Document:

ex42.htm

  
Exhibit 4.2

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER HEREOF FOR ITS OWN ACCOUNT FOR INVESTMENT WITH NO INTENTION OF MAKING OR CAUSING TO BE MADE A PUBLIC DISTRIBUTION OF ALL OR ANY PORTION THEREOF. SUCH SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.

       ______], 2012

Z TRIM HOLDINGS, INC. WARRANT

TO PURCHASE COMMON STOCK

 

Void after _____, 2017

 

Z trim holdings, inc., an Illinois corporation (the "Company"), hereby certifies that,

for value received, ________ (including any successors and assigns, "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:00 PM Central time, on September 6, 2016 (the "Expiration Date"), but not thereafter, up to FIFTY THOUSAND (50,000) fully paid and nonassessable shares of Common Stock (the "Warrant Shares") under the terms set forth herein.

 

1.           Number of Warrant Shares; Exercise Price. This Warrant shall evidence the right

of the Holder to purchase the Warrant Shares at an initial exercise price per Warrant Share of $1.50 per share (the "Exercise Price"), subject to adjustment as provided in Section 7 below.

 

2.           Definitions. As used herein the following terms, unless the context otherwise

 

requires, have the following respective meanings:

 

(a) The term "Common Stock" shall mean the common stock, par value

 

$.00005 per share, of the Company.

 

(b) The term "Company" shall include any company which shall succeed to

 

or assume the obligations of the Company hereunder.

 

(c) The term "Corporate Transaction" shall mean (i) a sale, lease transfer or

 

conveyance of all or substantially all of the assets of the Company; (ii) a consolidation of the

  

  

  

Company with, or merger of the Company with or into, another corporation or other business entity in which the stockholders of the Company immediately prior to such consolidation or merger own less than 50% of the voting power of the surviving entity immediately after such consolidation or merger; or (iii) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company's voting power is transferred, excluding any consolidation or merger effected exclusively to change the domicile of the Company.

 

(d)       The term "Stock" shall mean (i) Common Stock or (ii) any other class of stock resulting from successive changes or reclassifications of such Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value.

 

3. Exercise Date; Expiration. Subject to the terms hereof, this Warrant may be

 

exercised by the Holder at any time or from time to time before the Expiration Date (the

 

"Exercise Period").

 

4. Exercise of Warrant: Partial Exercise. This Warrant may be exercised in full by

 

the Holder by surrender of this Warrant, together with the Holder's duly executed form of

 

subscription attached hereto as Exhibit A, to the Company at its principal office, accompanied by

 

payment, in cash or by certified or official bank check payable to the order of the Company, of

 

the aggregate exercise price (as determined above) of the number of Warrant Shares to be

 

purchased hereunder. The exercise of this Warrant pursuant to this Section 4 shall be deemed to

 

have been effected immediately prior to the close of business on the business day on which this

 

Warrant is surrendered to the Company as provided in this Section 4, and at such time the person

 

in whose name any certificate for Warrant Shares shall be issuable upon such exercise shall be

 

deemed to be the record holder of such Warrant Shares for all purposes. As soon as practicable

 

after the exercise of this Warrant, the Company at its expense will cause to be issued in the name

 

of and delivered to the Holder, or as the Holder may direct, a certificate or certificates for the whole number of fully paid and nonassessable shares of Warrant Shares to which the Holder shall be entitled on such exercise, together with cash, in lieu of any fraction of a share, equal to such fraction of the current fair market value of one full Warrant Share as determined in good faith by the Board of Directors, and, if such Warrant is not exercised in full, a new warrant evidencing the balance of the shares remaining subject to the Warrant.

5. Company’s Right to Call the Option.  This Warrant shall be callable by the Company, if, at any time during the life of the Warrant, the 10 trading day trailing average closing stock price per share (as reported by the OTC Bulletin Board) for the Common Stock shall exceed $2.99.  The Holder shall have five (5) business days from the date of receipt of the Company’s notice of its intent to call the Warrant to exercise the Warrant.  If the Holder chooses not to exercise the Warrant within said time frame, the Warrant shall expire and be terminated without value.

6. Intentionally left blank.

 

7. Adjustments to Conversion Price. For the purposes of this Section 7, the term

 

Exercise Price shall mean the Exercise Price per share set forth on the first page of this Warrant

 

as adjusted from time to time pursuant to the provisions of this Section 7. The number and kind

 

of Warrant Shares (or any shares of stock or other securities which may be) issuable upon the

 

exercise of this Warrant and the Exercise Price hereunder shall be subject to adjustment from

 

time to time upon the happening of certain events, as follows:

 

(a) Splits and Subdivisions. In the event the Company should at any time or

 

from time to time fix a record date for the effectuation of a split or subdivision of the outstanding

 

shares of Common Stock or the determination of the holders of Common Stock entitled to

 

receive a dividend or other distribution payable in additional shares of Common Stock or other

 

securities or rights convertible into, or entitling the holder thereof to receive directly or

 

indirectly, additional shares of Common Stock (hereinafter referred to as the "Common Stock

 

Equivalents") without payment of any consideration by such holder for the additional shares of

 

Common Stock or Common Stock Equivalents, then, as of such record date (or the date of such

 

distribution, split or subdivision if no record date is fixed), the Exercise Price shall be

 

appropriately decreased, and the number of Warrant Shares for which this Warrant is exercisable

 

shall be appropriately increased, in proportion to such increase of outstanding shares.

 

(b) Combination of Shares. If the number of shares of Common Stock

 

outstanding at any time after the date hereof is decreased by a combination of the outstanding

 

shares of Common Stock, the Exercise Price shall be appropriately increased and the number of

 

Warrant Shares for which this Warrant is exercisable shall be appropriately decreased in

 

proportion to such decrease in outstanding shares.

 

(c) Reclassification or Reorganization. If the Warrant Shares issuable upon

 

the exercise of this Warrant shall be changed into the same or different number of shares of any

 

class or classes of stock, whether by capital reorganization, reclassification or otherwise (other

 

than a split, subdivision or stock dividend provided for in Section 7(a) above or a combination of

 

shares provided for in Section 7(b) above, or a reorganization, merger or consolidation provided

 

for in Section 7(d) below, then and in each such event the Holder shall be entitled to receive

 

upon the exercise of this Warrant the kind and amount of shares of stock and other securities and

property receivable upon such reorganization, reclassification or other change, to which a holder of the number of Warrant Shares issuable upon the exercise of this Warrant would have received if this Warrant had been exercised immediately prior to such reorganization, reclassification or other change, all subject to further adjustment as provided herein.

 

(d) Merger or Consolidation. If at any time or from time to time there shall be

 

a capital reclassification or reorganization of the Warrant Shares or a Corporate Transaction

 

(other than a subdivision, combination, reclassification or exchange of shares provided for

 

elsewhere in this Section 7) of the Company, then as a part of such reorganization or Corporate

 

Transaction, adequate provision shall be made so that the Holder shall thereafter be entitled to

 

receive upon the exercise of this Warrant, the number of shares of stock or other securities or

 

property of the Company, resulting from such reorganization, recapitalization or Corporate

 

Transaction to which a holder of the number of Warrant Shares issuable upon the exercise of this

 

Warrant would have received if this Warrant had been exercised immediately prior to such

 

reorganization or Corporate Transaction. In any such case, the Company will make appropriate

 

provision to insure that the provisions of this Section 7(d) hereof will thereafter be applicable as

 

nearly as may be in relation to any shares of stock or securities thereafter deliverable upon the

 

exercise of this Warrant. The Company shall not effect any such Corporate Transaction unless

 

prior to or simultaneously with the consummation thereof the successor corporation (if other than

 

the Company) resulting from such Corporate Transaction or the corporation purchasing or

 

acquiring such assets or other appropriate corporation or entity shall assume the obligation to

 

deliver to the Holder, at the last address of the Holder appearing on the books of the Company,

 

such shares of stock, securities or assets as, in accordance with the foregoing provisions, the

 

Holder may be entitled to purchase, and the other obligations under this Warrant. The provisions

 

of this Section 7(d) shall similarly apply to successive reorganizations, reclassifications, or

 

Corporate Transactions.

 

 (e)            Notice of Record Dates: Adjustments. In the event of a Corporate Transaction, the Company shall provide to the Holder twenty (20) days advance written notice of such Corporate Transaction. The Company shall promptly notify the Holder in writing of each adjustment or readjustment of the Exercise Price hereunder and the number of Warrant Shares issuable upon the exercise of this Warrant. Such notice shall state the adjustment or readjustment and show in reasonable detail the facts on which that adjustment or readjustment is based.

 

8. Replacement of Warrants. On receipt by the Company of evidence reasonably

 

satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in

 

the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity

 

agreement reasonably satisfactory in form and amount to the Company or, in the case of any

 

such mutilation, on surrender and cancellation of such Warrant, the Company at its expense will

 

execute and deliver to the Holder, in lieu thereof, a new Warrant of like tenor.

 

9. No Rights or Liability as a Stockholder. This Warrant does not entitle the Holder

 

hereof to any voting rights or other rights as a stockholder of the Company. No provisions

 

hereof, in the absence of affirmative action by the Holder to purchase Warrant Shares, and no

 

enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the

 

Holder as a stockholder of the Company.

 

10. Miscellaneous.

(a)       Transfer of Warrant; Permitted Designees. The Holder agrees not to make any disposition of this Warrant, the Warrant Shares or any rights hereunder without the prior written consent of the Company. Any such permitted transfer must be made by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto as Exhibit B to any such permitted transferee. As a condition precedent to such transfer, the transferee shall sign an investment letter in form and substance satisfactory to the Company. Subject to the foregoing, the provisions of this Warrant shall inure to the benefit of and be binding upon any successor to the Company and shall extend to any holder hereof. Notwithstanding anything contained herein, the Company shall, upon written instructions to be delivered to the Company within fifteen (15) business days following the date hereof, transfer all or a portion of this Warrant to officers, directors, employees and other registered agents or associated persons of the Holder (collectively, "Permitted Designees”) in accordance with this Section 10; provided, however, the Company shall not be required to issue such Warrants to any person who is not an "accredited investor" within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended, and provided, further, such transfer must be in compliance with applicable Federal and state securities laws. Each Permitted Designee shall be required to execute fully and completely the Investor Representation Letter in the form attached hereto as Exhibit C prior to the issuance of the Warrant to such person.

 

(b) Titles and Subtitles. The titles and subtitles used in this Warrant are for

 

convenience only and are not to be considered in construing or interpreting this Warrant.

 

(c) Notices. Any notice required or permitted to be given to a party pursuant

 

to the provisions of this Warrant shall be in writing and shall be effective and deemed given to

 

such party under this Warrant on the earliest of the following: (a) the date of personal delivery;

 

(b) two (2) business days after transmission by facsimile, addressed to the other party at its

 

facsimile number, with confirmation of transmission; (c) four (4) business days after deposit with

 

a return receipt express courier for United States deliveries; or (d) five (5) business days after

 

deposit in the United States mail by registered or certified mail (return receipt requested) for

 

United States deliveries. All notices not delivered personally or by facsimile will be sent with

 

postage and/or other charges prepaid and properly addressed to such party at the address set forth

 

on the signature page hereto, or at such other address as such party may designate by ten (10)

 

days advance written notice to the other party hereto. Notices to the Company will be marked

 

"Attention: Chief Financial Officer."

 

(d) Attorneys' Fees. If any action at law or in equity is necessary to enforce

 

or interpret the terms of this Warrant, the prevailing party shall be entitled to reasonable

 

attorneys' fees, costs and disbursements in addition to any other relief to which such party may

 

be entitled.

 

(e) Amendments and Waivers. In addition to the provision for waiver of an exercise price adjustment set forth in Section 7 above, any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Holder and the Company. Any amendment or waiver effected in accordance with this Section 10(e) shall be binding upon the Holder of this Warrant (and of any securities into which this Warrant is convertible), each future holder of all such securities, and the Company.

(f)       Severability. If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

 

(g)       Governing Law. This Warrant shall be governed by and construed and enforced in accordance with the laws of the State of Illinois, without giving effect to its conflicts of laws principles.

 

(h)        Counterparts. This Warrant may be executed in any number of

counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

  

  

  

in witness whereof, the Company has caused this Warrant to be executed by its duly authorized officer as of the date first written above.

 

Z TRIM HOLDINGS, INC.,

an Illinois corporation

 

By:

Name: Steven J. Cohen

Title: Chief Executive Officer

 

	
  

	
Address:    1011 Campus Drive Mundelein, IL 60060

  

  

  

EXHIBIT A

FORM OF SUBSCRIPTION (To be signed only on exercise of Warrant)

 

To:      Z TRIM HOLDINGS, INC.

 

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby

irrevocably elects to (a) purchase                    shares of the Common Stock covered by such Warrant

and herewith makes payment of $                                                             , representing the full purchase price for such

shares at the price per share provided for in such Warrant, or (b) exercise such Warrant for

shares purchasable under the Warrant pursuant to the Net Issue Exercise provisions of

Section 5 of such Warrant.

 

Please issue a certificate or certificates representing                                                       shares in the name of the

undersigned or in such other name or names as are specified below:

 

(Name)

 

(Address)

The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares, all except as in compliance with applicable securities laws.

 

(Signature must conform in all respects to name of the Holder as specified on the face of the Warrant)

 

(Print Name)

 

(Address) Dated:

  

  

  

EXHIBIT B

FORM OF ASSIGNMENT

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

for value received, the foregoing Warrant and all rights evidenced thereby are hereby assigned to:

 

Name:                                                                                                                          

(Please Print)

Address:                                                                  

(Please Print)

 

Dated:                            , 20_

 

Holder's

Signature:                                                                                

 

Holder's Address:

 

NOTE: The signature to this Form of Assignment must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

  

  

  

EXHIBIT C

 

FORM OF INVESTOR REPRESENTATION LETTER

 

DATE

 

Z Trim Holdings, Inc. 1011 Campus Drive Mundelein, IL 60060

 

Gentlemen:

 

In connection with my receipt of warrants ("Warrants") to purchase the number of shares of common stock referred to below, I hereby represent, warrant and covenant as follows:

 

1.   Check each one which is applicable:

 

I am an "accredited investor" within the meaning of Regulation D promulgated under the

 

Securities Act of 1933, as amended (the "Act");

 

 I have such knowledge and experience in financial, tax, and business matters so as to

utilize information made available to me in order to evaluate the merits and risks of an investment decision with respect thereto;

 

2.           I have had the opportunity to ask questions and receive and review such answers and information concerning Z Trim Holdings Inc. (the "Issuer") as I have deemed pertinent;

 

3.          I am not relying on the Issuer respecting the tax and other economic considerations of an investment in the Issuer;

 

4.           I am acquiring the Warrants and the underlying securities related thereto solely for my

 

own account for investment and not with a view to resale or distribution. I acknowledge that neither the Warrants nor the underlying securities have been registered under the Act and may not be resold except pursuant to an effective registration statement thereunder or an exemption therefrom.

 

Name:

 

Holder of Warrants to purchase                                                    

shares of common stock of Z Trim Holdings, Inc. pursuant to the terms of the Common Stock Purchase Warrant dated ________ex101.htm

  

Exhibit 10.1

 

Z TRIM HOLDINGS, INC.

 

 

Subscription Documentation Package

 

To subscribe for Units in the private offering of

 

Z TRIM HOLDINGS, INC.

 

1.           Date and Fill in the number of Units being subscribed for and Complete and Sign the Signature Page included in the Subscription Agreement.

 

2.           Initial the Accredited Investor Certification page attached to this letter.

 

	
3.

	
Complete and Return the Investor Profile and, if applicable, Wire Transfer Authorization

	
attached to this letter.

 

	
4.

	
Fax all forms to Brian Chaiken (847) 549-6028 and then send all signed original

	
documents with a check to:

 

Brian Chaiken

 

Chief Financial Officer

 

Z Trim Holdings, Inc.

 

1011 Campus Drive

 

Mundelein, IL 60060

 

	
5.

	
Please make your subscription payment payable to the order of Z Trim Holdings, Inc.

 

For wiring funds, send directly to the following account:

 

	
Acct. Name:

	
Z Trim Account

ABA Number:                         071925046

A/C Number:                         10143857 

FBO:

 

 

Investors will purchase the number of units (the “Units”) set forth on the signature page to the Subscription Agreement at a purchase price of $1.50 per Unit.  Each Unit consists of 1 share of Common Stock, par value $0.00005 per share.  The original issue price of the Common Stock is $1.50 per share. The subscription for the Units will be made in accordance with and subject to the terms and conditions of the Subscription Agreement and the Term Sheet.

 

All subscription funds will be immediately available to the Company.  If the Company rejects a subscription, either in whole or in part (which decision is in the sole discretion of the Company), the rejected subscription funds or the rejected portion thereof will be returned promptly to such subscriber without interest accrued thereon.

