Document:

ex43.htm

     

     

    
      THIS
AMENDED AND RESTATED WARRANT TO PURCHASE COMMON STOCK IS GIVEN IN REPLACEMENT OF
A WARRANT TO PURCHASE COMMON STOCK DATED OCTOBER 15, 2009.  THE
PREDECESSOR WARRANT, MARKED “EXCHANGED”, WILL BE RETURNED TO THE COMPANY UPON
THE HOLDER’S RECEIPT OF THIS AMENDED AND RESTATED WARRANT (HEREINAFTER REFERRED
TO AS THIS “WARRANT”).

      

      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, AS AMENDED (THE
SECURITIES ACT’) 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.
____                                                                                                                     October 15,
2009

      

      

      Z
TRIM HOLDINGS, INC.

      FORM
OF WARRANT TO PURCHASE COMMON STOCK

      

      Void
after October 15, 2014

      

      Z
Trim Holdings, Inc., an Illinois corporation (the “Company”), hereby
certifies that, for value received, Brightline Ventures I, LLC (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 October 15, 2014 (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 October 15, 2009 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 March 25,
2009 as amended and supplemented by a restatement thereof dated as of August 31,
2009 (the “Private
Offering”).

      

      1. Number of Warrant Shares;
Exercise Price.  This Warrant shall evidence the right of the
Holder to purchase up to 2,778,750 Warrant Shares at an exercise price per
Warrant Share of $1.50 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.

      

      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  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.

      

      (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  (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 Quotation Bureau Incorporated 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.

      

      (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.

       

      (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 October 15, 2009, 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 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.”

      

      (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]

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

      In
Witness Whereof, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first written above.

      

      

      Z
TRIM HOLDINGS, INC.,

      an
Illinois corporation

      

      

      By:

      Name:
Steven J. Cohen

      Title:
Chief Executive Officer

      

      Address:                           1011
Campus Drive

      Mundelein, IL 60060

       

      

       

      

      

      

      

      

      

      

      

      

      

      

      

      
        
          
             

             

          

           

        

        
           

          
            

          

        

        
           

        

      

      

      EXHIBIT
A

      

      FORM OF
SUBSCRIPTION

      

      (To be
signed only on exercise of Warrant)

      

      

      

      To:           Z-TRIM
HOLDINGS, INC.

      

      The undersigned, pursuant to the
provisions set forth in the attached Warrant, hereby irrevocably elects to (a)
purchase _____ shares of the Common Stock covered by such Warrant and herewith
makes payment of $ _________, representing the full purchase price for such
shares at the price per share provided for in such Warrant, or (b) exercise such
Warrant for _______ shares purchasable under the Warrant pursuant to the Net
Issue Exercise provisions of Section 5 of such Warrant.

      

      Please issue a certificate or
certificates representing ________ shares in the name of the undersigned or in
such other name or names as are specified below:

       

      

      (Name)

       

      

      

      (Address)

      

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

      

      

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

      

      

      (Print Name)

      

      

      (Address)

      Dated:                                                      

      

      

      EXHIBIT
B

      

      FORM OF
ASSIGNMENT

       

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

       

      For Value
Received, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to:

       

      Name:                                                                                                                                          

      (Please
Print)

      Address:                                                                                                                                          

      (Please
Print)

      

      Dated:  __________,
20__

      

      Holder’s

      Signature:                                                                                     

      

      Holder’s

      Address:                                                                                     

       

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

      
        
          
             

             

          

           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT
C

      

      FORM OF INVESTOR
REPRESENTATION LETTER

      

      DATE

      

      Z Trim
Holdings, Inc.

      1011
Campus Drive

      Mundelein,
IL 60060

      

      Gentlemen:

      

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

      

      
        	
                 
      1.

              	
                   Check
      each one which is applicable:

              

      

      

      
        	
                    

              	
                I
      am an “accredited investor” within the meaning of Regulation D promulgated
      under the Securities Act of 1933 (the
“Act”);

              

      

      

      
        	
                    

              	
                I
      have such knowledge and experience in financial, tax, and business matters
      so as to utilize information made available to me in order to evaluate the
      merits and risks of an investment decision with respect
      thereto;

              

      

      

      
        	
                2.
      

