amendno1arrangmentagrmnt.htm


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

              

                  -  -      
    

      

    


    AMENDMENT
      TO ARRANGEMENT AGREEMENT dated February
      26, 2007,

     

    BETWEEN:

     

    AA
      ACQUISITION CORP., a corporation existing under the laws of Canada
      (hereinafter referred to as “Acquireco”),

     

    -
      and
      -

     

    ALLIANCE
      ATLANTIS COMMUNICATIONS INC., a corporation existing under the laws of
      Canada (hereinafter referred to as the
“Corporation”),

     

    WHEREAS
      Acquireco (formerly 6681859 Canada Inc.) and the Corporation are parties to
      an
      Arrangement Agreement dated January 10, 2007 (the “Arrangement
      Agreement”);

     

    AND
      WHEREAS the parties wish to amend the Arrangement Agreement in the
      manner set out in this amendment (the “Amendment”) in
      accordance with Section 7.5 of the Arrangement Agreement;

     

    THIS
      AGREEMENT WITNESSES THAT, in consideration of the respective covenants
      and agreements herein contained and other good and valuable consideration (the
      receipt and sufficiency of which are hereby acknowledged), and intending to
      be
      legally bound hereby, Acquireco and the Corporation hereby agree as
      follows:

     

    
      	
              1.1

            	
              Interpretation

            


    

     

    All
      capitalized terms used in this Amendment that are not otherwise defined herein
      shall have the meaning given to them in the Arrangement Agreement.

     

    
      	
              1.2

            	
              Amendments
                to the Arrangement
                Agreement

            


    

     

    
      	
               

            	
              (a)

            	
              The
                reference to “GS Capital Partners VI, L.P.” in the seventh recital of the
                Arrangement Agreement shall be changed to “GS Capital Partners VI Fund,
                L.P.”

            


    

     

    
      	
               

            	
              (b)

            	
              Section
                1.1 of the Arrangement Agreement is hereby amended by deleting the
                existing definition of “Arrangement”, “Debt Receipt Failure”, “Disclosure
                Letter”, “Effective Time” and “Outside Date” and substituting therefor the
                following:

            


    

     

    “Arrangement”
      means the arrangement of the Corporation pursuant to the provisions of section
      192 of the CBCA on the terms and subject to the conditions set out in the Plan
      of Arrangement;”

     

    “Disclosure
      Letter” means that certain letter dated as of January 10, 2007 and
      delivered by the Corporation to Acquireco and signed by the Corporation and
      Acquireco, as amended by that certain letter dated February 26, 2007 and
      delivered by the Corporation to Acquireco and signed by the Corporation and
      Acquireco;”

     

    “Debt
      Receipt Failure” has the meaning ascribed thereto in section
      7.1(i);”

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Effective
      Time” means 4:30 p.m. (Toronto time) on the Effective Date;”
and

     

    “Outside
      Date” means June 30, 2007 or such later date as may be agreed in
      writing between the parties subject to the right of:  (a) either party
      to postpone the Outside Date by one period of 30 days (and not more than one
      period of 30 days in aggregate) if (A) the Competition Act Clearance or the
      HSR
      Clearance has not been obtained or waived, or (B) the condition in section
      6.2(j) shall not have been satisfied; (b) either party to postpone the Outside
      Date to August 7, 2007 if the Required Financial Information is provided to
      Acquireco after May 28, 2007 and prior to 11:59 p.m. (Toronto time) June 29,
      2007; and (c) Acquireco to postpone the Outside Date by one period of 30 days
      if
      the Required Financial Information has not been provided to Acquireco by June
      30, 2007, in any such case by giving written notice to the other party to such
      effect no later than 11:59 p.m. (Toronto time) on June 29, 2007 provided that
      in
      no event can the Outside Date be extended beyond August 7, 2007 unless otherwise
      agreed in writing by Acquireco and the Corporation;”.

     

    
      	
               

            	
              (c)

            	
              Section
                2.1(b) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 2.1(b) and substituting therefor as new section
                2.1(b)
                the following:

            


    

     

    “subject
      to Court approval, call and hold the Meeting on April 5, 2007 for the purpose
      of
      considering the Special Resolution (and, with the consent of Acquireco, for
      any
      other purpose as may be set out in the notice for such meeting), provided that
      if the Court does not approve April 5, 2007 as the Meeting date, the Meeting
      date will be the next earliest date approved by the Court prior to April 30,
      2007 and with the consent of Acquireco, the Meeting date may be changed,
      adjourned or postponed, subject to Court approval if necessary;”  

     

    
      	
               

            	
              (d)

            	
              Section
                2.5 of the Arrangement Agreement is hereby amended by deleting the
                existing section 2.5 and substituting therefor as new section 2.5
                the
                following:

            


    

     

    “Acquireco
      shall, subject to obtaining the Final Order and the satisfaction or waiver
      of
      the other conditions precedent contained in this Agreement in its favour, at
      or
      before the time of issuance of the certificate of arrangement issued by the
      Director, deposit with the Depositary sufficient cash to pay the amounts payable
      to Shareholders (other than Shareholders exercising Dissent Rights and who
      have
      not withdrawn their notice of objection) and Qualifying Holdco
      Shareholders  pursuant to the Plan of Arrangement.”

