NEITHER
      THESE WARRANTS NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THESE WARRANTS
      HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
      OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
      TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
      SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
      AVAILABLE.

    


    
      	
              3,300,000
                Warrants

            	
              March
                30, 2006

            


    

    


    NATURALNANO
      INC.

    


    WARRANTS

    


    


    NaturalNano
      Inc., a Delaware corporation (“NaturalNano”),
      certifies that, for value received, SBI Brightline XIII LLC (“SBI”), or
      registered assigns (the “Holder”),
      is
      the owner of Three Million Three Hundred Thousand (3,300,000 ) Warrants of
      NaturalNano (the “Warrants”).
      Each
      Warrant entitles the Holder to purchase from NaturalNano at any time prior
      to
      the Expiration Date (as defined below) one share of the common stock of
      NaturalNano (the “Common
      Stock”)
      for
      the per share prices set forth on Schedule B, which is attached hereto and
      made
      part hereof (the “Exercise
      Price”),
      on
      the terms and conditions hereinafter provided. The Exercise Price and the number
      of shares of Common Stock purchasable upon exercise of each Warrant are subject
      to adjustment as provided in this Certificate. 

     

    1. Vesting;
      Expiration Date; Exercise

     

    1.1 
      Vesting.
      The Warrants shall vest and become exercisable as set forth on Schedule
      B.

     

    1.2 Expiration
      Date. The Warrants shall expire on March 30, 2008 (the “Expiration
      Date”).

     

    1.3 Manner
      of
      Exercise. The Warrants are exercisable by delivery to NaturalNano of the
      following (the “Exercise
      Documents”):
      (a)
      this Certificate (b) a written notice of election to exercise the Warrants;
      and
      (c) payment of the Exercise Price in cash or by check. Within three business
      days following receipt of the foregoing, NaturalNano shall execute and deliver
      to the Holder: (a) a certificate or certificates representing the aggregate
      number of shares of Common Stock purchased by the Holder, and (b) if less than
      all of the Warrants evidenced by this Certificate are exercised, a new
      certificate evidencing the Warrants not so exercised.

     

    1.4 Warrant
      Exercise Limitation. Notwithstanding any other provision of this Agreement,
      if
      as of the date of exercise NaturalNano has a class of securities registered
      under Section 12 of the Securities Exchange Act of 1934, as amended, Holder
      may
      not exercise Warrants under this Section 1 to the extent that immediately
      following such exercise Holder would beneficially own 5% or more of the
      outstanding Common Stock of NaturalNano. For this purpose, a representation
      of
      the Holder that following such exercise it would not beneficially own 5% or
      more
      of the outstanding Common Stock of NaturalNano shall be conclusive and binding
      upon NaturalNano unless the number of shares of Common Stock for which the
      Holder seeks to exercise Warrants would themselves represent 5% or more of
      the
      outstanding Common Stock of NaturalNano following such exercise.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. Adjustments
      of Exercise Price and Number and Kind of Conversion Shares

     

    2.1 In
      the
      event that NaturalNano shall at any time hereafter (a) pay a dividend in Common
      Stock or securities convertible into Common Stock; (b) subdivide or split its
      outstanding Common Stock; (c) combine its outstanding Common Stock into a
      smaller number of shares; then the number of shares to be issued immediately
      after the occurrence of any such event shall be adjusted so that the Holder
      thereafter may receive the number of shares of Common Stock it would have owned
      immediately following such action if it had exercised the Warrants immediately
      prior to such action and the Exercise Price shall be appropriately adjusted
      to
      reflect such proportionate increases or decreases in the number of
      shares.