 

Questions regarding completion of the subscription documents should be directed to Brian Chaiken (847) 549-6002.  ALL SUBSCRIPTION DOCUMENTS MUST BE FILLED IN AND SIGNED EXACTLY AS SET FORTH WITHIN.

 

  

  

  

SUBSCRIPTION AGREEMENT

 

FOR Z TRIM HOLDINGS, INC.

 

Z Trim Holdings, Inc.

1011 Campus Drive

Mundelein, IL 60060

 

Ladies and Gentlemen:

 

1.           Subscription.

 

(a)            The undersigned (the “Purchaser”), intending to be legally bound, hereby irrevocably agrees to purchase a unit or units (each, a “Unit” and collectively, the “Units”) at a purchase price of $1.50 per Unit, from Z Trim Holdings, Inc., an Illinois corporation (the “Company”).  Each Unit consists of 1 share of common stock, $.00005 par value (the “Common Stock”) of the Company.

 

2.            Payment.  The Purchaser encloses herewith a check payable to, or will immediately make a wire transfer payment to, Z Trim Holdings, Inc., pursuant to the wire instructions provided by the Company, in the full amount of the purchase price of the Units being subscribed for (the “Subscription Amount”).  Together with the check for, or wire transfer of, the full Subscription Amount, the Purchaser is delivering a completed and executed Signature Page to this Subscription Agreement.

 

3.           Deposit of Funds.  All payments made as provided in Section 2 hereof shall be deposited by the Company as soon as practicable in its corporate bank account.  If the Company rejects a Purchaser’s subscription, either in whole or in part (which decision is in the sole discretion of the Company), the rejected Subscription Amount or the rejected portion thereof will be returned promptly to the Purchaser without interest accrued thereon or deduction therefrom.  The Minimum Subscription Amount for a Purchaser in the Offering is one Unit; provided, however, that the Company may, in its sole discretion, permit fractional Units to be purchased.

 

4.            Acceptance of Subscription.  The Purchaser understands and agrees that the Company in its sole discretion reserves the right to accept or reject this or any other subscription for the Units, in whole or in part, notwithstanding prior receipt by the Purchaser of notice of acceptance of this or any other subscription.  The Company shall have no obligation hereunder until the Company shall execute and deliver to the Purchaser an executed copy of this Subscription Agreement.  If Purchaser’s subscription is rejected in whole, or the Offering is terminated, all funds received from the Purchaser will be returned without interest, penalty, expense or deduction, and this Subscription Agreement shall thereafter be of no further force or effect.  If Purchaser’s subscription is rejected in part, the funds for the rejected portion of such subscription will be returned without interest, penalty, expense or deduction, and this Subscription Agreement will continue in full force and effect to the extent such subscription was accepted.

 

5.            Representations and Warranties of the Purchaser.  The Purchaser hereby acknowledges, represents, warrants, and agrees as follows:

 

(a)           None of the Units, the Preferred Stock, the Warrants or any of the shares of Common Stock issuable upon conversion of the Preferred Stock, in payment of dividends on the Preferred Stock or the exercise of the Warrants or offered pursuant to the Term Sheet are registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws.  The Purchaser understands and has advised each of its equity owners that the offering and sale of the Units is intended to be exempt from registration under the Securities Act, by virtue of Section 4(2) thereof and the provisions of Regulation D promulgated thereunder, based, in part, upon the representations, warranties and agreements of the Purchaser contained in this Subscription Agreement;

 

(b)           The Purchaser and the Purchaser’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, “Advisors”), have received the Term Sheet and all other documents requested by the Purchaser or its Advisors, if any, have carefully reviewed them and understand the information contained therein, prior to the execution of this Subscription Agreement;

 

(c)           Neither the Securities and Exchange Commission (the “Commission”) nor any state securities commission has approved the Units, the Preferred Stock, the Warrants or any of the Common Stock issuable upon conversion of the Preferred Stock, or in payment of dividends thereon or exercise of the Warrants, or passed upon or endorsed the merits of the Offering or confirmed the accuracy or determined the adequacy of the Term Sheet.  The Term Sheet has not been reviewed by any Federal, state or other regulatory authority;

 

(d)           All documents, records, and books pertaining to the investment in the Units (including, without limitation, the Term Sheet) have been made available for inspection by the Purchaser and its Advisors, if any;

 

(e)          The Purchaser has carefully read the Term Sheet including the section entitled “Risk Factors.”  The Purchaser and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the offering of the Units and the business, financial condition, results of operations and prospects of the Company, and all such questions have been answered by the Company to the full satisfaction of the Purchaser and its Advisors, if any, and the Purchaser and its Advisors have had access, including through the EDGAR system, to true and complete copies of the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “10-K”) and all other reports filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since the filing of the 10-K and prior to the date hereof including the Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, filed with the Securities and Exchange Commission on  November 21, 2011 (the “10 Q”), and have reviewed such filings;

 

(f)             In evaluating the suitability of an investment in the Company, the Purchaser has not relied upon any representation or other information (oral or written) other than as stated in the filings or as contained in documents so furnished to the Purchaser or its Advisors, if any, by the Company in writing;

 

(g)             Neither the Purchaser nor any of its equity owners is aware of, or is in anyway relying on and did not become aware of the offering of the Units through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television, radio, or over the Internet, in connection with the offering and sale of the Units and is not subscribing for Units and did not become aware of the offering of the Units through or as a result of any seminar or meeting to which the Purchaser was invited by, or any solicitation of a subscription by, a person not previously known to the Purchaser in connection with investments in securities generally;

 

(h)            The Purchaser has taken no action which would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Subscription Agreement or the transactions contemplated hereby;

 