     

    
      	
               

            	
              (e)

            	
              Section
                2.8(a) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 2.8(a) and substituting therefor as a new section
                2.8(a)
                the following:

            


    

     

    “Subject
      to receipt of all required regulatory approvals, Acquireco will permit Persons
      (“Qualifying Holdco Shareholders”) who are,
      (a) resident in Canada for purposes of the Tax Act (including a partnership
      if
      all of the members of the partnership are resident in Canada), and (b)
      registered and beneficial owners of

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Shares
      (directly or indirectly through a Qualifying Holdco) as of the Effective Date,
      and (c) shareholders of a corporation that meets the conditions described below
      in this section 2.8Error! Reference source not
      found. (a “Qualifying Holdco”) to elect in respect
      of such Shares (or Shares held by such Qualifying Holdco), by notice in writing
      provided to Acquireco (or the Depositary) not later than 5:00 p.m. (Toronto
      time) on the 10th Business
      Day prior
      to the Effective Date (the “Holdco Election Date”), to sell
      such Shares through a Qualifying Holdco (the “Holdco
      Alternative”) provided that:”

     

    
      	
               

            	
              (f)

            	
              Section
                3.2(c)(ii) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 3.2(c)(ii) and substituting therefor as a new section
                3.2(c)(ii) the following:

            


    

     

    “Subject
      to its terms and conditions, the Financing, when funded in accordance with
      the
      Funding Commitment Letter and the Debt Commitment Letter, will provide financing
      sufficient to permit Acquireco to deposit with the Depositary sufficient cash
      to
      pay the amount payable to Shareholders and Qualifying Holdco Shareholders
      pursuant to the Plan of Arrangement (assuming all Share Purchase Rights are
      exercised and all Shares issuable thereunder are fully paid for prior to the
      Effective Time and assuming no Shareholders exercise Dissent Rights) and to
      pay
      related fees and expenses.”

     

    
      	
               

            	
              (g)

            	
              Section
                5.1(a)(iv) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 5.1(a)(iv) and substituting therefor as new section
                5.1(a)(iv) the following:

            


    

     

    “allot,
      reserve, set aside, issue, sell, pledge, dispose of, grant or encumber,
      orauthorize or propose the allotment, reservation, setting aside, issuance,
      sale,pledge, disposition, grant or encumbrance of, or purchase, redeem, or
      otherwise acquire, directly or indirectly, any shares in its capital or the
      capital of any subsidiary or any options, warrants, convertible securities
      or
      rights to subscribe for, purchase or otherwise acquire or exchange into any
      shares, or any other ownership interest in the Corporation or any subsidiary
      (including any phantom interest or other right linked to the price of the
      Shares), except (i) for the issuance of Class B Shares pursuant to Options,
      Purchase Rights, restricted stock units and deferred stock units issued pursuant
      to the terms of the Compensation Plans and which are outstanding on the date
      of
      this Agreement in accordance with their terms as in effect on the date of this
      Agreement, (ii) the settlement for cash by the Corporation of any Performance
      Share Appreciation Plan Units outstanding on January 10, 2007 in accordance
      with
      their terms and (iii) the settlement for cash by the Corporation of Options
      outstanding on January 10, 2007 in accordance with their terms;”.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (h)

            	
              Section
                5.1(a)(xi) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 5.1(a)(xi) and substituting therefor as new section
                5.1(a)(xi) the following:

            


    

     

    “take
      any
      action or make any change, other than actions or changes required by Canadian
      GAAP, with respect to accounting policies or procedures;”.

     

     (i)            Section
      5.1(f)(ii) of the Arrangement Agreement is hereby deleted.

     

    
      	
               

            	
              (j)

            	
              Section
                5.1(l) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 5.1(l) and substituting therefor as new section
                5.1(l)
                the following:

            


    

     

    “Notwithstanding
      anything to the contrary herein, any obligation of the Corporation in this
      Agreement with respect to causing Motion Picture Distribution Inc. to take
      any
      action or refrain from taking any action shall only be a requirement for the
      Corporation to use its reasonable best efforts to cause Motion Picture
      Distribution Inc. to take such action or refrain from taking such action;
      provided that no director of Motion Picture Distribution Inc. shall be required
      to take any action in breach of such person's fiduciary duties.  The
      Corporation shall strictly enforce its rights under any existing agreements
      with
      Motion Picture Distribution Inc. in furtherance of the Corporation’s obligations
      hereunder, including pursuant to section 5.1(a).”.

     

    
      	
               

            	
              (k)

            	
              The
                following section 5.1(m) is hereby added to the Arrangement
                Agreement:

            


    

     

    “At
      or before the time of issuance of
      the certificate of arrangement issued by the Director, the Corporation shall,
      subject to the satisfaction or waiver of the conditions precedent contained
      in
      this Agreement in its favour, deposit with the Depositary sufficient cash to
      pay
      the amounts payable to Eligible Shareholders (as hereinafter defined) pursuant
      to the Plan of Arrangement.  The Corporation shall also provide the
      Depositary with the requisite information regarding the identity of the holders
      of Options, RSUs and DSUs that are transferred to the Corporation pursuant
      to
      Section 2.3(a) of the Plan of Arrangement (“Eligible Holders”)
      and the amounts to which such Eligible Holders have become entitled as a result
      of such transfer.”.

     

    
      	
               

            	
              (l)

            	
              Section
                5.2(a)(vii)(G) of the Arrangement Agreement is hereby amended by
                deleting
                the existing section 5.2(a)(vii)(G) and substituting therefor as
                new
                section 5.2(a)(vii)(G) the
                following:

            


    

     

    “Acquireco
      shall keep the Corporation informed on a reasonably current basis in reasonable
      detail of the status of its efforts to arrange the Financing and shall not
      permit any material amendment or modification to be made to, or any waiver
      of
      any material provision or remedy under the Debt Commitment Letter, the Financing
      Agreements or any definitive agreement or documentation referred to in this
      section 5.2, without the prior written consent of the Corporation (such
      consent not to be unreasonably withheld or delayed).”.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (m)

            	
              Section
                6.2(c) of the Arrangement Agreement is hereby
                deleted.

