Intellectual Property License and Platfrom Distribution Agreement

This is an updated draft we are sharing as it gets finalized

BETWEEN:

SUBVERT INCORPORATED, PBC, a Delaware public benefit corporation ("Licensor" or "Corporation")

AND:

SUBVERT COOPERATIVE LCA, a Colorado limited cooperative association ("Licensee" or "Cooperative")

RECITALS

WHEREAS, pursuant to an Assignment and Assumption Agreement dated March 17, 2025 (the "Assignment Agreement"), Licensee assigned to Licensor all right, title, and interest in and to certain intellectual property, including the Subvert Platform, associated software, trademarks, brand assets, and related materials;

WHEREAS, Licensor desires to grant Licensee a perpetual, exclusive license to use, develop, and operate the Subvert Platform to provide music distribution and related services to artists and musicians;

WHEREAS, the parties desire to establish an economic arrangement whereby Licensee pays Licensor annual Platform Distributions based on Licensee's Distributable Cash Flow, which Licensor will distribute to its Investor Share holders;

WHEREAS, the parties desire to establish a framework whereby the Corporation serves as the default owner and hub of all ventures using the Subvert brand, intellectual property, or member base (the "Ecosystem Brand & Ventures Framework");

WHEREAS, the parties desire to establish terms whereby the Corporation pays the Cooperative for development and operations services related to the Subvert Platform and ecosystem ventures (the "Development & Operations Services"); and

WHEREAS, this Agreement governs both the intellectual property licensing relationship and the economic relationship between the two entities.

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:

ARTICLE 1: DEFINITIONS

1.1 "Agreement" means this Intellectual Property License and Platform Distribution Agreement, including all exhibits and amendments.

1.2 "Annual Services Budget" means the budget prepared by Licensee and approved by both Boards pursuant to Section 5.2, setting forth projected operating costs, projected platform revenue, target operating reserves, and the calculated Services Fee for an upcoming fiscal year.

1.3 "Brand" means the "Subvert" name, wordmark, logos, design marks, trade dress, and all associated brand elements and goodwill, whether registered or unregistered.

1.4 "Deliverables" means all work product, developments, improvements, modifications, enhancements, derivatives, documentation, code, designs, and other materials created by Licensee in the course of performing Development & Operations Services under Article 5.

1.5 "Distributable Cash Flow" or "DCF" means, for any fiscal year of Licensee, an amount equal to:

Licensee's net income for such fiscal year (calculated on a basis consistent with Licensee's historical accounting practices)

PLUS: Non-cash charges (depreciation, amortization, stock-based compensation, and other non-cash expenses)

MINUS: Capital expenditures

MINUS: Operating Reserve additions (or PLUS Operating Reserve reductions)

MINUS: Loan repayments to Licensor (if any outstanding intercompany loans, though parties do not currently anticipate using such mechanism)

Distributable Cash Flow may be negative in any given fiscal year. For the avoidance of doubt, the Services Fee paid by Licensor to Licensee pursuant to Article 5 is revenue to Licensee and is included in Licensee's net income for purposes of calculating DCF.

1.6 "Gross Revenue" means all revenue received by Licensee from any source, including but not limited to:

Platform fees charged to members
Transaction fees and commissions
Subscription revenue
Services Fees received from Licensor
Any other income from operations

Gross Revenue is calculated before deducting any costs, expenses, refunds, or chargebacks.

1.7 "Intellectual Property" means all intellectual property assigned to Licensor pursuant to the Assignment Agreement, including:

The Subvert Platform (software, source code, databases, APIs, architecture, and documentation)
The Brand (trademarks, service marks, logos, trade dress)
Domain names (subvert.com and all related domains)
Copyrights in all platform content, documentation, and creative works
Trade secrets, know-how, and proprietary methods
All improvements, modifications, enhancements, and derivative works
All goodwill associated with the foregoing

1.8 "Investor Share Percentage" or "ISP" means, as of any date of determination, the percentage equal to:

(Number of Investor Shares outstanding on an as-converted to Common Stock basis) ÷ (Total shares of Licensor outstanding on an as-converted to Common Stock basis)

As of the Effective Date, the Investor Share Percentage is twenty and fifty-six hundredths percent (20.56%).

1.9 "Investor Shares" means the series of non-voting preferred stock of Licensor designated as "Investor Shares" and issued pursuant to Licensor's Amended and Restated Certificate of Incorporation.

1.10 "Member" or "Members"** means members of the Licensee in accordance with Licensee's organizational documents.

