1035-00003 · Flor de Luna Publishing, LLC · Settlement

settlement-agreement-mutual-release.docx DOCUMENT Litigation

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SETTLEMENT AGREEMENT AND MUTUAL RELEASE

Effective Date: August 14, 2023

This SETTLEMENT AGREEMENT AND MUTUAL RELEASE (this "Agreement") is entered into as of August 14, 2023 (the "Effective Date"), by and among:

(1) Marguerite D. Fonseca, an individual residing at 4827 Laurelgrove Avenue, Studio City, California 91604 ("Fonseca");

(2) Flor de Luna Publishing, LLC, a California limited liability company, with its principal office at 1200 South Grand Avenue, Suite 1450, Los Angeles, California 90015 ("FDL Publishing");

(3) Mariposa Sound Recordings, LLC, a California limited liability company, with its principal office at 1200 South Grand Avenue, Suite 1450, Los Angeles, California 90015 ("Mariposa Sound");

Fonseca, FDL Publishing, and Mariposa Sound are referred to collectively herein as "Plaintiffs";

and

(4) Crescendo Digital Media, Inc., a Delaware corporation with its principal place of business at 3100 Esperanza Crossing, Suite 600, Austin, Texas 78758 ("Defendant" or "Crescendo").

Each of the foregoing is referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

A. On April 3, 2023, Plaintiffs filed a Complaint for Copyright Infringement against Defendant in the United States District Court for the Central District of California, captioned Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA (the "Action"). In the Action, Plaintiffs allege that Defendant infringed Plaintiffs' copyrights in forty-seven (47) musical compositions and thirty-two (32) sound recordings (collectively, the "Works"), as identified in Exhibit A to the Complaint filed in the Action. Plaintiffs' claims in the Action include claims for direct, contributory, and vicarious copyright infringement under 17 U.S.C. §§ 106, 501, and related provisions, and Plaintiffs seek actual and statutory damages, injunctive relief, costs, and attorney's fees.

B. On April 28, 2023, Defendant filed its Answer and Affirmative Defenses to the Complaint in the Action, denying all material allegations of liability and asserting various affirmative defenses, including, without limitation, implied license, waiver, estoppel, laches, de minimis use, innocent infringement under 17 U.S.C. § 504(c)(2), and failure to mitigate damages.

C. On July 10, 2023, the Parties participated in a full-day mediation before the Honorable Gerald T. Nakashima (Retired), serving as mediator through Ashgrove Equity Partners Dispute Resolution Services, LLC, located at 1901 Avenue of the Stars, Suite 1050, Los Angeles, California 90067. The Parties thereafter continued arm's-length settlement negotiations with the assistance of their respective counsel, resulting in the execution of a non-binding Term Sheet on August 2, 2023.

D. The Parties desire to resolve the Action and all disputes between them relating to the Works on the terms and conditions set forth in this Agreement, and to avoid the uncertainty, expense, and burden of further litigation.

E. This Agreement is the definitive agreement contemplated by the Term Sheet executed by the Parties on August 2, 2023. Upon execution of this Agreement, the Term Sheet shall be superseded in its entirety by this Agreement and shall have no further force or effect.

F. The underlying dispute arises from the following factual circumstances: Defendant operated its digital streaming and content aggregation platform, the Crescendo Stream, under a blanket content license obtained from Peregrine Music Group, LLC (the "Peregrine License"), which was effective as of January 1, 2016. The Peregrine License expired by its own terms on December 31, 2018. Peregrine Music Group, LLC ceased operations in or around November 2018 and subsequently dissolved. The Peregrine License was non-transferable, non-assignable, and contained no automatic renewal provision. Notwithstanding the expiration of the Peregrine License, Defendant continued to stream and sublicense the Works through the Crescendo Stream platform from approximately January 1, 2019 through December 31, 2022, a period of approximately four (4) years, without authorization from Plaintiffs or any other party authorized to grant such rights.

G. FDL Publishing is the sole owner of copyright in the forty-seven (47) musical compositions identified in Exhibit A to the Complaint in the Action, which compositions are registered with the United States Copyright Office under Registration Nos. PA 1-742-891 through PA 2-318-406. Mariposa Sound is the sole owner of copyright in the thirty-two (32) sound recordings identified in Exhibit A to the Complaint in the Action, which sound recordings are registered with the United States Copyright Office under Registration Nos. SR 0-891-220 through SR 1-104-773. Fonseca is the sole member and manager of both FDL Publishing and Mariposa Sound.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth below:

1.1 "Action" means the lawsuit captioned Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA, pending in the United States District Court for the Central District of California, assigned to the Honorable R. Gary Klausner (District Judge) and the Honorable Patricia L. Alvarez (Magistrate Judge).

1.2 "Claims" means any and all claims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, controversies, agreements, promises, variances, trespasses, judgments, executions, liabilities, obligations, damages, losses, penalties, costs, fees, and expenses of every kind and nature whatsoever, whether known or unknown, suspected or unsuspected, asserted or unasserted, fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, arising out of, based upon, or in any way related to the reproduction, distribution, public performance, digital audio transmission, or any other exploitation of the Works during the Release Period.

1.3 "Crescendo Stream" means Defendant's proprietary digital streaming and content aggregation platform, including all subdomains, applications, and integrated interfaces through which digital content is made available to end users and commercial licensees.

1.4 "Effective Date" means August 14, 2023, as set forth in the preamble of this Agreement.

1.5 "Exhibit A" means the schedule of forty-seven (47) musical compositions and thirty-two (32) sound recordings attached as Exhibit A to the Complaint in the Action and incorporated herein by this reference.

1.6 "License Term" means the three (3)-year period commencing on the Effective Date and expiring at 11:59 p.m. Pacific Time on August 14, 2026, unless earlier terminated in accordance with Section 3.7 of this Agreement.

1.7 "License Year" means each consecutive twelve (12)-month period during the License Term. The first License Year shall commence on the Effective Date and end on August 13, 2024. The second License Year shall commence on August 14, 2024 and end on August 13, 2025. The third License Year shall commence on August 14, 2025 and end on August 14, 2026.

1.8 "MAG" means the Minimum Annual Guarantee, as defined in Section 3.4 of this Agreement.

1.9 "Peregrine License" means that certain Peregrine Music Group License Agreement, effective as of January 1, 2016 and expired as of December 31, 2018, by and between Peregrine Music Group, LLC, as licensor, and Crescendo Digital Media, Inc., as licensee.

1.10 "Prospective License" means the non-exclusive license granted to Defendant under Section 3 of this Agreement.

1.11 "Release Period" means the period commencing on January 1, 2019 and ending on the Effective Date.

1.12 "Settlement Amount" means One Million Six Hundred Twenty Thousand Dollars ($1,620,000.00), as further described in Section 2.1 of this Agreement.

1.13 "Works" means the forty-seven (47) musical compositions and thirty-two (32) sound recordings identified in Exhibit A, collectively comprising seventy-nine (79) copyrighted works.

2. SETTLEMENT PAYMENT

2.1 Amount. In full and complete settlement of all Claims arising during the Release Period, Defendant shall pay Plaintiffs and their counsel a total Settlement Amount of One Million Six Hundred Twenty Thousand Dollars ($1,620,000.00), allocated as follows:

(a) FDL Payment. Seven Hundred Twelve Thousand Five Hundred Dollars ($712,500.00) payable to Flor de Luna Publishing, LLC (EIN: 82-4193507) (the "FDL Payment"), representing Plaintiffs' share of back royalties and damages attributable to the forty-seven (47) musical compositions;

(b) Mariposa Payment. Seven Hundred Twelve Thousand Five Hundred Dollars ($712,500.00) payable to Mariposa Sound Recordings, LLC (EIN: 84-2671058) (the "Mariposa Payment"), representing Plaintiffs' share of back royalties and damages attributable to the thirty-two (32) sound recordings;

(c) Fee Payment. One Hundred Ninety-Five Thousand Dollars ($195,000.00) payable to Calderwood & Harkness LLP, 777 South Figueroa Street, 34th Floor, Los Angeles, California 90017, as reimbursement of Plaintiffs' attorney's fees and litigation costs incurred in connection with the Action (the "Fee Payment").

For the avoidance of doubt, the total back-royalty component of the Settlement Amount is One Million Four Hundred Twenty-Five Thousand Dollars ($1,425,000.00), consisting of the FDL Payment ($712,500.00) and the Mariposa Payment ($712,500.00). The total Settlement Amount is One Million Six Hundred Twenty Thousand Dollars ($1,620,000.00), consisting of the back-royalty component ($1,425,000.00) plus the Fee Payment ($195,000.00).

2.2 Payment Schedule. The Settlement Amount shall be paid in two (2) installments as follows:

(a) First Installment. One Million One Hundred Thousand Dollars ($1,100,000.00), due and payable within thirty (30) calendar days of the Effective Date, no later than September 13, 2023 (the "First Payment Date"). The First Installment shall be allocated pro rata among the FDL Payment, the Mariposa Payment, and the Fee Payment based on each payment's proportion of the total Settlement Amount. Specifically, of the First Installment:

(i) approximately $483,796.30 shall be allocated to the FDL Payment;

(ii) approximately $483,796.30 shall be allocated to the Mariposa Payment; and

(iii) approximately $132,407.41 shall be allocated to the Fee Payment.

(b) Second Installment. Five Hundred Twenty Thousand Dollars ($520,000.00), due and payable within ninety (90) calendar days of the Effective Date, no later than November 12, 2023 (the "Second Payment Date"). The Second Installment shall be allocated pro rata among the FDL Payment, the Mariposa Payment, and the Fee Payment in the same manner as the First Installment. Specifically, of the Second Installment:

(i) approximately $228,703.70 shall be allocated to the FDL Payment;

(ii) approximately $228,703.70 shall be allocated to the Mariposa Payment; and

(iii) approximately $62,592.59 shall be allocated to the Fee Payment.

For the avoidance of doubt, the sum of the First Installment and the Second Installment equals One Million Six Hundred Twenty Thousand Dollars ($1,100,000.00 + $520,000.00 = $1,620,000.00).

2.3 Method of Payment. All payments under this Section 2 shall be made by federal wire transfer of immediately available funds to bank accounts designated in writing by Plaintiffs and Calderwood & Harkness LLP, respectively. Plaintiffs and Calderwood & Harkness LLP shall provide Defendant with complete wire transfer instructions, including bank name, ABA routing number, account number, and account name, within five (5) business days of the Effective Date. Defendant shall not be deemed in default of any payment obligation hereunder if the delay in payment is solely attributable to Plaintiffs' failure to timely provide wire instructions.

