SANCTUARY SUED for £50 MILLION Submitted By: Chelgate Friday, 18 November 2005

SANCTUARY SUED FOR £50 MILLION Submitted by: Chelgate Friday, 18 November 2005 News release sent by Chelgate on behalf of 5.1 Label Group, USA 18 November 2005 FOR IMMEDIATE RELEASE Sanctuary Records Group Sued for More than $50,000,000 by 5.1 Label Group for Breach of Contract and Fraud Sanctuary, owner of the world's largest independent recorded music catalog, is being sued for over fifty million dollars by west coast label 5.1 Label Group. The dispute arose over 5.1's claim that Sanctuary had failed to deliver some 140-220 albums for release in the DualDisc format. The albums in question include those by top international artists Journey, Alison Moyet, Morrisey, Robert Plant, Meat Loaf, Black Sabbath, Emerson Lake and Palmer and Eric Clapton, among others. Sanctuary is also engaged in the business of artist management, representing such acts as Sir Elton John and Beyonce. A statement issued by the 5.1 Label Group in Los Angeles today said: “The complaint by 5.1, filed in Los Angeles Superior Court on July 5, 2005, charges that Sanctuary breached the terms of an amendment to the original agreement between the parties that provided for delivery by Sanctuary to 5.1 of up to 220 albums, at least 140 for release in DualDisc configuration, and that Sanctuary committed fraud by making promises to deliver albums it did not intend to deliver to induce 5.1 to enter into the amendment prior to the end of September, 2003, “for the purpose of inflating its financial performance for its fiscal year ended September 30, 2003.” 5.1 also alleges that “Sanctuary, for its own financial reasons, including but not limited to the reporting of its financial results and/or conditions to its shareholders, intentionally defrauded” 5.1 by making the promises and representations set forth in the complaint. The agreement, as amended, contained a guarantee by 5.1 to Sanctuary of a minimum of $6,150,000 and required that Sanctuary make available to 5.1 all titles in Sanctuary's catalog as of September 29, 2003, the effective date of the amendment, and all titles added to Sanctuary's catalog thereafter, at the rate of five per month. A spokesperson for 5.1 asserted that as of August of 2004, nine months after the execution of the amendment, when 5.1 was preparing to announce its imminent release of a large number of DualDiscs as part of the industry rollout of that new format, which embodies a DVD on one side and a CD on the other, Sanctuary had not made available to 5.1 a single album for release in DualDisc format and, to date, Sanctuary has failed and refused to deliver to 5.1 any of its top-line albums for release on DualDiscs, the main purpose of the amendment. In an updated statement to the London Stock Exchange dated October 28, 2004, Sanctuary admitted that its Board “has carefully reviewed the accounting policies and judgements used in compiling its financial statements” and, as a consequence, “the Board believes that it is likely to make changes to accounting policies, which may give rise to prior year adjustments.” The update further noted that Page 1 Sanctuary is likely to “alter its methods of estimation in certain areas,” “is continuing discussions with its auditors” and expects that the changes “will be to alter the balance sheet significantly” to show net liabilities on its balance sheet for the September 30, 2005, balance sheet. During the negotiations leading up to the amendment of the agreement between Sanctuary and 5.1, Sanctuary made it clear that the amendment with the $6,150,000 guarantee had to be dated “as of” a September date to get within its then current fiscal year ending on September 30, 2003. The amendment, actually executed on or about October 15, 2003, was dated “as of September 29, 2003.” The concern of Sanctuary's auditors was whether the income should be booked over time or all at once. 5.1 is in the process of noticing depositions of Sanctuary personnel involved in those negotiations to investigate why they made the various representations about their need to expedite the finalization of the amendment or else the “deal will not count,” why it was so important that the United Kingdom auditors applying UK accounting rules had to accept the “explanation” of the deal and why Sanctuary agreed to deliver the albums to 5.1 at the rate of 5 per month to close the amendment containing the guarantee only to violate it from day one by failing to deliver the albums.” Ends Notes to editors: For further information contact Chelgate executives: Guy Rowland 0207 [email protected] Tony Brown 0207 9397939 Background information on the 5.1 Group Based in Los Angeles, California, the 5.1 Entertainment Group owns the immergent, Silverline and Myutopia record labels, 5.1 Production Services and 5.1 Music Publishing. The Group has released the largest catalog of music in DVD worldwide and is part of the team comprised of the four major record labels and 5.1 that conceived and launched the DualDisc format. Additionally, the production division of the Group has produced projects for Norah Jones, Usher, Britney Spears, Eminem, R. Kelly, Janet Jackson, Fleetwood Mac, Sting, Eminem, Herbie Hancock, Dishwalla, Yellownote, A Perfect Circle, Radiohead, Rob Thomas, Queen, Robbie Williams and many others. Page 2 Distributed via Press Release Wire (https://pressreleases.responsesource.com/) on behalf of Chelgate Copyright © 1999-2021 ResponseSource, The Johnson Building, 79 Hatton Garden, London, EC1N 8AW, UK e: [email protected] t: 020 3426 4051 f: 0345 370 7776 w: https://www.responsesource.com.

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