Exhibit
      4.1




**NaturalNano,
      Inc.**


**2007
      Incentive**




**Stock
      Plan**







**TABLE
      OF CONTENTS**





***Page***Article
                1.
            Establishment,
                Objectives, and Duration
            1Article
                2.
            Definitions
            1Article
                3.
            Administration
            4Article
                4.
            Shares
                Subject to the Plan and Maximum Awards
            5Article
                5.
            Eligibility
                and Participation
            6Article
                6.
            Stock
                Options
            7Article
                7.
            Stock
                Appreciation Rights
            9Article
                8.
            Restricted
                Stock
            10Article
                9.
            Performance
                Units and Performance Shares
            11Article
                10.
            Performance
                Measures
            12Article
                11.
            Rights
                of Participants
            12Article
                12.
            Termination
                of Employment/Directorship
            13Article
                13.
            Change
                in Control
            13Article
                14.
            Amendment,
                Modification, and Termination
            14Article
                15.
            Withholding
            14Article
                16.
            Successors
            14Article
                17.
            General
                Provisions
            15





**Article
      1. Establishment, Objectives, and Duration**




**1.1**  **Establishment
      of the Plan** .
      NaturalNano, Inc., a Nevada **** corporation
      (the “Company”), hereby adopts the “NaturalNano, Inc. 2007 Incentive Stock Plan”
(hereinafter referred to as the “Plan”), as set forth in this document. The
      Plan permits the grant of Nonqualified Stock Options, Incentive Stock
      Options, Stock Appreciation Rights, Restricted Stock, Performance Shares and
      Performance Units.




**1.2**  **Objectives
      of the Plan** .
      The
      objectives of the Plan are to optimize the profitability and growth of the
      Company through incentives that are consistent with the Company’s goals and that
      link the personal interests of Participants to those of the Company’s
      stockholders, to provide Participants with an incentive for excellence in
      individual performance, and to promote teamwork among Participants.




The
      Plan
      is further intended to provide flexibility to the Company and its
      Subsidiaries in their ability to motivate, attract, and retain the services
      of
      Participants who make significant contributions to the Company’s success and to
      allow Participants to share in that success.




**1.3**  **Duration
      of the Plan** .
      The
      Plan shall remain in effect, subject to the right of the Committee to amend
      or
      terminate the Plan at any time pursuant to Article 14 hereof, until all
      Shares subject to it shall have been purchased or acquired according to the
      Plan’s provisions. However, in no event may an Award of an Incentive Stock
      Option be granted under the Plan on or after the tenth (10 th )
      anniversary of the Effective Date.




**Article
      2. Definitions**




Whenever
      used in this Plan, the following terms shall have the meanings set forth below,
      and when the meaning is intended, the initial letter of the word shall be
      capitalized:




**2.1**  **“Award”** means,
      individually or collectively, a grant under this Plan of Nonqualified Stock
      Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
      Performance Shares or Performance Units.




**2.2**  **“Award
      Agreement”** means a
      written or electronic agreement entered into by the Company and a Participant
      setting forth the terms and provisions applicable to an Award granted under
      this
      Plan.




**2.3**  **“Beneficial
      Owner”** or **“Beneficial
      Ownership”** shall
      have the meaning ascribed to such term in Rule 13d-3 of the General Rules and
      Regulations under the Exchange Act.




**2.4**  **“Board”** or **“Board
      of Directors”** means
      the Board of Directors of the Company.




**2.5**  **“Change
      in Control”** shall
      be
      deemed to have occurred under any one or more of the following
      conditions:




i.
            if,
                within one year of any merger, consolidation, sale of a substantial
                part
                of the Company’s assets, or contested election, or any combination of the
                foregoing transactions (a “Transaction”), the persons who were directors
                of the Company immediately before the Transaction shall cease to
                constitute a majority of the Board of Directors (x) of the Company
                or (y)
                of any successor to the Company, or (z) if the Company becomes a
                subsidiary of or is merged into or consolidated with another corporation,
                of such corporation (the Company shall be deemed a subsidiary of
                such
                other corporation if such other corporation owns or controls, directly
                or
                indirectly, a majority of the combined voting power of the outstanding
                shares of the capital stock of the Company entitled to vote generally
                in
                the election of directors (“Voting
                Stock”));







ii.
            if,
                as a result of a Transaction, the Company does not survive as an
                entity,
                or its shares are changed into the shares of another corporation
                unless
                the stockholders of the Company immediately prior to the Transaction
                own a
                majority of the outstanding shares of such other corporation immediately
                following the Transaction;  iii.
            if any Person becomes, after the date
              this
              Plan is adopted, a beneficial owner directly or indirectly of securities
              of the Company representing 50% or more of the combined voting power
              of
              the Company’s Voting Stock;  iv.
            the dissolution or liquidation of the
              Company
              is approved by its stockholders; or  v.
            if the members of the Board as of the
              date
              this Plan is adopted (the “Incumbent Board”) cease to represent at least
              two-thirds of the Board; provided, that any person becoming a director
              subsequent to the date hereof whose election, or nomination for election
              by the Company’s stockholders, was approved by at least two-thirds of the
              members comprising the Incumbent Board (either by a specific vote or
              by
              approval of the proxy statement in which such person is named as a
              nominee
              for director without objection to such nomination) shall be, for purposes
              of this paragraph (v), treated as though such person were a member
              of the
              Incumbent Board.




