Document:

arrangementagreementjan10.htm

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6681859
      CANADA INC.

     

    -
      and -

     

    ALLIANCE
      ATLANTIS COMMUNICATIONS INC.

     

    

     

    

     

    ARRANGEMENT
      AGREEMENT

     

    

     

    

     

    JANUARY
      10,2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

              

                  TABLE
            OF
            CONTENTS      
      

                  
      
      

                  Page      

           
      

                  
      
    

      

    

    ARTICLE
      1

    

    
      	
                  INTERPRETATION

            	 	
                                                          2

            
	
                  1.1

            	
              Definitions

            	
                                                          2

            
	
                  1.2

            	
              Interpretation
                Not Affected by Headings, etc.

            	
                                                          13

            
	
                  1.3

            	
              Currency

            	
                                                          13

            
	
                  1.4

            	
              Number,
                etc.

            	
                                                          13

            
	
                  1.5

            	
              Statutory
                References

            	
                                                          14

            
	
                  1.6

            	
              Date
                for Any Action

            	
                                                          14

            
	
                  1.7

            	
              Prior
                Written Notices

            	
                                                          14

            
	
                  1.8

            	
              Schedules

            	
                                                          14

            

    

     

    ARTICLE
      2

    

    
      	
                  THE
                ARRANGEMENT

            	 	
                          15

            
	
                  2.1

            	
              Implementation
                Steps by the Corporation

            	
                          15

            
	
                  2.2

            	
              Interim
                Order

            	
                          15

            
	
                  2.3

            	
              The
                Arrangement

            	
                          16

            
	
                  2.4

            	
              Circular

            	
                          16

            
	
                  2.5

            	
              Deposit
                of Funds by Acquireco

            	
                          16

            
	
                  2.6

            	
              Preparation
                of Filings

            	
                          16

            
	
                  2.7

            	
              Dissenting
                Shareholders

            	
                          18

            
	
                  2.8

            	
              Holdco
                Alternative

            	
                          18

            

    

     

    ARTICLE
      3

    

    
      	
                  REPRESENTATIONS
                AND WARRANTIES

            	 	
                          19

            
	
                  3.1

            	
              Representations
                and Warranties of the Corporation

            	
                          19

            
	
                  3.2

            	
              Representations
                and Warranties of Acquireco

            	
                          28

            
	
                  3.3

            	
              Investigation

            	
                          29

            
	
                  3.4

            	
              Survival

            	
                          29

            

    

    ARTICLE
      4

    

    
      	
                  REGULATORY
                APPROVALS

            	 	
                          29

            
	
                  4.1

            	
              Applications

            	
                          29

            
	
                  4.2

            	
              Competition
                Approval

            	
                          30

            

    

     

    ARTICLE
      5

    

    
      	
                  COVENANTS

            	 	
                          30

            
	
                  5.1

            	
              Covenants
                of the Corporation

            	
                          30

            
	
                  5.2

            	
              Covenants
                of Acquireco

            	
                          39

            
	
                  5.3

            	
              Covenants
                Regarding Non-Solicitation

            	
                          40

            
	
                  5.4

            	
              Notice
                by the Corporation of Superior Proposal Determination

            	
                          40

            
	
                  5.5

            	
              Closing
                Matters

            	
                          40

            
	
                  5.6

            	
              Cooperation
                regarding Reorganization

            	
                          40

            

    

    
                   

                
      
    

      
      

    

    
      i

    

    
            

                TABLE
          OF
          CONTENTS      
      

                (continued)      
      

                Page      

         
      

                
      
    

    

    
    

    ARTICLE
      6

     

    
      	
                  CONDITIONS

            	 	
                          40

            
	
                  6.1

            	
              Mutual
                Conditions Precedent

            	
                          40

            
	
                  6.2

            	
              Additional
                Conditions Precedent to the Obligations of Acquireco

            	
                          41

            
	
                  6.3

            	
              Additional
                Conditions Precedent to the Obligations of the Corporation

            	
                          42

            
	
                  6.4

            	
              Notice
                and Cure Provisions

            	
                          42

            
	
                  6.5

            	
              Satisfaction
                of Conditions

            	
                          43

            

    

     

    ARTICLE
      7

    

    
      	
                  TERMINATION,
                AMENDMENT AND WAIVER

            	 	
                          43

            
	
                  7.1

            	
              Termination

            	
                          43

            
	
                  7.2

            	
              Effect
                of Termination

            	
                          44

            
	
                  7.3

            	
              Expenses

            	
                          45

            
	
                  7.4

            	
              Acquireco
                Termination Payment

            	
                          45

            
	
                  7.5

            	
              Amendment

            	
                          45

            
	
                  7.6

            	
              Waiver

            	
                          45

            

    

    ARTICLE
      8

    

    
      	
                  GENERAL

            	 	
               

            
	
                  8.1

            	
              Notices

            	
                          

            
	
                  8.2

            	
              Assignment

            	
                          48

            
	
                  8.3

            	
              Binding
                Effect

            	
              48

            
	
                  8.4

            	
              No
                Other Warranties

            	
                           48

            
	
                  8.5

            	
              Separate
                Warranties

            	
                           48

            
	
                  8.6

            	
              Entire
                Agreement

            	
                           48

            
	
                  8.7

            	
              Remedies
                and Waivers

            	
                           48

            
	
                  8.8

            	
              No
                Personal Liability

            	
                           48

            
	
                  8.9

            	
              Control
                of Other Party’s Business

            	
                           48

            
	
                  8.10

            	
              Indemnification

            	
                           48

            
	
                  8.11

            	
              Further
                Assurances

            	
                           49

            
	
                  8.12

            	
              Public
                Statements

            	
                           49

            
	
                  8.13

            	
              Governing
                Law

            	
                           49

            
	
                  8.14

            	
              Invalidity
                of Provisions

            	
                           49

            
	
                  8.15

            	
              Counterparts

            	
                           49

            

    

    EXHIBIT
      1  FORM OF PLAN OF ARRANGEMENT                                                                             51

     

    SCHEDULE
      1.1(A) CRTC REGULATED COMPANIES                                                                       57

     

    SCHEDULE
      5.1(K) ERISA COMPLIANCE COMPANIES                                                                         58

     

    

    
                   

                
      
    

      ii

    

    
      
        

      

    

    
    

    
    

    

     

     

    ARRANGEMENT
      AGREEMENT

     

    THIS
      AGREEMENT is made as of  January 10, 2007

     

    BETWEEN:

     

    6681859
      CANADA INC., 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 wishes to acquire all of the Shares on a fully diluted
      basis;

     

    WHEREAS
      SHS and Sumac have entered into the Voting Agreements;

     

    WHEREAS
      the Corporation has agreed to propose an Arrangement involving Acquireco and
      the
      Corporation;

     

    WHEREAS
      the Arrangement will be on the terms and conditions set forth in the Plan of
      Arrangement attached hereto as Exhibit 1 as it may be amended in accordance
      with
      the terms of this Agreement;

     

    WHEREAS
      the Board of Directors of the Corporation has determined that the consideration
      offered under the Arrangement for each Share is fair from a financial point
      of
      view to the Shareholders, and that it is in the best interests of the
      Corporation for it to enter into this Agreement, to take all reasonable actions
      to support and implement the Arrangement, and consequently, the Board of
      Directors recommends that the Shareholders vote in favour of the Special
      Resolution (as defined below);

     

    WHEREAS,
      simultaneous with the execution and delivery hereof, CanWest MediaWorks Inc.,
      a
      corporation existing under the laws of Manitoba (“CanWest”), is
      executing and delivering a guarantee dated the date hereof (the “CanWest
      Guarantee”) in favor of the Corporation pursuant to which CanWest is
      guaranteeing certain of Acquireco’s obligations under this Agreement;
      and

     

    WHEREAS,
      simultaneous with the execution and delivery hereof, GS Capital Partners VI,
      L.P., a Delaware Limited Partnership (“GSCP”), GS Capital
      Partners VI Offshore, L.P., a Cayman Limited Partnership
      (“GSCPO”) and GS Capital Partners VI GmbH & CO. KG, a
      German Limited Partnership (“GSCPG” and, together with GSCP and
      GSCPO, the “GS Guarantors”, and the GS Guarantors and CanWest
      referred to collectively as the “Guarantors”), are executing
      and delivering a guarantee dated the date hereof (the “GSCP
      Guarantee” and, together with the CanWest Guarantee, the
“Guarantees”) in favor of the

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    Corporation
      pursuant to which the GS Guarantors are guaranteeing certain of Acquireco’s
      obligations under this Agreement.

     

    NOW
      THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
      respective covenants and agreements herein contained, the parties hereto
      covenant and agree as follows:

     

    ARTICLE
      1

     

    INTERPRETATION
      

     

    
      	
              1.1

            	
              Definitions
                

            

    

     

    In
      this
      Agreement, unless there is something in the subject matter or context
      inconsistent therewith, the following terms shall have the following meanings,
      respectively:

     

    “Acquireco
      Disclosure Letter” means that certain letter dated as of the date
      hereof and delivered by Acquireco to the Corporation concurrently with the
      execution and delivery of this Agreement and signed by Acquireco and the
      Corporation;

     

    “Acquireco
      Termination Payment” has the meaning ascribed thereto in section 0;

     

    “Acquisition
      Proposal” means any merger, amalgamation, take-over bid, tender offer,
      arrangement, recapitalization, liquidation, dissolution or share exchange
      involving the Corporation or any subsidiary, any sale of assets (including
      shares of subsidiaries or rights or interests therein or thereto) of the
      Corporation or any of its subsidiaries representing 20% or more of the
      consolidated assets or contributing 20% or more of the consolidated revenue
      of
      the Corporation and its subsidiaries, taken as a whole (or any lease, long
      term
      supply agreement or other arrangement having the same economic effect), any
      sale
      of more than 20% of any class of equity securities of the Corporation (or rights
      or interests therein or thereto), or similar transactions involving the
      Corporation or any subsidiaries of the Corporation having the same economic
      effect, or a proposal or offer, or public announcement of an intention, to
      do
      any of the foregoing, directly or indirectly, or any modification or proposed
      modification of any of the foregoing, excluding however, the Arrangement, the
      Contemplated Transactions, or any transaction to which the Guarantors or
      Acquireco are a party;

     

    “Acquisition
      Proposal Assessment Period” has the meaning ascribed thereto in section
0;

     

    “affiliate”
      means, in respect of any Person, another Person if:

     

    
      	
               

            	
              (a)

            	
              one
                of them is the subsidiary of the other;
                or

            

    

     

    
      	
               

            	
              (b)

            	
              each
                of them is Controlled by the same
                Person;

            

    

     

    “Alternative
      Debt Financing” has the meaning ascribed thereto in section
      5.2(a)(vii)(B);

     

    “Arm’s
      Length” has the meaning attributed thereto under the Tax
      Act;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Arrangement”
      means an arrangement involving Acquireco and 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;

     

    “Articles
      of Arrangement” means the articles of arrangement of the Corporation in
      respect of the Arrangement to be filed by the Corporation with the Director
      on
      the Closing Date, in form and substance satisfactory to Acquireco and the
      Corporation, acting reasonably;

     

    “Board”
      or “Board of Directors” means the board of directors of the
      Corporation;

     

    “Books
      and Records” means all books and records of the Corporation and its
      subsidiaries, including financial, personnel, corporate, operations and sales
      books, books of account, sales and purchase records, lists of suppliers and
      customers, formulae, business reports, plans and projections and all other
      documents, surveys, plans, files, records, correspondence, and other data and
      information, financial or otherwise including all data and information stored
      on
      computer-related or other electronic media;

     

    “Bridge
      Financing” has the meaning ascribed thereto in section 0;

     

    “Broadcasting
      Legislation” means the Broadcasting Act (Canada), the
Radiocommunication Act (Canada) and all orders, decisions, notices,
      policies, circulars and binding guidelines issued thereunder or pursuant thereto
      as now in effect and as they may be amended from time to time prior to the
      Effective Date;

     

    “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;

     

    “Canadian
      GAAP” has the meaning ascribed thereto in 0;

     

    “CanWest”
      has the meaning ascribed thereto in the recitals to this Agreement;

     

    “CanWest
      Guarantee” has the meaning ascribed thereto in the recitals to this
      Agreement;

     

    “Cash
      Amount” means $53.00 in cash per Share;

     

    “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;

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Closing
      Date” shall be (i) the first Business Day following the earliest of (a)
      any Business Day during the Marketing Period as may be specified by Acquireco
      on
      no less than three Business Days’ prior notice to the Corporation, (b) the final
      day of the Marketing Period or (c) the date following commencement of the
      Marketing Period that is three Business Days following the date the Debt
      Financing is obtained or (ii) on such other date as Acquireco and the
      Corporation may agree; provided that, in each case, each of the conditions
      set
      forth in Article 6 hereof shall have been satisfied or waived on or by the
      Closing Date;

     

    “Commissioner”
      means the Commissioner of Competition appointed pursuant to the Competition
      Act;

     

    “Compensation
      Plans” means the Corporation’s Amended and Restated 1993 Employee Stock
      Option Plan, the Corporation’s 1998 Share Compensation Plan, as amended, the
      Corporation’s April 1, 2003 Performance Share Appreciation Plan, as amended, the
      Corporation’s March 14, 2006 Restricted Share Unit Plan, and the Corporation’s
      May 31, 1999 Deferred Share Unit Plan, the Motion Picture Distribution LP
      (“MPDLP”) March 14, 2005 Alliance Atlantis Capital Pool Plan,
      as amended, the MPDLP March 4, 2005 Alliance Atlantis Equity Bonus Pool Plan,
      as
      amended, the MPDLP March 4, 2005 Alliance Atlantis Consideration Pool Plan,
      as
      amended, and the MPDLP Joint Long-Term Incentive Plans (amended and restated
      effective September 1, 2006);

     

    “Competition
      Act” means the Competition Act (Canada), as now in effect and
      as it may be amended from time to time prior to the Effective Date;

     

    “Competition
      Act Clearance” means the occurrence of either of the
      following:

     

    
      	
               

            	
              (a)

            	
              the
                issuance of an advance ruling certificate (“ARC”) by the
                Commissioner under section 102(1) of the Competition Act, in form
                and
                substance satisfactory to Acquireco acting reasonably, to the effect
                that
                the Commissioner is satisfied that the Commissioner would not have
                sufficient grounds upon which to apply to the Competition Tribunal
                for an
                order under section 92 of the Competition Act with respect to the
                completion of the Arrangement and which ARC shall remain in force,
                unamended, at the Effective Date;
                or

            

    

     

    
      	
               

            	
              (b)

            	
              the
                applicable waiting period under section 123 of the Competition Act
                shall
                have expired or been earlier terminated or waived and the Commissioner
                shall have advised Acquireco in writing (which advice will not have
                been
                rescinded at the Effective Date) that the Commissioner is of the
                view that
                there are not sufficient grounds to initiate proceedings before the
                Competition Tribunal under the merger provisions of the Competition
                Act in
                respect of the completion of the Arrangement and such written
                communication does not contain any conditions, restrictions or
                requirements (other than the normal caveat that such proceedings
                may be
                initiated at any time up to three years after the transactions have
                been
                substantially completed) that are not satisfactory to Acquireco acting
                reasonably;

            

    

     

    “Competition
      Authorities” means the Commissioner, the United States Department of
      Justice and the United States Federal Trade Commission and comparable officials
      in other relevant jurisdictions;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Competition
      Laws” means the Competition Act and the HSR Act and similar Laws of
      other relevant jurisdictions;

     

    “Competition
      Tribunal” means the Competition Tribunal established under the
Competition Tribunal Act (Canada), as now in effect and as it may be
      amended from time to time prior to the Effective Date;

     

    “Confidentiality
      Agreements” means, together, the confidentiality agreement dated
      December 17, 2006 between the Corporation and CanWest, as amended by letter
      dated December 22, 2006 and as further amended by letter dated January 1, 2007,
      and the Confidentiality Agreement dated December 16, 2006 between the
      Corporation and GS, as amended by letter dated December 23, 2006 and as further
      amended by letter dated January 1, 2007;

     

    “Confidential
      Material Contracts” has the meaning ascribed thereto in section 0;

     

    “Contemplated
      Transactions” means the transactions listed in the Acquireco Disclosure
      Letter;

     

    “Control”
      means, when applied to a relationship between two Persons, that a Person (the
      “first Person”) is considered to control another Person (the
“second Person”) if:

     

    
      	
               

            	
              (a)

            	
              the
                first Person, directly or indirectly, beneficially owns or exercises
                control or direction over securities of the second Person carrying
                votes
                which, if exercised, would entitle the first Person to elect a majority
                of
                the directors of the second Person, unless that first Person holds
                the
                voting securities only to secure an
                obligation;

            

    

     

    
      	
               

            	
              (b)

            	
              the
                second Person is a partnership, other than a limited partnership,
                and the
                first Person holds more than 50% of the interests of the partnership;
                or

            

    

     

    
      	
               

            	
              (c)

            	
              the
                second Person is a limited partnership and the general partner of
                the
                limited partnership is the first
                Person;

            

    

     

    “Corporation
      Expenses” means all of the Corporation’s actual out-of-pocket expenses
      incurred in connection with the transactions contemplated in this Agreement,
      including in connection with preparing and negotiating this Agreement (including
      regulatory filing fees and attorneys’, accountants’, investment bankers’,
      experts’ and consultants’ fees and expenses), up to a limit of
      $15,000,000;

     

    “Corporation
      Information” means (i) the documents made available to Acquireco or the
      Guarantor Representatives on or before the date of this Agreement as described
      in Schedule A of the Disclosure Letter and (ii) the Filed CSA
      Documents;

     

    “Corporation
      Intellectual Property” means Intellectual Property, other than Licensed
      Intellectual Property, that has been developed by or for, or is being developed
      by or for, the Corporation or any of its subsidiaries or that is owned by the
      Corporation or any of its subsidiaries, in each case that is material to the
      conduct of the business of the Corporation and its subsidiaries, on a
      consolidated basis, as currently conducted;

     

    “Corporation’s
      Documents” has the meaning ascribed thereto in section 0;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Court”
      means the Ontario Superior Court of Justice;

     

    “CRTC”
      means the Canadian Radio-television and Telecommunications
      Commission;

     

    “CRTC
      Approval” means the approval by the CRTC of (a) the Trust Arrangements
      and (b) the reorganization of the CRTC Regulated Companies as described in
      sections 8 and 16 through 20 of the Acquireco Disclosure Letter;

     

    “CRTCRegulated
      Companies” means those corporations and partnerships listed on Schedule
      1.1(a);

     

    “CSAs”
      means the Canadian Securities Administrators;

     

    “Debt
      Commitment Letter” has the meaning ascribed thereto in section 0;

     

    “Debt
      Financing” has the meaning ascribed thereto in section 0;

     

    “Debt
      Receipt Failure” has the meaning ascribed thereto in section 0;

     

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

     

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

     

    “Disclosure
      Letter” means that certain letter dated as of the date hereof and
      delivered by the Corporation to Acquireco concurrently with the execution and
      delivery of this Agreement and signed by the Corporation and
      Acquireco;

     

    “Dissent
      Rights” means the rights of dissent in respect of the Arrangement
      described in the Plan of Arrangement;

     

    “Effective
      Date” means the date upon which the 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 12:01 a.m. (Toronto time) on the Effective
      Date;

     

    “Employee
      Plans” has the meaning ascribed thereto in section 0;

     

    “ERISA”
      means the United States Employee Retirement Income Security Act of
      1974, as now in effect and as it may be amended from time to time prior to
      the Effective Date;

     

    “Exclusivity
      Agreement” means the exclusivity agreement dated as of December 23,
      2006 between the Corporation, SHS and the Guarantors, as amended;

     

    “Fairness
      Opinion” means an opinion of RBC Dominion Securities Inc. to the Board
      of Directors that, as of the date of such opinion, the consideration under
      the
      Arrangement is fair from a financial point of view to the
      Shareholders;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Filed
      CSA Documents” means any documents filed with the CSAs on or before
      December 31, 2006, that are publicly disclosed under the profiles on the SEDAR
      website for each of (i) the Corporation, (ii) Movie Distribution Income Fund
      and
      (iii) Score Media Inc.;

     

    “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;

     

    “Financial
      Statements” means the audited consolidated financial annual statements
      of the Corporation as at and for the period ending December 31, 2005 and the
      unaudited comparative consolidated interim financial statements as at and for
      the period ending September 30, 2006, and the notes thereto, in each case in
      the
      form in which the Corporation filed them with the CSAs;

     

    “Financing”
      has the meaning ascribed thereto in section 0;

     

    “Financing
      Agreements” has the meaning ascribed thereto in section 0;

     

    “Funding
      Commitment Letter” has the meaning ascribed thereto in section 0;

     

    “Governmental
      Entity” means any (i) multinational, federal, provincial, state,
      regional, municipal, local or other government, governmental or public
      department, central bank, court, tribunal (including the Competition Tribunal),
      arbitral body, commission, board, bureau or agency, domestic or foreign,
      including the Competition Authorities; (ii) any subdivision, agent, commission,
      board or authority of any of the foregoing; or (iii) any quasi-governmental
      or
      private body exercising any regulatory, expropriation or taxing authority under
      or for the account of any of the foregoing, including the Toronto Stock Exchange
      or any other stock exchange;

     

    “GS
      Guarantors” means GSCP, GSCPO and GSCPG;

     

    “GSCP”
      has the meaning ascribed thereto in the recitals to this Agreement;

     

    “GSCPG”
      has the meaning ascribed thereto in the recitals to this Agreement;

     

    “GSCPO”
      has the meaning ascribed thereto in the recitals to this Agreement;

     

    “GSCP
      Guarantee” has the meaning ascribed thereto in the recitals to this
      Agreement;

     

    “GuarantorExpenses”
      means all of the Guarantors’ and Acquireco’s actual out-of-pocket expenses
      incurred in connection with the transactions contemplated in this Agreement,
      including in connection with preparing and negotiating the Agreement and
      carrying out its due diligence of the Corporation and its subsidiaries, and
      their respective assets and liabilities (including in connection with each
      of
      the foregoing, regulatory filing fees and attorneys’, accountants’, investment
      bankers’, experts’ and consultants’ fees and expenses), up to a limit of
      $15,000,000;

     

    “Guarantor
      Representatives” has the meaning ascribed thereto in section 0;

     

    “Guarantors”
      has the meaning ascribed thereto in the recitals to this Agreement;

     

    “High
      Yield Financing” has the meaning ascribed thereto in section 0;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Holdco
      Agreement” has the meaning ascribed thereto in section 0;

     

    “Holdco
      Alternative” has the meaning ascribed thereto in section 0;

     

    “Holdco
      Election Date” has the meaning ascribed thereto in section 0;

     

    “HSR
      Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
      1976 (U.S.), as now in effect and as it may be amended from time to time
      prior to the Effective Date;

     

    “HSR
      Clearance” means expiration or earlier termination of the waiting
      period under the HSR Act;

     

    “Initial
      Financing” has the meaning ascribed thereto in section 0;

     

    “Intellectual
      Property” means any and all intellectual property and intellectual
      property rights including patents, copyrights, Trade-marks, and industrial
      designs (including registrations of and applications for all of the foregoing
      in
      any jurisdiction and renewals, divisions, extensions and reissues, where
      applicable, relating thereto), trade secrets, confidential information,
      technology and software;

     

    “Inter-Affiliate
      Transfer” means a transfer of shares or interest in a partnership or
      assets of a Person which is a subsidiary of the Corporation to the Corporation
      or another affiliate of the Corporation (other than an upstream affiliate of
      the
      Corporation), but specifically excluding the regulated assets of
      AABI;

     

    “Interim
      Order” means the interim order of the Court in respect of the
      Arrangement, as contemplated by section 0;

     

