Document:

ex43.htm

    Exhibit
4.3

    

    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.

    

    

    No.
____ __________, 2008

    

    

    Z
TRIM HOLDINGS, INC.

    FORM
OF WARRANT TO PURCHASE COMMON STOCK

    

    Void
after ___________, [2013]

    

    

    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 during the Exercise Period, defined below, and
prior to 5:00 PM Central time, on ________, [2012] (the “Expiration Date”),
fully paid and nonassessable shares of Common Stock (the “Warrant Shares”)
under the terms set forth herein.

    

    This
Warrant is issued pursuant to that certain Subscription Agreement dated
_______________, 2008 by and between the Company and the Holder (the “Subscription
Agreement”) that was executed and delivered in connection with that
certain Confidential Private Placement Memorandum of the Company dated ________,
2008 (the “Private
Offering”).

    

    1. Number of Warrant Shares;
Exercise Price.  This Warrant shall evidence the right of the
Holder to purchase up to
[         ] Warrant Shares at an
exercise price per Warrant Share of $____per share (the “Exercise Price”),
subject to adjustment as provided in Section 6 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.

     

     

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    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 number of fully paid and nonassessable full 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 applicable, a new warrant evidencing the balance of the
shares remaining subject to the Warrant.

    

    5. Net
Issuance.

    

    (a) Cashless
Exercise.  Only in the event that there is not in effect on or
before the 6-month anniversary of the date of this Warrant a registration
statement with the SEC covering the Warrant Shares, in addition to and without
limiting the rights of the Holder under the terms of this Warrant, the Holder
shall have the right to convert this Warrant (the “Conversion Right”)
into Warrant Shares as provided in this Section 5 at any time or from time to
time beginning on the 6-month anniversary of the date of this Warrant and ending
at the expiration of the Exercise Period.  Upon exercise of the
Conversion Right with respect to shares subject to the Warrant (the “Converted Warrant
Shares”), the Company shall deliver to the Holder (without payment by the
Holder of any exercise price or any cash or other consideration) that number of
fully paid and nonassessable Warrant Shares computed using the following
formula:

    

    X = Y (A -
B)

                A

    

    Where:      

     

    X
=           the number of
Warrant Shares to be delivered to the Holder;

    

    Y
=           the number of
Converted Warrant Shares;

    

    A
=           the fair
market value of one Warrant Share on the Conversion Date (as defined below);
and

    

    B
=           the Exercise
Price (as adjusted on the Conversion Date).

    

    No
fractional shares shall be issuable upon exercise of the Conversion Right, and
if the number of shares to be issued determined in accordance with the foregoing
formula is other than a whole number, the Company shall pay to the Holder an
amount in cash equal to the fair market value of the resulting fractional share
on the Conversion Date (as defined below).  Shares issued pursuant to
the Conversion Right shall be treated as if they were issued upon the exercise
of the Warrant.

    

    (b) Method of
Exercise.  The Conversion Right may be exercised by the Holder
by the surrender of the Warrant at the principal office of the Company together
with a written statement specifying that the Holder thereby intends to exercise
the Conversion Right and indicating the total number of shares under the Warrant
that the Holder is exercising through the Conversion Right.  Such
conversion shall be effective upon receipt by the Company of the Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the “Conversion
Date”).  Certificates for the shares issuable upon exercise of
the Conversion Right shall be delivered to the Holder promptly following the
Conversion Date.

     

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c) Determination of Fair Market
Value.  For purposes of this Section 5, fair market value of a
Warrant Share on the Conversion Date shall be determined as
follows:

    

    (i) If
this Warrant is to be exercised contingent upon and effective immediately prior
to the initial public offering of the Company’s Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(an “Initial Public
Offering”), the fair market value of a Warrant Share shall be deemed to
be equal to the price per share to the public of the shares of Common Stock sold
in the Initial Public Offering as set forth on the front cover of the final
prospectus relating to the Initial Public Offering;

    

    (ii) If
the Common Stock is traded on a stock exchange or the Nasdaq Stock Market (or a
similar national quotation system), the fair market value of a Warrant Share
shall be deemed to be the average of the closing selling prices of the Common
Stock on the stock exchange or system determined by the Board to be the primary
market for the Common Stock over the ten (10) trading day period ending on the
date prior to the Conversion Date, as such prices are officially quoted in the
composite tape of transactions on such exchange or system;

    

    (iii) If
the Common Stock is traded over-the-counter, the fair market value of a Warrant
Share shall be deemed to be the average of the closing bid prices (or, if such
information is available, the closing selling prices) of the Common Stock over
the ten (10) trading day period ending on the date prior to the Conversion Date,
as such prices are reported by the National Association of Securities Dealers
through its NASDAQ system or any successor system ; and

    

    (iv) If
there is no public market for the Common Stock, then the fair market value of a
Warrant Share shall be determined by the Board of Directors of the Company in
good faith and, upon request of the Holder, the Board (or a representative
thereof) shall, as promptly as reasonably practicable but in any event not later
than 15 days after such request, notify the Holder of the Fair Market Value per
share of Common Stock.

    

    6. Adjustments to Conversion
Price and Number of Warrant Shares.  For the purposes of this
Section 6, 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 6.  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 6(a) above or a combination of shares provided for in
Section 6(b) above, or a reorganization, merger or consolidation provided for in
Section 6(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.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (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 6) 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 6(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 6(d) shall similarly apply to
successive reorganizations, reclassifications, or Corporate
Transactions.

    

    (e) Computation of Adjusted
Exercise Price.  In the event that the Company sells or issues
shares of Stock at a price less than the Exercise Price in effect immediately
prior to such sale or issuance, then the Exercise Price shall be reduced
immediately thereafter so that it shall equal the price at which such shares of
Stock are sold or issued, as applicable.

    

    (f) Options, Rights, Warrants
and Convertible and Exchangeable Securities.  Subject to
Section 6(h) hereof, in case the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Stock, or issue any
securities convertible into or exchangeable for shares of Stock, for a
consideration per share less than the Exercise Price in effect immediately prior
to the issuance of such options, rights, warrants or such convertible or
exchangeable securities, or without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights, warrants or such
convertible or exchangeable securities, as the case may be, shall be reduced to
the price established for such options, rights, warrants or convertible or
exchangeable securities that entitle the holders thereof to receive a share of
Stock.

    

    (g) Adjustment in Number of
Warrant Shares.  Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 6, the number of Warrant Shares
issuable upon the exercise of this Warrant shall be adjusted to the nearest full
amount by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Shares issuable upon exercise
of the Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.

    

    (h) No Adjustment of Exercise
Price in Certain Cases.  No adjustment of the Exercise Price
shall be made:

    

    (i)           Upon
issuance or sale of this Warrant or Warrant Shares, or the other warrants and
warrant shares issued in connection herewith pursuant to the Subscription
Agreement, or shares of Common Stock issuable upon exercise of other options,
warrants and convertible securities outstanding as of the date hereof,
including, without limitation, those that are being issued in connection with
the closing of the Private Offering.

     

    (ii)           Upon
the issuance or sale of any shares of capital stock, or the grant of options
exercisable therefor, issued or issuable after the date of this Warrant, to
directors, officers, employees, advisers and consultants of the Company or any
subsidiary pursuant to any incentive or non-qualified stock option plan or
agreement, stock purchase plan or agreement, stock restriction agreement or
restricted stock plan, employee stock ownership plan (ESOP), consulting
agreement, stock appreciation right (SAR), stock depreciation right (SDR), bonus
stock arrangement, or such other similar compensatory options, issuances,
arrangements, agreements or plans approved by the Board of Directors of the
Company.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (iii)           Upon
the issuance of any shares of capital stock or the grant of warrants or options
(or the exercise thereof) as consideration for mergers, acquisitions, strategic
alliances and other commercial transactions, other than in connection with a
financing transaction.

    

    (iv)           If
the amount of said adjustment shall be less than one cent ($0.01) per security
issuable upon exercise of this Warrant; provided, however, that in such
case any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least one cent ($0.01) per security issuable upon exercise of
this Warrant.

    

    (i) Notice of Record Dates;
Adjustments.  In the event of an Initial Public Offering or a
Corporate Transaction, the Company shall provide to the Holder twenty (20) days
advance written notice of such Initial Public Offering or 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.

    

    7. Registration
Rights.  The Company hereby agrees that the Holder shall be
entitled, with respect to all Warrant Shares issued upon the exercise of this
Warrant, to the registration rights set forth in the Registration Rights
Agreement, dated as of [__________], 2008, by and among the Company, the Holder
and the investors in the Private Offering, as may be amended or supplemented
from time to time, the terms of which are hereby incorporated by this reference,
with the same force and effect as if specifically set forth herein.

    

    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: (i) the date of
personal delivery; (ii) two (2) business days after transmission by facsimile,
addressed to the other party at its facsimile number, with confirmation of
transmission; (iii) four (4) business days after deposit with a return receipt
express courier for United States deliveries; or (iv) 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.”

