ESPI 23/2022 Signing of letter of intent with one of the most renowned music studios in the world

Management Board of IMS S.A. (“The Issuer”, “the Company”) hereby informs that on 25 October 2022 the Company and a subsidiary of the Issuer – Closer Music Sp. z o.o. (‘CM’), have signed a letter of intent to collaborate with European Music Market Inc. based in Las Vegas, USA (‘DMI’), which owns one of the most renowned and well-known music studios in the US and worldwide market – Studio DMI. DMI offers mixing and mastering for major artists in all genres of music.

 Over the past 25 years, the studio has worked with artists such as Drake, Diplo, Major Lazer, David Guetta and many others. Studio head Luca Pretolesi is a world-renowned mixing and mastering engineer.  Multiple Grammy nominations, Platinum and Diamond records, Billboard and Golden Melody awards are the trademarks of Studio DMI and Mr Pretolesi. The key provisions of the letter are as follows:

1/ It is the intention of CM and DMI to establish a capital company (limited liability company) in the territory of the Republic of Poland, which will operate under the brand name of DMI – STUDIO DMI EUROPE (“DMI EUROPE”). The Company will be active in the provision of mixing and mastering services of musical works on behalf of third parties (clients) and will provide on-line and off-line training to acquired external and internal clients – authors, musicians, engineers and DJs.

2/ Initially, 100% ownership of STUDIO DMI EUROPE will be held by DMI. CM (or possibly IMS S.A.) will hold an option to acquire 51% of the shares within a maximum of 18 months from the establishment of DMI EUROPE. The purchase price of the 51% will be agreed by the parties and will not exceed PLN 150,000.

3/ Mr Luca Pretolesi will hold the position of the President of the Board of Directors of DMI EUROPE, while the other two members of the Board of Directors will be appointed by the Shareholders’ Meeting of DMI EUROPE, where the majority of votes after the execution of the option to purchase 51% of shares will be held by CM.

4/ DMI will receive from CM, on the basis of the cooperation agreement concluded, commission remuneration for CM’s performance of projects for customers with whom contracts are concluded as a result of DMI’s activities.

5/ CM and Mr. Pretolesi will enter into a cooperation agreement, on the basis of which Mr. Pretolesi will undertake promotional and marketing activities aimed at creating awareness among music market participants (professionals and consumers) of the cooperation between DMI and CM, using for such purposes in particular his own profiles on social media networks (social media).

6/ On the basis of the CM share-based incentive programme under development, Mr Pretolesi will, upon fulfilment of the relevant conditions, be entitled to acquire a maximum of 5% of CM shares. The entitlement indicated above will be valid for a period of two years, with a maximum of 2.5% of CM shares available for subscription annually. Key conditions for the acquisition of shares are marketing activities and extensive promotion of CM and CM’s music bases to potential CM customers worldwide.

The letter of intent is valid until 1 June 2023. The parties will strive in good faith to conclude an investment agreement as soon as possible and to start extensive cooperation. In the Issuer’s opinion, the cooperation with such a renowned music studio as DMI will greatly enhance Closer Music’s brand recognition and widely promote CM’s music libraries worldwide. As a result, this should lead to a very significant increase in Closer Music’s revenues from the various fields of exploitation of these libraries.

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