8% CONVERTIBLE SENIOR SECURED NOTE DUE 24 Months from Issuance

THIS AMENDED AND RESTATED 8% CONVERTIBLE SENIOR SECURED NOTE IS GIVEN IN REPLACEMENT OF AN 8% CONVERTIBLE SENIOR SECURED NOTE DATED OCTOBER 15, 2009.  THE PREDECESSOR 8% CONVERTIBLE SENIOR SECURED NOTE, MARKED “EXCHANGED”, WILL BE RETURNED TO THE COMPANY UPON THE HOLDER’S RECEIPT OF THIS AMENDED AND RESTATED 8% CONVERTIBLE SENIOR SECURED NOTE.

THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.

Date: October 15, 2009                                                                                                                                                                                                                            $1,852,500

For value received, Z TRIM HOLDINGS, INC., an Illinois corporation (the “ Company ”),   hereby promises to pay to the order of Brightline Ventures   I, LLC, a  Delaware limited liability company  (together with its successors and permitted assigns, the “ Holder ”),   in accordance with the terms hereinafter provided, the principal amount of One Million Eight Hundred Fifty Two Thousand Five Hundred Dollars ($1,852,500) (the “ Principal Amount ”).  The Company is issuing this amended and restated convertible senior secured note (this “ Note ” and, collectively with all other notes issued in connection with the Offering Memorandum (as defined below), the “2009 Notes”)   to the Holder pursuant to the Subscription Agreement (the “ Subscription Agreement ”)   executed and delivered in connection with the Offering Memorandum (the “Private Offering”).  As used herein, the term “ Issuance Date ”   means October 15, 2009.  The Company previously issued a series of 8% convertible senior secured notes in 2008 (the “ 2008 Notes ”). This Note is one of a series of the 2009 Notes offered by the Company for up to a maximum principal amount of $5,500,000.  The 2008 Notes and the 2009 Notes are hereinafter collectively referred to as the “Company Notes”.

The Company hereby promises to pay to the order of the Holder the Principal Amount in United States Dollars in immediately available funds to the Holder at the address of the Holder as set forth in the Subscription  Agreement, or at such other place as the Holder may designate from time to time in writing to the Company, on 24 months from issuance (the “ Maturity Date ”) or such earlier date as the Holder elects, with interest to the Holder on the aggregate unconverted and then outstanding Principal Amount in accordance with the provisions hereof.  All interest payments under or pursuant to this Note shall be made in Common Shares (as defined below) pursuant to Section 1.1 hereof.

This Note is secured by a Security Agreement dated October 15, 2009(the “ Security Agreement ”)   among the Company and the holders of the 2009 Notes covering certain collateral (the “ Collateral ”),   all as more particularly described and provided therein, and is entitled to the benefits thereof.  As part of this transaction, the Holder is becoming a party to the Security Agreement and will be entitled to the same benefits thereof.  The Security Agreement, the Uniform Commercial Code (“ UCC ”) financing statements on form UCC-1 naming the Holder as a secured party which is to be filed in connection with the Security Agreement and any and all other documents executed and delivered by the Company to the Holder under which the Holder is granted Liens ( as defined in the Security Agreement) on assets of the Company are collectively referred to as the “ Security Documents .”

     ARTICLE I THE NOTE

Section 1.1                                 Interest .  Interest on the Principal Amount of this Note shall commence accruing on the Issuance Date and shall accrue daily at a rate of eight percent (8%) per annum (the “ Interest Rate ”) until payment in full of the Principal Amount and all accrued and unpaid interest and other amounts which may become due hereunder have been made.  Interest shall be computed on the basis of a 365-day year and actual days elapsed.  Accrued interest on the Principal Amount of this Note (the “ Interest Amount ”) shall either be payable to the Holder, on the Maturity Date or quarterly at the Holder’s option in shares of common stock of the Company, par value $0.0005 per share (the “ Common Shares ”).  The number of Common Shares to be issued to the Holder shall be equal to the result obtained by dividing (x) the Interest Amount by (y) the Conversion Price (as defined in Section 3.2(a) below).  Payment of the Interest Amount in Common Shares shall occur pursuant to Section 3.3.