1.11 "Member Base" means the collective body of Licensee's Members, including their contact information, transaction history, preferences, and other data collected by Licensee in the course of providing Platform services.

1.12 "New Venture" means any entity (including corporations, limited liability companies, partnerships, and other business organizations) in which Licensee holds any equity interest or over which Licensee exercises operational control, and which:

(a) Uses the Brand in its legal name, trade name, or marketing materials; OR

(b) Licenses or uses any Intellectual Property owned by Licensor; OR

(d) Uses Member data or the Member Base for any purpose; OR

(e) Is publicly presented, held out, or described as part of the Subvert ecosystem, family of companies, or related ventures.

1.13 "Operating Reserves" means cash and liquid investments held by Licensee and designated by Licensee's Board of Directors as reserves for future operating expenses, capital expenditures, contingencies, or strategic initiatives, as reflected on Licensee's balance sheet.

1.14 "Platform" means the Subvert music distribution platform and all related technology, including web applications, mobile applications, APIs, backend systems, databases, and infrastructure used to provide music distribution and related services to Members.

1.15 "Platform Distribution" means the annual payment calculated pursuant to Section 3.2 and paid by Licensee to Licensor based on Distributable Cash Flow and the Investor Share Percentage.

1.16 "Services Fee" means the annual payment calculated pursuant to Section 5.2 and paid by Licensor to Licensee for Development & Operations Services.

1.17 "Territory" means worldwide.

ARTICLE 2: LICENSE GRANT

2.1 Grant of License.

Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee an exclusive, perpetual, irrevocable, royalty-free (except for Platform Distributions as set forth in Article 3), worldwide license to:

(a) Use, reproduce, modify, adapt, enhance, and create derivative works of the Intellectual Property;

(b) Operate, market, and commercialize the Platform using the Intellectual Property;

(d) Sublicense Members to use the Platform as end-users in accordance with Licensee's standard terms of service; and

(e) Exercise all rights necessary to develop, operate, maintain, improve, and expand the Platform and provide related services to Members.

2.2 Exclusivity.

The license granted herein is exclusive. During the term of this Agreement, Licensor shall not:

(a) Grant any other licenses to the Intellectual Property for purposes competitive with Licensee's business;

(b) Use the Intellectual Property to compete with Licensee; or

(c) Authorize any third party to use the Brand or Intellectual Property in a manner that competes with or undermines Licensee's business.

For the avoidance of doubt, this exclusivity does not prevent Licensor from (i) licensing the Intellectual Property to New Ventures as contemplated by Article 4, or (ii) using the Brand for Licensor's own corporate purposes (fundraising, investor relations, etc.) in a manner that does not compete with Licensee.

2.3 Territory and Scope.

The license is granted for the entire Territory and for all fields of use related to music distribution, artist services, and related creative professional services.

2.4 Sublicensing.

Licensee may sublicense end-users (Members) to use the Platform in accordance with Licensee's standard terms of service. Licensee may not sublicense the Intellectual Property to third parties for commercial exploitation without Licensor's prior written consent, except as expressly permitted under Article 4 (New Ventures) or as necessary for Licensee's authorized use of the Platform (e.g., sublicensing to hosting providers, CDN services, and other infrastructure vendors as part of normal operations).

2.5 Improvements and Derivative Works.

All Deliverables, improvements, modifications, enhancements, derivative works, and other developments created by Licensee using or based on the Intellectual Property shall be deemed "work made for hire" for Licensor under the U.S. Copyright Act. To the extent any such work does not qualify as work made for hire, Licensee hereby irrevocably assigns to Licensor all right, title, and interest in and to such work, including all intellectual property rights therein.

Notwithstanding the foregoing assignment, Licensor hereby grants Licensee a license to use all such improvements and derivative works on the same terms as the license granted in Section 2.1.

2.6 Ownership.

Licensor retains all right, title, and interest in and to the Intellectual Property. Licensee acquires no ownership rights except the license expressly granted herein. All use of the Intellectual Property by Licensee shall inure to the benefit of Licensor.

2.7 Quality Control and Brand Standards.

Licensee shall maintain high standards of quality in all uses of the Brand and shall comply with any reasonable brand guidelines provided by Licensor from time to time. Licensor shall have the right to inspect and approve Licensee's use of the Brand, and Licensee shall cooperate with such inspections and make any changes reasonably requested by Licensor to maintain brand integrity.

2.8 Trademark Notice.

Licensee shall include appropriate trademark notices (e.g., ™, ®, or "Subvert is a trademark of Subvert Incorporated, PBC") in connection with uses of the Brand as reasonably requested by Licensor.

