Exhibit 10.2
 
 
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

THIS NOTE IS SUBORDINATE IN RIGHTS OF PAYMENT AND SECURITY TO THE OBLIGATIONS OF
THE BORROWER TO THE SENIOR CREDITORS

Principal Amount:
$225,000                                                                                                Issue
Date: November 30, 2009

SUBORDINATED SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, NaturalNano, Inc., a Nevada corporation (hereinafter called
“Borrower”), hereby promises to pay to  __________________, located at
______________________ (together with its successors, representatives, and
permitted assigns, the “Holder”) or order, without demand, the sum of two
hundred and twenty five thousand dollars ($225,000) (the “Principal Amount”) on
February __, 2011 (the “Maturity Date”), if not sooner paid.
.
This Note has been entered into pursuant to the terms of a subscription
agreement between the Borrower and the Holder dated at or about the date hereof
(the “Subscription Agreement”), and shall be governed by the terms of such
Subscription Agreement.  Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement.  The following terms shall apply to this Note:

ARTICLE I

GENERAL PROVISIONS

1.1     Interest.  The outstanding principal amount of this Note shall bear
simple interest at a rate of ten percent (10%) per annum from the date of this
Note above until the Maturity Date.  Such interest will be based on a 365-day
year and calculated for the actual number of days elapsed in which interest is
being calculated.
 
1.2     Interest Payments.  The Borrower shall pay the Holder all accrued but
unpaid interest on the first business day of each fiscal quarter, provided
however, that the first interest payment shall also include all interest accrued
between the Closing Date and January 1, 2010.  The Holder shall have no
obligation to deliver to the Borrower any invoice or other statement setting
forth the amount of principal, interest or any other amount due on any payment
date, and any absence by the Holder to provide any such invoice or statement
shall not reduce or otherwise impair the Borrower’s obligation to pay any
amounts payable hereunder.  The Borrower shall make all interest payments under
this Note to the Holder by 5:00 p.m. EST on the date when due.  The Borrower
shall make all payments in:
 
 
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(a)    United States Dollars in immediately available funds transferred by wire
transfer to an account designated by the Holder; or

(b)    if a registration statement for shares of Common Stock related to
interest payments is so effective on an interest payment date, then in shares of
the Company’s Common Stock based on a 25% discount to:

(i)  
the closing bid price on the Bulletin Board; or

(ii)  
if on a national exchange, the volume weighted average price (VWAP)

,in each case, for the twenty (20) trading days immediately preceding (but not
including) the applicable interest payment date.

1.3     Default Interest.  Upon the occurrence of an Event of Default (as
defined in Article III hereof), then to the extent permitted by law, the
Borrower will pay interest in cash to the Holder, payable on demand, on the
outstanding principal balance of this Note from the date of the Event of Default
until such Event of Default is cured at the rate of the lesser of eighteen
percent (18%) per annum and the maximum applicable legal rate per annum.

1.4     Ranking.  Except as set forth in the next sentence, this Note shall be
senior in priority to all obligations of the Borrower.  This note shall be
subordinate in payment and security to all obligations the Borrower has to
Platinum Long Term Growth IV, LLC (aka Platinum Partners Long Term Growth IV),
Longview Special Finance, Inc. (aka Longview Special Financing, Inc.), and
Platinum Advisors, LLC (collectively, the “Senior Creditors”) pursuant to the
following instruments and agreements (as the same may be amended, modified or
refinanced, the “Senior Debt”):

(a) the $2,750,000 8% Senior Secured Promissory Note due March 6, 2009 issued to
Platinum Long Term Growth IV, LLC (aka Platinum Partners Long Term Growth)
(“Platinum”);

(b) the $500,000 8% Senior Secured Promissory Note due March 6, 2009 issued to
Longview Special Finance Inc. (aka Longview Special Financing Inc.)
(“Longview”);

(c) the $97,500 8% Senior Secured Promissory Note due March 6, 2009 issued to
Platinum Advisors, LLC;

(d) the $150,000 8% Senior Secured Promissory Note due March 6, 2009 issued to
Platinum;

(e) the $20,000 8% Senior Secured Promissory Note due March 6, 2009 issued to
Longview;

(f) the $190,000 8% Senior Secured Promissory Note due January 31, 2010 issued
to Platinum;

(g) the $30,000 8% Senior Secured Promissory Note due January 31, 2010 issued to
Longview;

(h) the $59,500 8% Senior Secured Promissory Note due January 31, 2010 issued to
Platinum;
 
 
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(i) the $25,500 8% Senior Secured Promissory Note due January 31, 2010 issued to
Longview;

(j) an aggregate of $145,711.12 in additional indebtedness issued pursuant to
several short-term bridge notes and other instruments.

