JUDGE COTEJS 44C/SDNYREV. 4/2014

CIVIL COVER SHEET

The JS-44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or other papers as required by law,except as provided by local rules of court. This form, approved bytheJudicial Conference of the United States in September 1974, is required for use of the Clerk of Court for the purpose ofinitiating the civil docket sheet.

PLAINTIFFSTHE ESTATE OF SELENA QUINTANILLA, by Abraham Quintanilla, Jr., itsduly appointed Administrator, and Q PRODUCTS, INC.

DEFENDA:UMG REO|b|.nc.CV 2447

ATTORNEYS (FIRM NAME, ADDRESS, AND TELEPHONE NUMBERCertilman Balin Adler & Hyman, LLP Attn: Jaspreet S. Mayall, Esq.90 Merrick Avenue, 9th FloorEast Meadow, NY 11554(516)296-7000CAUSE 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(DO NOT CITE JURISDICTIONAL STATUTES UNLESS DIVERSITY)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 2015Has this action, case, or proceeding, or one essentially the same been previously filed in SDNY atany time? NttZVesLUudge Previously Assigned

ATTORNEYS (IF KNOWN)

Ifyes,was thiscase Vol. Invol. Dismissed. No Yes fj If yes, give date.Is THIS AN INTERNATIONALARBITRATIONCASE?

(PLACE AN [x] IN ONEBOXONLY)TORTS

No [x] Yes NATURE OF SUIT

CONTRACT PERSONAL INJURY

[ 1110 INSURANCE [ ] 310 AIRPLANE[ ]120 MARINE [ ] 315 AIRPLANE PRODUCT1)130 MILLER ACT LIABILITY[ ]140 NEGOTIABLE [ ] 320 ASSAULT, LIBEL &

INSTRUMENT SLANDER[]150 RECOVERY OF [ ] 330 FEDERAL

OVERPAYMENT & EMPLOYERS'ENFORCEMENT LIABILITYOF JUDGMENT [ ) 340 MARINE

[]151 MEDICARE ACT [ ] 345 MARINE PRODUCT[]152 RECOVERY OF LIABILITY

DEFAULTED [ ] 350 MOTOR VEHICLESTUDENT LOANS [ ] 355 MOTOR VEHICLE(EXCL VETERANS) PRODUCT LIABILITY

I )153 RECOVERY OF [ ] 360 OTHER PERSONALOVERPAYMENT INJURYOF VETERAN'S [ ) 362 PERSONAL INJURY -BENEFITS MED MALPRACTICE

[]160 STOCKHOLDERSSUITS

[X]190 OTHERCONTRACT

[J195 CONTRACTPRODUCT ACTIONS UNDER STATUTESLIABILITY

[ ] 196 FRANCHISE CIVIL RIGHTS

I ] 440 OTHER CIVIL RIGHTSREAL PROPERTY

(Non-Prisoner)[ ] 441 VOTING

[]210 LAND ( ) 442 EMPLOYMENTCONDEMNATION "[ ) 443 HOUSING/

[ ]220 FORECLOSURE ACCOMMODATIONS[ ]230 RENT LEASE & [ ] 445 AMERICANS WITH

EJECTMENT DISABILITIES -[ )240 TORTS TO LAND EMPLOYMENT[ ]245 TORT PRODUCT [ ] 446 AMERICANS WITH

LIABILITY DISABILITIES -OTHER

[ ]290 ALL OTHERREAL PROPERTY

[ ] 448 EDUCATION

Checkif demanded in complaint:

CHECK IF THIS IS A CLASS ACTIONUNDER F.R.C.P. 23

PERSONAL INJURY[ ] 367 HEALTHCARE/PHARMACEUTICAL PERSONAL , j625 DRUG RELATEDINJURY/PRODUCT LIABILITY[ ] 365 PERSONAL INJURY

PRODUCT LIABILITY . . RqflnTHFR[ ]368 ASBESTOS PERSONAL ' ]69 OTHERINJURY PRODUCTLIABILITY

PERSONAL PROPERTY

[ ] 370 OTHER FRAUD[ ] 371 TRUTH IN LENDING

[ ] 380 OTHER PERSONALPROPERTY DAMAGE

[ J 385 PROPERTY DAMAGEPRODUCT LIABILITY

PRISONER PETITIONS[ ] 463 ALIEN DETAINEE[ ] 510 MOTIONS TO

VACATE SENTENCE28 USC 2255

[ ) 530 HABEAS CORPUS[ ] 535 DEATH PENALTY[ ) 540 MANDAMUS & OTHER

PRISONER CIVIL RIGHTS

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

FORFEITURE/PENALTY

SEIZURE OF PROPERTY21 USC 881

LABOR

[ ] 710 FAIR LABORSTANDARDS ACT

[ ) 720 LABOR/MGMTRELATIONS

[ ] 740 RAILWAY LABOR ACT[ ] 751 FAMILY MEDICALLEAVE ACT (FMLA)[ ] 790 OTHER LABOR

LITIGATION[ ] 791 EMPL RET INC

SECURITY ACT

IMMIGRATION

[ ] 462 NATURALIZATIONAPPLICATION

[ ] 465 OTHER IMMIGRATIONACTIONS

CONDITIONS OF CONFINEMENT

& Case No.

ACTIONS UNDER STATUTES

BANKRUPTCY

[ J 422 APPEAL28 USC 158

[ ) 423 WITHDRAWAL28 USC 157

PROPERTY RIGHTS

[ ] 820 COPYRIGHTS[ ] 830 PATENT[ ] 840 TRADEMARK

SOCIAL SECURITY .

[ ] 861 HIA(1395ff)[ ] 862 BLACK LUNG (923)[ ] 863 DIWC/DIWW (405(g))[ ] 864 SSID TITLE XVI[ ] 865 RSI (405(g))

FEDERAL TAX SUITS

[ ] 870 TAXES (U.S. Plaintiff orDefendant)

[ ) 871 IRS-THIRD PARTY26 USC 7609

OTHER STATUTES

[ 1 375 FALSE CLAIMSf 1400STATE

REAPPORTIONMENT[ ] 410 ANTITRUST[ ] 430 BANKS & BANKING[ ] 450 COMMERCE[ ] 460 DEPORTATION[ ] 470 RACKETEER INFLU

ENCED & CORRUPTORGANIZATION ACT(RICO)

[ ] 480 CONSUMER CREDIT[ ] 490 CABLE/SATELLITE TV

[ ] 850 SECURITIES/COMMODITIES/EXCHANGE

[ ] 890 OTHER STATUTORYACTIONS

[ J 891 AGRICULTURALACTS

[ ] 893 ENVIRONMENTALMATTERS

[ ) 895 FREEDOM OFINFORMATION ACT

[ ] 896 ARBITRATION[ ) 899 ADMINISTRATIVE

PROCEDURE ACT/REVIEW ORAPPEAL OF AGENCY DECISION

[ J 950 CONSTITUTIONALITY OFSTATE STATUTES

DEMAND $_ OTHER

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

JUDGE DOCKET NUMBER

Check YES onlyifdemandedincomplaintJURY DEMAND: EYES t-NO NOTE: You must also submit at the time of filing the Statement of Relatedness form (Form IH-32).