    “Investment
      Canada Act” means the Investment Canada Act (Canada) as now in
      effect and as it may be amended from time to time prior to the Effective
      Date;

     

    “knowledge
      of the Corporation” means the actual knowledge of Michael MacMillan,
      Phyllis Yaffe, David Lazzarato and Andrea Wood; 

     

    “Laws”
      means all laws, statutes, rules, regulations and by-laws, official directives,
      orders, ordinances, judgments, promulgations and decrees,
      and the terms and conditions of any grant of approval, permission, authority
      or
      licence, of any Governmental Entity or self-regulatory authority (including
      the
      Toronto Stock Exchange);

     

    “Licensed
      Intellectual Property” means the Intellectual Property owned by Persons
      other than the Corporation or any of its subsidiaries and which the Corporation
      or any of its subsidiaries uses, in each case, that is material to the conduct
      of the business of the Corporation and its subsidiaries on a consolidated basis
      as currently conducted;

     

    “Liens”
      means any hypothecs, mortgages, liens, charges, security interests, encumbrances
      and adverse claims;

     

    “Marketing
      Period” has the meaning ascribed thereto in section
      5.2(a)(vii);

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    “Material
      Adverse Change” or “Material Adverse Effect” means any
      change, effect, event, development, occurrence or state of facts that is, or
      would reasonably be expected to be, material and adverse to the business,
      operations, results of operations, liabilities (including contingent
      liabilities), obligations (whether absolute, accrued, conditional or otherwise)
      capital, properties, assets or financial condition of the Corporation and its
      subsidiaries taken as a whole or that would materially impair the Corporation’s
      ability to perform its obligations under this Agreement in any material respect,
      other than any change, effect, event, development, occurrence or state of facts
      relating to (i) any change in general economic conditions in Canada or the
      United States or any change in Canadian or United States securities, financial,
      banking or currency exchange markets; (ii) any change in the trading volume
      or
      market price of the Class A Shares or the Class B Shares primarily resulting
      from a change, effect, event, development or occurrence excluded from the
      definition of Material Adverse Change under clauses (i), (iii), (iv) or (v)
      hereof; (iii) any change or development resulting from any act of terrorism
      or
      any outbreak of hostilities or war (or any escalation or worsening thereof)
      or
      any natural disaster; (iv) any change or development affecting the broadcasting,
      entertainment and motion picture distribution industries generally or the
      specific industries in which the Corporation and its subsidiaries operate;
      or
      (v) the announcement of the entering into of this Agreement, the Arrangement,
      the Contemplated Transactions or the Debt Financing; provided, however, that
      any
      such change referred to in clause (i), (iii) or (iv) above
      does not primarily relate only to (or have the effect of primarily relating
      only
      to) the Corporation and its subsidiaries, taken as a whole, or
      disproportionately adversely affect the Corporation and its subsidiaries taken
      as a whole, compared to other companies of similar size operating in the
      industries in which the Corporation and its subsidiaries operate;

     

    “Material
      Contract” means any contract, agreement, commitment (other than any
      employment agreement or Employee Plan) or licence (other than a licence issued
      by the CRTC) that is material to the Corporation and its subsidiaries on a
      consolidated basis relating to:

     

    
      	
               

            	
              (i)

            	
              long-term
                and bank indebtedness;

            

    

     

    
      	
               

            	
              (ii)

            	
              co-ownership,
                joint venture, partnership or other revenue-sharing
                arrangements;

            

    

     

    
      	
               

            	
              (iii)

            	
              program
                supply, including any agreements with respect to Licensed Intellectual
                Property;

            

    

     

    
      	
               

            	
              (iv)

            	
              distribution
                or carriage agreements;

            

    

     

    
      	
               

            	
              (v)

            	
              shareholder
                agreements, unanimous shareholder declarations or voting trust, pooling
                or
                transfer agreements;

            

    

     

    
      	
               

            	
              (vi)

            	
              put
                or call agreements relating to equity securities of the Corporation,
                other
                than where such agreement forms part of an Employee
                Plan;

            

    

     

    
      	
               

            	
              (vii)

            	
              Score
                Media Inc.;

            

    

     

    
      	
               

            	
              (viii)

            	
              non-competition
                agreements or other agreements containing restrictions on the business
                that may be carried on by the Corporation and its
                subsidiaries;

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (ix)

            	
              financial
                risk management contracts, such as currency, commodity or interest
                related
                hedge contracts;

            

    

     

    
      	
               

            	
              (x)

            	
              the
                lease for the Corporation’s head office at 121 Bloor Street East;
                and

            

    

     

    
      	
               

            	
              (xi)

            	
              to
                the extent not included in any of clauses (i) through (x) above,
                any
                contract outside the ordinary course of business of the Corporation
                or its
                Material Subsidiaries, as the case may
                be;

            

    

     

    “material
      fact” has the meaning ascribed thereto in the Securities
      Act;

     

    “Material
      Subsidiaries” means those subsidiaries of the Corporation the business
      operations of which are material to the Corporation and its subsidiaries, on
      a
      consolidated basis, including those subsidiaries listed in section 0 of the Disclosure Letter;

     

    “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, approve the Special
      Resolution;

     

    “Offering
      Documents” has the meaning ascribed thereto in section 0;

     

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

     

    “OSC”
      means the Ontario Securities Commission;

     

    “Other
      Competition Act Approvals” shall mean all required approvals under any
      Competition Law to the Arrangement (other than, in the case of the Arrangement,
      the HSR Clearance and Competition Act Clearance) and to the Contemplated
      Transactions;

     

    “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
0 shall not have been satisfied; and (b) the right
      of
      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 5:00 p.m. (Toronto time) on the date that is five days prior to
      the
      then current Outside Date provided that in no event can the Outside Date be
      extended beyond July 30, 2007;

     

    “Permits”
      has the meaning ascribed thereto in section 0;

     

    “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, in relation to the Arrangement, the plan of
      arrangement in the form of Exhibit 1 as it may be amended by any amendments
      or
      variations thereto made in accordance with the provisions hereof or made at
      the
      direction of the Court in the Final Order;

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    “Proceedings”
      has the meaning ascribed thereto in section 0;

     

    “Purchase
      Rights” means purchase rights granted under the Corporation’s 1998
      Share Compensation Plan;

     

    “Qualifying
      Holdco” has the meaning ascribed thereto in section 0;

     

    “Qualifying
      Holdco Shareholders” has the meaning ascribed thereto in section 0;

     

    “Receivables
      Financing” has the meaning ascribed thereto in section 0;

     

    “Regulatory
      Approvals” means, collectively, the Competition Act Clearance, the HSR
      Clearance, the CRTC Approval and any other approvals of Competition Authorities
      required in order to complete the Arrangement;

     

    “Required
      Financial Information” has the meaning ascribed thereto in section 0;

     

    “Rule
      144A” means Rule 144A under the US Securities Act;

     

    “SEC”
      means the United States Securities and Exchange Commission;

     

    “Securities
      Act” means the Securities Act (Ontario), as now in effect and
      as it may be amended from time to time prior to the Effective Date;

     

    “Shareholder”
      means a registered holder of Shares;

     

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

     

    “SHS”
      means Southhill Strategy Inc., a corporation existing under the laws of the
      Province of Ontario;

     

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

     

    “Specified
      Person” has the meaning ascribed thereto in section 0;

     

    “subsidiary”
      means a Person that is Controlled by another Person and includes a subsidiary
      of
      that Person;

     

    “Sumac”
      means Sumac Corporation Limited, a corporation existing under the laws of Nova
      Scotia;

     

    “Superior
      Proposal” means a bona fide written Acquisition Proposal,
      whether for consideration per Share payable wholly in cash, wholly in securities
      or any combination of cash and securities, (i) to purchase or otherwise acquire,
      directly or indirectly, by means of a merger, take-over bid, amalgamation,
      plan
      of arrangement, business combination or similar transaction, all of the Shares,
      or all or substantially all of the assets of the Corporation and its
      subsidiaries, and offering or making available to all Shareholders (with no
      distinction between the classes) the same consideration in form and amount
      per
      Share to be purchased or otherwise acquired; (ii) for which financing is then
      committed at least to the extent that the financing for the
      transactions

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    contemplated
      by this Agreement is committed at the date of this Agreement; (iii) that is
      not
      subject to any due diligence and/or access condition which would allow access
      to
      the Books and Records, personnel or properties of the Corporation or its
      subsidiaries beyond 5:00 p.m. (Toronto time) on the fifth day after which access
      is first afforded to the third party making the Acquisition Proposal (provided,
      however, that the foregoing shall not restrict the ability of such third party
      to continue to review after such period information provided to it by the
      Corporation during such five day period); and (iv) that the Board of Directors
      has determined in good faith (after consultation with its financial advisors
      and
      with its outside legal counsel) is reasonably capable of completion without
      undue delay taking into account all legal, financial, regulatory and other
      aspects of such Acquisition Proposal and the party making such Acquisition
      Proposal and such Acquisition Proposal would, if consummated in accordance
      with
      its terms (but not assuming away any risk of non-completion), result in a
      transaction more favourable from a financial point of view to the Shareholders
      than the Arrangement (including any adjustment to the terms and conditions
      of
      the Arrangement proposed by Acquireco pursuant to section 0 of this Agreement);

     

    “Supplemental
      Disclosure Letter” means that certain letter dated as of the date
      hereof and delivered by the Corporation to Acquireco concurrently with the
      execution and delivery of this Agreement and signed by the Corporation and
      Acquireco and supplemental to the Disclosure Letter;

     

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

     

    “Tax
      Returns” means all returns, reports, declarations, elections, notices,
      filings, information returns and statements including all amendments, schedules,
      attachments or supplements thereto and whether in tangible, electronic or other
      form, filed or required to be filed in respect of Taxes;

     

    “Taxes”
      means all taxes, duties, fees, premiums, assessments, imposts, levies and other
      charges of any kind whatsoever imposed by any Governmental Entity or payable
      under any Laws, together with all interest, penalties, fines, additions to
      tax
      or other additional amounts imposed in respect thereof, including those levied
      on, or measured by, or referred to as income, gross receipts, profits, capital,
      transfer, land transfer, sales, goods and services, harmonized sales, use,
      value-added, excise, stamp, withholding, business, franchising, property,
      employer health, payroll, employment, health, social services, education and
      social security taxes, all surtaxes, all customs duties and import and export
      taxes, all license, franchise and registration fees and all employment
      insurance, health insurance, workers’ compensation and Canada, Québec and other
      government pension plan premiums or contributions;

     

    “Term
      Loan Financing” has the meaning ascribed thereto in section 0;

     

    “Termination
      Payment” means $65,000,000;

     

    “Third
      Party Acquisition” means any of the following transactions or any
      agreement by the Corporation to enter into or support one of the following
      transactions:  (i) any direct or indirect acquisition through one or
      more transactions of (A) all or substantially all of the assets of the
      Corporation and its subsidiaries taken as a whole or (B) more than 50% of the
      outstanding Class A Shares, (ii) any tender offer, exchange offer, take-over
      bid
      or agreement that, if consummated, would result in any Person beneficially
      owning more than 50% of the outstanding Class A

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Shares,
      (iii) any merger, amalgamation, arrangement, consolidation or other business
      combination with the Corporation other than the Arrangement, or (iv) any
      recapitalization of the Corporation or similar transaction that, if consummated,
      would result in any Person beneficially owning more than 50% of the outstanding
      Class A Shares;

     

    “Trade-marks”
      means trade-marks, brand names, internet domain names, trade names, slogans,
      URLs, brand designs, brand graphics, logos and other indicia of origin, whether
      or not registered and the goodwill associated therewith;

     

    “Trust
      Agreement” means an agreement in form and substance acceptable to
      Acquireco, acting reasonably, to be entered into between Acquireco and the
      Trustee in order to give effect to the Trust Arrangements;

     

    “Trust
      Arrangements” means arrangements whereby the shares of, or partnership
      interests in, the CRTC Regulated Companies and/or the shares of any successor
      thereto or of a corporation holding CRTC Regulated Companies shall be deposited
      with the Trustee pursuant to the Trust Agreement pending approval by the CRTC
      of
      the acquisition of such shares and partnership interests;

     

    “Trustee”
      means the trustee under the Trust Agreement;

     

    “US
      Securities Act” means the U.S. Securities Act of 1933 and the rules and
      regulations promulgated thereunder, as now in effect and as may be amended
      from
      time to time prior to the Effective Date; and

     

    “Voting
      Agreements” means the voting agreement dated as of the date hereof
      between SHS, Michael MacMillan, Seaton McLean and Acquireco and the voting
      agreement dated as of the date hereof between Sumac, Donald K. Sobey and
      Acquireco, whereby each of the parties thereto other than Acquireco, agrees,
      subject to certain conditions, to vote its Shares in favour of the
      Arrangement.

     

    
      	
              1.2

            	
              Interpretation
                Not Affected by Headings, etc.

            

    

     

    The
      division of this Agreement 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 Agreement. The terms “this
      Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to
      this Agreement (including the Schedules and Appendices hereto) and not to any
      particular Article, section or other portion hereof and include any agreement
      or
      instrument supplementary or ancillary hereto.

     

    
      	
              1.3

            	
              Currency
                

            

    

     

    All
      sums
      of money referred to in this Agreement are expressed in lawful money of
      Canada.

     

    
      	
              1.4

            	
              Number,
                etc. 

            

    

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    1.5           Statutory
      References

     

    Any
      reference in this Agreement 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 to be taken hereunder by
      any
      of the parties hereto is not a Business Day, such action shall be required
      to be
      taken on the next succeeding day which is a Business Day.

     

    
      	
              1.7

            	
              Prior
                Written Notices

            

    

     

    Where
      the
      Agreement provides that the prior written consent of a Party is required for
      any
      action unless otherwise expressly provided for herein the response by the other
      Party shall not be unreasonably delayed, provided that neither party shall
      be
      deemed to be in breach for failure to provide such response nor shall any such
      failure be deemed to be a consent to the requested action.

     

    
      	
              1.8

            	
              Schedules
                

            

    

     

    The
      Schedules to this Agreement are an integral part of this Agreement.

     

    
      	
              Schedule

            	
              Description

            
	
              1.1(a)

            	
              CRTC
                Regulated Companies

            
	
              5.1(k)

            	
              ERISA
                Compliance Companies

            

    

    

     

    ARTICLE
      2

     

    THE
      ARRANGEMENT 

     

    
      	
              2.1

            	
              Implementation
                Steps by the Corporation 

            

    

     

    The
      Corporation covenants in favour of Acquireco that the Corporation
      shall:

     

    
      	
               

            	
              (a)

            	
              as
                soon as reasonably practicable, apply to the Court under section
                192(4) of
                the CBCA for the Interim Order, and thereafter proceed with and diligently
                pursue the obtaining of the Interim Order, in all cases acting in
                a manner
                acceptable to Acquireco, acting
                reasonably;

            

    

     

    
      	
               

            	
              (b)

            	
              call
                and hold the Meeting as soon as practicable after the date of this
                Agreement, but in any event by April 30, 2007, or such other date
                as
                Acquireco and the Corporation may agree in writing, for the purpose
                of
                considering the Special Resolution (and, with the consent of Acquireco,
                for any other proper purpose as may be set out in the notice for
                such
                meeting);

            

    

     

    
      	
               

            	
              (c)

            	
              except
                as required for quorum purposes, not adjourn (except as required
                by
                applicable Law), postpone, cancel (or propose the adjournment,
                postponement or

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              cancellation
                of) or fail to call the Meeting without the Acquireco’s written
                consent;

            

    

     

    
      	
               

            	
              (d)

            	
              use
                commercially reasonable efforts to solicit from Shareholders proxies
                in
                favour of the Special Resolution, including, if so requested by Acquireco
                and at its expense, using the services of dealers and proxy solicitation
                services;

            

    

     

    
      	
               

            	
              (e)

            	
              subject
                to obtaining the approvals required by the Interim Order, as soon
                as
                reasonably practicable after the Meeting, apply to the Court under
                section
                192(3) of the CBCA for the Final Order, and thereafter proceed with
                and
                diligently pursue the obtaining of the Final Order, in all cases
                acting in
                a manner acceptable to Acquireco, acting
                reasonably;

            

    

     

    
      	
               

            	
              (f)

            	
              subject
                to obtaining the Final Order and the satisfaction or waiver of the
                conditions contained herein in favour of each party, on the Closing
                Date
                send to the Director for endorsement and filing the Articles of
                Arrangement and such other documents as may be required in connection
                therewith under section 192(6) of the CBCA to give effect to the
                Arrangement;

            

    

     

    
      	
               

            	
              (g)

            	
              instruct
                counsel acting for it to bring the applications referred to in sections
00 and
00
                in cooperation
                with counsel to Acquireco;

            

    

     

    
      	
               

            	
              (h)

            	
              permit
                Acquireco and its counsel to review and comment upon drafts of all
                material to be filed by the Corporation with the Court in connection
                with
                the Arrangement prior to the service and filing of that material
                and give
                reasonable consideration to such comments and all information regarding
                the Arrangement and Acquireco; the Corporation shall also provide
                counsel
                to Acquireco on a timely basis copies of any notice of appearance
                and
                evidence served on the Corporation or its counsel in respect of the
                application for the Final Order or any appeal therefrom and of any
                notice
                (written or oral) received by the Corporation indicating any intention
                to
                appeal the Final Order; and

            

    

     

    
      	
               

            	
              (i)

            	
              not
                (i) file any material with the Court in connection with the Arrangement
                or
                serve any such material, and not agree to modify or amend materials
                so
                filed or served, or (ii) send to the Director, for endorsement and
                filing
                by the Director, the Articles of Arrangement, except in either case
                as
                contemplated hereby or with Acquireco’s prior written consent, such
                consent not to be unreasonably withheld or
                delayed.

            

    

     

    
      	
              2.2

            	
              Interim
                Order 

            

    

     

    The
      notice of motion for the application referred to in section 0 shall request that the Interim Order
      provide:

     

    
      	
               

            	
              (a)

            	
              for
                the class of Persons to whom notice is to be provided in respect
                of the
                Arrangement and the Meeting and for the manner in which such notice
                is to
                be provided;

            

    

     

    
      	
               

            	
              (b)

            	
              that
                the requisite Shareholder approval for the Special Resolution shall
                be
                two-thirds of the votes cast on the Special Resolution by the Class
                A
                Shareholders and

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              the
                Class B Shareholders present in person or represented by proxy at
                the
                Meeting, each voting separately as a class (provided, however, that
                the
                requisite shareholder approval, and approval of any other parties,
                is
                subject to the discretion of the
                Court);

            

    

     

    
      	
               

            	
              (c)

            	
              that,
                in all other respects, the terms, restrictions and conditions of
                the
                by-laws and articles of the Corporation, including quorum requirements
                and
                all other matters, shall apply in respect of the
                Meeting;

            

    

     

    
      	
               

            	
              (d)

            	
              for
                the grant of the Dissent Rights;
                and

            

    

     

    
      	
               

            	
              (e)

            	
              for
                the notice requirements with respect to the presentation of the
                application to the Court for the Final
                Order.

            

    

     

    
      	
              2.3

            	
              The
                Arrangement 

            

    

     

    The
      Articles of Arrangement shall implement the Plan of Arrangement.  The
      Articles of Arrangement shall include the form of the Plan of Arrangement
      attached as Exhibit 1, as amended, to include such terms and conditions as
      may
      be determined by Acquireco to be necessary or desirable provided that no such
      term or condition shall, except as contemplated hereby, be prejudicial to the
      Shareholders or other parties to be bound by the Plan of Arrangement (other
      than
      in an insignificant manner) nor be inconsistent with the provisions of this
      Agreement or section 0 of the Plan of Arrangement
      attached to this Agreement as Exhibit 1. The Corporation agrees to amend
      the Plan of Arrangement at any time prior to the Effective Time in accordance
      with section 0 of this Agreement to include such
      other terms determined to be necessary or desirable by Acquireco, provided
      that
      the Plan of Arrangement shall not be amended in any manner which has the effect
      of reducing the Cash Amount or which is otherwise prejudicial to the
      Shareholders or other parties to be bound by the Plan of Arrangement (other
      than
      in an insignificant manner) nor is inconsistent with the provisions of this
      Agreement.  The closing of the Arrangement will take place at the
      offices of McCarthy Tétrault LLP, Suite 4700, Toronto Dominion Bank Tower,
      Toronto, at 10:00 a.m. on the Closing Date.

     

    
      	
              2.4

            	
              Circular
                

            

    

     

    
      	
               

            	
              (a)

            	
              As
                promptly as reasonably practicable after the execution of this Agreement,
                the Corporation shall prepare and complete, in consultation with
                Acquireco, the Circular together with any other documents required
                by the
                CBCA, the Securities Act and other applicable Laws in connection
                with the
                Meeting and the Arrangement, and the Corporation shall, as promptly
                as
                practicable after obtaining the Interim Order, cause the Circular
                and
                other documentation required in connection with the Meeting to be
                sent to
                each Shareholder and beneficial holder of Shares and filed as required
                by
                the Interim Order and applicable
                Laws.

            

    

     

    
      	
               

            	
              (b)

            	
              The
                Corporation shall ensure that the Circular complies with all applicable
                Laws and, without limiting the generality of the foregoing, the
                Corporation shall ensure that the Circular provides Shareholders
                with
                information in sufficient detail to permit them to form a reasoned
                judgment concerning the matters to be placed before them at the Meeting.
                The Corporation covenants that the information to becontained in
                the
                Circular or any amendment thereto (including any information referred
                to
                therein or incorporated therein by reference), other than information
                furnished to the Corporation by Acquireco, will be complete in all
                material respects as at the date thereof and will not contain any
                untrue
                statement of a material fact or omit to state a material fact required
                to
                be stated therein or necessary to make the statements contained therein
                not misleading in light of the circumstances in which they are
                made.  The Corporation shall permit Acquireco and its counsel to
                review and comment on drafts of the Circular and other documents
                referred
                to above in the course of its preparation and shall consider in good
                faith
                Acquireco’s comments thereon.

            

    

     

    
      	
               

            	
              (c)

            	
              Acquireco
                covenants to furnish to the Corporation, on a timely basis, all
                information requested by the Corporation that may be required under
                applicable Laws to be contained in the Circular or any amendment
                thereto
                relating to Acquireco and the Guarantors, and Acquireco covenants
                that all
                such information (including any information referred to therein or
                incorporated therein by reference) will be complete in all material
                respects as at the date thereof and will not contain any untrue statement
                of a material fact or omit to state a material fact required to be
                stated
                therein or necessary to make the statements contained therein not
                misleading in light of the circumstances in which they are
                made.

            

    

     

    
      	
               

            	
              (d)

            	
              Each
                of the Corporation and Acquireco shall promptly notify each other
                if at
                any time before the Effective Time it becomes aware that the Circular
                contains an untrue statement of a material fact or omits to state
                a
                material fact required to be stated therein or necessary to make
                the
                statements contained therein not misleading in light of the circumstances
                in which they are made, or that otherwise requires an amendment or
                supplement to the Circular, and the parties shall co-operate in the
                preparation of such amendment or supplement as
                required.

            

    

     

    
      	
              2.5

            	
              Deposit
                of Funds by Acquireco 

            

    

     

    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, on
      the
      Effective Date and at or before the time of filing with the Director of the
      Articles of Arrangement deposit with the Depositary immediately available funds
      equal to the aggregate Cash Amount payable pursuant to the
      Arrangement.

     

    
      	
              2.6

            	
              Preparation
                of Filings 

            

    

     

    
      	
               

            	
              (a)

            	
              Acquireco
                and the Corporation shall cooperate
                in:

            

    

     

    
      	
               

            	
              (i)

            	
              the
                preparation of any documents reasonably deemed by Acquireco or the
                Corporation to be necessary to discharge their respective obligations
                under applicable Laws (other than the Regulatory Approvals) in connection
                with the Arrangement and all other matters contemplated by this Agreement;
                and

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (ii)

            	
              Acquireco
                and the Corporation shall cooperate in the taking of all such action
                as
                may be required under applicable Laws in connection with the Arrangement
                and all other matters contemplated by this
                Agreement.

