ex431.htm


     

                                                                                            Exhibit Exhibit
4.31

     

     

    FORM OF WARRANT
AGREEMENT

     

    This
Warrant Agreement is made and entered into as of February 8, 2008, by and
between Z Trim Holdings, Inc. f/k/a Circle Group Holdings, Inc., an Illinois
corporation whose principal place of business is located at 1011 Campus Drive,
Mundelein, Illinois 60060 (“Z Trim”), and Farhad Zaghi, who resides in Los
Altos, California (“Farhad”), Farshad Zaghi, who resides in Los Altos,
California (“Farshad”), Nurieel Akhamzadeh, who resides in the Nation of Israel
(“Nurieel”), Zaghi Trading Partnership, whose principal place of business is
located in California, and Pac Bay, Inc. d/b/a Bay Financial, a California
corporation, whose principal place of business is located in California,
(collectively the “Zaghi Parties”).

     

    WHEREAS, Z Trim has issued
various warrants to the Zaghi Parties and the Parties now desire to cancel all
such warrants and issue warrants on the following terms and conditions, and the
terms and conditions of the Settlement Agreement and Mutual Releases between the
Parties as of February 8, 2008, (the “Agreement), and this Warrant Agreement is
made pursuant to the Agreement;

     

    NOW THEREFORE, in consideration of good
and valuable consideration, receipt of which is hereby acknowledged, the Parties
agree as follows:

     

    1. The
recitals and prefatory phrases set forth above, and the Agreement, are
incorporated fully by reference as if expressly set forth herein.

    2.  All
warrants previously issued to the Zaghi Parties (totaling 2,266,666) pursuant to
the Agreement to Issue Warrants dated March 27, 2007, unless this Warrant
Agreement is declared null and void by the Zaghi Parties pursuant to paragraph 7
of the Agreement in which case the Parties shall be returned to the status quo
as it existed prior to the execution of this Warrant Agreement, are deemed
cancelled and shall be considered null and void.  The Zaghi Parties
represent that they have not transferred, assigned or otherwise disposed of any
of the warrants referred to the Agreement to Issue Warrants. Pursuant to the
Agreement, Z Trim agrees to issue one or more warrants to purchase 2,500,000
shares of Z Trim common stock to the Zaghi Parties under the following
terms:

    (a) New
warrants will be available no sooner than 5 business days after the date of the
Closing of the Agreement and no later than 36 months after the date of this
Warrant Agreement at the request of the Zaghi Parties. Z Trim has provided the
Zaghi Parties with a sample warrant (attached hereto as Exhibit 1) leaving only
the names of the parties, number of shares and the strike price blank. Upon the
Zaghi Parties notifying Z Trim of the date they wish to use as the date to
calculate the strike price of the warrants, as well as the name of the party to
be issued the warrants, Z Trim will provide the Zaghi Parties with an executed
warrant within five (5) business days after Z Trim’s receipt of notice from the
Zaghi Parties.

    (b) The
strike price of the warrants shall be calculated as the 12 trading day trailing
average of the closing price of Z Trim stock during any 12 trading day selected
by the Zaghi Parties.  Such 12-day period to be selected by the Zaghi
Parties shall be any such time period from the date of this Warrant Agreement to
the date the Zaghi Parties notify Z Trim of the 12-day trading period they wish
to use as the date to calculate the strike price of the warrants.

    (c) The date
in which to start the calculation of the 12-day trading period (the “Calculation
Date”) will be the date chosen by the Zaghi parties within the date range set
forth in paragraph 2(a) and (b); provided, however, that Zaghi Parties’
designation of the Calculation Date shall be irrevocable.

    (d) The
warrants shall be exercisable for a period of 3 years from the date on which
this Agreement is executed and delivered.

    (e) The
warrants shall be transferable, subject to securities law
restrictions.

    (f) The
Parties agree that the warrants shall not be exercisable if the exercise of such
would result in the party making the exercise, at the time of exercise, a
greater than 4.99% shareholder of Z Trim. However, the Zaghi Parties shall be
allowed to exercise any amount of warrants that would not exceed the 4.99%
threshold.

    (g) Z Trim
agrees that it shall use its best efforts to register for resale the shares
underlying the warrants on a registration statement to be filed with the SEC and
declared effective within 3 months of the date in which the warrants are issued.
Z Trim shall further cause the shares underlying the warrants to be listed with
the American Stock Exchange. If Z Trim has a registration within the first 3
months following the issuance of the warrants, it agrees to register such
underlying shares on said registration. In no event shall the registration of
such shares take place later than 3 months from the date of issuance of the
warrants.  Z Trim shall take all reasonably necessary actions to cause
the registration statement to remain effective throughout the period in which
the Warrants remain exercisable.