1.5    Security.  Payment of the principal of, and interest on, this Note and
all other amounts due under the Subscription Agreement, is secured by certain
personal property as provided in the Security Agreement.

1.6    Payment.  Payment of this Note and all interest thereon shall be paid to
the Holder by wire transfer to an account designated by the Holder or at such
address outside of the United States and its possessions as the Holder may
instruct the Borrower in writing in U.S. Dollars.

1.7     Conversion Privileges.  The Conversion Privileges set forth in Article
II shall remain in full force and effect immediately from the date hereof and
until the Note is paid in full regardless of the occurrence of an Event of
Default.  The Note shall be payable in full on the Maturity Date, unless
previously converted into Common Stock in accordance with Article II hereof.

ARTICLE II

CONVERSION RIGHTS

The Holder shall have the right to convert the principal and any interest due
under this Note into Shares of the Borrower's Common Stock, $0.001 par value per
share (“Common Stock”) as set forth below.

2.1.     Conversion into the Borrower's Common Stock.

(a)           The Holder shall have the right from and after the date of the
issuance of this Note and then at any time until this Note is fully paid, to
convert any outstanding and unpaid principal portion of this Note, and accrued
interest, at the election of the Holder (the date of giving of such notice of
conversion being a “Conversion Date”) into fully paid and nonassessable shares
of Common Stock as such stock exists on the date of issuance of this Note, or
any shares of capital stock of Borrower into which such Common Stock shall
hereafter be changed or reclassified, at the Conversion Price as defined in
Section 2.1(b) hereof, determined as provided herein.  Upon delivery to the
Borrower of a completed Notice of Conversion, a form of which is annexed hereto
as Exhibit A, Borrower shall issue and deliver to the Holder within seven (7)
business days after the Conversion Date (such fourth day being the “Delivery
Date”) that number of shares of Common Stock for the portion of the Note
converted in accordance with the foregoing.  At the election of the Holder, the
Borrower will deliver accrued but unpaid interest on the Note, if any, through
the Conversion Date directly to the Holder on or before the Delivery Date.  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 outstanding principal amount
of the Note and accrued but unpaid interest, if any, to be converted, by the
Conversion Price.

(b) Subject to adjustment as provided in Section 2.1(c) hereof, the initial
conversion price per share shall be equal to $0.005 (“Conversion Price”).
 
 
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(c)            The Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to Section 2.1(a),
shall be subject to adjustment from time to time upon the happening of certain
events while this conversion right remains outstanding, as follows:

A.           Merger, Sale of Assets, etc.  If (A) the Borrower effects any
merger or  consolidation of the Borrower with or into another entity, (B) the
Borrower effects any sale of all or substantially all of its assets in one or a
series of related transactions,  (C) any tender offer or exchange offer (whether
by the Borrower or another entity) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, (D) the Borrower consummates a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more persons or entities whereby such other persons or entities acquire more
than the 50% of the outstanding shares of Common Stock (not including any shares
of Common Stock held by such other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or party to,
such stock purchase agreement or other business combination), (E) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of
the 1934 Act) is or shall become the “beneficial owner” (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate
Common Stock of the Borrower, or (F) the Borrower effects any reclassification
of the Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other securities,
cash or property (in any such case, a “Fundamental  Transaction”), this Note, as
to the unpaid principal portion thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to convert into such number and kind
of shares or other securities and property as would have been issuable or
distributable on account of such Fundamental Transaction, upon or with respect
to the securities subject to the conversion right immediately prior to such
Fundamental Transaction.  The foregoing provision shall similarly apply to
successive Fundamental 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 Fundamental Transaction.

B.           Reclassification, etc.  If the Borrower 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 deemed to evidence the right to purchase
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.