            

    

     

    
      	
               

            	
              (b)

            	
              Each
                of the parties shall furnish to the other party, on a timely basis,
                all
                information as may be required to effectuate the foregoing actions,
                and
                each covenants that, to its knowledge, no information so furnished
                by it
                in writing in connection with those actions or otherwise in connection
                with the consummation of the actions contemplated by this Agreement
                will
                contain any untrue statement of a material fact or omit to state
                a
                material fact required to be stated therein or necessary to make
                the
                statements contained therein not misleading in light of the circumstances
                in which they are made (other than with respect to any information
                relating to and provided by the other or any third party that is
                not an
                affiliate of one of the parties).

            

    

     

    
      	
               

            	
              (c)

            	
              Each
                of the Corporation and Acquireco shall promptly notify each other
                if at
                any time before the Effective Time it becomes aware that an application
                for any order, registration, consent, ruling, exemption, no-action
                letter
                or approval in connection with the Arrangement or this Agreement,
                or any
                other filing under applicable Laws (other than Competition Laws)
                contains
                an untrue statement of a material fact or omits to state a material
                fact
                required to be stated therein or necessary to make the statements
                contained therein not misleading in light of the circumstances in
                which
                they are made, or that otherwise requires an amendment or supplement
                to
                such application or filing, and the parties shall co-operate in the
                preparation of such amendment or supplement as
                required.

            

    

     

    
      	
               

            	
              (d)

            	
              The
                Corporation and Acquireco shall co-operate in the preparation of
                presentations, if any, to investors regarding the Arrangement, and
                no
                party shall issue any press release or other public disclosure document
                with respect to this Agreement or the Arrangement (other than its
                regular
                interim and annual continuous disclosure documents, provided no reference
                is made to this Agreement or the Arrangement in such documents other
                than
                as previously disclosed) without the consent of the other party (which
                shall not be unreasonably withheld) and the Corporation shall not
                make any
                filing with any Governmental Entity with respect thereto (other than
                the
                Competition Authorities and the Corporation’s regular interim and annual
                continuous disclosure documents) without the consent of Acquireco
                (which
                shall not be unreasonably withheld) and Acquireco shall not make
                any
                filing with any Governmental Entity (other than the Competition
                Authorities) in connection with the Arrangement without the consent
                of the
                Corporation (which shall not be unreasonably withheld); provided,
                however,
                that the foregoing shall be subject to each party’s overriding obligation
                to make any disclosure or filing required under applicable Laws,
                and the
                party making such disclosure shall use all commercially reasonable
                efforts
                to give prior oral or written notice to each other party and reasonable
                opportunity to review or comment on the disclosure or filing, and
                if such
                prior notice is not possible, to give such notice immediately following
                the making of such disclosure or filing.  This clause 2.6(d)
                shall not apply to Movie Distribution Income Fund, Motion Picture
                Distribution Inc. or Motion Picture Distribution
                LP.

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              2.7

            	
              Dissenting
                Shareholders 

            

    

     

    The
      Corporation shall give Acquireco prompt notice of any written notice of a
      dissent, withdrawal of such notice, and any other letters, notices or
      instruments received by the Corporation in respect of the Dissent Rights. The
      Corporation shall not settle any claim by any present, former or purported
      holder of any of its securities in connection with the transactions contemplated
      by this Agreement, including the Arrangement, without the prior written consent
      of Acquireco.

     

    
      	
              2.8

            	
              Holdco
                Alternative

            

    

     

    
      	
               

            	
              (a)

            	
              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 date of this Agreement, and (c) shareholders of a corporation
                that
                meets the conditions described below in this section 0 (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:

            

    

     

    
      	
               

            	
              (i)

            	
              such
                Qualifying Holdco was incorporated under the CBCA not earlier than
                a date
                acceptable to Acquireco or will be continued under the
                CBCA;

            

    

     

    
      	
               

            	
              (ii)

            	
              such
                Qualifying Holdco is a single purpose corporation that has not carried
                on
                any business, has no employees and has not held and does not hold
                any
                assets other than Shares and a nominal amount of
                cash;

            

    

     

    
      	
               

            	
              (iii)

            	
              at
                the Effective Time, such Qualifying Holdco has no liabilities or
                obligations of any kind whatever (except to Acquireco and the Corporation
                under the terms of the Holdco Alternative and the Voting
                Agreements);

            

    

     

    
      	
               

            	
              (iv)

            	
              such
                Qualifying Holdco shall have been the sole legal and beneficial owner
                of
                such Shares since February 15, 2007, or such later date as Acquireco
                may
                determine in its sole discretion;

            

    

     

    
      	
               

            	
              (v)

            	
              at
                all times such Qualifying Holdco is a resident of Canada for the
                purposes
                of the Tax Act and is not a resident of the United States and has
                no
                taxable presence in the United
                States;

            

    

     

    
      	
               

            	
              (vi)

            	
              all
                Qualifying Holdco Shareholders will be required to employ the same
                form of
                Holdco Alternative, which shall be a Holdco acquisition
                model;

            

    

     

    
      	
               

            	
              (vii)

            	
              such
                Holdco Alternative will be completed in accordance with applicable
                Laws
                (including securities Laws) at or prior to the Effective
                Time;

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (viii)

            	
              the
                Qualifying Holdco Shareholder and, if applicable, its shareholder
                and/or
                the ultimate principal investor of the Qualifying Holdco Shareholder
                will
                be required to provide a comprehensive indemnity in favour of Acquireco
                and the Corporation, on terms satisfactory to Acquireco, acting
                reasonably, in respect of (A) any liabilities of such Qualifying
                Holdco
                relating to any matter occurring on or before the Effective Time,
                and (B)
                any breach by the Qualifying Holdco Shareholder, and where applicable,
                its
                shareholder and/or the ultimate principal investor of the Qualifying
                Holdco Shareholder, of any representation, warranty, obligation or
                covenant of the Qualifying Holdco Shareholder, its shareholder and/or
                the
                ultimate principal investor of such Qualifying Holdco Shareholder,
                as the
                case may be, to Acquireco and the Corporation.  For greater
                certainty, the term “liabilities” for purposes of this subsection 0 shall include any and all claims,
                demands,
                proceedings, losses, damages, liabilities, deficiencies, costs and
                expenses (including legal and other professional fees), interest,
                penalties and Taxes suffered or incurred by Acquireco, the Corporation
                and
                such Qualifying Holdco, as
                applicable;

            

    

     

    
      	
               

            	
              (ix)

            	
              the
                entering into or implementation of the Holdco Alternative will not
                result
                in any delay in completing any other transaction contemplated by
                this
                Agreement;

            

    

     

    
      	
               

            	
              (x)

            	
              the
                Qualifying Holdco Shareholder will be required to pay all of the
                reasonable out-of-pocket expenses incurred by Acquireco, such Qualifying
                Holdco and the Corporation in connection with the Holdco Alternative,
                including any reasonable costs associated with any due diligence
                conducted
                by Acquireco;

            

    

     

    
      	
               

            	
              (xi)

            	
              access
                to the books and records of such Qualifying Holdco shall have been
                provided on or before 15 Business Days prior to the Effective Time
                and
                Acquireco and its counsel shall have completed their due diligence
                regarding the business and affairs of such Qualifying Holdco;
                and

            

    

     

    
      	
               

            	
              (xii)

            	
              the
                terms and conditions of such Holdco Alternative must be satisfactory
                to
                Acquireco and the Corporation, acting reasonably, and must include
                representations and warranties which are satisfactory to Acquireco,
                acting
                reasonably.

            

    

     

    
      	
               

            	
              (b)

            	
              Any
                Qualifying Holdco Shareholder who elects the Holdco Alternative will
                be
                required to make full disclosure to Acquireco of all transactions
                involved
                in such Holdco Alternative.  In the event that the terms and
                conditions of such Holdco Alternative or any transactions involved
                in the
                Holdco Alternative are not satisfactory to Acquireco, acting reasonably,
                or the CSAs, Acquireco will use its commercially reasonable efforts,
                for a
                period not to exceed 15 Business Days, to assist the Corporation
                in
                structuring an alternative transaction in a manner satisfactory to
                Acquireco, acting reasonably.  In the event that the terms and
                conditions of or the transactions involved in such Holdco Alternative
                are
                not satisfactory to Acquireco, acting reasonably, and no alternative
                transactionsatisfactory to Acquireco, acting reasonably, can be agreed
                upon despite Acquireco having used its commercially reasonable efforts,
                no
                Holdco Alternative shall be offered and the other transactions
                contemplated by this Agreement shall be completed subject to the
                other
                terms and conditions hereof.

            

    

     

    
      	
               

            	
              (c)

            	
              Each
                Qualifying Holdco Shareholder that has elected the Holdco Alternative
                will
                be required to enter into a share purchase agreement (the “Holdco
                Agreement”) providing for the acquisition of all issued and
                outstanding shares of the Qualifying Holdco in a form consistent
                with the
                foregoing.  Failure of any Qualifying Holdco Shareholder to
                properly elect the Holdco Alternative on or prior to the Holdco Election
                Date or failure of any Qualifying Holdco Shareholder to properly
                enter
                into a Holdco Agreement will disentitle such Qualifying Holdco Shareholder
                from the Holdco Alternative.

            

    

     

    

     

    ARTICLE
      3

     

    REPRESENTATIONS
      AND WARRANTIES 

     

    
      	
              3.1

            	
              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 Agreement and completing the
      Arrangement:

     

    
      	
               

            	
              (a)

            	
              Organization.

            

    

     

    
      	
               

            	
              (i)

            	
              The
                Corporation and each of its Material Subsidiaries has been duly
                incorporated under the Laws of its jurisdiction of incorporation,
                is
                validly existing and has full corporate power and capacity to own
                or lease
                its properties and assets and conduct its business as currently owned
                and
                conducted.  The Corporation has disclosed in section 000
                of the Disclosure Letter the names and
                jurisdictions of incorporation of each of its Material
                Subsidiaries.

            

    

     

    
      	
               

            	
              (ii)

            	
              All
                the outstanding shares in the capital of each Material Subsidiary
                have
                been validly issued and are fully paid and non-assessable and, except
                as
                set forth in section 000
                of the
                Disclosure Letter, are as of the date of this Agreement owned by
                the
                Corporation, by another subsidiary of the Corporation or by the
                Corporation and another subsidiary, free and clear of all Liens.
                Except
                for its interests in its subsidiaries and except for the ownership
                interests set forth in section 000
                of the
                Disclosure Letter and ownership of interests in entities, the ownership
                of
                which is not material to the Corporation, the Corporation does not
                as of
                the date of this Agreement own, directly or indirectly, any shares,
                capital stock, membership interest, partnership interest, joint venture
                interest or other equity interest in any
                Person.

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (b)

            	
              Articles
                of Incorporation and Bylaws.  The Corporation
                Information contains a complete and correct copy of the Articles
                of
                Incorporation and Bylaws or equivalent organizational documents,
                each as
                amended to the date of this Agreement, of the Corporation and each
                of its
                Material Subsidiaries.

            

    

     

    
      	
               

            	
              (c)

            	
              Capitalization.

            

    

     

    
      	
               

            	
              (i)

            	
              The
                authorized capital of the Corporation consists of an unlimited number
                of
                Class A Shares and Class B Shares. As at December 31, 2006, there
                were
                1,005,438 Class A Shares and 40,145,955 Class B Shares issued and
                outstanding, and Options to acquire 1,780,450 Class B Shares, Purchase
                Rights to acquire 6,689 Class B Shares (3,185 of which Class B Shares
                are
                issued and outstanding), restricted stock units in respect of 60,025
                Class
                B Shares and, other than as disclosed in section 00 of the
                Disclosure Letter, deferred stock units in respect of 148,577 Class
                B
                Shares have been granted and are outstanding.  Except for such
                Options, Purchase Rights, restricted stock units and deferred stock
                units,
                the rights of the Class A Shareholders to convert their shares into
                Class
                B Shares and the rights of the Class B Shareholders to convert their
                shares into Class A Shares, in each case in accordance with their
                terms,
                there are no agreements, options, rights, warrants, rights of conversion
                or other rights pursuant to which the Corporation or any of its
                subsidiaries is, or may become, obligated to issue any shares or
                any
                securities convertible or exchangeable, directly or indirectly, into
                any
                shares of the Corporation or any of its subsidiaries.  All of
                the outstanding Shares in the capital of the Corporation are validly
                issued, fully paid and non-assessable and have been issued in compliance
                with all applicable Laws.

            

    

     

    
      	
               

            	
              (ii)

            	
              There
                are no bonds, debentures, notes or other indebtedness of the Corporation
                having the right to vote (or convertible into, or exchangeable for,
                securities having the right to vote) on the Arrangement or on any
                other
                matters on which Shareholders may
                vote.

            

    

     

    
      	
               

            	
              (d)

            	
              Authority
                and No Violation.

            

    

     

    
      	
               

            	
              (i)

            	
              The
                Corporation has the requisite corporate power and capacity to execute
                and
                deliver this Agreement and to perform its obligations hereunder and
                to
                complete the Arrangement. The execution, delivery and performance
                of this
                Agreement by the Corporation and the completion of the Arrangement
                by the
                Corporation have 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 Agreement or the completion
                of
                the Arrangement by the Corporation other than the approval of the
                Circular
                by the Board of Directors and the calling of the Meeting and the
                receipt
                of approval of the Shareholders required by the Interim Order and
                the
                approval of the Court.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (ii)

            	
              This
                Agreement 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
                Board of Directors has (i) received an oral Fairness Opinion (to
                be
                followed by a written Fairness Opinion); and (ii) after receiving
                the
                recommendation of a special committee of directors formed for the
                purpose
                of, among other things, considering this Agreement and the Arrangement
                and
                after consultation with its financial and outside legal advisors
                (A)
                determined unanimously (except for directors abstaining because of
                conflict of interests) that the consideration offered under the
                Arrangement for each Share is fair from a financial point of view
                to the
                Shareholders and that the entering into of this Agreement and the
                completion of the Arrangement are in the best interests of the
                Corporation; and (B) determined unanimously (except for directors
                abstaining because of conflict of interests) to recommend that the
                holders
                of the Shares vote in favour of the Arrangement.  As of the date
                hereof, all of the Directors have advised that they intend to vote
                all
                Shares held by them in favour of the Special Resolution and the Circular
                will so state.

            

    

     

    
      	
               

            	
              (iv)

            	
              The
                execution and delivery of this Agreement by the Corporation do not,
                and
                the consummation of the Arrangement and the performance of this Agreement
                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 000
                have been obtained and that all filings and
                obligations described in section 000
                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 000
                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 anyof 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 or materially impair the ability of the Corporation
      to
      complete the Arrangement.

     

    
      	
               

            	
              (v)

            	
              Except
                as set out in section 00 of the
                Disclosure Letter, 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 Agreement or the consummation of the Arrangement,
                other than:

            

    

     

    
      	
               

            	
              (A)

            	
              the
                Interim Order and the Final Order and any approvals required
                thereby;

            

    

     

    
      	
               

            	
              (B)

            	
              filings
                with the Director under the CBCA, with the Toronto Stock Exchange
                and
                under provincial securities
                legislation;

            

    

     

    
      	
               

            	
              (C)

            	
              the
                Regulatory Approvals relating to the Corporation;
                and

            

    

     

    
      	
               

            	
              (D)

            	
              those,
                which if not obtained, could not individually or in the aggregate
                be
                reasonably expected to be material to the
                Corporation.

            

    

     

    
      	
               

            	
              (e)

            	
              Compliance
                with Law.

            

    

     

    
      	
               

            	
              (i)

            	
              The
                Corporation and each of its Material Subsidiaries is duly qualified
                to
                carry on business in each jurisdiction in which the character of
                its
                properties and assets, owned or leased, or the nature of its business
                makes such qualification necessary, except where the failure to be
                so
                qualified could not reasonably be expected to have a Material Adverse
                Effect. The Corporation and each of its Material Subsidiaries is
                in
                possession of all franchises, grants, authorizations, licenses, permits,
                easements, variances, exceptions, consents, certificates, approvals
                and
                orders of any Governmental Entity necessary for each of the Corporation
                or
                any of its Material Subsidiaries to own, lease and operate its properties
                and assets and to carry on its business as it is now being conducted
                (the
                “Permits”), except where the failure to have any of the
                Permits have not had and could not reasonably be expected to have,
                individually or in the aggregate, a Material Adverse Effect. Each
                of the
                Corporation and each Material Subsidiary is in compliance with such
                Permits, except where the failure to be in compliance have not had
                and
                could not reasonably be expected to have, individually or in the
                aggregate, a Material Adverse Effect. No suspension or cancellation
                of any
                of the Permits is pending or, to the knowledge of the Corporation,
                threatened, except where the suspension orcancellation of any of
                the
                Permits have not had and could not reasonably be expected to have,
                individually or in the aggregate, a Material Adverse
                Effect.

            

    

     

    
      	
               

            	
              (ii)

            	
              Except
                as disclosed in section 00 of the
                Disclosure Letter, neither the
                Corporation nor any of its Material Subsidiaries is in conflict with,
                or
                in default, breach or violation of:

            

    

     

    
      	
               

            	
              (A)

            	
              any
                Law applicable to the Corporation or any of its Material Subsidiaries
                or
                by which any property or asset of the Corporation or any of its Material
                Subsidiaries is bound; or

            

    

     

    
      	
               

            	
              (B)

            	
              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 (A) and (B), for any such conflicts, defaults, breaches
      or violations that have not had and could not reasonably be expected to have,
      individually or in the aggregate, a Material Adverse Effect.

     

    
      	
               

            	
              (iii)

            	
              Each
                of the Corporation and its Material Subsidiaries is conducting its
                business in compliance with all applicable Laws, except where the
                failure
                to do so could not reasonably be expected to have a Material Adverse
                Effect.

            

    

     

    
      	
               

            	
              (f)

            	
              Absence
                of Certain Changes or Events. Except as disclosed in section 00
                of the
                Disclosure Letter or the Filed CSA Documents, since December 31,
                2005
                there has not been any Material Adverse Change. During the period
                since
                December 31, 2005 through the date of this Agreement, except as set
                forth
                in section 00 of
                the Disclosure Letter:

            

    

     

    
      	
               

            	
              (i)

            	
              the
                Corporation and its Material Subsidiaries have conducted their businesses
                only in the ordinary course consistent with past
                practice;

            

    

     

    
      	
               

            	
              (ii)

            	
              there
                has not been any material damage, destruction or other casualty loss
                with
                respect to any material asset owned, leased or otherwise used by
                the
                Corporation or any of its Material Subsidiaries, whether or not covered
                by
                insurance; and

            

    

     

    
      	
               

            	
              (iii)

            	
              except
                as disclosed in the Corporation’s Documents, neither the Corporation nor
                any of its Material Subsidiaries has taken any action that, if taken
                after
                the date of this Agreement, would be prohibited by or constitute
                a breach
                or violation of any of the covenants set forth in section 0, 0, 0,
0,
0,
0,
0,
0,
                or 0.

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (g)

            	
              Financial
                Statements.

            

    

     

    
      	
               

            	
              (i)

            	
              The
                Financial Statements have been prepared in accordance with Canadian
                generally accepted accounting principles applied on a consistent
                basis and
                present fairly in all material respects, on a consolidated basis,
                the
                financial position and the results of operations and the changes
                in
                Shareholders’ equity and cash flow of the Corporation and its subsidiaries
                for the periods and as at the dates thereof (except as may be indicated
                expressly in the notes thereto). In the case of unaudited statements,
                this
                representation is subject to normal, recurring year-end adjustments
                that
                would be made in the course of an audit and would not be
                material.

            

    

     

    
      	
               

            	
              (ii)

            	
              Except
                as disclosed in section 00 of the
                Disclosure Letter, management of the
                Corporation (A) has implemented disclosure controls and procedures
                designed to ensure that material information relating to the Corporation,
                including its subsidiaries, is made known to management of the Corporation
                by others within those entities, which disclosure controls and procedures
                are, given the size of the Corporation and the nature of its business,
                reasonably expected by management to be effective in alerting on
                a timely
                basis the Corporation’s Chief Executive Officer and its Chief Financial
                Officer to material information required to be included in the Filed
                CSA
                Documents (for the purposes of this section 000
                without reference to Movie Distribution Income
                Fund or Score Media Inc.), and (B) is not, to the knowledge of the
                Corporation, aware of any fraud, whether or not material, that involves
                management or other employees still employed by the Corporation who
                have a
                significant role in the Corporation’s internal control over financial
                reporting that occurred within the three years preceding the date
                of this
                Agreement.

            

    

     

    
      	
               

            	
              (iii)

            	
              Since
                September 30, 2006, to the knowledge of the Corporation, (A) neither
                the
                Corporation nor any of its subsidiaries nor any director, officer,
                employee, auditor, accountant or representative of the Corporation
                or any
                of its subsidiaries has received or otherwise had or obtained knowledge
                of
                any material complaint, allegation, assertion or claim, whether written
                or
                oral, regarding the material accounting or auditing practices, procedures,
                methodologies or methods of the Corporation or any of its subsidiaries
                or
                their respective internal accounting controls, including any complaint,
                allegation, assertion, or claim that the Corporation or any of its
                subsidiaries has engaged in questionable accounting or auditing practices,
                and (B) no legal counsel representing the Corporation or any of its
                subsidiaries, whether or not employed by the Corporation or any of
                its
                subsidiaries, has reported evidence of a material violation of applicable
                securities Laws, breach of fiduciary duty or similar violation by
                the
                Corporation, any of its subsidiaries or any of their respective officers,
                directors, employees or agents to the Board of Directors or any committee
                thereof or to any director or officer of the
                Corporation.

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (h)

            	
              Absence
                of Undisclosed Liabilities. Except as disclosed in the Financial
                Statements or in section 00 of the
                Disclosure Letter, and other than
                indemnification provisions contained in agreements among underwriters
                and
                financial advisors, the Corporation and its subsidiaries have no
                material
                obligations or liabilities of any nature (matured or unmatured, fixed
                or
                contingent) other than those incurred in the ordinary course of business
                consistent with past practice.

            

    

     

    
      	
               

            	
              (i)

            	
              Guarantees.
                Except as disclosed in section 00 of the
                Disclosure Letter or in the Financial
                Statements and other than (i) indemnification provisions contained
                in
                certain agreements among underwriters and financial advisors, (ii)
                cross-guarantees between two or more of the Corporation and its
                subsidiaries, (iii) guarantees by the Corporation of obligations
                of its
                subsidiaries, and (iv) other guarantees and indemnities entered into
                in
                the ordinary course, neither the Corporation nor any of its subsidiaries
                has given or agreed to give, nor are they a party to or bound by,
                any
                guarantee of indebtedness, indemnity or suretyship of other obligations
                of
                any Person, nor are they contingently responsible for such indemnity
                or
                suretyship or obligations to the Corporation which, if enforced,
                could
                reasonably be expected to be material to the
                Corporation.

            

    

     

    
      	
               

            	
              (j)

            	
              Restrictions
                on Business Activities. There is no arbitral award, judgment,
                injunction, order or decree binding upon the Corporation or any of
                its
                subsidiaries that has or could reasonably be expected to have the
                effect
                of prohibiting, restricting, or impairing any business practice of
                any of
                them, any acquisition or disposition of property by any of them,
                or the
                conduct of the business by any of them as currently conducted, which
                would
                have, individually or in the aggregate, a Material Adverse
                Effect.

            

    

     

    
      	
               

            	
              (k)

            	
              Rights
                of Other Persons. Except as disclosed in section 00
                of the
                Disclosure Letter, no Person has any right of first refusal or option
                to
                purchase or any other right of participation in any of the properties
                or
                assets in each case that are material to the Corporation and its
                subsidiaries on a consolidated basis, owned by the Corporation or
                any of
                its subsidiaries, or any part
                thereof.

            

    

     

    
      	
               

            	
              (l)

            	
              Insurance.
                All insurance maintained by the Corporation or any of its Material
                Subsidiaries is in full force and effect and in good standing and
                neither
                the Corporation nor any of its Material Subsidiaries is in default
                in any
                material respect, whether as to payment of premium or otherwise,
                under the
                terms of any such insurance nor has the Corporation or any Material
                Subsidiary failed to give any notice or present any material claim
                under
                any such insurance in a due and timely fashion or received notice
                or
                otherwise has knowledge of any intent of an insurer to either claim
                any
                default on the part of the Corporation or any of its Material Subsidiaries
                or not to renew any policy of insurance on its expiry or to increase
                any
                deductible or cost.

            

    

     

    
      	
               

            	
              (m)

            	
              Title
                to Properties.

            

    

     

    
      	
               

            	
              (i)

            	
              Neither
                the Corporation nor any of its Material Subsidiaries owns any real
                property.  Except as set forth in section 00 of the
                Disclosure Letter,each of the Corporation and its Material Subsidiaries
                has good and valid title to, or valid leasehold interests in, all
                its
                properties and assets except for such as are no longer used in the
                conduct
                of its businesses or as have been disposed of in the ordinary course
                of
                business and except for defects in title, easements, restrictive
                covenants
                and similar encumbrances or impediments that, in the aggregate, have
                not
                had and could not reasonably be expected to have a Material Adverse
                Effect.  All such properties and assets, other than properties
                and assets in which the Corporation or any of its Material Subsidiaries
                has leasehold interests, are free and clear of all Liens other than
                those
                set forth in section 00 of the
                Disclosure Letter and except for Liens
                that, in the aggregate, have not had and could not reasonably be
                expected
                to have a Material Adverse Effect.

            

    

     

    
      	
               

            	
              (ii)

            	
              Except
                as set forth in section 00 of the
                Disclosure Letter, each of the
                Corporation and each Material Subsidiary has complied in all material
                respects with the terms of all material leases to which it is a party
                and
                under which it is in occupancy, and all such leases are in full force
                and
                effect.  The Corporation and each of its Material Subsidiaries
                enjoys peaceful and undisturbed possession under all such material
                leases.

            

    

     

    
      	
               

            	
              (n)

            	
              Licences.
                All licences issued by the CRTC that the Corporation or any of its
                subsidiaries are required to obtain that are related to their respective
                businesses or the ownership or operation of their respective properties
                and assets have been obtained, are disclosed in section 00 of the
                Disclosure Letter and are currently valid, in full force and effect
                and in
                good standing in all material respects and no proceedings specific
                to the
                Corporation or any of its subsidiaries are pending (other than renewal
                proceedings as a result of expirations in accordance with the terms
                thereof) or, to the knowledge of the Corporation, threatened, which
                could
                reasonably be expected to result in their revocation or
                limitation.

            

    

     

    
      	
               

            	
              (o)

            	
              Material
                Contracts. Other than those Material Contracts set forth in section 00
                of the
                Disclosure Letter (“Confidential Material Contracts”),
                the Corporation Information includes a complete and accurate list
                of, and
                copies of, all Material Contracts, all of which are in full force
                and
                effect and unamended, except where the failure to be in full force
                and
                effect and unamended could not reasonably be expected to have a Material
                Adverse Effect. No default exists (or, but for the passage of time
                or the
                giving of notice, would exist) under any Material Contract on the
                part of
                the Corporation or any of its subsidiaries or, to the knowledge of
                the
                Corporation, on the part of any other party to such contracts other
                than
                defaults which could not reasonably be expected to have, individually
                or
                in the aggregate, a Material Adverse Effect.  Except as
                disclosed in section 00 of the
                Disclosure Letter, there is no
                provision in any Material Contract which would result in the cancellation
                or amendment of such Material Contract in any material respect or
                create,
                give rise to or change any rights or obligations of any Person under
                such
                Material Contract as a result of the consummation of the
                Arrangement.  Except as set out in section 00 of the
                Disclosure Letter, there is no provision in any Confidential Material
                Contract which would result in the cancellation or amendment of such
                Confidential Material Contract in any material respect orwhich would
                give
                rise to a change of any rights or obligations of any party to such
                Confidential Material Contract (other than it being obligated to
                the
                transferee and having rights against the transferor if the transferee
                does
                not perform its obligations) in any material respect as a result
                of an
                assignment or deemed assignment of that contract pursuant to an
                Inter-Affiliate Transfer.  Except as disclosed in section 00 of the
                Disclosure Letter, no Confidential Material Contract during 2005
                represented or related to or during 2006 is expected to represent
                or
                relate to more than 5% of the revenue or expenses of the Corporation
                and
                its subsidiaries, on a consolidated basis.  The Corporation has
                informed Acquireco of the general nature of the Confidential Material
                Contracts to the full extent it is permitted to do so.  Neither
                the Corporation nor any of its subsidiaries is a party to any material
                oral contract.

            

    

     

    
      	
               

            	
              (p)

            	
              Labour
                Matters.

            

    

     

    
      	
               

            	
              (i)

            	
              Except
                as disclosed in 000
                of the
                Disclosure Letter, neither the Corporation nor any of its subsidiaries
                are
                parties to any collective bargaining agreements. To the knowledge
                of the
                Corporation, except as disclosed in section 00 of the
                Disclosure Letter, (i) neither the Corporation nor any of its subsidiaries
                is subject to any application for certification or threatened or
                apparent
                union-organizing campaigns for employees not covered under a collective
                bargaining agreement, (ii) there are no current or, to the knowledge
                of
                the Corporation, threatened strikes or lockouts affecting the Corporation
                or any of its subsidiaries or any complaint of unfair labour practice
                (other than routine individual grievances), (iii) there are no successor
                or related employer applications; and (iv) there are no employee
                associations, voluntary recognized or certified unions authorized
                to
                represent any of the employees of the Corporation or any of its
                subsidiaries.

            

    

     

    
      	
               

            	
              (ii)

            	
              Except
                as disclosed in 000
                of the
                Disclosure Letter or where it could not reasonably be expected to
                result
                in a Material Adverse Effect, neither the Corporation nor any of
                its
                subsidiaries is subject to any claim for wrongful dismissal, constructive
                dismissal, unjust dismissal or any other tort claim, actual or, to
                the
                knowledge of Corporation, threatened, or any litigation, investigation,
                arbitration or grievance, actual or, to the knowledge of Corporation,
                threatened, relating to employment or termination of employment of
                employees or independent
                contractors.

            

    

     

    
      	
               

            	
              (iii)

            	
              Except
                as disclosed in section 000
                of the
                Disclosure Letter or where this could not reasonably be expected
                to result
                in a Material Adverse Effect, each of the Corporation and its subsidiaries
                has operated in accordance with all applicable Laws with respect
                to
                employment and labour, including any pay equity and, where applicable,
                employment equity Laws, and there are no current, pending or, to
                the
                knowledge of the Corporation, threatened proceedings before any board
                or
                tribunal with respect to any employment or labour
                matters.

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (iv)

            	
              The
                Corporation Information includes all material details of all plans
                or
                arrangements provided for the benefit of employees generally or for
                any
                particular executive officer including all of the employee benefit,
                health, welfare, disability, bonus, deferred compensation, stock
                compensation, stock option or purchase or other stock-based compensation
                plans or arrangements, retirement plans, post-retirement benefit
                plans or
                arrangements, pension plans or arrangements applicable to present
                or
                former employees or directors of the Corporation or any of its
                subsidiaries which are currently maintained or participated in by
                the
                Corporation or any of its subsidiaries and under which the Corporation
                or
                any of its subsidiaries has any material obligations or liabilities,
                but
                excluding any statutory or state sponsored employee plans which the
                Corporation or any of its subsidiaries are required to participate
                in or
                comply with (collectively, the “Employee
                Plans”).  Section 000(A)
                of the
                Disclosure Letter includes a list of all of the Employee
                Plans.  Except as disclosed in section 000(B)
                of the Disclosure Letter, neither the
                Corporation nor its subsidiaries sponsor or participate in a defined
                benefit pension plan and have never sponsored or participated in
                any
                defined benefit pension plan.

            

    

     

    
      	
               

            	
              (v)

            	
              Except
                as disclosed in section 000
                of the
                Disclosure Letter or where it could not reasonably be expected to
                result
                in a Material Adverse Effect, all of the Employee Plans have been
                established and administered in all respects in accordance with their
                terms and applicable Law, are registered where required by Law, and
                are in
                good standing in all respects, including being fully funded where
                required, under, all applicable Laws or other legislative, administrative
                or judicial promulgations applicable to the Employee Plans and pursuant
                to
                any applicable collective agreement and the terms of the Employee
                Plans
                and, other than routine claims for benefits, there are no actions,
                claims,
                or proceedings relating to the Employee
                Plans.

            

    

     

    
      	
               

            	
              (vi)

            	
              Except
                as disclosed in section 000
                of the
                Disclosure Letter, no material amendments to any Employee Plan have
                been
                promised and no amendments to any Employee Plan will be made or promised
                prior to the Effective Date which affect or pertain to the current
                or
                former employees or directors of the Corporation or any of its
                subsidiaries.

            

    

     

    
      	
               

            	
              (vii)

            	
              Except
                as disclosed in section 000
                of the
                Disclosure Letter, there are no agreements or undertakings by the
                Corporation or any of its subsidiaries to provide post-retirement
                benefits
                to any of their respective present or former employees or directors
                other
                than such as are not, either individually or in the aggregate, material
                to
                the Corporation and its subsidiaries on a consolidated
                basis.

            

    

     

    
      	
               

            	
              (viii)

            	
              The
                Corporation has the authority to cause the companies set forth on
                Schedule
                0 to enter into the letter agreement
                referred
                to in section 0 of this Agreement without the
                consent of any other party.

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (q)

            	
              Employees.
                Section 00 of
                the Disclosure Letter includes:

            

    

     

    
      	
               

            	
              (i)

            	
              an
                accurate list, in all material respects, as of the date of this Agreement,
                of the annual salary of all individuals earning annual salary of
                $200,000
                or more who are employed or retained by the Corporation or any of
                its
                subsidiaries (other than actors or production personnel) on a full
                or part
                time basis, notwithstanding that they may have been laid off or terminated
                or on a short-term, long-term or parental leave, together with the
                location of their employment or
                service;

            

    

     

    
      	
               

            	
              (ii)

            	
              an
                accurate list, in all material respects, as of the date of this Agreement,
                of the date each such individual or entity was hired or retained
                by the
                Corporation or a subsidiary, as applicable;
                and

            

    

     

    
      	
               

            	
              (iii)

            	
              an
                accurate list, in all material respects, of the severance or other
                arrangements or plans pursuant to each contract entitling any employee,
                officer or director of the Corporation or any subsidiary to any bonus,
                retention payment, severance payment, change in control payment,
                any
                acceleration of any right or benefit, including any such right under
                any
                stock-based compensation plan, or similar entitlement as a result
                of the
                Corporation entering into this Agreement or completing any of the
                transactions which are the subject
                hereof.

            

    

     

    
      	
               

            	
              (r)

            	
              Tax
                Matters.  Except as set out in section 00
                of the
                Disclosure Letter:

            

    

     

    
      	
               

            	
              (i)

            	
              all
                Tax Returns required to be filed with any taxing authority by or
                on behalf
                of the Corporation or any of its subsidiaries were filed when due
                with all
                appropriate taxing authorities in accordance with all applicable
                Laws and
                were correct in all material
                respects;

            

    

     

    
      	
               

            	
              (ii)

            	
              the
                unpaid Tax liability with respect to those returns identified in
                Section
                3.1(r) of the Disclosure Letter and any returns filed after their
                due date
                is not, individually or in the aggregate, in excess of
                $5,000,000;

            

    

     

    
      	
               

            	
              (iii)

            	
              the
                Corporation and each of its subsidiaries have timely paid (or withheld
                and
                remitted) to the appropriate taxing authority all Taxes due and payable
                (or to be withheld or remitted) by any of them under any applicable
                Law;

            

    

     

    
      	
               

            	
              (iv)

            	
              the
                charges, accruals and reserves for Taxes with respect to the Corporation
                and its subsidiaries reflected on the Financial Statements (whether
                or not
                due and whether or not shown on any Tax Return but excluding any
                provision
                for deferred income Taxes) are adequate under Canadian generally
                accepted
                accounting principles (“Canadian
                GAAP”) to cover Taxes accruing through the
                dates thereof, and since the dates thereof they have not incurred
                any
                material liability for Taxes other than in the ordinary course of
                business
                as disclosed and provided for in their Books and
                Records;

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (v)

            	
              the
                tax basis of the assets of the Corporation and its subsidiaries by
                category including the classification of such assets as being depreciable
                or amortizable (collectively, the “Tax Pools”) as
                reflected in the Tax Returns of the Corporation and its subsidiaries
                is
                true and correct in all material respects;
                and

            

    

     

    
      	
               

            	
              (vi)

            	
              there
                is no proceeding, investigation, claim, re-assessment or audit now
                pending
                or threatened in writing in respect of any Tax or “tax asset” of the
                Corporation or any of its subsidiaries, and there are no reassessments
                of
                Taxes of the Corporation or any of its subsidiaries that have been
                issued
                and which remain unpaid or unresolved.  For purposes of this
                section 00, the
                term “tax asset” shall include but is not limited to any net operating
                loss, non-capital losses, net capital losses, Tax Pools, investment
                tax
                credit, foreign tax credit, charitable deduction or any other credit
                or
                Tax attribute which could reduce
                Taxes.

            

    

     

    
      	
               

            	
              (s)

            	
              Intellectual
                Property.

            

    

     

    
      	
               

            	
              (i)

            	
              In
                respect of any applications or registrations relating to the Corporation
                Intellectual Property in Canada and elsewhere, to the knowledge of
                the
                Corporation, all steps have been taken, including payment of fees
                and
                timely filing of documentation, that are necessary to obtain valid
                and
                enforceable registrations and to maintain such registrations and
                applications in good standing to the extent such Corporation Intellectual
                Property is still in use by the Corporation, except where the failure
                to
                take such steps could not reasonably be expected to have a Material
                Adverse Effect.

            

    

     

    
      	
               

            	
              (ii)

            	
              Except
                as stated in section 00 of the
                Disclosure Letter, to the knowledge of
                the Corporation, the Corporation or one of its subsidiaries is the
                sole
                legal and beneficial owner of, and owns all right, title and interest
                in
                all Corporation Intellectual Property free and clear of all Liens
                or other
                adverse claims or interests of any kind or nature, except for Liens
                that,
                in the aggregate, have not had and could not reasonably be expected
                to
                have a Material Adverse Effect. None of the Corporation Intellectual
                Property is owned by or registered in the name of any Person other
                than
                the Corporation or a subsidiary, including, without limitation, any
                current or former owner, shareholder, partner, director, executive,
                officer, employee or contractor, nor does any such Person have any
                interest therein or right thereto, including any license or the right
                to
                any royalty or other payments where same could reasonably be expected
                to
                have a Material Adverse Effect. No consent of any Person is necessary
                to
                make, use, reproduce, license, sell, modify, update, enhance or otherwise
                exploit any Corporation Intellectual Property, except where the failure
                to
                obtain such consent could not reasonably be expected to have a Material
                Adverse Effect.

            

    

     

    
      	
               

            	
              (iii)

            	
              To
                the knowledge of the Corporation, neither the Corporation nor any
                of its
                subsidiaries has received notice from any Person that was not a
                regular,

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              full-time,
                salaried employee of the Corporation or a subsidiary at the time
                such
                Person contributed to the creation of any Corporation Intellectual
                Property or component thereof, asserting any claims with respect
                to any
                right, title or interest therein or any violation of any moral rights
                in
                connection therewith, except where such claim, if determined adverse
                to
                the Corporation, could not reasonably be expected to have a Material
                Adverse Effect.

            

    

     

    
      	
               

            	
              (iv)

            	
              The
                Corporation or one of its subsidiaries has lawfully acquired the
                right(s)
                to use the Licensed Intellectual Property in the manner in which
                it has
                been used and is currently being used by the Corporation or any of
                its
                subsidiaries and in the manner currently contemplated to be used
                in the
                future, except where the failure to acquire such right could not
                reasonably be expected to have a Material Adverse Effect. The Corporation
                or one of its subsidiaries has entered into valid and enforceable
                written
                agreements pursuant to which the Corporation and any of its subsidiaries
                has been granted all licenses and permissions to use, reproduce,
                sub-license, sell, modify, update, enhance or otherwise exploit the
                Licensed Intellectual Property to the extent required to operate
                in all
                material respects all aspects of the business of the Corporation
                and any
                of its subsidiaries as it is being operated at substantially the
                same
                level of performance as of the date
                hereof.

            

    

     

    
      	
               

            	
              (v)

            	
              To
                the knowledge of the Corporation, (i) the conduct of the businesses of the
                Corporation and its subsidiaries including, the use of any of the
                Corporation Intellectual Property does not infringe upon or breach
                the
                Intellectual Property rights of any other Person and (ii) the use
                of any
                of the Corporation Intellectual Property does not result in a default
                or
                give rise to a right of termination, cancellation or acceleration
                of any
                obligation or loss of any benefit under any Material Contract, and
                neither
                the Corporation nor any of its subsidiaries has received any written
                notice asserting any of the above, except where such infringements,
                breaches, defaults, rights or loss could not reasonably be expected
                to
                have a Material Adverse Effect.

            

    

     

    
      	
               

            	
              (vi)

            	
              There
                are no claims, oppositions, conflicts, proceedings, or investigations
                by
                any Governmental Entity against any Person, or, to the knowledge
                of the
                Corporation, any breaches, interferences, infringements, violations
                or
                appropriations by any Person, relating to any of the Corporation
                Intellectual Property, except for such claims, oppositions, conflicts,
                proceedings or investigations, if determined adverse to the Corporation,
                or any breaches, interferences, infringements, violations or
                appropriations that would have or could reasonably be expected to
                have a
                Material Adverse Effect.

            

    

     

    
      	
               

            	
              (vii)

            	
              The
                Corporation and its subsidiaries have the right to use all of the
                Corporation Intellectual Property and Licensed Intellectual Property
                which
                is necessary to conduct their respective businesses as currently
                conducted
                in all material respects, except where the failure to have such right
                has
                not

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              had
                and could not reasonably be expected to have a Material Adverse
                Effect.

            

    

     

    
      	
               

            	
              (t)

            	
              Restrictive
                Covenants. Except as disclosed in section 3.10 of the Disclosure Letter,
                the Corporation and
                its Material Subsidiaries are not party to or bound or affected by
                any
                commitment, agreement or document containing any covenant expressly
                limiting its ability to compete in any material respect in any principal
                line of business of the Corporation after the consummation of the
                transactions contemplated by the Arrangement on substantially the
                same
                basis as presently carried on.

            

    

     

    
      	
               

            	
              (u)

            	
              Non-Arm’s
                Length Transactions. Except for contracts made solely between the
                Corporation and any subsidiary or between any subsidiaries of the
                Corporation, there are no Material Contracts between the Corporation
                or
                any of its subsidiaries and any Person with whom the Corporation
                or any of
                its subsidiaries is not dealing, at the date hereof, at Arm’s Length,
                other than contracts entered into in the ordinary course of business
                on
                terms no less favourable to the Corporation and its subsidiaries
                than are
                available from an Arm’s Length
                party.

            

    

     

    
      	
               

            	
              (v)

            	
              Books
                and Records. All Books and Records fairly disclose in all material
                respects the financial position of the Corporation and its subsidiaries
                and all material financial transactions relating to the businesses
                carried
                on by the Corporation and its subsidiaries have been accurately recorded
                in all material respects in such Books and Records. The corporate
                minute
                books of the Corporation and its subsidiaries contain minutes of
                all
                meetings and resolutions of the directors and security holders held,
                except for those minutes which are not yet finalized. The Corporation
                Information contains complete and correct copies of the minutes of
                all
                such meetings other than meetings of the Board of Directors relating
                to
                the transactions contemplated hereunder and minutes of meetings of
                the
                directors of Motion Picture Distribution Inc. held since June 1,
                2006
                which have not yet been finalized.

            

    

     

    
      	
               

            	
              (w)

            	
              Government
                Grants. Except as disclosed in section 3.10 of the Disclosure Letter or the
                Financial
                Statements, there are no contracts relating to grants or other forms
                of
                financial assistance, including loans with interest at below market
                rates,
                received by the Corporation or any of its subsidiaries from any
                Governmental Entity.

            

    

     

    
      	
               

            	
              (x)

            	
              Canadian
                Securities Legislation. The Corporation is a “reporting issuer” under
                applicable Canadian securities legislation in each of the provinces
                of
                Canada in which such concept exists and is not in default of any
                material
                requirements of any securities Laws applicable in such jurisdictions
                or
                stock exchange on which its securities are listed for trading. No
                delisting, suspension of trading in or cease trading order with respect
                to
                the Shares is pending or, to the knowledge of the Corporation, threatened.
                The Corporation has filed with securities regulatory authorities
                in such
                jurisdictions and all applicable self-regulatory organizations, including
                the Toronto Stock Exchange, true and complete copies of all documents
                required to be filed with such authorities and organizations under
                applicable securities Laws or otherwise (such forms, reports, schedules,
                statements and other documents, including financial statements are
                referred to as the
                “Corporation’sDocuments”).  The
                Corporation’s Documents, at the time filed, did not contain any
                misrepresentation (as defined in the Securities Act), other than
                as has
                been subsequently corrected, and complied in all material respects
                with
                the applicable securities Laws or other requirements under which
                they were
                filed. As of the date of this Agreement, the Corporation’s Documents do
                not contain any misrepresentation (as defined in the Securities Act).
                The
                Corporation has not filed any confidential material change report
                which at
                the date hereof remains
                confidential.

            

    

     

    
      	
               

            	
              (y)

            	
              Litigation.
                Except as disclosed in section 00 of the
                Disclosure Letter, there is no court,
                administrative, regulatory or similar proceeding (whether civil,
                quasi-criminal or criminal), arbitration or other dispute settlement
                procedure, investigation, audit, assessment, inquiry, request for
                information, warrant, charge, suit or claim by any Governmental Entity,
                or
                any similar matter or proceeding (collectively,
                “Proceedings”) against or involving the Corporation or
                any of its subsidiaries in respect of their respective businesses,
                properties or assets (whether in progress or, to the best of the
                Corporation’s knowledge after due inquiry, threatened) which, if
                determined adversely to the Corporation or any of its subsidiaries,
                would
                have a Material Adverse Effect, and there is no order, ordinance,
                writ,
                judgment, decree, injunction, award or order of any Governmental
                Entity
                outstanding against the Corporation or any of its subsidiaries which
                would
                have a Material Adverse Effect.  There are no suits, claims,
                actions or Proceedings pending or, to the knowledge of the Corporation,
                threatened against the Corporation or any of its subsidiaries, seeking
                to
                prevent the Arrangement.

            

    

     

    
      	
               

            	
              (z)

            	
              Brokers.
                The Corporation and its subsidiaries have not incurred, nor will
                they
                incur, directly or indirectly, any liability for brokerage or finder’s
                fees or agent’s commissions or any similar charges in connection with this
                Agreement or any transaction contemplated hereby, other than fees
                and
                expenses payable to RBC Capital
                Markets.

