
35
|
|
|
11.8.3
|
Failure to Exercise
|
35
|
|
11.9
|
Deemed Transfers
|
35
|
|
|
|
11.9.1
|
Involuntary Transfers
|
36
|
|
|
11.9.2
|
Effect of Notice
|
36
|
|
|
11.9.3
|
Pricing
|
36
|
|
|
11.9.4
|
Other Terms
|
36
|
ARTICLE 12: ADDITIONAL MEMBERS
|
36
|
|||
|
12.1
|
Admission of Additional Member
|
36
|
|
|
12.2
|
Accounting
|
37
|
|
|
12.3
|
Adjustments to Company Assets
|
37
|
|
ARTICLE 13: SALE, DISSOLUTION AND LIQUIDATION
|
37
|
|||
|
13.1
|
Dissolution of the Company
|
37
|
|
|
13.2
|
Winding Up and Liquidation
|
37
|
|
|
13.3
|
Priority on Liquidation
|
38
|
|
ARTICLE 14: ACCOUNTING AND REPORTS
|
38
|
|||
|
14.1
|
Rooks and Records
|
38
|
|
|
14.2
|
Bank Accounts
|
38
|
|
|
14.3
|
Accounting Method; Audited Financial Statements
|
38
|
|
|
14.4
|
Fiscal Year
|
39
|
|
|
14.5
|
Reports; Tax Returns
|
39
|
|
|
14.6
|
Required Governmental Filings
|
39
|
|
|
14.7
|
Tax Matters Member
|
39
|
|
ARTICLE 15: REGULATORY MATTERS
|
39
|
|||
|
15.1
|
Prohibited Actions
|
39
|
|
|
15.2
|
Political Contributions
|
40
|
|
|
15.3
|
Compliance With Regulations
|
40
|
|
ARTICLE 16: DISPUTE RESOLUTION
|
40
|
|
16.1
|
General
|
40
|
|
|
16.2
|
Selection of Arbitrators
|
40
|
|
|
16.3
|
Qualifications of Mediator or Arbitrator
|
41
|
|
|
16.4
|
Discovery
|
41
|
|
|
16.5
|
Costs
|
41
|
|
ARTICLE 17: GENERAL PROVISIONS
|
42
|
|||
|
17.1
|
Notices
|
42
|
|
|
17.2
|
Consequential Damages; Affiliates
|
43
|
|
|
17.3
|
Waiver
|
43
|
|
|
17.4
|
Severability
|
43
|
|
|
17.5
|
Further Assurances
|
43
|
|
|
17.6
|
Governing Law; Jurisdiction
|
43
|
|
|
17.7
|
Counterparts
|
43
|
|
|
17.8
|
Limitation on Rights of Others
|
43
|
|
|
17.9
|
Successors and Assigns
|
44
|
|
|
17.10
|
Entire Agreement; Amendment
|
44
|
|
|
17.11
|
Expenses
|
44
|
|
|
17.12
|
Table of Contents; Headings
|
44
|
|
|
17.13
|
Disclaimer of Agency
|
44
|
|
|
17.14
|
Currency of Payment
|
44
|
|
|
|
|
|
|
EXHIBIT A
|
|
|
||
EXHIBIT B
|
|
|
||
EXHIBIT C
|
|
|
||
EXHIBIT D
|
|
|
||
EXHIBIT E
|
|
|
||
EXHIBIT F
|
|
|
||
FORM OF MASTER AGREEMENT
|
|
|||
EXHIBIT G
|
|
|
1.1
|
Definitions
|
1.2
|
Interpretation
|
1.3
|
Name
|
1.4
|
Principal Place of Business; Registered Office and Agent
|
1.5
|
Formation of Company; Certificate
|
1.6
|
Term
|
1.7
|
Purpose
|
1.8
|
Title to Company Property
|
1.9
|
Publicity
|
1.10
|
Non-Compete and Non-Solicitation
|
1.11
|
Confidentiality
|
1.12
|
Liability of Members, Manager and Board to Third Parties
|
1.13
|
Initial Capital Contributions; Percentage Interests
|
1.14
|
Additional Capital Contributions; Consequence of Failure to Make Additional Capital Contributions
|
1.15
|
No Withdrawal of Capital; No Interest on Capital
|
1.16
|
Maintenance of Capital Accounts
|
1.17
|
Additional Members
|
1.18
|
Loans
|
1.19
|
General
|
1.20
|
Loss Limitation
|
1.21
|
Special Allocations
|
1.22
|
Code Section 704(c) Allocations
|
1.23
|
Other Allocation Rules
|
1.24
|
Discretionary Distributions
|
1.25
|
Mandatory Distributions
|
1.26
|
Distributions in Liquidation
|
1.27
|
Deficit Capital Accounts
|
1.28
|
Waiver of Partition
|
1.29
|
The Manager
|
1.30
|
Limitations on the Authority of the Manager
|
1.31
|
Steering Committee
|
1.32
|
The Board of Directors
|
1.33
|
Officers
|
1.34
|
Related Party Transactions
|
1.35
|
Voting Rights of Members
|
1.36
|
Compensation of Members
|
1.37
|
Limitation on Liability
|
1.38
|
Indemnification
|
1.39
|
Indemnification Procedures
|
1.40
|
Advancement of Expenses
|
1.41
|
Pre-Trial
|
1.42
|
Trial
|
1.43
|
Post-Trial
|
1.44
|
Withdrawal Procedures
|
1.45
|
Business Plans
|
1.46
|
Provision of Services; Failure to Provide Services
|
1.47
|
In General
|
1.48
|