**2.6**  **“Code”** means
      the Internal Revenue Code of 1986, as amended from time to time.




**2.7**  **“Committee”** means
      the committee appointed from time to time by the Company's Board of Directors
      to
      administer the Plan. The full Board of Directors, in its discretion, may act
      as
      the Committee under the Plan, whether or not a Committee has been appointed,
      and
      shall do so with respect to grants of Awards to non-employee Directors. The
      Committee may delegate to one or more members of the Committee or officers
      of
      the Company, individually or acting as a committee, any portion of its
      authority, except as otherwise expressly provided in the Plan. In the event
      of a
      delegation to a member of the Committee, officer or a committee thereof, the
      term "Committee" as used herein shall include the member of the Committee,
      officer or committee with respect to the delegated authority. Notwithstanding
      any such delegation of authority, the Committee comprised of members of the
      Board of Directors and appointed by the Board of Directors shall retain overall
      responsibility for the operation of the Plan.




**2.8**  **“Company”** means
      NaturalNano Inc., a Nevada corporation, together will all subsidiaries thereof,
      and any successor thereto as provided in Article 16 hereof.




**2.9**  **“Covered
      Employee”** means a
      Participant who, as of the date of vesting and/or payout of an Award, or the
      date the Company or any of its Subsidiaries is entitled to a tax deduction
      as a
      result of the Award, as applicable, is one of the group of “covered employees,”
as defined in the regulations promulgated under Code Section 162(m), or any
      successor statute.


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**2.10**  **“Director”** means
      any individual who is a member of the Board of Directors of the Company;
      provided, however, that any Director who is employed by the Company shall be
      treated as an Employee under the Plan.




**2.11**  **“Disability”** shall
      mean a condition whereby the Participant is unable to engage in any substantial
      gainful activity by reason of any medically determinable physical impairment
      which can be expected to result in death or which is or can be expected to
      last
      for a continuous period of not less than twelve months, all as verified by
      a
      physician acceptable to, or selected by, the Company.




**2.12**  **“Effective
      Date”** shall
      have the meaning ascribed to such term in Section 1.1 hereof.




**2.13**  **“Employee”** means
      any employee of the Company or its Subsidiaries.




**2.14**  **“Exchange
      Act”** means
      the Securities Exchange Act of 1934, as amended from time to time, or any
      successor act thereto.




**2.15**  **“Fair
      Market Value”** as of
      any date and in respect of any Share means the then most recent closing price
      of
      a Share reported by the exchange or other trading system on which Shares are
      primarily traded or, if deemed appropriate by the Committee for any reason,
      the
      fair market value of Shares shall be as determined by the Committee in such
      other manner as it may deem appropriate. In no event shall the fair market
      value
      of any Share be less than its par value.




**2.16**  **“Incentive
      Stock Option”** or **“ISO”** means an
      option to purchase Shares granted under Article 6 hereof and that is designated
      as an Incentive Stock Option and that is intended to meet the requirements
      of Code Section 422.




**2.17**  **“Insider”** shall
      mean an individual who is, on the relevant date, an executive officer, director
      or ten percent (10%) beneficial owner of any class of the Company’s equity
      securities that is registered pursuant to Section 12 of the Exchange Act,
      all as defined under Section 16 of the Exchange Act.




**2.18**  **“Key
      Employee** ”
shall
      mean an individual as
      defined in Code
      Section 416(i)without
      regard to paragraph
      (5)thereof)
      of the Company.




**2.19**  **“Non-Employee
      Director** ”
shall
      mean any member of the Board of who is not an employee of the Company or a
      member of the immediate family of an employee of the Company .




**2.20**  **“Nonqualified
      Stock Option”** or **“NQSO”** means
      an option to purchase Shares granted under Article 6 hereof that is
      not intended to meet the requirements of Code Section 422, or that
      otherwise does not meet such requirements.




**2.21**  **“Option”** means an
      Incentive Stock Option or a Nonqualified Stock Option.




**2.22**  **“Option
      Price”** means
      the price at which a Share may be purchased by a Participant pursuant to an
      Option.




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**2.23**  **“Participant”** means an
      Employee, Director or consultant who has been selected to receive an Award
      or
      who has an outstanding Award granted under the Plan.




**2.24**  **“Performance-Based
      Exception”** means
      the performance-based exception from the tax deductibility limitations of Code
      Section 162(m).




**2.25**  **“Performance
      Share”** means an
      Award granted to a Participant, as described in Article 9
      hereof.




**2.26**  **“Performance
      Unit”** means an
      Award granted to a Participant, as described in Article 9 hereof.




**2.27**  **“Period
      of Restriction”** means
      the period during which the transfer of Shares of Restricted Stock is limited
      in
      some way (based on the passage of time, the achievement of performance goals,
      or
      upon the occurrence of other events as determined by the Committee, at its
      discretion), and the Shares are subject to a substantial risk of forfeiture,
      pursuant to the Restricted Stock Award Agreement, as provided in Article 8
      hereof.




**2.28**  **“Person”** shall
      have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
      Act and used in Sections 13(d) and 14(d) thereof and the rules promulgated
      thereunder, including a “group” as defined in Section 13(d) thereof and the
      rules promulgated.




**2.29**  **“Restricted
      Stock”** means an
      Award granted to a Participant pursuant to Article 8 hereof.




**2.30**  **“Shares”** means
      shares of the Company’s common stock, par value $.0001 per share.




**2.31**  **“Stock
      Appreciation Right”** or **“SAR”** means an
      Award, granted alone or in connection with a related Option, designated as
      an
      SAR, pursuant to the terms of Article 7 hereof.




**2.32**  **“Subsidiary”** means
      any corporation, partnership, joint venture, or other entity in which the
      Company, directly or indirectly, has a majority voting interest. With respect
      to
      Incentive Stock Options, “Subsidiary” means any entity, domestic or foreign,
      whether or not such entity now exists or is hereafter organized or acquired
      by
      the Company or by a Subsidiary that is a “subsidiary corporation” within the
      meaning of Code Section 424(d) and the rules thereunder.