C.           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.

                    D.           Share Issuance.   So long as this Note is
outstanding, if the Borrower shall issue any Common Stock except for the
Excepted Issuances, prior to the complete conversion or payment of this Note,
for a consideration per share that is less than the Conversion Price that would
be in effect at the time of such issuance, then, and thereafter successively
upon each such issuance, the Conversion Price shall be reduced to such other
lower issue price.  For purposes of this adjustment, the issuance of any
security or debt instrument of the Borrower carrying the right to convert such
security or debt instrument into Common Stock or of any warrant, right or option
to purchase Common Stock shall result in an adjustment to the Conversion Price
upon the issuance of the above-described security, debt instrument, warrant,
right, or option and again upon the issuance of shares of Common Stock upon
exercise of such conversion or purchase rights if such issuance is at a price
lower than the then applicable Conversion Price.  The reduction of the
Conversion Price described in this paragraph is in addition to the other rights
of the Holder described in the Subscription Agreement.  Common Stock issued or
issuable by the Borrower for no consideration will be deemed issuable or to have
been issued for $0.001 per share of Common Stock.
 
 
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(d)           Whenever the Conversion Price is adjusted pursuant to Section
2.1(c) above, the Borrower 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.

(e)           During the period the conversion right exists, Borrower will
reserve from its authorized and unissued Common Stock not less than an amount of
Common Stock equal to 100% of the amount of shares of Common Stock issuable upon
the full conversion of this Note.  Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable.  Borrower
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.

2.2      Method of Conversion.  This Note may be converted by the Holder in
whole or in part as described in Section 2.1(a) hereof and the Subscription
Agreement.  Upon partial conversion of this Note, a new Note containing the same
date and provisions of this Note shall, at the request of the Holder, be issued
by the Borrower to the Holder for the principal balance of this Note and
interest which shall not have been converted or paid.

2.3.     Maximum Conversion.  The Holder shall not be entitled to convert on a
Conversion Date that amount of the Note in connection with that number of shares
of Common Stock which would be in excess of the sum of (i) the number of shares
of Common Stock beneficially owned by the Holder and its affiliates on a
Conversion Date, (ii) any Common Stock issuable in connection with the
unconverted portion of the Note, and (iii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this provision is being made on a Conversion Date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock of the Borrower on such Conversion Date.  For
the purposes of the provision to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.  Subject to
the foregoing, the Holder shall not be limited to aggregate conversions of
4.99%.  The Holder shall have the authority and obligation to determine whether
the restriction contained in this Section 2.3 will limit any conversion
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the
Notes are convertible shall be the responsibility and obligation of the
Holder.  The Holder may waive the conversion limitation described in this
Section 2.3, in whole or in part, upon and effective after 61 days prior written
notice to the Borrower to increase such percentage to up to 9.99%.
 
 
 
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ARTICLE III
 
EVENT OF DEFAULT

The occurrence of any of the following events of default (“Event of Default”)
shall, at the option of the Holder hereof, make all sums of principal and
interest then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable, upon demand, without presentment, or grace period,
all of which hereby are expressly waived, except as set forth below:

3.1     Failure to Pay Principal or Interest.  The Borrower fails to pay any
installment of principal, interest or other sum due under this Note when due.

3.2      Breach of Covenant.  The Borrower breaches any material covenant or
other term or condition of the Subscription Agreement, Transaction Document or
this Note in any material respect and such breach, if subject to cure, continues
for a period of twenty (20) days after written notice to the Borrower from the
Holder.

3.3      Breach of Representations and Warranties.  Any material representation
or warranty of the Borrower made herein, in the Subscription Agreement or any
Transaction Document shall be false or misleading in any material respect as of
the date made and the Closing Date.

3.4      Liquidation.   Any dissolution, liquidation or winding up of Borrower
or any substantial portion of its business.
 
3.5      Cessation of Operations.   Any cessation of operations by Borrower or
Borrower admits it is otherwise generally unable to pay its debts as such debts
become due, provided, however that any disclosure of the Borrower’s ability to
continue as a “going concern” shall not be an admission that the Borrower cannot
pay its debts as they come due.
 
3.6      Maintenance of Assets.   The failure by Borrower to maintain any
material intellectual property rights, personal, real property or other assets
which are necessary to conduct its business (whether now or in the future) or
that represents any material part of the Collateral (as defined in the Security
Agreement).

