8-K

Form 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

Date of report (date of earliest event reported):

March 7, 2007

NaturalNano, Inc.

(Exact name of registrant as specified in its charter)

Nevada	000-49901	87-0646435
(State or other jurisdiction	(Commission File No.)	(I.R.S. Employer
of incorporation)		Identification No.)

15 Schoen Place

Pittsford, New York 14534

(Address of principal executive offices)

(585) 267-4850

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On March 7, 2007, we entered into a Loan and Security Agreement (the “Purchase Agreement”) with Platinum Partners Long Term Growth IV (“Platinum”), Longview Special Financing, Inc. (“Longview”) and Platinum Advisors LLC (the “Agent”), for its own account and as agent for the other investors.

Pursuant to the Purchase Agreement, we issued $3,250,000 face amount of 8% Senior Secured Promissory Notes (the “Notes”) to Platinum and Longview. The holders of the Notes may elect to convert the Notes at any time into shares of our common stock at a price of $0.22 per share (the “Conversion Price”). The Notes contain anti-dilution protection that will automatically adjust the Conversion Price should we issue equity or equity-linked securities at a price per common share below the Conversion Price to the price at which we issue such equity or equity-linked securities. Interest on the outstanding principal amount under the Notes is payable quarterly at rate of 8% per annum, payable at our option in cash or in shares of our common stock registered for resale under the Securities Act of 1933 (the “Securities Act”). If we elect to make an interest payment in common stock, the number of shares issuable by us will be based upon the 85% of the 20-day trailing volume weighted average price per share as reported on Bloomberg LP (the “VWAP”). Principal on the Notes is due and payable on March 7, 2009. If the closing price of our common stock on the principal market or exchange on which our stock is traded (currently, the Over-the-Counter Bulletin Board) is at least $1.00 for twenty consecutive trading days, we can compel conversion of the Notes at the Conversion Price.

Our obligations under the Notes are secured by first priority security interests in substantially all of our assets and substantially all of the assets of our wholly-owned subsidiary, NaturalNano Research, Inc. (“NN Research”). In connection with the grant of these security interests, on March 7, 2007, we entered into a Pledge Agreement (the “Pledge Agreement”) with the Agent and the other investors, pursuant to which we granted to the investors and the Agent a security interest in all of the outstanding shares of the common stock of NN Research. In connection with the grant of these security interests, on March 7, 2007, NN Research entered into Patent Security Agreement (the “Patent Security Agreement”) with the Agent and the other investors, pursuant to which NN Research granted to the investors and the Agent a security interest in all of NN Research’s patent interests.

As further consideration, on March 7, 2007 we issued to Platinum and Longview two series of warrants, for the purchase at any time on or before March 7, 2011, of an aggregate of 22,159,092 shares of our common stock. The first series of warrants (the “Series A Warrants”) covers the purchase of an aggregate of 11,079,546 shares of our common stock at an exercise price of $0.22 per share. The second series of warrants (the “Series B Warrants”) covers the purchase of an additional aggregate of 11,079,546 shares of our common stock at an exercise price of $0.33 per share. If the closing price of our common stock on the principal market or exchange on which our stock is traded (currently the Over-the-Counter Bulletin Board) is at least $0.75 for twenty consecutive trading days, we can compel exercise of the Series A Warrants. Each series of Warrants contain anti-dilution protection that will automatically adjust the exercise price of such series of Warrants should we issue equity or equity-linked securities at a price per common share below the exercise price of such series to the price at which we issue such equity or equity-linked securities.

On March 7, 2007, as consideration for due diligence services in connection with the Purchase Agreement, we paid to the Agent a cash fee of $97,500 and issued to that firm (i) a Note (identical in form to the Notes issued to the other investors) in the principal amount of $97,500, (ii) a Series A Warrant for the purchase of 332,387 shares of our common stock, (iii) Series B Warrants for the purchase of a total of 1,473,581 shares of our common stock, and (iv) a warrant (the “Series C Warrant”) for the purchase at any time on or before March 7, 2011 of 1,141,194 shares of our common stock at an exercise price of $0.22 per share.

On March 7, 2007, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Agent and the other investors, pursuant to which we agreed to register for resale under the Securities Act the common stock issuable upon the exercise of the Warrants, in payment of interest on, or upon conversion of, the Notes, or, at the option of the investors, in satisfaction of certain liquidated damages provisions in the Registration Rights Agreement.

In connection with the Purchase Agreement, on March 2 and 5, 2007, NN Research entered into Patent Assignment agreements (the “Patent Assignments”) with Technology Innovations, LLC (“TI”), our principal stockholder, pursuant to which TI assigned to NN Research all of its rights, title and interest in certain issued patents and pending patent applications, with respect to which TI had previously granted NN Research licenses. TI also agreed, in a letter to the Agent and the other investors dated March 7, 2007 (the “Lock-Up Letter”), that for a period of two years from the date of the Lock-Up Letter it will not (except as permitted under the Lock-Up Letter in certain limited circumstances) sell, transfer or otherwise dispose of any shares of our common stock or any securities convertible into or exchangeable or exercisable for shares of our common stock. TI further agreed, in a letter to the Agent and the other investors dated March 7, 2007 (the “Standstill Letter”), that it would not demand repayment by us or NN Research of any obligations for money borrowed except as permitted under Section 7.20 of the Purchase Agreement.

The Purchase Agreement is filed herewith as Exhibit 4.1; the form of the Notes is filed herewith as Exhibit 4.2; the forms of the Series A Warrants, the Series B Warrants and the Series C Warrant are filed herewith as Exhibits 4.3, 4.4 and 4.5, respectively; the Registration Rights Agreement is filed herewith as Exhibit 4.6; the Pledge Agreement is filed herewith as Exhibit 10.1; the Patent Security Agreement is filed herewith as Exhibit 10.2; the Patent Assignments are filed herewith as Exhibit 10.3; the Lock-Up Letter is filed herewith as Exhibit 10.4; and the Standstill Letter is filed herewith as Exhibit 10.5. The foregoing descriptions of the those agreements are qualified in their entirety by reference to such Exhibits.

Item 7.01.Regulation FD Disclosure

On March 8, 2007, we issued a press release announcing that we had entered into the Purchase Agreement, as reported in Item 1.01 above. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

Exhibit Number	Description of Exhibit
4.1	Loan and Security Agreement, dated March 7, 2007, by and among NaturalNano, Inc., NaturalNano Research, Inc., Platinum Advisors LLC, as Agent, and the Investors named therein
4.2	Form of 8% Senior Secured Promissory Notes due March 7, 2009 issued pursuant to the Loan and Security Agreement, dated March 7, 2007, by and among NaturalNano, Inc., NaturalNano Research, Inc., Platinum Advisors LLC, as Agent, and the Investors named therein
4.3	Form of Series A Common Stock Purchase Warrants issued pursuant to the Loan and Security Agreement, dated March 7, 2007, by and among NaturalNano, Inc., NaturalNano Research, Inc., Platinum Advisors LLC, as Agent, and the Investors named therein

4.4	Form of Series B Common Stock Purchase Warrants issued pursuant to the Loan and Security Agreement, dated March 7, 2007, by and among NaturalNano, Inc., NaturalNano Research, Inc., Platinum Advisors LLC, as Agent, and the Investors named therein
4.5	Form of Series C Common Stock Purchase Warrant issued to Platinum Advisors LLC pursuant to the Loan and Security Agreement, dated March 7, 2007, by and among NaturalNano, Inc., NaturalNano Research, Inc., Platinum Advisors LLC, as Agent, and the Investors named therein
4.6	Registration Rights Agreement, dated March 7, 2007, by and among NaturalNano, Inc., and the Investors named therein
10.1	Pledge Agreement, dated March 7, 2007, by and among NaturalNano, Inc., Platinum Advisors LLC, as Agent, and the Investors named therein
10.2	Patent Security Agreement, dated March 7, 2007, by and among NaturalNano, Inc., NaturalNano Research, Inc., Platinum Advisors LLC, as Agent, and the Investors named therein
10.3	Patent Assignments dated March 2, 2007 and March 5, 2007 by and between Technology Innovations, LLC and NaturalNano Research, Inc.
10.4	Letter from Technology Innovations, LLC to Platinum Advisors LLC, as Agent, and the Investors named therein (the “Lock-Up Letter”)
10.5	Letter from Technology Innovations, LLC to Platinum Advisors LLC, as Agent, and the Investors named therein (the “Standstill Letter”)
99.1	Press Release entitled “NaturalNano Closes $3.25 Million Deal - Will Use Proceeds to Develop Pleximer Product Line” issued by NaturalNano, Inc. on March 8, 2007

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NaturalNano, Inc.
Date: March 8, 2007	By:	/s/ Kathleen A. Browne
		Kathleen A. Browne
		Chief Financial Officer

EX-4.1

Exhibit 4.1

LOAN AND SECURITY AGREEMENT

THIS AGREEMENT made as of March 7, 2007 by and among the investors listed on Schedule 1 to this Agreement (collectively, the “Investors,” and each, individually, a “Investor”), Platinum Advisors LLC, a limited liability company, as agent for the Investors (the “Agent”) and NaturalNano, Inc., a Nevada corporation with its chief executive office, principal place of business and mailing address at 15 Schoen Place, Pittsford, New York 14534-2025 (“NaturalNano”), and NaturalNano Research, Inc., a Delaware corporation (“NN Research” and, together with NaturalNano, the “Borrower”). The obligations of NaturalNano and NN Research shall be joint and several.

Section 1.DEFINITIONS. As used herein:

1.1.4.99% Limitation has the meaning set forth in Section 2.4 of this Agreement.

1.2.Accounting Terms.Allaccountingtermsnotspecificallydefined herein shall be construed in accordance with generally accepted accounting principles in the United States and all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles.

1.3.Accountsmeans “Accounts” as defined in the Uniform Commercial Code.

1.4.Additional Collateral means (a) all “Securities Entitlements,” “InvestmentProperty,” “Financial Assets,” “Commercial Tort Claims” and “Documents” as those terms are defined in the Uniform Commercial Code as of the date hereof, whether now existing or hereafter acquired or arising, (b) all securities, bills of lading, dock warrants, dock receipts, warehouse receipts or orders for the delivery of goods, and any other documents which in the regular course of business or financing are treated as adequately evidencing that the persons in possession of them are entitled to receive, hold, and dispose of the goods they cover; (c) all motor vehicles, whether now owned or hereafter acquired by the Borrower, and all accessions and additions thereto, replacements therefor, and substitutions therefor; (d) all “General Intangibles” as that term is defined in the Uniform Commercial Code as of the date hereof, whether now owned or hereafter acquired, including, without limitation, Payment Intangibles and Software (as those terms are defined in the Uniform Commercial Code), all choses in action, causes of action, and all other intangible personal property of the Borrower, including, without limitation, corporate or other business records, inventions, designs, patents, patent applications, trademarks, servicemarks, tradenames, trade secrets, goodwill, copyrights, registrations, licenses, franchises, customer lists, tax refund claims, credit files, computer programs, printouts and other computer materials and records, guaranty claims, security interests or other property held by or granted to Borrower to secure payment of any obligation of any obligor of Borrower and any and all of the rights of Borrower of whatever nature under any and all contracts, agreements, or leases (whether of real or personal property) to which the Borrower is or may become a party, including without limitation all of the rights of Borrower to enforce all of the provisions of, and to obtain payments or other performance due under, all contracts, agreements, or leases; (e) all of Borrower’s rights (including rights as licensee and lessee) with respect to all patents, trademarks, copyrights and other intellectual property rights, know-how, technology, computer hardware and software and all rights with respect thereto including, any and all licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications, and any substitutions, replacements, additions or model conversions of any of the foregoing, and further including (i) computer and other electronic data processing hardware, including all integrated computer systems, central processing units, memory units, display terminals, printers, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories, peripheral devices and other related computer hardware, (ii) all Software and all software programs designed for use on the computers and electronic data processing hardware described in clause (i) above, including all operating system software, utilities and application programs in any form (source code and object code in magnetic tape, disk or hard copy format or any other listings whatsoever (iii) any firmware associated with any of the foregoing; and (iv) any documentation for hardware, Software and firmware described in clauses (i), (ii) and (iii) above, including flow charts, logic diagrams, manuals, specifications, training materials, charts and pseudo codes, and (f) all monies, securities and other property of the Borrower, and the proceeds thereof, now or hereafter held or received by or in transit to the Investor whether for safekeeping, custody, pledge, transmission, collection or otherwise, and also in and to any and all deposits, general or special, and credits of the Borrower with, and any and all claims of the Borrower against, the Bank now or at any time hereafter existing.

1.5.Additional Definitions. Unless otherwise specifically defined herein, all terms used in this Agreement and in all documents referred to herein and which have been defined in Articles 1, 2 or 9 of the Uniform Commercial Code, shall be interpreted and construed in light of the sections, the definitions, the “official comment,” and the definitional and substantive cross-references of the Uniform Commercial Code.

1.6.Affiliate means, with respect to any Person (the subject Person), a Person: (a) which directly or indirectly Controls, or is Controlled by, or is under common Control with, the subject Person; (2) which directly or indirectly beneficially owns or holds a majority of the outstanding shares of any class of voting stock of the subject Person; or (3) a majority of the outstanding shares of any class of the voting stock of which is directly or indirectly beneficially owned or held by the subject Person.

1.7.Agent’s Warrants shall have the meaning set forth in Section 7.18.

1.8.Agreement means this Loan and Security Agreement, as the same may hereafter be supplemented, modi-fied or amended.

1.9.Business Day means with respect to any date that is specified in this Agreement, a day other than a Saturday or Sunday or other day on which commercial banks in the City of New York are required or permitted to be closed during all or part of normal banking hours. Any payment which is due on a date which is not a Business Day shall be payable on the next day which is a Business Day.

1.10.Closing Date means the on which the Borrower issues the Notes and Warrants and receives the proceeds from the sale thereof.

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1.11.Collateralmeans all of Borrower’s personal property, now owned or hereafter acquired, including without limitation all Accounts, Letter-of-Credit Rights, Supporting Obligations, Electronic Chattel Paper, Tangible Chattel Paper and Instruments, as these terms are defined in the Uniform Commercial Code, together with all Inventory, Equipment,Patents, Trademarks and Additional Collateral and all products and proceeds of the foregoing including, without limitation, proceeds of any insurance policies insuring any of the foregoing, all as more particularly described on Schedule 1.10 to the Disclosure Schedule.

1.12.The Commission means the United States Securities and Exchange Commission.

1.13.Common Stock means shares of the NaturalNano’s common stock, par value $.001 per share.

1.14.Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

1.15.Disclosure Schedule shall have the meaning set forth in the introductory paragraph of Section 4 of this Agreement.

1.16.Equipmentmeans all Equipment, as that term is defined in the Uniform Commercial Code as of the date hereof, of Borrower, whether now owned or hereafter acquired, and including, without limitation, machinery, furniture, furnishings, and fixtures, and any and all goods used or bought for use in or being used or for use in the conduct of Borrower’s business and all goods used or bought for use in Borrower’s business which are not included within the definition of Inventory, and all accessions and additions thereto, replacements therefor, and substitutions therefor, supplies and motor vehicles, now owned and hereafter acquired, present and future, by the Borrower of whatsoever name, nature, kind or description, wherever located, and all additions and accessions thereto and replacements or substitutions therefor, and all pro-ceeds thereof and all proceeds of any insurance thereon.

1.17.Escrow Agreement means the escrow agreement among the Borrower, the Investors, the Agent and Sichenzia Ross Friedman Ference LLP, as escrow agent.

1.18.The Exchange Act means the Securities Exchange Act of 1934, as amended.

1.19.Exempt Issuance means the issuance of (a) shares of Common Stock or options to employees, officers, directors of and consultants (other than consultants whose services relate to the raising of funds) the Borrower pursuant to the NaturalNano’s outstanding stock option or long-term incentive plans or as otherwise provided in Section 6.10 of this Agreement, (b) securities upon the exercise or conversion of the Securities issued hereunder, in payment of principal or interest on the Notes, and pursuant to the Registration Rights Agreement, (c) any other options, warrants or convertible securities which are outstanding on the Closing Date after completion of the Closing and set forth in Schedule 4.3.1 to the Disclosure Schedule, (d) securities issued pursuant to acquisition, licensing agreements, or other strategic transactions, provided any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company (including, without limitation, a company engaged primarily in research and development) in a business which NaturalNano’s board of directors believes is beneficial to the Borrower and in which the Borrower receives benefits in addition to the investment of funds, but shall not include a transaction in which NaturalNano is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. For purposes of the parenthetical clause in clause (a), an investor relations firm that is not involved in fund raising is not deemed to be consultant whose services are related to the raising of funds.

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1.20.Governmental Entity means a court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency.

1.21.Inventory means all “Inventory” as that term is defined in the Uniform Commercial Code as of the date hereof, including, without limitation, any and all goods, merchandise or other personal property, wherever located and whether or not in transit, now owned or hereafter acquired by the Borrower, which is or may at any time be held for sale or lease, or furnished or to be furnished under any contract of service or held as raw materials, work in process, supplies or materials used or consumed in the Borrower’s business, and all such property the sale or other disposition of which has given rise to Accounts, Chattel Paper, Documents, or Instruments and which has been returned to or repossessed or stopped in transit by the Borrower.

1.22.Knowledge means the actual knowledge of any officer or director of Borrower or such knowledge which the chief executive officer, chief financial officer and chief technical officer would have in the diligent conduct of the Borrower’s business.

1.23.Material Adverse Change means any adverse change in the business, operations, properties, including Patents, Trademarks and other intellectual property rights, or financial condition or prospects of Borrower.

1.24.Material Adverse Effect means any adverse effect on the business, operations, properties, including Patents, Trademarks and other intellectual property rights, or financial condition or prospects of Borrower that is material and adverse to Borrower and its subsidiaries and affiliates, taken as a whole and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of Borrower to perform any of its material obligations under this Agreement, the Note, the Supplemental Agreements, or the Registration Rights Agreement or to perform its obligations under any other material agreement to which Borrower is a party.

1.25.Notes mean, collectively, the Borrower’s 8% Senior Secured Convertible Notes as defined in Section 2 of this Agreement, in the aggregate principal amount of $3,347,500. The Notes shall be in substantially the form of Exhibit A to this Agreement.

1.26.Obligations mean all loans, advances, debts, liabili-ties, obligations, covenants and duties owing by the Bor-rower to the Investors and/or the Agent of every kind and description (whether or not evidenced by any note or other instrument and whether or not for the payment of money), direct or in-direct, absolute or contingent, due or to become due, now existing or hereafter arising, whether or not such obliga-tions are related to the transaction described in this Agreement and the Transaction Documents, by class, or kind, or whether or not contem-plated by the parties at the time of the granting of this security interest, including without limitation, all interest, fees, charges, expenses and attorneys’ fees chargeable to the Borrower or incurred by the Investors or the Agent in connection with the Notes and the transactions contemplated by the Transaction Documents or otherwise.

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1.27.Patents mean all of the Borrower’s right, title and interest, present and future, in and to (a) all letters patent of the United States or any other country, all right, title and interest therein and thereto, and all registrations and recordings thereof, including without limitation applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States and State thereof or any other country or any political subdivision thereof, all whether now owned or hereafter acquired by the Borrower; and (b) all reissues, continuations, continuations-in-part or extensions thereof and all li-censes thereof; and all proceeds of the foregoing and all proceeds of any insurance on the foregoing.

1.28.Person means an individual, partnership, corporation, business trust, joint stock Borrower, trust, unincorporated association, joint venture, governmental authority, limited liability Borrower, or other entity of whatever nature.

1.29.Pledge Agreement means the agreement between the Investors, the Agent and NaturalNano pursuant to which it pledges the stock of NN Research. The Pledge Agreement shall be in substantially the form of Exhibit B to this Agreement.

1.30.Purchase Price means the purchase price for the Notes and Warrants, which is $3,250,000.

1.31.Registration Rights Agreement means the registration rights agreement among NaturalNano and the Investors. The Registration Rights Agreement shall be in substantially the form of Exhibit C to this Agreement.

1.32.Requisite Investors means holders of Notes representing, in the aggregate, a majority of then-outstanding principal amount of the Notes.

1.33.The Securities Act means the Securities Act of 1933, as amended.

1.34.Subsidiary means any Person which is either (a) controlled by the Borrower or (b) in which the Borrower and its other Subsidiaries own at least 40% of the equity or have at least 40% of the voting power.

1.35.Supplemental Agreements mean any and all agreements, instruments, documents, security agreements, mortgages, financing statements, and supplements thereto granting or intending to grant to the Investor any lien, security inter-est, pledge, assignment or indemnification to secure the Obligations, or entered into between the Borrower in favor of, or with, and the Investor, at any time, for any purpose including, without limitation, this Agreement and the Note.

1.36.Securities means the Notes and Warrants.

1.37.TI means Technology Innovations, Inc.

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1.38.TI Patents means the patents and patent applications relating to all intellectual property rights that are owned by TI and are licensed to NaturalNano or NN Research or are otherwise usable in their respective businesses.

1.39.Trademarks mean all of the Borrower’s right, title and interest, present and future, in and to (a) all trademarks, trade names, trade styles, service marks, prints and labels on which said trademarks, trade names, trade styles and service marks have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all right, title and interest therein and thereto, and all registrations and recordings thereof, including without limitation applications, registrations and recordings 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, all whether now owned or hereafter acquired by the Borrower; (b) all reissues, ex-tensions or renewals thereof and all licenses thereof; and (c) the goodwill of the business symbolized by each of the Trademarks, and all customer lists and other records of the Borrower relating to the distribution of products bearing the Trademarks; and all proceeds of the foregoing and all proceeds of any insurance on the foregoing.

1.40.Transaction Documents means this Agreement, the Securities, the Registration Rights Agreement, the Escrow Agreement, the Pledge Agreement and the other Supplemental Agreements, the UCC-1 financing statements, the collateral assignment of Patents and Trademarks or other instrument relating to the perfection of a security interest in Patents and Trademarks, and all other instruments, documents, certificates and agreements executed in connection with the transactions contemplated by this Agreement.

1.41.Warrants mean the common stock purchase warrants issued by NaturalNano on the Closing Date to the Investors pursuant to Section 2 of this Agreement. The Warrants shall be in substantially the form of Exhibits D-1 and D-2 to this Agreement.

Section 2.ISSUANCE OF SECURITIES.

2.1.Issuance of Securities. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with applicable law, the Borrower agrees to sell to the Investors, and the Investors agrees to purchase from the Borrower, on the Closing Date (i) Notes in the principal amount of $3,347,500 and (ii) Warrants to purchase a total of 22,823,866 shares of Common Stock, of which Warrants to purchase 11,411,933 shares of Common Stock will have an exercise price of $.22 per share, and Warrants to purchase 11,411,933 shares of Common Stock will have an exercise price of $.33 per share. On the Closing Date, the Borrower shall issue to the Agent, the Agent’s Warrants pursuant to Section 7.18 of this Agreement.

2.2.Payment of Purchase Price. The Purchase Price shall be paid by the Investors to the Borrower on the Closing Date by a wire transfer or check in the amount of the Purchase Price into escrow to be held by the escrow agent pursuant to the terms of the Escrow Agreement.

2.3.Delivery of Securities. Borrower shall cause the Notes and Warrants to be issued to the Investors upon the release of the Purchase Price to the Borrower by the escrow agent pursuant to the terms of the Escrow Agreement.

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2.4.Limitation on Right to Convert or Exercise Securities. Notwithstanding any other provision of this Agreement, except as expressly provided in the Note or the Warrants, no Investor or other holder of any Note or Warrant shall be entitled to convert the Note into shares of Common Stock or to exercise the Warrant to the extent that such conversion or exercise would result in beneficial ownership by the Investor or other holder and its Affiliates of more than 4.99% of the then outstanding number of shares of Common Stock on such date. For the purposes of this Agreement beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act, and Regulation 13d-3 thereunder. The limitation set forth in this Section 2.4 is referred to as the “4.99% Limitation.”

Section 3.COLLATERAL AND SECURITY INTEREST.

3.1.Security Interest. As security for payment and performance of the Obligations, the Borrower hereby assigns and grants to the Investors and the Agent a continuing security interest in the Collateral. The Investor shall retain its security interest in all Collateral, eligible and ineligible, until all Obligations have been fully satisfied. In the event that, for any reason after payment and satisfaction of all Obligations in full, the Investors or any Investor shall be required to return to the Borrower any amounts received by them or it in respect of the Obligations, the Borrower shall remain liable for the amount paid over to Borrower, and such amount, together with interest at the default rate of interest provided in the Notes, shall remain as an Obligation and the security interest shall reattach to the Collateral.

3.2.Collection of Accounts. Upon an Event of Default, the Agent, on behalf of the Investors, or its designee may notify customers or account debtors that Accounts have been assigned to the Investor or of the Investor’s security interest therein and collect them directly. All such payments will be placed by the Agent into a cash collateral account and, until paid to the Investors pursuant to this Agreement, shall be held by the Agent as collateral for payment and/or performance of the Borrower’s Obligations to the Investors.

3.3.Returns and Credits. Any merchandise which is returned by an account debtor or otherwise recovered shall remain part of the Investors’ security. The Borrower shall notify the Investor promptly of all returns and re-coveries and, upon an Event of Default, deliver at Agent’s request, the merchandise to the Agent. The Borrower shall also notify the Agent promptly of all disputes and claims and settle or adjust them at no expense to the Agent or the Investors, but no discount, credit or allowance (other than in the ordinary course of the Borrower’s busi-ness) shall be granted to any customer or account debtor, and no returns of merchandise (other than in the ordinary course of the Borrower’s business) shall be accepted by the Borrower without the consent of the Agent. The Agent may, after an Event of Default, settle or adjust disputes and claims directly with customers or account debtors for amounts and upon terms which the Agent considers advisable, and in all cases the Agent, on behalf of the Investors, will credit the Borrower’s account with only the net amounts received by the Agent in payment of Accounts.

3.4.Further Assurance. Upon the reasonable request of the Agent or any Investor, the Borrower shall perform all other steps reasonably requested by the Agent or the Investor to create and maintain in the Investor’s favor a valid first priority security interest, assignment or lien in, of or on all Accounts and all other security held by or for the Investor.

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3.5.Power of Attorney. The Borrower appoints the Agent, or any person whom the Agent may designate, as its attorney, with power, after an Event of Default: to endorse the Borrower’s name on any checks, notes, acceptances, money orders, drafts or other forms of payment or security that may come into any Investor’s or the Agent’s possession; to sign the Borrower’s name on any invoice or bill of lading relating to any Accounts, on notices of assignment, financing statements, and other public records, on verifi-cations of accounts and on notices to customers; to notify the post office authorities to change the address for de-livery of the Borrower’s mail to an address designated by the Agent; to send requests for verification of Accounts to customers or account debtors; and to do all things necessary to carry out this Agreement. The Borrower ratifies and approves all acts of the attorney. Neither any Investor nor the Agent nor the attorney will be liable for any acts or omissions nor for any error of judgment or mistake of fact or law. This power, being coupled with an interest, is irrevocable so long as any Accounts assigned to the Investors or in which the Investors have a security interest remain unpaid or until the Obligations have been fully satisfied. The Agent, on behalf of the Investors, or the Investors may file one or more financing statement disclosing the Investors’ security interest without the Borrower’s signature appearing thereon.

3.6.Possession of Collateral. Upon an Event of Default, the Agent, on behalf of the Investors, will have the right: (a) to take physical possession of the Collateral and to maintain such possession on the Borrower’s premises; and/or (b) to remove the Collateral or any part thereof to such other places as the Investor may desire; and/or (c) without removal, to render the Equipment unusable and to dispose of the Collateral on the Borrower’s premises. Upon an Event of Default, the Borrower shall, upon the Investor’s demand, assemble the Collateral and make it available to the Investor at a place reasonably convenient to the Investor.

3.7.Location of Collateral. The Collateral is and will be owned by the Borrower, free of all other liens and encumbrances (except as set forth in Schedule 3.7 to the Disclosure Schedule), and shall be kept by the Borrower at those locations listed in Schedule 3.7 to the Disclosure Schedule and the Borrower will not (without the Investors’ prior written approval) remove the Collateral therefrom, except for the purposes of sale in the regular course of business.

3.8.Limitation on Disposition of Collateral. The Borrower will not sell, exchange or otherwise dispose of the Collateral, other than Inventory in the ordinary course of business, or any part thereof, or any interest therein without the express written authorization of the Agent; in the event of the sale, exchange or other disposition of the Collateral or any part thereof or any interest therein (and no such sale, exchange or other disposition is hereby otherwise authorized or consented to), the security interest of the Investors shall nevertheless continue in said Collateral (including all proceeds, cash and non-cash) notwithstanding said sale, exchange or other disposition; all of said proceeds shall remain Collateral hereunder and shall be transferred and paid over to the Investor immediately following said sale, exchange or other disposition, and shall be applied at the option of the Investor to the payment of the Obligations; and the receipt by the Investor of all or any of said proceeds shall not be deemed or construed to be an authorization or consent of the Investor to such sale, exchange or other disposition of said Collateral. Any license of Borrower’s patents and other intellectual property rights with a non-affiliated party negotiated on an arms-length basis shall not be deemed a disposition of such patents or other intellectual property rights, it being understood and agreed that the Investors’ security interest shall attach to Borrower’s rights under such license.

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3.9.Further Assurances Relating to Inventory. The Borrower shall perform any and all steps reasonably requested by the Investors or the Agent to perfect the Investors’ security interest in the Inventory, such as leasing warehouses to the Investors or the Investors’ designee, placing and maintaining signs, appointing custodians, executing and filing financing or continuation statements in form and substance satisfactory to the Investors or the Agent, maintaining stock records and transferring Inventory to warehouses. If any Inventory is in the possession or control of any of the Borrower’s agents or processors, the Borrower shall notify such agents or processors of the Investors’ security interest therein, and, upon request, instruct them to hold all such Inventory for the Investors’ account and subject to the instructions of the Investors or the Agent. A physical listing of all Inventory, wherever located, shall be taken by the Borrower whenever reasonably requested by the Agent, and a copy of each such physical listing shall be supplied to each Investor. The Investors and the Agent may examine and inspect the Inventory at any time during normal business hours upon reasonable prior notice.

3.10.Further Assurances Relating to Intellectual Property Rights. The Borrower shall file such instruments and documents as shall be necessary to insure that any Patents and Trademarks which may be owned by Borrower or any Subsidiary are subject to the security interest granted by this Agreement. The Borrower shall not take any action which would have an adverse effect upon the ability of the Investors to maintain and enforce their security interest in license agreements for which Borrower is the licensee.

3.11.Discharge of Liens. The Investors may, at their option, discharge any taxes, liens, security interests or other encumbrances at any time levied or placed on the Collateral, and the Investors may pay insurance premiums or procure insurance and otherwise pay for the maintenance and preservation of the Collateral and the Borrower will reimburse the Investors on demand for any payment made or expense incurred by the Investor pursuant to the foregoing authority, with interest at the highest rate provided in this Agreement.

3.12.Existence, Properties, Insurance. The Borrower will at all times maintain, preserve and protect all franchises, patents, and trade names and preserve all the remainder of its property used or useful in the conduct of its business and keep the same in good condition and repair (normal wear and tear and obsolescence excepted), and from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements, betterments and improvements thereto, and will pay or cause to be paid, except when the same may be contested in good faith, all rent due on premises where any property is held or may be held, so that the business carried on in connection therewith may be continuously conducted. The Borrower will have and maintain insurance at all times with respect to all Collateral against risks of fire (including so-called extended coverage), theft and such risks as any Investor may require containing such terms, in such form, and for such periods, and written by such companies as may be satisfactory to the Investors, such insurance to be payable to the Investors and the Borrower as their interests may appear; each policy of liability insurance shall name each Investor and the Agent as an additional insured; each policy of property casualty and business interruption insurance shall have a loss payee endorsement providing:

3.12.1.That loss or damage, if any under the policy, shall be payable to the Agent, as agent for the Investors, as mortgagee and/or secured party, as its interests may appear;

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3.12.2.That the insurance as to the interest of the Investors shall not be invalidated by any act or neglect of the insured or owner of the property described in said policy, nor by any foreclosure, or other proceeding, nor by any change in the title of ownership of said property, nor by the occupation of the premises where the property is located for purposes more hazardous than are permitted by said policy;

3.12.3.That, if the policy is canceled at any time by the insurance carrier, in such case the policy shall continue in force for the benefit of the Investors for not less than thirty (30) days after written notice of cancellation to the Investors from the insurance carrier; and

3.12.4.That the policy will not be reduced or canceled at the request of the insured nor will said loss payee endorsement be amended or deleted without thirty (30) days’ prior written notice to the Investors from the insurance carrier.

3.13.Certificate of Insurance. The Borrower will furnish the Investors and the Agent with certificates or other evidence satisfactory to the Investors of compliance with the foregoing insurance provisions, and upon an Event of Default the Agent may act as attorney for the Borrower in obtaining, adjusting, settling, and canceling such insurance and receiving and endorsing any drafts. The Borrower hereby assigns to the Investors any and all monies which may become due and payable under any policies of property casualty insurance insuring the Collateral and business interruption insurance, including return of unearned premiums, and hereby directs any insurance Borrower issuing any such policy to make payment directly to the Investors and authorizes the Agent, on behalf of the Investors, at its option: (a) to apply such monies in payment on account of any of the Obligations, whether or not due, and remit any surplus to the Borrower; or (b) to return said funds to the Borrower for the purpose of replacement of the Collateral. The Borrower will also at all times maintain necessary workmen’s compensation insurance and such other insurance as may be required by law or as may be reasonably required by the Investors.

3.14.Setoff.Borrower hereby grants to the Investors a lien, security interest and a right of setoff as security for all of the Obligations, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of any Investor or the Agent or any entity under the control of Investor or the Agent , or in transit to any of them. At any time after the occurrence of an Event of Default, without demand or notice, Investors may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other Collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE INVESTOR TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. The Investors shall not be required to marshal any present or future security for, or guarantees of, the Obligations or to resort to any such security or guarantee in any particular order and the Borrower waives to the fullest extent that it lawfully can, (a) any right it might have to require the Investors to pursue any particular remedy before proceeding against the Investor and (b) any right to the benefit of, or to direct the application of the proceeds of any Collateral until the Obligations are paid in full.

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3.15.Agreements of the Borrower with Respect to the Collateral. Borrower agrees as follows with respect to the Collateral:

3.15.1.Subject to the provisions of this Section 3.15, as long as no event of default shall exist and be continuing, Borrower may receive and retain the proceeds of any Accounts, without any obligations to pay any such amounts to the Investors as a payment of Obligations, and the Investors shall have no right to contact or notify in any manner any Account Debtor directly; provided, however, that the Investors shall have the right to obtain verification of Accounts Receivable and may, through a third party designated by the Investors and reasonably acceptable to Borrower, communicate with Account Debtor to confirm the amount of the receivable, and the Borrower shall bear the cost of such verification. Borrower hereby agrees, at its own expense, to endeavor to collect, as and when due, all amounts due under the Accounts, including the taking of such action with respect to such collection as the Investors may reasonably request or, in the absence of such request, as Borrower shall deem advisable.

3.15.2.Borrower shall establish a special account (the “Special Account”) at the Bank or at a New York City bank reasonably acceptable to the Investors, in which Borrower shall deposit or have deposited, in a manner and in accordance with a procedure acceptable to the Investors, as security for payment of the Obligations, all cash, checks, drafts, wire transfers and other instruments for the payment of money which may be received by Borrower at any time in full or partial payment or otherwise as proceeds of any of the Accounts. Such amounts or items which may be received by Borrower and any amounts or items deposited in the Special Account shall not be commingled with any other of Borrower’s funds or property, but will be held separate and apart from Borrower’s other funds and property. Except as provided in Section 3.15.3 of this Agreement, Borrower may administer the funds deposited in the Special Account and may withdraw and utilize such funds as required in the course of its business. Borrower shall provide the Investors and the Agent with the account number, branch, bank and bank officer in charge with respect to the Special Account and shall advise the Bank in writing that, upon receipt by the Bank of notice from the Investors or the Agent as contemplated by said Section 3.15.3, the Investors shall Lender, have the rights with respect to the Special Account as are set forth in said Section 3.15.3.

3.15.3.The Investors may, at any time when any Obligations are outstanding, if an Event of Default shall have occurred, require Borrower to give the Investors control of the Collateral.