            

    

     

    
      	
               

            	
              (aa)

            	
              Corrupt
                Practices. Except as set forth in section 3.10 of the Disclosure Letter none
                of the
                Corporation or any of its subsidiaries, or, to the knowledge of the
                Corporation, any of their respective representatives (in each case
                acting
                in their capacities as such) has any reasonable basis for believing
                that,
                in the past five (5) years, any of the foregoing Persons has (i)
                used any
                funds for unlawful contributions, gifts, entertainment or other unlawful
                expenses relating to  political activity, (ii) directly or
                indirectly paid or delivered any fee, commission or other sum of
                money or
                item of property, however characterized, to any finder, agent or
                other
                party acting on behalf of or under the auspices of a governmental
                official
                or Governmental Entity, in the United States or any other country,
                that
                was illegal under any applicable law, (iii) made any payment to any
                customer or supplier, or to any officer, director, partner, employee
                or
                agent of any such customer or supplier, for the unlawful sharing
                of fees
                to any such customer or supplier or any such officer, director, partner,
                employee or agent for the unlawful rebating of charges, (iv) engaged
                in
                any other unlawful reciprocal practice, or made any other unlawful
                payment
                or given any other unlawful consideration to any such customeror
                supplier
                or any such officer, director, partner, employee or agent, (v) taken
                any
                action or made any omission in violation of any applicable law governing
                imports into or exports from the United States or any foreign country,
                or
                relating to economic sanctions or embargoes, corrupt practices, money
                laundering, or compliance with unsanctioned foreign boycotts, including
                without limitation: the Arms Export Control Act, the Trading with
                the
                Enemy Act, the International Emergency Economic Powers Act, the Export
                Administration Act, the 1930 Tariff Act and other U.S. customs laws,
                the
                Foreign Corrupt Practices Act, the Export Administration Regulations,
                the
                International Traffic in Arms Regulations, the Office of Foreign
                Assets
                Control Regulations, the U.S. Customs Regulations, or any regulation,
                ruling, rule, order, decision, writ, judgment, injunction, or decree
                of
                any governmental authority issued pursuant
                thereto.

            

    

     

    
      	
              3.2

            	
              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 Agreement and completing the
      Arrangement:

     

    
      	
               

            	
              (a)

            	
              Organization.
                It has been duly incorporated or created under the Laws of its
                jurisdiction of incorporation, is validly existing and has full corporate
                power and capacity to own its properties and assets and conduct its
                business as currently owned and
                conducted.

            

    

     

    
      	
               

            	
              (b)

            	
              Authority
                and No Violation.

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

            	
              This
                Agreement 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 Agreement and the
                completion by it of the Arrangement 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);

            

    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (2)

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

            

    

     

    
      	
               

            	
              (3)

            	
              subject
                to obtaining the Regulatory Approvals relating to it, 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
                Agreement or the completion by it of the Arrangement other than the
                Regulatory Approvals relating to
                it.

            

    

     

    
      	
               

            	
              (c)

            	
              Sufficient
                Funds.

            

    

     

    
      	
               

            	
              (i)

            	
              Acquireco
                has delivered to the Corporation copies
                of:

            

    

     

    
      	
               

            	
              (A)

            	
              commitment
                letters dated January 10, 2007 (the “Funding Commitment
                Letter”), pursuant to which each of the Guarantors have
                committed, subject to the terms and conditions set forth therein,
                to
                contribute (or cause to be contributed) capital to Acquireco (the
                “Initial Financing”);
                and

            

    

     

    
      	
               

            	
              (B)

            	
              commitment
                letters dated January 10, 2007 (collectively referred to herein as
                the
                “Debt Commitment Letter” and, together with the Funding
                Commitment Letter, the “Financing Agreements”), which
                relate to $1,925,000,000 of financing (the “Debt
                Financing”) including term loan financing (the “Term Loan
                Financing”), interim financing (the “Bridge
                Financing”), receivables facility financing,
                (“Receivables Financing”) and high yield debt financing
                (“High Yield
                Financing”).

            

    

     

    As
      used
      in this Agreement, the financing referred to under clause (A) above is referred
      to as the “Initial Financing”, the financing referred to under
      clause (B) above is referred to as the “Debt Financing”, and
      the Initial Financing and Debt Financing are collectively referred to as the
      “Financing”.

     

    
      	
               

            	
              (ii)

            	
              Subject
                to its terms and conditions, the Financing, when funded in accordance
                with
                the Funding Commitment Letter and the DebtCommitment Letter, will
                provide
                financing sufficient to permit Acquireco to pay the aggregate Cash
                Amount
                payable pursuant to the Arrangement and to pay related fees and
                expenses.

            

    

     

    
      	
               

            	
              (iii)

            	
              As
                of the date hereof, none of the Financing Agreements has been withdrawn
                and Acquireco does not know of any facts or circumstances that may
                reasonably be expected to result in any of the conditions set forth
                in the
                Financing Agreements to not be satisfied.  Except for the
                conditions set forth, described or provided in the Financing Agreements,
                there are no other conditions precedent to the
                Financing.

            

    

     

    
      	
               

            	
              (iv)

            	
              The
                Financing Agreements have been duly executed and delivered and, as
                at the
                date of this Agreement, the Financing Agreements are in full force
                and
                effect and are legal and binding obligations of the Guarantors, in
                the
                case of the Funding Commitment Letter, and of Acquireco, in the case
                of
                the Debt Commitment Letter.

            

    

     

    
      	
               

            	
              (d)

            	
              Investment
                Canada Act. Acquireco is a “Canadian” as such term is defined in the
                Investment Canada Act.

            

    

     

    
      	
               

            	
              (e)

            	
              Residency.
                Acquireco is not a “non-resident” of Canada within the meaning of the Tax
                Act.

            

    

     

    
      	
               

            	
              (f)

            	
              Direction
                to the CRTC. Acquireco is a “Canadian” within the meaning of the
                Direction to the CRTC (Ineligibility of
                Non-Canadians).

            

    

     

    
      	
              3.3

            	
              Investigation
                

            

    

     

    Any
      investigation by the Corporation or its advisors or by Acquireco or its advisors
      shall not mitigate, diminish or affect the representations and warranties of
      Acquireco or the Corporation, respectively. Notwithstanding the foregoing,
      the
      parties hereby confirm that, as at the date hereof, they have not determined
      any
      representation and warranty to be untrue or incorrect.

     

    
      	
              3.4

            	
              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
      Agreement and shall terminate on the earlier of the termination of this
      Agreement in accordance with the provisions hereof and the Effective
      Time.

     

    ARTICLE
      4

     

    REGULATORY
      APPROVALS 

     

    
      	
              4.1

            	
              Applications
                

            

    

     

    The
      Corporation and Acquireco covenant to proceed diligently, in a coordinated
      fashion, to apply for the Regulatory Approvals.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    4.2           Competition
      Approval 

     

    
      	
               

            	
              (a)

            	
              The
                Corporation, Guarantors and Acquireco shall file any required pre-merger
                notifications with the Competition Authorities as soon as
                practicable.  Counsel for the Corporation and Acquireco shall
                cooperate to the extent reasonably necessary to prepare the parties’
                pre-merger notifications and the competition analysis and, if requested
                by
                any of the Competition Authorities, to promptly furnish additional
                information. Counsel for the Corporation and Acquireco may exchange
                confidential information of the parties on an “external counsel only”
                basis in order to prepare filings and to secure clearance of this
                transaction under the Competition
                Laws.

            

    

     

    
      	
               

            	
              (b)

            	
              Guarantors
                and Acquireco shall keep the Corporation well informed of any meetings
                or
                correspondence with the Competition Authorities, shall provide the
                Corporation and its counsel with an opportunity to attend such meetings
                and to provide comments on draft correspondence to the Competition
                Authorities, and shall provide the Corporation and its counsel with
                copies
                of correspondence to and from the Competition
                Authorities.  Guarantors and Acquireco shall advise the
                Corporation of any requests from the Competition Authorities for
                information, documents or meetings, and Acquireco’s proposed response(s)
                to such requests. The Corporation and the Corporation’s counsel shall
                cooperate with Acquireco and Acquireco’s counsel in responding to the
                Competition Authorities’ requests for information, documents or
                meetings.

            

    

     

    
      	
               

            	
              (c)

            	
              If
                any of the Competition Authorities advises Guarantors and Acquireco
                that
                it has concerns about the competitive impact of the transactions
                contemplated by the Arrangement or this Agreement, and that Competition
                Act Clearance or HSR Clearance will be given if certain steps are
                taken to
                resolve those concerns, Guarantors and Acquireco shall take any steps
                reasonably necessary to secure Competition Act Clearance or HSR Clearance,
                including negotiating, offering to take and, if such offer is accepted,
                effecting by consent agreement or order, hold separate arrangement,
                so as
                to enable the transactions contemplated by the Arrangement and this
                Agreement to be completed prior to the Outside Date, but for greater
                certainty shall not be required to divest any
                assets.

            

    

     

    ARTICLE
      5

     

    COVENANTS
      

     

    
      	
              5.1

            	
              Covenants
                of the Corporation

            

    

     

    
      	
               

            	
              (a)

            	
              The
                Corporation covenants and agrees that, between the date of this Agreement
                and the earlier of the Effective Time and the date upon which this
                Agreement is terminated in accordance with Article 7, except as set
                forth
                in section 0 of the Disclosure Letter or as
                expressly contemplated by any other provision of this Agreement,
                the
                Corporation shall, and shall cause each of its subsidiaries to, carry
                on
                its business in the ordinary course consistent with past practice,
                and
                shall use its reasonable commercial efforts to preserve intact the
                present
                business organization of the Corporation and its subsidiaries and
                to
                preserve the current relationships of the Corporation and its subsidiaries
                with customers, suppliers,distributors, licensors, employees and
                other
                Persons with which the Corporation or any of its subsidiaries has
                significant business relations. Without limiting the generality of
                the
                foregoing, except as set forth in section 0
                of the Disclosure Letter or as expressly contemplated by any other
                provision of this Agreement, neither the Corporation nor any of its
                subsidiaries shall, between the date of this Agreement and the Effective
                Time, directly or indirectly, do or propose to do, any of the following
                except as expressly required by Law or without the prior written
                consent
                of Acquireco:

            

    

     

    
      	
               

            	
              (i)

            	
              commence
                to undertake a substantial or unusual expansion of its business facilities
                or an expansion that is out of the ordinary course of business consistent
                with past practice;

            

    

     

    
      	
               

            	
              (ii)

            	
              declare
                or pay any dividends (other than dividends in the ordinary course
                and
                consistent with past practice) on or make any other distributions
                on or in
                respect of the Class A Shares or the Class B
                Shares;

            

    

     

    
      	
               

            	
              (iii)

            	
              amend
                or otherwise change its articles of incorporation or by-laws (or
                equivalent organizational
                documents);

            

    

     

    
      	
               

            	
              (iv)

            	
              allot,
                reserve, set aside, issue, sell, pledge, dispose of, grant or encumber,
                or
                authorize 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
                and (ii) the settlement for cash by the Corporation of any Performance
                Share Appreciation Plan Units outstanding on the date of this Agreement
                in
                accordance with their terms;

            

    

     

    
      	
               

            	
              (v)

            	
              acquire
                (including by merger, amalgamation, plan of arrangement, consolidation
                or
                acquisition of securities or assets or any other business combination)
                any
                corporation, partnership, other business organization or any division
                thereof or any assets except (i) purchases of film and television
                programming and related assets that are made
                pursuant to contracts in effect as of the date hereof requiring such
                purchases in the ordinary course of business consistent with past
                practice
                and pursuant to the 2006 programming budget (except as disclosed
                in
                section 000
                of the Disclosure Letter) and (ii) except for
                capital expenditures in amounts which are consistent with the 2006
                Capital
                budget and in amounts no greater than $2 million individually or
                $5
                million in the aggregate;

            

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (vi)

            	
              sell,
                lease, pledge, dispose of or encumber or authorize the sale, lease,
                pledge, disposition or encumbrance of any assets of the Corporation
                or any
                of its subsidiaries, except sales in the ordinary course of business
                consistent with past practice limited to those transactions involving
                the
                sale of television programming;

            

    

     

    
      	
               

            	
              (vii)

            	
              assume,
                guarantee or endorse, or otherwise become responsible for the obligations
                of any Person (other than in respect of an obligation incurred by
                a
                wholly-owned subsidiary that is not restricted hereunder from incurring
                that obligation), make any loans or advances, incur any indebtedness
                for
                borrowed money or issue any debt securities, or rights, warrants,
                calls or
                options to acquire any debt securities of the Corporation or any
                of its
                subsidiaries, except for (i) borrowings under the Corporation’s credit
                facilities in effect as of the date hereof in the ordinary course
                of
                business or (ii) advances made to employees for travel and moving
                expenses
                in the ordinary course of business consistent with past
                practice;

            

    

     

    
      	
               

            	
              (viii)

            	
              repay,
                redeem, repurchase or retire, or otherwise make any payment in respect
                of,
                any indebtedness for borrowed money or any debt securities, or rights,
                warrants, calls or options to acquire debt securities of the Corporation
                or any of its subsidiaries, other than in the ordinary course of
                business
                consistent with past practice or as required by their terms as in
                effect
                on the date of this Agreement;

            

    

     

    
      	
               

            	
              (ix)

            	
              (A)
                increase the compensation payable, or benefits provided, to its directors,
                officers, or employees except, with respect to non-officer employees,
                increases in annual base salary in the ordinary course of business
                consistent with past practice or as expressly required by agreements
                or
                arrangements in existence as at the date hereof, (B) grant any severance
                or termination pay or otherwise pay any amount to which employees
                are not
                entitled or accelerate any benefits under (other than as required
                by
                applicable Law or employment agreements, collective agreements, or
                severance plans, agreements or arrangements in existence on the date
                of
                this Agreement), or enter into (except in the ordinary course consistent
                with past practice with respect to new hires and promotions), amend
                or
                modify any employment, bonus, change of control or severance agreement
                with, any director, officer or other employee of the Corporation
                or any of
                its subsidiaries except in the ordinary course of business for payments
                of
                annual bonuses that shall not exceed $12,000,000 in the aggregate
                at
                times, in amounts and otherwise on terms and conditions in the ordinary
                course of business consistent with past practice in accordance with
                the
                terms of the 2006 incentive plan, or (C) establish, adopt, enter
                into or
                amend any collective agreement or benefit plan for the benefit of
                any
                director, officer or employee, except as required by
                Law;

            

    

     

    
      	
               

            	
              (x)

            	
              reclassify,
                combine, split or subdivide any of its
                shares;

            

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (xi)

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

            

    

     

    
      	
               

            	
              (xii)

            	
              pay,
                discharge or satisfy any material claim, liability or obligation
                (whether
                absolute, accrued, asserted or unasserted, contingent or otherwise),
                other
                than in the ordinary course of business consistent with past
                practice;

            

    

     

    
      	
               

            	
              (xiii)

            	
              take
                any action to cause any of its representations or warranties set
                forth in
                Article 3 to be untrue in any respect such that the condition set
                forth in section 1)a)i)(1) would not be
                satisfied;

            

    

     

    
      	
               

            	
              (xiv)

            	
              amend
                or modify in any material respect or terminate any Material Contract
                or
                enter into any contract or agreement that would be a Material Contract
                if
                in effect on the date hereof, except for (A) any contract or agreement
                for
                the sale of goods or services entered into on arm’s length terms with a
                customer of the Corporation or any subsidiary and (B) any Material
                Contract that does not require payment of or receipt over the remaining
                life of such contract of an amount in excess of the greater of $1,000,000
                or an amount advised in writing by
                Acquireco;

            

    

     

    
      	
               

            	
              (xv)

            	
              enter
                into any union recognition agreement, collective agreement, works
                council
                agreement or similar agreement with any trade union or representative
                body;

            

    

     

    
      	
               

            	
              (xvi)

            	
              (A)
                cancel any material indebtedness, (B) waive, transfer, grant or release
                any claims or potential claims of material value or (C) waive any
                benefits
                of, or agree to modify in any respect, or terminate, release or fail
                to
                enforce, or consent to any material matter with respect to which
                consent
                is required under, any confidentiality, standstill or similar agreement
                to
                which the Corporation or any subsidiary is a party or of which the
                Corporation or any subsidiary is a
                beneficiary;

            

    

     

    
      	
               

            	
              (xvii)

            	
              amend,
                modify or terminate any insurance policy of the Corporation or any
                subsidiary in effect on the date of this Agreement, except for scheduled
                renewals of any other insurance policy of the Corporation or any
                subsidiary in effect on the date hereof in the ordinary course of
                business
                consistent with past practice;

            

    

     

    
      	
               

            	
              (xviii)

            	
              license
                or commit to license or otherwise acquire or transfer any Intellectual
                Property or rights in or in respect thereto, other than in the ordinary
                course of business; and

            

    

     

    
      	
               

            	
              (xix)

            	
              announce
                an intention, enter into any formal or informal agreement or otherwise
                make a commitment to do any of the
                foregoing.

            

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (b)

            	
              The
                Corporation and its subsidiaries shall use all reasonable commercial
                efforts to comply promptly with all requirements which applicable
                Laws may
                impose on the Corporation or its
                subsidiaries;

            

    

     

    
      	
               

            	
              (c)

            	
              Subject
                to compliance with Competition Laws and Broadcasting Legislation,
                the
                Corporation shall promptly advise Acquireco by telephone and in writing
                if
                any senior officer of the Corporation becomes aware
                of:

            

    

     

    
      	
               

            	
              (i)

            	
              any
                event occurring subsequent to the date of this Agreement that would
                render
                any representation or warranty of the Corporation contained in this
                Agreement, if made on or as at the date of such event or the Effective
                Date, untrue or inaccurate;

            

    

     

    
      	
               

            	
              (ii)

            	
              any
                Material Adverse Change; or

            

    

     

    
      	
               

            	
              (iii)

            	
              any
                breach by the Corporation of any covenant contained in this
                Agreement.

            

    

     

    
      	
               

            	
              (d)

            	
              Subject
                to compliance with Competition Laws and Broadcasting Legislation,
                the
                Corporation will use all reasonable commercial efforts to consult
                on an
                ongoing basis with the Trustee in order that the Trustee will become
                more
                familiar with the Corporation and its subsidiaries as well as with
                their
                respective financial affairs, including in relation to any commitments,
                arrangements or transactions proposed to be entered into that would
                be out
                of the ordinary course of business or outside the current operating
                plan
                that could reasonably be expected to give rise to a material liability
                or
                commitment of any kind and will use all reasonable commercial efforts
                so
                that such consultations are effected on a basis that will allow sufficient
                time for the Trustee to give reasonable consideration to the
                same;

            

    

     

    
      	
               

            	
              (e)

            	
              Subject
                to applicable Law (including Competition Laws and Broadcasting
                Legislation), from the date of this Agreement until the Effective
                Time,
                the Corporation shall, and shall use all commercially reasonable
                efforts
                to cause its subsidiaries and respective officers, directors, employees
                and agents of the Corporation and its subsidiaries to, afford Acquireco
                and its directors, officers, employees, agents and advisors (including
                financial advisors, counsel and accountants) collectively,
                “Guarantor Representatives”) reasonable access, during
                normal business hours and upon reasonable notice by Acquireco to
                the
                respective officers, employees, agents, properties, assets, offices
                and
                other facilities, Books and Records of the Corporation and each
                subsidiary, and shall furnish Acquireco with such financial operating
                and
                other data and information as Acquireco or the Guarantor Representatives
                may reasonably request; provided, however, that the Corporation
                and its subsidiaries may withhold any Confidential Material Contract
                or
                any other contract or portions thereof which it is expressly restricted
                from disclosing as a result of a legally enforceable confidentiality
                obligation.  If any material is withheld by the Corporation or a
                subsidiary in accordance with applicable Law, the Corporation or
                such
                subsidiary shall inform Acquireco as to the general nature of what
                is
                being withheld.All information obtained by Acquireco or any other
                Person
                pursuant to this section 0 shall be kept
                confidential in accordance with, and shall be subject to, the
                Confidentiality Agreements and the provisions regarding confidentiality
                in
                the Confidentiality Agreements should apply mutatis mutandis to
                Acquireco.

            

    

     

    
      	
               

            	
              (f)

            	
              Between
                the date of this Agreement and the earlier of the Effective Time
                and the
                date upon which this Agreement is terminated in accordance with Article
                7,
                the Corporation shall and shall cause its subsidiaries to perform
                all
                obligations required or desirable to be performed by the Corporation
                or
                any of its subsidiaries under this Agreement and shall do all such
                other
                acts and things as may be necessary or desirable in order to complete
                (A)
                as soon as reasonably practicable, the Arrangement, and (B) the
                Contemplated Transactions, to the extent requested by Acquireco (for
                the
                avoidance of doubt, the effectiveness of the Contemplated Transactions
                shall occur no more than three days prior to the Effective Time),
                and,
                without limiting the generality of the foregoing, the Corporation
                shall
                and where appropriate shall cause its subsidiaries
                to:

            

    

     

    
      	
               

            	
              (i)

            	
              recommend
                in the Circular and at the Meeting that Shareholders vote in favour
                of the
                Arrangement, and all public comment by the Corporation in relation
                to the
                Arrangement shall be made in accordance with section 0  and shall be consistent with and
                supportive of such recommendation; and the Corporation shall not
                act or
                fail to act in any way that might reasonably be expected to discourage
                Shareholders from voting in favour of the Special Resolution or that
                might
                encourage Shareholders to vote against the Special
                Resolution;

            

    

     

    
      	
               

            	
              (ii)

            	
              use
                all reasonable commercial efforts to encourage each holder of the
                Options,
                Purchase Rights, restricted stock units and deferred stock units
                to
                exercise his or her Options, Purchase Rights, restricted stock units
                and
                deferred stock units of the Corporation to acquire Shares or such
                cash
                equivalent as may be permitted by the terms of the respective Compensation
                Plan prior to the Effective Time and, subject to applicable Laws,
                the
                Corporation may, at its option, provide financing to the holders
                of such
                Options or Purchase Rights in respect of the exercise of such Options,
                Purchase Rights, restricted stock units and deferred stock units
                provided
                that the Corporation obtains an irrevocable direction from any such
                holder
                of Options, Purchase Rights or restricted stock units and deferred
                stock
                units to the effect that payment for the Shares obtained on exercise
                of
                such Options, Purchase Rights, restricted stock units and deferred
                stock
                units pursuant to the Arrangement shall be paid to the Corporation
                to the
                extent sufficient to repay any such
                financing;

            

    

     

    
      	
               

            	
              (iii)

            	
              apply
                for and use all reasonable commercial efforts to assist Acquireco
                to
                obtain all Regulatory Approvals and consents and waivers from any
                Persons
                required under the terms of any Material
                Contracts;

            

    

     

    
      	
               

            	
              (iv)

            	
              defend
                all lawsuits or other legal, regulatory or other proceedings challenging
                or affecting any matter contemplated by this Agreement or the completion
                of the Arrangement; and

            

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (v)

            	
              use
                all reasonable commercial efforts to have lifted or rescinded any
                injunction or restraining order or other order relating to the Corporation
                which may adversely affect the ability of the Corporation to complete
                the
                Arrangement.

            

    

     

    
      	
               

            	
              (g)

            	
              Notwithstanding
                the covenants of the Corporation contained in section 0 of this Agreement, the Corporation
                shall
                purchase run-off directors’ and officers’ liability insurance providing
                protection comparable to the protection provided by policies maintained
                by
                the Corporation in effect immediately prior to the Effective Date
                in
                favour of present and former directors and officers and providing
                protection in respect of claims arising from facts or events which
                occurred prior to the Effective Date for a period of up to six years
                from
                the Effective Time provided that the Corporation shall use commercially
                reasonable efforts to provide such insurance coverage at the lowest
                cost
                possible and in no event shall the Corporation expend an amount in
                excess
                of U.S.$2,000,000 for such insurance
                coverage.