3.7      Receiver or Trustee.  The Borrower or any Subsidiary of Borrower shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business; or such a receiver or trustee shall otherwise be
appointed.

3.8     Judgments.  Any money judgment, writ or similar final process shall be
entered or filed against Borrower or any of its property or other assets for
more than $100,000.

3.9     Bankruptcy.  Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower or any Subsidiary of
Borrower.

3.10    Delisting.   Delisting of the Common Stock from any Principal Market;
failure to comply with the requirements for continued listing on a Principal
Market for a period of five (5) consecutive trading days; or notification from a
Principal Market that the Borrower is not in compliance with the conditions for
such continued listing on such Principal Market.

3.11    Non-Payment.   A default by the Borrower under any one or more
obligations in an aggregate monetary amount in excess of $100,000 for more than
five days after the due date, unless the Borrower is contesting the validity of
such obligation in good faith and has segregated cash funds equal to not less
than one-half of the contested amount.
 
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3.12    Stop Trade.  An SEC or judicial stop trade order or Principal Market
trading suspension that lasts for five (5) or more consecutive trading days.

3.13   Failure to Deliver Common Stock or Replacement Note.  Borrower's failure
to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note and Sections 7 and 11 of the Subscription Agreement, or,
if required, a replacement Note.

3.14    Reservation Default.   Failure by the Borrower to have reserved for
issuance upon conversion of the Note or upon exercise of the Warrants issued in
connection with the Subscription Agreement, the number of shares of Common Stock
as required in the Subscription Agreement, this Note and the Warrants, and such
failure continues for a period of thirty (30) days.

3.15    Financial Statement Restatement.  The restatement of any financial
statements filed by the Borrower with the Securities and Exchange Commission for
any date or period from two years prior to the Issue Date of this Note and until
this Note is no longer outstanding, if the result of such restatement would, by
comparison to the unrestated financial statements, have constituted a Material
Adverse Effect.

3.16   Reverse Splits.   The Borrower effectuates a reverse split of its Common
Stock without twenty days prior written notice to the Holder.

3.17   Event Described in Subscription Agreement.  The occurrence of an Event of
Default as described in the Subscription Agreement that, if susceptible to cure,
is not cured during any designated cure period.

3.18   Executive Officers Breach of Duties.  Any of Borrower’s named executive
officers or directors is convicted of a violation of securities laws related to
activities regarding the Borrower’s securities, or a settlement in excess of
$250,000 is reached by any such officer or director relating to a violation of
securities laws related to activities regarding the Borrower’s securities,
breach of fiduciary duties or self-dealing.

3.19    Cross Default.  A default by the Borrower of a material term, covenant,
warranty or undertaking of any other material agreement to which the Borrower is
a party, or the occurrence of a material event of default under any such other
agreement to , in each case, which is not cured after any required stated notice
and/or cure period.

ARTICLE IV

MISCELLANEOUS

4.1      Failure or Indulgence Not Waiver.  No failure or delay on the part of
the 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.
 
 
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4.2      Notices.  All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the first business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The addresses for
such communications shall be:
 
If to the Borrower, to:

NaturalNano, Inc.
15 Schoen Place
Pittsford, NY 14534
Facsimile: (585) 267-4861

If to the Holder:

To the address and facsimile number listed on the first paragraph of this Note

With a copy by fax only to (which copy shall not constitute notice):

Anslow & Jaclin LLP
Attn: Joseph M. Lucosky, Esq.
195 Route 9 South, Suite 204
Manalapan, NJ 07726
facsimile: (732) 577-1188

4.3     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.
 
4.4      Assignability.  This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.  The Borrower may not assign its obligations under this
Note.
 
4.5      Expenses.  The Borrower shall pay the Holder hereof reasonable costs of
collection, including reasonable attorneys’ fees.
 
A.           Expenses for Amendments.  If the Holder shall employ counsel for
advice or other representation or shall incur legal or other costs and expenses
in connection with any amendment or modification of this Note or any of the
other Transaction Documents, then, and in any such even, the reasonable counsel
fees arising from such services and all expenses, costs, charges and other
reasonable fees of such counsel incurred in connection with or related to any of
the events or actions described above shall be payable by the company.
 