(a)The Investors’ control of the Accounts shall include, but not be limited to, the Investors’ right, at Borrower’s cost and expense, to (i) assume control, to the exclusion of Borrower, of the Special Account; (ii) to establish one or more lockbox accounts at one or more banks or trust companies designated by the Investors under which the Investors would exercise exclusive control over withdrawals from and charges against such accounts, to the exclusion of Borrower; (iii) to notify Account Debtor and instruct them to make all payments due Borrower to the lockbox account designated by the Investors, and (iv) to take such action as the Investors deem appropriate, including the institution of collection proceedings and litigation, against any delinquent Account Debtor, in Borrower’s name and/or Investors’ own names, as the Investors shall deem appropriate, and to sell any such Collateral as hereinafter provided.

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(b)The Investors’ control of the Collateral other than Accounts shall include, but not be limited to, the Investors’ or the Agent’s right, at Borrower’s cost and expense, (i) to enter upon any premises on which any of the Collateral may be located and, without resistance or interference by Borrower, take possession of the Collateral, (ii) to dispose of any part or all of the Collateral on any premises of Borrower, as hereafter provided, and to dispose of any Collateral consisting of intellectual property, including Patents and Trademarks, in such manner as the Investors or the Agent shall deem reasonable, (iii) to require Borrower to assemble and make available to the Investors or the Agent any part or all of the Collateral at any place and time designated by the Investors and reasonably convenient to both parties, it being agreed that a location in the New York City Metropolitan Area is reasonably convenient to Borrower, (iv) to remove any or all of the Collateral from any premises on which the same may be located, for the purpose of effecting sale or other disposition thereof or for any other purpose, and (v) to take such action as Investors deem appropriate, including the sale, lease, rental or other disposition of any such Collateral as hereinafter provided.

(c)Borrower will take such action as the Investors may request in order to assist the Investors in exercising its rights under this Section 3.15.3, and the Investors, the Agent or their designees may take such action, in the name and on behalf of Borrower, as they deem necessary in order to enable them to exercise their rights under this Section 3.15.3. In the event that Borrower shall receive any cash, checks, drafts, wire transfers and other instruments for the payment of money in full or partial payment or otherwise as proceeds of any of the Collateral, Borrower shall immediately cause such amounts and items to be deposited in a lockbox account designated by the Investors or the Agent. In the event that Borrower shall obtain possession, by return, repossession or otherwise, of any goods the sale or lease of which shall have given rise to any Accounts, Borrower will, not later than three days after such items shall have come into Borrower’s possession, pay to the lockbox account designated by the Investors, the unpaid purchase price or lease rental of such goods.

(d)In the event that, pursuant to Section 3.15.3(a) or (b) of this Agreement, the Agent or the Investors assume control of the Accounts, then the Agent shall apply the proceeds from the Accounts to a reduction of the Obligations in such order as the Agent shall, in its sole discretion, determine, including the payment of the expenses incurred in collection of Accounts or any other Collateral. Any excess shall be paid over to Borrower. The Agent is hereby authorized to endorse, in the name of Borrower, any item, howsoever received by the Investors or the Agent representing any payment on or other proceeds of any of the Collateral. The proceeds of the Accounts shall be applied to the reduction of the Obligations in the manner hereinbefore set forth on the Business Day following the date on which the Investors receive the cash from the Accounts, which day shall be, with respect to a check delivered in respect of an Account, the day on which the lockbox bank can advise the Agent that the check has cleared.

(e)Upon the occurrence of any Event of Default and at any time thereafter as long as any Obligations are outstanding, the Investors may, without notice to (except as set forth in this Section 3.15) or demand upon Borrower, declare any part or all of the Obligations immediately due and payable, and the Investors shall have the following rights and remedies (to the extent permitted by applicable law) in addition to all other rights and remedies of a secured party under the UCC, all such rights and remedies being cumulative, not exclusive, and enforceable alternatively, successively or concurrently:

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(i)The Agent may, at any time and from time to time, with or without judicial process or the aid and the assistance of others, sell, resell, lease, assign and deliver, grant options for or otherwise dispose of any or all of the Collateral in its then condition or following any commercially reasonable preparation or processing, at public or private sale or proceedings, or otherwise, by one or more contracts, in one or more parcels, at the same or different times, with or without having the Collateral at the place of sale or other disposition, for cash and/or credit, upon such terms, at such place(s) and time(s) and to such persons, firms or corporations as the Investors deem best, all without demand for performance or any notice or advertisement whatsoever except that, where an applicable statute requires reasonable notice of sale or other disposition, Borrower hereby agrees that the sending of five (5) days’ notice, given in the manner provided in Section 11.4 of this Agreement (other than by telecopier), to the address of Borrower set forth in this Agreement, of the place and time of any public sale or of the time after which any private sale or other intended disposition is to be made, shall be deemed reasonable notice thereof. If any of the Collateral is sold by the Investors upon credit or for future delivery, the Investors shall not be liable for the failure of the purchaser to pay for same, and in the event of such failure, the Investors may resell or otherwise dispose of such Collateral. The Agent or any Investor may buy any part or all of the Collateral at any public or private sale and in each case make payment therefor by any means, whether by credit against the Obligations or otherwise; the Investors may apply the cash proceeds actually received from any sale or other disposition to the costs and expenses in connection therewith, including the expenses of retaking, holding, preparing for sale, selling or otherwise disposing of the Collateral, to reasonable attorneys’ fees, to legal and travel expenses, premiums on bonds and undertakings, fees of custodians, sheriffs, marshals and auctioneers and others, and all other expenses which may be incurred by the Investors in attempting to collect the Obligations or in otherwise exercising their rights pursuant to this Agreement, proceed against the Collateral or enforce the Notes or this Agreement, or in the prosecution or defense of any action or proceeding related to the Obligations or the Note and/or this Agreement, and then to the Obligations in such order and manner and as to principal and interest and other Obligations as the Agent may in its sole discretion determine; and Borrower shall remain liable and will pay the Investors on demand any deficiency remaining, together with interest thereon at a rate equal to the highest rate then payable on any of the Obligations, and the balance of any cost or expenses unpaid, with any surplus to be paid to Borrower subject to legal process or any duty of the Investors imposed by law in favor of the holder of any subordinate security interest in the Collateral known to the Investors. Any purchase of any Collateral by the Investors shall be purchased by it discharged from all claims and free from any right of redemption. In case of any sale by the Agent of any of the Collateral on credit, or for future delivery, the property so sold may be retained by the Agent until the selling price is paid by the purchaser. Neither the Agent nor any Investor shall incur any liability if the purchaser fails to take up and pay for the property so sold. In case of any such failure, the Collateral may be sold again, from time to time. It is understood that any action or rights which Investors may exercise shall be exercised by the Agent on behalf of the Investors.

(ii)The Investors may at any time and from time to time without notice to Borrower set off, appropriate and apply any and all Collateral in or coming into possession of the Investors to the payment of any or all of the Obligations, in such order and manner and as to principal and interest and expenses as the Investors may in its sole discretion determine.

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(f)If, and to the extent that, a perfected security interest hereunder in any Collateral shall cease to be perfected for any reason whatsoever (including, without limitation, release of all or any balance in the Special Account or any lockbox account or use or disposition by Borrower of any proceeds of Collateral), then such Collateral (referred to in this Section 3.15.3(vi) as “released Collateral”) shall be deemed thereby released from the security interest hereunder in exchange, as of the time of such release, for any other Collateral of equivalent value in which a perfected security interest under this Agreement is being obtained contemporaneously or has been most recently obtained; but only to the extent such other Collateral does not represent either (A) Collateral in exchange for which any previously released Collateral shall have been deemed released, or (B) Collateral of equivalent value to any loan or advance (otherwise than by renewal or extension) from the Investors to Borrower in which Collateral a perfected security interest hereunder shall have been obtained contemporaneously with or most recently prior to such loan or advance.

3.16.Other Obligations of Borrower. Borrower:

3.16.1.will, upon request of the Agent or the Investors, execute such financing statements and other documents (and pay the cost of filing or recording the same in all public offices deemed necessary by the Investors) and do such other acts and things, all as the Agent or any Investor may from time to time reasonably request to establish and maintain a valid security interest in the Collateral (free of all other liens, claims and rights of third parties) to secure the payment of the Obligations;

3.16.2.will keep, at its address set forth in this Agreement, its records concerning the Collateral, which records will be of such character as will enable the Agent, the Investors or their designees to determine at any time the status of the Collateral, and Borrower will not, without the Investors’ prior written consent, duplicate any such records at any other address;

3.16.3.will, within twenty (20) calendar days of the last day of each month, unless the Investors agree to quarterly information, furnish the Agent and the Investors with monthly schedules (including information with respect to employee payroll taxes), executed by a duly authorized officer of Borrower, showing all Accounts outstanding, on an aging basis, in such detail as the Agent or the Investors may request, in addition to such other information concerning Borrower, the Collateral, the Special Account and the Account Debtors relating to the Accounts as the Investors may from time to time request;

3.16.4.will permit the Agent, any Investors and their designees, from time to time, upon reasonable notice, to inspect, audit and make copies of and extracts from all records and all other papers in the possession of Borrower pertaining to the Collateral, the Special Account and the Account Debtors;

3.16.5.will stamp on its records concerning the Collateral, a notation, and will affix to any Collateral which constitutes equipment, a notice, in form satisfactory to the Agent or the Investors, of the security interest of the Investors under this Agreement;

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3.16.6.will not create or permit to exist any lien on or security interest in any Collateral to or in favor of anyone other than the Investors;

3.16.7.will reimburse the Investors for all expenses, including reasonable attorneys’ fees and legal expenses, incurred by the Investors in seeking to collect or enforce any rights to the Collateral or under this Agreement, the Note or the other Transaction Documents;

3.16.8.when and as reasonably requested by the Investors, will execute and deliver to the Investors reports as to the Collateral listing all items thereof and, with respect to Collateral other than Accounts Receivable, describing the condition and value thereof;

3.16.9.will assume all responsibility for the operation and use of the Collateral;

3.16.10.will maintain liability and casualty insurance in such amounts and against such risks as is customary in the industry; provided, that in no event shall liability insurance be for less than three million dollars ($3,000,000) and casualty insurance for less than the total Obligations plus the any other indebtedness of Borrower, and name the Investors as an additional insured;

3.16.11.will, at Borrower’s sole cost and expense, perform all acts, and execute all documents reasonably requested by the Agent or any of the Investors at any time to evidence, perfect, maintain and enforce the Investors’ first priority security interest in the Collateral, or otherwise in furtherance of the provisions of this Agreement; and

3.17.Concerning the Agent. The Investors hereby acknowledge and appoint the Agent to act on their behalf as provided in this Agreement, and that, in so acting, the Agent is acting on behalf of the Investors. The Agent shall incur no liability to the Investors for any action taken or any omission to take any action unless such action or failure of action resulted from the Agent’s gross negligence or willful conduct.

3.18.Right of Investors to Make Payments. The Investors may, in their sole discretion and at any time, for the account and expense of Borrower, pay any amount or do any act required of Borrower hereunder or requested by the Investors to preserve, protect, maintain or enforce the Obligations, the Collateral or the priority of the security interest granted in this Agreement, and which Borrower fails to do or pay, including, without limitation, payment of any judgment against Borrower, any insurance premium, any warehouse charge, any processing charge, any landlord’s claim, and any other lien, claim or encumbrance upon or with respect to the Collateral and any such payment shall be added to the Obligations and shall be repayable upon demand, together with interest at the highest rate then payable on any of the Obligations. The Agent or the Investors may, in their sole discretion and at any time, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable by the Investors with respect to, any of the Collateral, and/or extend the time of payment, arrange for payment in installments or otherwise modify the terms of, or release, any of the Obligations and/or the Collateral, or any obligor, maker, endorser, acceptor, surety or guarantor of, or any party to, any of the Obligations or the Collateral, all without notice to or consent by Borrower and without otherwise discharging or affecting the Obligations, the Collateral or the first priority security interest granted in this Agreement. Any proceeds of the Collateral received by Borrower shall not be commingled, but shall be segregated, held by Borrower in trust as the exclusive property of the Investors, and be immediately delivered to the Investors in kind, duly endorsed in blank where appropriate to effectuate the provisions of this Agreement, the same to be held by the Investors as additional Collateral hereunder or, at the Investors’ option, to be applied to payment of the Obligations, whether or not due and in any order, all as provided in Section 3.15.3 of this Agreement. At any time, the Investors may assign, transfer and deliver or otherwise dispose of any of the Obligations alone or together with any or all of the Collateral, whereupon such Investors shall be fully discharged from all responsibility and the transferee shall be vested with full powers and rights of such Investors with respect thereto, but the Investors shall retain all rights and powers with respect to any obligations or Collateral not assigned, transferred, delivered or otherwise disposed of.

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3.19.Waiver of Automatic Stay. The Borrower acknowledges and agrees that should a proceeding under any bankruptcy or insolvency law be commenced by or against the Borrower, or if any of the Collateral should become the subject of any bankruptcy or insolvency proceeding, then the Investors should be entitled to, among other relief to which they may be entitled under the Transaction Documents and/or applicable law, an order from the court granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section 362 to permit the Holder to exercise all of its rights and remedies pursuant to the Transaction Documents and/or applicable law. TO THE EXTENT PERMITTED BY LAW, THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The Borrower hereby consents to any motion for relief from stay that may be filed by the Holder in any bankruptcy or insolvency proceeding initiated by or against the Borrower and, further, agrees not to file any opposition to any motion for relief from stay filed by the Holder. The Borrower represents, acknowledges and agrees that this provision is a specific and material aspect of the Transaction Documents, and that the Holder would not agree to the terms of the Note or the other Transaction Documents if this waiver were not a part of this Agreement. The Borrower further represents, acknowledges and agrees that this waiver is knowingly, intelligently and voluntarily made, that neither the Investors, the Agent nor any person acting on behalf of the Investors or the Agent has made any representations to induce this waiver, that the Borrower has been represented in the signing of this Agreement, the Notes and the other Transaction Documents and in the making of this waiver by independent legal counsel selected by the Borrower and that the Borrower has discussed this waiver with counsel.

Section 4.REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS.The Borrower hereby represents and warrants to the Investors (which representations and warranties will survive the delivery of the Securities and this Agreement shall be deemed to be continuing until the Note is fully paid or converted and the Warrants are fully exercised) that, except as set forth in a disclosure schedule separately provided to the Investors (the “Disclosure Schedule”):

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4.1.Organization and Qualification. Each of NaturalNano and NN Research:

4.1.1.Is and will continue to be duly organized and validly existing and in good standing under the laws of its state of organization.

4.1.2.Is qualified and in good standing to do business in all other jurisdictions in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where such failure will not have a Material Adverse Effect. Neither NaturalNano nor NN Research is qualified to conduct business in the State of New York and each of them will promptly take such steps as are necessary in order that they are qualified to conduct business as a foreign corporation in the State of New York.

4.1.3.Has the power to execute and deliver this Agreement, the Securities, the Registration Rights Agreement, the other Supplemental Agreements and to borrow hereunder.

4.1.4.Has all requisite permits, authorizations, franchise agreements and licenses, without unusual restrictions or limitations, to own, operate and lease its properties and to conduct the business in which it is presently engaged, all of which are in full force and effect.

4.2.No Legal Bar. All corporate and other action necessary for the Borrower to execute, deliver and perform in accordance with the terms of this Agreement and the other Transaction Documents has been taken, and this Agreement constitutes, and the other Transaction Documents to which the Borrower is a party, will, when executed and delivered, constitute the valid and binding obligations of the Borrower enforceable in accordance with their respective terms. The execution and delivery of this Agreement and compliance by the Borrower with any of the terms and provisions hereof or of the Notes, the Registration Rights Agreement and any other Transaction Documents will not, on the Closing Date and thereafter as long as the Notes remain unpaid or unconverted and any portion of the Warrants remains unexercised, violate any provision of any existing law or regulation or any writ or decree of any court or governmental instrumentality, or any agreement or instrument to which the Borrower is a party or which is binding upon it or its assets, and will not result in the creation or imposition of any lien, security interest, charge or encumbrance of any nature whatsoever upon or in any of its assets, except as contemplated by this Agreement; and no consent of any other party, and no consent, license approval or authorization of or registration or declaration with any governmental bureau or agency, is required in connection with the execution, delivery, performance, validity and enforceability of this Agreement, the Note, the Registration Rights Agreement or any of the other Transaction Documents.

4.3.Capitalization.

4.3.1.The authorized and outstanding capital stock of NaturalNano as of the date of this Agreement and as adjusted to reflect issuances pursuant to or contemplated by this Agreement is set forth in Schedule 4.3.1 to the Disclosure Schedule. Schedule 4.3.1 contains all shares and derivatives currently and potentially outstanding. The Borrower hereby represents that any and all shares and current potentially dilutive events have been included in Schedule 4.3.1, including employment agreements, acquisition, consulting agreements, debts, payments, financing or business relationships that could be paid in equity, derivatives or resulting in additional equity issuances.

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4.3.2.All outstanding shares of capital stock have been duly authorized and are validly issued, and are fully paid and non-assessable and free from preemptive rights. All shares of capital stock described above to be issued have been duly authorized and when issued, will be validly issued, fully paid and non-assessable and free from preemptive rights.

4.3.3.Except for the issuance of Common Stock upon conversion of the Notes and upon exercise of the Warrants or as set forth in Schedule 4.3.1 to the Disclosure Schedule as of the date hereof and as of the Closing Date, there are not now outstanding options, warrants, rights to subscribe for, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any class of capital stock of the Borrower, or agreements, understandings or arrangements to which the Borrower is a party, or by which the Borrower is or may be bound, to issue additional shares of its capital stock or options, warrants, scrip or rights to subscribe for, calls or commitment of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of any class of its capital stock. The Borrower agrees to inform the Investors in writing of any additional options, warrants, rights or convertible securities granted prior to the Closing Date or which, prior to the Closing Date, the Borrower agrees to issue.

4.3.4.The Borrower on the Closing Date (i) will have full right, power, and authority to sell, assign, transfer, and deliver, by reason of record and beneficial ownership, to the Investors, the Notes and Warrants, free and clear of all liens, charges, claims, options, pledges, restrictions, and encumbrances whatsoever; and (ii) upon conversion of the Notes or exercise of the Warrants, the Investors will acquire title to such underlying shares of Common Stock, free and clear of all liens, charges, claims, options, pledges, restrictions, and encumbrances whatsoever except for any of the foregoing which results from actions or omissions on the part of the Investor.

4.3.5.The capital stock of NN Research consists of 30,000,000 authorized shares of common stock, par value $.01 per share, of which 10,000,000 shares are issued and outstanding and owned by NaturalNano, free and clear of any lien, option, security interest, purchase right or other encumbrance. Except as contemplated by this Agreement, the Note, the Warrants and the Supplemental Agreements and except as set forth in Schedule 4.3.1 to the Disclosure Schedule, the Borrower does not have any agreements or understandings pertaining to the purchase or sale of its equity.

4.3.6.Except as set forth in Schedule 4.3.7, Borrower does not have any Subsidiary and there is no Person in which Borrower has an equity interest or to which Borrower has advanced money, whether or not represented by a note, or directly or indirectly guaranteed obligations or provided security for the obligations of such Person.

4.3.7.The Borrower’s executive officers and directors understand the nature of the Securities being sold hereby and recognize that the issuance of the Securities will have a potential dilutive effect on the equity holdings of other holders of the Borrower’s equity or rights to receive equity of the Borrower. The board of directors of the Borrower has concluded, in its good faith business judgment that the issuance of the Securities is in the best interests of the Borrower. The Borrower specifically acknowledges that its obligation to issue the shares of Common Stock upon conversion of the Notes and upon exercise of the Warrants is binding upon the Borrower and enforceable regardless of the dilution such issuance may have on the ownership interests of other stockholders of the Borrower or parties entitled to receive equity of the Borrower.

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4.4.Financial Statements; SEC Documents.

4.4.1.Borrower has delivered to the Investors its audited consolidated balance sheet at December 31, 2005 and its audited consolidated statements of operations for the year ended December 31, 2005, the period from inception (December 22, 2004) to December 31, 2004 and the cumulative period from December 22, 2004 to December 31, 2005, statement of stockholders’ equity for the year ended December 31, 2005, for the period from December 22, 2004 to December 31, 2004 and the cumulative period from December 22, 2004 to December 31, 2005, and statements of cash flows for the year ended December 31, 2005, for the period from December 22, 2004 to December 31, 2004 and the cumulative period from December 22, 2004 to December 31, 2005 together with notes to the financial statements, and its unaudited consolidated condensed balance sheet at September 30, 2006, consolidated statements of operations for the nine months ended September 30, 2006 and the period from December 22, 2004 through September 30, 2006, statements of stockholders’ equity for the period from December 22, 2004 through September 30, 2006, and statements of cash flows for the nine months ended September 30, 2006 and 2005 and the period from December 22, 2004 through September 30, 2006 together with notes to financial statements. The audited financial statements were audited by, and the unaudited financial statements were reviewed, but not audited, by Goldstein Golub Kessler LLP, registered independent accounting firm. Goldstein Golub Kessler LLP is independent within the rules and regulations of the Commission. The financial statements present and reflect, in accordance with generally accepted accounting principles, consistently applied, the Borrower’s financial position on the balance sheet date and the results of its operations, changes in stockholders’ equity and cash flows for the periods covered in accordance with generally accepted accounting principles consistently applied; provided, however, that the financial statements for the interim period were prepared in accordance with the rules and regulations of the Commission applicable to quarterly reports on Form 10-QSB. The books and records of the Borrower have been, and are being, maintained in all material respects in accordance with generally accepted accounting principles consistently applied and any other applicable legal and accounting requirements and reflect only actual transaction. The Borrower has no liabilities or obligations which are material, individually or in the aggregate, which are not disclosed in the financial statements, other than those incurred in the ordinary course of the Company’s businesses since September 30, 2006, and which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

4.4.2.As of the date of the financial information submitted, there were no material unrealized or anticipated losses from any unfavorable commitments of the Borrower; and there has been no material adverse change in the business or assets or in the condition, financial or otherwise, of the Borrower from that set forth in said financial statements.

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4.4.3.The Borrower has provided the Investors with a copy of:

(a)Each letter of comment received from the Commission since December 22, 2004.

(b)Each letter responding to the comments of the Commission.

(c)Each so-called management letter from the Borrower’s independent registered accounting firm which sets forth any comments on the Borrower’s financial statement, financial controls or other financial procedures or the Borrower’s books and records, or, if no such letter has been issued, a letter from the independent registered accounting firm to that effect.

(d)Any response to any management letter.

4.4.4.The Common Stock is traded on the OTC Bulletin Board, and, at or prior to the effective date of the Registration Statement, as defined in the Registration Rights Agreement, will be, eligible for transfer pursuant to the Depository Trust Company Automated Securities Transfer Program (the “DTC Program”). The name, address, telephone number, fax number, contact person and e-mail address of the NaturalNano’s transfer agent are set forth on Schedule 4.4.4 to the Disclosure Schedule. The Borrower has not taken any action which is likely to cause the Common Stock to be delisted from trading on the OTC Bulletin Board or to lose its eligibility for transfer pursuant to the DTC Program, and the Borrower does not know of any event which is likely to result in such delisting or ineligibility. NaturalNano will take such action as is necessary in order to file its 10-KSB for the year ended December 31, 2006 in a timely manner without the need to file for an extension pursuant to Section 12b-25 of the Exchange Act.

4.4.5.The Borrower has responded to all comments from the Commission relating to any filing made by the Borrower pursuant to the Securities Act or the Exchange Act, other than comments relating to a registration statement on Form SB-2 which will be withdrawn.

4.4.6.All of the Borrower’s filings with the Commission pursuant to the Exchange Act comply as to form with the requirements of the Exchange Act and the information contained therein does not contain a material misstatement of fact or the omission of a fact necessary to make the information presented not misleading.

4.5.Title, Liens and Encumbrances.

4.5.1.The Borrower has good and marketable title, and the right to grant a security interest in, to all Collateral, and none of the Collateral is subject to any pledge, lease, trust, bailment, lien, security interest, encumbrance, charge or title retention or other security agreement or arrangement of any character whatsoever other than as permitted in the Supplemental Agreements.

4.5.2.The security interest granted by this Agreement constitutes a valid, binding and enforceable first priority security interest on the Collateral, except as enforceability may be affected by bankruptcy, insolvency and other laws of general applications affecting the enforcement of creditors’ rights.

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4.6.No Material Litigation. There is no litigation or administrative proceeding of or before any Government Entity is pending or, to the Knowledge of the Borrower, threatened against the Borrower or any of its property which, if adversely determined based on the claims made against the Borrower, would have a Material Adverse Effect.

4.7.No Default. The Borrower is not, on the date hereof, in default with respect to the payment or performance of any of its obligations or in the performance of any covenants or conditions to be performed by it pursuant to the terms and provisions of any indenture, agreement or instrument to which it is a party or by which it may be bound and the Borrower has received no notice of default thereunder.

4.8.Compliance with Laws. The Borrower has complied in all material respects with and will continue to comply with all applicable statutes and regulations of the United States of America, and all states, counties, municipalities and agencies of any thereof with respect to (a) any restrictions, specifications or other requirements pertaining to products or technology which the Borrower develops, manufactures or sells, or to the services it performs; (b) the conduct of its business operations; (c) the use, maintenance and operation of the real and personal properties owned or leased by it in the operation of its business, including compliance with all application zoning and environmental laws and regulations; and (d) the issued and outstanding capital stock of the Borrower and the disclosure of material facts and information to its stockholders.

4.9.No Secondary Liabilities. There are no outstanding contracts or agreements of guaranty or suretyship made by the Borrower, or to which it is a party, or to which the Borrower or any of the Borrower’s assets are subject.

4.10.Taxes. The Borrower has filed or caused to be filed or obtained extensions for the filing of, and will continue to file and cause to be filed, all federal, state and local tax returns required by law to be filed, and has paid and will continue to pay all taxes shown to be due and payable on said returns or on any assessment made against it, except if being contested in good faith and adequate provision has been made therefor on its books of account. No claims are being asserted with respect to such taxes which are not reflected in the financial statements which have been furnished by the Borrower to the Investors.

4.11.Intellectual Property Rights.

4.11.1. Schedule 4.11 to the Disclosure Schedule sets forth a true and complete list of any existing Patents and patent applications, Trademark registrations and applications, service mark registrations and applications, computer software (other than off-the-shelf software for which the Borrower has the required number of use licenses), copyright registrations and applications, material unregistered trademarks, service marks, and copyrights, and internet domain names used or held for use in connection with the Borrower’s business, together with all licenses related to the foregoing, whether the Borrower is the licensee or licensor thereunder. Schedule 4.11 specifically identified each of the TI Patents.

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4.11.2.The Borrower is the sole and exclusive owner or valid licensee of all Patents, Trademarks and other intellectual property which is shown on said Schedule 4.11 to be owned by it, free and clear of all encumbrances other than the rights of licensees under license agreements which are set forth on said Schedule 4.11, and, with respect to licensed intellectual property, encumbrances incurred by Persons other than the Borrower, except as disclosed in the said Schedule 4.11 with respect to one of Patents; provided, however, that the failure to have title Patent will not have a Material Adverse Effect. The Borrower is the licensee under a valid and enforceable license agreement with respect to all intellectual property shown on Schedule 4.11 as being licensed by the Borrower. Neither the execution of this Agreement nor the enforcement of any rights which the Investors or the Agent may have under this Agreement and the Other Supplemental Agreements breaches or would result in a breach of the license agreement or would give the licensor any right to terminate or otherwise modify the terms of the license agreements.

4.11.3.All patents, registrations and applications for intellectual property that are owned by the Borrower and listed in Schedule 4.11 (a) are, to the Knowledge of the Borrower, valid, subsisting, in proper form and, to the Knowledge of Borrower, have been duly maintained, including the submission of all necessary filings and fees in accordance with the legal and administrative requirements of the appropriate jurisdictions and (b) except as disclosed on the Schedule 4.11, have not lapsed, expired or been abandoned, and no patent, registration or application therefor is the subject of any opposition, interference, cancellation proceeding or other legal or governmental proceeding before any Governmental Entity in any jurisdiction. The Borrower has no Knowledge of any facts that would make any intellectual property invalid or unenforceable.

4.11.4.To the Knowledge of the Borrower, all Patents that are licensed by the Borrower are valid and subsisting.

4.11.5.To the Borrower’s Knowledge, the Borrower owns or has the valid right to use all of the intellectual property used by it or held for use by it in connection with its business. To the Knowledge of the Borrower, there are no conflicts with or infringements of any of the Borrower’s intellectual property by any third party. To the Knowledge of the Borrower, the conduct of the Borrower’s businesses the Borrower as currently conducted does not conflict with or infringe in any way on any proprietary right of any third party.

4.11.6.Except as set forth on Schedule 4.11, there is no claim, suit, action or proceeding pending or, to the Knowledge of the Borrower, threatened against the Borrower (i) alleging any such conflict or infringement with any third party’s proprietary rights or (ii) challenging the ownership, use, validity or enforceability of the intellectual property used by the Borrower in its business.

4.11.7.All consents, filings, and authorizations by or with Governmental Entities or third parties, if any, necessary with respect to the consummation of the transactions contemplated by this Agreement, as they may affect the Borrower’s intellectual property, have been obtained.

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4.11.8.The Borrower has not entered into any consent, indemnification, forbearance to sue, settlement agreement or cross-licensing arrangement with any Person relating to the Borrower’s intellectual property or, to the Knowledge of the Borrower, any intellectual property licensed by the Borrower, or the intellectual property of any third party, except as contained in any license agreements listed in Schedule 4.11.

4.11.9.The Borrower is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, the Note or the Other Supplemental Agreements, in breach of any license, sublicense or other agreement relating to the Borrower’s Intellectual Property.

4.12.Absence of Certain Changes. Since September 30, 2006, except as set forth in the Schedule 4.12 to the Disclosure Schedule, the Borrower has conducted its business only in the ordinary and usual course consistent with past practice, and the Borrower has not:

4.12.1.Suffered any Material Adverse Change;

4.12.2.Incurred any liability or obligation (absolute, accrued, contingent or otherwise) except for those incurred in the ordinary course of business and consistent with past practice (counting obligations or liabilities arising from one transaction or a series of similar transactions, and all periodic installments or payments under any lease or other agreement providing for periodic installments or payments, as a single obligation or liability) or increased, or experienced any change in any assumptions underlying or methods of calculating, any bad debt, contingency or other reserves;

4.12.3.Paid, discharged or satisfied any claim, liability or obligation (whether absolute, accrued, contingent or otherwise) other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities and obligations reflected or reserved against in the September 30, 2006 balance sheet or incurred in the ordinary course of business and consistent with past practice since September 30, 2006;

4.12.4.Permitted or allowed any of its property or assets (real, personal or mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien, security interest, encumbrance, restriction or charge of any kind;

4.12.5.Cancelled any debts or waived any claims or rights of substantial value;

4.12.6.Sold, transferred, or otherwise disposed of any of its properties or assets (real, personal or mixed, tangible or intangible), except in the ordinary course of business and consistent with past practice;

4.12.7.Disposed of or permitted to lapse any rights to the use of any intellectual property, or disposed of or disclosed to any Person any trade secret, formula, process, know-how or other Intellectual Property not theretofore a matter of public knowledge;

4.12.8.Granted any general increase in the compensation of officers or employees (including any such increase pursuant to any bonus, pension, profit sharing or other plan or commitment which is disclosed in the Borrower’s financial statements) or any increase in the compensation payable or to become payable to any officer or employee, and no such increase is customary on a periodic basis or required by agreement or understanding;

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4.12.9.Made any single capital expenditure or commitment in excess of $5,000 for additions to property, plant, equipment or intangible capital assets or made in the aggregate capital expenditures and commitments in excess of $10,000 for additions to property, plant, equipment or intangible capital assets;

4.12.10.Declared, paid or set aside for payment any dividend or other distribution in respect of its capital stock or redeemed, purchased or otherwise acquired, directly or indirectly, any shares of capital stock or other securities of the Borrower;

4.12.11.Made any change in any method of accounting or accounting practice;

4.12.12.Paid, loaned or advanced any amount to, or sold, transferred or leased any properties or assets (real, personal or mixed, tangible or intangible) to, or entered into any agreement or arrangement with, any of its officers or directors or any Affiliate of any of its officers or directors except for directors’ fees and compensation to officers at rates not exceeding the rates disclosed in NaturalNano’s most recent filings with the Commission;

4.12.13.Allowed any obligations of the Borrower to become more than thirty (30) days past due; or

4.12.14.Agreed, whether in writing or otherwise, to take any action described in this Section 4.12.

4.12.15.Approved any stock dividend, split or distribution, reverse split, combination of shares or other recapitalization.

4.13.Employment Agreements; Collective Bargaining Agreements.

4.13.1.Except as set forth in Schedule 4.13 to the Disclosure Schedule, the Borrower has not entered into, and is not a party to, any employment, consulting or other services agreement with any officer, director, 5% stockholder or other person who has base compensation of more than $75,000. A copy of each of such agreements has been provided to the Investors.

4.13.2.Schedule 4.13 also sets forth the directors’ compensation and any proposed changes in the directors’ compensation.

4.13.3.The Borrower is not a party to any collective bargaining agreements.

4.14.Employee Benefit Plans. To the extent that any present or future pension or other employee benefit plan of the Borrower is subject to state or federal statutes or regulations, the Borrower represents and warrants that it is and shall at all times be in compliance with said statutes and regulations and will furnish the Investors with copies of such reports as it may be required to furnish under said statutes or regulations. A description of each such plan is set forth in Schedule 4.15 to the Disclosure Schedule.

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4.15.Commercial Tort Claims. The Borrower shall promptly notify the Investors and the Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof against any third party and, upon the Agent’s reasonable request, enter into a Supplemental Agreement and do such other acts and things required by Agent or the Investors to confirm Investors’ security interest in such Commercial Tort Claim.

4.16.Other Collateral. Borrower shall promptly notify Investor in writing upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights or Electronic Chattel Paper and, upon the reasonable request of any Investor or the Agent, promptly execute such other documents, and do such other acts or things deemed appropriate by Investors or the Agent to deliver to Investors control with respect to such Collateral; promptly notify Investors in writing upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of documents or other instruments and, upon the reasonable request of any Investor or the Agent, will promptly execute such other documents, and do such other acts or things deemed appropriate by Investors or the Agent to deliver to Investors possession of such Documents which are negotiable and Instruments, and, with respect to non-negotiable Documents, to have such nonnegotiable Documents issued in the name of Investors; and with respect to Collateral in the possession of a third party, other than Certificated Securities and Goods covered by a Document and obtain an acknowledgment from the third party that it is holding the Collateral for the benefit of Investor.

4.17.Lien Perfection; Further Assurances. Borrower shall execute such UCC-1 financing statements as may be required by the UCC and such other instruments, assignments or documents as are necessary to perfect Investor’s lien upon any of the Collateral and shall take such other action as may be required to perfect or to continue the perfection of Investor’s lien upon the Collateral. Unless prohibited by applicable law, Borrower hereby irrevocably authorizes the Agent on behalf of the Investors to execute and/or file any such financing statements, including, without limitation, financing statements that indicate the Collateral as all assets of Borrower or words of similar effect, on Borrower’s behalf. Borrower also hereby ratifies its authorization for the Agent to have filed in any jurisdiction any like financing statements or amendments thereto it filed prior to the date hereof. The parties agree that a photographic or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof. At Investors’ or the Agent’s reasonable request, Borrower shall also promptly execute or cause to be executed and shall deliver to Investor any and all documents, instruments and agreements deemed necessary by Investors or the Agent to give effect to or carry out the terms or intent of the Supplemental Agreements. The Borrower shall further take such steps as the Investors or the Agent may reasonably request for the Investors (a) to obtain an acknowledgement, in form and substance reasonably satisfactory to the Agent, of any bailee having possession of any of the Collateral that the bailee holds such Collateral for the Investors, (b) to obtain “control” of any Investment Property, Deposit Accounts, Letter-of-Credit Rights or Electronic Chattel Paper (in accordance with provisions in UCC Sections 9-104, 9-105, 9-106 and 9-107 relating to what constitutes “control” for such items of Collateral), with any agreements establishing control to be in form and substance satisfactory to the Investors, and (c) otherwise to insure the continued perfection and priority of the Investors’ security interest in any of the Collateral and of the preservation of its rights therein, whether in anticipation and following the effectiveness of Revised Article 9 of the Uniform Commercial Code in any jurisdiction.

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4.18.Solvency.The Borrower hereby represents to the Investor that it is solvent and is generally paying its debts as such debts become due and that neither the execution of this Agreement nor the issuance of the Notes pursuant to this Agreement will render the Borrower insolvent.