**2.33**  **“Ten
      Percent Shareholder”** means an
      employee who at the time an ISO is granted owns Shares possessing more than
      ten
      percent of the total combined voting power of all classes of Shares of the
      Company or any Subsidiary, within the meaning of Code Section 422.




**Article
      3. Administration**




**3.1**  **General** .
      Subject
      to the terms and conditions of the Plan, the Plan shall be administered by
      the
      Committee. The members of the Committee shall be appointed from time to time
      by,
      and shall serve at the discretion of, the Board of Directors. The Committee
      shall have the authority to delegate administrative duties to officers of the
      Company. For purposes of making Awards intended to qualify for the Performance
      Based Exception under Code Section 162(m), to the extent required under such
      Code Section, the Committee shall be comprised solely of two or more individuals
      who are “outside directors”, as that term is defined in Code Section 162(m) and
      the regulations thereunder.




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**3.2**  **Authority
      of the Committee** .
      Except
      as limited by law or by the Certificate of Incorporation or Bylaws of the
      Company, and subject to the provisions hereof, the Committee shall have full
      power to select Employees, Directors and consultants who shall be offered the
      opportunity to participate in the Plan; determine the sizes and types of Awards;
      determine the terms and conditions of Awards in a manner consistent with the
      Plan; construe and interpret the Plan and any agreement or instrument entered
      into under the Plan; establish, amend, or waive rules and regulations for the
      Plan’s administration; and amend the terms and conditions of any outstanding
      Award as provided in the Plan. Further, the Committee shall make all other
      determinations that it deems necessary or advisable for the administration
      of
      the Plan. As permitted by law and the terms of the Plan, the Committee may
      delegate its authority herein. No member of the Committee shall be liable for
      any action taken or decision made in good faith relating to the Plan or any
      Award granted hereunder.




**3.3**  **Decisions
      Binding** .
      All
      determinations and decisions made by the Committee pursuant to the provisions
      of
      the Plan and all related orders and resolutions of the Committee shall be final,
      conclusive, and binding on all persons, including the Company, its stockholders,
      Directors, Employees, Participants, and their estates and beneficiaries, unless
      changed by the Board.




**Article
      4. Shares Subject to the Plan and Maximum Awards**




**4.1**  **Number
      of Shares Available for Grants** .
      Subject
      to adjustment as provided in Section 4.2 hereof, the number of Shares
      hereby reserved for issuance to Participants under the Plan shall be seven
      million (7,000,000). Any Shares covered by an Award (or portion of an Award)
      granted under the Plan which is forfeited or canceled or expires shall be deemed
      not to have been delivered for purposes of determining the maximum number of
      Shares available for delivery under the Plan. Shares may be authorized, unissued
      shares or Treasury shares. The Committee shall determine the appropriate
      methodology for calculating the number of Shares issued pursuant to the Plan.




The
      following limitations shall apply to the grant of any Award to a Participant
      in
      a fiscal year:




(a)
            **Stock
                Options**:
                The maximum aggregate number of Shares that may be granted in the
                form of
                Stock Options pursuant to Awards granted in any one fiscal year to
                any one
                Participant shall be1,500,000.




(b)
            **SARs**:
                The maximum aggregate number of Shares that may be granted in the
                form of
                Stock Appreciation Rights pursuant to Awards granted in any one fiscal
                year to any one Participant shall be
                1,500,000.




(c)
            **Restricted
                Stock**:
                The maximum aggregate of Shares that may be granted with respect
                to Awards
                of Restricted Stock granted in any one fiscal year to any one Participant
                shall be 1,500,000.




(d)
            **Performance
                Shares/Performance Units Awards**:
                The maximum aggregate grant with respect to Awards of Performance
                Shares
                made in any one fiscal year to any one Participant shall be equal
                to the
                Fair Market Value of****500,000****Shares
                (measured on the date of grant); the maximum aggregate amount awarded
                with
                respect to Performance Units to any one Participant in any one fiscal
                year
                may not exceed $1,000,000.


-5-


**4.2**  **Adjustments
      in Authorized Shares** .
      Upon a
      change in corporate capitalization, such as a stock split, stock dividend or
      a
      corporate transaction, such as any merger, consolidation, combination,
      exchange of shares or the like, separation, including a spin-off, or other
      distribution of stock or property of the Company, any reorganization (whether
      or
      not such reorganization comes within the definition of such term in Code Section
      368) or any partial or complete liquidation of the Company, (i) the number
      and
      class of Shares reserved for issuance to Participants under the Plan, (ii)
      the
      number and class of and/or price of Shares subject to outstanding Awards granted
      under the Plan, and (iii) the Award limits set forth in Section 4.1, shall
      be
      proportionately adjusted in such manner as may be determined to be appropriate
      and equitable by the Committee, in its sole discretion, to prevent dilution
      or
      enlargement of rights.




**4.3**  **Adjustment
      of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
      Events** .
      The
      Committee may make adjustments in the terms and conditions of, and the criteria
      included in, Awards in recognition of unusual or nonrecurring events (including,
      without limitation, the events described in Section 4.2 hereof) affecting the
      Company or the financial statements of the Company or of changes in applicable
      laws, regulations, or accounting principles, whenever the Committee determines
      that such adjustments are appropriate in order to prevent dilution or
      enlargement of the benefits or potential benefits intended to be made available
      under the Plan; provided that (i) no such adjustment shall be authorized if,
      and
      to the extent that, such adjustment would result in an accounting charge for
      any
      affected outstanding Awards in accordance with Financial Accounting Standard
      No.
      123R (Accounting for Share Based Compensation) or (ii) unless the Committee
      determines otherwise at the time such adjustment is considered, no such
      adjustment shall be authorized to the extent inconsistent with the Plan’s or any
      Award’s meeting the requirements of Section 162(m) of the Code, as from time to
      time amended.