ARTICLE 3: PLATFORM DISTRIBUTIONS

3.1 Purpose.

Licensee shall pay Licensor annual Platform Distributions as set forth in this Article 3. Platform Distributions compensate Licensor for the license of the Intellectual Property and enable Licensor to make distributions to its Investor Share holders.

3.2 Calculation of Platform Distribution.

For each fiscal year of Licensee, the Platform Distribution shall be calculated as follows:

Platform Distribution = Distributable Cash Flow × Investor Share Percentage

Where:

Distributable Cash Flow is calculated as defined in Section 1.5
Investor Share Percentage is calculated as defined in Section 1.8

Example Calculation:

Assume for Fiscal Year 2027:

Licensee net income: $6,000,000
Non-cash charges: $500,000
Capital expenditures: $1,000,000
Operating reserve additions: $500,000
Distributable Cash Flow = $6M + $500K - $1M - $500K = $5,000,000
Investor Share Percentage (as of calculation date): 20.56%
Platform Distribution = $5,000,000 × 20.56% = $1,028,000

3.3 Payment Terms.

(a) Timing: Platform Distribution for each fiscal year shall be paid within one hundred twenty (120) days following the end of such fiscal year.

(b) Method: Payment shall be made via wire transfer to an account designated by Licensor in writing.

3.4 True-Up and Reconciliation.

(a) Within one hundred twenty (120) days of fiscal year-end, Licensee shall deliver to Licensor:

(i) Financial statements for the completed fiscal year (audited if Gross Revenue exceeds $50,000,000, otherwise unaudited with CFO certification);

(ii) A certificate signed by Licensee's Chief Financial Officer or principal accounting officer setting forth the calculation of Distributable Cash Flow, Operating Reserves, and Platform Distribution for such fiscal year; and

(iii) Payment of the Platform Distribution.

(b) If the actual Platform Distribution based on final financial statements differs from any estimated or interim payment, the parties shall true-up within thirty (30) days, with either party making an adjustment payment as necessary.

3.5 Payment Priority.

The Platform Distribution shall be calculated and paid before or simultaneously with any patronage distributions, dividends, or other distributions by Licensee to its Members. For the avoidance of doubt, Operating Reserves are established before calculating Distributable Cash Flow, so setting aside reserves does not violate this payment priority.

3.6 Pass-Through Commitment.

Within fifteen (15) days of receiving each Platform Distribution, Licensor shall distribute one hundred percent (100%) of such amount to holders of Investor Shares (on a pro rata basis), less:

(a) Corporate income taxes paid or payable by Licensor on such Platform Distribution; and

(b) Licensor's operating expenses, provided such expenses do not exceed Twenty-Five Thousand Dollars ($25,000) per fiscal year without the prior approval of holders of a majority of Investor Shares.

3.7 Operating Reserves - Transparency Requirement.

(a) Licensee's Board of Directors has sole discretion to determine the appropriate level of Operating Reserves for the prudent operation of Licensee's business.

(b) If Operating Reserves as of fiscal year-end exceed six (6) months of Licensee's trailing twelve-month operating expenses, Licensee shall include a written explanation in its annual true-up report (delivered pursuant to Section 3.4) addressing:

(i) The current Operating Reserve balance and number of months of trailing operating expenses it represents;

(ii) The business rationale for maintaining Operating Reserves at this level (e.g., planned capital expenditure, anticipated expansion, economic uncertainty, seasonal cash flow management, pending legal matters); and

(iii) The expected timeline for deployment or drawdown of reserves, if applicable.

(c) The transparency requirement set forth in subsection (b) is for informational purposes only and does not require approval by Licensor or holders of Investor Shares. Licensee retains full discretion over Operating Reserve levels.

(d) For the avoidance of doubt, Operating Reserves are deducted in calculating Distributable Cash Flow (per Section 1.5), so additions to Operating Reserves reduce Platform Distributions and distributions to Members proportionally.

3.8 Audit Rights.

(a) Licensor and holders of at least ten percent (10%) of Investor Shares (on an as-converted basis) shall have the right, no more than once per fiscal year, to engage an independent certified public accountant reasonably acceptable to Licensee to review and verify Licensee's calculation of Distributable Cash Flow and Platform Distribution.

(b) The requesting party shall provide Licensee with at least thirty (30) days' written notice of its intent to conduct an audit, specifying the fiscal year(s) to be audited.

(c) The audit shall be conducted during Licensee's normal business hours at Licensee's principal place of business. Licensee shall cooperate with the audit and provide reasonable access to books, records, and personnel.