     

     

    

    
      
        
        

      

      
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    (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.  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]

     

     

     

    
      
        
        

      

      
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    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:

            	
              /s/ 

            	 
      
	 
      	 
      	
              Name:
      Steven J. Cohen 

            	 
      
	 
      	 
      	
              Title:
      Chief Executive Officer

            	 
      
	 
      	 
      	
              Address:   1011
      Campus Drive Mundelein, IL 60060

            	 
      

    

    

     

    
      
        
        

      

      
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    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: ____________________                                                     

    

     

     

     

    
      
        
        

      

      
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    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.

     

     

    
      
        
        

      

      
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    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 (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 or ________ 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 of even date herewith

     

     

     

     

    
 

    10ex44.htm

    Exhibit
4.4

    

    SECURITY
AGREEMENT

    

    THIS SECURITY AGREEMENT (this
“Agreement”) dated as of June ___, 2008, is made by Z TRIM HOLDINGS, INC., an
Illinois corporation, with an address at 1011 Campus Drive, Mundelein, Illinois
60060 (“Debtor”) in favor of
[_________________], as collateral agent for
the benefit of the Secured Parties (as defined below), with an address of
[_________________] (in such capacity, the “Collateral
Agent”).

    

    R E C I T A L S

    

    A.           Pursuant
to the terms of an 8% Senior Secured Convertible Note by and between the Debtor
and each Holder (as amended, restated, supplemented or otherwise modified, the
“Note” and
collectively, the “Notes”; capitalized
terms used in this Agreement shall have the meanings set forth in the Note
unless specifically defined herein), the Holders have agreed to make loans to
the Debtor (the “Loans”), as offered
by that certain Private Placement Memorandum dated _______________, 2008 (the
“Offering”).

    

    B.           Each
Holder hereby designates and appoints [_____________] as the
Collateral Agent for the benefit of the Holders or any subsequent holders of the
Notes (collectively, the “Secured
Parties”).

    

    C.           In
order to induce the Secured Parties to make the Loans, the Debtor has agreed to
execute and deliver this Agreement granting a security interest in all of the
Debtor’s assets to the Collateral Agent for the benefit of the Secured
Parties.

    

    A G R E E M E N
T

    

    NOW THEREFORE, in
consideration of the foregoing recitals, the mutual agreements and covenants set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

    

     

    1.           Definitions.  The following
additional terms, when used in this Agreement, shall have the following
meanings:

     

    “Account Debtor” shall
mean any Person who is obligated under an Account.

    

    “Accounts” shall mean,
for any Person, all “accounts” (as defined in the UCC), now or hereafter owned
or acquired by such Person or in which such Person now or hereafter has or
acquires any rights
and, in any event, shall mean and include, without limitation, (a) all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to such Person arising from the sale or lease
of goods or other property by such Person or the performance of services by such
Person (including, without limitation, any such obligation which might be
characterized as an account or general intangible under the Uniform Commercial
Code in effect in any jurisdiction), (b) all of such Person’s rights in, to
and under all purchase and sales orders for goods, services or other property,
and all of such Person’s rights to any goods, services or other property
represented by any of the foregoing (including returned or repossessed goods and
unpaid sellers’ rights of rescission, replevin, reclamation and rights to
stoppage in transit), (c) all monies due to or to become due to such Person
under all contracts for the sale, lease or exchange of goods or other property
or the performance of services by such Person (whether or not yet earned by
performance on the part of such Person), and (d) all collateral security
and guarantees of any kind given to such Person with respect to any of the
foregoing.

     

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “Chattel Paper” shall
mean all “chattel paper” (as defined in the UCC) now owned or hereafter acquired
by the Debtor or in which the Debtor has or acquires any rights, or other
receipts of the Debtor, evidencing or representing rights or interest in such
chattel paper.

    

    “Collateral” shall
mean, collectively, all of the following:

    

    
      	
              (i)  

            	
              all
      Accounts;

            

    

    

    
      	
              (ii)  

            	
              all
      Chattel Paper;

            

    

    

    
      	
              (iii)  

            	
              all
      Deposit Accounts;

            

    

    

    
      	
              (iv)  

            	
              all
      Documents;

            

    

    

    
      	
              (v)  

            	
              all
      Equipment;

            

    

     

    
      	
              (vi)  

            	
              all
      Fixtures;

            

    

    

    
      	
              (vii)  

            	
              all
      General Intangibles;

            

    

    

    
      	
              (viii)  

            	
              all
      Instruments;

            

    

    

    
      	
              (ix)  

            	
              all
      Inventory;

            

    

    

    
      	
              (x)  

            	
              all
      Investment Property;

            

    

    

    
      	
              (xi)  

            	
              all
      Software;

            

    

    

    
      	
              (xii)  

            	
              all
      money, cash or cash equivalents;

            

    

    

    
      	
              (xii)  

            	
              all
      other goods and personal property, whether tangible
      orintangible;

            

    

    

    
      	
              (xiv)  

            	
              all
      Supporting Obligations and Letter-of-Credit Rights of the
      Debtor;

            

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
              (xv)  

            	
              all
      books and records pertaining to any of the Collateral (including, without
      limitation, credit files, Software, computer programs, printouts and other
      computer materials and records, including customer
  lists);

            

    

    

    
      	
              (xvi)  

            	
              the
      commercial tort claims; and

            

    

    

    
      	
              (xvii)  

            	
              All
      products and Proceeds of all or any of the Collateral described in clauses
      (i) through (xvi) hereof.

            

    

    

    “Collateral Agent”
shall have the meaning given to that term in the introductory paragraph
hereof.

    

    “Copyright License”
shall mean any and all rights of the Debtor under any written agreement granting
any right to use any Copyright or Copyright registration.

    

    “Copyrights” shall
mean all of the following now owned or hereafter acquired by the Debtor or in
which the Debtor now has or hereafter acquires any rights: (a) all
copyrights and general intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (b) all reissues, extensions or renewals
thereof.

    

    “Debtor” shall have
the meaning given to that term in the introductory paragraph
hereof.

    

    “Deposit Accounts”
shall mean all “deposit accounts” (as defined in the UCC) now owned or hereafter
acquired by the Debtor or in which the Debtor has or acquires any rights, or
other receipts, of the Debtor covering, evidencing or representing rights or
interest in such deposit accounts.

    

    “Documents” shall mean
all “documents” (as defined in the UCC) now owned or hereafter acquired by the
Debtor or in which the Debtor has or acquires any rights, or other receipts, of
the Debtor covering, evidencing or representing goods.

    

    “Equipment” shall mean
all “equipment” (as defined in the UCC) now owned or hereafter acquired by the
Debtor and wherever located, and, in any event, shall include all machinery,
equipment, furniture, furnishings, processing equipment, conveyors, machine
tools, engineering processing equipment, manufacturing equipment, materials
handling equipment, trade fixtures, trucks, trailers, forklifts, vehicles,
computers and other electronic data processing and other office equipment of the
Debtor, and any and all additions, substitutions and replacements of any of the
foregoing, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto, all leasehold improvements,
all fuel therefor and all manuals, drawings, instructions, warranties and rights
with respect thereto.

     

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    “Event of Default”
shall have the meaning set forth for such term in Section 8
hereof.

    

    “Fixtures” shall mean
all “fixtures” (as defined in the UCC) now owned or hereafter acquired by the
Debtor or in which the Debtor has or acquires any rights, or other receipts, of
the Debtor covering, evidencing or representing rights or interest in such
fixtures.

    

    “GAAP” shall mean
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accounts and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

    

    “General Intangibles”
shall mean all “general intangibles” (as defined in the UCC) now owned or
hereafter acquired by the Debtor or in which the Debtor has or acquires any
rights and, in any event, shall include all right, title and interest in or
under all contracts, all customer lists, Licenses, Copyrights, Trademarks,
Patents, and all applications therefor and reissues, extensions or renewals
thereof, rights in Intellectual Property, interests in partnerships, joint
ventures and other business associations, licenses, permits, copyrights, trade
secrets, proprietary or confidential information, inventions (whether or not
patented or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, data, skill, expertise, experience, processes,
models, drawings, materials and records, goodwill (including the goodwill
associated with any Trademark or Trademark License), all rights and claims in or
under insurance policies (including insurance for fire, damage, loss and
casualty, whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man and business interruption
insurance, and all unearned premiums), un-certificated securities, choses in
action, deposit, checking and other bank accounts, rights to receive tax refunds
and other payments, rights of indemnification, all books and records,
correspondence, credit files, invoices, tapes, cards, computer runs, domain
names, prospect lists, customer lists and other papers and
documents.

     

    “Instruments” shall
mean all “instruments” (as defined in the UCC) now owned or hereafter
acquired by the
Debtor or in which the Debtor has or acquires any rights and, in any event,
shall include all promissory notes, all certificates of deposit and all letters
of credit evidencing, representing, arising from or existing in respect of,
relating to, securing or otherwise supporting the payment of, any of the
Accounts or other obligations owed to the Debtor.

