JUDGE COTE

JS 44C/SDNY

CIVIL COVER SHEET

REV. 4/2014

The JS-44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of

pleadings or other papers as required by law, except as provided by local rules of court. This form, approved bythe
Judicial Conference of the United States in September 1974, is required for use of the Clerk of Court for the purpose of
initiating the civil docket sheet.
PLAINTIFFS

THE ESTATE OF SELENA QUINTANILLA, by Abraham Quintanilla, Jr., its

|b|.nc.CV 2447

DEFENDA:
UMG REO

duly appointed Administrator, and Q PRODUCTS, INC.

ATTORNEYS (FIRM NAME, ADDRESS, AND TELEPHONE NUMBER
Certilman Balin Adler & Hyman, LLP Attn: Jaspreet S. Mayall, Esq.

ATTORNEYS (IF KNOWN)

90 Merrick Avenue, 9th Floor

East Meadow, NY 11554
(516)296-7000

CAUSE OF ACTION(CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU AREFILING AND WRITE A BRIEF STATEMENT OF CAUS^
(DO NOT CITE JURISDICTIONAL STATUTES UNLESS DIVERSITY)

MAR 31 2015
Has this action, case, or proceeding, or one essentially the same been previously filed in SDNY atany time? NttZVesLUudge Previously Assigned
Ifyes,was thiscase Vol. Invol.

Dismissed. No

Is THIS AN INTERNATIONALARBITRATIONCASE?

No [x]

Yes fj If yes, give date.

Yes
NATURE OF SUIT

(PLACE AN [x] IN ONEBOXONLY)

ACTIONS UNDER STATUTES

TORTS

CONTRACT

& Case No.

PERSONAL INJURY

PERSONAL INJURY

FORFEITURE/PENALTY

BANKRUPTCY

OTHER STATUTES

[ J 422 APPEAL

f 1400STATE

[ ] 367 HEALTHCARE/
[ ] 310 AIRPLANE
[ ] 315 AIRPLANE PRODUCT

[ 1110
[ ]120
1)130
[ ]140

INSURANCE
MILLER ACT
NEGOTIABLE
INSTRUMENT

[ ] 320 ASSAULT, LIBEL &

[]150

RECOVERY OF

[ ] 330 FEDERAL

[]151
[]152

MARINE

OVERPAYMENT &
ENFORCEMENT
OF JUDGMENT
MEDICARE ACT
RECOVERY OF
DEFAULTED
STUDENT LOANS

LIABILITY
SLANDER

EMPLOYERS'
LIABILITY

[ ) 340 MARINE
[ ] 345 MARINE PRODUCT
LIABILITY

[ ] 350 MOTOR VEHICLE

[ ] 355 MOTOR VEHICLE

(EXCL VETERANS)
I )153

RECOVERY OF

[X]190

INJURY

[ ) 362 PERSONAL INJURY -

OF VETERAN'S
BENEFITS
STOCKHOLDERS
SUITS
OTHER
CONTRACT
PRODUCT
LIABILITY

[ ] 196 FRANCHISE

MED MALPRACTICE

[ )240
[ ]245

. . RqflnTHFR

28 USC 157

INJURY PRODUCT
PROPERTY RIGHTS

LIABILITY

REAPPORTIONMENT

[
[
[
[
[

] 410 ANTITRUST
] 430 BANKS & BANKING
] 450 COMMERCE
] 460 DEPORTATION
] 470 RACKETEER INFLU
ENCED & CORRUPT
ORGANIZATION ACT

[ ] 820 COPYRIGHTS

PERSONAL PROPERTY

[ ] 830 PATENT
[ ] 840 TRADEMARK

[ ] 370 OTHER FRAUD

[ ] 371 TRUTH IN LENDING

SOCIAL SECURITY

[ ] 380 OTHER PERSONAL

LABOR

PROPERTY DAMAGE

[ J 385 PROPERTY DAMAGE

[ ] 710 FAIR LABOR

STANDARDS ACT

(RICO)

[ ] 480 CONSUMER CREDIT

[ ] 490 CABLE/SATELLITE TV

[ ] 463 ALIEN DETAINEE

[ ] 510 MOTIONS TO
ACTIONS UNDER STATUTES

VACATE SENTENCE

28 USC 2255
CIVIL RIGHTS

LAND

CONDEMNATION
FORECLOSURE
RENT LEASE &

EJECTMENT
TORTS TO LAND
TORT PRODUCT
ALL OTHER

[ ) 530 HABEAS CORPUS

[ ] 535 DEATH PENALTY
[ ) 540 MANDAMUS & OTHER

[ ] 751 FAMILY MEDICAL

LEAVE ACT (FMLA)

[ ] 790 OTHER LABOR

LITIGATION

[ ] 791 EMPL RET INC

SECURITY ACT

ACCOMMODATIONS
DISABILITIES EMPLOYMENT

HIA(1395ff)
BLACK LUNG (923)
DIWC/DIWW (405(g))
SSID TITLE XVI
RSI (405(g))

[ ] 850 SECURITIES/
COMMODITIES/
EXCHANGE

[ ] 890 OTHER STATUTORY

ACTIONS

[ J 891 AGRICULTURALACTS
FEDERAL TAX SUITS

[ ] 870 TAXES (U.S. Plaintiff or

Defendant)
[ ) 871 IRS-THIRD PARTY

[ ] 893 ENVIRONMENTAL
MATTERS

[ ) 895 FREEDOM OF
INFORMATION ACT

26 USC 7609

[ ] 896 ARBITRATION
[ ) 899 ADMINISTRATIVE

IMMIGRATION

PRISONER CIVIL RIGHTS

"[ ) 443 HOUSING/

[ ] 445 AMERICANS WITH

] 861
] 862
] 863
] 864
] 865

[ ] 740 RAILWAY LABOR ACT

(Non-Prisoner)

[ ] 441 VOTING
( ) 442 EMPLOYMENT

[
[
[
[
[

RELATIONS

PRISONER PETITIONS

LIABILITY

[ ]290

[ ) 423 WITHDRAWAL

[ ]368 ASBESTOS PERSONAL ' ]69 OTHER

[ ) 720 LABOR/MGMT

I ] 440 OTHER CIVIL RIGHTS

[ ]220
[ ]230

21 USC 881

PRODUCT LIABILITY

REAL PROPERTY

[]210

[ ] 365 PERSONAL INJURY

PRODUCT LIABILITY

[ 1 375 FALSE CLAIMS

28 USC 158

SEIZURE OF PROPERTY

PRODUCT LIABILITY

CONTRACT

[J195

INJURY/PRODUCT LIABILITY

[ ] 360 OTHER PERSONAL

OVERPAYMENT

[]160

PHARMACEUTICAL PERSONAL , j 625 DRUG RELATED

[ ] 462 NATURALIZATION
[ ) 550 CIVIL RIGHTS
[ ] 555 PRISON CONDITION
[ ) 560 CIVIL DETAINEE

APPLICATION

[ ] 465 OTHER IMMIGRATION

PROCEDURE ACT/REVIEW OR

APPEAL OF AGENCY DECISION

[ J 950 CONSTITUTIONALITY OF
STATE STATUTES

ACTIONS

CONDITIONS OF CONFINEMENT

[ ] 446 AMERICANS WITH

DISABILITIES -OTHER

[ ] 448 EDUCATION

REAL PROPERTY

Check if demanded in complaint:

CHECK IF THIS IS A CLASS ACTION

DO YOU CLAJM THIS CASE IS RELATED TO A CIVIL CASE NOW PENDING IN S.D.N.Y.'

UNDER F.R.C.P. 23

DEMAND $_

OTHER

JUDGE

DOCKET NUMBER

Check YES onlyifdemandedincomplaint

JURY DEMAND: EYES t-NO

NOTE: You must also submit at the time of filing the Statement of Relatedness form (Form IH-32).

(PLACEAN xIN ONEBOXONLY)

Proceed
Proceeding

ORIGIN

^ 2 Removed
from
State Court

3 from
Remanded D 4Reinstated
or 5 (Specify
Transferred
from Q6 Litigation
Multidistrict
Reopened
District)

I I 3. all parties represented

D7Appeal
to Distri,
Judge from

Appellate

Magistrate Judg

Court

Judgment

I I b. Atleast one
party is pro se.

(PLACEAN x.NONEBOXONLY,

BAS|S QF JUR|SD|CT|0N

D1 U.S. PLAINTIFF Q2 U.S. DEFENDANT Q 3 FEDERAL QUESTION

IFDIVERSITY ,NDICATB

04 DIVERSITY

(U.S. NOT APARTY)

CITIZENSHIP BELOW

CITIZENSHIP OF PRINCIPAL PARTIES (FOR DIVERSITY CASES ONLY)

(Place an[X] in one box for Plaintiff and one box for Defendant)
CITIZEN OF THIS STATE

PTF

DEF

[]1

N1

CITIZEN OF ANOTHER STATE KX2 []2

PTF DEF

CITIZEN OR SUBJECT OF A
FOREIGN COUNTRY

[]3[]3

INCORPORATED and PRINCIPAL PLACE

PTF

DEF

[]6

[]6

M5 r l5

OF BUSINESS IN ANOTHER STATE

INCORPORATED or PRINCIPAL PLACE [ ]4VW

FOREIGN NATION

OF BUSINESS IN THIS STATE

PLAINTIFF(S) ADDRESS(ES) AND COUNTY/IFS)

The Estate Of Selena Quintanilla

5410 Leopard Street
Corpus Christi, TX 78408

Q Productions, Inc.
5410 Leopard Street
Corpus Christi, TX 78408

Nueces County

Nueces County

c/o Abraham Quintanilla, Jr.

DEFENDANT(S) ADDRESS(ES) AND COUNTY(IES)

UMG Recordings,

Inc.

UMG Recordings, Inc

c/o CT Corporation
111 Righth Avenue

c/o The Corporation Trust Company

Corporation Trust Center

1209 Orange Street

Wilmington, DE 19801

New York, NY 10011

New York County

New Castle County

DEFENDANT(S) ADDRESS UNKNOWN

D[JRESENTATI0N
'S HEREBY
MADE AT' DEFENDANTSAT THIS TIME' ' HAVE BEEN UNABLE. WITH REASONABLE DILIGENCE
RE9IBENCE ADDRESSES
OF THE FOLLOWING
uiLitafcNOfc, TO
TO ASCERTAIN
ASCERTAIN

Check one:

THIS ACTION SHOULD BE ASSIGNED TO:

WHITE PLAINS

(DO NOT check either box if this a PRISONER PETITION/PRISONER CIVIL RIGHTS

{/ijMANHATTAN

COMPLAINT.)

DATE 3/P//r SIGNATURE OF ATTORNEY OF RECCf^^^^

ADMITTED TO PRACTICE IN THIS DISTRICT

RECEIPT*

M YES (DATE ADMITTED Mo. JL

[] NO

Attorney BarCode#

Magistrate Judge is to be designated by the Clerk ofthe Court.

MAG. JUDGE GORMSTEI

Magistrate Judge
Ruby J. Krajick, Clerk of Court by

.
Deputy Clerk, DATED

UNITED STATES DISTRICT COURT (NEW YORK SOUTHERN)

is so Designated.

Yr /?$2 )
' * ^

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

15 CV 2447
THE ESTATE OF SELENA QUINTANILLA,

JUDGE COTE

Civil Action No.

by Abraham Quintanilla, Jr., its duly appointed

Administrator, and Q PRODUCTIONS, INC.,
COMPLAINT FOR BREACH OF

Plaintiffs,

CONTRACT; BREACH OF
IMPLIED DUTY OF GOOD FAITH

AND FAIR DEALING; an

ACCOUNTING; and

v.

UMG RECORDINGS, INC.,

DECLARATORY JUDGMENT

Defendant.

DEMAND FOR JURY TRIAL

Plaintiffs, The Estate of Selena Quintanilla, by Abraham Quintanilla, Jr., its

duly appointed Administrator, and Q Productions, Inc. ("Plaintiffs"), by and through their
attorneys, for their Complaint against Defendant named above allege as follows:
PARTIES

1.

"

Plaintiff, Abraham Quintanilla, Jr., the duly appointed administratof^bf the

Estate of Selena Quintanilla, is an individual residing in the state of Texas.

2.

no

Plaintiff Q Productions, Inc. is a Texas corporation that owns, manages*

and sells the rights in and to the musical and video content of, among other recording
artists, Selena Quintanilla. Q Productions engages in, among other things, managing the
business of the Estate of Selena Quintanilla.

3.

Defendant, UMG Recordings, Inc., ("UMG") is a Delaware corporation

with its headquarters in the State of California, with continuous and systematic business
transactions in all states, including specifically New York. At all relevant times, UMG

was and continues to be in the business of exploiting the sound recordings of musical
1

performances and the audio-visual recordings of such performances. UMG's exploitation

includes, but is not limited to, producing, manufacturing, distributing, licensing, and
selling these recordings.
JURISDICTION AND VENUE

4.

This Court has subject matter jurisdiction pursuant to 28 U.S.C. 1332(a),

as the amount in controversy is in excess of $75,000.00, and there is complete diversity of

citizenship between the Plaintiffs and Defendant.

5.

This Court has personal jurisdiction over Defendant in this matter as

Defendant maintains continuous and systematic business contacts within this State and
transacts substantial business activities within this State.

6.

Venue is proper in the Southern District of New York pursuant to 28

U.S.C. 1391 as one of the subject agreements upon which this controversy is based

provides that "[a]ll claims, disputes or disagreements which may arise out of the
interpretation, performance or breach of this Agreement shall be submitted exclusively to
thejurisdiction of the state courts of the state of New York or the Federal District Courts
located in New York City."
FACTUAL BACKGROUND

The Selena Agreements

7.

SelenaQuintanilla ("Selena"), known as the "Queen of Tejano Music", was

an American singer, songwriter, spokesperson, actress, and fashion designer. Selena's

contributions to music and fashion made her one of the most celebrated Mexican

American entertainers of the end of the 20th century. She was touted by the New York

Times as being"arguably the most important Latina musician in the country, on her wayto
becoming one of the most important, period."
2

8.

Selena and/or the Plaintiffs entered into various agreements and

amendments with UMG and/or UMG's predecessors regarding Selena's music, including
compositions and sound recordings, and audio-visual works (the "Selena Agreements").
9.

In particular, on April 2, 1993, Selena entered into a recording agreement

with UMG's predecessor Capital-EMI Latin Records, a division of Capitol Records Inc.,

regarding Selena's exclusive recording services and delivery of Spanish language

recordings (the "Latin Recording Agreement"). A true and corrected copy of the Latin
Recording Agreement, along with all amendments thereto, is attached hereto as Exhibit
"A".

10.

On June 28, 1993, Selena entered into a recording agreement UMG's

predecessor SBK Records, a division of EMI Records Group (UMG and its predecessors,
including Capital-EMI Latin Records, Capitol Records, Inc., SBK Records and EMI

Records Group, collectively referred to as "UMG" hereinafter) regarding Selena's

exclusive recording services and delivery of English language recordings to UMG (the
"English Recording Agreement") (the SelenaAgreements, the Latin Recording Agreement

and the English Recording Agreement collectively referred to as the "Recording

Agreements" hereinafter). A true and corrected copy of the English Recording Agreement
is attached hereto as Exhibit "B".

11.

Pursuant to and during the terms of the foregoing Recording Agreements,

Selena caused certain "master" recordings of musical performances (the "Masters") to be

made and delivered to UMG, which Masters UMG had agreed to manufacture, distribute,
sell, and license for sale and distribution in various configurations.

12.

In consideration of Selena's performance under the Recording Agreements,

UMG agreed to pay Selena under a certain royalty structure and to account to Selena

under that royalty structure.

13.

Specifically, regarding the royalty rate owed to Plaintiffs, paragraph 9.04 of

the English Recording Agreement states: "In respect of any Master Recording leased by
Company to others for their distribution of Phonograph Records in the United States,
Company will pay you fifty (50%) percent of Company's net receipts from Company's
licensee.'''

14.

Similarly, regarding the royalty rate owed to Plaintiffs, paragraph 9.04 of

the Spanish Recording Agreement states: "Record club, mail order, special markets, and
other uses pursuant to licenses to third parties: 50% of otherwise applicable rate applied
to the amount per record actually received by us for Artist's pro-rated share (i.e. pro-rated
among all royalty participants) from applicable third party licensee."
15.

Common to both of these Recording Agreements is that Plaintiffs are owed

a royalty of fifty percent (50%) of UMG's net receipts from licensing and/or leasing the
Masters to third-party digital content providers.
16.

In order to ensure UMG correctly accounted to and paid Selena, the

Recording Agreements gave Selena the explicit right to examine UMG's books and
records through an audit procedure.
17.

On March 31, 1995, Selena was tragically murdered by the former

president of her fan club, devastating millions of fans. Various media outlets, including
the New York Times, have compared the reaction to her death to that of musicians John
Lennon, Elvis Presley, and the assassination of United States President John F. Kennedy.
18.

Following her death, Selena's commercial success only continued to grow,

and has sustained for nearly a decade. Upon information and belief, to date, Selena has
sold, through UMG, over 60 million albums worldwide.

Music Download Services

19.

"Music Download Services" allow consumers to purchase and download

digital versions of master recordings directly to their computers or other electronic storage
devices ("Music Downloads"). There is no physical packaging and returns are not

permitted. However, Music Downloads often have various restrictions in place to prevent
the consumer from copying and/or sharing the Music Download with others. Oftentimes,
these restrictions are enforced through a Digital Rights Management system ("DRM") that

encrypts the content. Music Download Services are offered by "Music Download
Providers."

20.

On information and belief, in order to allow users to purchase digital copies

of the Masters, UMG has entered into licensing agreements with Music Download

Providers, which generally either: (a) charge a flat, per-download fee to end users; or (b)
operate as a subscription service, allowing consumers to access digital copies of the master

recordings for a set monthly fee for as long as they continue paying the monthly
subscription charge. Some providers offer both options.
21.

Music Download Providers have obtained licenses

from

UMG that

authorize these providers to sell or otherwise distribute, via digital download, UMG's

catalog of master recordings, including Plaintiffs' Masters as described herein.

22.

On information and belief, under its licensing agreements with Music

Download Providers, UMG does not manufacture or warehouse any physical product or

packaging, nor does it ship or sell any product to stores or other distribution points, and
faces no risk of breakage or the return of unsold product. Rather, UMG is "licensing"
and/or "leasing" its catalog of recordings to Music Download Providers for sale or

distribution via digital download by consumers.

23.