            


    

     

    
      	
               

            	
              (n)

            	
              Section
                6.3(e) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 6.3(e) and substituting therefor new
                section 6.3(e) as follows:

            


    

     

    “Acquireco
      shall, subject to obtaining the Final Order and the satisfaction or waiver
      of
      the other conditions precedent contained in this Agreement in its

     

    favour,
      at or before the time of issuance of the certificate of arrangement issued
      by
      the Director, deposit with the Depositary sufficient cash to pay the amounts
      payable to Shareholders (other than Shareholders exercising Dissent Rights
      and
      who have not withdrawn their notice of objection) and Qualifying Holdco
      Shareholders pursuant to the Plan of Arrangement.”

     

    
      	
               

            	
              (o)

            	
              Section
                7.1(g) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 7.1(g) and substituting therefor as new section
                7.1(g)
                the following:

            


    

     

    “by
      the
      Corporation, if there has been a breach of or failure to perform any
      representation, warranty, covenant or agreement on the part of Acquireco set
      forth in this Agreement, which breach or failure to perform would cause the
      conditions set forth in section 6.3(a), 6.3(b), 6.3(c) or 6.3(d) not to be
      satisfied;”.

     

    
      	
               

            	
              (p)

            	
              Section
                7.1(i) of the Arrangement Agreement is hereby amended by deleting
                the
                existing section 7.1(i) and substituting therefor as new section
                7.1(i)
                the following:

            


    

     

    “by
      the
      Corporation, if (a) all of the conditions set forth in sections 6.1 and 6.2
      have
      been satisfied and remain satisfied or waived by Acquireco (other than those
      conditions that by their terms are to be satisfied at the Effective Time) and
      (b) Acquireco shall not have received the proceeds of the Debt Financing or
      any
      Alternative Debt Financing by the Closing Date, any such event being a “Debt
      Receipt Failure”; or”.

     

    
      	
               

            	
              (q)

            	
              Exhibit
                1 – Form of Plan of Arrangement is hereby amended by deleting the existing
                Exhibit 1 and substituting therefor as new the Exhibit 1 attached
                hereto
                as Schedule A.

            


    

     

    
      	
              1.3

            	
              Representations
                and Warranties of the
                Corporation

            


    

     

    The
      Corporation represents and warrants to and in favour of Acquireco as follows
      and
      acknowledges that Acquireco is relying upon such representations and warranties
      in connection with entering into this Amendment and completing the
      Arrangement:

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (a)

            	
              Authority
                and No Violation.

            


    

     

    
      	
               

            	
              (i)

            	
              The
                Corporation has the requisite corporate power and capacity to execute
                and
                deliver this Amendment and to perform its obligations
                hereunder.  The execution, delivery and performance of this
                Amendment by the Corporation has been duly authorized by its Board
                of
                Directors and no other corporate proceedings on its part are necessary
                to
                authorize the execution, delivery and performance of this
                Amendment.

            


    

     

    
      	
               

            	
              (ii)

            	
              This
                Amendment has been duly executed and delivered by the Corporation
                and
                constitutes its legal, valid and binding obligation, enforceable
                against
                it in accordance with its terms, subject to bankruptcy, insolvency
                and
                other

            


    

     

    
      	
               

            	
              Laws
                affecting creditors’ rights generally and to general principles of
                equity.

            


    

     

    
      	
               

            	
              (iii)

            	
              The
                execution and delivery of this Amendment by the Corporation does
                not, and
                the performance of this Amendment by the Corporation will
                not:

            


    

     

    
      	
               

            	
              A.

            	
              conflict
                with or violate the Articles of Incorporation or Bylaws or equivalent
                organizational documents of the Corporation or any of its
                subsidiaries;

            


    

     

    
      	
               

            	
              B.

            	
              assuming
                that all consents, approvals, authorizations and other actions described
                in section 3.1(d)(v) of the Arrangement Agreement have been obtained
                and
                all filings and obligations described in section 3.1(d)(v) have been
                made,
                conflict with or violate any Law applicable to the Corporation or
                any of
                its subsidiaries or by which any property or asset of the Corporation
                or
                any of its subsidiaries is bound;
                or

            


    

     

    
      	
               

            	
              C.

            	
              except
                as set forth in section 3.1(d)(iv) of the Disclosure Letter, result
                in any
                breach of, or constitute a default (or an event which, with notice
                or
                lapse of time or both, would become a default) under, or give to
                others
                any right of termination, amendment, acceleration or cancellation
                of, or
                create, give rise to or change any rights or obligations of any Person
                under, or result in the creation of a Lien on any property or asset
                of the
                Corporation or any of its subsidiaries pursuant to any note, bond,
                mortgage, indenture, contract, agreement, lease, license, permit,
                franchise or other instrument or obligation to which the Corporation
                or
                any of its Material Subsidiaries is a party or by which the Corporation
                or
                any of its Material Subsidiaries or any property or asset of the
                Corporation or any of its Material Subsidiaries is
                bound;

            


    

     

    except,
      with respect to clauses (B) and (C), for any such events or occurrences that
      could not reasonably be expected to have, individually or in the aggregate,
      a
      Material Adverse Effect.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (iv)

            	
              No
                consent, approval, license, permit, order or authorization of, or
                registration, declaration or filing with, or permit from, any Governmental
                Entity is required to be obtained or made by or with respect to the
                Corporation or any of its subsidiaries in connection with the execution,
                delivery and performance of this
                Amendment.

            


    

     

    
      	
              1.4

            	
              Representations
                and Warranties of
                Acquireco

            


    

     

    Acquireco
      represents and warrants to and in favour of the Corporation as follows and
      acknowledges that the Corporation is relying upon such representations and
      warranties in connection with entering into this Amendment and completing the
      Arrangement:

     

     (a)           Authority
      and No Violation.

     

    
      	
               

            	
              (i)

            	
              It
                has the requisite power and capacity to execute, deliver and perform
                its
                obligations hereunder. The execution, delivery and performance of
                this
                Amendment by it has been duly authorized and no other proceedings
                on its
                part are necessary to authorize the execution, delivery and performance
                of
                this Amendment.

            


    

     

    
      	
               

            	
              (ii)

            	
              This
                Amendment has been duly executed and delivered by it and constitutes
                its
                legal, valid and binding obligation, enforceable against it in accordance
                with its terms, subject to bankruptcy, insolvency and other similar
                laws
                affecting creditors’ rights generally and to general principles of
                equity.

            


    

     

    
      	
               

            	
              (iii)

            	
              The
                execution, delivery and performance by it of this Amendment will
                not:

            


    

     

    
      	
               

            	
              A.

            	
              result
                in a violation or breach of, require any consent to be obtained under
                or
                give rise to any termination rights or payment obligation under any
                provision of:

            


    

     

    
      	
               

            	
              1.

            	
              its
                Articles or Bylaws (or other constating
                documents);

            


    

     

    
      	
               

            	
              2.

            	
              any
                resolution of its board of directors (or any committee thereof) or
                of its
                shareholders;

            


    

     

    
      	
               

            	
              3.

            	
              any
                applicable Laws; or

            


    

     

    
      	
               

            	
              4.

            	
              any
                material Contract to which it or its subsidiaries is a party or by
                which
                any of them is bound or their respective properties or assets are
                bound;
                or

            


    

     

    
      	
               

            	
              B.

            	
              give
                rise to any right of termination or acceleration of indebtedness,
                or cause
                any of its third party indebtedness to come due before its stated
                maturity
                or cause any available credit to cease to be available where such
                event
                would materially impair its ability to complete or materially prevent
                it
                from completing the Arrangement.

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (iv)

            	
              No
                consent, approval, order or authorization of, or declaration or filing
                with, any Governmental Entity or other Person is required to be obtained
                by it in connection with the execution, delivery or performance of
                this
                Amendment.

            


    

     

    
      	
               

            	
              1.5

            	
              Survival

            


    

     

    For
      greater certainty, the representations and warranties of each of the Corporation
      and Acquireco contained herein shall survive the execution and delivery of
      this
      Amendment and shall terminate on the earlier of the termination of the
      Arrangement Agreement, as amended by this Amendment, in accordance with the
      provisions thereof and the Effective Time.

     

    
      	
              1.6

            	
              Governing
                Law

            


    

     

    This
      Amendment shall be governed by and construed in accordance with the Laws of
      the
      Province of Ontario and the Laws of Canada applicable therein.  Each
      of the parties hereby irrevocably attorns and submits to the non-exclusive
      jurisdiction of the courts of the Province of Ontario with respect to any matter
      arising under this Amendment.

     

    
      	
              1.7

            	
              Counterparts

            


    

     

    This
      Amendment may be executed in two or more counterparts, each of which shall
      be
      deemed to be an original but all of which together shall constitute one and
      the
      same instrument.

     

    
      	
              1.8

            	
              Continued
                Effect of Arrangement
                Agreement

            


    

     

    The
      Arrangement Agreement, as amended by this Amendment, shall continue in full
      force and effect.

     

    
      	
              1.9

            	
              Consolidated
                Agreement

            


    

     

    The
      parties agree to prepare a consolidated version of the Arrangement Agreement
      as
      at the date hereof reflecting the amendments set forth in this Amendment and
      any
      references in the Arrangement Agreement to “the date hereof” or “the date of
      this Agreement” shall be changed to “January 10, 2007”.

     

    


     

    REMAINDER
      OF THIS PAGE INTENTIONALLY LEFT BLANK

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, Acquireco and the Corporation have caused this
      Amendment to be executed as of the date first written above by their respective
      officers thereunto duly authorized.

     

    
      	 	 	
              AA
                ACQUISITION CORP.

            
	
              By:

            	 /s/
              Richard Mayer
	 	
              Name:
                Richard Mayer

            
	 	
              Title:

            
	 	 	 	 
	 	 	
              By:

            	 /s/
              Steven Mayer
	 	 	 	
              Name:
                Steven Mayer

            
	 	 	 	
              Title:

            


    

     

    


     

     

    


     

    
      	 	 	
              ALLIANCE
                ATLANTIS COMMUNICATIONS INC.