    

    “Intellectual
Property” shall mean all of the following now owned or hereafter
acquired by the
Debtor or in which the Debtor has or acquires any rights: (a) all Patents,
patent rights and patent applications, Copyrights and copyright applications,
Trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, applications for registration of trademarks, trade names
and service marks, fictitious names registrations and trademark, trade name and
service mark registrations, and all derivations thereof; and (b) Patent
Licenses, Trademark Licenses, Copyright Licenses and other licenses to use any
of the items described in the preceding clause (a), and any other items
necessary to conduct or operate the business of the Debtor.

    

    “Inventory” shall mean
all “inventory” (as defined in the UCC) now owned or hereafter acquired by the
Debtor or in which the Debtor has or acquires any rights and, in any event,
shall include all goods owned or held for sale or lease to any other
Persons.

     

    “Investment Property”
shall mean all “investment property” (as defined in the UCC) now owned [or
hereafter acquired] by the Debtor or in which the Debtor has or acquires any
rights and, in any event, shall include all “certificated securities”,
“uncertificated securities”, “security entitlements”, “securities accounts”,
“commodity contracts” and “commodity accounts” (as all such terms are defined in
the UCC) of the Debtor.

     

    “Letter-of-Credit
Rights” shall mean “letter-of-credit rights” (as defined in the UCC), now
owned or hereafter acquired by the Debtor, including rights to payment or
performance under a letter of credit, whether or not the Debtor, as beneficiary,
has demanded or is entitled to demand payment or performance.

    

    “License” shall mean
any Copyright License, Patent License, Trademark License or other license of
rights or interests of the Debtor in Intellectual Property or authorization by
any Person or political entity entitling the Debtor to sell products or perform
services.

    

    “Lien” shall have the
meaning given that term in Section 5(d) hereof.

    

    “Patent License” shall
mean any written agreement now owned or hereafter acquired by the Debtor or in
which the Debtor has or acquires any rights granting any right with respect to
any property, process or other invention on which a Patent is in
existence.

    

    “Patents” shall mean
all of the following now owned or hereafter acquired by the Debtor or in which
the Debtor has or acquires any rights: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country; and (b) all reissues,
continuations, continuations-in-part and extensions thereof.

    

    “Permitted Liens”
shall have the meaning given that term in Section 5(d) hereof.

    

    “Person” shall mean an
individual, corporation, partnership, limited liability company, association,
trust or unincorporated organization, or a government or any agency or political
subdivision thereof.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Proceeds” shall mean
all “proceeds” (as defined in the UCC) of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, the
Collateral, and, in any event, shall mean and include all claims against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of any
Collateral, and any condemnation or requisition payments with respect to any
Collateral and the following types of property acquired with cash
proceeds:  Accounts, Inventory, General Intangibles, Documents,
Instruments and Equipment.

    

    “Requisite Holders”
shall mean, as of any date, Secured Parties holding more than 50% of the
aggregate outstanding principal amount of the Loans.

    

    “Secured Obligations”
shall mean (i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations under the Notes and
this Agreement and all other indebtedness, liabilities, or other obligations of
the Debtor to the Collateral Agent, however and whenever incurred or evidenced,
whether direct or indirect, absolute or contingent, or due or to become due (the
“Additional
Obligations”) (including obligations under the Notes and this Agreement
and the Additional Obligations which, but for the automatic stay under Section
362(a) of Title 11 of the United States Code entitled “Bankruptcy,” as now or
hereafter in effect, or any successor thereto, would become due), indebtedness
and liabil­ities (including, without limitation, indemnities, fees and
interest thereon and all interest that accrues after the commencement of any
case, proceed­ing or other action relating to the bank­ruptcy,
insolvency, reorganization or similar proceeding of the Debtor at the rate
provided for in the Notes or with respect to the Additional Obligations, as
applicable, whether or not a claim for post-petition interest is allowed in any
such case, proceeding or other action) of the Debtor owing to the Collateral
Agent, now exist­ing or hereafter incurred under, arising out of or in
connection with the Notes and this Agreement and with respect to the Additional
Obligations and the due performance and compliance by the Debtor with the terms,
conditions and agreements of the Notes, this Agreement and any agreements with
respect to the Additional Obligations; (ii) any and all sums paid by the
Collateral Agent in order to preserve the Collateral or preserve its Security
Interest (as defined below) in the Collateral; and (iii) in the event of any
proceeding for the col­lection or enforcement of any indebtedness,
obliga­tions or liabilities of the Debtor referred to in the preceding
clause (i) after an Event of Default (as defined hereinafter) shall have
occurred and be continuing, the expenses of re-taking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the Collateral
(as defined below), or of any exercise by the Collateral Agent of its rights
here­under, together with attorneys’ fees actually incurred and court
costs.

    

    “Security Interests”
shall mean the security interests granted to the Collateral Agent pursuant to
Section 3, as
well as all other security interests created or assigned as additional security
for the Secured Obligations pursuant to the provisions of this
Agreement.

     

    “Software” shall mean
all “software” (as defined in the UCC), now owned or hereafter acquired by the
Debtor, including all computer programs, computer programming source code, and
all supporting information provided in connection with a transaction related to
any program.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Supporting
Obligations” means all “supporting obligations” (as defined in the UCC),
including letters of credit and guaranties issued in support of Accounts,
Chattel Paper, Documents, General Intangibles, Instruments, or Investment
Property.

    

    “Trademark License”
shall mean any written agreement now owned or hereafter acquired by the Debtor
or in which the Debtor has or acquires any such rights granting to the Debtor
any right to use any Trademark.

    

    “Trademarks” shall
mean all of the following now owned or hereafter acquired by the Debtor or in
which the Debtor has or acquires any such rights: (i) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, web addresses/url’s, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, (ii) all reissues, extensions or
renewals thereof and (iii) all goodwill associated with or symbolized by any of
the foregoing.

    

    “UCC” shall mean the
Uniform Commercial Code as in effect, from time to time, in the State of
Delaware; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interests in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Delaware, “UCC” shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.

    

    “United States” shall
mean the United States of America, any of the fifty states thereof, and the
District of Columbia.

    

    
      	
              2.

            	
              Appointment and Authorization of Collateral
      Agent.

            

    

    

    (a)           Each
Secured Party appoints and authorizes the Collateral Agent to take such action
as collateral agent on its behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Collateral Agent by the terms
hereof, together with such powers and discretion as are reasonably incidental
thereto.  The Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any of the Secured Parties, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise be deemed to exist for, be undertaken by, or
apply to or against the Collateral Agent.  Nothing in this Agreement
shall be interpreted as giving the Collateral Agent responsibility for or any
duty concerning the validity, perfection, priority or enforceability of any Lien
or security interest in any Collateral or giving the Collateral Agent any
obligation to take any action to procure or maintain such validity, perfection,
priority or enforceability.

     

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    (b)           Whenever
pursuant to the provisions hereof it is required that any party hereto obtain
the consent or approval of the Collateral Agent, or that any matter prove
satisfactory to the Collateral Agent, or that any action be taken at the
request, discretion, option or determination of the Collateral Agent, the
Collateral Agent, prior to giving any such consent or approval or request, or
exercising any such option, discretion or determination, or indicating its
satisfaction with any such matter, shall (except where the failure to do so, in
its good faith judgment, could imperil the Collateral or the Liens thereon) be
required to consult with the Secured Parties in a manner deemed reasonable by
the Collateral Agent, and the Collateral Agent shall be protected in following
any direction of the Requisite Holders.

    

    (c)           The
Collateral Agent shall be under no obligation to exercise or to honor any of the
rights or powers vested in it by this Agreement at the request or direction of
any Person hereunder unless such Person shall have offered to the Collateral
Agent reasonable security or indemnity against the costs, expenses and
liabilities which might reasonably be incurred by it in compliance with such
request or direction.  The Collateral Agent may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or
experts.

    

    (d)           Neither
the Collateral Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement, except for its or their own gross
negligence or willful misconduct.  The Collateral Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
reasonably believed by it to be genuine or to be signed by the proper party or
parties.

    

    (e)           The
Debtor agrees to reimburse the Collateral Agent for all its expenses, including
reasonable attorney’s fees, incurred in connection with this
Agreement.  The Debtor and Secured Parties agree to indemnify the
Collateral Agent and its directors, officers, agents and employees for, and to
hold them harmless against, any loss, liability or expense incurred without
gross negligence or willful misconduct on their part, arising out of or in
connection with this Agreement, including the costs and expenses of defending
themselves against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.

     

    (f)           The
Collateral Agent may at any time resign by giving at least thirty (30) days
prior written notice thereof to each Secured Party, provided that no
resignation shall be effective until a successor for the Collateral Agent is
appointed.  Upon such resignation, the Requisite Holders shall have
the right to appoint a successor Collateral Agent.  If no successor
Collateral Agent shall have been so appointed by the Requisite Holders and shall
have accepted such appointment within thirty (30) days after the retiring
Collateral Agent’s giving of notice of resignation, then the retiring Collateral
Agent may, on behalf of the Secured Parties, appoint a successor Collateral
Agent.  Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations hereunder.  After
any retiring Collateral Agent’s resignation, the provisions of this Agreement
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Collateral Agent.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    (g)           All
notices and other communications provided for hereunder shall be in writing (i)
with respect to the Collateral Agent, sent to the address set forth in
introductory paragraph hereof and (ii) with respect to each Secured Party, sent
to the address set forth in the Note, and delivered in the manner required by
each Note.