4.19.Investment Company. Neither the Borrower nor any of its Affiliates is an investment company within the meaning of the Investment Company Act of 1940.

4.20.No Broker. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Borrower. The Borrower shall indemnify and hold harmless the Investors and the Agent for any loss, liability, damage or expense, including reasonable fees and expenses of counsel, they may incur as a result of a breach of this Section 4.20.

4.21.No Disagreements with Accountants and Lawyers. Except as disclosed on Schedule 4.21, there are no disagreements of any kind presently existing, or reasonably anticipated by the Borrower to arise, between the Borrower and the accountants and lawyers formerly or presently employed by the Borrower, including but not limited to disputes or conflicts over payment owed to such accountants and lawyers, nor have there been any such disagreements during the two years prior to the Closing Date.

4.22.Predecessor. All representations and warranties by the Borrower shall, where applicable, relate to the business of Cementitious Materials, Inc. prior to the reverse merger with NaturalNano.

4.23.Accuracy of Representations and Warranties. No representation or warranty by the Borrower contained in any certificate or other document furnished or to be furnished by the Borrower pursuant hereto or in connection with the transactions contemplated hereunder, contains, or at the time of delivery will contain, any untrue statement of material fact or omits or will omit to state a material fact necessary to make it not misleading.

Section 5.REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor, severally and not jointly, represents and warrants to the Borrower that:

5.1.Authorization and Power. Such Investor was not formed for the purpose of investing solely in the Securities. The execution, delivery and performance of this Agreement by the Investor and the consummation by the Investor of the transactions contemplated hereby have been duly authorized by all necessary action where appropriate. The state in which any offer to purchase the Securities was made or accepted by the Investor is the state shown as the Investor’s address. The Investor has the requisite power and authority to enter into and perform this Agreement and to purchase the Securities being sold to it hereunder. This Agreement, the Registration Rights Agreement and the Escrow Agreement have been duly executed and delivered by the Investor and at the Closing shall constitute valid and binding obligations of the Investor enforceable against the Investor in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

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5.2.No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Investor of the transactions contemplated hereby or relating hereto do not and will not result in a violation of the Investor’s governing instruments. The Investor is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of the Investor’s obligations under this Agreement or to purchase the Securities from the Borrower in accordance with the terms hereof, provided that for purposes of the representation made in this sentence, the Investor is assuming and relying upon the accuracy of the relevant representations and agreements of the Borrower herein.

5.3.Financial Risks. The Investor acknowledges that the Investor is able to bear the financial risks associated with an investment in the securities being purchased by the Investor from the Borrower and that it has been given full access to such records of the Borrower and the subsidiaries and to the officers of the Borrower and the subsidiaries as it has deemed necessary or appropriate to conduct its due diligence investigation. The Investor is capable of evaluating the risks and merits of an investment in the securities being purchased by the Investor from the Borrower by virtue of its experience as an Investor and its knowledge, experience, and sophistication in financial and business matters and the Investor is capable of bearing the entire loss of its investment in the securities being purchased by the Investor from the Borrower.

5.4.Accredited Status. The Investor is (i) an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated under the 1933 Act, (ii) experienced in making investments of the kind described in this Agreement and the related documents, (iii) able, by reason of the business and financial experience of its officers, managers or general partners and professional advisors (who are not affiliated with or compensated in any way by the Borrower or any of its affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related documents, and (iv) able to afford the entire loss of its investment in the Securities being purchased by the Investor from the Borrower. The Investor is acquiring the Securities for investment and not with a view to the sale or distribution thereof and understands that such Securities are restricted securities, as defined in the Rule 144 of the Commission under Securities Act, and may not be sold or otherwise distributed except pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act and that the certificates for the Securities and the Common Stock issuable upon conversion of the Note or exercise of the Warrants shall have the legends set forth below. Nothing in this Section 5.4 shall be construed to affect in any manner the right of the Investor to have the Common Stock issuable upon conversion of the Notes and exercise of the Warrants registered pursuant to the Registration Rights Agreement.

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5.4.1.The Notes shall have the following or a similar legend:

“THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR SUCH SHARES OF COMMON STOCK MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”

5.4.2.The Warrants shall have the following or a similar legend:

“THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR SUCH SHARES OF COMMON STOCK MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”

5.4.3.The Common Stock shall have the following or a similar legend:

“THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”

5.5.Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Investor. The Investor shall indemnify and hold harmless the Borrower for any loss, liability, damage or expense, including reasonable fees and expenses of counsel, the Borrower may incur as a result of a breach by such Investor of this Section 5.5.

5.6.Full Disclosure. No representation or warranty made by the Investor in this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

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Section 6.NEGATIVE COVENANTS. So long as any Obligations of the Borrower to the Investors remain outstanding and unpaid and, with respect to Sections 6.5 of this Agreement, as long as the Warrants are outstanding, the Borrower covenants and agrees as follows:

6.1.Limitation on Liens. The Borrower shall not create, assume or suffer to exist, any mortgage, pledge, encumbrance, lien, security interest or charges of any kind upon any of its assets (other than statutory liens provided same are paid within the time provided for payment without penalty or interest) or equity interests, whether now owned or hereafter acquired.

6.2.Limitation on Advances and Investments. The Borrower shall not make or suffer to exist any advances or loans to, or any investments in (by transfers or property, contributions to capital, purchase of stock or securities or evidence of indebtedness, acquisition of assets or business or otherwise) any Person other than the securities of the United States of America and certificates of deposits in a bank or trust Borrower or other deposit account acceptable to the Agent, and the Borrower shall not prepay any financing-related debt obligations. Notwithstanding the forgoing, Borrower may make advances to employees in the normal course of business based upon its employee expense reimbursement plan; provided, however, that all such advances shall be in compliance with the provisions of Section 402 of the Sarbanes-Oxley Act of 2002.

6.3.Limitation on Other Borrowing. The Borrower shall not incur, create, assume or permit to exist any indebtedness or liability outside of trade payables incurred in the ordinary course of the Borrower’s business or any other indebtedness or liability evidenced by notes, bonds, debentures or similar obligations or incorporated in any lease or license agreement, except as provided in this Agreement or as set forth in Schedule 6.3 to the Disclosure Schedule.

6.4.Prohibition on Dividends, Distributions and Purchases of Capital Stock. Borrower shall not declare or pay any dividend or distribution (whether in cash, property or otherwise) or redeem, retire, purchase or otherwise acquire for value any equity interests.

6.5.Limitation on Fundamental Changes. The Borrower shall not (a) convey, sell, lease or otherwise dispose of all or substantially all of its property, assets or business; enter into any transaction not in the usual course of business or (b) make any change in its capital structure, including any stock split, dividend or distribution or reverse split or combination of shares or other recapitalization not approved by Investors holding 75% of the principal amount of Notes then outstanding, or (c) make any change in any of its business objectives, purposes and operations which might in any way adversely affect the ability of the Borrower to repay the Obligations, or (d) merge or consolidate with or into any other firm or corporation or, without Investors’ approval or change its name, or (e) permit a transfer of more than 10% of its equity interests without the prior written consent of the Investors or (f) amend its articles of incorporation or by-laws in any manner which adversely affects the holders of the Notes or Warrants.

6.6.Limitation on Disposition of Assets.The Borrower shall not, other than in the ordinary course of business, sell, exchange or otherwise dispose of any of its assets, or any part thereof or any interest therein, without the express written authorization of the Investors. The Borrower shall not take any action which would impair, or the effect of which would impair, Borrower’s rights in its intellectual property, including the Patents and Trademarks and licenses relating to intellectual property.

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6.7.Limitation on Contingent Liabilities.The Borrower shall not become liable as guarantor, surety, endorser or otherwise for, or agree to purchase, repurchase or assume, any obligation of any Person, except for endorsement of commercial paper for deposit, collection, or discount in the ordinary course of business.

6.8.Limitation on Acquisition of Affiliates. The Borrower shall not acquire, directly or indirectly, any Affiliates without the prior written consent of the Investors.

6.9.Reliance on Financial Statements. No event or condition has occurred which requires the filing by the NaturalNano of an 8-K current report or any other report under the Exchange Act the effect of which is to state that previously filed financial statements cannot be relied upon.

6.10.Limitation on Grant of Equity-Based Incentives. The Borrower shall not, until all Obligations have been satisfied in full, grant any options or other equity-based incentives to its officers, directors, employees or consultants except pursuant to stock option or long-term incentive plans which are outstanding on the date of this Agreement and are listed on Schedule 6.11 to the Disclosure Schedule without the approval of the holders of 75% of the then outstanding principal amount of Notes.

6.11.Limitation on Transactions with Affiliates. As long as at least 25% of the initial principal amount of Notes is outstanding, the Borrower will not, without the written consent of the holders of a majority of the then outstanding principal amount of Notes, engage in any transactions with any officer, director, employee or any Affiliate of the Borrower, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Borrower, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $20,000 other than (i) for payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Borrower and (iii) for other employee benefits, including stock option agreements under any stock option plan of the Borrower.

Section 7.AFFIRMATIVE COVENANTS. The Borrower covenants and agrees that, so long as any of the Obligations shall remain outstanding, and, with respect to Sections with respect to Sections 7.1, 7.3, 7.5, 7.6, 7.8 (but not beyond the time period set forth therein), 7.11, 7.14, and 7.15 of this Agreement, as long as the Warrants are outstanding, the Borrower will perform and observe each and all of the covenants and agreements herein set forth.

7.1.Performance of Obligations under this Agreement, the Note and the Supplemental Agreements. The Borrower will make punctual payment of all monies and will faithfully and fully keep and perform all of the terms, conditions, covenants and agreements contained on the Borrower’s part to be paid, kept or performed hereunder, and will be bound in all respects as debtor under this Agreement, the Note, the Warrants, the Registration Rights Agreement and the Supplemental Agreements; and will make punctual payment of all monies and will faithfully and fully keep and perform all of the terms, conditions, covenants and agreements on its part to be paid, kept or performed under the terms of any lease or mortgage of the premises where Borrower operates or any license to which the Borrower is a party, whether as licensor or licensee, and will promptly notify the Investors and the Agent in the event of any default on the part of the Borrower or receipt by the Borrower of any notice of alleged default under any such lease, mortgage or license. The Borrower will pay and discharge at or before their maturity all taxes, assessments, rents, claims, debts and charges.

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7.2.Information, Access to Books and Inspection. The Borrower will furnish to the Investors such information regarding the business affairs and financial condition of the Borrower as the Investors may reasonably request, and upon reasonable notice to Borrower give any representative of the Investors access during normal business hours to, and permit such representative to examine and copy, and make extracts from, any and all books, records and documents in the possession of the Borrower relating to its affairs and to inspect any of the properties of the Borrower. Notwithstanding the foregoing, the Borrower shall not disclose to the Investors or the Agent any material non-public information concerning the Borrower in violation of Section 7.15 of this Agreement.

7.3.Existence, Properties and Insurance. The Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect the legal existence of Borrower and its rights and franchises, and comply with all laws applicable thereto; at all times maintain, preserve and protect all franchises, patents, and trade names and preserve all the remainder of its property used or useful in the conduct of its business and keep the same in good condition and repair (normal wear and tear and obsolescence excepted), and from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements, betterments and improvements thereto, and will pay or cause to be paid, except when the same may be contested in good faith, all rent due on premises where any property is held or may be held, so that the business carried on in connection therewith may be continuously conducted. The Borrower will have and maintain insurance at all times with respect to its properties against risks of fire (including so-called extended coverage), theft and such risks as the Investor may require containing such terms, in such form, and for such periods, and written by such companies as may be satisfactory to the Investor. The Borrower will furnish the Investor with certificates or other evidence satisfactory to the Investor of compliance with the foregoing insurance provisions. The Borrower will also at all times maintain necessary workmen’s compensation insurance and such other insurance as may be required by law or as may be reasonably required by the Investor.

7.4.Notices of Default and Governmental Orders. The Borrower will promptly give notice in writing to the Investors of the occurrence of any event which constitutes or which with notice or lapse of time, or both, would constitute an Event of Default; of any court or governmental orders, notices, claims, investigations, litigation and proceedings affecting the Borrower, and of any dispute which may exist between the Borrower, on the one hand, and any Governmental Entity or any other party, on the other hand, which, if decided adversely against the Borrower, would have a Material Adverse Effect and would prevent the Borrower to operate its business as presently operated.

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7.5.SEC Filings. The Borrower shall file with the Commission each filing required by the Exchange Act pursuant to Section 13 on or prior to the date that such filing is due. The financial statements included in each annual report on Form 10-K or Form 10-KSB and quarterly report on Form 10-Q or Form 10-QSB shall include financial statements which comply in all material respects with the requirements of the Exchange Act and the applicable requirements of Item 310 of Regulation S-B or Regulation S-X, as the case may be.

7.6.Independent Board and Audit and Compensation Committees. Not later than the first to occur of NaturalNano’s next meeting of stockholders or September 30, 2007, NaturalNano’s board of directors shall consist of a majority of independent directors and its audit and compensation committees shall consist solely of independent directors, and the chairman of the audit committee shall be an audit committee financial expert. The independence of the directors shall be determined by the rules of the Nasdaq Stock Exchange unless the Common Stock is listed on the New York or American Stock Exchange, in which event independence shall be determined by the rules of such exchange.

7.7.Use of Proceeds. The Borrower will use the net proceeds from the sale of the Securities as set forth in Schedule 7.7 of the Disclosure Schedule.

7.8.Right of First Refusal

7.8.1.In the event that, during the twelve months following the Closing Date, the Borrower, which term, for purposes of this Section 7.8, shall include any subsidiary of the Borrower, seeks to raise additional funds through a private placement of its securities (a “Proposed Financing”), other than Exempt Issuances, each Investor shall have the right to participate in the Proposed Financing on a pro rata basis, based on the percentage that (a) the number of shares of Common Stock held by the Investor plus the number of shares of Common Stock issuable upon conversion of the Note then owned by the Investor plus the number of shares of Common Stock issuable upon conversion of the Warrants, in each case without regard to the 4.99% Limitation, bears to (b) the total number of shares of Common Stock outstanding plus the number of Shares issuable upon conversion of the Notes and the Warrants, without regard to the 4.99% Limitations any other limitations on exercise such other convertible preferred stock or debt securities.

7.8.2.The terms on which the Investor shall purchase securities pursuant to the Proposed Financing shall be the same as such securities are purchased by other investors in such Proposed Financing. The Borrower shall give the Investors not less than twenty (20) days notice setting forth the terms of the Proposed Financing. In the event that the terms of the Proposed Financing are changed, the Borrower shall provide each Investor with the same notice of the revised terms that are provided to the other investors in such Proposed Financing.

7.8.3.In the event that any Investor does not exercise its right to participate in the Proposed Financing, the Borrower may sell the securities in the Proposed Financing at a price and on terms which are no more favorable to the investors in such Proposed Financing than the terms offered to the Investors. If the Borrower subsequently changes the price or terms so that the terms are at a price or more favorable to the investors in the Proposed Financing, the Borrower shall reoffer the securities to the Investors as provided in this Section 7.8.

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7.8.4.In the event that any Investor exercises its right of first refusal pursuant to this Section 7.8, the references in this Agreement to 4.99% shall, from and after the purchase by the Investor of such securities, be deemed for all purposes to mean, with respect to that Investor only, 9.99%.

7.9.Right to Convert into Subsequent Offering. If the Borrower completes a private equity or equity-linked financing, each Investor will have the right to exchange all or any portion of the unpaid principal amount of its Note, plus all accrued but unpaid interest thereon, for securities in such financing on the most favored terms available to other Investors, provided that the exchange is made in compliance with applicable securities laws.

7.10.Price Adjustment. The Note and the Warrants shall include a provision to the effect that if, at any time when the Note and Warrants are outstanding, the Borrower issues convertible debt securities, shares of Common Stock, or shares of any class of preferred stock or other convertible securities at a price per share of Common Stock, or with a conversion right to acquire Common Stock at a price per share of Common Stock or warrants or options, such price being referred to as the “lower price” (other than (x) an Exempt Issuance or (y) an issuance covered by the provisions of the Note and Warrants relating to stock dividends, distributions and reverse splits or (z) an issuance of Common Stock upon exercise or upon conversion of warrants, options or other convertible securities for which an adjustment has already been made pursuant to the applicable provisions of the Note or the Warrants, that is less than the conversion price of the Note or exercise price of the Warrant in effect at the time of such sale the conversion price of the Note and the exercise price of the Warrants shall be adjusted so that it equals the lower price. The initial conversion price and exercise price shall be set forth in the Note and the Warrants.

7.11.Employment and Consulting Contracts. For three years after the Closing Date or such earlier date as all of the Notes shall have been paid or converted and all of the Warrants shall have been exercised and, in each case, the underlying Common Stock shall have been sold, the Borrower must have a unanimous approval from the compensation committee for any officer, director or consultant whose compensation is more than $100,000 per annum. This Section 7.12 does not apply to the Borrower’s attorneys and accountants.

7.12.Subsequent Equity Sales. From the date hereof until such time as all of the Notes shall have been paid or converted and all of the Warrants shall have been exercised and, in each case, the underlying Common Stock shall have been sold, NaturalNano shall not effect or enter into an agreement to effect any financing involving a “Variable Rate Transaction” or an “MFN Transaction” (each as defined below). The term “Variable Rate Transaction” shall mean a transaction in which the Borrower issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (i) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Borrower or the market for the Common Stock. The term “MFN Transaction” shall mean a transaction in which the Borrower issues or sells any securities in a capital raising transaction or series of related transactions which grants to an investor the right to receive additional shares based upon future transactions of the Borrower on terms which are more favorable to the Investor than the terms initially provided to the Investor in its initial securities purchase agreement with the Borrower. The Investors shall be entitled to obtain injunctive relief against the Borrower to preclude any such issuance, which remedy shall be in addition to any right to collect damages. No Variable Rate Transaction or MFN Transaction shall be an Exempt Issuance.

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7.13.Amendment of Articles. At or before the next annual meeting of the stockholders of NaturalNano, the board of directors shall propose and submit to the holders of the Common Stock for approval, an amendment to the articles of incorporation that provides substantially as follows:

“The terms and conditions of any rights, options and warrants or other securities approved by the Board of Directors may provide that any or all of such terms and conditions may not be waived or amended or may be waived or amended only with the consent of the holders of a designated percentage of a designated class or classes of capital stock of the Corporation (or a designated group or groups of holders within such class or classes, including but not limited to disinterested holders), and the applicable terms and conditions of any such rights, options or warrants so conditioned may not be waived or amended or may not be waived or amended absent such consent.”

7.14.Stock Splits. All forward and reverse stock splits shall affect all equity and derivative holders proportionately.

7.15.No Disclosure of Material Non-Public Information. The Borrower will not disclose to the Investors or the Agent any material non-public information concerning the Borrower except (a) with the consent of Investors or the Agent and (b) if such consent is given, pursuant to a non-disclosure agreement which provides, among other things, that the Investor or the Agent will not disclose the material non-public information to any person and the Investor or the Agent will not engage in any transactions involving NaturalNano’s securities while in possession of material non-public information.

7.16.Regulation D Offering. The offer and issuance of the Securities to the Investors is being made pursuant to the exemption from the registration provisions of the Securities Act afforded by Section 4(2) or Section 4(6) of the Securities Act and/or Rule 506 of Commission promulgated thereunder. On the Closing Date, the Borrower will provide an opinion reasonably acceptable to Subscriber from the Borrower’s legal counsel provided for in Section 9.4 of this Agreement. The Borrower will also provide, at the Borrower’s expense, such other legal opinions in the future as are reasonably necessary for the issuance and resale of the Common Stock issuable upon conversion of the Notes and exercise of the Warrants pursuant to an effective registration statement under the Securities Act, Rule 144 or an exemption from registration.

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7.17.Indemnification.

7.17.1.The Borrower agrees to indemnify, hold harmless, reimburse and defend the Investors, the Investors’ officers, directors, agents, Affiliates, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Investor or any such person which results, arises out of or is based upon (a) any material misrepresentation by Borrower or material breach of any warranty by Borrower in this Agreement or in any Exhibits or Schedules attached hereto, or other agreement delivered pursuant hereto; or (b) after any applicable notice and/or cure periods, any material breach or default in performance by the Borrower of any covenant or undertaking to be performed by the Borrower hereunder, or any other agreement entered into by the Borrower and Investor relating hereto.

7.17.2.Each Investor agrees to indemnify, hold harmless, reimburse and defend the Borrower and each of the Borrower’s officers, directors, agents, Affiliates, control persons and principal shareholders against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Borrower or any such person which results, arises out of or is based upon (a) any material misrepresentation by such Investor in this Agreement or in any Exhibits or Schedules attached hereto, or other agreement delivered pursuant hereto; or (b) after any applicable notice and/or cure periods, any material breach or default in performance by such Investor of any covenant or undertaking to be performed by such Investor hereunder, or any other agreement entered into by the Borrower and Investors, relating hereto.

7.17.3.In no event shall the liability of any Investor or successor hereunder or under any Transaction Document or other agreement delivered in connection herewith be greater in amount than the lesser of (a) the principal amount of Notes purchased by the Investor or (b) the dollar amount of the net proceeds actually received by such Investor upon the sale of the shares of Common Stock issuable upon conversion of the Notes or exercise of the Warrants.

7.17.4.The procedures set forth in the Registration Rights Agreements with respect to indemnification shall apply to the indemnification set forth in this Section 7.17.

7.18.Payment of Due Diligence Expenses.

7.18.1.On the Closing Date, the Borrower will pay to the Agent a due diligence fee of $195,000 of which $97,500 will be paid in cash at the Closing and $97,500 will be paid in the form of a Note. With respect to the $97,500 which is being paid to the Agent in the form of a Note, the Agent shall, for all purposes in this Agreement be deemed to be an Investor with respect to such Note with the same effect as if the Agent purchased a Note for $97,500. NaturalNano shall also issue to the Agent at the Closing, warrants (the “Agent’s Warrants”) to purchase 10% of the number of shares issuable upon exercise of each set of the Warrants sold to the Investors, which represents Warrants to purchase 1,141,194 shares of Common Stock at $.22 per share and 1,141,194 shares of Common Stock at $.33 per share. Except for the exercise price, the Agent’s Warrants shall be in substantially the form of Exhibit D-2.

7.18.2.Upon any exercise of the Warrants issued to the Investors, the Borrower will pay the Agent a fee of 6% of the proceeds, of which 3% of such proceeds will be paid in cash and the remaining 3% will be paid in the form of a Note with the same effect as if the Agent were an Investor with respect to such additional Note pursuant to this Agreement and shall receive the Warrants that would be issued if the Agent had made an investment equal to the principal amount of the Note; provided, however, that if the Warrants are exercised after the Notes are paid in full or fully converted into Common Stock, such fee shall be paid in cash.

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7.19.Actions by Subsidiaries.

7.19.1.Each Subsidiary of the Borrower shall be subject to the covenants set forth in Sections 6 and 7 of this Agreement with the same force as if such subsidiary were named in this Agreement.

7.19.2.In the event that the Borrower creates or acquires any Subsidiaries, the Borrower shall immediately (a) pledge the stock or other equity interest in the Subsidiary pursuant to the Pledge Agreement, (b) cause the Subsidiary to grant the Lenders a first priority security interest in all of its assets and (c) cause the Subsidiary to agree to abide by the provisions of Sections 6 and 7 of this Agreement.

7.19.3.In the event that the Borrower acquires an interests in a Person that is not a Subsidiary, the Borrower shall immediately pledge the stock or other equity interest in such Person pursuant to the Pledge Agreement.

7.20.Payments to TI. Without the consent of the holders of a majority of the principal amount of the Notes then outstanding, the Borrower shall not make any payment to TI on account of the Company’s obligations to TI for money borrowed as long as any Notes are outstanding except from the proceeds from the exercise of Warrants, and the Borrower shall deliver at the Closing the agreement of TI not to demand payment prior to the date on which the Borrower may pay TI pursuant to this Section 7.20.

Section 8.DEFAULT

8.1.Events of Default. The occurrence of any one or more of the following events or conditions shall constitute an “Event of Default” under this Agreement:

8.1.1.Borrower’s failure to make any payment of principal or interest or any other sums within fifteen (15) days of the date when due on any of the Obligations.

8.1.2.Any representation or warranty or other statement made or furnished to the Investors by or on behalf of the Borrower in this Agreement or in any document or instrument furnished in connection with this Agreement proves to have been false or misleading in any material respect when made or furnished.

8.1.3.Breach of or failure in the due observance or performance in any material respect of any covenant, condition or agreement on the part of the Borrower to be observed or performed pursuant to this Agreement, the Registration Rights Agreement and the other Supplemental Agreements and the failure to cure (if curable) any such breach or failure within fifteen (15) days after receipt of written notice thereof from any Investor to the Borrower; provided, however, that the obligations of NaturalNano with respect to its failure to file the registration statement or the failure of the registration statement to be declared effective shall be subject to the provisions of the Registration Rights Agreement and not this Section 8.

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8.1.4.Failure of the Common Stock to be listed or quoted on the OTC Bulletin Board, the Nasdaq Stock Market or the American or New York Stock Exchange for any reason.

8.1.5.Failure of the Common Stock to be eligible for transfer pursuant to the DTC Program for any reason on or after the effective date of the Registration Statement, as defined in the Registration Rights Agreement.

8.1.6.Breach of or failure in the due observance or performance of any covenant, condition or agreement on the part of the Borrower to be observed or performed pursuant to any Supplemental Agreements or breach by Borrower of any other agreement with Investors beyond the expiration of any grace or cure periods provided therein.

8.1.7.A judgment or judgments for the payment of money in excess of $25,000 shall be rendered against the Borrower, and any such judgment shall remain unsatisfied and in effect for any period of 30 consecutive days without a stay of execution; or

8.1.8.The Borrower shall (a) apply for or consent to the appointment of a receiver, trustee or liquidator of all or a substantial part of any of its assets; (b) be unable, or admit in writing its inability, to pay its debts as they mature; (c) file or permit the filing of any petition, case arrangement, reorganization, or the like under any insolvency or bankruptcy law, or the adjudication of it as a bankrupt, or the making of an assignment for the benefit of creditors or the consenting to any form or arrangement for the satisfaction, settlement or delay of debt or the appointment of a receiver for all or any part of its properties; or (d) any action shall be taken by the Borrower for the purpose of effecting any of the foregoing; or

8.1.9.An order, judgment or decree shall be entered, or a case shall be commenced, against the Borrower, without its application, approval or consent by any court of competent jurisdiction, approving a petition or permitting the commencement of a case seeking reorganization or liquidation of the Borrower or appointing a receiver, trustee or liquidator of the Borrower, or of all or a substantial part of the assets of the Borrower, and Borrower, by any act, indicate its approval thereof, consent thereto, or acquiescence therein, or such order, judgment, decree or case shall continue unstayed and in effect for any period of 90 consecutive days or an order for relief in connection therewith shall be entered; or

8.1.10.If the Borrower shall dissolve or liquidate, or be dissolved or liquidated, or cease to legally exist, or merge or consolidate, or be merged or consolidated with or into any other corporation; or

8.1.11.Failure by the Borrower to pay any other indebtedness or obligation in excess of $25,000, or if any such other indebtedness or obligation which is not subject to a bonafide dispute shall be accelerated, or if there exists any event of default under any instrument, document or agreement governing, evidencing or securing such other indebtedness or obligation which is not subject to a bonafide dispute; or

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8.1.12.Failure by the Borrower to take all steps necessary to grant Investors a perfected first priority security interest in any intellectual property acquired subsequent to the Closing Date; or

8.1.13.Substantial loss, theft, damage, or destruction of the Collateral provided to the Investors pursuant to this Agreement, and not covered by insurance in any material respect.

8.2.Acceleration. Upon and after an Event of Default, the entire unpaid balance owed under this Agreement or any Note or other documents evidencing the same, plus any other Obligations, shall, at the option of the Investors, upon written notice from the Requisite Investors or from the Agent on behalf of the Requisite Investors, immediately become due and payable without presentment, demand, protest, notice of protest, or other notice of dishonor of any kind, all of which are hereby expressly waived by the Borrower, and Agent and the Investors shall immediately be entitled to exercise all of its rights and remedies under this Agreement, the Pledge Agreement, the Supplemental Agreements and applicable law.

Section 9.CONDITIONS TO INVESTORS’ OBLIGATIONS TO CLOSE. The obligations of the Investors to purchase the Securities shall be subject to the fulfillment, on or prior to Closing Date unless specified otherwise, of the following conditions:

9.1.Representations True and Correct. The representations and warranties of the Borrower contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on as of the Closing Date and the Borrower shall have performed and complied in all material respects with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing Date, and the certificate of the chief executive officer and chief financial officer of Borrower as to the matters set forth in this Section 9.1 and Section 9.2 of this Agreement.

9.2.No Adverse Proceedings. On the Closing Date, no action or proceeding shall be pending by any public authority or individual or entity before any court or administrative body to restrain, enjoin, or otherwise prevent the consummation of this Agreement or the transactions contemplated hereby or to recover any damages or obtain other relief as a result of the transactions proposed hereby.

9.3.Delivery of Securities. The Borrower shall have delivered to the Investors, the Notes and Warrants set forth on Schedule A to this Agreement and to the Agent the payment, Note and Warrant provided in Section 7.19 of this Agreement.

9.4.Opinion of Counsel. The Borrower shall have delivered the opinion of counsel as to the matter set forth in Exhibit E to this Agreement.

9.5.Lien Search. The Borrower shall have delivered a lien search, which shall include a search of the Patent and Trademark Office, which shall show no security interest in the Collateral other than the security interest contemplated by this Agreement.

9.6.Recordings of Liens. The Borrower shall have delivered evidence that UCC-1 filings have been made with the Secretary of State of the State of Nevada with respect to NaturalNano and Delaware with respect to NN Research and any other jurisdictions where such filings are required in order to perfect the Investors’ security interest in the Collateral, and that filings have been made with the Patent and Trademark Office evidencing the Investor’s security interest in the Borrower’s Patent and Trademarks.

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9.7.Other Deliveries. The Borrower shall have delivered to the Agent, on behalf of the Investors:

9.7.1.The executed Escrow Agreement.

9.7.2.The assignment by TI of the TI Patents to NaturalNano in form for recording in the United States Patent and Trademark Office and the comparable government offices in any other countries in which the TI Patents or an applications therefor are filed or registered in the forms of Exhibit F.

9.7.3.The executed Registration Rights Agreement and other Supplemental Agreements.

9.7.4.The lock-up agreement of TI and such other agreements and documents as the Investors may reasonably request, each to be in form and substance satisfactory to the Investors.

9.7.5.Evidence that the Borrower’s board of directors has approved the Transaction Documents and, NatualNano’s board of directors has approved, subject to stockholder approval, the amendment to NaturalNano’s certificate of incorporation set forth in Section 7.13 of this Agreement.

9.7.6.Copies articles of incorporation and all amendment of NaturalNano and NN Research certified by the Secretary of State of the state of incorporation.

9.7.7.Copies of by-laws of NaturalNano and NN Research, certified by their respective secretaries.

9.7.8.Good standing certificates as to the good standing of NaturalNano and NN Research in the state of its incorporation.

9.7.9.The certificate of insurance required by Section 3.13 of this Agreement.

9.7.10.Such other documents or instrument as may be reasonably requested by the Investors or the Agent.

Section 10.CONDITION TO BORROWER’S OBLIGATIONS TO CLOSE. The obligations of the Investors to purchase the Securities shall be subject to the payment by the Investors of the purchase price of the Securities to the Escrow Agent.

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Section 11.MISCELLANEOUS PROVISIONS.

11.1.Entire Agreement. This Agreement, including all exhibits and schedules hereto which constitute an integral part of this Agreement, sets forth the entire agreement and understanding between the parties and supersedes all prior or contemporaneous written or oral agreements, promises, representations, understandings, letters of intent and negotiations, between the parties with respect to the subject matter of this Agreement. No part of this Agreement may be modified or amended, nor may any right be waived, except by a written instrument which expressly refers to this Agreement, states that it is a modification or amendment of this Agreement or a waiver and is signed by the parties to this Agreement, or, in the case of waiver, by the party granting the waiver. No course of conduct or dealing or trade usage or custom and no course of performance shall be relied on or referred to by any party to contradict, explain or supplement any provision of this Agreement, it being acknowledged by the parties that this Agreement is intended to be, and is, the complete and exclusive statement of the agreement with respect to its subject matter, subject to the Additional Agreements. Any waiver shall be limited to the express terms thereof and shall not be construed as a waiver of any other provisions or the same provisions at any other time or under any other circumstances. No delay or failure by either party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other rights. Notwithstanding the foregoing, 4.99% Limitation and the provisions relating to the 4.99% Limitation may not be modified, amended or waived by any Investor or by the Borrower.

11.2.Governing Law. This Agreement and the rights of the parties shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such state and without regard to principles of conflicts of law. Each party irrevocably (a) consents to the jurisdiction of the federal and state courts situated in New York County, New York in any action that may be brought pursuant to this Agreement, and (b) submits to and accepts, with respect to its properties and assets, generally and unconditionally, the in personam jurisdiction of the aforesaid courts, waiving any defense that such court is not a convenient forum. In any such litigation to the extent permitted by applicable law, each party waives personal service of any summons, complaint or other process, and agrees that the service thereof may be made either (i) in the manner for giving of notices provided in Section 11.4 of this Agreement (other than by telecopier) or (ii) in any other manner permitted by law.

11.3.Waiver of Right to Trial by Jury. BORROWER AND INVESTORS MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR INVESTORS TO ACCEPT THIS AGREEMENT.

11.4.Notice. All notices, requests or other communications required or permitted to be given under this Agreement to any party shall be in writing and shall be deemed to have been sufficiently given when delivered by personal service or sent by certified or registered mail, overnight courier services with provided evidence of delivery or attempted delivery, or facsimile, to the recipient addressed to the parties at their respective addresses set forth on the signature page of this Agreement to the attention to the person who executed this Agreement on behalf of the party. Either party may, be like notice, change the address or telecopy number or the person to whom notice is to be given. Notice shall be deemed given when received or when attempted delivery is made, provided that notice by telecopier shall be deemed given when receipt is acknowledged by the recipient.

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11.5.Survival of Agreements. All agreements, representations and warranties made herein, in any agreement and in any statements, notices, invoices, certificates, schedules, documents or other instruments delivered to the Investor in connection with this Agreement or any other agreement shall survive the making of the loans and advances hereunder.

11.6.Rights of Assignee. All rights of each Investor in, to and under this Agreement shall pass to and may be exercised by any assignee thereof. The Borrower agrees that, in the event of an assignment of this Agreement and notice of such assignment to the Borrower, the liability of the Borrower to a holder for value of this Agreement shall be immediate and absolute and not affected by any actions of the assigning Investor; and that the Borrower will not set up any claim against the Investor as a defense, counterclaim or setoff to any action for the unpaid balance owed under this Agreement or for possession, brought by said holder.

11.7.Binding Effect. All rights and obligations of the Investors hereunder shall inure to the benefit of and be binding upon its successors and assigns, and all the obligations of the Borrower contained in this Agreement shall bind the successors, heirs and assigns of the Borrower. Since the Borrower consists of more than one party, all of the obligations, covenants, representations and warranties of the Borrower contained in this Agreement shall be the joint and several obligations of the parties constituting the “Borrower.”

11.8.Counsel Fees and Expenses. The Borrower agrees to pay all reasonable counsel fees and expenses, including recording and filing fees, incurred by the Investor in connection with the financing of any kind and character hereafter incurred by the Investor, whether in connection with efforts to collect the Obligations, or in the enforcement or defense of any of the provisions of this Agreement; or negotiations regarding and consultation concerning this Agreement or any Supplemental Agreement, or preparation therefor, or the financing extended thereunder; or the defense of any proceedings involving any claims made or threatened against or arising out of this Agreement or any Supplemental Agreement, or the financing extended thereunder, or which the Investors may hereafter incur in protecting, enforcing, increasing or releasing any security held by the Investors or any Obligation or any provision of this Agreement or any Supplemental Agreement. Borrower’s obligation to pay such counsel fees and expenses of the Investors shall exist whether or not proceedings are instituted or legal appearances are made in any court on behalf of the Investors or any of them. The legal fees for the preparation of the Transaction Documents and the closing shall be $20,000, plus disbursements, of which $10,000 has been paid on account. If the Investors engage special patent counsel, the Borrower shall also pay the reasonable fees and expenses of patent counsel.