**Article
      5. Eligibility and Participation**




**5.1**  **Eligibility** .
      Persons
      eligible to participate in this Plan include all Employees, Directors and
      consultants of the Company and its Subsidiaries.




**5.2**  **Actual
      Participation** .
      Subject
      to the provisions of the Plan, the Committee may, from time to time, select
      from
      all eligible Employees, Directors and consultants, those to whom Awards shall
      be
      granted and shall determine the nature and amount of each Award, provided that
      Incentive Stock Options shall only be awarded to Employees of the Company or
      its
      Subsidiaries.




**5.3**  **Stock
      Options for Non-Employee Directors**




**(a)**
            Subject
                to the provisions of Section 5.3(d), each person who, subsequent
                to the
                Effective Date, is for the first time elected or appointed to the
                Board
                and who qualifies, at such time, as a Non-Employee Director, shall
                automatically be granted a Nonqualified Stock Option to purchase
                100,000
                shares of Common Stock, effective as of the date of his or her election
                or
                appointment to the Board on the terms and conditions set forth in
                the
                Plan, at an option price per share equal to the Fair Market Value
                of a
                share of Common Stock on the date of grant or, if the date of the
                grant is
                not a business day on which the Fair Market Value can be determined,
                on
                the last business day preceding the date of grant on which the Fair
                Market
                Value can be determined.


-6-


**(b)**
            Subject
                to the provisions of Section 5.3(d), each Non-Employee Director who
                is
                re-elected as a director at an annual meeting of stockholders shall
                be
                granted an additional Nonqualified Stock Option to purchase 100,000
                shares
                of Common Stock, on the terms and conditions set forth in the Plan,
                at an
                option price per share equal to the Fair Market Value of a share
                of Common
                Stock on the date of such annual meeting.




**(c)**
            All
                Options granted to Non-Employee Directors pursuant to this Section
                5.3
                shall vest and become fully exercisable on the date of the first
                annual
                meeting of stockholders occurring after the end of the fiscal year
                of the
                Company during which such Option was granted. All Options granted
                to
                Non-Employee Directors pursuant to this Section 5.3 shall expire
                on the
                tenth (10th)
                anniversary of the date of grant, subject to earlier termination
                as
                provided in Article 12.




**(d)**
            Non-Qualified
                Stock Options may be granted to a person pursuant to this Section
                5.3 only
                if, and to the extent that, such person does not automatically receive
                Non-Qualified Stock Options to purchase 100,000 shares of Common
                Stock
                under the Company’s 2005 Incentive Stock Plan upon his or her election or
                re-election as a Non-Employee
                Director.




**Article
      6. Stock Options**




**6.1**  **Grant
      of Options** .
      Subject
      to the terms and provisions of the Plan, Options may be granted to Participants
      in such number, and upon such terms, and at any time and from time to time
      as shall be determined by the Committee.




**6.2**  **Award
      Agreement** .
      Each
      Option grant shall be evidenced by an Award Agreement that shall specify the
      Option Price, the duration of the Option, the number of Shares to which the
      Option pertains, and such other provisions as the Committee shall determine
      which are not inconsistent with the terms of the Plan.




**6.3**  **Option
      Price** .
      The
      Option Price for each grant of an Option under this Plan shall be as determined
      by the Committee; provided, however, the per-share exercise price shall not
      be
      less than the Fair Market Value of the Shares on the date of grant. ****




The
      Option Price for each Option shall equal the Fair Market Value of the Shares
      at
      the time such option is granted. If an ISO is granted to a Ten Percent
      Shareholder the Option Price shall be at least 110 percent of the Fair Market
      Value of the stock subject to the ISO.




**6.4**  **Duration
      of Options** .
      Except
      as otherwise provided in this Plan, each Option granted to a Participant shall
      expire at such time as the Committee shall determine at the time of grant,
      provided that an ISO must expire no later than the tenth (10th) anniversary
      of
      the date the ISO was granted. However, in the case of an ISO granted to a Ten
      Percent Shareholder, the ISO by its terms shall not be exercisable after the
      expiration of five years from the date such ISO is granted.


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**6.5**  **Exercise
      of Options** .
      Options
      shall be exercisable at such times and be subject to such restrictions and
      conditions as the Committee shall in each instance approve, which need not
      be
      the same for each grant or for each Participant.




**6.6**  **Payment** .
      Options
      shall be exercised by the delivery of a written, electronic or telephonic notice
      of exercise to the Company or its designated agent, setting forth the number
      of
      Shares with respect to which the Option is to be exercised, accompanied by
      full
      payment of the Option Price for the Shares.




Upon
      the
      exercise of any Option, the Option Price for the Shares being purchased pursuant
      to the Option shall be payable to the Company in full either: (a) in cash
      or its equivalent; or **** (b) subject
      to the Committee’s approval, by delivery of previously acquired Shares having an
      aggregate Fair Market Value at the time of exercise equal to the total Option
      Price (provided that the Shares that are delivered must have been held by the
      Participant for at least six (6) months prior to their delivery to satisfy
      the
      Option Price); or (c) by a combination of (a) and (b); or (d) by any
      other method approved by the Committee in its sole discretion. Unless otherwise
      determined by the Committee, the delivery of previously acquired Shares may
      be
      done through attestation. No fractional shares may be tendered or accepted
      in
      payment of the Option Price.




Unless
      otherwise determined by the Committee, cashless exercises are permitted pursuant
      to Federal Reserve Board’s Regulation T, subject to applicable securities
      law restrictions, or by any other means which the Committee determines to be
      consistent with the Plan’s purpose and applicable law.




