Z Trim Holdings, Inc. (Amex: ZTM) entered into private placement subscription agreements pursuant to which the Company sold 14 units consisting of convertible notes and warrants, for an aggregate offering price of $1,400,000.
Each of the units consists of a $100,000 24-month senior secured promissory note convertible at the rate of $0.26 per share into 384,615 shares of Common Stock, $.00005 par value, bearing interest at the rate of 8% per annum, which interest is payable quarterly in Common Stock at the rate of $0.26 per share.
Investors of each Unit also received two five-year warrants, one to purchase 230,769 shares of Common Stock with an exercise price of $0.01 per share (the "$0.01 Warrants"), and the other to purchase 153,846 shares of Common Stock with an exercise price of $0.26 per share (the "$0.26 Warrants" and, together with the $0.01 Warrants, collectively the "Warrants").
The Company also entered into registration rights agreements in connection with the private placement pursuant to which the Company has agreed to file with the Securities and Exchange Commission a registration statement covering the resale of the Common Stock underlying the Notes and the Warrants.
The Company paid a placement agent a 13% cash commission in connection with the private placement. The placement agent also received expense reimbursement, a five-year warrant to purchase 2,000,000 shares of Common Stock with an exercise price of $0.01 per share, and a five-year warrant to purchase 96,154 shares of Common Stock for each Unit sold, with an exercise price of $0.26 per share. In addition, the placement agent's warrants carry registration rights that are the same as those afforded to investors in the private placement.
The Company determined that all of the securities sold and issued in the private placement the Company were exempt from registration under the Securities Act of 1933, as amended pursuant to Section 4(2) of the Act and Rule 506 of Regulation D promulgated under the Act. The Company based this determination on the non-public manner in which the Company offered the securities and on the representations of the persons purchasing such securities, which included, in pertinent part, that such persons the Company were "accredited investors" within the meaning of Rule 501 of Regulation D promulgated under the Act, and that such persons the Company were acquiring such securities for investment purposes for their own respective accounts and not as nominees or agents, and not with a view to resale or distribution, and that each such person understood such securities may not be sold or otherwise disposed of without registration under the Act or an applicable exemption therefrom. -- Z Trim Holdings, Inc.
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