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

              

      

      

      
        	
                3.
      

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

              

      

      

      
        	
                4.
      

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

              

      

      

      

      _______________________

      Name:

      

      Holder of
Warrants to purchase _____ shares of
common stock of Z Trim Holdings, Inc. pursuant to the terms of the Common Stock
Purchase Warrant of evenex44.htm

     

     

    

      
        SECURITY
AGREEMENT

      

      
        

         

        THIS SECURITY AGREEMENT (this
“Agreement”) dated as of October 15, 2009, is made by Z TRIM HOLDINGS, INC., an
Illinois corporation, with an address at 1011 Campus Drive, Mundelein, Illinois
60060 (“Debtor”) in favor of  the Secured Parties
listed on Annex A attached hereto (the “Secured Parties”) (as defined
below).

      

      
        

         

        RECITALS

      

      
        

         

        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 as of August 31, 2009
(the “Offering”).

      

      
        

         

        B.           The
Notes and the Loans rank pari passu with those certain 8% senior secured
convertible notes issued by the Debtor in 2009 (the “2009 Notes”)and 2008 (the
“2008 Notes ).

      

      
        

         

        C.           Each
Holder hereby agrees that any and all action, agreements, extensions,
adjustments, waivers, notices, or amendments may be made by the consent of the
Requisite Holders (as herein after defined), including, if deemed appropriate,
the appointment of a collateral agent.

      

      
        

         

        D.           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 Secured Parties.

      

      
        

         

        AGREEMENT

      

      
        

         

        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.

      

      
        

         

        “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;

      

      
        
          	
                   
      

                	
                  (xiii)

                	
                  all
      other goods and personal property, whether tangible or
      intangible;

                

        

      

      
        
          	
                  (xiv)

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

                

        

      

      
        
          	
                  (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.

                

        

      

      
        

         

        “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.

      

      
        

         

        

      

      
        “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.

      

      
        

         

        “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 Secured Parties, 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 Secured
Parties, 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 Secured
Parties 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 Secured Parties of its rights hereunder, together with
attorneys’ fees actually incurred and court costs.

      

      
        

         

        “Security
Interests” shall mean the security interests granted to the Secured Parties
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.

      

      
        

      

      
        “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)            The
Requisite Holders may, if determined necessary or convenient, appoint and
authorize a person to act as  Collateral Agent to take such action as
collateral agent on their behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Collateral Agent by the terms of
such appointment, together with such powers and discretion as are reasonably
incidental thereto. The Debtor shall be entitled to prompt written notice of any
such appointment and acceptance by the collateral agent together with such
evidence of appointment and authority as it may reasonably
request.

      

      
        

         

         (g) All notices and other
communications provided for hereunder shall be in writing 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
Secured Parties and grants a continuing security interest to  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 agrees to file on behalf of the Secured Parties and, if one is
subsequently duly appointed, 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, if one is duly appointed by the
Requisite Holders promptly upon request.

      

      
        

         

        (b) If the
Debtor shall at any time hold or acquire a commercial tort claim, the Debtor
shall promptly  notify the Secured parties or, if one has been duly
appointed, the collateral agent, in a writing signed by the Debtor of the brief
details thereof and granting 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 Requisite
Holders or if one is duly appointed the collateral agent, including, without
limitation, delivery of certain Collateral or a control agreement granting
control of certain Collateral , to the person designated by the Requisite
Holders or, to the collateral agent, if one is duly appointed, to insure the
attachment, perfection and priority of, and the ability of the Secured Parties
to maintain or enforce, the Security Interest in any and all of the
Collateral.

      

      
        

         

        (d) The
Debtor hereby irrevocably agrees to make, constitute and appoint the collateral
agent, if one is duly appointed,  as the Debtor’s true and lawful
attorney-in-fact (with full power of substitution or resubstitution, 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 Secured Parties’
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 to be granted
herein is a power coupled with an interest and shall be irrevocable. The powers
to be 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.