     

    2.2 In
      case
      of any reclassification, capital reorganization, consolidation, merger, sale
      of
      all or substantially all of NaturalNano’s assets or any other change in the
      Common Stock of NaturalNano, other than as a result of a subdivision,
      combination, or stock dividend provided for in Section 2.1 (any of which, a
      “Change Event”), then, as a condition of such Change Event, lawful provision
      shall be made, and duly executed documents evidencing the same from NaturalNano
      or its successor shall be delivered to the Holder, so that the Holder shall
      have
      the right at any time prior to the expiration of the Warrants to purchase,
      at a
      total price equal to that payable upon the exercise of the Warrants, the kind
      and amount of shares of stock and other securities and property receivable
      in
      connection with such Change Event by a holder of the same number of shares
      of
      Common Stock as were purchasable by the Holder immediately prior to such Change
      Event. In any such case appropriate provisions shall be made with respect to
      the
      rights and interest of the Holder so that the provisions hereof shall thereafter
      be applicable with respect to any shares of stock or other securities and
      property deliverable upon exercise hereof, and appropriate adjustments shall
      be
      made to the Exercise Price per share payable hereunder, provided the Exercise
      Price for all the Warrants shall remain the same. The
      provisions of this Section 2.2 shall similarly apply to successive
      reclassifications, capital reorganizations, mergers, consolidations, sales
      or
      other transfers

     

    3. Reservation
      of Shares. NaturalNano
      shall at all times reserve and keep available out of its authorized but unissued
      shares of Common Stock, such number of shares of Common Stock as shall from
      time
      to time be issuable upon exercise of the Warrants. If at any time the number
      of
      authorized but unissued shares of Common Stock shall not be sufficient to permit
      the exercise of the Warrants, NaturalNano shall promptly seek such corporate
      action as may be necessary to increase its authorized but unissued shares of
      Common Stock to such number of shares as shall be sufficient for such
      purpose.

     

    4. Certificate
      as to Adjustments. In
      each
      case of any adjustment in the Exercise Price, or number or type of shares
      issuable upon exercise of these Warrants, the Chief Financial Officer of
      NaturalNano shall compute such adjustment in accordance with the terms of these
      Warrants and prepare a certificate setting forth such adjustment and showing
      in
      detail the facts upon which such adjustment is based, including a statement
      of
      the adjusted Exercise Price. NaturalNano shall promptly send (by facsimile
      and
      by either first class mail, postage prepaid or overnight delivery) a copy of
      each such certificate to the Holder.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    5. Loss
      or Mutilation. Upon
      receipt of evidence reasonably satisfactory to NaturalNano of the ownership
      of
      and the loss, theft, destruction or mutilation of this Certificate, and of
      indemnity reasonably satisfactory to it, and (in the case of mutilation) upon
      surrender and cancellation of these Warrants, NaturalNano will execute and
      deliver in lieu thereof a new Certificate of like tenor as the lost, stolen,
      destroyed or mutilated Certificate.

     

    6. Representations
      and Warranties of NaturalNano. NaturalNano
      hereby represents and warrants to Holder that:

     

    6.1 Due
      Authorization. All corporate action on the part of NaturalNano, its officers,
      directors and shareholders necessary for (a) the authorization, execution and
      delivery of, and the performance of all obligations of NaturalNano under, these
      Warrants, and (b) the authorization, issuance, reservation for issuance and
      delivery of all of the Common Stock issuable upon exercise of these Warrants,
      has been duly taken. These Warrants constitute a valid and binding obligation
      of
      NaturalNano enforceable in accordance with their terms, subject, as to
      enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
      reorganization and similar laws affecting creditors’ rights generally and to
      general equitable principles.

     

    6.2 Organization.
      NaturalNano is a corporation duly organized, validly existing and in good
      standing under the laws of the State of Nevada and has all requisite corporate
      power to own, lease and operate its property and to carry on its business as
      now
      being conducted and as currently proposed to be conducted.

     

    6.3 Valid
      Issuance of Stock. Any shares of Common Stock issued upon exercise of the
      Warrants in accordance with their terms will be duly and validly issued, fully
      paid and non-assessable without any preemptive or similar rights relating or
      with respect thereto or resulting therefrom.

     

    6.4 Governmental
      Consents. All consents, approvals, orders, authorizations or registrations,
      qualifications, declarations or filings with any federal or state governmental
      authority on the part of NaturalNano required in connection with the issuance
      of
      the Warrants have been obtained.

