-
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(DO NOT CITE JURISDICTIONAL STATUTES UNLESS DIVERSITY)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).
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(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)
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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
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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."
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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
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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.
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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.
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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.
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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.
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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.
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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
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(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
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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
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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
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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)[email protected]
Attorneyfor Plaintiffs
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(.(. A ?5EXHIBIT "A
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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
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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
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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-
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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.
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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.
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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.
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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,
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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
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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^
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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
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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
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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
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.
3W15.3
101293
-
#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.
101293
-
!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.
101293 5
-
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'.
;,>
-
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
ww.1
101293 1
-
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,
1012S1 B
-
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
wis.)101293 9
-
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-)
6- H2ittlZ.
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