(d) The requesting party shall bear all costs of the audit, unless the audit reveals a discrepancy of more than five percent (5%) in the Platform Distribution paid, in which case Licensee shall reimburse all reasonable costs of the audit.

(e) If the audit reveals an underpayment, Licensee shall pay the deficiency plus interest at the prime rate within thirty (30) days. If the audit reveals an overpayment, Licensor shall credit the excess against the next Platform Distribution or refund it within thirty (30) days, at Licensee's election.

(f) All financial information obtained in connection with an audit shall be subject to strict confidentiality obligations.

3.9 Tax Treatment.

The Platform Distribution is characterized as payment for licensing and use of intellectual property and services provided by Licensor. Licensee shall issue Licensor a Form 1099-MISC (or successor form) for each fiscal year in which a Platform Distribution is paid.

3.10 Reporting to Investor Share Holders.

Within fifteen (15) days of each Platform Distribution payment to Licensor, Licensor shall provide to each holder of Investor Shares a report containing:

(a) The amount of Platform Distribution received from Licensee;

(b) The calculation of Distributable Cash Flow (with sufficient detail to understand major components);

(d) Licensor's operating expenses deducted (if any);

(e) Total amount distributed to Investor Shares; and

(f) Per-share distribution amount for each holder.

ARTICLE 4: ECOSYSTEM BRAND & VENTURES FRAMEWORK

4.1 Purpose and Principles.

(a) The parties recognize that Licensee may from time to time identify opportunities to create or invest in new businesses, platforms, or services that leverage the Subvert ecosystem, Brand, Intellectual Property, or Member Base.

(b) The parties desire to ensure that such opportunities are structured in a manner that:

(i) Preserves Licensee's operational flexibility and ability to innovate;

(ii) Ensures holders of Investor Shares gain economic exposure to ecosystem growth through Licensor's equity appreciation;

(iii) Maintains alignment between Licensor, Licensee, and Members; and

(iv) Establishes Licensor as the hub and owner of the Subvert ecosystem.

(c) Accordingly, the parties agree that Licensor shall serve as the default owner and primary shareholder of all New Ventures, as set forth in this Article 4.

4.2 Corporation as Hub - Ownership Requirement.

(a) Ownership of New Ventures: If Licensee proposes to create, invest in, or acquire any New Venture, Licensor shall own one hundred percent (100%) of such New Venture, or such lesser percentage as approved by both Boards provided that Licensor retains a controlling equity interest and operational control rights.

(b) Formation Process: Prior to launching any New Venture, Licensee shall present the opportunity to Licensor's Board of Directors and Licensee's Board of Directors. Both Boards must approve:

(i) The structure and capitalization of the New Venture;

(ii) Licensor's ownership percentage;

(iii) The management agreement or operating agreement pursuant to which Licensee will develop and/or operate the New Venture; and

(iv) The funding sources for the New Venture.

(i) Capital contributions from Licensor (funded by issuance of additional Investor Shares, debt financing, or retained Platform Distributions);

(ii) Capital contributions from Licensee (funded by Operating Reserves, Distributable Cash Flow, or other Licensee resources); or

(iii) Co-investment with strategic partners, provided Licensor retains a controlling interest.

(d) Economic Alignment in Capitalization:

New Ventures may be capitalized by Licensor, Licensee, or both. Regardless of funding source, Licensor shall own one hundred percent (100%) of each New Venture (or such lesser controlling percentage as approved by both Boards).

When Licensee contributes capital to New Ventures from Operating Reserves or Distributable Cash Flow, such contributions effectively reduce Platform Distributions to Licensor during the period such reserves are accumulated. Holders of Investor Shares thus participate in funding New Ventures proportionally (via foregone Platform Distributions) and receive proportional economic exposure through Licensor's ownership of such New Ventures. This structure ensures alignment: all parties fund growth pro rata and own growth pro rata.

4.3 Brand Licensing to New Ventures.

(a) No New Venture may use the Brand without a written Brand License from Licensor.

(b) Licensor may grant Brand Licenses to New Ventures owned or controlled by Licensor on such terms as Licensor deems appropriate.

(c) Licensee may not grant Brand sublicenses to New Ventures or any other third parties without Licensor's prior written consent.

4.4 Member Base - Access and Use.

(a) The Member Base is an asset of Licensee, developed through Licensee's operation of the Platform.

(b) No New Venture may access or use the Member Base without:

(i) Authorization from Licensor and Licensee; and

(ii) Consent from Members in accordance with applicable privacy laws and Licensee's terms of service.