            
	
              By:

            	 /s/
              Andrea Wood
	 	
              Name:
                Andrea Wood

            
	 	
              Title:

            
	 	 	 	 
	 	 	
              By:

            	 /s/
              David Lazzarato
	 	 	 	
              Name:
                David Lazzarato

            
	 	 	 	
              Title:

            
	 	 	 	 


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    SCHEDULE
      A

     

    EXHIBIT
      1

    FORM
      OF PLAN OF ARRANGEMENT

     

    PLAN
      OF ARRANGEMENT UNDER SECTION 192

    OF
      THE CANADA BUSINESS CORPORATIONS ACT

     

    ARTICLE
      1

     

    INTERPRETATION

     

    
      	
              1.1

            	
              Definitions

            


    

     

    Unless
      indicated otherwise, where used in this Plan of Arrangement, the following
      terms
      shall have the following meanings:

     

    “Acquireco”
      means AA Acquisition Corp. (formerly 6681859 Canada Inc.), a corporation
      existing under the laws of Canada;

     

    “Arrangement”
      means the arrangement of the Corporation pursuant to the provisions of section
      192 of the CBCA on the terms and subject to the conditions set out in this
      Plan
      of Arrangement;

     

    “Arrangement
      Agreement” means the arrangement agreement dated as of January 10, 2007
      between Acquireco and the Corporation (including the Schedules and Appendices
      thereto) as amended, modified or supplemented from time to time;

     

    “Business
      Day” means any day on which commercial banks are open for business in
      Toronto, Ontario other than a Saturday, a Sunday or a day observed as a holiday
      in Toronto, Ontario under the laws of the Province of Ontario or the federal
      laws of Canada;

     

    “CBCA”
      means the Canada Business Corporations Act as now in effect and as it
      may be amended from time to time prior to the Effective Date;

     

    “Circular”
      means the notice of the Meeting and accompanying management information
      circular, including all schedules thereto, to be sent to Shareholders in
      connection with the Meeting;

     

    “Class
      A Shareholder” means a registered holder of Class A
      Shares;

     

    “Class
      A Shares” means the Class A Voting Shares in the capital of the
      Corporation;

     

    “Class
      B Shareholder” means a registered holder of Class B
      Shares;

     

    “Class
      B Shares” means the Class B Non-Voting Shares in the capital of the
      Corporation;

     

    “Compensation
      Plans” means, collectively, the Corporation’s Amended and Restated 1993
      Employee Stock Option Plan, as amended, the Corporation’s 1998 Share
      Compensation Plan, the RSU Plan and the DSU Plan;

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Corporation”
      means Alliance Atlantis Communications Inc., a corporation existing under the
      laws of Canada;

     

    “Court”
      means the Ontario Superior Court of Justice;

     

    “Depositary”
      means Computershare Investor Services Inc., as depositary, or such other
      depositary as Acquireco may determine;

     

    “Director”
      means the Director appointed under section 260 of the CBCA;

     

    “Dissent
      Rights” has the meaning ascribed thereto in section 3.1
      hereof;

     

    “DSU”
      means a deferred share unit being a right granted by the Corporation to a
      participant to receive on the basis set out in the DSU Plan, on a deferred
      payment basis, a Class B Share or the cash equivalent of a Class B
      Share;

     

    “DSU
      Plan” means the Corporation’s May 31, 1999 Deferred Share Unit
      Plan;

     

    “Effective
      Date” means the date upon which this Plan of Arrangement becomes
      effective as established by the date of issue shown on the certificate of
      arrangement issued by the Director under the CBCA;

     

    “Effective
      Time” means 4:30 p.m. (Toronto time) on the Effective
      Date;

     

    “Final
      Order” means the order of the Court approving the Arrangement, as such
      order may be amended at any time prior to the Effective Date or, if appealed,
      then unless such appeal is withdrawn or denied, as affirmed;

     

    “Holdco
      Alternative” has the meaning ascribed to it in the Arrangement
      Agreement;

     

    “Interim
      Order” means the interim order of the Court in respect of the
      Arrangement contemplated by section 2.2 of the Arrangement
      Agreement;

     

    “ITA”
      means the Income Tax Act (Canada) and regulations made thereunder, as
      now in effect and as it may be amended from time to time prior to the Effective
      Date;

     

    “Letter
      of Transmittal” means the letter of transmittal to be mailed to
      Shareholders by the Corporation;

     

    “Meeting”
      means the special meeting of Shareholders (including any adjournment or
      postponement thereof) to be called and held in accordance with the Interim
      Order
      to consider and, if deemed advisable, to approve the Special
      Resolution;

     

    “Options”
      means, collectively, the options to purchase Shares under the Compensation
      Plans
      which are outstanding and unexercised as of the date hereof;

     

    “Person”
      includes any individual, firm, partnership, limited partnership, joint venture,
      syndicate, sole proprietorship, company or corporation with or without share
      capital, unincorporated association, trust, trustee, executor, administrator
      or
      other legal personal representative, or other entity however designated or
      constituted;

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Plan
      of Arrangement” means this plan of arrangement proposed under section
      192 of the CBCA, as amended, modified or supplemented from time to time in
      accordance with the provisions hereof or made at the direction of the Court
      in
      the Final Order;

     

    “Qualifying
      Holdco” has the meaning ascribed to it in the Arrangement
      Agreement;

     

    “Qualifying
      Holdco Shareholder” has the meaning ascribed to it in the Arrangement
      Agreement;

     

    “RSU”
      means a restricted share unit being a right granted to a participant to receive,
      on the basis set out in the RSU Plan, one Class B Share or a cash payment equal
      to the fair market value of one Class B Share on the terms contained
      therein;

     

    “RSU
      Plan” means the Corporation’s May 14, 2006 Restricted Share Unit
      Plan;

     

    “Shareholder”
      means a registered holder of Shares;

     

    “Share
      Purchase Right” has the meaning ascribed thereto in the Arrangement
      Agreement;

     

    “Shares”
      means, collectively, the Class A Shares and the Class B Shares; and

     

    “Special
      Resolution” means the special resolution of the Shareholders approving
      the Arrangement in accordance with the Interim Order.