(PLACEAN xIN ONE BOX ONLY) ORIGINProceed ^ 2 Removed from 3 Remanded D 4Reinstated or 5 Transferred from Q6 Multidistrict D7Appeal to Distri,Proceeding State Court from Reopened (Specify District) Litigation Judge from

I I 3. all parties represented Appellate Magistrate JudgCourt Judgment

I I b. Atleast oneparty is pro se.

(PLACEAN x.NONEBOXONLY, BAS|S QF JUR|SD|CT|0N IF DIVERSITY ,NDICATBD1 U.S. PLAINTIFF Q2 U.S. DEFENDANT Q 3 FEDERAL QUESTION 04 DIVERSITY CITIZENSHIP BELOW

(U.S. NOT APARTY) ^CITIZENSHIP OF PRINCIPAL PARTIES (FOR DIVERSITY CASES ONLY)

(Place an[X] in one box for Plaintiff and one box for Defendant)

CITIZEN OF THIS STATEPTF DEF

[]1 N1 CITIZEN OR SUBJECT OF AFOREIGN COUNTRY

PTF DEF[]3[]3 PTF DEFINCORPORATED and PRINCIPAL PLACE M 5 r l 5

OF BUSINESS INANOTHERSTATECITIZEN OF ANOTHER STATE KX2 []2 INCORPORATED or PRINCIPAL PLACE [ ]4VW FOREIGN NATION

OF BUSINESS IN THIS STATE

PLAINTIFF(S) ADDRESS(ES) AND COUNTY/IFS)The Estate Of Selena Quintanillac/o Abraham Quintanilla, Jr.5410 Leopard StreetCorpus Christi, TX 78408Nueces County

DEFENDANT(S) ADDRESS(ES) ANDCOUNTY(IES)UMG Recordings, Inc.c/o The Corporation Trust CompanyCorporation Trust Center1209 Orange StreetWilmington, DE 19801New Castle County

DEFENDANT(S) ADDRESS UNKNOWND[JRESENTATI0N 'S HEREBY MADE AT' AT THIS TIME' ' HAVE BEEN UNABLE. WITH REASONABLE DILIGENCE TO ASCERTAINRE9IBENCE ADDRESSES OF THE FOLLOWING DEFENDANTS- uiLitafcNOfc, TO ASCERTAIN

Q Productions, Inc.5410 Leopard StreetCorpus Christi, TX 78408

Nueces County

UMG Recordings, Incc/o CT Corporation111 Righth AvenueNew York, NY 10011New York County

Check one: THIS ACTION SHOULD BE ASSIGNED TO: WHITE PLAINS(DO NOT check either box if this a PRISONER PETITION/PRISONER CIVIL RIGHTSCOMPLAINT.)

DATE 3/P//r SIGNATURE OF ATTORNEY OF RECCf^^^^ ADMITTED TO PRACTICE IN THIS DISTRICT[] NO

{/ijMANHATTAN

[]6 []6

RECEIPT* M YES (DATE ADMITTED Mo. JL Yr /?$2 )Attorney BarCode# ' * ^

MAG. JUDGE GORMSTEI. is so Designated.

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

Magistrate Judge

Ruby J. Krajick, Clerk of Court by Deputy Clerk, DATEDUNITED STATES DISTRICT COURT (NEW YORK SOUTHERN)

UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK

15 CV 2447JUDGE COTE

THE ESTATE OF SELENA QUINTANILLA,by Abraham Quintanilla, Jr., its duly appointedAdministrator, and Q PRODUCTIONS, INC.,

Plaintiffs,

v.

UMG RECORDINGS, INC.,

Defendant.

Civil Action No.

COMPLAINT FOR BREACH OFCONTRACT; BREACH OFIMPLIED DUTY OF GOOD FAITHAND FAIR DEALING; anACCOUNTING; andDECLARATORY JUDGMENT

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 theirattorneys, 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. no

2. 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 betweenthe Plaintiffs and Defendant.

5. This Court has personal jurisdiction over Defendant in this matter asDefendant 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 basedprovides that "[a]ll claims, disputes or disagreements which may arise out of theinterpretation, 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 Courtslocated in New York City."

FACTUAL BACKGROUND

The Selena Agreements

7. SelenaQuintanilla ("Selena"), known as the "Queen of Tejano Music", wasan 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 asbeing"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, andaudio-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 LatinRecording Agreement

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

Agreements" hereinafter). A true and corrected copyof 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, paragraph9.04 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 ofmaster 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 ofmaster 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 ofphysical 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%) ofUMG'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

13

S. MAYALL, ESQ. (0615)Balin Adler & Hyman, LLP

Merrick Avenue, 9th FloorEast Meadow, NY 11554Tel: (516) 296-7000Fax:(516)296-7111jmayall@certilmanbalin.com

Attorneyfor Plaintiffs

(.(. A ?5EXHIBIT "A

llullfaatui. CnU/onlia W)0HS^2

Contract No. {jij\- 9)029)

April 2, 1993W

Mr. Abraham QuintanillaP.O. Box 5421

Corpus Christi, Texas 78465-5421

RE: RECORDING AGREEMENT BETWEEN CAPITOrWEMI LATIN AND SELENAODINTANILLA P/lC/a "SELENA"

Dear Mr. Quintanilla:

The purpose of this letter is to set forth our agreement enteredinto on this 2nd day of April, 1993, in the County of San Antonio inthe State of Texas for "Selena's" exclusive personal services as arecording artist under the following terms and conditions:

1. Engagement. Term and Product:

a. Capitol-EMI Latin Records, a division of CapitolRecords Inc. (referred to below as "we" or "us") hereby engages"Selena" (referred to hereafter as "artist"), and artist agrees toprovide to us, her exclusive personal services as a recording vocalist and musician throughout the universe.

b. The term of this Agreement shall be for an InitialPeriod of Three (3) years for Three (3) Albums. The Initial Periodwill commence on the date set forth above and will continue until.thelast day of the twelfth (12th) full calendar month following ourcommercial release in the USA of the Third of Three Albums to berecorded and delivered by artist in the Initial Period. Artisthereby grants us One (1) Option to renew this Agreement. The OptionPeriod shall run from its commencement until the last day of thetwelfth (12th) full calendar month following our commercial releasein the USA of the Album to be recorded and delivered by the artistduring the Option Period. The Option Period shall run consecutivelyfrom the expiration of the Initial Period. The Option shall bedeemed to have been exercised and the term hereof automaticallyextended thereby, unless we shall have given artist notice of termination prior to the expiration of the then-current period of thisAgreement.

c. In the Initial Period of this Agreement, artist shallrecord and deliver to us sufficient masters to comprise at leastThree (3) Albums (as the term is defined below). In the OptionPeriod, if any., artist shall record and deliver to us sufficientmasters to coisprise at lfeast Otte (1) Album (as that term is definedbelow).

d. In Addition to the forgoing, we shall have the optionto 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 theapplicable USA release date of an Overcall LP shall be used forpurposes of determining the length of the Initial Term and the OptionPeriod- By way of example, but not in limitation thereof, if duringthe Initial Term which calls for Three (3) LP-masters, an Overcall LPoption is exercised, then the First Option Period shall commence uponthe date one (1) year from the U.S. commercial release of the Fourth(4th) LP-master.