11.9.Descriptive Headings.The descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

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11.10.Severability. If any provision of this Agreement or application thereof to any person or circumstance shall to any extent be invalid, the remainder of this Agreement or the application of such provision to persons, entities or circumstances other than those as to which it is held invalid, shall not be affected thereby and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

11.11.Third Party Purchaser.Each Investor shall have the unrestricted right at any time or from time to time, and without Borrower’s consent, to sell, assign, endorse, or transfer all or any portion of its rights and obligations hereunder to one or more entities (each, an “Assignee”) and, Borrower agrees that it shall execute, or cause to be executed such documents including without limitation, amendments to this Agreement and to any other documents, instruments and agreements executed in connection herewith as the Investors or the Agent shall deem necessary to effect the foregoing. In addition, at the reasonable request of the Investors and any such Assignee, Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required by an Investor in connection with such assignment, such Assignee shall be a party to this Agreement and shall have all of the rights and obligations of the assigning Investor hereunder (and under any and all other documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have been assigned by Investor pursuant to the assignment documentation between Investor and Assignee.

11.12.Preparation of Agreement. Neither this Agreement nor any of the other Transaction Documents shall be construed more strongly against any party regardless of who is responsible for its preparation. The parties acknowledge each contributed and is equally responsible for its preparation. In resolving any dispute regarding, or construing any provision in, this Agreement, there shall be no presumption made or inference drawn because of the drafting history of the Agreement, or because of the inclusion of a provision not contained in a prior draft or the deletion or modification of a provision contained in a prior draft.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by the proper and duly authorized officers as of the date and year first above written.

[Signatures on following page]

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SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT (A)

15 Schoen Place Pittsford, New York 14534-2025 Telecopier: (585) 267-4825	NATURALNANO, INC. a Nevada corporation
	By:   /s/ Cathy A. Fleischer
	Name: Cathy A. Fleischer Title:   President
15 Schoen Place Pittsford, New York 14534-2025 Telecopier: (585) 267-4825	NATURALNANO RESEARCH, INC. a Delaware corporation
	By:   /s/ Kathleen A. Browne
	Name: Kathleen A. Browne Title:   CFO
152 W. 57th Street, 54th Floor New York, NY 10019 Telecopier: (212)	PLATINUM ADVISORS LLC a Delaware limited liability company
	By: /s/ Mark Nordlicht
	Name: Mark Nordlicht Title:

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SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT (B)

Investor		Purchase Price		Note/Conversion Shares	A Warrants	B Warrants
Platinum Partners Long Term Growth IV By: /s/ Mark Nordlicht                            Name: Mark Nordlicht Title: Address: 152 W. 57th Street, 54th Floor   New York, NY 10019 Telecopier: (212)	$	2,750,000	$	2,750,000/ 12,500,000	9,375,000	9,375,000
Longview Special Financing, Inc. By: /s/ François Morax                            Name: François Morax Title:   Director Address: Lindstrassse 6  6341 Baar  Switzerland Telecopier:		500,000	$	500,000/ 2,272,728	1,704,546	1,704,546
Platinum Advisors, LLC By: /s/ Mark Nordlicht                             Name: Mark Nordlicht Title: Address: 152 W. 57th Street, 54th Floor   New York, NY 10019 Telecopier: (212)		97,500	$	97,500/ 443,182	332,387	332,387
	$	3,347,500	$	3,347,500/	11,411,933	11,411,933
Total				15,215,910

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List of Exhibits

Exhibit	Description	Section
A	Notes	1.25
B	Pledge Agreement	1.29
C	Registration Rights Agreement	1.31
D-1 and D-2	A Warrants and B Warrants, respectively	1.41
E	Opinion of Counsel	9.4
F	Assignment of TI Patents	9.7.2

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EX-4.2

Exhibit 4.2

THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR SUCH SHARES OF COMMON STOCK MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

Principal Amount $[    ] Issue Date: March 7, 2007

8% SENIOR SECURED PROMISSORY NOTE DUE MARCH 7, 2009

FOR VALUE RECEIVED, NaturalNano, Inc., a Nevada corporation (“NaturalNano”), and NaturalNano Research, Inc., a Delaware corporation and wholly owned subsidiary of NaturalNano (“NN Research” and, together with NaturalNano, the “Borrowers”), hereby jointly and severally promise to pay to the order of [ ] (the “Holder”), the sum of [ ], on March 7, 2009 (the “Maturity Date”).

This Note is one of the Notes issued pursuant to the terms of a loan and security agreement between the Borrowers and the Holder, dated the date of this Note (the “Loan Agreement”).

Interest on the outstanding principal balance shall be paid at the rate of eight percent (8%) per annum, payable quarterly on the first day of June, September, December and March of each year; provided, however, that the first interest payment shall be due on June 1, 2007 and a final interest payment due on the Maturity Date. Interest shall be payable to the holder of this Debenture of record on the fifteenth day of the preceding month. Interest shall be computed on the basis of a 360-day year, using the number of days actually elapsed. Interest may be paid in cash or in shares of NaturalNano’s common stock, par value $.001 per share (“Common Stock”); provided, that any payment in shares of Common Stock shall be subject to the provisions of Section 1.2 of this Note. Interest shall be payable at the default interest rate of the lesser of (x) eighteen percent (18%) per annum or (y) the maximum rate of interest which may legally be charged, (a) if the Borrowers fail to make any monetary payment due on this Note within ten (10) days after the date such payment is due and continuing at such rate until the payment default is cured, and (b) during the pendency of any Event of Default, as hereinafter defined, other than a failure to make any monetary payment.

Payment of this Note is secured by a security interest in the Collateral, as defined in the Loan Agreement, and the Holder of this Note shall have all rights granted to the Investors, as defined in the Loan Agreement, pursuant the Loan Agreement. This Note is one of the Notes of like tenor issued pursuant to the Loan Agreement in the aggregate initial principal amount of $3,347,500, such Notes being collectively referred to as the “Notes.”

Section 1.

Interest Payments

1.1.Payment of Interest in Cash. Except as provided in Section 1.2 of this Note, interest shall be paid in cash on the interest payment date.

1.2.Payment of Interest in Stock. The Borrowers may pay interest on this Note in shares of Common Stock provided that the following conditions are met:

1.2.1.The shares of Common Stock issuable in payment of interest shall be subject to a current and effective registration statement and NaturalNano shall deliver to the Holder an unlegended stock certificate or, if the Holder shall have provided NaturalNano with account information, NaturalNano shall have caused the shares to be electronically delivered to Holder’s brokerage account.

1.2.2.NaturalNano shall be current in its filings with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.

1.2.3.The Common Stock shall be traded on the OTC Bulletin Board, the Nasdaq Stock Market or the New York or American Stock Exchange, NaturalNano shall not have received notice from any such market or exchange to the effect that the Common Stock may be subject to delisting from such market or exchange, and no event shall have occurred which would result in the delisting of the Common Stock from such market.

1.2.4.The number of shares of Common Stock to be issued shall be determined by dividing the amount of the interest payment by eighty five percent (85%) of the daily volume weighted average price (“VWAP”) of the Common Stock for the 20 trading days immediately preceding (but not including) the day that is one trading day prior to the interest payment date.

1.2.5.VWAP means the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the primary trading market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a trading day from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the VAP function.

Section 2.Conversion

2.1.Conversion Right. The Holder shall have the right at any time and from time to time until the principal and interest on this Note shall have been paid in full, to convert the principal and any interest due under this Note into shares of Common Stock as provided in this Section 2.

2.2.Conversion Procedure. If the Holder exercises its right of conversion, the Holder shall give NaturalNano a Notice of Conversion in the form annexed to this Note, setting forth the amount of principal and interest which the Holder is converting into Common Stock at the Conversion Price in effect on the date of such notice. The date of such notice is referred to as the Conversion Date. Upon delivery to NaturalNano of a completed Notice of Conversion, NaturalNano shall issue and deliver to the Holder within three (3) business days after the Conversion Date (such third day being the “Delivery Date”) that number of shares of Common Stock for the amount of principal and interest on the Note which is being converted, as set forth in Section 2.9 of this Note. To the extent that the Holder does not elect to convert interest, the Borrowers shall pay accrued interest to the Conversion Date on that portion of the principal of the Note with respect to which accrued interest is not being converted, such payment to be made not later than the Delivery Date. Except to the extent that the unpaid principal balance of this Note is being presented for conversion, the Holder shall not be required to present this Note in order to effect conversion, and the Holder shall maintain a ledger setting forth each conversion of principal and interest on this Note and such ledger shall, absent manifest error, be deemed to be binding and conclusive on the Borrowers.

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2.3.Conversion Price. The Conversion Price shall be $0.22 per share of Common Stock, subject to adjustment as set forth in Section 2.4 of this Note and in the Loan Agreement. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing that portion of the principal and interest of the Note to be converted by the Conversion Price in effect on the Conversion Date.

2.4.Adjustment to the Conversion Price. The Conversion Price and number and kind of shares or other securities to be issued upon conversion shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains outstanding, as follows:

2.4.1.Merger or Sale of Assets. If NaturalNano shall at any time consolidate with or merge into or sell or convey all or substantially all its assets to any other Person, as defined in the Loan Agreement, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to be convertible into such number and kind of shares of capital stock or other securities and property as would have been issuable or distributable on account of such consolidation, merger, sale or conveyance, upon or with respect to the securities subject to the conversion or purchase right immediately prior to such consolidation, merger, sale or conveyance. The foregoing provision shall similarly apply to successive transactions of a similar nature by any such successor or purchaser. Without limiting the generality of the foregoing, the anti-dilution provisions of this Section shall apply to such securities of such successor or purchaser after any such consolidation, merger, sale or conveyance.

2.4.2.Reclassification. If NaturalNano at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be convertible into an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.

2.4.3.Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Conversion Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

2.4.4.Stock Issuance. If, while this Note is outstanding, the Company sells or otherwise issues any Convertible Securities, shares of Common Stock, or shares of any class of capital stock at a price per share of Common Stock, or with a conversion right or Conversion Price to acquire Common Stock at a price per share of Common Stock (other than (x) an Exempt Issuance, as defined in the Loan Agreement, or (y) an issuance covered by Sections 2.4.1, 2.4.2 or 2.4.3 of this Note), that is less than the Conversion Price in effect at the time of such sale (such lower price being referred to as the “Lower Price”), the Conversion Price shall be reduced to an adjusted Conversion Price which is equal to the Lower Price. Such adjustment shall be made successively whenever any such sale or other issuance at a Lower Price is made. The term “Convertible Security” shall mean any debt or equity security or instrument upon the conversion or exercise of which shares of Common Stock may be issued.

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(a)For purposes of this Section 2.4.4, the price at which such shares of Common Stock are issued shall be the consideration paid for the Common Stock or the price at which the Company agrees to issue shares of Common Stock. The price at which any Convertible Security is issued shall be the amount received for the issuance of the Convertible Security plus the minimum amount of additional consideration which is payable upon exercise or conversion of the Convertible Security. If the Company issues securities as a unit, regardless of whether such issuance is defined as a unit, a separate computation shall be made with respect to (x) shares of Common Stock and convertible securities (based on the maximum number of shares of Common Stock which may be issued upon conversion, including conversion of interest or dividends, but excluding warrants, rights and options) and (y) warrants, options or rights, with a separate computation being made as to each warrant, option or right which is issued. If warrants, options or rights are issued, the Company shall not be deemed to have received any consideration for the issuance of the shares upon exercise of the warrant, option or right other than the lowest exercise price provided therein. If the Company has an agreement which provides for the issuance of shares at a fixed price or a formula price with a maximum price, the Company shall be deemed to have issued securities at such maximum price regardless of whether any securities are actually sold, and any issuance of securities below such maximum price shall, if such price is a Lower Price, be a sale which results in an adjustment pursuant to this Section 2.4.4.

(b)By way of example, if the Company issues for $1,000,000 securities consisting of 500,000 shares of Common Stock and a convertible note for $1,000,000 with a conversion price of $.40 and warrants to purchase 1,000,000 shares of Common Stock at $.40, the Lower Price would be determined by dividing the total consideration paid for the Common Stock and the note ($1,000,000) by the number of shares of Common Stock issued (3,000,000 shares, representing the 500,000 shares issued at closing plus the 2,500,000 shares issuable upon conversion of the note), which would result in Lower Price of $.333, which would become the adjusted Conversion Price. If, in the same example, the exercise price of the warrant were $.30 per share, the Lower Price would be $.30, which would become the adjusted Conversion Price. If, in either case, the conversion price of all or any part of the convertible security or the exercise price of all or any of the warrants were subsequently reduced, a further adjustment would be made.

(c)Any stock or convertible securities (other than warrants or options which shall be valued at the lowest stated Conversion Price thereof) issued for services that are not Exempt Issuances shall, for purposes of this Warrant, be valued at the par value thereof unless such issuance is made with the prior written approved of the Investors, as defined in the Loan Agreement, in which event the securities shall be valued in the manner as set forth in the Investors’ approval.

2.5.Notice of Adjustment. Whenever the Conversion Price is adjusted pursuant to Section 2.4 of this Note, NaturalNano shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a statement of the facts requiring such adjustment.

2.6.Reservation of Shares. During the period that the conversion right exists, NaturalNano will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock issuable upon the full conversion of this Note and as described in the Loan Agreement. NaturalNano represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. NaturalNano agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note.

2.7.Right to Require Conversion. Provided an Event of Default or an event which with the passage of time or the giving of notice could become an Event of Default has not occurred, whether or not such Event of Default has been cured, and provided that all of the shares of Common Stock issuable upon conversion of the Note, have been registered pursuant to the Securities Act of 1933, as amended (the “Securities Act”) the Borrowers shall have the right to require the Holder of this Note to covert all or any portion of this Note into shares of Common Stock at the Conversion Price on the date that the Borrowers give notice of such required conversion, subject to the following terms and conditions.

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2.7.1.The Borrowers may only exercise such right if a registration statement covering the sale by the Holder of the shares of Common Stock issuable upon conversion of this Note (the “Registration Statement”) is current and effective and, based on the date of the prospectus forming a part of the registration statement and the age of the financial statements contained in the registration statement, the registration statement can be used by the Holder in connection with the sale of the Common Stock for at least three months without the need to file a post-effective amendment to update the registration statement, and there shall not have occurred any material event concerning either of the Borrowers for which disclosure would be necessary in order that the information contained in the registration statement is true and correct in all material respects and does not omit any information necessary to make the information contained therein not misleading. The notice of required conversion shall include the certificate of the Borrowers’ respective chief executive officers as to the matters set forth in this Section 2.7.1.

2.7.2.The Common Stock shall be traded on the OTC Bulletin Board, the Nasdaq Stock Market or the New York or American Stock Exchange and shall be eligible for transfer using the facilities of the Depository Trust Company (the “DTC Program”); NaturalNano shall not have received notice from any such market or exchange to the effect that the Common Stock may be subject to delisting from such market or exchange, and no event shall have occurred which would result in the delisting of the Common Stock from such market.

2.7.3.The closing price of the Common Stock on the principal market or exchange on which the stock is traded is not less than $1.00 for not less than 20 consecutive trading days ending on the date prior to the date on which NaturalNano gives notice to the Holder exercising its rights under this Section 2.7.

2.7.4.NaturalNano will tender to the Holder such number of shares of Common Stock as are issuable upon conversion of the principal amount of this Note being converted, but not such number of shares as would result in a violation of the 4.99% Limitation, as hereinafter defined.

2.7.5.Any partial exercise of the rights under this Section 2.7 shall be made proportionately as to the Holder and all other holders of the Notes.

2.8.Limitation on Right to Convert or Exercise Securities.

2.8.1.Notwithstanding any other provision of this Note, except as expressly provided in this Note, the Holder shall not be entitled to convert this Note into shares of Common Stock to the extent that such conversion would result in beneficial ownership by the Holder and its Affiliates, as defined in the Loan Agreement, of more than 4.99% of the then outstanding number of shares of Common Stock on such date. For the purposes of this Agreement beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act, and Regulation 13d-3 thereunder. The limitation set forth in this Section 2.4 is referred to as the “4.99% Limitation.” The 4.99% Limitation may not be waived by the Holder or by the Borrowers, and any attempted wavier or modification of the 4.99% Limitation shall be void; provided, however, that to the extent provided in the Loan Agreement and Section 2.7.4 of the Note, the references in this Section 2.8 to 4.99% shall be deemed to be 9.99%.

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2.8.2.The 4.99% Limitation shall terminate upon the close of business on the business day immediately preceding the date fixed for consummation of any transaction resulting in a Change of Control of the Company. A “Change in Control” means a consolidation or merger of the Company with or into another company or entity in which the Company is not the surviving entity or the sale of all or substantially all of the assets of the Company to another company or entity not controlled by the then existing stockholders of the Company in a transaction or series of transactions. Upon the occurrence of a Change of Control, the Company shall promptly send written notice thereof, by hand delivery or by overnight delivery, to the Holder.

2.9.Mechanics of Conversion.

2.9.1.Delivery of Certificate Upon Conversion. Except as otherwise set forth herein, not later than the Delivery Date, NaturalNano shall deliver to the Holder (a) a certificate or certificates which, after the effective date of a registration statement covering the shares of Common Stock issuable upon conversion of this Note (the “Effective Date”), shall be free of restrictive legends and trading restrictions (other than those required by the Securities Act) representing the number of shares of Common Stock being acquired upon the conversion of the Note, and (b) a bank check in the amount of accrued and unpaid interest on the portion of the Note being converted unless the Holder converts such interest into Common Stock. After the Effective Date, NaturalNano shall, upon request of the Holder, deliver any certificate or certificates required to be delivered by NaturalNano under this Section 2.9 electronically through the Depository Trust Company or another established clearing company performing similar functions if NaturalNano’s transfer agent has the ability to deliver shares of Common Stock in such manner. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable Holder by the Delivery Date, the Holder shall be entitled to elect by written notice to the Borrowers at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the conversion shall be deemed void ab initio.

2.9.2.Obligation Absolute; Partial Liquidated Damages. NaturalNano’s obligations to issue and deliver the Common Stock upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Borrowers or either of them or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrowers to the Holder in connection with the issuance of such shares. In the event the Holder shall elect to convert any or all of this Note, NaturalNano may not refuse conversion based on any claim that such Holder or any one associated or affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason unless an injunction from a court, on notice, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained and NaturalNano posts a surety bond for the benefit of the Holder in the amount of 150% of the Conversion Value of Note outstanding, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration or litigation of the dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, NaturalNano shall issue the Common Stock or, if applicable, cash, upon a properly noticed conversion. If NaturalNano fails to deliver to the Holder such certificate or certificates pursuant to this Section 2.9 within two trading days of the Delivery Date applicable to such conversion, the Borrowers shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Conversion Value of Note being converted, $50 per trading day (increasing to $100 per trading day three (3) trading days after such damages begin to accrue and increasing to $200 per trading day six (6) trading days after such damages begin to accrue) for each trading day after the Delivery Date until such certificates are delivered. Nothing herein shall limit a Holder’s right to pursue actual damages for the Company’s failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

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2.9.3.Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. If NaturalNano fails to deliver to the Holder such certificate or certificates pursuant to this Section 2.9 by the Delivery Date, and if after such Delivery Date the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Common Stock which the Holder was entitled to receive upon the conversion relating to such Delivery Date (a “Buy-In”), then the Borrowers shall pay in cash to the Holder the amount by which (a) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (i) the product of (x) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by (y) the price at which the sell order giving rise to such purchase obligation was executed. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the aggregate sale price giving rise to such purchase obligation is $10,000, under the immediately preceding sentence the Borrowers shall be required to pay the Holder $1,000. The Holder shall provide the Borrowers written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Borrowers. Nothing in this Section 2.9 shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to NaturalNano’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the shares of this Note pursuant to its terms.

2.9.4.Fractional Shares. Upon a conversion hereunder, NaturalNano shall not be required to issue stock certificates representing fractions of shares of the Common Stock. All fractional shares shall be carried forward and any fractional shares which remain after a Holder converts all of this Note shall be rounded up to the next whole number of shares.

2.9.5.Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Borrowers shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note and the Borrowers shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Borrower the amount of such tax or shall have established to the satisfaction of the Borrowers that such tax has been paid.

Section 3.Events of Default.

3.1.The entire unpaid principal amount of this Note, together with interest thereon shall, on written notice from the Holders of a majority of the outstanding principal amount of the Notes or by the Agent, as defined in the Loan Agreement, upon the request of the holders of a majority of the outstanding principal amount of the Notes, forthwith become and be due and payable if any one or more Events of Default shall have occurred (for any reason whatsoever and whether such happening shall be voluntary or involuntary or be affected or come about by operation of law pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) and be continuing.

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3.2.The occurrence of any one or more of the following events or conditions shall constitute an “Event of Default” under this Agreement:

3.2.1.Borrowers’ failure to make any payment of principal or interest or any other sums within fifteen (15) days of the date when due on this Note or on any of the Obligations, as defined in the Loan Agreement.

3.2.2.Any representation or warranty or other statement made or furnished to the Holder by or on behalf of the Borrowers in the Loan Agreement or in any document or instrument furnished in connection with the Loan Agreement proves to have been false or misleading in any material respect when made or furnished.

3.2.3.Breach of or failure in the due observance or performance in any material respect of any covenant, condition or agreement on the part of the Borrower to be observed or performed pursuant to the Loan Agreement or any of the other Transaction Documents and the failure to cure (if curable) any such breach or failure within fifteen (15) days after receipt of written notice thereof from the holder of any Note issued pursuant to the Loan Agreement to the Borrower; provided, however, that the obligations of NaturalNano with respect to its failure to file the Registration Statement (as defined in the Registration Rights Agreement, or the failure of the registration statement to be declared effective shall be subject to the provisions of the Registration Rights Agreement and not this Section 3.

3.2.4.Failure of the Common Stock to be listed or quoted on the OTC Bulletin Board, the Nasdaq Stock Market or the American or New York Stock Exchange for any reason.

3.2.5.Failure of the Common Stock, at any time after the Registration Statement becomes effective, to be eligible for transfer pursuant to the DTC Program for any reason.

3.2.6.Breach of or failure in the due observance or performance of any covenant, condition or agreement on the part of the Borrowers to be observed or performed pursuant to any Transaction Documents or breach by Borrower of any other agreement with Investors beyond the expiration of any grace or cure periods provided therein.

3.2.7.A judgment or judgments for the payment of money in excess of $25,000 shall be rendered against either Borrower, and any such judgment shall remain unsatisfied and in effect for any period of 30 consecutive days without a stay of execution; or

3.2.8.Either Borrower shall (a) apply for or consent to the appointment of a receiver, trustee or liquidator of all or a substantial part of any of its assets; (b) be unable, or admit in writing its inability, to pay its debts as they mature; (c) file or permit the filing of any petition, case arrangement, reorganization, or the like under any insolvency or bankruptcy law, or the adjudication of it as a bankrupt, or the making of an assignment for the benefit of creditors or the consenting to any form or arrangement for the satisfaction, settlement or delay of debt or the appointment of a receiver for all or any part of its properties; or (d) any action shall be taken by the Borrower for the purpose of effecting any of the foregoing; or

3.2.9.An order, judgment or decree shall be entered, or a case shall be commenced, against either Borrower, without its application, approval or consent by any court of competent jurisdiction, approving a petition or permitting the commencement of a case seeking reorganization or liquidation of such Borrower or appointing a receiver, trustee or liquidator of the Borrower, or of all or a substantial part of the assets of the Borrower, and the Borrower, by any act, indicate its approval thereof, consent thereto, or acquiescence therein, or such order, judgment, decree or case shall continue unstayed and in effect for any period of 90 consecutive days or an order for relief in connection therewith shall be entered; or

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3.2.10.If the Borrower shall dissolve or liquidate, or be dissolved or liquidated, or cease to legally exist, or merge or consolidate, or be merged or consolidated with or into any other corporation; or

3.2.11.Failure by the Borrower to pay any other indebtedness or obligation in excess of $25,000, or if any such other indebtedness or obligation which is not subject to a bonafide dispute shall be accelerated, or if there exists any event of default under any instrument, document or agreement governing, evidencing or securing such other indebtedness or obligation which is not subject to a bonafide dispute; or

3.2.12.Failure by the Borrower to take all steps necessary to grant Investors a perfected first priority security interest in any intellectual property acquired subsequent to the Closing Date; or

3.2.13.Substantial loss, theft, damage, or destruction of the Collateral provided to the Investors pursuant to this Agreement, and not covered by insurance in any material respect.

Section 4.Miscellaneous

4.1.Usury Saving Provision. All payment obligations arising under this Note are subject to the express condition that at no time shall the Borrowers be obligated or required to pay interest at a rate which could subject the Holder to either civil or criminal liability as a result of being in excess of the maximum rate which the Borrowers are permitted by law to contract or agree to pay. If by the terms of this Note, the Borrowers are at any time required or obligated to pay interest at a rate in excess of such maximum rate, the applicable rate of interest shall be deemed to be immediately reduced to such maximum rate, and interest thus payable shall be computed at such maximum rate, and the portion of all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of principal.

4.2.Failure or Indulgence Not Waiver. No failure or delay on the part of Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

4.3.Governing Law. This Agreement and the rights of the parties shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such state and without regard to principles of conflicts of law. Each party irrevocably (a) consents to the jurisdiction of the federal and state courts situated in New York County, New York in any action that may be brought pursuant to this Agreement, and (b) submits to and accepts, with respect to its properties and assets, generally and unconditionally, the in personam jurisdiction of the aforesaid courts, waiving any defense that such court is not a convenient forum. In any such litigation to the extent permitted by applicable law, each party waives personal service of any summons, complaint or other process, and agrees that the service thereof may be made either (i) in the manner for giving of notices provided in Section 4.5 of this Note (other than by telecopier) or (ii) in any other manner permitted by law.

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4.4.Waiver of Right to Trial by Jury. BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND WAIVE ANY RIGHT TO BRING A COUNTERCLAIM AGAINST THE HOLDER IN ANY ACTION TO ENFORCE THIS NOTE. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR HOLDER TO ACCEPT THIS NOTE.

4.5.Notice. All notices, requests or other communications required or permitted to be given under this Agreement to any party shall be in writing and shall be deemed to have been sufficiently given when delivered by personal service or sent by registered mail, overnight courier services with provided evidence of delivery or attempted delivery, or facsimile, to the Borrowers c/o NaturalNano, Inc., 15 Schoen Place, Pittsford, New York 14534-2025, telecopier (585) 267-4825, to the attention of the person who executed this Note on behalf of NaturalNano of this Agreement or to the Holder at its address set forth on the Borrower’s records. Either party may, be like notice, change the address or telecopy number or the person to whom notice is to be given. Notice shall be deemed given when received or when attempted delivery is made (based on evidence of attempted delivery by the United States Postal Service or an overnight courier or a messenger service), provided that notice by telecopier shall be deemed given when receipt is acknowledged by the recipient.

4.6.Amendment Provision. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented; provided, however, that the terms of the 4.99% Limitation may not be modified, amended or waived.

4.7.Assignability. This Note shall be binding upon the Borrowers and their respective successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns. The Borrowers may not assign any of its obligations under this Note without the consent of the Holder.

4.8.Cost of Collection. If default is made in the payment of this Note, Borrowers shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees, regardless of whether the Holder commenced litigation in order to enforce its rights under this Note.

4.9.Stockholder Status. The Holder shall not have rights as a stockholder of NaturalNano with respect to unconverted portions of this Note. However, from and after the Conversion Date, the Holder will have all the rights of a shareholder of NaturalNano with respect to the shares of Common Stock to be received by Holder after delivery by the Holder of a Conversion Notice to the Borrower regardless of whether physical certificates shall have been delivered.

[Signature on following page]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by the proper and duly authorized officers as of the date and year first above written.

NATURALNANO, INC.
By:
	Name:
	Title:

NATURALNANO RESEARCH, INC.
By:
	Name:
	Title:

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NOTICE OF CONVERSION

(To be executed by the Holder in order to convert the Note)

The undersigned hereby elects to convert $_________ of the principal and $_________ of the interest due on the Note issued by NaturalNano, Inc. and NaturalNano Research, Inc. on March ___, 2007 into shares of Common Stock of NaturalNano, Inc. according to the conditions set forth in such Note, as of the date written below.

Date of Conversion:__________________________________________

Conversion Price:____________________________________________

Number of Shares To Be Delivered:_______________________________

Signature:__________________________________________________

Print Name and Title:_____________________________________________________________________________________________________________________

Address:______________________________________________________________________________________________________________________________

______________________________________________________________________________________________________________________________

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EX-4.3

Exhibit 4.3

WA-[   ] Warrant to Purchase **        ** Shares of Common Stock

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR SUCH SHARES OF COMMON STOCK MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

Void after 5:30 P.M. New York City time on March 7, 2011

SERIES A COMMON STOCK PURCHASE WARRANT

(subject to mandatory exercise as provided in Section 10 of this Warrant)

OF

NATURALNANO, INC.

This is to certify that, FOR VALUE RECEIVED, [ ]., or registered assigns (“Holder”), is entitled to purchase, on the terms and subject to the provisions of this Warrant, from NaturalNano, Inc., a Nevada corporation (the “Company”), at an exercise price (the “Exercise Price”) of twenty two cents ($0.22) per share, [ ] shares of common stock, par value $.001 per share (“Common Stock”), of the Company at any time during the period (the “Exercise Period”) commencing on the date of this Warrant and ending at 5:30 P.M. New York City time, on March 7, 2011; provided, however, that if such date is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which such banks are not authorized to close. The number of shares of Common Stock to be issued upon the exercise or conversion of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time in the manner set forth in this Warrant. The shares of Common Stock deliverable upon such exercise or conversion, and as adjusted from time to time, are hereinafter sometimes referred to as “Warrant Shares,” and the exercise price for the purchase of a share of Common Stock pursuant to this Warrant in effect at any time, as the same may be adjusted from time to time, is hereinafter sometimes referred to as the “Exercise Price.” This Warrant was issued pursuant to a Loan and Security Agreement (the “Loan Agreement”) dated March 7, 2007, between the Company, the initial holder of this Warrant and the other investors named therein, and the holder of this Warrant is entitled to the benefits of the Loan Agreement and the Registration Rights Agreement, as defined in the Loan Agreement. The date of the initial issuance of this Warrant is the Closing Date under the Loan Agreement. Reference in this Warrant to “all of the Warrants” or words of like import shall relate to all of the Series A Common Stock Purchase Warrants issued pursuant to the Loan Agreement.

1.Exercise of Warrant.

(a)This Warrant may be exercised in whole at any time or in part from time to time during the Exercise Period by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of shares of Common Stock specified in such form. Payment of the Exercise Price may be made either by check (subject to collection) or wire transfer in the amount of the Exercise Price. If this Warrant should be exercised in part only, whether pursuant to this Section 1(a) or pursuant to Section 1(b) of this Warrant, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder hereof to purchase the balance of the shares of Common Stock purchasable hereunder. The holder of this Warrant shall not be required to physically deliver this Warrant upon exercise of this Warrant pursuant to this Section 1(a) or on conversion of this Warrant as provided in Section 1(b) of this Warrant. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, or upon delivery of the notice of conversion or exercise without delivery of this Warrant, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder.

(b)In lieu of exercising this Warrant by payment of the Exercise Price pursuant to Section 1(a) of this Warrant, and subject to the limitations provisions of Section 1(c) of this Warrant, the Holder shall have the right, on notice to the Company, to convert this Warrant, in whole or in part to the extent that this Warrant has not been exercised pursuant to said Section 1(a) of this Warrant or converted pursuant to this Section 1(b), for the number of shares of Common Stock equal to a fraction of the number of shares of Common Stock as to which this Warrant is being converted, the numerator of which is excess of the Current Market Value (as defined below) per share over the total cash exercise price per share, and the denominator of which is the Market Price of the Common Stock as of the trading day immediately prior to the Conversion Date. For the purpose of this Warrant, the terms (x) “Current Market Value” shall be the last sales per share of the Common Stock (as reported by Bloomberg, L.P. or, if the Common Stock is traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange) as of the trading day immediately prior to the Conversion Date, and (y) “Market Price of the Common Stock” shall be the average of the low bid price per share of the Common Stock (as reported by Bloomberg L.P. or, if the Common Stock is traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange) for the five trading days prior to the Conversion Date. The Conversion Date shall mean, the date on which the Holder gives the Company notice of conversion by hand delivery or telecopier. In the event that Bloomberg, L.P. shall not provide such information, the information shall be provided by a person or entity that regularly provides price and volume information that is selected by the Holders of a majority of the Warrants then outstanding, based on the number of shares of Common Stock issuable upon exercise of the Warrants. The parties understand and agree that, for purposes of Rule 144 of the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), if the holder converts the Warrant pursuant to this Section 1(b), its holding period will commence on the Closing Date, as defined in the Loan Agreement.

(c)The holder of this Warrant may not make a cashless exercise pursuant to Section 1(b) of this Warrant (i) during the twelve months following the initial issuance of this Warrant and (ii) thereafter if the sale by the Holder of the Warrant Shares is covered by an effective registration statement.

(d)The Holder shall not be entitled to exercise or convert this Warrants to the extent that, on the date of such conversion or exercise, the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates, as defined in the Loan Agreement, on such date plus (ii) the number of shares of Common Stock issuable upon exercise or conversion of this Warrant would result in the Holder and its Affiliates beneficially owning more than 4.99% of the outstanding shares of Common Stock of the Company, except as expressly provided in Section 1(e) of this Agreement. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act of 1934, as amended, and Regulation 13d-3 of the Commission thereunder. This limitation shall not affect the ability of the Investor to exercise or convert the warrants in a manner which would result in the Company having issued in the aggregate shares of Common Stock in excess of the 4.99% limitation as long as the Holder does not, at any one time as a result of such conversion or exercise, beneficially own more than such percentage. Under conditions set forth in the Loan Agreement and in Section 10(a)(i) of this Warrant, the reference in this Section 1(d) to 4.99% shall mean 9.99%. The limitation set forth in this Section 1(d) is referred to as the “4.99% Limitation.” The 4.99% Limitation may not be waived, modified or amended and any attempted waiver, modification or amendment of the 4.99% Limitation shall be void.

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(e)The 4.99% Limitation shall terminate upon the close of business on the business day immediately preceding the date fixed for consummation of any transaction resulting in a Change of Control of the Company. A “Change in Control” means a consolidation or merger of the Company with or into another company or entity in which the Company is not the surviving entity or the sale of all or substantially all of the assets of the Company to another company or entity not controlled by the then existing stockholders of the Company in a transaction or series of transactions. Upon the occurrence of a Change of Control, the Company shall promptly send written notice thereof, by hand delivery or by overnight delivery, to the Holder.

2.Reservation and Delivery of Shares.

(a)The Company hereby agrees that at all times there shall be reserved for issuance upon exercise of this Warrant such number of shares of Common Stock as shall be required for issuance and delivery upon exercise or conversion of this Warrant and that it shall not increase the par value of the Common Stock.

(b)Except as otherwise set forth herein, upon delivery of a completed Purchase Form accompanied, if the exercise is not a cashless exercise, by payment of the Exercise Price, not later than three (3) business days after the Exercise Date (such third day being the “Delivery Date”), the Company shall deliver to the Holder a certificate or certificates which, after the effective date of a registration statement covering the shares of Common Stock issuable upon exercise of this Warrant (the “Effective Date”), shall be free of restrictive legends and trading restrictions (other than those required by the Securities Act) representing the number of shares of Common Stock being acquired upon such exercise. After the Effective Date, the Company shall, upon request of the Holder, deliver any certificate or certificates required to be delivered by the Company under this Section 2(b) electronically through the Depository Trust Company or another established clearing company performing similar functions if the Company’s transfer agent has the ability to deliver shares of Common Stock in such manner. If in the case of any exercise of this Warrant such certificate or certificates are not delivered to or as directed by the applicable Holder by the second day after the Delivery Date, the Holder shall be entitled to elect 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 conversion shall be deemed void ab initio.