Notwithstanding such licensing income, rather than paying Plaintiffs half of

the net receipts UMG received (and continues to receive) from these Digital Content
Providers, however, UMG wrongfully treats each such digital download as a "sale" of a

physical phonorecord (i.e., an LP, EP, CD, or cassette tape) through its "Normal Retail
Channels," which are governed by much lower royalty provisions in UMG's Recording

Agreements. In doing so, based on information and belief, UMG has:

(a)

Failed to properly account for and pay Plaintiffs moneys owed from

the licensing of master recordings to Digital Content Providers;

(b)

Underreported the actual number of digital downloads that occur by

treating downloads as sales of physical product that might be returned; and/or

(c)

Improperly made certain deductions attributed to the "sale" of

phonorecords, including without limitation container/packaging deductions, when no such

deductions are applicable to digital downloads.
24.

In addition, UMG wrongfully withholds a certain percentage of royalties

owed to Plaintiffs as "reserves." These reserves are meant to offset losses related to the

return of unsold records; however, digital downloads are incapable of being returned, as
there is no physical product to return.

25.

Despite enjoying the continued posthumous commercial success of

Selena's music, UMG has, contrary to its obligations under the Recording Agreements,
consistently failed to properly account to and pay Plaintiffs under the agreed-upon royalty
structure set forth in the Recording Agreements.
26.

The prevalence of Music Download sales by Music Download Providers

means that UMG's continued and improper accounting of royalties owed to Plaintiffs has
deprived Plaintiffs of a substantial sum of royalties.

Master Ringtones

27.

Ringtones that are a portion/clip of an artist's actual sound recording (rather

than an electronic reproduction, e.g., MIDI) that are played on a mobile phone when
someone is calling, texting, or otherwise trying to contact the mobile phone operator are
known as "Mastertones."

28.

Mastertones are sold to consumers by "Ringtone Providers." Mastertones

range in price between $1.00 and $3.00 per ringtone. Ringtone Providers include, but are
not limited to, mobile phone companies (including, but not limited to, AT&T Wireless,

Verizon Wireless, Sprint, and T-Mobile), content owners (including, but not limited to
MTV and VH1), and third-party aggregators (including, but not limited to, Zed, Hudson
Soft, Jamster and iTunes). In general, consumers purchase and download Mastertones

directly from their mobile phones. Currently, Mastertones are available on the iTunes
Store for between 0.990 and $1.29 per download.
29.

On information and belief, in order to sell Mastertones to consumers, UMG

has entered into license agreements with Ringtone Providers that authorize Ringtone

Providers to use the Masters to produce Mastertones for sale to consumers. In return, the

Ringtone Providers pay UMG a significant portion of the retail sales price of the
Mastertone.

30.

On information and belief, under its licensing agreements with Ringtone

Providers, UMG does not manufacture or warehouse any physical product or packaging,

nor does it ship or sell any product to stores or other distribution points, and faces no risk

of breakage or the return of unsold product. Rather, UMG is licensing and/or leasing the
Masters to Ringtone Providers for sale or distribution by them via digital download to
consumers.

31.

Notwithstanding such licensing income, rather than paying Plaintiffs half of

the net receipts UMG received (and continues to receive) from these Ringtone Providers,
however, UMG wrongfully treats each such digital download as a "sale" of a physical

phonorecord (i.e., an LP, EP, CD, or cassette tape) through its "Normal Retail Channels,"
which are governed by much lower royalty provisions in UMG's Recording Agreements.
In doing so, based on information and belief, UMG has:
(a)

Failed to properly account for and pay Plaintiffs moneys owed from

the licensing of master recordings to Digital Content Providers;

(b)

Underreported the actual number of digital downloads that occur by

treating downloads as sales of physical product that might be returned; and/or

(c)

Improperly made certain deductions attributed to the "sale" of

phonorecords, including without limitation container/packaging deductions, when no such

deductions are applicable to digital downloads.
32.

In addition, UMG wrongfully withholds a certain percentage of royalties

owed to Plaintiffs as "reserves." These reserves are meant to offset losses related to the

return of unsold records; however, digital downloads are incapable of being returned, as
there is no physical product to return.

33.

Despite enjoying the continued posthumous commercial success of

Selena's music, UMG has, contrary to its obligations under the Recording Agreements,
consistently failed to properly account to and pay Plaintiffs under the agreed-upon royalty

structure set forth in the Recording Agreements.

34.

The lucrative sales of Mastertones by Ringtone Providers means that

UMG's continued, improper accounting of royalties owed to Plaintiffs has deprived

Plaintiffs of a substantial sum of royalties.
8

The Audit

35.

Pursuant to their audit rights under the Recording Agreements, on or

around June 1, 2012, Plaintiffs commenced an audit of UMG's book and records

pertaining to any and all accounting statements rendered to Plaintiffs during the period
from July 1, 2009 to the present (the "Audit").
36.

On or around June 1, 2012, the parties entered into a tolling agreement,

which has been amended as of February 17, 2015, for the purpose of tolling the various

contractual and statutory limitation periods with respect to the Audit.

37.

Ultimately, the Audit revealed that UMG had miscalculated the royalties,

whether in bad faith or due to misinterpreting the Recording Agreements, as to the

applicable royalty provision, owed to Plaintiffs and, as a result, had grossly underpaid
Plaintiffs on the royalties due and owing.
38.

On or around June 10, 2014, a representative for Plaintiffs notified UMG

that its improper calculation of royalties for digital downloads and masters licensed to
Music Download Providers and Ringtone Providers (hereinafter collectively the "Digital
Content Providers") was in violation of the Recording Agreements.
39.

Further, Plaintiffs have notified UMG of the findings of the Audit, namely

the gross underpayment and improper accounting by UMG, and attempted, to no avail, to
resolve these breaches by UMG.

40.

Ultimately, UMG has failed and refused to cure these breaches and

continues to incorrectly calculate these royalties and the contractual rights of Plaintiffs in
violation of the Recording Agreements.
CLAIMS FOR RELIEF

CLAIM I

(Breach of Contract)

41.

Plaintiffs repeat and reallege each and every allegation in paragraph 1

through 40 hereof as if fully set forth herein.

42.

Plaintiffs, as successors and representatives of the deceased Selena, entered

into the Recording Agreements with UMG.

43.

The Recording Agreements contained substantially similar terms relating to

the licensing income for royalty accounting.

By definition, such licensing income

includes income derived from the licensing of the Masters to Digital Content Providers.

44.

Specifically, under the Recording Agreements, UMG is required to pay

Plaintiffs a royalty equal to fifty percent (50%) of all net receipts received by UMG from
licenses to third-party licensees, including without limitation the Digital Content
Providers.

45.

Plaintiff has performed its obligations under the Recording Agreements by,

among other things, providing the Masters to UMG for exploitation.

46.

By reason of the foregoing, and other acts not presently known to Plaintiffs,

UMG has materially breached its contractual obligations under the Recording Agreements

by failing to properly account and provide royalty compensation to Plaintiffs with regards
to the licensing of the Masters. Further, UMG has disregarded the rights of Plaintiff by
breaching its contractual obligations.
47.

Plaintiffs have notified UMG that its Audit of UMG revealed a gross

underpayment and improper accounting by UMG, and attempted, to no avail, to resolve

these breaches by UMG.

48.

Ultimately, UMG has failed and refused to cure these breaches and

continues to incorrectly calculate these royalties and knowingly misinterpret the

10

contractual rights of Plaintiffs in violation of the Recording Agreements.

49.

By reason of the foregoing, and by wrongfully withholding the benefits of

the Recording Agreements, UMG has caused substantial damage to Plaintiff for which
Plaintiff seeks monetary damages in an amount to be determined at the time of trial.
CLAIM II

(Breach of the Duty of Good Faith and Fair Dealing)

50.

Plaintiffs repeat and reallege each and every allegation in paragraph 1

through 49 hereof as if fully set forth herein.

51.

Plaintiffs and UMG have valid and enforceable contracts, the Recording

Agreements.

52.

Plaintiffs have performed all their obligations under the Recording

Agreements.

53.

UMG, by and through their conduct and actions described in this

Complaint herein, and by other actions not presently known by Plaintiffs, wrongfully
withheld the benefits of the Recording Agreements from Plaintiffs. Such actions by UMG
frustrated the purpose of the Recording Agreements.

54.

UMG's actions in wrongfully withholding the benefits of the Recording

Agreements from Plaintiffs and frustrating the purpose of the Recording Agreements,
namely compensating Plaintiffs for the provision of and the granting of ownership in and
to the Masters, is the legal cause of substantial damage to Plaintiffs for which Plaintiffs
seek damages in an amount to be determined at trial.
CLAIM III

(Accounting)

55.

Plaintiffs repeat and reallege each and every allegation in paragraph 1

11

through 54 hereof as if fully set forth herein.

56.

Plaintiffs, due to the wrongful acts of UMG, are entitled to a full

accounting by UMG of amounts relating to the royalties received under the Recording

Agreements, whereby Plaintiffs may determine revenues, profits, and royalties rightfully
belonging to Plaintiffs and wrongfully gained by UMG.
CLAIM IV

(Declaratory Judgment)

57.

Plaintiffs repeat and reallege each and every allegation in paragraph 1

through 56 hereof as if fully set forth herein

58.

Pursuant to 28 U.S.C. 2201, this Court may declare the rights and other

legal relations of anyinterested party seeking such declaration whether or not further relief
is, or could be sought. Any such declaration shall have the force and effect of a final
judgment or decree and shall be reviewable as such.
59.

Plaintiffs seek a declaration that, pursuant to the Recording Agreements,

UMG is obligated to pay Plaintiffs fifty percent (50%) of UMG's net receipts derived
from the licensing and/or leasing of the Masters to third parties, including, but not limited
to, the Digital Content Providers.

60.

UMG denies that the licensing and/or leasing of the Masters to Digital

Content Providers requires it to pay Plaintiffs fifty percent (50%) of UMG's net receipts.
61.

UMG continues to license and/or lease the Masters to Digital Content

Providers and receive payment from Digital Content Providers, but continues to account to
Plaintiffs for these licenses and/or leases at a royalty rate that is substantially lower than

fiftypercent (50%) of UMG's net receipts from such licenses and/orleases.

62.

By reason of the foregoing, there is a present controversy between Plaintiffs

12

and UMG for which a declaratory judgment should be entered.

63.

Plaintiffs have no adequate remedy at law.

Praver for Relief

WHEREFORE, Plaintiffs pray for judgment against Defendant as follows:

1.

For compensatory damages in amount to be determined at the time of trial;

2.

For an Order requiring UMG to provide Plaintiffs with a full accounting;

3.

For and An Order and Judgment declaring that the Recording Agreements

require UMG to account to and pay Plaintiffs fifty (50%) of net receipts for licensing
and/or leasing of the Masters, including the licensing and/or leasing to the Digital Content
Providers;

4.

An award of actual and reasonable attorneys' fees and costs for services

rendered to Plaintiffs in this action;

5.

An award of pre- and post-judgment interest;

6.

A trial by jury on all triable issues; and

7.

Such other and further relief as the Court deems just and proper.

DATED: March 30, 2015

Respectful

S. MAYALL, ESQ. (0615)

Balin Adler & Hyman, LLP

Merrick Avenue, 9th Floor

East Meadow, NY 11554

Tel: (516) 296-7000

Fax:(516)296-7111
[email protected]

Attorneyfor Plaintiffs

13

(.(.

EXHIBIT "A

?5

llullfaatui. CnU/onlia W)0HS^2

Contract No. {jij\- 9)029)

April 2,

1993

W
Mr.
P.O.

Abraham Quintanilla
Box

5421

Corpus Christi, Texas

RE:

78465-5421

RECORDING AGREEMENT BETWEEN CAPITOrWEMI LATIN AND SELENA

ODINTANILLA P/lC/a "SELENA"

Dear Mr. Quintanilla:

The purpose of this letter is to set forth our agreement entered

into on this 2nd day of April, 1993, in the County of San Antonio in
the State of Texas for "Selena's" exclusive personal services as a
recording artist under the following terms and conditions:
Engagement.

1.

Term and Product:

a. Capitol-EMI Latin Records, a division of Capitol

Records Inc. (referred to below as "we" or "us") hereby engages
"Selena" (referred to hereafter as "artist"), and artist agrees to
provide to us, her exclusive personal services as a recording vocal
ist and musician throughout the universe.
b.

The term of this Agreement shall be for an Initial

Period of Three (3) years for Three (3) Albums. The Initial Period
will commence on the date set forth above and will continue until.the
last day of the twelfth (12th) full calendar month following our
commercial release in the USA of the Third of Three Albums to be
recorded and delivered by artist in the Initial Period. Artist

hereby grants us One (1) Option to renew this Agreement. The Option
Period shall run from its commencement until the last day of the
twelfth (12th) full calendar month following our commercial release

in the USA of the Album to be recorded and delivered by the artist

during the Option Period.

The Option Period shall run consecutively

from the expiration of the Initial Period.

The Option shall be

deemed to have been exercised and the term hereof automatically

extended thereby, unless we shall have given artist notice of termi

nation prior to the expiration of the then-current period of this

Agreement.

c. In the Initial Period of this Agreement, artist shall

record and deliver to us sufficient masters to comprise at least
Three (3) Albums (as the term is defined below). In the Option
Period,

if any., artist shall record and deliver to us sufficient

masters to coisprise at lfeast Otte (1) Album (as that term is defined
below).

d.

In Addition to the forgoing, we shall have the option

to obtain from you Three (3) additional Jg-masters during the Initial

^JQ^H^J

Term and One (1) additional LP-master during the option Period
("Overcall LPs"). If any Overcall LP option is exercised, then the
applicable USA release date of an Overcall LP shall be used for
purposes of determining the length of the Initial Term and the Option
Period- By way of example, but not in limitation thereof, if during
the Initial Term which calls for Three (3) LP-masters, an Overcall LP

option is exercised, then the First Option Period shall commence upon
the date one (1) year from the U.S. commercial release of the Fourth
(4th) LP-master.
2.

recorded,

Recording:

a.
We shall mutually agree on all repertoire to be
instrumentation, production and all other aspects of the

recording of masters hereunder. In the event of a disagreement on

any of these elements, our decision shall control. Artist hereby
acknowledges and agrees to exclusively deliver Spanish language
recordings during the term of this agreement. The Spanish language
recordings may contain English language words or phrases as long as
each trac3c of any LP-recording is primarily in Spanish.
b.
We shall establish a recording budget and pay all
ordinary and necessary costs that have been pre-approved by us to
record the Albums hereunder.
All recording costs, artist advances,
producer advances and other expenses of recording the Albums which
are paid or incurred by us shall be deemed advances to artist, and
shall be fully recoupable from royalties otherwise payable by us to
artist.
The only compensation to which the artist shall be entitled
in consideration of the rendition of services hereunder,

shall be the

advances payable pursuant Paragraphs 6 and 7. hereof and royalties,

if any, payable pursuant Paragraph B. hereof.
3.

Delivery:

a.

Artist shall deliver Three (3) Albums to be recorded

and delivered in the Initial Period.

The first LP-master, a "Live"

recording, shall be delivered in March 1993.

The remaining albums to

be delivered in Initial Term shall be as follows:

The 2nd LP-master

shall be delivered not later than One (1) year following the date of

this Agreement; The 3rd LP-master shall be delivered not later than
One (1) year following the date upon which records derived from the
Second LP-master delivered by artist to us are commercially released
in the USA.

Artist shall deliver the Album to be recorded and

delivered in the Option Period, if any, to us within three (3) months

following the commencement of such Option Period.
Times of deliver
ies of Albums hereunder are of the essence of this Agreement.
All
masters embodied on Albums hereunder shall be original recordings of
selections approved by us which shall not theretofore have been
recorded by artist.
All masters shall be technically and commer
cially acceptable to us for the manufacture and sale of records and
shall be of the same quality and style as the recordings which

origina.lly induced us to enter into this Agreement for artist's

services.

b.
Notwithstanding the foregoing, we shall have the
option to obtain from artist Three (3) additional LP-masters during

the Initial Term ("Overcall LPs") and one (l) during the Option
Period ("Overcall LP").

The Overcall LP is to be delivered within

three (3) months from notice of exercise of the Overcall LP option.

4..
video:
At our request, artist agrees to perform at ses
sions for the purposes of embodying performances on videotape

("Tapes") for the promotion of artist's Capitol/EMI Latin recordings.

We guarantee the release of Two (2) Tapes per Album.

We shall

mutually agree on the video budget to produce these Tapes. We shall

have the exclusive, perpetual and universe-wide rights to all such

Tapes for all promotional and commercial uses. Fifty Percent (50%)
of the production costs of the Tapes ("Video Costs") shall be recoupable from all royalties otherwise payable hereunder.

5.
Rights Granted to Ds: We shall have the exclusive, perpet
ual and worldwide ownership of all masters recorded hereunder, all ,

copyrights therein and all records manufactured therefrom, which

ownership shall entitle us among other things to the following:

The

exclusive right to use and control the masters and the performances

embodied therein; and the exclusive, perpetual and worldwide right to

manufacture, advertise, sell, lease, license, synchronize with any
medium, or otherwise use or dispose of masters and records manufac
tured therefrom, in any field of use upon such terms and conditions

as we may determine, or refrain therefrom. We shall own all copy

rights in the masters recorded hereunder, which shall be considered
contributions to a collective work, and works made for hire; and we
shall have all rights of the owner of copyright specified in 17
U.S.C. 106.
We shall have the perpetual right to use and publish

and to permit others to use and publish your name (including any
professional names heretofore or hereafter adopted), your likeness,

and biographical material concerning you, for advertising, marketing,

merchandising and other trade purposes in connection with the sale
and exploitation of the masters and records produced from the mas
ters, or to refrain therefrom. We shall have the right to release
records manufactured from the masters recorded hereunder under the

name "Capitol/EMI Latin" or such other trade name or mark as we may

elect.

We shall have the right to sell and exploit records on which

masters recorded hereunder are coupled with masters embodying perfor

mances of other artists.
6.

Reco-upable Advance:

a.

We shall pay artist Forty Thousand Dollars ($4 0,000)

for the first LP-master, a "Live" album.

b.

We shall pay artist the sura of Seventy-Five Thousand

Dollars ($75,000), for each subseguent LP-master delivered by artist

to us, from which all recording costs shall be paid. The subsequent
advances shall be payable as follows: One-half (1/2) or Thirty-Seven
Thousand Five Hundred Dollars ($37,500) within Thirty (30) days after
commencement of recording each LP-master and the balance One-half

(1/2) within Thirty (30) days after records embodying the LP-master

(together with any necessary licenses, consents, credits, publishing

information) are delivered by artist to us during either the Initial
Period, Option Period or any such Overcall Period, have been commer

cially released in the U.S. ("the Recoupable Advance").