(i)            The Purchaser, either alone or together with its Advisor(s), if any, have such knowledge and experience in financial, tax, and business matters, and, in particular, investments in securities, so as to enable them to utilize the information made available to them in connection with the offering of the Units to evaluate the merits and risks of an investment in the Units and the Company and to make an informed investment decision with respect thereto;

 

(j)            The Purchaser is not relying on the Company or any of its employees or agents with respect to the legal, tax, economic and related considerations of an investment in the Units, and the Purchaser has relied on the advice of, or has consulted with, only its own Advisors;

 

(k)            The Purchaser is acquiring the Units solely for such Purchaser’s own account for investment and not with a view to resale or distribution thereof, in whole or in part.  The Purchaser has no agreement or arrangement, formal or informal, with any person to sell or transfer all or any of the Units, or Common Stock issuable, and the Purchaser has no plans to enter into any such agreement or arrangement;

 

(1)            The purchase of the Units represents high risk capital and the Purchaser is able to afford an investment in a speculative venture having the risks and objectives of the Company.  The Purchaser must bear the substantial economic risks of the investment in the Units indefinitely because none of the Units, or the Common Stock issuable may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available.  Legends shall be placed on the securities included in the Units to the effect that they have not been registered under the Securities Act or applicable state securities laws and appropriate notations thereof will be made in the Company’s stock books. Stop transfer instructions will be placed with the transfer agent of the securities constituting the Units.  Unless made the subject of an effective registration Statement filed under the Securities Act, the Common Stock issuable will not be transferable until at least 6 months after conversion or payment in full upon exercise and then only upon compliance with the conditions of Rule 144 promulgated under the Securities Act.

 

(m)            The Purchaser has adequate means of providing for such Purchaser’s current financial needs and foreseeable contingencies and has no need for liquidity of the investment in the Units, or any of the Common Stock for an indefinite period of time;

 

(n)            The Purchaser is aware that an investment in the Units involves a number of very significant risks and has carefully read and considered the matters set forth in the Form 10-K and, in particular, the matters under the caption “Risk Factors” therein, and, in particular, acknowledges that such risks may materially adversely affect the Company’s results of operations and future prospects;

 

(o)            The Purchaser and each of its equity owners is an “accredited investor” as that term is defined in Regulation D under the Securities Act, and the Purchaser has truthfully and accurately completed the Accredited Investor Certification contained herein;

 

(p)            The Purchaser: (i) if a natural person, represents that the Purchaser has reached the age of 21 and has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof; (ii) if a corporation, partnership, limited liability company or partnership, association, joint stock company, trust, unincorporated organization or other entity, represents that such entity is duly organized, validly existing and in good standing under the laws of the state of its organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation of state law or its charter or other organizational documents, such entity has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the securities constituting the Units, the execution and delivery of this Subscription Agreement has been duly authorized by all necessary action, this Subscription Agreement has been duly executed and delivered on behalf of such entity; or (iii) if executing this Subscription Agreement in a representative or fiduciary capacity, represents that it has full power and authority to execute and deliver this Subscription Agreement in such capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, or other entity for whom the Purchaser is executing this Subscription Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited liability company or partnership, or other entity has full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company, and represents that this Subscription Agreement constitutes a legal, valid and binding obligation of such entity.  The execution and delivery of this Subscription Agreement will not violate or be in conflict with any order, judgment, injunction, agreement or controlling document to which the Purchaser is a party or by which it is bound;

 

(q)             The Purchaser and its advisors, if any, have had the opportunity to obtain any additional information, to the extent the Company had such information in their possession or could acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information contained in the Term Sheet and all documents received or reviewed in connection with the purchase of the Units and have had the opportunity to have representatives of the Company provide them with such additional information regarding the terms and conditions of this particular investment and the financial condition, results of operations, business and prospects of the Company deemed relevant by the Purchaser or its Advisors, if any, and all such requested information, to the extent the Company had such information in its possession or could acquire it without unreasonable effort or expense, has been provided by the Company in writing to the full satisfaction of the Purchaser and its Advisors, if any;

 

(r) The Purchaser represents to the Company that any information which the undersigned has heretofore furnished or is furnishing herewith to the Company is complete and accurate and may be relied upon by the Company in determining the availability of an exemption from registration under Federal and state securities laws in connection with the offering of securities as described in the Term Sheet.  The Purchaser further represents and warrants that it will notify and supply corrective information to the Company immediately upon the occurrence of any change therein occurring prior to the Company’s issuance of the securities contained in the Units;

 

(s) The Purchaser has significant prior investment experience, including investment in non-listed and non-registered securities.  Each of the equity owners of the Purchaser is knowledgeable about investment considerations in public companies and, in particular, public companies traded on the OTCBB.  The Purchaser has a sufficient net worth to sustain a loss of its entire investment in the Company in the event such a loss should occur.  The Purchaser’s overall commitment to investments which are not readily marketable is not excessive in view of the Purchaser’s net worth and financial circumstances and the purchase of the Units will not cause such commitment to become excessive.  This investment is a suitable one for the Purchaser;

 

(t) The Purchaser is satisfied that it has received adequate information with respect to all matters which it or its Advisors, if any, consider material to its decision to make this investment;

 

(u) The Purchaser acknowledges that any estimates or forward-looking statements or projections included in the Term Sheet were prepared by the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed by the Company and should not be relied upon;

 

(v) No oral or written representations have been made, or oral or written information furnished, to the Purchaser or its Advisors, if any, in connection with the offering of the Units which are in any way inconsistent with the information contained in the Term Sheet;

 

(w) Within five days after receipt of a request from the Company, the Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject;

 

(x) The Purchaser’s substantive relationship with the Company predates the Company’s contact with the Purchaser regarding an investment in the Units;

 

(y) THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS.  THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE TERM SHEET.  ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL;

 

(z) The Purchaser acknowledges that none of the Units, or the Common Stock have been recommended by any Federal or state securities commission or regulatory authority.  In making an investment decision investors must rely on their own examination of the Company and the terms of the Offering, including the merits and risks involved.  Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Subscription Agreement.  Any representation to the contrary is a criminal offense.  Investors should be aware that they will be required to bear the financial risks of this investment for an indefinite period of time; and

 

(aa) (For ERISA plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities.  The Purchaser or Plan fiduciary (a) is responsible for the decision to invest in the Company; (b) is independent of the Company and any of its affiliates; (c) is qualified to make such investment decision; and (d) in making such decision, the Purchaser or Plan fiduciary has not relied on any advice or recommendation of the Company or any of its affiliates.