     

    7. Representations
      and Warranties of SBI.
      SBI,
      and any subsequent holder of Warrants, by its acceptance hereof, represents
      and
      warrants to NaturalNano that:

     

    7.1 It
      is
      acquiring the Warrants for its own account, for investment purposes
      only.

     

    7.2 It
      understands that an investment in the Warrants and in the shares of Common
      Stock
      issuable upon exercise of the Warrants involves a high degree of risk, and
      it
      has the financial ability to bear the economic risk of this investment in the
      Warrants and such shares, including a complete loss of such investment. It
      has
      adequate means for providing for its current financial needs and has no need
      for
      liquidity with respect to this investment.

     

    7.3 It
      has
      such knowledge and experience in financial and business matters that it is
      capable of evaluating the merits and risks of an investment in the Warrants
      and
      in the shares of Common Stock issuable upon exercise of the Warrants and in
      protecting its own interest in connection with such transactions.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    7.4 It
      understands that neither the Warrants nor the shares of Common Stock issuable
      upon exercise of the Warrants have been registered under the Securities Act
      of
      1933, as amended (the “Securities
      Act”)
      or
      under any state securities laws. It is familiar with the provisions of the
      Securities Act and Rule 144 thereunder and understands that the restrictions
      on
      transfer on the Warrants and on the shares of Common Stock issuable upon
      exercise of the Warrants may result in it being required to hold the Warrants
      or
      such shares for an indefinite period of time.

     

    7.5 It
      agrees
      not to sell, transfer, assign, gift, create a security interest in, or otherwise
      dispose of, with or without consideration (collectively, “Transfer”)
      any of
      the Warrants or any of the shares of Common Stock issuable upon exercise of
      the
      Warrants except pursuant to an effective registration statement under the
      Securities Act or an exemption from registration. As a further condition to
      any
      such Transfer, except in the event that such Transfer is made pursuant to an
      effective registration statement under the Securities Act, if in the reasonable
      opinion of counsel to NaturalNano any such Transfer would not be exempt from
      the
      registration and prospectus delivery requirements of the Securities Act,
      NaturalNano may require the Holder and the contemplated transferee to furnish
      NaturalNano with letters setting forth such information and agreements as may
      be
      reasonably requested by NaturalNano to ensure compliance with the Securities
      Act.

     

    8. Notices
      of Record Date

    


    In
      the
      event:

     

    8.1 NaturalNano
      shall take a record of the holders of its Common Stock (or other stock or
      securities at the time receivable upon the exercise of these Warrants), for
      the
      purpose of entitling them to receive any dividend or other distribution, or
      any
      right to subscribe for or purchase any shares of stock of any class or any
      other
      securities or to receive any other right; or

     

    8.2 of
      any
      consolidation or merger of NaturalNano with or into another corporation, any
      capital reorganization of NaturalNano, any reclassification of the capital
      stock
      of NaturalNano, or any conveyance of all or substantially all of the assets
      of
      NaturalNano to another corporation in which holders of NaturalNano’s stock are
      to receive stock, securities or property of another corporation; or

     

    8.3 of
      any
      voluntary dissolution, liquidation or winding-up of NaturalNano; or

     

    8.4 of
      any
      redemption or conversion of all outstanding Common Stock;

     

    then,
      and
      in each such case, NaturalNano will mail or cause to be mailed to the Holder
      a
      notice specifying, as the case may be, (a) the date on which a record is to
      be
      taken for the purpose of such dividend, distribution or right, or (b) the date
      on which such reorganization, reclassification, consolidation, merger,
      conveyance, dissolution, liquidation, winding-up, redemption or conversion
      is to
      take place, and the time, if any is to be fixed, as of which the holders of
      record of Common Stock (or such stock or securities as at the time are
      receivable upon the exercise of these Warrants), shall be entitled to exchange
      their shares of Common Stock (or such other stock or securities), for securities
      or other property deliverable upon such reorganization, reclassification,
      consolidation, merger, conveyance, dissolution, liquidation or winding-up.
      NaturalNano shall use all reasonable efforts to ensure such notice shall be
      delivered at least five days prior to the date therein specified. 

    


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    9.  Cashless
      Exercise.
      