2. Recording:

a. We shall mutually agree on all repertoire to berecorded, instrumentation, production and all other aspects of therecording of masters hereunder. In the event of a disagreement onany of these elements, our decision shall control. Artist herebyacknowledges and agrees to exclusively deliver Spanish languagerecordings during the term of this agreement. The Spanish languagerecordings may contain English language words or phrases as long aseach trac3c of any LP-recording is primarily in Spanish.

b. We shall establish a recording budget and pay allordinary and necessary costs that have been pre-approved by us torecord the Albums hereunder. All recording costs, artist advances,producer advances and other expenses of recording the Albums whichare paid or incurred by us shall be deemed advances to artist, andshall be fully recoupable from royalties otherwise payable by us toartist. The only compensation to which the artist shall be entitledin consideration of the rendition of services hereunder, shall be theadvances 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 recordedand delivered in the Initial Period. The first LP-master, a "Live"recording, shall be delivered in March 1993. The remaining albums tobe delivered in Initial Term shall be as follows: The 2nd LP-mastershall be delivered not later than One (1) year following the date ofthis Agreement; The 3rd LP-master shall be delivered not later thanOne (1) year following the date upon which records derived from theSecond LP-master delivered by artist to us are commercially releasedin the USA. Artist shall deliver the Album to be recorded anddelivered in the Option Period, if any, to us within three (3) monthsfollowing the commencement of such Option Period. Times of deliveries of Albums hereunder are of the essence of this Agreement. Allmasters embodied on Albums hereunder shall be original recordings ofselections approved by us which shall not theretofore have beenrecorded by artist. All masters shall be technically and commercially acceptable to us for the manufacture and sale of records andshall be of the same quality and style as the recordings whichorigina.lly induced us to enter into this Agreement for artist'sservices.

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

the Initial Term ("Overcall LPs") and one (l) during the OptionPeriod ("Overcall LP"). The Overcall LP is to be delivered withinthree (3) months from notice of exercise of the Overcall LP option.

4.. video: At our request, artist agrees to perform at sessions 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 shallmutually agree on the video budget to produce these Tapes. We shallhave the exclusive, perpetual and universe-wide rights to all suchTapes for all promotional and commercial uses. Fifty Percent (50%)of the production costs of the Tapes ("Video Costs") shall be recoup-able from all royalties otherwise payable hereunder.

5. Rights Granted to Ds: We shall have the exclusive, perpetual and worldwide ownership of all masters recorded hereunder, all ,copyrights therein and all records manufactured therefrom, whichownership shall entitle us among other things to the following: Theexclusive right to use and control the masters and the performancesembodied therein; and the exclusive, perpetual and worldwide right tomanufacture, advertise, sell, lease, license, synchronize with anymedium, or otherwise use or dispose of masters and records manufactured therefrom, in any field of use upon such terms and conditionsas we may determine, or refrain therefrom. We shall own all copyrights in the masters recorded hereunder, which shall be consideredcontributions to a collective work, and works made for hire; and weshall have all rights of the owner of copyright specified in 17U.S.C. 106. We shall have the perpetual right to use and publishand to permit others to use and publish your name (including anyprofessional names heretofore or hereafter adopted), your likeness,and biographical material concerning you, for advertising, marketing,merchandising and other trade purposes in connection with the saleand exploitation of the masters and records produced from the masters, or to refrain therefrom. We shall have the right to releaserecords manufactured from the masters recorded hereunder under thename "Capitol/EMI Latin" or such other trade name or mark as we mayelect. We shall have the right to sell and exploit records on whichmasters recorded hereunder are coupled with masters embodying performances of other artists.

6. Reco-upable Advance:

a. We shall pay artist Forty Thousand Dollars ($40,000)for the first LP-master, a "Live" album.

b. We shall pay artist the sura of Seventy-Five ThousandDollars ($75,000), for each subseguent LP-master delivered by artistto us, from which all recording costs shall be paid. The subsequentadvances shall be payable as follows: One-half (1/2) or Thirty-SevenThousand Five Hundred Dollars ($37,500) within Thirty (30) days aftercommencement 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, publishinginformation) are delivered by artist to us during either the InitialPeriod, Option Period or any such Overcall Period, have been commercially released in the U.S. ("the Recoupable Advance"). Said pay-

ments, as described, shall be deemed an advance against, and shall befully 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 unitsales performance in the United States and Puerto Rico as follows:

Unit Sales Additional CumulativefUnits i- Advance Advance

0 - 150,000 -0- $ 75,000150.000 - 200,000 $25,000 $100,000200.001 - 250,000 $25,000 $125,000250,001 - 300,000 $25,000 $150,000300,001+ $50,000 $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 ofthe copyright ownership provided herein, our right to use artist'sname and likeness, and the other agreements, representations andwarranties contained herein, we shall pay artist in connection withall masters recorded and delivered hereunder, a royalty on net salesof records at the rates specified below. The royalties set forth inthis paragraph are "all in," and any producer royalties shall bededucted from these amounts. The royalties will be payable on asemi-annual basis, less a reasonable reserve for returns, rebatesand/or credits:

USA Full Price Albums:

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

$1.25 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 orderand 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 otheruses pursuant to licenses to third parties: 50% of otherwise applicable rate applied to the amount per record actually received by usfor Artist's pro-rated share (i.e. pro-rated among all royaltyparticipants) from applicable third party licensee.

e. Record club and special market free goods, promotionalrecords, sales inducement records, records sold as scrap and closeoutrecords: No royalty.

f. Premiums: 50% of otherwise applicable rate, appliedto the amount per record actually received by us, less any commissions, taxes, shipping and delivery expenses.

g. Foreign Sales: Royalty rates on sales outside the USAand Puerto Rico shall be one-half (1/2) of the rates set forth inParagraph 8.a. above. Royalties shall be computed in the currency ofthe applicable foreign country at the same rate exchange as we arepaid or credited, and shall be paid only after receipt by or creditto us in the USA. Any royalties payable in so-called "blocked currency" shall be placed in an account in your name in the applicablecountry. 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 whichcase your royalty rate shall be adjusted such that, at the time ofthe conversion, the royalty, in pennies, payable on a retail basisshall equal the royalty, in pennies, otherwise payable hereunder.

i. In the event that masters recorded hereunder arecoupled with masters embodying the performances of other artists, theroyalty payable to you shall be prorated on the basis of the numberof othe:r royalty-bearing masters embodied on such records.