            

    

     

    
      	
               

            	
              (h)

            	
              The
                Corporation covenants and agrees that until the earlier of the Effective
                Date and the termination of this Agreement in accordance with Article
                7,
                it and its subsidiaries will take those actions set out in paragraph
                8 of
                section 0 of the Disclosure Letter and will
                (1) duly and timely file all Tax Returns required to be filed by
                them,
                which shall be correct and complete in all respects, (2) pay, withhold,
                collect and remit in a timely fashion all amounts required to be
                so paid,
                withheld, collected or remitted, and (3) not, without the prior written
                consent of Acquireco, (A) make, rescind or change any election relating
                to
                Taxes, annual Tax accounting period or method of Tax accounting in
                any
                material respect, (B) except as disclosed in section 00 of the
                Disclosure Letter enter into (or offer to enter into) any agreement
                (including any waiver) with any Governmental Entity relating to Taxes,
                (C)
                without the prior written consent of Acquireco, settle (or offer
                to
                settle) any material Tax claim, audit, proceeding or re-assessment,
                (D)
                amend any Tax Return or change from most recent practice any manner
                of
                reporting income or claiming deductions for Tax purposes, or (E)
                take any
                action or enter into any transaction, other than a Contemplated
                Transaction or a transaction effected at the request of Acquireco
                pursuant
                to section 0 hereof, that would have the
                effect of reducing, other than in the ordinary course of business,
                or
                eliminating the amount of the tax cost “bump” pursuant to paragraphs
                88(1)(c) and (d) of the Tax Act otherwise available to Acquireco
                and its
                successors in respect of the Shares or the non-depreciable capital
                properties owned by the Corporation and its subsidiaries including
                for
                greater certainty the subsidiaries of Motion Picture Distribution
                LP as of
                the date of this Agreement or acquired by such entities subsequent
                to the
                date of this Agreement as part of the Contemplated
                Transactions.

            

    

     

    
      	
               

            	
              (i)

            	
              The
                Corporation shall provide, and shall cause its affiliates to provide,
                and
                shall use reasonable best efforts to cause its and their officers,
                employees, independent auditors, counsel and other representatives
                to
                provide, all reasonable and timely cooperation in connection with
                the
                arrangement of the Debt Financing as may be reasonably requested
                by
                Acquireco (provided, that the Corporation shall not berequired to
                provide, or cause any affiliate to provide, cooperation under this
                section
                00 that
                involves
                any binding commitment by the Corporation or any of its affiliates
                which
                commitment is not conditional on the completion of the Arrangement
                and
                does not terminate without liability to the Corporation or its affiliates
                upon the termination of this Agreement), including but not limited
                to:

            

    

     

    
      	
               

            	
              (i)

            	
              arranging
                for appropriate senior management of the Corporation, each of its
                principal business divisions  and its affiliates (X) to meet at
                reasonable times and on a reasonable number of occasions with rating
                agencies, prospective lenders and investors in presentations, meetings,
                road shows and due diligence sessions, (Y) to provide reasonable
                and
                customary management and legal representations to auditors and (Z)
                to
                provide reasonable and timely assistance with the preparation of
                business
                projections and similar materials with respect to the Corporation
                and each
                of its principal business
                divisions;

            

    

     

    
      	
               

            	
              (ii)

            	
              otherwise
                reasonably cooperating with the marketing efforts of Acquireco and
                its
                financing sources for any of the Debt
                Financing;

            

    

     

    
      	
               

            	
              (iii)

            	
              furnishing
                Acquireco and its financing sources with timely financial and other
                pertinent information regarding the Corporation and each of its three
                principal business divisions (including by preparing such financial
                or
                other pertinent information that may not exist) that it reasonably
                believes to be accurate in all material respects and as may be reasonably
                requested by Acquireco and is customary for (a) a high yield bond
                offering
                in the case of the Corporation’s broadcasting division and (b) a bank book
                for a term loan financing, receivable financing and bridge financing,
                in
                each case, including the audited and unaudited historical financial
                statements and financial data, pro forma financial statements and
                related material (including appropriate management’s discussion and
                analysis) for each of such three business divisions, which in the
                case of
                the Corporation’s broadcasting division shall be consistent with the
                requirements of the U.S. Securities Act of 1933 and the rules and
                regulations promulgated thereunder (the “US Securities
                Act”) for a registered offering of debt securities as customarily
                applied to an offering under Rule 144A under the US Securities Act
                (“Rule 144A”) for a private offering of debt securities
                (and including, with respect to any audited financial statements,
                the
                report of the auditors of each such division) (the “Required
                Financial Information”);

            

    

     

    
      	
               

            	
              (iv)

            	
              satisfying
                the conditions set forth in the Debt Commitment Letter (to the extent
                satisfaction of such conditions requires actions by or cooperation
                of the
                Corporation or any of its affiliates), subject to such provisions
                of the
                Debt Commitment Letter being in the form provided to the Corporation
                prior
                to the signing of this Agreement;

            

    

     

    
      	
               

            	
              (v)

            	
              assisting
                Acquireco and its financing sources (including by participating in
                drafting sessions) in the timely preparation of (A) offering, information
                or syndication documents for any of the Financing or any alternative
                to
                all orany portion thereof (“Offering Documents”),
                including but not limited to (X) an offering memorandum, prepared
                in
                accordance with customary practices for any offering of debt securities
                under Rule 144A, as customarily applied to an offering under Rule
                144A for
                a private offering of debt securities, with respect to any High Yield
                Financing (or any alternative thereto) that Acquireco is seeking
                to obtain
                and (Y) an offering memorandum or prospectus prepared in accordance
                with
                customary practices for Term Loan Financing, Receivables Financing
                and
                Bridge Financing (or any alternative thereto) that Acquireco is seeking
                to
                obtain, including in each case under clauses (X) and (Y) above by
                timely
                providing the Required Financial Information and such other financial
                and
                pertinent information (such as tabular, compiled or other financial
                data),
                as shall exist (or if not existing, using reasonable best efforts
                to
                prepare such financial or other pertinent information) that the
                Corporation reasonably believes to be accurate in all material respects
                and as may be reasonably requested by Acquireco, and (B) materials
                for
                rating agency presentations;

            

    

     

    
      	
               

            	
              (vi)

            	
              if
                applicable, facilitating the pledging of collateral and obtaining
                surveys
                and title insurance as reasonably requested by
                Acquireco;

            

    

     

    
      	
               

            	
              (vii)

            	
              if
                applicable in connection with the Receivables Financing, cooperation
                in
                restructuring the ownership of Intellectual Property and internal
                and
                external licensing agreements, preparation of analyses of receivables,
                and
                cooperation with surety providers;

            

    

     

    
      	
               

            	
              (viii)

            	
              using
                reasonable best efforts to obtain comfort letters from the auditors
                of
                each of the business divisions and consent from such auditors for
                Acquireco and any applicable business division to use any of their
                audit
                reports (including but not limited to by including such reports in
                any
                Offering Documents);

            

    

     

    
      	
               

            	
              (ix)

            	
              using
                reasonable best efforts to take such corporate actions as shall be
                reasonably necessary to permit the consummation of the Debt Financing
                and
                to permit the proceeds thereof to be made available to Acquireco
                on the
                Closing Date;

            

    

     

    
      	
               

            	
              (x)

            	
              using
                reasonable best efforts to obtain legal opinions as may reasonably
                be
                requested by Acquireco; and

            

    

     

    
      	
               

            	
              (xi)

            	
              using
                reasonable best efforts to provide and execute necessary documents
                and
                certificates, including officer’s certificates, as may be reasonably
                requested by Acquireco.

            

    

     

    In
      no
      event shall the Corporation or any affiliate be required to pay any commitment
      or similar fee or (except as otherwise expressly contemplated by this Agreement)
      incur any liability in connection with the Debt Financing prior to the Effective
      Time.  Acquireco shall, if this Agreement is terminated pursuant to
      section 0, reimburse the Corporation for all
      out-of-pocket costs (including legal and accounting fees) incurred in good
      faith
      by the Corporation and its subsidiaries

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    and
      their
      respective advisers, agents and representatives in connection with such
      cooperation.  The Corporation, in consultation with Acquireco, shall
      be entitled to engage such advisors, agents and representatives as it believes
      are necessary or desirable to carry out these tasks.

     

    Notwithstanding
      anything provided in this section 00 neither the Corporation
      nor its subsidiaries shall
      be required to disclose any information the provision of which would breach
      privacy laws or any contractual agreements to which the Corporation or any
      of
      its subsidiaries is a party.  Acquireco shall keep, and cause to be
      kept by its representatives confidential all non-public or otherwise
      confidential information obtained by Acquireco or its representatives pursuant
      to this section 00
      unless the Corporation otherwise agrees.

     

    Notwithstanding
      anything provided in this section 00, the Corporation
      has agreed to cooperate in
      obtaining the Financing, however, absent wilful breach, no failure by the
      Corporation or its subsidiaries to perform any of the actions required in this
      section 00 shall be
      construed as a breach by the Corporation under this Agreement.

     

    
      	
               

            	
              (j)

            	
              The
                Corporation shall keep Acquireco informed, on a current basis, of
                any
                events, discussions, notices or changes with respect to any Tax (other
                than ordinary course communications which could not reasonably be
                expected
                to be material to the Corporation), criminal or regulatory investigation
                or action involving the Corporation or any of its subsidiaries, so
                that
                the Guarantors, their members and their respective affiliates will
                have
                the opportunity to take appropriate steps to avoid or mitigate any
                cost or
                regulatory consequences to them that might arise from such investigation
                or action (including by reviewing written submissions in advance,
                attending meetings with Taxing authorities and  coordinating and
                providing assistance in meeting with
                regulators).

            

    

     

    
      	
               

            	
              (k)

            	
              The
                Corporation shall cause each of the companies set forth on Schedule
00 and
                use
                reasonable best efforts to cause such other companies identified
                by GSCP
                prior to the Closing Date to enter into a letter agreement with GSCP
                or
                its applicable affiliate, delegate or assignee, as of immediately
                prior to
                the Closing Date, that is reasonably satisfactory to GSCP and contains
                substantially all of the rights described in U.S. Department of Labour
                Advisory Opinion 2002-01A in order to comply with the requirements
                of
                Section 2510.3-101(d)(3)(ii) of
                ERISA.

            

    

     

    
      	
               

            	
              (l)

            	
              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.  Acquireco shall strictly enforce its rights under any
                existing agreements with Motion Picture Distribution Inc. in furtherance
                of Acquireco’s obligations hereunder, including pursuant to section 00.

            

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              5.2

            	
              Covenants
                of Acquireco

            

    

     

    
      	
               

            	
              (a)

            	
              Acquireco
                covenants and agrees that between the date of this Agreement and
                the
                earlier of the Effective Time and the date this Agreement is terminated
                in
                accordance with Article 7, to perform all obligations required or
                desirable to be performed by it under this Agreement and to do all
                such
                other acts and things as may be necessary or desirable in order to
                complete, as soon as reasonably practicable, the Arrangement and,
                without
                limiting the generality of the foregoing,
                to:

            

    

     

    
      	
               

            	
              (i)

            	
              use
                all reasonable commercial efforts to comply promptly with all requirements
                which applicable Laws may impose on Acquireco with respect to the
                matters
                contemplated by this Agreement and the
                Arrangement;

            

    

     

    
      	
               

            	
              (ii)

            	
              apply
                for and use all reasonable commercial efforts to obtain all Regulatory
                Approvals relating to Acquireco;

            

    

     

    
      	
               

            	
              (iii)

            	
              defend
                all lawsuits or other legal, regulatory or other proceedings to which
                Acquireco is a party challenging or affecting any matter contemplated
                by
                this Agreement or the completion of the
                Arrangement;

            

    

     

    
      	
               

            	
              (iv)

            	
              use
                all reasonable commercial efforts to have lifted or rescinded any
                injunction or restraining order or other order relating to Acquireco
                which
                may adversely affect the ability of the parties to complete the
                Arrangement; and

            

    

     

    
      	
               

            	
              (v)

            	
              not
                permit any amendment or modification to be made to the Voting Agreements
                in any manner that is material and adverse to the shareholders of
                the
                Corporation, without the prior written consent of the
                Corporation;

            

    

     

    
      	
               

            	
              (vi)

            	
              not
                take any action to cause any of its representations or warranties
                set
                forth in Article 3 to be untrue in any material respect such that
                the
                condition set forth in section 0 would not be
                satisfied;

            

    

     

    
      	
               

            	
              (vii)

            	
              (A)

            	
              Acquireco
                shall use its reasonable best efforts to arrange the Debt

            	
              Financing
                on the terms and conditions described in the Debt

            	
              Commitment
                Letter, including using reasonable best efforts
                to:

            

    

     

    
      	
               

            	
              (1)

            	
              negotiate
                definitive agreements with respect thereto on the terms and conditions
                contained therein or on other terms not less beneficial to
                Acquireco;

            

    

     

    
      	
               

            	
              (2)

            	
              satisfy
                on a timely basis all conditions applicable to Acquireco in such
                definitive agreements that are within its control;
                and

            

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (3)

            	
              consummate
                the Financing contemplated by the Debt Commitment Letter at the Effective
                Time, subject to the Corporation’s compliance with section 0.

            

    

     

    
      	
               

            	
              (B)

            	
              In
                the event any portion of the Debt Financing becomes unavailable on
                the
                terms and conditions contemplated in the Debt Commitment Letter,
                Acquireco
                shall use its reasonable best efforts to arrange to obtain alternative
                financing, including from alternative sources, on terms that are
                not less
                beneficial to Acquireco (the “Alternative Debt
                Financing”) as promptly as practicable following the occurrence
                of such event, subject to the Corporation’s compliance with section 0.

            

    

     

    
      	
               

            	
              (C)

            	
              In
                the event that (X) any portion of the Debt Financing structured as
                High
                Yield Financing has not been consummated, (Y) all closing conditions
                contained in Article 6 have been satisfied or waived (other than
                those
                conditions that are by their terms to be satisfied at the Effective
                Date)
                and (Z) the Bridge Financing (or bridge financing in any Alternative
                Debt
                Financing) is available on the terms and conditions described in
                the Debt
                Commitment Letter (or any replacement commitment letter obtained
                by
                Acquireco), then Acquireco shall borrow under and use the proceeds
                of the
                Bridge Financing (or such bridge financing in any Alternative Debt
                Financing) to replace such affected portion of the High Yield Financing
                no
                later than the last day of the Marketing
                Period.

            

    

     

    For
      purposes of this Agreement, the “Marketing Period” shall mean
      the 20 consecutive Business Day period commencing on the later of (X) the date
      on which all of the conditions set forth in section 0 and 0 shall have been
      satisfied and continue to be satisfied (other than those conditions that are
      by
      their terms to be satisfied and continue to be satisfied at the Effective Date)
      and (Y) the fifth Business Day after the Corporation delivers to Acquireco
      the
      Required Financial Information and all Offering Documents reasonably requested
      with respect to the Debt Financing in accordance with section 0; provided, however, that if the financial statements
      included in the Required Financial Information that is available to Acquireco
      on
      the first day of the Marketing Period would be “stale”, within the meaning of
      Rule 3-12 of Regulation S-X, on any day during such 20 Business Day period
      if a
      registration statement using such financial statements were to be filed with
      the
      SEC on such date, then the Marketing Period shall be deemed to commence after
      the Corporation delivers the Required Financial Information with financial
      statements included therein that are not “stale” (and would not become “stale”
during such period) and are otherwise in compliance with relevant
      requirements.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    (D)           Acquireco
      shall give the Corporation prompt notice upon becoming aware of any material
      breach by any party of the Debt Commitment Letter or any termination of the
      Debt
      Commitment Letter.

     

    
      	
               

            	
              (E)

            	
              Acquireco
                shall use its reasonable best efforts to enter into definitive credit
                or
                loan or other agreements and all documentation with respect to the
                Financings on the terms and conditions set out in the Financing Agreements
                or other terms and conditions not less favourable, in the aggregate,
                to
                Acquireco as soon as reasonably practicable, and Acquireco shall
                deliver
                to the Corporation correct and complete copies of such executed definitive
                agreements and documentation promptly upon
                execution.

            

    

     

    
      	
               

            	
              (F)

            	
              Acquireco
                agrees to notify the Corporation promptly, if at any time prior to
                the
                Effective Time any of the Financing Agreements expires or is terminated
                for any reason.

            

    

     

    
      	
               

            	
              (G)

            	
              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 Finance Agreements or any definitive agreement
                or
                documentation referred to in this section 0, without the prior written consent of
                the
                Corporation (such consent not to be unreasonably withheld or
                delayed).

            

    

     

    
      	
               

            	
              (H)

            	
              Acquireco
                shall provide notice to the Corporation promptly upon confirming
                the
                drawdown dates for the Debt Financing and receiving the proceeds
                of the
                Debt Financing; and

            

    

     

    
      	
               

            	
              (viii)

            	
              not
                permit, without the prior written consent of the Corporation (such
                consent
                not to be unreasonably withheld), any Person other than the Guarantors
                or
                one or more of their affiliates to acquire, directly or indirectly,
                a
                voting or equity interest in Acquireco if it would materially increase
                the
                risk of obtaining approval of the Arrangement or the Contemplated
                Transactions pursuant to the Competition
                Act.

            

    

     

    
      	
              5.3

            	
              Covenants
                Regarding Non-Solicitation

            

    

     

    
      	
               

            	
              (a)

            	
              The
                Corporation shall not, and shall cause each of its subsidiaries not
                to,
                directly or indirectly, through any officer, director, employee,
                representative (including for greater certainty any financial or
                other
                advisors) or agent of the Corporation or any of its
                subsidiaries:

            

    

     

    
      	
               

            	
              (i)

            	
              solicit,
                assist, initiate, encourage or otherwise facilitate (including, without
                limitation, by way of furnishing non-public information, permitting
                any
                visit to any facilities or properties of the Corporation or any subsidiary
                or

            

    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              entering
                into any form of written or oral agreement, arrangement or understanding)
                any inquiries, proposals or offers regarding an Acquisition
                Proposal;

            

    

     

    
      	
               

            	
              (ii)

            	
              engage
                in or otherwise facilitate any discussions or negotiations regarding
                any
                Acquisition Proposal;

            

    

     

    
      	
               

            	
              (iii)

            	
              withdraw,
                modify or qualify in a manner adverse to Acquireco, or propose publicly
                to
                withdraw, modify or qualify in a manner adverse to Acquireco, the
                approval
                or recommendation by the Board of Directors or any committee thereof
                with
                respect to this Agreement or the Arrangement (it being understood
                that
                publicly taking a neutral position or no position with respect to
                an
                Acquisition Proposal shall be considered an adverse modification,
                except
                that publicly taking a neutral position or no position with respect
                to an
                Acquisition Proposal for a period of time not in excess of 10 Business
                Days after the first public announcement of such Acquisition Proposal
                shall not be considered an adverse modification (such time period,
                an
                “Acquisition Proposal Assessment Period”) unless such
                position continues beyond the expiration of the Acquisition Proposal
                Assessment Period);

            

    

     

    
      	
               

            	
              (iv)

            	
              approve
                or recommend, or propose publicly to approve or recommend, any Acquisition
                Proposal; or

            

    

     

    
      	
               

            	
              (v)

            	
              accept
                or enter into or propose publicly to approve or recommend any letter
                of
                intent, agreement in principle, agreement, arrangement or undertaking
                related to any Acquisition Proposal (other than a confidentiality
                agreement as permitted pursuant to the terms of this
                Agreement).

            

    

     

    
      	
               

            	
              (b)

            	
              Subject
                to sections 00,
                00 and
0
                but notwithstanding section 00 and
                any other
                provision of this Agreement, nothing shall prevent the Board of Directors
                at any time prior to the approval of the Special Resolution by the
                Shareholders from considering, discussing or negotiating any bona
                fide written Acquisition Proposal not solicited after the date of
                this Agreement nor solicited contrary to the Exclusivity Agreement
                that
                (i) did not result from a breach of section 00 and
                (ii) the
                Board of Directors determines in good faith (after consultation with
                its
                financial advisors and outside counsel) is, or is reasonably likely
                to
                result in, a Superior Proposal if and only if the Board of Directors
                determines in good faith, after consultation with outside legal counsel,
                that the failure to take such action would be inconsistent with its
                fiduciary duties.

            

    

     

    
      	
               

            	
              (c)

            	
              The
                Corporation will immediately cease and cause to be terminated any
                existing
                solicitation, discussion or negotiation with any Person (other than
                Acquireco) by the Corporation or any subsidiary or any of its or
                their
                officers, directors, employees, representatives or agents with respect
                to
                any potential Acquisition Proposal, whether or not initiated by the
                Corporation or any subsidiaries or any of its or their officers,
                directors, employees, representatives or agents, and, in connection
                therewith, the Corporation will discontinue access to any data
                rooms(virtual or otherwise).  The Corporation shall not release
                any third party from any confidentiality agreement or standstill
                agreement
                (except to allow such party to propose an Acquisition Proposal to
                the
                Corporation), provided that the foregoing shall not prevent the Board
                of
                Directors from considering and accepting any new Acquisition Proposal
                that
                is determined to be a Superior Proposal that might be made by any
                such
                third party, provided that the remaining provisions of sections 0 and 0 of this
                Agreement are complied with.  Within 15 Business Days from the
                date hereof, the Corporation shall request the return or destruction
                of
                all information provided to any third parties who have entered into
                a
                confidentiality agreement with the Corporation relating to any potential
                Acquisition Proposal and shall use all reasonable efforts to ensure
                that
                such requests are honoured in accordance with the terms of such
                confidentiality agreements.

            

    

     

    
      	
               

            	
              (d)

            	
              The
                Corporation shall promptly notify Acquireco by telephone, followed
                by
                notice in writing, of any proposal, inquiry, offer (or any amendment
                thereto) or request relating to or constituting a bona fide
                Acquisition Proposal received by or communicated to any officer of
                director of the Corporation after the date hereof, or of any request
                received after the date hereof for non-public information relating
                to the
                Corporation or any subsidiary in connection with an Acquisition Proposal
                or for access to the properties, Books and Records of the Corporation
                or
                any subsidiary by any Person, and shall provide Acquireco with copies
                of
                any such proposal, inquiry, offer, request or Acquisition
                Proposal.  Such notice shall include a description of the
                material terms and conditions of any proposal and provide such details
                of
                the proposal, inquiry or contact as Acquireco may reasonably request
                including the identity of the Person making such proposal, inquiry
                or
                contact.  The Corporation shall keep Acquireco reasonably
                informed of the status and the material terms and conditions (including
                any amendment thereto) of any such Acquisition Proposal, inquiry
                or
                request.

            

    

     

    
      	
               

            	
              (e)

            	
              If,
                prior to the date of the Meeting, the Corporation receives a request
                for
                material non-public information from a Person who proposes a bona
                fide Acquisition Proposal (notice of which has been provided to
                Acquireco in accordance with 00) and
                is permitted, as contemplated by section
                00, to
                consider,
                discuss or negotiate, then, and only in such case, the Board of Directors
                may, subject to the execution by such Person of a confidentiality
                agreement which is substantially in the form of the Confidentiality
                Agreements, provide such Person with access to information regarding
                the
                Corporation and its subsidiaries provided, however, that Acquireco
                is
                provided with a list of or copies of the information provided to
                such
                Person and is immediately provided with access to the same information
                to
                which such Person was provided.

            

    

     

    
      	
               

            	
              (f)

            	
              Nothing
                contained in this section 0 shall prohibit
                the Board of Directors at any time prior to approval of the Special
                Resolution by the Shareholders
                from:

            

    

     

    
      	
               

            	
              (i)

            	
              making
                any disclosure of an Acquisition Proposal to the Shareholders prior
                to the
                Effective Time if the Board of Directors determines in good faith
                (after
                consultation with outside counsel) that such disclosure is necessary
                for
                the Board of Directors to fulfill its fiduciary duties or is otherwise
                required under applicable Law; and

            

    

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (ii)

            	
              responding
                to a bona fide request for information that could reasonably be
                expected to lead to an Acquisition Proposal solely by advising that
                no
                information can be provided unless a bonafide written
                Acquisition Proposal is made and then only in compliance with section
00.