Section 1.2                                 Ranking and Covenants .

(a)          Except as set forth on Schedule 1 attached hereto, no indebtedness of the Company or any subsidiary of the Company is senior to this Note in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Until this Note is fully paid and discharged in full, the Company shall not, and shall not permit any subsidiary of the Company to, directly or indirectly, incur any indebtedness for borrowed money (excluding accounts payable incurred in the ordinary course of business) unless such indebtedness is expressly subordinated to this Note pursuant to a written subordination agreement reasonably acceptable in form, scope and substance to the Holders of not less than a simple majority of the then outstanding aggregate principal of the 2009 Notes.  Notwithstanding the foregoing, the Company may issue, under the Company Notes, an aggregate combined maximum of indebtedness, including this Note, in the amount of $10,000,000.  The Company Notes rank pari passu with each other and shall be secured equally and ratably by Liens, on or with respect to any of the Company’s property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom and shall have the benefit, to the full extent that and with such priority as the obligations under the Company Notes.

(b)   Except for Permitted Liens (as defined in Section 6.14 below), until this Note is fully paid and discharged in full, the Company shall not, and shall not permit any subsidiary of the Company to, directly or indirectly, incur any Lien (as defined in Section 6.14 below) on or with respect to any of the Collateral now owned or hereafter acquired, or any interest therein or any income or profits therefrom, without the prior written consent of the Holders of not less than a simple majority of the then outstanding aggregate principal on the Company Notes.

(c)   Until this Note is fully paid and discharged in full, the Company shall not, and shall not permit any subsidiary of the Company to, directly or indirectly, without the prior written consent of the Holders of not less than the simple majority of the then outstanding aggregate principal amount of the Company Notes, redeem, purchase or otherwise acquire any of the Company’s capital stock or set aside any monies for such a redemption, purchase or other acquisition.

(d)   The Company shall perform any and all acts and execute any and all documents (including, without limitation, the execution, amendment or supplementation of any financing statement and continuation statement) for filing under the provisions of the UCC, and the rules and regulations thereunder, or any other statute, rule or regulation of any applicable jurisdiction which are necessary at the request of the Holder or its counsel in order to maintain in favor of the Holder of the Note, a valid and perfected Lien on and security interest in the Collateral.

Section 1.3                                   Payment on Non-Business Days . Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of Illinois, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the Interest Amount on such date.

Section 1.4                                   Transfers . This Note may not be sold, transferred or otherwise disposed of by the Holder to any Person without the express written consent of the Company, which consent shall not be unreasonably withheld.

Section 1.5                                   Replacement . Upon receipt of a duly executed and notarized written statement from the Holder with respect to the loss, theft or destruction of this Note (or any replacement hereof) and a standard indemnity reasonably satisfactory to the Company, or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Company shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note.  The Holder hereby unconditionally agrees to indemnify and hold harmless the Company against any claims, loss, liabilities, damages and expenses that may arise directly or indirectly on account of the actual or alleged loss, mutilation, theft or destruction of the original Note or the issuance of a new Note in exchange for said Note.

Section 2.1                                   Events of Default . The occurrence of any of the following events shall be an “ Event of Default ”   under this Note:

(a)   Any default in the payment of (i) the Principal Amount or (ii) Interest Amount on, or liquidated damages in respect of, any Note, in each case free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, solely in the case of a default under clause (ii) above, is not cured within five Trading Days;

(b)   the Company’s notice to the Holder, including by way of public announcement, at any time, of its inability to comply or its intention not to comply with proper requests for conversion of this Note into Common Shares; or

(c)   the Company shall fail for any reason to deliver certificates to a Holder prior to the fifth Trading Day after a Conversion Date pursuant to and in accordance with Section 3.3 or the Company shall provide notice to the Holder, including by way of public announcement, at any time, of its intention not to comply with the requests for conversion of any Note in accordance with the terms hereof; or