     

    
      	
              1.2

            	
              Interpretation
                Not Affected by Headings,
                etc.

            


    

     

    The
      division of this Plan of Arrangement into Articles, sections, and other portions
      and the insertion of headings are for convenience of reference only and shall
      not affect the construction or interpretation hereof. Unless otherwise
      indicated, all references to an “Article” or “section” followed by a number
      and/or a letter refer to the specified Article or section of this Plan of
      Arrangement. The terms “hereof”, “herein” and “hereunder” and similar
      expressions refer to this Plan of Arrangement and not to any particular Article,
      section or other portion hereof.

     

    
      	
              1.3

            	
              Currency

            


    

     

    All
      sums
      of money which are referred to herein are expressed in lawful money of
      Canada.

     

    
      	
              1.4

            	
              Number,
                etc.

            


    

     

    Unless
      the subject matter or context otherwise requires, words importing the singular
      shall include the plural and vice versa and words importing gender shall include
      all genders.

     

    
      	
              1.5

            	
              Statutory
                References

            


    

     

    Any
      reference herein to a statute includes all regulations made thereunder, all
      amendments to such statute in force from time to time and any statute or
      regulation that supplements or supersedes such statute or
      regulation.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    1.6           Date
      for Any Action

     

    In
      the
      event that any date on which any action is required or permitted to be taken
      hereunder by any Person is not a Business Day, such action shall be required
      or
      permitted to be taken on the next succeeding day which is a Business
      Day.

     

    
      	
              1.7

            	
              Time

            


    

     

    Time
      shall be of the essence in every matter or action contemplated hereunder. All
      times expressed herein are local time (Toronto, Ontario) unless otherwise
      stipulated herein.

     

    ARTICLE
      2

     

    THE
      ARRANGEMENT

     

    
      	
              2.1

            	
              Arrangement
                Agreement

            


    

     

    This
      Plan
      of Arrangement is made pursuant to, is subject to the provisions of and forms
      part of, the Arrangement Agreement.

     

    
      	
              2.2

            	
              Binding
                Effect

            


    

     

    This
      Plan
      of Arrangement will become effective at, and be binding at and after, the
      Effective Time, on Acquireco, the Corporation, all Qualifying Holdco
      Shareholders, all Qualifying Holdcos, the Shareholders (including those
      described in section 3.1), all beneficial holders of Shares and all holders
      of
      Options, DSUs, RSUs and Share Purchase Rights.

     

    
      	
              2.3

            	
              Effective
                Time

            


    

     

    At
      the
      Effective Time, the following shall occur and shall be deemed to occur in the
      following order, without any further authorization, act or
      formality:

     

    
      	
               

            	
              (a)

            	
              first,
                the following transactions shall occur
                simultaneously:

            


    

     

    
      	
               

            	
              (i)

            	
              each
                Option outstanding immediately prior to the Effective Time shall
                be deemed
                to be vested and transferred by the holder thereof to the Corporation
                and
                cancelled in exchange for a cash amount equal to the excess, if any,
                of
                (i) the product of the number of Class B Shares issuable upon exercise
                of
                such Option and $53.00, less (ii) the aggregate exercise price payable
                under such Option by the holder to acquire the Class B Shares issuable
                upon exercise of such Option;

            


    

     

    
      	
               

            	
              (ii)

            	
              each
                DSU outstanding immediately prior to the Effective Time shall be
                deemed to
                be transferred by the holder thereof to the Corporation and cancelled
                in
                exchange for a cash amount equal to $53.00 for each such
                DSU;

            


    

     

    
      	
               

            	
              (iii)

            	
              each
                RSU outstanding immediately prior to the Effective Time will be deemed
                to
                be vested and transferred by the holder thereof to the Corporation
                and
                cancelled in exchange for a cash amount equal to $53.00 for each
                such
                RSU;

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (iv)

            	
              each
                Share Purchase Right outstanding immediately prior to the Effective
                Time
                that has not been exercised and any right or entitlement of a participant
                relating to a Share Purchase Right that has been exercised but in
                respect
                of which the purchase price for the Class B Shares issuable upon
                such
                exercise has not been paid in full prior to the Effective Time by
                the
                holder thereof shall be deemed to be cancelled;
                and

            


    

     

    
      	
               

            	
              (v)

            	
              the
                Compensation Plans shall be terminated;
                and

            


    

     

    
      	
               

            	
              (b)

            	
              second,
                and five minutes following the occurrence of the transactions described
                in
                paragraph (a), the following transactions shall occur
                simultaneously:

            


    

     

    
      	
               

            	
              (i)

            	
              each
                Share outstanding immediately prior to the Effective Time (other
                than a
                Share described in section 3.1(a) or a Share held by a Qualifying
                Holdco
                in respect of which the Holdco Alternative has been validly elected)
                shall
                be transferred by the holder thereof to Acquireco in exchange for
                a cash
                amount equal to $53.00, and the name of each such holder will be
                removed
                from the register of holders of Shares and Acquireco will be recorded
                as
                the registered holder of such Share and will be deemed to be the
                legal and
                beneficial owner thereof free and clear of any liens, claims or
                encumbrances;

            


    

     

    
      	
               

            	
              (ii)

            	
              all
                of the shares outstanding immediately prior to the Effective Time
                of a
                Qualifying Holdco in respect of which the Holdco Alternative has
                been
                validly elected shall be transferred by the holder thereof to Acquireco
                in
                exchange for an aggregate amount equal to the product of $53.00 and
                the
                total number of Shares beneficially owned by such Qualifying Holdco,
                and
                the name of the holder of shares of such Qualifying Holdco will be
                removed
                from the register of holders of shares of such Qualifying Holdco
                and
                Acquireco shall be recorded as the registered holder of the shares
                of such
                Qualifying Holdco and shall be deemed to be the legal and beneficial
                owner
                thereof free and clear of any liens, claims or
                encumbrances.

