TZ LIMITED — Capital/Financing Update 2010

Apr 22, 2010

TZ Limited ABN 26 073 979 272

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23 April 2010

Lodged by ASX Online

The Manager Company Announcement Office ASX Ltd Level 4, 20 Bridge Street Sydney, NSW 2000

Dear Sir/Madam

$1,200,000 CONVERTIBLE NOTE FACILITY

TZ Limited (the " Company ") refers to its announcement dated 18 March 2010 (the “March Announcement” ) with respect to the binding Memorandum of Understanding (the " MOU ") between the Company and QVT Fund LP ( “QVT” ) and Quintessence Fund L.P. ( “Quintessence” ) (together, the “QVT Funds” ).

The Company confirms that the $1,200,000 loan facility being provided by the QVT Funds has been completed today, which has allowed the Company to borrow a further $1,200,000. The conditions set out in item 3 of the March Announcement have been satisfied and the Company has today issued 1,714 senior unsecured convertible notes with a total face value of $1,714,000 ($1,000 per convertible note) ( “Series III Convertible Notes” ) as follows:

1. 1,547 Series III Convertible Notes issued to QVT; and

2. 167 Series III Convertible Notes issued to Quintessence.

The Series III Convertible Notes have the key terms as set out in item 1(c) of the March Announcement. An Appendix 3B is attached in respect of the 1,714 Series III Convertible Notes.

Series III Convertible Notes

The QVT Funds are to lend $1,200,000 to the Company in payment of the subscription price for 1,200 of the above Series III Convertible Notes.

As set out at item 1(a)(ii) of the March Announcement, under the terms of the MOU the Company was required to issue additional Series III Convertible Notes (in addition to the 1,200 Series III Convertible Notes) with a face value equal to the aggregate of:

Chicago (Operational Headquarters)

ASX: TZL Web: www.tz.net Email: info@tz.net

Sydney (Registered Office) Level 11, 1 Chifley Square Sydney, NSW 2000 Australia

520 West Erie Street, Suite 210 Chicago, IL 60654 United States

ASX Announcement

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• (i) the QVT Fund’s costs and expenses paid or payable in connection with the issue of the Series III Convertible Notes to the QVT Funds;

• (ii) the QVT Fund’s costs and expenses relating to the Company’s annual general meeting held on 26 February 2010 (the “2009 AGM” ); and

• (iii) costs and expenses incurred by the QVT Funds in connection with the Company’s default under the Convertible Note and Option Subscription Deed (the “Series I Note Deed” ) dated 24 December 2007 between the Company and the QVT Funds for failing to pay the interest due on 31 December 2008,

to the extent those costs and expenses are not satisfied by the issue of ordinary shares in the Company to the QVT Funds as approved under resolution 9(e) passed at the 2009 AGM.

During the negotiation of the formal document concerning the matters set out in the MOU which was completed today, the QVT Funds agreed:

• (i) to release the Company from any claims that the QVT Funds may have against the Company for the payment of interest on payments previously made by the QVT Funds on the Company’s behalf during the period from 1 June 2009 to 22 April 2010; and

• (ii) to release the Company from any interest liability for the 2010 calendar year on the 12,000 Series I Convertible Notes that were converted into 12,000,000 ordinary class shares on 26 March 2010.

Because of the additional costs incurred by the QVT Funds in finalising the formal document required under the MOU and in finalising the amendments needed to be made to the Series I Note Deed to enable Series III Convertible Notes to be issued, the number of additional Series III Convertible Notes required to be issued to the QVT Funds increased to 514 (which is 114 more than the number of additional Series III Convertible Notes referred to in item 1(a)(ii) of the March Announcement).

Accordingly the Company has issued a total of 1,714 Series III Convertible Notes to the QVT Funds today, namely 1,200 Series III Convertible Notes in exchange for the loan of $1,200,000 from the QVT Funds and 514 Series III Convertible Notes in reimbursement of $514,000 of costs and expenses owing by the Company to the QVT Funds.