    (h) The Zaghi
Parties shall be entitled to choose the strike price/Calculation Date(s) for the
warrants pursuant to paragraph 2(a) and (b) in blocks of no less than 150,000
shares (with the obvious exception of the last increment of warrants
remaining.)

    3. Upon the
Zaghi Parties delivery of a cashier’s or banker’s check payable to Z Trim to Law
Offices of Cathy A. Pilkington for the exercise any of these warrants referred
to herein, the stock certificate will be issued and released within five (5)
business days pursuant to directions provided by the Zaghi Parties, provided,
however, that the stock certificates cannot be issued prior to their
registration, as set forth in paragraph 2(g) hereinabove. The cashier’s or
bankers check will be held by Cathy Pilkington until the stock certificate is
produced to DWAC and confirmation of such is received by the Zaghi Parties as
well as receipt by them of an accompanying attorney opinion letter or any other
necessary documentation to ensure that the shares are free trading, which
opinion letter or other documentation Z Trim shall provide.

    4. Z Trim
shall provide to the Zaghi Parties information on a monthly basis of the status
of any registrations effecting the warrants issued under this
Agreement.

    5. The Zaghi
Parties agree on behalf of themselves and their affiliates that so long as there
exist outstanding warrants without an irrevocable strike price under this
Warrant Agreement that they will not, directly or indirectly, sell short or
contract to sell short, any Z Trim securities.

    6.  Z
Trim and the Zaghi Parties agree that any breach of the provisions of paragraphs
2 and 3 of this Warrant Agreement by Z Trim or the Zaghi Parties will cause the
non-breaching party substantial and significant injury and expense, but that the
amount of such injury and expense is difficult, if not impossible, to reasonably
calculate with certainty. Therefore, Z Trim and the Zaghi Parties agree that
upon a breach of paragraphs 2 and 3 of this Warrant Agreement by Z Trim or the
Zaghi Parties, the non-breaching party is entitled to damages in the amount of
$5,000 a day until the breach is cured and that this amount is not a penalty but
an agreed upon liquidated damages provision. Upon a breach by Z Trim or the
Zaghi Parties, the non-breaching party shall serve notice of the claimed breach
and the breaching party shall have ten (10) business days to cure the breach.
The $5,000 a day damages will accrue during the period of the cure and shall be
payable even upon a cure, but the non-breaching party cannot initiate any legal
action to recover these damages or enforce this provision during the period of
the cure. In the event the non-­breaching party initiates litigation to
enforce this provision or any other breach or default of this Warrant Agreement,
the prevailing party in such litigation shall be entitled to all attorneys’ fees
and costs incurred in enforcing this provision. However, this paragraph 5 shall
not apply to any breach by Z Trim of the above provisions of this Warrant
Agreement caused by events exclusively in control of the SEC, AMEX or any
regulatory authority. The Parties agree that a private placement by Z Trim for
the raising of funds or substantially similar transaction shall not justify or
excuse Z Trim’s failure to timely register shares pursuant to paragraphs 2 and
3.

    7. Notices. Any required notices,
statements or confirmations to be given under the terms of this Warrant
Agreement shall be served by e-mail or Federal Express Delivery to the following
or any other address designated by the parties in writing:

    
      	
              FOR
      Z TRIM

            	
              FOR
      THE ZAGHI PARTIES

            	 
      
	
              Z
      Trim Holdings, Inc.

              1011
      Campus Drive

              Mundelein,
      IL 60060

              Attn:           Brian
      Chaiken, Esq.

              (847)
      549-6028

              brian.chaiken@ztrim.com

               

            	
              Farhad
      Zaghi

              4020
      Moorpark Avenue, #17

              San
      Jose, CA 95117

              (408)
      296-5287

              fzaghi@aol.com

               

               

            
	
              Cathy
      A. Pilkington, Esq.

              Law
      Offices of Cathy A. Pilkington

              161
      N. Clark Street, Suite 4700

              Chicago,
      IL 60601

              (312)
      346-2762

              cpilkington@pilkingtonlaw.com

               

            	
              William
      M. McErlean

              Barnes
      & Thornburg LLP

              One
      N. Wacker Drive, Suite 4400

              Chicago,
      IL 60606

              (312)
      214-8820

              wmcerlean@btlaw.com

               

            


    

    


    8. In
entering into the Agreement, the Parties acknowledge that the terms of this
Warrant Agreement have been completely read and that the terms are fully
understood and voluntarily accepted by them.  Each Party agrees and
represents that this Warrant Agreement is made on its or his sole judgment,
belief, and knowledge as to all phases of its alleged claims.  Except
as is set forth herein, no Party is relying on any representations or statements
made by the other Party or anyone representing the other Party or by any person
employed by the other Party.

