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**AMENDMENT      NO. 2 TO ARRANGEMENT AGREEMENT** dated July      30, 2007,

**BETWEEN**

**AA      ACQUISITION CORP.**
**Acquireco**

**ALLIANCE      ATLANTIS COMMUNICATIONS INC**
**Corporation**

**WHEREAS**
**Arrangement Agreement**

**AND      WHEREAS**
**Amendment No.2**

**THIS      AGREEMENT WITNESSES THAT**

| 1.1 | **Interpretation** |
|-----|--------------------|

| 1.2 | **Amendments                to the Arrangement                Agreement** |
|-----|---------------------------------------------------------------------------|

|   | (a) | Section                1.1 of the Arrangement Agreement is hereby amended by deleting the                existing definitions of "Closing Date", "Effective Time"                and  “Outside Date” and substituting therefor the                following: |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Closing      Date**

**Effective      Time**

**Outside      Date**

|   | (b) | Section                5.2(a)(vii)(C) of the Arrangement Agreement is hereby amended by                deleting                the second paragraph of section 5.2(a)(vii)(C) and substituting therefor                the following: |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | “For                purposes of this Agreement, "**Marketing Period**" shall mean                the period terminating on August 15, 2007.”. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Section                1.1 of the Plan of Arrangement is hereby amended by deleting the                existing                definition of "Effective Time" and substituting therefor the                following: |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Effective      Time**

| 1.3 | **Financial                Information** |
|-----|------------------------------------------|

| 1.4 | **Amending                Order** |
|-----|-----------------------------------|

**Amending Order**

| 1.5 | **Representations                and Warranties of the                Corporation** |
|-----|-------------------------------------------------------------------------------------|

|   | (a) | Authority                and No Violation. |
|--------|-----|--------------------------------------------|

|   | (i) | The                Corporation has the requisite corporate power and capacity to execute                and                deliver this Amendment No.2 and to perform its obligations                hereunder.  The execution, delivery and performance of this                Amendment No.2 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                No.2. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | This                Amendment No.2 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. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (iii) | The                execution and delivery of this Amendment No.2 by the Corporation                does not,                and the performance of this Amendment No.2 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; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Except                for the Amending Order, 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                No.2. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1.6 | **Representations                and Warranties of                Acquireco** |
|-----|-------------------------------------------------------------------------------|

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|   | (i) | It                has the requisite power and capacity to execute, deliver and perform                its                obligations hereunder. The execution, delivery and performance of                this                Amendment No.2 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 No.2. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | This                Amendment No.2 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 No.2                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) | Except                for the Amending Order, 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                No.2. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | **1.7** | Survival |
|--------|---------|----------|

| 1.8 | **Governing                Law** |
|-----|----------------------------------|

| 1.9 | **Counterparts** |
|-----|------------------|

| 1.10 | **Continued                Effect of Arrangement                Agreement** |
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**REMAINDER      OF THIS PAGE INTENTIONALLY LEFT BLANK**

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**IN      WITNESS WHEREOF**

|   |                                            | **AA                ACQUISITION CORP.** |
|--------|-------------------------------------------------|-----------------------------------------|
| By:    | *"Richard                Leipsic"*              |
|   | Name:  Richard                Leipsic |
|   | Title:    Vice-President    |
|   |                                            |                                    |   |
|   |                                            | By:                                     | *"Riva                Richard"* |
|   |                                            |                                    | Name:  Riva                Richard |
|   |                                            |                                    | Title:    Secretary |

|   |                                                | **ALLIANCE                ATLANTIS COMMUNICATIONS INC.** |
|--------|-----------------------------------------------------|----------------------------------------------------------|
| By:    | *"Michael                MacMillan"*                |
|   | Name:                Michael MacMillan              |
|   | Title:  Executive                Chairman |
|   |                                                |                                                     |   |
|   |                                                | By:                                                      | *"Phyllis                Yaffe"* |
|   |                                                |                                                     | Name:  Phyllis                Yaffe |
|   |                                                |                                                     | Title:     Chief                Executive Officer |
|   |                                                |                                                     |   |

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