            

    

     

    
      	
              5.4

            	
              Notice
                by the Corporation of Superior Proposal Determination
                

            

    

     

    
      	
               

            	
              (a)

            	
              The
                Corporation shall not accept, approve, recommend or enter into any
                agreement relating to an Acquisition Proposal (other than a
                confidentiality agreement contemplated by section 0) on the basis that it would constitute
                a
                Superior Proposal unless (A) it has provided Acquireco with a copy
                of the
                Acquisition Proposal and five Business Days shall have elapsed from
                the
                later of (i) the date Acquireco received written notice of the
                Corporation’s proposed determination to accept, approve, recommend or
                enter into any agreement relating to such Acquisition Proposal, and
                (ii)
                the date Acquireco received a copy of the Acquisition Proposal, and
                (B) it
                has paid the Termination Payment pursuant to section 0.

            

    

     

    
      	
               

            	
              (b)

            	
              During
                the five Business Day notice period referred to in section 00, the
                Corporation
                acknowledges that Acquireco shall have the opportunity, but not the
                obligation, to offer to amend the terms of this Agreement. The Board
                of
                Directors will review any offer by Acquireco to amend the terms of
                this
                Agreement in order to determine in good faith in the exercise of
                its
                fiduciary duties (after consultation with its advisors and outside
                counsel) whether Acquireco’s offer to amend the terms of this Agreement
                upon acceptance by the Corporation would result in the Acquisition
                Proposal ceasing to be a Superior Proposal. If the Board of Directors
                so
                determines, it will enter into an amended agreement with Acquireco
                reflecting Acquireco’s amended proposal. If the Board of Directors, acting
                reasonably and in good faith, continues to believe that the Acquisition
                Proposal remains a Superior Proposal and therefore rejects Acquireco’s
                amended proposal, the Corporation must terminate this Agreement pursuant
                to section 0 prior to or simultaneously with
                entering into a definitive agreement with the Person making the Superior
                Proposal. For greater certainty, the Corporation shall be entitled
                to
                adjourn or postpone the Meeting for a period of seven Business Days
                from
                the date of receipt of an Acquisition Proposal referred to in section
00 if such
                Acquisition Proposal is received by the Corporation less than seven
                Business Days prior to the date of the Meeting provided, however,
                that the
                Meeting shall not be adjourned or postponed to a date later than
                the third
                Business Day prior to the Outside
                Date.

            

    

     

    
      	
               

            	
              (c)

            	
              The
                Corporation acknowledges and agrees that each successive material
                modification of any Acquisition Proposal shall constitute a new
                Acquisition Proposal for purposes of section 00 to initiate
                an
                additional five Business Day notice
                period.

            

    

     

    
      	
               

            	
              (d)

            	
              The
                Board of Directors shall promptly reaffirm its recommendation of
                the
                Arrangement by press release after (X) any Acquisition Proposal (which
                is
                determined not to be a Superior Proposal) is publicly announced or
                made;
                or (Y) the Board of Directors determines that a proposed amendment
                to the
                terms of thisAgreement would result in the Acquisition Proposal not
                being
                a Superior Proposal.  Acquireco and its counsel shall be given a
                reasonable opportunity to review and comment on the form and content
                of
                any such press release, recognizing that whether or not such comments
                are
                appropriate will be determined by the Corporation, acting
                reasonably.  Such press release shall state that the Board of
                Directors has determined that the Acquisition Proposal is not a Superior
                Proposal.

            

    

     

    
      	
              5.5

            	
              Closing
                Matters 

            

    

     

    Each
      of
      Acquireco (on behalf of itself and the Guarantors) and the Corporation shall
      deliver or cause to be delivered at the closing of the Arrangement such
      customary certificates, resolutions and other closing documents as may be
      required by each other party hereto, acting reasonably.

     

    
      	
              5.6

            	
              Cooperation
                regarding Reorganization

            

    

     

    The
      Corporation shall, and shall cause each of its subsidiaries to, cooperate with
      Acquireco in structuring, planning and preparing any reorganization (including
      for tax purposes) of their respective capital, assets and corporate structure
      as
      Acquireco may reasonably require including in connection with completing the
      Contemplated Transactions; provided, however, that (i) such requested
      cooperation does not unreasonably interfere with the ongoing operations of
      the
      Corporation and its subsidiaries, (ii) Acquireco shall pay the implementation
      costs and any direct or indirect costs and liabilities thereof, including
      employment costs, Taxes and liabilities, that may be incurred to unwind any
      such
      transaction if the Arrangement is not completed, including actual out-of-pocket
      costs and expenses for filing fees and external counsel and auditors which
      may
      be incurred; (iii) such cooperation does not require the directors, officers,
      employees or agents of the Corporation or its subsidiaries to take any action
      in
      any capacity other than as a director, officer or employee; and (iv) the
      effectiveness thereof shall occur not more than three days prior to the
      Effective Time; and provided further that no such actions shall be considered
      to
      constitute a breach of the representations or warranties or covenants
      hereunder.

     

    ARTICLE
      6

     

    CONDITIONS
      

     

    
      	
              6.1

            	
              Mutual
                Conditions Precedent 

            

    

     

    The
      obligations of Acquireco and the Corporation hereunder, including the obligation
      to complete the Arrangement, are subject to the satisfaction, on or before
      the
      Effective Time, of the following conditions precedent, each of which may only
      be
      waived by the mutual consent of Acquireco and the Corporation, and any one
      or
      more of which, if not satisfied or waived by either party, will permit that
      party to terminate this Agreement in accordance with Article 7:

     

    
      	
               

            	
              (a)

            	
              the
                Special Resolution shall have been approved at the Meeting in accordance
                with the terms of the Interim
                Order;

            

    

     

    
      	
               

            	
              (b)

            	
              the
                Interim Order and the Final Order shall each have been obtained in
                form
                and on terms satisfactory to each of Acquireco and the Corporation,
                acting
                reasonably, and shall not have been set aside or modified in a manner
                unacceptable to Acquireco and the Corporation, acting reasonably,
                on
                appeal or otherwise, and

            

    

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              any
                approvals required to be obtained under same in addition to the
                Shareholder approval referred to in section 00 shall
                have been
                obtained;

            

    

     

    
      	
               

            	
              (c)

            	
              the
                Competition Act Clearance and HSR Clearance shall have been
                obtained;

            

    

     

    
      	
               

            	
              (d)

            	
              there
                shall not be in force any injunction, order or decree issued by a
                Governmental Entity of competent jurisdiction restraining or enjoining
                the
                completion of the Arrangement; and

            

    

     

    
      	
               

            	
              (e)

            	
              this
                Agreement shall not have been terminated pursuant to Article
                7.

            

    

     

    
      	
              6.2

            	
              Additional
                Conditions Precedent to the Obligations of Acquireco
                

            

    

     

    The
      obligations of Acquireco hereunder, including the obligation to complete, or
      cause to be completed, the Arrangement, are also subject to the fulfilment
      of
      each of the following conditions precedent (each of which is for Acquireco’s
      exclusive benefit and may be waived by Acquireco, and any one or more of which,
      if not satisfied or waived, will permit Acquireco to terminate this Agreement
      in
      accordance with Article 7):

     

    
      	
               

            	
              (a)

            	
              (1)

            	
              each
                of the representations and warranties of the Corporation contained
                in
                sections 0, 0,
                0 and 0 shall
                be
                true and correct in all respects as of the Effective Date as though
                made
                on and as of such date (except to the extent such representations
                and
                warranties are by their express terms made as of the date of this
                Agreement or another specific date (in which case, such representations
                and warranties shall be true and correct as of such
                date));

            

    

     

    
      	
               

            	
              (ii)

            	
              each
                of the representations and warranties of the Corporation, (other
                than
                those set forth in clause 0(1)(1)
                above) shall
                be true and correct without regard to any materiality or Material
                Adverse
                Effect qualifications contained in them as of the Effective Date
                as though
                made on such date (except to the extent such representations and
                warranties are by their express terms made as of the date of this
                Agreement or another specific date (in which case, such representations
                and warranties shall be true and correct as of such date)), other
                than any
                failure of the representations and warranties of the Corporation
                to be
                true and correct which could not reasonably be expected to constitute,
                individually or in the aggregate, a Material Adverse Effect;
                and

            

    

     

    
      	
               

            	
              (iii)

            	
              Acquireco
                shall have received a certificate of the Corporation addressed to
                Acquireco and dated the Effective Date, signed on behalf of the
                Corporation by two senior executive officers of the Corporation without
                personal liability, confirming the matters in (i) and (ii) above
                as of the
                Effective Date;

            

    

     

    
      	
               

            	
              (b)

            	
              the
                covenants of the Corporation contained in this Agreement to be performed
                on or before the Effective Date shall have been duly performed by
                the
                Corporation in all material respects and Acquireco shall have received
                a
                certificate of the Corporation addressed to Acquireco and dated the
                Effective Date, signed onbehalf of the Corporation by two senior
                executive
                officers of the Corporation without personal liability, confirming
                the
                same;

            

    

     

    
      	
               

            	
              (c)

            	
              all
                of the Options, Purchase Rights, restricted stock units and deferred
                stock
                units of the Corporation, shall have vested in accordance with the
                provisions of the relevant Compensation Plan or any necessary amendment
                thereto, and been exercised at or immediately prior to the Effective
                Time
                or the Corporation shall have cancelled
                same;

            

    

     

    
      	
               

            	
              (d)

            	
              except
                as disclosed in section 0 of the Disclosure
                Letter, between the date hereof and the Effective Date, there shall
                not
                have occurred, in the judgment of Acquireco, acting reasonably, a
                Material
                Adverse Change;

            

    

     

    
      	
               

            	
              (e)

            	
              the
                Board of Directors shall have made and shall not have withheld, withdrawn,
                modified or qualified in a manner adverse to Acquireco, prior to
                the
                Meeting, the approval or recommendation by the Board of Directors
                or any
                committee thereof of the
                Arrangement;

            

    

     

    
      	
               

            	
              (f)

            	
              the
                Minister of Finance (Canada) shall not have announced any proposal
                to
                change or amend the Tax Act and there shall not have occurred any
                actual
                change or amendment to any published administrative position of the
                Canada Revenue Agency with respect to the interpretation of the Tax
                Act,
                which individually or in the aggregate has or could reasonably be
                expected
                to have any material adverse effect on Acquireco’s ability to increase the
                tax cost of the Shares or the non-depreciable capital property of
                the
                Corporation and its subsidiaries by a bump pursuant to paragraphs
                subsection 88(1)(c) and (d) of the Tax Act) and which was not publicly
                announced or proposed on or prior to the date of this
                Agreement;

            

    

     

    
      	
               

            	
              (g)

            	
              the
                Voting Agreements shall not have been terminated and there shall
                not have
                been a material breach thereof by any of the parties thereto other
                than
                Acquireco;

            

    

     

    
      	
               

            	
              (h)

            	
              holders
                of Shares shall not have exercised the Dissent Rights or similar
                rights,
                and shall not have instituted proceedings to exercise the Dissent
                Rights
                or similar rights, in connection with the Arrangement (other than
                holders
                of Shares representing, in the aggregate, not more than 10% of the
                outstanding Shares);

            

    

     

    
      	
               

            	
              (i)

            	
              any
                consent or waiver of any Person required under the terms of the
                Confidential Material Contracts (other than those listed as items
                2, 3 and
                4 of section 0 of the Disclosure Letter to
                the extent the consent or waiver requirements of such Confidential
                Material Contracts were made available to Acquireco prior to the
                date
                hereof) with respect to (A) the Arrangement or (B) the completion
                of any
                of the Contemplated Transactions, in each case, shall have been duly
                obtained or given, as the case may be, at or before the Effective
                Time on
                terms satisfactory to Acquireco acting
                reasonably;

            

    

     

    
      	
               

            	
              (j)

            	
              there
                shall not be pending or threatened in writing any suit, action or
                proceeding by any Governmental Entity (other than the CRTC) or any
                other
                Person:

            

    

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (i)

            	
              that
                would reasonably be expected to prohibit or restrict the acquisition
                by
                Acquireco of any Shares, that would reasonably be expected to restrain
                or
                prohibit the consummation of the Arrangement or the Contemplated
                Transactions or seeking to obtain from the Corporation or Acquireco
                any
                material damages directly or indirectly in connection with the Arrangement
                or the Contemplated Transactions,

            

    

     

    
      	
               

            	
              (ii)

            	
              that
                would reasonably be expected to prohibit or materially limit the
                ownership
                or operation by Acquireco of the Corporation or any material portion
                of
                the business or assets of the Corporation or any of its
                subsidiaries,

            

    

     

    
      	
               

            	
              (iii)

            	
              that
                would reasonably be expected to impose limitations on the ability
                of
                Acquireco to acquire or hold, or exercise full rights of ownership
                of, any
                Shares, including the right to vote the Shares to be acquired by
                it on all
                matters properly presented to the shareholders of the
                Corporation,

            

    

     

    
      	
               

            	
              (iv)

            	
              that
                would reasonably be expected to prohibit Acquireco from effectively
                controlling in any material respect the business or operations of
                the
                Corporation or any of its subsidiaries,
                or

            

    

     

    
      	
               

            	
              (v)

            	
              which
                arises after the date of this Agreement and is reasonably likely
                to have a
                Material Adverse Effect on the Corporation or
                Acquireco;

            

    

     

    
      	
               

            	
              (k)

            	
              there
                shall not be in force any injunction, order or decree issued by a
                Governmental Entity of competent jurisdiction restraining or enjoining
                the
                completion of the Contemplated Transactions;
                and

            

    

     

    
      	
               

            	
              (l)

            	
              the
                Other Competition Act Approvals and CRTC Approval shall each have
                been
                obtained on or prior to the Outside Date on terms acceptable to
                Acquireco.

            

    

     

    
      	
              6.3

            	
              Additional
                Conditions Precedent to the Obligations of the Corporation
                

            

    

     

    The
      obligations of the Corporation hereunder, including the obligation to complete
      the Arrangement, shall also be subject to the following conditions precedent
      (each of which is for the exclusive benefit of the Corporation and may be waived
      by the Corporation and anyone or more of which, if not satisfied or waived,
      will
      permit the Corporation to terminate this Agreement in accordance with Article
      7):

     

    
      	
               

            	
              (a)

            	
              each
                of the representations and warranties of Acquireco contained in sections
                0 and 0 shall
                be
                true and correct as of the Effective Date as though made on and as
                of the
                such date (except to the extent such representations and warranties
                are by
                their express terms made as of the date of this Agreement or another
                specific date (in which case, such representations and warranties
                shall be
                true and correct as of such date)).

            

    

     

    
      	
               

            	
              (b)

            	
              each
                of the representations and warranties of Acquireco in this Agreement
                (other than those set forth in clause 00 above),
                shall be true and correct as of the
                date of this Agreement without regard to any materiality qualifications
                contained inthem as of the Effective Date as though made on such
                date
                (except to the extent such representations and warranties are by
                their
                express terms made as of the date of this Agreement or another specific
                date (in which case, such representations and warranties shall be
                true and
                correct as of such date)), other than any failure of the representations
                and warranties of Acquireco to not be true and correct as which could
                not
                reasonably be expected, individually or in the aggregate, to materially
                impair Acquireco’s ability to complete, or cause to be completed, the
                Arrangement;

            

    

     

    
      	
               

            	
              (c)

            	
              the
                Corporation shall have received a certificate of Acquireco addressed
                to
                the Corporation and dated the Effective Date, signed on behalf of
                Acquireco by two senior executive officers thereof without personal
                liability, confirming the matters in (i) and (ii) above as of the
                Effective Date;

            

    

     

    
      	
               

            	
              (d)

            	
              all
                covenants of Acquireco contained in this Agreement to be performed
                on or
                before the Effective Date shall have been duly performed by Acquireco
                in
                all material respects, except to the extent such failure to so comply
                would not materially impair Acquireco’s ability to complete the
                Arrangement; and

            

    

     

    
      	
               

            	
              (e)

            	
              Acquireco
                shall, subject to the Corporation obtaining the Final Order and the
                satisfaction or waiver of the other conditions precedent contained
                in this
                Agreement in its favour, on the Effective Date, have deposited the
                aggregate Cash Amount payable pursuant to the Arrangement (other
                than to
                Shareholders exercising Dissent Rights) with the
                Depositary.

            

    

     

    
      	
              6.4

            	
              Notice
                and Cure Provisions

            

    

     

    Each
      of
      Acquireco and the Corporation will give prompt notice to the other of the
      occurrence, or failure to occur, at any time from the date hereof until the
      Effective Time, of any event or state of which it is aware, which occurrence
      or
      failure would, or would be likely to:

     

    
      	
               

            	
              (a)

            	
              cause
                any of its representations or warranties contained herein to be untrue
                or
                inaccurate in any material respect on the date hereof or on the Effective
                Date; or

            

    

     

    
      	
               

            	
              (b)

            	
              result
                in its failure to comply with or satisfy in any material respect
                any
                covenant, condition or agreement to be complied with or satisfied
                hereunder prior to the Effective
                Date.

            

    

     

    Neither
      Acquireco nor the Corporation may elect not to complete the Arrangement by
      reason of failure to satisfy the conditions precedent for the benefit of such
      party contained in sections (1), 0, 0,
0,
0
      or 0, or exercise any termination right in section
0 and 0
      arising therefrom
      unless, prior to the Closing Date Acquireco has or the Corporation has, as
      the
      case may be, delivered a written notice to the other specifying in reasonable
      detail all such breaches of representations and warranties, covenants or
      agreements which Acquireco is, or the Corporation is, as the case may be,
      asserting as the basis for the non-fulfilment of the applicable condition
      precedent or the exercise of the termination right, as the case may
      be.  If any such notice is delivered, provided that Acquireco is, or
      the Corporation is, as the case may be, proceeding diligently to cure such
      matter, if such matter is susceptible to being cured, the other

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    party
      may
      not terminate this Agreement until the earlier of the expiration of a period
      of
      30 days from such notice and three Business Days prior to the Outside
      Date.

     

    
      	
              6.5

            	
              Satisfaction
                of Conditions 

            

    

     

    The
      conditions precedent set out in sections 0, 0 and 0
      shall be
      conclusively deemed to have been satisfied, waived or released when, with the
      agreement of Acquireco and the Corporation, a certificate of arrangement in
      respect of the Arrangement is issued by the Director.

     

    ARTICLE
      7

     

    TERMINATION,
      AMENDMENT AND WAIVER

     

    
      	
              7.1

            	
              Termination
                

            

    

     

    This
      Agreement may be terminated and the Arrangement may be abandoned at any time
      prior to the Effective Time, notwithstanding any requisite approval and
      authorization of this Agreement by Shareholders:

     

    
      	
               

            	
              (a)

            	
              by
                mutual written consent of Acquireco and the Corporation duly authorized
                by
                the board of directors of Acquireco and the
                Corporation;

            

    

     

    
      	
               

            	
              (b)

            	
              by
                either Acquireco or the Corporation if the Effective Time shall not
                have
                occurred on or before the Outside Date; provided, however, that the
                right
                to terminate this Agreement under this section 00 shall
                not be
                available to any party whose failure to fulfill any obligation under
                this
                Agreement has been the cause of, or resulted in, the failure of the
                Effective Time to occur on or before such
                date;

            

    

     

    
      	
               

            	
              (c)

            	
              (A)
                by either Acquireco or the Corporation if any Governmental Entity
                shall
                have enacted, issued, promulgated, enforced or entered any Law which
                has
                become final and non-appealable and has the effect of making the
                Arrangement illegal or otherwise preventing or prohibiting consummation
                of
                the Arrangement;

            

    

     

    (B)
      by
      Acquireco if any Governmental Entity shall have enacted, issued, promulgated,
      enforced or entered any Law which has become final and non-appealable and has
      the effect of making the Contemplated Transactions illegal or otherwise
      preventing or prohibiting consummation of the Contemplated
      Transactions;

     

    
      	
               

            	
              (d)

            	
              by
                either Acquireco or the Corporation if the Special Resolution shall
                have
                failed to receive the requisite vote for approval at the Meeting
                including
                any adjournment or postponement thereof in accordance with the Interim
                Order;

            

    

     

    
      	
               

            	
              (e)

            	
              by
                Acquireco if, prior to the Effective
                Time:

            

    

     

    
      	
               

            	
              (i)

            	
              the
                Board of Directors shall have withdrawn, withheld, qualified or modified
                in a manner adverse to Acquireco its recommendation of this Agreement
                (it
                being understood that the taking of a neutral position or no position
                with
                respect to an Acquisition Proposal beyond the Acquisition Proposal
                Assessment Period shall be considered an adverse
                modification),

            

    

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (ii)

            	
              the
                Board of Directors shall have approved or recommended, or proposed
                publicly to approve or recommend, any Acquisition Proposal,
                or

            

    

     

    
      	
               

            	
              (iii)

            	
              the
                Board of Directors shall have, after the end of an Acquisition Proposal
                Assessment Period, failed to reaffirm its approval or recommendation
                of
                this Agreement and the Arrangement as promptly as practicable (but
                in any
                event within 10 Business Days) after receipt of any written request
                to do
                so from Acquireco;

            

    

     

    
      	
               

            	
              (f)

            	
              by
                Acquireco, if there has been a breach of or failure to perform any
                representation, warranty, covenant or agreement on the part of the
                Corporation set forth in this Agreement, which breach or failure
                to
                perform by the Corporation would cause the conditions set forth in
                section
                (1) or 0 not
                to
                be satisfied;

            

    

     

    
      	
               

            	
              (g)

            	
              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 0
                or 0 not to be
                satisfied.

            

    

     

    
      	
               

            	
              (h)

            	
              by
                the Corporation in accordance with section 0;

            

    

     

    
      	
               

            	
              (i)

            	
              by
                the Corporation, if (a) all of the conditions set forth in sections
0 and 0 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;
                or

            

    

     

    
      	
               

            	
              (j)

            	
              by
                Acquireco if the conditions set forth in section 0 or 0 have
                not
                been satisfied.

            

    

     

    
      	
              7.2

            	
              Effect
                of Termination 

            

    

     

    
      	
               

            	
              (a)

            	
              In
                the event of the termination of this Agreement pursuant to section
0, written notice thereof shall forthwith
                be
                given by the terminating party to the other party specifying the
                provision
                pursuant to which such termination is made, this Agreement shall
                be of no
                further force or effect, and there shall be no liability under this
                Agreement on the part of any party hereto after such termination
                (except
                that sections 0, 0, 0
                and Article 8
                and all related definitions set forth in Article 1 and the reimbursement
                obligations in sections, 0 and 0 shall
                survive any such
                termination).

            

    

     

    
      	
               

            	
              (b)

            	
              The
                Corporation shall pay the Termination Payment (as liquidated damages
                for
                the termination of Acquireco’s rights under this Agreement) to Acquireco
                if,

            

    

     

    
      	
               

            	
              (i)

            	
              either
                (A)  Acquireco or the Corporation terminates this Agreement
                pursuant to section 0, or (B) Acquireco or
                the Corporation terminates this Agreement pursuant to section 0, or (C) Acquireco terminates this
                Agreement
                pursuant to section 0, and in any such case,
                (X) after the date of this Agreement and prior to such termination,
                an
                Acquisition

            

    

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              Proposal
                was made or publicly disclosed, and (Y) within twelve months after
                such
                termination, the Corporation shall have entered into a definitive
                agreement to consummate, or there shall have been consummated, a
                Third
                Party Acquisition;

            

    

     

    
      	
               

            	
              (ii)

            	
              Acquireco
                terminates this Agreement pursuant to section 0;

            

    

     

    
      	
               

            	
              (iii)

            	
              the
                Corporation terminates this Agreement pursuant to section 0; or

            

    

     

    
      	
               

            	
              (iv)

            	
              Acquireco
                terminates this Agreement pursuant to section 0 due to the wilful breach or fraud
                of the
                Corporation.