Said pay-

ments, as described, shall be deemed an advance against, and shall be

fully recoupable from, all royalties otherwise payable to artist.
Recoupment will be made from all domestic and foreign sales.
c.
Additional advances shall be paid based on net unit
sales performance in the United States and Puerto Rico as follows:
Unit Sales
fUnits i-

0 150.000 200.001 250,001 300,001+

150,000
200,000
250,000
300,000

Additional
Advance

Cumulative
Advance

-0$25,000
$25,000
$25,000
$50,000

$ 75,000
$100,000
$125,000
$150,000
$200,000

The first album ("Live") is not subject to these additional advances.

7.
Non-Recoupable Record-tug- fm!; we shall pay artist Fifteen
Thousand Dollars ($15,000) for each album with the exception of the
"Live" album delivered hereunder. Payment shall be made within ten
(10) working days after commencement of each recording session.
8.

Royalties:

a. Subject to Paragraph 9. hereof, and in consideration of

the copyright ownership provided herein, our right to use artist's
name and likeness, and the other agreements, representations and
warranties contained herein, we shall pay artist in connection with
all masters recorded and delivered hereunder, a royalty on net sales
of records at the rates specified below.
The royalties set forth in
this paragraph are "all in," and any producer royalties shall be
deducted from these amounts. The royalties will be payable on a
semi-annual basis, less a reasonable reserve for returns, rebates
and/or credits:
USA Full Price Albums:

$ -93 per Cassette on 100% of Net Units Sold

$1.2 5 per Compact Disc on 100% of Net Units Sold

USA Singles:

$0.10 per single record

b. PX sales, budget-line records, record club, mail order

and special markets records distributed by us or our affiliates: 50%
of otherwise applicable rate.

c.

Mid-line records:

75% of otherwise applicable rate.

d.

Record club, mail order, special markets, and other

uses pursuant to licenses to third parties: 50% of otherwise appli

cable rate applied to the amount per record actually received by us

for Artist's pro-rated share (i.e. pro-rated among all royalty

participants) from applicable third party licensee.

e. Record club and special market free goods, promotional

records, sales inducement records, records sold as scrap and closeout
records:

No royalty.

f.

Premiums:

50% of otherwise applicable rate, applied

to the amount per record actually received by us, less any commis
sions, taxes, shipping and delivery expenses.
g.
Foreign Sales: Royalty rates on sales outside the USA
and Puerto Rico shall be one-half (1/2) of the rates set forth in

Paragraph 8.a. above.

Royalties shall be computed in the currency of

the applicable foreign country at the same rate exchange as we are

paid or credited, and shall be paid only after receipt by or credit
to us in the USA.
Any royalties payable in so-called "blocked cur

rency" shall be placed in an account in your name in the applicable

country. Royalties for sales in Eastern Europe and the Soviet Union ,
shall not exceed 50% of our "hard currency" receipts for such sales.

h.
We may convert to a "retail" royalty basis, in which
case your royalty rate shall be adjusted such that, at the time of
the conversion, the royalty, in pennies, payable on a retail basis
shall equal the royalty, in pennies, otherwise payable hereunder.
i.

In the event that masters recorded hereunder are

coupled with masters embodying the performances of other artists, the

royalty payable to you shall be prorated on the basis of the number
of othe:r royalty-bearing masters embodied on such records.
9.
Recoupment:
All recording costs, except those explicitly
designated otherwise, artist and producer advances and fifty percent
(50%) of video costs which are paid or incurred by us, throughout the
term of this agreement, shall be fully recoupable from all royalties
otherwise payable hereunder.
All costs will be cross-collateralized.
10.

Royalty Statements:

a.
We shall render you a statement of royalties payable
hereunder within sixty (60) days after the first day of January and

July of each year (or such other semiannual payment dates as we may
adopt) for the preceding six (6) month period and will pay such
royalties, less reserves and any then unrecouped advances or other
recoupable payments.

b.
Artist or a certified public accountant on her behalf,
may, at: artist's sole expense, and at reasonable intervals, examine
our books pertaining to the albums released hereunder during our
usual business hours and upon reasonable notice. Our books relating

to activities during any accounting period may be examined only

during the two (2) year period following service by us of the state
ment far said accounting period.
c.
You shall be foreclosed from maintaining any action,
claim or proceeding against us with respect to any statement or
accounting due hereunder unless such action, claim or proceeding is
commenced against us in a court of competent jurisdiction within two
(2) years after the date of such statement or accounting.

12.

Mechanical Licenses:

a.

Non-owned Compositions:

Artist shall cause the

applicable publisher(s) or administrator(s) to grant us mechanical

licenses for the USA and Canada for each different Non-Owned Composi
tion embodied in a record manufactured hereunder at the respective
USA and Canadian statutory rates for a musical composition with a

playing time of five (5) minutes ("Standard Musical Composition") in

effect as of the date of this Agreement ("Statutory Rate").
b.

Owned Compositions:

Artist hereby grants to us mechan

ical licenses for the USA and Canada for each different Owned Compo
sition embodied in a record manufactured hereunder at seventy-five
percent: (75%) of the statutory Rate (as defined above) .
c. Ceilings:
The combined rates for all of the different
musical compositions in an album shall not exceed the total of ten

(10) times the Statutory Rate for a Standard Musical Composition and
the combined rates for all of the different musical compositions in a

single record shall not exceed two (2) times the Statutory Rate for a
Standard Musical Composition.

d. We shall have no obligation to pay mechanical royalties

on promotional records, sales inducement records, so-called cut-outs,
or on any other records as to which no record royalty is payable
hereunder.

Artist agrees to indemnify and hold us harmless from

rates in excess of the amounts specified in this paragraph.

If we

pay any such excess, such payments shall be a direct debt from artist

to us, which we may recover from royalties or any other monies other
wise payable by us to artist hereunder.
13.

Definitions:

a.
The noun "record" shall mean any device by which sound
may be recorded for later transmission to listeners, whether now
known or unknown and howsoever used, embodying sound alone.

b.
The noun "Album" shall mean a 12-inch, 33-1/3 rpm,
long playing disc-type record or the tape record or compact disc

equivalent thereof, embodying thereon not less than eight (8) selec
tions nor less than thirty (3 0) minutes of playing time.
c.

The term "net sales of records" shall mean one-hundred

percent (100%) of the aggregate number of records sold for which we

(or our affiliate) has been paid or credited in each applicable

royalty category, after deducting returns, rebates and credits on
records- returned in each royalty category.
d.
The words "budget line record" mean a record which, on
the date of its release as a non-top line record, bears a box-lot
price to dealers of three-fourths (3/4) or less of the then-current

highest box-lot price to dealers for a top-line record in that

particular configuration.

e.
The words "mid-line record" mean a record which, on
the date of its release as a non-top line record, bears a box-lot
price to dealers of more than three-fourths (3/4) but less than four-

fifths (4/5) of the then-current highest box-lot price to dealers for

a top line record in that particular configuration.
f.
The term "Owned Composition" shall mean each musical
composition that is written by artist in whole or in part, or owned
or controlled, directly or indirectly, by artist in whole or in part,
or by a publishing company owned or controlled by artist directly or
indirectly, in whole or in part.

, 14.

Representations and Warranties:

Artist hereby represents,

warrants and agrees as follows:

a.

:Artist has the right to enter into this agreement on; ,.;

all of the terms, covenants and conditions hereof; and artist has not

done or permitted anything to be done which may curtail or impair any

of the rights granted to us herein.

Neither the execution and

delivery of this Agreement nor the performance by artist of any of

the obligations hereunder will constitute a violation or breach of,
or a default under, any agreement or restriction of any kind to which

artist is a party or by which artist is currently bound.

b.

Artist acknowledges that her services in the record

field are of a special, unique, unusual, extraordinary and intellec

tual character which gives them a peculiar value, the loss of which
cannot reasonably or adequately be compensated for in damages in an
action at law and that a breach of artist's obligations hereunder

wilj. cause irreparable injury and damage to us, entitling us to

injunctive and other equitable relief.
c.

During the term of this Agreement,

including all

renewals, extensions, days of suspension, and all periods added by

option exercises, amendments or by other agreements, (i) artist will
not perform for the purpose of making records for anyone other than
us; and (ii) artist will not authorize or permit the use of her name
or group name, likeness, or other identification for the purpose of

distributing, selling, advertising, or exploiting records for anyone

other than us.

d.

Artist will not perform any of the repertoire embodied

in the masters recorded and delivered hereunder for the purpose of

making records for anyone other than us for a period of ten (10)
consecutive years after delivery of such masters.

15.

Indemnification:

Artist agrees to indemnify us against,

and hold us harmless from, any and all claims, liabilities, causes of

action, damages, expenses, costs of defense (including reasonable

attorney's fees and court costs) and other costs arising out of or in
any way related to any breach or claimed breach by artist of any
representations, warranties or agreements contained herein.

ie. Notices: All notices which either of us may be required or

desire to serve upon the other shall be served by depositing the
same, by certified or registered mail, return receipt requested,

postage prepaid, in any mail box, chute or other receptacle autho

rized by the USA Post Office Department for mail, addressed to the
applicable party at the address for such party set forth herein. The
date of service of any notice so deposited shall be the date of
deposit.

; 17-

Notice and Cure:

No failure by us to perform any of our

obligations hereunder shall be deemed a material breach of this

Agreement until artist has given us written notice of such breach and
such breach has not been corrected within forty-five (45) days after
the giving of such notice.

18..

Applicable Law:

This Agreement and all matters arising

from or related to it shall be governed by the laws of the State of

Texas applicable to contracts entered into and wholly performed

therein.

,.._.

Please acknowledge agreement to the foregoing by executing

each original of this letter and returning them to our attention.
Once' they are executed here, an original will be sent to you on
behalf of the artist. We look forward to a mutually beneficial
association.

Very truly yours,

Capitol-EMI Latin Records

Dave Palacio

Executive Vice President

(>"* 3 "?3
Date

Nd.

/
Abraham Quibtanilla

Date

VI

cAi-aoz&
AMENDMENT TO RECORDING AGREEMENT

THIS AMENDMENT TO RECORDING AGREEMENT (the "Amendment") is made and

entered into as of the 21si day of January, 1997, by and between ABRAHAM QUINTANILLA, JR.
("Quintanilla") and the ESTATE OF SELENA QUINTANILLA (the -Estate") (Quintanilla and (he
Estate are hereinafter collectively referred to as "Licensor")i on the one hand, and EMI LATIN
("EMI"), on the other hand, with reference to the following:

A.

Capitol-EM) Latin Records, EMI's predecessor-in-interest, on the one hand,

and Quintanilla and Selena Quintanilla ("Artist"), on the other hand, entered into a recording
agreement, dated April 2, 1993, bearing Contract No. CRI-8028 (the "Recording Agreement"),
relating to the exclusive recording services of Artist.

B.

Licensor and EMI desire to amend the Recording Agreement in certain

respects.

NOW, THEREFORE, the parties hereby agree as follows:

1.
(a)
The royalty rates set forth in Paragraph 8 of the Recording Agreement
under the heading "USA Full Price Albums' shall be increased to the following amounts ("New
Rates") with respect to sates and returns of the albums listed on Schedule "A", attached hereto and
made a part hereof ("Schedule A Albums"), occurring on or after July 1, 1996:
USA Full Price Albums:

$ 1.12 per Cassette on 100% of Net Units Sold

$ 1.50 per Compact Disc on 100% of Net Units Sold

(b)

The royalty rates set forth in paragraph 1(a) above are based on a

wholesale price to dealers of $5.24 per Cassette, and $9.14 per Compact Disc. Such royalty rates

shall be increased ordecreased in proportion to any Increase above ordecrease below the foregoing
wholesale prices to dealers of Cassettes and/or Compact Discs, determined as of the
commencement of each accounting period. [Byway of example only: (i) if, as of the commencement

of any accounting period, the wholesale price to dealers of a Cassette has increased to $5.42, the
royalty rate for sales ofUSA Full Price Albums in the form ofCassettes in that accounting period and
thereafter shall increase to $1.16 (5.42 divided by 5.24 multiplied by $1.12); (ii) if, as of the
commencement of any accounting period, the wholesale price to dealers of a Compact Disc has

increased to $9.66, the royalty rate forsales of USA Full Price Albums in the form of Compact Discs
in thai accounting period and thereaftershall increase to $1.59 (9.66 divided by 9.14 multiplied by
$1.50); and (iii) if, as of the commencemenl of anyaccounting period, (he wholesale price to dealers
of a Compact Disc has decreased to $8.78, the royalty rate for safes of USA Full Price Albums in the

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form ot Compact Discs in that accounting period and thereafter shall decrease to $1.44 (8.78 divided
by 9.14 multiplied by $1.50).

(c)
The New Rates shall apply on a pro-raled basis only to those master
recordings embodied on the Schedule A Albums which were recorded and delivered to EMI by
Licensor pursuantto the Recording Agreement, and not to anyother master recordings which may
be embodied on the Schedule A Albums.

2.
(a)
Licensor hereby grants to EMI, In perpetuity throughout the universe,
the non-exclusive license (subject to the restrictions set forth in 3g. below) to use and exploit the six
(6) master recordirigs listed on Schedule "B* attached heretoand made a part hereof (the "Additional
Licensed Masters") for the following purposes, upon all the terms and conditions set forth in the
Recording Agreement, as amended: (i) to manufacture, distribute, advertise, promote and sell the
"NewAlbum" (as defined below) and singles derived from the New Album; (ii) to produce, distribute,
advertise, promote and broadcast promotional music videos in connection with the NewAlbum and
singles derived therefrom; and (iii) to couple the Additional Licensed Masters on records with other
master recordings embodying Artist's featured performance (but not with master recordings
embodying the featured performance of artists other than Artist). Licensor acknowledges that Ihe
Additional Licensed Masters are not intended to satisfy any other obligations Licensor may have
urider the Recording Agreement to deliver master recordings embodying Artist's featured
performance.

(b)
If EMI fails to release (he New Album in a particular territory prior to
March 1.1997 ("Unreleased Territory"), at Licensor's written request EMI shall sublicense its rights
hereunder in and to the New Album for (he Unreleased Territory to a third-party record distributor
selected by Licensor, and shall credit licensor's royalty account under the Recording Agreement with
50% of EMI's net receipts under each such sublicense.
3.

EMI and Licensor acknowledge that it is their intention initially to release the

Additional Licensed Masters on a new album of Artist's recordings entitled "Siempre Selena" ("New
Album") consisting of the Additional Licensed Masters and the four (4) master recordings owned by
EMI listed on Schedule "C attached hereto and made a part hereof ("EM! Masters"). The following
prbvisions shall apply to the New Album:

a.

The royalty rates set forth in the Recording Agreement, as modified

In paragraph 1 of this Amendment, shall apply to (he exploitation of the EMI Masters (other than
"Sjempre Hace Frio") on the New Album, pro-raled based on the number of recordings embodied
ori the New Album.

b.
With respect lo the EMI Master "Siempre Hace Frio", (i) the royalty rate
for full-price sales in the United States of all configurations of albums (including, without limitation,
the New Album) shall be 11% of 90% of the SRLP of the particular configuration of album ("USA
SHF Rate"), pro-rated based on the number of recordings on the particular album, and (ii) the royalty
rate for full-price sales outside the United States of alt configurations of albums (including, withoul

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limitation, the New Album) shall be 50% of the USA SHF Rate, pro-rated based on the number of
recordings on the particular album. A packaging deduction of 20% of the SRLP for Cassettes, and
25% cf the SRLP for Compact Discs, shall be deducted in computing royalties. For purposes of this
paragraph 3b., the term "SRLP" shall mean 130% of EMI's or EMI's licensee's published price to
dealers applicable to the price series of the unit concerned in the applicable country of sale.

c.
With respect to the Additional Licensed Masters, the royalty rate for
full-price sales in (he United States of all configurations of albums (including, without limitation, the
New Album) shall be 24% of 100% of ihe wholesale price of the particular configuration of album
("USAALM Rate"), pro-rated based on the number of recordings embodied on the particular album.
The royalty rate wilh respect to the Additional Licensed Masters for full-price sales outside the United
States-of all configurations of albums (including, without limitation, the New Album) shall be 85% of
the USA ALM Rate, pro-rated based on the number of recordings on the particular album. A

packaging deduction of 10% of the applicable wholesale price shall be deducted In computing
royalties for all configurations of albums. The foregoing royalty rates shall apply to all configurations
of album records (including compact discs) in general distribution as of the date hereof, and shall

not be reduced by reason of any"standard free goods" (but may be reduced by any special program
free goods and/or discounts).

d.
Licensor's royalties set forth In 3a., 3b. and 3c. above include all
royalties payable to third parties. Notwithstanding the foregoing, with respect to (he EMI Master

entitled "SiempreHace Frio", the royalty rate set forth in 3b. above includes royalties payable to the
producer of the master, J. Hernandez (which royalties shall be deducted from the royalties otherwise
payable to Licensor pursuant to 3b. above), but does not include royalties payable to New Line
Cinema, payment of which shall be EMI's responsibility.
e.
EMI's normal policies with respect to the establishment and liquidation
of royalty reserves shall apply to all sales of the New Album.

f.
The term "Owned Composition" shall mean each musical composition
which is (i) written, inwhole or in part, by Artist, or A.B. Quintanilla III, or any member of Artist's band

(including, without limitation, Ricky Vela or Pete Astudillo), or by any combination ofthe foregoing,
or (ij) owned or controlled, directly or indirectly, in whole or in part by Licensor or by any of the

foregoing, orby any publishing company owned or controlled, directly or indirectly, by Licensor orby
anyof the foregoing. Each Owned Composition shall be licensed to EMI for the USA at: (i) 85% of
theStatutory Rale with respect to the first 300,000 units of the New Album sold in the USA; and (ii)
100% of the Statutory Rate with respect to all units of the New Album sold in the USA in excess of
300,000 units.

g.
Licensor shall not have the right to use or exploit the EM! Masters for
any purpose without EMI's priorwritten consent, which may be withheld for any reason.

h.
Licensor may not use or exploit, or authorize others to use or exploit,
the Additional Licensed Masters on anyform of (i) audio-only record for a period of three (3) years
128982.04

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after the initial release in the USA of the New Album, or (ii) audio-visual device for a period of one

(1) year after the Initial release In the USA ofthe New Album. Thereafter, Licensor may not embody
or;au(horize others to embody more than two (2) Additional Licensed Masters on any one (1) audioonly record orany one (1) audio-visual device. Notwithstanding the foregoing, nothing contained in
this subparagraph 3h. shall impose any holdback period on the release ofa home video device of

atheatrical motion picture, television motion picture, or other television program which, under licehse

frdm Licensor, embodies anyAdditional Licensed Master. Exceptas set forth herein, Licensor shall
not be restricted from using or exploiting the Additional Licensed Masters in any manner, including,
without limitation, in audiovisual productions.

i.
Without limiting anything contained in the Recording Agreement,
Licensor acknowledges and agrees that EMI shall own, throughout the universe in perpetuity, all
artwork: for the packaging of the New Album, which artwork shall not be used by Licensorfor any,
purpose without EMI's prior written consent, which may be withheld for any reason.

j.
If any promotional videos are produced by EMI In connection with the
New Album (which EMI shall have no obligation to do), the budget and concept shall be subject to
Licenser's and EMI's mutual approval. Only fifty percent (50%) of the costs of any such video shall
be recoupable from sound-only record royalties payable to Licensor with respect to (he New Album
or otherwise payable to Licensor under the Recording Agreement.

k.
Upon execution hereof, EMI shall pay Licensor the sum of $400,000
as an advance ("NewAlbumAdvance") recoupable only from royalties otherwise payable to Licensor
in connection with Ihe New Album and other permitted exploitation of the Additional Licensed
Masters, including, without limitation, all such royalties otherwise payable to Licensor with respect
to the accounting period ending December 31, 1996. Notwithstanding the foregoing, if, after
recoupment of the New Album Advance, Licensor's royalty statement for any accounting period with

respect to the New Album and the Additional Licensed Masters would otherwise show a negative
balance, EMI shall have the right to recoup the full amount of such negative balance from any

royalties otherwise payable to Licensor under the Recording Agreement.