    

    
      	
              3.

            	
              Grant of Security
  Interest.

            

    

    

    As
security for the prompt and complete payment and performance when due of the
Secured Obligations, Debtor hereby collaterally assigns and pledges to the
Collateral Agent for the benefit of the Secured Parties and grants a continuing
security interest to the Collateral Agent for the benefit of the Secured Parties
in and to all of the Debtor’s right, title and interest in to and under all of
the Collateral (and all rights therein), or in which or to which the Debtor has
any rights, in each case, whether now existing or hereafter from time to time
acquired.

    

    4.           Authorization
to File Financing Statement and other Actions.

    

    (a)           Debtor
hereby authorizes the Collateral Agent or its counsel at any time and from time
to time to file one or more financing statements, continuation statements or
other documents in any Uniform Commercial Code jurisdiction as Collateral Agent
may deem necessary or desirable, which financing statements, continuation
statements or other documents (a) indicate the Collateral (i) as all assets of
the Debtor or words of similar effect, regardless of whether any particular
asset comprised in the Collateral falls within the scope of Article 9 of the
UCC, or (ii) as being of an equal or lesser scope or with greater detail, and
(b) contain any other information required by part 5 of Article 9 of the UCC for
the sufficiency or filing office acceptance of any financing statement or
amendment.  The Debtor agrees to furnish any such information to the
Collateral Agent promptly upon request.

    

    (b)           If
the Debtor shall at any time hold or acquire a commercial tort claim, the Debtor
shall immediately notify the Collateral Agent in a writing signed by the Debtor
of the brief details thereof and grant to the Collateral Agent in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement.

    

    (c)           The
Debtor agrees to take any other action reasonably requested by the Collateral
Agent, including, without limitation, delivery of certain Collateral or a
control agreement granting control of certain Collateral to the Collateral
Agent, to insure the attachment, perfection and priority of, and the ability of
the Collateral Agent to maintain or enforce, the Security Interest in any and
all of the Collateral.

     

    (d)           The
Debtor hereby irrevocably makes, constitutes and appoints the Collateral Agent
as the Debtor’s true and lawful attorney-in-fact (with full power of
substitution or re-substitution, in the name of the Debtor, the Collateral Agent
or otherwise) upon an Event of Default with the power (i) to do any and every
act that the Debtor is obligated by this Agreement to do, (ii) to do all things
necessary to preserve and protect the Collateral, and to preserve, protect, and
keep perfected the Collateral Agent’s security interest in the Collateral, (iii)
to demand, sue for, collect, receive and give acquittance for any and all monies
due or to become due with respect to any Collateral, (iv) to settle, compromise,
compound, prosecute or defend any action or proceeding with respect to any
Collateral, (v) to sell, transfer, assign or otherwise deal in or with the
collateral or the proceeds or avails thereof, as fully and effectually as if the
Collateral Agent were the absolute owner thereof, and (vi) to extend the time of
payment of any or all thereof and to make any allowance and other adjustments
with reference to the Collateral.  The Debtor acknowledges and agrees
that the power of attorney granted herein is a power coupled with an interest
and shall be irrevocable.  The powers conferred on the Collateral
Agent hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers.  The
Collateral Agent shall be accountable only for the amounts it actually receives
as a result of the exercise of such powers and neither it nor any of its
officers, directors, employees or agents shall be responsible to the Debtor for
any act or failure to act pursuant to the foregoing power of
attorney.

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
 

    
      	
              5.

            	
              Representations
      and Warranties.  Debtor represents, warrants and agrees
      as follows:

            

    

    

    (a)           Debtor
has full power and authority to enter into this Agreement;

    

    (b)           All
corporate action on the part of the Debtor, its directors and its stockholders
necessary for the authorization, execution, delivery and performance of this
Agreement by the Debtor has been taken.  This Agreement shall
constitute the valid and binding obligation of the Debtor enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors;

    

    (c)           All
material consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings required on the part of
the Debtor in connection with the valid execution and delivery of this Agreement
have been obtained and are effective, other than such filings to be made or to
become effective after the date hereof with respect to the Security
Interests.  The Debtor has the right to pledge and grant the Security
Interests or otherwise transfer the Collateral free and clear of any liens,
claims, encumbrances or other security interests, other than the Permitted Liens
(as defined below);

    

    (d)           The
Debtor is the owner of the Collateral, free from any lien, mortgage, pledge,
charge, security interest, hypothecation or encumbrance of any kind (“Liens”) except (i)
Liens imposed by law for taxes not yet due which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
being maintained in accordance with GAAP, (ii) statutory Liens of landlords and
Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed
by law created in the ordinary course of business for amounts not yet due which
are being contested in good faith by appropriate proceedings and with respect to
which adequate reserves are being maintained in accordance with GAAP, (iii)
pledges and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or
regulations, (iv) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do not,
in any case, detract from the value of such property or impair the use thereof
in the ordinary conduct of business, (v) purchase money Liens incurred prior to
[the date of the offering
memo] upon or in any fixed or capital assets to secure the purchase price
or the cost of construction or improvement of such fixed or capital assets or to
secure indebtedness incurred solely for the purpose of financing the
acquisition, construction or improvement of such fixed or capital assets
(including Liens securing any capital lease obligations); provided, that (x)
such Lien attached to such asset concurrently or within 90 days after the
acquisition, improvement or completion of the construction thereof; (y) such
Lien does not extend to any other asset; and (z) the debt secured thereby does
not exceed the cost of acquiring, constructing or improving such fixed or
capital assets and (vi) Liens in favor of the Collateral Agent for the benefit
of the Secured Parties granted pursuant to this Agreement (the Liens described
in the preceding clauses (i) – (vi) collectively, “Permitted
Liens”)

    

    (e)           None
of the account debtors or other persons obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or like
federal, state or local statute or rule in respect of such
Collateral;

    

    (f)           The
exact legal name of the Debtor and its state of incorporation is set forth
below:

    Z Trim
Holdings,
Inc.                          Illinois

    

    (g)           The
Debtor has at all times operated its business in compliance in all material
respects with all applicable provisions of federal, state and local statutes and
ordinances, including, without limitation, those dealing with the control,
shipment, storage or disposal of hazardous materials or substances;

    

    (h)           When
the UCC financing statement in appropriate form is filed in the Office of the
Secretary of State of the State of Illinois, the Security Interests shall
constitute valid and perfected security interests in the Collateral in favor of
the Collateral Agent for the benefit of the Secured Parties, to the extent that
a security interest therein may be perfected by filing pursuant to the UCC,
assuming the proper filing and indexing thereof; and

    

    (i)       
     Except as set forth on Schedule I attached
hereto, the Debtor does not have any interest in, or title to, any registration
or pending application for any Patent, Trademark or Copyright.  This
Security Agreement is effective to create a valid and continuing Lien on
Debtor’s Intellectual Property.  Upon filing of the Patent Security
Agreement in the form attached hereto as Exhibit A and the
Trademark Security Agreement in the form attached hereto as Exhibit B with the
United States Patent and Trademark Office and the filing of an appropriate
financing statement referenced in subsection (h) above, all action necessary or
desirable to protect and perfect the Collateral Agent’s Lien on Debtor’s
Intellectual Property shall have been duly taken.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    

    
      	
              6.

            	
              Covenants.

            

    

    

    (a)           Except
for the Permitted Liens, the Debtor shall be the owner of the Collateral free
from any lien, security interest or other encumbrance.  Debtor agrees
that Debtor will not create, permit or suffer to exist any lien, security
interest or encumbrance on any of the Collateral other than Permitted Liens and
will defend the right, title and interest of the Collateral Agent in and to any
of its right, title and interest in and to the Collateral against the claims and
demands of all other persons.

    

    (b)           The
Debtor agrees that (i) without providing at least twenty (20) days prior written
notice to the Collateral Agent, the Debtor will not change its name, its place
of business or, if more than one, chief executive office, or its mailing address
or organizational identification number if it has one, and (ii) the Debtor will
not change its type of organization, jurisdiction of organization or other legal
structure.

    

    (c)           The
Collateral, except for sales of inventory in the ordinary course of business,
will be kept at the collateral locations listed on Schedule II, and the
Debtor will not remove the Collateral from such locations, without providing at
least twenty (20) days prior written notice to the Collateral
Agent.

    

    (d)           The
Debtor shall keep the Collateral in good order and repair and will not use the
same in violation of law or any policy of insurance thereon.

    

    (e)           The
Debtor shall permit the Collateral Agent, or its designee, to inspect the
Collateral during business hours with reasonable prior written notice, wherever
located.

    

    (f)           The
Debtor will promptly pay when due all taxes, assessments, governmental charges
and levies upon the Collateral or incurred in connection with the use or
operation of the Collateral or incurred in connection
therewith.  Furthermore, the Debtor shall maintain current all fees
and licenses on all Intellectual Property.