 

(bb) The Purchaser represents that it has complied with applicable anti-terrorism/anti-money laundering measures, and the Purchaser is not in violation of the Executive Order 13224 (the “Order”) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act or other anti-terrorist/anti-money laundering measures.  Neither the Purchaser nor any of its equity owners is a Specially Designated National as defined in the Order.

 

6.          Representations and Warranties of the Company.  The Company hereby acknowledges, represents, warrants, and agrees as follows:

 

(a) The Company is duly organized, validly existing and in good standing under the laws of the State of Illinois.  The Company is duly qualified to transact business and is in good standing in each jurisdiction in which failure to do so would have a material adverse effect on the assets, business, properties, operations, financial condition or prospects of the Company and has all requisite power to own its respective properties and to carry on its respective businesses as now being conducted and as proposed to be conducted.  The Company has all requisite power to execute, deliver and perform its obligations under the offering documents entered into in connection with the Offering by the Company, which offering documents include, without limitation, this Subscription Agreement;

 

(b) The execution and delivery of the Transaction Documents and the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby have been duly authorized by the Company and no other proceedings on the part of the Company are necessary.  The person(s) executing the Transaction Documents on behalf of the Company has all right, power and authority to execute and deliver such agreements in the name and on behalf of the Company.  The Transaction Documents have been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by the subscriber hereto, will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and the availability of equitable remedies.

 

(c) Neither the execution and delivery by the Company of this Subscription Agreement or any of the other Transaction Documents to which it is a party, nor the offering, issuance or sale of the Units, the Preferred Stock, the 2008 Notes, nor the 2009 Notes and any documents executed in connection therewith, nor the fulfillment of or compliance with the terms and provisions hereof or thereof, will conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default under, or result in the creation of any Lien on any properties or assets of the Company pursuant to the organizational documents of the Company, or any material contract, agreement, mortgage, indenture, lease or instrument to which it is a party or by which it is bound or to which its assets are subject, or any requirement of law to which it or its assets are subject, which conflict, breach, violate, default or could reasonably be expected to have a material adverse effect;

 

(d) The Company has filed in a timely manner (including pursuant to an extension thereof on Form 12b-25) all required reports, proxy statements and other filings required to be filed with or furnished to the Commission during the twelve (12) months prior to the date of this Agreement (the “Exchange Act Filings”).  On their respective dates of filing, the Exchange Act Filings complied as to form in all material respects with the requirements of the Exchange Act applicable to such Exchange Act Filings and the Exchange Act Filings did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and all financial statements contained in the Exchange Act Filings fairly present in all material respects the financial position of the Company on the dates of such statements and the results of operations for the periods covered thereby in accordance with GAAP consistently applied throughout the periods involved and prior periods, except as otherwise indicated in the Exchange Act Filings including the notes to such financial statements;

 

(e) Trading in the Company’s Common Stock has not have been suspended by the Commission or any trading market and at any time prior to the Closing, trading in securities generally as reported by Bloomberg Financial Markets (“Bloomberg”) has not have been suspended or limited, and minimum prices have not have been established on securities whose trades are reported by Bloomberg.  Except as set forth in the Exchange Act Filings, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements;

 

(f) Since December 31, 2010 and through the date of this Agreement except as otherwise reflected in the Exchange Act Filings or the Term Sheet, (a) the business of the Company and its Subsidiaries has been carried on and conducted in all material respects, in the ordinary course of business consistent with past practice and (b) there has not been any material adverse effect or any fact, circumstance, event, change, occurrence or effect that, individually or in the aggregate, would be reasonably expected to have a material adverse effect, and (c) there has not been: (i) any declaration, setting aside or payment of any dividend or other distribution in cash, stock, property or otherwise in respect of the Company’s or any of its Subsidiaries’ capital stock, except for any dividend or distribution by a Subsidiary to the Company; (ii) any redemption, repurchase or other acquisition of any shares of capital stock of the Company or any of its Subsidiaries; (iii) any material change by the Company in its accounting principles; or (iv) any material tax election made by the Company or any of its Subsidiaries or any settlement or compromise of any material tax liability by the Company or any of its Subsidiaries;

 

(g) The Company has also previously furnished the Purchaser the10-Q and the10-K, each as filed with the Securities and Exchange Commission.  The capitalization table as reflected in the 10-K is true and complete. The audited financial statements therein contained present fairly, in all material respects, the financial position of the Company as of December 31, 2010;

 

(h) All consents, approvals or authorizations of or declarations, registrations or filings with any agency, authority, instrumentality, regulatory body, court, administrative tribunal or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any central bank or similar monetary or regulatory authority), and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing (“Governmental Authority”) or any other Person, including any creditor or stockholder of the Company, required in connection with the execution or delivery by the Company of the Common Stock to which the Company is a party, or the performance by the Company of its obligations hereunder and thereunder, or as a condition to the legality, validity or enforceability of Common Stock have been obtained or effected on or prior to the date hereof;

 

(i) There are no actions, suits, or proceedings pending, or, to the Company’s knowledge, threatened against or affecting the Company, or any of its  properties or rights which, if adversely determined, individually or in the aggregate would have a material adverse effect.  There are no actions, suits or proceedings pending, or, to the Company’s knowledge, threatened in writing against the Company which seek to enjoin, or otherwise prevent the consummation of, the transactions contemplated herein or to recover any damages or obtain any relief as a result of any of the transactions contemplated herein in any court or before any arbitrator of any kind or before or by any governmental authority;

 

(j) All material agreements to which the Company or any of its Subsidiary are a party or to which the property or assets of the Company or any of its Subsidiaries are subject are included as part of or specifically identified in the Exchange Act Filings;

 

(k) Except as may have been waived, the Company is not in default under or with respect to any provision of any of its securities, organizational documents, or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which it is a party or by which it or any of its property is bound which, individually or together with all such defaults, could reasonably be expected to have a material adverse effect.