     

    9.1 Definitions.
      For purposes of this Section 9, the following term shall have the meanings
      set
      forth below:

     

    9.1.1 “Market
      Price”
      as
      of any
      date, (i) means the average of the last reported sale prices for the shares
      of
      Common Stock on the Over the Counter Bulletin Board (the "OTCBB")
      for
      the five (5) trading days immediately preceding such date as reported by
      Bloomberg Financial Markets or an equivalent reliable reporting service mutually
      acceptable to and hereafter designated by the holder of this Warrant and
      NaturalNano ("Bloomberg"), or (ii) if the OTCBB is not the principal trading
      market for the shares of Common Stock, the average of the last reported sale
      prices on the principal trading market for the Common Stock during the same
      period as reported by Bloomberg, or (iii) if market value cannot be calculated
      as of such date on any of the foregoing bases, the Market Price shall be the
      fair market value as reasonably determined in good faith by (a) the Board of
      Directors of the NaturalNano or, at the option of a majority-in-interest of
      the
      holders of the outstanding Warrants by (b) an independent investment bank of
      nationally recognized standing in the valuation of businesses similar to the
      business of the NaturalNano. The manner of determining the Market Price of
      the
      Common Stock set forth in the foregoing definition shall apply with respect
      to
      any other security in respect of which a determination as to market value must
      be made hereunder.

     

    9.2 
      Cashless
      Exercise.
      Notwithstanding anything to the contrary contained in this Warrant, this Warrant
      may be exercised by presentation and surrender of this Warrant to NaturalNano
      at
      its principal executive offices with a written notice of the holder's intention
      to effect a cashless exercise, including a calculation of the number of shares
      of Common Stock to be issued upon such exercise in accordance with the terms
      hereof (a "Cashless Exercise"). In the event of a Cashless Exercise, in lieu
      of
      paying the Exercise Price in cash, the holder shall surrender this Warrant
      for
      that number of shares of Common Stock determined by multiplying the number
      of
      shares of common stock to which it would otherwise be entitled by a fraction,
      the numerator of which shall be the difference between the then current Market
      Price per share of the Common Stock and the Exercise Price, and the denominator
      of which shall be the then current Market Price per share of Common
      Stock.

     

    10. Nontransferability.
      SBI may
      not sell or transfer any Warrants to any person other than a director, officer,
      employee, manager or affiliate of SBI (or a person controlled by one or more
      directors, officers, employees, managers or affiliates of SBI)
      or
      to a
      person or entity that assists SBI in providing services to
      NaturalNano without
      the consent
      of NaturalNano. 

     

    11. Severability.
      If
      any
      term, provision, covenant or restriction of these Warrants is held by a court
      of
      competent jurisdiction to be invalid, void or unenforceable, the remainder
      of
      the terms, provisions, covenants and restrictions of these Warrants shall remain
      in full force and effect and shall in no way be affected, impaired or
      invalidated.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    12. Notices.
      All
      notices, requests, consents and other communications required hereunder shall
      be
      in writing and shall be effective when delivered or, if delivered by registered
      or certified mail, postage prepaid, return receipt requested, shall be effective
      on the third day following deposit in United States mail: to the Holder, at
      SBI
      Brightline XIII LLC, 610 Newport Center Drive, Newport Beach, CA 92660; and
      if
      addressed to NaturalNano, at NaturalNano Inc., 150 Lucius Gordon Drive, West
      Henrietta, NY 14586, or such other address as Holder or NaturalNano may
      designate in writing.

     

    13. No
      Rights as Shareholder. The
      Holder shall have no rights as a shareholder of NaturalNano with respect to
      the
      shares issuable upon exercise of the Warrants until the receipt by NaturalNano
      of all of the Exercise Documents. 

     

    
      
        	 	
                NaturalNano
                  Inc.

                


                


                By:  /s/
                  Michael D.
                  Riedlinger                            
                  

                       
                  Michael D. Riedlinger, President

              


      

       

       

    

    
      Agreed
        to
        and accepted by:

      SBI
        Brightline XIII, LLC

      


      


      By: /s/
        Shelly
        Singhal                                    

          
Shelly
        Singhal, Manager

    

    


    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    


    EXHIBIT
      “A”

    NOTICE
      OF EXERCISE

    (To
      be signed only upon exercise of the Warrants)

    


    To: NaturalNano
      Inc.