    

    (g)           The
Debtor shall continue to operate its business in compliance in all material
respects with all applicable provisions of federal, state and local statutes and
ordinances, including, without limitation, those dealing with the control,
shipment, storage or disposal of hazardous materials or substances.

    

    (h)           The
Debtor shall not sell, transfer or otherwise dispose, or offer to sell, transfer
or otherwise dispose, of the Collateral or any interest therein except in the
ordinary course of the Debtor’s business, and in the event of any sale not in
the ordinary course of Debtor’s business, the Security Interest and Lien created
herein shall continue in the Collateral itself.

     

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (i)   
        The Debtor shall notify the
Collateral Agent immediately upon the occurrence of each of the following (i)
acquisition after the date of this Agreement of any material Intellectual
Property, (ii) registration of any of the Debtor’s Intellectual Property with
the Untied States Copyright Office, the United States Patent and Trademark
Office or any other office or court, or (iii) Debtor’s obtaining knowledge, or
reason to know, that any application or registration relating to any material
Intellectual Property owned by or licensed to the Debtor is reasonably likely to
become abandoned or dedicated, or of any material adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Copyright
Office, the United States Patent and Trademark Office or any court) regarding
the Debtor’s ownership of any material Intellectual Property, its right to
register the same, or to keep and maintain the same.

    

    (j)      
     The Debtor shall notify the Collateral Agent
immediately upon awareness of any potential or actual lawsuit against the Debtor
or any material adverse or positive business development.

    

    (k)           The
Debtor shall take such action and provide such assistance as the Collateral
Agent may request to transfer any Licenses or enter into any agreement or
document required with a licensor to transfer any interest in or obligation
under any Licenses to enable the Collateral Agent to enforce the rights and
remedies under this Agreement.

    

    7.           Insurance.  The Debtor shall
at all times maintain insurance on the Collateral with reputable insurance
companies against loss or damage by fire, theft, burglary, pilferage, loss in
transit and such other hazards and risks and in such amounts as is customarily
maintained by similar businesses or as may be required by applicable
law.  All premiums on such insurance shall be paid by the Debtor and
certified copies of the policies, or other evidence of insurance, shall be
delivered to the Collateral Agent promptly upon its request. At the request of
the Collateral Agent, all insurance policies required under this Section shall
contain standard lender’s loss payable clauses, naming the Collateral Agent for
the benefit of the Secured Parties as loss payee, and providing
that:  (a) no such insurance shall be affected by any act or neglect
of the insured or owner of the property described in such policy; and (b) such
policies and loss payable clauses may not be canceled, amended or terminated
with respect to the Collateral Agent unless at least thirty (30) days’ prior
written notice is given to the Collateral Agent.

    

    8.           Event of
Default.  Failure of the
Debtor to pay any of the Secured Obligations when due shall constitute an Event
of Default.

    

    9.           Rights and
Remedies.

    

    (a)           If
any Event of Default has occurred and is continuing, the Collateral Agent may,
without further notice, exercise all rights and remedies under this Agreement or
the Notes or that are available to a secured creditor under the UCC or that are
otherwise available at law or in equity, at any time, in any order and in any
combination, including to collect any and all Secured Obligations from the
Debtor, and, in addition, the Collateral Agent may sell the Collateral or any
part thereof at public or private sale, for cash, upon credit or for future
delivery, and at such price or prices as the Collateral Agent may deem
satisfactory.  The Collateral Agent shall give Debtor not less than
ten (10) days’ prior written notice of the time and place of any sale or other
intended disposition of Collateral, except any Collateral which is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market.  The Debtor agrees that any such notice constitutes
“reasonable notification” within the meaning of Section 9-611 of the UCC
(to the extent such Section or any successor provision under the UCC is
applicable).

     

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    (b)  
The Collateral Agent may be the purchaser of any or all of the Collateral so
sold at any public sale (or, if such Collateral is of a type customarily sold in
a recognized market or is of a type that is the subject of widely distributed
standard price quotations or if otherwise permitted under applicable law, at any
private sale) and thereafter hold the same, absolutely, free from any right or
claim of whatsoever kind.  The Debtor agrees to execute and deliver
such documents and take such other action as the Collateral Agent deems
necessary or advisable in order that any such sale may be made in compliance
with law.  Upon any such sale the Collateral Agent shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral so
sold.  Each purchaser at any such sale shall hold the Collateral so
sold to it absolutely, free from any claim or right of any kind, including any
equity or right of redemption of the Debtor.  To the extent permitted
by law, the Debtor hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
adopted.  The notice (if any) of such sale shall (i) in case of a
public sale, state the time and place fixed for such sale, and (ii) in the case
of a private sale, state the day after which such sale may be
consummated.  Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as the Collateral
Agent may fix in the notice of such sale.  At any such sale Collateral
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may determine.  The Collateral Agent shall not be obligated to
make any such sale pursuant to any such notice.  The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned.  In case of any sale of all or any part of
the Collateral on credit or for future delivery, such Collateral so sold may be
retained by the Collateral Agent until the selling price is paid by the
purchaser thereof, but the Collateral Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for such Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice.  The Collateral Agent, instead of exercising the power of
sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the Security Interests and sell Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.  The Debtor shall remain liable for any
deficiency.

    

    (c)  
For the purpose of enforcing any and all rights and remedies under this
Agreement, the Collateral Agent may (i) require the Debtor to, and the Debtor
agrees that it will, at the  expense of the Debtor, and upon the
request of the Collateral Agent, forthwith assemble all or any part of its
Collateral as directed by the Collateral Agent and make it available at a place
designated by the Collateral Agent which is, in the Collateral Agent's opinion,
reasonably convenient to the Collateral Agent and the Debtor, whether at the
premises of the Debtor or otherwise, (ii) to the extent permitted by applicable
law, enter, with or without process of law and without breach of the peace, any
premise where any such Collateral is or may be located and, without charge or
liability to the Collateral Agent, seize and remove such Collateral from such
premises, (iii) have access to and use such Debtor’s books and records,
computers and software relating to the Collateral, and (iv) prior to the
disposition of any of the Collateral, store or transfer such Collateral without
charge in or by means of any storage or transportation facility owned or leased
by the Debtor, process, repair or recondition such Collateral or otherwise
prepare it for disposition in any manner and to the extent the Collateral Agent
deems appropriate and, in connection with such preparation and disposition, use
without charge any trademark, trade name, copyright, patent or technical process
used by the Debtor.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    (d)  
Without limiting the generality of the foregoing, if any Event of Default has
occurred and is continuing:

    

    (i) the
Collateral Agent may (without assuming any obligations or liability thereunder),
at any time and from time to time, enforce (and shall have the exclusive right
to enforce) against any licensee or sublicensee all rights and remedies of the
Debtor in, to and under any Licenses and take or refrain from taking any action
under any thereof, and the Debtor hereby releases the Collateral Agent from, and
agrees to hold the Collateral Agent free and harmless from and against any
claims arising out of, any lawful action so taken or omitted to be taken with
respect thereto except
for the Collateral Agent’s gross negligence or willful misconduct as
determined by a final and nonappealable decision of a court of competent
jurisdiction; and

    

    (ii) upon
request by the Collateral Agent, the Debtor agrees to execute and deliver to the
Collateral Agent powers of attorney, in form and substance satisfactory to the
Collateral Agent, for the implementation of any lease, assignment, license,
sublicense, grant of option, sale or other disposition of any Intellectual
Property.  In the event of any such disposition pursuant to this
Section, the Debtor shall supply its know-how and expertise relating to the
manufacture and sale of the products bearing Trademarks or the products or
services made or rendered in connection with Patents or Copyrights, and its
customer lists and other records relating to such Intellectual Property and to
the distribution of said products, to the Collateral Agent.

    

    10.         No Waiver
by Collateral Agent, etc.  The Collateral Agent shall not be
deemed to have waived any of their rights and remedies in respect of the Secured
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Collateral Agent.  No delay or omission on the part of the
Collateral Agent in exercising any right or remedy shall operate as a waiver of
such right or remedy or any other right or remedy.  A waiver on any
one occasion shall not be construed as a bar to or waiver of any right or remedy
on any future occasion.  All rights and remedies of the Collateral
Agent with respect to the Secured Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Collateral Agent deems expedient.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
 

    11.         Marshalling.  The
Collateral Agent shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of payment of, the Secured Obligations or any of them or to resort to
such collateral security or other assurances of payment in any particular order,
and all of the rights and remedies of the Collateral Agent hereunder in respect
of such collateral security and other assurances of payment shall be cumulative
and in addition to all other rights and remedies, however existing or
arising.  To the extent that it lawfully may, the Debtor hereby agrees
that it will not invoke any law relating to the marshalling of collateral which
might cause delay in or impede the enforcement of Collateral Agent’s rights and
remedies under this Agreement or under any other instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured
Obligations is outstanding or by which any of the Secured Obligations is secured
or payment thereof is otherwise assured, and, to the extent that it lawfully
may, the Debtor hereby irrevocably waives the benefits of all such
laws.