I.

In all other respects not specifically covered in subparagraphs 3a.

through 3k. above, the New Album shall be subject to the terms and provisions of the Recording
Agreement.

A.
Licensor represents and warrants that: (a) it has the right to enter into this
Amendment and to grant to EMI the rights herein granted In and to the Additional Licensed Masters,
free from any claims by any third party; (b) Licensor has not done or permitted anything to be done
which may curtail or Impair any of the rights granted to EMI herein; (c) neither the execution of this
Amendment nor (he performance by Licensor of any of its obligations hereunder will violate or
infringe the rights of any third party; and (d) neither the Additional Licensed Masters nor any material

erjibodied therein will violate orinfringe the rights of any third party.

12*982.04

6H/01219'.RS

'

5.

The provisions of Paragraphs 15, 16, 17 and 18 of the Recording Agreement

are incorporated herein by this reference a& iffully set forth herein, provided that (a) in Paragraph
15, the word "Licensor" shall be substituted wherever the word "artist" appears and (b) in Paragraphs
15 and 17, the word "EMI" shall be substituted wherever the word"us"appears, and the word "EMI's"
shall be substituted wherever the word "our" appears. Terms not defined herein shall have the same

meaning sel forth in the Recording Agreement Courtesy copies of all notices to Licensor under Ihe
Recording Agreement shall be sent to Weinberg, Lopez, Lange, Brisbin & Cuddy, 15250 Ventura

Boulevard, Penthouse 1220, Sherman Oaks, CA 91403-3201, Attention: Peter M. Lopez, Esq.,
provided that inadvertent failure to send such courtesy copies shall not be deemed a breach of the
Recording Agreement.

6.

Except as modified by this Amendment, the Recording Agreement shall

remain unchanged and in full foree and-effect with respect to all master recordings heretofore
delivered thereunder.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set
forth above.

EMI LATJALRECORDS

Jose^ Behar, President

Date: 1. /

<7^i

' '

Dave Palacio, Exec. V.P.

Date:

ACCEPTED AND AGREED:

Date:

Abraham Quintanilla, Jr.

S5# 459-52-4276

ESTATE OF SELENA QUINTANILLA

Date:

AftftAf/AM AOidrAri'fU-A, Executor

128982.04

GHAM2197.F6

Schedule "A"

Schedule A Albums

Album Title

"Live"

Release Date

May 1993

Cataloa No.

42770

"Mis Mejores Canciones" -

*' s>irSuperExifos

August 1993

27190

,: "Amor Prohibido"

March 1994

28803

1 "12 Super Exitos"

October 1994

30907

"Las Reinas Del Pueblo"

"Dreaming of You"

1289S2.0I

GfHA>121f>7.f6

IT

April 1995

34639

July 1995

34123

Schedule "B"

Additional Licensed Masters

Title

"Soy Amiga"
"Como Quisiera"

A Million To One"
"Costumbres"

"Cien Anos"

"Ya No"

Writer(s)

Publishers)

Lone Iguana Music

R. Vela

A.B. Quintanilla 111

Phat Kat Groove

R. Vela

Lone Iguana Music

P. Medley

EMI Music

Juan Gabriel

unknown

Fu entes/C ervantes

unknown

A.B. Quintanilla III

Phat Kat Groove

Lone Iguana Music

R. Vela

128982.04

6H/012197.F6

r~

Schedule "C"

EMI Masters

Title

Writerfs)

"Siempre Hace Frio"

Cuco Sanchez
(Under license from New Line Cinema)
"Only Love"

unknown

Publisherfs)
Peer International

Nanacub Music/

EMI Screen Gems

"Tu Robaste Mi Corazon"

A.B. Quintanilla II
R. Vela

"No Quiero Saber"

A. B. Quintanilla III
Pete Astudillo

12^982.04
GH(012197.F6

Phat Kat Groove

Lone Iguana Music

Phat Kat Groove

Peace Rock Music

U"T>"

EXHIBIT "B

AGREEMENT -made as of this 2Bth day of June,

between 5BK RECORDS a

1993, by and

division of EHI RECORDS GROUP,

1290 Avenue

of trie Americas^JJAW^ork, New York 16104 (hereinafter

'Company"), anc^PBI^'euin'tariilJty <=/ Stephen J. Finfer, Esq.
6634 Sunset Boulevard, Hollywood, California 90028 (hereinafter
"you").
1-

SERVICES-

1.01 fa)
During the term of this Agreement (the "Term") you
will render your exclusive services as a performing artist for
the purpose of making English language Master Recordings for

Company, you will cause those Master Recordings to be produced,

and you will Deliver the Master Recordings to Company, as
provided in this Agreement.
(You are sometimes called "the
Artist" below; all references in this agreement to "you and the
Artist", and the like, will be understood to refer to you alone)
(b) The parties hereby acknowledge, that you and
Company's affiliate, Capitol-EMI Latin, are parties to an

agreement (the "Latin Agreement") regarding your e^clv

Spanish language recording services, dated as of m^s
Company further acknowledges that, prior to the Terfcherebf
, you
sEfT
have previously recorded and delivered certain English language
roaster recordings pursuant to the Latin Agreement (the "LatinEnglish Masters") which are set forth in Schedule "A" attached
hereto.
It is also hereby acknowledged that if, during the Term
hereof, the Latin Agreement expires or otherwise terminates, you
shall thereafter be free to enter into a subsequent agreement

with a third party for your services as a Spanish language

recording artist, subject to the terms and provisions of this
Agreement-

1.02 Your obligations will include furnishing the iervices

of the producers of those Master Recordings and all other third
parties rendering services in connection with those Master

Recordings, subject to the terms of this Agreement, and you will

be solely responsible for engaging and paying them.
Without
limiting the foregoing. Company will not unreasonably refuse to
account and pay advances and royalties, if any, to a producer of
the Album recorded during the Initial Period, approved in advance
by Company,

so long as you have forwarded a letter of direction

in Company's standard form with no such producer faeing in a "pay"

position prior to Company having recouped the applicable

Recording Costs for the Album project concerned at the so-called
"net artist rate" and provided further, that Company has preapproved in writing the material terms and conditions of such
producer's engagement (including, without limitation, the advance
and the royalty rate).

101293

2.

TERM.

2.01 The Term shall consist of an Initial Period and of the

Option Periods (defined below) for which Company shall have

exercised the options hereafter provided. The Initial Period and
each Option Period are each hereafter sometimes referred to as a
"Contract Period".

The Initial

Period shall commence on the date

hereof and shall continue until the earlier of the dates referred

to in paragraphs (a) and (b)

immediately below:

(a)
the date ten (10) months after the Delivery to
Company, as defined in paragraph 19.09 below, of the fully
equalized, digital tape Masters to be used in manufacturing the
Phonograph Record units to be made for distribution in the United
States from the last Master Recordings made in fulfillment of
your Recording Commitment for the Contract Period concerned under
Article

below;

(b)

or

the date nine (9) months after the initial

commercial release in the United States of the Album required to

be delivered in fulfillment of your Recording Commitment for the

Contract Period concerned;

but will not end earlier than one (1) year after the date of its
commencement.

2.02 You grant Company six (6) separate consecutive options

to extend that Term for additional Contract Periods ("Option

Periods") on the same terms and conditions, except as otherwise

provided herein.
Company may exercise each of those options by
sending you a written notice not later than the expiration date
of the Contract Period which is then in effect (the "Current

Contract Period"). If Company exercises such an option, the

Option Period concerned will begin immediately after the end of
the Current Contract Period and shall continue until the earlier

of the dates referred to in paragraphs 2.01 (a) and (b) above.

2.

RECORDING

COMMITMENT.

3.01 Your Recording Commitment hereunder is as follows.

During the Initial Period you shall record for and you shall

deliver to company one (1) Album. During each Option Period you
shall record for and you shall deliver to Company one (1) Album.
The Albums delivered hereunder in fulfillment of your Recording
Commitment are sometimes referred to collectively herein as the
"Committed Albums" and individually as a "Committed Album". The
Committed Albums are sometimes herein called the "First Album",
the "Second Album", the "Third Album", the "Fourth Album", the
"Fifth Album", the "Sixth Album", and the "Seventh Album",
respectively, in order of their Delivery to Company.

3W15.3

101293

#
3.02 You shall deliver to Company the Album constituting
your Recording. Commitment for-the Initial -Period no later than
one hundred twenty (120) days after the commencement of that
Contract Period.
You shall deliver to Company the Album
constituting your Recording Commitment for each Option Period no
later than one hundred twenty (120) days after the commencement
of that particular Contract Period.
4.

RECORDING

PROCEDURES.

4.01 You shall designate and submit to Company for Company 's
all other
individuals rendering services in connection with the recording
of those Masters, the Musical Compositions or other Selections or
approval the producer of each of the Masters,

materials which shall be embodied in those Masters, the studios

at which those Masters shall be recorded, and the dates of

recording of those Masters (the "Recording Elements").

You shall
also prepare and submit to Company in writing for Company's
'approval a recording budget for those Masters in such detail as
Company shall reasonably require (the "Recording Budget") at
least fourteen (14)

days before the planned commencement of

recording.
Company shall not withhold its approval of a
Recording Budget by reason of its overall amount if such overall

amount is less than a sum equal to eighty-five (8S%) percent of

the applicable Recording Fund less any applicable previously paid
Advances.
You shall advise Company of the content of each medley
before it is recorded.
Company shall not be deemed to be
unreasonable in rejecting any request to begin recording any
Album which is a part of the Recording Commitment within six (6)

months after the Delivery of a prior Album under this agreement.

The scheduling and booking of all studio time will be done by

Company. No recording sessions shall be commenced nor shall any

commitments be made or costs incurred hereunder with respect to

any Masters until and unless Company shall have approved in

writing each Recording Element and the Recording Budget for those
Masters. If Company shall disapprove of any Recording Element
submitted by you or the Recording Budget submitted by you, then
at Company's election, Company may designate one (1) or more
Recording Elements in substitution for any Recording Elements

designated by you and disapproved by Company ("Substitute

Recording Elements"). Such Substitute Recording Elements shall
be subject to your reasonable approval, provided, however, in the
event of a dispute, Company's decision shall be final.
4.02 (a)
You shall notify the appropriate Local of the
American Federation of Musicians in advance of each recording
session.

101293

!bi

You will comply w*^h the following procedures in

connection'with the requirements of fch* U-S- tasugration Law:

(II

Before *ach recording session*

. i ;

v ftu will recuire eaih fcackgrounti

_*struntalisT, background vscalirt, and other person to be

ployed

by you or tn* applicable producer in cannecticn with the

session to couple'-* an3 si.gr. the EMPLOYEE IHPORHATIOH MID

vt3?I!"I">-TI0H t -eaployec"! iection of & 0.5- Immigration and
MatureliSaticn Service Employment Eligibility Certificate (Fora
I-*1 unless you r^avt already obtained such a Certificate trorr,

the"pernor copctrniC within the past three (J) yearsr

I iii You will eosrpLete and sign tn* EMPUHftH
REVIEW UTO vnEBIFlCATlOK (~ employ*!""} section of each such
Certificate;

and

(iii)
Kou will attach eopie-s. of _the
documents establishing identity e.n4 mptioyent eligibility which
vo'i examine in accordance with the instructions in the eployr
i*ctin-

If in',, surr. person is s-.caged during a sesslart you ill

coisply wiw!". Sviciec* iO'-.s

fiat per^T!,

i. through . 11 i' aoove, witr, respect tc

s^ettre ffrc rcrders any sen-'ices

.;,
Vi^ rfiii ret permit ary sue. pernor- yno fails
to complete the esplsyee stccior.. -Z to furnish yon with the
required iscuin-ertatirr to rerviei any services ir- conf-tcf. wn wit*.
Recording* to o* na<Jt u^dt: this agreement
j'

i'oi; v/i;

0-;ver t^ctft Certi.'uates ar-cf

dcruse fits tc Ccn-pa-y prompt;/ s^s if -c event latjsr than the

Z*iiverj' C the s.ezordi-^gs z;>r< carded.
,; * ,

j'i-L. will ccaply vxth any rev^irj :t

id-ri.ticr.si vtrificatisr- and ^ecur *-*-&tir

Cop&ny aflviafis you .t the future

,5 i

riirc.reBants zi wMCh

Upcn yo-jr resonari.e retpjfc'_.

^6 *clciy **

ar, sccosaoDstior. tc- jtjmi , C&ap*ry'* * i *. aflB'u4't'4* i f ttaft

shall 3tist Artist r cccp^yi-no vf. t*r piovinsr.* of th*s
paraarapn i.eilfct
'Uctviti-sta^sintj t*e fnreqit.1..";. !*"
requirements set fortt, i*-. tms paiasjrap^ 4 CS?''t,
e?-ij*1 reSAir
solely Artist's respsrtt ifc j lily . ;

;C.
Ks. ar.i ~*=er. r#gui;r:i t> '';,ftp.* y y'ftv ch* i L. i'i3*'
Company's repr*-*e-tat lv-es t- itt",<! a*".y r>r a.l recr.ri^g *s* ii-ni.
ntreunder

I012S3

(d.) You shall timely supply Company with all of the

information Company reasonably needs in order: (1) to make

payments due in connection with such Recordings; (2) to comply

with any other obligations Company may have in connection with
the making of such Master Recordings; and (3) to prepare to

release Phonograph Records derived from such Master Recordings.

Without limiting the generality of clause (2) of the preceding
sentence:

(1) You shall furnish Company with all

information Company requires to comply with its obligations under

Company's union agreements, including, without limitation, the

following;

(i) If a session is held to record new

tracks intended to be mived with existing tracks (and if such
information is requested by the American Federation of

Musicians), the dates and places of the prior sessions at which

such existing tracks were made, and the AFM Phonograph Recording
Contract (Form "B") number(s) covering such sessions;
(ii) Each change of title of any.composition
listed in an AFM Phonograph Recording Contract (Form "B") ; and
(iii)

A listing of all the musical

selections contained in Recordings Delivered to Company

hereunder;

and

(2)

vou will furnish Company with all of the

immigration control documentation required by subparagraph

4.01(b) above, at the same time as the AFM or AFTRA session

reports, tax withholding forms, and other documentation required

by us in order to make the payments to the session musicians and
other employees concerned, if any

(e) (i) All Master Recordings shall be recorded under

Company's current Phonograph Record Labor Contract with the AFM;
all musicians who render services in connection with the

recording of such Master Recordings (including instrumentalists,

if any) will be paid by Company, on your behalf, the scale set
forth in the said Labor Contract; and Company, on your behalf,
shall pay the required contributions to the Pension Welfare Fund.
(ii)

All AFTRA members whose performances are

embodied in the Master Recordings will be paid by Company, on

your behalf, the rates applicable under the current AFTRA Code of
Fair Practices for Phonograph Recordings,
Company shall, on your
behalf, if necessary, also pay to the AFTRA Pension and Welfare
Fund any contribution required to be made under the AFTRA Code
based on compensation to other performers whose performances are

embodied on the applicable Master Recordings recorded hereunder.

101293

i ;ii i

Trur farea&;t>e represe.t*t ;ot-.s in*

warranties are deluded for the benefit. r9p*=tiv*:>. -'! >

*FM

AFTRA

and the AFM and AFTRA aeaaeri vhese peitorfcai'.ces. *r#

embodied ir. the applacsble Master fieroramgs. and ft-.- the wtit
o Conpiny. and aay be enforced try AFM ar.s.or AFTRA or their
re*pp#ctiv* designees, as the case &> be. ard ov Company.
;iv) Vou shall furnish at sn* 11 raut> tfw

aoplicable Producer to fumisn rospapy wit*, ccpiet of ill ufuot,

contracts md/sr umon sess^an repayts so tRat li.i pAyBACt* *4V

be made Oy Company, on your behalf in timely fa;en t n the

proper parties tnereuncer : and it ye^ tail to do sc vt.tr> the
result th*t- Cowpany ;S teaiiirea tt way any penalty nw* for *sfcmq

a l&te payment under the applicable uniar, agreements, such

payments shall be a direct debt fras you to Company wr.;cn m
addition to any ether raMy Company a&y have, Cowtwmy pay

recover fro*> any tr.or.ie*. fother th&r> Ad vara**'; atMrviSE payasi*

to you hereunder

4 . C-j t,as you shell oelivtx to Company the Masters promptly

after their con-plot-iOT,
All original session tapes and any
derivatives cr teprocuctioris tJierec* snail &e delivered to

Company coftcurrertl,-, or. at CoBparsys elsctior., wii^tamed at a

tecordmo. stud.; or etner .o=*tiOf- de* s.s;r.atea ay coopary ,

ir

Company' <c narw arfj s-U?ect to Cciaanv : 5 cor.trai ,5'JC'r itair.tsr.ance

of such tapes *tter a*;;very to Compary shall ae. at Company's

expense).

fcach rtast*r shall Oe sua?act tc Cc=?any's approval as

c&mmetCj.aliv and technically satisfactory* for tne isiiufattire and

A.aie of. Fhor.oaraph Records

and.

upon Cawparty' & request,

you

shall r#-rtcori any Kusicat ^supositlor or other SrL*ctiar. until

a Master co**r = valiv -ani trchmpail v s.atssiactorv ti Camcany has

b*ri attained

prcvid** tr.at

If necessary, 'ampary sr.ail provide

at addjt jeiil Advances any addition*! fotics that ft*Y o*s

necessary to di> sn& .provide; *urth*t,

tr.at if a-.y ras-.er ;s

-Draerci'aiiy and tech^iiolly aatisiactpry uhe*' delivered to

Cono*Tiy , a^d tatpany nevertheless requests that van; re-record
juch Selection, ipv rcfs incurred i r, ccrnection therewith .shall
not t>e deducted fr-: the applicable Eecorslnq F"jna i'6ut shall tit
tvtated as recoupable S#c^ra ir.s Costs nonetheless'.