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(c)The Company’s obligations to issue and deliver the Common Stock upon exercise of this Warrant in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such shares. In the event the Holder shall elect to exercise this Warrant in whole or in part, the Company may not refuse to effect such exercise based on any claim that the Holder or any one associated or affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason unless an injunction from a court, on notice, restraining and or enjoining such exercise shall have been sought and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the Value, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration or litigation of the dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, the Company shall issue the Common Stock upon a properly executed Purchase Form. If the Company fails to deliver to the Holder such certificate or certificates pursuant to this Section 2(b) within two trading days of the Delivery Date applicable to such exercise, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Value of the Warrant being exercised, $50 per trading day (increasing to $100 per trading day three (3) trading days after such damages begin to accrue and increasing to $200 per trading day six (6) trading days after such damages begin to accrue) for each trading day after the Delivery Date until such certificates are delivered. Nothing herein shall limit a Holder’s right to pursue actual damages for the Company’s failure to deliver certificates representing shares of Common Stock upon exercise within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

(d)If the Company fails to deliver to the Holder such certificate or certificates pursuant to this Section 2(b) by the Delivery Date, and if after such Delivery Date the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Common Stock which the Holder was entitled to receive upon the exercise relating to such Delivery Date (a “Buy-In”), then the Company shall pay in cash to the Holder the amount by which (a) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (i) the product of (x) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the exercise at issue multiplied by (y) the price at which the sell order giving rise to such purchase obligation was executed. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of this Warrant with respect to which the aggregate sale price giving rise to such purchase obligation is $10,000, under the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Borrowers. Nothing in this Section 2(d) shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant pursuant to its terms.

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3.Fractional Shares. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise or conversion of this Warrant, the Company shall round the number of shares of Common Stock to be issued to the next higher integral number of shares

4.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Subject to the provisions of Section 11 of this Warrant, upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term “Warrant” as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone.

5.Rights of the Holder. The Holder shall not, by virtue of this Warrant, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant, the Loan Agreement and the Registration Rights Agreement and are not enforceable against the Company except to the extent set forth herein and therein.

6.Adjustments To Exercise Price. The Exercise Price in effect at any time and the number and kind of securities purchasable upon exercise of each Warrant shall be subject to adjustment as follows:

(a)In case the Company shall, subsequent to the date of the initial issuance of this Warrant, (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common Stock into a greater number of shares or otherwise effect a stock split or distribution, or (iii) combine or reclassify its outstanding Common Stock into a smaller number of shares or otherwise effect a reverse split, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 6. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 6(a)) be issuable on such exercise by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 6(a)) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise (prior to any adjustment pursuant to Section 6(f) of this Warrant).

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(b)In case the Company shall, subsequent to the date of the initial issuance of this Warrant, distribute to all holders of Common Stock evidences of its indebtedness or assets (excluding (x) cash dividends or distributions paid out of current earnings and (y) dividends or distributions referred to in Section 6(a) of this Warrant), then in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, of which the numerator shall be the total number of shares of Common Stock outstanding multiplied by the Current Market Price per share of Common Stock, less the fair market value (as determined by the Company’s Board of Directors) of said assets or evidences of indebtedness so distributed or of such rights or warrants, and of which the denominator shall be the total number of shares of Common Stock outstanding multiplied by such Current Market Price per share of Common Stock. Such adjustment shall be made successively whenever such a record date is fixed. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution.

(c)If, while this Warrant is outstanding, the Company sells or otherwise issues any Convertible Securities, shares of Common Stock, or shares of any class of capital stock at a price per share of Common Stock, or with a conversion right or exercise price to acquire Common Stock at a price per share of Common Stock (other than (x) an Exempt Issuance, as defined in the Loan Agreement, or (y) an issuance covered by Section 6(a) or 6(b) of this Warrant), that is less than the Exercise Price in effect at the time of such sale (such lower price being referred to as the “Lower Price”), the Exercise Price shall be reduced to an adjusted Exercise Price which is equal to the Lower Price. Such adjustment shall be made successively whenever any such sale or other issuance at a Lower Price is made. The term “Convertible Security” shall mean any debt or equity security or instrument upon the conversion or exercise of which shares of Common Stock may be issued.

(i) For purposes of this Section 6(c), the price at which such shares of Common Stock are issued shall be the consideration paid for the Common Stock or the price at which the Company agrees to issue shares of Common Stock. The price at which any Convertible Security is issued shall be the amount received for the issuance of the Convertible Security plus the minimum amount of additional consideration which is payable upon exercise or conversion of the Convertible Security. If the Company issues securities as a unit, regardless of whether such issuance is defined as a unit, a separate computation shall be made with respect to (x) shares of Common Stock and convertible securities (based on the maximum number of shares of Common Stock which may be issued upon conversion, including conversion of interest or dividends, but excluding warrants, rights and options) and (y) warrants, options or rights, with a separate computation being made as to each warrant, option or right which is issued. If warrants, options or rights are issued, the Company shall not be deemed to have received any consideration for the issuance of the shares upon exercise of the warrant, option or right other than the lowest exercise price provided therein. If the Company has an agreement which provides for the issuance of shares at a fixed price or a formula price with a maximum price, the Company shall be deemed to have issued securities at such maximum price regardless of whether any securities are actually sold, and any issuance of securities below such maximum price shall, if such price is a Lower Price, be a sale which results in an adjustment pursuant to this Section 2(c).

(ii) By way of example, if the Company issues for $1,000,000 securities consisting of 500,000 shares of Common Stock and a convertible note for $1,000,000 with a conversion price of $.40 and warrants to purchase 1,000,000 shares of Common Stock at $.40, the Lower Price would be determined by dividing the total consideration paid for the Common Stock and the note ($1,000,000) by the number of shares of Common Stock issued (3,000,000 shares, representing the 500,000 shares issued at closing plus the 2,500,000 shares issuable upon conversion of the note), which would result in Lower Price of $.333, which would become the adjusted Exercise Price of this Warrant. If, in the same example, the exercise price of the warrant were $.30 per share, the Lower Price would be $.30, which would become the adjusted Exercise Price. If, in either case, the conversion price of all or any part of the convertible notes or the exercise price of all or any of the warrants were subsequently reduced, a further adjustment would be made.

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(iii) Any stock or convertible securities (other than warrants or options which shall be valued at the lowest stated exercise price thereof) issued for services that are not Exempt Issuances shall, for purposes of this Warrant, be valued at the par value thereof unless such issuance is made with the prior written approved of the Investors, as defined in the Loan Agreement, in which event the securities shall be valued in the manner as set forth in the Investors’ approval.

(d)In case the Company shall, subsequent to the date of initial issuance of this Warrant, issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (or having a conversion price per share) less than the Current Market Price per share of Common Stock for the record date mentioned below, if issuance does not result in an adjustment pursuant to Section 6(c) of this Warrant, the Exercise Price shall be adjusted to an adjusted Exercise equal to the price determined by multiplying the Exercise Price in effect immediately prior to the date of such issuance by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the record date mentioned below plus the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such Current Market Price per share of the Common Stock, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered for subscription or purchased (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights or warrants; and shall be effective regardless of whether such rights are exercised or expire in whole or in part unexercised. The provisions of this Section 6(d) are in addition to the provisions of Section 6(c) and any adjustment pursuant to this Section 6(d) shall be made after the application of Section 6(c).

(e)Subject to the provisions of Section 6(a) of this Warrant, whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to this Section 6, the number of shares of Common Stock issuable upon exercise or conversion of this Warrant shall simultaneously be adjusted by multiplying the number of shares of Common Stock issuable upon exercise of each Warrant in effect on immediately prior to the adjustment by the Exercise Price then in effect and dividing the product so obtained by the Exercise Price, as adjusted. In no event shall the Exercise Price per share be less than the par value per share, and, if any adjustment made pursuant to said Section 6 would result in an Exercise Price which would be less than the par value per share, then, in such event, the Exercise Price per share shall be the par value per share; provided, however, that the limitation contained in this sentence shall not affect the number of shares of Common Stock issuable upon exercise or conversion of this Warrant.

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(f)In the event that at any time, as a result of an adjustment made pursuant to this Section 6, the Holder of any Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in this Section 6.

(g)Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of Warrants, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this and similar Warrants initially issued by the Company.

7.Officer’s Certificate. Whenever the Exercise Price shall be adjusted as required by the provisions of Section 6 of this Warrant, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer’s certificate showing the adjusted Exercise Price and the adjusted number of shares of Common Stock issuable upon exercise of each Warrant, determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer’s certificate shall be made available at all reasonable times for inspection by the Holder, and the Company shall, forthwith after each such adjustment, mail, by certified mail, return receipt requested and by telecopier and e-mail, a copy of such certificate to the Holder at the Holder’s address set forth in the Company’s Warrant Register.

8.Notices To Warrant Holders. So long as this Warrant shall be outstanding, (a) if the Company shall pay any dividend or make any distribution upon Common Stock (other than a regular cash dividend payable out of retained earnings) or (b) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (c) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail, return receipt requested, to the Holder, at least fifteen days prior to the date specified in clauses (i) and (ii), as the case may be, of this Section 8 a notice containing a brief description of the proposed action and stating the date on which (i) a record is to be taken for the purpose of such dividend, distribution or rights, or (ii) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.

9.Reclassification, Reorganization or Merger. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another corporation (other than a merger in which the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter by exercising this Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section 9 shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances. Notwithstanding the foregoing, in the event that, as a result of any merger, consolidation, sale of assets or similar transaction, all of the holders of Common Stock receive and are entitled to receive no consideration other than cash in respect of their shares of Common Stock, then, at the effective time of the transaction, the rights to purchase Common Stock pursuant to the Warrants shall terminate, and the holders of the Warrants shall, notwithstanding any other provisions of this Warrant, receive in respect of each Warrant to purchase one (1) share of Common Stock, upon presentation of the Warrant Certificate, the amount by which the consideration per share of Common Stock payable to the holders of Common Stock at such effective time exceeds the Exercise Price in effect on such effective date, without giving effect to the transaction; provided, however, that if such transaction would, but for this Section 9, result in a reduction in the Exercise Price pursuant to Section 6(c) of this Warrant, the Exercise Price shall be reduced to reflect that transaction. In the event that, in such a transaction, the value of the consideration to be received per share of Common Stock is equal to or less than the Exercise Price, the Warrants shall automatically terminate and no consideration will be paid with respect thereof.

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10.Mandatory Exercise.

(a)i)The Company shall have the right at any time, on not less than forty five (45) days written notice, to require the Holder to exercise the outstanding Warrants, if, and only if, the Market Price of the Common Stock shall equal or exceed the “Target Price” and the “Trading Volume” shall equal or exceed the “Target Volume” on any consecutive twenty (20) trading days ending on the trading day prior to the date that the Company delivers notice of mandatory exercise. Notice of mandatory exercise shall be mailed by first class mail, postage prepaid, and sent by telecopier or e-mail, and shall be deemed given on the date of receipt of the notice by the Holder, provided that receipt is acknowledged. The Company must require that all Warrants be exercised if it requires any Warrants to be exercised; provided, however, that if exercise pursuant to this Section 10(a)(i) would result in a violation of the 4.99% Limitation (provided, however, that for purposes of this Section 10, the references to 4.99% shall be deemed to be 9.99%), the Company shall not have the right to require exercise of the Holders’ Warrants to the extent that the exercise of the Warrants would result in such a violation. In such event, the Company may subsequently exercise its right to require exercise of the remaining Warrants held by the Holder at such future time as, and to the extent that, such exercise would not result in a violation of the 4.99% Limitation.

(ii) As used in this Section 10, the following terms shall have the meanings set forth below:

(A)“Mandatory Exercise Date” shall mean the date by which the Warrants are required to be exercised, as set forth in the notice of mandatory exercise from the Company to the Holders of the Warrants, subject to Section 10(b)(ii) of this Warrant.

(B)“Market Price” shall mean the closing price of the Common Stock (as reported by Bloomberg L.P. or, if the Common Stock is traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange).

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(C)“Target Price” shall mean seventy five cents ($.75); which price shall be subject to adjustment for events described in Section 6(a) of this Warrant.

(D)“Trading Volume” shall mean the trading volume in the Common Stock (as reported by Bloomberg L.P. or the Nasdaq Stock Market or the New York or American Stock Exchange, as the case may be).

(E)“Target Volume” shall mean one hundred fifty thousand (150,000) shares.

(b)Notwithstanding any other provision of this Section 10:

(i) The Company may only exercise the right of required exercise pursuant to Section 10(a)(i) of this Warrant if a registration statement covering the sale by the Holder of the shares of Common Stock issuable upon exercise of this Warrant is current and effective and, based on the date of the prospectus forming a part of the registration statement and the age of the financial statements contained in the registration statement, the registration statement can be used by the Holder in connection with the sale of the Common Stock for at least three months after the Mandatory Exercise Date without the need to file a post-effective amendment to update the registration statement, and there shall not have occurred any material event concerning the Company or its Affiliates for which disclosure would be necessary in order that the information contained in the registration statement is true and correct in all material respects and does not omit any information necessary to make the information contained therein not misleading. The redemption notice shall include the certificate of the Borrowers’ respective chief executive officers as to the matters set forth in this Section 10(b)(i).

(ii) In the event that, at any time subsequent to the date on which the Company gives notice of mandatory exercise and before the Mandatory Exercise Date, the shares of Common Stock issuable upon exercise of the Warrants are not subject to a current and effective registration statement, the Company’s right to require exercise of the Warrants shall be suspended with respect to all Warrants that have not then been exercised or converted and such notice of mandatory exercise shall be deemed to have been withdrawn; provided, however, that the Holder’s right to convert the Warrant as provided in Section 1(b) of this Warrant shall continue for the balance of the Exercise Period. Nothing in the preceding sentence shall be construed to prohibit or restrict the Company from thereafter requiring mandatory exercise of the Warrants in the manner provided for, and subject to the provisions of, this Section 10.

(c)The notice of mandatory exercise shall specify (i) the Mandatory Exercise Date, (ii) the representation required by Section 10(b)(i) of this Warrant, and (iii) the number of Warrants with respect to which mandatory exercise is being demanded if exercise of less than all of the Warrants is being demanded. No failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the demand for mandatory exercise except as to a Holder (a) to whom notice was not mailed or (b) whose notice was defective. An affidavit of the Chief Financial Officer of the Company that notice of mandatory exercise has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

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(d)The Holder’s obligation to exercise this Warrant in accordance with the terms of this Section 10 are absolute and unconditional, irrespective of any action or inaction by the Company to enforce the same.

11.Transfer to Company with the Securities Act.

(a)The Holder of this Warrant shall be entitled to the benefits of the Registration Rights Agreement.

(b)This Warrant or the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act, or an exemption from the registration requirements of such Act.

Dated as of March 7, 2007	NATURALNANO, INC.
	By:
	Name:
	Title:

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PURCHASE FORM

Dated: , 20

______ The undersigned hereby irrevocably exercises this Warrant to the extent of purchasing _______ shares of Common Stock and hereby makes payment of $____________ in payment of the Exercise Price therefor.

______ The undersigned hereby irrevocably converts this Warrant pursuant to the cashless conversion provisions of Section 1(b) of this Warrant with respect to _______ shares of Common Stock.

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name:______________________________________________________________________________________________________________________________________

(Please typewrite or print in block letters)

Signature:___________________________________________

Social Security or Employer Identification No.________________________

ASSIGNMENT FORM

FOR VALUE RECEIVED,____________________________________________________________________________________________________________

hereby sells, assigns and transfer unto

Name ______________________________________________________________________________________________________________________________________

(Please typewrite or print in block letters)

Address____________________________________________________________________________________________________________________________________

Social Security or Employer Identification No._______________________

The right to purchase Common Stock represented by this Warrant to the extent of _________shares as to which such right is exercisable and does hereby irrevocably constitute and appoint __________________ attorney to transfer the same on the books of the Company with full power of substitution.

Dated: , 20

Signature_________________________________________

Signature Medallion Guaranteed:

_________________________________________________

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EX-4.4

Exhibit 4.4

WB-[   ] Warrant to Purchase **         ** Shares of Common Stock

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR SUCH SHARES OF COMMON STOCK MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

Void after 5:30 P.M. New York City time on March 7, 2011

SERIES B COMMON STOCK PURCHASE WARRANT

OF

NATURALNANO, INC.

This is to certify that, FOR VALUE RECEIVED, [ ], or registered assigns (“Holder”), is entitled to purchase, on the terms and subject to the provisions of this Warrant, from NaturalNano, Inc., a Nevada corporation (the “Company”), at an exercise price (the “Exercise Price”) of thirty three cents ($0.33) per share, [ ] shares of common stock, par value $.001 per share (“Common Stock”), of the Company at any time during the period (the “Exercise Period”) commencing on the date of this Warrant and ending at 5:30 P.M. New York City time, on March 7, 2011; provided, however, that if such date is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which such banks are not authorized to close. The number of shares of Common Stock to be issued upon the exercise or conversion of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time in the manner set forth in this Warrant. The shares of Common Stock deliverable upon such exercise or conversion, and as adjusted from time to time, are hereinafter sometimes referred to as “Warrant Shares,” and the exercise price for the purchase of a share of Common Stock pursuant to this Warrant in effect at any time, as the same may be adjusted from time to time, is hereinafter sometimes referred to as the “Exercise Price.” This Warrant was issued pursuant to a Loan and Security Agreement (the “Loan Agreement”) dated March 7, 2007, between the Company, the initial holder of this Warrant and the other investors named therein, and the holder of this Warrant is entitled to the benefits of the Loan Agreement and the Registration Rights Agreement, as defined in the Loan Agreement. The date of the initial issuance of this Warrant is the Closing Date under the Loan Agreement. Reference in this Warrant to “all of the Warrants” or words of like import shall relate to all of the Series B Common Stock Purchase Warrants issued pursuant to the Loan Agreement.

1.Exercise of Warrant.

(a)This Warrant may be exercised in whole at any time or in part from time to time during the Exercise Period by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of shares of Common Stock specified in such form. Payment of the Exercise Price may be made either by check (subject to collection) or wire transfer in the amount of the Exercise Price. If this Warrant should be exercised in part only, whether pursuant to this Section 1(a) or pursuant to Section 1(b) of this Warrant, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder hereof to purchase the balance of the shares of Common Stock purchasable hereunder. The holder of this Warrant shall not be required to physically deliver this Warrant upon exercise of this Warrant pursuant to this Section 1(a) or on conversion of this Warrant as provided in Section 1(b) of this Warrant. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, or upon delivery of the notice of conversion or exercise without delivery of this Warrant, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder.

(b)In lieu of exercising this Warrant by payment of the Exercise Price pursuant to Section 1(a) of this Warrant, and subject to the limitations provisions of Section 1(c) of this Warrant, the Holder shall have the right, on notice to the Company, to convert this Warrant, in whole or in part to the extent that this Warrant has not been exercised pursuant to said Section 1(a) of this Warrant or converted pursuant to this Section 1(b), for the number of shares of Common Stock equal to a fraction of the number of shares of Common Stock as to which this Warrant is being converted, the numerator of which is excess of the Current Market Value (as defined below) per share over the total cash exercise price per share, and the denominator of which is the Market Price of the Common Stock as of the trading day immediately prior to the Conversion Date. For the purpose of this Warrant, the terms (x) “Current Market Value” shall be the last sales per share of the Common Stock (as reported by Bloomberg, L.P. or, if the Common Stock is traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange) as of the trading day immediately prior to the Conversion Date, and (y) “Market Price of the Common Stock” shall be the average of the low bid price per share of the Common Stock (as reported by Bloomberg L.P. or, if the Common Stock is traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange) for the five trading days prior to the Conversion Date. The Conversion Date shall mean, the date on which the Holder gives the Company notice of conversion by hand delivery or telecopier. In the event that Bloomberg, L.P. shall not provide such information, the information shall be provided by a person or entity that regularly provides price and volume information that is selected by the Holders of a majority of the Warrants then outstanding, based on the number of shares of Common Stock issuable upon exercise of the Warrants. The parties understand and agree that, for purposes of Rule 144 of the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), if the holder converts the Warrant pursuant to this Section 1(b), its holding period will commence on the Closing Date, as defined in the Loan Agreement.

(c)The holder of this Warrant may not make a cashless exercise pursuant to Section 1(b) of this Warrant (i) during the twelve months following the initial issuance of this Warrant and (ii) thereafter if the sale by the Holder of the Warrant Shares is covered by an effective registration statement.

(d)The Holder shall not be entitled to exercise or convert this Warrants to the extent that, on the date of such conversion or exercise, the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates, as defined in the Loan Agreement, on such date plus (ii) the number of shares of Common Stock issuable upon exercise or conversion of this Warrant would result in the Holder and its Affiliates beneficially owning more than 4.99% of the outstanding shares of Common Stock of the Company, except as expressly provided in Section 1(e) of this Agreement. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act of 1934, as amended, and Regulation 13d-3 of the Commission thereunder. This limitation shall not affect the ability of the Investor to exercise or convert the warrants in a manner which would result in the Company having issued in the aggregate shares of Common Stock in excess of the 4.99% limitation as long as the Holder does not, at any one time as a result of such conversion or exercise, beneficially own more than such percentage. Under conditions set forth in the Loan Agreement, the reference in this Section 1(d) to 4.99% shall mean 9.99%. The limitation set forth in this Section 1(d) is referred to as the “4.99% Limitation.” The 4.99% Limitation may not be waived, modified or amended and any attempted waiver, modification or amendment of the 4.99% Limitation shall be void.

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(e)The 4.99% Limitation shall terminate upon the close of business on the business day immediately preceding the date fixed for consummation of any transaction resulting in a Change of Control of the Company. A “Change in Control” means a consolidation or merger of the Company with or into another company or entity in which the Company is not the surviving entity or the sale of all or substantially all of the assets of the Company to another company or entity not controlled by the then existing stockholders of the Company in a transaction or series of transactions. Upon the occurrence of a Change of Control, the Company shall promptly send written notice thereof, by hand delivery or by overnight delivery, to the Holder.

2.Reservation and Delivery of Shares.

(a)The Company hereby agrees that at all times there shall be reserved for issuance upon exercise of this Warrant such number of shares of Common Stock as shall be required for issuance and delivery upon exercise or conversion of this Warrant and that it shall not increase the par value of the Common Stock.

(b)Except as otherwise set forth herein, upon delivery of a completed Purchase Form accompanied, if the exercise is not a cashless exercise, by payment of the Exercise Price, not later than three (3) business days after the Exercise Date (such third day being the “Delivery Date”), the Company shall deliver to the Holder a certificate or certificates which, after the effective date of a registration statement covering the shares of Common Stock issuable upon exercise of this Warrant (the “Effective Date”), shall be free of restrictive legends and trading restrictions (other than those required by the Securities Act) representing the number of shares of Common Stock being acquired upon such exercise. After the Effective Date, the Company shall, upon request of the Holder, deliver any certificate or certificates required to be delivered by the Company under this Section 2(b) electronically through the Depository Trust Company or another established clearing company performing similar functions if the Company’s transfer agent has the ability to deliver shares of Common Stock in such manner. If in the case of any exercise of this Warrant such certificate or certificates are not delivered to or as directed by the applicable Holder by the second day after the Delivery Date, the Holder shall be entitled to elect 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 conversion shall be deemed void ab initio.

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(c)The Company’s obligations to issue and deliver the Common Stock upon exercise of this Warrant in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such shares. In the event the Holder shall elect to exercise this Warrant in whole or in part, the Company may not refuse to effect such exercise based on any claim that the Holder or any one associated or affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason unless an injunction from a court, on notice, restraining and or enjoining such exercise shall have been sought and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the Value, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration or litigation of the dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, the Company shall issue the Common Stock upon a properly executed Purchase Form. If the Company fails to deliver to the Holder such certificate or certificates pursuant to this Section 2(b) within two trading days of the Delivery Date applicable to such exercise, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Value of the Warrant being exercised, $50 per trading day (increasing to $100 per trading day three (3) trading days after such damages begin to accrue and increasing to $200 per trading day six (6) trading days after such damages begin to accrue) for each trading day after the Delivery Date until such certificates are delivered. Nothing herein shall limit a Holder’s right to pursue actual damages for the Company’s failure to deliver certificates representing shares of Common Stock upon exercise within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

(d)If the Company fails to deliver to the Holder such certificate or certificates pursuant to this Section 2(b) by the Delivery Date, and if after such Delivery Date the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Common Stock which the Holder was entitled to receive upon the exercise relating to such Delivery Date (a “Buy-In”), then the Company shall pay in cash to the Holder the amount by which (a) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (i) the product of (x) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the exercise at issue multiplied by (y) the price at which the sell order giving rise to such purchase obligation was executed. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of this Warrant with respect to which the aggregate sale price giving rise to such purchase obligation is $10,000, under the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Borrowers. Nothing in this Section 2(d) shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant pursuant to its terms.

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3.Fractional Shares. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise or conversion of this Warrant, the Company shall round the number of shares of Common Stock to be issued to the next higher integral number of shares

4.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Subject to the provisions of Section 11 of this Warrant, upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term “Warrant” as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone.

5.Rights of the Holder. The Holder shall not, by virtue of this Warrant, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant, the Loan Agreement and the Registration Rights Agreement and are not enforceable against the Company except to the extent set forth herein and therein.

6.Adjustments To Exercise Price. The Exercise Price in effect at any time and the number and kind of securities purchasable upon exercise of each Warrant shall be subject to adjustment as follows:

(a)In case the Company shall, subsequent to the date of the initial issuance of this Warrant, (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common Stock into a greater number of shares or otherwise effect a stock split or distribution, or (iii) combine or reclassify its outstanding Common Stock into a smaller number of shares or otherwise effect a reverse split, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 6. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 6(a)) be issuable on such exercise by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 6(a)) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise (prior to any adjustment pursuant to Section 6(f) of this Warrant).

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(b)In case the Company shall, subsequent to the date of the initial issuance of this Warrant, distribute to all holders of Common Stock evidences of its indebtedness or assets (excluding (x) cash dividends or distributions paid out of current earnings and (y) dividends or distributions referred to in Section 6(a) of this Warrant, then in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, of which the numerator shall be the total number of shares of Common Stock outstanding multiplied by the Current Market Price per share of Common Stock, less the fair market value (as determined by the Company’s Board of Directors) of said assets or evidences of indebtedness so distributed or of such rights or warrants, and of which the denominator shall be the total number of shares of Common Stock outstanding multiplied by such Current Market Price per share of Common Stock. Such adjustment shall be made successively whenever such a record date is fixed. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution.

(c)If, while this Warrant is outstanding, the Company sells or otherwise issues any Convertible Securities, shares of Common Stock, or shares of any class of capital stock at a price per share of Common Stock, or with a conversion right or exercise price to acquire Common Stock at a price per share of Common Stock (other than (x) an Exempt Issuance, as defined in the Loan Agreement, or (y) an issuance covered by Section 6(a) or 6(b) of this Warrant), that is less than the Exercise Price in effect at the time of such sale (such lower price being referred to as the “Lower Price”), the Exercise Price shall be reduced to an adjusted Exercise Price which is equal to the Lower Price. Such adjustment shall be made successively whenever any such sale or other issuance at a Lower Price is made. The term “Convertible Security” shall mean any debt or equity security or instrument upon the conversion or exercise of which shares of Common Stock may be issued.

(i) For purposes of this Section 6(c), the price at which such shares of Common Stock are issued shall be the consideration paid for the Common Stock or the price at which the Company agrees to issue shares of Common Stock. The price at which any Convertible Security is issued shall be the amount received for the issuance of the Convertible Security plus the minimum amount of additional consideration which is payable upon exercise or conversion of the Convertible Security. If the Company issues securities as a unit, regardless of whether such issuance is defined as a unit, a separate computation shall be made with respect to (x) shares of Common Stock and convertible securities (based on the maximum number of shares of Common Stock which may be issued upon conversion, including conversion of interest or dividends, but excluding warrants, rights and options) and (y) warrants, options or rights, with a separate computation being made as to each warrant, option or right which is issued. If warrants, options or rights are issued, the Company shall not be deemed to have received any consideration for the issuance of the shares upon exercise of the warrant, option or right other than the lowest exercise price provided therein. If the Company has an agreement which provides for the issuance of shares at a fixed price or a formula price with a maximum price, the Company shall be deemed to have issued securities at such maximum price regardless of whether any securities are actually sold, and any issuance of securities below such maximum price shall, if such price is a Lower Price, be a sale which results in an adjustment pursuant to this Section 2(c).

(ii) By way of example, if the Company issues for $1,000,000 securities consisting of 500,000 shares of Common Stock and a convertible note for $1,000,000 with a conversion price of $.40 and warrants to purchase 1,000,000 shares of Common Stock at $.40, the Lower Price would be determined by dividing the total consideration paid for the Common Stock and the note ($1,000,000) by the number of shares of Common Stock issued (3,000,000 shares, representing the 500,000 shares issued at closing plus the 2,500,000 shares issuable upon conversion of the note), which would result in Lower Price of $.333, which would become the adjusted Exercise Price of this Warrant. If, in the same example, the exercise price of the warrant were $.30 per share, the Lower Price would be $.30, which would become the adjusted Exercise Price. If, in either case, the conversion price of all or any part of the convertible notes or the exercise price of all or any of the warrants were subsequently reduced, a further adjustment would be made.

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(iii) Any stock or convertible securities (other than warrants or options which shall be valued at the lowest stated exercise price thereof) issued for services that are not Exempt Issuances shall, for purposes of this Warrant, be valued at the par value thereof unless such issuance is made with the prior written approved of the Investors, as defined in the Loan Agreement, in which event the securities shall be valued in the manner as set forth in the Investors’ approval.

(d)In case the Company shall, subsequent to the date of initial issuance of this Warrant, issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (or having a conversion price per share) less than the Current Market Price per share of Common Stock for the record date mentioned below, if issuance does not result in an adjustment pursuant to Section 6(c) of this Warrant, the Exercise Price shall be adjusted to an adjusted Exercise equal to the price determined by multiplying the Exercise Price in effect immediately prior to the date of such issuance by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the record date mentioned below plus the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such Current Market Price per share of the Common Stock, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered for subscription or purchased (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights or warrants; and shall be effective regardless of whether such rights are exercised or expire in whole or in part unexercised. The provisions of this Section 6(d) are in addition to the provisions of Section 6(c) and any adjustment pursuant to this Section 6(d) shall be made after the application of Section 6(c).

(e)Subject to the provisions of Section 6(a) of this Warrant, whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to this Section 6, the number of shares of Common Stock issuable upon exercise or conversion of this Warrant shall simultaneously be adjusted by multiplying the number of shares of Common Stock issuable upon exercise of each Warrant in effect on immediately prior to the adjustment by the Exercise Price then in effect and dividing the product so obtained by the Exercise Price, as adjusted. In no event shall the Exercise Price per share be less than the par value per share, and, if any adjustment made pursuant to said Section 6 would result in an Exercise Price which would be less than the par value per share, then, in such event, the Exercise Price per share shall be the par value per share; provided, however, that the limitation contained in this sentence shall not affect the number of shares of Common Stock issuable upon exercise or conversion of this Warrant.

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(f)In the event that at any time, as a result of an adjustment made pursuant to this Section 6, the Holder of any Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in this Section 6.

(g)Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of Warrants, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this and similar Warrants initially issued by the Company.

7.Officer’s Certificate. Whenever the Exercise Price shall be adjusted as required by the provisions of Section 6 of this Warrant, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer’s certificate showing the adjusted Exercise Price and the adjusted number of shares of Common Stock issuable upon exercise of each Warrant, determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer’s certificate shall be made available at all reasonable times for inspection by the Holder, and the Company shall, forthwith after each such adjustment, mail, by certified mail, return receipt requested and by telecopier and e-mail, a copy of such certificate to the Holder at the Holder’s address set forth in the Company’s Warrant Register.

8.Notices To Warrant Holders. So long as this Warrant shall be outstanding, (a) if the Company shall pay any dividend or make any distribution upon Common Stock (other than a regular cash dividend payable out of retained earnings) or (b) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (c) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail, return receipt requested, to the Holder, at least fifteen days prior to the date specified in clauses (i) and (ii), as the case may be, of this Section 8 a notice containing a brief description of the proposed action and stating the date on which (i) a record is to be taken for the purpose of such dividend, distribution or rights, or (ii) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.

9.Reclassification, Reorganization or Merger. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another corporation (other than a merger in which the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter by exercising this Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section 9 shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances. Notwithstanding the foregoing, in the event that, as a result of any merger, consolidation, sale of assets or similar transaction, all of the holders of Common Stock receive and are entitled to receive no consideration other than cash in respect of their shares of Common Stock, then, at the effective time of the transaction, the rights to purchase Common Stock pursuant to the Warrants shall terminate, and the holders of the Warrants shall, notwithstanding any other provisions of this Warrant, receive in respect of each Warrant to purchase one (1) share of Common Stock, upon presentation of the Warrant Certificate, the amount by which the consideration per share of Common Stock payable to the holders of Common Stock at such effective time exceeds the Exercise Price in effect on such effective date, without giving effect to the transaction; provided, however, that if such transaction would, but for this Section 9, result in a reduction in the Exercise Price pursuant to Section 6(c) of this Warrant, the Exercise Price shall be reduced to reflect that transaction. In the event that, in such a transaction, the value of the consideration to be received per share of Common Stock is equal to or less than the Exercise Price, the Warrants shall automatically terminate and no consideration will be paid with respect thereof.

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10.No Right to Call or Require Exercise. The Company shall have no right call this Warrant or to require the Holder to exercise this Warrant.

11.Transfer to Company with the Securities Act.

(a)The Holder of this Warrant shall be entitled to the benefits of the Registration Rights Agreement.

(b)This Warrant or the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act, or an exemption from the registration requirements of such Act.

Dated as of March 7, 2007	NATURALNANO, INC.
	By:
	Name:
	Title:

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PURCHASE FORM

Dated: , 20

______ The undersigned hereby irrevocably exercises this Warrant to the extent of purchasing _______ shares of Common Stock and hereby makes payment of $____________ in payment of the Exercise Price therefor.

______ The undersigned hereby irrevocably converts this Warrant pursuant to the cashless conversion provisions of Section 1(b) of this Warrant with respect to _______ shares of Common Stock.

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name:______________________________________________________________________________________________________________________________________

(Please typewrite or print in block letters)

Signature:___________________________________________

Social Security or Employer Identification No.________________________

ASSIGNMENT FORM

FOR VALUE RECEIVED,__________________________________________________________________________________________________

hereby sells, assigns and transfer unto

Name______________________________________________________________________________________________________________________________________

(Please typewrite or print in block letters)

Address____________________________________________________________________________________________________________________________________

Social Security or Employer Identification No._______________________

The right to purchase Common Stock represented by this Warrant to the extent of _________shares as to which such right is exercisable and does hereby irrevocably constitute and appoint __________________ attorney to transfer the same on the books of the Company with full power of substitution.

Dated: , 20

Signature_________________________________________

Signature Medallion Guaranteed:

________________________________________________

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EX-4.5

Exhibit 4.5

WC-1 Warrant to Purchase **1,141,194** Shares of Common Stock

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR SUCH SHARES OF COMMON STOCK MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

Void after 5:30 P.M. New York City time on March 7, 2011

SERIES C COMMON STOCK PURCHASE WARRANT

OF

NATURALNANO, INC.

This is to certify that, FOR VALUE RECEIVED, Platinum Advisors, LLC, or registered assigns (“Holder”), is entitled to purchase, on the terms and subject to the provisions of this Warrant, from NaturalNano, Inc., a Nevada corporation (the “Company”), at an exercise price (the “Exercise Price”) of twenty two cents ($0.22) per share, one million, one hundred forty one thousand one hundred ninety four (1,141,194) shares of common stock, par value $.001 per share (“Common Stock”), of the Company at any time during the period (the “Exercise Period”) commencing on the date of this Warrant and ending at 5:30 P.M. New York City time, on March 7, 2011; provided, however, that if such date is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which such banks are not authorized to close. The number of shares of Common Stock to be issued upon the exercise or conversion of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time in the manner set forth in this Warrant. The shares of Common Stock deliverable upon such exercise or conversion, and as adjusted from time to time, are hereinafter sometimes referred to as “Warrant Shares,” and the exercise price for the purchase of a share of Common Stock pursuant to this Warrant in effect at any time, as the same may be adjusted from time to time, is hereinafter sometimes referred to as the “Exercise Price.” This Warrant was issued pursuant to a Loan and Security Agreement (the “Loan Agreement”) dated March 7, 2007, between the Company, the initial holder of this Warrant and the other investors named therein, and the holder of this Warrant is entitled to the benefits of the Loan Agreement and the Registration Rights Agreement, as defined in the Loan Agreement. The date of the initial issuance of this Warrant is the Closing Date under the Loan Agreement. Reference in this Warrant to “all of the Warrants” or words of like import shall relate to all of the Series C Common Stock Purchase Warrants issued pursuant to the Loan Agreement.

1.Exercise of Warrant.