    

    12.         Application
of Proceeds.  The proceeds of any sale of, or other realization
upon, all or any part of the Collateral of the Debtor shall be applied by the
Collateral Agent to the Secured Obligations as follows:

    

    (a)           First,
to the payment of, or reimbursement of the Collateral Agent for or in respect of
all reasonable costs, expenses, disbursements and losses which shall have been
incurred or sustained by the Collateral Agent in connection with the exercise or
enforcement of all or any of the rights, remedies, powers under this
Agreement;

    

    (b)           Second,
to the payment of interest on the Secured Obligations, to be applied for the
ratable benefit of the Secured Parties;

    

    (c)           Third,
to the payment of principal in respect of the Secured Obligations, to be applied
for the ratable benefit of the Secured Parties;

    

    (d)           Fourth,
to the payment of all other Secured Obligations, if any, to be applied for the
ratable benefit of the Secured Parties; and

    

    (e)           Fifth,
the excess, if any, shall be returned to the Debtor or to such other Persons as
are legally entitled thereto.

    

    It is
understood and agreed that the Debtor shall remain liable to the Collateral
Agent to the extent of any deficiency between (a) the amount of the proceeds of
the Collateral received by the Collateral Agent hereunder and (b) the aggregate
amount of the Secured Obligations.

    

    13.         Limitations
on Duty of  the Collateral Agent in Respect of
Collateral.  Anything herein to the contrary notwithstanding,
the Debtor shall remain obligated and liable under each contract or agreement
comprised in the Collateral to be observed or performed by the Debtor
thereunder. The Collateral Agent shall not have any obligation or liability
under any such contract or agreement by reason of or arising out of this
Agreement or the receipt by the Collateral Agent of any payment relating to any
of the Collateral; nor shall the Collateral Agent be obligated in any manner to
perform any of the obligations of the Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent in respect of the Collateral or as to
the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Collateral Agent or to which the Collateral Agent may be
entitled at any time or times.  The Collateral Agent’s sole duty with
respect to the custody, safe keeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the UCC or otherwise, shall be to
deal with such Collateral in the same manner as the Collateral Agent deals with
similar property for its own account.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

     

    14.         Expenses;
Indemnification.  The Debtor agrees
to pay to the Collateral Agent on demand any and all reasonable expenses,
including reasonable attorneys’ fees and disbursements, incurred or paid by the
Collateral Agent in protecting or preserving the Collateral Agent’s rights and
remedies under or in respect of any of the Secured Obligations or any of the
Collateral. The Debtor agrees to pay to the Collateral Agent on demand any and
all expenses, including attorneys’ fees and disbursements, incurred or paid by
the Collateral Agent in enforcing the Collateral Agent’s rights and remedies
under or in respect of any of the Secured Obligations or any of the Collateral.
The Debtor agrees to indemnify and hold the Collateral Agent harmless from and
against any claim, loss, damage, action, cause of action, liability, cost and
expense or suit of any kind or nature whatsoever, brought against or incurred by
the Collateral Agent, in any manner arising out of or, directly or indirectly,
related to or connected with any action taken by the Collateral Agent pursuant
to the terms of this Agreement.

    

    15.         Term;
Termination.  This Agreement shall remain in full force and
effect with respect to the Notes, throughout the term of the Notes, and until
all of the Secured Obligations have been fully paid or satisfied and such Notes
have been terminated and canceled.  Upon the termination of this
Agreement as provided above (other than as a result of the sale of the
Collateral), Collateral Agent will release the security interests and liens
created hereunder (including, without limitation, the execution and delivery to
Debtor of UCC termination statements and any related documents, agreements or
instruments that Debtor may reasonably request).

    

    16.         Assignment.  This Agreement
and all obligations of the Debtor hereunder shall be binding upon the successors
and assigns of the Debtor (including any debtor-in-possession on behalf of such
Debtor) and shall, together with the rights and remedies of the Collateral Agent
hereunder, inure to the benefit of the Collateral Agent, all future holders of
any instrument evidencing any of the Secured Obligations and their respective
successors and assigns.  No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Secured Obligations or any portion thereof or interest
therein shall in any manner affect the Security Interest granted to the
Collateral Agent hereunder.  The Debtor shall not assign, sell,
hypothecate or otherwise transfer any interest in or obligation under this
Agreement.

    

    17.         Notices.  All notices and
other communications provided for hereunder shall be in writing sent to the
address set forth in introductory paragraph hereof and delivered in the manner
required by each Note.

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
 

    18.         Further
Documents and Cooperation.  The Debtor and
the Collateral Agent agree to execute, acknowledge and deliver to each other all
instructions, agreements, documents and other instruments reasonably required to
consummate the transactions contemplated by and the purposes of this
Agreement.  The Debtor and the Collateral Agent further agree that
they will take such action and execute such further documents and agreements as
may be reasonably necessary or appropriate to fulfill the purposes expressed in
this Agreement and to perform the terms and conditions of this
Agreement.

    

    19.         Governing
Law; Waiver of Jury Trial.

    

    (a)           THIS
AGREEMENT AND THE RIGHTS AND SECURED OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF DELAWARE, EXCEPT TO
THE EXTENT THAT PERFECTION (AND THE EFFECT OF PERFECTION AND NONPERFECTION) AND
CERTAIN REMEDIES MAY BE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN
DELAWARE.

    

    (b)           THE
DEBTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSSELF AND ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT OF THE
NORTHERN DISTRICT OF DELAWARE, AND OF ANY STATE COURT LOCATED IN FULTON COUNTY
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH DELAWARE STATE
COURT OR, TO THE EXTENT PERMITTED BY APPLICABLE LAW, SUCH FEDERAL
COURT.  THE DEBTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE DEBTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION IN WHICH THE PROPERTY THAT IS THE
SUBJECT OF SUCH ACTION OR PROCEEDING IS LOCATED.

    
 

    (c)           THE
DEBTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING DESCRIBED IN PARAGRAPH (b) OF THIS SECTION AND BROUGHT IN ANY
COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION.  THE DEBTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

    

    (d)           THE
DEBTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN EACH NOTE.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT
OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.

    

    (e)           THE
DEBTOR HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY (WHICH THE LENDER ALSO WAIVES) IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  THE DEBTOR (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, AND (ii) ACKNOWLEDGES THAT IT HAS NOT BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

    

    20.         Section
Headings.  The section
headings herein are for convenience of reference only, and shall not affect in
any way the interpretation of any of the provisions hereof.

    

    21.         Counterparts.  This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.

     

     

    
 

    [SIGNATURES
ON FOLLOWING PAGE]

     

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    IN WITNESS WHEREOF, the Debtor
has each executed and delivered this Security Agreement as of the date first
written above.

     

     

    
      	 
      	
              Z
      TRIM HOLDINGS, INC.

            	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ 

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      
	 
      	 
      	 
      	 
      

    

     

    

    Acknowledged
and Agreed:

    

    [___________________________],

    as
Collateral Agent

    

    
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              By:

            	
              /s/

            	 
      	 
      	 
      	 
      
	 
      	
              Name:

            	 
      	 
      	 
      	 
      
	 
      	
              Title:

            	 
      	 
      	 
      	 
      

    

                                                                   

    

    
      	
              The
      Secured Parties:

            	
              [Contained
      in Omnibus Signature Date in Subscription
  Agreement]

            

    

    

     

    [Signature
Page to Security Agreement]

     

     

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    Schedule
I

    

    Intellectual
Property

    

     

     

     

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    Schedule
II

    

    Locations
of Collateral

    

    

     

     

     

     

     

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

    

    FORM
OF PATENT SECURITY AGREEMENT

    

    

    THIS PATENT SECURITY AGREEMENT
(this “Agreement”), dated as
of June __, 2008, executed by Z TRIM HOLDINGS, INC., an Illinois
corporation (the “Grantor”), in favor
of [____________________] for the
benefit of the Secured Parties (the “Collateral
Agent”).  Capitalized terms used in this Agreement shall have
the meanings set forth in the Security Agreement (as defined below) unless
specifically defined herein.

    

    

    W I T N E S S E T
H:

    

    WHEREAS, the Grantor and the
Secured Parties are parties to an 8% Senior Secured Convertible Note (as
amended, restated, supplemented or otherwise modified, the “Note”) pursuant to
which the Secured Parties have agreed to make loans to the Grantor (the “Loans”) as offered by
that certain Private Placement Memorandum dated _______________, 2008 (the
“Offering”);

    

    WHEREAS, the Grantor has
entered into a Security Agreement dated the date hereof (the “Security Agreement”)
pursuant to which the Grantor has granted to the Collateral Agent for the
benefit of the Secured Parties a continuing security interest in, among other
things, the Intellectual Property of the Grantor, including, without limitation,
(a) all of the Grantor’s Patents (as herein defined), whether presently existing
or hereafter acquired or arising, or in which the Grantor now has or hereafter
acquires rights and wherever located; (b) all of the Grantor’s Patent Licenses
(as herein defined), whether presently existing or hereafter acquired or in
which the Grantor now has or hereafter acquires rights and wherever located; and
(c) all products and proceeds of any of the foregoing, as security for all of
the Secured Obligations;

    

    NOW, THEREFORE, in consideration of
the premises and of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

    

    1. For
purposes of this Agreement and in addition to terms defined elsewhere in this
Agreement, the following terms shall have the meanings herein specified (such
meaning to be equally applicable to both the singular and plural forms of the
terms defined):

    

    “Patent License” shall
mean any written agreement now owned or hereafter acquired by the Grantor or in
which the Grantor has or acquires any rights granting any right with respect to
any property, process or other invention on which a Patent is in existence,
including, without limitation, the agreements listed on Schedule I attached
hereto.