;,>
<fy *.rail 0*iiv*r t? Ccmpftny fully fitted, edited.
r.<j ufieqxiai seed mj rquaiitd M*tt#t Recordings. including but
r,ot

ijBit#d t,:

f*n*i

*>?track <p-erua: i, = ti3i

rap* copy],

caaan-rri*; ;y ttitfactory tc conpanv tor its manufacture and sale

of Pr&n&grapn B*cc-rd,

<Jf J <'; i crjq;i*i a~d duplicate Master

ftcc-ro*f-gt ft? ?he *t.?;A* recorded, together witn I j ' the multiU3Ci tepe ***.5 f-.ree >; > tafety capie* thereof; i \ t ) all
n:*t:*ry i ic'-r-es *d permiSEio'ifi : i'i l i I fill seitnals required
tr t furr,.s.%ei t>% yc.- t = Ccwpafy for cue ih th p.cK<igjne and
tf,# sicfK
i'.il'vJinq without 1 iit a* ion , roBipiete
' lat-*-: c;.p,-" ;rfo;-aat*or Jitr respect tc s.^ Kd&tei Frtordiros,

r;r*:ct nq c*

!*'*. ;

1 r i: *:

such "label copy" shall include, without .limitation JA) the

title, recording daces, timing, publisher(s) songwriter(5|,

perDrer(s) and composer(s) of each musical composition embodied

on the waster R#cordings; (&) the producer(s) thereofi and (C)

any other credit and information that is to appear on the lab*is,

liners and packaging of Records embodying such Master Recordings,'
(iv> all "sidenan" and any third party clearances and consentsf
including, without limitation, all written consents in connection
with Embodied copyrighted Materials (as defined in paragraph
13.04(6)- below) j (v) all mechanical and first-use licenses Cor
each wasleal composition embodied in the Master Recording at the
rate specified herein fit being understood that: (A) as between
Company and you.. Company shall be responsible for preparing the
actual paperwork, in connection therewith! (B) notwithstanding
anything to the contrary contained in this paragraph 4.01(b), you
shall obtain and deliver all first-use licenses and: licenses tor

any so-called "samples11 for non- control led Compositions recorded

hraundir; and (C) notwithstanding anything to the contrary

contained in this paragraph 4.03(bi, you shall not be responsible

for securing any mechanical license for a musical composition if
such composition was initially submitted to you by Company? r and
(vi> all liner notes, approved artwork, and credits for all

configurations of records, upon your reasonable request, and

solely as an accommodation to you., Company' s A ft administration
staff shall assist Artist in complying with the provisions of

this paragraph 4.03(&},

|Notwithstanding the foregoing, the
requirements set forth in this paragraph 4-D3fb) shall ramain
solely Artist's responsibility.;)

(c>
You farther agree to irrevocadblj1 direct m writing
the person who has possession of any and all tapos of masters or
digital roasters recorded hereunder that all such tapes and
masters ate Company's property and that such person shall be
obligsted to deliver such tapes and masters to Company upon its
written request.

so4 Each Master shell e,stbody the Artist's perfornance as

the sola featured artist of a single Musical Composition

previously unrecorded by the Artist and shall be recorded in its

entirety in a recording studio. Mo Masters shall be recorded in
wnoie or

in part at live concerts or other live, performances

unless an authorized officer of Company agreee to the contrary in
writing.
E&ch Cownitted Album shall embody no fewer man forty
[id] minutes in playing time ar.fi containing no fewer than eight
|fi) and no more than ten .fio) Musical Compositions unless Company
otherwise agrees to the contrary in writing.
You shall not
record or deliver hereunder, nor shall company be obligated to
accept. Masters constituting a Multiple Album.
However, if you
shall do so and Company shall accept those Masters hereunder,
than, at Company's election, for ths purpose o calculating the
nuaiber of Masters recorded ana delivered hereunder,
ww.1

101293

those Masters

shall be deemed to be only one (1) Album.

Masters delivered

hereunder shall not contain selections designed to appeal to

specialized or limited markets including, but not limited to

gospel, Christmas and/or children's music (unless otherwise
agreed in advance and in writing by Company).

4.05 Any Masters which are not recorded or delivered in all

respects in accordance with the material terms hereof shall not,

unless Company otherwise consents in writing, apply towards the
fulfillment of your Recording Commitment. Notwithstanding the

foregoing, if you deliver an Album which is the subject of any

third party claim(s) but which is otherwise in compliance with
your obligations, and if such Albuo is released by Company
without any substantial legal impediment to Company's full
exploitation of such record and without financial detriment to

Company due to such claim(s), such Masters shall apply towards

the fulfillment of your Recording Commitment. Furthermore, if

Company shall make any payments with respect to any Master_which

shall not have been recorded or delivered in ail respects in
accordance with the terms hereof, you shall, upon Company's
demand, pay to Company the amount thereof and company may,
without limiting Company's other rights and remedies, deduct that

amount from any monies payable by Company hereunder or any other

agreement between you and Company or Company's affiliates.
4.06 If you or the Artist shell for any reason whatsoever

delay the commencement of or be unavailable for any recording

sessions for the Masters, you shall, upon Company's demand, pay
Company an amount equal to the expenses or charges paid or
incurred by company by reason thereof. Company may, without
limiting Company's other rights and remedies, deduct that amount
from any monies payable by Company hereunder or under any other
agreement between you and Company or Company's affiliates.
4.07 Company may, at its election, discontinue any recording
sessions for the Masters if in Company's judgment the Recording
Costs incurred or to be incurred will exceed the approved
Recording Budget or if the Masters being produced will not be
technically and commercially satisfactory.
5>.

RECORDING

COSTS.

5-01 Company shall pay the Recording Costs of the Masters

recorded at recording sessions conducted in accordance with the
terms hereof in an amount not in excess of the Recording Budget

approved by Company in writing. If the Recording Costs of any

Masters shall exceed a sum eqrual to the applicable Recording Fund
less any prepayments thereof (e.g., commencement payments, etc.)
due to Artist's acts or omissions (or those of any producer,

agent, employee, etc. engaged by Artist) you shall be solely

responsible for and sh&L! promptly pay the excess.

1012S1

If, however,

company shall pay the excess, you shall, upon Company's demand,
pay to Company the amount thereof and Company may, without
limiting Company's other rights and remedies, deduct that amount
from any monies payable by Company hereunder or under any other
agreement between you and Company or Company's affiliates. You
shall be solely responsible for and shall pay any payments to any
individuals rendering services in connection with the recording
of the Masters which exceed union scale unless the excess and the
recipient thereof shall have been specified in the Recording

Budget approved by Company. You shall also be solely responsible

for and shall pay any penalties incurred for late payments caused
by your delay in submitting union contracts forms, report forms,
or invoices or other documents.

If, however, Company shall pay

any excess not approved by Company or any penalties, you shall,

upon Company's demand, pay Company the amount thereof, and
Company may, without limiting Company's other rights and
remedies, deduct that amount from any monies payable by Company
hereunder or under any other agreement between you and Company or
Company's affiliates.

5.02 Recording Costs shall mean and include all union scale

payments (including "excess" scale payments) made to, the Artist,

all payments made by Company to any other individuals rendering
services in connection with the recording of the Masters, all

other payments which are made by Company pursuant to any

applicable law or regulation or the provisions of any collective

bargaining agreement between Company and any union or guild, all
amounts paid or incurred for studio or hail rentals, tape,
engineering, editing, instrument rentals and cartage, mastering,
mixing, re-mixing, "sweetening", transportation and
accommodations, immigration clearances, trademark and service
mark searches and clearances,

"sample*' clearances any so-called

"per diems" for any individuals {including the Artist) rendering

services in connection with recording of the Masters and for

Company's A&R employees attending recording sessions hereunder

(but only if such A & R employees are, with your consent or at

your request, actually rendering services in connection with the

recording process), together with all other amounts paid or
incurred by Company in connection with the recording of the
Masters.
Recording Costs shall be recoupable from royalties
payable by Company hereunder (other than mechanical royalties,
except as specifically provided herein) ox under any other
agreement between you and Company or Company's affiliates. The
costs of metal parts other than lacquer, copper or equivalent
roasters, and payments to the AFM Special Payments Fund and the
Music Performance Trust Fund based upon record sales (so-called
"per-record royalties"), will not be recoupable from your
royalties or reimbursable by you.
Notwithstanding the foregoing,
you agree that the Advances hereunder include the prepayment of
session union scale as provided in the applicable union codes,
and you and Artist agree to complete any documentation required
wis.)

101293

by the applicable union to implement trsis sentence.

Notwithstanding the foregoing, the Recording Budget in respect of
tne First Album and the respective Recording funds in respect of

ail subsequent Albums shall include all costs incurred in

connection with the remixing of satisfactorily delivered Masters;
provided, however, m the event that such costs exceed Ten
Thousand 1510,005) in respect of the First Albun or five (51J
percent of the applicable Recording Fund for each applicable
subsequent .Album, such excess renixing costs shall not reduce the

applicable Budget or Recording fund, but shall be deemed

additional Recording costs hereunder.

Any costs incurred in the

translation/recording of English language Masters to Spanish

language Masters hereunder which have been approved by Company
shall be at Company's recoupable expense (provided, such costs
snail not be recouped fro* mechanical royalties, except as
otherwise proviae-d herein)

5.03 If packaging lor Phonograph Records hereunder contains

special elements or requires additional fabrication cost* (e.g.,
for etaiaossing, die-cutting, special ink or paper, additional
color separations requested by you, etc.) such that Company would
incur manufacturing or fabrication costs in excess of Company's
normal per-unit costs, without such special elements or costs.
(''Standard Manufacturing Costs'4} , and provided you have requested
or consented to Company incurring such excess costs, the excess
above Company's Standard Manufacturing Costs shall be paid by you
or reimbursed to Company on demand.
Ail such excevs costs
incurred by Company shall be invoiced to you, and ay be deducted
iron, any royalties required to ne pa ad by company pursuant to

this Agreement (other than mechanical royalties, except as

otherwise provided herein).
(Nothing contained herein shall be
deemed to reeruire Company to utilize any artwork elements which
would cause Company to incur any Special Packaging Costs-)
6-

H2ittlZ.

fi.oi All Master Recordings recorded during the Term, which

embody the performances of the Artist,

from the inception of the

recording thereof, shall, tor purposes of copyright law, be

deemed "work s-oade-for-hire"* for company by you, the Artist,

arid

All other persons rendering services in connection with those

Master Recordings, as Company's *'employs-for-hite'1. Those
Master Recordings, from cne inception of the recording thereof,
and all Phonograph Records and other reproductions made
therefrow, together with the performances embodied therein and

all copyrights therein and thereto throughout, the Territory (taut

excluding the copyright in the musical compositions embodied
therein),

and all renewals and extensions thereof, shall

be-

entirely Company's property, free of any claims whatsoever by

you, the Artist, or any other person, firm, or corporation.
Company shall, accordingly, have the exclusive tight to obtain

registration of copyright (and all renewals and extensions) in

those Master Recordings, in Company's name, as the owner and
author thereof. If Company shall be deemed not to be the author
of those Master Recordings or those Master Recordings are deemed
not to be "works-made-for-hire", this agreement shall constitute

an irrevocable transfer to Company of ownership of copyright (and

all renewals and extensions) in those Master Recordings. Vou and
the Artist shall, upon Company's request, cause to be executed
and delivered to Company transfers of ownership of copyright (and
all renewals and extensions) in those Master Recordings and any
other documents as Company may deem reasonably necessary or

appropriate to vest in Company the rights granted to Company in

this Agreement, and you and the Artist hereby irrevocably appoint
Company your attorney-in-fact for the limited purpose of
executing those transfers of ownership and other necessary and
related documents in your naiaes.

Without limiting the generality

of the foregoing, Company and any person, firm, or corporation

designated by Company shall have the exclusive, perpetual and
worldwide right to manufacture, sell, distribute and advertise
Phonograph Records embodying those Master Recordings under any
trademarks, trade names or labels, and to lease, license, convey
or otherwise use or dispose of those Master Recordings by any
method now or hereafter known in any field of use and to perform

publicly Phonograph Records and other reproductions embodying

those Master Recordings, all upon such terms as Company may

approve, or Company may refrain from doing any or all of the

foregoing.
6A.

MARKETING RESTRICTIONS

6A.01
Provided that you are in compliance with your
material obligations hereunder:

(i) Company will not, during the Term and in the United
States, Canada, and Spanish speaking countries in the Territory,
without your written consent, license the Masters for use in
television or radio commercials advertising products not derived
from the Masters, and such consent shall not be unreasonably
withheld.
Notwithstanding the foregoing, Company will not,
without your written consent (such consent not to be unreasonably

withheld), license the Masters for use in any television or radio

commercial advertising so-called "soft-drink" products.

(ii) During the Term, Company shall not during any one (1)
year without your consent, license more than tv/o (2) Masters made
hereunder

for use in the United states in television programs

(excluding so-called "background uses" in television programs) or

motion pictures. The immediately preceding sentence shall only
apply provided that your royalty account hereunder is in a
"recouped position" (as such term is commonly understood in the
recording industry) as of the semi-annual accounting period

101293

11

immediately prior to the semi-annual accounting period during

which Company wishes to so license an applicable Master.
Notwithstanding the foregoing, Company shall consult with you
with respect to any such licensing of Masters for use in
television programs or motion pictures, provided, however,
Company's inadvertent failure to so consult shall not be deemed a
breach hereof.

(iii) Company will not, without your consent, initially

release any Committed Album in the United States under any record
label other than a "top-line" label then used by EMI Records
Group ("ERG") for recordings of performances by the pop artists
then under exclusive term contract to ERG or its affiliates.

(iv) During the Term, Company will not, without your

consent, sell any Committed Album as a Mid-Priced Record in the

United States within twelve (12) months after the initial release
of.the Album concerned in the United States; provided, however,
if"Company sells any Records in contravention of the foregoing
restriction, your sole remedy shall be that you shall be entitled
to the otherwise applicable royalty rate hereunder on all such
sales during the period of such restriction.

(v)

During the Term, Company will not, without your

consent, sell any Committed Album as a Budget Record in the

United States within eighteen (18) months after the initial
release of the Album concerned in the United States); provided,
however, if Company sells any Records in contravention of the
foregoing restriction, your sole remedy shall be that you shall
be entitled to the otherwise applicable royalty rate hereunder on
all such sales during the period of such restriction.
6A.02

It is hereby acknowledged and agreed:

(i)
Provided Company obtains all necessary approvals from
Company's affiliate, Capitol-EMI Latin, Company shall have the
right to cause Artist to render services in connection with the
recording of up to two (2) Masters embodying performances in
Spanish by the Artist (the "Spanish Masters") and two (2) Masters
embodying performances by the Artist which are partly in English
and partly in Spanisb (the "Spanglish Masters") (such Spanish and

Spanglish Masters are acknowledged to be included in, and not in

addition to, your Recording Commitment hereunder).
Company
shall, without limitation of its rights therein, be entitled to
include the aforementioned Spanish and Spanglish Masters on any
of Artist's Records to be released hereunder-

In the event a

successor entity (i.e., other than Capitol-EMT Latin) is entitled

to the exclusive Spanish language recording services of Artist,
Artist shall cause such successor entity to grant the

aforementioned rights to Company. Company shall indemnify you

against any claims by Capitol-EMI Latin arising out of this
101293

12

paragraph A,.02{U

in the same mannftt and subject to the same

conditions as Artist is-required te indemnify Company pursuant to

paragraph 20 hereof, provided, however,, th provisions regarding
the withholding of monies payable hereunder shall not apply..
(ill During tne Tern*, hereof,. Artist shall not

(and shall not

allow any person other than Copany tc) utilise and/or eicpleit

any Master Recordings, embodying Engl is.ti~ language p-etfor#nces &y

Artist, without the prior written consent of Company.

Notwithstanding the foregoing., company shall not unreasonably

withhold jts consent to the exploitation by Capitol-EMI Latin of
one (1) master recording embodying an English-lBTiguage
performance by Artist for esch Spanish-language &Jhiut recorded by
Artist. Cor Capitol -Oil Latin.
It is hereby acwsowl edged anfi
9red that you land your designees.) shall 'have no rights to
release suCh EnfliSh-language Master on. Singles.
5*-03

:*}

Provided you are not it. aatexial rreacfrs under

this. Agreement, Company will cornice re i* 11 y telease each Alburn

recorded m fulfillment of your Recording Conafixtlner.t hereunder ir
tr.e United States within one hundred twenty -lic-i days ifter tr-#
dat of compiier inn of the lAccjuer, cappmr ox equivalent easters
concerned
If company fails tc dr> to yn^ may notsfj lompany.
Within ttarty i'jQ'/ days after tne e-^d cf tr.e one undTd txtty
si;'0j

day period concerned,

tnat vou _ntni ti terxir.ate the "erx

cf thjs Aqr*eent unless. Co&paf.y releases the A.ibur *;tMn sixty

i.D'i day* after Compar.y & rrccipt cf yoat net ice -the "cure
period").
If Company fails to coswerci*! Ly release the >.*ou.- ithe United States, bet? the ind cf trie cure period ye- ^aj.
tpru-jnat* thi T*t* Of this A^reeme^t ty tjiving Cocpa^y *st.c
wjthir r.mrty ,^h\ etsya after the ena of t* cut* per;od.
~n
ri:*ipt by Company rf your r *n*5 "sti^- r o t i tne Tern cf t-_is
Asiree*#f.t will ens *nc a. prt;e*. *;,- t dtemec to n*vt

fuituiert *i) c?f their obligations arier it except these

obligation* vruch jurviwe h* end cf the Tens

'*.-. warrir.:t,

rftccordinq r *t ract iens a-.d tfcl *gat *cn to pay royalties

s"4i
only raedif 'or i*iiute by- c*p*ny tc release in Albui- w.n te
trtJfi*tior, jn ccorS*nce tif. this pajrasrapr; it ; & a;*nawldged
?n*t tf-.ii ttfceay is. not jntenstes ts I**it ycur #r* it iesent. ;f
appjicable. t c- r.ht payuer.t cf ft<e tmlsnce cf r Advance due
hetruhdet1.
I! you fail to q,v# Company either of tnose notices
vjth^n ti># p:.r*d specified, your right to terxmate - ,U 1 lips-

s
<
;
;

?'.
The n.*,f.in5 if tte t-n* hjndsec twfcrtv . . 2 *J 4-}
anrt n. BJ^ty :'.'. di,y pcr*od itdriFd to if. f,t3g:pn fcA -3&.
*,14

r..e tuipcnaw

.#ni tn* tiseif a'.isr, date cf tacr

n.f those

pet ' od* vi;, te pt'ttponed for the period tf *r.y s-uspersio" of
f-.fr n;r.fiM rf * h* Tert of rr..i Agr*>*nt under paragraph .'*

!f Any iucf. sr* ".undra^ twenty ',-;, day ?r si*ty <$' aiv pc ; i &
wPL-id cthirrvi** 'k'Ptrf- jr. 4 d#t* t-:wtfi wc!V*jc<t

;.ST,y4r*.-

H.!.^.