2.4 Late Payment. Any payment not received by its respective due date shall accrue interest at the rate of one and one-half percent (1.5%) per month (eighteen percent (18%) per annum), compounded monthly, from the applicable due date until the date such payment is received in full. The accrual of interest under this Section 2.4 shall not constitute a waiver of any other right or remedy available to Plaintiffs, including the right to terminate the Prospective License under Section 3.7.

2.5 Tax Treatment. Each Party shall be solely responsible for its own tax obligations, including federal, state, and local income taxes, arising from or related to the settlement payments made or received under this Agreement. Defendant shall issue IRS Form 1099-MISC (or such other form as may be required by applicable law) to FDL Publishing and Mariposa Sound, as applicable, for all payments made hereunder (other than the Fee Payment, for which Defendant shall issue IRS Form 1099-MISC to Calderwood & Harkness LLP). The Parties make no representations or warranties regarding the tax treatment or tax consequences of any payments made or received under this Agreement, and each Party acknowledges that it has had the opportunity to consult with its own tax advisors regarding such matters.

3. PROSPECTIVE LICENSE

3.1 Grant of License. Effective upon Defendant's payment and Plaintiffs' receipt of the First Installment in accordance with Section 2.2(a), Plaintiffs hereby grant to Defendant a non-exclusive, non-transferable, non-sublicensable (except as expressly provided in Section 3.6) license (the "Prospective License") to reproduce, distribute, publicly perform by means of digital audio transmission, and otherwise digitally transmit the Works solely through the Crescendo Stream platform, subject to the terms and conditions of this Agreement.

3.2 Term. The Prospective License shall have a term of three (3) years, commencing on the Effective Date (August 14, 2023) and expiring at 11:59 p.m. Pacific Time on August 14, 2026, unless earlier terminated as provided in Section 3.7 of this Agreement (the "License Term"). For the avoidance of doubt, the Prospective License shall not become effective until the First Installment has been received by Plaintiffs.

3.3 Royalty Rate. During the License Term, Defendant shall pay Plaintiffs a royalty of three and one-half cents ($0.035) per individual stream of each Work through the Crescendo Stream platform (each such individual playback event constituting a "stream" for purposes of royalty calculation). The per-stream royalty shall apply regardless of whether the stream is initiated by an end user, generated through an algorithm or automated playlist, or played as part of a sublicensed content package under Section 3.6. Royalties due under this Section 3.3 shall be allocated equally between FDL Publishing (with respect to the underlying musical compositions) and Mariposa Sound (with respect to the underlying sound recordings).

3.4 Minimum Annual Guarantee. Notwithstanding the per-stream royalty rate set forth in Section 3.3, Defendant shall pay Plaintiffs a minimum annual guarantee (the "MAG") of One Hundred Seventy-Five Thousand Dollars ($175,000.00) for each License Year during the License Term. The total MAG over the full License Term shall be Five Hundred Twenty-Five Thousand Dollars ($525,000.00) ($175,000.00 multiplied by three (3) License Years). The MAG shall operate as follows:

(a) If the aggregate per-stream royalties earned by Plaintiffs in a given License Year exceed the MAG for that License Year, no additional payment shall be due on account of the MAG, and the full amount of per-stream royalties shall constitute the total royalty payment for such License Year.

(b) If the aggregate per-stream royalties earned by Plaintiffs in a given License Year are less than the MAG for that License Year, Defendant shall pay to Plaintiffs the difference between the MAG and the actual per-stream royalties earned within thirty (30) days after the end of such License Year. Such payment is sometimes referred to herein as the "MAG Shortfall Payment."

(c) The MAG shall be allocated equally between FDL Publishing and Mariposa Sound, such that each entity shall be entitled to a minimum of Eighty-Seven Thousand Five Hundred Dollars ($87,500.00) per License Year.

3.5 Reporting and Payment. Defendant shall provide Plaintiffs with a detailed written royalty statement within thirty (30) days after the end of each calendar quarter during the License Term (i.e., within thirty (30) days after September 30, December 31, March 31, and June 30 of each year, with the first reporting period running from the Effective Date through September 30, 2023). Each royalty statement shall set forth, at a minimum: (i) the title and identifying information of each Work streamed during the applicable quarter; (ii) the total number of streams of each Work during the applicable quarter; (iii) the per-stream royalty rate; (iv) the aggregate royalty amount due for each Work; (v) the total royalty amount due for the quarter; and (vi) a cumulative year-to-date total of streams and royalties for the applicable License Year. Payment of all quarterly royalties shall accompany each royalty statement. All royalty statements and corresponding payments shall be sent simultaneously to Plaintiffs and to Thornfield Music Administration, Inc. (as Plaintiffs' designated catalog administrator), 6363 Wilshire Boulevard, Suite 410, Los Angeles, California 90048, Attention: Raymond O. Sato, President.

3.6 Sublicensing. Defendant may include the Works in curated playlists and content packages that are sublicensed to Defendant's commercial clients and business partners through the Crescendo Stream platform, provided that: (a) all revenue derived from such sublicenses, including per-stream fees, subscription revenue, and advertising revenue attributable to the streaming of the Works, is included in the royalty calculation under Section 3.3 and the MAG calculation under Section 3.4; (b) Defendant remains fully responsible for all royalty payments and reporting obligations under this Agreement regardless of any sublicense arrangement; and (c) each sublicensee's use of the Works is limited to streaming through the Crescendo Stream platform or an integrated interface thereof. Defendant may not grant any standalone sublicense of any individual Work, or any sublicense permitting the use of any Work outside the Crescendo Stream platform, without the prior written consent of Plaintiffs, which consent may be withheld in Plaintiffs' sole and absolute discretion.

3.7 Termination for Default. If Defendant fails to make any payment due under this Section 3 or under Section 2 of this Agreement within ten (10) business days after receipt of written notice from Plaintiffs specifying such failure (the "Cure Period"), the Prospective License shall terminate automatically without further notice or action by Plaintiffs. Upon such termination, Defendant shall remove all Works from the Crescendo Stream platform and from all sublicensed content packages within forty-eight (48) hours of the effective date of termination. For the avoidance of doubt, termination of the Prospective License shall not relieve Defendant of its obligation to pay any amounts accrued and owing prior to the effective date of termination, including any unpaid royalties, MAG Shortfall Payments, or interest.

3.8 Effect of Termination. Upon termination or expiration of the Prospective License for any reason, all rights granted to Defendant under this Section 3 shall immediately and automatically revert to Plaintiffs. Defendant shall cease all reproduction, distribution, public performance, and digital transmission of the Works within the time periods specified in Section 3.7 (in the case of termination for default) or within five (5) business days following the expiration of the License Term (in the case of expiration). Defendant shall certify in writing to Plaintiffs, within five (5) business days of the effective date of termination or expiration, that all Works have been removed from the Crescendo Stream platform and all sublicensed content packages, and that Defendant is no longer exploiting the Works in any manner.

3.9 No Other Rights. Except as expressly granted in this Section 3, no rights in or to the Works are granted to Defendant by Plaintiffs, whether by implication, estoppel, or otherwise. Plaintiffs expressly reserve all rights not specifically and expressly granted herein, including, without limitation, the right to license the Works to third parties, the right to exploit the Works in any medium or format, and all rights under the Copyright Act of 1976, as amended, 17 U.S.C. § 101 et seq.

4. AUDIT RIGHTS

4.1 Annual Audit. Once per calendar year during the License Term and for a period of one (1) year following the expiration or termination of the License Term, Plaintiffs (acting through Thornfield Music Administration, Inc. or another independent certified public accountant or auditor designated by Plaintiffs in writing) shall have the right to audit and examine Defendant's books, records, accounts, data, and systems relating to the streaming, exploitation, and sublicensing of the Works, for the purpose of verifying the accuracy of Defendant's royalty statements and payments under Section 3 of this Agreement. Plaintiffs shall provide Defendant with not less than thirty (30) days' prior written notice of any such audit, specifying the audited period and the identity of the auditor. Each audit shall be conducted during Defendant's normal business hours at Defendant's principal office or at such other location where the relevant records are maintained, and shall be conducted in a manner that minimizes disruption to Defendant's business operations.

4.2 Cost of Audit. If an audit conducted under Section 4.1 reveals an underpayment or discrepancy in excess of five percent (5%) of the total royalties reported by Defendant for the audited period, Defendant shall bear the reasonable cost of such audit, including the fees and expenses of the auditor and any travel expenses incurred in connection therewith, in addition to paying any underpayment within fifteen (15) days of the conclusion of the audit. Any such underpayment shall bear interest at the rate of one and one-half percent (1.5%) per month from the date such underpayment was originally due until the date it is paid in full. If the audit does not reveal an underpayment or discrepancy in excess of five percent (5%), Plaintiffs shall bear the cost of the audit.

4.3 Cooperation. Defendant shall cooperate fully and in good faith with any audit conducted pursuant to this Section 4, including providing prompt and complete access to all streaming logs, server records, content management system data, revenue reports, sublicense agreements, advertising revenue allocations, and any other books, records, or documents reasonably necessary to verify the accuracy of Defendant's royalty calculations and payments.

4.4 Record Retention. Defendant shall maintain complete and accurate books and records relating to the exploitation of the Works, including all streaming data, revenue records, sublicense agreements, and royalty calculations, for a period of not less than three (3) years following the expiration or termination of the License Term. This obligation to maintain records shall survive the expiration or termination of this Agreement.

5. MUTUAL RELEASE

5.1 Release by Plaintiffs. Effective upon receipt of the First Installment, Plaintiffs — including Marguerite D. Fonseca, individually, Flor de Luna Publishing, LLC, and Mariposa Sound Recordings, LLC — on behalf of themselves and their respective heirs, executors, administrators, successors, assigns, agents, attorneys, and representatives, hereby fully, finally, and forever release, acquit, and discharge Defendant, Crescendo Digital Media, Inc., together with its officers (including, without limitation, Nikolai R. Sorensen, Chief Executive Officer, and Priya Chandrasekaran, General Counsel), directors, employees, agents, shareholders (including, without limitation, Ridgeline Ventures Partners, LP), parents, subsidiaries, affiliates, predecessors, successors, and assigns, from any and all Claims, whether known or unknown, suspected or unsuspected, asserted or unasserted, arising out of, based upon, or in any way related to the reproduction, distribution, public performance, digital audio transmission, or any other exploitation of the Works during the Release Period (January 1, 2019 through the Effective Date).