      

      
        

         

        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, material men 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 August 31, 2009 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 Secured Parties granted pursuant
to this Agreement, the Security Agreements relating  to the 2008 Notes
and the 2009 Notes (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 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 Secured Parties’ Lien on Debtor’s
Intellectual Property shall have been duly taken.

      

      
        

         

        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 Secured Parties 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 Secured Parties, or to the Collateral Agent, if one is duly
appointed, 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 Secured Parties or to the
collateral agent, if one is duly appointed.

      

      
        

         

        (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 a representative of the Requisite Holders or the Collateral
Agent, if one is duly appointed, 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.

      

      
        

         

          
(i) The Debtor shall notify the Secured Parties or the Collateral Agent, if one
is duly appointed 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 Secured Parties or, if one is duly appointed, 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 Requisite
Holders, or if one is duly appointed, 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 Secured Parties or, if one is duly appointed 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 representative of the Requisite Holders or, if one is duly
appointed the Collateral Agent promptly upon request. At the request of the
Requisite Holders, or, if one is duly appointed, the Collateral Agent, all
insurance policies required under this Section shall contain standard lender’s
loss payable clauses, naming 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 Secured Parties unless at least thirty (30) days’ prior written notice is
given to the Secured Parties or, if one is duly appointed, 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 Requisite Holders, or
if one is duly appointed, 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
Secured Parties, or, if one is duly appointed, 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 Requisite Holders or
, if one is duly appointed, the  Collateral Agent may deem
satisfactory. The Secured Parties, or , if one is duly appointed, 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).

      

      
        

         

        (b) The
Secured Parties, or, if one is duly appointed, the Collateral Agent for the
benefit of the Secured Parties, 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 Requisite
Holders, or, if one is duly appointed, 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 Secured Parties, or, if one is duly
appointed 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
Requisite Holders, or, if one is duly appointed, 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 Requisite Holders or, if
one is duly appointed, Collateral Agent may determine.  The Secured
Parties, or , if one is dully appointed, the Collateral Agent shall not be
obligated to make any such sale pursuant to any such notice.  The
Secured Parties, or , if one is duly appointed, 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 Secured Parties or, if one is duly appointed, 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 Secured Parties, or, if one is duly appointed, 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
Secured Parties, or, if one is duly appointed, 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 Requisite Holders or, if one is duly
appointed, the Collateral Agent, forthwith assemble all or any part of its
Collateral as directed by the Secured Parties, or if one is duly appointed, the
Collateral Agent and make it available at a place designated by the Secured
parties, or if one is duly appointed, the Collateral Agent which is, in the
Secured Parties’ or, if one is duly appointed, the Collateral Agent’s opinion,
reasonably convenient to the Secured Parties, or, if one is duly appointed,
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 Secured Parties, 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 Secured Parties,
or, if one is duly appointed, 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.

      

      
        

         

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

      

      
        

         

        (i) the
Requisite Holders, or, if one is duly appointed, 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 Requisite Holders or, if one is duly
appointed, the  Collateral Agent from, and agrees to hold the
Requisite Holders or, if one is duly appointed, 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 Requisite Holders’ or, the  Collateral
Agent’s (as the case may be)  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  Requisite Holders or, if one is duly appointed, the
Collateral Agent, the Debtor agrees to execute and deliver to the duly
appointed representative of the Requisite Holders or, if one is duly appointed,
the  Collateral Agent powers of attorney, in form and substance
satisfactory to the duly appointed representative of the Requisite Holders or,
if one is duly appointed, 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 duly
appointed representative of the Requisite Holders or, if one is duly appointed,
Collateral Agent.

      

      
        

         

         10.           No Waiver
by Secured Parties, etc. The Secured Parties or, if
one is duly appointed, 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 duly
appointed representative of the Requisite Holders or, if one is duly appointed,
Collateral Agent. No delay or omission on the part of the duly appointed
representative of the Requisite Holders or, if one is duly appointed, 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 duly appointed representative of the
Requisite Holders or, if one is duly appointed, 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
duly appointed representative of the Requisite Holders or, if one is duly
appointed, Collateral Agent reasonably deems expedient.