 

(l) The Company possesses all material franchises, certificates, licenses, permits, registrations, and other authorizations from Governmental Authorities, that are necessary for the ownership, maintenance and operation of their respective properties and assets, and for the conduct of its businesses as now conducted, and the Company is not in violation of any thereof in any material respect;

 

(m) The Company is not now and has not been, at any time, during the past 10 years, a shell company, as defined by Rule 405 of the Securities Act of 1933;

 

(n) Neither this Agreement nor any other document, certificate or statement furnished to the Purchaser by or on behalf of the Company in connection herewith, including but not limited to the Term Sheet, contained, as of its respective date, or now contains, any untrue statement of a material fact or as of any such date omitted, or now omits, to state a material fact necessary in order to make the statements contained herein and therein not misleading.

 

7.          Covenants.

 

To the extent it may be required, the Company shall file with the Commission a Current Report on Form 8-K (“Form 8-K”) disclosing the sale of unregistered securities to the Purchaser, the entry into this Subscription Agreement and a press release announcing the sale of the Units to the Purchaser within the required time period.

 

8.          Indemnification.  Each of the parties hereto agrees to indemnify and hold harmless the other party their respective officers, directors, employees, agents, control persons and affiliates from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation or warranty, or misrepresentation or omission to state a material fact, or breach by such party of any covenant or agreement made by such party herein or in any other document delivered in connection with the Transaction Documents.

 

9.           Irrevocability; Binding Effect.  The Purchaser hereby acknowledges and agrees that the subscription hereunder is irrevocable by the Purchaser, except as required by applicable law, and that this Subscription Agreement shall survive the death or disability of the Purchaser and shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives, and permitted assigns.  If the Purchaser is more than one person, the obligations of the Purchaser hereunder shall be joint and several and the agreements, representations, warranties, and acknowledgments herein shall be deemed to be made by and be binding upon each such person and such person’s heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

10.           Modification.  This Subscription Agreement shall not be modified or waived except by an instrument in writing signed by the party against whom any such modification or waiver is sought.

 

11.           Notices.  Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered against receipt to the party to whom it is to be given (a) if to the Company, at the address set forth above or (b) if to the Purchaser, at the address set forth on the signature page hereof (or, in either case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 12).  Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party’s address which shall be deemed given at the time of receipt thereof.

 

12.          Assignability.  This Subscription Agreement and the rights, interests and obligations hereunder are not transferable or assignable by the Purchaser and the transfer or assignment of the Units, and the shares of Common Stock issuable by the Company shall be made only in accordance with all applicable laws.

 

13.          Applicable Law.  This Subscription Agreement shall be governed by and construed under the laws of the State of Illinois as applied to agreements among Illinois residents entered into and to be performed entirely within Illinois.  Each of the parties hereto (1) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted exclusively in the 19th Judicial Circuit Court of Lake County, Illinois, or in the United States District Court for the Northern District of Illinois, (2) waive any objection which the Company may have now or hereafter to the venue of any such suit, action or proceeding, and (3) irrevocably consent to the jurisdiction of the 19th Judicial Circuit Court of Lake County, Illinois, and the United States District Court for the Northern District of Illinois in any such suit, action or proceeding.  Each of the parties hereto further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the 19th Judicial Circuit Court of Lake County, Illinois, or in the United States District Court for the Northern District of Illinois and agrees that service of process upon it mailed by certified mail to its address shall be deemed in every respect effective service of process upon it, in any such suit, action or proceeding.  THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

 

14.          Blue Sky Qualification.  The purchase of Units under this Subscription Agreement is expressly conditioned upon the exemption from qualification of the offer and sale of the Units from applicable Federal and state securities laws.  The Company shall not be required to qualify this transaction under the securities laws of any jurisdiction and, should qualification be necessary, the Company shall be released from any and all obligations to maintain its offer, and may rescind any sale contracted, in the jurisdiction.

 

15.          Use of Pronouns.  All pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require.

 

16.          Confidentiality.  The Purchaser acknowledges and agrees that any information or data the Purchaser has acquired from or about the Company, not otherwise properly in the public domain, was received in confidence (the “Information”).  The Purchaser agrees not to divulge, communicate or disclose, except as may be required by law or for the performance of this Subscription Agreement, or use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any confidential information of the Company, including any scientific, technical, trade or business secrets of the Company and any scientific, technical, trade or business materials that are treated by the Company as confidential or proprietary, including, but not limited to, ideas, discoveries, inventions, developments and improvements belonging to the Company and confidential information obtained by or given to the Company about or belonging to third parties.  The Purchaser represents that each of its equity owners have signed similar confidentiality agreements covering the Information.

 

17.          Miscellaneous.

 

(a)            This Subscription Agreement, constitutes the entire agreement between the Purchaser and the Company with respect to the subject matter hereof and supersede all prior oral or written agreements and understandings, if any, relating to the subject matter hereof.  The terms and provisions of this Subscription Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions.