9. Recoupment: All recording costs, except those explicitlydesignated otherwise, artist and producer advances and fifty percent(50%) of video costs which are paid or incurred by us, throughout theterm of this agreement, shall be fully recoupable from all royaltiesotherwise payable hereunder. All costs will be cross-collateralized.

10. Royalty Statements:

a. We shall render you a statement of royalties payablehereunder within sixty (60) days after the first day of January andJuly of each year (or such other semiannual payment dates as we mayadopt) for the preceding six (6) month period and will pay suchroyalties, less reserves and any then unrecouped advances or otherrecoupable payments.

b. Artist or a certified public accountant on her behalf,may, at: artist's sole expense, and at reasonable intervals, examineour books pertaining to the albums released hereunder during ourusual business hours and upon reasonable notice. Our books relatingto activities during any accounting period may be examined onlyduring the two (2) year period following service by us of the statement far said accounting period.

c. You shall be foreclosed from maintaining any action,claim or proceeding against us with respect to any statement oraccounting due hereunder unless such action, claim or proceeding iscommenced 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 theapplicable publisher(s) or administrator(s) to grant us mechanicallicenses for the USA and Canada for each different Non-Owned Composition embodied in a record manufactured hereunder at the respectiveUSA and Canadian statutory rates for a musical composition with aplaying time of five (5) minutes ("Standard Musical Composition") ineffect as of the date of this Agreement ("Statutory Rate").

b. Owned Compositions: Artist hereby grants to us mechanical licenses for the USA and Canada for each different Owned Composition embodied in a record manufactured hereunder at seventy-fivepercent: (75%) of the statutory Rate (as defined above) .

c. Ceilings: The combined rates for all of the differentmusical compositions in an album shall not exceed the total of ten(10) times the Statutory Rate for a Standard Musical Composition andthe combined rates for all of the different musical compositions in asingle record shall not exceed two (2) times the Statutory Rate for aStandard Musical Composition.

d. We shall have no obligation to pay mechanical royaltieson promotional records, sales inducement records, so-called cut-outs,or on any other records as to which no record royalty is payablehereunder. Artist agrees to indemnify and hold us harmless fromrates in excess of the amounts specified in this paragraph. If wepay any such excess, such payments shall be a direct debt from artistto us, which we may recover from royalties or any other monies otherwise payable by us to artist hereunder.

13. Definitions:

a. The noun "record" shall mean any device by which soundmay be recorded for later transmission to listeners, whether nowknown 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 discequivalent thereof, embodying thereon not less than eight (8) selections nor less than thirty (3 0) minutes of playing time.

c. The term "net sales of records" shall mean one-hundredpercent (100%) of the aggregate number of records sold for which we(or our affiliate) has been paid or credited in each applicableroyalty category, after deducting returns, rebates and credits onrecords- returned in each royalty category.

d. The words "budget line record" mean a record which, onthe date of its release as a non-top line record, bears a box-lotprice to dealers of three-fourths (3/4) or less of the then-currenthighest box-lot price to dealers for a top-line record in thatparticular configuration.

e. The words "mid-line record" mean a record which, onthe date of its release as a non-top line record, bears a box-lotprice 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 fora top line record in that particular configuration.

f. The term "Owned Composition" shall mean each musicalcomposition that is written by artist in whole or in part, or ownedor controlled, directly or indirectly, by artist in whole or in part,or by a publishing company owned or controlled by artist directly orindirectly, 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 notdone or permitted anything to be done which may curtail or impair anyof the rights granted to us herein. Neither the execution anddelivery of this Agreement nor the performance by artist of any ofthe obligations hereunder will constitute a violation or breach of,or a default under, any agreement or restriction of any kind to whichartist is a party or by which artist is currently bound.

b. Artist acknowledges that her services in the recordfield are of a special, unique, unusual, extraordinary and intellectual character which gives them a peculiar value, the loss of whichcannot reasonably or adequately be compensated for in damages in anaction at law and that a breach of artist's obligations hereunderwilj. cause irreparable injury and damage to us, entitling us toinjunctive and other equitable relief.

c. During the term of this Agreement, including allrenewals, extensions, days of suspension, and all periods added byoption exercises, amendments or by other agreements, (i) artist willnot perform for the purpose of making records for anyone other thanus; and (ii) artist will not authorize or permit the use of her nameor group name, likeness, or other identification for the purpose ofdistributing, selling, advertising, or exploiting records for anyoneother than us.

d. Artist will not perform any of the repertoire embodiedin the masters recorded and delivered hereunder for the purpose ofmaking 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 ofaction, damages, expenses, costs of defense (including reasonableattorney's fees and court costs) and other costs arising out of or inany way related to any breach or claimed breach by artist of anyrepresentations, warranties or agreements contained herein.

ie. Notices: All notices which either of us may be required ordesire to serve upon the other shall be served by depositing thesame, by certified or registered mail, return receipt requested,

postage prepaid, in any mail box, chute or other receptacle authorized by the USA Post Office Department for mail, addressed to theapplicable party at the address for such party set forth herein. Thedate of service of any notice so deposited shall be the date ofdeposit.

;17- Notice and Cure: No failure by us to perform any of ourobligations hereunder shall be deemed a material breach of thisAgreement until artist has given us written notice of such breach andsuch breach has not been corrected within forty-five (45) days afterthe giving of such notice.

18.. Applicable Law: This Agreement and all matters arisingfrom or related to it shall be governed by the laws of the State ofTexas applicable to contracts entered into and wholly performedtherein. ,.._.

Please acknowledge agreement to the foregoing by executingeach original of this letter and returning them to our attention.Once' they are executed here, an original will be sent to you onbehalf of the artist. We look forward to a mutually beneficialassociation.

Very truly yours,

Capitol-EMI Latin Records

Nd.

Abraham Quibtanilla

Dave PalacioExecutive Vice President

(>"* 3 "?3Date

/Date

VI

cAi-aoz&AMENDMENT TO RECORDING AGREEMENT

THIS AMENDMENT TO RECORDING AGREEMENT (the "Amendment") is made andentered 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 (heEstate 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 recordingagreement, 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 certainrespects.

NOW, THEREFORE, the parties hereby agree as follows:

1. (a) The royalty rates set forth in Paragraph 8 of the Recording Agreementunder the heading "USA Full Price Albums' shall be increased to the following amounts ("NewRates") with respect to sates and returns of the albums listed on Schedule "A", attached hereto andmade 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 awholesale price to dealers of $5.24 per Cassette, and $9.14 per Compact Disc. Such royalty ratesshall be increased ordecreased in proportion to any Increase above ordecrease below the foregoingwholesale prices to dealers of Cassettes and/or Compact Discs, determined as of thecommencement of each accounting period. [Byway of example only: (i) if, as of the commencementof any accounting period, the wholesale price to dealers of a Cassette has increased to $5.42, theroyalty rate for sales ofUSA Full Price Albums in the form ofCassettes in that accounting periodandthereafter shall increase to $1.16 (5.42 divided by 5.24 multiplied by $1.12); (ii) if, as of thecommencement of any accounting period, the wholesale price to dealers of a Compact Disc hasincreased to $9.66, the royalty rate forsales of USA Full Price Albums in the form of Compact Discsin thai accounting period and thereaftershall increase to $1.59 (9.66 divided by9.14 multiplied by$1.50); and (iii) if, as of the commencemenl ofanyaccounting period, (he wholesale price to dealersof a Compact Disc has decreased to $8.78, the royalty rate for safes of USA Full Price Albums in the

128982.04CH12(d?.F6

JfU4M^

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

(c) The New Rates shall apply on a pro-raled basis only to those masterrecordings embodied on the Schedule A Albums which were recorded and delivered to EMI byLicensor pursuantto the Recording Agreement, and not to anyother master recordings which maybe 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 "AdditionalLicensed Masters") for the following purposes, upon all the terms and conditions set forth in theRecording Agreement, as amended: (i) to manufacture, distribute, advertise, promote and sell the"NewAlbum" (as defined below) and singles derived from the NewAlbum; (ii) to produce, distribute,advertise, promote and broadcastpromotional music videos in connection with the NewAlbum andsingles derived therefrom; and (iii) to couple the Additional Licensed Masters on records with othermaster recordings embodying Artist's featured performance (but not with master recordingsembodying the featured performance of artists other than Artist). Licensor acknowledges that IheAdditional Licensed Masters are not intended to satisfy any other obligations Licensor may haveurider the Recording Agreement to deliver master recordings embodying Artist's featuredperformance.

(b) If EMI fails to release (he New Album in a particular territory prior toMarch 1.1997 ("Unreleased Territory"), at Licensor's written request EMI shall sublicense its rightshereunder in and to the New Album for (he Unreleased Territory to a third-party record distributorselected by Licensor, and shall credit licensor's royalty account under the Recording Agreement with50% of EMI's net receipts under each such sublicense.

3. EMI and Licensor acknowledge that it is their intention initially to release theAdditional Licensed Masters on a new album of Artist's recordings entitled "Siempre Selena" ("NewAlbum") consisting of the Additional Licensed Masters and the four (4) master recordings owned byEMI listed on Schedule "C attached hereto and made a part hereof ("EM! Masters"). The followingprbvisions shall apply to the New Album:

a. The royalty rates set forth in the Recording Agreement, as modifiedIn 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 embodiedori the New Album.

b. With respect lo the EMI Master "Siempre Hace Frio", (i) the royalty ratefor 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 ("USASHF Rate"), pro-rated based on the number of recordings on the particular album, and (ii) the royaltyrate for full-price sales outside the United States of alt configurations of albums (including, withoul

126982.04GH/012I97F6

limitation, the New Album) shall be 50% of the USA SHF Rate, pro-rated based on the number ofrecordings on the particular album. A packaging deduction of 20% of the SRLP for Cassettes, and25% cf the SRLP for Compact Discs, shall be deducted in computing royalties. For purposes of thisparagraph 3b., the term "SRLP" shall mean 130% of EMI's or EMI's licensee's published price todealers 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 forfull-price sales in (he United States of all configurations of albums (including, without limitation, theNew 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 UnitedStates-of all configurations of albums (including, without limitation, the New Album) shall be 85% ofthe USA ALM Rate, pro-rated based on the number of recordings on the particular album. Apackaging deduction of 10% of the applicable wholesale price shall be deducted In computingroyalties for all configurations of albums. The foregoing royalty rates shall apply to all configurationsof album records (including compact discs) in general distribution as of the date hereof, and shallnot be reduced byreason of any"standard freegoods" (but may be reduced by any special programfree goods and/or discounts).

d. Licensor's royalties set forth In 3a., 3b. and 3c. above include allroyalties payable to third parties. Notwithstanding the foregoing, with respect to (he EMI Masterentitled "SiempreHace Frio", the royalty rate set forth in 3b. above includes royalties payable to theproducer of the master, J. Hernandez (which royalties shall be deducted from the royalties otherwisepayable to Licensor pursuant to 3b. above), but does not include royalties payable to New LineCinema, payment of which shall be EMI's responsibility.

e. EMI'snormal policieswith respect to the establishment and liquidationof royalty reserves shall apply to all sales of the New Album.

f. The term "Owned Composition" shall mean each musical compositionwhich is (i) written, inwhole or in part, byArtist, or A.B. Quintanilla III, or any member of Artist's band(including, without limitation, Ricky Vela orPete 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 theforegoing, orby any publishing company owned orcontrolled, directly or indirectly, by Licensor orbyanyof the foregoing. Each Owned Composition shall be licensed to EMI for the USA at: (i) 85%oftheStatutory 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 of300,000 units.

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

h. Licensor may notuse or exploit, or authorize others to use or exploit,theAdditional Licensed Masters on anyform of (i) audio-only record for a period of three (3) years

128982.04GH/012197.FE 3

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 embodyor;au(horize others to embody more than two (2) Additional Licensed Masters on any one (1) audio-only record orany one (1) audio-visual device. Notwithstanding the foregoing, nothing contained inthis subparagraph 3h. shall impose any holdback period on the release ofa home video device ofatheatrical motion picture, television motion picture, or other television program which, under licehsefrdm Licensor, embodies anyAdditional Licensed Master. Exceptas set forth herein, Licensor shallnotbe restricted from using or exploiting the Additional Licensed Masters inany 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, allartwork: 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 Inconnection with theNew Album (which EMI shall have no obligation to do), the budget and concept shall be subject toLicenser's and EMI's mutual approval. Only fifty percent (50%) of the costs of any such video shallbe recoupable from sound-only record royalties payable to Licensor with respect to (he New Albumor otherwise payable to Licensor under the Recording Agreement.

k. Upon execution hereof, EMI shall pay Licensor the sum of $400,000as an advance ("NewAlbumAdvance") recoupable only from royalties otherwise payable to Licensorin connection with Ihe New Album and other permitted exploitation of the Additional LicensedMasters, including, without limitation, all such royalties otherwise payable to Licensor with respectto the accounting period ending December 31, 1996. Notwithstanding the foregoing, if, afterrecoupment of the New Album Advance, Licensor's royalty statement for any accounting period withrespect to the New Album and the Additional Licensed Masters would otherwise show a negativebalance, EMI shall have the right to recoup the full amount of such negative balance from anyroyalties 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 RecordingAgreement.

A. Licensor represents and warrants that: (a) it has the right to enter into thisAmendment 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 donewhich may curtail or Impair any of the rights granted to EMI herein; (c) neither the execution of thisAmendment nor (he performance by Licensor of any of its obligations hereunder will violate orinfringe the rights of any thirdparty; and (d) neither the Additional Licensed Masters nor any materialerjibodied therein will violate orinfringe the rights of any third party.

12*982.046H/01219'.RS

' 5. The provisions of Paragraphs 15, 16, 17 and 18 of the Recording Agreementare incorporated herein by this reference a& iffully set forth herein, provided that (a) in Paragraph15, the word "Licensor" shall be substituted wherever the word "artist" appears and (b) in Paragraphs15 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 samemeaning sel forth in the Recording Agreement Courtesy copies of all notices to Licensor under IheRecording Agreement shall be sent to Weinberg, Lopez, Lange, Brisbin &Cuddy, 15250 VenturaBoulevard, 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 theRecording Agreement.

6. Except as modified by this Amendment, the Recording Agreement shallremain unchanged and in full foree and-effect with respect to all master recordings heretoforedelivered thereunder.

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

EMI LATJALRECORDS

Jose^ Behar, President Dave Palacio, Exec. V.P.

Date: 1. /

Schedule "A"

Schedule A Albums

Album Title Release Date Cataloa No.

"Live" May 1993 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" April 1995 34639

"Dreaming of You" July 1995 34123

1289S2.0IGfHA>121f>7.f6

IT

Schedule "B"

Additional Licensed Masters

Title Writer(s) Publishers)

"Soy Amiga" R. Vela Lone Iguana Music

"Como Quisiera" A.B. Quintanilla 111 Phat Kat GrooveR. Vela Lone Iguana Music

A Million To One" P. Medley EMI Music

"Costumbres" Juan Gabriel unknown

"Cien Anos" Fuentes/Cervantes unknown

"Ya No" A.B. Quintanilla III Phat Kat GrooveR. Vela Lone Iguana Music

128982.046H/012197.F6

r~

Title

Schedule "C"

EMI Masters

Writerfs)

"Siempre Hace Frio" Cuco Sanchez(Under license from New Line Cinema)

"Only Love" unknown

"Tu Robaste Mi Corazon" A.B. Quintanilla IIR. Vela

"No Quiero Saber" A. B. Quintanilla IIIPete Astudillo

12^982.04GH(012197.F6

Publisherfs)

Peer International

Nanacub Music/

EMI Screen Gems

Phat Kat Groove

Lone Iguana Music

Phat Kat GroovePeace Rock Music

U"T>"EXHIBIT "B

AGREEMENT -made as of this 2Bth day of June, 1993, by andbetween 5BK RECORDS a division of EHI RECORDS GROUP, 1290 Avenueof trie Americas^JJAW^ork, New York 16104 (hereinafter'Company"), anc^PBI^'euin'tariilJty

2. TERM.

2.01 The Term shall consist of an Initial Period and of theOption Periods (defined below) for which Company shall haveexercised the options hereafter provided. The Initial Period andeach Option Period are each hereafter sometimes referred to as a"Contract Period". The Initial Period shall commence on the datehereof and shall continue until the earlier of the dates referredto in paragraphs (a) and (b) immediately below:

(a) the date ten (10) months after the Delivery toCompany, as defined in paragraph 19.09 below, of the fullyequalized, digital tape Masters to be used in manufacturing thePhonograph Record units to be made for distribution in the UnitedStates from the last Master Recordings made in fulfillment ofyour Recording Commitment for the Contract Period concerned underArticle 3 below; or

(b) the date nine (9) months after the initialcommercial release in the United States of the Album required tobe delivered in fulfillment of your Recording Commitment for theContract Period concerned;

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

2.02 You grant Company six (6) separate consecutive optionsto extend that Term for additional Contract Periods ("OptionPeriods") on the same terms and conditions, except as otherwiseprovided herein. Company may exercise each of those options bysending you a written notice not later than the expiration dateof the Contract Period which is then in effect (the "CurrentContract Period"). If Company exercises such an option, theOption Period concerned will begin immediately after the end ofthe Current Contract Period and shall continue until the earlierof 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 shalldeliver to company one (1) Album. During each Option Period youshall record for and you shall deliver to Company one (1) Album.The Albums delivered hereunder in fulfillment of your RecordingCommitment are sometimes referred to collectively herein as the"Committed Albums" and individually as a "Committed Album". TheCommitted 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.

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

4. RECORDING PROCEDURES.

4.01 You shall designate and submit to Company for Company 'sapproval the producer of each of the Masters, all otherindividuals rendering services in connection with the recordingof those Masters, the Musical Compositions or other Selections ormaterials which shall be embodied in those Masters, the studiosat which those Masters shall be recorded, and the dates ofrecording of those Masters (the "Recording Elements"). You shallalso prepare and submit to Company in writing for Company's'approval a recording budget for those Masters in such detail asCompany shall reasonably require (the "Recording Budget") atleast fourteen (14) days before the planned commencement ofrecording. Company shall not withhold its approval of aRecording Budget by reason of its overall amount if such overallamount is less than a sum equal to eighty-five (8S%) percent ofthe applicable Recording Fund less any applicable previously paidAdvances. You shall advise Company of the content of each medleybefore it is recorded. Company shall not be deemed to beunreasonable in rejecting any request to begin recording anyAlbum 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 byCompany. No recording sessions shall be commenced nor shall anycommitments be made or costs incurred hereunder with respect toany Masters until and unless Company shall have approved inwriting each Recording Element and the Recording Budget for thoseMasters. If Company shall disapprove of any Recording Elementsubmitted by you or the Recording Budget submitted by you, thenat Company's election, Company may designate one (1) or moreRecording Elements in substitution for any Recording Elementsdesignated by you and disapproved by Company ("SubstituteRecording Elements"). Such Substitute Recording Elements shallbe subject to your reasonable approval, provided, however, in theevent of a dispute, Company's decision shall be final.

4.02 (a) You shall notify the appropriate Local of theAmerican Federation of Musicians in advance of each recordingsession.

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!bi You will comply w*^h the following procedures inconnection'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 beployed by you or tn* applicable producer in cannecticn with thesession to couple'-* an3 si.gr. the EMPLOYEE IHPORHATIOH MIDvt3?I!"I">-TI0H t -eaployec"! iection of & 0.5- Immigration andMatureliSaticn Service Employment Eligibility Certificate (ForaI-*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* EMPUHftHREVIEW UTO vnEBIFlCATlOK (~ employ*!""} section of each suchCertificate; and

(iii) Kou will attach eopie-s. of _thedocuments establishing identity e.n4 mptioyent eligibility whichvo'i examine in accordance with the instructions in the eployri*ctin-

If in',, surr. person is s-.caged during a sesslart you illcoisply wiw!". Sviciec* iO'-.s i. through .. 11 i' aoove, witr, respect tcfiat per^T!, s^ettre ffrc rcrders any sen-'ices

.;, Vi^ rfiii ret permit ary sue. pernor- yno failsto complete the esplsyee stccior.. -Z to furnish yon with therequired iscuin-ertatirr to rerviei any services ir- conf-tcf. wn wit*.Recording* to o* nar< carded.

