ENTERTAINMENT ONE LTD. ( ENTERTAINMENT ONE CAYMAN ) THE SCHEME SHAREHOLDERS

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1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in doubt as to any aspect of this document or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, lawyer, professional accountant, or other professional adviser. If you have sold or transferred all your ordinary shares in Entertainment One Ltd. you should at once hand this document and the accompanying forms of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. INFORMATION CIRCULAR OF ENTERTAINMENT ONE LTD. IN RELATION TO A PROPOSED SCHEME OF ARRANGEMENT UNDER SECTION 86 OF THE COMPANIES LAW (2009 REVISION) OF THE CAYMAN ISLANDS BETWEEN ENTERTAINMENT ONE LTD. ( ENTERTAINMENT ONE CAYMAN ) and THE SCHEME SHAREHOLDERS and ENTERTAINMENT ONE LTD. ( ENTERTAINMENT ONE CANADA ) (a company incorporated under the laws of Canada) (as those terms are defined in this document) 3 JUNE 2010 A Notice convening the Court Meeting of the Scheme Shareholders (all defined herein) to be held at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF, United Kingdom on 28 June 2010 at 3.00 p.m. BST is set out at Annex F of this document. WHETHER OR NOT YOU ARE ABLE TO ATTEND THE COURT MEETING OR ANY ADJOURNMENT THEREOF, YOU ARE STRONGLY URGED TO COMPLETE AND SIGN THE ENCLOSED FORM OF PROXY OR FORM OF VOTING DIRECTION IN RESPECT OF THE COURT MEETING IN ACCORDANCE WITH THE INSTRUCTIONS PRINTED THEREON, AND TO LODGE THEM WITH ENTERTAINMENT ONE CAYMAN AT THE ADDRESSES STATED IN THE ENCLOSED FORM OF PROXY OR FORM OF VOTING DIRECTION, AS SOON AS POSSIBLE BUT IN ANY EVENT NOT LATER THAN THE TIMES AND DATES AS STATED IN THE ENCLOSED FORM OF PROXY OR FORM OF VOTING DIRECTION. This document does not comprise a prospectus for the purposes of the Prospectus Rules issued by the UK Financial Services Authority and has not been approved or filed with the UK Financial Services Authority or any other competent authority.

2 Dear Shareholders, A special ordered court meeting ( Court Meeting ) of the ordinary shareholders of Entertainment One Ltd., a Cayman Islands company ( Entertainment One Cayman ), will be held on 28 June 2010, commencing at 3.00 p.m., BST at the offices of Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF, United Kingdom. At the Court Meeting, you will be asked to vote on a proposal for a scheme of arrangement that would change the place of incorporation of the ultimate parent holding company of the Entertainment One group of companies (the Group ) from the Cayman Islands to Canada, through a scheme of arrangement under Cayman Islands law. Completion of the proposed scheme of arrangement will result in an exchange of your ordinary shares in Entertainment One Cayman for an equal number of common shares of Entertainment One Ltd., a newly incorporated Canadian company ( Entertainment One Canada ). In connection with the proposed scheme of arrangement, Entertainment One Canada has also made applications to the Financial Services Authority and to the London Stock Exchange for admission of all of the common shares of Entertainment One Canada to a standard listing on the Official List and to trading on the London Stock Exchange s main market for listed securities (together Admission ). The Admission and the scheme of arrangement are in effect interdependent on each other. If the scheme of arrangement does not become effective the Admission will not take place. Likewise, if prior to the scheme of arrangement becoming effective Entertainment One Canada receives notice that the Admission will not take place, the scheme of arrangement will not become effective. Accordingly, upon completion of the scheme of arrangement and the Admission, your common shares in Entertainment One Canada will be listed on the Official List and the holding company of the Group will be in Canada. Our Board of Directors has unanimously determined that changing the place of incorporation of our holding company to Canada and the Admission to the Official List are in the best interests of Entertainment One Cayman and its shareholders. In summary, our Board of Directors believes that changing our place of incorporation will increase the attractiveness of the Group to existing and potential investors, enable the Group to simplify its capital structure and more efficiently and economically satisfy certain Canadian regulatory requirements applicable to businesses operating in the Canadian film and television distribution industry. In addition, our Board of Directors believes that Admission to the Official List will provide improved liquidity of the common shares, and enhanced corporate exposure to an enlarged investor base. The reasons for the scheme of arrangement and the other proposals are discussed in further detail in the accompanying information circular. The circular also provides important information about the proposals described above. We encourage you to read the entire document carefully, including the Risk Factors of the circular, before voting by proxy or at the Court Meeting. Your vote is very important. Our Board of Directors unanimously recommends that you vote FOR all of the proposals set out in the circular. To ensure that your ordinary shares are voted in accordance with your wishes, please mark, date, sign and return the accompanying proxy card in the enclosed, postage-paid envelope as promptly as possible. If you hold your ordinary shares beneficially through the company s depository interest facility with Capita IRG Trustees Limited ( Depository ), please mark, date, sign and return the accompanying form of voting direction as promptly as possible to direct the Depository how to vote your ordinary shares. Alternatively please direct the Depository how to vote using the CREST electronic proxy voting service. If you hold your ordinary shares beneficially through a bank, broker or other nominee holder, please follow the voting instructions provided to you by such bank, broker or other nominee holder. If you hold Class S shares in Entertainment One Cayman, your Class S shares will be redeemed in connection with (but not pursuant to) the scheme of arrangement. Please see the enclosed circular for more detail. Accordingly, as the terms of the scheme of arrangement will not apply to the Class S shares, Class S 2

3 shareholders are not being asked to vote at the Court Meeting. Class S shareholders are receiving this circular for information purposes only. If you have any questions about the meetings or require assistance, please call Giles Willits at +44 (0) On behalf of Entertainment One Cayman s Board of Directors, thank you for your continued support. Yours sincerely James Corsellis Chairman 3

4 CONTENTS SUMMARY 6 Introduction 6 The Scheme of Arrangement Proposal 6 Parties to the Scheme 6 The Scheme of Arrangement 7 Court Approval of the Scheme of Arrangement 9 No Appraisal Rights 9 Court Meeting 9 Admission to the Official List 10 Recommendation of the Board of Directors 10 QUESTIONS AND ANSWERS ABOUT THE SCHEME OF ARRANGEMENT AND THE COURT MEETING 11 THE COURT MEETING AND VOTING AT THE COURT MEETING 18 Time, Place and Date of the Court Meeting 18 Purpose of the Court Meeting 18 Record Date and Shares Outstanding 18 Quorum and Votes Required for Approval 18 How Shareholders Vote 19 Entertainment One Cayman ordinary shares held through a Depository Interest 19 Entertainment One Cayman ordinary shares held through a broker or other nominee 19 Attendance and Voting in Person at the Court Meeting 19 Proxies 20 Voting Directions for holders of Depository Interests 20 Revoking Proxy Authorisations or Voting Directions 20 RISK FACTORS 22 Risks Relating to the Scheme of Arrangement 22 Risks Relating to the Entertainment One Canada Common Shares 23 Risks Relating to Market Conditions 25 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 30 THE SCHEME OF ARRANGEMENT PROPOSAL 31 Background and Reasons for the Scheme of Arrangement 33 Amendment, Termination or Delay 34 Conditions to Consummation of the Scheme of Arrangement 34 Court Approval of the Scheme of Arrangement 35 Effective Date and Transaction Time 36 Management of Entertainment One Canada 36 No Appraisal Rights 37 Exchange of Shares 37 Share Incentive Arrangements 37 Exchangeable Shares and Class S Shares 38 Marwyn Warrant 38 Summit Option Agreement 39 E-One UK Ltd. Exchangeable Notes 39 Accounting Treatment of the Scheme 39 Required Vote; Board Recommendation 39 Admission to the Official List 40 Reasons for moving to the Official List 40 Page 4

5 Page UK Listing and Reporting Obligations 40 Settlement and Dealing Arrangements 42 Dealing Arrangements and CREST 42 Depository Interests Terms of the Deed Poll 43 Depository Interests Terms of Depository Agreement 45 SELECTED FINANCIAL INFORMATION 47 MATERIAL TAX CONSIDERATIONS 48 UK Tax Considerations 48 Canadian Tax Considerations 51 Cayman Islands Tax Considerations 53 DESCRIPTION OF ENTERTAINMENT ONE CANADA SHARES 54 Objects clause 54 Entertainment One Canada Shares 54 Preferred Variable Voting Shares 54 Variation of rights 56 Transfer of Entertainment One Canada common shares 56 Transfer of Preferred Variable Voting Shares 56 Capital Variations 56 Dividends 56 Directors 56 Conflicts of Interest 57 Share qualification 57 Appointment and Retirement of directors 57 Indemnity 57 Borrowing Powers 58 Meetings of Shareholders 58 Quorum 58 Votes of Shareholders 58 Fundamental Changes 58 Rights of Dissent 58 Pre-emption 59 Takeovers 59 Preferred Variable Voting Shareholders Agreement 60 COMPARISON OF RIGHTS OF SHAREHOLDERS 61 STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 89 WHERE YOU CAN FIND MORE INFORMATION 91 Annex A Scheme of Arrangement 92 Annex B Expected Timetable 97 Annex C Articles of Incorporation of Entertainment One Canada 98 Annex D By-Laws of Entertainment One Canada 131 Annex E Order of the Grand Court of the Cayman Islands 142 Annex F Notice of the Court Meeting 145 Annex G Glossary of Terms 146 5

6 SUMMARY This summary highlights selected information from the Circular. It does not contain all of the information that is important to you. To understand the scheme of arrangement more fully, and for a more complete legal description of the scheme of arrangement, you should read the entire Circular carefully, including the annexes. The scheme of arrangement document, attached as Annex A to this Circular, is the legal document that governs the process. The Articles of Incorporation and By-Laws of Entertainment One Canada, substantially in the form attached as Annex C and D to this Circular, will govern our holding company after the completion of the Scheme of Arrangement. We encourage you to read those documents carefully. Unless defined elsewhere in this Circular, all capitalized words and terms in this summary and this Circular have the meaning given to them in the Glossary of Terms at Annex G. Introduction This Circular is being sent to all ordinary shareholders of Entertainment One Cayman of record ( Scheme Shareholders ) as at 31 May 2010 ( Record Date ) in connection with a proposal for a scheme of arrangement (the Scheme of Arrangement or the Scheme ) that would change the place of incorporation of the ultimate parent holding company of the Entertainment One group ( Group ) from the Cayman Islands to Canada. It is proposed that the Scheme of Arrangement will be effected through a court process supervised by the Grand Court of the Cayman Islands (the Cayman Court ). The Scheme of Arrangement will result in the exchange of your ordinary shares in Entertainment One Cayman for an equal number of common shares of a new holding company incorporated in Canada which is also named Entertainment One Ltd. ( Entertainment One Canada ). This proposal is referred to as the Scheme of Arrangement Proposal in the Circular and full details are set out below. In connection with the Scheme of Arrangement, Entertainment One Canada has made an application to the Financial Services Authority and to the London Stock Exchange for admission of all of its common shares to a standard listing on the Official List and to trading on the London Stock Exchange s main market for listed securities (together Admission ). The Admission is conditional upon the Scheme of Arrangement becoming effective. Scheme Shareholders are not being asked to formally approve any proposals relating to the Admission. However, if the Scheme Shareholders do not approve the Scheme of Arrangement, the Admission will not take place. Equally if Entertainment One Canada receives notification that the Admission will not take place, the Scheme of Arrangement will not become effective. Full details in respect of the Admission are set out below under the heading Admission to the Official List. If you hold Class S shares in Entertainment One Cayman, your Class S shares will be redeemed in connection with (but not pursuant to) the scheme of arrangement. Please see below for more detail. Accordingly, as the terms of the scheme of arrangement will not apply to the Class S shares, Class S shareholders are not being asked to vote at the Court Meeting. Class S shareholders are receiving this circular for information purposes only. The Scheme of Arrangement Proposal Parties to the Scheme Entertainment One Cayman Entertainment One Cayman was incorporated in the Cayman Islands on 11 January Entertainment One Cayman is the holding company for the Group and owns directly or indirectly all of the operating companies in the Group. The Group is an international entertainment group specialising in the acquisition, production and distribution of film and television content across all media. The Group s current rights library includes more than 20,000 film and television titles, 2,400 hours of television programming and 45,000 music tracks. During the year ended 31 March 2010, the Group released 123 films theatrically and produced 213 half hours of television content, broadcast in over 180 countries. 6

7 The Group was admitted to trading on the AIM market of the London Stock Exchange on 29 March 2007, and since then has gone on to complete a number of acquisitions within North America, the UK and Europe. The Group employs approximately 1,500 staff worldwide. The Group s total sales for the year ended 31 March 2010 were million, representing growth of 30 per cent. over the prior year. The Group s underlying EBITDA increased from 25.3 million to 34.3 million over the same period. Entertainment One Canada Entertainment One Canada was incorporated in Canada on 14 April Entertainment One Canada has only nominal assets and capitalisation and has not engaged in any business or other activities other than in connection with its formation and the Scheme. As a result of the Scheme, Entertainment One Canada will become the parent holding company of Entertainment One Cayman and its subsidiaries. The registered office and principal place of business of Entertainment One Canada is at 175 Bloor Street East, Suite 1400, North Tower, Toronto, Ontario, Canada M4W 3R8 (telephone number: ). The Scheme of Arrangement The Scheme of Arrangement will change the place of incorporation of the ultimate parent holding company of the Group from the Cayman Islands to Canada. There are several steps required in order for us to effect the Scheme of Arrangement, including holding a special ordered court meeting ( Court Meeting ) of the Scheme Shareholders. The Court Meeting is being held in accordance with an order of the Cayman Court dated 31 May 2010, which as a matter of Cayman Islands law, Entertainment One Cayman was required to obtain prior to holding the Court Meeting. A copy of the Cayman Court s order is attached as Annex E to this Circular. We will hold the Court Meeting to approve the Scheme of Arrangement Proposal on 28 June If the Scheme of Arrangement Proposal is approved by the Scheme Shareholders (and we do not abandon the Scheme of Arrangement), we will seek the Cayman Court s sanction of the Scheme of Arrangement (as discussed below under the section Court Approval of the Scheme of Arrangement ). If the Cayman Court sanctions the Scheme of Arrangement and if all of the other pre-conditions are satisfied or, if allowed by law, waived (and we do not abandon the Scheme of Arrangement), we intend to file the court order authorising the Scheme of Arrangement with the Cayman Islands Registrar of Companies, which will by its terms cause the Scheme of Arrangement to become effective at 5.00 p.m. BST on 14 July 2010 (or at such other date and time as the Board may determine) (the Transaction Time ). The Scheme of Arrangement will lapse on 31 December 2010 (unless extended with the approval of the Cayman Court) if the Transaction Time has not occurred on or prior to that date. At and around the Transaction Time, the following steps will occur: all Entertainment One Canada common shares issued and outstanding prior to the Transaction Time (over which shares Entertainment One Cayman currently holds an irrevocable power of attorney) will be purchased by Entertainment One Canada at nominal value and cancelled; all Scheme Shares will be transferred to Entertainment One Canada; in consideration therefor, Entertainment One Canada will issue common shares of Entertainment One Canada (on a one-for-one basis) to the holders of Entertainment One Cayman ordinary shares; pursuant to Article 3(B) of the Articles of Association of Entertainment One Cayman, the Class S Shares will be redeemed for their nominal value (as discussed further below under the section Exchangeable Shares and Class S Shares below). 7

8 The business day after the Transaction Time the following steps will occur prior to the opening of the London Stock Exchange: Entertainment One Cayman will migrate to Canada by way of continuation and will be amalgamated with Entertainment One Canada; and Entertainment One Canada s common shares will be admitted to trading on the Official List. As a result of the Scheme of Arrangement, the ordinary shareholders of Entertainment One Cayman will instead become common shareholders of Entertainment One Canada and the common shares will be traded on the Official List. Entertainment One Cayman will become a subsidiary of Entertainment One Canada and will then migrate to Canada by way of continuation and will be amalgamated with Entertainment One Canada. The members of the Board of Directors of Entertainment One Cayman then in office will be members of the Board of Directors of Entertainment One Canada at the Transaction Time. As at the Record Date, 151,926,963 ordinary shares of Entertainment One Cayman were issued and outstanding and we had 31 shareholders of record. After the Transaction Time, the ultimate holding company of the Entertainment One Group will be governed by the companies law of Canada rather than the companies law of the Cayman Islands. There are differences between what your rights as a common shareholder will be under Canadian law and what they currently are as a common shareholder under Cayman Islands law. In addition, there are differences between the organisational documents of Entertainment One Canada and Entertainment One Cayman. Please see Comparison of Rights of Shareholders for a summary of some of these differences. In connection with the completion of the Scheme of Arrangement, Entertainment One Canada will assume, on a one-for-one basis, Entertainment One Cayman s existing obligations in connection with awards granted under Entertainment One Cayman s Share Incentive Arrangements. The Share Incentive Arrangements will be modified to reflect the Scheme of Arrangement. Options to acquire Entertainment One Cayman ordinary shares will be exchanged for options to acquire common shares of Entertainment One Canada. Any stock options, stock appreciation rights, restricted stock units or performance shares issued by Entertainment One Cayman that are convertible, exchangeable or exercisable into ordinary shares of Entertainment One Cayman will become convertible, exchangeable or exercisable, as the case may be, into common shares of Entertainment One Canada. As a result of the Scheme of Arrangement, Canada Inc. ( ), a subsidiary of Entertainment One Cayman, will be entitled to initiate the exchange of all of its issued and outstanding Exchangeable Shares. These Exchangeable Shares are currently exchangeable in return for ordinary shares in Entertainment One Cayman. Immediately after the Transaction Time, Entertainment One Canada will execute agreements supplementary to the Support Agreement and the Voting and Exchange Agreement to evidence the assumption by Entertainment One Canada of liability for all moneys payable and property deliverable and to observe and perform all of the covenants and obligations of Entertainment One Cayman under such agreements, including the issuance of Entertainment One Canada common shares to holders of the Exchangeable Shares in exchange for the Exchangeable Shares. In accordance with the Articles of Association of Entertainment One Cayman and contemporaneously with the exchange of the Exchangeable Shares, Entertainment One Cayman will redeem all of the Class S Shares that are issued and outstanding in exchange for redemption proceeds of CAD0.01 per Class S Share. The Entertainment One Cayman ordinary shares will be exchanged for common shares in Entertainment One Canada pursuant to the Scheme of Arrangement, which is the primary legal document that will govern the Scheme. A copy of the Scheme of Arrangement is attached to and is a part of this Circular as Annex A. After the Transaction Time, you will continue to own an interest in the ultimate parent holding company of the Group. Entertainment One Canada will conduct the same business operations through its subsidiaries as conducted by Entertainment One Cayman through its subsidiaries before the Transaction Time. The number 8

9 of common shares you will own in Entertainment One Canada will be the same as the number of Entertainment One Cayman ordinary shares you owned in Entertainment One Cayman immediately prior to the Transaction Time. As set out further below in the section entitled Exchangeable Shares and Class S Shares, after the Scheme of Arrangement you will hold the same number of Entertainment One Canada common shares as your Entertainment One Cayman ordinary shares. The terms of the Scheme of Arrangement itself do not impact on your economic interest in the Group. However, since 24 September 2008, the holders of the Exchangeable Shares in the capital of , a subsidiary of Entertainment One Cayman, and since 1 January 2010, the holders of the Maximum Deferred Exchangeable Shares in the capital of , have been entitled to exchange the Exchangeable Shares for ordinary shares in Entertainment One Cayman. This entitlement arises out of the share terms of the Exchangeable Shares and certain agreements in place since the acquisition of the Acquired Companies in September 2008 ( Acquired Companies Agreements ) which gave the holders of the Exchangeable Shares an economic interest in the Group alongside the economic interests of the Entertainment One Cayman ordinary shareholders. Court Approval of the Scheme of Arrangement We cannot complete the Scheme of Arrangement without the approval of the Cayman Court. Subject to the Scheme Shareholders of Entertainment One Cayman approving the Scheme of Arrangement, the Cayman Court will hold the Sanction Hearing, which is expected to be held at a.m. Cayman Time on 9 July 2010, to approve the Scheme of Arrangement. At the Sanction Hearing, the Cayman Court may impose such conditions as it deems appropriate in relation to the Scheme of Arrangement, but may not impose any material changes without the joint consent of Entertainment One Cayman and Entertainment One Canada. Entertainment One Cayman may consent to any modification of the Scheme of Arrangement on behalf of the shareholders which the Cayman Court may think fit to approve or impose. In determining whether to exercise its discretion and approve the Scheme of Arrangement, the Cayman Court will determine, among other things, whether the Scheme of Arrangement is fair to the Scheme Shareholders. In doing so, the Cayman Court will place considerable weight on the views of the Scheme Shareholders, as expressed through the vote at the Court Meeting, and will typically consider the Scheme Shareholders to be the best judge of the commercial merits of the Scheme of Arrangement and their own commercial interests. If you are a Scheme Shareholder who wishes to appear in person or by counsel at the Sanction Hearing and present evidence or arguments in support of or opposition to the Scheme of Arrangement, you may do so. In addition, the Cayman Court has wide discretion to hear from interested parties. Entertainment One Cayman will not object to the participation in the Sanction Hearing by any ordinary shareholder who holds shares through Capita IRG Trustees Limited (the Depository ) or through a broker or other nominee. No Appraisal Rights Under Cayman Islands law, the shareholders of Entertainment One Cayman do not have any dissenters rights or right to an appraisal of the value of their ordinary shares or receive payment for them in connection with the Scheme of Arrangement. Court Meeting Time, Place, Date and Purpose: The Court Meeting will be held on 28 June 2010 at 3.00 p.m. BST at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF, United Kingdom. At the Court Meeting, Entertainment One Cayman s board of directors will ask the ordinary shareholders of Entertainment One Cayman to vote to approve the Scheme of Arrangement. If the Scheme of Arrangement is approved and becomes effective, your ordinary shares of Entertainment One Cayman will be transferred to Entertainment One Canada and you will receive, on a one-for-one basis, new common shares of Entertainment One Canada for each ordinary share of Entertainment One Cayman. The ordinary shareholders of Entertainment One Cayman may also be asked to approve a motion to adjourn the Court Meeting to a later date to solicit additional proxies if there are insufficient proxies or shareholders to approve the proposals at the time of the Court Meeting. 9

10 Record Date: Only registered holders of record of Entertainment One Cayman ordinary shares as of the Record Date are entitled to notice of and to vote at the meeting or any adjournments or postponements of the meeting. The Record Date is 5.00 p.m. BST on 31 May Quorum: At least two registered holders of Entertainment One Cayman s ordinary shares as of the Record Date must be present, in person or by proxy, in order for the Court Meeting to proceed. Admission to the Official List In connection with the proposed scheme of arrangement, Entertainment One Canada has also made applications to the Financial Services Authority and to the London Stock Exchange for admission of all of its common shares to a standard listing on the Official List and to trading on the London Stock Exchange s main market for listed securities (together Admission ). Since its admission to AIM in 2007, the Group has expanded significantly through organic and acquisitive growth and as a result, the Directors believe that a move to a standard listing on the Official List and to trading on the main market of the London Stock Exchange is now appropriate. The Directors also believe that Admission would also provide improved liquidity of the Entertainment One Canada common shares, and enhanced corporate exposure to an enlarged investor base. The Admission is conditional upon the Scheme of Arrangement becoming effective. Equally, if Entertainment One Canada receives notification prior to the Transaction Time that the Admission will not take place, the Scheme of Arrangement will not become effective. It is anticipated that the Entertainment One Canada common shares will be formally admitted to the Official List at 8.00 a.m. BST on 15 July 2010 being the time the London Stock Exchange opens after the Scheme of Arrangement becomes effective. Scheme Shareholders are not being asked to formally vote on any proposals relating to the Admission; however, if the Scheme Shareholders do not approve the Scheme of Arrangement, the Admission will not take place. Recommendation of the Board of Directors Our Board of Directors has unanimously determined that changing the place of incorporation of our holding company to Canada and the Admission to the Official List are in the best interests of Entertainment One Cayman and its shareholders. In summary, our Board of Directors believes that changing our place of incorporation will increase the attractiveness of the Group to existing and potential investors, enable the Group to simplify its capital structure and more efficiently and economically satisfy certain Canadian regulatory requirements applicable to businesses operating in the Canadian film and television distribution industry. In addition, our Board of Directors believes that Admission to the Official List will provide improved liquidity of the Entertainment One Canada common shares, and enhanced corporate exposure to an enlarged investor base. The Entertainment One Cayman board of directors recommends that the Scheme Shareholders vote FOR the Scheme of Arrangement Proposal. The Entertainment One Cayman board of directors also unanimously recommends that the Scheme Shareholders vote FOR the proposal to adjourn the Court Meeting to a later date if there are insufficient votes at the time of the meeting to approve the Scheme of Arrangement Proposal. 10

11 QUESTIONS AND ANSWERS ABOUT THE SCHEME OF ARRANGEMENT AND THE COURT MEETING Q. What am I being asked to vote on at the Court Meeting? A. Ordinary shareholders of Entertainment One Cayman are being asked to vote on the following two proposals at the Court Meeting: to approve the Scheme of Arrangement attached as Annex A to this Circular. If the Scheme of Arrangement becomes effective, all of your ordinary shares in Entertainment One Cayman will be transferred to Entertainment One Canada. Entertainment One Canada will then issue one common share to the Scheme Shareholders for each ordinary share of Entertainment One Cayman that was transferred to Entertainment One Canada. As a result, Entertainment One Canada will become the ultimate parent holding company of Entertainment One Cayman; and to approve a motion to adjourn the Court Meeting to a later date to solicit additional proxies if there are insufficient proxies to approve the proposals at the time of the Court Meeting. Q. Why am I receiving this Circular and the accompanying materials? A. You are receiving this Circular and the accompanying materials because you own ordinary shares or Class S Shares in Entertainment One Cayman. Voting procedures differ depending on whether you are a registered holder of ordinary shares in Entertainment One Cayman or whether you hold your ordinary shares in Entertainment One Cayman through a Depository Interest or through a broker or nominee. Please follow the instructions in this Circular and the accompanying materials carefully. Class S Shareholders are not being asked to vote at the Court Meeting and are being sent this Circular for information purposes only. Q. What vote of the Entertainment One Cayman shareholders is required to approve the proposals at the Court Meeting? A. The affirmative vote of a majority in number of the registered holders of the Entertainment One Cayman ordinary shares present and voting at the meeting, whether in person or by proxy, representing 75 per cent. or more in value of the ordinary shares present and voting at the meeting, whether in person or by proxy, is required to approve the Scheme of Arrangement. The affirmative vote of holders of at least a majority of the Entertainment One Cayman ordinary shares present in person or by proxy at the meeting and entitled to vote on the matter is required to approve the adjournment proposal. No other holders of Entertainment One Cayman shares are entitled to vote on the proposals. Please see the section entitled the Court Meeting and Voting at the Court Meeting for more information. Q. What quorum is required for action at the meeting? A. At least two registered holders of Entertainment One Cayman s ordinary shares as of the Record Date must be present, in person or by proxy, in order for the Court Meeting to proceed. Abstentions will be counted as present for purposes of determining whether there is a quorum in respect of the proposals. Q. What vote does the Entertainment One Cayman Board of Directors recommend? A. The Entertainment One Cayman Board of Directors unanimously recommends that Entertainment One Cayman s shareholders vote FOR the proposal to approve the Scheme of Arrangement and FOR the proposal to adjourn the meeting to a later date if there are insufficient votes at the time of the meeting to approve the Scheme of Arrangement proposal. 11

12 Q. What happens if I decide not to vote on the Scheme or if I vote against the Scheme? A. If the Scheme is approved by the requisite majorities at the Court Meeting and the Cayman Court sanctions the Scheme, if the Scheme becomes effective at the Transaction Time, you will be bound by the terms of the Scheme even if you did not vote on the Scheme or if you voted against the Scheme. Q. What happens to the Class S Shares and why are they not voting on the Scheme? A. The Class S Shares will be redeemed for their par value at or shortly after the Transaction Time. Accordingly, the Class S Shares will not be affected by the terms of the Scheme and instead are dealt with on their terms. In these circumstances, the Class S Shares are not being asked to vote on the Scheme and are being sent this Circular for information purposes only. The Class S Shares were issued by Entertainment One Cayman to certain parties in connection with certain acquisitions made by Entertainment One Cayman. These parties also hold Exchangeable Shares in a subsidiary of Entertainment One Cayman which are exchangeable for ordinary shares in Entertainment One Cayman. In accordance with the terms of the Exchangeable Shares, if the Scheme of Arrangement is completed, the Exchangeable Shares will be exchanged in return for common shares in Entertainment One Canada. Q. Why do you want to change Entertainment One Cayman s place of incorporation from the Cayman Islands to Canada? A. In summary, our Board of Directors believes that changing our place of incorporation will increase the attractiveness of the Group to existing and potential investors, enable the Group to simplify its capital structure and more efficiently and economically satisfy certain Canadian regulatory requirements applicable to businesses operating in the Canadian film and television distribution industry. In addition, our Board of Directors believes that changing our place of incorporation together with Admission to the Official List will provide improved liquidity of the common shares, and enhanced corporate exposure to an enlarged investor base. Please see the section entitled Background and Reasons for the Scheme below. Q. What risks are associated with the consummation of the Scheme of Arrangement? A. While our Board of Directors has considered the risks to our shareholders and our company associated with the Scheme of Arrangement and has recommended that shareholders vote for approval of the Scheme of Arrangement, there are risks and we cannot assure you that the anticipated benefits of the Scheme of Arrangement will be realised. For example: compliance with certain Canadian regulatory requirements under the Investment Canada Act may dilute the voting rights of your common shares in Entertainment One Canada; legislative and regulatory action could materially and adversely affect us regardless of whether we complete the Scheme of Arrangement; the Scheme of Arrangement will result in additional costs even if it is not completed; dividends paid following the Scheme may be subject to Canadian withholding tax in certain circumstances; although we do not expect Canadian taxes materially to affect our worldwide effective corporate tax rate, we will be subject to various Canadian taxes as a result of the Scheme. We currently are not subject to taxes in the Cayman Islands; the market for Entertainment One Canada common shares may differ from the market for Entertainment One Cayman ordinary shares. You should consider these risks carefully. For additional information, please see the discussion under Risk Factors. 12

13 Q. How will the Scheme of Arrangement affect my economic interest in the Group? A. After the Scheme of Arrangement you will hold the same number of Entertainment One Canada common shares as your Entertainment One Cayman ordinary shares. The terms of the Scheme of Arrangement itself do not impact on your economic interest in the Group. However, since 24 September 2008, the holders of the Exchangeable Shares in the capital of , a subsidiary of Entertainment One Cayman, and since 1 January 2010, the holders of the Maximum Deferred Exchangeable Shares in the capital of have been entitled to exchange the Exchangeable Shares for ordinary shares in Entertainment One Cayman. This entitlement arises out of the share terms for the Exchangeable Shares and certain agreements in place since the acquisition of the Acquired Companies in September The Acquired Companies Agreements gave the holders of the Exchangeable Shares an economic interest in the Group alongside the economic interests of the ordinary shareholders. Immediately after the Transaction Time, in accordance with the terms of the Exchangeable Shares, will initiate the exchange of all of its issued and outstanding Exchangeable Shares. The Exchangeable Shares will be exchanged for common shares in the capital of Entertainment One Canada on the basis set out at section entitled Exchangeable Shares and Class S Shares below. It is expected that the holders of the Exchangeable Shares will receive 15,620,395 common shares in the capital of Entertainment One Canada. The issuance of these common shares (a) reflects the existing economic interest granted to the holders of the Exchangeable Shares pursuant to the Acquired Companies Agreements and (b) will satisfy Entertainment One Cayman s existing obligations pursuant to the Acquired Companies Agreements. Please refer to section entitled Exchangeable Shares and Class S Shares below for further details. Q. How will the Scheme of Arrangement affect my voting rights in the holding company of the Group? A. Your voting rights as a common shareholder in Entertainment One Canada will be diluted in circumstances where Canadians own less than 51 per cent. of the votes attached to the Entertainment One Canada common shares. In these circumstances, the Preferred Variable Voting Shares held by the Chief Executive Officer allow the Chief Executive Officer to exercise a voting influence over the business and affairs of Entertainment One Canada where submitted to a vote of common shareholders of Entertainment One Canada. The exercise of the Preferred Variable Voting Shares in this manner is necessary to enable Entertainment One Canada to benefit from certain Canadian licences, incentive programmes and government tax credits available to Canadian companies operating in the television and film industry. See further below under the section Preferred Variable Voting Shares. Q. Will the Scheme of Arrangement affect the Group s current or future operations? A. We believe that the Scheme will have no material impact on how we conduct our day-to-day operations. Q. How will the Scheme of Arrangement affect the Group s presence around the world? A. At present, there are no material changes planned for our operations or workforce as a result of the Scheme of Arrangement. Q. What will be the Group s corporate presence in Canada? A. If the Scheme of Arrangement becomes effective, the head office of the Group will be in Canada and board meetings will be held in Canada. 13