      

      
        

         

         
11.           Marshalling. The duly appointed
representative of the Requisite Holders or, if one is duly appointed, 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 duly appointed representative of the
Requisite Holders or, if one is duly appointed, 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 the Secured Parties’ or, if
one is duly appointed, 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 duly appointed representative of the Requisite Holders
or, if one is duly appointed, 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 and  under the
2008 and 2009 Notes , to be applied for the ratable benefit of the Secured
Parties and the holders of the 2008 Notes and the 2009 Notes;

      

      
        

         

        (c) Third, to
the payment of principal in respect of the Secured Obligations and under
the 2008 and 2009 Notes, to be applied for the ratable benefit of the Secured
Parties and the holders of the 2008 Notes and the 2009
Notes;

      

      
        

         

        (d) Fourth,
to the payment of all other Secured Obligations, if any, to be applied for the
ratable benefit of the Secured Parties and the holders of the 2008 Notes
and the 2009 Notes; 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 Secured Parties
to the extent of any deficiency between (a) the amount of the proceeds of the
Collateral received by the Secured Parties  hereunder and (b) the
aggregate amount of the Secured Obligations.

      

      
        

         

        13.  Limitations
on Duty of the Secured Parties or 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 Secured Parties or, if one is duly appointed, 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 Secured Parties of any payment relating
to any of the Collateral; nor shall the Secured Parties 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 Secured
Parties 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 Secured
Parties  or to which the duly appointed representative of the
Requisite Holders or, if one is duly appointed, Collateral Agent may be entitled at
any time or times.
The Secured Parties’ or, if one is duly
appointed, 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 Secured parties or ,if one is duly
appointed, the  Collateral Agent deals with similar property for its
own account.

      

      
        

         

        14. Expenses;
Indemnification. The
Debtor agrees to pay to the Secured Parties, or, if one is duly appointed, the
Collateral Agent on demand any and all reasonable expenses, including reasonable
attorneys’ fees and disbursements, incurred or paid by the Secured Parties, or,
if one is duly appointed, the Collateral Agent, in protecting or preserving the
Secured Parties’ 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
duly appointed representative of the Requisite Holders or, if one is duly
appointed, Collateral Agent  any and all expenses, including
attorneys’ fees and disbursements, reasonably incurred or paid by the Secured
Parties in enforcing the Secured Parties’ 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 Secured parties or, if one is duly appointed,
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 Secured Parties, or if one is
duly appointed, the Collateral Agent, in any manner arising out of or, directly
or indirectly, related to or connected with any reasonable and valid action
taken by the Requisite Holders or, if one is duly appointed, 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), duly appointed representative of the Requisite Holders or, if one
is duly appointed, 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 Secured Parties
hereunder, inure to the benefit of the Secured Parties, 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 Secured Parties
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.

      

      
        

         

        18. Further
Documents and Cooperation.  The Debtor and the
Secured Parties 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 Secured Parties 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, OR ITSELF 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 WELL 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 HE
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.

      

      
        
          
            --

          

           

        

        
           

          
            

          

        

        
           

        

      

      
         

        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:

      

      
        

         

        Name:

      

      
        

         

        Acknowledged
and Agreed:

      

      
        

         

        Secured
Parties:                                           [Contained in Omnibus Signature Pate
in Subscription Agreement]

      

      
        
          
            --

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        Schedule
I

      

      
        

         

        Intellectual
Property

         

        

      

      

      
        

         

        Patents/Registration
or Application
Numbers

      

      
        

         

        Registration
Number:

      

      
        

         

        5,766,662

      

      
        

         

        Filing
Date:

      

      
        

         

        11/28/1995

      

      
        

         

        Issue
Date:

      

      
        

         

        6/16/1998

      

      
        Title: 1

      

      
        Dietary
fiber gels for calorie

      

      
        

         

        reduced
foods and method for

      

      
        preparing
the same

      

      
        

         

