VANCOUVER, BRITISH COLUMBIA– Rainmaker Entertainment Inc. (“Rainmaker”) announced today that it has entered into an asset purchase agreement dated June 27, 2012 pursuant to which Rainmaker Studios Inc. (“RSI”), a wholly-owned subsidiary of Xing Xing Digital Corporation, has agreed to acquire certain assets comprising substantially all of Rainmaker’s animation studio assets (the “Transaction”). The assets are being acquired in consideration for the assumption of existing Rainmaker book liabilities in an approximate amount of $7 million and the assumption of all real property leases. The Transaction is conditional upon, among other things, the approval of Rainmaker’s shareholders and the receipt of the required regulatory approvals, including any approvals required under the Investment Canada Act.
In connection with the Transaction, Rainmaker has agreed to provide a loan to RSI in the aggregate principal amount of $5 million. The loan has a term of four years and will bear interest at a rate of prime plus 2%. The loan may be prepaid at any time without penalty. Additionally, Rainmaker shall be granted an option, exercisable during the fourth year of the loan, to convert the principal and accrued interest in respect of the loan into common shares of RSI. Based on the starting principal amount of the loan, Rainmaker would be entitled to acquire 30% of the outstanding common shares of RSI at the time of conversion. Also, during the term of the loan, Rainmaker shall be entitled to nominate one of five directors to the board of RSI.