            


    

     

    ARTICLE
      3

     

    RIGHTS
      OF DISSENT

     

    
      	
              3.1

            	
              Rights
                of Dissent

            


    

     

    Shareholders
      (other than Qualifying Holdcos or Qualifying Holdco Shareholders) may exercise
      rights of dissent in connection with the Arrangement with respect to their
      Shares pursuant to and in the manner set forth in the Interim Order, section
      190
      of the CBCA and this section 3.1 (the “Dissent Rights”) as the same may be
      modified by the Interim Order or the Final Order. Shareholders who duly exercise
      such Dissent Rights and who:

     

    
      	
               

            	
              (a)

            	
              are
                ultimately entitled to be paid fair value for their Shares shall
                be deemed
                to have transferred such Shares to Acquireco on the Effective Date
                simultaneously with the transactions described in section 2.3(b)
                without
                any further act or formality and free and clear of all liens, claims
                and
                encumbrances, with Acquireco being obligated to pay such Shareholders
                in
                consideration therefor the

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    fair
      value of such Shares, which fair value, notwithstanding anything to the contrary
      in the CBCA, if permitted by the Court, shall be determined as of the close
      of
      business on the day before the Special Resolution is adopted, and the name
      of
      each such Shareholder will be removed from the register of holders of Shares
      and
      Acquireco will be recorded as the registered holder of the Shares so transferred
      and will be deemed to be the legal and beneficial owner of such Shares free
      and
      clear of any liens, claims or encumbrances; or

     

    
      	
               

            	
              (b)

            	
              for
                any reason are ultimately not entitled to be paid fair value for
                their
                Shares shall be deemed to have participated in the Arrangement on
                the same
                basis as any non-dissenting Shareholder who is not a Qualifying Holdco
                or
                Qualifying Holdco Shareholder as at and from the Effective Time,
                and shall
                be deemed to have transferred their Shares to Acquireco under section
                2.3(b),

            


    

     

    but
      in no
      case shall the Corporation, Acquireco or any other Person be required to
      recognize such Shareholders as holders of Shares after the time set out in
      Section 2.3(b), and the names of such Shareholders shall be deleted from the
      register of Shareholders at the time set out in Section 2.3(b).

     

    ARTICLE
      4

     

    CERTIFICATES
      AND PAYMENTS

     

    
      	
              4.1

            	
              Exchange
                of Certificates for Cash

            


    

     

    
      	
               

            	
              (a)

            	
              At
                or before the time of issuance of the Certificate of Arrangement,
                Acquireco shall deposit sufficient cash with the Depositary for the
                benefit of Shareholders and Qualifying Holdco Shareholders entitled
                to
                amounts under the transactions described in Section
                2.3(b).  Upon surrender to the Depositary for cancellation of a
                certificate which immediately prior to the Effective Time represented
                outstanding Shares that were exchanged for cash, together with a
                duly
                completed and executed Letter of Transmittal and such additional
                documents
                and instruments as the Depositary may reasonably require, the Shareholder
                of such surrendered certificate shall be entitled to receive in exchange
                therefor a cheque issued by the Depositary in Canadian currency payable
                at
                any branch in Canada of a Canadian chartered bank or trust company
                in an
                amount equal to the cash which such Shareholder has the right to
                receive
                under the Arrangement for such Shares, less any amounts withheld
                pursuant
                to section 4.3 and any certificate so surrendered shall forthwith
                be
                cancelled.  The cash deposited with the Depositary shall be held
                in an interest-bearing account, and any interest earned on such funds
                shall be applied against the expenses of the Depositary and under
                no
                circumstances will any interest be payable to Shareholders or Qualifying
                Holdco Shareholders. For the purposes of this section 4.1(a), references
                to “Shareholders” shall exclude Qualifying Holdcos described in section
                2.3(b) and shall include Qualifying Holdco Shareholders described
                in
                section 2.3(b) and such Qualifying Holdco Shareholders shall be considered
                to own Shares owned by their Qualifying
                Holdcos.

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (b)

            	
              Until
                surrendered as contemplated by this section 4.1, each certificate
                which
                immediately prior to the Effective Time represented Shares shall
                be deemed
                after the time set out in section 2.3(b), to represent only the right
                to
                receive upon such surrender a cash payment, out of the cash deposited
                pursuant to this section 4.1, in lieu of such certificate as contemplated
                in this section 4.1, less any amounts withheld pursuant to section
                4.3.
                For greater certainty, as of the Effective Time, a Shareholder’s right and
                a Qualifying Holdco Shareholder’s right to receive cash under the
                Arrangement shall be satisfied only out of the amount deposited pursuant
                to this section 4.1 and such Shareholder or Qualifying Holdco Shareholder
                shall have no further right or claim as against Acquireco or the
                Corporation except to the extent the cash deposited by Acquireco
                is
                insufficient to satisfy the amounts payable to the Shareholders or
                Qualifying Holdco Shareholders. Any such certificate formerly representing
                Shares not duly surrendered on or before the sixth anniversary of
                the
                Effective Date shall cease to represent a claim by or interest of
                any
                former Shareholder of any kind or nature against or in the Corporation
                or
                Acquireco.  On such date, all Acquireco cash to which such
                former holder was entitled shall be deemed to have been surrendered
                to
                Acquireco.

