Contract analysis

From: Alan Ngo <a.ngo@calderwoodharkness.com> To: Marcus Delgado <m.delgado@calderwoodharkness.com> Cc: Christy Bauer <c.bauer@calderwoodharkness.com> Date: Wed, 02 Aug 2023 18:47:00 -0700 Subject: Fonseca v. Crescendo — Settlement Reached [PRIVILEGED & CONFIDENTIAL]

Good news to close out the day — we reached a settlement with Crescendo this afternoon. This came together at the conclusion of a follow-up negotiation session building on the July 10 mediation before Hon. Gerald T. Nakashima (Ret.) at Ashgrove Equity Partners Dispute Resolution Services, LLC. Both sides signed the term sheet about an hour ago, and Christy will circulate the executed copy separately.

Here's where we landed on the principal terms:

Total cash settlement: $1,620,000, broken down as follows:

- $1,425,000 in back-royalties, split equally between Flor de Luna Publishing, LLC ($712,500) and Mariposa Sound Recordings, LLC ($712,500) - $195,000 in attorney's fees reimbursement, payable directly to Calderwood & Harkness LLP

Payment is structured in two installments:

- First installment: $1,100,000 due within 30 calendar days of execution of the definitive agreement (target date: September 13, 2023) - Second installment: $520,000 due within 90 calendar days of execution (target date: November 12, 2023)

Crescendo receives a 3-year non-exclusive license covering the 47 compositions and 32 master recordings at issue. Key terms:

- Royalty rate of $0.035 per stream - Minimum annual guarantee (MAG) of $175,000 per year ($525,000 total over the 3-year term) - Quarterly reporting and payment, with statements due within 30 days after the end of each calendar quarter - Automatic termination of the license and a 48-hour takedown obligation if Crescendo fails to make any payment within 10 business days of its due date

- Annual audit rights for Fonseca, exercisable through Thornfield Music Administration, Inc. or a designated auditor. If discrepancies exceed 5%, Crescendo bears the cost of the audit. - Mutual confidentiality provisions with standard carve-outs for tax reporting, legal obligations, and catalog administrators. - Mutual release covering all claims arising from the identified works for the period January 1, 2019 throug

A few notes on this front. Denise K. Whitford at Hargrove, Pennington & Cao LLP negotiated hard on the attorney's fees component — Crescendo initially offered $125,000. We held firm at $195,000 given our lodestar and the strength of a potential motion under 17 U.S.C. § 505, and they ultimately came around.

The $195,000 attorney's fees reimbursement will be credited against Ms. Fonseca's fee obligation to the Firm. The 10% contingency on gross recovery yields $162,000 (10% × $1,620,000). Total estimated fee realization on the matter comes to approximately $285,000, inclusive of hourly fees at reduced rates ($725/hr partner, $475/hr associate) plus the contingency uplift. A good result on a six-month engagement.

Ms. Fonseca is pleased with the outcome. She views the prospective license as particularly important — it legitimizes the ongoing relationship with Crescendo and provides a guaranteed revenue stream going forward. That was a priority for her from the outset, and I'm glad we were able to deliver on it.

Christy and Peter — please convert the signed term sheet into a full Settlement Agreement and Mutual Release, targeting execution by August 14, 2023. We'll also need the Stipulation of Dismissal with Prejudice prepared for simultaneous filing in Case No. 2:23-cv-02841-RGK-PLA (C.D. Cal.).

Marcus, if you have any questions or concerns on the billing side, please flag them and we can discuss.

Alan Ngo Partner Calderwood & Harkness LLP Matter No. 1035-00003

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