Shareholder approvals

The Company will seek shareholder approval at its next annual general meeting to allow the QVT Funds to convert the 1,714 Series III Convertible Notes into ordinary class shares in the Company and to give effect to the proposed restructure of the terms of the 3,000,000 options issued to the QVT Funds under the Series I Note Deed as set out in item 2 of the March Announcement.

Page 2 of 2

ASX Announcement

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Release of shares from escrow

As announced at item 4 of the March Announcement, the Company has agreed to release from escrow 1,200,000 ordinary shares held by the QVT Funds that were to be the subject of a voluntary escrow arrangement agreed by the QVT Funds and the Company and announced to the ASX on 28 January 2010. The Company hereby gives notice in accordance with Listing Rule 3.10A that 1,200,000 of the 12,000,000 ordinary shares issued to the QVT Funds on 26 March 2010 will be released from escrow on 10 May 2010.

Yours faithfully,

TZ LIMITED

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Mark Bouris Chairman

Page 3 of 3

Rule
2.7,
3.10.3,
3.10.4,
3.10.5

Appendix
3B

New
issue
announcement, application
for
quotation
of
additional
securities and
agreement

Information
or
documents
not
available
now
must
be
given
to
ASX
as
soon
as
available.

Information
and documents
given
to
ASX
become
ASX’s
property
and
may
be
made
public.

Introduced
1/7/96.

Origin:
Appendix
5.

Amended
1/7/98,
1/9/99,
1/7/2000,
30/9/2001,
11/3/2002,
1/1/2003,
24/10/2005.

Name
of
entity

TZ
LIMITED

ABN

26
073
979
272

We
(the
entity)
give
ASX
the
following
information.

Part
1
­
All
issues

You
must
complete
the
relevant
sections
(attach
sheets
if
there
is
not
enough
space).

1 +Class of+securities issued or to beissued 2 Numberof+securitiesissuedorto beissued(ifknown)ormaximum numberwhichmaybeissued 3 Principal terms of the +securities (eg, if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price anddatesforconversion)	ConvertibleNotes
	1,714convertiblenotesissuedon23 April2010
	• Theconvertiblenotesbearinterestat10% per annum, payable on 31 December each year. • Theconvertiblenotesmustberepaidonthe fifth anniversary of the date of their issue unlessconvertedintoordinaryshares. • Subject to any required shareholder approvalbeingobtained,conversionofeach convertible note into ordinary shares occurs at a conversation rate per share equalto$1.00. • The convertible notes may be converted into ordinary shares during the period commencingontheearlierof:(1)thedate onwhichshareholderapprovaloftheissue of the convertible notes and the issue of sharesontheirconversionisobtainedand

• (ii)
 31
 December
 2010,
 and
 continuing
 up to
and
including
the
fifth
anniversary
of
the date
of
their
issue.

• • The
convertible
notes
rank
equally
with
all present and future senior unsecured liabilities of
the Company

	dateoftheirissue. • Theconvertiblenotesrankequallywithall present and future senior unsecured liabilitiesoftheCompany	dateoftheirissue. • Theconvertiblenotesrankequallywithall present and future senior unsecured liabilitiesoftheCompany
4 Dothe +securitiesrankequallyin all respects from the date of allotment with an existing +class ofquoted+securities? If the additional securities do not rankequally,pleasestate: • thedatefromwhichtheydo • the extent to which they participate for the next dividend,(inthecaseofatrust, distribution) or interest payment • theextenttowhichtheydonot rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issuepriceorconsideration 6 Purposeoftheissue (Ifissuedasconsiderationforthe acquisition of assets, clearly identifythoseassets) 7 Datesofentering+securitiesinto uncertificated holdings or despatchofcertificates 8 Number and +class of all +securities quoted on ASX (including the securities in clause2ifapplicable)	Notapplicable
	$1,000.00perconvertiblenote
	Toprovideadditionalworkingcapitalfor theCompany.
	23April2010
	Number	+Class
	62,729,325	Ordinary fully paid shares
	Number	+Class

+
See
chapter
19
for
defined
terms.

Appendix
3B
Page
2

1/1/2003

9 Number and +class of all +securities not quoted on ASX (including the securities in clause2ifapplicable) 10 Dividendpolicy(inthecaseofa trust,distributionpolicy)onthe increasedcapital(interests)	200,000 200,000 600,000 300,000 300,000 100,000 195,000 149,000 3,000,000 13,714 1,000,000 5,241,000 150,000	Directoroptions exercisableat$3.75 Directoroptions exercisableat$5.00 Directoroptions exercisableat$3.75 CEOoptions exercisableat$3.00 CEOoptions exercisableat$3.75 Optionsexercisable at$3.75andexpiring on18January2011 Optionsexercisable at$3.75andexpiring on19January2011 Optionsexercisable at$3.00andexpiring on20January2011 CBOptions exercisableat$4.00 andexpiringon 19February2013 Convertiblenotesat anissuepriceof $1,000per convertiblenote Optionsexercisable at$0.75andexpiring on15June2010 Convertible Notes at an issue price of $1.00perconvertible note Options exercisable at $1.00 expiring on 29March2011.
	Notapplicable

Part
2
­

Bonus
issue
or
pro
rata
issue

11 Is security holder approval required? 12 Is the issue renounceable or non‐ renounceable? 13 Ratio in which the +securities will beoffered 14 +Class of +securities to which the offerrelates 15 +Record date to determine entitlements 16 Willholdingsondifferentregisters (orsubregisters)beaggregatedfor calculatingentitlements? 17 Policy for deciding entitlements in relationtofractions 18 Names of countries in which the entity has +security holders who will not be sent new issue documents Note: Security holders must be told how their entitlementsaretobedealtwith. Crossreference:rule7.7. 19 Closing date for receipt of acceptancesorrenunciations 20 Namesofanyunderwriters 21 Amountofanyunderwritingfeeor commission 22 Namesofanybrokerstotheissue 23 Fee or commission payable to the brokertotheissue	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A

+
See
chapter
19
for
defined
terms.

Appendix
3B
Page
4

1/1/2003

• 24 Amount of any handling fee N/A payable to brokers who lodge acceptances or renunciations on behalf
of[+] security
holders

• 25 If the issue is contingent on N/A +security holders’ approval, the date
of
the
meeting

• 26 Date entitlement and acceptance N/A form and prospectus or Product Disclosure
 Statement
 will
 be
 sent to
persons
entitled

• 27 If
the
entity
has
issued
options,
and N/A the
terms
entitle
option
holders
to participate
on
exercise,
the
date
on which
notices
will
be
sent
to
option holders

• 28 Date rights trading will begin (if N/A applicable)

• 29 Date rights trading will end (if N/A applicable)

• 30 How
do[+] security
holders
sell
their N/A entitlements in full through a broker?

• 31 How
do[+] security
holders
sell part N/A of their entitlements through a broker
and
accept
for
the
balance?

• 32 How
 do[+] security
 holders
 dispose N/A of their entitlements (except by sale
through
a
broker)?

• 33 +Despatch
date N/A

Part
3
­
Quotation
of
securities

You
need
only
complete
this
section
if
you
are
applying
for
quotation
of
securities

• 34 Type
of
securities ( tick
one )

• (a) Securities
described
in
Part
1

• (b) All
other
securities

Example:
 restricted
 securities
 at
 the
 end
 of
 the
 escrowed
 period,
 partly
 paid
 securities
 that
 become
 fully
 paid, employee
incentive
share
securities
when
restriction
ends,
securities
issued
on
expiry
or
conversion
of
convertible securities

Entities
that
have
ticked
box
34(a)

Additional
securities
forming
a
new
class
of
securities

Tick
to
indicate
you
are
providing
the
information
or documents

• 35 If
the[+] securities
are[+] equity
securities,
the
names
of
the
20
largest
holders
of
the additional[+] securities,
 and
 the
 number
 and
 percentage
 of
 additional[+] securities held
by
those
holders

36 If
the[+] securities
are[+] equity
securities,
a
distribution
schedule
of
the
additional +securities
setting
out
the
number
of
holders
in
the
categories 1
‐
1,000 1,001
‐
5,000 5,001
‐
10,000 10,001
‐
100,000 100,001
and
over

• 37 A
copy
of
any
trust
deed
for
the
additional[+] securities

+
See
chapter
19
for
defined
terms.

Appendix
3B
Page
6

1/1/2003

Entities
that
have
ticked
box
34(b)

38 Number of securities for which N/A +quotation
is
sought 39 Class of +securities for which N/A quotation
is
sought 40 Do
the[+] securities
rank
equally
in N/A all respects from the date of allotment
 with
 an
 existing[+] class of
quoted[+] securities? If
 the
 additional
 securities
 do
 not rank
equally,
please
state: • the
date
from
which
they
do • the extent to which they participate for the next dividend,
(in
the
case
of
a
trust, distribution) or interest payment • the
extent
to
which
they
do
not rank equally, other than in relation
 to
 the
 next
 dividend, distribution or interest payment 41 Reason
 for
 request
 for
 quotation N/A now Example:
In
the
case
of
restricted
securities,
end of
restriction
period (if issued upon conversion of another security, clearly identify that
other
security)

Number +Class 42 Number and +class of all N/A +securities quoted on ASX ( including the
 securities
 in
 clause 38)

Quotation
agreement

• 1 +Quotation
 of
 our
 additional
 +securities
 is
 in
 ASX’s
 absolute
 discretion.
 
 ASX may
quote
the[+] securities
on
any
conditions
it
decides.

• 2 We
warrant
the
following
to
ASX.

• The
issue
of
the[+] securities
to
be
quoted
complies
with
the
law
and
is not
for
an
illegal
purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An
offer
of
the[+] securities
for
sale
within
12
months
after
their
issue will
not
require
disclosure
under
section
707(3)
or
section
1012C(6)
of the
Corporations
Act.

  • Note:
An
entity
may
need
to
obtain
appropriate
warranties
from
subscribers
for
the
securities
in
order
to
be
able to
give
this
warranty

• Section
724
or
section
1016E
of
the
Corporations
Act
does
not
apply
to any
 applications
 received
 by
 us
 in
 relation
 to
 any[+] securities
 to
 be quoted
 and
 that
 no‐one
 has
 any
 right
 to
 return
 any[+] securities
 to
 be quoted
under
sections
737,
738
or
1016F
of
the
Corporations
Act
at
the time
that
we
request
that
the[+] securities
be
quoted.

• If
we
are
a
trust,
we
warrant
that
no
person
has
the
right
to
return
the +securities
to
be
quoted
under
section
1019B
of
the
Corporations
Act
at the
time
that
we
request
that
the[+] securities
be
quoted.

• 3 We
will
indemnify
ASX
to
the
fullest
extent
permitted
by
law
in
respect
of
any claim,
 action
 or
 expense
 arising
 from
 or
 connected
 with
 any
 breach
 of
 the warranties
in
this
agreement.

• 4 We
 give
 ASX
 the
 information
 and
 documents
 required
 by
 this
 form.
 
 If
 any information or document not available now, will give it to ASX before +quotation
of
the
+securities
begins.

We
acknowledge
that
ASX
is
relying
on
the information
 and
 documents.
 
 We
 warrant
 that
 they
 are
 (will
 be)
 true
 and complete.

Sign
here: ............................................................






Date: Director/Company
secretary

Print
name:

==
==
==
==
==

+
See
chapter
19
for
defined
terms.

Appendix
3B
Page
8

1/1/2003