5'-c tr.e nevr

,t* rurir ,r.7 wi;, *>c tuts&*^a#d f :-T t r.# durt;rjr of

the period and between November 1 and January 16th and its
expiration date will be postponed by the same amount of time.
6A.04
Provided you have fulfilled all of your material
obligations under this Agreement, Company will commercially
release in Mexico (the "Release Territory") each Committed Album
recorded in fulfillment of your Recording Commitment within
ninety (90) days following the date of the initial commercial
release of each such Album in the United States.
If Company does
not so release (or cause its licensees to release) the applicable
Committed Album within ninety (90) days following the date of

initial commercial release in the United States, then you may

give Company notice, within thirty (30) days following the
expiration of such ninety (90) day period, of such failure to so
release such Record in the Release Territory, and Company shall
have a period of sixty (60) days following the date of such
notice to cure such failure.
If company does not cure such
failure within said sixty (60) day period, you will have the
option, which may be exercised by giving Company written notice
within thirty (30) days following the end of such sixty (60) day
period, to require Company to enter into an agreement with &

licensee designated by you, which licensee is actually engaged in

the business of manufacturing and distributing Records in the
Release Territory, authorizing such licensee to manufacture and
distribute Records derived from the Master Recordings not
released in accordance with this paragraph 6A.04 in the Release
Territory.
xour sole remedy for Company's failure to release an

Album in the Release Territory pursuant to this paragraph 6A.04

shall be the exercise of your option pursuant to this paragraph
6A.04.
If you fail to give Company either of the notices

specified in this paragraph 6A.04, your rights under this

paragraph 6A.04 will lapse.

fifty (50%)

percent of all revenues

actually received tay Company under such licenses will be credited

to your royalty account under this agreement.

Each such license

agreement will provide for such compensation for the license as

you negotiate with the licensee, and will contain such other

provisions as Company shall reasonably require, including but not

limited to the following;
(a) The licensee will be required to deliver to
Company all consents reguired by Company, and all agreements
which Company may require for any third party to look to the

licensee, and not to Company, tor the fulfillment of any

obligations arising in connection with the manufacture or
distribution of Records under the license.
The licensee will

also become a first party to the Phonograph Record Manufacturers'

Special Payments Fund Agreement with the American Federation of
Musicians, or any successor agreement then in effect. The
license agreement will not become effective until the licensee
has complied with all the provisions of this subsection 6A.04
(a) .
JW1S.1

101293

24

(b) The licensee will make all payments required in

connection witli the manufacture, sale or distribution, by parties
other than Company, in the Release Territory of Records made from
those Master Recordings after the effective date of the license,

including, without limitation, all royalties and other payments

to performing artists, producers, owners of copyrights in musical
compositions, the Music Performance Trust Fund and Special
Payments Fund, and any other unions and union funds, and will
authorize the applicable Fund Administrator's designated agent to
audit the licensee's books and records with respect to the sale
and/or distribution of such Records. The licensee will comply
with all applicable rules and regulations covering any use of the
Master Recordings by the licensee.

(c)

No warranty or representation will be made by

Company in connection with the applicable Master Recordings,

license, or otherwise.

the

you and the licensee will indemnify and

hold harmless Company and its licensees against all claims,

damages, liabilities, costs and expenses, including reasonable
counsel fees, arising out of any use of the Master Recordings or
exercise of such rights by the licensee.
(d)

Company will instruct its licensees in the Release

Territory not to manufacture Records derived from the Master

Recordings licensed to the licensee.
If the licensee notifies

Company of such manufacture Company will instruct its licensees

to discontinue it, but neither Company nor its licensees shall
have any liability by reason of such manufacture occurring before
company's receipt of such notice, and Company shall have no
liability by reason of such manufacture at any time.
(e)

Each Record made under the license will bear a

sound recording copyright notice identical to the notice used by

Company for initial United States release of the Master

Recordings concerned, or such other notice as Company shall

require, but those Records will not otherwise be identified

directly or indirectly with Company.

(f) Company shall have the right to examine the books
and records of the licensee and all others authorized by the
license to manufacture or distribute Records under the license,
for the purpose of verifying the accuracy of the accountings
rendered to Company by the license.

(q) The licensee will not ha\iit the right to authorize

any other party to exercise any rights without Company's prior
written consent.

(h) Company and its licensees will have the continuing

right at all times to manufacture and sell recompilation Albums
in the Release Territory which may contain the Master Recordings.
19913.3

101293

15

A re.compiLa.tion Albuts is an Album,, such as a "Greatest Hits'4 or

"Best Of" type Album, containing Master Recordings previously
released in different Album combinations.

For purposes of computing each of the ninety ^90) and sixty (60)
day periods described in Chi* paragraph fiA.04, the period between
November l snd January IS shall not be counted.

'-

nkm/ktm likeness.

7.01 (a)
(i^ company and any person, firm or corporation
designated .by Company shall "have the perpetual right throughout
the Territory to use and to permit others to use the Artist's
naise (both legal and professional, and whether presently or
hereafter used by the Artist), likeness, other idnntification and
biographical material concerning the Artist, and the name and
likeness of any producer or other person rendering services in
connection with Master Recordings recorded by the Artist during
the Tens for purposes of trade and. advertising in connection with
the exploitation of Phonograph Records and other derivatives of
th.* Masters, ana goodwill/institutional Advertising relating to
Company.

Company shall have the further right to refer to the

Artist during the Term as Company's exclusive recording 'art.iat

and you and the Artist shall in all your and the Artist's
activities in the entertainment fisid use reasonable efforts to

cause the Artist to be billed and advertised during the Tarn* as

Company's exclusive recording artist. The rights granted tc
Coapany pursuant to this, paragraph with respect to the Artist's
name, likeness,, other identification and biographical material

concerning the Artist shall be exclusiv* during the Term .and

nonexclusive thereafter.
Accordingly, hut without limiting fch*
generality of the foregoing, neither you nor the Artist shall
authorize or permit any person, firm, or corporation other than
Company to use during the Term the Artist's legal or professional
name or the Artist's likeness in connection with the advertising
or Sale of Phonograph Records.

(ii) Cosnpany will make available to you for your

approval any pictures of the Artist or biographical material

about the Artist which Company proposes to use fox packaging,
advertising or publicity in th*. united States during the Term of

this Agreement (Catapany shall instruct its applicable licensees

to make available tc you for your approval any pictures of Artist
or biographical material about Artist which Company [or such
licensee) proposes to use for packaging, advertising or publicity
in Mexico during the Term; provided, any failure by such licensee
to comply with, Company's instructions hereunder shall not be

deemed a breach hereof) . Company will not use any such material
which you disapprove in writing within five (5) days fro* the
tie &vch materials are delivered to yaw, provided you furnish

substitute material, satisfactory to company in its*sole and

mi s.j

1012S3

reasonable discretion,

in time for use within Company's

producti,on..-and release schedules.

In any evnt, "Company"shall

not he required to incur expenses beyond those customary for one

(l) photograph shooting for each Albue hereunder. This

subparagraph will not apply to any wateriai previously approved

by you. or used oy Company. (notwithstanding: the foregoing, if
the approval for a particular picture or material is more than
two (t) years old. Artist may withdraw such approval ir she
isrovides Company with applicable replacement photographs,

likenesses and/or biographical material., subject to Company's

right to continue using uch old materials in connection with
Records or other products previously releas#d-> No inadvertent
failure to comply with this subparagraph will constitute a breach
of this Agreement,, and you will not be entitled to injunctive.
re.lief to restrain the continuing use of any material

inadvertently used in contravention of tftis subparagraph. Vou

shall have the right to submit photographs, likenesses and
biographical material of Artist and your submission of saoe shall
constitute your Approval thereof.
fb)
Neither you or the Artist shall render any
services or authorize or permit your or the Artist's.name or

likeness or any biographical material concerning you or the

jhrtist to be used in any manner by any person, firm or

corporation in the advertising, promoting or marketing of_blank

magnetic recording tape or any other product or devj.ee primarily
intended for home u=e, whether now known or hereafter developed,

which ay fe used for the fixation of sound alone or sound

together with visual

images.

1.B2 It is hereby expressly agre-ed that,

is between you,

Artist and company, Company shall exclusively own and control all
materials comprising the artwork (including, without limitation,
art, photographs, graphic designs, etc.) and other iteeis created
or ued in connection with the exploitation of Phonograph Records
hereunder (the "Art Materials"), including, without limitation,
a)J copyrights and the right to secure copyright throughout the
world and in perpetuity.
1.03 In the event you receive a bona-fide third party offer
(or wish to enter into an agreement with a third party) with
respect to the commercial, exploitatiof of your name, logo and
likene&E and/or tne names, logos and likenesses of ether persons
embodied in the Art Materials in the manufacture,

sale and

distribution of merchandise {"Merchandising Uses"), including,

without limitation,

in connection with t-shirts and other

clothing, posters., stickers and novelties, then the following

will apply, provided Company (or any affiliate thereof) owns,

controls or has entered into an agreement or other business

arrangement with a hana-flde first class merchandising company at
such tine:

101293

17

(a)

Vou agree that neither you nor any person or

entity affiliated with you; directly or indirectly, will enter

into any agreement with any third party with respect to such
commercial exploitation unless you first:

(x)

notify Company in writing ("Your Notice") of

the proposed agreement with such third party,-

(ii)
furnish Company with complete copies of all
the instruments constituting the proposed agreement (the "Outside
Proposal"); and

(iii) offer to enter into an agreement with

Company on the same terms and conditions as contained m the
Outside Proposal,

(b)

If Company does not accept your offer wirhin

twenty (20) days after receipt of Your Notice ("Offer Period")

you may then enter into the agreement set forth in the outside
Proposal provided that agreement is consummated within sixty (60)
days after the end of che Offer Period upon the same terms and
conditions and in the same form as set

Proposal.

forth in the Outside

If that agreement is not so consummated within the

sixty (60) day period set forth above, the right of preemption
granted to Company in this paragraph 7.03 will be revived and no
third party other than Company will be authorized to enter into
any agreement concerning commercial exploitation of such items
through Merchandising Uses.

(c)

Company will not be required, as a condition to

accepting any offer made to it pursuant to this paragraph, to

agree to any term or condition which cannot be fulfilled by

Company as readily as by any other person or to waive any of its

rights under this Agreement.

(d)
No failure by Company to accept an Outside
Proposal will be deemed to waive or otherwise affect any of
Company's rights. Without limiting the generality of the
preceding sentence, Company will not be deemed bound by any
proposed waiver, consent, or other agreement required or
contemplated to be made by Company by an Outside Proposal which
Company does not preempt.

(e)

Notwithstanding anything to the contrary contained

herein, if you enter ihto an agreement with a third party

pursuant to an Outside Proposal, you shall have no right to
commercially exploit any of the Art Marerials unless you pay to
Company fifty (50%) percent of Company's costs incurred with
respect to the preparation of such Art Materials. Such payment
shall not affect Company's ultimate ownership interest in any

such Art Materials, and vr*> ---*JWS.3

101293

:ause a copyright notice in the

name of Company to appear on each commercial item embodying such

Art Materials or any portion thereof, and you shall take all
steps necessary to protect such copyright.

You or the third

party will be required to obtain and deliver to Company, in

advance, (1) all consents by other Persons which Company may
reasonably require (upon your request, Company shall provide you
with any relevant information it has regarding the Persons from
which it would require you to obtain such consents); and (2) all
agreements by other Persons which Company may reasonably require
to look to the third party, and not to Company, for the

fulfillment of any obligations arising in connection with the

third party's use of the Art Materials. No warranty of
merchantability or fitness for a particular purpose or any other
warranty or representation, express or implied, will be made by
Company in connection with the Art Materials,

or otherwise.

You

and the third party will indemnify and hold harmless Company and
its Licensees against all clairas, damages, liabilities, costs and
expenses, including reasonable counsel fees, arising out of any
use of the Art Materials by you, the third party or any Person
deriving rights from either you or the third party. Company will
have no obligation to license the Art Materials to you if, in
Company's sole judgment, such license might subject it to
unfavorable regulatory action, violate any law, violate the right
of any Person, or subject it to liability for any reason.
If by
reason of Company's license of the Art Materials to you, Company
incurs any obligation to make any payments to any other Person,
such payments will be your sole responsibility and will be paid
by you promptly (or reimbursed by you if paid by Company).
Such
payments will constitute Advances.
Nothing contained in this
paragraph 7.03(e) will be deemed to limit, in any way, Company's
rights in the use of the Art Materials for purposes other than
merchandising uses.
8.

ADVANCES

8.01 All monies paid to you or the Artist or on your or the

Artist's behalf or to or on behalf of any person, firm or

corporation representing you or the Artist (with your consent or
in order to discharge a legal obligation incurred by you,
directly or indirectly affecting Company's rights to the Masters)
other than royalties payable pursuant to this Agreement, shall
constitute Advances hereunder.

8.02 Conditioned upon your full performance of all your

obligations hereunder, Company shall pay you the following

nonreturnable (except as otherwise provided herein) amounts,
which shall constitute Advances hereunder.

(a)

For the Album recorded during the Initial

Period, the Advance shall be Forty Thousand ($40,000) Dollars,

payable as follows: Twenty Thousand ($2C,000) Dollars upon
101293

19

complete execution hereof, Ten Thousand ($10,000) Dollars

prouptiy following eomseneewcnt of recording of the Masters for

such Album, and Ten Thousand {510,0001 Dollars promptly following
delivery to and acceptance by Company of such Album. In the
event that the Recording Costs {which Company shall pay pursuant

to an approved Recording Budget and which such costs shall be

fully recoupable hereunder) incurred m connection with such
Album (including the afrecentioned S40,000 advance) do not
exceed 5185,000, Company shall pay to you an additional Advance
of $10,000 promptly following Delivery to and acceptance by
Company of such Album.

(b) With respect to each Album recorded and

deliverod hereunder in fulfillment of your F*cording Commitment
for each Contract Period other than the Initial Period, Company

shall pay to you as an Advance the amount by Which the

designated below as the "Recording Fund" exceeds the Recording

costs

tor

that Album:

<i) For the Album recorded during the first

Option Period, the Secording Fund thall be the Formula Amount,
but no less chan 'Two Hundred Twenty Five Thousand ($225,000)
Dollars and no mere than Four Hundred Fifty Thousand ($4S0,00G)
Dollars.

fill For the Albu3 recorded during tne second

Option Period, the Recording fund shall be the formula Amount,
but no less than Two Hundred Fifty Thousand |250,000) Dollars.
and ne niore than Five Hundred Thousand- ($$00,000)

Dollars

(ii.il For tne Album recorded during the third

Option Period, the Recording Fund shall be the Formula Jwount,.
but no less than Three Hundred Thousand ($300,000) Dollars and no
more than five Hundred Fifty Thousand ($65.0,000}

Dollars.

(iv) For the Album recorded during the fourth

Option Period, the Recording Fund shall be the formula Amount,
but no less than Three Hundred Fifty Thousand f$.3 50, 0*0\ Hollars
and no more than Sue Hundred Thousand ($600,000]

Dollars.

(v>
for tha Album, recorded during the fifth
Option Period, the Recording Fund shall be the Formula Ajaount,
but no less, than Four Hundred Thousand ($4 00,000) Dollars and no
more than Seven Hundred Thousand (S?00,000) Dollars.

<vi) For the Album recorded during the siicth

optisn Period, the Recording Fund shall tee the Formula Amount,
but no

less than Five Hundred Thousand ($500,000)

Dollars end no

aor# than Eight Hundred Thousand [$$0O,O00| Dollars.

WIS j

101253

2.0

The "Formula Amount" for a particular Album recorded and

Delivered hereunder in fulfillment of your Recording Commitment

shall mean an amount equal to sixty-six and two-thirds (66 2/3%)
percent of whichever of the following amounts is less: (A) the
amount of the royalties, after the retention of reserves (for

purposes of this calculation only, not to exceed twenty-five

(25%) percent), earned by you hereunder from Met Sales through
Normal Retail Channels in the United States ("USNRC Net Sales")
of the immediately preceding Album delivered hereunder in
fulfillment of your Recording Commitment; or (B) the average of
the amounts of such royalties so earned by you hereunder on the

two (2) immediately preceding Albums delivered hereunder in

fulfillment of your Recording Commitment.
In either case, the
amount of royalties with respect to any preceding Album shall be
computed as of the roost recent guarterly trial balance accounting
statement preceding delivery to Company of the Album for which
the Formula Amount is being calculated, or, if earlier, as of the
most recent quarterly trial balance accounting statement
preceding the date on which such Album should have been timely
delivered pursuant to paragraph 3.02 above.
Notwithstanding the
foregoing, with respect to any applicable Album which is not
delivered to Company within ninety (90) days of the applicable
period provided for in paragraph 3.02 above, the Recording Fund
for that Album shall be reduced by ten (10%) percent of the

otherwise applicable Recording Fund for each month (or portion

thereof) until that Album is delivered, provided, however,
Company shall not reduce the Recording Fund below actual
Recording Costs pursuant to the approved Recording Budget for the
Album concerned, and provided further, Company shall not be
deemed to have waived its right to apply such reductions against
royalties otherwise payable to you hereunder.
(c) Each Advance payable pursuant to paragraph 8.02(b)
shall be payable as follows: twenty (20*) percent of the
applicable Recording Fund promptly following the actual
commencement of recording the applicable Album, and the balance
(if any) promptly following Delivery of such Album.
(d)

Fifty (50%) percent of all sums paid or incurred

by Company in connection with independent marketing and publicity

and the independent promotion of Phonograph Records hereunder, if
any,

shall be deemed to constitute Advances hereunder.

9.