14 Q. How will shares of Entertainment One Canada differ from shares of Entertainment One Cayman? A. Entertainment One Canada common shares will be similar to your Entertainment One Cayman ordinary shares. However, there are differences between what your rights as a shareholder will be under Canadian law and what they currently are as a shareholder under Cayman Islands law. See Comparison of Rights of Shareholders. In addition, there are differences between the organisational documents of Entertainment One Canada and Entertainment One Cayman. We discuss these differences in detail under Description of Entertainment One Canada Shares and Comparison of Rights of Shareholders. Entertainment One Canada s Articles of Incorporation and By-Laws will be substantially in the forms attached to this Circular as Annex C and D. In addition, Entertainment One Canada s common shares will be listed on the Official List of the London Stock Exchange. Q. Will the Admission take place even if the Scheme of Arrangement is not approved? A. No, the Admission is conditional upon the Scheme of Arrangement becoming effective. If the Scheme Shareholders do not approve the Scheme of Arrangement or if it is not sanctioned by the Cayman Court or if the Board of Directors elects to withdraw the Scheme of Arrangement, the Admission will not take place. In those circumstances, your ordinary shares in Entertainment One Cayman will continue to be admitted to trading on AIM. Q. Will the Scheme of Arrangement take place even if the Admission does not occur? A. No, the Scheme of Arrangement is conditional upon Entertainment One Canada not receiving any notification that the common shares will not be admitted to the Official List prior to the Transaction Time. If, prior to the Transaction Time, Entertainment One Canada is notified that the Admission will not occur, the Scheme of Arrangement will not take place. In those circumstances, your ordinary shares in Entertainment One Cayman will continue to be admitted to trading on AIM. Q. How will the Scheme of Arrangement affect the Group s financial reporting and the information the Group provides to its shareholders? A. Please see the section entitled UK Listing and Reporting Obligations for the manner in which Entertainment One Canada will continue to provide information to shareholders. Q. What are the material tax consequences of the Scheme? A. Please refer to Material Tax Considerations for a description of the material UK income tax and Canadian tax consequences of the Scheme to Entertainment One Cayman shareholders. There will be no Cayman Islands tax consequences to Entertainment One Cayman or our shareholders. Determining the actual tax consequences of the Scheme of Arrangement to you may be complex and will depend on your specific situation. We urge you to consult your tax advisor for a full understanding of the tax consequences of the Scheme of Arrangement to you. Q. Is the Scheme taxable to me? A. Determining the tax consequences of the Scheme to you may be complex and will depend on your specific situation. We urge you to consult your tax advisor for a full understanding of the tax consequences of the Scheme to you. Tax deferral may be available depending on your specific situation and your jurisdiction of residence. It is expected that there will be no tax consequences for UK tax resident shareholders in so far as the Scheme involves an exchange of the ordinary shares in Entertainment One Cayman by Scheme Shareholders for common shares in Entertainment One Canada. A clearance letter has been obtained from Her Majesty s Revenue and Customs ( HMRC ) confirming that they will not invoke the relevant anti-avoidance provisions to override that expectation. There may however be UK tax 14

15 consequences for UK tax resident shareholders arising from other aspects of the Scheme and UK tax resident shareholders are therefore urged to contact your tax advisors accordingly. Q. Is the Scheme a taxable transaction for either Entertainment One Cayman or Entertainment One Canada? A. No. The Scheme should not be a taxable transaction for Entertainment One Cayman or Entertainment One Canada. Q. Will the Scheme impact Group s underlying effective tax rate in 2010 or expectations for later years? A. We do not expect Canadian taxes materially to affect our worldwide effective corporate tax rate. However, we will be subject to various Canadian taxes as a result of the Scheme. We currently are not subject to taxes in the Cayman Islands. Q. What are the most important Canadian corporate tax consequences of being organized as a Canadian holding company? A. Please see the questions and answers below for Canadian withholding tax implications on future share repurchases and dividend distributions of Entertainment One Canada and to Material Tax Considerations Canadian Tax Considerations for a further description of Entertainment One Canada s corporate tax treatment. The above types of Canadian taxes and rates aim to provide only a very broad overview of some corporate tax aspects in Canada and do not purport to be a complete analysis of the tax types and rates that would be relevant for either Entertainment One Canada or its shareholders. We are currently not subject to income, capital, stamp or issuance taxes or VAT in the Cayman Islands. Q. Will there be Canadian withholding tax on future dividends, if any, by Entertainment One Canada? A. Please see the section below Material Tax Consideration for a description of the types of withholding tax that may apply to Scheme Shareholders. Q. When do you expect the Scheme of Arrangement to be completed? A. Assuming the Scheme of Arrangement is approved by the requisite shareholder vote and by the Cayman Court, we currently expect to complete the Scheme of Arrangement prior to the opening of the London Stock Exchange on Thursday 15 July See Annex B for an expected timetable. However, the Scheme of Arrangement may be abandoned, delayed or accelerated for any reason by our Board of Directors at any time prior to the Scheme becoming effective. Q. What will I receive for my Entertainment One Cayman ordinary shares? A. After the Scheme of Arrangement is completed, you will hold one Entertainment One Canada common share for each Entertainment One Cayman ordinary share you held immediately prior to the completion of the Scheme of Arrangement. Q. Do I have to take any action to exchange my Entertainment One Cayman ordinary shares and receive Entertainment One Canada common shares? A. No. Your Entertainment One Cayman ordinary shares will be exchanged for Entertainment One Canada common shares without any action on your part. If you hold your shares through a Depository Interest, at or shortly after the Transaction Time, the records of the Depository will be updated without any action on your part to reflect your new interest in the Entertainment One Canada common shares. After the Transaction Time, you will continue to hold your Entertainment One Canada common shares by way of a Depository Interest. 15

16 Q. Can I trade Entertainment One Cayman shares between the date of this Circular and the Transaction Time? A. Yes. Entertainment One Cayman shares will continue to trade on the AIM during this period. Q. After the Scheme, where can I trade Entertainment One Canada shares? A. The Entertainment One Canada common shares will be listed and traded on the Official List of the London Stock Exchange after the Transaction Time. Q. What should I do now to vote? A. The Court Meeting will take place on 28 June After carefully reading and considering the information contained in this Circular, please indicate on the enclosed proxy card how you want to vote. Submit your proxy by following the instructions on the enclosed proxy card as soon as possible, so that your shares may be represented at the meeting. Q. How do I vote at the Court Meeting if I hold my ordinary shares in Entertainment One Cayman through a Depository Interest? A. If you hold your interest in your ordinary shares through a Depository Interest, you should direct the Depository how it ought to vote the shares it holds on your behalf. You should do this by completing the enclosed Form of Direction, and returning it to the Depository, at the address indicated on that form. To be effective, the completed Form of Direction must be received by the Depository before 3.00 p.m. on 25 June 2010 (being 72 hours prior to the Court Meeting). Alternatively, holders of Depository Interests can vote electronically using the CREST electronic proxy voting service. Q. How do I vote at the Court Meeting if I hold my ordinary shares in Entertainment One Cayman through a broker or other nominee? A. Each broker or nominee must solicit from their customers, directions on how to vote the ordinary shares in Entertainment One Cayman, and the broker or nominee must then direct the Depository to vote such shares in accordance with such directions. Your broker will give you directions on how to instruct the broker to vote your shares and you should follow these instructions. Your broker will not be able to vote your shares unless the broker receives appropriate instructions from you. Q. What form should I use to cast my vote? A. If you are the registered holder of Entertainment One Cayman ordinary shares, you should use the enclosed Proxy Card for voting at the Court Meeting. If you are the beneficial holder of Entertainment One Cayman ordinary shares through a Depository Interest, you should direct the Depository to vote your shares by completing the enclosed Form of Direction. If you hold your shares through a broker or other nominee, you should follow the instructions provided to you by your broker. 16

17 Q. Can I change my vote after I grant my proxy? A. Yes. You can change your vote before your proxy is voted at the Court Meeting. You may revoke your proxy prior to its exercise by: giving written notice of the revocation to Capita Registrars Limited, the registrars assisting Entertainment One Cayman with the conduct of the Court Meeting; appearing at the Court Meeting, notifying the Chairman of the Court Meeting and voting in person; or properly completing and executing a later-dated proxy and delivering it to Capita Registrars Limited, no later than 3.00 p.m. on 26 June 2010, being 48 hours before the meeting. However, your attendance at the Court Meeting alone will not revoke your proxy. If you have instructed the Depository to vote your shares, you can change your vote by properly completing and executing a later-dated form of direction and delivering it to the Depository, no later than 3.00 p.m. BST on 25 June 2010 being 72 hours before the meeting. If you have instructed a broker to vote your shares, you must follow the procedure provided by your broker to change those instructions. Q. Are proxy materials available on the Internet? A. Yes. This Circular and related materials are available at: Q. What happens after the Court Meeting? A. If the Scheme of Arrangement is approved at the Court Meeting, Entertainment One Cayman will apply to the Cayman Court for the approval of the Scheme of Arrangement. You are entitled to be present at that hearing in person or through your attorney to support or oppose the application for approval of the Cayman Court. The hearing is scheduled for a.m., Cayman time on 9 July Q. What is the Cayman Court s view of the Scheme proposal? A. Pursuant to the relevant laws and procedure, the Cayman Court has made the order attached as Annex E (the Interlocutory Order ) which, among other things, convenes the Court Meeting and orders the dispatch of this Circular. In making the Interlocutory Order, the Cayman Court expresses no view on the commercial merits of the Scheme of Arrangement proposal, or as to the validity or otherwise of the Board s reasons given for recommending the Scheme of Arrangement. The Interlocutory Order is not and should not be interpreted as a recommendation by the Cayman Court to vote either for or against the Scheme proposal. The Cayman Court has not independently verified and makes no statement as to the correctness of the matters or opinions contained in this Circular Q. Whom should I contact if I have questions about the voting arrangements for the Court Meeting? A. You should contact the following: Giles Willits Chief Financial Officer Entertainment One 120 New Cavendish Street London W1W 6XX Tel: +44 (0) [email protected] 17

18 THE COURT MEETING AND VOTING AT THE COURT MEETING We are furnishing this Circular in connection with the solicitation of proxies by Entertainment One Cayman s board of directors for use at the Court Meeting of Scheme Shareholders of Entertainment One Cayman. Time, Place and Date of the Court Meeting The Court Meeting will be held at 3.00 p.m., BST, on 28 June 2010, at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF, United Kingdom. Purpose of the Court Meeting At the Court Meeting, the Board intends to ask you to vote on a proposal for a Scheme of Arrangement that would change the place of incorporation of the ultimate parent holding company of the Group from the Cayman Islands to Canada through a scheme of arrangement filed with the Cayman Court. The Scheme of Arrangement will result in the exchange of your ordinary shares of Entertainment One Cayman for an equal number of common shares in Entertainment One Canada. If there are insufficient proxies to approve the Scheme of Arrangement, you may also be asked to approve a motion to adjourn the Court Meeting to a later date to solicit additional proxies. If you do not vote at the Court Meeting, you will still be bound by the outcome. You are therefore strongly urged to attend and vote at the meeting in person or by proxy. ENTERTAINMENT ONE CAYMAN S BOARD OF DIRECTORS HAS APPROVED THE SCHEME OF ARRANGEMENT AND RECOMMENDS VOTING FOR APPROVAL OF THE SCHEME OF ARRANGEMENT Record Date and Shares Outstanding The Cayman Court has fixed 5.00 p.m. BST on 31 May 2010 as the record date for the Court Meeting. Only registered holders of record of Entertainment One Cayman ordinary shares on the Record Date are entitled to notice of and to vote at the Court Meeting or any adjournments or postponements of the Court Meeting. You will not be the holder of record of shares that you hold beneficially. Instead, the Depository or other nominee will be the holder of record of such shares. At the Record Date, Entertainment One Cayman had issued and outstanding 151,926,963 ordinary shares, with a par value of CAD0.01 per share. Quorum and Votes Required for Approval At least two registered holders of Entertainment One Cayman s ordinary shares as of the Record Date must be present, in person or by proxy, in order for the Court Meeting to proceed. The Scheme of Arrangement must be approved by a majority in number of the Scheme Shareholders as of the Record Date present and voting on the proposal, whether in person or by proxy, representing 75 per cent. or more in value of the Entertainment One Cayman ordinary shares present and voting on the proposal, whether in person or by proxy. For the purpose of calculating the majority in number requirement for the approval of the Scheme of Arrangement, each Scheme Shareholder, present and voting in person or by proxy, will be counted as a single shareholder, regardless of the number of shares voted by that shareholder. If a Scheme Shareholder elects to vote a portion of such holder s Entertainment One Cayman ordinary shares in favour of the proposal, and a portion against the proposal, then, that Scheme Shareholder will be counted as one shareholder voting in favour of the proposal and as one shareholder voting against the proposal, thereby effectively cancelling out that Scheme Shareholder s vote for the purposes of the majority in number calculation. 18

19 You will not be the registered holder of shares that you hold beneficially through the Depository, or a broker or other nominee. Instead, the Depository or the nominee will be the registered holder of such shares and will be the Scheme Shareholder. The adjournment proposal, if presented, must be approved by more than 50 per cent. of all ordinary shares present and voting, in person or by proxy. Because the quorum for the Court Meeting is the presence of at least two Scheme Shareholders, the Scheme of Arrangement proposal could be approved with the affirmative vote of less than 50 per cent. of the total number of issued and outstanding Entertainment One Cayman ordinary shares. How Shareholders Vote Scheme Shareholders holding Entertainment One Cayman ordinary shares on the Record Date may vote such shares as follows: Scheme Shareholders may only vote their shares if they or their proxies are present at the Court Meeting. Scheme Shareholders may appoint a proxy by inserting the full name of their appointed proxy where indicated. In that case, the person named as proxy must be present and vote at the Court Meeting. Scheme Shareholders are also entitled to appoint the Chairman of the Court Meeting as their proxy and the Chairman is the default proxy on the Proxy Card. The appointed proxy will vote all Entertainment One Cayman ordinary shares for which it is the proxy as specified by the Scheme Shareholders on the Proxy Card. If a properly executed and unrevoked Proxy Card, appointing the Chairman as proxy, does not specify how the Entertainment One Cayman ordinary shares represented thereby are to be voted, the Chairman intends to vote such shares for the approval of the Scheme of Arrangement. Entertainment One Cayman ordinary shares held through a Depository Interest If you are not the registered holder of the Entertainment One Cayman ordinary shares and instead hold your shares beneficially through the Depository Interest facility, you are not entitled to vote in person or by proxy at the Court Meeting. Instead such beneficial holders must give voting instructions to the Depository. You should do this by completing the enclosed Form of Direction and returning it to the Depository at the address and before the time indicated on that form. On receipt of such voting instructions, the Depository must then vote such shares in accordance with instructions. Alternatively, holders of Depository Interests can vote electronically by using the CREST electronic proxy voting service. Please note that the Depository may not be able to vote your shares unless the Depository receives appropriate instructions from you. Brokers or nominees are to forward this Circular to the beneficial holders. Entertainment One Cayman ordinary shares held through a broker or other nominee If you are not the registered holder of the Entertainment One Cayman ordinary shares and instead hold your shares beneficially through a broker or nominee, you are not entitled to vote in person or by proxy at the Court Meeting. Instead you must give voting instructions to your broker or nominee. Your broker will give you directions on how to instruct the broker to vote your shares and you should follow these instructions. Your broker will not be able to vote your shares unless the broker receives appropriate instructions from you. Attendance and Voting in Person at the Court Meeting Attendance at the Court Meeting is limited to Scheme Shareholders or their properly appointed proxies, beneficial holders having evidence of such ownership, and guests of Entertainment One Cayman. Scheme Shareholders may vote by casting a ballot at the Court Meeting. Beneficial holders may only vote by instructing the Depository or their broker or nominee how they wish to vote. Beneficial holders may not cast a ballot at the Court Meeting. 19

20 Proxies A Proxy Card is being sent to each Entertainment One Cayman shareholder as of the Record Date. Scheme Shareholders can cast their votes by proxy by completing, signing and returning the enclosed Proxy Card. If a properly executed and unrevoked Proxy Card submitted by a shareholder of record does not specify how the shares represented thereby are to be voted, the proxy holders intend to vote such shares for the approval of the Scheme of Arrangement. Voting Directions for holders of Depository Interests A Form of Direction is being sent to each beneficial holder holding Entertainment One Cayman ordinary shares through the Depository as at the Record Date. Holders of Depository Interests can direct the Depository how to vote their shares by completing, signing and returning the enclosed Form of Direction. Alternatively, holders of Depository Interests can vote using the CREST electronic proxy voting service by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment, or instruction, made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction ) must be properly authenticated in accordance with Euroclear UK & Ireland Limited s ( EUI ) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer s agent (ID RA 10), by 3.00 p.m. on 25 June 2010 being 72 hours before the Court Meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. CREST members and where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy instructions. It is therefore the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. Entertainment One Cayman may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) of the Uncertificated Securities Regulations Revoking Proxy Authorisations or Voting Directions You may revoke your proxy at any time before your proxy is voted at the Court Meeting. You may revoke your proxy prior to its exercise by: giving written notice of the revocation to Capita Registrars Limited; appearing at the Court Meeting, notifying the Chairman of the Court Meeting and voting in person by casting a ballot at the Court Meeting; or properly completing and executing a later-dated proxy and delivering it to Capita Registrars Limited at or before the Court Meeting. However, your attendance at the Court Meeting alone will not revoke your proxy. 20

21 If the case of shareholders holding their ordinary shares beneficially through the Depository, you may revoke your voting instructions prior to its exercise by: giving written notice of the revocation to Capita Registrars Limited; properly completing and executing a later-dated voting instruction and delivering it to Capita Registrars Limited, by 3.00 p.m. on 25 June 2010, being 72 hours before the Court Meeting. If you hold your shares through a broker or nominee, you must follow the procedure provided by your broker to change those voting instructions. 21

22 RISK FACTORS Before you decide how to vote your shares, you should consider carefully the following risk factors related to the proposals set forth in this Circular. The Board considers the following risks and other factors to be material for Scheme Shareholders but the risks and uncertainties described are not intended to be exhaustive, are not set out in order of priority and are not the only ones that may face the Group. Additional risks and uncertainties not currently known to the Group, or that the Group currently deems immaterial, may also have an adverse effect on the Group s business, financial condition, prospects and/or results of operations after the Scheme. Scheme Shareholders should read this section in conjunction with this entire document. Risks Relating to the Scheme of Arrangement Your rights as a shareholder will change as a result of the Scheme of Arrangement due to differences between Canadian law and Cayman Islands law Because of differences between Canadian law and Cayman Islands law, we will become subject to new legal requirements if the Scheme of Arrangement is effected. In addition, your rights as a shareholder will change if the Scheme of Arrangement is effected. We discuss some of these differences in detail under Description of Entertainment One Canada Share Capital and Comparison of Rights of Shareholders Entertainment One Canada s Articles of Incorporation and By-Laws are attached to this circular as Annex C and D. If the Cayman Court does not sanction the Scheme of Arrangement, Entertainment One Cayman will not have the ability to effect the Scheme of Arrangement We cannot proceed with the Scheme of Arrangement unless the Cayman Court sanctions the Scheme of Arrangement after conducting a hearing. Assuming that the Court Meeting is conducted in accordance with the Cayman Court s order and that the Scheme Shareholders approve the Scheme of Arrangement Proposal by the majority required by the Cayman Companies Law, we are not aware of any reason why the Cayman Court would not sanction the Scheme of Arrangement. Nevertheless, the Cayman Court s sanction is a matter for its discretion and there can be no assurance if or when such sanction will be obtained. If the Cayman Court does not sanction the Scheme of Arrangement, Entertainment One Cayman will be unable to effect the Scheme of Arrangement as contemplated (even if the requisite Scheme Shareholders have approved the Scheme of Arrangement). In addition, the Cayman Court may impose such conditions, modifications or amendments as it deems appropriate in relation to the Scheme of Arrangement, but may not impose any material changes without the joint consent of Entertainment One Cayman and Entertainment One Canada. If such conditions, modifications or amendments are imposed, Entertainment One Cayman will be unable to effect the Scheme of Arrangement without amending the Scheme of Arrangement, which, depending on the nature of such conditions, modifications or amendments, might require new shareholder approvals. Please see The Scheme of Arrangement Proposal Court Approval of the Scheme of Arrangement. The anticipated benefits of the Scheme of Arrangement may not be realised We may not realise the benefits we anticipate from the Scheme of Arrangement. Our failure to realise those benefits could have an adverse effect on our business, results of operations or financial condition. Please see The Scheme of Arrangement Proposal Background and Reasons for the Scheme of Arrangement. The Scheme of Arrangement will result in additional direct and indirect costs, even if it is not consummated We will incur additional costs and expenses in connection with and as a result of the Scheme of Arrangement. These costs and expenses include professional fees to comply with Canadian corporate and tax laws and financial reporting requirements as well as any additional costs we may incur going forward as a result of 22

23 our new corporate structure. In addition, we have incurred and expect to incur further legal, accounting, filing and possible other fees and mailing, financial printing and other expenses in connection with the Scheme of Arrangement, even if the Scheme of Arrangement Proposal is not approved or the Scheme of Arrangement is not consummated. The Scheme of Arrangement may not allow us to maintain a competitive worldwide effective corporate tax rate We believe the Scheme of Arrangement should permit us to maintain a competitive worldwide effective tax rate. However, the Group operates in a number of different tax jurisdictions. In any of the jurisdictions, the tax rules and their interpretation may change. Any change in taxation legislation or regulation or its interpretation could affect the value of the Group s assets, the Group s ability to provide returns to shareholders or otherwise have an adverse effect on the Group s business, results of operations, financial condition or prospects. Further, any relief from taxation that may be available to the Group in the future may not be in accordance with the assumptions made by the Group as to its future performance (these assumptions being based on the current legislative position and any known future changes). If the assumptions made by the Group as to such taxation reliefs available do not prove correct, the Group s ability to provide returns to shareholders may be affected and there may be an adverse effect on the Group s business, results of operations prospects or financial condition. Risks Relating to the Entertainment One Canada Common Shares Entertainment One Canada may be obliged to subject you to a Canadian withholding tax on any dividends Any dividend on a common share of Entertainment One Canada (other than a capital dividend or certain capital gains dividends), including a stock dividend, paid or credited, or deemed to be paid or credited, by Entertainment One Canada to a shareholder will be subject to Canadian withholding tax at the rate of 25 per cent. on the gross amount of the dividend, or such lesser rate as may be available to a shareholder under any income tax convention that Canada may have in the country where the shareholder is resident for the purposes of that convention. See further under Material Tax Considerations below. There may be other tax consequences for holders of Entertainment One Canada Shares Please see Material Tax Considerations below. Influence of Marwyn (and its related parties) over the Group s business following Admission) On Admission Marwyn (and its related parties) will hold up to 21.9 per cent. of the Entertainment One Canada common shares directly and an additional 19.4 per cent. indirectly through an independent Canadian voting trustee. James Corsellis, Non-Executive Chairman of Entertainment One Canada and Mark Watts, a Non-Executive Director of Entertainment One Canada, are partners of Marwyn Capital and Marwyn Investment Management and shareholders in Marwyn Capital Management Limited. Marwyn Capital Management Limited is the fund manager of Marwyn Value Investors, and Marwyn Capital Management Limited has sub-contracted the investment management of Marwyn Value Investors to Marwyn Investment Management. Whilst the Board considers that the Group is capable of carrying on its business independently of Marwyn (and its related parties), notwithstanding their shareholding, Marwyn may influence certain matters requiring the approval of the shareholders as a whole. There could also be a conflict between the interests of Marwyn (and its related parties) and Entertainment One Canada s other shareholders with respect to, for example, dividend policy. Additionally, Marwyn has sufficient voting power, amongst other things, to exert a degree of control over Entertainment One Canada and in particular to delay or deter a change of control. Control of Entertainment One Canada by Holders of Preferred Variable Voting Shares In order to meet certain Canadian regulatory requirements for film and television distribution companies under the Investment Canada Act, Entertainment One Canada must ensure that a majority of Entertainment One Canada s voting shares are owned by Canadians and Entertainment One Canada is controlled in fact by Canadians. To do this, Entertainment One Canada has put in its capital structure a class of Preferred Variable 23

24 Voting Shares. The votes attached to the Preferred Variable Voting Shares as a class will be automatically adjusted so that they, together with the votes attached to the Entertainment One Canada common shares that are owned by Canadians (as determined based on enquiries Entertainment One Canada will make of the holders of common shares), will equal a minimum of 51 per cent. of the votes attached to all shares in the capital of Entertainment One Canada, which is sufficient to ensure that control in fact remains with Canadians for the purposes of the Investment Canada Act. The Preferred Variable Voting Shares, which will not be transferable without the consent of the Board, will be held by Entertainment One Canada s Chief Executive Officer Darren Throop, who is a Canadian, and will not be listed on any stock exchange. Accordingly in circumstances where Canadians own less than 51 per cent. of the votes attached to the Entertainment One Canada common shares, the Preferred Variable Voting Shares allow the Chief Executive Officer to exercise a voting influence over the business and affairs of Entertainment One Canada where submitted to a vote of shareholders of Entertainment One Canada. Substantial future sales of Entertainment One Canada common shares could impact on the market price of Entertainment One Canada common shares The Board cannot predict what effect, if any, future sales of Entertainment One Canada common shares, or the availability of such shares for future sale, will have on the market price of Entertainment One Canada common shares. Sales of substantial numbers of Entertainment One Canada common shares in the public market, or the perception or any announcement that such sales could occur, could adversely affect the market price of Entertainment One Canada common shares and may make it more difficult for shareholders to sell their Entertainment One Canada common shares at a time and price which they deem appropriate. There may be volatility in the value of an investment in Entertainment One Canada common shares and the market price for Entertainment One Canada common shares may fluctuate Following Admission, the trading price of the Entertainment One Canada common shares may be subject to wide fluctuations in response to a range of events and factors (including those referred to in this section), such as variations in operating results, changes in financial estimates and recommendations by securities analysts, the share price performance of other companies that shareholders may deem comparable to the Group, the general market perception of entertainment companies, news reports relating to trends in the Group s markets or the wider economy, legislative changes in the Group s sector and other factors outside of the Group s control. Such events and factors may adversely affect the trading price of the Entertainment One Canada common shares, regardless of the performance of the Group. Stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for securities and any such fluctuation may be unrelated to the Group s operating performance or prospects. Scheme Shareholders should be aware that the value of the Entertainment One Canada common shares could go down as well as up and Scheme Shareholders may therefore not recover their original investment, especially as the market in the Entertainment One Canada common shares may have limited liquidity. Entertainment One Canada s ability to pay dividends is not guaranteed As a matter of Canadian law, Entertainment One Canada cannot declare or pay dividends if there are reasonable grounds for believing that Entertainment One Canada is, or would after the payment of dividends be, unable to pay its liabilities as they become due or if the realisable value of Entertainment One Canada s assets is less than the aggregate of its liabilities and stated capital of all its classes of shares. The ability of Entertainment One Canada to pay dividends in respect of Entertainment One Canada common shares will depend on the level of earnings, reserves, any ongoing capital requirements and cash position. The payment of any future dividends by Entertainment One Canada will be at the discretion of the Board after taking into account many factors, including Entertainment One Canada s operating results, financial condition and current and anticipated cash needs. 24

25 Further issues of Entertainment One Canada common shares could impact of the market price of Entertainment One Canada common shares It is possible that Entertainment One Canada may decide to offer additional Entertainment One Canada common shares in the future although Entertainment One Canada has no current plans to do so. An additional offering of common shares by Entertainment One Canada or the public perception that an offering or sale may occur, could have an adverse effect on the market price of Entertainment One Canada common shares. The Directors currently have no plans to issue any Entertainment One Canada common shares (save in relation to satisfy the exercise of any options under the Entertainment One Share Incentive Arrangements, the Marwyn Warrant, the Summit Option and the Exchangeable Shares) during the next 12 months. However, depending on the prevailing circumstance, ultimately the Directors may decide that it is appropriate to issue further Entertainment One Canada common shares. Entertainment One Canada is applying for a standard listing and accordingly Entertainment One Canada will not be required to comply with those protections applicable to a premium listing Entertainment One Canada is seeking a standard listing on the Official List, and as a consequence additional on-going requirements and protections applicable to a premium listing under the Listing Rules will not apply to Entertainment One Canada. In particular, the provisions of Chapters 6 to 13 of the Listing Rules being additional requirements for listing of equity securities (listing principles, sponsors, continuing obligations, significant transactions, related party transactions, dealing in own securities and treasury shares and contents of circulars) will not apply, however Entertainment One Canada voluntarily intends to comply with the requirements of the AIM Rules in relation to substantial transactions, related party transactions, reverse takeovers and fundamental change of business (AIM Rules 12 to 16) and Entertainment One Canada intends that it will continue to conduct its activities as if such requirements continued to apply to it following Admission (in so far as reasonably practicable). It should be noted that the UK Listing Authority will not have the authority to monitor Entertainment One Canada s voluntary compliance with any of the Listing Rules applicable to companies with a premium listing (and will not do so) nor will it impose sanctions in respect of any breach of such requirements by Entertainment One Canada. Risks Relating to Market Conditions Reliance on distribution of Canadian content and government funding The Group s library includes a number of motion picture and television titles that are certified as Canadian content programming or Cancon. The titles produced by the Group s television production operations in Canada are also certified as Cancon. Canadian broadcasters are required by the CRTC, as a condition of their broadcast licences, to devote a certain amount of their programming schedules to the broadcast of Cancon and to spend a certain portion of their revenues on Cancon. There can be no assurance that the CRTC s policies applicable to Canadian broadcasters with respect to Cancon will not be eliminated or scaled back, thereby reducing the advantages that they currently provide to Entertainment One Canada as a supplier of such programs. In addition, substantially all of the Group s programs are contractually required by broadcasters to be certified as Canadian under the CRTC s policies. Although Entertainment One Canada has taken measures to ensure that it continues to be Canadian under the Investment Canada Act, there can be no assurance that the Group s programming will continue to qualify as Cancon. In the event a production does not qualify for certification as Canadian, Entertainment One Canada would be in default under any government incentive and broadcast licenses for that production, Canadian broadcasters would not be able to use the programs to meet their Canadian programming obligations, and the broadcaster could refuse acceptance of Entertainment One Canada s productions. In addition to license fees from domestic and foreign broadcasters and financial contributions from co producers, the Group finances a significant portion of its production budgets from certain governmental incentive programs and tax credits in Canada. There can be no assurance that such incentive programs or tax credits will not be reduced, amended or eliminated or that Entertainment One Canada or any production will 25

26 qualify for them. Any such change could have a material adverse impact on Entertainment One Canada s business, results of operations, prospects or financial condition. Loss of the Group s Canadian status Entertainment One Canada and its subsidiaries are able to benefit from a number of licenses, incentive programs and Canadian government tax credits as a result of Entertainment One Canada being Canadian as defined under the Investment Canada Act. Although Entertainment One Canada has taken measures through the Preferred Variable Voting Shares to ensure that its Canadian status is maintained, there can be no assurance that the Minister of Canadian Heritage may nevertheless determine that Entertainment One Canada is not a Canadian-controlled entity under the Investment Canada Act. If Entertainment One Canada lost its Canadian status, this would have a material adverse affect on the Group s business, results of operations, prospects or financial condition. Risks related to the nature of the entertainment industry The entertainment industry involves a substantial degree of risk. Audience acceptance of entertainment programming is a factor not only of the response to the production s artistic components, but also to the reviews of critics, promotions, the quality and acceptance of other competing forms of entertainment programming released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions, public tastes generally and other intangible factors, all of which could change rapidly and most of which are beyond the control of the Group. A lack of audience acceptance for the entertainment programming produced or distributed by the Group could have a material adverse effect on the Group s business, results of operations, prospects and financial condition. Entertainment industry trends The entertainment industry is constantly undergoing change with respect to the formats through which movies, television programming and recorded music are ultimately delivered to the consumer. Recently, the effects of such changes have been most obvious in the retail distribution of recorded music with the advent of internet downloads. The Board believes that the changes in consumer preferences will continue to be felt across the Group s businesses. Although the Group does have all-rights ownership, there can be no assurance that the Group will be able to assess these changes in the industry and make effective changes to its business to respond to or capitalise upon such changes, and any such failure could result in a material adverse effect on the Group s business, results of operations, prospects or financial condition. The entertainment industry continues to undergo significant changes driven by technological developments. The Group cannot accurately predict the overall effect that technological growth or the availability of alternative forms of entertainment may have on the potential revenue from, and profitability of, the entertainment content produced or distributed by the Group. In particular, the conversion of content into digital formats may make it easier for consumers to create, transmit and share high quality unauthorised copies of motion pictures, television programs or recorded music. As a result, consumers may be able to download and distribute unauthorised or pirated copies of copyrighted motion pictures, television programs or recorded music over the internet. As long as pirated content is available on the internet, some consumers may choose to download pirated versions of such content rather than attend theatres to watch motion pictures or rent or purchase motion pictures, television programs or recorded music. Some consumers may also purchase pirated DVDs of motion pictures or television series rather than purchase them from authorised vendors. Significant growth in these consumer practices could have an adverse impact on the Group s business and results of operations. Dependence on relationships with content producers and suppliers The Group obtains distribution rights for motion pictures from third party content producers. The Board believes that the Group s financial performance is, and will continue to be, affected by its continued relationship with these content producers and the ability of these content producers to continue to produce motion pictures that receive significant audience acceptance. A certain number of these content suppliers are affiliates of major studios that have their own distribution capability in the markets in which the Group 26

27 operates. There can be no assurance that these or other content producers would not determine, or be required by their respective parent companies, to use this intracompany distribution capability rather than contracting with the Group for distribution rights. The loss of one or more of these relationships with content producers could have an adverse effect on the business of the Group. The Distribution Division also relies on relationships with a number of suppliers in relation to the supply of home entertainment products. These suppliers are often not the same as those content producers from which the Group obtains distribution rights. The Distribution Division has not entered into written, long-term contracts with all of its suppliers and relationships with such suppliers are largely based on historical verbal relationships. Although it has long standing relationships with these suppliers, there can be no assurance that these suppliers will not discontinue or change their relations with the Group. The failure of the Group to maintain these existing relationships could have an adverse effect on its operations. Commitments under supplier agreements may require significant capital outlays The Group s agreements with its content suppliers, in line with industry norms, generally require the Group to pay the content supplier/producer a minimum guarantee for the right to distribute each motion picture. The amount of this advance can require a significant financial commitment by the Group. To the extent that the Group is unable, or unwilling for any reason, to finance the required payments under its contracts with content suppliers/producers, its ability to retain the related distribution rights for motion pictures, or to secure such rights in the future, could be adversely affected. Dependence on customer relationships Historically, the Group has not entered into written agreements with certain of its customers. As a result, these customers may, without notice or penalty, terminate their relationship with the Group at any time. In addition, if these customers decide to continue their relationship with the Group, there can be no guarantees that they will purchase the same amount of products as in the past or that any purchase will be on similar terms. The failure of the Group to maintain its existing relationships could have a material adverse effect on the Group s business, results of operations, prospects or financial condition. Fluctuation of financial results The results of operations for any period are dependent on the number, timing and commercial success of motion pictures, television programs and music albums delivered or released during that period, none of which can be predicted with certainty or are entirely within the control of the Group. Consequently, the Group s results of operations may fluctuate materially from period to period and the results of any one period are not necessarily indicative of results for future periods. Competition The Group faces competition from other companies which supply similar products through wholesale/fulfilment and/or retail distribution channels. Some of its competitors have substantially greater marketing and financial resources than the Group which means they may be able to compete aggressively on pricing. Such competition may result in the Group losing market share which would have a material adverse effect on the Group s business, results of operations prospects or financial condition. Dependence on key personnel The Group is dependent on members of its senior management team and skilled personnel at all levels and believes that its future financial success and ability to meet its financial objectives will depend, in part, on its ability to retain highly skilled management and personnel. The Group is also dependent on the implementation of adequate succession planning procedures in respect of key roles, to ensure continuity. Further, the departure from the Group of any of the Executive Directors or certain senior employees could, in the short-term, have an adverse effect on the Group s business, results of operations prospects or financial condition. The Board cannot give any assurances that they, or any of the members of the senior management, will remain with the Group, although the Board believes that the Group offers competitive remuneration packages which are attractive to its current and future personnel. If the Group does not succeed in retaining 27

