Exhibit 10.04

 

[LENDER NAME]

[LENDER ADDRESS]

 

 

VIA FACSIMILE AND FIRST CLASS MAIL

 

 

Effective September 29, 2008

 

 

 

Re:

FORBEARANCE AGREEMENT

 

Ladies and Gentlemen:

 

Reference is made to the $o 8% Senior Secured Promissory Note due March 6, 2009,
issued on or about March 6, 2007 (together the “Notes”) from NaturalNano, Inc.
and NaturalNano Research, Inc. (jointly and severally, the “Borrower”) to
[Lender] (the “Lender”). Capitalized terms used herein and not otherwise defined
shall have the respective meanings given in the Notes.

 

As of the date hereof, the principal amount of the indebtedness evidenced by the
Notes is $o, plus interest accruing on and after the date hereof at rate set
forth in the Notes. The Borrower has requested that the Lender forbear from
exercising its various rights and remedies under the Notes and other related
documents (collectively, the “Loan Documents”) that may otherwise be exercised
by the Lender on the maturity date of the Notes (March 6, 2009) (the “Maturity
Date”), in order to provide the Borrower with additional time during which it
may resolve its current financial problems.

 

The Lender is prepared to forbear from demanding payment of principal on the
Notes on the Maturity Date of the Notes, or taking any other action to collect
the principal amount of the Notes due on the Maturity Date until the earlier of
January 31, 2010 (unless extended by the Lender in its discretion) or the
termination of the Forbearance Period pursuant to the terms of this Letter
Agreement (such period, the “Forbearance Period”), provided the Borrower accepts
and agrees to the terms, conditions and covenants set forth herein, and
communicates such acceptance (by delivering a signed copy of this Letter
Agreement) to the Lender no later than 5:00 p.m. on September 29, 2008; provided
further it is understood that Borrower is obligated to make all interest
payments required under the Notes during the Forbearance Period.

 

Upon execution by the Borrower, this letter shall be a binding agreement among
the respective parties hereto (referred to as the “Letter Agreement”).

 

By its execution, the Borrower represents, warrants and covenants as follows:

 

1.         No Duress.      The Borrower has freely and voluntarily entered into
this Letter Agreement after an adequate opportunity to review and discuss the
terms and conditions and all

 

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factual and legal matters relevant hereto with counsel freely and independently
chosen by it and this Letter Agreement is being executed without fraud, duress,
undue influence or coercion of any kind or nature whatsoever having been exerted
by or imposed upon any party.

2.         Amount Due.  The Borrower acknowledges and agrees that, excluding any
Indebtedness incurred by the Borrower pursuant to the Loan and Security
Agreement, dated as of September 29, 2008, as of the date hereof, pursuant to
the Notes and the other Loan Documents, the Borrower owes the Lender $o (the
“Outstanding Amount”). The Borrower shall also be responsible for reimbursing
the Lender for all costs and expenses, including the fees and expenses of legal
counsel that may be incurred in connection with the enforcement of this Letter
Agreement, which, if incurred, shall be added to the Outstanding Amount. The
Borrower acknowledges and agrees that the Outstanding Amount (as reduced by
payments made pursuant hereto), plus interest accrued thereon, shall be due and
owing upon termination of the Forbearance Period.

3.         No Defenses.  The Borrower has no defenses, affirmative or otherwise,
rights of setoff, rights of recoupment, claims, counterclaims, or causes of
action of any kind or nature whatsoever against the Lender, its officers,
directors, employees, attorneys, legal representatives or affiliates
(collectively, the “Lender Group”), directly or indirectly, arising out of,
based upon, or in any manner connected with, any transaction, event,
circumstance, action, failure to act, or occurrence of any sort or type, whether
known or unknown, which occurred, existed, was taken, permitted, or began prior
to the execution of this Letter Agreement and accrued, existed, was taken,
permitted or begun in accordance with, pursuant to, or by virtue of the Notes or
any of the terms or conditions of the Loan Documents, or which directly or
indirectly relate to or arise out of or in any manner are connected with the
Notes or any of the Loan Documents; TO THE EXTENT ANY SUCH DEFENSES, AFFIRMATIVE
OR OTHERWISE, RIGHTS OF SETOFF, RIGHTS OF RECOUPMENT, CLAIMS, COUNTERCLAIMS, OR
CAUSES OF ACTION EXIST, SUCH DEFENSES, RIGHTS, CLAIMS, COUNTERCLAIMS, AND CAUSES
OF ACTION ARE HEREBY FOREVER WAIVED, DISCHARGED AND RELEASED.   