Representations and Warranties
|
1.49
|
Restrictions on Transfer
|
1.50
|
Permitted Transfers
|
1.51
|
Continuing Liability; Conditions to Permitted Transfers
|
1.52
|
Prohibited Transfers
|
1.53
|
Rights of Unadmitted Assignees and Transferor
|
1.54
|
Admission of Substituted Members
|
1.55
|
Specific Performance
|
1.56
|
Right of First Offer
|
1.57
|
Deemed Transfers
|
1.58
|
Admission of Additional Member
|
1.59
|
Accounting
|
1.60
|
Adjustments to Company Assets
|
1.61
|
Dissolution of the Company
|
1.62
|
Winding Up and Liquidation
|
1.63
|
Priority on Liquidation
|
1.64
|
Books and Records
|
1.65
|
Bank Accounts
|
1.66
|
Accounting Method; Audited Financial Statements
|
1.67
|
Fiscal Year
|
1.68
|
Reports; Tax Returns
|
1.69
|
Required Governmental Filings
|
1.70
|
Tax Matters Member
|
1.71
|
Prohibited Actions
|
1.72
|
Political Contributions
|
1.73
|
Compliance with Regulations
|
1.74
|
General
|
1.75
|
Selection of Arbitrators
|
1.76
|
Qualifications of Mediator or Arbitrator
|
1.77
|
Discovery
|
1.78
|
Costs
|
1.79
|
Notices
|
1.80
|
Consequential Damages; Affiliates
|
1.81
|
Waiver
|
1.82
|
Severability
|
1.83
|
Further Assurances
|
1.84
|
Governing Law; Jurisdiction
|
1.85
|
Counterparts
|
1.86
|
Limitation on Rights of Others
|
1.87
|
Successors and Assigns
|
1.88
|
Entire Agreement; Amendment
|
1.89
|
Expenses
|
1.90
|
Table of Contents; Headings
|
1.91
|
Disclaimer of Agency
|
1.92
|
Currency of Payment
|
Member
|
Capital Contribution
|
Percentage Interest
|
AWS
|
$765,000
|
51%
|
MTN
|
735,000
|
49%
|
|
|
Page
|
|
|
|
Section 1.
|
The Services
|
1
|
1.1
|
AWS Services
|
1
|
1.2
|
MTN Services
|
1
|
1.3
|
Additional Services
|
1
|
1.4
|
Regulatory Services
|
1
|
1.5
|
Work Orders
|
2
|
1.6
|
Scope
|
2
|
1.7
|
Documentation of Service Requirements
|
2
|
Section 2.
|
Performance of Services
|
2
|
2.1
|
Generally
|
2
|
2.2
|
Coordination with Company’s Operations and Performance of Others
|
3
|
2.3
|
Schedule
|
3
|
2.4
|
Inspection and Tests
|
3
|
2.5
|
Reports; Records
|
3
|
2.6
|
Qualifications of Personnel
|
3
|
2.7
|
Status of Provider Personnel
|
4
|
2.8
|
Subcontractors
|
4
|
2.9
|
Compliance with Laws
|
4
|
2.1
|
Liens
|
4
|
Section 3.
|
Compensation
|
5
|
3.1
|
Fees
|
5
|
3.2
|
Expenses
|
5
|
3.3
|
Additional Services
|
5
|
3.4
|
Invoices
|
5
|
3.5
|
Payment
|
5
|
3.6
|
Cost Changes, Review
|
5
|
3.7
|
Taxes
|
6
|
3.8
|
Full Compensation
|
6
|
Section 4.
|
Limited
|
6
|
4.1
|
AWS Warranties
|
6
|
4.2
|
MTN Warranties
|
7
|
4.3
|
Limitations
|
7
|
4.4
|
Correction of Noncompliances
|
7
|
4.5
|
Failure to Provide Core Services
|
8
|
4.6
|
Indemnification
|
8
|
4.7
|
Disclaimer
|
8
|
Section 5.
|
Rights in Property
|
8
|
5.1
|
Results
|
8
|
5.2
|
Supplied Technology
|
8
|
5.3
|
No Restriction on Competitive Materials
|
9
|
Section 6.
|
Confidential Information
|
9
|
6.1
|
General
|
9
|
6.2
|
Limitations
|
9
|
6.3
|
Remedies
|
10
|
Section 7.
|
Insurance
|
10
|
7.1
|
Workers’ Compensation
|
10
|
7.2
|
Liability and Property Insurance
|
10
|
7.3
|
General Requirements
|
10
|
7.4
|
Certificates of Insurance
|
10
|
7.5
|
Waiver of Subrogation
|
11
|
7.6
|
No Limitation
|
11
|
Section 8.
|
Indemnity
|
11
|
8.1
|
By Company
|
11
|
8.2
|
By AWS
|
11
|
8.3
|
By MTN
|
12
|
8.4
|
Notice, Cooperation, Etc
|
12
|
8.5
|
Waiver of Certain Immunities, Defenses and Protections Relating to Employee Injuries
|
12
|
8.6
|
Limitation
|
13
|
Section 9.
|
Limitations of Liability
|
13
|
9.1
|
Force Majeure
|
13
|
9.2
|
Limitation of Consequential Damages
|
13
|
Section 10.
|
Termination of Provider
|
13
|
10.1
|
Termination
|
13
|
10.2
|
Effect of Termination
|
14
|
Section 11.
|
Term and Termination of Agreement
|
14
|
11.1
|
General
|
14
|
11.2
|
Termination of Operating Agreement
|
14
|
11.3
|
Termination by a Provider for Payment Default
|
14
|
11.4
|
Termination for Act of Insolvency
|
14
|
11.5
|
End of the Term
|
14
|
Section 12.
|
Dispute Resolution Procedures
|
15
|
12.1
|
General
|
15
|
12.2
|
Selection of the Mediator or Arbitrator
|
15
|
12.3
|
Qualifications of Mediator or Arbitrator
|
15
|
12.4
|
Discovery
|
16
|
12.5
|
Costs
|
16
|
Section 13.
|
Miscellaneous
|
16
|
13.1
|
Notices
|
16
|
13.2
|
Independent Contractors
|
17
|
13.3
|
No Third-Party Beneficiaries
|
18
|
13.4
|
Rights and Remedies Cumulative
|
18
|
13.5
|
Assignment
|
18
|
13.6
|
Severability
|
18
|
13.7
|
Relationship of This Agreement and Work Orders
|
19
|
13.8
|
Nonwaiver
|
19
|
13.9
|
No Restriction on Services for or from Third Parties
|
19
|
13.10
|
Publicity
|
19
|
13.11
|
Governing Law; Jurisdiction
|
19
|
13.12
|
Counterparts
|
19
|
13.13
|
Table of Contents; Headings
|
20
|
13.14
|
Currency of Payment
|
20
|
13.15
|
Entire Agreement; Amendment
|
20
|
13.16
|
Attorneys Fees
|
20
|
Exhibit
|
Description
|
Reference
|
A
|
Definitions
|
Title Paragraph
|
B
|
AWS Services
|
Section 1.1
|
C
|
MTN Services
|
Section 1.2
|
D
|
Form of Work Order
|
Section 1.5
|
E
|
Form of Second Amendment Agreement
|
Section 2.7
|
1.
|
The Services
|
(a)
|
AWS Services
|
(b)
|
MTN Services
|
(c)
|
Additional Services
|
(d)
|
Regulatory Services
|
(e)
|
Work Orders
|
(f)
|
Scope
|
(g)
|
Documentation of Service Requirements
|
2.
|
Performance of Services
|
(a)
|
Generally
|
(b)
|
Coordination with Company’s Operations and Performance of Others
|
(c)
|
Schedule
|
(d)
|
Inspection and Tests
|
(e)
|
Reports; Records
|
(f)
|
Qualifications of Personnel
|
(g)
|
Status of Provider Personnel
|
(h)
|
Subcontractors
|
(i)
|
Compliance with Laws
|
(j)
|
Liens
|
3.
|
Compensation
|
(a)
|
Fees
|
(b)
|
Expenses
|
(c)
|
Additional Services
|
(d)
|
Invoices
|
(e)
|
Payment
|
(f)
|
Cost Changes, Review
|
(g)
|
Taxes
|
(h)
|
Full Compensation
|
4.
|
Limited Warranties
|
(a)
|
AWS Warranties
|
(b)
|
MTN Warranties
|
(c)
|
Limitations
|
(d)
|
Correction of Noncompliances
|
(e)
|
Failure to Provide Core Services
|
(f)
|
Indemnification
|
(g)
|
Disclaimer
|
5.
|
Rights in Property
|
(a)
|
Results
|
(b)
|
Supplied Technology
|
(c)
|
No Restriction on Competitive Materials
|
6.
|
Confidential Information
|
(a)
|
General
|
(b)
|
Limitations
|
(c)
|
Remedies
|
7.
|
Insurance
|
(a)
|
Workers’ Compensation
|
(b)
|
Liability and Property Insurance
|
(c)
|
General Requirements
|
(d)
|
Certificates of Insurance
|
(e)
|
Waiver of Subrogation
|
(f)
|
No Limitation
|
8.
|
Indemnity
|
(a)
|
By Company
|
(b)
|
By AWS
|
(c)
|
By MTN
|
(d)
|
Notice, Cooperation, Etc
.
|
(e)
|
Waiver of Certain Immunities, Defenses and Protections Relating to Employee Injuries
|
(f)
|
Limitation
|
9.
|
Limitations of Liability
|
(a)
|
Force Majeure
|
(b)
|
Limitation of Consequential Damages
|
10.
|
Termination of Provider
|
(a)
|
Termination
|
(b)
|
Effect of Termination
|
11.
|
Term and Termination of Agreement
|
(a)
|
General
|
(b)
|
Termination of Operating Agreement
|
(c)
|
Termination by a Provider for Payment Default
|
(d)
|
Termination for Act of Insolvency
|
(e)
|
End of the Term
|
12.
|
Dispute Resolution Procedures
|
(a)
|
General
|
(b)
|
Selection of the Mediator or Arbitrator
|
(c)
|
Qualifications of Mediator or Arbitrator
|
(d)
|
Discovery
.
|
(e)
|
Costs
|
13.
|
Miscellaneous
|
(a)
|
Notices
|
(b)
|
Independent Contractors
|
(c)
|
No Third-Party Beneficiaries
|
(d)
|
Rights and Remedies Cumulative
|
(e)
|
Assignment
|
(f)
|
Severability
|
(g)
|
Relationship of This Agreement and Work Orders
|
(h)
|
Nonwaiver
|
(i)
|
No Restriction on Services for or from Third Parties
|
(j)
|
Publicity
|
(k)
|
Governing Law; Jurisdiction
|
(l)
|
Counterparts
|
(m)
|
Table of Contents; Headings
|
(n)
|
Currency of Payment
|
(o)
|
Entire Agreement; Amendment
|
(p)
|
Attorneys Fees
|
Required AWS Services
|
||||
Service
|
Service Description
|
[***]
9
|
[***]
10
|
Charge Commencement
|
Roaming Settlement and Billing
|
Roaming agreement and billing set-up and testing. Monthly roaming settlement. Services include: Signaling transport and conversion Testing of new links. Market configuration for CDMA and GSM, ARIS RoamBox functionality, CIBER Development, TAP interface, BID rating, IREG/TADIG person, ISUP and GRX connectivity, and financial settlement
|
[***]
11
|
[***]
12
|
Post Trial
|
|
|
[***]
13
|
[***]
14
|
|
Wholesale LD
|
Provide transport of Long Distance calls from Ojus, FL to both Domestic and international call termination points.
|
[***]
15
|
[***]
16
|
Trial
|
|
|
[***]
17
|
[***]
18
|
|
Network Leased-lines for System Architecture
|
Leased-line cost for transport of voice/data traffic between MTN teleport hand-off points to the AWS facilities location in Ojua, FL
|
[***]
19
|
[***]
20
|
Trial
|
|
|
[***]
21
|
[***]
22
|
|
Network Operations Control
|
National Operations Center (NOC) support for alarm and control management of sites and switches. Approximately full time equivalent required to provide support for 15 ships.
|
[***]
23
|
[***]
24
|
Post Trial
|
Company:
|
Provider:
|
Wireless Maritime Services, LLC, Inc.
|
_____________________, Inc.
|
By:
|
By:
|
Name:
|
Name:
|
Title:
|
Title:
|
By:
/a/ William W. Hague
|
Its: Executive Vice President - International |
By:
|
Its: |
By:
|
Its: |
By:
|
Its: |
By:
/s/ David B Kagan
|
Its: President & CEO |
By:
|
/s/ Authorized Signatory
Its: |
Service
|
Service Description
|
[***]
79
|
[***]
80
|
Charge Commencement
|
Warehousing
|
Outlined in the Warehousing Statement of Work, attached as
Exhibit F
.
|
[***]
81
|
[***]
82
|
September 1, 2010
|
Service
|
Service Description
|
[***]
83
|
[***]
84
|
Charge Commencement
|
Co-location of Equipment
|
Co-location of 15 racks worth of maritime cellular equipment at MTN’s Teleport Facility located in Holmdel, New Jersey.*
|
[***]
85
|
[***]
86
|
N/A
|
•
|
Includes the right for WMS and its personnel to access the Teleport Facility during normal business hours to use, maintain, and operate the WMS equipment co-located therein. WMS shall provide 24 hours’ advance notice of such access to MTN, except in circumstances where it is not practicable, using commercially reasonable efforts, for WMS to provide such notice.
|
•
|
WMS’s access will not interfere with the normal business operations of MTN or its affiliates.
|
•
|
WMS and its personnel will not “prop open” any door to, or otherwise bypass the MTN security measures for, the Teleport Facility.
|
•
|
WMS acknowledges that certain areas within the Teleport Facility may be secure and off-limits and WMS agrees to abide by any access restrictions imposed by MTN, provided that such restrictions do not interfere with WMS’s right to use, maintain and operate the WMS equipment located at the Teleport Facility; WMS personnel may be required to have an MTN escort for security purposes.
|
•
|
|
Service
|
Service Description
|
[***]
94
|
[***]
95
|
Charge Commencement
|
Satellite Space Segment
|
Bandwidth connectivity between covered vessel and earth station
|
[***]
96
|
[***]
97
|
July 1, 2012
|
•
|
[***]
99
|
(a)
|
[***]
101
|
(b)
|
VOIP Portal and MIN VOIP Apps
.
|
i.
|
MTN will make a VOIP Portal available through its internet services web platform on vessels served by MTN. The Parties will cooperate to make the VOIP Portal available on vessels aboard which End Users will receive VOIP Services and which are not served by MTN. If an End User aboard a VOIP Vessel accesses the VOIP Portal in a manner that permits identification of the handset and handset operating system used by the End User, and if a VOIP App exists for such handset and handset operating system, MTN will cause the VOIP Portal to prominently display a link to purchase a VOIP Plan and download the applicable VOIP App along with a message encouraging the user to use the VOIP App. Each VOIP Portal created by or on behalf of MTN will comply with the applicable VOIP Specifications.
|
ii.
|
[***]
102
|
iii.
|
Unless otherwise agreed by the Company and the Providers in writing, the VOIP Portal and VOIP Apps will include the Company trademarks appearing on
Exhibit G
(the “
Company Marks
”). The Company hereby grants to each Provider a non-exclusive, royalty-free, worldwide, revocable, non-transferrable license, without the right to sublicense, to display the Company Marks solely in the VOIP Portal and VOIP Apps and solely for the purpose of promoting use of the VOIP Services by End Users. Each use of the Company Marks for a new VOIP Portal or VOIP App, and any changes to the content, functionality and look and feel of a VOIP Portal or VOIP App, will be in compliance with the trademark use guidelines included in
Exhibit G
.
|
iv.
|
No Provider Deliverable under this Section 1.8 will contain any Malware upon delivery of the App to a reputable third party distribution channel (
e.g
., Apple’s App Store or Google Play).
|
v.
|
Within sixty (60) business days after notice from the Company that the Company has created, and is prepared to release, its own Comparable VOIP App (as defined below): (i) MTN will replace all links on the VOIP Portals to the Providers’ VOIP Apps with links to the Company’s VOIP Apps, (ii) each Provider will cause its VOIP Apps to be removed from all other distribution channels, including without limitation the Apple App Store and Android Market, and (iii) each Provider will provide End Users attempting to access the VOIP Service through such Provider’s VOIP Apps with notice that a new version of the mobile application is available, providing the user with a link to the Company’s VOIP Apps. For purposes of this Section 1.8(b)(v), the term “
Comparable VOIP App
” shall mean a Company VOIP App which offers voice and service quality, bandwidth optimization and functionality that is comparable to or better than the then-current Provider VOIP App.
|
(a)
|
Billing and Collection of VOIP Revenue
.
|
i.
|
[***]
103
|
ii.
|
[***]
104
|
(a)
|
VOIP Data Ownership, Confidentiality and Security
. As among the Parties, each Provider will own all VOIP Data collected by it. Notwithstanding the preceding sentence, neither Provider will use any VOIP Data for any purpose other than the performance by such Provider of its obligations under this Agreement. Each Provider will protect the VOIP Data collected or stored by it against any unauthorized use or disclosure to the same extent that such Provider protects its other confidential information of a similar nature against unauthorized use or disclosure. Without limitation of the foregoing, each Provider will: (i) restrict access to such Provider’s VOIP Data to those of its employees, consultants and other representatives who have a need to know the same in connection with performance of such Provider’s obligations under this Agreement; and (ii) cooperate with the Company to ensure that Deliverables under this Section 1.8 and such Provider’s collection, storage, use and disclosure of VOIP Data comply with the best practices of well-managed, top-tier, service providers for the safeguarding and non-disclosure of personal data. This Section 1.8(d) will survive the termination of this Agreement for so long as either Provider is in possession or control of any VOIP Data.
|
(b)
|
Intellectual Property
.
|
i.
|
The Company will own and have all right and title (including IPR and other proprietary rights) in and to: (i) any VOIP Apps developed by or on behalf of the Company by any third party other than a Provider; (ii) the Company Marks; and (iii) any modifications, enhancements or derivations of any of the foregoing developed by or on behalf of the Company. Other than as expressly set forth herein, no license or other rights in or to any of the foregoing are granted to MTN or AT&T, and all such licenses and rights are hereby expressly reserved.
|
ii.
|
Except as set forth in Section 1.8(e)(i), each Provider will own and retain all right and title (including PR and other proprietary rights) in and to: (i) any VOIP Portal developed by or on behalf of the Provider; (ii) any VOIP Apps developed by or on behalf of such Provider; and (iii) any modifications, enhancements or derivations of any of the foregoing developed by or on behalf of such Provider.
|
(a)
|
Indemnification
.
|
i.
|
Each Provider will defend, indemnify and hold harmless the Company, the other Provider and its and their respective officers, directors, employees, successors and assigns (the “
Indemnitees
”) on demand, from and against any and all losses, liabilities, damages, fines, penalties, settlements, awards, charges, liens, judgments, costs and expenses, including reasonable attorneys’ fees, and interest (including taxes) incurred by any of them arising from or in connection with a claim by a third party: (A) that any VOIP Portal created by or on behalf of the indemnifying Provider, Provider VOIP App created by or on behalf of the indemnifying Provider or the performance by the indemnifying Provider of its obligations under this Section 1.8, infringe, violate or misappropriate any right of any third party (including IPR and other proprietary rights) in or to any Intellectual Property; or (B) arising out of or resulting from a breach by the indemnifying Provider of Section 1.8(d) (Information Security).
|
ii.
|
The Company will give the indemnifying Provider prompt written notice of a claim for indemnification, provided that any failure to give the indemnifying Provider prompt notice will not relieve the indemnifying Provider of its obligations under this Section 1.8(f) except to the extent such failure prejudices the indemnifying Provider’s defense of such claim. Upon receipt of such notice, the indemnifying Provider will defend the Indemnitees against any such claim with counsel reasonably acceptable to the Indemnitees. The Indemnitees will cooperate in the defense or settlement of any such claim or suit, provided that the Indemnitees will be reimbursed for all reasonable out-of-pocket expenses incurred in providing any cooperation requested by the indemnifying Provider. The Indemnitees may participate in
|
(a)
|
Reports
. MTN will report to the Company monthly the traffic and bandwidth utilized for VOIP Services (including for voice calls and SMS) on each VOIP Vessel. Such reports will be delivered to the Company within five business days after the end of the applicable calendar month.
|
(b)
|
Audit
. If any audit conducted pursuant to Section 2.4 uncovers any non-compliance with Section 1.8(d) (Information Security) or any discrepancy between VOIP records or the reports described in the preceding paragraph and any amounts paid by MTN under this Section 1.8 or paid to MTN for the performance of its obligations relating to the VOIP Services, MTN shall promptly correct such non-compliance and promptly pay, as applicable, any and all amounts necessary to reconcile such discrepancy.
|
Service
|
Service Description
|
[***]
105
|
[***]
106
|
Charge Commencement
|
VOIP Services
|
MTN will perform its obligations relating to the VOIP Services as set forth in Section 1.8 of the Agreement.