(c) Licensee shall establish reasonable policies and procedures for Member consent and data sharing with New Ventures in a manner that protects Member privacy and complies with applicable law.

4.5 Management Agreements with New Ventures.

(a) Licensee may enter into management agreements with New Ventures owned by Licensor pursuant to which Licensee develops, operates, markets, or provides services to such New Ventures.

(b) Such management agreements shall include:

(i) Scope of services to be provided by Licensee;

(ii) Compensation to Licensee (calculated on a basis consistent with Article 5, i.e., cost reimbursement);

(iii) Performance standards and metrics;

(iv) Term and termination provisions; and

(v) Intellectual property ownership (with all work product deemed work made for hire for Licensor).

(c) Management fees paid to Licensee by New Ventures are revenue to Licensee and are included in Licensee's net income for purposes of calculating Distributable Cash Flow.

4.6 Investor Exposure Through Equity Appreciation.

(a) Holders of Investor Shares gain economic exposure to New Ventures through Licensor's equity ownership of such ventures. As New Ventures grow in value, Licensor's net asset value increases, and Investor Shares appreciate accordingly.

(b) Holders of Investor Shares do not receive separate Platform Distributions from New Ventures. New Venture income flows to Licensor and either (i) is retained by Licensor (increasing NAV), or (ii) is distributed to stockholders (Investor Shares and Common Stock) as dividends at the discretion of Licensor's Board of Directors.

(c) For the avoidance of doubt, management fees paid by New Ventures to Licensee are included in Licensee's revenue, and to the extent such fees contribute to Distributable Cash Flow, they result in Platform Distributions to Licensor under Article 3.

4.7 Reporting on New Ventures.

In connection with Licensor's annual financial reporting to Investor Share holders (pursuant to the Investors' Rights Agreement), Licensor shall provide updates on:

(a) New Ventures launched or acquired during the fiscal year;

(b) Licensor's ownership percentage in each New Venture;

(d) Capital deployed by Licensor into New Ventures; and

(e) Estimated fair value of Licensor's interests in New Ventures (based on Licensor's valuation policies).

4.8 Existing Platform Subsidiaries.

For the avoidance of doubt, wholly-owned operating subsidiaries of Licensee engaged solely in the operation of the existing Subvert Platform (i.e., music distribution and related services to artists as of the Effective Date) are not "New Ventures" and are not subject to the requirements of this Article 4. Licensee may create and operate such subsidiaries without Licensor involvement, provided they use the Brand only in connection with Platform operations and do not offer services materially distinct from the existing Platform.

4.9 Exceptions and Waivers.

Licensor's Board of Directors may waive the requirements of this Article 4 for specific ventures if it determines that such waiver is in the best interests of Licensor and its stockholders. Any such waiver requires approval by holders of a majority of Investor Shares, voting as a separate class.

ARTICLE 5: DEVELOPMENT & OPERATIONS SERVICES

5.1 Services to be Provided.

(a) Licensor hereby engages Licensee to provide development, operations, maintenance, support, and related services for the Platform (collectively, "Development & Operations Services"), including but not limited to:

(i) Software development, enhancement, and maintenance;

(ii) Platform operations, hosting, and infrastructure management;

(iii) Member support and customer service;

(iv) Marketing and business development;

(v) Legal, compliance, and regulatory affairs;

(vi) Finance, accounting, and administrative functions; and

(vii) Any other services necessary or appropriate for the operation of the Platform and Licensee's business.

(b) Licensee shall perform Development & Operations Services using commercially reasonable efforts consistent with industry standards for similar platforms.

(c) All Deliverables created by Licensee in the course of performing Development & Operations Services shall be deemed work made for hire for Licensor, and Licensee hereby assigns to Licensor all right, title, and interest in such Deliverables. Licensor grants Licensee a license to use such Deliverables for the purposes of this Agreement.

5.2 Annual Services Budget and Services Fee.

(a) Budget Preparation: At least sixty (60) days prior to the end of each fiscal year, Licensee shall prepare and deliver to Licensor a proposed Annual Services Budget for the upcoming fiscal year.

(b) Budget Content: The Annual Services Budget shall include:

(i) Projected operating costs for the upcoming fiscal year (detailed by major category: personnel, infrastructure, marketing, legal, etc.);

(ii) Projected Platform revenue (revenue from Members, excluding Services Fee from Licensor);

(iii) Target Operating Reserve balance as of the end of the upcoming fiscal year;

(iv) Current Operating Reserve balance; and

(v) Calculated Services Fee (as set forth in subsection (c) below).