28 skilled personnel, it may not be able to grow its business as anticipated, which could have an adverse effect on the Group s business, results of operations prospects or financial condition. Protection of intellectual property Distribution rights to filmed entertainment and recorded music are granted legal protection under the copyright laws of Canada, the United Kingdom, the United States, Holland and most other foreign countries, which impose substantial civil and criminal sanctions for unauthorised duplication and exhibition of motion pictures. From time to time, various third parties contest or infringe upon the Group s intellectual property rights. There can be no assurance that the Group s actions to establish and protect copyright, trade-marks and other proprietary rights will be adequate to prevent imitation by others of motion pictures, television programming or music albums produced and/or distributed by the Group or to prevent third parties from seeking to block the Group s distribution and exploitation of contract rights as a violation of their trade-marks and proprietary rights. Moreover, there can be no assurance that others will not assert rights in, or ownership of, the Group s trade-marks and other proprietary rights, or that the Group will be able to successfully resolve these conflicts. If a claim is made against the Group, any litigation to defend the claim could be costly and divert the time and resources of management, regardless of the merits of the claim. The results of the business may be adversely affected if the Group were to lose litigation relating to intellectual property, either through the requirement to pay monetary damages or the requirement to cease the sale of certain products or the exploitation of certain rights. Investment strategy There can be no certainty that the Group will be able to implement successfully the strategy set out in this document. The ability of the Group to implement its strategy in a competitive market requires effective planning and management control systems. The Group s future growth will depend on its ability to expand and improve operational, financial and management information and control systems in line with its growth. Failure to do so could have an adverse effect on the Group s business, results of operations and financial condition. Impacts of fluctuations in exchange rates Approximately 57 per cent. of Entertainment One s revenues are generated in Canadian dollars, 17 per cent. in US dollars, 19 per cent. in UK pounds sterling and 7 per cent. in Euro. Therefore, fluctuations in exchange rates between the Canadian dollar, the US dollar, the UK pound sterling and the Euro may have a material impact on the Group s business, results of operations and financial condition. International distribution activities The Group has television and motion picture distribution operations in North America and Europe and, as a result, its business is subject to certain risks inherent in international business, many of which are beyond its control. These risks include: laws and policies affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws; changes in local regulatory requirements, including restrictions on content; differing cultural tastes and attitudes; differing degrees of protection for intellectual property; and the instability of foreign economies and governments. Events or developments related to these and other risks associated with international trade could adversely affect the Group s business. 28

29 Strikes or Other Union Job Actions A strike by, or a lockout of, one or more of the unions that provide personnel essential to the production by the Group s content partners of motion pictures television programs could delay or halt the delivery of completed motion pictures or television programmes to the Group. Such a halt or delay, depending on the length of time and the number of productions affected, could cause a delay or interruption in the timing of the release of new motion pictures and the number of pictures available for release, which could have a material adverse effect on the Group s business, results of operations, prospects or financial condition. The impact of any changes in Interest Rates The Group seeks to mitigate the impact of any changes in interest rates through derivative financial instruments. Any movements in rates may affect the applicable interest rate on any unhedged portion of the Group s senior debt and an increase in rates could reduce the headroom available under the Group s financial banking covenants. Dependence on Management Information Systems The Group s ability to conduct its business, including maintaining financial controls, is based in part on the efficient and uninterrupted operation of its computer systems, including its management information systems and access to the internet. The Group has in-house information technology resources and the Board believes that it has properly structured information technology solutions. However, if any of the Group s financial, personnel, , internet access or other information technology systems or other systems or processes were to be disabled or did not operate properly, for any significant period of time, by reason of events beyond the Group s control (for example, computer viruses, problems with the internet or sabotage), the Group could suffer disruption to its business, liability to its stakeholders, loss of data, regulatory intervention or reputational damage. Future financing Although the Group has no current plans to do so, the Group may deliver growth, through further material acquisitions and/or investments, for which additional sources of finance may be required. There can be no assurance that should the Group seek to deliver such growth it will be able to raise those funds, whether on acceptable terms or at all. If further financing is obtained by issuing equity securities or convertible debt securities, the existing shareholdings may be diluted and the new securities may carry rights, privileges and preferences superior to the Entertainment One Canada common shares. If the Group were to seek to deliver such growth through debt financing, the Group may incur significant borrowing costs. 29

30 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements under Summary, Risk Factors, Selected Financial Information and elsewhere in this document include forward-looking statements which reflect the Group s or, as appropriate, the Directors current views with respect to financial performance, business strategy, plans and objectives of management for future operations (including development plans relating to the Group s products and services). These statements include forward-looking statements both with respect to the Group and the sectors and industries in which the Group operates. Statements which include the words expects, intends, plans, believes, projects, anticipates, will, targets, aims, may, would, could, continue and similar statements of a future or forward-looking nature identify forward looking statements. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the Group s actual results to differ materially from those indicated in these statements. These factors include but are not limited to those described in the section headed Risk Factors, which should be read in conjunction with the other cautionary statements that are included in this document. Any forward-looking statements in this document reflect the Group s current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Group s business, results of operations, financial conditions, growth strategy and liquidity. These forward-looking statements speak only as of the date of this document. Entertainment One Cayman undertakes no obligation publicly to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. 30

31 THE SCHEME OF ARRANGEMENT PROPOSAL We are seeking your approval of a scheme of arrangement under Cayman Islands law, substantially in the form attached as Annex A to this Circular. When the Scheme of Arrangement becomes effective, it will result in a newly formed Canadian company serving as the publicly traded parent of the Entertainment One group. The Scheme of Arrangement will effectively change the place of incorporation of the publicly traded parent company of the Group from the Cayman Islands to Canada and will result in you holding common shares of a Canadian company instead of ordinary shares of a Cayman Islands company. The Scheme of Arrangement process involves several steps: On 14 April 2010, Entertainment One Canada was incorporated. On 31 May 2010 we applied to the Cayman Court for an order, among other things, directing Entertainment One Cayman to call a meeting of Scheme Shareholders to approve the Scheme of Arrangement. The Cayman Court duly ordered us to seek your approval of the Scheme of Arrangement. We will hold the Court Meeting to approve the Scheme of Arrangement on 28 June If we obtain the necessary shareholder approval, the Cayman Court will hold the Sanction Hearing, which is expected to be held on 9 July 2010 to approve the Scheme of Arrangement. Assuming we receive the necessary approvals from the Scheme Shareholders and the Cayman Court and the conditions to consummation of the Scheme of Arrangement are satisfied (and we do not abandon the Scheme of Arrangement), we will file the court order approving the Scheme of Arrangement with the Cayman Islands Registrar of Companies. The Scheme of Arrangement is scheduled to become effective at 5.00 p.m. BST on 14 July 2010 or such other date and time as the Board may determine (the Transaction Time ). However, Our Board cannot delay the Transaction Time to a date later than 31 December 2010 (unless extended with the approval of the Cayman Court) because the Scheme of Arrangement will lapse by its terms if the Transaction Time has not occurred on or prior to that date. At and around the Transaction Time, the following steps will occur: the Entertainment One Canada common shares, issued and outstanding prior to the Transaction Time, (over which shares Entertainment One Cayman currently holds an irrevocable power of attorney), will be repurchased by Entertainment One Canada for cancellation immediately prior to the Transaction Time; at the Transaction Time all issued and outstanding Entertainment One Cayman ordinary shares will be transferred to Entertainment One Canada; in consideration therefore, before the opening of trading of the London Stock Exchange on the business day following the Transaction Time, Entertainment One Canada will issue common shares (on a one-for-one basis) to the holders of the Entertainment One Cayman ordinary shares that will be transferred to Entertainment One Canada; immediately after the Transaction Time, the Class S Shares in Entertainment One Cayman will be redeemed at par value in accordance with their terms; Entertainment One Cayman will then migrate to Canada by way of continuation and will be amalgamated with Entertainment One Canada; and the common shares of Entertainment One Canada will be admitted to trading on the Official List of the London Stock Exchange (see Admission to the Official List below) prior to the opening of the London Stock Exchange on the business day following the Transaction Time. 31

32 As a result of the Scheme of Arrangement, the ordinary shareholders of Entertainment One Cayman will instead become common shareholders of Entertainment One Canada and their common shares will be traded on the Official List. Entertainment One Cayman will become a subsidiary of Entertainment One Canada and will then migrate to Canada by way of continuation and will be amalgamated with Entertainment One Canada. The members of the Board of Directors of Entertainment One Cayman then in office will be members of the Board of Directors of Entertainment One Canada at or immediately after the Transaction Time. In connection with the completion of the Scheme of Arrangement, Entertainment One Canada will assume, on a one-for-one basis, Entertainment One Cayman s existing obligations in connection with awards granted under Entertainment One Cayman s Share Incentive Arrangements. The Share Incentive Arrangements will be modified to reflect the Scheme of Arrangement. Options to acquire Entertainment One Cayman ordinary shares will be exchanged for options to acquire Entertainment One Canada common shares. Any stock options, stock appreciation rights, restricted stock units or performance shares issued by Entertainment One Cayman that are convertible, exchangeable or exercisable into ordinary shares of Entertainment One Cayman will become convertible, exchangeable or exercisable, as the case may be, into common shares of Entertainment One Canada. As a result of the Scheme of Arrangement, , a subsidiary of Entertainment One Cayman, will be entitled to initiate the exchange of all of its issued and outstanding Exchangeable Shares. These Exchangeable Shares are currently exchangeable in return for ordinary shares in Entertainment One Cayman. Immediately after the Transaction Time, Entertainment One Canada will execute agreements supplementary to the Support Agreement and the Voting and Exchange Agreement to evidence the assumption by Entertainment One Canada of liability for all moneys payable and property deliverable and to observe and perform all of the covenants and obligations of Entertainment One Cayman under such agreements, including the issuance of Entertainment One Canada common shares to holders of the Exchangeable Shares in exchange for the Exchangeable Shares. In accordance with the Articles of Association of Entertainment One Cayman and contemporaneously with the exchange of the Exchangeable Shares, Entertainment One Cayman will redeem all of the Class S Shares that are issued and outstanding in exchange for redemption proceeds of CAD0.01 per Class S Share. Following the Scheme of Arrangement, you will continue to own an interest in a parent company that will continue to conduct, through its subsidiaries, the same businesses as conducted by Entertainment One Cayman before the Scheme of Arrangement. The number of common shares you will own in Entertainment One Canada immediately after the Scheme of Arrangement will be the same as the number of ordinary shares you owned in Entertainment One Cayman immediately prior to the Scheme of Arrangement. After the Scheme of Arrangement you will hold the same number of Entertainment One Canada common shares as your Entertainment One Cayman ordinary shares. The terms of the Scheme of Arrangement itself do not impact on your economic interest in the Group. However, since 24 September 2008, the holders of the Exchangeable Shares in the capital of , a subsidiary of Entertainment One Cayman, and since 1 January 2010, the holders of the Maximum Deferred Exchangeable Shares in the capital of have been entitled to exchange the Exchangeable Shares for Entertainment One Cayman ordinary shares. This entitlement arises out of the share terms for the Exchangeable Shares and certain agreements in place since the acquisition of the Acquired Companies in September 2008, which gave the holders of the Exchangeable Shares an economic interest in the Group alongside the economic interests of the Entertainment One Cayman ordinary shareholders. See the section entitled Exchangeable Shares and Class S Shares below for more information. The completion of the Scheme of Arrangement will change the governing corporate law that applies to shareholders of our parent company from Cayman Islands law to Canadian law. The legal system governing corporations organized under Canadian law differs from the legal system governing corporations organized under Cayman Islands law. As a result, we are unable to adopt governing documents for Entertainment One Canada that are identical to the governing documents for Entertainment One Cayman. We have attempted to preserve in the Articles of Incorporation and By-Laws of Entertainment One Canada the same allocation of material rights and powers between the shareholders and our board of directors that exists under 32

33 Entertainment One Cayman s memorandum and articles of association. Nevertheless, Entertainment One Canada s proposed Articles of Incorporation and By-Laws differ from Entertainment One Cayman s memorandum and articles of association. We summarise the material differences between the governing documents for Entertainment One Cayman and Entertainment One Canada, and the changes in your rights as a shareholder resulting from the Scheme of Arrangement, under the section entitled Comparison of Rights of Shareholders. Background and Reasons for the Scheme of Arrangement We have been incorporated in the Cayman Islands since 11 January While our time in the Cayman Islands has served Entertainment One Cayman and its shareholders well, the next stage in our strategic development has caused the Board of Directors to reconsider the domicile of our place of incorporation. There are a number of compelling reasons why the Board of Directors has made the decision to seek to re-domicile our place of incorporation to Canada: Collapsing the Exchangeable Share Structure In connection with the acquisition of Barna-Alper Productions, Blueprint Entertainment Corporation, Oasis International and Maximum (collectively, the Acquired Companies ) in September 2008, a Canadian subsidiary of Entertainment One Cayman named issued Exchangeable Shares to the vendors of the Acquired Companies as part of the consideration price. Entertainment One Cayman also issued non participating voting Class S Shares to the vendors of the Acquired Companies to give the vendors voting rights in Entertainment One Cayman. This complex exchangeable share structure was implemented to ensure the Canadian vendors would obtain a tax free rollover in connection with the sale of their shares. Entertainment One Cayman therefore now has a very complex capital structure that is both expensive to maintain and difficult to explain to potential investors and lenders. By re-domiciling to Canada, Entertainment One Cayman can greatly simplify is capital structure by redeeming the Class S shares and causing to initiate the exchange of the Exchangeable Shares for common shares in Entertainment One Canada. This will result in Entertainment One Canada having a more streamlined and simplified share capital. Furthermore, as the holders of the Exchangeable Shares will receive shares in a Canadian company, the vendors will maintain their tax free rollover. More Cost Effective Regulatory Compliance While we have extensive international operations, a significant proportion of our business is conducted in Canada, where we are subject to a number of regulatory requirements applicable to businesses operating within the Canadian film and television distribution industry. In order to facilitate compliance with those requirements Entertainment One Cayman has constructed a complicated holding structure for its Canadian assets which includes two Canadian holding companies that have separate independent Canadian boards. Maintaining this structure and operating through the independent boards adds significant costs and complexity to our Canadian operations. Re-domiciling to Canada and including the Preferred Variable Voting Shares in our capital structure will allow us to simplify these governance arrangements, retire the two independent boards, streamline our holding structure and govern Entertainment One Canada, as the new holding company of the Group, entirely through our main board. The savings in both management time and financial costs will be very material to us. Use of Our Shares in Making Canadian Acquisitions We believe that there are a number of compelling acquisition opportunities for us in Canada. However, we are inhibited in our ability to make these acquisitions by paying with our shares because the Canadian target shareholders would not be entitled to receive our Entertainment One Cayman shares as consideration on a tax free rollover basis. This leaves us at a competitive disadvantage with other potential acquirers for Canadian assets. As noted above by re-domiciling to Canada we will be in a position to offer Canadian vendors publically traded Canadian shares, in Entertainment One Canada, which they can receive on a tax free rollover basis. This will level the playing field in the competition to acquire Canadian assets and give us significantly more scope and flexibility to use our shares as currency for Canadian acquisitions. 33

34 Investor Awareness and Access to Capital Although our ordinary shares have performed moderately well on AIM we strongly believe we would benefit greatly from a broader more diverse investor base. Given our profile and assets in Canada we are hopeful that by re-domiciling to Canada and having the ability to issue stock of a public Canadian holding company that North American investors and in particular Canadian pension funds and other institutional investors will have greater interest in investing in us and our shareholder base and profile across North America will grow. Simplify our Story Our experience has suggested that our complex exchangeable share structure and complicated Canadian holding and governance arrangements make our story unnecessarily convoluted for investors, lenders, regulators and listing authorities. By re-domiciling to Canada we will be able to greatly streamline our capital structure, holding and governance arrangements and our story will be a much simpler one to tell to the market. We believe this will deliver significance benefits to us. After having considered these and other factors the Board of Directors determined it is in the best interests of the Group to re-domicile the place of incorporation of our holding company to Canada. Amendment, Termination or Delay The Scheme of Arrangement may be amended, modified or supplemented at any time before or after its adoption by the Scheme Shareholders at the Court Meeting. However, after adoption, no amendment, modification or supplement may be made or effected that legally requires further approval by Scheme Shareholders without obtaining such approval. At the Sanction Hearing, the Cayman Court may impose such conditions as it deems appropriate in relation to the Scheme of Arrangement, but may not impose any material changes without the joint consent of Entertainment One Cayman and Entertainment One Canada. Entertainment One Cayman may consent to any modification of the Scheme of Arrangement on behalf of the shareholders which the Cayman Court may think fit to approve or impose. The board of directors of Entertainment One Cayman may terminate the Scheme of Arrangement and abandon the Scheme of Arrangement or delay the Scheme of Arrangement, at any time prior to the Transaction Time, without obtaining the approval of Scheme Shareholders, even though the Scheme of Arrangement may have been approved by such shareholders and approved by the Cayman Court and all other conditions to the Scheme of Arrangement may have been satisfied, if the board of directors determines that such course is in our best interests and the best interests of our shareholders. Unless the Scheme of Arrangement has become effective and the Transaction Time has occurred on or before 31 December 2010, or such later date, if any, as Entertainment One Cayman and Entertainment One Canada may agree and the Cayman Court may allow, the Scheme of Arrangement will lapse by its terms and not come into effect and therefore, the Scheme of Arrangement will not be effected. Conditions to Consummation of the Scheme of Arrangement The Scheme of Arrangement will not be completed unless, among other things, the following conditions are satisfied or, if allowed by law, waived: the Scheme of Arrangement is approved by the requisite vote of the Scheme Shareholders of Entertainment One Cayman at the Court Meeting; the requisite court order approving the Scheme of Arrangement is obtained from the Cayman Court, and is duly lodged with the Cayman Islands Registrar of Companies; Entertainment One Canada does not receive any notification from the London Stock Exchange that the Admission to the Official List will not be completed; Entertainment One Cayman has received the required consents pursuant to its senior secured committed credit facilities; 34

35 there is no threatened, pending or effective decree, order, injunction or other legal restraint prohibiting the consummation of the Scheme of Arrangement; all consents and governmental authorisations that are necessary, desirable or appropriate in connection with the Scheme of Arrangement and related Scheme of Arrangement are obtained on terms acceptable to Entertainment One Cayman and are in full force and effect; Court Approval of the Scheme of Arrangement Pursuant to Section 86 of the Companies Law (2009 Revision) of the Cayman Islands (the Cayman Islands Companies Law ), the Scheme of Arrangement must be approved by the Cayman Court. This requires Entertainment One Cayman to file a petition (the Petition ) for the Scheme of Arrangement with the Cayman Court. Prior to the mailing of this Circular, Entertainment One Cayman obtained directions from the Cayman Court providing for the convening of a meeting of the Scheme Shareholders and other procedural matters regarding the meeting and the further conduct of the Petition, including a date upon which the Cayman Court will hear the Petition. A copy of the Cayman Court s Interlocutory Order is attached as Annex E to this Circular. In making the Interlocutory Order, the Cayman Court expresses no view on the commercial merits of the Scheme of Arrangement proposal, or as to the validity or otherwise of the Board s reasons given for recommending the Scheme of Arrangement. The Interlocutory Order is not and should not be interpreted as a recommendation by the Cayman Court to vote either for or against the Scheme of Arrangement proposal. The Cayman Court has not independently verified and makes no statement as to the correctness of the matters or opinions contained in this Circular. Subject to the Scheme Shareholders approving the Scheme of Arrangement with the vote required by the Cayman Islands Companies Law, a Sanction Hearing will be required to hear the Petition and approve the Scheme of Arrangement. At the Sanction Hearing, the Cayman Court may impose such conditions as it deems appropriate in relation to the Scheme of Arrangement, but may not impose any material changes without the joint consent of Entertainment One Cayman and Entertainment One Canada. Entertainment One Cayman may, consent to any modification of the Scheme of Arrangement on behalf of the Scheme Shareholders which the Cayman Court may think fit to approve or impose. In determining whether to exercise its discretion and approve the Scheme of Arrangement, the Cayman Court will determine, among other things, whether the Scheme of Arrangement is fair to Entertainment One Cayman s shareholders. We expect the Sanction Hearing to be held at a.m. on 9 July 2010 at the Cayman Court in George Town, Grand Cayman, Cayman Islands. If you are a Scheme Shareholder who wishes to appear in person or by counsel at the Sanction Hearing and present evidence or arguments in support of or in opposition to the Scheme of Arrangement, you may do so. In addition, the Cayman Court has wide discretion to hear from interested parties. Entertainment One Cayman will not object to the participation in the Sanction Hearing by any beneficial holder of Entertainment One Cayman ordinary shares that holds shares through the Depository or a broker or nominee. In accordance with its terms, the Scheme of Arrangement will become effective on its terms as soon as a copy of the Order of the Cayman Court approving the Scheme of Arrangement has been delivered to the Registrar of Companies of the Cayman Islands for registration as required by Section 86 of the Cayman Islands Companies Law. Pursuant to the terms of the Scheme, the Scheme of Arrangement does not take effect until that and a number of other conditions precedent are satisfied or waived and the Transaction Time occurs. It is anticipated that the Transaction Time will be 5.00 p.m. BST on 14 July 2010, but may be such earlier or later date as Entertainment One Cayman nominates. Please see above under the caption Conditions to Consummation of the Scheme of Arrangement for more information on the conditions to the consummation of the Scheme of Arrangement. At the Court Meeting, the Scheme Shareholders will be asked to approve the Scheme of Arrangement, substantially in the form attached as Annex A to this Circular. If the shareholders approve the Scheme of Arrangement, then Entertainment One Cayman will apply for sanction of the Scheme of Arrangement at the 35

36 Sanction Hearing. We encourage you to read the Scheme of Arrangement in its entirety for a complete description of its terms and conditions. Once the Scheme of Arrangement becomes effective, the Cayman Court will have exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute which arises out of or is connected with the terms of the Scheme of Arrangement or its implementation or out of any action taken or omitted to be taken under the Scheme of Arrangement or in connection with the administration of the Scheme of Arrangement. After the Transaction Time, no shareholder may commence a proceeding against Entertainment One Canada or Entertainment One Cayman before the Cayman Court in respect of or arising from the Scheme of Arrangement except to enforce its rights under the Scheme of Arrangement where a party has failed to perform its obligations under the Scheme of Arrangement. A Scheme Shareholder who wishes to enforce any rights under the Scheme of Arrangement after such time must notify Entertainment One Cayman in writing of its intention at least five clear business days prior to commencing such proceeding. When under any provision of the Scheme of Arrangement a matter is to be determined by Entertainment One Cayman, then Entertainment One Cayman will have discretion to determine those matters under the Scheme of Arrangement in a manner that it considers fair and reasonable, and its decisions will be binding on all concerned. Effective Date and Transaction Time If the Scheme of Arrangement is approved by the requisite shareholder majorities and approved by the Cayman Court and the other conditions to the consummation of the Scheme of Arrangement are satisfied (and we do not abandon the Scheme of Arrangement), the Scheme of Arrangement will become effective on its terms upon our filing of the court order approving the Scheme of Arrangement with the Registrar of Companies in the Cayman Islands. However, provided all the conditions precedent set out in the Scheme of Arrangement are satisfied or waived, the Scheme of Arrangement itself will not take effect until the Transaction Time. The Transaction Time is anticipated to be 5.00 p.m. BST on 14 July 2010, but may be at such earlier or later date as Entertainment One Cayman determines. Please see The Scheme of Arrangement Proposal-Conditions to Consummation of the Scheme of Arrangement. Various steps in order to implement the Scheme of Arrangement will occur at or shortly following the Transaction Time. Prior to the opening of trading of the London Stock Exchange on the business day following the Transaction Time, Entertainment One Canada will issue common shares (on a one-for-one basis) to the holders of the Entertainment One Cayman ordinary shares that will be transferred to Entertainment One Canada. Prior to the opening of trading of the London Stock Exchange on the business day following the Transaction Time the common shares of Entertainment One Canada will be admitted to the Official List of the London Stock Exchange. The expected timetable for the implementation of the Scheme of Arrangement is set forth in Annex B to this Circular. In the event the conditions to the Scheme of Arrangement are not satisfied, the Scheme of Arrangement may be abandoned or delayed, even after approval by the Entertainment One Cayman ordinary shareholders, the approval of the Cayman Court and the lodgement of the court order with the Cayman Islands Registrar of Companies. In addition, the Scheme of Arrangement may be abandoned or delayed by our board of directors at any time prior to the Transaction Time, without obtaining the approval of the Scheme Shareholders, even though the Scheme of Arrangement may have been approved by the Scheme Shareholders and approved by the Cayman Court and all other conditions to the Scheme of Arrangement may have been satisfied. Please see The Scheme of Arrangement Proposal Amendment, Termination or Delay. Management of Entertainment One Canada If the Scheme of Arrangement is consummated, the executives and directors of Entertainment One Cayman immediately prior to the Transaction Time shall be the executives and directors of Entertainment One Canada. 36

37 No Appraisal Rights Under Cayman Islands law, none of the ordinary shareholders of Entertainment One Cayman has any dissenters rights or right to an appraisal of the value of their shares or receive payment for them in connection with the Scheme of Arrangement. Exchange of Shares At the Transaction Time, your Entertainment One Cayman ordinary shares will be exchanged for Entertainment One Canada common shares without any action on your part. You will not be required to exchange any physical share certificates. If you currently hold Entertainment One Cayman shares in certificated form, following the Scheme of Arrangement, your Entertainment One Cayman share certificates will cease to have effect as documents or evidence of title. New share certificates in respect of the Entertainment One Canada common shares will be mailed to shareholders within 14 days of the Admission to the Official List. If you hold your shares through the Depository Interest facility, at or shortly after the Transaction Time, the records of the Depository will be updated without any action on your part to reflect your new interest in the Entertainment One Canada common shares. After the Transaction Time, you will continue to hold your Entertainment One Canada common shares by way of a Depository Interest. Share Incentive Arrangements If the Scheme of Arrangement is consummated, Entertainment One Canada will assume the existing obligations of Entertainment One Cayman in connection with the following share incentive arrangements: (a) (b) (c) (d) Management Participation Scheme; Executive Share Plan; Employee Benefit Trust; and Deferred Share Unit Plan. (collectively the Share Incentive Arrangements ). The Share Incentive Arrangements will be amended, and new plans adopted, as necessary to comply with Canadian law and give effect to the Scheme of Arrangement, including to provide (1) that Entertainment One Canada common shares will be issued, held, available or used to measure or satisfy benefits as appropriate under the Share Incentive Arrangements, in substitution for Entertainment One Cayman ordinary shares; and (2) for the appropriate substitution of Entertainment One Canada for Entertainment One Cayman in those plans. Options to acquire Entertainment One Cayman ordinary shares will be exchanged for options to acquire Entertainment One Canada common shares and other Share Incentive Arrangements will be modified to reflect the Scheme of Arrangement. Beneficiaries pursuant to the Share Incentive Arrangements may be subject to tax as a result of the conversion of the underlying Entertainment One Cayman ordinary shares to Entertainment One Canada common shares as of the Transaction Time, depending on the country where the holders are citizens or tax residents or the country where they resided during the life of such equity awards. Tax withholding and/or reporting may be required by Entertainment One Canada or one of its affiliates and/or the holder of the applicable equity award, and certain employer social insurance contributions or other taxes may be due as a result of the conversion of the equity awards. Depending on the country where the holders are citizens or residents or the country where they resided during the life of the Entertainment One Cayman awards, the conversion of equity awards may trigger certain regulatory filings or notices to employees concerning the tax or regulatory consequences of the Scheme of Arrangement. After the Transaction Time, options and awards granted under the Share Incentive Arrangements will be outstanding over a total of 21,517,425 Entertainment One Canada common shares. This includes a maximum of 10,723,031 common shares relating to the Management Participation Scheme. Issuance of common shares 37

38 under the Management Participation Scheme is conditional, amongst other things, on the performance of the Entertainment One Canada share price exceeding a compound annual growth rate of at least 12.5 per cent. For the maximum number of common shares to be issued under the Management Participation Scheme, Entertainment One Canada s share price would need to perform materially above the 12.5 per cent. hurdle rate and at significant multiples to the current prevailing price. Exchangeable Shares and Class S Shares In connection with the acquisition of the Acquired Companies in September 2008, a Canadian subsidiary of Entertainment One Cayman named issued Exchangeable Shares to the vendors of the Acquired Companies as part of the consideration price. Entertainment One Cayman also issued Class S Shares to the vendors of the Acquired Companies to give the vendors voting rights in Entertainment One Cayman. Immediately after the Transaction Time, Entertainment One Canada will execute agreements supplementary to the Support Agreement and the Voting and Exchange Agreement to evidence the assumption by Entertainment One Canada of liability for all moneys payable and property deliverable and to observe and perform all of the covenants and obligations of Entertainment One Cayman under such agreements, including the issuance of Entertainment One Canada common shares to holders of the Exchangeable Shares in exchange for the Exchangeable Shares. Pursuant to the terms of the Exchangeable Shares, will initiate the exchange of all of its issued and outstanding Exchangeable Shares and the holders of the Exchangeable Shares will receive 15,620,395 Entertainment One Canada common shares. The holders of the Exchangeable Shares will then hold Entertainment One Canada common shares instead of the Exchangeable Shares. The issuance of these Entertainment One Canada common shares (a) reflects the existing economic interest granted to the holders of the Exchangeable Shares pursuant to the Acquired Companies Agreements and (b) will satisfy Entertainment One Cayman s existing obligations pursuant to the Acquired Companies Agreements. In accordance with the Articles of Association of Entertainment One Cayman and contemporaneously with the exchange of the Exchangeable Shares, Entertainment One Cayman will redeem all of the Class S Shares that are issued and outstanding in exchange for redemption proceeds of CAD0.01 per Class S Share. As the Class S Shares are being redeemed in accordance with their terms immediately after the Transaction Time, the Class S shareholders are not affected by the Scheme of Arrangement and are not being asked to vote at the Court Meetings. Marwyn Warrant On 29 March 2007, Entertainment One Cayman issued a warrant to Marwyn Value Investors to subscribe for ordinary shares in Entertainment One Cayman (the Marwyn Warrant ). In connection with the Scheme of Arrangement, Marwyn Value Investors and Entertainment One Cayman have consented to and agreed that, the Scheme of Arrangement shall not constitute an offer for purposes of the 29 March 2007 warrant instrument, and Entertainment One Canada will amend and restate the warrant instrument to give effect to the consequences of the amalgamation of Entertainment One Cayman into Entertainment One Canada. Pursuant to the Marwyn Warrants, after the Transaction Time, Marwyn Value Investors, (which will on completion of the Scheme of Arrangement and Admission beneficially own 69,141,393 of the Entertainment One Canada common shares), will have warrants to subscribe for 4,000,000 Entertainment One Canada common shares for 1.00 per share. Marwyn Value Investors may exercise its right in respect of 2,000,000 Entertainment One Canada common shares once the share price has reached at least 1.25 and in respect of the remaining 2,000,000 Entertainment One Canada common shares once the share price reaches at least The Marwyn Warrants expire 29 March So long as any subscription rights remain exercisable, Entertainment One Canada shall, among other things, not modify the rights attaching to the existing Entertainment One Canada common shares and keep available for issue sufficient authorised but unissued shares to satisfy in full at all times all subscription rights remaining exercisable. If at any time an offer is made to acquire the whole or part of the share capital of Entertainment One Canada under which the consideration consists solely of shares of the offeror, and the offeror makes available to 38