5.2 Release by Defendant. Effective upon execution of this Agreement, Defendant, Crescendo Digital Media, Inc., on behalf of itself and its officers, directors, employees, agents, shareholders, parents, subsidiaries, affiliates, predecessors, successors, assigns, attorneys, and representatives, hereby fully, finally, and forever releases, acquits, and discharges Plaintiffs — including Marguerite D. Fonseca, individually, Flor de Luna Publishing, LLC, and Mariposa Sound Recordings, LLC — together with their respective heirs, executors, administrators, successors, assigns, agents, attorneys, and representatives, from any and all Claims, whether known or unknown, suspected or unsuspected, asserted or unasserted, arising out of, based upon, or in any way related to the Action or the subject matter of the Action, including, without limitation, any claims for declaratory relief, equitable relief, or damages that Defendant has asserted or could have asserted in the Action.

5.3 Scope of Release. The releases set forth in Sections 5.1 and 5.2 are limited in scope to Claims arising from the identified Works during the Release Period only. The releases do not extend to, and shall not affect, any rights, obligations, or claims arising under this Agreement itself, including, without limitation, the Prospective License, payment obligations under Sections 2 and 3, audit rights under Section 4, confidentiality obligations under Section 7, indemnification obligations under Section 9, or any other obligation expressly set forth in this Agreement. Nothing in this Section 5 shall release any Party from liability for a breach of this Agreement.

5.4 Waiver of California Civil Code § 1542. Each Party acknowledges that it has been advised by its respective legal counsel regarding the provisions of California Civil Code Section 1542, which provides:

> "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."

Each Party, having been so advised, hereby expressly, knowingly, and voluntarily waives and relinquishes any and all rights and benefits it may have under California Civil Code Section 1542, or under any similar statute, regulation, or common law principle of any jurisdiction, with respect to the releases set forth in Sections 5.1 and 5.2 of this Agreement. Each Party understands and acknowledges the significance of this waiver and that it may discover facts in addition to or different from those which it now knows or believes to be true with respect to the Claims released herein, and agrees that the releases set forth herein shall remain effective in all respects regardless of such later-discovered facts.

6. DISMISSAL

6.1 Stipulation of Dismissal. Within five (5) business days of the full execution of this Agreement by all Parties, the Parties shall jointly file a Stipulation of Dismissal with Prejudice of the Action in the United States District Court for the Central District of California, substantially in the form attached hereto as Exhibit 1, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii). The Stipulation of Dismissal shall dismiss with prejudice all claims, counterclaims, cross-claims, and affirmative defenses asserted by any Party in the Action.

6.2 Court Jurisdiction. The Stipulation of Dismissal filed pursuant to Section 6.1 shall expressly provide that the Court retains jurisdiction to enforce the terms of this Agreement, in accordance with Kokkonen v. Ridgeline Mutual Insurance, 511 U.S. 375 (1994), and the Parties' express request that the Court incorporate the Agreement's enforcement terms into the dismissal order by reference. In the event that the Court declines to retain such jurisdiction, the dispute resolution provisions of Section 10.2 of this Agreement shall govern any disputes arising under or relating to this Agreement.

6.3 Costs. Except as otherwise expressly provided in Section 2.1(c) of this Agreement (regarding the Fee Payment to Calderwood & Harkness LLP), each Party shall bear its own costs, attorney's fees, and expenses incurred in connection with the Action, including filing fees, service costs, discovery costs, expert fees, and any other litigation-related expenses.

7. CONFIDENTIALITY

7.1 Confidential Terms. The Parties agree that the existence and terms of this Agreement, including, without limitation, all financial terms, settlement payment amounts, payment schedules, royalty rates, the MAG, the existence and terms of the Prospective License, and the specific terms of the mutual release, are confidential and proprietary and shall not be disclosed to any third party, except as follows:

(a) Professional Advisors. Disclosure to the Parties' respective attorneys, accountants, tax advisors, and financial advisors, on a need-to-know basis and subject to such advisors' professional obligations of confidentiality or, in the absence of such professional obligations, a written confidentiality agreement no less restrictive than this Section 7;

(b) Catalog Administrators. Disclosure by Plaintiffs to Plaintiffs' catalog administrators, including Thornfield Music Administration, Inc., Attention: Raymond O. Sato, President, to the extent reasonably necessary for royalty administration, collection, monitoring, and reporting purposes;

(c) Legal Compulsion. Disclosure as required by applicable law, regulation, court order, subpoena, or other legal process (including, without limitation, tax reporting obligations to the Internal Revenue Service and applicable state tax authorities), provided that the disclosing Party shall, to the extent legally permissible, provide the other Party with prompt written notice of the required disclosure and cooperate with the other Party's efforts to obtain a protective order or other appropriate remedy to limit the scope of such disclosure;

(d) Consent. Disclosure with the prior written consent of the other Party, which consent may be granted, withheld, or conditioned in such Party's sole discretion;

(e) Investor and Board Reporting. Disclosure by Defendant to its board of directors, officers, and investors (including, without limitation, Ridgeline Ventures Partners, LP) on a confidential, need-to-know basis, in connection with Defendant's internal governance, financial reporting, and investor relations obligations, provided that Defendant shall use commercially reasonable efforts to ensure that such recipients maintain the confidentiality of the disclosed information.

7.2 Non-Disparagement. Neither Party shall make, publish, or cause to be made or published any public statements, whether written or oral, that are disparaging, defamatory, or derogatory of the other Party, or any of the other Party's officers, directors, employees, products, services, or business practices, in connection with the Action, this Agreement, or the underlying subject matter thereof. This non-disparagement obligation shall not restrict any Party from making truthful statements in connection with legal proceedings, regulatory inquiries, or as otherwise required by law.

7.3 Press and Public Statements. The Parties may jointly issue a public statement acknowledging the resolution of the Action on mutually agreed terms. The text of any such joint public statement shall be agreed upon by the Parties in writing prior to its issuance. Neither Party shall disclose specific financial terms of this Agreement in any press release, public statement, social media post, or other public communication without the prior written consent of the other Party.

8. REPRESENTATIONS AND WARRANTIES

8.1 Authority. Each Party represents and warrants to the other Parties that it has full power, legal capacity, and authority to enter into this Agreement and to perform all of its obligations hereunder, and that the person executing this Agreement on its behalf is duly authorized to do so.

(a) Fonseca represents and warrants that she is the sole member and manager of both FDL Publishing and Mariposa Sound, and that she has full authority to execute this Agreement on behalf of herself individually and on behalf of each such entity, and to bind each such entity to the terms and conditions set forth herein.

(b) Nikolai R. Sorensen, as Chief Executive Officer of Crescendo Digital Media, Inc. (EIN: 81-3729164), represents and warrants that he is duly authorized by Crescendo's board of directors to negotiate, execute, and deliver this Agreement on behalf of Crescendo, and that the execution and performance of this Agreement have been approved by all necessary corporate action of Crescendo.

8.2 No Assignment of Claims. Each Party represents and warrants that it has not assigned, transferred, pledged, hypothecated, or otherwise conveyed to any third party any Claim released herein, and that no other person or entity has any interest in any such Claim.

8.3 Ownership of Copyrights. Plaintiffs represent and warrant that:

(a) FDL Publishing is the sole and exclusive owner of all right, title, and interest in and to the copyrights in the forty-seven (47) musical compositions identified in Exhibit A, including all rights of reproduction, distribution, public performance, and digital audio transmission, and that such copyrights are registered with the United States Copyright Office under Registration Nos. PA 1-742-891 through PA 2-318-406;

(b) Mariposa Sound is the sole and exclusive owner of all right, title, and interest in and to the copyrights in the thirty-two (32) sound recordings identified in Exhibit A, including all rights of reproduction, distribution, public performance by means of digital audio transmission, and making of derivative works, and that such copyrights are registered with the United States Copyright Office under Registration Nos. SR 0-891-220 through SR 1-104-773; and

(c) Plaintiffs have the right and authority to grant the Prospective License on the terms set forth in Section 3 of this Agreement.

Fonseca's broader catalog comprises two hundred fourteen (214) registered musical compositions and one hundred eighty-eight (188) registered sound recordings with the United States Copyright Office; the Works constitute a subset thereof.

8.4 No Encumbrances. Plaintiffs represent and warrant that the Works are not subject to any lien, mortgage, pledge, security interest, encumbrance, or third-party claim that would impair, restrict, or conflict with the rights granted under the Prospective License. Plaintiffs further represent and warrant that Plaintiffs' catalog is administered on a non-exclusive basis by Thornfield Music Administration, Inc., which collects mechanical royalties and performance royalties on behalf of FDL Publishing through applicable performing rights organizations and mechanical licensing agencies; such administration arrangement does not conflict with the rights and obligations set forth in this Agreement and does not restrict Plaintiffs' ability to grant the Prospective License.

8.5 Defendant's Representations. Defendant represents and warrants that it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with its principal place of business at 3100 Esperanza Crossing, Suite 600, Austin, Texas 78758, and its registered agent for service of process at Capitol Registered Agents, Inc., 1209 Orange Street, Wilmington, Delaware 19801. Defendant further represents that it has all necessary corporate power and authority to conduct its business as presently conducted and to enter into and perform its obligations under this Agreement.

9. INDEMNIFICATION

9.1 Indemnification by Plaintiffs. Plaintiffs shall indemnify, defend, and hold harmless Defendant and its officers, directors, employees, agents, shareholders, affiliates, successors, and assigns from and against any and all losses, liabilities, damages, costs, and expenses (including reasonable attorney's fees and court costs) arising out of or resulting from any third-party claim, demand, action, or proceeding based upon: (a) a breach of any representation or warranty made by Plaintiffs in Section 8 of this Agreement; or (b) any claim that the grant of the Prospective License or Defendant's use of the Works in accordance with the terms of the Prospective License infringes, violates, or misappropriates the intellectual property rights or other rights of any third party.

9.2 Indemnification by Defendant. Defendant shall indemnify, defend, and hold harmless Plaintiffs and their respective heirs, executors, administrators, successors, assigns, agents, and representatives from and against any and all losses, liabilities, damages, costs, and expenses (including reasonable attorney's fees and court costs) arising out of or resulting from any third-party claim, demand, action, or proceeding based upon: (a) Defendant's exploitation, use, streaming, sublicensing, or other exploitation of the Works under the Prospective License, including, without limitation, any claims by Defendant's commercial sublicensees, end users, or content partners; or (b) a breach of any representation, warranty, or obligation made or undertaken by Defendant under this Agreement.