            


    

     

    In
      the
      event any certificate which immediately prior to the Effective Time represented
      one or more outstanding Shares that were exchanged pursuant to section 2.3
      shall
      have been lost, stolen or destroyed, upon the making of an affidavit of that
      fact by the Person claiming such certificate to be lost, stolen or destroyed,
      the Depositary will issue in exchange for such lost, stolen or destroyed
      certificate, cash deliverable in accordance with such holder’s Letter of
      Transmittal.  When authorizing such payment in exchange for any lost,
      stolen or destroyed certificate, the Person to whom such cash is to be delivered
      shall as a condition precedent to the delivery of such cash, give a bond
      satisfactory to Acquireco and the Depositary in such sum as Acquireco may
      direct, or otherwise indemnify Acquireco and the Corporation in a manner
      satisfactory to Acquireco and the Corporation, against any claim that may be
      made against Acquireco and the Corporation with respect to the certificate
      alleged to have been lost, stolen or destroyed.

     

    
      	
              4.2

            	
              Transfer
                of Options, RSUs and DSUs

            


    

     

    At
      or
      before time of the issuance of the Certificate of Arrangement, the Corporation
      shall deposit, for the benefit of the persons entitled to amounts under the
      transactions described in Section 2.3(a)(i) through (iii), sufficient cash
      to
      pay the amounts outstanding as a result of such transactions.  The
      Corporation shall also provide the Depositary with the requisite information
      regarding the identity of the holders of Options, RSUs and DSUs that are
      transferred to the Corporation pursuant to Section 2.3(a) (“Eligible
      Holders”) and the amounts to which such Eligible Holders have become
      entitled as a result of such transactions.  Each Eligible Holder shall
      be entitled to receive, from the cash deposited with the Depositary pursuant
      to
      this Section 4.2, the amount which such Eligible Holder has the right to receive
      under the Arrangement in respect of his Option, RSU or DSU, as the case may
      be,
      less any amounts withheld pursuant to section 4.3 and shall have no claim
      against the Corporation or Acquireco except to the extent the cash deposited
      by
      the Corporation is insufficient to satisfy the amounts payable to the Eligible
      Holders.  The cash deposited with the Depositary shall be held in an
      interest-bearing account, and any interest earned on such funds shall be applied
      against the expenses of the Depositary and under no circumstances will any
      interest be payable to Eligible Holders.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    4.3           Withholding
      Rights

    Acquireco,
      the Corporation or the Depositary shall be entitled to deduct and withhold
      from
      any amount payable to any Person under the Plan of Arrangement (including,
      without limitation, any amounts payable pursuant to section 3.1), such amounts
      as Acquireco, the Corporation or the Depositary is required or permitted to
      deduct and withhold with respect to such payment under the ITA or any provision
      of federal, provincial, territorial, local or foreign tax laws, in each case,
      as
      amended.  To the extent that amounts are so withheld, such withheld
      amounts shall be treated for all purposes hereof as having been paid to the
      Person in respect of which such withholding was made, provided that such amounts
      are actually remitted to the appropriate taxing authority.

     

    ARTICLE
      5

     

    AMENDMENTS

     

    
      	
              5.1

            	
              Amendments
                to Plan of Arrangement

            


    

     

    
      	
               

            	
              (a)

            	
              The
                Corporation may amend, modify and/or supplement this Plan of Arrangement
                at any time and from time to time prior to the Effective Date, provided
                that each such amendment, modification and/or supplement must (i)
                be set
                out in writing, (ii) be approved by Acquireco, (iii) filed with the
                Court
                and, if made following the Meeting, approved by the Court, and (iv)
                communicated to Shareholders if and as required by the
                Court.

            


    

     

    
      	
               

            	
              (b)

            	
              Any
                amendment, modification or supplement to this Plan of Arrangement
                may be
                proposed by the Corporation at any time prior to the Meeting (provided
                that Acquireco shall have consented thereto acting reasonably) with
                or
                without any other prior notice or communication, and if so proposed
                and
                accepted by the Persons voting at the Meeting (other than as may
                be
                required under the Interim Order), shall become part of this Plan
                of
                Arrangement for all purposes.

            


    

     

    
      	
               

            	
              (c)

            	
              Any
                amendment, modification or supplement to this Plan of Arrangement
                that is
                approved or directed by the Court following the Meeting shall be
                effective
                only if (i) it is consented to by each of the Corporation and Acquireco
                (in each case, acting reasonably) and (ii) if required by the Court,
                it is
                consented to by Shareholders voting in the manner directed by the
                Court.

            


    

     

    
      	
               

            	
              (d)

            	
              Any
                amendment, modification or supplement to this Plan of Arrangement
                may be
                made following the Effective Date unilaterally by Acquireco, provided
                that
                it concerns a matter which, in the reasonable opinion of Acquireco,
                is of
                an administrative nature required to better give effect to the
                implementation of this Plan of Arrangement and is not adverse to
                the
                economic interest of any former
                Shareholder.

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ARTICLE
      6

     

    FURTHER
      ASSURANCES

     

    
      	
              6.1

            	
              Notwithstanding
                that the transactions and events set out herein shall occur and shall
                be
                deemed to occur in the order set out in this Plan of Arrangement
                without
                any further act or formality, each of the parties to the Arrangement
                Agreement shall make, do and execute, or cause to be made, done and
                executed, all such further acts, deeds, agreements, transfers, assurances,
                instruments or documents as may reasonably be required by any of
                them in
                order further to document or evidence any of the transactions or
                events
                set out herein.