39 Marwyn Value Investors an offer of warrants to subscribe for share of the offeror in exchange for the Marwyn Value Investors warrants (the Warrant Offer ), Entertainment One Canada shall give notice to Marwyn Value Investors of the offer and Marwyn shall be entitled, at any time within 30 days after receipt of the notice, to exercise its subscription rights on the basis application on the date immediately preceding the date of such offer as if such were a subscription date. Subscription rights which are not exercised within that 30 day period will lapse. If the financial advisors to Entertainment One Canada consider in their opinion that the Warrant Offer is fair, then any director of Entertainment One Canada shall be authorised as attorney for Marwyn Value Investors to exercise a transfer of the Marwyn Warrants in favour of the offeror in consideration of the issue of warrants to subscribe for shares of the offeror in consideration of the issue of warrants to subscribe for shares of the offeror, where upon all the Marwyn Warrants shall lapse, subject to the offer by the offeror becoming unconditional and the offeror being in a position to compulsorily acquire all of Entertainment One Canada s Entertainment One Canada common shares and all the warrants being issue. Summit Option Agreement An option agreement has been entered into between (1) Entertainment One Cayman and (2) Summit Entertainment, LLC ( Summit ) pursuant to which Entertainment One Cayman will grant Summit the right to acquire 2,500,000 ordinary shares in the capital of Entertainment One Cayman at an exercise price of 0.50 per ordinary share. The option lapses on 13 September Additionally the option lapses, if not previously exercised, on a sale of the Entertainment One Cayman or the termination of certain commercial agreements between the Entertainment One Group and Summit in accordance with their terms prior to 30 June Following the exercise of the option agreement, Summit will agree not to dispose of those ordinary shares issued to it (subject to certain standard exceptions) until the earlier of (a) the expiry of the option period, (b) termination of the certain commercial agreements referred to above and (c) the date falling 6 months after the date of exercise. After the Transaction Time, Entertainment One Canada and Entertainment One Cayman are entitled to convert the option into an option to acquire common shares in Entertainment One Canada, in place of the ordinary shares of Entertainment One Cayman. E-One UK Ltd. Exchangeable Notes On 9 January 2008 E-One UK Ltd, a UK subsidiary of Entertainment One Cayman, issued 19,600,000 aggregated principal guaranteed senior subordinated Exchangeable Notes maturing September The Exchangeable Notes attract an accrued interest of 10 per cent. per annum payable on maturity. The Exchangeable Notes are currently exchangeable for ordinary shares in Entertainment One Cayman. After the Transaction Time, the 5,100,000 Exchangeable Notes that are not held intra-group will be exchangeable for 7.5 million common shares in Entertainment One Canada at 0.68 per common share. Accounting Treatment of the Scheme The Scheme of Arrangement represents a reverse acquisition under International Financial Reporting Standard 3 Business Combinations. As such the transaction will be accounted for as if Entertainment One Cayman is acquiring Entertainment One Canada. The effect of this is that the underlying net assets of the group will not alter as a result of the transaction, with the exception of share capital which will reflect the share capital of Entertainment One Canada. Required Vote; Board Recommendation The Court Meeting will be conducted in accordance with the directions of the Cayman Court. The presence in person or by proxy of at least two registered holders of Entertainment One Cayman ordinary shares is required to constitute a quorum. Assuming the presence of a quorum at the meeting, the Scheme of Arrangement must be approved by a majority in number of the Scheme Shareholders present and voting on the proposal, whether in person or by proxy, representing 75 per cent. or more in value of the Entertainment One Cayman ordinary shares present and voting on the proposal, whether in person or by proxy. 39

40 Admission to the Official List Application has been made to the UK Listing Authority for the Entertainment One Canada common shares to be listed on a standard listing on the Official List and for the Entertainment One Canada common to be admitted to trading on the London Stock Exchange s main market for listed securities. It is expected that Admission will become effective and the dealings in the Entertainment One Canada common shares will commence at 8.00 a.m. BST on Thursday 15 July Admission to the Official List is conditional upon the Scheme of Arrangement becoming effective. Accordingly, if Scheme Shareholders do not vote to approve the Scheme of Arrangement proposal, the Admission will not take place and Entertainment One Cayman ordinary shares will continue to be admitted to trading on AIM. Scheme Shareholders are not being asked to vote in respect of the Admission however by approving the Scheme of Arrangement; the Scheme Shareholders are in fact facilitating the Admission. Reasons for moving to the Official List Since its admission to AIM in 2007, the Group has expanded significantly through organic and acquisitive growth and as a result, the Directors believe that a move to a standard listing on the Official List and to trading on the main market of the London Stock Exchange is now appropriate. The Directors also believe that Admission would also provide improved liquidity of the Entertainment One Canada common shares, and enhanced corporate exposure to an enlarged investor base. UK Listing and Reporting Obligations The Entertainment One Canada common shares are expected to be admitted to a standard listing on the Official List. A standard listing is different to a premium listing and as a consequence additional on-going requirements and protections applicable to a premium listing under the Listing Rules will not apply to Entertainment One Canada. Entertainment One Canada will be listed under Chapter 14 of the Listing Rules on the basis of European Directive requirements and as a consequence a significant number of the Listing Rules will not apply to Entertainment One Canada. The listing will be classified as a standard listing under the Listing Rules. Shareholders in Entertainment One Canada will therefore not receive the full protections of the Listing Rules otherwise associated with a premium listing. An applicant that is applying for a standard listing of equity securities must comply with all the requirements listed in Chapter 2 of the Listing Rules, which specifies the requirements for listing for all securities. Where an application is made for the admission to the Official List of a class of shares, at least 25 per cent. of shares of that class must be distributed to the public in one or more EEA states. Listing Rule 14.3 sets out the continuing obligations applicable to Entertainment One Canada and requires that Entertainment One Canada s listed securities must be admitted to trading on a regulated market at all times. The applicant must have a minimum number of shares of any listed class (25 per cent. ) in public hands at all times in the relevant jurisdictions and must notify the FSA as soon as possible if these holdings fall below the stated level. There are a number of other continuing obligations set out in Chapter 14 of the Listing Rules that will be applicable to Entertainment One Canada. These include requirements as to: (a) (b) (c) (d) forwarding of circulars and other documentation to the FSA for publication through the document viewing facility, and related notification to a regulatory information service; the provision of contact details of appropriate persons nominated to act as a first point of contact with the FSA in relation to compliance with the Listing Rules and Disclosure and Transparency Rules; the form and content of temporary and definitive documents of title; the appointment of a registrar; 40

41 (e) (f) regulatory information service notification obligation in relation to a range of debt and equity capital issues; and compliance with, in particular, Chapters 4, 5 and 6 of the Disclosure Rules and Transparency Rules (relating to financial reporting, vote holder and issuer notification rules and continuing obligations and access to information). A shareholder in Entertainment One Canada whose common shares are admitted to trading on the main market of the London Stock Exchange is required pursuant to Rule 5 of the Disclosure and Transparency Rules to notify Entertainment One Canada of the percentage of their voting rights if the percentage of voting rights which they hold as a shareholder or through their direct or indirect holding of financial instruments (or a combination of such holdings) reaches, exceeds or falls below 5%, 10%, 15%, 20%, 25%, 30%, 50% and 70% as a result of an acquisition or disposal of shares. Chapter 14 of the Listing Rules, which sets out the requirements for standard listings, does not require Entertainment One Canada to comply with, inter alia, the provisions of Chapters 6 to 13 of the Listing Rules being additional requirements for listing of equity securities (listing principles, sponsors, continuing obligations, significant transactions, related party transactions, dealing in own securities and treasury shares and contents of circulars). Chapter 6 of the Listing Rules contains additional requirements for listing of equity securities, which are only applicable for companies with a premium listing. Consequently, Entertainment One Canada does not intend to comply with such provisions. Entertainment One Canada intends to comply with the Listing Principles set out in Chapter 7 of the Listing Rules which would otherwise apply to Entertainment One Canada if it were to obtain a premium listing on the Official List. Entertainment One Canada is not, however, subject to such Listing Principles and will not be required to comply with them. The directors of Entertainment One Canada intend to ensure that shareholders of Entertainment One Canada are provided with sufficient information in order for them to make an informed decision on any matter which they need to approve, and the directors of Entertainment One Canada will also take independent financial advice where appropriate. Entertainment One Canada is not required, and does not intend, to appoint a listing sponsor under Chapter 8 of the Listing Rules to guide Entertainment One Canada in understanding and meeting its responsibilities under the Listing Rules. The provisions of Chapter 9 of the Listing Rules (continuing obligations) will not apply to Entertainment One Canada. Chapter 9 includes provisions relating to transactions, including, inter alia, requirements relating to further issues of shares, the ability to issue shares at a discount in excess of 10 per cent. of market value, notifications, contents of financial information. Although Entertainment One Canada is not required to comply with Chapter 9 of the Listing Rules, it will voluntarily: (a) (b) (c) publish its preliminary statement of annual results (or the information from its annual financial report that is required to be communicated to the media pursuant to the Disclosure and Transparency Rules) through a regulatory information service as soon as possible after it has been approved and in any event within four months of the end of the period to which it relates and only after it has been agreed with Entertainment One Canada s auditors; notify a regulatory information service as soon as possible after its directors have approved any decision to pay or make any dividend or other distribution or to withhold any dividend or interest payment; and publish its half yearly report to a regulatory information service as soon as possible after it has been approved and in any event within two months of the end of the period to which it relates. Entertainment One Canada is not required to comply with the Model Code on Directors dealings in shares of Entertainment One Canada set out in Chapter 9 of the Listing Rules. However, 41

42 Entertainment One Cayman adopted a code of conduct in relation to the share dealings at the time of its AIM listing, and Entertainment One Canada will continue to follow such dealing code following admission to a standard listing. Entertainment One Canada is not required to comply with Chapters 10, 11 and 12 under the Listing Rules (significant transactions, related party transactions, dealing in own securities and treasury shares). Entertainment One Cayman does however currently comply with the requirements of the AIM Rules in relation to substantial transactions, related party transactions, reverse takeovers and fundamental change of business (AIM Rules 12 to 16) and Entertainment One Canada intends that it will continue to conduct its activities as if such requirements continued to apply to it following admission to the Official List (in so far as reasonably practicable). It should be noted that neither the UK Listing Authority nor the London Stock Exchange will have the authority to monitor Entertainment One Canada s voluntary compliance with, nor impose sanctions in the event of a breach of, any such provisions. Chapter 13 of the Listing Rules contains provisions relating to the content of circulars and is only applicable to companies with a premium listing. Consequently, Entertainment One Canada does not intend to comply with such provisions. Entertainment One Canada confirms that, notwithstanding that upon admission to the Official List neither Listing Rule (cancellation of listing) nor the equivalent protection currently provided under the AIM Rules will be applicable, in the event a cancellation of its listing were to be proposed, it would in any event seek the approval of its shareholder as if Listing Rule of the Listing Rules was applicable to it. Pursuant to Listing Rule this will mean, inter alia, that Entertainment One Canada would send a circular to its shareholders containing certain information as specified in the Listing Rules and obtain the approval of not less than 75 per cent. of its shareholders in the event that it proposes to seek a cancellation of its listing. It should be noted that the UK Listing Authority will not have the authority to monitor Entertainment One Canada s voluntary compliance with any of the Listing Rules applicable to companies with a premium listing (and will not do so) nor will it impose sanctions in respect of any breach of such requirements by Entertainment One Canada. Settlement and Dealing Arrangements Dealing Arrangements and CREST The common shares of Entertainment One Canada are currently in registered form and in certificated form. It is proposed that, with effect from Admission, interests in Entertainment One Canada common shares may be delivered, held and settled in CREST by means of the creation of dematerialised depository interests representing such Entertainment One Canada common shares. Euroclear is unable to take responsibility for electronic settlement of shares issued by companies in certain non-uk jurisdictions. Pursuant to a method proposed by Euroclear under which transactions in international securities may be settled through the CREST system, the Depository will issue dematerialised Depository interests representing entitlements to Entertainment One Canada common shares, known as Depository Interests. The Depository Interests will be independent securities constituted under Jersey law which may be held and transferred through the CREST system. Shareholders should note that it is the Depository Interests which will be admitted to and settled through CREST and not Entertainment One Canada common shares. The Articles of Incorporation of Entertainment One Canada are consistent with CREST membership in respect of Entertainment One Canada common shares, and amongst other things allow for the holding and transfer of Depository Interests in uncertificated form. Under the CBCA, companies are not prohibited from issuing shares in book-entry form but shareholders have the right to require the companies to issue physical certificates. Under the CBCA, companies are not prohibited from issuing shares in book-entry form but shareholders have the right to require the companies to issue physical certificates. The Board will pass a resolution authorising the issuance of shares in book-entry form. The Depository Agreement under which Entertainment One Canada has appointed the Depository to provide the Depository Interest arrangements is summarised below. 42

43 The Depository Interests will be created pursuant to and issued on the terms of a deed poll executed by the Registrar in favour of the holders of the Depository Interests from time to time (the Deed Poll ). Prospective holders of Depository Interests should note that they will have no rights in respect of the underlying Entertainment One Canada common shares or the Depository Interests representing them against Euroclear or its subsidiaries. Entertainment One Canada common shares will be transferred to an account of the Depository or their nominated custodian ( Custodian ) and the Depository will issue Depository Interests to participating CREST members. Each Depository Interest will be treated as one Ordinary Share for the purposes of determining, for example, eligibility for any dividends. The Depository will pass on to holders of Depository Interests any stock or cash benefits received by it as holder of Entertainment One Canada common shares on trust for such Depository Interest holder. Depository Interest holders, through the Depository, will also be able to receive notices of meetings of holders of Entertainment One Canada common shares and other notices issued by Entertainment One Canada to its Shareholders. The Depository Interests will have the same security code (ISIN) as the underlying Entertainment One Canada common shares and will not require a separate admission to the London Stock Exchange s main market for listed securities. Conversion into and transfers of Depository Interests are subject to stamp duty or stamp duty reserve tax, as appropriate. CREST is a voluntary system and holders of Entertainment One Canada common shares who wish to receive and retain share certificates will be able to do so. Share certificates will be dispatched to shareholders by first-class post within 14 days of the date of Admission. No temporary certificates of title will be issued. Depository Interests Terms of the Deed Poll In summary, the Deed Poll contains, inter alia, provisions to the following effect: (a) (b) (c) The Depository will hold (itself or through the Custodian), as bare trustee, the underlying securities issued by Entertainment One Canada and all and any rights and other securities, property and cash attributable to the underlying securities for the time being held by the Depository or Custodian pertaining to the Depository Interests for the benefit of the holders of the Depository Interests as tenants in common. The Depository will re-allocate securities or Depository Interests distributions allocated to the Depository or Custodian pro rata to the Entertainment One Canada common shares held for the respective accounts of the holders of Depository Interests but will not be required to account for fractional entitlements arising from such re-allocation. Holders of Depository Interests agree to give such warranties and certifications to the Depository as the Depository may reasonably require. In particular, holders of Depository Interests warrant, inter alia, that the securities in Entertainment One Canada transferred or issued to the Depository or Custodian on behalf of the Depository for the account of the Depository Interest holder are free and clear of all liens, charges, encumbrances or third party interests and that such transfers or issues are not in contravention of Entertainment One Canada s constitutional documents or any contractual obligation, or applicable law or regulation binding or affecting such holder, and holders of Depository Interests agree to indemnify the Depository against any liability incurred as a result of any breach of such warranty. The Depository and any Custodian shall pass on to Depository Interest holders, and so far as reasonably able exercise on their behalf, all rights and entitlements received by the Depository or the Custodian or to which they are entitled in respect of the underlying securities which are capable of being passed or exercised. Rights and entitlements to cash Depository Interests distributions, to information, to make choices and elections and to attend and vote at meetings shall, subject to the Deed Poll, be passed on in the form which they are received, together with amendments and additional documentation necessary to effect such passing-on, or exercised in accordance with the Deed Poll. If arrangements are made which allow a holder to take up rights in Entertainment One Canada s securities requiring further payment, the holder must put the Depository in cleared funds before the 43

44 relevant payment date or other date notified by the Depository if it wishes the Depository to exercise such rights. (d) (e) (f) The Depository will be entitled to cancel Depository Interests and treat the holders as having requested a withdrawal of the underlying securities in certain circumstances including where a Depository Interest holder fails to furnish to the Depository such certificates or representations as to material matters of fact, including his identity, as the Depository deems appropriate. The Depository warrants that it is an authorised person under the FSMA and is duly authorised to carry out custodial and other activities under the Deed Poll. It also undertakes to maintain that status and authorisation. The Deed Poll contains provisions excluding and limiting the Depository s liability. For example, the Depository shall not be liable to any Depository Interest holder or any other person for liabilities in connection with the performance or non-performance of obligations under the Deed Poll or otherwise except as may result from its negligence or wilful default or fraud or that of any person for whom it is vicariously liable, provided that the Depository shall not be liable for the negligence, wilful default or fraud of the Custodian or agent which is not a member of its group unless it has failed to exercise reasonable care in the appointment and continued use and supervision of any Custodian or agent. Furthermore, the Depository s liability to a holder of Depository Interests will be limited to the lesser of: the value of the Entertainment One Canada common shares and other deposited property properly attributable to the Depository Interests to which the liability relates; and that proportion of 10 million which corresponds to the portion which the amount the Depository would otherwise be liable to pay to the Depository Interest holder bears to the aggregate of the amounts the Depository would otherwise be liable to pay to all such holders in respect of the same act, omission, or event or, if there are no such amounts, 10 million. (g) (h) (i) (j) (k) The Depository is entitled to charge holders of Depository Interests fees and expenses for the provision of its services under the Deed Poll. Each holder of Depository Interests is liable to indemnify the Depository and any Custodian (and their agents, officers and employees) against all liabilities arising from or incurred in connection with, or arising from any act performed in accordance with or for the purposes of or otherwise related to, the Deed Poll so far as they relate to the Depository Interests (and any property or rights held by the Depository or Custodian in connection with the Depository Interests) held by that holder, other than those resulting from the wilful default, negligence or fraud of the Depository, or the Custodian or any agent if such Custodian or agent is a member of the Depository s group or if, not being a member of the same group, the Depository shall have failed to exercise reasonable care in the appointment and continued use and supervision of such Custodian or agent. The Depository is entitled to make deductions from any income or capital arising from the underlying securities, or to sell such underlying securities and make deductions from the sale proceeds therefrom, in order to discharge the indemnification obligations of Depository Interest holders. The Depository may terminate the Deed Poll by giving not less than 30 days notice. During such notice period holders may cancel their Depository Interests and withdraw their deposited property and, if any Depository Interests remain outstanding after termination, the Depository must, among other things, deliver the deposited property in respect of the Depository Interests to the relevant Depository Interest holders or, at its discretion, sell all or part of such deposited property. It shall, as soon as reasonably practicable, deliver the net proceeds of any such sale, after deducting any sums due to the Depository, together with any other cash held by it under the Deed Poll pro rata to holders of Depository Interests in respect of their Depository Interests. The Depository or the Custodian may require from any holder information as to the capacity in which Depository Interests are or were owned and the identity of any other person with or previously having 44

45 any interest in such Depository Interests and the nature of such interest and evidence or declarations of nationality or residence of the legal or beneficial owners of Depository Interests and such information as is required for the purposes of the Deed Poll. Holders agree to provide such information requested and consent to the disclosure of such information by the Depository or Custodian to the extent necessary or desirable to comply with their legal or regulatory obligations. Furthermore, to the extent that Entertainment One Canada s constitutional documentation require disclosure to Entertainment One Canada of, or limitations in relation to, beneficial or other ownership of Entertainment One Canada s securities, the holders of Depository Interests are to comply with such constitutional documentation and Entertainment One Canada s instructions with respect thereto. (l) (m) It should also be noted that holders of Depository Interests may not have the opportunity to exercise all of the rights and entitlements available to holders of Entertainment One Canada common shares including, for example, the ability to vote on a show of hands. In relation to voting, it will be important for holders of Depository Interests to give prompt instructions to the Registrar or its nominated Custodian, in accordance with any voting arrangements made available to them, to vote the underlying Entertainment One Canada common shares on their behalf or, to the extent possible, to take advantage of any arrangements enabling holders of Depository Interests to vote such Entertainment One Canada common shares as a proxy of the Registrar or its nominated Custodian. The Deed Poll is available for inspection at the offices of Mayer Brown International LLP. Depository Interests Terms of Depository Agreement The terms of the Depository agreement between Entertainment One Canada and the Depository (the Depository Agreement ) which will be executed prior to the Transaction Time, under which Entertainment One Canada appoints the Depository to constitute and issue from time to time, upon the terms of the Deed Poll, series of Depository Interests representing securities issued by Entertainment One Canada and to provide certain other services in connection with such Depository Interests, are summarised below. The Depository Agreement contains, inter alia, provisions to the following effect: (a) (b) (c) (d) The Depository agrees that it will comply, and will procure certain other persons comply, with the terms of the Deed Poll and that it and they will perform their obligations and exercise all rights in good faith and with all reasonable skill, diligence and care. The Depository assumes certain specific obligations including, for example, to arrange for the Depository Interests to be admitted to CREST as participating securities and provide copies of, and access to, the Depository Interest Register. The Depository warrants that it is an authorised person under the FSMA and is duly authorised to carry out custodial and other activities under the Deed Poll. It also undertakes to maintain that status and authorisation. Entertainment One Canada gives various warranties and undertakings including, inter alia, a warranty that the Depository does not require any permission, authorisation or licence from any authority in any country (other than the United Kingdom) in which Entertainment One Canada carries on business in order to hold the underlying securities in Entertainment One Canada, and that there are no special arrangements, exclusions, restrictions, national declarations or similar matters which attach to or apply in connection with the Entertainment One Canada common shares which would restrict the transfer of those Entertainment One Canada common shares by any holder of Depository Interests (including the Depository and/or any Custodian). Entertainment One Canada agrees to indemnify the Depository against any liabilities incurred as a result of any breach of such warranties and undertakings. Entertainment One Canada agrees to provide such assistance, information and documentation to the Depository as is reasonably required by the Depository for the purposes of performing its duties, responsibilities and obligations under the Deed Poll and Depository Agreement. In particular, Entertainment One Canada is to supply the Depository with all documents it sends to its shareholders so that the Depository can distribute the same to all holders of Depository Interests. 45

46 (e) (f) (g) (h) (i) (j) (k) The Depository will not be obliged to accept transfers of Depository Interests if the transfer would place the Depository in breach of any law or regulation. Entertainment One Canada warrants that it is not aware of any such breach. If such circumstances were to occur the Depository will discuss this with Entertainment One Canada as soon as is reasonably practicable in order to review how to proceed. The Depository Agreement sets out the procedures to be followed where Entertainment One Canada is to pay or make a dividend or other distribution. The Depository is to indemnify Entertainment One Canada against each loss, liability, cost and expense reasonably incurred as a result of any claim made against Entertainment One Canada by any holder of Depository Interests or any person having any direct or indirect interest in any such Depository Interests or the underlying securities represented thereby which arises out of alleged breach of the terms of the Deed Poll or any trust declared or arising thereunder, save where such liability arises as a result of the fraud, negligence or wilful default of Entertainment One Canada. The aggregate liability of the Depository under the Depository Agreement is limited to the lesser of (a) 1,000,000 and (b) an amount equal to 10 times the total annual fee payable to the Depository under the Depository Agreement. Entertainment One Canada is to indemnify the Depository against all liabilities reasonably incurred as a result of any claim made against the Depository by any holder of the Depository Interests or any person having any direct or indirect interest in any such Depository Interests or the underlying securities which arises out of the performance by the Depository of its obligations under the Depository Agreement and the Deed Poll, save where such liability arises as a result of the fraud, negligence or wilful default of the Depository. The Depository Agreement is to remain in force for as long as the Deed Poll remains in force. Both Entertainment One Canada and the Depository may terminate the Depository Agreement on 30 days notice in the event of a material breach by the other party and otherwise on 45 days notice. The Depository may not subcontract or delegate its obligations under the Depository Agreement to any person without Entertainment One Canada s prior consent (not to be unreasonably withheld or delayed). Entertainment One Canada is to pay certain fees and charges including, inter alia, an annual fee, a fee based on the number of Depository Interests per year and certain CREST related fees. The Depository is also entitled to recover reasonable out of pocket expenses. 46

47 SELECTED FINANCIAL INFORMATION The table below sets out the Group s summary financial information for the periods indicated, in each case prepared in accordance with IFRS. Summary Consolidated Income Statement Financial year ended 31 March Revenue 444, , ,375 Underlying EBITDA 34,334 25,256 18,620 One-off items (1,582) (29,677) (2,249) Amortisation of intangible assets (17,488) (15,168) (11,067) Depreciation (2,019) (1,699) (1,007) Share-based payment charge (2,743) (4,171) (5,797) Operating profit/(loss) 10,502 (25,459) (1,500) Net finance charges (3,627) (5,550) (6,176) Profit/(loss) before tax 6,875 (31,009) (7,676) Taxation (321) 578 (879) Profit/(loss) after tax 6,554 (30,431) (8,555) Earnings/(loss) per share: Basic earnings/(loss) per share 4.6 (23.2) (9.5) Diluted earnings/(loss) per share 4.3 (23.2) (9.5) Summary Consolidated Balance Sheet Financial year ended 31 March Non-current assets 217, , ,723 Current assets 247, , ,627 Total assets 464, , ,350 Non-current liabilities 97, ,892 70,265 Current liabilities 203, ,215 91,507 Total liabilities 300, , ,772 Net assets 164, , ,578 Total equity 164, , ,578 Summary Consolidated Cash Flows Financial year ended 31 March Net cash from operating activities 85,201 35,851 28,718 Net cash used in investing activities (82,468) (59,433) (178,792) Net cash generated from financing activities 3,106 16, ,558 Net increase/(decrease) in cash and cash equivalents 5,839 (6,767) 16,484 Cash and cash equivalents at the beginning of the period 11,767 16,484 Effects of exchange rate fluctuations on cash held 951 2,050 Cash and cash equivalents at the end of the year 18,557 11,767 16,484 47

48 MATERIAL TAX CONSIDERATIONS UK Tax Considerations The following comments are based on current UK tax legislation, case law and HMRC practice. These paragraphs broadly outline the taxation position of the holders of Entertainment One Canada common shares after the Scheme of Arrangement becomes effective. These comments broadly outline the position in respect of UK Scheme Shareholders who are UK domiciled and resident or ordinarily resident in the UK for tax purposes and who will hold Entertainment One Canada common shares beneficially as investments (other than under an individual savings account or former personal equity plans) and who will not (and will not be deemed to have) acquired their Entertainment One Canada common shares by virtue of an office or employment (including any former or prospective office or employment). The following comments provide general advice only and may not apply to certain classes of investor who may be subject to special rules (such as brokers, traders or dealers in securities, insurance companies, charities, collective investment schemes or pension providers). Each Scheme Shareholder s specific circumstances will impact on their taxation position. All Scheme Shareholders are recommended to obtain their own taxation advice. In particular, all Scheme Shareholders, including UK tax resident or ordinarily resident in the UK shareholders are advised to consider the potential impact of any relevant double tax agreements on their shareholding. Taxation of Chargeable Gains UK Resident Individual Shareholders A disposal of Entertainment One Canada common shares by a shareholder who is (at any time in the relevant UK tax year) resident or ordinarily resident in the UK (and not otherwise covered by a specific concession) or (where the circumstances apply) who resumes UK tax residence without achieving the appropriate number of intervening years of non-residence, may give rise to a chargeable gain or allowable loss for the purpose of UK taxation of chargeable gains. Chargeable gains are currently liable to tax at a flat rate of 18 per cent., subject to the availability of any allowances, exemptions or reliefs. Scheme Shareholders should also be aware that following the formation of the new government in the United Kingdom, the Conservative Liberal Democrat coalition agreement dated 11 May 2010 notes that the Government plans to change the taxation of capital gains on non-business assets, such that those gains are taxed at rates at, or close to, those applied to income. No effective date is given for this change, which could possibly take effect following the first budget expected on 22 June Any future disposal of shares by UK Scheme Shareholders are likely to be affected by these changes. Non-UK Resident Individual Shareholders A shareholder who is not resident in the UK for tax purposes but who carried on a trade, profession or vocation in the UK through a branch or agency and has used, held or acquired the Entertainment One Canada common shares for the purpose of such trade, profession or vocation may also be subject to UK taxation on chargeable gains arising on a disposal of Entertainment One Canada common shares if the Entertainment One Canada common shares are deemed to be situated in the UK, subject to any relevant double tax agreements, allowances, exemptions or reliefs. Special rules apply to tax gains on disposals made by individuals at a time when they are temporarily not resident and not ordinarily resident in the UK. Further advice should be sought. Non-UK Domiciled Individual Shareholders Different and complex rules apply for individuals who are resident or ordinarily resident but not UK domiciled for UK tax purposes and for individuals who are resident but not ordinarily resident in the UK. These individuals should seek further advice. 48

49 UK Resident Corporate Shareholders UK Resident Corporate Shareholders will, on first principles, be chargeable to corporation tax on any gain made on the sale of Entertainment One Canada common shares, unless the Substantial Shareholdings Exemption applies to exempt the gain from charge. Further advice should be sought. Companies are due indexation allowance which may also reduce the chargeable gain. Dividends UK Resident Individual Shareholders For the avoidance of doubt, the UK does not impose dividend withholding tax in any event. Any dividend on an Entertainment One Canada common share (other than a capital dividend or certain capital gains dividends), including a stock dividend, paid or credited, or deemed to be paid or credited, by Entertainment One Canada to a shareholder will be subject to Canadian withholding tax at the rate of 25 per cent. on the gross amount of the dividend, or such lesser rate as may be available to a shareholder under any income tax convention that Canada may have in the country where the shareholder is resident for the purposes of that convention. The terms of the Canada United Kingdom Tax Convention (the UK/Canadian Double Taxation Treaty ) may reduce the dividend withholding tax rate to 15 per cent. depending on the status of the UK Resident Shareholder, and various conditions being met. The amount of the dividend received plus the dividend withholding tax if any will represent taxable dividend income for the UK individual Shareholder. In these circumstances the shareholder should be entitled to credit the dividend withholding tax (if any) against any liability to UK income tax. The credit would be limited to the lesser of the dividend withholding tax or the UK tax payable on the combined amount of the dividend plus dividend withholding tax. If the dividend withholding tax exceeds the UK tax payable on the dividend, the excess is neither creditable nor repayable. Any withholding tax suffered on dividends would instead reduce the gross dividend chargeable to UK tax. Individual shareholders are entitled to a non-refundable 10 per cent. tax credit on dividends received from Entertainment One Canada. This tax credit is set against the individual s UK tax liability on the dividend, however, it is not possible for this tax credit to put the individual in a repayment position. The amount of tax payable on dividends received by a UK resident individual will depend on the type and extent of their other income for the relevant UK tax year. The basic rate of tax on dividends is 10 per cent. against which a non-refundable 10 per cent. tax credit is applied. Higher rates of tax may apply for certain individuals in receipt of dividends with effect from 6 April 2010 following the changes to the top rate of tax on dividends. The higher rates are 32.5 per cent. or 42.5 per cent. and in both cases the non-refundable 10 per cent. tax credit is applied, resulting in an effective tax rate of 25 per cent. or per cent. respectively of the actual dividends provided any withholding tax suffered does not exceed the UK tax payable on the dividend. As noted above separate advice should be obtained by anyone who is UK resident but either not ordinarily resident or non-uk domiciled. The UK tax treatment of any holder of Entertainment One Canada common shares who is resident in the UK, and carries on a trade, profession or vocation in the UK in relation to these Entertainment One Canada common shares may be different from that described above and such Shareholder should seek his own tax advice. UK Resident Corporate Shareholder The terms of the UK/Canadian Double Taxation Treaty may reduce the dividend withholding tax rate to either 5 per cent. or 15 per cent. depending on the status of the UK resident corporate shareholder and various conditions being met. 49

50 Dividends paid to a UK resident corporate Shareholder will be taxable income of the UK corporate shareholder unless the dividends fall within an exempt class and certain other conditions are met. It is however expected that dividends paid by Entertainment One Canada to a UK resident corporate Shareholder would generally be exempt, provided certain anti-avoidance provisions are not triggered. To the extent that dividends are not exempt, UK resident corporate Shareholders may be able to obtain credit for any withholding tax and any underlying tax paid by Entertainment One Canada, subject to certain conditions. The UK has complex double tax relief where UK resident companies receive dividends from non-uk resident companies and therefore UK Resident Corporate Shareholders should seek further advice on these issues. Inheritance Tax If any individual shareholder is regarded as domiciled in the UK for inheritance tax purposes, inheritance tax may be payable in respect of the Entertainment One Canada common shares on the death of the shareholder or on any gift of the Entertainment One Canada common shares during their lifetime which qualifies as a chargeable lifetime transfer, subject to any allowances, exemptions or reliefs. This is the case regardless of their residence and ordinary residence status. In the case of an individual shareholder who is not regarded as domiciled in the UK for inheritance tax purposes at the date of death or gift, their liability to inheritance tax is limited to assets situated in the UK. Non-UK domiciled individual shareholders may be regarded as deemed domiciled for inheritance tax purposes only following a long period of residence in the UK. It should be noted that the rules for determining whether someone is regarded as domiciled in the UK for inheritance tax purposes may be different for the rules in determining if someone is domiciled in the UK for income tax purposes. Further advice should be sought in these circumstances. To the extent the Entertainment One Cayman ordinary shares are not already treated as UK assets for UK inheritance tax purposes, then admittance of the Entertainment One Canada common shares to the Official List, may result in the Entertainment One Canada common shares being treated as UK assets for UK inheritance tax purposes. Admittance of the Entertainment One Canada common shares to the Official List will not constitute a disposal of the Entertainment One Canada common shares held by existing shareholders. However, as the Entertainment One Canada common shares will no longer be admitted to trading on AIM, this could have an adverse impact on the reliefs available from inheritance tax to individual shareholders. Entertainment One Canada common shares that were admitted to trading on AIM may qualify for business property relief (a relief from UK inheritance tax), provided that certain circumstances are met by both Entertainment One Canada and the Shareholder. However, Entertainment One Canada common shares listed on the Official List are unlikely to benefit from business property relief from inheritance tax. Individual shareholders who are in any doubt about the impact of this change on their tax position should obtain detailed tax advice from their own professional advisers. UK inheritance tax is a complex area and individuals should obtain their own advice in respect of this. UK Stamp Duty and Stump Duty Reserve Tax ( SDRT ) No stamp duty or SDRT is payable on the issue of Entertainment One Canada common shares by Entertainment One Canada, whether issued in certificated form or in uncertificated form through CREST, unless they are issued into Depository or clearance arrangements and at the time of issue the Entertainment One Canada common shares in question are registered on a Shareholders Register maintained in the UK. Provided the Entertainment One Canada common shares continue to be registered only on a Shareholders Register maintained outside the UK and are not paired with UK shares, no SDRT is payable on any agreement to transfer Entertainment One Canada common shares. However, the purchaser will normally be liable to pay SDRT at 0.5 per cent. of the consideration on any agreement to transfer Entertainment One Canada common shares which are registered on a Shareholders Register which is maintained in the UK. The 50