        Country:

      

      
        USA

      

      
        

        
          	
                   
      

                	
                  Trademarks/Registration
      or Application
      Numbers

                

        

      

      
        

         

        Registration
Number:

      

      
        

         

        3,069,709

      

      
        Filing
Date:

      

      
        

         

        12/08/2003

      

      
        

         

        Registration
Date:

      

      
        

         

        03/21/2006

      

      
        Trademark:

      

      
        

         

        Z
TRIM

      

      
        Country:

      

      
        

         

        USA

      

      
        

         

        
          	
                   
      

                	
                  Copyrights/Registration
      or Application
      Numbers

                

        

      

      
            N/A

      

      

       

      

      

        

      

       

        1 Licensed
to Z Trim Holdings, Inc. from the United States Department of
Agriculture

      

      
        
          
            --

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        Registration
Number:

      

      
        

         

        EP 0 873
054

      

      
        Filing
Date:

      

      
        

         

        11/26/1996

      

      
        Issue
Date

      

      
        

         

        06/08/2005

      

      
        Title:

      

      
        Dietary
fiber gels for calorie

      

      
        reduced
foods and method for

      

      
        preparing
the same

      

      
        

         

        Countries:

      

      
        Switzerland,
France,

      

      
        

         

        Germany,
Great Britain and

      

      
        

         

        the
Netherlands

      

      
        

                                                                       Registration
Number:

      

      
        

         

                                                                            N/A

      

      
        Filing
Date:

      

      
        

         

        06/08/2004

      

      
        

         

        Registration
Date:

      

      
        varies by
country

      

      
        Trademark:

      

      
        Z TRIM®

      

      
        Country:

      

      
        Madrid,
Hungary, Singapore,

      

      
        

         

        Ireland,
Turkey, Denmark and

      

      
        Norway

      

      

       

      

      

      
        

         

        Registration
Number:

      

      
        PR
199800943

      

      
        Filing
Date:

      

      
        11/26/1996

      

      
        Issue
Date

      

      
        8/21/1998

      

      
        Title:

      

      
        Dietary
fiber gels for calorie

      

      
        reduced
foods and method for

      

      
        preparing
the same

      

      
        

         

        Country:

      

      
        

         

        Turkey

      

      
        

        Registration
Number:

      

      
        3,350,203

      

      
        Filing
Date:

      

      
        05/15/2006

      

      
        Registration
Date:

      

      
        12/04/2007

      

      
        Trademark:

      

      
        LIVE LIFE
BETTER

      

      
        Country:

      

      
        USA

      

      
        
          
            --

          

           

        

        
           

          
            

          

        

        
           

        

      

       

      
        Application
Number:

      

      
         

        11/844,878

      

      
         

        Filing
Date:

      

      
         

        1/17/2008

      

      
         

        Title:

      

      
        Amorphous
Insoluble

      

      
        Cellulosic
Fiber and Method

      

      
        For
Making Same

      

      
        

         

        Country:

      

      
        USA

      

      
        

         

        Application
Number:

      

      
        PCT/US05/25197

      

      
        Filing
Date:

      

      
        7/15/2005

      

      
        

         

        Title:

      

      
        Amorphous
Insoluble

      

      
        Cellulosic
Fiber and Method

      

      
        for
Making Same

      

      
        

         

        Countries:

      

      
        Brazil,
Mexico, Canada,

      

      
        European
Union, Japan and

      

      
        Australia

      

      
         

        Application
Number:

      

      
        11/491297

      

      
         

        Filing
Date:

      

      
        11/23/2006

         

      

      
        Title:
Emulsified Liquid Shortening

      

      
        Compositions
Comprising Dietary Fiber Gel, Water and

      

      
        Lipid

      

      
         

        Country:

      

      
        USA

      

      
        

         

        Application
Number:

      

      
        PCT/US03/36667

      

      
        Filing
Date:

      

      
        11/17/2003

      

      
        

         

        Title:

      

      
        Emulsified
Liquid Shortening

      

      
        Compositions
Comprising

      