     

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    9. Neither
this Warrant Agreement nor any negotiations or proceedings in connection
therewith may be used in any proceeding against any Party for any purpose
whatsoever, except with respect to the effectuation and enforcement of this
Agreement.  Each Party agrees not to introduce this Warrant Agreement
into evidence in any action involving any other Party for the purpose of
establishing or attempting to prove liability, any admission of liability, or
otherwise.  Provided that nothing herein shall prevent any Party from
taking necessary legal action to enforce the terms of this Warrant
Agreement.

    10. This
Warrant Agreement may not be changed, altered, amended or otherwise modified
except by agreement in writing signed by all Parties hereto.

    11. Each
Party represents and warrants that it has all necessary capacity, power, and
authority to enter into, and perform its obligations under this Warrant
Agreement, and each individual executing this Warrant Agreement on behalf of an
entity represents and warrants by his or her signature that he or she has been
fully authorized by such entity to execute this Agreement on behalf of such
entity.  Upon execution and delivery of this Warrant Agreement, the
Warrant Agreement and such instruments will represent the valid, legal, and
binding obligations of each such Party, enforceable in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
or similar laws affecting creditors’ rights generally.

    11. This
Warrant Agreement and the covenants contained herein shall be binding on and
inure to the benefit of the successors, assigns, and legal representatives of
each Party hereto, whether by way of merger, consolidation, operation of law,
assignment, purchase or other acquisition.

    12.  If
any term or other provision of this Warrant Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
terms, conditions and provisions of this Warrant Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Warrant Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.

    13. Waiver of
any one breach of any provision of this Warrant Agreement shall not be deemed a
waiver of any other breach of the same or any other provision of this Warrant
Agreement.

    14. Each
Party to this Warrant Agreement and their counsel has reviewed and revised this
Warrant Agreement, and the normal rule of construction to the effect that any
ambiguities in this Warrant Agreement are to be resolved against the drafting
party shall not be employed in the interpretation of this Warrant Agreement, and
this Warrant Agreement shall not be construed or interpreted strictly against or
in favor of any party.

    15.  This
Warrant Agreement shall be governed by and construed under the laws of the State
of Illinois and applicable Federal law, (without regard to the laws as to choice
or conflict of laws), provided that in the event that all or any part of this
Warrant Agreement should be held to be invalid or unenforceable for any reason
under such laws, this Warrant Agreement shall be governed by and/or construed
under the laws of any other jurisdiction which would validate and make
enforceable the provisions contained in this Warrant Agreement. It is the intent
of the parties to choose the law of one or more jurisdictions (including
application of the laws of different jurisdictions to different provisions if
necessary), so as to validate and make enforceable the provisions contained in
this Warrant Agreement. In the event that all provisions cannot be validated and
made enforceable by application of the laws of one or more such jurisdictions,
then the provisions hereof shall be severable and enforced to the greatest
extent possible.

    16.  Collective
or singular nouns used herein refer to one or more of the defined persons or
entities, whether singularly, collectively, jointly and/or severally, as the
context may require. The masculine includes the feminine and vice versa, as the
context may require.

    17.  This
Warrant Agreement may be executed in multiple counterparts, each of which shall
be deemed to be an original. A copy of a signature (including but not limited to
a signature transmitted by fax or other electronic means) shall have the same
force and effect as an original signature.

    IN
WITNESS WHEREOF, the parties hereto have executed this Warrant Agreement the day
and year first set forth above.

    


    
      	
              Z
      TRIM HOLDINGS, INC.

              an
      Illinois corporation

               

              By:                                                                

            	 
      	
              FARHAD
      ZAGHI

               

               

              By:                                                                

            
	 
      	 
      	
              Its:                                                                

            
	 
      	 
      	
              Individually,
      and on behalf of Pac Bay, Inc. and Zaghi Trading
    Partnership

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              FARSHAD
      ZAGHI

               

               

              By:                                                                

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              NURIEEL
      AKHAMZADEH

               

               

              By:                                                                

            
	 
      	 
      	 
      
	 
      	 
      	 
      


    

     

     

    
 

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