Subject
      to any governing rules or regulations, as soon as practicable after receipt
      of
      notification of exercise and full payment, the Company shall deliver to the
      Participant, in the Participant’s name, Share certificates in an appropriate
      amount based upon the number of Shares purchased pursuant to the
      Option(s).




Unless
      otherwise determined by the Committee, all payments under all of the methods
      indicated above shall be paid in United States dollars.




**6.7**  **Restrictions
      on Share Transferability** .
      The
      Committee may impose such restrictions on any Shares acquired pursuant to the
      exercise of an Option granted under this Article 6 as it may deem advisable,
      including, without limitation, restrictions under applicable federal securities
      laws, under the requirements of any stock exchange or market upon which such
      Shares are then listed and/or traded, or under any blue sky or state
      securities laws applicable to such Shares.




**6.8**  **Nontransferability
      of Options** .




(a)
            **Incentive Stock Options**.
              No ISO granted under the Plan may be sold, transferred, pledged, assigned,
              encumbered or otherwise alienated or hypothecated, other than by will
              or
              by the laws of descent and distribution. Further, all ISOs granted
              to a
              Participant under the Plan shall be exercisable during such Participant’s
              lifetime only by such Participant.  (b)
            **Nonqualified
                Stock Options**.
                Except as otherwise provided in the applicable Award Agreement, no
                NQSO
                may be sold, transferred, pledged, assigned, encumbered or otherwise
                alienated or hypothecated, other than by will or by the laws of descent
                and distribution. Further, except as otherwise provided in the applicable
                Award Agreement, all NQSOs granted to a Participant shall be exercisable
                during such Participant’s lifetime only by such
                Participant.




-8-


**6.9**  **Special
      Limitation on Grants of Incentive Stock Options.** No
      ISO
      shall be granted to an Employee under the Plan or any other ISO plan of the
      Company or its Subsidiaries to purchase Shares as to which the aggregate Fair
      Market Value (determined as of the date of grant) of the Shares which first
      become exercisable by the Employee in any calendar year exceeds $100,000. To
      the
      extent an Option initially designated as an ISO exceeds the value limit of
      this
      Section 6.9 or otherwise fails to satisfy the requirements applicable to
      ISOs, it shall be deemed a NQSO and shall otherwise remain in full force and
      effect.




**Article
      7. Stock Appreciation Rights**




**7.1**  **Grant
      of SARs** .
      Subject
      to the terms and conditions of the Plan, SARs may be granted to Participants
      at
      any time and from time to time as shall be determined by the
      Committee.




Subject
      to the terms and conditions of the Plan, the Committee shall have complete
      discretion in determining the number of SARs granted to each Participant and,
      consistent with the provisions of the Plan, in determining the terms and
      conditions pertaining to such SARs.




The
      grant
      price of a SAR shall equal the Fair Market Value of a Share on the date of
      grant.




**7.2**  **SAR
      Agreement** .
      Each
      SAR grant shall be evidenced by an Award Agreement that shall specify the grant
      price, the term of the SAR, and such other provisions as the Committee shall
      determine.




**7.3**  **Term
      of SARs** .
      The
      term of an SAR granted under the Plan shall be determined by the Committee,
      in
      its sole discre-tion.




**7.4**  **Exercise
      of SARs** .
      SARs
      may be exercised upon whatever terms and conditions the Committee, in its sole
      discretion, imposes upon them.




**7.6**  **Payment
      of SAR Amount** .
      Upon
      exercise of an SAR, a Participant shall be entitled to receive payment from
      the
      Company in an amount determined by multiplying:




(a)
            The
                amount by which the Fair Market Value of a Share on the date of exercise
                exceeds the grant price of the SAR;
                by




(b)  The
      number of Shares with respect to which the SAR is exercised.




The
      payment upon SAR exercise shall be in Shares. Any Shares delivered in payment
      shall be deemed to have a value equal to the Fair Market Value on the date
      of
      exercise of the SAR.




**7.7**  **Nontransferability
      of SARs** .
      Except
      as otherwise provided in a Participant’s Award Agreement, no SAR granted under
      the Plan may be sold, transferred, pledged, assigned, encumbered, or
      otherwise alienated or hypothecated, other than by will or by the laws of
      descent and distribution. Further, except as otherwise provided in a
      Participant’s Award Agreement, all SARs granted to a Participant under the Plan
      shall be exercisable during such Participant’s lifetime only by such
      Participant.


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**Article
      8. Restricted Stock**




**8.1**  **Grant
      of Restricted Stock** .
      Subject
      to the terms and provisions of the Plan, the Committee, at any time and from
      time to time, may grant Shares of Restricted Stock to Participants in such
      amounts as the Committee shall determine.




**8.2**  **Restricted
      Stock Agreement** .
      Each
      Restricted Stock grant shall be evidenced by a Restricted Stock Award Agreement
      that shall specify the Period(s) of Restriction, the number of Shares of
      Restricted Stock granted, and such other provisions as the Committee shall
      determine which are not inconsistent with the terms of this Plan.




**8.3**  **Transferability** .
      Except
      as provided in the Award Agreement, the Shares of Restricted Stock granted
      herein may not be sold, transferred, pledged, assigned, encumbered, or otherwise
      alienated or hypothecated until the end of the applicable Period of Restriction
      established by the Committee and specified in the Restricted Stock Award
      Agreement, or upon earlier satisfaction of any other conditions, as specified
      by
      the Committee in its sole discretion and set forth in the Restricted Stock
      Award
      Agreement. All rights with respect to the Restricted Stock granted to a
      Participant under the Plan shall be available during such Participant’s lifetime
      and prior to the end of the Period of Restriction only to such
      Participant.