     

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    
 

    “Patents” shall mean
all of the following now owned or hereafter acquired by the Grantor or in which
the Grantor has or acquires any rights: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country or political subdivision
thereof (except in any jurisdiction in which the grant of a security interest in
the patents is prohibited and except for any intent to use application unless or
until a statement of use or amendment to assert use has been filed with the
United States Patent and Trademark Office), including, without limitation, those
letters patent and applications for letters patent listed on Schedule I attached
hereto, together with all the rights, benefits and privileges derived therefrom
and the goodwill of the business symbolized thereby; and (b) all reissues,
continuations, continuations-in-part and extensions thereof.

    

    2. As
security for all of the Secured Obligations, the Grantor hereby pledges,
hypothecates, sets over and conveys a security interest to the Collateral Agent
for the benefit of the Secured Parties in, and does hereby grant to Collateral
Agent for the benefit of the Secured Parties, a continuing security interest in
all of the Grantor’s right, title and interest in, to and under the following
(collectively, the “Property”):

    

    (a)           each
Patent now or hereafter owned by the Grantor or in which the Grantor now has or
hereafter acquires rights and wherever located, including, without limitation,
each Patent referred to in Schedule I
hereto and any renewals of registrations thereof; and

    

    (b)           each
Patent License now or hereafter held by the Grantor or in which the Grantor now
has or hereafter acquires rights and wherever located, including, without
limitation, the Patent Licenses, if any, referred to in Schedule I
hereto; and

    

    (c)           all
products and proceeds of the foregoing, includ­ing, without limitation, any
claim by the Grantor against third par­ties for past, present or future
infringement of any Patent or breach of Patent Licenses, if any, includ­ing,
without limitation, any Patent or Patent License referred to in Schedule I
hereto.

    

    Notwithstanding
the foregoing or anything else contained in this Agreement to the contrary the
grant set forth above shall not be effective as a transfer of title to the
Property unless and until the Collateral Agent exercises the rights and remedies
accorded to it under the Security Agreement and by law with respect to the
realization upon its security interest in the Property, and until such time, the
Grantor shall own and may use and enjoy the Property in connection with its
business operations and exercise all incidents of ownership, including, without
limitation, enforcement of its rights and remedies with respect to the Property,
but with respect to all Property being used in Grantor’s businesses, only in a
manner consistent with the preservation of the current substance, validity and
registration of, and the security interest granted in, such Property; provided,
however, that the foregoing shall not impose an obligation on the Grantor to
continue to use any of the Property in the Grantor’s businesses to the extent
that such Property is not necessary in the normal conduct of its
businesses.  The Grantor agrees not to sell or assign its interest in,
or grant any sublicense under, the Property, except that the Grantor may
sublicense the Property in the ordinary course of the Grantor’s businesses,
including, without limitation, licensing or cross-licensing any of the Property
to others in connection with settlement of claims or counterclaims for
infringement of intellectual property rights, but only in a manner consistent
with the preservation of the current substance, validity, and registration, and
the security interest granted in, such Property. Upon the exercise by the
Collateral Agent of the rights and remedies accorded to it under the Security
Agreement and by law with respect to the realization upon its security interest
in the Property, Grantor’s ownership of the Collateral, in which a continuing
security interest under this paragraph has been granted to the Collateral Agent
shall be terminated.

     

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

     

    3. The
Grantor does hereby further acknowledge and affirm that the representations,
warranties and covenants of the Grantor with respect to the Property and the
rights and remedies of the Collateral Agent with respect to the security
interest in the Property made and granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.

    

    4. This
Agreement shall terminate upon termination of the Security
Agreement.  At any time and from time to time prior to such
termination, the Collateral Agent may, in accordance with the terms of the
Security Agreement, terminate its security interest in or reconvey to the
Grantor any rights with respect to any or all of the Property.  Upon
termination of this Agreement and following a request from the Grantor, the
Collateral Agent shall, at the expense of the Grantor, execute and deliver to
the Grantor all deeds, releases and other instruments as the Grantor may
reasonably request (but without recourse or warranty by the Collateral Agent) in
order to evidence such termination.

    

    5. If
at any time before the termination of this Agreement in accordance with Section
4, the Grantor shall obtain or acquire rights to any new patent (including any
Patent application), whether under a Patent License or otherwise, the provisions
of Section 2 shall automatically apply thereto and the Grantor shall comply with
the terms of the Security Agreement with respect to such new
Patent.  The Grantor authorizes the Collateral Agent to modify this
Agreement by amending Schedule I to include
any future Patents and Patent Licenses covered by Section 2 or by this Section
5.

    

    6. The
Grantor further agrees that (a) the Collateral Agent shall not have any
obligation or responsibility to protect, defend, file, prosecute, obtain or
maintain the Property and the Grantor shall, at its own expense protect, defend,
file, prosecute, obtain and maintain the same in accordance with the terms and
conditions set forth in the Security Agreement and in accordance with its
prudent business judgment, (b) the Grantor shall forthwith advise the Collateral
Agent promptly in writing upon detection of infringements of any of the Property
being used in the Grantor’s businesses and (c) if the Grantor fails to (i)
comply with the requirements of the preceding clause (a) with regard to the
maintenance of any registered Property or, (ii) with regard to infringements of
or actions against any Property, commence efforts to comply with the
requirements of the preceding clause (a) within thirty (30) days after the
Grantor gives notice of such infringement or action to the Collateral Agent (or
such shorter time determined by the Collateral Agent if waiting thirty days
would diminish the Collateral Agent’s security interest in or other rights in
and to the Property), the Collateral Agent may do so in the Grantor’s name or in
its own name, but in any case at the Grantor’s expense, and the Grantor hereby
agrees to reimburse the Collateral Agent for all reasonable expenses, including
attorneys’ fees incurred by the Collateral Agent in protecting, defending and
maintaining the Property.  For the purpose of permitting the
Collateral Agent to fulfill its obligations set forth above, the Grantor hereby
appoints Collateral Agent as its agent for the purpose of filing, prosecuting,
obtaining, and maintaining, at its own expense, any new patent (including any
patent application), and appointing attorneys and/or agents to appear before the
U.S. Patent & Trademark Office and before corresponding foreign patent
offices, to file, prosecute, obtain, and maintain Patents (including any Patent
applications) on behalf of the Grantor and the Collateral Agent, and the
Collateral Agent, to the extent necessary under the Security Agreement, on
behalf of the Grantor.

     

    

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

     

    7. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.

    

    8. THE
VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCEPT TO THE
EXTENT THAT PERFECTION (AND THE EFFECT OF PERFECTION AND NONPERFECTION) AND
CERTAIN REMEDIES MAY BE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN
DELAWARE.

    

    [Signatures
on Following Page]

     

     

     

     

     

     

     

     

    

     

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

    

    

    IN
WITNESS WHEREOF, the Grantor has caused this Patent Security Agreement to be
duly executed under seal and delivered by its duly authorized officer as of the
date first above written.

    

    
      	 
      	
              Z
      TRIM HOLDINGS, INC.

            	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ 

            	 
      
	 
      	
              Name: 

            	 
      	 
      
	 
      	
              Title:

            	 
      	 
      
	 
      	 
      	 
      	 
      

    

    

     

    

    Signed,
sealed and delivered

    this ___
day of _____, 2008

    

     

    
      
 Notary
Public

    

    

    
      
 My
Commission expires:

    

    

    
      
 Witness

    

     

    
      
 Witness

    

    

     

    

    

    [Signature
Page to Patent Security Agreement]

    

    

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
I

     

    to
Patent Security Agreement

     

     

     

     

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

    Exhibit
B

    

    FORM
OF TRADEMARK SECURITY AGREEMENT

    

    THIS TRADEMARK SECURITY
AGREEMENT (this “Agreement”), dated as
of June ___, 2008, executed by Z TRIM HOLDINGS, INC., an Illinois corporation
(the “Grantor”)
in favor of [____________________] (the
“Collateral Agent”).  Capitalized terms used in this Agreement shall
have the meanings set forth in the Security Agreement (as defined below) unless
specifically defined herein.