51 purchaser will normally be liable to pay SDRT at the same rate on any agreement to transfer Depository Interests representing the Entertainment One Canada common shares unless Entertainment One Canada is centrally managed and controlled outside the UK, the underlying Entertainment One Canada common shares are registered only on a Shareholders Register which is maintained outside the UK and Entertainment One Canada common shares are listed on a recognised stock exchange (which expression includes the London Stock Exchange). Any liability to SDRT will normally be collected by a stockbroker or other intermediary member of the London Stock Exchange acting in the transaction. Any document of transfer which acts to transfer Entertainment One Canada common shares may be subject to stamp duty at 0.5 per cent. of the consideration for the transfer if the document of transfer is executed in the UK, or relates to any property situated in the UK, or to any matter or thing done, or to be done in the UK. Payment of stamp duty is not compulsory (if there is no SDRT charge arising) but documents may not be available for certain official purposes unless they have been duly stamped. Payment of any stamp duty and stamping of the relevant document within six years of the related agreement to transfer will normally cancel any SDRT charge arising on that agreement. Certain reliefs may be available to relieve charges to stamp duty or stamp duty reserve tax if appropriate conditions are satisfied. Canadian Tax Considerations The following discussion summarises the principal Canadian federal income tax considerations generally applicable to a shareholder who acquires Entertainment One Canada common shares and who at all material times for the purposes of the Income Tax Act (Canada) (the Tax Act ) deals at arm s length with Entertainment One Canada and holds all Entertainment One Canada common shares solely as capital property. It is assumed that the Entertainment One Canada common shares will at all material times be listed on a stock exchange that is designated for the purposes of the Tax Act (which currently includes the London Stock Exchange). This summary is based on the current provisions of the Tax Act, including the regulations thereunder, and the UK/Canadian Double Taxation Treaty. This summary takes into account all specific proposals to amend the Tax Act and the regulations thereunder publicly announced by the Government of Canada to the date hereof and Entertainment One Canada s understanding of the current published administrative and assessing practices of the Canada Revenue Agency. It is assumed that all such amendments will be enacted substantially as currently proposed, and that there will be no other material change to any such law or practice, although no assurances can be given in these respects. Except to the extent otherwise expressly set out herein, this summary does not take into account any provincial, territorial or foreign income tax law or treaty. The information does not purport to be comprehensive or to describe all potential relevant tax considerations and does not generally consider tax relief or exemptions. This summary is not, and is not to be construed as, tax advice to any particular Shareholder. Each Shareholder is urged to obtain independent advice as to the Canadian income tax consequences of an investment in Entertainment One Canada common shares applicable to the Shareholder s particular circumstances. Canadian Resident Shareholders The following portion of the summary applies to shareholders who at all relevant times are resident or deemed to be resident in Canada for the purposes of the Tax Act (a Resident Shareholder ). Certain Resident Shareholders whose Entertainment One Canada common shares might not otherwise be capital property, may, in certain circumstances, be entitled to have the Entertainment One Canada common shares and all other Canadian securities, as defined in the Tax Act, treated as capital property by making the irrevocable election permitted by subsection 39(4) of the Tax Act. This summary is not applicable to a purchaser that is a financial institution, as defined in the Tax Act, a trader or dealer in securities or a corporation whose principal business is the lending of money or the purchasing of debt obligations or a combination thereof. 51

52 Disposition of Shares Generally, on a disposition or deemed disposition of an Entertainment One Canada common share, a Resident Shareholder will realise a capital gain (or capital loss) equal to the amount, if any, by which the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Shareholder of the Entertainment One Canada common share immediately before the disposition or deemed disposition. Generally, a Resident Shareholder is required to include in computing its income for a taxation year one-half of the amount of any capital gain (a taxable capital gain ). Subject to and in accordance with the provisions of the Tax Act, a Resident Shareholder is required to deduct one-half of the amount of any capital loss (an allowable capital loss ) realised in a taxation year from taxable capital gains realised by the Resident Shareholder in the year. Allowable capital losses in excess of taxable capital gains may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realised in such years subject to and in accordance with the provisions of the Tax Act. Capital gains realised by an individual may give rise to liability for alternative minimum tax. Dividends A Resident Shareholder will generally be required to include in computing its income for a taxation year any dividends received, or deemed to be received, by a Resident Shareholder on the Entertainment One Canada common shares. In the case of a Resident Shareholder that is an individual (other than certain trusts), such dividends will be subject to the gross-up and dividend tax credit rules applicable to taxable dividends received from taxable Canadian corporations. A dividend will be eligible for the enhanced gross up and dividend tax credit if the recipient receives written notice from the Corporation designating the dividend as an eligible dividend within the meaning of the Tax Act. Taxable dividends received by an individual will be relevant in computing possible liability for alternative minimum tax. A dividend received or deemed to be received by a Resident Shareholder that is a corporation will generally be deductible in computing the corporation s taxable income. A private corporation as defined in the Tax Act, or any other corporation controlled, whether because of a beneficial interest in one or more trusts or otherwise, by or for the benefit of an individual (other than a trust) or a related group of individuals (other than trusts) will generally be liable to pay under Part IV of the Tax Act a refundable tax of per cent. on dividends received or deemed to be received on the Entertainment One Canada common shares to the extent such dividends are deductible in computing taxable income for the year. Additional refundable tax A Resident Shareholder that is a Canadian-controlled private corporation as defined in the Tax Act may be liable to pay an additional 6.67 per cent. refundable tax on certain investment income, including taxable capital gains. Non Canadian Resident Shareholders The following portion of the summary applies to shareholders who at all relevant times for the purposes of the Tax Act and any applicable income tax convention, are not, and are not deemed to be resident in Canada and does not use or hold, and will not be deemed to use or hold, the Entertainment One Canada common shares in a business carried on in Canada (a Non-resident Shareholder ). Special rules, which are not discussed in this summary, may apply to a Shareholder that is an insurer that carries on an insurance business in Canada and elsewhere. Such Shareholders should consult their own tax advisers. Disposition of Shares A shareholder generally will not be subject to Canadian tax on any capital gains realised by the Shareholder on a disposition of an Entertainment One Canada common share unless the Entertainment One Canada common share constitutes taxable Canadian property to the Shareholder for the purposes of the Tax Act. 52

53 Where an Entertainment One Canada common share is listed on a stock exchange that is designated for the purposes of the Tax Act (the London Stock Exchange is a designated exchange for this purpose), the Entertainment One Canada common share (or an interest in or option to acquire an Entertainment One Canada common share) will constitute taxable Canadian property of the Shareholder, if at any time during the 60 months preceding the disposition: the shareholder, and any persons with whom the shareholder did not deal at arm s length owned 25 per cent. or more of the issued shares of any class of the capital stock of Entertainment One Canada, and (pursuant to proposed legislation), more than 50 per cent. of the fair market value of the share was derived directly or indirectly from real or immovable property situated in Canada, Canadian resource property, timber resources property or a right to acquire such property. Such shareholder may be eligible for relief pursuant to the UK/Canadian Double Taxation Treaty or any income tax convention that Canada may have with a country where the shareholder is a resident for the purposes of the convention. Such shareholder should obtain independent tax advice with respect to the availability of such relief. Further, for a shareholder that is resident in the UK for the purposes of the UK/Canadian Double Taxation Treaty, even if an Entertainment One Canada common share does constitute taxable Canadian property of the shareholder, the shareholder will not be subject to Canadian income tax unless the shareholder is a resident in Canada at any time during the fiscal year in which the Entertainment One Canada common share is disposed of or has been resident in Canada at any time during the 6 years immediately preceding the disposition of the Entertainment One Canada common shares. Dividends Any dividend on an Entertainment One Canada common share (other than a capital dividend or certain capital gains dividends), including a stock dividend, paid or credited, or deemed to be paid or credited, by Entertainment One Canada to a Shareholder will be subject to Canadian withholding tax at the rate of 25 per cent. on the gross amount of the dividend, or such lesser rate as may be available to a Shareholder under any income tax convention that Canada may have in the country where the Shareholder is resident for the purposes of that convention. Pursuant to the UK/Canadian Double Taxation Treaty, the rate of withholding tax applicable to a dividend paid on an Entertainment One Canada common share to an investor who is a resident of the United Kingdom for the purposes of the UK/Canadian Double Taxation Treaty will generally be reduced to 15 per cent. of the gross amount of the dividend. If a corporate investor who is a resident of the United Kingdom for the purposes of the UK/Canadian Double Taxation Treaty controls directly or indirectly 10 per cent. of the voting power in Entertainment One Canada, the withholding tax may be reduced to 5 per cent.. Entertainment One Canada will be required to withhold any such tax from the dividend, and remit the tax directly to the Canada Revenue Agency for the account of the investor. Cayman Islands Tax Considerations The Scheme will not result in any income tax consequences under Cayman Islands law to Entertainment One Cayman, Entertainment One Canada or their shareholders. 53

54 DESCRIPTION OF ENTERTAINMENT ONE CANADA SHARES The following is a summary of certain provisions of Entertainment One Canada s Articles of Incorporation, By-Laws and certain aspects of the CBCA. This summary does not purport to be complete and is qualified in its entirety by the full terms of the Articles of Incorporation (which are in the form attached as Annex C), By-Laws (attached at Annex D) and the terms and provisions of the CBCA. We encourage you to read those laws and documents carefully. There are differences between Entertainment One Cayman s memorandum and articles of association and Entertainment One Canada s Articles of Incorporation as they will be in effect after the Transaction Time. However there are no material differences between those documents except for changes that are required by Canadian law (i.e., certain provisions of Entertainment One Cayman s articles of association were not replicated in Entertainment One Canada s Articles of Incorporation because Canadian law would not permit such replication, and certain provisions were included in Entertainment One Canada s Articles of Incorporation although they were not in Entertainment One Cayman s articles of association because Canadian law requires such provisions to be included in the articles of incorporation of a Canadian company). See Comparison of Rights of Shareholders. Except where otherwise indicated, the description below reflects Entertainment One Canada s Articles of Incorporation and By-Laws and the provisions of the CBCA as those documents will be in effect upon completion of the Scheme. Objects clause Under the CBCA, Entertainment One Canada is not required to include objects in its constitutional documents. The CBCA provides that Entertainment One Canada has the capacity and rights, powers and privileges of an individual of full capacity, subject to any restrictions in its Articles of Incorporation. The Articles of Incorporation do not provide for any restrictions on the business that may be carried on by Entertainment One Canada. Entertainment One Canada Shares The following is a summary of the material rights, privileges, restrictions and conditions attaching to the Entertainment One Canada common shares: (a) (b) (c) Each holder of Entertainment One Canada common shares is entitled to receive notice of and to attend all meetings of Shareholders of Entertainment One Canada and to vote at such meetings, except meetings at which only holders of a specified class of shares (other than Entertainment One Canada common shares) or specified series of shares are entitled to vote. Each holder of Entertainment One Canada common shares is entitled, subject to any preferential rights attaching to any other class or series of shares of Entertainment One Canada, to receive dividends if, as and when declared on the Entertainment One Canada common shares by Entertainment One Canada. Each holder shall be entitled, subject to any preferential rights attaching to any other class or series of shares of Entertainment One Canada, to participate in any distribution of the remaining property and assets of Entertainment One Canada upon the liquidation, dissolution or winding up of Entertainment One Canada. Preferred Variable Voting Shares In order to benefit from certain a certain number of licences, incentive programs and Canadian government tax credits, Entertainment One Canada must be Canadian as defined under the Investment Canada Act This requires that the majority of voting shares in Entertainment One Canada must be held by Canadians. 54

55 In order to ensure that Entertainment One Canada will continue to meet these requirements, prior to the Transaction Time, Entertainment One Canada will issue 100 Preferred Variable Voting Shares to the Chief Executive Officer. In circumstances where Canadians own less than 51 per cent. of the votes attached to the Entertainment One Canada common shares, the votes attached to the Preferred Variable Voting Shares as a class will be automatically adjusted so that they, together with the votes attached to the common shares that are owned by Canadians (as determined based on enquiries Entertainment One Canada will make of the holders of common shares), will equal a minimum of 51 per cent. of the votes attached to all shares in the capital of Entertainment One Canada. This will ensure that control in fact remains with Canadians for the purposes of the Investment Canada Act. The Preferred Variable Voting Shares, which will not be transferable without the consent of the Board, will be held by Entertainment One Canada s Chief Executive Officer Darren Throop, who is a Canadian, and will not be listed on any stock exchange. The following is a summary of the material rights, privileges, restrictions and conditions attaching to the Preferred Variable Voting Shares: (a) (b) (c) (d) (e) The votes attached to the Preferred Variable Voting Shares as a class are automatically adjusted so that they, together with the votes attached to the Entertainment One Canada common shares that are owned by Canadians (as defined in the Investment Canada Act) (as determined based on inquiries Entertainment One Canada has made of holders of Entertainment One Canada common shares and Depository Interests), equal 51 per cent. of the votes attached to all shares in the capital of Entertainment One Canada. The votes attached to the Preferred Variable Voting Shares as a class are, in aggregate, not less than 1 per cent. of the votes attached to all shares in the capital of Entertainment One Canada. The votes attached to the Preferred Variable Voting Shares as a class are determined based on the level of Canadian ownership of Entertainment One Canada common shares ascertained through Entertainment One Canada s monitoring process. The Articles of Incorporation provide that Entertainment One Canada shall, not less than 25 days before each meeting of Shareholders, undertake inquiries or instruct the Registrar to undertake inquiries of the holders of Entertainment One Canada common shares and CREST interests held by brokers and other market intermediaries as to the level of Canadian ownership of Entertainment One Canada common shares or Depository Interests representing entitlement to the underlying Entertainment One Canada common shares in their respective accounts. If no response to these inquiries is received from a particular broker or market intermediary, the Entertainment One Canada common shares or Depository Interests held by that broker or market intermediary will be deemed to be owned by non-canadians (as defined in the Investment Canada Act). If an Entertainment One Canada common share is owned by one or more persons jointly and one such person is non-canadian then such Entertainment One Canada common share, for the purpose of monitoring Canadian control of Entertainment One Canada, shall be deemed to be owned by such person who is non-canadian. The votes attached to the Preferred Variable Voting Shares as a class are determined once the level of Canadian (as defined in the Investment Canada Act) ownership of Entertainment One Canada common shares has been established through this monitoring process. The Board will not approve or compel a transfer of Preferred Variable Voting Shares to a person that is not a current officer of Entertainment One Canada and a Resident Canadian, and it is the current intention of the Board that all of the Preferred Variable Voting Shares will be held by the individual that holds the position of Chief Executive Officer of Entertainment One Canada. The Preferred Variable Voting Shares are redeemable at the option of Entertainment One Canada for CAD0.01 per share and, in the event of the liquidation, dissolution or other distribution of Entertainment One Canada s assets for the purpose of winding up of Entertainment One Canada s affairs, holders of Preferred Variable Voting Shares are entitled to CAD0.01 per share in priority to the holders of Entertainment One Canada common shares, but have no further rights. Preferred Variable Voting Shares will not be entitled to receive dividends. 55

56 (f) The terms of the Preferred Variable Voting Shares and the Preferred Variable Voting Shareholders Agreement contain a coat-tail provision which prevents a holder of Preferred Variable Voting Shares from accepting an offer to purchase all or part of the holder s shares unless the party making the offer also offers to purchase, by way of a take-over bid, all of the outstanding Entertainment One Canada common shares at a price per Entertainment One Canada common share and on other terms and conditions as are approved by the Board. Variation of rights Subject to the CBCA, the Articles of Incorporation may by Special Resolution be amended to change the designation of all or any of its shares, and to add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued or unissued. Transfer of Entertainment One Canada common shares There are no restrictions in the Articles of Incorporation or By-Laws on the transferability of the Entertainment One Canada common shares. Transfer of Preferred Variable Voting Shares The Preferred Variable Voting Shares may only be transferred to a person who is a Resident Canadian and in accordance with the Articles of Incorporation and the Preferred Variable Voting Shareholders Agreement. The Preferred Variable Voting Shares are not listed on any stock exchange. Capital Variations Subject to the CBCA, the Articles of Incorporation may by Special Resolution be amended to change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series. Any class of shares may by Special Resolution be divided into different series of shares. Under the CBCA, Entertainment One Canada may by Special Resolution reduce its stated capital for any purpose, including for the purpose of (i) extinguishing or reducing a liability in respect of an amount unpaid on any share, (ii) distributing to the holder of an issued share of any class or series an amount not exceeding the stated capital of the class or series and (iii) declaring its stated capital to be reduced by an amount that is not represented by realisable assets. However, Entertainment One Canada shall not reduce its stated capital for any purpose, except for declaring its stated capital to be reduced by an amount that is not represented by realisable assets, if there are reasonable grounds for believing Entertainment One Canada would become insolvent. Dividends Under the CBCA, subject to any restriction in the Articles of Incorporation, the Board may declare and pay dividends, whether out of profits, capital or otherwise as it deems advisable. A dividend may be payable in shares or in property, including money. The Board may not declare and Entertainment One Canada may not pay a dividend if Entertainment One Canada is insolvent or if the payment of the dividend would render Entertainment One Canada insolvent. Directors The Board shall consist of such number of directors, being a minimum of three directors and a maximum of fifteen directors, as may from time to time be determined by resolution of the Board. Under the CBCA, at least a majority of the directors of Entertainment One Canada must be Resident Canadians. In addition, the By-Laws provide that at least 2 /3 of the Board must be Canadian (as defined in the Investment Canada Act). 56

57 The election of directors of Entertainment One Canada shall take place at the first meeting of shareholders and at each succeeding annual meeting of shareholders at which an election of directors is required. All the directors whose term has expired shall retire but, if qualified, shall be eligible for re-election. The number of directors to be elected at any such meeting shall be the number of directors then retiring unless the shareholders otherwise determine. Where the shareholders adopt an amendment to the Articles of Incorporation to increase the number or minimum number of directors, the shareholders may, at the meeting at which they adopt such amendment, elect the additional number of directors authorised by the amendment. The election of directors shall be by Ordinary Resolution and the directors so elected shall hold office until the close of the annual meeting of shareholders next following the election. If an election of directors is not held at the proper time, the incumbent directors shall continue in office until their successors are elected. Under the CBCA, the following persons are disqualified from being a director: (a) (b) (c) (d) anyone who is less than 18 years of age; anyone who is of unsound mind and has been so found by a court in Canada or elsewhere; a person who is not a natural person; or a person who has the status of bankrupt. Subject to the provisions of the CBCA, the shareholders may, by Ordinary Resolution passed at a meeting called for such purpose, remove any director from office. The vacancy created by such removal may be filled at the same meeting, failing which it may be filled by the Board. Conflicts of Interest A director or officer who is a party to, or who is a director or officer of or has a material interest in any person who is a party to a material contract or proposed material contract with Entertainment One Canada shall disclose the nature and extent of his interest at the time and in the manner provided by the CBCA. A director interested in a contract so referred to the Board shall not vote on any resolution to approve the same, except as provided by the CBCA. Share qualification A director need not hold any share qualification but shall be entitled to receive notice of and to attend and speak at any general meeting of Entertainment One Canada or at any separate meeting of the holders of any class of shares of Entertainment One Canada. Appointment and Retirement of directors Subject to the CBCA, the annual meeting of shareholders shall be held on such day and at such time in each year as the Board, or the chairperson of the Board, or the President in the absence of the chairperson of the Board, may from time to time determine, for the purpose of electing directors. Vacancies among the directors or appointment additional directors may be made by the Board in accordance with the By-laws. Neither the By-laws nor the CBCA prescribe a retirement age for directors. Indemnity Entertainment One Canada may indemnify a director or officer of Entertainment One Canada but the director or officer must have acted honestly and in good faith with a view to the best interests of Entertainment One Canada, and in the case of a criminal or administrative proceeding or a proceeding involving a monetary penalty, the director or officer must have had reasonable grounds for believing that his or her conduct was lawful. 57

58 Borrowing Powers Without limit to the powers of the Board as provided in the CBCA, the Board may exercise all the powers of Entertainment One Canada to borrow money and to issue, reissue, sell or pledge debt obligations of Entertainment One Canada. Meetings of Shareholders Entertainment One Canada is required to hold an annual meeting of shareholders no later than 15 months after the last annual meeting and within 6 months after the end of Entertainment One Canada s preceding financial year for the purposes of reviewing the financial statements, electing directors, and appointing auditors. In addition, the directors of Entertainment One Canada may at any time call a Special Meeting of shareholders. A holder of 5 per cent. of the issued and outstanding Entertainment One Canada common shares has the right to requisition the directors of Entertainment One Canada to call a meeting of shareholders, and if the directors of Entertainment One Canada fail to do so, such shareholder has the right to call the meeting. Shareholders are entitled to receive not less than 21 days nor more than 60 days notice of a meeting of shareholders. The directors of Entertainment One Canada may establish a record date for receiving notice of and voting at a meeting which shall be not less than 21 days nor more than 60 days before the date of the meeting, and where no such record date for notice is fixed by the directors of Entertainment One Canada, the record date shall be the close of business on the day immediately preceding the day on which notice is given. The By-Laws set out the procedures for conducting meetings of shareholders. Quorum A quorum for the transaction of business at any meeting of shareholders shall be two persons present in person, each being a shareholder entitled to vote at the meeting or a duly appointed proxy holder or representative for a shareholder so entitled, who hold or represent by proxy not less than 5 per cent. of the total number of shares entitled to vote at the meeting. If a quorum is present at the opening of any meeting of shareholders, the shareholders present or represented may proceed with the business of the meeting notwithstanding that a quorum is not present throughout the meeting. If a quorum is not present at the opening of the meeting of shareholders, the shareholders present or represented may adjourn the meeting to a fixed time and place but may not transact any other business. Notwithstanding the foregoing quorum requirements, at such adjourned meeting, the shareholder or shareholders entitled to vote then present or represented shall constitute a quorum. Votes of Shareholders Subject to the Articles of Incorporation, on a show of hands every shareholder who being an individual is present in person or represented by proxy or, being a corporation is present by a duly authorised representative or proxy, has one vote, and on a poll every member has one vote for every Entertainment One Canada common share of which he is the holder. Fundamental Changes The shareholders must approve by Special Resolution, among other matters, any proposed amalgamation of Entertainment One Canada with another company, the disposition of substantially all of Entertainment One Canada s assets, or any changes to the Articles of Incorporation of Entertainment One Canada. Rights of Dissent Under the CBCA, a shareholder is entitled to dissent in respect of certain proposed fundamental actions by Entertainment One Canada to be voted upon by the shareholders, including the following: a resolution to adopt an amalgamation agreement; a resolution to authorise the continuance of Entertainment One Canada; a resolution to authorise or ratify the sale, lease or exchange of all or substantially all of Entertainment One Canada s property; or a resolution to authorise a going private transaction or an arrangement. 58

59 In order to exercise a dissent right, a shareholder must comply with the notice requirements and time periods set out in the CBCA. Upon dissent, the shareholder will be entitled to be paid the fair value of his or her Entertainment One Canada common shares immediately before the passing of the resolution in respect of which the shareholder dissented, provided that the action in question is implemented. The CBCA also provides remedies to a complainant (which includes a registered or beneficial shareholder) in respect of an act or omission of Entertainment One Canada or the conduct of the business of Entertainment One Canada, or the exercise of the powers of the directors in a manner that is oppressive, or unfairly prejudicial to, or that unfairly disregards the interests of the complainant. The Canadian courts have broad powers to make interim or final orders in respect of such oppressive conduct or exercise of powers. Pre-emption The CBCA does not confer rights of pre-emption upon the issue or sale of any shares in Entertainment One Canada. However, the Articles of Incorporation provide that if Entertainment One Canada is proposing to issue equity securities: it shall not issue any of them on any terms to a person unless it has made an offer to each holder of relevant shares or relevant employee shares to issue to him on the same or more favourable terms a proportion of those securities which is as nearly as practicable equal to the proportion in nominal value held by him of the aggregate of relevant shares and relevant employee shares; and it shall not issue any of those securities to a person unless the period during which any such offer may be accepted has expired or Entertainment One Canada has received notice of the acceptance or refusal of every offer so made. Notwithstanding that the Articles of Incorporation provide the pre-emptive rights referred to above, shareholders have no pre-emptive right in respect of shares in the capital of Entertainment One Canada to be issued: (a) for consideration other than money; (b) as a share dividend; or (c) pursuant to the exercise of conversion privileges, options or rights previously granted by Entertainment One Canada. Securities which Entertainment One Canada has offered to issue to a holder of relevant shares or relevant employee shares may be issued to him or anyone in whose favour he has renounced his right to their issuance, without contravening sub-paragraph (b) above. These pre-emptive provisions do not apply to the issuance of securities which would, apart from a renunciation or assignment of the right to their issuance, be held under an employees share scheme. The pre-emption rights summarised above may be disapplied, provided that the directors are given power to do so by Special Resolution. Takeovers The management and control of Entertainment One Canada is situated outside the UK. For this reason the Takeover Code does not apply to Entertainment One Canada. It is emphasised that, although the Entertainment One Canada common shares will trade on the Official List, Entertainment One Canada will not be subject to takeover regulation in the UK. In certain circumstances the takeover provisions may also not apply in other jurisdictions where shareholders are residents. To cater for this circumstance, certain protections have been incorporated into the Articles of Incorporation which, to an extent, mirror provisions of the Takeover Code (the Relevant Code Provisions ). Consequently, the Articles of Incorporation provide that if an acquisition of Entertainment One Canada common shares were to increase the aggregate holding of the acquirer and its concert parties to shares carrying 30 per cent. or more of the voting rights in Entertainment One Canada, the acquirer (other than an Existing Substantial Shareholder) and, depending on the circumstances, its concert parties, would be required (except with the agreement of Entertainment One Canada in general meeting by Special Resolution) to make a cash offer for the outstanding shares in Entertainment One Canada at a price not less than the highest price paid for the Entertainment One Canada common shares by the acquirer or its concert parties during the previous 12 months. This requirement would also be triggered by any acquisition of shares by a person (other than an Existing Substantial Shareholder) holding (together with its concert parties) shares carrying not less than 30 per cent. but not more than 50 per cent. of the voting rights in Entertainment One Canada if the effect of such acquisition were to increase that person s percentage of the voting rights. The main difference between these provisions and the 59

60 Relevant Code Provisions is that the Panel on Takeovers and Mergers does not have any jurisdiction to exercise its discretion in waiving any of the provisions of the Articles of Incorporation. These provisions are subject to applicable Securities laws. Preferred Variable Voting Shareholders Agreement Prior to the Transaction Time, Entertainment One Canada will issue 100 Preferred Variable Voting Shares to Entertainment One Canada s Chief Executive Officer, Darren Throop, who will enter into a Preferred Variable Voting Shareholders Agreement with Entertainment One Canada pursuant to which Mr. Throop (a) will agree not to transfer Preferred Variable Voting Shares, in whole or in part, except with the prior written approval of the Board, (b) will grant Entertainment One Canada the unilateral right to compel the transfer of the Preferred Variable Voting Shares, at any time and from time to time, in whole or in part, to a person designated by the Board who is a current officer of Entertainment One Canada and a Resident Canadian if it is determined by the Board to be in the best interests of Entertainment One Canada in order to enable Entertainment One Canada to be eligible for tax credits or government incentives and (c) will grant Entertainment One Canada a power of attorney to effect any transfers contemplated by the Preferred Variable Voting Shareholders Agreement. In determining whether to approve or compel a transfer, the Board will act in the best interest of Entertainment One Canada in order to enable Entertainment One Canada to be eligible for tax credits or government incentives. Pursuant to the Preferred Variable Voting Shareholders Agreement, the consideration received as a result of the transfer of the Preferred Variable Voting Shares cannot exceed one Canadian cent per share. Under the terms of the Preferred Variable Voting Shares, transfer of the shares will be restricted to Resident Canadians. 60

61 COMPARISON OF RIGHTS OF SHAREHOLDERS Provision Entertainment One Cayman Entertainment One Canada Capital Structure Authorised Share Capital Entertainment One Cayman s authorised share capital is CAD 2,250,000 divided into (i) 200,000,000 ordinary shares of a par value of CAD0.01 each (the Entertainment One Cayman Ordinary Shares ) and (ii) 25,000,000 Class S shares of a par value of CAD0.01 each (the Class S Shares ). Entertainment One Cayman Ordinary Shares carry the right to receive notice of, attend at and vote at any general meeting of Entertainment One Cayman and to participate in the assets and profits of Entertainment One Cayman. Class S Shares have the right to receive notice of, attend at and vote at any general meeting of Entertainment One Cayman, can be redeemed at the option of Entertainment One Cayman and the right to repayment of par value upon the winding-up of Entertainment One Cayman, but otherwise have no right to participate in the profits or assets of Entertainment One Cayman. There is no provision of Cayman Islands law which requires the Board to exercise the powers of Entertainment One Cayman to issue shares only with the authority of shareholders in general meeting. However, Entertainment One Cayman s articles of association provide that the Board shall not exercise any power to allot relevant securities (other than Class S Shares to which this provision does not apply) unless they are, in accordance with the articles of association, authorised to do so by shareholders in general meeting. Entertainment One Cayman s articles of association provide that subject thereto and to the provisions, if any, in the memorandum and articles of association relating to authority to issue shares, pre-emption rights or otherwise and to any direction that may be given by the shareholders in general meeting and without prejudice to any rights Entertainment One Canada s authorised share capital is an unlimited number of common shares of no par value (the Entertainment One Canada common shares ) and an unlimited number of preferred variable voting shares of no par value (the Preferred Variable Voting Shares ). Entertainment One Canada common shares carry the right to receive notice of, attend at and vote at any meeting of shareholders of Entertainment One Canada, and, subject to any preferential rights attaching to any other class or series of shares of Entertainment One Canada, to participate in any distribution of the remaining property and assets of Entertainment One Canada upon the liquidation, dissolution or winding up of Entertainment One Canada. Preferred Variable Voting Shares carry the right to receive notice of, attend at and vote at any meeting of shareholders of Entertainment One Canada. The votes attached to Preferred Variable Voting Shares as a class are automatically adjusted so that they, together with the votes attached to Entertainment One Canada common shares that are owned by Canadians (as defined in the Investment Canada Act), equal 51% of the votes attached to all shares in the capital of Entertainment One Canada. In the event of a liquidation, dissolution or other distribution of the assets of Entertainment One Canada for the purpose of winding up the affairs of Entertainment One Canada, Preferred Variable Voting Shares have the right of repayment of one Canadian cent per share in priority to the Entertainment One Canada common shares. The Preferred Variable Voting Shares have no other rights to participate in the profits or assets of Entertainment One Canada. Subject to the Canada Business Corporations Act ( CBCA ), 61

62 Provision Entertainment One Cayman Entertainment One Canada Capital Structure (continued) Issued Share Capital Reduction of Share Capital attached to any existing shares, the directors may allot (with or without conferring a right of renunciation), issue, grant options over or otherwise dispose of (including fractions of a share) with or without preferred, deferred or other rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper. Shares may be allotted and issued otherwise than for cash (in whole or in part). Entertainment One Cayman shall not issue shares to bearer. The authorised share capital of Entertainment One Cayman may be increased by an ordinary resolution of the shareholders. An ordinary resolution of Entertainment One Cayman requires approval by a simple majority (i.e. more than 50%) of the votes cast at a meeting of shareholders by shareholders entitled to vote at that meeting. As of 31 May 2010 there are 151,926,963 Entertainment One Cayman ordinary shares and 15,620,395 Class S Shares in issue. Entertainment One Cayman may, by special resolution of its shareholders, reduce its authorised but unissued share capital. No court approval is required for a reduction of authorised but unissued share capital. Entertainment One Cayman also may, by a special resolution of its ordinary shareholders and subject to confirmation by the Grand Court of the Cayman Islands, authorise the reduction in any manner of its issued share capital or any share premium account. A special resolution of Entertainment One Cayman requires approval by not less than three-fourths of the votes cast at a meeting of shareholders by shareholders entitled to vote at that meeting or approval in writing by all shareholders entitled to vote at a general meeting.entertainment One Cayman may issue fractional shares. the articles of Entertainment One Canada may by special resolution be amended to change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series. Any class of shares may by special resolution be divided into different series of shares. A special resolution of Entertainment One Canada means a resolution passed by a majority of not less than two-thirds of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution. As of 31 May 2010 there are 10 Entertainment One Canada common shares in issue. Under the CBCA, Entertainment One Canada may by special resolution reduce its stated capital for any purpose, including for the purpose of (i) extinguishing or reducing a liability in respect of an amount unpaid on any share, (ii) distributing to the holder of an issued share of any class or series an amount not exceeding the stated capital of the class or series and (iii) declaring its stated capital to be reduced by an amount that is not represented by realisable assets. However, Entertainment One Canada shall not reduce its stated capital for any purpose, except for declaring its stated capital to be reduced by an amount that is not represented by realisable assets, if there are reasonable grounds for believing Entertainment One Canada would become insolvent. 62

63 Provision Entertainment One Cayman Entertainment One Canada Pre-emption Rights Cayman Islands law does not provide for statutory pre-emption rights. However, Entertainment One Cayman s articles of association provide that if Entertainment One Cayman is proposing to allot equity securities (i) it shall not allot any of them on any terms to a person unless it has made an offer to each holder of relevant shares or relevant employee shares to allot to him on the same or more favourable terms a proportion of those securities which is as nearly as practicable equal to the proportion in nominal value held by him of the aggregate of relevant shares and relevant employee shares; and (ii) it shall not allot any of those securities to a person unless the period during which any such offer may be accepted has expired or Entertainment One Cayman has received notice of the acceptance or refusal of every offer so made. These pre-emptive provisions do not apply to a particular allotment of equity securities if these are, or are to be, wholly or partly paid up otherwise than in cash, and securities which Entertainment One Cayman has offered to allot to a holder of relevant shares or relevant employee shares may be allotted to him, or anyone in whose favour he has renounced his right to their allotment, without contravening the foregoing provisions. The preemption rights summarised above may be disapplied, provided that the Board are given power to do so by special resolution. Pre-emption provisions do not apply to Class S Shares. The CBCA does not confer rights of pre-emption upon the issue or sale of any shares in Entertainment One Canada. However, the articles of Entertainment One Canada provide that if Entertainment One Canada is proposing to issue equity securities: (i) it shall not issue any of them on any terms to a person unless it has made an offer to each holder of relevant shares or relevant employee shares to issue to him on the same or more favourable terms a proportion of those securities which is as nearly as practicable equal to the proportion in nominal value held by him of the aggregate of relevant shares and relevant employee shares; and (ii)it shall not issue any of those securities to a person unless the period during which any such offer may be accepted has expired or Entertainment One Canada has received notice of the acceptance or refusal of every offer so made. These pre-emptive rights do not apply in respect of shares in the capital of Entertainment One Canada to be issued: (a) for consideration other than money; (b) as a share dividend; or (c) pursuant to the exercise of conversion privileges, options or rights previously granted by Entertainment One Canada. Securities which Entertainment One Canada has offered to issue to a holder of relevant shares or relevant employee shares may be issued to him or anyone in whose favour he has renounced his right to their issuance, without contravening subparagraph (b) above. These pre-emptive rights also do not apply to the issuance of securities which would, apart from a renunciation or assignment of the right to their issuance, be held under an employees share scheme. The preemption rights summarised above may be disapplied, provided that the directors are given power to do so by special resolution. The pre-emption provisions do not apply to Preferred Variable Voting Shares. 63

64 Provision Entertainment One Cayman Entertainment One Canada Dividends and Distributions The Board may, with the approval of an ordinary resolution of the shareholders, declare the payment of dividends to shareholders, which under Cayman Islands law may be paid out of Entertainment One Cayman s (i) profits available for distribution, or (ii) share premium account, which represents the excess of the price paid to Entertainment One Cayman on the issue of its shares over the par or nominal value of those shares. However, no dividends may be paid if, after payment, Entertainment One Cayman would not be able to pay its debts as they come due in the ordinary course of business. Subject to the foregoing, dividends on Entertainment One Cayman Ordinary Shares, if any, are at the discretion of the Board and depend on, among other things, results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that the Board deems relevant, as well as Entertainment One Cayman s ability to pay dividends in compliance with the Cayman Companies Law. Entertainment One Cayman may pay dividends in any currency. Except insofar as the rights attaching to, or the terms of issue of, any shares otherwise provide, all dividends shall be declared and paid according to the amounts paid up (other than amounts paid up in advance of calls) on the shares in respect of which the dividend is paid and all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion of the period in respect of which the dividend is paid. The Board may deduct from any dividend payable to any shareholder all sums of money, if any, due from the shareholder to Entertainment One Cayman on any account. The Board may, with the authority of an ordinary resolution and in accordance with the articles of association of Entertainment One Cayman, offer any shareholder the right to elect to receive further new shares credited as fully paid instead of cash Under the CBCA, subject to any restriction in the articles of Entertainment One Canada, the Board may declare and pay dividends, whether out of profits, capital or otherwise as it deems advisable. A dividend may be payable in shares or in property, including money. The Board may not declare and Entertainment One Canada may not pay a dividend if Entertainment One Canada is insolvent or if the payment of the dividend would render Entertainment One Canada insolvent. Each holder of Entertainment One Canada common shares shall be entitled, subject to any preferential rights attaching to any other class or series of shares of Entertainment One Canada, to participate in any distribution. Each holder of Entertainment One Canada common shares is entitled, subject to any preferential rights attaching to any other class or series of shares of Entertainment One Canada, to receive dividends if, as and when declared on the Entertainment One Canada common shares by Entertainment One Canada. Preferred Variable Voting Shares are not entitled to receive dividends. 64

65 Provision Entertainment One Cayman Entertainment One Canada Dividends and Distributions (continued) Share Repurchases and Redemptions in respect of all (or some part) of any dividend specified by the ordinary resolution. No dividends are payable on the Class S Shares. Under the articles of association of Entertainment One Cayman and the Cayman Companies Law, Entertainment One Cayman may issue shares that are to be redeemed or liable to be redeemed at the option of the shareholder of Entertainment One Cayman. The redemption of such shares shall be effected in such manner as the shareholders may, by special resolution, determine before the issue of shares but unless such special resolution has been passed shares (other than Class S Shares) are not generally redeemable. Issued shares may be repurchased or redeemed by the company out of profits, from proceeds of a fresh issue of shares made for that purpose, out of capital or out of the share premium account, in such circumstances and on such terms as may be agreed by the Board and the holder of the shares to be repurchased or redeemed (provided that the company has the ability to pay its debts as they come due in the ordinary course of business). The Cayman Companies Law requires that the articles of association of a Cayman Islands company set out, or the shareholders approve, the manner of any repurchase of shares of the company. As a matter of Cayman Islands law, no share may be redeemed or repurchased unless it is fully paid up and unless such redemption or repurchase is not of all outstanding shares. No share may be redeemed after a company has commenced liquidation. Cayman Islands law does not distinguish between on-market and offmarket purchases of a company s own shares. Redeemed or repurchased shares of Entertainment One Cayman will automatically be cancelled. Cayman Islands law does not recognise any concept of treasury shares. Class S Shares are redeemable at the option of Entertainment One Cayman but are not redeemable at the option of the holders thereof. Under the CBCA, Entertainment One Canada may authorize and issue shares that are redeemable at the option of Entertainment One Canada or at the option of the shareholder of Entertainment One Canada. The redemption of such shares shall be effected in the manner set out in the articles of Entertainment One Canada and in accordance with the provisions of the CBCA. Entertainment One Canada shall not make any payment to purchase or redeem any redeemable shares issued by it if there are reasonable grounds for believing that Entertainment One Canada is insolvent or if the payment would render Entertainment One Canada insolvent. The Preferred Variable Voting Shares are redeemable at the option of Entertainment One Canada for one Canadian cent per share but are not redeemable at the option of the holders thereof. 65

66 Provision Entertainment One Cayman Entertainment One Canada Bonus Shares Shareholder Approval of Business Combinations Under Entertainment One Cayman s articles of association, upon the recommendation of the Board, the shareholders by ordinary resolution may authorise the Board to capitalise any amount credited to any reserve account or any amount available for distribution, and use such amount for issuance to shareholders as fully paid bonus shares on the same basis of entitlement as would apply in respect of a dividend distribution. There are a number of mechanisms for acquiring a Cayman company, including: (i) a court-approved scheme of arrangement under the Cayman Companies Law. A scheme of arrangement with one or more class of shareholders requires the sanction of the scheme of arrangement by the Grand Court of the Cayman Islands and the approval of (1) a majority in number of the registered holders of each relevant class of shares voting on the scheme of arrangement, (2) representing 75% or more in value of the shares of each relevant class voted on such proposal at the relevant meeting or meetings. Shares held by the acquiring party are excluded from the tally of any vote on the scheme; (ii) through a tender offer by a third party. The Cayman Companies Law provides that when an offer is made for shares of any class of a Cayman Islands company and, within four months of the offer, the holders of not less than 90% of the outstanding shares of such class accept the offer, the offeror may, for two months after that four- month period, require the remaining shareholders of the relevant class to transfer their shares on the same terms as the original offer. In those circumstances, non-tendering shareholders will be compelled to sell their shares, unless within one month from the date on which the notice to compulsorily acquire was given to the non-tendering shareholder, the nontendering shareholder is able to obtain a Cayman Islands court order otherwise Under the CBCA Entertainment One Canada may pay a dividend by issuing fully paid shares of Entertainment One Canada. There are a number of mechanisms for acquiring a Canadian company, including (i) a court-approved plan of arrangement under the CBCA, (ii) an offer to acquire the shares of the company by a third party, and (iii) through an amalgamation with another Canadian company. A plan of arrangement requires the approval of the plan of arrangement by a court. In connection with an application for approval of a plan of arrangement, the court may make any interim or final order it thinks fit, including an order requiring the corporation to call, hold and conduct a meeting of holders of securities or options in such manner as the court directs and an order permitting a shareholder to dissent in respect of the plan of arrangement in accordance with the provisions of the CBCA. Under the CBCA, if within 120 days of the date of an offer to acquire the shares of Entertainment One Canada at least 90% of the outstanding shares of Entertainment One Canada not owned by the offeror and its affiliates and associates are tendered to the bid, the offeror may, after taking up and paying for such shares, send written notice to any shareholder who did not accept the offer compelling them to sell its shares on the same terms as contained in the original offer, subject to the right of such shareholder to demand payment of the fair value of the shares. If a shareholder has elected to demand payment of the fair value of its shares, a court will fix the fair value 66

67 Provision Entertainment One Cayman Entertainment One Canada Shareholder Approval of Business Combinations (continued) Takeovers and Mergers providing; and (iii) through a merger or consolidation between Entertainment One Cayman and a company incorporated in the Cayman Islands or another jurisdiction (provided the merger or consolidation is allowed by the laws of that other jurisdiction). Authorisation of the merger or consolidation requires either: (1) adoption of a special resolution under Cayman Islands law by the shareholders of each constituent company entitled to vote if the shares to be issued to each shareholder in the consolidated or the surviving company will have the same rights and economic value as the shares the shareholder owned in the relevant constituent company; or (2) adoption of a resolution by the shareholders of each constituent company, including holders of any outstanding preference shares, in each case voting together as one class, by the affirmative vote of a majority in number of the holders of each company s shares representing 75% or more in value of the shares present and voting, whether in person or by proxy. In addition, the consent of each holder of a fixed or floating security interest of either constituent company must be obtained, unless the court waives such requirement.under Cayman Islands law, Board approval, but not shareholder approval, is required for a sale, lease or exchange of all or substantially all of the assets of Entertainment One Cayman. Entertainment One Cayman s articles of association provide that if an acquisition of Entertainment One Cayman Ordinary Shares were to increase the aggregate holding of the acquirer and its concert parties to shares carrying 50 per cent. or more of the voting rights in Entertainment One Cayman, the acquirer and, depending on the circumstances, its concert parties, would be required to make a cash offer for the outstanding shares in Entertainment One Cayman at a price not less than the highest price paid for of such shares. The shareholders must approve by special resolution any proposed amalgamation of E-One Canada with another company. Shareholders must also approve by special resolution the sale, lease or exchange of all or substantially all of the property of Entertainment One Canada other than in the ordinary course of business. The articles of Entertainment One Canada provide that if an acquisition of Entertainment One Canada common shares were to increase the aggregate holding of the acquirer (other than an Existing Substantive Shareholder) and its concert parties to shares carrying 30% or more of the voting rights in Entertainment One Canada, the acquirer and, depending on the circumstances, its concert parties, would be required (except with the agreement of the shareholders of Entertainment One Canada by special resolution) 67

68 Provision Entertainment One Cayman Entertainment One Canada Takeovers and Mergers (continued) Disclosure of Interests in Shares the Entertainment One Cayman Ordinary Shares by the acquirer or its concert parties during the previous 12 months. There are no provisions under Cayman Companies Law requiring the disclosure of shareholdings in Entertainment One Cayman to the public. However, Entertainment One Cayman s articles of association provide that where a person, either (i) to his knowledge requires an interest in three per cent. or more of the relevant share capital of Entertainment One Cayman, or ceases to be interested in shares so comprised (whether or not retaining an interest in other shares so comprised); or (ii) becomes aware that he has acquired an interest in three per cent. or more of the relevant share capital of Entertainment One Cayman or that he has ceased to be interested in shares so comprised in which he was previously interested, then he is obliged to make a notification to Entertainment to make a cash offer for the outstanding shares in Entertainment One Canada at a price not less than the highest price paid for the Entertainment One Canada common shares by the acquirer or its concert parties during the previous 12 months. This requirement would also be triggered by any acquisition of shares by a person (other than an Existing Substantive Shareholder) holding (together with its concert parties) shares carrying not less than 30% but not more than 50% of the voting rights in Entertainment One Canada if the effect of such acquisition were to increase that person s percentage of the voting rights. The terms of the Preferred Variable Voting Shares and the Preferred Variable Voting Shareholders Agreement contain a coat-tail provision which prevents a holder of Preferred Variable Voting Shares from accepting an offer to purchase all or part of the holder s shares unless the party making the offer also offers to purchase, by way of a take-over bid, all of the outstanding Entertainment One Canada common shares at a price per Entertainment One Canada common share and on other terms and conditions as are approved by the Board. There are no provisions under the CBCA requiring the disclosure of shareholdings in Entertainment One Canada to the public. However, the Entertainment One Canada articles provide that where a person, either (i) to his knowledge acquires an interest in three per cent. or more of the issued share capital of Entertainment One Canada of any class carrying the right to vote, or ceases to be interested in shares so comprised (whether or not retaining an interest in other shares so comprised) or (ii) becomes aware that he has acquired an interest in three percent or more of the issued share capital of Entertainment One Canada of any class carrying the right to vote or that he has ceased to be interested in shares so comprised in which he was previously interested, then he is obliged 68

69 Provision Entertainment One Cayman Entertainment One Canada Disclosure of Interests in Shares (continued) One Cayman with respect to his interests or cessation of interests in Entertainment One Cayman s shares upon becoming aware of the acquisition or disposal of such interest or upon becoming aware of any transaction whereby his interest rises to or above three per cent. or falls below three per cent. or rises or falls any whole percentage point above three per cent. Each shareholder is also required, to the extent that he is lawfully able to do so, to notify Entertainment One Cayman if any other person requires or ceases to have a notifiable interest in the relevant share capital of which he is the registered shareholder, or, if unable lawfully to provide such notification, to use his reasonable endeavours to procure that such other person makes notification of his interests to Entertainment One Cayman. This does not apply to a shareholder that is a Shareholder of Entertainment One Cayman solely by reason of its role as depository. This provision is more stringent than any requirement of Cayman Island law. Where notice is required to be provided, the notification must, among other things, be performed without undue delay and in any event within the period of four days not following the day on which the obligation arises. The Board may further by notice in writing require a person whom Entertainment One Cayman knows or has reasonable cause to believe to be or, at any time during the three years immediately preceding the date on which notice is issued, to have been interested in the shares comprised in Entertainment One Cayman s relevant share capital (i) to confirm that fact or (as the case may be) to indicate whether or not it is the case; and (ii) where he holds or has during that time held an interest in shares so comprised, to give such further information as may be required in the notice. to make a notification to Entertainment One Canada with respect to his interests or cessation of interests in Entertainment One Canada s shares upon becoming aware of the acquisition or disposal of such interest or upon becoming aware of any transaction whereby his interest rises to or above three percent or falls below three percent or rises or falls any whole percentage point above three percent. Each shareholder is also required, to the extent he is lawfully able to do so, to notify Entertainment One Cayman if any other person acquires or ceases to have a notifiable interest in the issued share capital of Entertainment One Canada of any class carrying the right to vote of which he is the registered shareholder, or, if unable lawfully to provide such notification, to use his reasonable endeavours to procure that such other person makes notification of his interests to Entertainment One Canada. These notification provisions do not apply to a shareholder that is a shareholder of Entertainment One Canada solely by reason of its role as depository. Where a notice is required to be provided, the notification must be performed without undue delay and in any event within the period of four days next following the day on which the obligation arises. In addition, the Board of Entertainment One Canada may by notice in writing require a person whom Entertainment One Canada knows or has reasonable cause to believe to be or, at any time during the three years immediately preceding the date on which the notice is issued, to have been interested in shares comprised of the issued share capital of Entertainment One Canada of any class carrying the right to vote (i) to confirm that fact or (as the case may be) to indicate whether or not it is the case; and (ii) where he holds or has during that time held an interest in shares so comprised, to give such further information as may be required in the notice. 69

70 Provision Entertainment One Cayman Entertainment One Canada Appraisal Rights Election of Directors Neither Cayman Islands law nor Entertainment One Cayman s articles of association specifically provide for appraisal rights. However, in connection with the compulsory transfer of shares to a 90% shareholder of a Cayman Islands company as described above under Shareholder Approval of Business Combinations, a minority shareholder may, within one month of receiving notice of the compulsory transfer, apply to the court to object to that transfer. In these circumstances, the burden is on the minority shareholder to show that the court should exercise its discretion to prevent the compulsory transfer. Further, a Cayman Islands court has the power to make provision for appraisal rights for dissenters under a scheme of arrangement that is proposed in connection with an amalgamation between two companies. However, Cayman Islands counsel have advised us that they are not aware of any reported cases in which the Cayman Islands court has considered the imposition of such appraisal rights. Entertainment One Cayman s articles of association provide for a minimum of three directors where (i) at least two thirds of the directors must be Canadians (as defined in the Investment Canada Act (Canada)), (ii) a majority of the directors must be independent directors, and (iii) a majority of such independent directors must be Canadians. The shareholders of Entertainment One Cayman may from time to time increase or reduce the minimum number of directors by ordinary resolution. The shareholders of Entertainment One Cayman may Under the CBCA, a shareholder of Entertainment One Canada is entitled to dissent in respect of certain proposed fundamental actions by Entertainment One Canada to be voted upon by the Shareholders, including the following: (a) a resolution to adopt an amalgamation agreement; (b) a resolution to authorise the continuance of Entertainment One Canada; (c) a resolution to authorise or ratify the sale, lease or exchange of all or substantially all of Entertainment One Canada s property; or (d) a resolution to authorise a going private transaction or a plan of arrangement. In order to exercise a dissent right, a shareholder must comply with the notice requirements and time periods set out in the CBCA. Upon dissent, the shareholder will be entitled to be paid the fair value of his or her shares immediately before the passing of the resolution in respect of which the shareholder dissented, provided that the action in question is implemented. In addition, in connection with the compulsory transfer of shares to a 90% shareholder of Entertainment One Canada, as discussed above under Shareholder Approval of Business Combinations, a minority shareholder has the right to demand payment of the fair value of its shares. If a shareholder has elected to demand payment of the fair value of its shares, a court will fix the fair value of such shares. The Board shall consist of such number of directors, being a minimum of three directors and a maximum of 15 directors, as may from time to time be determined by resolution of the Board. At least majority of the directors of Entertainment One Canada must be Resident Canadians. In addition, at least 2/3 of the directors of Entertainment One Canada must be Canadian within the meaning of the Investment Canada Act. The election of directors of Entertainment One Canada shall take place at the first meeting of shareholders and at each succeeding 70

71 Provision Entertainment One Cayman Entertainment One Canada Election of Directors (continued) further, within such limits outlined above, elect any person to be a director by ordinary resolution. Directors are elected or appointed at the annual general meeting or at any extraordinary general meeting called for that purpose. Each director is elected by the affirmative vote of a majority of the votes cast with respect to such director at any meeting for the election of directors at which a quorum is present. annual meeting of shareholders at which an election of directors is required. All the directors whose term has expired shall retire but, if qualified, shall be eligible for re-election. The number of directors to be elected at any such meeting shall be the number of directors then retiring unless the shareholders otherwise determine. Where the shareholders adopt an amendment to the articles to increase the number or minimum number of directors, the shareholders may, at the meeting at which they adopt such amendment, elect the additional number of directors authorised by the amendment. The election of directors shall be by ordinary resolution and the directors so elected shall hold office until the close of the annual meeting of shareholders next following the election. If an election of directors is not held at the proper time, the incumbent directors shall continue in office until their successors are elected. Under the CBCA, the following persons are disqualified from being a director: (i) anyone who is less than 18 years of age; (ii) anyone who is of unsound mind and has been so found by a court in Canada or elsewhere; (iii) a person who is not a natural person; or (iv) a person who has the status of bankrupt. Appointment of Directors by the Board Under Entertainment One Cayman s articles of association, the Board has the authority to appoint one or more directors to the Board, either to fill a vacancy or as an additional director on recommendation of the nominations committee, subject to the maximum number of directors provided for in the articles of association. The Board may fill a vacancy by an affirmative vote of a majority of the directors constituting a quorum, provided that if there are an insufficient number of directors to constitute a quorum, the Board may nonetheless act to fill such vacancies or call a general meeting of the shareholders. Vacancies among the directors, except a vacancy resulting from an increase in the minimum or maximum number of directors or a failure to elect the number of directors provided for in the articles, or appointment of additional directors (subject to a maximum of one third of the number of directors elected at the previous annual meeting of shareholders) may be made by the Board in accordance with the Articles. 71

72 Provision Entertainment One Cayman Entertainment One Canada Removal of Directors Board and Committee Composition; Management Entertainment One Cayman s articles of association provide that the shareholders may by an ordinary resolution, and the Board may also with unanimous approval of the directors provided there are not less than three directors, remove a director with or without cause provided that such removal does not cause the number of Canadian and Independent Directors to fall below the levels stated above under Election of Directors. At every annual general meeting one-third of the directors for the time being or, if their number is not a multiple of three, then the number nearest to, but not greater than, one-third are required to retire from office. The directors to retire on each occasion shall include any director who wishes to retire and not to offer himself for re-election and those subject to retirement by rotation who have been longest in office since their last election. Subject to the provisions of the Cayman Companies Law, Entertainment One Cayman s memorandum and articles of association and to any directions given by special resolution, the business of Entertainment One Cayman is managed by the directors who may exercise all the powers of Entertainment One Cayman. Subject to the provisions of Entertainment One Cayman s articles of association, the directors may regulate their proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. The Board may then delegate management of Entertainment One Cayman to committees of the Board or such other persons as it thinks fit provided that any nominations committee for considering nominations to the Board is comprised of a majority of independent directors. Committees may meet and adjourn as they determine proper. A vote at any committee meeting will be determined by a majority of votes of the members present. Regardless of any delegation by the Board, the Board will remain The shareholders may, by ordinary resolution passed at a meeting called for such purpose, remove any director from office. The vacancy created by such removal may be filled at the same meeting, failing which it may be filled by the Board. Subject to any unanimous shareholders agreement, the Board of Entertainment One Canada shall manage, or supervise the management of, the business and affairs of Entertainment One Canada. Subject to the limitations prescribed by the CBCA, the Board of Entertainment One Canada may delegate any of the powers of the directors of Entertainment One Canada to a managing director who is a resident Canadian or a committee of directors. Pursuant to the by-laws of Entertainment One Canada, the Board shall appoint an audit committee and may designate and appoint additional committees. Each committee shall have the power to fix its quorum at not less than a majority of members, to elect its chairperson and to regulate its procedure. 72

73 Provision Entertainment One Cayman Entertainment One Canada Board and Committee Composition; Management (continued) Duties of the Board of Directors Loans to Directors responsible, as a matter of Cayman Islands law, for the proper management of the affairs of Entertainment One Cayman. The Board may create new committees or change the responsibilities of existing committees from time to time. The Cayman Companies Law does not specify the duties of directors. Judicial precedent in the Cayman Islands has defined the duties of a director generally as being the observance of general standards of loyalty, good faith, and the avoidance of a conflict of duty and self-interest. In the absence of a developed body of Cayman Islands law in this regard, the principles outlined by English and Commonwealth common law are highly persuasive in the Cayman Islands courts. More specifically, the duties of a director of a Cayman Islands company may be summarized as follows: (i) a duty to act in what the Board in good faith considers to be the best interest of the company. The interests of the company and the shareholders are distinct. However, in practical terms, there is often an overlap between the interests of the company and its shareholders as a whole; (ii) a duty to exercise their powers for the purposes for which they are conferred; (iii) a duty of trusteeship of the company s assets; (iv) the duty, where possible, to avoid conflicts of interest and of duty; (v) a duty to disclose personal interest in contracts involving the company; (vi) a duty not to make secret profits from the directors office; and (viii) a duty to act with skill and care. There are no provisions under Cayman Islands law which prevent a company making loans to any of its directors and neither Entertainment One Cayman s memorandum or articles of association impose such a prohibition. Every director or officer of Entertainment One Canada in exercising their powers and discharging their duties shall: (i) act honestly and in good faith with a view to the best interests of the corporation; and (ii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The first branch of these duties, the fiduciary duty, or duty of loyalty, requires directors to give the corporation s best interests unqualified priority over the directors personal interests or any other competing claims. Actual or apparent conflicts of interest must be avoided. The second branch of a director s duties involves the duty of care. This duty requires a director to act carefully, on an informed basis and to exhibit the diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The duty of care contains an objective standard of what a reasonably prudent person would be expected to do in comparable circumstances. The CBCA does not prevent a company from making loans to any of its directors, and neither Entertainment One Canada s articles nor its by-laws impose such a prohibition. 73

74 Provision Entertainment One Cayman Entertainment One Canada Borrowing Powers Shareholding Qualification Indemnification of Directors and Officers; Insurance The directors may exercise all the powers of Entertainment One Cayman to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of Entertainment One Cayman or of any third party. The shareholders may in general meeting fix a minimum shareholding required to be held by a director, but unless and until such a shareholding qualification is fixed a director is not required to hold shares and nevertheless shall be entitled to attend and speak at any meeting of the shareholders or any class thereof. Entertainment One Cayman s articles of association provide that other than in respect of fraud or wilful default, Entertainment One Cayman may, but is not obligated to, indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who (a) is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director, agent or officer of Entertainment One Cayman; or is or was, at the request of Entertainment One Cayman, serving as a director of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise. Entertainment One Cayman is permitted under its articles of association and the Cayman Companies Law to take out directors and officers liability insurance, as well as other types of insurance, for its directors, officers, employees and agents and other subsidiary and associated entities. Without limit to the powers of the Board as provided in the CBCA, the Board may exercise all the powers of Entertainment One Canada to borrow money and to issue, reissue, sell or pledge debt obligations of Entertainment One Canada. A director need not hold any share qualification but shall be entitled to receive notice of and to attend and speak at any general meeting of Entertainment One Canada or at any separate meeting of the holders of any class of shares of Entertainment One Canada. Under the CBCA, Entertainment One Canada may indemnify a director or officer of Entertainment One Canada but the director or officer must have acted honestly and in good faith with a view to the best interests of Entertainment One Canada, and in the case of a criminal or administrative proceeding or a proceeding involving a monetary penalty, the director or officer must have had reasonable grounds for believing that his or her conduct was lawful. Under the by-laws of Entertainment One Canada, Entertainment One Canada shall indemnify a director or officer, subject to the same limitations as set out above. 74

75 Provision Entertainment One Cayman Entertainment One Canada Limitation on Director Liability Cayman Islands law, in certain circumstances, permits a company to limit the liability of a director to the company. The considerations under Cayman Islands law with regard to the limitation of a director s liability are similar to those that apply to the enforcement of provisions relating to the indemnification of directors discussed above under Indemnification of Directors and Officers; Insurance. In summary, a Cayman Islands court will enforce such a limitation except to the extent that enforcement of the relevant provision may be held to be contrary to public policy. There are no provisions under the CBCA permitting a company to limit the liability of a director to the company. Conflicts of Interest As a matter of the common law applied in the Cayman Islands, the director of a Cayman Islands company should seek to avoid placing himself in a position where there is a conflict, or a possible conflict, between the duties he owes to the company and either his personal interest or other duties that he owes to a third party, and if a director is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company, he must declare the nature and extent of that interest to the other directors at the first opportunity. The duty to avoid conflicting interests extends to contracts with the company, the use of information or opportunities that come to him by virtue of his directorship and actions competing with the company. Matters that have been authorised by the Board generally or authorised by the provisions of the company s articles of association will not result in a breach of this common law duty of a director to avoid conflicts of interest. There is no requirement to maintain a register of director declared interests under Cayman Islands law. Under the Entertainment One Cayman articles of association, a director of Entertainment One Cayman may (i) enter into or otherwise be interested in any contract, arrangement, transaction or proposal with Entertainment One Cayman or in which Entertainment One A director or officer who is a party to, or who is a director or officer of or has a material interest in, any person who is a party to, a material contract or material transaction or proposed material contract or material transaction with Entertainment One Canada shall disclose the nature and extent of his interest at the time and in the manner provided by the CBCA. A director interested in a contract or transaction so referred to the Board shall not vote on any resolution to approve the same, unless the contract or transaction (i) relates primarily to his or her remuneration as a director, officer, employee or agent of Entertainment One Canada or an affiliate, (ii) is for indemnity or insurance, or (iii) is with an affiliate. 75

76 Provision Entertainment One Cayman Entertainment One Canada Conflicts of Interest (continued) Cayman is otherwise interested; (ii) hold any other office or place of profit under Entertainment One Cayman (except the office of auditor) in conjunction with the office of Director and be paid such extra remuneration for so doing as the Board may decide; (iii) be or become a member or director of, or hold any other office or place of profit under, or otherwise be interested in, any other company in which Entertainment One Cayman may be interested; and (iv) act in a professional capacity for Entertainment One Cayman (except as auditor) and be entitled to remuneration for professional services as if he were not a director, and such director will not be accountable to Entertainment One Cayman for any remuneration received from such employment or other interest. A director shall not vote or be counted in the quorum at a meeting in relation to any resolution of the Board or a committee of the Board relating to any contract, arrangement, transaction or other proposal in which he has an interest which, together with any interest of any person connected with him, is to his knowledge a material interest (other than an interest in shares, debentures or other securities of or otherwise in or through Entertainment One Cayman), save that this prohibition does not apply to (i) the giving of any guarantee, security or indemnity in respect of money lent or obligations incurred by him or by any other person at the request of or for the benefit of Entertainment One Cayman or any of its subsidiaries; (ii) the giving of any guarantee, security or indemnity in respect of a debt or obligation of Entertainment One Cayman or any of its subsidiaries for which the director has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security; (iii) any proposal concerning an offer of shares or debentures or other securities of or by Entertainment One Cayman or any of its subsidiaries for subscription or purchase or exchange in which offer 76

77 Provision Entertainment One Cayman Entertainment One Canada Conflicts of Interest (continued) he is or is to be interested as a participant in the underwriting or subunderwriting of such offer; (iv) any proposal concerning any other company in which he is interested, directly or indirectly and whether as an officer or shareholder or otherwise, provided that he (together with persons connected with him) does not to his knowledge hold an interest in shares representing one per cent. or more of the issued shares of any class of the equity share capital of such company (or of any third company through which his interest is derived) or of the voting rights available to shareholders of the relevant company (any such interest being deemed for the purposes of this provision to be a material interest in all circumstances); (v) any proposal concerning the adoption, modification or operation of a pension, superannuation or similar scheme or retirement death or disability benefits scheme or an employees share scheme under which he may benefit and which relates both to employees and directors and does not accord to such director any privilege or benefit not generally accorded to the employees to whom such scheme relates; (vi) any proposal under which he may benefit concerning the giving of indemnities to directors or other officers of Entertainment One Cayman which the directors are empowered to give under the articles of association; (vii) any proposal which he may benefit concerning the purchase, funding and/or maintenance of insurance to purchase, fund and/or maintain for any director or other officer of Entertainment One Cayman any proposal under which he may benefit concerning the provision to directors of funds to meet expenditure incurred or to be incurred by them in defending any criminal or civil proceedings or in connection with certain applications or otherwise enabling any such person to avoid incurring that expenditure. A director shall not vote or be counted in the quorum at a meeting in respect of any 77

78 Provision Entertainment One Cayman Entertainment One Canada Conflicts of Interest (continued) Shareholders Suits resolution of the Board or a committee of the Board concerning his own appointment (including fixing or varying its terms), or the termination of his own appointment, to an office or place of profit with Entertainment One Cayman or any other company in which Entertainment One Cayman is interested but, where proposals are under consideration concerning the appointment (including fixing or varying its terms), or the termination of the appointment, of two or more directors to offices or places of profit with Entertainment One Cayman or any other company in which Entertainment One Cayman is interested, those proposals may be divided and a separate resolution may be put in relation to each director and, in that case, each of the directors concerned (if not otherwise debarred from voting under this provision) shall be entitled to vote (and be counted in the quorum) in respect of each resolution unless it concerns his own appointment or the termination of his own appointment. In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company s board of directors. In certain limited circumstances, a shareholder may be entitled to bring a derivative action on behalf of Entertainment One Cayman. The central question at issue in deciding whether a minority shareholder may be permitted to bring a derivative action is whether, unless the action is brought, a wrong committed against Entertainment One Cayman would otherwise go unredressed. The cause of action may be against the director, another person or both. A shareholder may also be permitted to bring an action in his or her own name against a Cayman Islands company, a director or any other person in respect of any direct loss suffered by such shareholder as a result of any negligence, default, breach of duty or breach of trust. In any such action, however, a loss suffered by Under the CBCA, certain persons ( complainants ), including a registered or beneficial shareholder, may apply to the applicable court for leave to bring an action in the name and on behalf of a corporation or any of its subsidiaries, or intervene in an existing action to which a corporation or its subsidiary is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the corporation or its subsidiary. Under the CBCA, no such action may be brought and no such intervention in an action may be made unless the court is satisfied that: (i) the person has given reasonable notice to the directors of the corporation or its subsidiary of his intention to apply to the court if the directors of the corporation or its subsidiary to not bring, diligently prosecute or defend, or discontinue the action; (ii) the person is acting in good faith; and (iii) it appears to be in the interests of the corporation or its subsidiary that the action 78

79 Provision Entertainment One Cayman Entertainment One Canada Shareholders Suits (continued) the company will not be regarded as a direct loss suffered by the individual shareholder. A shareholder may also be permitted to bring an action on the basis that the company s affairs are being, or have been, conducted in a manner that is unfairly prejudicial to the interests of shareholders generally or to some shareholders in particular. be brought, prosecuted, defended or discontinued. Under the CBCA, the court in a derivative action may make any order it thinks fit, including an order authorizing the person to control the conduct of the action and an order requiring the corporation or its subsidiary to pay reasonable legal fees incurred by the person in connection with the action. In addition, a complainant may apply to a court for an order in respect of an act or omission of Entertainment One Canada, the conduct of the business of Entertainment One Canada, or the exercise of the power of the directors of Entertainment One Canada, that is oppressive or unfairly prejudicial to, or that unfairly disregards the interest of any security holder, creditor, director or officer. Under the CBCA, a court may make any interim or final order in respect of such oppressive conduct or exercise of powers it thinks fit, including, without limitation, an order restraining the conduct complained of, an order to regulate a corporation s affairs by amending the articles or by-laws, an order appointing directors in place of or in addition to all or any of the directors then in office, an order directing the corporation to purchase securities of a security holder, an order varying or setting aside a transaction or contract, and an order compensating an aggrieved person. Shareholder Consent to Action Without Meeting Entertainment One Cayman s articles of association provide that anything which may be done by resolution of Entertainment One Cayman at a general meeting may be done by resolution in writing, but only if it is signed by all of the shareholders entitled to receive notice of, attend and vote at such general meeting if it had been convened and held. Under the CBCA, a resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of shareholders. 79

80 Provision Entertainment One Cayman Entertainment One Canada Annual Meetings of Shareholders Extraordinary Meetings of Shareholders Entertainment One Cayman s articles of association provide that the company shall, if required by Cayman Islands law, hold an annual general meeting each year. As the company is an exempted company, there is currently no requirement under Cayman Islands law for the company to hold an annual general meeting. Extraordinary general meetings of Entertainment One Cayman s shareholders may be called by the Board or upon written requisition of shareholders holding not less than 10% in par value of the issued shares that carry the right to vote at general meetings. Extraordinary general meetings are generally held for the purposes of approving shareholder resolutions of Entertainment One Cayman as may be required from time to time. The business to be conducted at any extraordinary general meeting generally must be set forth in the notice of the meeting. At least 14 clear days notice of an extraordinary general meeting must be given to shareholders of Entertainment One Cayman.In the case of an extraordinary general meeting requisitioned by shareholders of Entertainment One Cayman, the proposed purpose of the meeting must be set out in the requisition notice, and the shareholders requisitioning an extraordinary meeting can specify any business to be considered at that meeting. Upon receipt of this requisition notice, the Board has 21 days to convene the extraordinary general meeting. If the Board does not proceed to convene the meeting within such 21-day period, the requisitioning shareholders, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a meeting, which meeting must be held within three months of the expiration of such 21-day period. Entertainment One Canada is required to hold an annual meeting of shareholders no later than 15 months after the last annual meeting and within 6 months after the end of Entertainment One Canada s preceding financial year for the purposes of reviewing the financial statements, electing directors, and appointing auditors. The directors of Entertainment One Canada may at any time call a special meeting of shareholders. All business transacted at a special meeting of shareholders and all business transacted at an annual meeting of shareholders, except consideration of the financial statements, auditor s report, election of directors and re-appointment of the incumbent auditor, is deemed to be special business. Notice of a meeting of shareholders at which special business is to be transacted shall state the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment on such business. Holders of not less than 5% of the issued and outstanding shares of Entertainment One Canada that carry the right to vote at a meeting of shareholders may requisition the directors of Entertainment One Canada to call a meeting of shareholders, and if the directors of Entertainment One Canada fail to do so within 21 days of receiving such requisition, then any shareholder who signed the requisition has the right to call the meeting. The requisition must state the business to be transacted at the meeting. Shareholders are entitled to receive not less than 21 days nor more than 60 days notice of a meeting of shareholders. The By-Laws set out the procedures for conducting meetings of shareholders. 80

81 Provision Entertainment One Cayman Entertainment One Canada Record Dates for Shareholder Meetings Adjournment of Shareholder Meetings Entertainment One Cayman s articles of association provide that the Board, for purposes of determining which shareholders are entitled to notice of or to vote at a general meeting, may set in advance or arrears a record date or may provide that the register of members be closed for transfers for a stated period not to exceed 40 days. If the register of members is closed for such purposes, it must be closed for at least 10 days preceding such meeting. If the register of members is not so closed and no record date is fixed, the record date will be the date on which notice of the meeting is mailed. The articles of association of Entertainment One Cayman provide that if within half an hour after the time appointed for a general meeting a quorum is not present or if during such meeting a quorum ceases to be present, the meeting, if convened upon the requisition of shareholders, will be dissolved and in any other case will be adjourned to the same day, time and place of the following week or to such other day, time and place as the Board determine. If a quorum is present, the chairman of the meeting may adjourn a general meeting with the consent of, the shareholders and may adjourn a general meeting with out the consent of the shareholders if necessary to accommodate all shareholders wishing to attend, if unruly conduct of any persons could prevent the orderly continuation of the meeting or if an adjournment is required so that the business of the meeting can be conducted lawfully. No business may be transacted at any adjourned meeting other than the business left unfinished at the meeting at which the adjournment took place. Not less than 7 clear days notice must be given for meetings adjourned for 30 days or more or for an indefinite period. The directors of Entertainment One Canada may establish a record date for receiving notice of and voting at a meeting which shall be not less than 21 days nor more than 60 days before the date of the meeting, and where no such record date for notice is fixed by the directors of Entertainment One Canada, the record date shall be the close of business on the day immediately preceding the day on which notice is given. Under the CBCA, if a quorum is not present at the opening of a meeting of shareholders, the shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business. If a meeting is adjourned for less than 30 days, it is not necessary to give notice of the adjourned meeting. If a meeting of shareholders is adjourned by one or more adjournments for more than an aggregate of 30 days, notice of the meeting must be given not less than 21 days and not more than 60 days prior to the meeting. 81

82 Provision Entertainment One Cayman Entertainment One Canada Voting On a show of hands, every shareholder present in person or by proxy is entitled to one vote and on a poll every shareholder is entitled to one vote for each share held. At any general meeting, all votes are decided on a show of hands unless a poll is demanded by (i) the chairman of the meeting, (ii) in writing by at least five shareholders present in person or by proxy and entitled to vote at the meeting, (iii) in writing by any member present in person or by proxy who holds not less than one tenth of the total voting rights of all shareholders having the right to vote at the general meeting, or (iv) in writing by one or more shareholders present in person or by proxy holding shares having the right to vote at such meeting on which an aggregate sum has been paid-up equal to not less than one-tenth of the total sum paid up on all shares having the right to vote at the meeting. Except where a greater majority is required by Cayman Islands law or Entertainment One Cayman s articles of association, any question proposed for consideration at any general meeting of Entertainment One Cayman or of any class of shareholders will be decided by a simple majority of the votes cast by shareholders entitled to vote at such meeting Entertainment One Canada common shares) or specified series of shares are entitled to vote. Subject to the articles of incorporation, on a show of hands every shareholder who being an individual is present in person or represented by proxy or, being a corporation is present by a duly authorised representative or proxy, has one vote, and on a poll every member has one vote for every Entertainment One Canada common share of which he is the holder. Each holder of Entertainment One Canada common shares is entitled to receive notice of and to attend all meetings of shareholders of Entertainment One Canada and to vote at such meetings, except meetings at which only holders of a specified class of shares (other than common shares) are entitled to vote. The votes attached to the Preferred Variable Voting Shares as a class are automatically adjusted so that they, together with the votes attached to the Entertainment One Canada common shares that are owned by Canadians (as defined in the Investment Canada Act) (as determined based on inquiries Entertainment One Canada has made of holders of Entertainment One Canada common shares and Depository Interests), equal 51% of the votes attached to all shares in the capital of Entertainment One Canada. The votes attached to the Preferred Variable Voting Shares as a class are, in aggregate, not less than 1% of the votes attached to all shares in the capital of Entertainment One Canada. The votes attached to the Preferred Variable Voting Shares as a class are determined based on the level of Canadian ownership of Entertainment One Canada common shares ascertained through Entertainment One Canada s monitoring process. The Articles provide that Entertainment One Canada shall, not less than 25 days before each meeting of shareholders, undertake inquiries or instruct the Registrar to undertake inquiries of the holders of Entertainment One Canada common shares and CREST interests held by brokers and other market intermediaries as to the level of Canadian ownership 82

83 Provision Entertainment One Cayman Entertainment One Canada Voting (continued) of Entertainment One Canada common shares or Depository Interests representing entitlement to the underlying Entertainment One Canada common shares in their respective accounts. If no response to these inquiries is received from a particular broker or market intermediary, the Entertainment One Canada common shares or Depository Interests held by that broker or market intermediary will be deemed to be owned by non- Canadians (as defined in the Investment Canada Act). If an Entertainment One Canada common share is owned by one or more persons jointly and one such person is non-canadian then such Entertainment One Canada common share, for the purpose of monitoring Canadian control of Entertainment One Canada, shall be deemed to be owned by such person who is non-canadian. The votes attached to the Preferred Variable Voting Shares as a class are determined once the level of Canadian (as defined in the Investment Canada Act) ownership of Entertainment One Canada common shares has been established through this monitoring process. Variation of Rights Attaching to a Class of Shares Variation of any rights attached to any issued shares of Entertainment One Cayman (unless otherwise provided by the terms of issue of the shares of that class) must be approved by a special resolution of the shareholders of the class affected or by the written consent of three-quarters of the shareholders of that class. The necessary quorum for any such meeting is one or more shareholders present in person or by proxy representing at least one third of the issued shares of such class. Every shareholder of the affected class will, on a poll, have one vote for each share that he or she holds as of the record date for the meeting. Where the directors determine that two or more classes are effected in the same way by any variation of rights, they may combine such classes and treat them as a single class for the purposes of any vote. Subject to the CBCA, the articles may by special resolution be amended to change the designation of all or any of the shares of Entertainment One Canada, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued or unissued. The holders of shares of a class or of a series are entitled to vote separately as a class or series on a proposal to amend the articles to add, change or remove the rights, privileges, restrictions or conditions attached to the shares of such class or to increase the rights or privileges of any class of shares having rights or privileges equal to or superior to the shares of such class. 83

84 Provision Entertainment One Cayman Entertainment One Canada Amendment of Governing Documents Quorum Requirements Inspection of Books and Records Under Cayman Islands law, Entertainment One Cayman may alter its memorandum and articles of association by passing a special resolution of its shareholders to effect such amendment. The presence, in person or by proxy, of at least two shareholders entitled to vote at any general meeting of Entertainment One Cayman constitutes a quorum for the conduct of any business at such general meeting, unless the company only has one shareholder in which case the quorum is one shareholder present in person or by proxy. In the case of a meeting to vary the rights of any class of shares, discussed above under Variation of Rights Attaching to a Class of Shares, the necessary quorum is the presence, in person or by proxy, of the holders of at least one third of the issued shares of the relevant class. Under Cayman Islands law, the register of shareholders of Entertainment One Cayman is not open to inspection Cayman Islands law requires that the register of mortgages and charges of Entertainment One Cayman be open to inspection by any shareholder or creditor of the company at all reasonable times. The articles of association of Entertainment One Cayman provide that the Board may determine whether and to what extent the accounts and books of that company will be open to the inspection of shareholders, subject to Cayman Islands law. Under the CBCA, the articles of Entertainment One Canada may be amended by special resolution. A quorum for the transaction of business at any meeting of shareholders shall be two persons present in person, each being a shareholder entitled to vote at the meeting or a duly appointed proxy holder or representative for a shareholder so entitled, who hold or represent by proxy not less than 5% of the total number of shares entitled to vote at the meeting. If a quorum is present at the opening of any meeting of shareholders, the shareholders present or represented may proceed with the business of the meeting notwithstanding that a quorum is not present throughout the meeting. If a quorum is not present at the opening of the meeting of shareholders, the shareholders present or represented may adjourn the meeting to a fixed time and place but may not transact any other business. Shareholders of Entertainment One Canada may examine the articles and by-laws, any unanimous shareholders agreement, minutes of meetings and resolutions of shareholders, notices of directors filed with the Director appointed under the CBCA, and the securities register of Entertainment One Canada during usual business hours. However, any person who wishes to examine the securities register must first make a request to Entertainment One Canada or its agent, accompanied by the affidavit prescribed by the CBCA. 84

85 Provision Entertainment One Cayman Entertainment One Canada Transfer and Registration of Shares Entertainment One Cayman s share register is maintained by Capita Registrars. Registration in this share register is determinative of membership in Entertainment One Cayman. A shareholder of Entertainment One Cayman who holds shares beneficially will not be the holder of record of such shares. Instead, the Depository or other nominee will be the holder of record of such shares. Accordingly, a transfer of shares from a person who holds such shares beneficially to a person who will also hold such shares beneficially through the same Depository or other nominee will not be registered in Entertainment One Cayman s official share register, as the Depository or other nominee will remain the record holder of such shares. A written instrument of transfer is required under Cayman Islands law in order to register on Entertainment One Cayman s official share register any transfer of shares. The articles of association of Entertainment One Cayman provide that the Board may decline to register a transfer of shares unless (i) it is in respect of a share which is fully paid up or on which Entertainment One Cayman does not have a lien; (ii) the instrument of transfer is left at the registered office, or at such other place as the directors may decide, for registration; (iii) the instrument of transfer is accompanied by the certificate for the shares to be transferred (except in the case of a financial institution) and such other evidence (if any) as the directors may reasonably require to prove the title of the intending transferor or his right to transfer the shares;(iv) the instrument of transfer is duly stamped (if so required); (v) it is in respect of only one class of shares; and (vi) in the case of joint holders, it is in favour of not more than four transferees. In the case of shares which have been admitted to the Official List of the UK Listing Authority or to trading on AIM, the directors shall not refuse to register a transfer of any share or Depository There are no restrictions in the Articles of Incorporation or By-Laws of Entertainment One Canada on the transferability of the Entertainment One Canada common shares. The Preferred Variable Voting Shares may only be transferred to a person who is a resident Canadian and in accordance with the Articles and the Preferred Variable Voting Shareholders Agreement. The Board will not approve or compel a transfer of Preferred Variable Voting Shares to a person that is not a current officer of Entertainment One Canada and a resident Canadian, and it is the current intention of the Board that all of the Preferred Variable Voting Shares be held by the individual that holds the position of Chief Executive Officer of Entertainment One Canada. 85

86 Provision Entertainment One Cayman Entertainment One Canada Transfer and Registration of Shares (continued) Rights upon Liquidation Interest if the refusal would prevent dealings in those shares or Depository Interests from taking place on an open and proper basis. Subject to the above, the Board has absolute discretion under the Entertainment One Cayman articles of association to decline to register any transfer of shares. Class S Shares may not be transferred, assigned, sold, mortgaged, charged or otherwise disposed of without the prior consent of the Board which may by withheld or delayed in its absolute discretion. Under Cayman Islands law, the rights of the shareholders to a return of Entertainment One Cayman s assets on dissolution or winding up, following the settlement of all claims of creditors, may be prescribed in Entertainment One Cayman s articles of association or the terms of any preferred shares issued by the Board from time to time. The holders of preferred shares, in particular, may have the right to priority over other shareholders in a dissolution or winding up of Entertainment One Cayman. The articles of association of Entertainment One Cayman provide that if the company is to be wound up, the liquidator may, with the sanction of a special resolution of the Entertainment One Cayman shareholders and any other sanction required by statute, value the assets of Entertainment One Cayman and divide them among the shareholders. Pursuant to sanction by special resolution, the liquidator will have discretion to determine how such distribution will be carried out among classes of shareholders and may make other provisions in his or her discretion. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of Entertainment One Cayman, the assets available for distribution to shareholders shall be applied in the following priority: (i) first in repaying the par value on the Entertainment One Cayman Ordinary Shares; (ii) second in repaying the par value on the Class S Shares; and In the event of the liquidation, dissolution or other distribution of Entertainment One Canada s assets for the purpose of winding up of Entertainment One Canada s affairs, holders of Preferred Variable Voting Shares are entitled to one Canadian cent. per share in priority to the holders of Entertainment One Canada common shares, but have no further rights. Each holder of Entertainment One Canada common shares shall be entitled to participate in the remaining property and assets of Entertainment One Canada upon the liquidation, dissolution or winding up of Entertainment One Canada. 86

87 Provision Entertainment One Cayman Entertainment One Canada Rights upon Liquidation (continued) Enforcement of Civil Liabilities Against Foreign Persons Financial Assistance to purchase shares Valuation of non-cash assets (iii) third amounts the shareholders holding Entertainment One Cayman Ordinary Shares in proportion to the par value of the Entertainment One Cayman Ordinary Shares held by them at the commencement of the winding-up. Entertainment One Cayman has been advised by Cayman Islands counsel that there is no statutory recognition in the Cayman Islands of judgments obtained outside the Cayman Island except for judgments of the Australian courts. However, the courts of the Cayman Islands will in certain circumstances recognise and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. The courts of the Cayman Islands will recognise a foreign judgment as the basis for a claim at common law in the Cayman Islands provided such judgment:(i) is given by a competent foreign court; (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given;(iii) is final;(iv) is not in respect of taxes, a fine or a penalty; and (v) was not obtained in a manner and is not of a kind the enforcement of which is contrary to the public policy of the Cayman Islands. There are no provisions under the Companies Law which prevent a company giving financial assistance to any person in connection with the acquisition of the company s own shares. Neither the Memorandum of Association nor the Articles contain any restriction on the provision of financial assistance. There are no provisions under Cayman Islands law which require independent valuation of non-cash assets if shares are being issued as consideration for those assets. Neither the Memorandum of Association nor the Articles contain provisions requiring non-cash assets to be independently valued. The enforcement by shareholders of civil liabilities under foreign securities law may be affected adversely by the fact that: (i) Entertainment One Canada is incorporated and organized under the laws of Canada; (ii) some of its directors or officers may reside in Canada or abroad; and (iii) all or a substantial portion of the assets of Entertainment One Canada may be located in multiple foreign jurisdictions. There are no provisions in the CBCA which prevent a company from giving financial assistance to any person in connection with the acquisition of shares of the company. Neither the articles of Entertainment One Canada nor its by-laws contain any restriction on the provision of financial assistance. There are no provisions in the CBCA or the articles or by-laws of Entertainment One Canada which require independent valuation for non-cash assets if shares are being issued as consideration for those assets. 87

88 Provision Entertainment One Cayman Entertainment One Canada Untraced shareholders There are no provisions of Cayman Islands law in relation to the powers of Entertainment One Cayman with respect to untraced Shareholders. However, the Articles provide that, subject to various requirements, Entertainment One Cayman may sell any Shares of a Shareholder if, during a period of 12 years, at least three cash dividend payments on those Shares have become payable and the cheques or warranty have remained uncashed and Entertainment One Cayman has received no indication of the existence of such Shareholder during such period. There are no provisions in the CBCA or the articles or by-laws of Entertainment One Canada in relation to the powers of Entertainment One Canada in respect of untraced shareholders. 88

89 STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT On completion of the Scheme of Arrangement and Admission, the number of shares held by the Directors (all of which are held beneficially except as shown below) in the existing share capital of Entertainment One Canada and (so far as is known to the Directors having made appropriate enquiries) persons connected with them (which expression shall be construed in accordance with s252 of the UK Companies Act, 2006) will be as follows: Number of Percentage of Entertainment Company's One Canada Issued and common shares outstanding Name on Admission Share Capital 2 James Corsellis nil nil Darren Throop *1 4,786, Patrice Theroux 430, Giles Willits 320, Bob Allan nil nil Sir George Bain 28, Clare Copeland nil nil Garth Girvan nil nil Mark Opzoomer nil nil Robert Lantos 3,126, Mark Watts 1, Darren Throop, in his capacity as Chief Executive Officer of Entertainment One Canada, will have an interest in 100 Preferred Variable Voting Shares as described above. 2 Assuming that no further Entertainment One Canada common shares are issued as a result of the exercise of any option under the Entertainment One Share Incentive Arrangements, the Marwyn Warrant, the Summit Option and the Exchangeable Notes between the date of this document and Admission. On Admission, assuming that no further Entertainment One Canada common shares are issued as a result of the exercise of any option under the Entertainment One Share Incentive Arrangements between the date of this document and Admission, the Directors will hold, in aggregate, 8,693,285 Entertainment One Canada common shares, representing 5.2 per cent. of the issued and outstanding share capital. On Admission, the Directors will have the following options and other rights to acquire Entertainment One Canada common shares 1 : Exercise Number of Price per Date of Shares share Vesting Name Grant under award (pence) Period Darren Throop 29/03/2007 1,468,429 CAD$ years 05/07/ ,333 CAD$ years 01/04/ ,000 CAD$ years 2,301,762 Patrice Theroux 29/03/2007 1,468,429 CAD$ years 05/07/ ,333 CAD$ years 01/04/ ,000 CAD$ years 2,301,762 Giles Willits 29/03/2007 1,468,429 3 years 05/07/ ,000 2 years 01/04/ ,000 3 years 2,143,429 89

90 1 As at 1 June 2010 (being the latest practicable date prior to the publication of this document) the options set out above were over shares in the capital of Entertainment One Cayman but will exchange for options over shares in the capital of Entertainment One Canada as part of the Restructuring. Entertainment One Canada also has an out-performance incentive plan that will allocate up to 5 million to an incentive pool to be paid to executive directors in the future, conditional on the sale of Entertainment One Canada for no less than 2.25 per share or the Entertainment One Canada s share price achieving a share price of 2.25 per share following 29 March This replicates existing arrangements in Entertainment One Cayman. Under the Management Participation Scheme, a total of 10,000 Management Participation shares were issued. Of these, Darren Throop, Patrice Theroux, and Giles Willits subscribed for 4,125, 3,625, and 2,250 Management Participation shares respectively which entitle the holders of the Management Participation shares to a maximum of 10,723,031 Entertainment One common shares. Issuance of common shares under the Management Participation Scheme is conditional, amongst other things, on the performance of the Entertainment One Canada share price exceeding a compound annual growth rate of at least 12.5 per cent. For the maximum number of common shares to be issued under the Management Participation Scheme, Entertainment One Canada s share price would need to perform materially above the 12.5 per cent. hurdle rate and at significant multiples to the current prevailing price. Neither James Corsellis, Bob Allan, Sir George Bain, Clare Copeland, Garth Girvan, Mark Opzoomer, Robert Lantos nor Mark Watts have options or other rights to acquire Entertainment One Canada common shares. Save as disclosed in this document, none of the Directors have any interests, whether beneficial or non-beneficial, in the issued share capital or loan capital of any member of the Group and nor does (so far as is known to the Directors having made appropriate enquiries) persons connected with them (which expression shall be construed in accordance with s252 of the 2006 Act). 90

91 WHERE YOU CAN FIND MORE INFORMATION Copies of this Circular will be available free of charge during normal business hours on any weekday (except Saturdays, Sundays and public holidays) at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF and the website Annual, quarterly and current financial reports and regulatory information can be found at on the AIM website at We have not authorised anyone to give any information or make any representation about the Scheme of Arrangement or about us that differs from or adds to the information in this Circular. Therefore, you should not rely upon any information that differs from or is in addition to the information contained in this Circular. The information contained in this Circular speaks only as of the date on the cover, unless the information specifically indicates that another date applies. 91

92 Annex A SCHEME OF ARRANGEMENT IN THE GRAND COURT OF THE CAYMAN ISLANDS FINANCIAL SERVICES DIVISION CAUSE NO: FSD 141 OF 2010 IN THE MATTER OF ENTERTAINMENT ONE LTD. and IN THE MATTER OF SECTION 86 OF THE COMPANIES LAW (2009 REVISION) OF THE CAYMAN ISLANDS SCHEME OF ARRANGEMENT between ENTERTAINMENT ONE LTD. ( Entertainment One Cayman ) and ENTERTAINMENT ONE LTD. ( Entertainment One Canada ) and THE SCHEME SHAREHOLDERS (as defined herein) PRELIMINARY In this Scheme, unless inconsistent with the subject or context, the following expressions shall bear the meanings respectively set opposite them: Admission AIM Allowed Proceeding Business Day CAD Cayman Court The admission of all of the common shares of Entertainment One Canada to a standard listing on the Official List and to trading on the London Stock Exchange s main market for listed securities proposed to occur at 8.00 a.m. BST on 15 July The market of that name operated by the London Stock Exchange. Any Proceeding by a Scheme Shareholder to enforce its rights under this Scheme where any party fails to perform its obligations under this Scheme; Any day other than (1) a day on which banks are required or permitted by law to be closed in the Cayman Islands, or Ontario, Canada or (2) a day on which the LSE or AIM is closed for trading; Canadian Dollar The Grand Court of the Cayman Islands and any court capable of hearing appeals therefrom; 92

93 Circular Companies Law Entertainment One Cayman Entertainment One Canada Shares Entertainment One Canada LSE Latest Practicable Date Parties Proceeding Prohibited Proceeding Register Scheme Meeting Scheme Shareholders Scheme Shares Scheme Transaction Time Transaction The explanatory statement of Entertainment One Cayman dated 2 June 2010 issued to the Scheme Shareholders in connection with this Scheme by order of the Cayman Court dated 31 May 2010; The Companies Law (2009 Revision) of the Cayman Islands, and its predecessors, as consolidated and revised from time to time; Entertainment One Limited, an exempted company incorporated in the Cayman Islands with limited liability, the common shares of which are currently listed on the AIM; Common shares of Entertainment One Canada to be issued pursuant to clause 2 Entertainment One Ltd., a company incorporated under the laws of Canada with limited liability with its registered office in Canada. London Stock Exchange 24 May 2010, being the latest practicable date for the purposes of ascertaining certain information contained herein; Entertainment One Cayman, Entertainment One Canada and the Scheme Shareholders. Any process, suit, action, legal or other proceeding, including without limitation any arbitration, mediation, alternative dispute resolution, judicial review, adjudication, demand, execution, restraint, forfeiture, re-entry, seizure, lien, enforcement of judgment, enforcement of any security or enforcement of any letters of credit; Any Proceeding against Entertainment One Cayman or Entertainment One Canada or their subsidiaries or property, or any of their directors, officers, employees or agents, in any jurisdiction whatsoever other than an Allowed Proceeding; The register of members of Entertainment One Cayman; The class meeting of the Scheme Shareholders convened by the Cayman Court for the purposes of considering, and if seen fit, approving this Scheme; The registered holders of the Scheme Shares, as recorded on the Register; Ordinary shares issued by Entertainment One Cayman with a par value of CAD 0.01 per share; This scheme of arrangement in its present form or with or subject to any modifications, additions or conditions which the Cayman Court may approve or impose; The time at which Part I of this Scheme becomes effective in accordance with Clause 5 of this Scheme; The transaction to be effected by this Scheme (A) Entertainment One Cayman was incorporated as an exempted company on 11 January 2007 in the Cayman Islands under the Companies Law. The authorised share capital of Entertainment One Cayman is CAD 2,250,000 divided into 200,000,000 common shares of par value CAD 0.01 each and 93

94 25,000,000 Class S Shares of par value of CAD 0.01 each. As at the Latest Practicable Date, 151,926,963 Entertainment One Cayman common shares were issued and fully paid, and 15,620,395 class S Shares were issued and fully paid. (B) (C) Entertainment One Cayman proposes to relocate the ultimate holding company of the Entertainment One group from the Cayman Islands to Ontario, Canada by way of this Scheme, such that upon the Transaction Time Entertainment One Cayman shall become a wholly owned subsidiary of Entertainment One Canada. Entertainment One Canada has undertaken to the Cayman Court to be bound by this Scheme and to execute and do and procure to be executed and done all such documents, acts and things as may be necessary or desirable to be executed and done by it for the purpose of giving effect to this Scheme. SCHEME OF ARRANGEMENT PART I SHARE EXCHANGE 1. At the Transaction Time, all issued and outstanding Scheme Shares shall be transferred to Entertainment One Canada and such Scheme Shares shall be credited as fully paid and recorded in the Register in the name of Entertainment One Canada. 2. In consideration of the transfer of the Scheme Shares pursuant to Clause 1 of this Scheme, at the Transaction Time, Entertainment One Canada will issue to each Scheme Shareholder one Entertainment One Canada Share for each Scheme Share that was transferred pursuant to Clause 1 of this Scheme that such Scheme Shareholder held immediately prior to the Transaction Time. 3. As from the Transaction Time, the Scheme Shareholders prior to the Transaction Time shall in accordance with this Scheme cease to have any rights with respect to the Scheme Shares, except the right to receive the consideration set out in Clause 2 of this Scheme, provided, however, that nothing in this Scheme shall in any way affect the right (if any) of a shareholder of Entertainment One Cayman to receive any dividend declared by Entertainment One Cayman prior to the Transaction Time but which has not been paid prior to the Transaction Time. 4. As from the Transaction Time, each instrument of transfer and certificate existing at the Transaction Time in respect of a holding of any number of Scheme Shares shall cease to be valid for any purpose as an instrument of transfer or a certificate for such Scheme Shares. PART II GENERAL 5. Part I of this Scheme shall become effective at 5.00 p.m. BST on 14 July 2010 or such earlier or later date and time as the board of Entertainment One Cayman (or its duly authorised officer) shall at any time determine, provided that at or by that time all of the following conditions are satisfied or, to the extent permitted law, waived by Entertainment One Cayman and Entertainment One Canada: (a) (b) (c) this Scheme is approved by the affirmative vote at the Scheme Meeting of a majority in number representing 75 per cent. or more in value of the Scheme Shares present and voting in person or by proxy at the Scheme Meeting on the resolution to approve this Scheme; the requisite court order sanctioning this Scheme is obtained from the Cayman Court; a copy of the order of the Cayman Court sanctioning the Scheme is lodged with the Cayman Islands Registrar of Companies; 94

95 (d) (e) (f) (g) Entertainment One Canada does not receive any notice from the London Stock Exchange that the Admission will not be completed; Entertainment One Cayman has received the required consents pursuant to its senior secured committed credit facilities; there is no threatened, pending or effective decree, order, injunction or other legal restraint prohibiting the consummation of the Scheme; all consents and governmental authorizations that are necessary, desirable or appropriate in connection with the Transaction are obtained on terms acceptable to Entertainment One Cayman (as it should think fit its absolute discretion) and are in full force and effect; 6. All mandates or other instructions to Entertainment One Cayman in force at the Transaction Time relating to any of the Scheme Shares (including, without limitation, elections for the payment of dividends by way of scrip (if any) shall, mutatis mutandis immediately after the Transaction Time, be deemed to be valid as effective mandates or instructions in respect of the E1- Canada Shares received in consideration of the transfer of such Scheme Shares. 7. Subject to any applicable U.K. securities laws, this Scheme may be amended, modified or supplemented at any time before or after its approval by the shareholders of Entertainment One Cayman at the Scheme Meetings. At the Cayman Court hearing to sanction this Scheme, the Cayman Court may impose such conditions, modifications and amendments as it deems appropriate in relation to this Scheme but will not impose any material changes without the joint consent of Entertainment One Cayman and Entertainment One Canada. Entertainment One Cayman may, subject to any applicable securities laws, consent to any condition, modification or amendment of this Scheme on behalf of the Scheme Shareholders which Entertainment One Cayman may think fit to approve or impose. After its approval, no amendment, modification or supplement may be made or effected that legally requires further approval by shareholders or any class of shareholders of Entertainment One Cayman without obtaining that approval. 8. Entertainment One Cayman may terminate or abandon this Scheme at any time prior to the Transaction Time without obtaining the approval of the Scheme Shareholders, even though this Scheme may have been approved at the Scheme Meetings and sanctioned by the Cayman Court and all other conditions may have been satisfied. 9. None of the Scheme Shareholders shall commence a Prohibited Proceeding in respect of or arising from this Scheme after the Transaction Time. A Scheme Shareholder may commence an Allowed Proceeding against Entertainment One Cayman or Entertainment One Canada after the Transaction Time provided that it has first given Entertainment One Cayman and Entertainment One Canada five clear Business Days prior notice in writing of its intention to do so. 10. Any notice or other written communication to be given under or in relation to this Scheme (other than pursuant to Clause 15 below) shall be given in writing and shall be deemed to have been duly given if it is delivered by hand or sent by post to: (a) in the case of Entertainment One Cayman, Maples Corporate Services Limited PO Box 209, Ugland House, South Church Street, George Town, Grand Cayman, KY Cayman Islands, marked for the attention of Nicholas Butcher; (b) (c) (d) in the case of Entertainment One Canada 175 Bloor Street East, Suite 1400, North Tower, Toronto, Ontario, Canada, M4W 3R8; in the case of any Scheme Shareholder, its address as it appeared on the Register immediately prior to the Transaction Time; and in the case of any other person, any address set forth for that person in any agreement entered into in connection with this Scheme or the last known address according to the records of 95

96 Entertainment One Cayman, or by fax or to its last known fax number or address according to the records of Entertainment One Cayman. 11. In proving service, it shall be sufficient proof, in the case of a notice sent by post, that the envelope was properly stamped, addressed and placed in the post. 12. Without limiting the manner in which notice or other written communication may be given or deemed given pursuant to any other clause of this Scheme, any notice or other written communication to be given under this Scheme shall be deemed to have been served as provided in Articles 55.2 of Entertainment One Cayman s Articles of Association. 13. The accidental omission to send any notice, written communication or other document in accordance with Clauses 10 or 11 above or the non-receipt of any such notice by a Scheme Shareholder, shall not affect the provisions of this Scheme. 14. Entertainment One Cayman shall not be responsible for any loss or delay in the transmission of any notices, or other documents posted by or to a Scheme Shareholder, which shall be posted at the risk of such Scheme Shareholder. 15. Entertainment One Canada shall give notification of this Scheme having become effective. Entertainment One Cayman shall give notification if it decides to terminate or abandon the Scheme pursuant to Clause 8 above. This notification, and any other notice or other written communication that is required to be given to all or substantially all of the Scheme Shareholders, may (but is not required to) be made by issuing a press release. 16. The operative terms of this Scheme shall be governed by, and construed in accordance with, the laws of the Cayman Islands and the Scheme Shareholders hereby agree that the courts of the Cayman Islands shall have exclusive jurisdiction to hear and determine any Proceeding and to settle any dispute which arises out of or connected with the terms of this Scheme or their implementation or out of any action taken or omitted to be taken under this Scheme or in connection with the administration of this Scheme and for such purposes, the Parties irrevocably submit to the jurisdiction of the courts of the Cayman Islands. 17. If any provision (or any part of any provision) of this Scheme is found by the Cayman Court to be illegal or unenforceable, it shall be severed from this Scheme and the remaining provisions of this Scheme shall continue in force. 18. Notwithstanding any other clause of this Scheme, unless Part I of this Scheme has become effective on or before 31 December 2010 (or such later date, if any, as the Cayman Court may allow), this Scheme shall lapse and be of no further effect. Dated: [ ] July

97 Annex B Description Date Record date for determining the Entertainment One Cayman ordinary shareholders eligible to vote at the Court Meeting 5.00 p.m. BST, 31 May 2010 Circular and form of proxy first despatched to Entertainment One Cayman ordinary shareholders 4 June 2010 Latest time for receiving forms of voting direction 3.00 p.m. BST, 25 June 2010 Latest time for receiving forms of proxy: 3.00 p.m. BST, 26 June 2010 Court Meeting of Scheme Shareholders 3.00 p.m. BST, 28 June 2010 Court hearing to sanction the Scheme of Arrangement 9 July 2010 Anticipated Transaction Time of the Scheme of Arrangement 5.00 p.m. BST, 14 July 2010 Continuation to Canada 6.00 a.m. BST, 15 July 2010 Amalgamation of Entertainment One Cayman with Entertainment One Canada 7.45 a.m. BST, 15 July 2010 Admission to the Official List 8.00 a.m. BST, 15 July

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131 Annex D BY-LAW NO. 1 a by-law relating generally to the transaction of the business and affairs of Entertainment One Ltd. (the Corporation ) ARTICLE 1 DEFINITIONS AND PRINCIPLES OF INTERPRETATION 1.1 Definitions In this by-law and all other by-laws of the Corporation: (a) (b) (c) (d) (e) (f) (g) (h) (i) the Act means the Canada Business Corporations Act or any statute which may be substituted therefor, including the regulations thereunder, as amended from time to time; articles means the articles of the Corporation, as defined in the Act, and includes any amendments thereto; board means the board of directors of the Corporation; by-laws means the by-laws of the Corporation in force as amended or restated from time to time; director means a director of the Corporation as defined in the Act; meeting of shareholders means an annual meeting of shareholders or a special meeting of shareholders; non-business day means Saturday, Sunday and any other day that is a holiday as defined in the Interpretation Act (Canada); officer means an officer of the Corporation as defined in the Act; and person includes an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative. 1.2 Interpretation In this by-law and all other by-laws of the Corporation: (a) (b) words importing the singular include the plural and vice-versa; and words importing gender include all genders; and all words used in this by-law and defined in the Act shall have the meanings given to such words in the Act or in the related Parts thereof. ARTICLE 2 GENERAL BUSINESS 2.1 Registered Office The registered office of the Corporation shall be in the province within Canada specified in the articles and at such place and address therein as the board may from time to time determine. 2.2 Seal The Corporation may have a seal which shall be adopted and may be changed by the board. 131

132 2.3 Financial Year Until changed by the board, the financial year of the Corporation shall end on the 31st day of March in each year. 2.4 Execution of Instruments Deeds, transfers, assignments, contracts, obligations, certificates and other instruments shall be signed on behalf of the Corporation by any two directors or officers or as otherwise directed by the board. Notwithstanding the foregoing, any officer or director may sign certificates and similar instruments (other than share certificates) on the Corporation s behalf with respect to any factual matters relating to the Corporation s business and affairs, including certificates verifying copies of the articles, by-laws, resolutions and minutes of meetings of the Corporation. 2.5 Execution in Counterpart, by Facsimile, and by Electronic Signature (a) Subject to the Act, any instrument or document required or permitted to be executed by one or more persons on behalf of the Corporation may be signed by means of secure electronic signature (as defined in the Act) or facsimile; (b) (c) Any instrument or document required or permitted to be executed by one or more persons may be executed in separate counterparts, each of which when duly executed by one or more of such persons shall be an original and all such counterparts together shall constitute one and the same such instrument or document; Subject to the Act, wherever a notice, document or other information is required under the Act or the by-laws to be created or provided in writing, that requirement may be satisfied by the creation and/or provision of an electronic document. Notwithstanding the foregoing, the board may from time to time direct the manner in which and the person or persons by whom any particular instrument or class of instruments may or shall be signed. 2.6 Voting Rights in Other Bodies Corporate Any officer or director may execute and deliver proxies and take any other steps as in the officer s or director s opinion may be necessary or desirable to permit the exercise on behalf of the Corporation of voting rights attaching to any securities held by the Corporation. In addition, the board may from time to time direct the manner in which and the persons by whom any particular voting rights or class of voting rights may or shall be exercised. 2.7 Banking Arrangements The banking business of the Corporation, or any part or division of the Corporation, shall be transacted with such bank, trust company or other firm or body corporate as the board may designate, appoint or authorize from time to time and all such banking business, or any part thereof, shall be transacted on the Corporation s behalf by such one or more officers or other persons as the board may designate, direct or authorize from time to time and to the extent thereby provided. ARTICLE 3 BORROWING 3.1 Borrowing Without limit to the powers of the board as provided in the Act, the board may from time to time on behalf of the Corporation: (a) (b) borrow money upon the credit of the Corporation; issue, reissue, sell or pledge debt obligations of the Corporation; 132

133 (c) (d) to the extent permitted by the Act, give, directly or indirectly, financial assistance to any person by means of a loan, a guarantee to secure the performance of an obligation or otherwise; and mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Corporation, owned or subsequently acquired, to secure any obligation of the Corporation. 3.2 Delegation Subject to the Act, the board may from time to time delegate to a director, a committee of directors, an officer or such other person or persons so designated by the board all or any of the powers conferred on the board by section 3.1 or by the Act to such extent and in such manner as the board shall determine at the time of each such delegation. ARTICLE 4 DIRECTORS 4.1 Duties of Directors The board shall manage or supervise the management of the business and affairs of the Corporation. 4.2 Qualification At least a majority of the directors of the Corporation must be resident Canadians. However, if the Corporation has only one or two directors, that director or one of the two directors, as the case may be, must be a resident Canadian. In addition, two-thirds of the directors of the Corporation must be Canadian within the meaning of the Investment Canada Act (Canada). 4.3 Eligibility Requirements at Meetings The board shall not transact business at a meeting, other than filling a vacancy in the board, unless a majority of directors present are resident Canadians or if the Corporation has only two directors, at least one of the directors present is a resident Canadian, except where: (a) (b) a resident Canadian director who is unable to be present approves in writing or by telephone or other communications facilities the business transacted at the meeting; and the required number of resident Canadian directors would have been present had that director been present at the meeting. 4.4 Quorum A majority of the number of directors fixed from time to time or, in the event that there are less than four directors, one director shall constitute a quorum for the transaction of business at any meeting of the board, provided that at all times that a majority of the directors present are Canadian within the meaning of the Investment Canada Act (Canada). Notwithstanding vacancies, a quorum of directors may exercise all of the powers of the board. 4.5 Calling of Meetings Meetings of the board shall be held from time to time at the registered office of the Corporation or at any other place within or outside Canada, on such day and at such time as the board, the chairperson of the board, the president or any two directors may determine. 133

134 4.6 Notice of Meetings Notice of the time and place of each meeting of the board shall be given to each director not less than 48 hours before the time when the meeting is to be held and need not be in writing. A notice of meeting need not specify the purpose of or the business to be transacted at the meeting except where the Act requires such purpose or business to be specified, including, if required by the Act, any proposal to: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) submit to the shareholders any question or matter requiring the approval of the shareholders; fill a vacancy among the directors or in the office of auditor, or appoint additional directors; issue securities; issue shares of a series under section 27 of the Act; declare dividends; purchase, redeem or otherwise acquire shares issued by the Corporation; pay a commission referred to in section 41 of the Act; approve a management proxy circular referred to in Part XIII of the Act; approve a take-over bid circular or directors circular referred to in Part XVII of the Act; approve any financial statements referred to in section 155 of the Act; or adopt, amend or repeal by-laws. 4.7 First Meeting of New Board Provided a quorum of directors is present, each newly elected board may without notice hold its first meeting following the meeting of shareholders at which such board is elected. 4.8 Chairperson and Secretary The chairperson of the board or, in the chairperson s absence, the president or, in the president s absence, a vice-president shall be chairperson of any meeting of the board. If none of these officers are present, the directors present shall choose one of their number to be chairperson. The secretary of the Corporation shall act as secretary at any meeting of the board and, if the secretary of the Corporation is absent, the chairperson of the meeting shall appoint a person who need not be a director to act as secretary of the meeting. 4.9 Votes to Govern At all meetings of the board any question shall be decided by a majority of the votes cast on the question and in the case of an equality of votes the chairperson of the meeting shall not be entitled to a second or casting vote. Any question at a meeting of the board shall be decided by a show of hands unless a ballot is required or demanded Participation by Telephonic, Electronic or other Communication Facility Subject to the Act, if all of the directors of the Corporation consent, a director may participate in a meeting of directors or of a committee of directors by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting. A director s consent shall be effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the board held while the director holds office. A director participating in a meeting by such means shall be deemed to be present at that meeting Electronic Voting Subject to the Act, a director participating in a meeting by telephonic, electronic or other communication facility in accordance with section 4.9 may vote by means of such facility. 134

135 4.12 Conflict of Interest A director or officer of the Corporation who is a party to a material transaction or material contract, or proposed material transaction or material contract with the Corporation, is a director or an officer of, or acts in a capacity similar to a director or officer of, or has a material interest in any person who is a party to a material transaction or material contract or proposed material transaction or material contract with the Corporation shall disclose the nature and extent of his interest at the time and in the manner provided in the Act. Except as provided in the Act, no such director of the Corporation shall vote on any resolution to approve any transaction. If a material transaction or material contract is made between the Corporation and one or more of its directors or officers, or between the Corporation and another person of which a director or officer of the Corporation is a director or officer or in which he has a material interest, the transaction is neither void nor voidable by reason only of that relationship, or by reason only that a director with an interest in the transaction or contract is present at or is counted to determine the presence of a quorum at a meeting of directors or committee of directors that authorized the transaction, if the director or officer disclosed his interest in accordance with the provisions of the Act and the transaction or contract was approved by the directors or the shareholders and it was reasonable and fair to the Corporation at the time it was approved. ARTICLE 5 COMMITTEES 5.1 Audit Committee The directors shall appoint from among their number an audit committee whose composition and function will conform with applicable law. The audit committee shall have the functions provided in the Act. 5.2 Other Committees The board may designate and appoint additional committees of directors and, subject to the limitations prescribed by the Act, may delegate to such committees any of the powers of the board. 5.3 Procedure Subject to the Act and unless otherwise determined by the board, each committee shall have the power to fix its quorum at not less than a majority of its members, to elect its chairperson and to regulate its procedure. ARTICLE 6 OFFICERS 6.1 Appointment of Officers The board may from time to time designate the offices of the Corporation, appoint persons to such offices, specify their duties and, subject to any limitations prescribed in the Act, may delegate to them powers to manage the business and affairs of the Corporation. 7.1 Limitation of Liability No director or officer shall be liable for: ARTICLE 7 PROTECTION OF DIRECTORS AND OFFICERS (a) (b) the acts, receipts, neglects or defaults of any other director, officer, employee or agent of the Corporation or any other person; any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired by, for, or on behalf of the Corporation, or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Corporation shall be loaned out or invested; 135

136 (c) (d) (e) any loss or damage arising from the bankruptcy, insolvency or tortious act of any person, firm or corporation, including any person, firm or corporation with whom any moneys, securities or other assets belonging to the Corporation shall be lodged or deposited; any loss, conversion, misapplication or misappropriation of or any damage resulting from any dealings with any moneys, securities or other assets belonging to the Corporation; any other loss, damage or misfortune whatever which may happen in the execution of the duties of the director s or officer s respective office or in relation thereto, unless the same shall happen by or through the director s or officer s failure to exercise the powers and to discharge the duties of the director s or officer s office honestly and in good faith with a view to the best interests of the Corporation, and in connection therewith, to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, provided that nothing herein contained shall relieve a director or officer from the duty to act in accordance with the Act or relieve such director or officer from liability for a breach of the Act. 7.2 Indemnity of Directors and Officers (a) The Corporation shall indemnify a director or officer of the Corporation, a former director or officer of the Corporation or another individual who acts or acted at the Corporation s request as a director or officer, or an individual acting in a similar capacity, of another entity against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by such individual in respect of any civil, criminal or administrative, investigative or other proceeding in which the individual is involved because of that association with the Corporation or other entity. (b) The Corporation may not indemnify an individual under paragraph (a) unless the individual: (i) (ii) acted honestly and in good faith with a view to the best interests of the Corporation or other entity for which the individual acted as a director or officer or in a similar capacity at the Corporation s request, as the case may be; and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that his conduct was lawful. (c) (d) (e) The Corporation shall advance moneys to such individual for the costs, charges and expenses of a proceeding referred to in paragraph (a) provided such individual agrees in advance, in writing, to repay the moneys if the individual does not fulfill the condition of paragraph (b). If required by an individual referred to in paragraph (a), the Corporation shall seek the approval of a court to indemnify such individual or advance moneys under paragraph (c) in respect of an action by or on behalf of the Corporation or other entity to procure a judgment in its favour, to which such individual is made a party because of the individual s association with the Corporation or other entity as described in paragraph (a), against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual fulfills the conditions set out in paragraph (b). Notwithstanding paragraph (a), an individual referred to in paragraph (a) is entitled to indemnity from the Corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual s association with the Corporation or other entity as described in paragraph (a), if the individual seeking indemnity: (i) (ii) was not adjudged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and fulfills the conditions set out in paragraph (b). 136

137 7.3 Indemnification of Others Subject to the Act, the Corporation may indemnify its employees and agents on the same basis as that upon which the persons referred to in section 7.2 are indemnified. 7.4 Insurance The Corporation shall purchase and maintain insurance for the benefit of an individual referred to in section 7.1 against any liability incurred by such individual: (a) (b) in the individual s capacity as a director or officer of the Corporation; or in the individual s capacity as a director or officer, or similar capacity, of another entity, if the individual acts or acted in that capacity at the Corporation s request. 7.5 Indemnities Not Exclusive Each of the provisions of this Article 7 shall be in addition to and not in substitution for or derogation from any rights to which any person referred to herein may otherwise be entitled. ARTICLE 8 MEETINGS OF SHAREHOLDERS 8.1 Annual Meetings Subject to the Act, the annual meeting of shareholders shall be held on such day and at such time in each year as the board, or the chairperson of the board, or the president in the absence of the chairperson of the board, may from time to time determine, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing auditors and for the transaction of such other business as may properly be brought before the meeting. 8.2 Place of Meetings Subject to the Act, meetings of shareholders shall be held at such place within Canada as the directors shall determine or at such place outside Canada as may be specified in the articles. 8.3 Notice of Meetings Subject to the Act, notice of the time and place of each meeting of shareholders shall be sent not less than 21 days nor more than 60 days before the meeting to each shareholder entitled to vote at the meeting, to each director and to the auditor of the Corporation. 8.4 Participation in Meeting by Electronic Means Subject to the Act, any person entitled to attend a meeting of shareholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if the Corporation makes available such a communication facility. A person participating in a meeting by such means shall be deemed to be present at the meeting. 8.5 Electronic Meetings Subject to the Act, if the directors or the shareholders of the Corporation call a meeting of shareholders pursuant to the Act, those directors or shareholders, as the case may be, may determine that the meeting shall be held entirely by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting. 137

138 8.6 Chairperson and Secretary The chairperson of the board or, in the chairperson s absence, the president or, in the president s absence, a vice-president shall be chairperson of any meeting of shareholders. If none of these officers are present within 15 minutes after the time appointed for holding the meeting, the persons present and entitled to vote shall choose a chairperson from amongst themselves. The secretary of the Corporation shall act as secretary at any meeting of shareholders or, if the secretary of the Corporation be absent, the chairperson of the meeting shall appoint some person, who need not be a shareholder, to act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by resolution or by the chairperson with the consent of the meeting. 8.7 Persons Entitled to be Present The only persons entitled to be present at a meeting of shareholders shall be those persons entitled to vote thereat, the directors and auditors of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted only on the invitation of the chairperson of the meeting or with the consent of the meeting. 8.8 Quorum A quorum of shareholders is present at a meeting of shareholders, if the holders of 5 per cent. of the shares entitled to vote at the meeting are present in person or represented by proxy, provided that a quorum shall not be less than two persons. A quorum need not be present throughout the meeting provided a quorum is present at the opening of the meeting. 8.9 Shareholder Representatives A body corporate or association which is a shareholder of the Corporation may be represented at a meeting of shareholders by any individual authorized by a resolution of its directors or governing body and such individual may exercise on behalf of the body corporate or association which such individual represents all the powers it could exercise if it were an individual shareholder Time for Deposit of Proxies The board may specify in a notice calling a meeting of shareholders a time, preceding the time of such meeting by not more than 48 hours, exclusive of non-business days, before which time proxies to be used at such meeting must be deposited. A proxy shall be acted upon only if, prior to the time so specified, it shall have been deposited with the Corporation or an agent thereof specified in such notice or, if no such time is specified in such notice, it shall have been received by the secretary of the Corporation or by the chairperson of the meeting or any adjournment thereof prior to the time of voting Voting Any question at a meeting of shareholders shall be decided by a show of hands unless a ballot is required or demanded. Upon a show of hands every person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands has been taken upon a question, unless a ballot is so required or demanded, a declaration by the chairperson of the meeting that the vote upon the question has been carried or carried by a particular majority or not carried and an entry to that effect in the minutes of the meeting shall be, in the absence of evidence to the contrary, proof of the fact without proof of the number or proportion of the votes recorded in favour of or against any resolution Ballots On any question proposed for consideration at a meeting of shareholders, and whether or not a show of hands has been taken thereon, the chairperson may require, or any shareholder or proxyholder entitled to vote at the meeting may demand, a ballot. A ballot so required or demanded shall be taken in such manner as the chairperson shall direct. A requirement or demand for a ballot may be withdrawn at any time prior to the 138

139 taking of the ballot. If a ballot is taken each person present shall be entitled, in respect of the shares which each person is entitled to vote at the meeting upon the question, to that number of votes provided by the Act or the articles, and the result of the ballot so taken shall be the decision of the shareholders upon that question Electronic Voting (a) Notwithstanding section 8.11, any person participating in a meeting of shareholders by telephonic, electronic, or other communication facility in accordance with section 8.4 and entitled to vote at the meeting may vote by means of the telephonic, electronic or other communication facility that the Corporation has made available for that purpose. (b) Any vote referred to in section 8.11 or 8.12 may be held entirely by means of a telephonic, electronic or other communication facility if the Corporation makes available such a communication facility, provided, in each case, that the facility: (i) (ii) enables the votes to be gathered in a manner that permits their subsequent verification; and permits the tallied votes to be presented to the Corporation without it being possible for the Corporation to identify how each shareholder or group of shareholders voted Casting Vote In case of an equality of votes at any meeting of shareholders either upon a show of hands or upon a ballot, the chairperson of the meeting shall be entitled to a second or casting vote. ARTICLE 9 SECURITIES 9.1 Issuance Subject to the Act and the articles, the board may from time to time issue or grant options to purchase, or authorize the issue or grant of options to purchase, any part of the authorized and unissued shares of the Corporation at such times and to such persons and for such consideration as the board shall determine or authorize, provided that no share shall be issued until it is fully paid. 9.2 Securities Records The Corporation shall maintain a register of shares and other securities in which it records the shares and other securities issued by it in registered form, showing with respect to each class or series of shares and other securities: (a) (b) (c) the names, alphabetically arranged, and the latest known address of each person who is or has been a holder; the number of shares or other securities held by each holder; and the date and particulars of the issue and transfer of each share or other security. 9.3 Transfer Agents and Registrars The directors may from time to time appoint a registrar to maintain the securities register and a transfer agent to maintain the register of transfers and may also appoint one or more branch registrars to maintain branch securities registers and one or more branch transfer agents to maintain branch registers of transfers. One person may be appointed both registrar and transfer agent and the board may at any time terminate any such appointment. 139

140 9.4 Dealings with Registered Holders Subject to the Act, the Corporation may treat the registered owner of a share as the person exclusively entitled to vote, to receive notices, to receive any dividend or other payments in respect thereof and otherwise to exercise all the rights and powers of an owner of a share. 9.5 Security Certificates Security certificates shall be signed by at least one of the following persons: (a) (b) (c) any director or officer of the Corporation; a registrar, transfer agent or branch transfer agent of the Corporation or an individual on their behalf; or a trustee who certifies it in accordance with a trust indenture. Signatures may be printed or otherwise mechanically reproduced on the security certificates and every such signature shall for all purposes be deemed to be the signature of the person whose signature it reproduces and shall be binding upon the Corporation. If a security certificate contains a printed or mechanically reproduced signature of a person, the Corporation may issue the security certificate, notwithstanding that the person has ceased to be a director or an officer of the Corporation, and the security certificate is as valid as if the person were a director or an officer at the date of its issue. ARTICLE 10 DIVIDENDS AND RIGHTS 10.1 Dividends Subject to the Act, the board may from time to time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation. Dividends may be paid in money or property or by issuing fully paid shares of the Corporation Dividend Cheques A dividend payable in cash shall be paid by cheque drawn on the Corporation s bankers or one of them to the order of each registered holder of shares of the class or series in respect of which it has been declared and mailed by prepaid ordinary mail to such registered holder at such holder s address recorded in the Corporation s securities register, unless in each case such holder otherwise directs. In the case of joint holders the cheque shall, unless such joint holders otherwise direct, be made payable to the order of all of such joint holders and mailed to them at their address recorded in the securities register of the Corporation. The mailing of such cheque, in such manner, unless the cheque is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold Non-receipt of Cheques In the event of non-receipt or loss of any dividend cheque by the person to whom it is sent, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt or loss and of title as the board may from time to time prescribe, whether generally or in any particular case Unclaimed Dividends Any dividend unclaimed after a period of two years from the date on which the dividend has been declared to be payable shall be forfeited and shall revert to the Corporation. 140

141 ARTICLE 11 MISCELLANEOUS 11.1 Timing of Delivery of Notices (a) Any notice, document or other information delivered to a director, officer, shareholder, auditor or member of a committee of the board by prepaid mail or personal delivery in accordance with the Act shall be deemed to be received at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the addressee did not receive the notice, document or other information at that time or at all. (b) Subject to the Act, wherever a notice, document or other information is provided to a person in the form of an electronic document in accordance with section 2.5, such document shall be deemed to have been provided at the time it leaves an information system within the control of the originator or another person who provided it on behalf of the originator, and shall be deemed to have been received when it enters the information system designated by the addressee Waiver of Notice Any shareholder (or such shareholder s duly appointed proxyholder), director, officer, auditor or member of a committee of the board may at any time waive the provision of any notice or document, or waive or abridge the time for any notice or document, required to be provided to such person under any provision of the Act, the articles, the by-laws or otherwise and such waiver or abridgement shall cure any default in the provision or in the timing of such notice or document, as the case may be. Any such waiver or abridgement shall be in writing except a waiver of notice of a meeting of shareholders or of the board, which may be given in any manner. Attendance of a director at a meeting of directors or of a shareholder or any other person entitled to attend a meeting of shareholders is a waiver of notice of the meeting except where such director, shareholder or other person, as the case may be, attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called Omissions and Errors The accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee of the board or the non-receipt of any notice by any such person or any error in any notice not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise based thereon Invalidity The invalidity or unenforceability of any provision of this by-law shall not affect the validity or enforceability of the remaining provisions of this by-law Effective Date This by-law shall come into force upon approval by the shareholder of the Corporation Repeal All other by-laws of the Corporation shall be repealed upon the coming into effect of this by-law. However, such repeal shall not affect the previous operation of such by-law or affect the validity of any act done or right, privilege, obligation or liability acquired or incurred under or the validity of any contract or agreement made pursuant to such by-law prior to its repeal. All officers and persons acting under such repealed by-law shall continue to act as if appointed under the provisions of this by-law and all resolutions of the shareholders or board with continuing effect passed under such by-law shall continue in force until amended or repealed, except to the extent inconsistent with this by-law. 141

142 Annex E Order of the Grand Court of the Cayman Islands 142

143 143

144 144

145 Annex F IN THE GRAND COURT OF THE CAYMAN ISLANDS CAUSE NO FSD 141 OF 2010 FINANCIAL SERVICES DIVISION IN THE MATTER OF ENTERTAINMENT ONE LTD. AND IN THE MATTER OF SECTION 86 OF THE COMPANIES LAW (2009 REVISION) NOTICE IS HEREBY GIVEN that, by an order dated 31 May 2010 (the Order ) made in the above matter, the Grand Court of the Cayman Islands (the Cayman Court ) has directed a meeting (the Court Meeting ) to be convened of the holders of ordinary shares of Entertainment One Ltd. ( Entertainment One Cayman ), for the purpose of considering and, if thought fit, approving, with or without modification, a scheme of arrangement (the Scheme ) proposed to be made between Entertainment One Cayman, Entertainment One Ltd. (a company incorporated in Canada), and the Scheme Shareholders (as defined in the Scheme) and that the Court Meeting will be held on 28 June 2010 at the offices of Mayer Brown International LLP at 201 Bishopsgate, London EC2M 3AF United Kingdom at 3.00 p.m. BST, at which place and time all such Scheme Shareholders are requested to attend. Copies of the Scheme of Arrangement and a copy of an explanatory statement explaining the effect of the Schemes are incorporated in the information circular of which this Notice forms part. A copy of the said information circular can also be obtained by the Scheme Shareholders at the offices of Mayer Brown International LLP and on the website The above-mentioned Scheme Shareholders as at the record date set by the Grand Court, being 31 May 2010, 2010, may vote in person at the Court Meeting or they may appoint one or more proxies, whether a member of Entertainment One Cayman or not, to attend and vote in their stead. A proxy card for use at the Court Meeting is enclosed with the information circular of which this Notice forms part. If such Scheme Shares are held in joint names, then either the holder whose name appears first in the Register of Members of Entertainment One Cayman or each holder should sign. If signing as Attorney, Executor, Administrator, Trustee or Guardian, please give your title as such. If the signer is a corporation, please sign in the full corporate name by a duly authorised officer. It is requested that forms appointing proxies be lodged, by post or hand delivery, with Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom in accordance with the instructions set out in the proxy card, which proxy card must be received by no later than 3.00 p.m. on 26 June 2010, being 48 hours prior to the time of the Court Meeting, but if forms are not so lodged they may be handed to the chairman of the Court Meeting at the meeting. By the Order, the Cayman Court has appointed Giles Willits, Chief Financial Officer and a director of Entertainment One Cayman, or failing him any other person who is a director of Entertainment One Cayman as at the date of the Court Meeting to act as the chairman of the Court Meeting and has directed the chairman of the Court Meeting to report the results thereof to the Cayman Court. The Scheme of Arrangement will be subject to a subsequent application seeking the sanction of the Cayman Court which shall be heard at a.m. on 9 July 2010 or as soon thereafter as it may be heard. Dated the 31 day of May MAPLES AND CALDER Cayman Islands Attorneys for Entertainment One Cayman 145

146 Annex G DEFINED TERMS The following definitions apply throughout this document, unless the context requires otherwise: a Canadian subsidiary of Entertainment One Cayman named Canada Inc Act United Kingdom Companies Act 2006 Acquired Companies Admission AIM AIM Rules Articles of Incorporation Barna-Alper Productions Blueprint Entertainment Board BST Business Day By-Laws CAD Cayman Court CBCA Class S Shares Companies Law Barna-Alper Productions, Blueprint Entertainment Corporation, Oasis International and Maximum admission to listing of the Entertainment One common shares on the Official List and admission to trading of the Entertainment One common shares on the main market of the London Stock Exchange and a reference to Admission becoming effective is to be construed in accordance with the Listing Rules or the Standards (as applicable) the AIM market operated by the London Stock Exchange the rules for AIM company and their nominated advisers published by the London Stock Exchange from time to time the Articles of Incorporation of Entertainment One Canada dated 14 April 2010, as amended by the Articles of Amendment dated 21 May 2010 Barna-Alper Productions Inc., now E1 Television BAP Ltd. Blueprint Entertainment Corporation, now E1 Television Productions Inc. the board of directors of the Entertainment One Cayman British Summer Time any day on which banks are generally open in England and Wales for the transaction of business, other than a Saturday or Sunday or a public holiday by-law number 1, a by law relating generally to the transaction of the business and affairs of Entertainment One Canada Canadian Dollar The Grand Court of the Cayman Islands and any court capable of hearing appeals therefrom; Canada Business Corporations Act, and the regulations promulgated thereunder, as amended the Class S Shares in the capital of Entertainment One Cayman with a par value of CAD0.01 The Companies Law (2009 Revision) of the Cayman Islands, and its predecessors, as consolidated and revised from time to time; 146

147 Court Meeting CRTC the class meeting of the Scheme Shareholders convened by the Cayman Court to be held at 3.00 p.m. BST on 28 June 2010 for the purposes of considering, and if thought fit, approving the Scheme; Canadian Radio-television and Telecommunications Commission Custodian the nominated custodian of the Depository, as defined at page 43 above Deed Poll Depository Depository Agreement Depository Interest Depository Interest Holders Depository Interest Register Directors Disclosure and Transparency Rules Distribution Division EEA Entertainment One Canada Entertainment One Canada common shares Entertainment One Cayman Entertainment One Cayman ordinary shares Entertainment One Share Incentive Arrangements Exchangeable Notes Exchangeable Shares the deed poll executed by the Registrar in favour of the holders of the Depository Interests from time to time the Depository appointed by Entertainment One Cayman or, after the Transaction Time, Entertainment One Canada in relation to the Depository Interests from time to time The Agreement under which Entertainment One Canada has appointed the Depository to provide the Depository Interest arrangements a Depository interest issued by the Depository in the ratio of one to one in respect of each security deposited with the Depository for conversion to a Depository interest and recorded on the Depository Interest Register of Entertainment One Cayman (or after the Transaction Time, Entertainment One Canada) maintained by the Depository and title to which may be transferred by means of a Relevant System holders of Depository Interests the register of Depository Interests maintained by the Depository the directors of Entertainment One Cayman, whose names are set out at page 89 the disclosure and transparency rules issued by the FSA acting in its capacity as the competent authority pursuant to s73a of FSMA the Group s distribution activities the European Economic Area comprising EU member states and three of the European Free Trade Area States Entertainment One Ltd., a company incorporated under the CBCA with corporation number common shares of no par value in the capital of Entertainment One Canada Entertainment One Ltd., a company registered in the Cayman Islands with registered number ordinary shares issued by Entertainment One Cayman with a par value of CAD 0.01 per share; the share schemes described at page 37 the E-One UK Ltd exchangeable notes (as amended) the Maximum Deferred Exchangeable Shares and those exchangeable shares in the capital of Canada Inc. held by 147

148 the vendors of Barna-Alper Productions, Blueprint Entertainment and Maximum, pursuant to the arrangements described at page 38 above Existing Substantial Shareholder EU Euroclear Executive Directors FSA FSMA Group HMRC IFRS Interlocutory Order ISIN Investment Canada Act Listing Rules London Stock Exchange Marwyn Marwyn Capital Marwyn Investment Management Marwyn Investments Group Marwyn Value Investors Marwyn Partners any shareholder of Entertainment One Canada or affiliates thereof who owned, directly or indirectly as a registered or beneficial owner, common shares in the capital of Entertainment One Canada amounting to 30 per cent. or more of the outstanding common shares in the capital of the Entertainment One Canada as of Admission the European Union Euroclear UK & Ireland Limited, a company registered in England and Wales with registered number , the operator of CREST Darren Throop, Giles Willits and Patrice Theroux the Financial Services Authority of the United Kingdom Financial Services and Markets Act 2000, as amended Before the Transaction Time, Entertainment One Cayman and its subsidiaries and subsidiary undertakings, and following Transaction Time, Entertainment One Canada and its subsidiaries and subsidiary undertakings and member of the Group shall be construed accordingly HM Revenue & Customs International Financial Reporting Standards as adopted for use in the EU the Order of the Cayman Court dated 31 May 2010 as attached at Annex E International Securities Identification Number Investment Canada Act (Canada), and the regulations promulgated thereunder, as amended the listing rules and regulations made by the FSA under s73a of FSMA, as amended from time to time London Stock Exchange plc Marwyn Investments Group and its subsidiary undertakings and affiliates from time to time including Marwyn Capital and Marwyn Investment Management; Marwyn Capital LLP Marwyn Investment Management LLP Marwyn Investments Group Limited Marwyn Value Investors LP (formerly known as Marwyn Neptune Fund LP) Marwyn Partners Limited 148

149 Marwyn Warrant the warrant instrument described at page 38 Maximum Maximum Deferred Exchangeable Shares Oasis International Official List Preferred Variable Voting Shares Preferred Variable Voting Shareholders Agreement Prospectus Rules Maximum Film Distribution Inc. (now E1 Films Canada Inc.) and Maximum Film International Inc. (now Seville Pictures Inc.) those exchangeable shares in the capital of Canada Inc. held by the vendors of Maximum pursuant to the arrangements described at page 38 Oasis Pictures Inc., now E1 Television International Ltd. the Official List of the UK Listing Authority preferred variable voting shares in the capital of the Entertainment One Canada the preferred variable voting shareholders agreement described at page 60 prospectus rules made by the FSA under s73a of FSMA Record Date 5.00 p.m. BST on 31 May 2010 Registrar Resident Canadian Scheme or Scheme of Arrangement Scheme Shareholders Standards Capita Registrars (Jersey) Limited of 12 Castle Street, St. Helier, Jersey JE2 3RT has the meaning given in the CBCA the Cayman Islands scheme of arrangement pursuant to which holders of Entertainment One Cayman ordinary shares will exchange their ordinary shares in Entertainment One Cayman for common shares in Entertainment One Canada holders of Entertainment One Cayman ordinary shares as recorded on the register of members of Entertainment One Cayman the Admission and Disclosure Standards of the London Stock Exchange Summit Option the option agreement described at page 39 Support Agreement the support agreement made 24 September 2008 between , Nova Scotia Limited and Entertainment One Cayman. Takeover Code Tax Act Transaction Time UK or United Kingdom UK Listing Authority uncertificated or in uncertificated form the City Code on Takeovers and Mergers, as amended from time to time Income Tax Act (Canada) and the regulations promulgated thereunder, as amended the time at which the Scheme becomes effective, currently expected to be 5.00 p.m. BST on 14 July 2010 or such later date or and time as the Board or any authorised officer thereof may determine the United Kingdom of Great Britain and Northern Ireland the FSA acting in its capacity as competent authority for the purposes of Part VI of FSMA Shares recorded on the register as being held in uncertificated form in CREST, entitlement which may be transferred by means of CREST 149

150 United States or US Voting and Exchange Agreement the United States of America, its territories and possessions, any State of the United States and the District of Columbia the voting and exchange agreement made 24 September 2008, between , Nova Scotia Limited, Entertainment One Cayman and CIBC Mellon Trust Company 150

151

152 sterling