,; * , j'i-L. will ccaply vxth any rev^irj :tid-ri.ticr.si vtrificatisr- and ^ecur *-*-&tir riirc.reBants zi wMChCop&ny aflviafis you .t the future

,5 i Upcn yo-jr resonari.e retpjfc'_. ^6 *clciy **ar, sccosaoDstior. tc- jtjmi , C&ap*ry'* * i *. aflB'u4't'4* if ttaftshall 3tist Artist r cccp^yi-no vf. t*r piovinsr.* of th*sparaarapn i.eilfct 'Uctviti-sta^sintj t*e fnreqit.1..";. !*"requirements set fortt, i*-. tms paiasjrap^ 4 CS?''t, e?-ij*1 reSAirsolely 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",

(d.) You shall timely supply Company with all of theinformation Company reasonably needs in order: (1) to makepayments due in connection with such Recordings; (2) to complywith any other obligations Company may have in connection withthe making of such Master Recordings; and (3) to prepare torelease Phonograph Records derived from such Master Recordings.Without limiting the generality of clause (2) of the precedingsentence:

(1) You shall furnish Company with allinformation Company requires to comply with its obligations underCompany's union agreements, including, without limitation, thefollowing;

(i) If a session is held to record newtracks intended to be mived with existing tracks (and if suchinformation is requested by the American Federation ofMusicians), the dates and places of the prior sessions at whichsuch existing tracks were made, and the AFM Phonograph RecordingContract (Form "B") number(s) covering such sessions;

(ii) Each change of title of any.compositionlisted in an AFM Phonograph Recording Contract (Form "B") ; and

(iii) A listing of all the musicalselections contained in Recordings Delivered to Companyhereunder; and

(2) vou will furnish Company with all of theimmigration control documentation required by subparagraph4.01(b) above, at the same time as the AFM or AFTRA sessionreports, tax withholding forms, and other documentation requiredby us in order to make the payments to the session musicians andother employees concerned, if any

(e) (i) All Master Recordings shall be recorded underCompany's current Phonograph Record Labor Contract with the AFM;all musicians who render services in connection with therecording of such Master Recordings (including instrumentalists,if any) will be paid by Company, on your behalf, the scale setforth 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 areembodied in the Master Recordings will be paid by Company, onyour behalf, the rates applicable under the current AFTRA Code ofFair Practices for Phonograph Recordings, Company shall, on yourbehalf, if necessary, also pay to the AFTRA Pension and WelfareFund any contribution required to be made under the AFTRA Codebased on compensation to other performers whose performances areembodied on the applicable Master Recordings recorded hereunder.

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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 wtito Conpiny. and aay be enforced try AFM ar.s.or AFTRA or theirre*pp#ctiv* designees, as the case &> be. ard ov Company.

;iv) Vou shall furnish at sn* 11 raut> tfwaoplicable Producer to fumisn rospapy wit*, ccpiet of ill ufuot,contracts md/sr umon sess^an repayts so tRat li.i pAyBACt* *4Vbe made Oy Company, on your behalf in timely fa;en t n theproper parties tnereuncer : and it ye^ tail to do sc vt.tr> theresult th*t- Cowpany ;S teaiiirea tt way any penalty nw* for *sfcmqa l&te payment under the applicable uniar, agreements, suchpayments shall be a direct debt fras you to Company wr.;cn maddition to any ether raMy Company a&y have, Cowtwmy payrecover 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 promptlyafter their con-plot-iOT, All original session tapes and anyderivatives cr teprocuctioris tJierec* snail &e delivered toCompany coftcurrertl,-, or. at CoBparsys elsctior., wii^tamed at atecordmo. stud.; or etner .o=*tiOf- de* s.s;r.atea ay coopary , irCompany' sn& .provide; *urth*t, tr.at if a-.y ras-.er ;s-Draerci'aiiy and tech^iiolly aatisiactpry uhe*' delivered toCono*Tiy , a^d tatpany nevertheless requests that van; re-recordjuch Selection, ipv rcfs incurred i r, ccrnection therewith .shallnot t>e deducted fr-: the applicable Eecorslnq F"jna i'6ut shall tittvtated as recoupable S#c^ra ir.s Costs nonetheless'.

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such "label copy" shall include, without .limitation JA) thetitle, recording daces, timing, publisher(s) songwriter(5|,perDrer(s) and composer(s) of each musical composition embodiedon 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 consentsfincluding, without limitation, all written consents in connectionwith Embodied copyrighted Materials (as defined in paragraph13.04(6)- below) j (v) all mechanical and first-use licenses Coreach wasleal composition embodied in the Master Recording at therate specified herein fit being understood that: (A) as betweenCompany and you.. Company shall be responsible for preparing theactual paperwork, in connection therewith! (B) notwithstandinganything to the contrary contained in this paragraph 4.01(b), youshall obtain and deliver all first-use licenses and: licenses torany so-called "samples11 for non-controlled Compositions recordedhraundir; and (C) notwithstanding anything to the contrarycontained in this paragraph 4.03(bi, you shall not be responsiblefor securing any mechanical license for a musical composition ifsuch composition was initially submitted to you by Company? r and(vi> all liner notes, approved artwork, and credits for allconfigurations of records, upon your reasonable request, andsolely as an accommodation to you., Company' s A ft administrationstaff shall assist Artist in complying with the provisions ofthis paragraph 4.03(&}, |Notwithstanding the foregoing, therequirements set forth in this paragraph 4-D3fb) shall ramainsolely Artist's responsibility.;)

(c> You farther agree to irrevocadblj1 direct m writingthe person who has possession of any and all tapos of masters ordigital roasters recorded hereunder that all such tapes andmasters ate Company's property and that such person shall beobligsted to deliver such tapes and masters to Company upon itswritten request.

so4 Each Master shell e,stbody the Artist's perfornance asthe sola featured artist of a single Musical Compositionpreviously unrecorded by the Artist and shall be recorded in itsentirety in a recording studio. Mo Masters shall be recorded inwnoie or in part at live concerts or other live, performancesunless an authorized officer of Company agreee to the contrary inwriting. 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 Companyotherwise agrees to the contrary in writing. You shall notrecord or deliver hereunder, nor shall company be obligated toaccept. Masters constituting a Multiple Album. However, if youshall do so and Company shall accept those Masters hereunder,than, at Company's election, for ths purpose o calculating thenuaiber of Masters recorded ana delivered hereunder, those Masters

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shall be deemed to be only one (1) Album. Masters deliveredhereunder shall not contain selections designed to appeal tospecialized or limited markets including, but not limited togospel, Christmas and/or children's music (unless otherwiseagreed in advance and in writing by Company).