    

    

    W I T N E S S E T
H:

    

    WHEREAS, the Grantor and the
Secured Parties are parties to an 8% Senior Secured Convertible Note (as
amended, restated, supplemented or otherwise modified, the “Note”) pursuant to
which the Secured Parties have agreed to make loans to the Grantor (the “Loans”) as offered by
that certain Private Placement Memorandum dated _______________, 2008 (the
“Offering”);

    

    WHEREAS, the Grantor has
entered into a Security Agreement dated the dated hereof (the “Security Agreement”)
pursuant to which the Grantor has granted to the Collateral Agent  for
the benefit of the Secured Parties a continuing security interest in, among
other things, the Intellectual Property of the Grantor, including, without
limitation, (a) all of the Grantor’s Trademarks (as herein defined), whether
presently existing or hereafter acquired or arising, or in which the Grantor now
has or hereafter acquires rights and wherever located; (b) all of the Grantor’s
Trademark Licenses (as herein defined), whether presently existing or hereafter
acquired or in which the Grantor now has or hereafter acquires rights and
wherever located; and (c) all products and proceeds of any of the foregoing, as
security for all of the Secured Obligations;

     

    NOW,
THEREFORE, in consideration of the premises and of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     

    1. For purposes of this
Agreement and in addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings herein specified (such meaning to be
equally applicable to both the singular and plural forms of the terms
defined):

     

    “Trademark
License” means any written agreement now or hereafter acquired by the Grantor or
in which the Grantor has or acquires any right, title or interest and wherever
located granting to the Grantor any right to use any Trademark, including,
without limitation, the agreements listed on Schedule I attached
hereto.

     

    “Trademarks”
means all of the following now owned or hereafter acquired by the Grantor or in
which the Grantor has or acquires any right, title or interest and wherever
located:  (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof (except in any jurisdiction in which the grant of a security
interest in trademarks is prohibited and except for any intent to use
applications unless or until a statement of use or amendment to assert use has
been filed with the United States Patent and Trademark Office), including,
without limitation, those U.S. registrations and applications for registration
listed on Schedule
I attached hereto, together with all the rights, benefits and privileges
derived therefrom and the goodwill of the business relating thereto or
symbolized thereby, (ii) all renewals thereof and (iii) all proceeds of the
foregoing.

     

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    2. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor hereby pledges, mortgages,
hypothecates, sets over and conveys a security interest to the Collateral Agent
for the benefit of the Secured Parties, and does hereby grant to the Collateral
Agent for the benefit of the Secured Parties, a continuing security interest in,
all of the Grantor’s right, title and interest in, to and under the following
(collectively, the “Property”):

     

    (a)           each
Trademark; and

     

    (b)           each
Trademark License; and

     

    (c)           all
products and proceeds of, and rights associated with, the foregoing,
includ­ing, without limitation, any claim by the Grantor against third
par­ties for past, present or future infringement or dilution of any
Trademark or Trademark registration, for breach or enforcement of any Trademark
License or for any injury to the goodwill associated with the use of any such
Trademark, and all rights corresponding thereto throughout the world, if any,
includ­ing, without limitation, with respect to any Trademark or Trademark
License referred to in Schedule I
hereto.

     

    Notwithstanding
the foregoing or anything else contained in this Agreement to the contrary, the
grant set forth above shall not be effective as a transfer of title to the
Property unless and until the Collateral Agent exercises the rights and remedies
accorded to it under the Security Agreement and by law with respect to the
realization upon its security interest in the Property, and until such time, the
Grantor shall own, and may use and enjoy the Property in connection with its
business operations, and exercise all incidents of ownership, including, without
limitation, enforcement of its rights and remedies with respect to the Property,
but with respect to all Property being used in the Grantor’s business, only in a
manner consistent with the preservation of the current substance, validity and
registration of, and the security interest granted in, such Property; provided,
however, that the foregoing shall not impose an obligation on the Grantor to
continue to use any of the Property in the Grantor’s business to the extent that
such Property is not necessary in the normal conduct of its business. The
Grantor agrees not to sell or assign its interest in, or grant any sublicense
under, the Property, except that the Grantor may sublicense the Property in the
ordinary course of the Grantor’s business but only in a manner consistent with
the preservation of the current substance, validity and registration, and the
security interest granted in, such Property. Upon the exercise by the Collateral
Agent of the rights and remedies accorded to it under the Security Agreement and
by law with respect to the realization upon its security interest in the
Property, the Grantor’s ownership of the Property, in which a continuing
security interest under this paragraph has been granted to the Collateral Agent
shall be terminated.

     

    3. This Agreement has been
executed and delivered by the Grantor for the purpose of registering the
security interest of the Collateral Agent for the benefit of the Secured Parties
in the Property with the United States Patent and Trademark
Office.  The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Collateral Agent for the benefit of the Secured Parties under the Security
Agreement.  The Security Agreement (and all rights and remedies of the
Collateral Agent thereunder) shall remain in full force and effect in accordance
with its terms.

     

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

    4. The Grantor does hereby
further acknowledge and affirm that the representations, warranties and
covenants of the Grantor with respect to the Property and the rights and
remedies of the Collateral Agent with respect to the security interest in and
collateral assignment of the Property made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

     

    5. This Agreement shall
terminate upon termination of the Security Agreement.  At any time and
from time to time prior to such termination, the Collateral Agent may, in
accordance with the terms of the Security Agreement, terminate its security
interest in or reconvey to the Grantor any rights with respect to any or all of
the Property.  Upon termination of this Agreement and following a
request from the Grantor, the Collateral Agent shall, at the expense of the
Grantor, execute and deliver to the Grantor all deeds, releases and other
instruments as the Grantor may reasonably request (but without recourse or
warranty by the Collateral Agent) in order to evidence such
termination.

     

    6. If at any time before the
termination of this Agreement in accordance with Section 5, the Grantor shall
obtain or acquire rights to any new Trademark or Trademark License, the
provisions of Section 2 shall automatically apply thereto and the Grantor shall
comply with the terms of the Security Agreement with respect to such new
Trademark or Trademark License.  The Grantor authorizes the Collateral
Agent to modify this Agreement by amending Schedule I to include
any future Trademarks and Trademark Licenses covered by Section 2 or by this
Section 6.

     

     

     

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

     

     

    7. The Grantor further agrees
that (a) the Collateral Agent shall not have any obligation or responsibility to
protect, defend, file, prosecute, obtain or maintain the Property and the
Grantor shall, at its own expense, protect, defend, file, prosecute, obtain and
maintain the same in accordance with the terms and conditions set forth in the
Security Agreement and in accordance with its prudent business judgment, (b) the
Grantor shall forthwith advise the Collateral Agent promptly in writing upon
detection of infringements of any of the Property being used in the Grantor’s
businesses and (c) if the Grantor fails to (i) comply with the requirements of
the preceding clause (a) with regard to the maintenance of any registered
Property or, (ii) with regard to infringements of or actions against any
Property, commence efforts to comply with the requirements of the preceding
clause (a) within thirty days after the Grantor gives notice of such
infringement or action to the Collateral Agent (or such shorter time determined
by the Collateral Agent if waiting thirty days would diminish the Collateral
Agent’s security interest in or other rights in and to the Property), the
Collateral Agent may do so in the Grantor’s name or in its own name, but in any
case at the Grantor’s expense, and the Grantor hereby agrees to reimburse the
Collateral Agent for all reasonable expenses, including attorneys’ fees incurred
by the Collateral Agent in protecting, defending and maintaining the
Property.  For the purpose of permitting the Collateral Agent to
fulfill its obligations set forth above, the Grantor hereby appoints Collateral
Agent as its agent for the purpose of filing, prosecuting, obtaining, and
maintaining, at its own expense, any new trademark (including any trademark
application), and appointing attorneys and/or agents to appear before the U.S.
Patent & Trademark Office and before corresponding foreign trademark
offices, to file, prosecute, obtain, and maintain Trademarks (including any
Trademark applications) on behalf of the Grantor and the Collateral Agent, and
the Collateral Agent, to the extent necessary under the Security Agreement, on
behalf of the Grantor.

     

    8. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.

     

    9. THE VALIDITY OF THIS
AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE
RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF) OF THE STATE OF DELAWARE, EXCEPT TO THE EXTENT THAT
PERFECTION (AND THE EFFECT OF PERFECTION AND NONPERFECTION) AND CERTAIN REMEDIES
MAY BE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN
DELAWARE.

     

     [Signatures
on Following Page]

    

     

     

    
      
        
        

      

      
        B-4

        
          

        

      

      
        
        

      

    

    

    IN
WITNESS WHEREOF, the Grantor has caused this Trademark Security Agreement to be
duly executed under seal and delivered by its duly authorized officer as of the
date first above written.

    

     

    
      	 
      	
              Z
      TRIM HOLDINGS, INC.

            	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ 

            	 
      
	 
      	
              Name: 

            	 
      	 
      
	 
      	
              Title:

            	 
      	 
      
	 
      	 
      	 
      	 
      

    

    

     

    

    Signed,
sealed and delivered

    this ___
day of _____, 2008

    

    
      
        

      

    

    Notary
Public

    

    

    
      
 My
Commission expires:

    

    

    
      
 Witness

    

     

    
      
 Witness

    

    [Signature
Page to Trademark Security Agreement]

    

    

     

    
      
        
        

      

      
        B-5

        
          

        

      

      
        
        

      

    

     

     

     

    
 

    Schedule
I

    

    Trademarks

     

     

     

     

     

     

     

     

     

     

    B-6

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