Services Fee = MAX(0, [Projected Operating Costs + Target Operating Reserve - Current Operating Reserve - Projected Platform Revenue])

Translation: The Services Fee is the shortfall between what Licensee needs to operate and what Licensee expects to self-fund from Platform revenue and existing reserves.

If Licensee projects that it will be self-funding (i.e., Projected Platform Revenue + Current Operating Reserve ≥ Projected Operating Costs + Target Operating Reserve), then Services Fee = $0.

(d) Board Approval: Both Licensor's Board of Directors and Licensee's Board of Directors must approve the Annual Services Budget within thirty (30) days of Licensee's submission.

(e) Default Budget: If the Boards cannot agree on an Annual Services Budget by the start of the fiscal year, the prior fiscal year's Services Fee, indexed for inflation (CPI-U or successor index), shall serve as the default Services Fee for the upcoming year.

Example Calculation:

Assume Licensee prepares the following budget for Fiscal Year 2028 (as of November 2027):

Projected operating costs:        $8,000,000
Target operating reserve:          $4,000,000
Total cash needed:                $12,000,000

Less: Current reserves (Nov 2027): ($2,500,000)
Less: Projected FY2028 revenue:    ($5,500,000)

Services Fee (shortfall):          $4,000,000

Licensor pays Licensee $4,000,000 upon budget approval (by December 31, 2027).

5.3 Payment of Services Fee.

(a) Timing: Upon approval of the Annual Services Budget by both Boards, Licensor shall pay the full Services Fee to Licensee via wire transfer within thirty (30) days.

(b) General Timing: The Services Fee is typically paid before the start of the fiscal year (i.e., in November or December for a January 1 fiscal year start).

(c) First Year Proration: If this Agreement becomes effective mid-fiscal-year, the first Services Fee shall be prorated based on the number of months remaining in the fiscal year.

5.4 Annual True-Up for Services Fee.

(a) Within one hundred twenty (120) days of fiscal year-end, Licensee shall deliver to Licensor:

(i) Actual financial statements for the fiscal year;

(ii) Budget-to-actual variance analysis comparing projected vs. actual operating costs, Platform revenue, and Operating Reserves; and

(iii) True-up calculation showing whether the Services Fee paid was sufficient or excessive.

(b) Adjustment Threshold: A true-up adjustment payment is required only if the variance between budgeted and actual shortfall exceeds the lesser of:

(i) Ten percent (10%) of the Services Fee; OR

(ii) Five Hundred Thousand Dollars ($500,000)

(i) Underfunding (actual shortfall exceeded Services Fee paid): Licensor shall make a catch-up payment to Licensee within thirty (30) days, OR the deficit shall be carried into the next fiscal year's Annual Services Budget and included in the next Services Fee (at the mutual discretion of both Boards).

(ii) Overfunding (actual shortfall was less than Services Fee paid): Licensee shall credit the excess against the next fiscal year's Services Fee, OR Licensee shall refund the excess to Licensor within thirty (30) days, at Licensee's election, provided that Licensee's Operating Reserves do not exceed Target Operating Reserve by more than six (6) months of operating expenses.

5.5 Emergency Supplemental Services Fee.

(a) If unforeseen circumstances arise during a fiscal year that require funding beyond the approved Services Fee and available Operating Reserves, Licensee may submit a request for a supplemental Services Fee to both Boards.

(b) The request shall include:

(i) Description of the unforeseen circumstances;

(ii) Amount of additional funding required;

(iii) Explanation of why Operating Reserves are insufficient; and

(iv) Impact on Licensee's operations if supplemental funding is not provided.

(c) Approval of a supplemental Services Fee requires affirmative vote of both Licensor's Board of Directors and Licensee's Board of Directors.

(d) If approved, Licensor shall pay the supplemental Services Fee within thirty (30) days of approval.

5.6 Work Made for Hire.

All Deliverables created by Licensee in performing Development & Operations Services shall be deemed "work made for hire" for Licensor under applicable copyright law. To the extent any Deliverable does not qualify as work made for hire, Licensee hereby irrevocably assigns to Licensor all right, title, and interest in and to such Deliverable, including all intellectual property rights therein. Licensor hereby grants Licensee a license to use all Deliverables for the purposes contemplated by this Agreement.

5.7 Subcontracting.

Licensee may subcontract portions of Development & Operations Services to third-party vendors, provided that (a) Licensee remains responsible for all subcontractor performance, (b) subcontractors agree to work-made-for-hire and assignment provisions equivalent to those in Section 5.6, and (c) costs of subcontractors are included in Licensee's operating costs and budgeted in the Annual Services Budget.

