CINAR Corporation Comes to an Agreement With Telefilm Canada.

Business Editors

MONTREAL--(BUSINESS WIRE)--June 22, 2001

Co-Productions Again Eligible for Certification

CINAR Corporation announced today that it has reached an agreement with Telefilm Canada under which a full restitution will be made by CINAR Corporation to Telefilm Canada for all investments and other financial subsidies of Telefilm Canada in CINAR Corporation's productions that have been decertified or for productions for which final certification will not be granted by the Canadian Audio-visual Certification Office (CAVCO) in connection with the agreement reached in December with Canada Customs and Revenue Agency (CCRA).

"The agreement between Telefilm Canada and CINAR Corporation announced today is very important as a large portion of CINAR Corporation's productions, to date, have been official co-productions which require Telefilm Canada certification. This agreement will allow the Company to move forward with potential co-producers on future co-production projects which fall under the international co-production treaties," said Barrie Usher, President and Chief Executive Officer of CINAR Corporation.

Under the terms of the agreement, CINAR Corporation will repay Telefilm Canada approximately $2,594,000 in full reimbursement of investments and subsidies including interest. These amounts will be payable over the next two years with interest at prime rate plus 2% compounded monthly. The Company has recorded the principal amounts owing in prior financial information issued and will record the interest portion in the second quarter financial information.

Under the terms of the agreement, CINAR Corporation, whose applications for certification of co-productions have not been processed by Telefilm Canada since November 9, 1999, will once again be eligible to apply for certification of its productions.

While CINAR Corporation's productions will be eligible for certification as official co-productions effective immediately, Telefilm Canada has imposed a five year suspension on CINAR Corporation and its subsidiaries, in respect of investments, subsidies and other financial assistance by Telefilm Canada, retroactive to November 9, 1999, being the date upon which Telefilm Canada ceased the processing of CINAR Corporation applications and disbursement of investments to CINAR Corporation.

As of January 2002, the terms and conditions of the suspension may be reviewed by Telefilm Canada, which may result in a partial reinstatement of CINAR Corporation for investment and financial assistance purposes during the remaining portion of the five year suspension period. To the extent that Telefilm Canada is satisfied with changes in CINAR Corporation's control and administrative systems, Telefilm Canada could gradually allow funding of films not exceeding the following amounts : $800,000 in funding for fiscal year 2002-2003 from Telefilm Canada; $1,300,000 in funding for fiscal year 2003-2004; $1,800,000 in funding for fiscal year 2004-2005. The amount for the fiscal year 2003-2004 and 2004-2005 could be reevaluated in January 2003 and in January 2004 respectively.

Furthermore, in the event of completion of a sale or other corporate reorganization of CINAR Corporation resulting in the change of control of the Corporation or any of its subsidiaries in favor of a third party at arm's length, the suspension will be lifted in respect of the Corporation or such subsidiary but in any event, not prior to January 2002.

In addition to the foregoing, it has been acknowledged and agreed that Telefilm Canada shall be entitled to audit certification files, past, present and future.

CINAR Corporation is continuing discussions and negotiations with other funding and film regulatory bodies.

CINAR Corporation is an integrated entertainment and education company involved in the development, production, post-production and worldwide distribution of non-violent, quality programming and educational products for children and families. CINAR's web site is www.cinar.com.

This release may include information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 (U.S.). Forward-looking statements are identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. Actual results or conditions may differ from those anticipated by these and other forward-looking statements. Such forward-looking statements are subject to a number of known or unknown risks and uncertainties.