LOAN AMENDMENT AGREEMENT
LOAN AMENDMENT AGREEMENT
THIS AGREEMENT dated for reference March 19, 2003, is between:
QUEST INVESTMENT CORPORATION, a British Columbia
company,
having an office at Xxxxx 000, 000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0
(the "Lender")
AND:
ZI CORPORATION, an Alberta corporation, having an office at
Xxxxx
0000, 000 - 0xx Xxxxxx XX, Xxxxxxx, Xxxxxxx X0X 0X0
(the "Borrower")
BACKGROUND
| A. The Lender and the Borrower
entered into a loan agreement dated for reference December 5, 2002 (the
"Loan Agreement"), under which the Lender has advanced the principal sum of
US$3,300,000 (the "Loan"). |
| B. The Lender and the Borrower wish to amend the terms of the Loan and the Loan Agreement pursuant to the terms of this Agreement. |
AGREEMENTS
For good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the parties agree as follows:
| 1. | Outstanding
Balance. The Borrower acknowledges and agrees that as of the date of
this Agreement, the following amounts remain outstanding under the Loan
Agreement: |
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| (a) | the principal amount
of US$3,270,000; and |
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| (b) | Cdn$7,974.19 in fees
and expenses payable by the Borrower pursuant to paragraph 14 of the Loan
Agreement. |
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| The Lender confirms
that it has received from the Borrower the payment of all interest up to and
including March 5, 2003. |
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| 2. | Loan Extension.
Subject to paragraph 7 below, the Loan Agreement is hereby amended and
modified by deleting subparagraph 4(a)(i) in its entirety and replacing it
with the following: |
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| "(i) April 30,
2003;". |
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| 3. | Interest Payments.
Interest shall continue to accrue and be payable in accordance with
paragraph 5 of the Loan Agreement |
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| 4. | Principal Payments. On April 5, 2003, the Borrower shall pay to the Lender US$30,000 on account of the outstanding principal amount of the Loan, provided however, that if the Borrower | ||
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| is in default of
paying any outstanding interest or other fees or expenses payable to the
Lender under the Loan Agreement or hereunder, such amounts shall be first
applied on account of such interest or other fees or expenses, then to
principal. |
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| 5. | Extension Fee.
In consideration for the extension of the Loan hereunder, the Borrower will
pay to the Lender a non-refundable extension fee of US$130,800, payable upon
the execution and delivery of this Agreement. |
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| 6. | AOL Subordination.
The Borrower will use reasonable commercial efforts to obtain the written
consent of America Online, Inc. ("AOL") to the subordination of its security
to the security of the Lender, as contemplated pursuant to Section 5.18 of
the Security Agreement between the Borrower and AOL dated December 6, 2002. |
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| 7. | Conditions
Precedent. As conditions precedent to the extension of the Loan
hereunder: |
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| (a) |
the Borrower will": | ||
| (i) | have paid all outstanding
interest and fees and expenses referred to in subparagraph 1(b) and
paragraph 5 above; |
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| (ii) | provide the Lender with a
certified copy of the resolutions of the Borrower's board of directors,
approving of the transactions contemplated herein, in form and terms
satisfactory to the Lender; |
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| (iii) | cause Quarry Bay Investments
Inc. ("Quarry Bay") to execute and deliver a replacement limited recourse
guarantee, confirming its agreement to guarantee (on a limited recourse
basis) all indebtedness of the Borrower to the Lender pursuant to the Loan
Agreement, as amended by this Agreement, and an amendment to the share
pledge agreement dated for reference December 5, 2002 between Quarry Bay and
the Lender, under which Quarry Bay will deposit an additional 1,500,000
free-trading Common shares in the capital of the Borrower, together with
original share certificates, undated medallion signature guaranteed stock
powers of attorney and certified directors' resolutions, all in form and
terms satisfactory to the Lender; and |
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| (b) | the Lender will have received the approval of its board of directors and provided confirmation of same to the Borrower in writing. | ||
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If the above conditions have not been satisfied or waived in writing by the
Lender on or before 5:00pm March 21, 2003, this Agreement shall terminate and
the Loan shall be in default. In that case, the Lender may take all such steps
or actions as it, in its sole discretion, deems necessary or appropriate, to
realize on its security and recover all amounts due under the Loan. |
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| 8. | Representations and
Warranties. The Borrower affirms and restates each of the
representations and warranties set out in paragraph 9 of the Loan Agreement
as of the date of this Agreement. |
| 9. | Definitions. Unless otherwise
defined in this Agreement, all defined terms herein shall have the meanings
ascribed in the Loan Agreement. |
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| 10. | Amendment. This Agreement
amends and modifies the Loan Agreement and, together with it and the
collateral documents referred to therein, constitutes the entire agreement
between the parties. This Agreement may only be modified by further written
instrument, signed by each of the parties hereto. |
| 11. | Legal Fees. The Borrower
covenants and agrees to pay all of the Lender's legal fees and other costs,
charges and expenses of and incidental to the preparation, execution and
carrying out of this Agreement or as may otherwise be required by the Lender
to complete the transactions contemplated herein. |
| 12. | Further Assurances. The
parties hereto shall provide such further assurances, documents and
instruments as the Lender may reasonably require to complete the
transactions contemplated in the Loan Agreement and herein. |
| 13. | Time of the Essence. Time
shall remain of the essence of this Agreement. |
| 14. | Counterparts. This Agreement may be signed in one or more counterparts, originally or by facsimile, each such counterpart taken together shall form one and the same agreement. |
TO EVIDENCE THEIR AGREEMENT each of the parties has executed this Agreement on the date first above written.
QUEST INVESTMENT CORPORATION
| Per: | "Xxxxxx Xxxxxxxx" |
| Authorized Signatory |
ZI CORPORATION
| Per: | "Xxxx Xxxxxx" |
| Authorized Signatory |
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