      
        Dietary
Fiber Gel, Water and

      

      
        Lipid

      

      
        Country:

      

      
        European
Union

      

      
        

        Serial
Number:

      

      
        77,718,734

      

      
        Filing
Date:

      

      
        04/21/2009

      

      
        Registration
Date:

      

      
        Pending

      

      
        Trademark:

      

      
        NANOGUM

      

      
        Country:

      

      
        USA

      

      
        
          
            --

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        Schedule
II

      

      
        Locations
of Collateral

      

      
        1011
Campus Dr., Mundelein, Illinois 60060

      

      
        
          
            --

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        Annex
A

      

      
        Secured
Parties

      

      
        Brightline
Ventures I, LLC

      

      
        
          
            --

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        Exhibit
A

      

      
        

         

        FORM
OF PATENT SECURITY AGREEMENT

      

      
        

         

        THIS PATENT SECURITY AGREEMENT
(this “Agreement”), dated as of October 15, 2009, executed by Z TRIM
HOLDINGS, INC., an Illinois corporation (the “Grantor”), in favor of the Secured
Parties listed on Appendix A hereto  (the “Secured Parties” ).
Capitalized terms used in this Agreement shall have the meanings set forth in
the Security Agreement (as defined below) unless specifically defined
herein.

      

      
        

         

        WITNESSED:

      

      
        

         

        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 August 31, 2009
(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 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; and

      

      
        

         

        WHEREAS,  the
Grantor has previously entered into security, patent and
trademark  agreements with the holders of the 2009 Notes and the 2008
Notes (each as defined in the Security Agreement)with which the Note ranks pari
passu;

      

      
        

         

        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.

      

      
        

         

        “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 Secured Parties
in, and does hereby grant to 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 Secured Parties exercise 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 Secured Parties 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 Secured Parties and, if one is duly appointed, the
Collateral Agent, shall be terminated.

      

      
        

         

        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 Secured Parties 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 Secured Parties 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, duly appointed
representative of the Requisite Holders or, if one is duly
appointed,  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 Secured Parties, or 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 duly appointed
representative of the Requisite Holders or, if one is duly appointed, 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 Secured Parties 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 duly appointed representative of the Requisite Holders
or, if one is duly appointed, 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 duly appointed
representative of the Requisite Holders or, if one is duly
appointed,  the Collateral Agent (or such shorter time determined by
the duly appointed representative of the Requisite Holders or, if one is duly
appointed, Collateral Agent if waiting thirty days would diminish the Collateral
Agent’s security interest in or other rights in and to the Property), the duly
appointed representative of the Requisite Holders or, if one is duly appointed,
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
duly appointed representative of the Requisite Holders or, if one is duly
appointed, 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 duly appointed representative of
the Requisite Holders or, if one is duly appointed, 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 duly appointed representative of the Requisite
Holders or, if one is duly appointed, Collateral Agent, to the extent necessary
under the Security Agreement, on behalf of the Grantor.

      

      
        

         

        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--

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        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:

      

      
        Name:
Title:

         

        

      

      
        Signed,
sealed and delivered

      

      
        this 15th
day of October, 2009

      

      
        

         

        Notary
Public

      

      
        

         

        My
Commission expires:

      

      
        

         

        Witness

      

      
        

         

        Witness

      

      
        

         

        

      

      
        

         

        

      

      
        

         

        

      

      
        

         

        

      

      
        

         

        [Signature
Page to Patent Security Agreement]

      

      
        
          
            -A--

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        SCHEDULE
I

      

      
        

         

        to Patent
Security Agreement

      

      
        

         

        Item A.
Patents

      

      

       

      
        	
                
                  Issued Patents

                

              
	
                
                  *Country

                

              	
                
                  Registration No.

                

              	
                
                  Issue Date

                

              	
                
                  Title

                

              
	
                
                  USA

                

              	
                
                  5,766,662

                

              	
                
                  6/16/1998

                

              	
                
                  Dietary
      fiber gels for calorie reduced foods and method for preparing the
      same

                

              

      

      

       

      
        	
                
                  Pending Patent
      Applications

                

              
	
                
                  *Country

                

              	
                
                  Application No.