     

    The
      undersigned hereby elects to purchase shares of Common Stock (the “Warrant
      Shares”)
      of
NaturalNano
      Inc.
      (“NaturalNano”),
      pursuant to the terms of the enclosed warrant certificate (the “Certificate”).
      The
      undersigned tenders herewith payment of the exercise price pursuant to the
      terms
      of the Certificate. 

     

    The
      undersigned hereby represents and warrants to, and agrees with, NaturalNano
      as
      follows: 

     

    1. Holder
      is
      acquiring the Warrant Shares for its own account, for investment purposes only
      and not with a view to distribution in violation of the Securities Act of 1933,
      as amended (the “Securities
      Act”).

     

    2. Holder
      understands that an investment in the Warrant Shares involves a high degree
      of
      risk, and Holder has the financial ability to bear the economic risk of this
      investment in the Warrant Shares, including a complete loss of such investment.
      Holder has adequate means for providing for its current financial needs and
      has
      no need for liquidity with respect to this investment.

     

    3. Holder
      has such knowledge and experience in financial and business matters that it
      is
      capable of evaluating the merits and risks of an investment in the Warrant
      Shares and in protecting its own interest in connection with this
      transaction.

     

    4. Holder
      understands that the issuance of the Warrant Shares to Holder has not been
      registered under the Securities Act or under any state securities laws. Holder
      is familiar with the provisions of the Securities Act and Rule 144 thereunder
      and understands that the restrictions on transfer on the Warrant Shares may
      result in Holder being required to hold the Warrant Shares for an indefinite
      period of time unless the transfer by Holder is registered under the Securities
      Act.

     

    5. Holder
      agrees not to sell, transfer, assign, gift, create a security interest in,
      or
      otherwise dispose of, with or without consideration (collectively, “Transfer”)
      any of
      the Warrant Shares except pursuant to an effective registration statement under
      the Securities Act or an exemption from registration. As a further condition
      to
      any such Transfer, except in the event that such Transfer is made pursuant
      to an
      effective registration statement under the Securities Act, if in the reasonable
      opinion of counsel to NaturalNano any Transfer of the Warrant Shares by the
      contemplated transferee thereof would not be exempt from the registration and
      prospectus delivery requirements of the Securities Act, NaturalNano may require
      the contemplated transferee to furnish NaturalNano with an investment letter
      setting forth such information and agreements as may be reasonably requested
      by
      NaturalNano to ensure compliance by such transferee with the Securities
      Act.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Each
      certificate evidencing the Warrant Shares will bear the following
      legend:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND
      MAY NOT BE EXERCISED, SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS
      AN
      EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

     

    6. Immediately
      following this exercise of Warrants, if as of the date of exercise NaturalNano
      has a class of securities registered under Section 12 of the Securities Exchange
      Act of 1934, as amended, the undersigned will not beneficially own five percent
      (5%) or more of the then outstanding Common Stock of NaturalNano (based on
      the
      number of shares outstanding set forth in the most recent periodic report filed
      by NaturalNano with the Securities and Exchange Commission and any additional
      shares which have been issued since that date of which Holder is aware have
      been
      issued). 

     

    Number
      of
      Warrants Exercised: ______________

    


    Dated:
      ____________________

     

    
 

    
      	 	____________________________________


    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    


    Schedule
      B

    


    
      	
              Number
                Shares

            	
              Vesting
                Date

            	
              Exercise
                Price

            
	
              785,715

            	
              Upon
                completion of purchase of shares in Tranche 1

            	
              $1.20

            
	
              628,572

            	
              Upon
                completion of purchase of shares in Tranche 2

            	
              $1.35

            
	
              628,571

            	
              Upon
                completion of purchase of shares in Tranche 3

            	
              $1.50

            
	
              628,571

            	
              Upon
                completion of purchase of shares in Tranche 4

            	
              $1.65

            
	
              628,571

            	
              Upon
                completion of purchase of shares in Tranche 5

            	
              $1.75

            


    

    


    Tranche
      shall have the same meaning as set forth in the Stock Purchase Agreement between
      the parties dated March 30, 2006.

     

    
      
        
        

      

      
        -3-