10. GENERAL PROVISIONS

10.1 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California, without giving effect to any choice-of-law or conflicts-of-law rules or provisions that would cause the application of the laws of any other jurisdiction.

10.2 Dispute Resolution. Any dispute, claim, or controversy arising out of, relating to, or in connection with this Agreement, including any dispute regarding the formation, interpretation, performance, breach, or termination of this Agreement, that cannot be resolved by good-faith negotiation between the Parties within thirty (30) days of written notice by one Party to the other, shall be submitted to and resolved by final and binding arbitration before a single neutral arbitrator in Los Angeles, California, administered by Ashgrove Equity Partners Dispute Resolution Services, LLC, 1901 Avenue of the Stars, Suite 1050, Los Angeles, California 90067, in accordance with its then-current Commercial Arbitration Rules. The arbitrator shall be selected by mutual agreement of the Parties, or, in the absence of agreement within fifteen (15) days after the filing of the arbitration demand, by Ashgrove Equity Partners Dispute Resolution Services, LLC in accordance with its rules. The arbitrator shall have the authority to award any remedy available at law or in equity, including injunctive relief, specific performance, and monetary damages. The arbitrator's award shall be final, binding, and enforceable in any court of competent jurisdiction. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

10.3 Attorney's Fees (Enforcement). In any action, arbitration, or other proceeding to enforce or interpret any provision of this Agreement, or arising out of or relating to a breach of this Agreement, the prevailing Party shall be entitled to recover from the non-prevailing Party its reasonable attorney's fees, costs, and expenses incurred in connection with such action, arbitration, or proceeding, in addition to any other relief to which it may be entitled.

10.4 Entire Agreement. This Agreement, together with Exhibit A (Schedule of Works) and Exhibit 1 (Form of Stipulation of Dismissal with Prejudice) attached hereto and incorporated herein by reference, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, understandings, discussions, term sheets, letters of intent, memoranda of understanding, and agreements, whether written or oral, between the Parties relating to the subject matter hereof, including, without limitation, the Term Sheet dated August 2, 2023. No Party has relied upon any statement, representation, or warranty not expressly set forth in this Agreement.

10.5 Amendments. This Agreement may not be amended, modified, supplemented, or otherwise changed except by a written instrument executed by all Parties hereto.

10.6 Severability. If any provision of this Agreement (or any portion thereof) is held to be invalid, illegal, or unenforceable by a court or arbitrator of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and the remaining provisions shall continue in full force and effect. The Parties agree that the invalid, illegal, or unenforceable provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable while preserving the Parties' original intent as closely as possible.

10.7 Waiver. No waiver of any provision of this Agreement, or of any right or remedy hereunder, shall be effective unless made in writing and signed by the Party granting such waiver. No failure or delay by any Party in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.

10.8 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic means, including by email transmission of PDF copies or through electronic signature platforms (e.g., Brightwater Software or Ashford Health IT), shall have the same legal force and effect as original ink signatures, and each Party hereby waives any defense to the enforcement of this Agreement based on the form of signature.

10.9 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given: (a) when delivered personally to the recipient; (b) one (1) business day after being sent by nationally recognized overnight courier (e.g., Severin Partners LLC or Halcyon Partners LLC), with delivery confirmation; (c) three (3) business days after being deposited in the United States mail, registered or certified mail, return receipt requested, postage prepaid; or (d) when sent by email with confirmation of receipt (by non-automated reply from the recipient or by delivery receipt), to the addresses set forth below (or such other addresses as a Party may designate by written notice to the other Parties in accordance with this Section):

To Plaintiffs:

Marguerite D. Fonseca 4827 Laurelgrove Avenue Studio City, California 91604

With a copy (which shall not constitute notice) to:

Alan Ngo, Partner Calderwood & Harkness LLP 777 South Figueroa Street, 34th Floor Los Angeles, California 90017

Email: a.ngo@calderwoodharkness.com

To Defendant:

Nikolai R. Sorensen, Chief Executive Officer Crescendo Digital Media, Inc. 3100 Esperanza Crossing, Suite 600 Austin, Texas 78758

With a copy (which shall not constitute notice) to:

Denise K. Whitford, Partner Hargrove, Pennington & Cao LLP 401 Congress Avenue, Suite 2800 Austin, Texas 78701

Email: d.whitford@hpclaw.com

10.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. Neither Party may assign, delegate, or otherwise transfer this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that Plaintiffs may assign the right to receive payments hereunder to their successors, affiliated entities, or designated catalog administrators without the consent of Defendant, upon written notice to Defendant.

10.11 Third-Party Beneficiaries. Except as expressly provided herein, including Calderwood & Harkness LLP's right to receive the Fee Payment under Section 2.1(c) of this Agreement, this Agreement is not intended to, and shall not, confer any rights, benefits, or remedies upon any person or entity other than the Parties hereto and their respective permitted successors and assigns. Calderwood & Harkness LLP is an intended third-party beneficiary solely with respect to Section 2.1(c).

10.12 Headings. The section headings, article headings, and captions contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define, limit, extend, or describe the scope or intent of any provision of this Agreement.

10.13 Construction. This Agreement has been negotiated at arm's length by the Parties, each of which has been represented by experienced legal counsel. No provision of this Agreement shall be construed against or interpreted to the disadvantage of any Party by reason of such Party having or being deemed to have structured, dictated, or drafted such provision.

IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement and Mutual Release as of the Effective Date first written above.

PLAINTIFFS:

________________________________________

Marguerite D. Fonseca, individually

Address: 4827 Laurelgrove Avenue, Studio City, CA 91604

Date: ________

FLOR DE LUNA PUBLISHING, LLC

By: ________

Name: Marguerite D. Fonseca

Title: Sole Member

Address: 1200 South Grand Avenue, Suite 1450, Los Angeles, CA 90015

Date: ________

MARIPOSA SOUND RECORDINGS, LLC

By: ________

Name: Marguerite D. Fonseca

Title: Sole Member

Address: 1200 South Grand Avenue, Suite 1450, Los Angeles, CA 90015

Date: ________

DEFENDANT:

CRESCENDO DIGITAL MEDIA, INC.

By: ________

Name: Nikolai R. Sorensen

Title: Chief Executive Officer

Address: 3100 Esperanza Crossing, Suite 600, Austin, TX 78758

Date: ________

APPROVED AS TO FORM:

CALDERWOOD & HARKNESS LLP Attorneys for Plaintiffs

By: ________

Name: Alan Ngo

Title: Partner

Address: 777 South Figueroa Street, 34th Floor, Los Angeles, CA 90017

HARGROVE, PENNINGTON & CAO LLP Attorneys for Defendant

By: ________

Name: Denise K. Whitford

Title: Partner

Address: 401 Congress Avenue, Suite 2800, Austin, TX 78701

EXHIBIT A

SCHEDULE OF WORKS

The following is a schedule of the forty-seven (47) musical compositions and thirty-two (32) sound recordings that constitute the "Works" as defined in the Settlement Agreement and Mutual Release dated August 14, 2023 (the "Agreement"), to which this Exhibit A is attached and incorporated by reference.

Part I — Musical Compositions

Owner: Flor de Luna Publishing, LLC

United States Copyright Office Registration Nos.: PA 1-742-891 through PA 2-318-406

Forty-seven (47) musical compositions, each authored or co-authored by Marguerite D. Fonseca, with copyrights registered with the United States Copyright Office and assigned to Flor de Luna Publishing, LLC.

[Detailed schedule of works with individual titles, registration numbers, and registration dates to be attached.]

Part II — Sound Recordings

Owner: Mariposa Sound Recordings, LLC

United States Copyright Office Registration Nos.: SR 0-891-220 through SR 1-104-773

Thirty-two (32) sound recordings, each embodying one or more of the musical compositions identified in Part I above, with copyrights registered with the United States Copyright Office and assigned to Mariposa Sound Recordings, LLC.

[Detailed schedule of works with individual titles, registration numbers, and registration dates to be attached.]

Note: The complete schedule of Works, including individual titles, registration numbers, and registration dates for each of the 47 musical compositions and 32 sound recordings, shall be appended to this Exhibit A prior to execution. The Works referenced herein are identical to those identified in Exhibit A to the Complaint filed in Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA (C.D. Cal.).

EXHIBIT 1

FORM OF STIPULATION OF DISMISSAL WITH PREJUDICE

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), Plaintiffs Marguerite D. Fonseca, Flor de Luna Publishing, LLC, and Mariposa Sound Recordings, LLC, and Defendant Crescendo Digital Media, Inc., by and through their respective undersigned counsel, hereby stipulate and agree to the dismissal with prejudice of this Action, including all claims asserted in the Complaint, all counterclaims, cross-claims, and affirmative defenses asserted in the Answer, and all related claims between the Parties, upon the following terms:

1. All claims, counterclaims, cross-claims, and affirmative defenses asserted by any Party in the above-captioned Action are hereby dismissed with prejudice.

2. Each Party shall bear its own costs and attorney's fees incurred in this Action, except as otherwise provided in the Settlement Agreement and Mutual Release executed by the Parties as of August 14, 2023 (the "Agreement").

3. The Court shall retain jurisdiction to enforce the terms of the Agreement, pursuant to Kokkonen v. Ridgeline Mutual Insurance, 511 U.S. 375 (1994), and the Parties' express request that the Court incorporate the Agreement's enforcement terms into this Stipulation and the Court's order by reference. In the event of any breach of the Agreement, any Party may apply to this Court for appropriate relief, including specific performance, injunctive relief, or damages.