|
[***]
107
|
[***]
108
|
July 1, 2012
|
(a)
|
Effective Date
. This Amendment will be effective on July 1, 2012 (the “
Effective Date
”); provided that Section 2 will have retroactive effect to January 1, 2012.
|
(b)
|
Internal References
. All references in the Agreement to “this Agreement,” “herein” and “hereunder” and all similar references shall be deemed to refer to the Agreement as amended by this Third Amendment.
|
(c)
|
No Other Effect
. This Third Amendment is entered into as permitted by Section 13.15 (Entire Agreement; Amendment) of the Agreement. Except as expressly amended hereby, the Agreement shall remain in full force and effect.
|
(d)
|
Counterparts
. This Third Amendment, including a facsimile or photocopy hereof, may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.
|
(e)
|
Applicable Law
. The provisions of this Third Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the choice of law provisions of the State of Delaware or any other provisions. The parties and their successors and assigns hereby irrevocably consent to the nonexclusive jurisdiction of the state and federal courts located in Atlanta, Georgia and Broward County, Florida in connection with any legal action between the parties related to this Third Amendment, and agree that venue will he in such courts.
|
(f)
|
Severability
. In the event any provision contained in this Third Amendment is for any reason held to be unenforceable in any respect, such unenforceability shall not affect any other provision of this Third Amendment, and this Third Amendment shall be construed as if such an unenforceable provision or provisions had never been included in this Third Amendment.
|
Required AWS Services
|
||||
Service
|
Service Description
|
Billing Methodology
|
Cost
|
Charge Commencement
|
Roaming Settlement and Billing
|
Roaming agreement and billing set-up and testing. Monthly roaming settlement Services included: Signaling transport and conversion, Testing of new links, Market configuration for CDMA and GSM, ARIS RoamBox functionality, CIBER Development, TAP Interface, BID rating IREG/TADIG person, ISUP and GRX connectivity, and financial settlement.
|
[***]
114
|
[***]
115
|
Post Trial
|
|
|
[***]
116
|
[***]
117
|
|
Wholesale LD
|
Provide transport of Long Distance calls from Ojus, FL to both Domestic and International call termination points.
|
[***]
118
|
[***]
119
|
Trial
|
|
|
[***]
120
|
[***]
121
|
|
Network Leased-lines for System Architecture
|
Leased line cost for transport of voice/data traffic between MTN teleport hand-off points to the AWS facilities location in Ojus, FL.
|
[***]
122
|
[***]
123
|
Trial
|
|
|
[***]
124
|
[***]
125
|
|
Network Operations Control
|
National Operations Center (NOC) support for alarm and control management of sites and switches. Approximately 1 full time equivalent required to provide support for 15 ships.
|
[***]
126
|
[***]
127
|
Post Trial
|
1.
|
[***]
146
|
2.
|
[***]
147
|
3.
|
Miscellaneous
.
|
(a)
|
Effective Date
. This Amendment will be effective on ______, 2015 (the “
Effective Date
”).
|
(b)
|
Internal References
. All references in the Agreement to “this Agreement,” “herein” and “hereunder” and all similar references shall be deemed to refer to the Agreement as amended by this Seventh Amendment.
|
(c)
|
No Other Effect
. This Seventh Amendment is entered into as permitted by Section 13.15 (Entire Agreement; Amendment) of the Agreement. Except as expressly amended hereby, the Agreement shall remain in full force and effect.
|
(d)
|
Counterparts
. This Seventh Amendment, including a facsimile or photocopy hereof, may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.
|
(e)
|
Applicable Law
. The provisions of this Seventh Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the choice of law provisions of the State of Delaware or any other provisions. The parties and their successors and assigns hereby irrevocably consent to the nonexclusive jurisdiction of the state and federal courts located in Atlanta, Georgia and Broward County, Florida in connection with any legal action between the parties related to this Seventh Amendment, and agree that venue will lie in such courts.
|
(f)
|
Severability
. In the event any provision contained in this Seventh Amendment is for any reason held to be unenforceable in any respect, such unenforceability shall not effect any other provision of this Seventh Amendment, and this Seventh Amendment shall be construed as if such an unenforceable provision or provisions had never been included in this Seventh Amendment.
|
Service
|
Service Description
|
[***]
149
|
[***]
150
|
Charge Commencement
|
Satellite Space Segment
|
Bandwidth connectivity between covered vessel and earth station
|
[***]
151
|
[***]
152
|
November 1, 2015
|
2.
|
Reimbursement of Time and Travel Expenses for Modem Upgrades
. The cell in the “Cost” column of the “Installation” row in the list of Required MTN Services in
Exhibit C
of the Agreement is hereby supplemented by inserting the following at the end thereof: [***]
153
|
3.
|
Use of MTN’s Ticketing System
. WMS and MTN will work together in good faith to develop mutually agreed terms and conditions governing the access and use by WMS of MTN’s ticketing system to open and track support tickets. Subject to WMS’s and MTN’s mutual written agreement on terms and conditions governing such access and use, WMS will be permitted to access MTN’s ticketing system to open and track support tickets relating to the services provided by MTN.
|
4.
|
Development of Service Levels
. WMS and MTh will work together in good faith to develop mutually agreed service levels for the Services provided by MTN, together with measurement methodologies and remedies for failure to achieve the service levels. Such service levels and related terms and conditions will be documented in a subsequent amendment to the Agreement.
|
5.
|
Miscellaneous
.
|
(a)
|
Effective Date
. This Amendment will be effective on _________, 2015 (the “
Effective Date
”).