4.         Interest Continues to Accrue. During the Forbearance Period, the
Outstanding Amount shall bear interest at the interest rate set forth under the
Notes (8%); it being understood that the default rate shall apply upon the
occurrence of any Event of Default (other than Existing Defaults) thereunder or
upon termination of the Forbearance Period.

5.         Other Notes. The Borrower agrees that it shall not provide any holder
of the Notes issued on or about March 6, 2007 (the “Other Notes”) any concession
or payment with respect to such Other Notes without first offering the Lender
the opportunity to receive such payment or concession with respect to the Notes.

6.         Forbearance.   During the Forbearance Period, the Lender agrees that
it will not take any further action against the Borrower or exercise or move to
enforce any other rights or remedies provided for in the Loan Documents or
otherwise available to it, at law or in equity, by virtue of the occurrence
and/or continuation of any default or Event of Default under the Notes

 

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existing on the date hereof (the “Existing Defaults”) or take any action against
any property in which the Borrower has any interest.

7.         Lender to Retain all Rights.   It is understood and agreed that this
Letter Agreement does not waive or evidence consent to any default or Event of
Default (including the Existing Defaults) under the Notes or the Loan Documents.
The parties hereto acknowledge and agree that the Lender (i) shall retain all
rights and remedies it may now have with respect to the Notes and the Borrower’s
obligations under the Loan Documents (“Default Rights”), and (ii) shall have the
right to exercise and enforce such Default Rights upon termination of the
Forbearance Period. The parties further agree that the exercise of any Default
Rights by the Lender upon termination of the Forbearance Period shall not be
affected by reason of this Letter Agreement, and the parties hereto shall not
assert as a defense thereto the passage of time, estoppel, laches or any statute
of limitations to the extent that the exercise of any Default Rights was
precluded by this Letter Agreement.

8.         Termination of Forbearance Period.  The Forbearance Period shall
terminate upon the earlier to occur of: (1) 5:00 pm (New York City Time) on
January 31, 2010; (2) the Borrower shall fail to observe, perform, or comply
with any of the terms, conditions or provisions of this Letter Agreement as and
when required and/or any other Event of Default (other than the Existing
Defaults occurring prior to the date hereof) shall occur under the Notes or any
of the Loan Documents or any other agreement between the Borrower and the Lender
(or its affiliates) or any other indebtedness issued by the Borrower to the
Lender or its affiliates; (3) any representation or warranty made herein, in any
document executed and delivered in connection herewith, or in any report,
certificate, financial statement or other instrument or document now or
hereafter furnished by or on behalf of the Borrower in connection with this
Letter Agreement, shall prove to have been false, incomplete or misleading in
any material respect on the date as of which it was made; (4) any suit preceding
or other action is commenced by any other creditor against the Company; or (5) a
court of competent jurisdiction shall enter an order for relief or take any
similar action in respect of the Borrower in an involuntary case under any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law now
or hereafter in effect or a petition for relief under any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar law shall be filed by or
against the Borrower.

Upon termination of the Forbearance Period, should the Notes or any of the
Borrower’s obligations under the Loan Documents not be satisfied in full, the
Lender shall be entitled to pursue immediately its various rights and remedies,
including its Default Rights, against the Borrower, all collateral given by the
Borrower to secure the Loan and the obligations under the Loan Documents,
without regard to notice and cure periods, all of which are hereby waived by the
Borrower. Without limiting the generality of the foregoing, upon termination of
the Forbearance Period, the Lender shall be permitted to immediately exercise
its rights to demand and collect on the Outstanding Amount.           

 

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If the foregoing is acceptable to you, please sign in the space provided below.

 

 

Sincerely,

 

 

 

[Lender]

 

 

 

By:

Name:

Title:

 

 

Accepted and Agreed as of this 29th day of September, 2008

 

NATURALNANO, INC.

 

 

By:

Name:

Title:

 

NATURALNANO RESEARCH, INC.

 

 

By:

Name:

Title: