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Rainmaker To Complete Acquisition of Mainframe

Rainmaker Animation & Visual Effects has entered into an agreement to acquire all of Mainframe Ent., with the new corporate name to be Rainmaker Ent. Inc. (REI).

This was the result of Rainmaker acquiring the balance of the 38% of the outstanding shares of Mainframe not owned by Rainmakers majority owned subsidiary, RNK Capital Ltd. Partnership (RNK Capital LP), by way of an amalgamation, resulting in a cash purchase price of $0.24 per share.

The board of directors of Mainframe has received a fairness opinion with respect to the acquisition consideration and has recommended approval of the acquisition by Mainframe shareholders. The acquisition is conditional upon the approval by 66.7% of the Mainframe shareholders and by 50.1% of the Mainframe shareholders other than RNK Capital LP, as well as other customary conditions and regulatory approval. A special meeting of Mainframe shareholders is proposed for October, and closing is expected to occur that same month.

REI will be the largest animation and visual effects studio in Canada, with more than 300 employees. Warren Franklin, the president of Rainmaker, will be the ceo of REI; and Rick Mischel, the ceo of Mainframe, will be the president and coo of REI.

"We're pleased that everything is coming together on this acquisition," stated Franklin. "It's a good indication of why this was the right move for both Rainmaker and Mainframe in the first place. We look forward to integrating our operations and creating a dynamic digital entertainment company."

Mischel added, "Combining our facilities and operations, and streamlining our pipelines will be our first priorities. We will also continue our development of a broad slate of intellectual properties."

The transaction will be executed through an amalgamation between Mainframe and a special purpose subsidiary of RNK Capital LP. Upon the amalgamation becoming effective each holder of common shares of Mainframe (other than RNK Capital LP) will exchange their shares for preferred shares of the amalgamated entity: REI. RNK Capital LP will have a call right to purchase the preferred shares of REI exercisable by the payment of cash consideration of $0.24 per share. RNK Capital LP will agree to exercise the call right promptly following the amalgamation. The aggregate purchase price payable by RNK Capital LP upon the exercise of the call right will be approximately $6.5 million. Upon exercise of the call right RNK Capital LP will own all of the outstanding shares of REI.

The definitive agreement includes a commitment by Mainframe not to solicit alternate transactions to the merger. In addition Mainframe has granted a right to RNK Capital LP's subsidiary to match an unsolicited competing offer. As previously announced by Rainmaker, RNK Capital LP has entered into an agreement with Working Opportunity Fund (EVCC) Ltd. (WOF), a holder of approximately 13% of Mainframe, which has agreed to support the transaction.

Rainmaker (www.rnkincomefund.com) is an unincorporated open-ended limited purpose trust located in Vancouver, British Columbia. Rainmaker indirectly owns three operating limited partnerships: Rainmaker Ltd. Partnership (Rainmaker LP), EP Canada Ltd. Partnership, a leading provider of payroll services for the film and television industry across Canada, and Canada Film Capital Ltd. Partnership, which provides tax credit administration services and financing of tax credits through factoring for film and television productions across Canada.

Rainmaker LP (www.rainmaker.com), headquartered in Vancouver, Canada, is an award-winning visual effects, CG animation and post- production entity with a 27-year history of technical excellence and outstanding service in feature films, television, games and commercials. Rainmaker LP is one of North America's pre-eminent post-production service providers. Rainmaker LP recently opened a new facility in London, Rainmaker Animation and Visual Effects UK Ltd., which offers cutting edge visual effects and 3D animation in that market. Rainmaker LP's Vancouver facility continues to provide a wide array of post production services ranging from traditional film developing to the very latest in digital image processing, visual effects and CG animation.

Mainframe (www.mainframe.ca) is the industry leader in CG animation for television and direct-to-DVD family entertainment. Mainframe has produced more than 269 half hours of CG-animated television as well as 16 CG-animated direct-to-video/DVD feature films and three CG-animated television specials. Mainframe's CG animation expertise is also being used in the production of theatrical feature films, interactive games and commercials. Established in 1993, Mainframe continues to grow its library of proprietary productions, and has received many prestigious awards for its work on such international brands as Barbie (winner of the VSDA Award for Children's Title of the Year), Hot Wheels, Spider-Man, Casper and Popeye. The company is recognized as a CG animation pioneer having developed the groundbreaking internationally distributed television series REBOOT. Mainframe clients include Sony, Mattel, Lionsgate Home Ent., Electronic Arts (Canada) and MTV.

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