|
(b)
|
Internal References
. All references in the Agreement to “this Agreement,” “herein” and “hereunder” and all similar references shall be deemed to refer to the Agreement as amended by this Eighth Amendment.
|
(c)
|
No Other Effect
. This Eighth Amendment is entered into as permitted by Section 13.15 (Entire Agreement; Amendment) of the Agreement. Except as expressly amended hereby, the Agreement shall remain in full force and effect.
|
(d)
|
Counterparts
. This Eighth Amendment, including a facsimile or photocopy hereof, may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.
|
(e)
|
Applicable Law
. The provisions of this Eighth Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the choice of law provisions of the State of Delaware or any other provisions. The parties and their successors and assigns hereby irrevocably consent to the nonexclusive jurisdiction of the state and federal courts located in Atlanta, Georgia and Broward County, Florida in connection with any legal action between the parties related to this Eighth Amendment, and agree that venue will lie in such courts.
|
(f)
|
Severability
. In the event any provision contained in this Eighth Amendment is for any reason held to be unenforceable in any respect, such unenforceability shall not effect any other provision of this Eighth Amendment, and this Eighth Amendment shall be construed as if such an unenforceable provision or provisions had never been included in this Eighth Amendment.
|
Service
|
Service Description
|
[***]
154
|
[***]
155
|
Charge
Commencement
|
Warehousing
|
Basic storage (in / out), including as described in greater detail in the Warehousing Statement of Work, attached as
Exhibit F
.
|
[***]
156
|
[***]
157
|
Charges for warehousing services commenced on September 1,
2010 and were amended as of September 1,
2016
|
(a)
|
Company’s use of any Mark (including the AWS Licensed Marks) contrary to the provisions of this Agreement, or the use by an Authorized Dealer of any Mark (including the AWS Licensed Marks) contrary to the provisions of this Agreement, in each case that continues for more than 30 days after written notice thereof has been given to Company;
|
(b)
|
Subject to the provisions of Section 9.1, Company’s use of the Licensed Marks in connection with any Marketing Materials, or the offering, marketing or provision of any Licensed Services, or the conduct of any Licensed Activities or any other aspect of its business conducted by it, that fail to meet the Quality Standards in any material respect;
|
(c)
|
Company’s refusing or neglecting a request by AWS pursuant to Section 8.3 for access to Company’s facilities or Marketing Materials, which refusal or neglect continues for more than five business days after written notice thereof is given to Company;
|
(d)
|
Company’s licensing, assigning, transferring, disposing of or relinquishing (or purporting to license, assign, transfer, dispose of or relinquish) any of the rights granted in this Agreement to others;
|
(e)
|
Company’s failure to maintain the Quality Standards and other information furnished under this Agreement in confidence pursuant to Section 18, or failing to restrict the transmission of information, products and commodities as required by Section 18;
|
(g)
|
The occurrence of a Change of Control of Company;
|
(h)
|
The Bankruptcy of Company;
|
(i)
|
Company’s failure in any material respect to obtain AWS’ permission as provided in, or any other material breach of the provisions of, Section 8.4; or
|
(j)
|
Other than as specified in Section 9.1, any material breach by Company that is not cured within sixty (60) days of written notice specifying such breach.
|
If to AWS:
|
AT&T Wireless Services, Inc.
P.O. Box 97061, 16221 NE 72 nd Way Richmond, WA 98052 Attn: [***] 159 Fax: (425)580-6288 |
•
|
Amount of time customer waits for an agent to answer call
|
•
|
Established calls the customer terminates prior to agent answering
|
•
|
Average amount of time customer waits for an agent to answer call
|
•
|
Bills issued without adjustment
|
▪
|
Illegal activities
|
▪
|
Content which demeans, ridicules or attacks an individual or group on the basis of age, color, national origin, race, religion, sex, secular orientation, or handicap
|
▪
|
Pornographic, obscene or sexually explicit suggestive material or content
|
▪
|
Material targeted to children, which is deemed to be obscene, vulgar or pornographic
|
▪
|
Tobacco and/or alcoholic beverages
|
▪
|
Firearms/Ammunition/Fireworks
|
▪
|
Gambling
|
▪
|
Contraceptives
|
▪
|
Violence
|
▪
|
Vulgar/obscene language
|
▪
|
Solicitation of funds
|
1.
|
Local community events, such as school athletic and cultural events or other athletic events (e.g. corporate golf or tennis outings).
|
2.
|
Local events held in conjunction with regionally or nationally recognized organizations, such as Rotary International, Exchange Club, heart Association, Red Cross, Make-A-Wish Foundation etc.
|
3.
|
Events in support of major charitable institutions such as Children’s Hospitals, Ronald McDonald Foundation, March of Dimes and so on.
|
4.
|
Local trade shows, Chamber of Commerce events, educational business seminars.
|
5.
|
Company grand openings and kiosk sampling.
|
Member
|
Capital Contribution
|
Percentage Interest
|
Cingular
|
$1,297,145
|
51%
|
MTN
|
$1,246,277
|
49%
|
1.
|
Amendment of Section 14.2 of the LLC Agreement
. The Third sentence of Section 14.2 of the LLC Agreement is hereby deleted and substituted in lieu thereof with the following sentence:
|
2.
|
Miscellaneous
.
|
By:
/s/ William W. Hague
|
Its: |
By:
|
Its: |
By:
|
Its: |
By:
/s/ Authorized Signatory
|
Its: |
1.
|
Amendment and Restatement of Section 2.9 (b) and (c) of the LLC Agreement
.