CALDERWOOD & HARKNESS LLP Attorneys for Plaintiffs

By: ________

Name: Alan Ngo

Title: Partner

Address: 777 South Figueroa Street, 34th Floor

Los Angeles, California 90017

Date: ________

HARGROVE, PENNINGTON & CAO LLP Attorneys for Defendant

By: ________

Name: Denise K. Whitford

Title: Partner

Address: 401 Congress Avenue, Suite 2800

Austin, Texas 78701

SETTLEMENT AGREEMENT AND MUTUAL RELEASE
Effective Date: August 14, 2023
This SETTLEMENT AGREEMENT AND MUTUAL RELEASE (this "Agreement") is entered into as of August 14, 2023 (the "Effective Date"), by and among:
(1) Marguerite D. Fonseca, an individual residing at 4827 Laurelgrove Avenue, Studio City, California 91604 ("Fonseca");
(2) Flor de Luna Publishing, LLC, a California limited liability company, with its principal office at 1200 South Grand Avenue, Suite 1450, Los Angeles, California 90015 ("FDL Publishing");
(3) Mariposa Sound Recordings, LLC, a California limited liability company, with its principal office at 1200 South Grand Avenue, Suite 1450, Los Angeles, California 90015 ("Mariposa Sound");
Fonseca, FDL Publishing, and Mariposa Sound are referred to collectively herein as "Plaintiffs";
and
(4) Crescendo Digital Media, Inc., a Delaware corporation with its principal place of business at 3100 Esperanza Crossing, Suite 600, Austin, Texas 78758 ("Defendant" or "Crescendo").
Each of the foregoing is referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
A. On April 3, 2023, Plaintiffs filed a Complaint for Copyright Infringement against Defendant in the United States District Court for the Central District of California, captioned Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA (the "Action"). In the Action, Plaintiffs allege that Defendant infringed Plaintiffs' copyrights in forty-seven (47) musical compositions and thirty-two (32) sound recordings (collectively, the "Works"), as identified in Exhibit A to the Complaint filed in the Action. Plaintiffs' claims in the Action include claims for direct, contributory, and vicarious copyright infringement under 17 U.S.C. §§ 106, 501, and related provisions, and Plaintiffs seek actual and statutory damages, injunctive relief, costs, and attorney's fees.
B. On April 28, 2023, Defendant filed its Answer and Affirmative Defenses to the Complaint in the Action, denying all material allegations of liability and asserting various affirmative defenses, including, without limitation, implied license, waiver, estoppel, laches, de minimis use, innocent infringement under 17 U.S.C. § 504(c)(2), and failure to mitigate damages.
C. On July 10, 2023, the Parties participated in a full-day mediation before the Honorable Gerald T. Nakashima (Retired), serving as mediator through Ashgrove Equity Partners Dispute Resolution Services, LLC, located at 1901 Avenue of the Stars, Suite 1050, Los Angeles, California 90067. The Parties thereafter continued arm's-length settlement negotiations with the assistance of their respective counsel, resulting in the execution of a non-binding Term Sheet on August 2, 2023.
D. The Parties desire to resolve the Action and all disputes between them relating to the Works on the terms and conditions set forth in this Agreement, and to avoid the uncertainty, expense, and burden of further litigation.
E. This Agreement is the definitive agreement contemplated by the Term Sheet executed by the Parties on August 2, 2023. Upon execution of this Agreement, the Term Sheet shall be superseded in its entirety by this Agreement and shall have no further force or effect.
F. The underlying dispute arises from the following factual circumstances: Defendant operated its digital streaming and content aggregation platform, the Crescendo Stream, under a blanket content license obtained from Peregrine Music Group, LLC (the "Peregrine License"), which was effective as of January 1, 2016. The Peregrine License expired by its own terms on December 31, 2018. Peregrine Music Group, LLC ceased operations in or around November 2018 and subsequently dissolved. The Peregrine License was non-transferable, non-assignable, and contained no automatic renewal provision. Notwithstanding the expiration of the Peregrine License, Defendant continued to stream and sublicense the Works through the Crescendo Stream platform from approximately January 1, 2019 through December 31, 2022, a period of approximately four (4) years, without authorization from Plaintiffs or any other party authorized to grant such rights.
G. FDL Publishing is the sole owner of copyright in the forty-seven (47) musical compositions identified in Exhibit A to the Complaint in the Action, which compositions are registered with the United States Copyright Office under Registration Nos. PA 1-742-891 through PA 2-318-406. Mariposa Sound is the sole owner of copyright in the thirty-two (32) sound recordings identified in Exhibit A to the Complaint in the Action, which sound recordings are registered with the United States Copyright Office under Registration Nos. SR 0-891-220 through SR 1-104-773. Fonseca is the sole member and manager of both FDL Publishing and Mariposa Sound.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below:
1.1 "Action" means the lawsuit captioned Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA, pending in the United States District Court for the Central District of California, assigned to the Honorable R. Gary Klausner (District Judge) and the Honorable Patricia L. Alvarez (Magistrate Judge).
1.2 "Claims" means any and all claims, demands, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, controversies, agreements, promises, variances, trespasses, judgments, executions, liabilities, obligations, damages, losses, penalties, costs, fees, and expenses of every kind and nature whatsoever, whether known or unknown, suspected or unsuspected, asserted or unasserted, fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, arising out of, based upon, or in any way related to the reproduction, distribution, public performance, digital audio transmission, or any other exploitation of the Works during the Release Period.
1.3 "Crescendo Stream" means Defendant's proprietary digital streaming and content aggregation platform, including all subdomains, applications, and integrated interfaces through which digital content is made available to end users and commercial licensees.
1.4 "Effective Date" means August 14, 2023, as set forth in the preamble of this Agreement.
1.5 "Exhibit A" means the schedule of forty-seven (47) musical compositions and thirty-two (32) sound recordings attached as Exhibit A to the Complaint in the Action and incorporated herein by this reference.
1.6 "License Term" means the three (3)-year period commencing on the Effective Date and expiring at 11:59 p.m. Pacific Time on August 14, 2026, unless earlier terminated in accordance with Section 3.7 of this Agreement.
1.7 "License Year" means each consecutive twelve (12)-month period during the License Term. The first License Year shall commence on the Effective Date and end on August 13, 2024. The second License Year shall commence on August 14, 2024 and end on August 13, 2025. The third License Year shall commence on August 14, 2025 and end on August 14, 2026.
1.8 "MAG" means the Minimum Annual Guarantee, as defined in Section 3.4 of this Agreement.
1.9 "Peregrine License" means that certain Peregrine Music Group License Agreement, effective as of January 1, 2016 and expired as of December 31, 2018, by and between Peregrine Music Group, LLC, as licensor, and Crescendo Digital Media, Inc., as licensee.
1.10 "Prospective License" means the non-exclusive license granted to Defendant under Section 3 of this Agreement.
1.11 "Release Period" means the period commencing on January 1, 2019 and ending on the Effective Date.
1.12 "Settlement Amount" means One Million Six Hundred Twenty Thousand Dollars ($1,620,000.00), as further described in Section 2.1 of this Agreement.
1.13 "Works" means the forty-seven (47) musical compositions and thirty-two (32) sound recordings identified in Exhibit A, collectively comprising seventy-nine (79) copyrighted works.
2. SETTLEMENT PAYMENT
2.1 Amount. In full and complete settlement of all Claims arising during the Release Period, Defendant shall pay Plaintiffs and their counsel a total Settlement Amount of One Million Six Hundred Twenty Thousand Dollars ($1,620,000.00), allocated as follows:
(a) FDL Payment. Seven Hundred Twelve Thousand Five Hundred Dollars ($712,500.00) payable to Flor de Luna Publishing, LLC (EIN: 82-4193507) (the "FDL Payment"), representing Plaintiffs' share of back royalties and damages attributable to the forty-seven (47) musical compositions;
(b) Mariposa Payment. Seven Hundred Twelve Thousand Five Hundred Dollars ($712,500.00) payable to Mariposa Sound Recordings, LLC (EIN: 84-2671058) (the "Mariposa Payment"), representing Plaintiffs' share of back royalties and damages attributable to the thirty-two (32) sound recordings;
(c) Fee Payment. One Hundred Ninety-Five Thousand Dollars ($195,000.00) payable to Calderwood & Harkness LLP, 777 South Figueroa Street, 34th Floor, Los Angeles, California 90017, as reimbursement of Plaintiffs' attorney's fees and litigation costs incurred in connection with the Action (the "Fee Payment").
For the avoidance of doubt, the total back-royalty component of the Settlement Amount is One Million Four Hundred Twenty-Five Thousand Dollars ($1,425,000.00), consisting of the FDL Payment ($712,500.00) and the Mariposa Payment ($712,500.00). The total Settlement Amount is One Million Six Hundred Twenty Thousand Dollars ($1,620,000.00), consisting of the back-royalty component ($1,425,000.00) plus the Fee Payment ($195,000.00).
2.2 Payment Schedule. The Settlement Amount shall be paid in two (2) installments as follows:
(a) First Installment. One Million One Hundred Thousand Dollars ($1,100,000.00), due and payable within thirty (30) calendar days of the Effective Date, no later than September 13, 2023 (the "First Payment Date"). The First Installment shall be allocated pro rata among the FDL Payment, the Mariposa Payment, and the Fee Payment based on each payment's proportion of the total Settlement Amount. Specifically, of the First Installment:
(i) approximately $483,796.30 shall be allocated to the FDL Payment;
(ii) approximately $483,796.30 shall be allocated to the Mariposa Payment; and
(iii) approximately $132,407.41 shall be allocated to the Fee Payment.
(b) Second Installment. Five Hundred Twenty Thousand Dollars ($520,000.00), due and payable within ninety (90) calendar days of the Effective Date, no later than November 12, 2023 (the "Second Payment Date"). The Second Installment shall be allocated pro rata among the FDL Payment, the Mariposa Payment, and the Fee Payment in the same manner as the First Installment. Specifically, of the Second Installment:
(i) approximately $228,703.70 shall be allocated to the FDL Payment;
(ii) approximately $228,703.70 shall be allocated to the Mariposa Payment; and
(iii) approximately $62,592.59 shall be allocated to the Fee Payment.
For the avoidance of doubt, the sum of the First Installment and the Second Installment equals One Million Six Hundred Twenty Thousand Dollars ($1,100,000.00 + $520,000.00 = $1,620,000.00).
2.3 Method of Payment. All payments under this Section 2 shall be made by federal wire transfer of immediately available funds to bank accounts designated in writing by Plaintiffs and Calderwood & Harkness LLP, respectively. Plaintiffs and Calderwood & Harkness LLP shall provide Defendant with complete wire transfer instructions, including bank name, ABA routing number, account number, and account name, within five (5) business days of the Effective Date. Defendant shall not be deemed in default of any payment obligation hereunder if the delay in payment is solely attributable to Plaintiffs' failure to timely provide wire instructions.
2.4 Late Payment. Any payment not received by its respective due date shall accrue interest at the rate of one and one-half percent (1.5%) per month (eighteen percent (18%) per annum), compounded monthly, from the applicable due date until the date such payment is received in full. The accrual of interest under this Section 2.4 shall not constitute a waiver of any other right or remedy available to Plaintiffs, including the right to terminate the Prospective License under Section 3.7.