**8.4**  **Other
      Restrictions** .
      The
      Committee may impose such other conditions and/or restrictions on any Shares
      of
      Restricted Stock granted pursuant to the Plan as it may deem advisable
      including, without limitation, a requirement that Participants pay a stipulated
      purchase price for each Share of Restricted Stock, restrictions based upon
      the
      achievement of specific performance goals, time-based restrictions on vesting
      following the attainment of the performance goals, time-based restrictions,
      and/or restrictions under applicable federal or state securities
      laws.




To
      the
      extent deemed appropriate by the Committee, the Company may retain the
      certificates representing Shares of Restricted Stock in the Company’s possession
      until such time as all conditions and/or restrictions applicable to such Shares
      have been satisfied.




Except
      as
      otherwise provided in the Award Agreement, Shares of Restricted Stock covered
      by
      each Restricted Stock grant made under the Plan shall become freely transferable
      by the Participant after the last day of the applicable Period of
      Restriction.




**8.5**  **Voting
      Rights** .
      If the
      Committee so determines, Participants holding Shares of Restricted Stock granted
      hereunder may be granted the right to exercise full voting rights with respect
      to those Shares during the Period of Restriction.




**8.6**  **Dividends
      and Other Distributions** .
      During
      the Period of Restriction, Participants holding Shares of Restricted Stock
      granted hereunder (whether or not the Company holds the certificate(s)
      representing such Shares) may, if the Committee so determines, be credited
      with
      dividends paid with respect to the underlying Shares while they are so held.
      The
      Committee may apply any restrictions to the dividends that the Committee deems
      appropriate. Without limiting the generality of the preceding sentence, if
      the
      grant or vesting of Restricted Shares granted to a Covered Employee is
      designed to comply with the requirements of the Performance-Based Exception,
      the
      Committee may apply any restrictions it deems appropriate to the payment of
      dividends declared with respect to such Restricted Shares, such that the
      dividends and/or the Restricted Shares maintain eligibility for the
      Performance-Based Exception.


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**Article
      9. Performance Units and Performance Shares**




**9.1**  **Grant
      of Performance Units/Shares Awards** .
      Subject
      to the terms of the Plan, Performance Units and/or Performance Shares
      Awards may be granted to Participants in such amounts and upon such terms,
      and
      at any time and from time to time, as shall be determined by the
      Committee.




**9.2**  **Award
      Agreement** .
      At the
      Committee’s discretion, each grant of Performance Units/Shares Awards may be
      evidenced by an Award Agreement that shall specify the initial value, the
      duration of the Award, the performance measures, if any, applicable to the
      Award, and such other provisions as the Committee shall determine which are
      not
      inconsistent with the terms of the Plan.




**9.3**  **Value
      of Performance Units/Shares Awards** .
      Each
      Performance Unit shall have an initial value that is established by the
      Committee at the time of grant. Each Performance Share shall have an initial
      value equal to the Fair Market Value of a Share on the date of grant. The
      Committee shall set performance goals in its discretion which, depending on
      the
      extent to which they are met, will determine the number and/or value of
      Performance Units/Shares Awards that will be paid out to the Participant. For
      purposes of this Article 9, the time period during which the performance goals
      must be met shall be called a “Performance Period.”




**9.4**  **Earning
      of Performance Units/Shares Awards** .
      Subject
      to the terms of this Plan, after the applicable Performance Period has
      ended, the holder of Performance Units/Shares Awards shall be entitled to
      receive a payout based on the number and value of Performance Units/Shares
      Awards earned by the Participant over the Performance Period, to be determined
      as a function of the extent to which the corresponding performance goals
      have been achieved.




**9.5**  **Form
      and Timing of Payment of Performance Units/Shares Awards** .
      Payment
      of earned Performance Units/Shares Awards shall be as determined by the
      Committee and, if applicable, as evidenced in the related Award Agreement.
      Subject to the terms of the Plan, the Committee, in its sole
      discretion, may pay earned Performance Units/Shares Awards in the form of
      cash or in Shares (or in a combination thereof) that have an aggregate Fair
      Market Value equal to the value of the earned Performance Units/Shares Awards
      at
      the close of the applicable Performance Period. Such Shares may be delivered
      subject to any restrictions deemed appropriate by the Committee. No fractional
      shares will be issued. The determination of the Committee with respect to the
      form of payout of such Awards shall be set forth in the Award Agreement
      pertaining to the grant of the Award or the resolutions establishing the
      Award.




Unless
      otherwise provided by the Committee, Participants holding Performance
      Units/Shares shall be entitled to receive dividend units with respect to
      dividends declared with respect to the Shares represented by such Performance
      Units/Shares. Such dividends may be subject to the same accrual, forfeiture,
      and
      payout restrictions as apply to dividends earned with respect to Shares of
      Restricted Stock, as set forth in Section 8.6 hereof, as determined by the
      Committee.




**9.6**  **Nontransferability** .
      Except
      as otherwise provided in a Participant’s Award Agreement, Performance
      Units/Shares Awards may not be sold, transferred, pledged, assigned, encumbered,
      or otherwise alienated or hypothecated, other than by will or by the laws of
      descent and distribution.


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**Article
      10. Performance Measures**




Unless
      and until the Committee proposes for shareholder vote and the Company’s
      shareholders approve a change in the general performance measures set forth
      in
      this Article 10, the attainment of which may determine the degree of payout
      and/or vesting with respect to Awards to Covered Employees that are designed
      to
      qualify for the Performance-Based Exception, the performance measure(s) to
      be
      used for purposes of such grants shall be chosen from among:




(a)  Earnings
      per share;




(b)  Net
      income (before or after taxes);




(c)  Cash
      flow
      (including, but not limited to, operating cash flow and free cash
      flow);




(d)  Gross
      revenues;




(e)  Gross
      margins;




(f)  EBITDA;
      and




(g)  Any
      of
      the above measures compared to peer or other companies.