(a)This Warrant may be exercised in whole at any time or in part from time to time during the Exercise Period by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of shares of Common Stock specified in such form. Payment of the Exercise Price may be made either by check (subject to collection) or wire transfer in the amount of the Exercise Price. If this Warrant should be exercised in part only, whether pursuant to this Section 1(a) or pursuant to Section 1(b) of this Warrant, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder hereof to purchase the balance of the shares of Common Stock purchasable hereunder. The holder of this Warrant shall not be required to physically deliver this Warrant upon exercise of this Warrant pursuant to this Section 1(a) or on conversion of this Warrant as provided in Section 1(b) of this Warrant. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, or upon delivery of the notice of conversion or exercise without delivery of this Warrant, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder.

(b)In lieu of exercising this Warrant by payment of the Exercise Price pursuant to Section 1(a) of this Warrant, and subject to the limitations provisions of Section 1(c) of this Warrant, the Holder shall have the right, on notice to the Company, to convert this Warrant, in whole or in part to the extent that this Warrant has not been exercised pursuant to said Section 1(a) of this Warrant or converted pursuant to this Section 1(b), for the number of shares of Common Stock equal to a fraction of the number of shares of Common Stock as to which this Warrant is being converted, the numerator of which is excess of the Current Market Value (as defined below) per share over the total cash exercise price per share, and the denominator of which is the Market Price of the Common Stock as of the trading day immediately prior to the Conversion Date. For the purpose of this Warrant, the terms (x) “Current Market Value” shall be the last sales per share of the Common Stock (as reported by Bloomberg, L.P. or, if the Common Stock is traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange) as of the trading day immediately prior to the Conversion Date, and (y) “Market Price of the Common Stock” shall be the average of the low bid price per share of the Common Stock (as reported by Bloomberg L.P. or, if the Common Stock is traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange) for the five trading days prior to the Conversion Date. The Conversion Date shall mean, the date on which the Holder gives the Company notice of conversion by hand delivery or telecopier. In the event that Bloomberg, L.P. shall not provide such information, the information shall be provided by a person or entity that regularly provides price and volume information that is selected by the Holders of a majority of the Warrants then outstanding, based on the number of shares of Common Stock issuable upon exercise of the Warrants. The parties understand and agree that, for purposes of Rule 144 of the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), if the holder converts the Warrant pursuant to this Section 1(b), its holding period will commence on the Closing Date, as defined in the Loan Agreement.

(c)The holder of this Warrant may not make a cashless exercise pursuant to Section 1(b) of this Warrant (i) during the twelve months following the initial issuance of this Warrant and (ii) thereafter if the sale by the Holder of the Warrant Shares is covered by an effective registration statement.

(d)The Holder shall not be entitled to exercise or convert this Warrants to the extent that, on the date of such conversion or exercise, the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates, as defined in the Loan Agreement, on such date plus (ii) the number of shares of Common Stock issuable upon exercise or conversion of this Warrant would result in the Holder and its Affiliates beneficially owning more than 4.99% of the outstanding shares of Common Stock of the Company, except as expressly provided in Section 1(e) of this Agreement. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act of 1934, as amended, and Regulation 13d-3 of the Commission thereunder. This limitation shall not affect the ability of the Investor to exercise or convert the warrants in a manner which would result in the Company having issued in the aggregate shares of Common Stock in excess of the 4.99% limitation as long as the Holder does not, at any one time as a result of such conversion or exercise, beneficially own more than such percentage. Under conditions set forth in the Loan Agreement, the reference in this Section 1(d) to 4.99% shall mean 9.99%. The limitation set forth in this Section 1(d) is referred to as the “4.99% Limitation.” The 4.99% Limitation may not be waived, modified or amended and any attempted waiver, modification or amendment of the 4.99% Limitation shall be void.

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(e)The 4.99% Limitation shall terminate upon the close of business on the business day immediately preceding the date fixed for consummation of any transaction resulting in a Change of Control of the Company. A “Change in Control” means a consolidation or merger of the Company with or into another company or entity in which the Company is not the surviving entity or the sale of all or substantially all of the assets of the Company to another company or entity not controlled by the then existing stockholders of the Company in a transaction or series of transactions. Upon the occurrence of a Change of Control, the Company shall promptly send written notice thereof, by hand delivery or by overnight delivery, to the Holder.

2.Reservation and Delivery of Shares.

(a)The Company hereby agrees that at all times there shall be reserved for issuance upon exercise of this Warrant such number of shares of Common Stock as shall be required for issuance and delivery upon exercise or conversion of this Warrant and that it shall not increase the par value of the Common Stock.

(b)Except as otherwise set forth herein, upon delivery of a completed Purchase Form accompanied, if the exercise is not a cashless exercise, by payment of the Exercise Price, not later than three (3) business days after the Exercise Date (such third day being the “Delivery Date”), the Company shall deliver to the Holder a certificate or certificates which, after the effective date of a registration statement covering the shares of Common Stock issuable upon exercise of this Warrant (the “Effective Date”), shall be free of restrictive legends and trading restrictions (other than those required by the Securities Act) representing the number of shares of Common Stock being acquired upon such exercise. After the Effective Date, the Company shall, upon request of the Holder, deliver any certificate or certificates required to be delivered by the Company under this Section 2(b) electronically through the Depository Trust Company or another established clearing company performing similar functions if the Company’s transfer agent has the ability to deliver shares of Common Stock in such manner. If in the case of any exercise of this Warrant such certificate or certificates are not delivered to or as directed by the applicable Holder by the second day after the Delivery Date, the Holder shall be entitled to elect 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 conversion shall be deemed void ab initio.

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(c)The Company’s obligations to issue and deliver the Common Stock upon exercise of this Warrant in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such shares. In the event the Holder shall elect to exercise this Warrant in whole or in part, the Company may not refuse to effect such exercise based on any claim that the Holder or any one associated or affiliated with the Holder of has been engaged in any violation of law, agreement or for any other reason unless an injunction from a court, on notice, restraining and or enjoining such exercise shall have been sought and obtained and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the Value, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration or litigation of the dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of an injunction precluding the same, the Company shall issue the Common Stock upon a properly executed Purchase Form. If the Company fails to deliver to the Holder such certificate or certificates pursuant to this Section 2(b) within two trading days of the Delivery Date applicable to such exercise, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Value of the Warrant being exercised, $50 per trading day (increasing to $100 per trading day three (3) trading days after such damages begin to accrue and increasing to $200 per trading day six (6) trading days after such damages begin to accrue) for each trading day after the Delivery Date until such certificates are delivered. Nothing herein shall limit a Holder’s right to pursue actual damages for the Company’s failure to deliver certificates representing shares of Common Stock upon exercise within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

(d)If the Company fails to deliver to the Holder such certificate or certificates pursuant to this Section 2(b) by the Delivery Date, and if after such Delivery Date the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Common Stock which the Holder was entitled to receive upon the exercise relating to such Delivery Date (a “Buy-In”), then the Company shall pay in cash to the Holder the amount by which (a) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (i) the product of (x) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the exercise at issue multiplied by (y) the price at which the sell order giving rise to such purchase obligation was executed. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of this Warrant with respect to which the aggregate sale price giving rise to such purchase obligation is $10,000, under the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Borrowers. Nothing in this Section 2(d) shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant pursuant to its terms.

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3.Fractional Shares. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise or conversion of this Warrant, the Company shall round the number of shares of Common Stock to be issued to the next higher integral number of shares

4.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Subject to the provisions of Section 11 of this Warrant, upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term “Warrant” as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone.

5.Rights of the Holder. The Holder shall not, by virtue of this Warrant, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant, the Loan Agreement and the Registration Rights Agreement and are not enforceable against the Company except to the extent set forth herein and therein.

6.Adjustments To Exercise Price. The Exercise Price in effect at any time and the number and kind of securities purchasable upon exercise of each Warrant shall be subject to adjustment as follows:

(a)In case the Company shall, subsequent to the date of the initial issuance of this Warrant, (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common Stock into a greater number of shares or otherwise effect a stock split or distribution, or (iii) combine or reclassify its outstanding Common Stock into a smaller number of shares or otherwise effect a reverse split, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 6. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 6(a)) be issuable on such exercise by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 6(a)) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise (prior to any adjustment pursuant to Section 6(f) of this Warrant).

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(b)In case the Company shall, subsequent to the date of the initial issuance of this Warrant, distribute to all holders of Common Stock evidences of its indebtedness or assets (excluding (x) cash dividends or distributions paid out of current earnings and (y) dividends or distributions referred to in Section 6(a) of this Warrant, then in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, of which the numerator shall be the total number of shares of Common Stock outstanding multiplied by the Current Market Price per share of Common Stock, less the fair market value (as determined by the Company’s Board of Directors) of said assets or evidences of indebtedness so distributed or of such rights or warrants, and of which the denominator shall be the total number of shares of Common Stock outstanding multiplied by such Current Market Price per share of Common Stock. Such adjustment shall be made successively whenever such a record date is fixed. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution.

(c)If, while this Warrant is outstanding, the Company sells or otherwise issues any Convertible Securities, shares of Common Stock, or shares of any class of capital stock at a price per share of Common Stock, or with a conversion right or exercise price to acquire Common Stock at a price per share of Common Stock (other than (x) an Exempt Issuance, as defined in the Loan Agreement, or (y) an issuance covered by Section 6(a) or 6(b) of this Warrant), that is less than the Exercise Price in effect at the time of such sale (such lower price being referred to as the “Lower Price”), the Exercise Price shall be reduced to an adjusted Exercise Price which is equal to the Lower Price. Such adjustment shall be made successively whenever any such sale or other issuance at a Lower Price is made. The term “Convertible Security” shall mean any debt or equity security or instrument upon the conversion or exercise of which shares of Common Stock may be issued.

(i) For purposes of this Section 6(c), the price at which such shares of Common Stock are issued shall be the consideration paid for the Common Stock or the price at which the Company agrees to issue shares of Common Stock. The price at which any Convertible Security is issued shall be the amount received for the issuance of the Convertible Security plus the minimum amount of additional consideration which is payable upon exercise or conversion of the Convertible Security. If the Company issues securities as a unit, regardless of whether such issuance is defined as a unit, a separate computation shall be made with respect to (x) shares of Common Stock and convertible securities (based on the maximum number of shares of Common Stock which may be issued upon conversion, including conversion of interest or dividends, but excluding warrants, rights and options) and (y) warrants, options or rights, with a separate computation being made as to each warrant, option or right which is issued. If warrants, options or rights are issued, the Company shall not be deemed to have received any consideration for the issuance of the shares upon exercise of the warrant, option or right other than the lowest exercise price provided therein. If the Company has an agreement which provides for the issuance of shares at a fixed price or a formula price with a maximum price, the Company shall be deemed to have issued securities at such maximum price regardless of whether any securities are actually sold, and any issuance of securities below such maximum price shall, if such price is a Lower Price, be a sale which results in an adjustment pursuant to this Section 2(c).

(ii) By way of example, if the Company issues for $1,000,000 securities consisting of 500,000 shares of Common Stock and a convertible note for $1,000,000 with a conversion price of $.40 and warrants to purchase 1,000,000 shares of Common Stock at $.40, the Lower Price would be determined by dividing the total consideration paid for the Common Stock and the note ($1,000,000) by the number of shares of Common Stock issued (3,000,000 shares, representing the 500,000 shares issued at closing plus the 2,500,000 shares issuable upon conversion of the note), which would result in Lower Price of $.333, which would become the adjusted Exercise Price of this Warrant. If, in the same example, the exercise price of the warrant were $.30 per share, the Lower Price would be $.30, which would become the adjusted Exercise Price. If, in either case, the conversion price of all or any part of the convertible notes or the exercise price of all or any of the warrants were subsequently reduced, a further adjustment would be made.

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(iii) Any stock or convertible securities (other than warrants or options which shall be valued at the lowest stated exercise price thereof) issued for services that are not Exempt Issuances shall, for purposes of this Warrant, be valued at the par value thereof unless such issuance is made with the prior written approved of the Investors, as defined in the Loan Agreement, in which event the securities shall be valued in the manner as set forth in the Investors’ approval.

(d)In case the Company shall, subsequent to the date of initial issuance of this Warrant, issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (or having a conversion price per share) less than the Current Market Price per share of Common Stock for the record date mentioned below, if issuance does not result in an adjustment pursuant to Section 6(c) of this Warrant, the Exercise Price shall be adjusted to an adjusted Exercise equal to the price determined by multiplying the Exercise Price in effect immediately prior to the date of such issuance by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the record date mentioned below plus the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such Current Market Price per share of the Common Stock, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered for subscription or purchased (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights or warrants; and shall be effective regardless of whether such rights are exercised or expire in whole or in part unexercised. The provisions of this Section 6(d) are in addition to the provisions of Section 6(c) and any adjustment pursuant to this Section 6(d) shall be made after the application of Section 6(c).

(e)Subject to the provisions of Section 6(a) of this Warrant, whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to this Section 6, the number of shares of Common Stock issuable upon exercise or conversion of this Warrant shall simultaneously be adjusted by multiplying the number of shares of Common Stock issuable upon exercise of each Warrant in effect on immediately prior to the adjustment by the Exercise Price then in effect and dividing the product so obtained by the Exercise Price, as adjusted. In no event shall the Exercise Price per share be less than the par value per share, and, if any adjustment made pursuant to said Section 6 would result in an Exercise Price which would be less than the par value per share, then, in such event, the Exercise Price per share shall be the par value per share; provided, however, that the limitation contained in this sentence shall not affect the number of shares of Common Stock issuable upon exercise or conversion of this Warrant.

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(f)In the event that at any time, as a result of an adjustment made pursuant to this Section 6, the Holder of any Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in this Section 6.

(g)Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of Warrants, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this and similar Warrants initially issued by the Company.

7.Officer’s Certificate. Whenever the Exercise Price shall be adjusted as required by the provisions of Section 6 of this Warrant, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer’s certificate showing the adjusted Exercise Price and the adjusted number of shares of Common Stock issuable upon exercise of each Warrant, determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer’s certificate shall be made available at all reasonable times for inspection by the Holder, and the Company shall, forthwith after each such adjustment, mail, by certified mail, return receipt requested and by telecopier and e-mail, a copy of such certificate to the Holder at the Holder’s address set forth in the Company’s Warrant Register.

8.Notices To Warrant Holders. So long as this Warrant shall be outstanding, (a) if the Company shall pay any dividend or make any distribution upon Common Stock (other than a regular cash dividend payable out of retained earnings) or (b) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (c) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail, return receipt requested, to the Holder, at least fifteen days prior to the date specified in clauses (i) and (ii), as the case may be, of this Section 8 a notice containing a brief description of the proposed action and stating the date on which (i) a record is to be taken for the purpose of such dividend, distribution or rights, or (ii) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.

9.Reclassification, Reorganization or Merger. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another corporation (other than a merger in which the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter by exercising this Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section 9 shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances. Notwithstanding the foregoing, in the event that, as a result of any merger, consolidation, sale of assets or similar transaction, all of the holders of Common Stock receive and are entitled to receive no consideration other than cash in respect of their shares of Common Stock, then, at the effective time of the transaction, the rights to purchase Common Stock pursuant to the Warrants shall terminate, and the holders of the Warrants shall, notwithstanding any other provisions of this Warrant, receive in respect of each Warrant to purchase one (1) share of Common Stock, upon presentation of the Warrant Certificate, the amount by which the consideration per share of Common Stock payable to the holders of Common Stock at such effective time exceeds the Exercise Price in effect on such effective date, without giving effect to the transaction; provided, however, that if such transaction would, but for this Section 9, result in a reduction in the Exercise Price pursuant to Section 6(c) of this Warrant, the Exercise Price shall be reduced to reflect that transaction. In the event that, in such a transaction, the value of the consideration to be received per share of Common Stock is equal to or less than the Exercise Price, the Warrants shall automatically terminate and no consideration will be paid with respect thereof.

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10.No Right to Call or Require Exercise. The Company shall have no right call this Warrant or to require the Holder to exercise this Warrant.

11.Transfer to Company with the Securities Act.

(a)The Holder of this Warrant shall be entitled to the benefits of the Registration Rights Agreement.

(b)This Warrant or the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act, or an exemption from the registration requirements of such Act.

Dated as of March 7, 2007	NATURALNANO, INC.
	By:
	Name:
	Title:

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PURCHASE FORM

Dated: , 20

______ The undersigned hereby irrevocably exercises this Warrant to the extent of purchasing _______ shares of Common Stock and hereby makes payment of $____________ in payment of the Exercise Price therefor.

______ The undersigned hereby irrevocably converts this Warrant pursuant to the cashless conversion provisions of Section 1(b) of this Warrant with respect to _______ shares of Common Stock.

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name: _________________________________________________________________________________________________________________

(Please typewrite or print in block letters)

Signature: ______________________________________________________________________________________________________________

Social Security or Employer Identification No.________________________

ASSIGNMENT FORM

FOR VALUE RECEIVED, ___________________________________________________________________________________

hereby sells, assigns and transfer unto

Name__________________________________________________________________________________________________________________

(Please typewrite or print in block letters)

Address _______________________________________________________________________________________________________________

Social Security or Employer Identification No._______________________

The right to purchase Common Stock represented by this Warrant to the extent of _________shares as to which such right is exercisable and does hereby irrevocably constitute and appoint __________________ attorney to transfer the same on the books of the Company with full power of substitution.

Dated: , 20

Signature_________________________________________

Signature Medallion Guaranteed:

_________________________________________________

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EX-4.6

Exhibit 4.6

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the “Agreement”) is made and entered into as of 7th day of March 2007 by and amongNaturalNano, Inc., a Nevada corporation (the “Company”), and the investors identified on the signature page hereto (each an “Investor” and collectively “Investors”).

W I T N E S S E T H:

WHEREAS, pursuant to the Loan Agreement, as hereinafter defined, the Investors are purchasing the Company’s 8% Senior Secured Convertible Notes and Warrants, upon conversion and exercise of which the Investors will receive shares of the Company’s common stock, par value $.001 per share (“Common Stock”); and

WHEREAS, the ability of the Investors to sell their shares of Common Stock is subject to certain restrictions under the Securities Act; and

WHEREAS, as a condition to the Investors’ obligations to purchase the Notes and Warrants, the Company has agreed to provide the Investors with a mechanism that will permit the Investors to sell their shares of Common Stock in the future, as set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements, and subject to the terms and conditions herein contained, the parties hereto hereby agree as follows:

1.Definitions.

(a)Unless otherwise defined herein, capitalized terms used herein shall have the following meanings:

(i) “Affiliate” of a Person means any Person: (a) which directly or indirectly Controls, or is Controlled by, or is under common Control with, the subject Person; (2) which directly or indirectly beneficially owns or holds a majority of the outstanding shares of any class of voting stock of the subject Person; or (3) a majority of the shares of any class of voting stock of which is directly or indirectly beneficially owned or held by the subject Person.

(ii) “Black-Out Period” shall have the meaning set forth in Section 4(a)(ii) of this Agreement.

(iii) “Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to be closed.

(iv) “Closing Date” shall have the meaning set forth in the Loan Agreement.

(v) “Common Stock” shall have the meaning set forth in the preamble and any other capital stock of the Company which is issuable upon conversion of the Notes and exercise of the Warrants.

(vi) “Commission” means the Securities and Exchange Commission

(vii) “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

(viii) “Covered Securities” shall mean the Notes, the Warrants and any other securities upon the conversion or exercise of which Registrable Securities may be issued.

(ix) “Daily Amount” shall have the meaning set forth in Section 2(f) of this Agreement.

(x) “Delay Period” shall have the meaning set forth in Section 2(f) of this Agreement.

(xi) “Demand Registration” shall have the meaning set forth in Section 2(b) of this Agreement.

(xii) “Exchange” means the principal stock exchange or market on which the Company’s Common Stock is traded.

(xiii) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, or any similar or successor statute.

(xiv) “Expenses” means all expenses incident to the Company’s performance of or compliance with its obligations under this Agreement, including, without limitation, all registration, filing, listing, stock exchange and NASD fees, all fees and expenses of complying with state securities or blue sky laws (including fees, disbursements and other charges of counsel for the underwriters only in connection with blue sky filings), all word processing, duplicating and printing expenses, messenger and delivery expenses, the fees, disbursements and other charges of counsel for the Company and of its independent public accountants, including the expenses incurred in connection with “cold comfort” letters required by or incident to such performance and compliance, any fees and disbursements of underwriters customarily paid by the issuer of securities, and including legal fees of not more than twenty thousand dollars ($20,000) to one counsel selected by the Investors, but excluding from the definition of Expenses underwriting discounts and commissions and applicable transfer taxes, if any, or legal and other expenses incurred by any sellers (except as provided above), which discounts, commissions, transfer taxes and legal and other expenses shall be borne by the seller or sellers of Registrable Stock in all cases.

(xv) “Filing Date” shall mean the date by which the Company shall file a registration statement pursuant to Section 2(a) of this Agreement.

(xvi) “Holder” shall mean a holder of Covered Securities or Registrable Securities.

(xvii) “Loan Agreement” shall mean the Loan and Security Agreement dated the date of this Agreement among the Company and the Investors.

(xviii) “NASD” means the National Association of Securities Dealers, Inc. and NASD Regulation, Inc.

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(xix) “Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint stock company, trust, unincorporated organization, governmental or regulatory body or subdivision thereof or other entity.

(xx) “Purchase Price” shall mean $3,250,000.

(xxi) “Recapitalization Event” shall mean any stock dividend, split or other distribution, combination or shares or reverse split, or recapitalization.

(xxii) “Registrable Securities” means and includes the shares of Common Stock issuable upon conversion of the Notes and upon exercise of the Warrants issued pursuant to the Loan Agreement and any additional shares of Common Stock which may be issuable pursuant the Loan Agreement or this Agreement or upon conversion or exercise of any securities issuable pursuant to the Loan Agreement or this Agreement, including shares of Common Stock issuable as interest pursuant to the Note and any securities issued pursuant to Section 7.18 of the Loan Agreement and such number of shares issuable pursuant to Section 2(f)(i) of this Agreement as the Holders may request. As to any particular Registrable Securities, such securities will cease to be Registrable Securities when (a) they have been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) they are or may be freely traded without registration and without restriction pursuant to Rule 144(k) under the Securities Act (or any similar provisions that are then in effect), or (c) they have been otherwise transferred and new certificates for them not bearing a restrictive legend have been properly issued by the Company, and the Company shall not have “stop transfer” instructions against them.

(xxiii) “Registration Maintenance Period” has the meaning set forth in Section 4(a)(ii) of this Agreement.

(xxiv) “Required Effectiveness Date” shall have the meaning set forth in Section 2(a) of this Agreement.

(xxv) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar or successor statute.

(xxvi) “Transfer” means any transfer, sale, assignment, pledge, hypothecation or other disposition of any interest. “Transferor” and “Transferee” have correlative meanings.

(b)Unless defined otherwise, capitalized terms used in this Agreement that are defined in the Loan Agreement shall have the identical meaning herein as in the Loan Agreement.

(c)All references to laws, rules and forms shall relate to the laws, rules and forms as in effect on the date of the Agreement and shall include any amendments thereto and any subsequent successor laws, rules and forms.

2.Registration of Registrable Securities.

(a)Mandatory Registration. The Company shall prepare and file within 60 days following the Closing Date (the “Filing Date”) a registration statement (the “Registration Statement”) covering the sale of such number of Registrable Securities as the Investors shall elect by written notice to the Company, and absent such election, covering the sale of all of the Registrable Securities. The Company shall use its best efforts to cause the Registration Statement to be declared effective by the Commission on the Required Effective Date. The Required Effective Date shall mean the first to occur of (i) 120 days following the Closing Date or 150 days from the Closing Date if the staff of the Commission issues comments on the Registration Statement, (ii) ten (10) days following the receipt of a “No Review” or similar letter from the Commission with respect to the Registration Statement, or (iii) the third (3^rd) business day following the day the Company receives notice from the Commission that the Commission has determined that the Registration Statement is eligible to be declared effective without further comments by the Commission. Nothing contained herein shall be deemed to limit the number of Registrable Securities to be registered by the Company pursuant to this Agreement. As a result, if the Registration Statement does not relate to the maximum number of Registrable Securities acquired by (or issuable to) the holders of the Shares of the Company issued to the Investors pursuant to the Notes, the Loan Agreement and the Warrants the Company shall be required to promptly file a separate registration statement (utilizing Rule 462 promulgated under the Securities Act, if applicable) relating to such Registrable Securities which then remain unregistered. The provisions of this Agreement shall relate to any such separate registration statement as if it were an amendment to the Registration Statement.

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(b)Demand Registration. Subject to the limitations of Section 2(a) of this Agreement, at any time and from time to time, the Investors may request the registration under the Securities Act of all or part of the Registrable Shares then outstanding (a “Demand Registration”). Subject to the conditions of Section 3 of this Agreement, the Company shall use its best efforts to file such registration statement under the Securities Act as promptly as practicable, but not later than sixty (60) days after the date any such request is received by the Company and to cause such registration statement to be declared effective, subject to the policies of the Commission relating to the filing of registration statements relating to securities acquired in the same or related transactions. The Company shall notify the Investors promptly when any such registration statement has been declared effective. The parties intend that all Registrable Securities are to be registered pursuant to Section 2(a) of this Agreement, and that this Section 2(b) is intended solely to provide the Investors with registration rights in the event that all of the Registrable Securities are not included in the registration statement required by Section 2(a), either because the number of Registrable Shares had to be reduced in order for the offering to be deemed a secondary offering under Rule 415 of the Commission pursuant to the Securities Act or because the Investors believed that the Commission’s formal or informal guidelines would not permit the registration of all of the Registrable Securities.

(c)Registration Statement Form. Registration statements under Section 2(a) and Section 2(b) shall be on the appropriate registration form of the Commission as shall permit the disposition of such Registrable Securities in accordance with the intended method or methods of disposition specified in the Registration Statement.

(d)Expenses. The Company will pay all Expenses in connection with any registration required by under Sections 2(a) and 2(b) of this Agreement.

(e)Effective Registration Statement. A registration required to be filed pursuant to Sections 2(a) and 2(b) shall not be deemed to have been effected (i) unless a registration statement with respect thereto has become effective, provided that a registration which does not become effective after the Company filed a registration statement with respect thereto solely by reason of the refusal to proceed of any holder of Registrable Securities (other than a refusal to proceed based upon the advice of counsel set forth in a letter signed by such counsel and provided to the Company relating to a disclosure matter unrelated to such holder) shall be deemed to have been effected by the Company, (ii) if, after it has become effective, such registration becomes subject to any stop order, injunction or other order or extraordinary requirement of the Commission or other governmental agency or court for any reason and such stop order or other action continues in effect for five trading days or (iii) if, after it has become effective, such registration ceases to be effective for more than the allowable Black-Out Periods.

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(f)Liquidated Damages.

(i) If (a) the Company does not file a Registration Statement covering Registrable Securities pursuant to Section 2(a) of this Agreement by the Filing Date, or (b) the Registration Statement filed pursuant to said Section 2(a) is not declared effective by the Required Effective Date, or (c) the Registrable Securities are registered pursuant to an effective Registration Statement and such Registration Statement or other Registration Statement(s) demanded by Investors including the Registrable Securities is not effective in the period from the Required Effective Date through two years following the Closing Date, subject to allowable Black-Out Periods, the Company shall pay the Investors in kind, as liquidated damages and not as a penalty, an amount equal to the applicable Daily Amount for each day in each of the following periods (a “Delay Period”): the period (x) between the Filing Date and the date that the Registration Statement is filed with the Commission, (y) between the Required Effective Date and the date that the Registration Statement is declared effective and (z) during which the Registration Statement is not effective other than, in each case, for permitted Black-Out Periods. The liquidated damages shall accrue on the first day of each Delay Period and be payable on the same date of each of the following calendar months which includes any part of the Delay Period. Such shares shall be delivered not later than the first business day of the calendar month following the month in which such shares accrued in accordance with the preceding sentence. The parties agree that the only damages payable for a violation of the terms of this Agreement with respect to which liquidated damages are expressly provided shall be such liquidated damages. Nothing shall preclude the Investors from pursuing or obtaining specific performance or other equitable relief with respect to this Agreement. The parties hereto agree that the liquidated damages provided for in this Section 2(f) constitute a reasonable estimate of the damages that may be incurred by the Investors by reason of the failure of the Registration Statement(s) to be filed or declared effective or to be maintained effective in accordance with the provisions hereof. The term “Daily Amount” shall mean 0.0333% of the principal amount of Notes relating to the shares of Common Stock issuable upon conversion of the Notes registered or to be registered. For example, if the shares of Common Stock issuable upon conversion of Notes in the principal amount of $1,000,000 are registered in the Registration Statement for sale by a Holder, the Daily Amount relating to such Holder will be $333.33. The Daily Amount shall be paid in cash unless any Holder shall elect, with respect to his securities, to receive payment of liquidated damages in shares of Common Stock. Payment shall be made monthly, not later than the fifth business day of the month for liquidated damages accrued during the prior calendar month. If a Holder desires to receive payment for liquidated damages due with respect to any month in stock, such holder shall advise the Company in writing not later than the last day of the month of such election. Such election shall continue in force until and unless the Holder notifies the Company that it revokes the election, in which event the Company shall thereafter make payment in cash. If, at the election of the Holder, the Company pays liquidated damages in shares of Common Stock, such shares of Common Stock shall be valued at the average of the closing price per share of the Common Stock (as reported by Bloomberg L.P. or, if the Common Stock is traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange) for the last five trading days of the calendar month with respect to which the liquidated damages are accrued.

(ii) Notwithstanding the provisions of Section 2(f)(i) of this Agreement:

(A)The obligation of the Company with respect to any Investor terminates when the sum of (x) the Registrable Securities issuable upon conversion of exercise of Covered Securities owned by such Investor and its transferees plus (y) the Registrable Securities such Investor and its transferees own, in the aggregate represent less than 5% of its shares of Registrable Securities issuable upon the Covered Securities initially purchased by the Investor pursuant to the Loan Agreement.

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(B)In the event that the Company shall fail to file the Registration Statement by the Filing Date but the Registration Statement shall have been declared effective by the Required Effectiveness Date, then no liquidated damages shall be payable with respect to the failure to file by the Filing Date. The Company shall pay any such liquidated damages into an escrow account with counsel acceptable to the Holders, and, if the Registration Statement is not declared effective by the Required Effective Date, the liquidated damages for the failure to file by the Filing Date shall be promptly paid to the Holders on the first business day following the Required Effectiveness Date.

(C)In the event that, because of the limitation resulting from the Commission’s interpretation of Rule 415 of the Commission pursuant to the Securities Act, the Company is unable to register all of the Registrable Securities, the liquidated damages per day shall be based on the number of shares of Common Stock issuable upon conversion of the Notes which are included in the Registration Statement.

(D)In the event that, at the time of a failure of the Company to maintain the effectiveness of the Registration Statement, the Holders have sold Registrable Securities pursuant to the Registration Statement, no liquidated damages shall be payable with respect to such Registrable Securities.

(E)The maximum liquidated damages payable pursuant to this Section 2(f) shall be $803,400.

(F)No fractional shares of Common Stock shall be issued. Any fractional shares which would otherwise be issued on any date on which Common Stock is to be issued pursuant to this Section 2(f) of this Agreement, shall be carried forward; provided, however, that if, at the expiration of the period during which liquidated damages is payable there remains a fractional shall which has not been applied to liquidated damages, the Company shall have no further obligation to issue such fractional share.

(G)In no event shall the Company be required to pay any liquidated damages in the event that the Company can demonstrate by clear and convincing evidence that the failure of the registration statement to be declared effective by the Required Effective Date results in whole or in part from either (a) the failure of any Investor to provide information relating to the Investor and its proposed method of sale or any other information concerning the Investor that is required to be included in the registration statement or (b) any delays resulting from questions raised by the Commission or any other regulatory agency, market or exchange concerning any Investor or the affiliates of any Investor.

3.Piggy-Back Registration Rights.

(a)Registration Statement. Provided that the Registrable Securities have not been registered or if a registration statement has not been filed with respect to the Registrable Securities, if at any time after the date hereof but before the second anniversary of the date hereof, the Company proposes to register any of its securities under the Securities Act (other than by a registration in connection with an acquisition in a manner which would not permit registration of Registrable Securities for sale to the public, on Form S-8, or any successor form thereto, on Form S-4, or any successor form thereto and other than pursuant to Section 2 of this Agreement), whether or not on an underwritten basis (either best-efforts or firm-commitment), then, the Company will each such time give prompt written notice to all holders of Registrable Securities and Covered Securities of its intention to do so and of such holders of Registrable Securities’ rights under this Section 3(a). Upon the written request of any such holders of Registrable Securities made within ten (10) days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such holders of Registrable Securities and the intended method of disposition thereof), the Company will, subject to the terms of this Agreement, use its commercially reasonable best efforts to effect the registration under the Securities Act of the Registrable Securities, to the extent requisite to permit the disposition (in accordance with the intended methods thereof as aforesaid) of such Registrable Securities so to be registered, by inclusion of such Registrable Securities in the registration statement which covers the securities which the Company proposes to register, provided that if, at any time after written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason either not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to each holders of Registrable Securities and, thereupon, (i) in the case of a determination not to register, shall be relieved of this obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Expenses in connection therewith), without prejudice, however, to the rights of any holder or holders of Registrable Securities entitled to do so to request that such registration be effected as a registration under Section 2, and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities, for the same period as the delay in registering such other securities. No registration effected under this Section 3(a) shall relieve the Company of its obligation to effect any registration upon request under Section 2 except to the extent that Registrable Securities are registered and sold pursuant thereto. The Company will pay all Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 3(a).

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(b)Priority In Incidental Registrations. If the managing underwriter of an underwritten offering contemplated by this Section 3 shall inform the Company and holders of the Registrable Securities requesting such registration by letter of its belief that the number of securities requested to be included in such registration exceeds the number which can be sold in such offering, then the Company will include in such registration, to the extent of the number which the Company is so advised can be sold in such offering, (i) first securities proposed by the Company to be sold for its own account, and (ii) second to holders of securities having demand registration rights and exercising such rights in connection with such registration statement and the holders of Registrable Securities and Covered Securities, on a pari passu basis and (iii) third securities of other selling security holders requesting to be included in such registration (other than affiliates of the Company), on a pari passu basis, and (iv) to affiliates of the Company.

4.Registration Procedures.

(a)Procedures. If and whenever the Company is required to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2(a) and 2(b) of this Agreement, the Company shall, as expeditiously as possible:

(i) prepare and file with the Commission the Registration Statement, or amendments thereto, to effect such registration (including such audited financial statements as may be required by the Securities Act or the rules and regulations promulgated thereunder) and thereafter use its commercially reasonable best efforts to cause such registration statement to be declared effective by the Commission, as soon as practicable, but in any event no later than the Required Effectiveness Date (with respect to a registration pursuant to Section 2(a) of this Agreement); provided, however, that before filing such registration statement or any amendments thereto, the Company will furnish to one counsel selected by the holders of Registrable Securities which are to be included in such registration, copies of all such documents proposed to be filed;

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(ii) with respect to any registration statement pursuant to Section 2(a) or Section 2(b), prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement until the earlier to occur of two (2) years after the Closing Date (subject to the right of the Company to suspend the effectiveness thereof for not more than 15 consecutive Trading Days or an aggregate of 20 Trading Days during any calendar year (each a “Black-Out Period”)) or such time as all of the securities which are the subject of such registration statement cease to be Registrable Securities (such period, in each case, the “Registration Maintenance Period”);

(iii) furnish to each holder of Registrable Securities covered by such registration statement such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as such holder of Registrable Securities and underwriter, if any, may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such holder of Registrable Securities;

(iv) use its commercially reasonable best efforts to register or qualify all Registrable Securities and other securities covered by such registration statement under such other U.S. federal or state securities laws or U.S. state blue sky laws as any U.S. holder of Registrable Securities thereof shall reasonably request, to keep such registrations or qualifications in effect for so long as such registration statement remains in effect, and take any other action which may be reasonably necessary to enable such holder of Registrable Securities to consummate the disposition in such jurisdictions of the securities owned by such holder of Registrable Securities, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this Section 4(a)(iv) be obligated to be so qualified or to consent to general service of process in any such jurisdiction;

(v) use its commercially reasonable best efforts to cause all Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the U.S. holder of Registrable Securities to consummate the disposition of such Registrable Securities in accordance with the plan of distribution set forth in the registration statement;

(vi) if such registration includes an underwritten public offering, furnish to each holder of Registrable Securities a signed counterpart, addressed to such holder of Registrable Securities, and the underwriters, of an opinion of counsel for the Company, dated the effective date of such registration statement and an opinion dated the date of the closing under the underwriting agreement in the form required by the underwriting agreement), and

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(vii) notify the Investors and their counsel promptly and confirm such advice in writing promptly after the Company has knowledge thereof:

(A)when the Registration Statement, the prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective;

(B)of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus or for additional information;

(C)of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings by any Person for that purpose; and

(D)of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation or threat of any proceeding for such purpose;

(viii) notify each holder of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material facts required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of any such holder of Registrable Securities promptly prepare and furnish to such holder of Registrable Securities a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the Investors of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

(ix) use its commercially reasonably efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible moment;

(x) otherwise use its commercially reasonable best efforts to comply with all applicable rules and regulations of the Commission;

(xi) make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(xii) enter into such agreements and take such other actions as the Investors shall reasonably request in writing (at the expense of the requesting or benefiting Investors) in order to expedite or facilitate the disposition of such Registrable Securities; and

(xiii) use its best efforts to list all Registrable Securities covered by such registration statement on any securities exchange or market on which the Common Stock is then listed.