Sections 2.9 (b)
and
2.9 (c)
of the LLC Agreement are hereby amended and restated in their entirety as follows:
|
2.
|
Amendment of Section 17.1 of the LLC Agreement
. The contact information of MTN in Section 17.1 of the LLC Agreement is hereby amended and restated in its entirety to read as follows:
|
3.
|
Miscellaneous
.
|
SUBSIDIARIES
|
|
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
|
Advanced Film GmbH
|
|
Germany
|
Airline Media Productions, Inc.
|
|
Delaware
|
DTI Software FZ-LLC
|
|
United Arab Emirates
|
DTI Software Inc.
|
|
Canada
|
Emerging Markets Communications Deutschland GmbH
|
|
Germany
|
Emerging Markets Communications, LLC
|
|
Delaware
|
Entertainment in Motion, Inc.
|
|
California
|
Global Eagle Entertainment FZ-LLC
|
|
United Arab Emirates
|
Global Eagle Entertainment Luxembourg II S.à r.l.
|
|
Luxembourg
|
Global Eagle Entertainment Operations Solutions, Inc.
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Delaware
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Global Eagle Entertainment Spain SL
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Spain
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IFE Services Limited
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United Kingdom
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IFES Acquisition Corp. Ltd
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United Kingdom
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Inflight Production Ltd
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United Kingdom
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Inflight Production B.V.
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Netherlands
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Inflight Productions Limited
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New Zealand
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Inflight Productions USA Inc.
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California
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MariTel Holdings, Inc.
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Delaware
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Maritime Telecommunications Network, Inc.
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Colorado
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Post Modern Edit, Inc.
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Delaware
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Row 44, Inc.
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Delaware
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SeaMobile, Inc.
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Washington
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Western Outdoor Interactive Private Limited
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India
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(1)
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Registration Statement (Form S-3 No. 333-188121) of Global Eagle Entertainment Inc.,
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(2)
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Registration Statement (Forms S-8 Nos. 333-193052, 333-206251 and 333-213167) pertaining to the Amended and Restated 2013 Equity Incentive Plan, as amended, of Global Eagle Entertainment Inc.,
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(3)
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Registration Statement (Form S-3 No. 333-214065) of Global Eagle Entertainment Inc.,
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(4)
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Registration Statement (Form S-8 No. 333-213168) pertaining to 2016 Inducement and Retention Stock Plan for Emerging Markets Communications Employees of Global Eagle Entertainment Inc.;
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1.
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I have reviewed this Annual Report on Form 10-K of Global Eagle Entertainment Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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Date: November 17, 2017
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/s/ JEFFREY A. LEDDY
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Jeffrey A. Leddy
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Chief Executive Officer and Director
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(Principal Executive Officer)
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1.
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I have reviewed this Annual Report on Form 10-K of Global Eagle Entertainment Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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Date: November 17, 2017
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/s/ PAUL RAINEY
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Paul Rainey
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Chief Financial Officer and Treasurer
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(Principal Financial Officer and Duly Authorized Officer)
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(1)
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the Annual Report on Form 10-K of the Company for the year ended
December 31, 2016
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: November 17, 2017
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/s/ JEFFREY A. LEDDY
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Jeffrey A. Leddy
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Chief Executive Officer and Director
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(Principal Executive Officer)
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(1)
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the Annual Report on Form 10-K of the Company for the year ended
December 31, 2016
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: November 17, 2017
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/s/ PAUL RAINEY
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Paul Rainey
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Chief Financial Officer and Treasurer
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(Principal Financial Officer and Duly Authorized Officer)
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Year Ended December 31,
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||||||
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2016
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2015
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||||
Net loss
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$
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(112,932
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)
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$
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(2,126
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)
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Adjustments to reconcile net loss to Adjusted EBITDA:
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||||
Income tax expense (benefit)
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(44,911
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)
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1,621
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Interest expense
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18,198
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2,492
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Change in fair value of derivatives
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(25,515
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)
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(11,938
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)
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Other (income) expense, net
(1)
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5,406
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1,140
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Depreciation and amortization (including depreciation and amortization relating to equity method investments) and loss on disposal and impairment of fixed assets
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65,215
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36,592
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Impairment of goodwill
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64,000
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—
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Stock-based compensation
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10,747
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8,235
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Acquisition, integration and realignment expenses
(2)
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77,335
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13,598
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Restructuring charges
(3)
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—
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411
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Adjusted EBITDA
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$
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57,543
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$
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50,025
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(1)
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Other (income) expense, net, includes primarily, when applicable, (gains) losses from investments and foreign-currency transactions (gains) losses. Management does not consider these costs to be indicative of our core operating results.
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(2)
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Acquisition, integration and realignment expenses include (a) acquisition-related expenses and transaction costs and legal, accounting and other professional fees attributable to acquisition and corporate realignment activities, (b) extraordinary professional accounting fees relating to our 2016 audit, (c) operation realignment set-up fees, (d) employee severance and termination benefits as well as employee retention and relocation costs, (e) settlement fees and expenses (and related third-party professional fees) and loss-contingency reserves for actual or threatened litigation pertaining to liabilities (that existed prior to their acquisition date) at companies or businesses that we acquired through our M&A activities and (f) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs. Management does not consider these costs to be indicative of our core operating results.
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(3)
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Restructuring charges include restructuring expenses pursuant to our integration plan announced on September 23, 2014. Management does not consider these costs to be indicative of our core operating results.
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