Performance
      measures may be set either at the corporate level, subsidiary level, division
      level, or business unit level.




Awards
      that are designed to qualify for the Performance-Based Exception, and that
      are
      held by Covered Employees, may not be adjusted upward (the Committee shall
      retain the discretion to adjust such Awards downward).




If
      applicable tax and/or securities laws change to permit Committee discretion
      to
      alter the governing performance measures without obtaining shareholder approval
      of such changes, the Committee shall have sole discretion to make such changes
      without obtaining shareholder approval.




**Article
      11. Rights of Participants**




**11.1**  **Employment** .
      Nothing
      in the Plan shall confer upon any Participant any right to continue in the
      Company’s or its Subsidiaries’ employ, or as a Director, or interfere with or
      limit in any way the right of the Company or its Subsidiaries to terminate
      any
      Participant’s employment or directorship at any time.




**11.2**  **Participation** .
      No
      Employee, Director or consultant shall have the right to be selected to receive
      an Award under this Plan, or, having been so selected, to be selected to receive
      a future Award.




**11.3**  **Rights
      as a Stockholder** .
      Except
      as provided in Sections 8.5, 8.6 and 9.5 or in applicable Award Agreement
      consistent with such Sections, a Participant shall have none of the rights
      of a
      shareholder with respect to shares of Common Stock covered by any Award until
      the Participant becomes the record holder of such Shares, or the Period of
      Restriction has expired, as applicable.


-12-




**Article
      12. Termination of Employment/Directorship**




Upon
      termination of the Participant's employment or directorship for any reason
      other
      than Disability or death, an Award granted to the Participant may be exercised
      by the Participant or permitted transferee at any time on or prior to the
      earlier of the expiration date of the Award or the expiration of three (3)
      months after the date of termination but only if, and to the extent that, the
      Participant was entitled to exercise the Award at the date of termination.
      All
      Awards or any portion thereof not yet vested or exercisable or whose Period
      of
      Restriction has not expired as of the date of termination (other than a
      termination by reason of Disability or death) shall terminate and be forfeited
      immediately on the date of termination. If the employment or directorship of
      a
      Participant terminates by reason of the Participant's Disability or death,
      all
      Awards or any portion thereof not yet vested or exercisable or whose Period
      of
      Restriction has not expired as of the date of a Participant’s Disability or
      death shall become immediately vested and/or exercisable on the date of
      termination due to Disability or death. If the employment or directorship of
      a
      Participant terminates by reason of the Participant's Disability or death,
      the
      Participant (or, if appropriate, the Participant's legal representative or
      permitted transferee) may exercise such Participant’s rights under any
      outstanding Award at any time on or prior to the earlier of the expiration
      date
      of the Award or the expiration of six months after the date of Disability or
      death.




Unless
      otherwise determined by the Committee, an authorized leave of absence pursuant
      to a written agreement or other leave entitling an Employee to reemployment
      in a
      comparable position by law or rule shall not constitute a termination of
      employment for purposes of the Plan unless the Employee does not return at
      or
      before the end of the authorized leave or within the period for which
      re-employment is guaranteed by law or rule. For purposes of this Article, a
      “termination” includes an event which causes a Participant to lose his
      eligibility to participate in the Plan (e.g., an individual is employed by
      a
      company that ceases to be a Subsidiary). In the case of a consultant, the
      meaning of “termination” or “termination of employment” includes the date that
      the individual ceases to provide services to the Company or its Subsidiaries.
      In
      the case of a nonemployee director, the meaning of “termination” includes the
      date that the individual ceases to be a director of the Company or its
      Subsidiaries.




Notwithstanding
      the foregoing, the Committee has the authority to prescribe different rules
      that
      apply upon the termination of employment of a particular Participant, which
      shall be memorialized in the Participant’s original or amended Award Agreement
      or similar document.




An
      Award
      that remains unexercised after the latest date it could have been exercised
      under any of the foregoing provisions or under the terms of the Award shall
      be
      forfeited.




**Article
      13. Change in Control**




In
      the
      event of a Change in Control, unless otherwise specifically prohibited under
      applicable laws, or by the rules and regulations of any governing governmental
      agencies or national securities exchange or trading system, or unless the
      Committee shall otherwise specify in the Award Agreement, the Board, in its
      sole
      discretion, may:




(a)
              elect
                  to terminate Options or SARs in exchange for a cash payment equal
                  to the
                  amount by which the Fair Market Value of the Shares subject to
                  such Option
                  or SAR to the extent the Option or SAR has vested exceeds the exercise
                  price with respect to such Shares;  (b)
              elect to terminate Options or SARs
                provided
                that each Participant is first notified of and given the opportunity
                to
                exercise his/her vested Options or SARs for a specified period of
                time (of
                not less than 15 days) from the date of notification and before the
                Option
                or SAR is terminated;




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(c)  permit
      Awards to be assumed by a new parent corporation or a successor corporation
      (or
      its parent) and replaced with a comparable Award of the parent corporation
      or
      successor corporation (or its parent);




(d)  amend
      an
      Award Agreement or take such other action with respect to an Award that it
      deems
      appropriate; or




(e)  implement
      any combination of the foregoing.




**Article
      14. Amendment, Modification, and Termination**




**14.1**  **Amendment,
      Modification, and Termination** .
      Subject
      to the terms of the Plan, the Board may at any time and from time to time,
      alter, amend, suspend, or terminate the Plan in whole or in
      part.




**14.2**  **Awards
      Previously Granted** .
      Notwithstanding any other provision of the Plan to the contrary, no termination,
      amendment, or modification of the Plan shall adversely affect in any
      material way any Award previously granted under the Plan, without the written
      consent of the Participant holding such Award.