2.5 Tax Treatment. Each Party shall be solely responsible for its own tax obligations, including federal, state, and local income taxes, arising from or related to the settlement payments made or received under this Agreement. Defendant shall issue IRS Form 1099-MISC (or such other form as may be required by applicable law) to FDL Publishing and Mariposa Sound, as applicable, for all payments made hereunder (other than the Fee Payment, for which Defendant shall issue IRS Form 1099-MISC to Calderwood & Harkness LLP). The Parties make no representations or warranties regarding the tax treatment or tax consequences of any payments made or received under this Agreement, and each Party acknowledges that it has had the opportunity to consult with its own tax advisors regarding such matters.
3. PROSPECTIVE LICENSE
3.1 Grant of License. Effective upon Defendant's payment and Plaintiffs' receipt of the First Installment in accordance with Section 2.2(a), Plaintiffs hereby grant to Defendant a non-exclusive, non-transferable, non-sublicensable (except as expressly provided in Section 3.6) license (the "Prospective License") to reproduce, distribute, publicly perform by means of digital audio transmission, and otherwise digitally transmit the Works solely through the Crescendo Stream platform, subject to the terms and conditions of this Agreement.
3.2 Term. The Prospective License shall have a term of three (3) years, commencing on the Effective Date (August 14, 2023) and expiring at 11:59 p.m. Pacific Time on August 14, 2026, unless earlier terminated as provided in Section 3.7 of this Agreement (the "License Term"). For the avoidance of doubt, the Prospective License shall not become effective until the First Installment has been received by Plaintiffs.
3.3 Royalty Rate. During the License Term, Defendant shall pay Plaintiffs a royalty of three and one-half cents ($0.035) per individual stream of each Work through the Crescendo Stream platform (each such individual playback event constituting a "stream" for purposes of royalty calculation). The per-stream royalty shall apply regardless of whether the stream is initiated by an end user, generated through an algorithm or automated playlist, or played as part of a sublicensed content package under Section 3.6. Royalties due under this Section 3.3 shall be allocated equally between FDL Publishing (with respect to the underlying musical compositions) and Mariposa Sound (with respect to the underlying sound recordings).
3.4 Minimum Annual Guarantee. Notwithstanding the per-stream royalty rate set forth in Section 3.3, Defendant shall pay Plaintiffs a minimum annual guarantee (the "MAG") of One Hundred Seventy-Five Thousand Dollars ($175,000.00) for each License Year during the License Term. The total MAG over the full License Term shall be Five Hundred Twenty-Five Thousand Dollars ($525,000.00) ($175,000.00 multiplied by three (3) License Years). The MAG shall operate as follows:
(a) If the aggregate per-stream royalties earned by Plaintiffs in a given License Year exceed the MAG for that License Year, no additional payment shall be due on account of the MAG, and the full amount of per-stream royalties shall constitute the total royalty payment for such License Year.
(b) If the aggregate per-stream royalties earned by Plaintiffs in a given License Year are less than the MAG for that License Year, Defendant shall pay to Plaintiffs the difference between the MAG and the actual per-stream royalties earned within thirty (30) days after the end of such License Year. Such payment is sometimes referred to herein as the "MAG Shortfall Payment."
(c) The MAG shall be allocated equally between FDL Publishing and Mariposa Sound, such that each entity shall be entitled to a minimum of Eighty-Seven Thousand Five Hundred Dollars ($87,500.00) per License Year.
3.5 Reporting and Payment. Defendant shall provide Plaintiffs with a detailed written royalty statement within thirty (30) days after the end of each calendar quarter during the License Term (i.e., within thirty (30) days after September 30, December 31, March 31, and June 30 of each year, with the first reporting period running from the Effective Date through September 30, 2023). Each royalty statement shall set forth, at a minimum: (i) the title and identifying information of each Work streamed during the applicable quarter; (ii) the total number of streams of each Work during the applicable quarter; (iii) the per-stream royalty rate; (iv) the aggregate royalty amount due for each Work; (v) the total royalty amount due for the quarter; and (vi) a cumulative year-to-date total of streams and royalties for the applicable License Year. Payment of all quarterly royalties shall accompany each royalty statement. All royalty statements and corresponding payments shall be sent simultaneously to Plaintiffs and to Thornfield Music Administration, Inc. (as Plaintiffs' designated catalog administrator), 6363 Wilshire Boulevard, Suite 410, Los Angeles, California 90048, Attention: Raymond O. Sato, President.
3.6 Sublicensing. Defendant may include the Works in curated playlists and content packages that are sublicensed to Defendant's commercial clients and business partners through the Crescendo Stream platform, provided that: (a) all revenue derived from such sublicenses, including per-stream fees, subscription revenue, and advertising revenue attributable to the streaming of the Works, is included in the royalty calculation under Section 3.3 and the MAG calculation under Section 3.4; (b) Defendant remains fully responsible for all royalty payments and reporting obligations under this Agreement regardless of any sublicense arrangement; and (c) each sublicensee's use of the Works is limited to streaming through the Crescendo Stream platform or an integrated interface thereof. Defendant may not grant any standalone sublicense of any individual Work, or any sublicense permitting the use of any Work outside the Crescendo Stream platform, without the prior written consent of Plaintiffs, which consent may be withheld in Plaintiffs' sole and absolute discretion.
3.7 Termination for Default. If Defendant fails to make any payment due under this Section 3 or under Section 2 of this Agreement within ten (10) business days after receipt of written notice from Plaintiffs specifying such failure (the "Cure Period"), the Prospective License shall terminate automatically without further notice or action by Plaintiffs. Upon such termination, Defendant shall remove all Works from the Crescendo Stream platform and from all sublicensed content packages within forty-eight (48) hours of the effective date of termination. For the avoidance of doubt, termination of the Prospective License shall not relieve Defendant of its obligation to pay any amounts accrued and owing prior to the effective date of termination, including any unpaid royalties, MAG Shortfall Payments, or interest.
3.8 Effect of Termination. Upon termination or expiration of the Prospective License for any reason, all rights granted to Defendant under this Section 3 shall immediately and automatically revert to Plaintiffs. Defendant shall cease all reproduction, distribution, public performance, and digital transmission of the Works within the time periods specified in Section 3.7 (in the case of termination for default) or within five (5) business days following the expiration of the License Term (in the case of expiration). Defendant shall certify in writing to Plaintiffs, within five (5) business days of the effective date of termination or expiration, that all Works have been removed from the Crescendo Stream platform and all sublicensed content packages, and that Defendant is no longer exploiting the Works in any manner.
3.9 No Other Rights. Except as expressly granted in this Section 3, no rights in or to the Works are granted to Defendant by Plaintiffs, whether by implication, estoppel, or otherwise. Plaintiffs expressly reserve all rights not specifically and expressly granted herein, including, without limitation, the right to license the Works to third parties, the right to exploit the Works in any medium or format, and all rights under the Copyright Act of 1976, as amended, 17 U.S.C. § 101 et seq.
4. AUDIT RIGHTS
4.1 Annual Audit. Once per calendar year during the License Term and for a period of one (1) year following the expiration or termination of the License Term, Plaintiffs (acting through Thornfield Music Administration, Inc. or another independent certified public accountant or auditor designated by Plaintiffs in writing) shall have the right to audit and examine Defendant's books, records, accounts, data, and systems relating to the streaming, exploitation, and sublicensing of the Works, for the purpose of verifying the accuracy of Defendant's royalty statements and payments under Section 3 of this Agreement. Plaintiffs shall provide Defendant with not less than thirty (30) days' prior written notice of any such audit, specifying the audited period and the identity of the auditor. Each audit shall be conducted during Defendant's normal business hours at Defendant's principal office or at such other location where the relevant records are maintained, and shall be conducted in a manner that minimizes disruption to Defendant's business operations.
4.2 Cost of Audit. If an audit conducted under Section 4.1 reveals an underpayment or discrepancy in excess of five percent (5%) of the total royalties reported by Defendant for the audited period, Defendant shall bear the reasonable cost of such audit, including the fees and expenses of the auditor and any travel expenses incurred in connection therewith, in addition to paying any underpayment within fifteen (15) days of the conclusion of the audit. Any such underpayment shall bear interest at the rate of one and one-half percent (1.5%) per month from the date such underpayment was originally due until the date it is paid in full. If the audit does not reveal an underpayment or discrepancy in excess of five percent (5%), Plaintiffs shall bear the cost of the audit.
4.3 Cooperation. Defendant shall cooperate fully and in good faith with any audit conducted pursuant to this Section 4, including providing prompt and complete access to all streaming logs, server records, content management system data, revenue reports, sublicense agreements, advertising revenue allocations, and any other books, records, or documents reasonably necessary to verify the accuracy of Defendant's royalty calculations and payments.
4.4 Record Retention. Defendant shall maintain complete and accurate books and records relating to the exploitation of the Works, including all streaming data, revenue records, sublicense agreements, and royalty calculations, for a period of not less than three (3) years following the expiration or termination of the License Term. This obligation to maintain records shall survive the expiration or termination of this Agreement.
5. MUTUAL RELEASE
5.1 Release by Plaintiffs. Effective upon receipt of the First Installment, Plaintiffs — including Marguerite D. Fonseca, individually, Flor de Luna Publishing, LLC, and Mariposa Sound Recordings, LLC — on behalf of themselves and their respective heirs, executors, administrators, successors, assigns, agents, attorneys, and representatives, hereby fully, finally, and forever release, acquit, and discharge Defendant, Crescendo Digital Media, Inc., together with its officers (including, without limitation, Nikolai R. Sorensen, Chief Executive Officer, and Priya Chandrasekaran, General Counsel), directors, employees, agents, shareholders (including, without limitation, Ridgeline Ventures Partners, LP), parents, subsidiaries, affiliates, predecessors, successors, and assigns, from any and all Claims, whether known or unknown, suspected or unsuspected, asserted or unasserted, arising out of, based upon, or in any way related to the reproduction, distribution, public performance, digital audio transmission, or any other exploitation of the Works during the Release Period (January 1, 2019 through the Effective Date).