 
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B.           Costs of Collection.  In the event of a default or an Event of
Default, in addition to any other sums payable by the Borrower hereunder, the
Borrower shall pay the Holder’s and any other holders’ of the Notes costs of
collection, including reasonable attorneys’ fees, including post judgment costs
of collection, incurred by the Holder’s or any other holders’ of the Notes in
the collection of the obligations of the Borrower to the Holder and any other
holders of the notes whether under this Note or the other Transaction Documents,
and in the enforcement of any provision hereof and thereof, whether suit be
brought or not.
 
C.           Expenses in Dispute.  In the event of any dispute regarding the
subject matter hereunder, the non-prevailing party in any dispute shall be
required to fully reimburse the prevailing party in any dispute for all of its
documents attorneys’ fees, costs and expenses incurred in connection with such
dispute, the outcome of which shall have been determined by a court of competent
jurisdiction.
 
4.6      Governing Law.  This Note shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction.  Any action brought by either party against the other
concerning the transactions contemplated by this Agreement must be brought only
in the civil or state courts of New York or in the federal courts located in the
State and county of New York.  Both parties and the individual signing this
Agreement on behalf of the Borrower agree to submit to the jurisdiction of such
courts.  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 Note 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 unenforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other decision in favor of the Holder.  This Note shall be
deemed an unconditional obligation of Borrower for the payment of money and,
without limitation to any other remedies of Holder, may be enforced against
Borrower by summary proceeding pursuant to New York Civil Procedure Law and
Rules Section 3213 or any similar rule or statute in the jurisdiction where
enforcement is sought.  For purposes of such rule or statute, any other document
or agreement to which Holder and Borrower are parties or which Borrower
delivered to Holder, which may be convenient or necessary to determine Holder’s
rights hereunder or Borrower’s obligations to Holder are deemed a part of this
Note, whether or not such other document or agreement was delivered together
herewith or was executed apart from this Note.
 
4.7      Maximum Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum rate permitted by applicable law.  In the event that the
rate of interest required to be paid or other charges hereunder exceed the
maximum rate permitted by applicable law, any payments in excess of such maximum
rate shall be credited against amounts owed by the Borrower to the Holder and
thus refunded to the Borrower.
 
4.8      Non-Business Days.   Whenever any payment or any action to be made
shall be due on a Saturday, Sunday or a public holiday under the laws of the
State of New York, such payment may be due or action shall be required on the
next succeeding business day and, for such payment, such next succeeding day
shall be included in the calculation of the amount of accrued interest payable
on such date.
 
 
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4.9      Redemption.  This Note may not be redeemed or called without the
consent of the Holder except as described in this Note or the Subscription
Agreement.

4.10    Shareholder Status.  The Holder shall not have rights as a shareholder
of the Borrower with respect to unconverted portions of this Note.  However, the
Holder will have the rights of a shareholder of the Borrower with respect to the
Shares of Common Stock to be received after delivery by the Holder of a
Conversion Notice to the Borrower.

4.11    Facsimile Signature.  In the event that the Borrower’s signature is
delivered by facsimile transmission, PDF, electronic signature or other similar
electronic means, such signature shall create a valid and binding obligation of
the Borrower with the same force and effect as if such signature page were an
original thereof.

[REMAINDER OF PAGE LEFT BLANK]
 
 
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[SIGNATURE PAGE TO SUBORDINATED SECURED CONVERTIBLE PROMISSORY NOTE]

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an
authorized officer as of the 30th day of November, 2009.

NATURALNANO, INC.

By:________________________________
           Name: Jim Wemett
           Title: Chief Executive Officer

 
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NOTICE OF CONVERSION

(To be executed by the Registered 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. on
________, 200__ into Shares of Common Stock of NATURALNANO, INC. (the
“Borrower”) according to the conditions set forth in such Note, as of the date
written below.

 
Date of
Conversion:                                                                                                                                                                                                                            
       

Conversion
Price:                                                                                                                                                                                                                                    
   

Number of Shares of Common Stock Beneficially Owned on the Conversion Date: Less
than 5% of the outstanding Common Stock of NATURALNANO, INC.

 
Shares To Be
Delivered:                                                                                                                                                                                                                                  

Signature:                                                                                                                                                          
                                                                                               

Print
Name:                                                                                                                                                                                                                                       

Address:                                                                                                                                                                                                                                      

                                                                                                                                                                                                                                         

 
 
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