ARTICLE 6: TERM AND TERMINATION

6.1 Term.

This Agreement shall commence on the Effective Date and shall continue in perpetuity unless terminated as set forth in this Article 6.

6.2 Termination for Cause.

This Agreement may be terminated by Licensor only upon the occurrence of any of the following events:

(a) Material Breach: Licensee materially breaches any provision of this Agreement and fails to cure such breach within sixty (60) days after receiving written notice from Licensor specifying the breach.

(b) Bankruptcy: Licensee files for bankruptcy, becomes insolvent, makes a general assignment for the benefit of creditors, or has a receiver or trustee appointed over substantially all of its assets.

(c) Illegal Use: Licensee uses the Intellectual Property for illegal purposes, or in a manner that exposes Licensor to material legal liability.

(d) Fraud or Willful Misconduct: Licensee engages in fraud, willful misconduct, or gross negligence in the performance of its obligations under this Agreement.

For the avoidance of doubt, non-payment or late payment of Platform Distributions is a material breach subject to the cure period set forth in subsection (a).

6.3 No Termination for Convenience or Commercial Disputes.

Licensor may not terminate this Agreement for convenience or due to commercial disputes regarding the amount of Platform Distributions, Services Fees, or other business matters. The license granted in Article 2 is perpetual and irrevocable except as provided in Section 6.2.

6.4 Effect of Termination.

(a) License Termination: Upon termination, the license granted in Article 2 shall terminate, and Licensee shall immediately cease all use of the Intellectual Property and Brand.

(b) Transition: Licensor and Licensee shall cooperate in good faith to transition operation of the Platform to Licensor or a designee, including transfer of hosting, data, Member relationships, and ongoing operations. Licensee shall provide reasonable transition assistance for up to one hundred eighty (180) days following termination.

(c) Payment Obligations: All payment obligations accrued prior to termination (including unpaid Platform Distributions and Services Fees) shall survive termination.

(d) Survival: Articles 1 (Definitions to the extent necessary), 6.4 (Effect of Termination), 7 (Amendment), 8.5 (Limitation of Liability), 8.6 (Indemnification), 8.11 (Governing Law), and 8.12 (Dispute Resolution) shall survive termination.

6.5 Remedies.

Termination is Licensor's sole contractual remedy for breaches by Licensee. For the avoidance of doubt, Licensor may also pursue equitable remedies (specific performance, injunction) and damages for breaches, but termination of the license is a remedy of last resort given the parties' interdependent relationship.

ARTICLE 7: AMENDMENT

7.1 Amendment Process.

This Agreement may be amended only by a written instrument signed by Licensor and Licensee and approved as set forth in this Article 7.

7.2 Standard Amendments.

Amendments to this Agreement (other than Core Economic Amendments as defined in Section 7.3) require:

(a) Approval by Licensor's Board of Directors;

(b) Approval by Licensee's Board of Directors; AND

7.3 Core Economic Amendments.

Amendments that would change any of the following (collectively, "Core Economic Amendments") require the approvals set forth in Section 7.2 PLUS approval by Licensee's Members in accordance with Licensee's bylaws:

(a) The definition of Distributable Cash Flow (Section 1.5);

(b) The definition of Gross Revenue (Section 1.6);

(d) The calculation of Platform Distribution (Section 3.2);

(e) The Ecosystem Brand & Ventures Framework provisions (Article 4), including the definition of New Venture, the Corporation-as-hub requirement, or the prohibition on Licensee funding New Ventures;

(f) Any provision that would delay, defer, or reduce Platform Distribution payments; or

(g) The amendment provisions of this Article 7.

7.4 Rationale.

Standard amendments require Investor Share holder approval because Investor Share holders have a contractual right to veto changes that affect their economic position. Core Economic Amendments additionally require Licensee Member approval because such amendments fundamentally affect the economic relationship between the entities and Licensee's ability to make patronage distributions to Members.

7.5 Administrative Amendments.

Notwithstanding Sections 7.2 and 7.3, administrative amendments that do not affect the substantive rights or obligations of the parties (e.g., address changes, notice provisions, typographical corrections) may be made by mutual written agreement of Licensor and Licensee without further approvals.

ARTICLE 8: GENERAL PROVISIONS

8.1 Notices.

All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be deemed given when:

(a) Delivered personally;

(b) Sent by email (with confirmation of receipt);

(d) Three (3) business days after being sent by certified mail, return receipt requested.