5.2 Release by Defendant. Effective upon execution of this Agreement, Defendant, Crescendo Digital Media, Inc., on behalf of itself and its officers, directors, employees, agents, shareholders, parents, subsidiaries, affiliates, predecessors, successors, assigns, attorneys, and representatives, hereby fully, finally, and forever releases, acquits, and discharges Plaintiffs — including Marguerite D. Fonseca, individually, Flor de Luna Publishing, LLC, and Mariposa Sound Recordings, LLC — together with their respective heirs, executors, administrators, successors, assigns, agents, attorneys, and representatives, from any and all Claims, whether known or unknown, suspected or unsuspected, asserted or unasserted, arising out of, based upon, or in any way related to the Action or the subject matter of the Action, including, without limitation, any claims for declaratory relief, equitable relief, or damages that Defendant has asserted or could have asserted in the Action.
5.3 Scope of Release. The releases set forth in Sections 5.1 and 5.2 are limited in scope to Claims arising from the identified Works during the Release Period only. The releases do not extend to, and shall not affect, any rights, obligations, or claims arising under this Agreement itself, including, without limitation, the Prospective License, payment obligations under Sections 2 and 3, audit rights under Section 4, confidentiality obligations under Section 7, indemnification obligations under Section 9, or any other obligation expressly set forth in this Agreement. Nothing in this Section 5 shall release any Party from liability for a breach of this Agreement.
5.4 Waiver of California Civil Code § 1542. Each Party acknowledges that it has been advised by its respective legal counsel regarding the provisions of California Civil Code Section 1542, which provides:
> "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."
Each Party, having been so advised, hereby expressly, knowingly, and voluntarily waives and relinquishes any and all rights and benefits it may have under California Civil Code Section 1542, or under any similar statute, regulation, or common law principle of any jurisdiction, with respect to the releases set forth in Sections 5.1 and 5.2 of this Agreement. Each Party understands and acknowledges the significance of this waiver and that it may discover facts in addition to or different from those which it now knows or believes to be true with respect to the Claims released herein, and agrees that the releases set forth herein shall remain effective in all respects regardless of such later-discovered facts.
6. DISMISSAL
6.1 Stipulation of Dismissal. Within five (5) business days of the full execution of this Agreement by all Parties, the Parties shall jointly file a Stipulation of Dismissal with Prejudice of the Action in the United States District Court for the Central District of California, substantially in the form attached hereto as Exhibit 1, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii). The Stipulation of Dismissal shall dismiss with prejudice all claims, counterclaims, cross-claims, and affirmative defenses asserted by any Party in the Action.
6.2 Court Jurisdiction. The Stipulation of Dismissal filed pursuant to Section 6.1 shall expressly provide that the Court retains jurisdiction to enforce the terms of this Agreement, in accordance with Kokkonen v. Ridgeline Mutual Insurance, 511 U.S. 375 (1994), and the Parties' express request that the Court incorporate the Agreement's enforcement terms into the dismissal order by reference. In the event that the Court declines to retain such jurisdiction, the dispute resolution provisions of Section 10.2 of this Agreement shall govern any disputes arising under or relating to this Agreement.
6.3 Costs. Except as otherwise expressly provided in Section 2.1(c) of this Agreement (regarding the Fee Payment to Calderwood & Harkness LLP), each Party shall bear its own costs, attorney's fees, and expenses incurred in connection with the Action, including filing fees, service costs, discovery costs, expert fees, and any other litigation-related expenses.
7. CONFIDENTIALITY
7.1 Confidential Terms. The Parties agree that the existence and terms of this Agreement, including, without limitation, all financial terms, settlement payment amounts, payment schedules, royalty rates, the MAG, the existence and terms of the Prospective License, and the specific terms of the mutual release, are confidential and proprietary and shall not be disclosed to any third party, except as follows:
(a) Professional Advisors. Disclosure to the Parties' respective attorneys, accountants, tax advisors, and financial advisors, on a need-to-know basis and subject to such advisors' professional obligations of confidentiality or, in the absence of such professional obligations, a written confidentiality agreement no less restrictive than this Section 7;
(b) Catalog Administrators. Disclosure by Plaintiffs to Plaintiffs' catalog administrators, including Thornfield Music Administration, Inc., Attention: Raymond O. Sato, President, to the extent reasonably necessary for royalty administration, collection, monitoring, and reporting purposes;
(c) Legal Compulsion. Disclosure as required by applicable law, regulation, court order, subpoena, or other legal process (including, without limitation, tax reporting obligations to the Internal Revenue Service and applicable state tax authorities), provided that the disclosing Party shall, to the extent legally permissible, provide the other Party with prompt written notice of the required disclosure and cooperate with the other Party's efforts to obtain a protective order or other appropriate remedy to limit the scope of such disclosure;
(d) Consent. Disclosure with the prior written consent of the other Party, which consent may be granted, withheld, or conditioned in such Party's sole discretion;
(e) Investor and Board Reporting. Disclosure by Defendant to its board of directors, officers, and investors (including, without limitation, Ridgeline Ventures Partners, LP) on a confidential, need-to-know basis, in connection with Defendant's internal governance, financial reporting, and investor relations obligations, provided that Defendant shall use commercially reasonable efforts to ensure that such recipients maintain the confidentiality of the disclosed information.
7.2 Non-Disparagement. Neither Party shall make, publish, or cause to be made or published any public statements, whether written or oral, that are disparaging, defamatory, or derogatory of the other Party, or any of the other Party's officers, directors, employees, products, services, or business practices, in connection with the Action, this Agreement, or the underlying subject matter thereof. This non-disparagement obligation shall not restrict any Party from making truthful statements in connection with legal proceedings, regulatory inquiries, or as otherwise required by law.
7.3 Press and Public Statements. The Parties may jointly issue a public statement acknowledging the resolution of the Action on mutually agreed terms. The text of any such joint public statement shall be agreed upon by the Parties in writing prior to its issuance. Neither Party shall disclose specific financial terms of this Agreement in any press release, public statement, social media post, or other public communication without the prior written consent of the other Party.
8. REPRESENTATIONS AND WARRANTIES
8.1 Authority. Each Party represents and warrants to the other Parties that it has full power, legal capacity, and authority to enter into this Agreement and to perform all of its obligations hereunder, and that the person executing this Agreement on its behalf is duly authorized to do so.
(a) Fonseca represents and warrants that she is the sole member and manager of both FDL Publishing and Mariposa Sound, and that she has full authority to execute this Agreement on behalf of herself individually and on behalf of each such entity, and to bind each such entity to the terms and conditions set forth herein.
(b) Nikolai R. Sorensen, as Chief Executive Officer of Crescendo Digital Media, Inc. (EIN: 81-3729164), represents and warrants that he is duly authorized by Crescendo's board of directors to negotiate, execute, and deliver this Agreement on behalf of Crescendo, and that the execution and performance of this Agreement have been approved by all necessary corporate action of Crescendo.
8.2 No Assignment of Claims. Each Party represents and warrants that it has not assigned, transferred, pledged, hypothecated, or otherwise conveyed to any third party any Claim released herein, and that no other person or entity has any interest in any such Claim.
8.3 Ownership of Copyrights. Plaintiffs represent and warrant that:
(a) FDL Publishing is the sole and exclusive owner of all right, title, and interest in and to the copyrights in the forty-seven (47) musical compositions identified in Exhibit A, including all rights of reproduction, distribution, public performance, and digital audio transmission, and that such copyrights are registered with the United States Copyright Office under Registration Nos. PA 1-742-891 through PA 2-318-406;
(b) Mariposa Sound is the sole and exclusive owner of all right, title, and interest in and to the copyrights in the thirty-two (32) sound recordings identified in Exhibit A, including all rights of reproduction, distribution, public performance by means of digital audio transmission, and making of derivative works, and that such copyrights are registered with the United States Copyright Office under Registration Nos. SR 0-891-220 through SR 1-104-773; and
(c) Plaintiffs have the right and authority to grant the Prospective License on the terms set forth in Section 3 of this Agreement.
Fonseca's broader catalog comprises two hundred fourteen (214) registered musical compositions and one hundred eighty-eight (188) registered sound recordings with the United States Copyright Office; the Works constitute a subset thereof.
8.4 No Encumbrances. Plaintiffs represent and warrant that the Works are not subject to any lien, mortgage, pledge, security interest, encumbrance, or third-party claim that would impair, restrict, or conflict with the rights granted under the Prospective License. Plaintiffs further represent and warrant that Plaintiffs' catalog is administered on a non-exclusive basis by Thornfield Music Administration, Inc., which collects mechanical royalties and performance royalties on behalf of FDL Publishing through applicable performing rights organizations and mechanical licensing agencies; such administration arrangement does not conflict with the rights and obligations set forth in this Agreement and does not restrict Plaintiffs' ability to grant the Prospective License.
8.5 Defendant's Representations. Defendant represents and warrants that it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with its principal place of business at 3100 Esperanza Crossing, Suite 600, Austin, Texas 78758, and its registered agent for service of process at Capitol Registered Agents, Inc., 1209 Orange Street, Wilmington, Delaware 19801. Defendant further represents that it has all necessary corporate power and authority to conduct its business as presently conducted and to enter into and perform its obligations under this Agreement.
9. INDEMNIFICATION
9.1 Indemnification by Plaintiffs. Plaintiffs shall indemnify, defend, and hold harmless Defendant and its officers, directors, employees, agents, shareholders, affiliates, successors, and assigns from and against any and all losses, liabilities, damages, costs, and expenses (including reasonable attorney's fees and court costs) arising out of or resulting from any third-party claim, demand, action, or proceeding based upon: (a) a breach of any representation or warranty made by Plaintiffs in Section 8 of this Agreement; or (b) any claim that the grant of the Prospective License or Defendant's use of the Works in accordance with the terms of the Prospective License infringes, violates, or misappropriates the intellectual property rights or other rights of any third party.
9.2 Indemnification by Defendant. Defendant shall indemnify, defend, and hold harmless Plaintiffs and their respective heirs, executors, administrators, successors, assigns, agents, and representatives from and against any and all losses, liabilities, damages, costs, and expenses (including reasonable attorney's fees and court costs) arising out of or resulting from any third-party claim, demand, action, or proceeding based upon: (a) Defendant's exploitation, use, streaming, sublicensing, or other exploitation of the Works under the Prospective License, including, without limitation, any claims by Defendant's commercial sublicensees, end users, or content partners; or (b) a breach of any representation, warranty, or obligation made or undertaken by Defendant under this Agreement.
