Mainframe Entertainment, Inc.

Mainframe Entertainment, Inc.
Rainmaker Income Fund

Rainmaker Income Fund

August 30, 2006 08:00 ET

Rainmaker and Mainframe Enter Into Agreement for Rainmaker to Acquire Balance of Mainframe Shares

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 29, 2006) - Rainmaker Income Fund ("Rainmaker") (TSX:RNK.UN) and Mainframe Entertainment, Inc. ("Mainframe") (TSX:MFE) announced today that Mainframe and a subsidiary of Rainmaker have entered into a definitive agreement under which Rainmaker's majority owned subsidiary RNK Capital Limited Partnership ("RNK Capital LP") will acquire the balance of the 38% of the outstanding shares of Mainframe which are not owned by RNK Capital LP by way of an amalgamation, resulting in a cash purchase price of $0.24 per share.

Upon completion of the acquisition by RNK Capital LP, the businesses of Mainframe and Rainmaker Animation & Visual Effects will be fully integrated under the corporate name "Rainmaker Entertainment Inc."

The board of directors of Mainframe has received a fairness opinion with respect to the acquisition consideration and has recommended approval of the acquisition by Mainframe shareholders. The acquisition is conditional upon the approval by 66.7% of the Mainframe shareholders and by 50.1% of the Mainframe shareholders other than RNK Capital LP, as well as other customary conditions and regulatory approval. A special meeting of Mainframe shareholders is proposed to be held in October 2006 and closing is expected to occur that same month.

Rainmaker Entertainment Inc. - Largest Animation and Visual Effects Studio in Canada

Rainmaker Entertainment Inc. ("REI") will be the largest animation and visual effects studio in Canada with over 300 employees. Warren Franklin, the President of Rainmaker, will be the CEO of REI; and Rick Mischel, the CEO of Mainframe, will be the President and COO of REI.

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

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

Transaction Details

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

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

About Rainmaker

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

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

About Mainframe

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

This press release and any related attachments may contain forward-looking statements that involve a number of risks and uncertainty. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are market and general economic conditions and the risk factors detailed from time to time in the periodic reports and documents filed by Rainmaker and Mainframe with The Toronto Stock Exchange and other regulatory authorities. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made, and neither Rainmaker nor Mainframe undertakes any obligation to update the forward-looking statements should there be a change in conditions, or in managements' estimates or opinions.

The contents of this press release have neither been approved nor disapproved by any regulatory authority.

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