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(xiv) in the event that the Company, with the consent of the Agent, as defined in the Loan agreement, or of holders of a majority of the Registrable Securities, includes in a registration statement filed pursuant to Section 2(a) or 2(b) of this Agreement any shares of Common Stock which are not Registrable Securities and, as a result of comments from the Commission, the Company is required to reduce the number of shares of Common Stock which may be registered pursuant to the registration statement, all of such other shares of Common Stock will be withdrawn from the registration statement before any Registrable Securities are withdrawn.

(b)Limitation. The Company will not file any registration statement pursuant to Section 2(a) or Section 2(b), or amendment thereto or any prospectus or any supplement thereto to which the Investors shall reasonably object, provided that the Company may file such documents in a form required by law or upon the advice of its counsel.

(c)Necessary Consents. The Company represents and warrants to each holder of Registrable Securities that it has obtained all necessary waivers, consents and authorizations necessary to execute this Agreement and consummate the transactions contemplated hereby other than such waivers, consents and/or authorizations specifically contemplated by the Loan Agreement.

(d)Discontinuation of Sales. Each holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the occurrence of any event of the kind described in Section 4(a)(viii), such Holder will forthwith discontinue such holder of Registrable Securities’ disposition of Registrable Securities pursuant to the Registration Statement relating to such Registrable Securities until such holder of Registrable Securities’ receipt of the copies of the supplemented or amended prospectus contemplated by said Section 4(a)(viii) and, if so directed by the Company, will deliver to the Company (at the Company’s expense) or destroy all copies, other than permanent file copies, then in such Holder’s possession of the prospectus relating to such Registrable Securities current at the time of receipt of such notice.

5.Underwritten Offerings.

(a)Incidental Underwritten Offerings. If the Company at any time proposes to register any of its securities under the Securities Act as contemplated by Section 3(a) of this Agreement and such securities are to be distributed by or through one or more underwriters, the Company will, if requested by any Holder, as provided in Section 3(a) and subject to the provisions of Section 3(b), use its commercially reasonable best efforts to arrange for such underwriters to include all the Registrable Securities to be offered and sold by such Holder among the securities to be distributed by such underwriters. In no event shall any Investor be deemed an underwriter for purposes of this Section 5. This Section 5 shall not apply to any Registrable Securities theretofore registered pursuant to Section 2 of this Agreement.

(b)Participation In Underwritten Offerings. No Holder may participate in any underwritten offering under Section 3(a) unless such holder of Registrable Securities (i) agrees to sell such Holder’s securities on the basis provided in any underwriting arrangements approved, subject to the terms and conditions hereof, by the holders of a majority of Registrable Securities to be included in such underwritten offering and (ii) completes and executes all questionnaires, indemnities, underwriting agreements and other documents (other than powers of attorney) required under the terms of such underwriting arrangements. Notwithstanding the foregoing, no underwriting agreement (or other agreement in connection with such offering) shall require any holder of Registrable Securities to make a representation or warranty to or agreements with the Company or the underwriters other than representations and warranties contained in a writing furnished by such holder of Registrable Securities expressly for use in the related registration statement or representations, warranties or agreements regarding such Holder, such Holder’s Registrable Securities and such Holder’s intended method of distribution and any other representation required by law.

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(c)Preparation; Reasonable Investigation. In connection with the preparation and filing of each registration statement under the Securities Act pursuant to this Agreement, the Company will give the Holders of Registrable Securities registered under such registration statement, and their respective counsel and accountants, the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto, and will give each of them such access to its books and records and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the reasonable opinion of such holders’ and such underwriters’ respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.

6.Indemnification.

(a)Indemnification by the Company. In connection with any registration statement filed by the Company pursuant to Section 2 or 3 of this Agreement, the Company shall, and hereby agrees to, indemnify and hold harmless, each Holder and seller of any Registrable Securities covered by such registration statement, each Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act, and their respective directors, officers, partners, agents and Affiliates from and against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof), which are collectively referred to as “Losses,” arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact made by the Company contained in the Registration Statement, or any amendment thereof, or in any Preliminary Prospectus or the Prospectus, or any amendment thereof or supplement thereto, or in any blue sky application or other document executed by the Company specifically for that purpose (or based upon written information furnished by the Company) filed in any state or other jurisdiction in order to qualify any of the Securities or other Securities under the securities laws thereof (any such application, document or information being referred to as a “Blue Sky Application”); or (ii) the omission or alleged omission to state in any such Registration Statement, Preliminary Prospectus or Prospectus, or amendment thereof or supplement thereto, or Blue Sky Application a material fact required to be stated therein or necessary to make the statements made therein not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by it in connection with investigating or defending against any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein or omitted therefrom in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Holder or any underwriter acting on behalf of any Holder specifically for use in connection with the preparation thereof, and further provided, however, that the foregoing indemnity with respect to any untrue statement, alleged untrue statement, omission, or alleged omission contained in any Preliminary Prospectus shall not inure to the benefit of any Holder or other Person from whom the Person asserting any such loss, claims any of, damage, or liability purchased any of the securities that are the subject thereof (or to the benefit of any person who controls such Holder or other Person), if a copy of the prospectus was not delivered to such person with or prior to the written confirmation of the sale of such security to such person and such prospectus corrected the matter from the preliminary prospectus. The indemnify provided for in this Section 6(a) shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party and shall survive any transfer of the Registrable Shares by the indemnified party. This indemnity agreement will be in addition to any liability that the Company may otherwise have.

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(b)Indemnification by Holder. In connection with any registration statement filed by the Company pursuant to Section 2 or 3 of this Agreement in which a Holder has registered for sale Registrable Securities, each Holder or seller of Registrable Securities shall, and hereby agrees to, indemnify and hold harmless the Company and each of its directors, officers, employees and agents, each other Person, if any, who controls the Company and each other seller and such seller’s directors, officers, stockholders, partners, employees, agents and affiliates from and against any and all Losses to which they or any of them may become subject under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereof, or in any preliminary prospectus or the prospectus, or any amendment thereof or supplement thereto, or in a blue sky application, or (ii) the omission or the alleged omission to state in any such Registration Statement, preliminary prospectus or prospectus, amendment thereof or supplement thereto, or Blue Sky Application a material fact required to be stated therein or necessary to make the statements made therein not misleading, in each case to the extent, but only to the extent, that the same was made therein or omitted therefrom in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder specifically for use in the preparation thereof, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by it in connection with investigating or defending against any such loss, claim, damage, liability or action. The indemnify provided for in this Section 6(b) shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party and shall survive any transfer of the Registrable Shares by the indemnified party. In no event shall the liability of any Holder pursuant to this Section 6(b) exceed the lesser of (x) the purchase price paid by the Holder for the Registrable Securities sold pursuant to the Registration Statement or (y) the net proceeds from the sale of the Registrable Securities by the Holder pursuant to the Registration Statement..

(c)Procedure. Within five (5) days after receipt by an indemnified party under Section 6(a) or 6(b) of this Agreement of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; the failure so to notify the indemnifying party shall relieve the indemnifying party from any liability under this Section 8 as to the particular item for which indemnification is then being sought, unless such indemnifying party has otherwise received actual notice of the action at least thirty (30) days before any answer or response is required by the indemnifying party in its defense of such action, but will not relieve it from any liability that it may have to any indemnified party otherwise than under this Section 6. If any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof; provided, that if the defendants in any such action include both the indemnified party and the indemnifying party and either (i) the indemnifying party or parties agree, or (ii) in the opinion of counsel for the indemnified parties, representation of both the indemnifying party or parties and the indemnified party or parties by the same counsel is inappropriate under applicable standards of professional conduct because of actual or potential conflicting interests between them, then the indemnified party or parties shall have the right to select separate counsel to assume such legal defense and to otherwise participate in the defense of such action. The indemnifying party will not be liable to such indemnified party under this Section 6 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (x) the indemnified party shall have employed counsel in connection with the assumption of legal defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel in each jurisdiction which counsel is approved by indemnified parties (whether pursuant to this Agreement or other agreements if the claim relates to the same or similar allegations) holding a majority of the shares as to which indemnification is claimed), (ii) the indemnifying party shall not have employed counsel to represent the indemnified party within a reasonable time after notice of commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. In no event shall an indemnifying party be liable under this Section 6 for any settlement, effected without its written consent, which consent shall not be unreasonably withheld, of any claim or action against an indemnified party.

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(d)Contribution. If the indemnification provided for in this Section 6 shall for any reason be unavailable to an indemnified party under Sections 6(a) and 6(b) of this Agreement in respect of any Losses, then, in lieu of the amount paid or payable under said Section 6(a) or 6(b), the indemnified party and the indemnifying party under said Section 6(a) or 6(b) shall contribute to the aggregate Losses (including legal or other expenses reasonably incurred in connection with investigating the same) (i) in such proportion as is appropriate to reflect the relative fault of the Company and the prospective sellers of Registrable Securities covered by the registration statement which resulted in such Loss or action in respect thereof, with respect to the statements, omissions or action which resulted in such Loss or action in respect thereof, as well as any other relevant equitable considerations, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and such prospective sellers, on the other hand, from their sale of Registrable Securities; provided, that, for purposes of this clause (ii), the relative benefits received by any prospective sellers shall be deemed not to exceed (and the amount to be contributed by any Holder shall not exceed) the amount received by such Person. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The obligations, if any, of the Selling Holders of Registrable Securities to contribute as provided in this Section 6(d) are several in proportion to the relative value of their respective Registrable Securities covered by such registration statement and not joint. In addition, no Person shall be obligated to contribute hereunder any amounts in payment for any settlement of any action or Losses effected without such Person’s consent.

7.Rule 144. The Company shall file in a timely manner the reports required to be filed by it under the Securities Act and the 1934 Act (including but not limited to the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 adopted by the Commission under the Securities Act) and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, will, upon the request of any holder of Registrable Securities, make publicly available other information) and will take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with the requirements of this Section 7. The Company shall, within two business days after a Holder provides documentation relating to a sale pursuant to Rule 144 or Rule 144(k), whichever shall be appropriate, the Company will cause its legal counsel to provide such opinion of counsel as the Company’s transfer agent may require in order to enable the Holder to transfer the shares. If the Company fails to comply with this Section 7, the Company shall pay the Holder the Daily amount applicable to the shares which the Holder is seeking to transfer, commencing on the third business day after the documentation is presented to the Company’s or its transfer agent. The Daily Amount shall be based on the conversion price applicable to the Notes at the date of the transfer or, if the Notes shall have been paid or fully converted, the last conversion price. For example, if the applicable conversion price is $.20, and the Holder is seeking to transfer or have the legend removed from 1,000,000 shares, daily amount will be based on Notes in the principal amount of $200,000. The provisions of Section 2(d) of the Warrant and Section 2.9.3 of the Note shall also apply in the event that the Company fails to deliver a timely opinion of counsel as required by this Section 7.

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8.Miscellaneous.

(a)Amendments and Waivers. This Agreement may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the Holder or Holders seventy five percent (75%) or more of the sum of the shares of (i) Registrable Securities issued at such time, plus (ii) Registrable Securities issuable upon exercise or conversion of the Covered Securities. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any consent authorized by this Section 8(a), whether or not such Registrable Securities shall have been marked to indicate such consent.

(b)Nominees For Beneficial Owners. In the event that any Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof shall be treated as the holder of such Registrable Securities for purposes of any request or other action by any Holder or Holders of Registrable Securities pursuant to this Agreement or any determination of any number of percentage of shares of Registrable Securities held by a holder or holders of Registrable Securities contemplated by this Agreement. The Company may require assurances reasonably satisfactory to it of such owner’s beneficial ownership or such Registrable Securities.

(c)Notices. Except as otherwise provided in this Agreement, all notices, requests and other communications to any Person provided for hereunder shall be in writing and shall be given to such Person (a) in the case of a party hereto other than the Company, addressed to such party in the manner set forth in the Loan Agreement or at such other address as such party shall have furnished to the Company in writing, or (b) in the case of any other Holder of Registrable Securities or Covered Securities, at the address of such Holder set forth on the signature page of this Agreement, or (c) in the case of the Company, at the address set forth on the signature page hereto, to the attention of its Chief Financial Officer or other officer designated by the Company, or at such other address, or to the attention of such other officer, as the Company shall have furnished to each holder of Registrable Securities at the time outstanding. Each such notice, request or other communication shall be effective (i) upon receipt if given by mail, or (ii) if given by any other means (including, without limitation, by fax or air courier), when delivered at the address specified above, provided that any such notice, request or communication shall not be effective until received, provided, that notice by fax shall not be deemed received unless receipt is acknowledged.

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(d)Assignment. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the parties hereto other than the Company shall also be for the benefit of and enforceable by any subsequent holder of any Registrable Securities. Each of the holders of the Registrable Securities agrees, by accepting any portion of the Registrable Securities after the date hereof, to the provisions of this Agreement including, without limitation, appointment of the Investor or the Investor’s designated representative to act on behalf of such holder pursuant to the terms hereof which such actions shall be made in the good faith discretion of the Investors’ representative and be binding on all persons for all purposes.

(e)Descriptive Headings. The descriptive headings of the several sections and paragraphs of this Agreement are inserted for reference only and shall not limit or otherwise affect the meaning hereof.

(f)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State without regard to principles of conflicts of law. Each party hereby (i) consent to the exclusive jurisdiction of the United States District Court for the Southern District of New York and Supreme Court of the State of New York in the County of New York in any action relating to or arising out of this Agreement, (ii) agrees that any process in any such action may be served upon it either (x) by certified or registered mail, return receipt requested, or by hand delivery or overnight courier service which obtains evidence of delivery, with the same full force and effect as if personally served upon such party in New York City or (y) any other manner of service permitted by law, and (iii) waives any claim that the jurisdiction of any such tribunal is not a convenient forum for any such action and any defense of lack of in personam jurisdiction with respect thereto. The parties executing this Agreement agree to waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.

(g)Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties and supersedes all prior or contemporaneous written or oral agreements, promises, representations, understandings, letters of intent and negotiations, among the parties with respect to the subject matter of this Agreement. No part of this Agreement may be modified or amended, nor may any right be waived, except by a written instrument which expressly refers to this Agreement, states that it is a modification or amendment of this Agreement or a waiver and is signed by the parties to this Agreement in the case of a modification or amendment, or by the party granting the waiver in the case of a waiver, subject to Section 8(a) of this Agreement. No course of conduct or dealing or trade usage or custom and no course of performance shall be relied on or referred to by any party to contradict, explain or supplement any provision of this Agreement, it being acknowledged by the parties to this Agreement that this Agreement is intended to be, and is, the complete and exclusive statement of the agreement with respect to its subject matter. Any waiver shall be limited to the express terms thereof and shall not be construed as a waiver of any other provisions or the same provisions at any other time or under any other circumstances. No delay or failure by either party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other rights.

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(h)Severability. If any provision of this Agreement, or the application of such provisions to any Person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of such provision to Persons or circumstances other than those to which it is held invalid, shall not be affected thereby.

(i)Binding Effect. All the terms and provisions of this Agreement whether so expressed or not, shall be binding upon, inure to the benefit of, and be enforceable by the parties and their respective administrators, executors, legal representatives, heirs, successors and assignees.

(j)Preparation of Agreement. This Agreement shall not be construed more strongly against any party regardless of who is responsible for its preparation. The parties acknowledge each contributed and is equally responsible for its preparation.

(k)Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.

[SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the Investors and the Company have as of the date first written above executed this Agreement.

NATURALNANO, INC.

By: /s/ Cathy A. Fleischer

Name: Cathy A. Fleischer

Title: President

INVESTORS

Investor

Platinum Partners Long Term Growth IV

By:  /s/ Mark Nordlicht

Name: Mark Nordlicht

Title:   Pres

Address: 152 W. 57th Street, 54th Floor

  New York, NY 10019

Telecopier: (212)

Longview Special Financing, Inc.

By: /s/ François Morax

Name: François Morax

Title:   Director

Address: Lindstrassse 6

 6341 Baar

 Switzerland

Telecopier:

Platinum Advisors, LLC

By: /s/ Mark Nordlicht

Name: Mark Nordlicht

Title:

Address: 152 W. 57th Street, 54th Floor

  New York, NY 10019

Telecopier: (212)

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EX-10.1

Exhibit 10.1

PLEDGE AGREEMENT

This Pledge Agreement dated this 7th day of March, 2007, among NaturalNano, Inc., a Nevada corporation (the “Company”), and the pledgees identified on the signature page hereto (each a “Pledgee” and collectively the “Pledgees”) and Platinum Advisors LLC, a limited liability company, as agent for the Pledgees (the “Agent”).

W I T N E S S E T H:

WHEREAS, the Company entered into a Loan and Security Agreement (the “Loan Agreement”), dated as of March 5, 2007, pursuant to which the Company issued to the Pledgees its 8% Senior Secured Convertible Notes in the total principal amount of $3,347,500; and

WHEREAS, as a condition to the Pledgees’ purchase of the Notes and Warrants pursuant to the Loan Agreement, the Company has agreed to pledge and grant a security interest in the capital stock of NaturalNano Research, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“NN Research”), and any other subsidiaries which the Company may create or acquire during the period that the Notes are outstanding and any other equity interest which the Company may acquire;

NOW, THEREFORE, the parties hereto agree as follows:

1.Defined Terms. All capitalized terms used in this Agreement which are defined in the Loan Agreement and not defined herein shall have the meanings given to them in the Loan Agreement.

2.Pledge and Grant of Security Interest. To secure the full and punctual payment of all loans, advances, debts, liabili-ties, obligations, covenants and duties owing by the Company to the Pledgees of every kind and description (whether or not evidenced by any note or other instrument and whether or not for the payment of money), direct or in-direct, absolute or contingent, due or to become due, now existing or hereafter arising, whether or not such obliga-tions are related to the transaction described in this Agreement, the Loan Agreement and the other Transaction Documents, by class, or kind, or whether or not contem-plated by the parties at the time of the granting of this security interest, including without limitation, all interest, fees, charges, expenses and attorneys’ fees chargeable to the Company or incurred by the Agent or the Pledgees in connection with the Notes and the transactions contemplated by the Transaction Documents or otherwise (collectively, the “Obligations”), the Company hereby pledges, assigns, hypothecates, transfers and grants a security interest to Pledgees in all of the following (the “Pledged Collateral”):

(a)the 10,000,000 shares of common stock of NN Research, representing all of the issued and outstanding shares of capital stock of NN Research and represented by stock certificate no. 2 (together with any additional shares or other equity interests in NN Research which may be hereafter acquired by the Company, the “Pledged Shares”), the certificates representing the Pledged Shares and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares;

(b)all shares of capital stock of, or equity or beneficial interest in, any Person (each, together with NN Research, an “Issuer”) which becomes a Subsidiary or which is required to be pledged to the Pledgees pursuant to Section 7.20 of the Loan Agreement, including, without limitation, dividends or a distribution in connection with any increase or reduction of capital, reclassification, merger, amalgamation, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off (which shares shall be deemed to be part of the Pledged Collateral), and the certificates representing such shares, and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; and

(c)all options and rights, whether as an addition to, in substitution of or in exchange for any Pledged Shares and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all such options and rights.

3.Delivery of Collateral. All certificates representing or evidencing the Pledged Shares shall be delivered to and held by or on behalf of Pledgees by the Agent pursuant hereto and shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Pledgees. Upon an Event of Default (as defined below) under the Note or the Loan Agreement that has occurred and is continuing beyond any applicable grace period, the Pledgees and the Agent shall have the right, during such time in its discretion and without notice to the Company, to transfer to or to register in the name of the Agent or any of its nominees any or all of the Pledged Shares to be held by the Agent pursuant to this Agreement. In addition, the Agent shall have the right at such time to exchange certificates or instruments representing or evidencing Pledged Shares for certificates or instruments of smaller or larger denominations.

4.Representations and Warranties of the Company. The Company represents and warrants to the Pledgees and the Agent (which representations and warranties shall be deemed to continue to be made until all of the Obligations have been paid in full) that:

(a)the execution, delivery and performance by the Company of this Agreement and the pledge of the Pledged Collateral hereunder do not and will not result in any violation of any agreement, indenture, instrument, license, judgment, decree, order, law, statute, ordinance or other governmental rule or regulation applicable to the Company;

(b)this Agreement constitutes the legal, valid, and binding obligation of the Company enforceable against the Company in accordance with its terms;

(c)the Company is the sole record and beneficial owner of all of the Pledged Shares;

(d)all of the Pledged Shares have been duly authorized, validly issued and are fully paid and non-assessable;

(e)no consent or approval of any person (including any Issuer), corporation, governmental body, regulatory authority or other entity, is or will be necessary for (i) the execution, delivery and performance of this Agreement, (ii) the exercise by the Pledgee of any rights with respect to the Pledged Collateral or (iii) the pledge and assignment of, and the grant of a security interest in, the Pledged Collateral hereunder;

(f)there are no pending or, to the best of the Company’s knowledge, threatened actions or proceedings before any court, judicial body, administrative agency or arbitrator which may materially adversely affect the Pledged Collateral;

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(g)the Company has the requisite power and authority to enter into this Agreement and to pledge and assign the Pledged Collateral to the Pledgees in accordance with the terms of this Agreement;

(h)the Company owns the Pledged Collateral, except for the pledge and security interest granted to Pledgee hereunder, the Pledged Collateral shall be, immediately following the closing of the transactions contemplated by the Loan Agreement, free and clear of any other security interest, pledge, claim, lien, charge, hypothecation, assignment, offset or encumbrance whatsoever (collectively, “Liens”) other than the Pledgees’ and the Agent’s security in the Pledged Collateral;

(i)other than restrictions generally applicable under the Securities Act, there are no restrictions on transfer of the Pledged Shares contained in the certificate of incorporation or by-laws (or equivalent organizational documents) of the Issuer or otherwise which have not otherwise been enforceable and legally complied with or waived as the case may be, by the necessary parties;

(j)none of the Pledged Shares have been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject;

(k)the Pledged Shares constitute one hundred percent (100%) of the issued and outstanding shares of NN Research.

5.Covenants. The Company covenants and agrees that, until the Obligations shall be satisfied in full:

(a)The Company will not sell, assign, transfer, convey, or otherwise dispose of its rights in or to the Pledged Collateral or any interest therein; nor will the Company create, incur or permit to exist any Lien whatsoever with respect to any of the Pledged Collateral or the proceeds thereof other than that created hereby.

(b)The Company will, at its expense, defend Pledgees’ and the Agent’s right, title and security interest in and to the Pledged Collateral against the claims of any other party.

(c)The Company shall at any time, and from time to time, upon the written request of the Agent, execute and deliver such further documents and do such further acts and things as the Agent may reasonably request in order to effect the purposes of this Agreement including, but without limitation, delivering to Agent upon the occurrence of an Event of Default irrevocable proxies in respect of the Pledged Collateral in form satisfactory to the Agent. Until receipt thereof, upon an Event of Default that has occurred and is continuing beyond any applicable grace period, this Agreement shall constitute Company’s proxy to Agent, on behalf of the Pledgees, or its nominee to vote all shares of Pledged Collateral then registered in each Company’s name.

(d)The Company will not consent to or approve the issuance of (i) any additional shares of any class of shares or other equity interests of the Issuer; or (ii) any securities convertible either voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or condition into, or any securities exchangeable for, any such shares, unless, in either case, such shares are pledged as Collateral pursuant to this Agreement.

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6.Voting Rights and Dividends. Until the occurrence of an Event of Default which is continuing: (i) the Company may exercise all rights to vote with respect to any Pledged Collateral; (ii) the Company shall be entitled to receive all dividends (whether paid or distributed in cash, securities or other property). In addition to the Pledgee’s rights and remedies set forth in Section 8 hereof, in case an Event of Default shall have occurred and be continuing, beyond any applicable cure period, the Pledgee shall (x) be entitled to vote the Pledged Collateral, (y) be entitled to give consents, waivers and ratifications in respect of the Pledged Collateral (the Company hereby irrevocably constituting and appointing the Pledgee, with full power of substitution, the proxy and attorney-in-fact of the Company for such purposes) and (z) be entitled to collect and receive for its own use cash dividends paid on the Pledged Collateral. The Company shall not be permitted to exercise or refrain from exercising any voting rights or other powers if, in the reasonable judgment of the Agent or any Pledgee, such action would have a material adverse effect on the value of the Pledged Collateral or any part thereof; and, provided, further, that the Company shall give at least five (5) days’ written notice of the manner in which the Company intends to exercise, or the reasons for refraining from exercising, any voting rights or other powers other than with respect to any election of directors and voting with respect to any incidental matters. Following the occurrence of an Event of Default, all dividends and all other distributions in respect of any of the Pledged Collateral, shall be delivered to the Agent to hold as Collateral and shall, if received by the Company, be received in trust for the benefit of the Pledgees, be segregated from the other property or funds of the Company, and be forthwith delivered to the Agent as Collateral in the same form as so received (with any necessary endorsement).

7.Event of Default. An Event of Default shall be deemed to have occurred and may be declared by any Pledgee upon the occurrence of an “Event of Default” under and as defined in the Loan Agreement or in the Notes which shall have occurred and be continuing beyond any applicable cure period.

8.Remedies.

(a)In case an Event of Default shall have occurred, the Agent and/or the Pledgees may:

(i)Transfer any or all of the Pledged Collateral into its name, or into the name of its nominee or nominees;

(ii)Exercise all corporate rights with respect to the Pledged Collateral including, without limitation, all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any shares of the Pledged Collateral as if it were the absolute owner thereof, including, but without limitation, the right to exchange, at its discretion, any or all of the Pledged Collateral upon the merger, consolidation, amalgamation, reorganization, recapitalization or other readjustment of the Issuer thereof, or upon the exercise by the Issuer of any right, privilege or option pertaining to any of the Pledged Collateral, and, in connection therewith, to deposit and deliver any and all of the Pledged Collateral with any committee, depository, transfer agent, registrar or other designated agent upon such terms and conditions as it may determine, all without liability but subject to the requirements of applicable law except to account for property actually received by it; and

(iii)Subject to any requirement of applicable law including for greater certainty, the Uniform Commercial Code of New York (the “UCC”), sell, assign and deliver the whole or, from time to time, any part of the Pledged Collateral at the time held by the Pledgee, at any private sale or at public auction, with or without demand, advertisement or notice of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived, except such notice as is required by applicable law and cannot be waived), for cash or credit or for other property for immediate or future delivery, and for such price or prices and on such terms as the Pledgee in its sole discretion may determine, or as may be required by applicable law, provided that the foregoing shall be done in a commercially reasonable manner.

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(b)The Company hereby waives and releases any and all right or equity of redemption, whether before or after sale hereunder. At any such sale, unless prohibited by applicable law, the Pledgee may bid for and purchase the whole or any part of the Pledged Collateral so sold free from any such right or equity of redemption. All moneys received by the Agent or the Pledgees hereunder whether upon sale of the Pledged Collateral or any part thereof or otherwise shall be held by the Agent or the Pledgees and applied by it as provided in Section 10 of this Agreement. No failure or delay on the part of the Agent or the Pledgees in exercising any rights hereunder shall operate as a waiver of any such rights nor shall any single or partial exercise of any such rights preclude any other or future exercise thereof or the exercise of any other rights hereunder. Neither the Agent nor any Pledgee shall have any duty as to the collection or protection of the Pledged Collateral or any income thereon nor any duty as to preservation of any rights pertaining thereto, except to apply the funds in accordance with the requirements of Section 10 hereof. The Agent or any Pledgee may exercise its rights with respect to property held hereunder without resort to other security for or sources of reimbursement or payment of the Obligations. In addition to the foregoing, to the extent applicable, Pledgees shall have all of the rights, remedies and privileges of a secured party under the UCC regardless of the jurisdiction in which enforcement hereof is sought.

9.Private Sale. The Company recognizes that the Pledgees or the Agent on behalf of the Pledgees may be unable to effect (or to do so only after delay which would adversely affect the value that might be realized from the Pledged Collateral) a public sale of all or part of the Pledged Collateral by reason of certain prohibitions contained in the Securities Act and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. The Company agrees (a) that any such private sale may be at prices and on terms that are less favorable to the seller than if sold at public sales and (b) that such private sales shall be deemed to have been made in a commercially reasonable manner. The Company agrees that the Agent and the Pledgees have no obligation to delay sale of any Pledged Collateral for the period of time necessary to permit the Issuer to register the Pledged Collateral for public sale under the Securities Act. The Agent and/or the Pledgees or any of them acting with or without the others shall have the right to purchase all or any part of the Pledged Collateral at any public or private sale and in each case make payment therefor by any means, whether by credit against the Obligations or otherwise. If the Agent or the Pledgees propose to sell the Pledged Collateral to either the Agent, any of the Pledgees or any affiliate of the Agent or any Pledgee (an “Affiliated Purchaser”), the Agent shall advise the Company in writing as to the terms of sale and the Company shall have five (5) business days to provide the Agent with evidence that it has received a better offer, accompanied by the terms of the better offer and payment or reasonable evidence of payment. Upon receipt of the better offer, the Agent shall so notify the Affiliated Purchaser and the Affiliated Purchaser shall have five (5) business days to match the better offer, and, if they do not match the better offer by the expiration of the five (5) day period, the Agent shall sell the Pledged Collateral to the party making the better offer. If such party does not purchase the Pledged Collateral on the terms of the better offer within five (5) business days after the second five (5) day period, the Agent may sell the Pledged Collateral to the Affiliated Purchaser on the initial terms on which the Affiliated Purchaser initially proposed to purchase the Pledged Collateral.

10.Proceeds of Sale. Subject to applicable law, the proceeds of any collection, recovery, receipt, appropriation, realization or sale of the Pledged Collateral shall be applied by the Agent or the Pledgees as follows:

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First, to the payment of all costs, reasonable expenses and charges of the Agent and the Pledgees and to the reimbursement of the Agent and the Pledgees for the prior payment by them of such costs, reasonable expenses and charges incurred in connection with the care and safekeeping of the Pledged Collateral (including, without limitation, the reasonable expenses of any sale or any other disposition of any of the Pledged Collateral), the expenses of any taking, legal fees and reasonable expenses, court costs, any other fees or expenses incurred or expenditures or advances made by Pledgee in the protection, enforcement or exercise of its rights, powers or remedies hereunder;

Second, to the payment of the Obligations, in whole or in part, in such order as the Agent or the Pledgees may elect, whether or not such Obligations are then due;

Third, to the extent applicable, to such persons, firms, corporations or other entities as required by applicable law including, without limitation, Section 9-504(1)(c) of the UCC; and

Fourth, to the extent of any surplus, to the Company or as a court of competent jurisdiction may direct.

In the event that the proceeds of any collection, recovery, receipt, appropriation, realization or sale are insufficient to satisfy the Obligations, the Company shall be liable for the deficiency plus the costs and fees of any lawyers employed by Pledgee to collect such deficiency.

11.Waiver of Marshalling. The Company hereby waives any right to compel any marshalling of any of the Pledged Collateral.

12.No Waiver. Any and all of the Pledgees’ rights with respect to the Liens granted under this Agreement shall continue unimpaired, and Company shall be and remain obligated in accordance with the terms hereof, notwithstanding (a) the bankruptcy, insolvency or reorganization of the Company, (b) the release or substitution of any item of the Pledged Collateral at any time, or of any rights or interests therein, or (c) any delay, extension of time, renewal, compromise or other indulgence granted by the Agent or any Pledgee in reference to any of the Obligations. The Company hereby waives all notice of any such delay, extension, release, substitution, renewal, compromise or other indulgence, and hereby consents to be bound hereby as fully and effectively as if the Company had expressly agreed thereto in advance. No delay or extension of time by the Agent or any Pledgee in exercising any power of sale, option or other right or remedy hereunder, and no failure by the Agent or any Pledgee to give notice or make demand, shall constitute a waiver thereof, or limit, impair or prejudice the Pledgees’ right to take any action against the Company or to exercise any other power of sale, option or any other right or remedy.

13.Expenses. The Pledged Collateral shall secure, and the Company shall pay to Pledgee on demand, from time to time, all reasonable costs and expenses, (including but not limited to, reasonable legal fees and costs, taxes, and all transfer, recording, filing and other charges) of, or incidental to, the custody, care, transfer, administration of the Pledged Collateral or any other collateral, or in any way relating to the enforcement, protection or preservation of the rights or remedies of the Agent and the Pledgees under this Agreement or with respect to any of the Obligations.

14.The Agent Appointed Attorney-In-Fact and Performance by the Agent and the Pledgees.

(a)Upon the occurrence of an Event of Default, the Company hereby irrevocably constitutes and appoints the Agent as such Company’s true and lawful attorney-in-fact, with full power of substitution, to execute, acknowledge and deliver any instruments and to do in such Company’s name, place and stead, all such acts, things and deeds for and on behalf of and in the name of the Company, which the Company could or might do or which the Agent may deem necessary, desirable or convenient to accomplish the purposes of this Agreement, including, without limitation, to execute such instruments of assignment or transfer or orders and to register, convey or otherwise transfer title to the Pledged Collateral into the Agent’s name, as agent for the Pledgees. The Company hereby ratifies and confirms all that said attorney-in-fact may so do and hereby declares this power of attorney to be coupled with an interest and irrevocable. If the Company fails to perform any agreement herein contained, the Agent or any Pledgee may itself perform or cause performance thereof, and any costs and expenses of the Pledgee incurred in connection therewith shall be paid by the Company as provided in Section 10 hereof.

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(b)The Pledgees hereby acknowledge and appoint the Agent to act on their behalf as provided in this Agreement, and that, in so acting, the Agent is acting on behalf of the Pledgees. The Agent shall incur no liability to the Pledgees for any action taken or any omission to take any action unless such action or failure of action resulted from the Agent’s gross negligence or willful conduct.

15.Waivers.EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR PLEDGEES TO ACCEPT THIS AGREEMENT.

16.Recapture. Notwithstanding anything to the contrary in this Agreement, if the Pledgees receives any payment or payments on account of the Obligations, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver, interim receiver, receiver and manager or any other party under the United States Bankruptcy Code, or any other federal, provincial or state bankruptcy, reorganization, moratorium or insolvency law relating to or affecting the enforcement of creditors’ rights generally, common law or equitable doctrine, then to the extent of any sum not finally retained by the Pledgees, the Company’s obligations to the Pledgees shall be reinstated and this Agreement shall remain in full force and effect (or be reinstated) until payment shall have been made to Pledgees, which payment shall be due on demand and shall bear interest at the highest rate of interest payable under the Note.

17.Miscellaneous.

(a)This Agreement sets forth the entire agreement and understanding between the parties and supersedes all prior or contemporaneous written or oral agreements, promises, representations, understandings, letters of intent and negotiations, between the parties with respect to the subject matter of this Agreement. No part of this Agreement may be modified or amended, nor may any right be waived, except by a written instrument which expressly refers to this Agreement, states that it is a modification or amendment of this Agreement or a waiver and is signed by the parties to this Agreement, or, in the case of waiver, by the party granting the waiver. No course of conduct or dealing or trade usage or custom and no course of performance shall be relied on or referred to by any party to contradict, explain or supplement any provision of this Agreement, it being acknowledged by the parties that this Agreement is intended to be, and is, the complete and exclusive statement of the agreement with respect to its subject matter, subject to the Loan Agreement and the Notes. Any waiver shall be limited to the express terms thereof and shall not be construed as a waiver of any other provisions or the same provisions at any other time or under any other circumstances. No delay or failure by either party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other rights.

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(b)In the event that any provision of this Agreement or the application thereof to the Company or any circumstance in any jurisdiction governing this Agreement shall, to any extent, be invalid or unenforceable under any applicable statute, regulation, or rule of law, such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute, regulation or rule of law, and the remainder of this Agreement and the application of any such invalid or unenforceable provision to parties, jurisdictions, or circumstances other than to whom or to which it is held invalid or unenforceable shall not be affected thereby, nor shall same affect the validity or enforceability of any other provision of this Agreement.

(c)This Agreement shall inure to the benefit of and be binding upon the Company, and the Company’s successors and assigns, and shall inure to the benefit of and be binding upon the Agent, the Pledgees and their respective successors and assigns.

(d)Any notice or other communication required or permitted pursuant to this Agreement shall be given in the manner and to the address and person set forth in the Loan Agreement.

(e)This Agreement and the rights of the parties shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such state and without regard to principles of conflicts of law. Each party irrevocably (a) consents to the jurisdiction of the federal and state courts situated in New York County, New York in any action that may be brought pursuant to this Agreement, and (b) submits to and accepts, with respect to its properties and assets, generally and unconditionally, the in personam jurisdiction of the aforesaid courts, waiving any defense that such court is not a convenient forum. In any such litigation to the extent permitted by applicable law, each party waives personal service of any summons, complaint or other process, and agrees that the service thereof may be made either (i) in the manner for giving of notices provided in Section 17(d) of this Agreement (other than by telecopier) or (ii) in any other manner permitted by law.

(f)All captions in this Agreement are included herein for convenience of reference only and shall not constitute part of this Agreement for any other purpose.

(g)This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission or by sending a scanned copy by electronic mail shall be deemed an original signature hereto.

(h)If there is any inconsistency between the provisions of this Agreement and the provisions of the Loan Agreement or Note, the provisions of the Loan Agreement and the Note shall prevail.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first written above.

[Signatures on following pages]

- 8 -

SIGNATURE PAGE TO PLEDGE AGREEMENT

NATURALNANO, INC.
By:	/s/ Cathy A. Fleischer
Name:	Cathy A. Fleischer
Title:	President

PLATINUM ADVISORS LLC
By:	/s/ Mark Nordlicht
Name:	Mark Nordlicht
Title:

PLEDGEES:
Platinum Partners Long Term Growth IV
By:	/s/ Mark Nordlicht
Name:	Mark Nordlicht
Title:	Pres
Address:	152 W. 57th Street, 54th Floor
	New York, NY 10019
Telecopier:	(212)
Longview Special Financing, Inc.

By:	/s/ François Morax
Name:	François Morax
Title:	Director
Address:	Lindstrassse 6
	6341 Baar
	Switzerland
Telecopier:
Platinum Advisors, LLC

By:	/s/ Mark Nordlicht
Name:	Mark Nordlicht
Title:
Address:	152 W. 57th Street, 54th Floor
	New York, NY 10019
Telecopier:	(212)

- 9 -

EX-10.2

Exhibit 10.2

PATENT SECURITY AGREEMENT

This is a Patent Security Agreement ("Agreement"), dated March 7, 2007, made byNaturalNano, Inc., a Nevada corporation, and its wholly-owned subsidiary NaturalNano Research, Inc, a Delaware corporation (collectively referred to herein as the "Company") with a place of business at 15 Schoen Place, Pittsford, NY 14534 in favor of the investors named Schedule I to this Agreement (the "Secured Parties") and Platinum Advisors, LLC, a Delaware limited liability company with an address of 152 West 57^th Street, 65^th Floor, New York, NY 10019, as agent (the “Agent”).

Background.

A.This Agreement is being executed in connection with that certain Loan and Security Agreement dated as of March 7, 2007, by and among the Company, NaturalNano, Inc., the Secured Parties and the Agent (as amended, supplemented, restated, replaced, or otherwise modified from time to time, the "Loan Agreement"). Capitalized terms used but not defined herein shall have the meanings given to such terms in, or by reference in, the Loan Agreement.

B.As security for payment and performance of the Obligations, the Company is granting Secured Party a first and prior lien on and security interest in certain assets of the Company associated with or relating to services or products related to the Company's Patent Collateral (as defined herein), and under which the Secured Party is entitled to foreclose or otherwise deal with such assets under the terms and conditions set forth herein.

C.The Company owns, is developing the technology of, and/or is using (i) the Letters Patent and the inventions disclosed and claimed therein set forth on Exhibit A to this Agreement (hereinafter referred to collectively as the "Patents"); (ii) the applications for Letters Patent and the inventions disclosed and claimed therein set forth on Exhibit A to this Agreement and any Letters Patent which may be issued upon any of said applications (hereinafter referred to collectively as the "Applications"); (iii) US provisional patent applications and the inventions disclosed therein set forth on Exhibit A to this Agreement (hereinafter referred to collectively as the "Provisional Applications”); (iv) foreign patents, foreign patent applications, and/or Patent Cooperation treaty (PCT) applications and the inventions disclosed and claimed therein set forth on Exhibit A to this Agreement (hereinafter referred to collectively as the "Foreign Patents"). In conjunction with the patents and applications, Company may use and/or adopt any reissues, extensions, divisions, continuations or continuations-in-part of the patents or applications (such reissues, extensions, divisions, continuations and continuations-in-part being herein referred to collectively as the "Reissued Patents"); and may be entitled to future royalties or other fees paid or payments made to Company in respect of the Patents (hereinafter referred to collectively as the "Royalties"), (the Patents, Applications, Provisional Applications, Foreign Patents, Reissued Patents and Royalties are referred to collectively as the "Patent Rights").

D.Pursuant to the Loan Agreement, the Secured Party has been granted a first and prior lien on and security interest in, among other things, the Patent Collateral (as defined herein) and the registration thereof, as security for all of the Obligations, and the Secured Party desires to have its security interest in such Patent Collateral confirmed by a document identifying same and in such form that it may be recorded in the United States Patent and Trademark Office.

Now therefore, with the foregoing Background deemed incorporated by reference and made a part hereof, and in consideration of the premises and mutual promises herein contained, the parties hereto, intending to be legally bound hereby, covenant and agree as follows:

1.In consideration of and pursuant to the terms of the Loan Agreement, and for other good, valuable and sufficient consideration, the receipt of which is hereby acknowledged, and to secure the payment and performance of the Obligations, the Company grants a first and prior lien and security interest to the Secured Party in all of the Patent Rights and all proceeds thereof and all the Company's right, title, interest, claims and demands that the Company has or may have in profits and damages for past and future infringements of the Patent Rights (such rights, interest, claims and demand being herein called the "Claims") (the Patent Rights and Claims are collectively herein referred to as the "Patent Collateral").

2.The Company hereby covenants and agrees to maintain the Patent Collateral in full force and effect (except to the extent any Patent Collateral expires by its terms) until all of the Obligations are satisfied in full.

3. The Company represents, warrants and covenants to the Secured Party that:

(a)The Company is, except as otherwise noted herein or in Exhibit A, the sole and exclusive respective owner of the entire and unencumbered right, title and interest in and to the Patent Collateral;

(b)To the best of the Company's knowledge, based either upon an on-line search (see Exhibit A, footnote 1) and review of application documents available, but with no other investigation having been made or required to be made, the Patent Collateral has not been adjudged invalid or unenforceable;

(c)To the best of the Company's knowledge, with no investigation having been made or required to be made, all issued patents of the Patent Rights, if any, are valid and enforceable;

(d)To the best of the Company's knowledge, based either upon an on-line USPTO assignment search (see Exhibit A, footnote 1) and review of application documents available, but with no investigation having been made or required to be made, except as noted by Footnote 1 of Exhibit A, all of the Patent Collateral is free and clear of any liens, charges and encumbrances including, without limitation, pledges, assignments, licenses and covenants by Company not to sue third persons, except that certain patent applications may be subject to a non-exclusive license as set forth in NCRADA-NRL-05-367;

2

(e)The Company has no notice of any suits or actions commenced or threatened against it, or notice of claims asserted or threatened against it, with reference to the Patent Collateral;

(f)The Company has the right, power and authority to enter into this Agreement and perform its terms;

(g)The Company has used and will continue to use for the duration of this Agreement, consistent standards of quality in services or products leased or sold under the Patent Collateral and hereby grants to the Secured Party and its employees, representatives and agents the right (with no obligation of any kind upon the Secured Party to do so) upon prior notice to visit the Company's affiliates, franchises or management locations and to inspect the use of the Patent Collateral and quality control records relating thereto at reasonable times during regular business hours to ensure the Company's compliance with this paragraph 3(h).

4.The Company further covenants that:

(a)Until the Obligations have been satisfied in full, the Company will not enter into any agreement, including, without limitation, license agreements or options, which are inconsistent with the Company’s obligations under this Agreement or any obligation under the Loan Agreement or which restrict or impair the Secured Party 's rights hereunder.

(b)If the Company shall acquire or hold any new Patent Collateral that is not listed on Exhibit A hereto ("Additional Patent Collateral") or even though presently listed in Exhibit A, Company later records such acquisition or holding, then (i) the provisions of this Agreement shall be deemed to automatically apply thereto and such Additional Patent Collateral shall be deemed part of the Patent Collateral, (ii) the Company shall give the Secured Party prompt written notice thereof, and (iii) the Company shall promptly deliver to the Secured Party with respect to such Additional Patent Collateral, a Supplement to Patent Security Agreement in a form satisfactory to the Secured Party, duly completed and executed by the Company. Each schedule of Additional Patent Collateral shall be incorporated and become a part of Exhibit A, and all references to Exhibit A contained in this Agreement shall be deemed, for all purposes, to also include each such schedule. The Company hereby authorizes and empowers the Secured Party, its successors and assigns, and any officer or agent of the Secured Party as the Secured Party may select, in its exclusive discretion, as the Company's true and lawful attorney-in-fact, with the power to endorse the Company's name on such Supplement to Patent Security Agreement and to execute any documents or make any filings in connection therewith.

5.So long as this Agreement is in effect and so long as the Company has not received notice from the Secured Party that an Event of Default has occurred and is continuing under the Loan Agreement or the Note and that the Secured Party has elected to exercise its rights hereunder (i) the Company shall continue to have the exclusive right to use the Patent Collateral; and (ii) the Secured Party shall have no right to use the Patent Collateral or issue any exclusive or non-exclusive license with respect thereto, or assign, pledge or otherwise transfer title in the Patent Collateral to any third party. Foreclosure with respect to the Patent Collateral shall not abrogate or diminish the rights of any licensee or any other permitted transferee of any part of the Patent Collateral in the normal course of the Company’s business.

3

6.The Company agrees not to sell, license, grant any option, assign or further encumber its rights and interest in the Patent Collateral to any entity or person without the prior written consent of the Secured Party, except that the Company may, without any consent, grant exclusive, field of use and non-exclusive licenses in the normal course of its business.

7.Anything herein contained to the contrary notwithstand-ing, if and while an Event of Default exists under the Loan Agreement or the Note, the Company covenants and agrees that the Secured Party, as the holder of a security interest under the Uniform Commercial Code, as now or hereafter in effect in the State of New York, may take such action as permitted hereunder, in its exclusive discretion, to foreclose upon the Patent Collateral.

8.This Agreement shall be subject to the terms, provisions, and conditions set forth in the Loan Agreement and may not be modified without the written consent of the party against whom enforcement is being sought.

9.All rights and remedies herein granted to the Secured Party shall be in addition to any rights and remedies granted to the Secured Party under the Loan Agreement and the Note. In the event of an inconsistency between this Agreement and Loan Agreement, the language of this Agreement shall control.

10.Upon performance and full satisfaction of all Obligations, the Secured Party shall execute and deliver to the Company all documents reasonably necessary to terminate the Secured Party's security interest in the Patent Collateral and to record such satisfaction and termination wherever Company chooses, including but not limited to the United States Patent and Trademark Office, at the sole expense of the Company.

11.Any and all reasonable fees, costs and expenses, of whatever kind or nature, including the reasonable attorneys' fees and legal expenses incurred by the Secured Party in connection with the preparation of this Agreement and all other documents relating hereto and the consummation of this transaction, the filing or recording of any documents (including all taxes in connection therewith) in public offices, the payment or discharge of any taxes, reasonable counsel fees, maintenance fees, encumbrances or costs otherwise incurred in protecting, maintaining, preserving the Patent Collateral, or in defending or prosecuting any actions or proceed-ings arising out of or related to the Patent Collateral, in each case in accordance with the terms of this Agreement, shall be borne and paid by the Company on demand by the Secured Party and until so paid shall be added to the principal amount of the Note.

12.Subject to the terms of the Loan Agreement and except to the extent that the Company reasonably determines such Patent Collateral is not material to its business, the Company shall have the duty to prosecute diligently any application and/or registration with respect to the Patent Collateral pending as of the date of this Agreement or thereafter, until all of the Obligations shall have been satisfied in full, to preserve and maintain all rights in the Patent Collateral, and upon reasonable request by the Secured Party, the Company shall make application for a patent on patentable technology belonging to the Company or licensed to the Company. Any reasonable expenses incurred in connection with such applications shall be borne exclusively by the Company. The Company shall not abandon any Patent Collateral (other than Patent Collateral that the Company reasonably determines is not material to its business) without the prior written consent of the Secured Party, which consent shall not be unreasonably withheld.

4

13.The Company shall have the right to bring suit in its own name to enforce the Patent Collateral, in which event the Secured Party may, if the Company reasonably deems it necessary, be joined as a nominal party to such suit, so long as the Secured Party shall have been satisfied, in its sole discretion, that it is not thereby incurring any risk of liability because of such joinder. The Company shall promptly, upon demand, reimburse and indemnify the Secured Party for all damages, costs and expenses, including reasonable attorneys' fees and costs, incurred by the Secured Party in the fulfillment of the provisions of this paragraph.

14.Upon the occurrence and during the continuance of an Event of Default under the Loan Agreement or the Note, the Secured Party may, without any obligation to do so, complete any obligation of the Company hereunder, in the Company's name or in the Secured Party's name, but at the expense of the Company, and the Company hereby agrees to reimburse the Secured Party in full for all reasonable expenses, including, without limitation, all reasonable attorneys' fees incurred by the Secured Party in protecting, defending and maintaining the Patent Collateral.

15.No course of dealing between the Company and the Secured Party, nor any failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder, shall operate as a waiver thereof, and all of the Secured Party's rights and remedies with respect to the Patent Collateral, whether established hereby or by the Loan Agreement or the Note, or by any other future agreements between the Company and the Secured Party or by law, shall be cumulative and may be exercised singularly or concurrently.

16.The provisions of this Agreement are severable and the invalidity or unenforceability of any provision herein shall not affect the remaining provisions which shall continue unimpaired and in full force and effect.

17.This Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.

18.This Agreement shall be governed by and construed in conformity with the laws of the State of New York, without regard to its otherwise applicable principles of conflicts of laws.

5

19.THE COMPANY AND THE SECURED PARTY EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A JURY TRIAL ARISING IN CONNECTION WITH ANY PROCEED-ING OR CONTROVERSY RELATING TO THIS AGREEMENT.

In witness whereof, the parties hereto have executed this Patent Security Agreement, the day and year first above written.

NATURALNANO, INC.
By:	/s/ Cathy A. Fleischer
Name:	Cathy A. Fleischer
Title:	President
Attest:	/s/ Ninetta McDonald
Name:	Ninetta McDonald
Title:	Administrative Assistant
NATURALNANO RESEARCH, INC.
By:	/s/ Kathleen A. Browne
Name:	Kathleen A. Browne
Title:	Chief Financial Officer
Attest:	/s/ Ninetta McDonald
Name:	Ninetta McDonald
Title:	Administrative Assistant

6

CORPORATE ACKNOWLEDGMENT

UNITED STATES OF AMERICA		:
STATE OF NEW YORK	:	SS
COUNTY OF MONROE		:

On this 5th day of March, 2007, before me personally appeared Cathy Fleischer, who being duly sworn, deposes and says that she is the President of NaturalNano, Inc., the corporation described in the foregoing document, that she in such capacity as officer of said corporation is authorized to execute on behalf of each corporation the foregoing document for the purposes contained therein, and that she is the person whose name and signature is subscribed to the foregoing document.

/s/ Paul M. LeFrois, Jr.

Notary Public

Paul M. LeFrois, Jr.

Notary Public, State of New York

Monroe County No. 01LE5019379

Commission Expires 10/18/2009

CORPORATE ACKNOWLEDGMENT

UNITED STATES OF AMERICA		:
STATE OF NEW YORK	:	SS
COUNTY OF MONROE		:

On this 5th day of March, 2007, before me personally appeared Kathleen Browne, who being duly sworn, deposes and says that she is the Chief Financial Officer of NaturalNano Research, Inc., the corporation described in the foregoing document, that she in such capacity as officer of said corporation is authorized to execute on behalf of each corporation the foregoing document for the purposes contained therein, and that she is the person whose name and signature is subscribed to the foregoing document.

/s/ Paul M. LeFrois, Jr.

Notary Public

Paul M. LeFrois, Jr.

Notary Public, State of New York

Monroe County No. 01LE5019379

Commission Expires 10/18/2009

PATENT SECURITY AGREEMENT

Exhibit A

Application S/N, Date

11/244,376

Filed 10/06/05

11/042,219

Filed 01/25/05

11/134,657

Filed 05/20/02

11/183,417

Filed 07/18/05

11/099,055

Filed 4/5/2005 (1)

PCT/US2006/019682

Filed 05/19/06

PCT/US2006/026936

Filed 5/19/06

11/481,025

Filed 7/6/2006

11/469,128

Filed 08/31/06

PCT/US2006/034281

Filed 9/1/2006

11/531,459

Filed 09/13/06

PCT/US2006/035659

Filed 9/14/2006

11/541,115

Filed 10/19/06

PCT/US2006/041208

Filed 10/20/06

11/554,575

Filed 10/30/06

PCT/US2006/042554

Filed 10/31/06

60/867,369

Filed 11/27/2006

60/888,685

Filed 2/7/07

¹ Application may be subject to a claim of joint ownership.

Schedule I

Platinum Partners Long Term Growth IV

Platinum Advisors LLC

Longview Special Financing Inc.

EX-10.3

Exhibit 10.3

PATENT ASSIGNMENT

WHEREAS, Technology Innovations, LLC, of 15 Schoen Place, Pittsford, NY 14534 (formerly 150 Lucius Gordon Drive, West Henrietta, NY 14586) (“Assignor”) owns certain rights, title and interest in, to and under the improvements and the applications of various issued patents and pending applications set forth in the attached Patent Assets Schedule (“Patents”), and

WHEREAS, NaturalNano Research, Inc., a Delaware Corporation, of 15 Schoen Place, Pittsford, NY 14534 (“Assignee”) is desirous of obtaining Assignor’s right, title and interest in, to and under the said improvements and the said applications as referred to in the attached Patent Assets Schedule (collectively the “Patents”);

NOW THEREFORE, in consideration of the exchange of $10.00 and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor relinquishes and has sold, assigned, transferred and set over, free and clear of any and all liens, security interest, pledges or encumbrances of any kind, and by these presents does hereby sell, assign, transfer and set over, unto the Assignee, its successors, legal representatives and assigns, the entire right, title and interest in and to:

a)the patents and the applications for said improvements as set forth in the Patents, and including all divisions, renewals and continuations thereof and all patents of the United States which may be granted thereon and all reissues and extensions thereof, and all applications for patents which may hereafter be filed for said improvements in any country or countries foreign to the United States, and all patents which may be granted for said improvements in any country or countries foreign to the United States and all extensions, renewals and reissues thereof;

b)all of Assignor’s priority rights under the International Convention for the Protection of Industrial Property relating to the patents and the applications as set forth in the attached Patents;

c)all income, royalties, damages or payments due or payable with respect thereto at any time; and

d)the right to sue for damages, injunctive relief and any other remedies in respect of any past, present or future infringement thereof, or any of them, whenever or wherever occurring, and to collect the same for its own use and employment.

Assignor represents and warrants to Assignee that Assignor has full power and authority, and that no consents of any other parties are necessary, to enter into this Assignment, and to the best of Assignor’s knowledge, upon consummation of this Assignment, Assignee shall have good and marketable title to the Patents, free and clear of any and all liens, mortgages, encumbrances, pledges, security interests, licenses, or charges of any nature whatsoever. Assignee owns the entire right, title and interest in, to and under the Patents for the sole use and employment of Assignee, its successor, assigns or other legal representatives.

Page 1 of 8

Assignor authorizes and requests the Director of the U.S. Patent and Trademark Office to record this assignment and to reflect Assignee as owner of the Patents, including any divisionals, reissues, reexaminations or extensions thereof or continuations that have been or may be filed, and to issue any and all letters of patent of the United States thereon to Assignee.

Assignor further agrees to cooperate with Assignee and to execute and deliver to Assignee all papers, instruments, and assignments, as may be necessary to vest such right, title and interest in and to the Patents to Assignee.

This Assignment shall be governed by and construed and interpreted in accordance with the substantive laws of the State of New York, without giving effect to any conflicts of law rule or principle that might require application of the laws of another jurisdiction.

IN TESTIMONY WHEREOF, I hereunto set my hand and seal this 2nd day of March, 2007.

Assignor - Technology Innovations, LLC:

/s/ Michael L. Weiner
By:  Michael L. Weiner	Title:	Manager

STATE OF NEW YORK

COUNTY OF MONROE: ss.:

On this 2nd day of March, 2007, before me, the undersigned, personally appeared Michael L. Weiner, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to there foregoing instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/s/ Paul M. LeFrois, Jr.

Notary Public

Paul M. LeFrois, Jr.

Notary Public, State of New York

Monroe County No. 01LE5019379

Commission Expires 10/18/2009

Page 2 of 8

Assignee - NaturalNano Research, Inc.: (required for foreign recordation)

/s/ C. A. Fleischer
By:  C. A. Fleischer	Title:	President

STATE OF NEW YORK

COUNTY OF MONROE: ss.:

On this 2nd day of March, 2007, before me, the undersigned, personally appeared Cathy A. Fleischer, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to there foregoing instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/s/ Paul M. LeFrois, Jr.

Notary Public

Paul M. LeFrois, Jr.

Notary Public, State of New York

Monroe County No. 01LE5019379

Commission Expires 10/18/2009

Page 3 of 8

Patent Assets Schedule

SERIAL NO.	FILING DATE
11/244,376	Oct. 6, 2005
11/042,219	Jan. 25, 2005
11/134,657	May 20, 2005
11/183,417	July 18, 2005
11/099,055	Feb. 5, 2006
PCT/US2006/019682	May 19, 2006
PCT/US2006/026936	May 19, 2006
11/454,025	July 6, 2006

Page 4 of 8

PATENT ASSIGNMENT

WHEREAS, Technology Innovations, LLC, of 15 Schoen Place, Pittsford, NY 14534 (formerly 150 Lucius Gordon Drive, West Henrietta, NY 14586) (“Assignor”) owns certain rights, title and interest in, to and under the improvements and the applications of various issued patents and pending applications set forth in the attached Patent Assets Schedule (“Patents”), and

WHEREAS, NaturalNano Research, Inc., a Delaware Corporation, of 15 Schoen Place, Pittsford, NY 14534 (“Assignee”) is desirous of obtaining Assignor’s right, title and interest in, to and under the said improvements and the said applications as referred to in the attached Patent Assets Schedule (collectively the “Patents”);

NOW THEREFORE, in consideration of the exchange of $10.00 and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor relinquishes and has sold, assigned, transferred and set over, free and clear of any and all liens, security interest, pledges or encumbrances of any kind, and by these presents does hereby sell, assign, transfer and set over, unto the Assignee, its successors, legal representatives and assigns, the entire right, title and interest in and to:

a)the patents and the applications for said improvements as set forth in the Patents, and including all divisions, renewals and continuations thereof and all patents of the United States which may be granted thereon and all reissues and extensions thereof, and all applications for patents which may hereafter be filed for said improvements in any country or countries foreign to the United States, and all patents which may be granted for said improvements in any country or countries foreign to the United States and all extensions, renewals and reissues thereof;

b)all of Assignor’s priority rights under the International Convention for the Protection of Industrial Property relating to the patents and the applications as set forth in the attached Patents;

c)all income, royalties, damages or payments due or payable with respect thereto at any time; and

d)the right to sue for damages, injunctive relief and any other remedies in respect of any past, present or future infringement thereof, or any of them, whenever or wherever occurring, and to collect the same for its own use and employment.

Assignor represents and warrants to Assignee that Assignor has full power and authority, and that no consents of any other parties are necessary, to enter into this Assignment, and to the best of Assignor’s knowledge, upon consummation of this Assignment, Assignee shall have good and marketable title to the Patents, free and clear of any and all liens, mortgages, encumbrances, pledges, security interests, licenses, or charges of any nature whatsoever. Assignee owns the entire right, title and interest in, to and under the Patents for the sole use and employment of Assignee, its successor, assigns or other legal representatives.

Page 5 of 8

Assignor authorizes and requests the Director of the U.S. Patent and Trademark Office to record this assignment and to reflect Assignee as owner of the Patents, including any divisionals, reissues, reexaminations or extensions thereof or continuations that have been or may be filed, and to issue any and all letters of patent of the United States thereon to Assignee.

Assignor further agrees to cooperate with Assignee and to execute and deliver to Assignee all papers, instruments, and assignments, as may be necessary to vest such right, title and interest in and to the Patents to Assignee.

This Assignment shall be governed by and construed and interpreted in accordance with the substantive laws of the State of New York, without giving effect to any conflicts of law rule or principle that might require application of the laws of another jurisdiction.

IN TESTIMONY WHEREOF, I hereunto set my hand and seal this 05 day of March, 2007.

Assignor - Technology Innovations, LLC:

/s/ S G MacDonald
By:  S G MacDonald	Title:	VP - R&D

STATE OF NEW YORK

COUNTY OF MONROE: ss.:

On this 05^th day of March, 2007, before me, the undersigned, personally appeared Stuart MacDonald, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to there foregoing instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/s/ Paul M. LeFrois, Jr.

Notary Public

Paul M. LeFrois, Jr.

Notary Public, State of New York

Monroe County No. 01LE5019379

Commission Expires 10/18/2009

Page 6 of 8

Assignee - NaturalNano Research, Inc.: (required for foreign recordation)

/s/ C. A. Fleischer
By:  C. A. Fleischer	Title:	President

STATE OF NEW YORK

COUNTY OF MONROE: ss.:

On this 05^th day of March, 2007, before me, the undersigned, personally appeared Cathy Fleischer, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to there foregoing instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/s/ Paul M. LeFrois, Jr.

Notary Public

Paul M. LeFrois, Jr.

Notary Public, State of New York

Monroe County No. 01LE5019379

Commission Expires 10/18/2009

Page 7 of 8

Patent Assets Schedule

SERIAL NO.	FILING DATE
11/481,025	July 6, 2006

Page 8 of 8

EX-10.4

Exhibit 10.4

March 7, 2007

The Investors described below

Platinum Advisors, LLC, as Agent

152 West 57^th Street

New York, New York 10019

Re: Proposed Loan and Security Agreement with NaturalNano, Inc.

Ladies and Gentlemen:

The undersigned Technology Innovations, llc, a stockholder of NaturalNano, Inc., a Nevada corporation (the “Company”), understands that, pursuant to a Loan and Security Agreement (the “Agreement”) dated the date of this letter, among the Company, NaturalNano Research, Inc., the Company’s wholly-owned subsidiary, the Investors named therein (the “Investors”), and Platinum Advisers llc, as agent (the “Agent”), the Company is issuing to the Investors its 8% Senior Secured Convertible Notes in the principal amount of $3,347,500 (the “Notes”) and Common Stock Purchase Warrants for the purchase of an aggregate of 25,106,253 shares of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”) (together, the “Securities”). In recognition of the benefit that such a purchase will confer upon the undersigned as a major stockholder of the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with the Investors and the Agent that, during a period of two years from the date of the Agreement (the "Lock-Up Period"), the undersigned will not, without the prior written consent of the Agent, directly or indirectly and except as provided below: (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer (a “Transfer”) any shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares of Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition (collectively, the “Lock-Up Securities”) or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of shares of Common Stock or other securities, in cash or otherwise.

Notwithstanding the foregoing, and subject to the conditions below, the undersigned may Transfer the Lock-Up Securities during the Lock-Up Period, provided that, in any such case it shall be a condition to such Transfer (other than a Transfer described in clauses (ii) and (iii) below) that the transferee execute and deliver to the Agent an agreement stating that the transferee is receiving and holding the Lock-Up Securities and any shares of Common Stock issuable upon the conversion, exercise or exchange of any Lock-Up Securities, subject to the provisions of this Agreement, that thereshall be no further Transfer of such Lock-Up Securities or any shares of Common Stock issuable upon the conversion, exercise or exchange of any Lock-Up Securities, except in accordance with this Agreement:

(i) as a bona fide gift or gifts to an educational, charitable, religious or other not-for-profit entity; or

(ii) in dispositions of shares of Common Stock to the Company; or

(iii) to the persons and entities identified on Exhibit A attached hereto, in the amounts and at the prices set forth opposite the names of such persons and entities on said Exhibit A, pursuant to contractual obligations in effect on the date hereof, it being understood that the undersigned in an affiliate of the Company and, pursuant to Rule 144, the holding period of such named transferees will start with their acquisition of shares from the undersigned; or

(iv) in a private transaction;

Further, after the first anniversary of the closing date under the Agreement, the undersigned and its transferees may also Transfer such Lock-Up Securities, if, and only if, on the date of such Transfer, shares of the Common Stock (x) are traded on the OTC Bulletin Board or the Nasdaq Stock Market or the New York or American Stock Exchange and (y) shall have traded at price of $0.50 per share or greater (as reported by Bloomberg L.P. or, if the Common Stock is then traded on the Nasdaq Stock Market or the New York or American Stock Exchange, as reported by such market or exchange); provided, however, that in the event that the registration statement required by the Agreement and the registration rights agreement executed pursuant to the Agreement has not been declared effective (or, having been declared effective, in no longer current and effective) twelve months from the closing date, the period referred to in the preceding sentence shall be 13 months from the closing date instead of the first anniversary of the closing date.

The undersigned further agrees that, during the Lock-Up Period, the undersigned will not and will not permit any permitted transferee, without the prior written consent of the Agent and Investors holding, in the aggregate, Notes representing at least 75% of the principal amount then outstanding under all of the Notes, make any demand for, or exercise any right with respect to, the registration under the Securities Act of 1933 of any Lock-Up Securities or any shares of Common Stock issuable upon the conversion, exercise or exchange of any Lock-Up Securities. For purpose of computing the 75% of the principal amount of the Notes, if any Investor shall have converted the Notes and shall not have sold the underlying shares pursuant to an effective registration statement, the Notes upon conversion of which the shares of common stock were issued shall be deemed to be outstanding.

Very truly yours,
Technology Innovations, llc
By:	/s/ Michael L. Weiner
	Michael L. Weiner, Manager

Exhibit A

Option Holder	Number of Shares		Price per Share
Xinhua Financial Network		728,155	$	3.00
Xinhua Financial Network		2,000,000	$	4.00
Michael Duffy		2,600,000	$	0.10
James McCarthy		100,000	$	0.10

EX-10.5

Exhibit 10.5

March 7, 2007

The Investors identified below

and

Platinum Advisers llc

152 West 57^th Street

New York, New York 10019

Re: Loan and Security Agreement with NaturalNano, Inc.

Ladies and Gentlemen:

The undersigned Technology Innovations, llc, a stockholder of NaturalNano, Inc., a Nevada corporation (the “Company”), understands that, pursuant to a Loan and Security Agreement (the “Agreement”) dated the date of this letter, among the Company, NaturalNano Research, Inc., a Delaware corporation and the Company’s wholly-owned subsidiary (“NN Research”), the Investors named therein (the “Investors”) and Platinum Advisers llc, as agent (the “Agent”), the Company is issuing to the Investors and the Agent (i) $3,347,500 face amount of the Company’s 8% Senior Secured Convertible Notes (the “Notes”) and (ii) Common Stock Purchase Warrants for the purchase of an aggregate of 25,106,253 shares of the Company’s Common Stock, par value $0.001 per share (together with the Notes, the “Securities”). In recognition of the benefit that the sale and issuance of the Securities will confer upon the undersigned as a stockholder of the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with the Investors and the Agent that, as long as any Notes are outstanding, the undersigned will not demand repayment by the Company or NN Research of any obligations for money borrowed except as permitted under Section 7.20 of the Agreement. The undersigned further agrees with the Investors and the Agent that, if, at any time when any Notes are outstanding, the undersigned receives any payments of any amounts from the Company or NN Research other than as permitted under Section 7.20 of the Agreement, the undersigned will promptly return such payments to the Company.

Very truly yours,
Technology Innovations, llc
By:	/s/ Michael L. Weiner
	Michael L. Weiner, Manager

EX-99.1

Exhibit 99.1

NaturalNano Closes $3.25 Million Deal - Will Use Proceeds to Develop Pleximer Product Line

Allowing NaturalNano to Meet Critical Unmet Market Needs in the $40 Billion Nanocomposites Industry

NaturalNano (OTCBB: NNAN) (FWB:N3N) (www.naturalnano.com), a materials science company, today announced it has received a $3.25 million cash investment from Platinum Partners Long Term Growth IV and Longview Special Financing, Inc. through the issuance of Convertible Secured Notes. The transaction closed on March 7, 2007.

NaturalNano intends to use the bulk of the funds to complete the commercialization of a line of industrial grade polymer additives to be marketed under the Pleximer^tm brand name. “Interest in our proprietary breakthroughs in polymer chemistry is strong and widespread throughout the polymers industry. The nanomaterials that we enhance are part of the fastest growing segment of the $40 billion composites market. Pleximer technology makes these polymers, such as nylon and polypropylene, stronger, lighter and more flexible than today’s composite materials, while reducing the cost of production and capital equipment needed by NaturalNano’s customers,” stated Cathy Fleischer, President and Chief Technology Officer.

Fleischer continued, “Even with the rapid growth of the overall market, there is a significant unmet market need that has been held back by complications of complexity, quality and the up front capital investment needed to manufacture nanocomposites. Pleximer changes this equation by reducing the complications and quality control problems with a Pleximer additive that can be put right into the extruders on the production line, eliminating the complex steps usually associated with other nanocomposites.”

NaturalNano recently demonstrated manufacturing scale trials of its Pleximer materials, producing excellent results. “The new capital received today will allow us to leverage our innovations into commercial products for which there is substantial demand and a true market need, which Pleximer addresses,” stated Fleischer.

In connection with the financing, NaturalNano issued warrants for the purchase of a total of 25,106,254 shares of common stock; if the warrants are exercised in full, NaturalNano would receive an additional $6.9 million in proceeds. “We are honored by the vote of confidence in NaturalNano that this investment by Platinum and Longview represents,” said Cathy Fleischer, President and Chief Technology Officer. Details of the transaction are described in a Report on Form 8-K filed today with the Securities and Exchange Commission and available at NaturalNano’s website http://www.naturalnano.com

About Pleximer

NaturalNano’s Pleximer additive can be utilized with a broad range of polymers, enabling a wider array of capabilities.  Pleximer offers the following benefits:

.               Saves investment capital needed for equipment to fabricate nanocomposites;

.               Reduces cost of production by eliminating process steps;

.               Improves quality at reduced cost;

.               Provides a stronger, lighter, less brittle, and more uniform output; and

.               Covered by pending patents.

Pleximer additives consist of halloysite clay nanotubes functionalized, concentrated and mixed with various polymer materials using the Company’s proprietary processes. Plastics manufacturers currently use nanoclay additives to produce stronger, lighter composites but these improvements come at a high cost.  The increased costs result from the complex exfoliation process required in separating the clay layers to obtain good dispersion and uniform properties, and the associated complexity of working with competing nanoclays.

About NaturalNano, Inc.

NaturalNano, Inc. (OTCBB:NNAN) (FWB:N3N) is a nanomaterials company developing proprietary technologies and processes for providing novel properties for a wide range of applications.  These include industrial polymers, plastics and composites; and additives to cosmetics, agricultural, and household products.  NaturalNano holds over twenty issued or pending patents and proprietary know-how for extraction and separation processes, of halloysite and other nanotubes, in combination with other materials for a wide range of applications.  For more information, please visit http://www.naturalnano.com. 

Investor Relations Contact

Jim Blackman, PR Financial Marketing, LLC

713-256-0369

jim@prfmonline.com

Media Contact

Ginny Brandreth, NaturalNano, Inc.

585-267-4810

gbrandreth@naturalnano.com

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