            

    

     

    Any
      payment due under this section 00 shall be paid
      by wire transfer of same-day funds to
      an account designated in writing by Acquireco (W) in the case of termination
      pursuant to clause (i) above, within two business days after date of execution
      of such definitive agreement or, if earlier, consummation of such Third Party
      Acquisition; (X) in the case of clause (ii) or (iv) within two business days
      of
      receipt of a notice of termination by Acquireco; and (Y) in the case of
      termination pursuant to clause (iii) above, immediately prior to the termination
      of this Agreement. In the event that the Corporation has previously paid an
      amount to Acquireco pursuant to section 00, the amount payable
      pursuant to this section 00 shall be the
      difference between the Termination Payment and the amount previously paid to
      Acquireco pursuant to section 00.

     

    
      	
               

            	
              (c)

            	
              The
                Corporation shall reimburse Acquireco for the Guarantor Expenses
                actually
                incurred in connection with this Agreement if this Agreement is terminated
                pursuant to (A) section 0 and after the date
                of this Agreement and prior to such termination, an Acquisition Proposal
                was made or publicly disclosed prior to such termination, (B) section
0 and the conditions set forth in either
                section
                0 or section 0
                have not been satisfied prior to such date, (C) section 0 or (D) section 0,
                in each case, upon demand upon such
                termination.

            

    

     

    
      	
               

            	
              (d)

            	
              Acquireco
                shall reimburse the Corporation for the Corporation Expenses if this
                Agreement is terminated (A) by the Corporation pursuant to section
0 or (B) by Acquireco pursuant to section
0 for
                failure of the condition set forth in
                section 0 or section 0(B),
                upon demand upon such
                termination.

            

    

     

    
      	
               

            	
              (e)

            	
              Each
                party acknowledges and agrees that if the amounts required to be
                paid to
                Acquireco or the Corporation, as the case may be, pursuant to section
0 are paid by the Corporation or Acquireco,
                respectively, the amounts so paid are in lieu of any damages or any
                other
                payment or remedy which Acquireco or the Corporation, as the case
                may be,
                may be entitled to and shall constitute payment of liquidated damages
                which are a genuine estimate of the damages which Acquireco or the
                Corporation, as the case may be, will suffer or incur as a result
                of the
                event giving rise to such damages and resultant termination of this
                Agreement and are not penalties.  Each party irrevocably waives
                any right it may have to raise as a defence that any such liquidated
                damages are excessive or punitive.  For greater certainty, the
                parties agree that the payment of the amounts pursuant to section
0 or 0 is the
                sole
                monetary remedy available to it and itshall not have any alternative
                right
                or remedy against the other.  In no event shall the Corporation
                be obligated to make more than one single payment of the Termination
                Payment or more than one single payment of the Guarantor
                Expenses.  The maximum amount payable by the Corporation
                pursuant to this Article 7 is
                $65,000,000.

            

    

     

    
      	
              7.3

            	
              Expenses

            

    

     

    Except
      as
      set forth in section 0, and except that Acquireco
      and the Corporation shall each pay half of all Competition Law filing fees,
      all
      costs and expenses incurred in connection with this Agreement and the
      Arrangement shall be paid by the party incurring such costs and expenses,
      whether or not the Arrangement is consummated.

     

    
      	
              7.4

            	
              Acquireco
                Termination Payment

            

    

     

    In
      the
      event that this Agreement is terminated pursuant to section 0 due to the wilful breach or fraud by Acquireco,
      or
      pursuant to section 0 or pursuant to section 0, or pursuant to
      section 0 for failure of the condition set forth in section
0 with respect to
      a suit, action or proceeding
      relating to a Contemplated Transaction, or pursuant to section 0(B), then Acquireco shall pay to the Corporation
      an
      aggregate amount equal to $65,000,000 (the “Acquireco Termination
      Payment”) as promptly as reasonably practicable (and, in any event,
      within two Business Days following such termination) by wire transfer of
      same-day funds.  The receipt of a single payment of the Acquireco
      Termination Payment pursuant to this section 0 or a
      single payment of the Corporation Expenses pursuant to section 0, as the case may be, shall be the sole and exclusive
      remedy of the Corporation and its affiliates against Acquireco, Acquireco’s
      affiliates and any of their respective former, current or future general or
      limited partners, members or shareholders against any of their respective
      former, current or future directors, officers, employees, affiliates, general
      or
      limited partners, shareholders, managers, members or agents (each a
“Specified Person”) for all breaches of any representation,
      warranty, covenant or agreement contained in this Agreement by Acquireco and
      the
      failure of the transactions contemplated hereby to be consummated, and upon
      payment of the Acquireco Termination Payment in accordance with this section
0 or the Corporation Expenses pursuant to section
0, as the case may
      be, none of Acquireco, its
      affiliates or any of their respective Specified Persons shall have any further
      liability or obligation relating to or arising out of this Agreement or the
      transactions contemplated by this Agreement.  The maximum amount
      payable by Acquireco pursuant to this Article 7 is $65,000,000.

     

    
      	
              7.5

            	
              Amendment

            

    

     

    This
      Agreement may be amended by the parties hereto by action taken by or on behalf
      of their respective boards of directors at any time prior to the Effective
      Time;
      provided, however, that, after receipt of approval of Shareholders there shall
      be made no amendment that by Law requires further approval by Shareholders
      without the further approval of such holders. This Agreement may not be amended
      except by an instrument in writing signed by each of the parties
      hereto.

     

    
      	
              7.6

            	
              Waiver

            

    

     

    At
      any
      time prior to the Effective Time, any party hereto may:

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    (a)           extend
      the time for the performance of any obligation or other act of any other party
      hereto;

     

    
      	
               

            	
              (b)

            	
              waive
                any inaccuracy in the representations and warranties of any other
                party
                contained herein or in any document delivered pursuant hereto;
                or

            

    

     

    
      	
               

            	
              (c)

            	
              waive
                compliance with any agreement of any other party or any condition
                to its
                own obligations contained herein. Any such extension or waiver shall
                be
                valid if set forth in an instrument in writing signed by the party
                or
                parties to be bound thereby.

            

    

     

    ARTICLE
      8

     

    GENERAL
      

     

    
      	
              8.1

            	
              Notices

            

    

     

    All
      notices and other communications which may or are required to be given pursuant
      to any provision of this Agreement shall be given in writing and shall be deemed
      to be validly given if delivered personally or by fax, in each case
      addressed:

     

    
      	
               

            	
              (a)

            	
              if
                to Acquireco, at:

            

    

     

    c/o

     

    CanWest
      Media Works Inc.

     

    31st
      Floor, 201 Portage Avenue

     

    CanWest
      Global Place

     

    Winnipeg,
      MB R3B 3L7

     

    Attention:                                Richard
      Leipsic

     

    Fax
      No.:                      (204)
      947-9841

     

    with
      a
      copy to (which shall not constitute notice):

     

    Osler,
      Hoskin & Harcourt LLP

     

    Box
      50,
      One First Canadian Place

     

    Toronto,
      ON M5X 1B8

     

    Attention:                                Linda
      Robinson

     

    Fax
      No.:                      (416)
      862-6666

     

    and
      to:

     

    GS
      Capital Partners VI, L.P.

     

    85
      Broad
      Street

     

    New
      York,
      NY 10004

     

    U.S.A.

     

    Attention:                                Gerry
      Cardinale

     

    Fax
      No.:                      212-357-5505

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    with
      a
      copy to (which shall not constitute notice):

     

    GS
      Capital Partners VI, L.P.

     

    One
      New
      York Plaza

     

    38th
      Floor

     

    New
      York,
      NY 10004

     

    U.S.A.

     

    Attention:                                Ben
      Adler

     

    Fax
      No.:                      212-482-3820

     

    with
      a
      copy to (which shall not constitute notice):

     

    McCarthy
      Tétrault LLP

     

    Suite
      4700, Toronto Dominion Bank Tower

     

    Toronto,
      ON M5K lE6

     

    Attention:                                Gary
      Girvan

     

    Fax
      No.:                      416-868-0673

     

    with
      a
      copy to (which shall not constitute notice):

     

    Wachtell,
      Lipton, Rosen & Katz

     

    51
      West
      52nd
      Street

     

    New
      York,
      NY  10019

     

    Attention:                                Daniel
      A. Neff

     

    Fax
      No.:                      212-403-2000

     

    
      	
               

            	
              (b)

            	
              if
                to the Corporation, at:

            

    

     

    121
      Bloor
      Street East

     

    Suite
      1500

     

    Toronto,
      ON  M4W 3M5

     

    Attention:                                Phyllis
      Yaffe, CEO

     

    Fax
      No.:                      416-967-8061

     

    with
      a
      copy to:

     

    Bennett
      Jones LLP

     

    3400
      One
      First Canadian Place

     

    Toronto,
      ON  M5X 1A4

     

    Attention:                                Gary
      Solway

     

    Fax
      No.:                      416-863-1716

     

    or
      at
      such other address at which any party may, from time to time, advise the other
      by notice in writing given in accordance with this section 0. The date of receipt of any notice given pursuant
      to
      this section 0 shall be deemed to be the date of
      delivery or faxing thereof.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    8.2           Assignment

     

    No
      party
      hereto may assign any of its rights or obligations under this Agreement or
      the
      Arrangement, provided, however, that Acquireco may assign any of or all its
      rights, interests and obligations under this Agreement to any direct or indirect
      wholly-owned subsidiary of Acquireco or to any affiliate of Acquireco organized
      for the purpose of effecting the Arrangement or the
      Contemplated Transactions without the prior written
      consent of the Corporation, provided that no such assignment shall (i) relieve
      Acquireco of any of its obligations under this Agreement; (ii) require any
      consent, approval, license, permit, order or authorization of, or registration,
      declaration or filing with, or permit from, any Governmental Entity or other
      Person; or (iii) result in any delay in the completion of the transactions
      contemplated by this Agreement and the Guarantees shall extend to the assignee’s
      obligations. Any purported assignment without such consent shall be
      void.

     

    
      	
              8.3

            	
              Binding
                Effect 

            

    

     

    This
      Agreement and the Arrangement shall be binding upon and shall enure to the
      benefit of the parties hereto and their respective successors and permitted
      assigns.

     

    
      	
              8.4

            	
              No
                Other Warranties

            

    

     

    The
      parties do not rely on and have not been induced to enter into this Agreement
      on
      the basis of any representations, warranties, covenants, undertakings,
      indemnities or other statements whatsoever other than the representations and
      warranties contained in this Agreement and the Financing Agreement.

     

    
      	
              8.5

            	
              Separate
                Warranties

            

    

     

    Each
      of
      the representations and warranties contained in this Agreement shall be
      construed as a separate and independent representation and warranty and (except
      where expressly provided to the contrary) shall not be limited or restricted
      by
      reference to or inference from the terms of any other representation or warranty
      or any other term of this Agreement.

     

    
      	
              8.6

            	
              Entire
                Agreement

            

    

     

    This
      Agreement and the Financing Agreements set out the entire agreement between
      the
      parties hereto in relation to the subject matter hereof and thereof and
      supersedes any previous written or oral agreements, understandings,
      undertakings, representations, warranties and arrangements of any nature between
      the parties in relation to the matters set forth in this
      Agreement.  Without prejudice to the generality of the foregoing,
      Acquireco acknowledges and agrees that, except as expressly set forth in this
      Agreement, no representation, warranty or other assurance has been given by
      the
      Corporation in respect of any projection, forecast or other forward-looking
      information.

     

    
      	
              8.7

            	
              Remedies
                and Waivers

            

    

     

    
      	
               

            	
              (a)

            	
              No
                delay or omission by any party to this Agreement in exercising any
                right,
                power or remedy provided by Law or under this Agreement or any other
                documents referred to herein shall affect that right, power or remedy
                or
                operate asa waiver thereof.  The single or partial exercise of
                any right, power or remedy provided by Law or under this Agreement
                shall
                not preclude any further exercise of such right, power or remedy
                or the
                exercise of any other right, power or remedy.  The rights,
                powers and remedies provided in this Agreement are cumulative and
                not
                exclusive of any rights, powers and remedies (express or implied)
                provided
                by common law, statute, custom or
                otherwise.

            

    

     

    
      	
               

            	
              (b)

            	
              Subject
                to sections 0 and 0, the
                parties agree that irreparable damage
                would occur, and that the parties would not have any adequate remedy
                at
                law, in the event that any of the provisions of this Agreement were
                not
                performed in accordance with their specific terms or were otherwise
                breached.  It is accordingly agreed that the parties shall be
                entitled to an injunction or injunctions to prevent breaches of this
                Agreement and to enforce specifically the terms and provisions of
                this
                Agreement, this being in addition to any other remedy to which they
                are
                entitled at law or in equity.  For purposes of clarity, the
                parties hereto agree that the Corporation’s sole and exclusive remedy in
                the event of a Debt Receipt Failure shall be the remedy set forth
                in
                section 0, and that the Corporation shall not
                be entitled to enforce specifically the terms of this agreement in
                that
                circumstance (except with respect to enforcing the payment of the
                Acquireco Termination Payment).

            

    

     

    
      	
              8.8

            	
              No
                Personal Liability 

            

    

     

    
      	
               

            	
              (a)

            	
              No
                director or officer of Acquireco shall have any personal liability
                whatsoever to the Corporation under this Agreement or any other document
                delivered in connection with the Arrangement, the Contemplated
                Transactions, the Debt Financing or any other transaction contemplated
                by
                this Agreement on behalf of
                Acquireco.

            

    

     

    
      	
               

            	
              (b)

            	
              No
                director or officer of the Corporation shall have any personal liability
                whatsoever to Acquireco under this Agreement or any other document
                delivered in connection with the Arrangement, the Contemplated
                Transactions, the Debt Financing or any other transaction contemplated
                by
                this Agreement on behalf of the
                Corporation.

            

    

     

    
      	
              8.9

            	
              Control
                of Other Party’s Business 

            

    

     

    Nothing
      contained in this Agreement shall give Acquireco, directly or indirectly, the
      right to control or direct the operations of the Corporation and its
      subsidiaries prior to the later to occur of (a) the Effective Date and (b)
      Acquireco obtaining the Regulatory Approvals.

     

    
      	
              8.10

            	
              Indemnification
                

            

    

     

    Acquireco
      agrees that all rights to indemnification or exculpation existing in favour
      of
      the directors or officers of the Corporation or any of its subsidiaries as
      provided in their respective Articles or By-laws as at the date of this
      Agreement shall survive the completion of the Arrangement and shall continue
      in
      full force and effect for a period of not less than six years from the Effective
      Date.  This section 0 shall survive the
      completion of the Arrangement.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    8.11        Further
      Assurances

     

    Each
      party hereto shall, from time to time, and at all times hereafter, at the
      request of the other party hereto, but without further consideration, do all
      such further acts and execute and deliver all such further documents and
      instruments as shall be reasonably required in order to fully perform and carry
      out the terms and intent hereof.

     

    
      	
              8.12

            	
              Public
                Statements 

            

    

     

    Each
      of
      Acquireco and the Corporation agree to consult with each other as to the general
      nature of any news release or other public disclosure document with respect
      to
      this Agreement or the Arrangement (other than regular interim or annual
      continuous disclosure filings provided no reference is made to this Agreement
      or
      the Arrangement other than as previously disclosed) and to use their respective
      reasonable commercial efforts not to issue any news release or other public
      disclosure document inconsistent with the results of such consultations,
      provided that each of the Guarantors (on behalf of itself and its respective
      affiliates) also acts in the same manner in favour of the Corporation. Subject
      to applicable Laws, each party shall use its reasonable commercial efforts
      to
      enable the other party to review and comment on all such news releases or other
      public disclosure document prior to the release thereof. The Corporation agrees
      to issue jointly with the Guarantors a news release with respect to this
      Agreement as soon as practicable following the execution and delivery of this
      Agreement. Notwithstanding the foregoing, CanWest and the Corporation may file
      this Agreement on SEDAR. The provisions of this section 0 shall survive termination of this Agreement
      in
      respect of news releases or public statements relating to the termination of
      this Agreement.  This section 0 shall not
      apply to Movie Distribution Income Fund, Motion Picture Distribution Inc. or
      Motion Picture Distribution LP.

     

    
      	
              8.13

            	
              Governing
                Law 

            

    

     

    This
      Agreement 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 Agreement.

     

    
      	
              8.14

            	
              Invalidity
                of Provisions 

            

    

     

    If
      any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by any rule or Law, or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      hereby is not affected in any manner materially adverse to any party. Upon
      such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the parties hereto shall negotiate in good faith to modify
      this Agreement so as to effect the original intent of the parties as closely
      as
      possible in an acceptable manner to the end that the transactions contemplated
      hereby are fulfilled to the fullest extent possible.

     

    
      	
              8.15

            	
              Counterparts
                

            

    

     

    This
      Agreement may be executed in one 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.

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

              

                  -  -      
    

      

    

    IN
      WITNESS WHEREOF the parties hereto have executed this Agreement as of
      the date first written above.

     

    
      	 	 	
              6681859
                CANADA INC.

            
	
              By:

            	
               /s/
                Richard Leipsic

            
	 	
              Name:                      Ricard
                Leipsic

            
	 	
              Title:                      Vice-President

            
	
              By:

            	
              /s/
                Steven Mayer

            
	 	
              Name:                      Steven
                Mayer

            
	 	
              Title:                      Director

            

    

    

     

    
      	 	 	
              ALLIANCE
                ATLANTIS COMMUNICATIONS INC.

            
	
              By:

            	
              /s/
                Phyllis Yaffe

            
	 	
              Name:                      Phyllis
                Yaffe

            
	 	
              Title:                      Chief
                Executive Officer

            
	
              By:

            	
              /s/
                Michael MacMillan

            
	 	
              Name:                      Michael
                MacMillan

            
	 	
              Title:                      Executive
                Chair

            

    

    

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    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 6681859 Canada Inc., a corporation existing under the laws of
      Canada;

     

    “Arrangement”
      means the arrangement involving Acquireco and 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, Appendices
      and
      the Disclosure Letter 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;

     

    “Cash
      Amount” means $53.00 in cash per Share;

     

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

     

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

     

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

     

    “Compensation
      Plans” means the Corporation’s Amended and Restated 1993 Employee Stock
      Option Plan, the Corporation’s 1998 Share Compensation Plan, as amended, the
      Corporation’s 2006 Restricted Share Unit Plan, and the Corporation’s May 31,
      1999 Deferred Share Unit Plan;

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    “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;

     

    “Dissenting
      Shareholder” means a Shareholder who dissents from the Special
      Resolution in compliance with the Dissent Rights and who has not withdrawn
      such
      exercise of Dissent Rights and is ultimately determined to be paid fair value
      in
      respect of the Shares so held;

     

    “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 12:01 a.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;

     

    “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) 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 mailed to Shareholders
      by the Corporation together with the Circular;

     

    “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”
      has the meaning ascribed thereto in the Arrangement Agreement;

     

    “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;

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

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

     

    “Guarantors”
      means, together, CanWest MediaWorks Inc. and GS Capital Partners VI,
      L.P.;

     

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

     

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

     

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

     

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

     

    “Shareholder”
      means a registered holder of Class A Shares or 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.

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    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 or other rights under the Compensation Plans.

     

    
      	
              2.3

            	
              Effective
                Time

            

    

     

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

     

    
      	
               

            	
              (a)

            	
              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
                the Cash
                Amount, 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;

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

            	
              each
                Option and Purchase Right outstanding immediately prior to the Effective
                Time, whether or not vested, shall be cancelled;
                and

            

    

     

    
      	
               

            	
              (d)

            	
              the
                Compensation Plans shall be
                terminated.

            

    

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              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
                contemporaneously with the event described in section 2.3(a) 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 Effective Time, 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(a),

            

    

     

    but
      in no
      case shall the Corporation, Acquireco or any other Person be required to
      recognize such Shareholders as holders of Shares after the Effective Time,
      and
      the names of such Shareholders shall be deleted from the register of
      Shareholders at the Effective Time.

     

    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 to give effect to this Plan of
                Arrangement.  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, and the Depositary shall deliver to such Shareholder, the
                cash
                which such Shareholder has the right to receive under the Arrangement
                for
                such Shares, less any amountswithheld 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 for the account
                of
                Acquireco.  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 Effective Time to represent only the right to receive upon
                such
                surrender a cash payment in lieu of such certificate as contemplated
                in
                this section 4.1, less any amounts withheld pursuant to section
                4.3.  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 Company or Acquireco.  On such
                date, all Acquireco cash to which such former holder was entitled
                shall be
                deemed to have been surrendered to
                Acquireco.

            

    

     

    
      	
              4.2

            	
              Lost
                Certificates

            

    

     

    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.

     

    
      	
              4.3

            	
              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.  To the
      extent that the amounts so required or permitted to be deducted or withheld
      from
      any payment to a Person exceed the cash portion of the consideration otherwise
      payable to that Person, Acquireco, the Corporation and the Depositary are hereby
      authorized to sell or otherwise dispose of such portion of the consideration
      as
      is necessary to provide sufficient funds to Acquireco, the Corporation or the
      Depositary, as the case may be, to enable it to comply with

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

    such
      deduction or withholding requirement or entitlement, and Acquireco, the
      Corporation or the Depositary shall notify the Person thereof and remit to
      such
      Person any unapplied balance of the net proceeds of such sale.

     

    

     

    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.

            

    

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.1(a)

     

    CRTC
      REGULATED COMPANIES

     

    
      	
              1.

            	
              HGTV
                Canada Inc.

            

    

     

    
      	
              2.

            	
              Life
                Network Inc.

            

    

     

    
      	
              3.

            	
              Showcase
                Television Inc.

            

    

     

    
      	
              4.

            	
              History
                Television Inc.

            

    

     

    
      	
              5.

            	
              Food
                Network Canada Inc.

            

    

     

    
      	
              6.

            	
              Alliance
                Atlantis Broadcasting Inc. (as a partner in the Historia/Series+
                partnership)

            

    

     

    
      	
              7.

            	
              The
                Score Television Network Ltd.

            

    

     

    
      	
              8.

            	
              Discovery
                Health Channel Canada ULC

            

    

     

    
      	
              9.

            	
              Jasper
                Broadcasting Inc.

            

    

     

    
      	
              10.

            	
              Jasper
                Junior Broadcasting Inc.

            

    

     

    
      	
              11.

            	
              NGC
                Channel Inc.

            

    

     

    
      	
              12.

            	
              ONE:
                The Body, Mind & Spirit Channel
                Inc.

            

    

     

    
      	
              13.

            	
              3924181
                Canada Inc.

            

    

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

    SCHEDULE
      5.1(k)

     

    ERISA
      COMPLIANCE COMPANIES

     

    

     

    History
      Television Inc. (100%)

     

    Showcase
      Television Inc. (100%)

     

    Life
      Network Inc. (100%)

     

    Jasper
      Broadcasting Inc. (80%)

     

    Jasper
      Junior Broadcasting Inc. (80%)

     

    Discovery
      Health Channel Canada ULC (80%)

     

    HGTV
      Canada Inc. (80.2%)

     

    Food
      Network Canada Inc. (57.6%)

     

    NGC
      Channel Holdings Inc. (80%) (this holdco has 80% of the votes of the opco,
      NGC
      Channel Inc.)

     

    Alliance
      Atlantis Broadcasting Inc (100%).

     

    
      
        
        

      

      
        58amendno1arrangmentagrmnt.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.

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