ROYALTIES.

9.01 Company will pay you an "all-in" royalty, during the

term of copyright (and all extensions and renewals thereof) in
the country concerned of Masters embodied in Phonograph Records

delivered hereunder computed at the applicable percentage

indicated in the Royalty Schedule below, of the applicable
Royalty Base Price in respect of Net Sales of such Phonograph
39915.i

101293

21

Records (other than Audiovisual Records) consisting entirely of

Master Recordings recorded under this Agreement during the
respective Contract Periods specified below and sold by Company
or Company's licensees through Normal Retail Channels:
ROYALTY SCHEDULE
UNITED STATES

Master Recordings
made during the:

Singles

Albu ms

Long-Play
Singles

25

6%

19.2%

19.2%

First Option Period

26

6%

19.95%

19.95%

Second Option Period

26

6%

19.95%

19.95%

Third option Period

27

5%

20.63%

20.63%

Fourth Option Period

27

5%

20,63%

20.63%

Pifth Option Period

28 .5%

21.38%

21.38%

Sixth Option Period

28 .5%

21.38%

21.38%

Initial

Period

FOREIGN

Territory

All

Mexico

80% of the otherwise

Records

applicable rate set forth in

the United States Royalty
Schedule above in respect of
USNRC Net

Sales of

the

particular record concerned

(i.e., Albums, Singles and

Long Play Singles), without

regard to any escalations.
Canada,

Zealand,

U.K.,

Australia, New
France, Germany,

75%

of

the otherwise

applicable rate set forth

Spain and territories where

above

Spanish is the primary

Royalty Schedule in respect of

language

USNRC Net

(other than Mexico)

in the United
Sales

of

States
the

particular record concerned

(i.e., Albums, Singles and

Long Play Singles), without

regard to any escalations.

101293

22

67% of the otherwise

Japan and Benelux

applicable rate set forth

above in the United States

Royalty Schedule in respect of

USNRC Net Sales of the

particular record concerned

(i.e., Albums, Singles and
Long Play Singles), without
regard to any escalations,
60% of

Rest of World

the otherwise

applicable rate set forth

above

in the United States

Royalty Schedule in respect of

USNRC Net Sales of the

particular record concerned

(i.e.. Albums, Singles and
Long Play Singles), without
regard to any escalations.

The royalty rates set forth in this paragraph 9.01 are

sometimes referred co herein as your "basic royalty rate(s)".

9.02

Notwithstanding anything to the contrary contained

in the Royalty Schedule hereinabove, and with respect to each

Album Delivered in fulfillment of your Recording Commitment

hereunder, the royalty rate applicable to USNRC Net Sales of topline Albums pursuant to the terms hereof shall be the royalty
rate specified in the Royalty Escalation Schedule below.
ROYALTY
Album

ESCALATION SCHEDULE
Net Sales

recorded

of

in the United

States of top-line Albums

in all configurations

in fulfillment
the

Recording Commitment
for the;

0-500.000

Initial

Period

25. 6%

', I

500,001-

In

excess

1,000,000

of

1.000.000

26.6%

27.6%

.'

First Option
Period

2 6.6%

26.6%

3S-XS.J

101293

28.6%

27 .6%

28.6%

Second Option
Period

2 7. 64

23

Third Option

Period

27.5%

28.5%

fourth Option
Period

29-5%
X\

27.5%

28.5%

29-5%

28. 5%

29. 5%

30. 5%

Fifth Option
Period

Sixth Option

\\

28 .5%

Period

29.5%

30. S%

9.03
The royalty rate on Phonograph Records sold through
so-called "record clubs" shall be one-half (1/2) of the otherwise

pplicable royalty rate if manufactured and sold by Company, and

an amount equal to one-half (1/2) of the Net Royalty from the
sale of those Phonograph Records if manufactured and sold by
Company's licensees.

9.01
The royalty rate for the use of any Master as
described in clause (a), (b), or (c) of this sentence will be

one-half (1/2) of the basic royalty rate that would apply if the
Record concerned were sold through Normal Retail Channels: (a)
any catalog Phonograph Record sold by Company's special products
operations or those of the distributor of the Records concerned,

including, without limitation, CEMA Special Markets ( herein

v
'

collectively "SPO's") to educational institutions or libraries,

or to other SPO clients for their promotion or sales incentive

Retail Channels); (b) any Record sold outside the United States

purposes (but not for sale to the general public through Normal

by Company or Company's principal licensee in the country

concerned in conjunction with a television and/or radio

advertising campaign, during the calendar semi-annUal period in

which that campaign begins and the next period; and (c) any
non-catalog Phonograph Record created on a custom basis for SPO

clients.
The royalty on any Record described in clause (c) will
be computed on the basis of the SPO's actual sales price less all
taxes and Container Charges. In respect of any Master Recording
leased by Company to others for their distribution of Phonograph

Records in the United States, Company will pay you fifty (50%)
percent of Company's net receipts from Company's licensee. ("Net
receipts", in the preceding sentence, means receipts as computed
after deduction of all copyright, AFX and other applicable third
party payments.) If another artist, a producer, or any other
Person is entitled to royalties on sales of such Records, that
payment will be divided among you in the same ratio as that among

your respective basic royalty percentage rates.

f [

9-05

(a)

pJ

The royalty rate on any Budget Record or any

<t\ -''Picture disc" (i.e., a disc Record with artwork reproduced on

C '- J
the surface of the Record itself) will be one-half (1/2) of the
JW5 .1

101293

24

$</
applicable basic royalty ra/te
ra/t
prescribed in paragraph 9.01. The
royalty rate on any Wid-Prlce~d Record will be seventy (70%)
percent of the otherwise applicable royalty rate prescribed in
paragraph 9.01. and the royalty rate on any Record sold for
distribution through military exchange channels shall be three

'fourths (3/4) of the otherwise applicable royalty rate prescribed

in paragraph 9.01. The royalty rate on any Soundtrack Record
^<
will be seventy (70%) percent of the applicable basic royalty
rate prescribed in paragraph 9.01 (provided, however, that on --

Masters licensed by Company for use on a Soundtrack Record, the h<

royalty rate shall be an amount equal to fifty (50%) percent of1
Company's net receipts received from such use).//The royalty rate
on any Record which is not an Album, Single or a Long-Play Single
will be seventy (70%) percent of the applicable basic Album
royalty rate prescribed in paragraph 9.01. The royalty rate on

any compact disc Record will be seventy-five (75%) percent of the

rate which would otherwise be applicable under this Agreement.

jThe royalty rate on any digital compact cassette ("DCC") or any

Mini-disc Record will be seventy (70%) percent of the rate which
would otherwise be applicable under this Agreement.
(Notwithstanding the foregoing, the royalty rate on any DCC or
any Mini-disc Record made during any Contract Period .other than
the Initial and First Option Periods hereunder shall be seventy-

five (75%) of the rate which would otherwise be applicable under

this Agreement). The royalty rate for any Record in a New
Configuration will be one-half (1/2) the rate which would
otherwise be applicable hereunder.

(b)

The royalty rate on a Multiple Album will be

one-half (1/2) of the applicable basic Album royalty rate

prescribed in paragraph 9.01, if the Royalty Base Price of that

Album is the same as the Royalty Base Price applicable to the
top-line single-disc Conventional Albums marketed by Company or
its Licensee in the territory where the Album is sold at the

beginning of the royalty accounting period concerned. If a

different Royalty Base Price applies to a Multiple Album, the
royalty rate prescribed in the preceding sentence will be

adjusted in proportion to the variance in the Royalty Base Price

(but will not be more than the applicable Album royalty rate

prescribed in paragraph 9.01).

That adjustment of the royalty

rate will be made by using the following formula:

(X divided by Y) multiplied by Z = adjusted royalty

rate. (Subject to the parenthetical limit in the
second sentence of this subparagraph.)

("X" represents the Royalty Base Price for the

Multiple Album concerned; "Y" represents the

Royalty Base Price for such top-line single-disc

Records in the Multiple Album multiplied by the
number of disc Records in the Multiple Album
39915.}

101293

25

( ?(''

concerned; and "2" equals the otherwise applicable

basic royalty rate.)

9.06
(a) Except as otherwise specifically set forth
herein, on Masters licensed by Company on a flat-fee or a royalty
basis for the sale of Phonograph Records or for any other uses,

the royalty rate shall be an amount equal to fifty (S0%) percent

of the Net Flat Fee or Net Royalty, as applicable, from such
exploitation of the Masters.
(b)

To the extent permissible at law, you hereby

assign to Company all rib,ht, title and interest in and to any and
all royalties'or other payments to which you are .or may become
entitled to receive (herein "Your Share") under the Audio Home

Recording Act of 1992, as it may be amended (the "Act"), or any

implementing or similar legislation requiring the payment of
copyright royalties in connection with the sale of recording
devices or blank tapes or any other recordable device (e.g.,

digital audio tape, DCC). Upon receipt by Company of such

royalties or payments. Company shall credit your royalty account
with one hundred (100%) percent of Your Share of such royalties
or payments received. In order to effectuate the foregoing, you
shall execute and deliver to Company a letter of direction
address to the Register of Copyrights of the U.S. Copyright
Office and you agree to execute and deliver to Company any other
document or documents as may be reasonably necessary to cause the
payment to Company of Your Share of such royalties or payments.
It is expressly understood and agreed that except as provided

above in this paragraph 9.06(b), Company shall be entitled to

retain for its own use and benefit any royalties or payments
received by Company pursuant to the Act.

9.07

Notwithstanding anything to the contrary contained

herein, on Audiovisual Recordings,

x/fbK*

the royalty rate shall be as

follows:

(i)

On Audiovisual Records manufactured

.and sold by Company's licensees, in the United States or

Hlj/elsewhere shall be an amount equal to fifty (50%) percent of the

Net Receipts from the sale of those Audiovisual Records Jj on
Audiovisual Records manufactured and sold by Company,

the royalty

rate shall be computed in accordance with the provisions of this

.' Article 9 applicable to Conventional Albums, except;

(i)

on sales

/, of Audiovisual Records in the United States the royalty rate

/ pursuant to paragraph 9.01(a) above shall be deemed to be twelve

and one-half (12^%) percent; [ii) on sales of Audiovisual Records
outside of the United States the royalty rate shall be deemed to
be ten (10%) percent: and (iii) the Royalty Base Price of
Audiovisual Records shall be as prescribed in paragraph 19.23
below.

101293

26

(ii)
On Audiovisual Recordings licensed or
D otherwise furnished by Company for exploitation other than on
V"^ Audiovisual Records, the royalty rate shall be an amount equal to

^J

fifty percent (501) of the Net Receipts from that exploitation.

(iii) The following amounts will be charged
in reduction of all royalties payable or becoming payable to you
under this paragraph 9 .07 .
(A)

All royalties and other

compensation which may become payable to any Person for the right
to make any uses of copyrighted Musical Compositions in
Audiovisual

Records;

and

(B)
All payments to record
producers, directors or other Persons which are measured by uses
of Audiovisual Records or proceeds from those uses, whether such
payments are to be computed as royalties on sales, as
participation in revenues, or in any other manner. (The amounts
chargeable under the preceding sentence will not include
non-contingent advances, but will include payments - including
payments in fixed amounts - which accrue by reason that such
sales, revenues, or other bases for computation attain particular
levels.)
Notwithstanding anything to the contrary contained in
this paragraph 9.07(iii)(B). no royalty payment to any video
director or video producer shall be made without your consent,
unless such payments become customary in the music industry.
9.OS

Notwithstanding anything to the contrary contained

in this Article

9:

(a)

In respect of Joint Recordings, the

royalty rate to be used in determining the royalties payable to

you shall be computed by multiplying the royalty rate otherwise

applicable by a fraction,

tt

the numerator of which shall be one (1)

* and the denominator of which shall be the total number of royalty

artists whose performances are embodied on a Joint Recording.
The terra "Joint Recording" shall mean any Master Recording
embodying the Artist's performances and any performances by
another artist with respect to which Company is obligated to pay
royalties.
(b)

The royalty rate on a Phonograph

Record embodying Master Recordings made hereunder together with

other Master Recordings win be computed by multiplying the

royalty rate otherwise applicable by a fraction, the numerator of

which is the number of Selections embodying Master Recordings
made hereunder and contained on the particular record concerned
and the denominator of which is the total nurnber of royaltybearing Selections contained on such Record. The royalty rate on
an Audiovisual Record containing a Audiovisual Recordings made

101293

27

hereunder and other audiovisual works will be determined by

apportionment based upon actual playing time on the Record

concerned.

(c)

(i)

No royalties shall be payable

to you in respect of Phonograph Records sold or distributed by

Company or Company's licensees for promotional purposes, as cut-

-A /outs, at close-out prices, for scrap, at )ess than inventory cost

,.\ / or at fifty (56%) percent or less of the Record's highest posted

'// wholesale price (whether or not intended for resale), as "free",

"no charge" or "bonus" Records (whether or not intended for
resale), to Company's employees or those of Company's licensees
and their relatives, or to radio stations.
(ii)
Company acknowledges that as
of the date hereof Conpany and its distributor do not have a
regular free goods program for sales of Albums through USNRC

(i.e., a free goods program other than in connection with special

programs or discount programs, which special and/or discount
programs Company does now have, and from time to time,
implements) . In the event Company or its distributor implements
a regular free goods program for USNRC sales of Albums, such
regular free goods shall be royalty bearing hereunder except that
for purposes of paragraph 19.23(a)(1) hereunder, company's
published subdistributor price for such free goods shall be the
net effective subdistributor price (i.e..

Company's
subdistributor price as reduced to reflect any such regular free
goods if such price has not already been so reduced for such

regular free goods).

\i.
'

Company agrees that such special free goods

and discount programs for Albums in the United States shall not
exceed in the aggregate on a royalty-free basis twelve (12%)
percent of the aggregate gross units of the particular Album
concerned shipped through USNRC unless Company obtains your
consent.
If Company exceeds the foregoing limitation for any
particular Album without obtaining your consent, your sole remedy
shall be that you shall be entitled to be paid or credited with
royalties at tne applicable royalty rate for all such excess
units.

(d)
If records derived from the Masters
are sold to distributors or others for less than Company's

</v*

\ J^yi

N^r"
^frs.

highest posted wholesale price, or at a discount therefrom, but

fr more than fifty (50%) percent of such wholesale price, then,

for purposes of this paragraph, a percentage of such records

shall be deemed non-royalty bearing records, which percentage

shall be an amount equal to the percentage of such lesser amount
or the applicable discount.

(e)
Company may elect from time to time
to compute and pay you royalties hereunder on a royalty base
different than the Royalty Base Price provided herein, as long as
**ij.i

101293

28

such computation does not affect the net dollar-and-cents amount

of royalties otherwise payable to you at that time hereunder.
10.

ROYALTY

PAYMENTS

AND ACCOUNTINGS.

10.01
Company shall send to you statements for royalties
payable hereunder on or before October 1st for the semi-annual

period ending the preceding June 30th and on or before April 1st
for the semi-annual period ending the preceding December 31st,
together with payment of royalties, if any, earned by you
hereunder during the semi-annual period for which the statement
is rendered, less all Advances and other charges under this
Agreement.
Coropany shall have the right to retain, as a reserve

against charges, credits, or returns, such portion of payable

royalties as shall be reasonable in Company's best business
judgment.
With respect to Albums sold hereunder, Company's
reserve shall not exceed thirty-five (35%) percent of the number
of such records shipped, unless Company reasonably believes a
particular release justifies a higher reserve. With respect to
Singles sold hereunder, Company's reserve shall not exceed fifty
(S0%) percent of the number of such records shipped, unless
Company reasonably believes a particular release justifies a
higher reserve.
Reserves shall be fully liquidated no later than
the end of the fourth full accounting period following the period
in which such reserve was initially established. Records
returned will be apportioned between royalty-free records and
records on which royalties are payable in the same proportion as
such records were shipped to customers.
You shall reimburse
Company on demand for any overpayments, and Company may also
deduct the amount thereof from any monies (other than mechanical
royalties, except as otherwise provided herein) payable to you
hereunder or under any other agreement between you and Company or
Company's affiliates.
Royalties paid by Company on Phonograph
Records subsequently returned shall be deemed overpayments.
10.02
No royalties shall be payable to you on sales of
Phonograph Records by any of Company's licensees or distributors

until payment on those sales (or credit against an advance

actually received by Company in the United States in connection

therewith) has been received by Company in the United States.

Sales by a licensee or distributor shall be deemed to have

occurred in the semi-annual accounting period during which that

licensee or distributor shall have rendered to Company accounting
statements and payments for those sales.

10.03

(a)

Royalties on Phonograph Record sales outside

of the United States shall be computed in the national currency

in which Company's licensees pay to Company, shall be credited to
your royalty account hereunder at the same rate of exchange at
which Company's licensees pay to Company, and shall be

101293

29

proportionately subject to any withholding or comparable taxes

which may be imposed upon Company's receipts.

(b)

If Company shall not receive payment in

United States dollars in the United States for any sales of

Phonograph Records outside of the United States, royalties on

tnose sales shall not be credited to your royalty account

hereunder. Company shall, however, at your written request and

if Company is reasonably able to do so, accept payment for those
sales in foreign currency and shall deposit in a foreign bank or
other depository, at your expense, in that foreign currency, that

portion thereof, if any, as shall equal the royalties which would

have been payable to you hereunder on those sales had payment for
those sales been made to Company in United States dollars in the
United States.
Deposit as aforesaid shall fulfill Company's

royalty obligations hereunder as to those sales.

If any law,

ruling or other governmental restriction limits the amount a

licensee can remit to Company, Company may reduce your royalties
hereunder by an amount proportionate to the reduction in
Company's licensee's remittance to Company,

10.04

Company will maintain books and records, which

report the sales of Phonograph Records and other exploitations of

Masters, on which royalties are payable to you.