Notices shall be sent to the addresses set forth below or such other addresses as a party may designate by notice:

If to Licensor:
Subvert Incorporated, PBC
[Address]
Attn: [●]
Email: [●]

If to Licensee:
Subvert Cooperative LCA
[Address]
Attn: [●]
Email: info@subvert.fm

8.2 Assignment.

(a) Licensee may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Licensor and holders of a majority of Investor Shares.

(b) Licensor may assign this Agreement to an acquirer or successor entity, provided that:

(i) Such acquirer or successor assumes all obligations of Licensor hereunder;

(ii) Such acquirer or successor acknowledges and agrees to honor the perpetual, irrevocable nature of the license granted in Article 2 and the Ecosystem Brand & Ventures Framework; and

(iii) Such assignment does not materially impair Licensee's rights under this Agreement.

(c) Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties' successors and permitted assigns.

8.3 Entire Agreement.

This Agreement, together with the Assignment Agreement and any other agreements expressly referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written.

8.4 Severability.

If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect, and such invalid provision shall be reformed to the minimum extent necessary to make it valid and enforceable while preserving the parties' intent.

8.5 Limitation of Liability.

EXCEPT FOR BREACHES OF CONFIDENTIALITY, VIOLATIONS OF INTELLECTUAL PROPERTY RIGHTS, OR WILLFUL MISCONDUCT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

8.6 Indemnification.

(a) By Licensee: Licensee shall indemnify, defend, and hold harmless Licensor and its officers, directors, stockholders, employees, and agents from and against any and all claims, liabilities, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising from:

(i) Licensee's operation of the Platform or provision of services to Members;

(ii) Licensee's breach of this Agreement;

(iii) Licensee's violation of any law or regulation; or

(iv) Any claim by a Member or third party related to Licensee's use of the Intellectual Property (except to the extent arising from defects in the Intellectual Property itself).

(b) By Licensor: Licensor shall indemnify, defend, and hold harmless Licensee and its officers, directors, members, employees, and agents from and against any and all claims, liabilities, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising from:

(i) Claims that Licensee's authorized use of the Intellectual Property infringes third-party intellectual property rights;

(ii) Licensor's breach of this Agreement; or

(iii) Licensor's violation of any law or regulation.

8.7 Relationship of Parties.

The parties are independent contractors. Nothing in this Agreement creates a partnership, joint venture, agency, employment, or franchise relationship. Neither party has authority to bind the other except as expressly set forth herein.

8.8 Waiver.

No waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom the waiver is asserted. No failure or delay in exercising any right shall constitute a waiver, nor shall any single or partial exercise preclude further exercise.

8.9 Counterparts.

This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Electronic signatures shall have the same effect as original signatures.

8.10 Force Majeure.

Neither party shall be liable for any failure or delay in performance due to causes beyond its reasonable control, including acts of God, war, terrorism, labor disputes, governmental actions, or internet/telecommunications failures. The affected party shall promptly notify the other and use reasonable efforts to mitigate the impact.

8.11 Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles.

8.12 Dispute Resolution.

(a) Negotiation: Any dispute arising under this Agreement shall first be subject to good faith negotiation between senior executives of both parties for a period of thirty (30) days.

(b) Mediation: If negotiation fails, the dispute shall be submitted to non-binding mediation before a mutually agreed mediator.

(c) Arbitration: If mediation fails, the dispute shall be resolved by binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association. The arbitration shall be conducted in [●], and judgment on the award may be entered in any court of competent jurisdiction.

(d) Exception for Equitable Relief: Notwithstanding the foregoing, either party may seek injunctive or other equitable relief in a court of competent jurisdiction to prevent irreparable harm.

8.13 Confidentiality.

(a) Each party agrees to maintain the confidentiality of the other party's Confidential Information and to use such information only for purposes of this Agreement.

(b) "Confidential Information" means all non-public information disclosed by one party to the other, including business plans, financial information, Member data, technical specifications, and trade secrets.

(i) Is or becomes publicly available through no fault of the receiving party;

(ii) Was rightfully known by the receiving party prior to disclosure;

(iii) Is rightfully received from a third party without breach of confidentiality; or

(iv) Is independently developed by the receiving party.

(d) Each party may disclose Confidential Information:

(i) To its employees, directors, advisors, and service providers who need to know such information and who are bound by confidentiality obligations; or

(ii) As required by law or court order (with prompt notice to the disclosing party if legally permissible).

8.14 Further Assurances.

Each party agrees to execute and deliver such further documents and instruments and to take such further actions as may be reasonably necessary to effectuate the purposes of this Agreement.