**14.3**  **Shareholder
      Approval Required for Certain Amendments** . **** Shareholder
      approval will be required for any amendment of the Plan that does any of the
      following: (a) increases the maximum number of Shares subject to the Plan;
      (b)
      changes the designation of the class of persons eligible to receive ISOs under
      the Plan; or (c) modifies the Plan in a manner that requires shareholder
      approval under applicable law or the rules of a stock exchange or trading system
      on which Shares are traded.




**Article
      15. Withholding**




The
      Company shall have the power and the right to deduct or withhold, or require
      a
      Participant to remit to the Company, an amount sufficient to satisfy any
      applicable taxes (including social security or social charges), domestic or
      foreign, required by law or regulation to be withheld with respect to any
      taxable event arising as a result of this Plan. **** The
      Participant may satisfy, totally or in part, such Participant’s obligations
      pursuant to this Section 15 by electing to have Shares withheld, to redeliver
      Shares acquired under an Award, or to deliver previously owned Shares that
      have
      been held for at least six (6) months, provided that the election is made in
      writing on or prior to (i) the date of exercise, in the case of Options and
      SARs, (ii) the date of payment, in the case of Performance Units/Shares, and
      (iii) the expiration of the Period of Restriction in the case of Restricted
      Stock. Any election made under this Section 15 may be disapproved by the
      Committee at any time in its sole discretion. If an election is disapproved
      by
      the Committee, the Participant must satisfy his obligations pursuant to this
      paragraph in cash.




**Article
      16. Successors**




All
      obligations of the Company under the Plan with respect to Awards granted
      hereunder shall be binding on any successor to the Company, whether the
      existence of such successor is the result of a direct or indirect purchase,
      through merger, consolidation, or otherwise, of all or substantially all of
      the
      business, stock and/or assets of the Company.


-14-




**Article
      17. General Provisions**




**17.1**  **Gender
      and Number** .
      Except
      where otherwise indicated by the context, any masculine term used herein also
      shall include the feminine; the plural shall include the singular and the
      singular shall include the plural.




**17.2**  **Severability** .
      If any
      provision of the Plan shall be held illegal or invalid for any reason, the
      illegality or invalidity shall not affect the remaining parts of the Plan,
      and
      the Plan shall be construed and enforced as if the illegal or invalid provision
      had not been included.




**17.3**  **Requirements
      of Law** .
      The
      granting of Awards and the issuance of Shares under the Plan shall be subject
      to
      all applicable laws, rules, and regulations, and to such approvals by any
      governmental agencies or national securities exchanges as may be required.




**17.4**  **Securities
      Law Compliance** .
      With
      respect to Insiders, transactions under this Plan are intended to comply with
      all applicable conditions of Rule 16b-3 or its successors under the
      Exchange Act, unless determined otherwise by the Board. To the extent any
      provision of the Plan or action by the Committee fails to so comply, it shall
      be
      deemed null and void, to the extent permitted by law and deemed advisable by
      the
      Board.




**17.5**  **Listing** .
      The
      Company may use reasonable endeavors to register Shares issued pursuant to
      Awards with the United States Securities and Exchange Commission or to effect
      compliance with the registration, qualification, and listing requirements of
      any
      state or foreign securities laws, stock exchange, or trading
      system.




**17.6**  **Inability
      to Obtain Authority** .
      The
      inability of the Company to obtain authority from any regulatory body having
      jurisdiction, which authority is deemed by the Company’s counsel to be necessary
      to the lawful issuance and sale of any Shares hereunder, shall relieve the
      Company of any liability in respect of the failure to issue or sell such Shares
      as to which such requisite authority shall not have been obtained.




**17.7**  **No
      Additional Rights** .
      Neither
      the Award nor any benefits arising under this Plan shall constitute part of
      an
      employment contract between the Participant and the Company or any Subsidiary,
      and accordingly, subject to Section 14.2, this Plan and the benefits
      hereunder may be terminated at any time in the sole and exclusive discretion
      of
      the Committee without giving rise to liability on the part of the Company for
      severance payments.




**17.8**  **Noncertificated
      Shares** .
      To the
      extent that the Plan provides for issuance of certificates to reflect the
      transfer of Shares, the transfer of such Shares may be effected on a
      noncertificated basis, to the extent not prohibited by applicable law or the
      rules of any stock exchange or trading system.




**17.9**  **Governing
      Law** .
      The
      Plan and each Award Agreement shall be governed by the laws of Nevada, excluding
      any conflicts or choice of law rule or principle that might otherwise refer
      construction or interpretation of the Plan to the substantive law of another
      jurisdiction. Unless otherwise provided in the Award Agreement, recipients
      of an
      Award under the Plan are deemed to submit to the exclusive jurisdiction and
      venue of the federal or state courts whose jurisdiction covers Nevada, to
      resolve any and all issues that may arise out of or relate to the Plan or any
      related Award Agreement.




-15-


**17.10**  **Compliance
      with Code Section 409A** .
      No
      Award that is subject to Section 409A of the Code shall provide for deferral
      of
      compensation that does not comply with Section 409A of the Code, unless the
      Board, at the time of grant, specifically provides that the Award is not
      intended to comply with Section 409A of the Code. Notwithstanding any provision
      in the Plan to the contrary, with respect to any Award subject to Section 409A,
      distributions on account of a separation from service may not be made to Key
      Employees before the date which is six (6) months after the date of separation
      from service (or, if earlier, the date of death of the employee).





Dated
              as
              of February 23, 2007
            **NaturalNano,
              Inc.**By:
            /s/ Cathy
              A.
              FleischerPresident








Date
      of
      Shareholder Approval: _______________


-16-