 

(b)           Each of the Purchaser’s and the Company’s representations and warranties made in this Subscription Agreement shall survive the execution and delivery hereof and delivery of the Common Stock.

 

(c)           Each of the parties hereto shall pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with this Subscription Agreement and the transactions contemplated hereby whether or not the transactions contemplated hereby are consummated.

 

(d)           This Subscription Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.

 

(e)           Each provision of this Subscription Agreement shall be considered separable and, if for any reason any provision or provisions hereof are determined to be invalid or contrary to applicable law, such invalidity or illegality shall not impair the operation of or affect the remaining portions of this Subscription Agreement.

 

(f)           Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Subscription Agreement as set forth in the text.

 

	
  

	
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ANTI-MONEY LAUNDERING REQUIREMENTS

	
The USA PATRIOT Act

 

	
What is money laundering?

	
How big is the problem and why is it important?

	
 

The USA PATRIOT Act is designed to detect, deter, and punish terrorists in the United States and abroad.  The Act imposes new anti-money laundering requirements on brokerage firms and financial institutions.  Since April 24, 2002 all brokerage firms have been required to have new, comprehensive anti-money laundering programs.

 

To help you understand theses efforts, we want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.

	
 

Money laundering is the process of disguising illegally obtained money so that the funds appear to come from legitimate sources or activities.  Money laundering occurs in connection with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.

	
 

The use of the U.S. financial system by criminals to facilitate terrorism or other crimes could well taint our financial markets.  According to the U.S. State Department, one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.

	  
	
 

Under new rules required by the USA PATRIOT Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with the new laws.

	
 

As part of our required program, we may ask you to provide various identification documents or other information.  Until you provide the information or documents we need, we may not be able to effect any transactions for you.

  

  

  

Z TRIM HOLDINGS, INC.

SIGNATURE PAGE TO

SUBSCRIPTION AGREEMENT,

Purchaser hereby elects to purchase a total of ______ Units at a price of $________ per Unit (NOTE: to be completed by the Purchaser).

Date (NOTE: To be completed by the Purchaser): __________________, 2010

If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY:

____________________________                                                                ______________________________

Print Name(s)                                                                Social Security Number(s)

___________________________                                                      ______________________________

Signature(s) of Purchaser(s)                                                                Signature

____________________________                                                                ______________________________

Date                                                      Address

If the Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or TRUST:

Name

By:           ______________________________

Name

______________________________

Federal Taxpayer Identification Number

By:_________________________                                                                ______________________________

Name:                                                State of Organization

Title:

___________________________                                                      ______________________________

Date                                                      Address

Z TRIM HOLDINGS, INC.

By:           __________________________

Authorized Officer

  

  

  

Z TRIM HOLDINGS, INC.

ACCREDITED INVESTOR CERTIFICATION

For Individual Investors Only

(all Individual Investors must INITIAL where appropriate):

	
Initial _______

	
I certify that I have a net worth (including home, furnishings and automobiles) in excess of $1 million either individually or through aggregating my individual holdings and those in which I have a joint, community property or other similar shared ownership interest with my spouse.

	
Initial _______

	
I certify that I have had an annual gross income for the past two calendar years of at least $200,000 (or $300,000 jointly with my spouse) and expect my income (or joint income, as appropriate) to reach the same level in the current year.

	
Initial _______

	
I certify that I am a director or executive officer of Z Trim Holdings, Inc. (the “Company”).

	
  

	
For Non-Individual Investors

	
  

	
(all Non-Individual Investors must INITIAL where appropriate):

	
Initial _______

	
The undersigned certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned by persons who meet one of the criteria for Individual Investors, above.

	
Initial _______

	
The undersigned certifies that it is a partnership, corporation, limited liability company or business trust that has total assets in excess $5 million and was not formed for the purpose of investing in the Company.

	
Initial _______

	
The undersigned certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment adviser.

	
Initial _______

	
The undersigned certifies that it is an employee benefit plan whose total assets exceed $5,000,000 as of the date of the Subscription Agreement.

	
Initial _______

	
The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons who meet either of the criteria for Individual Investors, above.

	
Initial _______

	
The undersigned certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity.

	
Initial _______

	
The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934.

	
Initial _______

	
The undersigned certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets exceeding $5,000,000 and not formed for the specific purpose of investing in the Company.

	
Initial _______

	
The undersigned certifies that it is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of investing in the Company, and whose purchase is directed by a person with such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

	
Initial _______

	
The undersigned certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of $5,000,000.

	
Initial _______

	
The undersigned certifies that it is an insurance company as defined in §2(13) of the Securities Act of 1933, as amended, or a registered investment company.

  

  

  

Z TRIM HOLDINGS, INC.

Investor Profile

 

(Must be completed by Investor)

Section A - Personal Investor Information

 

Investor Name(s): _____________________________________________________________________________________

 

Individual executing Profile or Trustee: ____________________________________________________________________________

 

Social Security Numbers / Federal I.D. Number: __________________________________________________________________

 

Date of Birth:                                _________________                                              Marital Status:                              _________________

Joint Party Date of Birth:                                                      _________________   Investment Experience (Years): _______

Annual Income:                                _________________                                              Liquid Net Worth:                                        _____________

Net Worth: ________________

Home Street Address: _____________________________________________________________________________________

 

Home City, State & Zip Code: _____________________________________________________________________________________

 

Home Phone: ________________________ Home Fax: ________________________

 

Home Email: _______________________________

 

Employer: _____________________________________________________________________________________

 

Employer Street Address: _____________________________________________________________________________________

 

Employer City, State & Zip Code: _____________________________________________________________________________________

 

Bus. Phone: __________________________ Bus. Fax: __________________________

 

Bus. Email: ________________________________

 

Type of Business: _____________________________________________________________________________________

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