4.05 Any Masters which are not recorded or delivered in allrespects in accordance with the material terms hereof shall not,unless Company otherwise consents in writing, apply towards thefulfillment of your Recording Commitment. Notwithstanding theforegoing, if you deliver an Album which is the subject of anythird party claim(s) but which is otherwise in compliance withyour obligations, and if such Albuo is released by Companywithout any substantial legal impediment to Company's fullexploitation of such record and without financial detriment toCompany due to such claim(s), such Masters shall apply towardsthe fulfillment of your Recording Commitment. Furthermore, ifCompany shall make any payments with respect to any Master_whichshall not have been recorded or delivered in ail respects inaccordance with the terms hereof, you shall, upon Company'sdemand, pay to Company the amount thereof and company may,without limiting Company's other rights and remedies, deduct thatamount from any monies payable by Company hereunder or any otheragreement between you and Company or Company's affiliates.

4.06 If you or the Artist shell for any reason whatsoeverdelay the commencement of or be unavailable for any recordingsessions for the Masters, you shall, upon Company's demand, payCompany an amount equal to the expenses or charges paid orincurred by company by reason thereof. Company may, withoutlimiting Company's other rights and remedies, deduct that amountfrom any monies payable by Company hereunder or under any otheragreement between you and Company or Company's affiliates.

4.07 Company may, at its election, discontinue any recordingsessions for the Masters if in Company's judgment the RecordingCosts incurred or to be incurred will exceed the approvedRecording Budget or if the Masters being produced will not betechnically and commercially satisfactory.

5>. RECORDING COSTS.

5-01 Company shall pay the Recording Costs of the Mastersrecorded at recording sessions conducted in accordance with theterms hereof in an amount not in excess of the Recording Budgetapproved by Company in writing. If the Recording Costs of anyMasters shall exceed a sum eqrual to the applicable Recording Fundless 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 solelyresponsible for and sh&L! promptly pay the excess. If, however,

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company shall pay the excess, you shall, upon Company's demand,pay to Company the amount thereof and Company may, withoutlimiting Company's other rights and remedies, deduct that amountfrom any monies payable by Company hereunder or under any otheragreement between you and Company or Company's affiliates. Youshall be solely responsible for and shall pay any payments to anyindividuals rendering services in connection with the recordingof the Masters which exceed union scale unless the excess and therecipient thereof shall have been specified in the RecordingBudget approved by Company. You shall also be solely responsiblefor and shall pay any penalties incurred for late payments causedby your delay in submitting union contracts forms, report forms,or invoices or other documents. If, however, Company shall payany excess not approved by Company or any penalties, you shall,upon Company's demand, pay Company the amount thereof, andCompany may, without limiting Company's other rights andremedies, deduct that amount from any monies payable by Companyhereunder or under any other agreement between you and Company orCompany's affiliates.

5.02 Recording Costs shall mean and include all union scalepayments (including "excess" scale payments) made to, the Artist,all payments made by Company to any other individuals renderingservices in connection with the recording of the Masters, allother payments which are made by Company pursuant to anyapplicable law or regulation or the provisions of any collectivebargaining agreement between Company and any union or guild, allamounts paid or incurred for studio or hail rentals, tape,engineering, editing, instrument rentals and cartage, mastering,mixing, re-mixing, "sweetening", transportation andaccommodations, immigration clearances, trademark and servicemark searches and clearances, "sample*' clearances any so-called"per diems" for any individuals {including the Artist) renderingservices in connection with recording of the Masters and forCompany's A&R employees attending recording sessions hereunder(but only if such A & R employees are, with your consent or atyour request, actually rendering services in connection with therecording process), together with all other amounts paid orincurred by Company in connection with the recording of theMasters. Recording Costs shall be recoupable from royaltiespayable by Company hereunder (other than mechanical royalties,except as specifically provided herein) ox under any otheragreement between you and Company or Company's affiliates. Thecosts of metal parts other than lacquer, copper or equivalentroasters, and payments to the AFM Special Payments Fund and theMusic Performance Trust Fund based upon record sales (so-called"per-record royalties"), will not be recoupable from yourroyalties or reimbursable by you. Notwithstanding the foregoing,you agree that the Advances hereunder include the prepayment ofsession union scale as provided in the applicable union codes,and you and Artist agree to complete any documentation required

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by the applicable union to implement trsis sentence.Notwithstanding the foregoing, the Recording Budget in respect oftne First Album and the respective Recording funds in respect ofail subsequent Albums shall include all costs incurred inconnection with the remixing of satisfactorily delivered Masters;provided, however, m the event that such costs exceed TenThousand 1510,005) in respect of the First Albun or five (51Jpercent of the applicable Recording Fund for each applicablesubsequent .Album, such excess renixing costs shall not reduce theapplicable Budget or Recording fund, but shall be deemedadditional Recording costs hereunder. Any costs incurred in thetranslation/recording of English language Masters to Spanishlanguage Masters hereunder which have been approved by Companyshall be at Company's recoupable expense (provided, such costssnail not be recouped fro* mechanical royalties, except asotherwise proviae-d herein)

5.03 If packaging lor Phonograph Records hereunder containsspecial elements or requires additional fabrication cost* (e.g.,for etaiaossing, die-cutting, special ink or paper, additionalcolor separations requested by you, etc.) such that Company wouldincur manufacturing or fabrication costs in excess of Company'snormal per-unit costs, without such special elements or costs.(''Standard Manufacturing Costs'4} , and provided you have requestedor consented to Company incurring such excess costs, the excessabove Company's Standard Manufacturing Costs shall be paid by youor reimbursed to Company on demand. Ail such excevs costsincurred by Company shall be invoiced to you, and ay be deductediron, any royalties required to ne pa ad by company pursuant tothis Agreement (other than mechanical royalties, except asotherwise provided herein). (Nothing contained herein shall bedeemed to reeruire Company to utilize any artwork elements whichwould cause Company to incur any Special Packaging Costs-)

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fi.oi All Master Recordings recorded during the Term, whichembody the performances of the Artist, from the inception of therecording thereof, shall, tor purposes of copyright law, bedeemed "works-oade-for-hire"* for company by you, the Artist, aridAll other persons rendering services in connection with thoseMaster Recordings, as Company's *'employs-for-hite'1. ThoseMaster Recordings, from cne inception of the recording thereof,and all Phonograph Records and other reproductions madetherefrow, together with the performances embodied therein andall copyrights therein and thereto throughout, the Territory (tautexcluding the copyright in the musical compositions embodiedtherein), and all renewals and extensions thereof, shall be-entirely Company's property, free of any claims whatsoever byyou, the Artist, or any other person, firm, or corporation.Company shall, accordingly, have the exclusiv