(d)   default shall be made in the performance or observance of (i) any covenant, condition or agreement contained in this Note or any of the other Transaction Documents (other than a breach by the Company of its obligations to deliver Common Shares to the Holder upon conversion which breach is addressed in clause (c) above) which failure is not cured within the earlier to occur of (A) five (5) Trading Days after the Holders of not less than 20% of the then outstanding aggregate principal amount of the 2009 Notes deliver written notice to the Company of the occurrence thereof or (B) ten (10) Trading Days after the Company shall become or should have become aware of such failure;

(e)   a default or event of default (subject to any grace or cure period provided for in the applicable agreement, document or instrument) shall occur under (i) any of the Transaction Documents other than the Notes, or (ii) any other material agreement, lease, document or instrument to which the Company or any subsidiary is bound, which default, solely in the case of a default under (ii) above, is not cured, within 10 Trading Days;

(f)   any representation or warranty made by the Company herein or in the Security Documents, the Registration Rights Agreement, or any other Transaction Document or other report, financial statement or certificate made or delivered to the Holder or other holder of Notes shall prove to have been false or incorrect or breached in a material respect on the date as of which made; or

(g)   the Company or any subsidiary shall (i)apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii)make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) (the “Bankruptcy Code”) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same, (vii) fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due, (viii) call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (ix) by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing, or (x) take any corporate or other action for the purpose of effecting any of the foregoing;

(h)           a proceeding or case shall be commenced in respect of the Company or any subsidiary, without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with its liquidation or dissolution or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of thirty (30) days or any order for relief shall be entered in an involuntary case under  the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic) against the Company or any subsidiary or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Company or any subsidiary and shall continue undismissed, or unstayed and in effect for a period of thirty (30) days;

(i)           the Company or any subsidiary shall default in any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company in an amount exceeding $50,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

(j)           the Common Shares shall not be eligible for quotation on or quoted for trading on a trading market and shall not again be eligible for and quoted or listed for trading thereon within five Trading Days;

(k)           the Company shall redeem or repurchase more than a de minimis number of its outstanding Common Shares or other equity securities of the Company (other than redemptions of Conversion Shares and repurchases of Common Shares or other equity securities of departing officers and directors of the Company; provided that such repurchases shall not exceed $50,000, in the aggregate, for all officers and directors during the term of this Note;

(l)           the effectiveness of the applicable Registration Statement required to be maintained effective pursuant to the terms of the Registration Rights Agreement lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable to the Holder for sale of such Holder’s Registrable Securities (as defined in the Registration Rights Agreement) in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period (other than days during an Allowed Delay (as defined in the Registration Rights Agreement);

(m)           any change in the composition or form of business association; or a material change in the ownership of the Company, without Holder’s prior consent;

(n)           if the Company ceases conducting its operations as currently in effect as of the date hereof;

(o)           the Company shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In within five Trading Days after notice therefore is delivered hereunder or shall fail to pay all amounts owed on account of an Event of Default within five days of the due date.

(p)           any Event of Default as defined in any of the Company Notes.

Section 2.2                                            Remedies Upon An Event of Default . If an Event of Default shall have occurred and shall be continuing and unless the Event of Default shall have been waived in writing by the Holders of not less than a simple majority of the then outstanding aggregate principal amount of the 2009 Notes, the Holder of this Note may at any time at its option:

(a)        demand that the principal amount of this Note then outstanding shall be converted into shares of Common Stock at the Conversion Price (as defined in Section 3.2(a) below) then in effect; or declare immediately due and payable the full Principal Amount of this Note, together with the Interest Amount and other amounts owing in respect thereof, in cash, which aggregate amount payable upon an Event of Default shall be equal to the Mandatory Repayment amount, defined below; provided, however, that upon the occurrence of an Event of Default described in paragraphs (g) and (h) of Section 2.1, the outstanding principal balance and accrued interest hereunder shall be automatically due and payable.  Commencing five (5) days after the occurrence of any Event of Default that results in the eventual acceleration of this Note, the Interest Rate shall accrue at a rate of 18% per annum, or such lower maximum amount of interest permitted to be charged under applicable law.  All Notes for which the full Mandatory Repayment amount hereunder shall have been paid in accordance herewith shall promptly be surrendered to or as directed by the Company.  The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.   Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a Note holder until such time, if any, as the full payment under this Section shall have been received by it.  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

(b)           exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this Note, the Security Agreement, or applicable law.

In connection with the Holder’s exercise of any of its remedies hereunder, the Company shall use its reasonable best efforts to cooperate with the Holder to the end that the Holder’s rights hereunder will be effectuated.

Section 3.1                                 Conversion .  At any time on or after the Issuance Date, at the request of the Holder (the “ Conversion Election ”), this Note shall be convertible, in whole or in part, into such number of fully paid and non-assessable Common Shares as is determined by dividing (x) the outstanding Principal Amount and the Interest Amount then accrued hereon by (y) the Conversion Price (as defined in Section 3.2(a) hereof) then in effect (the “ Conversion Rate ”); provided, however, that the Conversion Price, defined below, shall be subject to adjustment as described in Section 3.4 of this Note.  The Holder shall effect a Conversion Election by delivering to the Company the form of Notice of Conversion attached hereto as Exhibit B (a “ Notice of Conversion ”), specifying therein the principal amount of the Note to be converted and the date on which such conversion is to be effected (a “ Conversion Date ”).  If no Conversion Date is specified, in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is provided hereunder.  To effect Conversion Elections hereunder, the Holder shall not be required to physically surrender its Note to the Company unless the entire Principal Amount of this Note plus the Interest Amount thereon shall have been so converted.  Conversions hereunder shall have the effect of lowering the outstanding Principal Amount in an amount equal to the applicable conversion.  The Holder and the Company shall maintain records showing the Principal Amount converted and the date of such conversions.  The Company shall deliver any objection to any Notice of Conversion within three (3) Trading Days of receipt of such Notice of Conversion.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error.  The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted Principal Amount of this Note may be less than the amount stated on the face hereof.  However, at the Company’s request, the Holder shall surrender the Note to the Company within five (5) Trading Days following such request so that a new Note reflecting the correct Principal Amount may be issued to Holder.

Section 3.2       Conversion Price .

(a)      The term “ Conversion Price ”   shall mean $1.00, subject to adjustment under Section 3.4 hereof.  References herein to the Conversion Price mean the Conversion Price as from time to time adjusted pursuant to the provisions of Section 3.4 and in effect on the applicable date.

(b)        The term “ Conversion Shares ”   shall mean such Common Shares issuable upon conversion of this Note.

Section 3.3                                   Mechanics of Conversion .  Not later than five (5) Trading Days after each Conversion Date (the last day of each such period, a “ Delivery Date ”),   the Company or its designated transfer agent, as applicable, shall issue and deliver to the Depository Trust Company account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“ DWAC ”)   as specified in the Conversion Election, registered in the name of the Holder or its designee, for the number of Common Shares to which the Holder shall be entitled.  Notwithstanding the foregoing, in the alternative, not later than the Delivery Date, the Company shall deliver to the applicable Holder by express courier a certificate or certificates representing the number of Conversion Shares being acquired upon the conversion of this Note.  If, in the case of any Conversion Election such DWAC transfer or certificate or certificates are not delivered to or as directed by the applicable Holder by the Delivery Date, the Holder shall be entitled by written notice to the Company at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return this Note tendered for conversion, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the delivery of such Conversion Election.

Section 3.4                                   Adjustment of Conversion Price .

(a)           The Conversion Price shall be subject to adjustment from time to time as follows:

(i)   Adjustments for Stock Splits and Combinations . If the Company shall at any time or from time to time after the Issuance Date, effect a stock split of the outstanding Common Shares, the applicable Conversion Price in effect immediately prior to the stock split shall be proportionately decreased.  If the Company shall at any time or from time to time after the Issuance Date, combine the outstanding shares of Common Stock, the applicable Conversion Price in effect immediately prior to the combination shall be proportionately increased.  Any adjustments under this Section 3.4(a)(i) shall be effective at the close of business on the date the stock split or combination occurs.

(ii)   Adjustments for Certain Dividends and Distributions . If the Company shall at any time or from time to time after the Issuance Date make or issue or set a record date for the determination of holders of Common Shares entitled to receive a dividend or other distribution payable in Common Shares, then, and in