10. GENERAL PROVISIONS
10.1 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California, without giving effect to any choice-of-law or conflicts-of-law rules or provisions that would cause the application of the laws of any other jurisdiction.
10.2 Dispute Resolution. Any dispute, claim, or controversy arising out of, relating to, or in connection with this Agreement, including any dispute regarding the formation, interpretation, performance, breach, or termination of this Agreement, that cannot be resolved by good-faith negotiation between the Parties within thirty (30) days of written notice by one Party to the other, shall be submitted to and resolved by final and binding arbitration before a single neutral arbitrator in Los Angeles, California, administered by Ashgrove Equity Partners Dispute Resolution Services, LLC, 1901 Avenue of the Stars, Suite 1050, Los Angeles, California 90067, in accordance with its then-current Commercial Arbitration Rules. The arbitrator shall be selected by mutual agreement of the Parties, or, in the absence of agreement within fifteen (15) days after the filing of the arbitration demand, by Ashgrove Equity Partners Dispute Resolution Services, LLC in accordance with its rules. The arbitrator shall have the authority to award any remedy available at law or in equity, including injunctive relief, specific performance, and monetary damages. The arbitrator's award shall be final, binding, and enforceable in any court of competent jurisdiction. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
10.3 Attorney's Fees (Enforcement). In any action, arbitration, or other proceeding to enforce or interpret any provision of this Agreement, or arising out of or relating to a breach of this Agreement, the prevailing Party shall be entitled to recover from the non-prevailing Party its reasonable attorney's fees, costs, and expenses incurred in connection with such action, arbitration, or proceeding, in addition to any other relief to which it may be entitled.
10.4 Entire Agreement. This Agreement, together with Exhibit A (Schedule of Works) and Exhibit 1 (Form of Stipulation of Dismissal with Prejudice) attached hereto and incorporated herein by reference, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, understandings, discussions, term sheets, letters of intent, memoranda of understanding, and agreements, whether written or oral, between the Parties relating to the subject matter hereof, including, without limitation, the Term Sheet dated August 2, 2023. No Party has relied upon any statement, representation, or warranty not expressly set forth in this Agreement.
10.5 Amendments. This Agreement may not be amended, modified, supplemented, or otherwise changed except by a written instrument executed by all Parties hereto.
10.6 Severability. If any provision of this Agreement (or any portion thereof) is held to be invalid, illegal, or unenforceable by a court or arbitrator of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and the remaining provisions shall continue in full force and effect. The Parties agree that the invalid, illegal, or unenforceable provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable while preserving the Parties' original intent as closely as possible.
10.7 Waiver. No waiver of any provision of this Agreement, or of any right or remedy hereunder, shall be effective unless made in writing and signed by the Party granting such waiver. No failure or delay by any Party in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.
10.8 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic means, including by email transmission of PDF copies or through electronic signature platforms (e.g., Brightwater Software or Ashford Health IT), shall have the same legal force and effect as original ink signatures, and each Party hereby waives any defense to the enforcement of this Agreement based on the form of signature.
10.9 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given: (a) when delivered personally to the recipient; (b) one (1) business day after being sent by nationally recognized overnight courier (e.g., Severin Partners LLC or Halcyon Partners LLC), with delivery confirmation; (c) three (3) business days after being deposited in the United States mail, registered or certified mail, return receipt requested, postage prepaid; or (d) when sent by email with confirmation of receipt (by non-automated reply from the recipient or by delivery receipt), to the addresses set forth below (or such other addresses as a Party may designate by written notice to the other Parties in accordance with this Section):
To Plaintiffs:
Marguerite D. Fonseca 4827 Laurelgrove Avenue Studio City, California 91604
With a copy (which shall not constitute notice) to:
Alan Ngo, Partner Calderwood & Harkness LLP 777 South Figueroa Street, 34th Floor Los Angeles, California 90017
Email: a.ngo@calderwoodharkness.com
To Defendant:
Nikolai R. Sorensen, Chief Executive Officer Crescendo Digital Media, Inc. 3100 Esperanza Crossing, Suite 600 Austin, Texas 78758
With a copy (which shall not constitute notice) to:
Denise K. Whitford, Partner Hargrove, Pennington & Cao LLP 401 Congress Avenue, Suite 2800 Austin, Texas 78701
Email: d.whitford@hpclaw.com
10.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. Neither Party may assign, delegate, or otherwise transfer this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that Plaintiffs may assign the right to receive payments hereunder to their successors, affiliated entities, or designated catalog administrators without the consent of Defendant, upon written notice to Defendant.
10.11 Third-Party Beneficiaries. Except as expressly provided herein, including Calderwood & Harkness LLP's right to receive the Fee Payment under Section 2.1(c) of this Agreement, this Agreement is not intended to, and shall not, confer any rights, benefits, or remedies upon any person or entity other than the Parties hereto and their respective permitted successors and assigns. Calderwood & Harkness LLP is an intended third-party beneficiary solely with respect to Section 2.1(c).
10.12 Headings. The section headings, article headings, and captions contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define, limit, extend, or describe the scope or intent of any provision of this Agreement.
10.13 Construction. This Agreement has been negotiated at arm's length by the Parties, each of which has been represented by experienced legal counsel. No provision of this Agreement shall be construed against or interpreted to the disadvantage of any Party by reason of such Party having or being deemed to have structured, dictated, or drafted such provision.
IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement and Mutual Release as of the Effective Date first written above.
PLAINTIFFS:
________________________________________
Marguerite D. Fonseca, individually
Address: 4827 Laurelgrove Avenue, Studio City, CA 91604
Date: ________
FLOR DE LUNA PUBLISHING, LLC
By: ________
Name: Marguerite D. Fonseca
Title: Sole Member
Address: 1200 South Grand Avenue, Suite 1450, Los Angeles, CA 90015
Date: ________
MARIPOSA SOUND RECORDINGS, LLC
By: ________
Name: Marguerite D. Fonseca
Title: Sole Member
Address: 1200 South Grand Avenue, Suite 1450, Los Angeles, CA 90015
Date: ________
DEFENDANT:
CRESCENDO DIGITAL MEDIA, INC.
By: ________
Name: Nikolai R. Sorensen
Title: Chief Executive Officer
Address: 3100 Esperanza Crossing, Suite 600, Austin, TX 78758
Date: ________
APPROVED AS TO FORM:
CALDERWOOD & HARKNESS LLP Attorneys for Plaintiffs
By: ________
Name: Alan Ngo
Title: Partner
Address: 777 South Figueroa Street, 34th Floor, Los Angeles, CA 90017
HARGROVE, PENNINGTON & CAO LLP Attorneys for Defendant
By: ________
Name: Denise K. Whitford
Title: Partner
Address: 401 Congress Avenue, Suite 2800, Austin, TX 78701
EXHIBIT A
SCHEDULE OF WORKS
The following is a schedule of the forty-seven (47) musical compositions and thirty-two (32) sound recordings that constitute the "Works" as defined in the Settlement Agreement and Mutual Release dated August 14, 2023 (the "Agreement"), to which this Exhibit A is attached and incorporated by reference.
Part I — Musical Compositions
Owner: Flor de Luna Publishing, LLC
United States Copyright Office Registration Nos.: PA 1-742-891 through PA 2-318-406
Forty-seven (47) musical compositions, each authored or co-authored by Marguerite D. Fonseca, with copyrights registered with the United States Copyright Office and assigned to Flor de Luna Publishing, LLC.
[Detailed schedule of works with individual titles, registration numbers, and registration dates to be attached.]
Part II — Sound Recordings
Owner: Mariposa Sound Recordings, LLC
United States Copyright Office Registration Nos.: SR 0-891-220 through SR 1-104-773
Thirty-two (32) sound recordings, each embodying one or more of the musical compositions identified in Part I above, with copyrights registered with the United States Copyright Office and assigned to Mariposa Sound Recordings, LLC.
[Detailed schedule of works with individual titles, registration numbers, and registration dates to be attached.]
Note: The complete schedule of Works, including individual titles, registration numbers, and registration dates for each of the 47 musical compositions and 32 sound recordings, shall be appended to this Exhibit A prior to execution. The Works referenced herein are identical to those identified in Exhibit A to the Complaint filed in Fonseca et al. v. Crescendo Digital Media, Inc., Case No. 2:23-cv-02841-RGK-PLA (C.D. Cal.).
EXHIBIT 1
FORM OF STIPULATION OF DISMISSAL WITH PREJUDICE
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
Pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), Plaintiffs Marguerite D. Fonseca, Flor de Luna Publishing, LLC, and Mariposa Sound Recordings, LLC, and Defendant Crescendo Digital Media, Inc., by and through their respective undersigned counsel, hereby stipulate and agree to the dismissal with prejudice of this Action, including all claims asserted in the Complaint, all counterclaims, cross-claims, and affirmative defenses asserted in the Answer, and all related claims between the Parties, upon the following terms:
1.  All claims, counterclaims, cross-claims, and affirmative defenses asserted by any Party in the above-captioned Action are hereby dismissed with prejudice.
2.  Each Party shall bear its own costs and attorney's fees incurred in this Action, except as otherwise provided in the Settlement Agreement and Mutual Release executed by the Parties as of August 14, 2023 (the "Agreement").
3.  The Court shall retain jurisdiction to enforce the terms of the Agreement, pursuant to Kokkonen v. Ridgeline Mutual Insurance, 511 U.S. 375 (1994), and the Parties' express request that the Court incorporate the Agreement's enforcement terms into this Stipulation and the Court's order by reference. In the event of any breach of the Agreement, any Party may apply to this Court for appropriate relief, including specific performance, injunctive relief, or damages.
CALDERWOOD & HARKNESS LLP Attorneys for Plaintiffs
By: ________
Name: Alan Ngo
Title: Partner
Address: 777 South Figueroa Street, 34th Floor
Los Angeles, California 90017
Date: ________
HARGROVE, PENNINGTON & CAO LLP Attorneys for Defendant
By: ________
Name: Denise K. Whitford
Title: Partner
Address: 401 Congress Avenue, Suite 2800
Austin, Texas 78701
Date: ________
ORDER
IT IS SO ORDERED.
________________________________________
Hon. R. Gary Klausner United States District Judge
Date: ________
[Form of Stipulation of Dismissal to be finalized and executed by counsel for both Parties prior to filing.]
MARGUERITE D. FONSECA, an individual; FLOR DE LUNA PUBLISHING, LLC, a California limited liability company; and MARIPOSA SOUND RECORDINGS, LLC, a California limited liability company, | Case No. 2:23-cv-02841-RGK-PLA
Plaintiffs, | Hon. R. Gary Klausner
v. | STIPULATION OF DISMISSAL WITH PREJUDICE
CRESCENDO DIGITAL MEDIA, INC., a Delaware corporation,
Defendant.

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

RECITALS

PLAINTIFFS:

FLOR DE LUNA PUBLISHING, LLC

MARIPOSA SOUND RECORDINGS, LLC

DEFENDANT:

CRESCENDO DIGITAL MEDIA, INC.

APPROVED AS TO FORM:

EXHIBIT A

SCHEDULE OF WORKS

EXHIBIT 1

FORM OF STIPULATION OF DISMISSAL WITH PREJUDICE

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Record

Parties

Dates

Amounts