Vou may, but not

more than once a year, at your own expense, examine and make
copies of those books and records, as provided in this paragraph
10.04 only. You may make those examinations only for the purpose
of verifying the accuracy of the statements sent to you under
paragraph 10.01.' All such examinations shall be in accordance
with GAAP procedures and regulations.
You may make such an
examination for a particular statement only once, and only within
two (2) years after the date when such statement is rendered to
you by Company under paragraph 10.01 (each statement shall be
deemed rendered when due unless you notify Company to the

contrary in writing within sixty (60) days after the applicable

due date specified in paragraph 10.01 above). You may make such
an examination only during Company's usual business hours, and at
the place where Company keeps the books and records to be
examined.
If you wish to make an examination you will be

required to notify Company at least thirty (30) days before the

data when you plan to begin it.
Company may postpone the
commencement of your examination by notice given to you not later
than fifteen (15) days before the commencement date specified in

your notice; if Company does so, the running of the time within
which the examination may be made will be suspended during the

postponement (provided, such postponement may last no longer than

45 days).
If your examination has not been completed uithin
seventy five (75) days from the time you begin it, Company may
require you to terminate it on seven (7) days' notice to you at
any time; Company will not be required to permit you to continue
the examination after the end of that seven (7) day period.
You

101293

30

will not be entitled to examine any manufacturing records or any

other records that do not specifically report sales or other
distributions of Phonograph Records on which royalties are
payable to you. You may appoint a certified public accountant to
make such an examination for you, but not if (s)he or his/her
firm has begun an examination of Company's books and records for
any Person except you unless the examination has been concluded
and any applicable audit issues have been resolved.
Such
certified public accountant will act only under a Letter of
Confidentiality which provides that any information derived from
such audit or examination will not be knowingly released,
divulged or published to any person, firm or corporation, other
than to you or to a judicial or administrative body in connection
with any proceeding relating to this Agreement.
The preceding
three (3) sentences will not apply to any item in a royalty
accounting if a court of competent jurisdiction determines that
the item was fraudulently misstated and such determination is not
overruled

or

reversed.

10.05
If you have any objections to a royalty statement,
you will give Company specific notice of that objection and your
reasons for it within two (2) years after the date such statement

is rendered by Company under paragraph 10.01 (each such statement

shall be deemed rendered when due unless you notify Company to
the contrary in writing within sixty (60} days after the
applicable due date specified in paragraph 10.01 above).
Each
royalty statement will become conclusively binding on you at the
end of that two (2) year period, and you will no longer have any

right to make any other objections to it.

You will not have the
right to sue Company in connection with any royalty accounting,
or to sue Company for royalties on Records sold during the period
a royalty accounting covers, unless you commence the suit within
three (3) years after the date such statement is rendered by
Company (each such statement shall be deemed rendered when due

unless you notify Company to the contrary in writing within sixty

(60] days after the applicable due date specified in paragraph
10.01 above).
If you commence suit on any controversy or claim
concerning royalty accountings rendered to you under this
agreement in a court of competent jurisdiction (as provided in
paragraph 23.09 below), the scope of the proceeding will be

limited to determination of the amount of the royalties due for

the accounting periods concerned, and the court will have no

authority to consider any other issues or award any relief except

recovery of any royalties found owing.
Your recovery of any such
royalties will be the sole remedy available to you or the Artist
by reason of any claim related to Company's royalty accountings.

Without limiting the generality of the preceding sentence,

neither you nor the Artist will have any right to seek
termination of this Agreement or avoid the performance of your

obligations under it by reason of any such claim. The preceding

three (3) sentences will not apply to any item in a royalty
jwns.J

101293

31

accounting if a court of competent jurisdiction determines that

the item was fraudulently misstated and such determination is not
overruled

or

reversed.

10-06 Company shall have the right to deduct from any

amounts payable to you hereunder that portion thereof as may be
required to be deducted under any statute, regulation, treaty or
other law, or under any union or guild agreement, and you shall
promptly execute and deliver to Company any forms or other
documents as may be required in connection therewith.
10.07 Each payment made by Company to you or the Artist
under this Agreement, other than union scale payments under
Article 5 hereof, shall, at Company's election, be made by a

single check payable to Selena Quintanilla.

All payments herein
are contingent upon Company receiving properly completed w-9
and/or 1001 IRS tax forms,

as applicable.

11.

LICENSES-

MUSICAL COMPOSITION

11.01 You hereby grant to Company and Company's designees

an irrevocable non-exclusive license, under copyright, to
reproduce each Controlled Composition on Phonograph Records and
to distribute those Phonograph Records in the United States and
Canada.

11.02 Mechanical royalties shall be payable for each

Controlled Composition on Net sales of Phonograph Records and at
the following rates:

(a)

On Phonograph Records sold in the United

States, the rate (the "United States Mechanical Rate") for each
Controlled Composition embodied thereon shall be equal to

seventy-five (75%) percent of the minimum statutory royalty rate

(without regard to playing time) provided for in the United
States Copyright Act which is applicable to the reproduction of
Musical Compositions (the "US Minimum Statutory Rate") as of the
date of the delivery of the first Master hereunder embodying the
Controlled Composition in question, or, if earlier, as of the
date upon which that first Master was required to be delivered
hereunder.

(b)
On Phonograph Records sold in Canada, the
rate (the "Canadian Mechanical Rate") for each Controlled
Composition embodied thereon shall be equal to seventy-five (75%)
percent of the prevailing rate agreed upon by the Canadian
recording industry and the Canadian music publishing industry or
its mechanical collection representative which is applicable to
the reproduction of Musical Compositions (the "Canadian Minimum
Rate") as of the date of delivery to Company of the first Master
hereunder embodying the Controlled Composition in question or, if
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earlier ,

as of the date upon which that first Master was required

to
hereunder; provided, however, in no event shall
to be
be delivered
de
the Canadian Mechanical Rate be greater than the applicable

United States Mechanical Rate.

(c)
Notwithstanding anything to the contrary
contained herein, with respect to Controlled Compositions as
embodied on a "Greatest Hits" type Album, the applicable United
States Mechanical Rate or Canadian Mechanical Rate shall be

calculated in accordance with paragraphs 11.02(a) or 11.02(b)

above, provided, however, the US Minimum Statutory Rate or the
Canadian Minimum Rate (as applicable) shall be determined as of
the date of initial release
Hits

in the United States of

such Greatest

Album.

11.03

Notwithstanding the foregoing:

(a)
The mechanical royalty rate for a Controlled
Composition contained on a Mid-Priced Record or a Budget Record
shall be three-fourths (3/4) of the United States Mechanical Rate
or the Canadian Mechanical Kate, as applicable.
The mechanical

royalty rate on a Controlled Composition which is a copyrighted

arrangement of a public domain work shall be one-half (1/2) of
the United States Mechanical Rate or the Canadian Mechanical

Rate, as applicable.

No mechanical royalties shall be payable on

any Phonograph Records for which no royalties are payable

pursuant to Article 9 above. No mechanical royalties shall be

payable on any Controlled Composition having a playing time of

less than ninety (90) seconds-

(b)
The maximum aggregate mechanical royalty
rate for all Selections, including Controlled Compositions,
contained on a Phonograph Record for sales in the United States
or Canada shall be the product of (1): the US Minimum Statutory
Rate or the Canadian Minimum Rate, as applicable, for the first
Master recorded in connection with the particular Album or EP

project concerned and (2): eleven (11) for Albums (containing one
(1) or more discs or the tape equivalent), four (4) for EPs, and
two (2)

for Singles and Long-play Singles, regardless of the

number of Selections contained thereon.

If the aggregate

mechanical royalty rate applicable to all of the Selections

embodied on any Phonograph Record hereunder shall exceed the
applicable maximum aggregate royalty rate set forth above for

i~" ' .

"' \v

^i
V, i ^
T

that Phonograph Record, then the aggregate mechanical royalty

rate for the Controlled Compositions, if any, contained thereon

shall be reduced by an amount eguel to such excess.

If the

aggregate mechanical royalty rate applicable to all of the

Selections embodied on that Phonograph Record shall, even as

reduced in accordance with the immediately preceding sentence,
still exceed the applicable maximum aggregate mechanical royalty
rate for that Phonograph Record,

L0129D

then you shall, upon Company's

33

demand, pay Company an amount equal to the additional mechanical

royalties payable as a-result of that excess and Company may, in
addition to all of Company's other rights or remedies, deduct
that amount from any monies payable by Company hereunder or under
any other agreement between you and Company or Company's
affiliates,

11.04
Company will compute Mechanical Royalties on
Controlled Compositions as of the end of each calendar

quarter-annual period in which there are sales or returns of

Records on which mechanical royalties are payable to you.

On the

next May 15th, August 15th, November 15th, or February 15th,

Company will send a statement covering those royalties and will
pay any net royalties which are due. Mechanical Royalty reserves
maintained against anticipated returns and credits will not be
held for an unreasonable period of time; retention of a reserve
for two (2) years after it is established will not be considered

unreasonable in any case. Notwithstanding anything to the

contrary contained herein, Mechanical Royalty reserves regarding
Albums released hereunder shall not exceed fifty (50%) percent of
the royalties earned with respect to Albums sold during a
particular accounting period.
If any overpayment of.mechanical
royalties is made to any Person you will reimburse Company for
it; Company may also recoup it from any payments due or oecoming
due to you.
If Company pays any mechanical royalties on Records
which are returned later, those royalties will be considered
overpayments.
If the total amount of the mechanical royalties

which Company pays on any Record consisting of Master Recordings

made under this agreement (including mechanical royalties for

Compositions which are not Controlled Compositions) is higher

than the limit fixed for that Record under subparagraph 11.03(b),
that excess amount will be considered an overpayment also
(provided, however, Company shall not deduct such excess from
Recording Funds for future Albums). Paragraphs 10.04 and 10.05
will apply to mechanical royalty accountings.
11.05

You shall,

upon Company's request, cause the

issuance to Company and Company's designees of mechanical

licenses to reproduce on Phonograph Records Selections which are
not Controlled Compositions and to distribute those Phonograph
Records in the United states and Canada.
Those mechanical
licenses sball be at rates and on terms no less favorable to

Company and Company's designees than those contained in the

standard mechanical license issued by the Harry Fox Agency, Inc.

or any successor with respect to Phonograph Records distributed

in the United States and by CMRRA or any successor with respect

to Phonograph Records distributed in Canada; provided, however,

in no event shall those rates exceed one hundred (100%) percent

of the applicable minimum statutory rates set forth in paragraph
11.02 above.
You shall also, upon Company's request, cause the
issuance to Company and Company's designees of mechanical
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licenses to reproduce Selections on Phonograph Records hereunder

and to distribute those Phonograph Records outside the United
States and Canada on terms no less favorable to Company and

Company's designees than those generally applicable to Phonograph

Record manufacturers in each country in question. The obligation
tc account and pay mechanical royalties on sales of Phonograph
Records outside of the United States shall be that of Company's
licensees,

11.06

If the copyright in any Controlled Composition is

owned or controlled by a person, firm or corporation other than

you, you shall cause that person, firm or corporation to grant to

Company and Company's designees the same rights as you are
required to grant to company and Company's designees pursuant to
this paragraph.

11.07

(a)

You hereby grant to Company and Company's

designees at no fee, royalty, or other cost to Company or

Company's designees, the irrevocable, non-exclusive, worldwide

right to reproduce and publicly perform each Controlled

Composition on Audiovisual Recordings, to distribute Audiovisual

Records embodying those Audiovisual Recordings, and to otherwise
exploit in any manner and through any media those Audiovisual
Recordings.
You shall, upon Company's request, cause the
issuance to Company and Company's designees, at no fee, royalty,
or other cost to Company or Company's designees, the irrevocable,
non-exclusive, worldwide right to reproduce and publicly perform
each Selection which is not a Controlled Composition on

Audiovisual Recordings and to distribute Audiovisual Records

embodying those Audiovisual Recordings, and to otherwise exploit

in any manner or media those Audiovisual Recordings.

If Company

or Company's designees shall pay any such fee, royalty, or other

cost, you shall, upon Company's demand, pay Company the amount
thereof, and Company may, in addition to all of Company's other
rights and remedies, deduct that amount from any monies payable
by Company hereunder or under any other agreement between you and

Company or Company's affiliates.

Without limiting the generality

of the foregoing, it is understood and agreed that Company's

rights under this paragraph 11.07 include the right to reproduce
and publicly perform, at no fee, royalty or other cost to Company
or Company's designees, Controlled Compositions and NonControlled Compositions in television and/or radio commercials
advertising Phonograph Records made hereunder.
(b)
Notwithstanding the foregoing, with respect to
Audiovisual Records sold directly by Company, Company shall pay a
"mechanical" royalty for Controlled Compositions embodied thereon
on Net Sales Through Normal Retail Channels in the United States
of such Audiovisual Records equal to four (4%) percent of the
applicable Royalty Base Price therefor.
The "mechanical" royalty
for Controlled Compositions shall be pro-rated by multiplying the
399IS.1

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royalty payable by a fraction, the numerator of which is equal to

the number of Controlled Compositions contained on such

Audiovisual Record and the denominator of which is equal to the

total number of Selections on such Audiovisual Record.

Notwithstanding the foregoing, if the total "mechanical" royalty

payable in respect of all Selections of such an Audiovisual
Record for Net Sales in the United states shall exceed five (5%)

percent of the applicable Royalty 8ase Price, the amount of such

excess may be deducted by Company from "mechanical" royalties in
respect of the Controlled Compositions contained on such
Audiovisual

Record.

11.OB Any assignment, license or other agreement made

with respect to Controlled Compositions shall be subject to the
terms

hereof.

12.

AUDIOVISUAL RECORDINGS.

12.01 Upon Company's request, (and at Company's sole

expense, subject to the other provisions hereof (including
applicable recoupment provisions]) you shall cause the Artist to
appear for the making of Audiovisual Recordings embodying the
Artist's performances on the following terms:
(a)

Company and you shall mutually designate the

Musical Compositions which shall be embodied in the Audiovisual

Recordings, provided, however, in the event of a dispute,
Company's decision shall be final. Company and you shall
mutually approve the producer and director of the Audiovisual
Recordings, all other individuals rendering services in
connection with the production of the Audiovisual Recordings, the
storyboard and script for the production of the Audiovisual
Recordings, and the locations at and the dates on which the
Audiovisual Recordings shall be produced (the "Audiovisual
Production Elements"),

provided, however,

in the event of a

dispute, Company's decision shall be final. Provided you are in

compliance with your material obligations hereunder, Company
shall produce one (1) Audiovisual Recording embodying a Master
embodied on the First Album, provided that the budget for such
Audiovisual Recording shall not exceed $75,000.

(b)

Company shall pay the Audiovisual Production

Costs in an amount not in excess of a written budget approved by

Company in writing.

The Audiovisual Production Costs shall mean

and include all minimum union scale payments made by Company to

the Artist in connection with the production of the Audiovisual

Recordings, all payments which are made by Company to any other

individuals rendering services in connection with the production

of the Audiovisual Recordings,

all other payments which are made

by Company pursuant to any applicable law or regulation or the

provisions of any collective bargaining agreement between Company
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and any union or guild (including, without limitation, payroll

taxes and payments to union pension and welfare funds), all
amounts paid or incurred by Company for studio, hall, location or

set rentals, tape, film, other stock, engineering, editing,

instrument rentals and cartage, transportation and

accommodations, immigration clearances, any so-called "per diems"

for any individuals (including the Artist) rendering services in
connection with the production of the Audiovisual Recordings,
together with all other amounts paid or incurred by Company in
connection with the production of the Audiovisual Recordings. To
the extent permissible under applicable union agreements, you and
Artist hereby waive any right to be paid union scale payments in
connection with the production of Audiovisual Recordings.

The

Audiovisual Production Costs shall constitute Advances hereunder

and shall be recoupable as set forth in paragraph 12.01(f) below.
(c)
The Audiovisual Recordings shall be produced
in accordance with the rules and regulations of all labor unions
and guilds having jurisdiction over the production thereof.
(d)

you shall cause the Artist to fully

cooperate with Company and Company's designees and to perform to

the best of the Artist's ability in connection with the
production of the Audiovisual Recordings.
(e)

If the Audiovisual

Production Costs exceed

the budget approved by Company in writing as a result of any

cause which is within your or the Artist's control, or if you or
the Artist shall for any reason whatsoever delay the commencement
of or not be available for any scheduled appearance by you or the
Artist relating to the production of the Audiovisual Recordings,
you shall, upon Company's demand, pay to Company an amount equal
to the expenses or charges paid or incurred by Company by reason
thereof. Company may, without limiting its other rights and
remedies, deduct that amount from any monies payable by Company
hereunder or under any other agreement between you and Company or
Company's affiliates.

(f)
One Hundred (100%) percent of the aggregate
amount of Audiovisual Production Costs shall be recoupable from
any and all monies payable to you from the exploitation of
Audiovisual Recordings hereunder. Fifty (50%) percent of the

Audiovisual Production Costs for each Audiovisual Recording not

in exceae of Seventy-Five Thousand (S75,000) Dollars may be
recouped from your royalties on sales of Records which do not

reproduce visual images or other exploitations of audio Master

Recordings ("audio royalties"); one hundred (100%) percent of

such Audiovisual Production Costs for each Audiovisual Recording
in excess of Seventy-Pive Thousand (575,000) Dollars may be
recouped from your audio royalties.

3|S.3

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3?

12.02

Company shall be the sole owner of all worldwide

rights in-and to.each-Audiovisual Recording (including the

worldwide copyrights therein and thereto). Without limiting the
generality of the foregoing, it is understood and agreed that
Company's rights to use your name and the name, likeness, and
other identification of the Artist and biographical material
concerning the Artist in the Audiovisual Recordings are set forth
in Articles 6 and 7 hereof,

wherein the terms "Master Recordings"

and "Phonograph Records" shall include Audiovisual Recordings and

Audiovisual Records,
13.

WARRANTIES.

respectively.

REPRESENTATIONS

AND COVENANTS.

You hereby warrant, represent and covenant (subject to

paragraph l.01(b)

hereof) that:

13-01 You have the right and power and capacity to enter
into chis Agreement, to grant the rights granted by you to
Company hereunder, and to perform all of the terms hereof, and
you have not done and shall not do anything that will impair
Company's rights hereunder.
Without limiting the generality of
the foregoing, ho Musical Composition or any other material
recorded by the Artist shall be subject to any re-recorcing or
other

restrictions.

13.02
During the Term you and Artist shall become and
remain members in gOod standing of any labor union or guilds with
which Company may at any time have an agreement lawfully
requiring your or the Artist's membership.

13.03

(a)

All recording sessions for the Masters shall

be conducted in all respects in accordance with the terms of the

AP of M Phonograph Record Labor Agreement, of the AFTRA Code for

che Phonograph Industry, and of the agreements with all other
labor unions and guilds having jurisdiction over the recording of
the

Masters.

(b)

The information supplied by you pursuant to

paragraph 4.03(b) above constitutes an accurate and complete

listing of all individuals, vocalists, musicians and other
performers whose performances are in fact embodied in such

Masters and a corresponding description of the specified vocal,

musical and/or other performances actually performed by each such
person and embodied on such Masters.
13.04

(a)

Your and Artist's names,

masters. Selections

embodied on masters and/or materials supplied to Company by you

hereunder will not violate or infringe upon any common law or

statutory right of any person,

including,

without limitation,

any

contractual rights, copyrights, rights of privacy, rights of

publicity, trademark rights and rights to trade names. Neither
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