August 5, 2002
Zi and JKC Sign Definitive Agreement for Magic Lantern Acquisition
CALGARY, ALBERTA and NEW YORK, NEW YORK--Zi Corporation (NASDAQ:
ZICA)(TSX:ZIC), a leading provider of intelligent interface solutions, and JKC
Group, Inc. ("JKC")(AMEX: JKC), a distributor and licensor, jointly announced
today that they have entered into a definitive agreement for Zi's sale of the
Magic Lantern group of companies (the "Lantern Group") to JKC. The proposed
sale is subject to a number of conditions, including approval by the
shareholders of JKC and regulatory clearances. All figures released by the
parties on the terms of the transaction are expressed in U.S. dollars.
Under the agreement, Zi will receive a 45% equity interest in JKC and a
three-year promissory note of JKC in the amount of $3,000,000. Both the stock
and cash consideration are subject to adjustment based on the Lantern Group's
performance for the first year after the sale. Zi may receive additional
consideration of up to $2,930,000, payable in cash and stock, if the Lantern
Group's consolidated revenues for that period exceed $12,222,500. The purchase
price will also be subject to reduction if Lantern Group revenues for that
period are less than $5,000,000. In that event, the shortfall, up to
$1,000,000, will be offset against the principal amount of the JKC promissory
note.
The JKC shareholder meeting for approval of the transaction is scheduled for
September 16, 2002. JKC's 85% shareholder, Alpha Omega Group (AOG), has
indicated its support of the transaction. AOG is an affiliate of the Lancer
Group and its related funds, which together own 9.7% of Zi's stock. Richard
Siskind, President and 5% owner of JKC, remarked, "the size and growth rate of
the education market in North America is generally believed to rank second only
to healthcare. The acquisition of the Lantern Group by JKC is an exciting
opportunity for us."
Michael Lobsinger, Chairman and Chief Executive Officer of Zi added, "this is
an important step towards our goal of monetizing our e-learning investments -
and through the JKC transaction Zi shareholders will have an opportunity to
participate in the growth potential of the e-learning space."
About Magic Lantern
Founded in 1975, Magic Lantern is one of Canada's leading distributors of
educational and learning content in video and other electronic formats. The
company has exclusive distribution rights to over 300 film producers
representing over 14,000 titles, and its customers include 9,000 out of 12,000
English speaking schools in Canada. The Magic Lantern library includes content
from Disney Educational, Annenberg / CPB and CTV Television. Tutorbuddy Inc.,
a subsidiary of Magic Lantern to be acquired as part of the JKC transaction, is
an internet-enabled provider of content and related educational services
on-demand to students, teachers and parents. Sonoptic Technologies Inc., a 75%
owned subsidiary of Magic Lantern, provides high-quality, state-of-the-art
digital video encoding services and has developed a proprietary videobase
indexing software that allows users to easily and quickly aggregate, bookmark,
re-sort and add their own comment boxes to pre-existing content. |