                

              	
                
                  Filing Date

                

              	
                
                  Title

                

              
	
                
                  USA

                

              	
                
                  1
      1/844,878

                

              	
                
                  1/17/2008

                

              	
                
                  Amorphous
      Insoluble Cellulosic Fiber and Method For Making
  Same

                

              
	
                
                  USA

                

              	
                
                  11/491,297

                

              	
                
                  1
      1/23/2006

                

              	
                
                  Emulsified
      Liquid Shortening Compositions Comprising Dietary Fiber Gel, Water and
      Lipid

                

              

      

      
        
          
            -A--

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        Exhibit B

        FORM
OF TRADEMARK SECURITY AGREEMENT

      

      
        

         

        THIS TRADEMARK SECURITY AGREEMENT
(this “Agreement”), dated as of October 15, 2009, executed by Z TRIM
HOLDINGS, INC., an Illinois corporation (the “Grantor”) in favor of the
Secured Parties. Capitalized terms used in this Agreement shall have the
meanings set forth in the Security Agreement (as defined below) unless
specifically defined herein.

      

      
        

         

        WITNESSED:

      

      
        

         

        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 August 31, 2009
(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 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; and

      

      
        

         

        WHEREAS,  the
Grantor has previously entered into security, patent and
trademark  agreements with the holders of the 2009 Notes and the 2008
Notes (each as defined in the Security Agreement)with which the Note ranks pari
passu;

      

      
        

         

        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.

      

      
        

         

        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 Secured Parties, and does hereby grant to 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 Secured Parties exercise the rights and remedies
accorded to them 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 Secured
Parties 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 Secured Parties
shall be terminated.

      

      
        

         

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

      

      
        

         

        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 Secured Parties  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 Secured Parties may, in accordance with the terms of the
Security Agreement, terminate their 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 Secured Parties
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  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  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.

      

      
        

         

        7. The
Grantor further agrees that (a) the Secured Parties 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 Secured Parties 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 Secured Parties (or such shorter
time determined by the Secured Parties if waiting thirty days would
diminish the Secured Parties’ security interest in or other rights in and to the
Property), the Secured Parties 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 Secured Parties for all reasonable expenses, including
attorneys’ fees incurred by the Secured Parties in protecting, defending and
maintaining the Property; For the purpose of permitting the Secured Parties
to fulfill its obligations set forth above, the Grantor hereby appoints
Secured Parties 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 Secured Parties, and the Secured Parties, 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--

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        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:                                         

      

      
        Name:                                         

      

      
        

         

        Title:                                        

      

      
        

         

        Signed,
sealed and delivered

      

      
        

         

        this
15th day
of October, 2009

      

      
        

         

        Notary
Public

      

      
        

         

        My
Commission expires:

      

      
        

         

        Witness

      

      
        

         

        Witness

      

      
        

         

        [Signature
Page to Trademark Security Agreement]

      

      
        
          
            -B--

          

           

        

        
           

          
            

          

        

        
           

        

      

      
        Schedule
I

      

      
        

         

        Trademarks

      

      

       

      
        	
                
                  Country

                

                 

              	
                
                  Trademark

                

                 

              	
                
                  Registration/Serial
      Number

                

                 

              	
                
                  Filing
      Date

                

                 

              	
                
                  Registration Date

                

              
	
                
                  USA

                

              	
                
                  Z
      TRIM

                

              	
                
                  3,069,709

                

              	
                
                  12/08/2003

                

              	
                
                  3/21/2006

                

              
	
                
                  USA

                

              	
                
                  LIVE
      LIFE BETTER

                

                
                   

                

              	
                
                  3,350,203

                

              	
                
                  5/15/2006

                

              	
                
                  12/04/2007

                

              
	
                
                  USA

                

              	
                
                  NANOGUM

                

              	
                
                  77,718,734

                

              	
                
                  4/21/2009

                

              	
                
                  Pending

                

              

      

      

      
        
          
            -B--

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}]]