Exhibit
      10.1

    
 

    
      NATURALNANO,
        INC.

      


      OBSERVATION
        RIGHTS AGREEMENT

       

    

    This
      Agreement is made on the 20th
      day of
      July 2007 by and among NaturalNano, Inc., a Nevada corporation (the “Company”),
      Technology Innovations, llc,
      a New
      York limited liability company (the “Investor”) and Michael L. Weiner (“Weiner”)
      and Ross B. Kenzie (“Kenzie”), the designees to serve as the Investor’s initial
      representatives for purposes of this Agreement.

    


    Whereas,
      the Investor is the registered and beneficial owner of 70,303,189 shares of
      the
      Common Stock of the Company, representing approximately 57.2% of the Company’s
      issued and outstanding Common Stock; and

    


    Whereas,
      Weiner and Kenzie have served as members of the Board of Directors;

    


    Now,
      therefore, in consideration of the foregoing and for other good and valuable
      consideration, the receipt and adequacy of which are hereby acknowledged, the
      parties agree as follows:

    


    1.  For
      so
      long as the Investor owns not less than 25% of the shares of the Company’s
      Common Stock held by the Investor on the date hereof, the Company shall permit
      two representatives designated by the Investor (who shall initially be Weiner
      and Kenzie) to attend all meetings of the Company’s Board of Directors in a
      nonvoting observer capacity and, in this respect, shall give such
      representatives copies of all notices, minutes, consents, and other materials
      that it provides to its directors at the same time and in the same manner as
      provided to such directors; provided, however, that such representatives shall
      agree to hold in confidence and trust and to act in a fiduciary manner with
      respect to all information so provided; and provided, further, that the Company
      may withhold any information and exclude such representatives from any meeting
      or portion thereof if access to such information or attendance at such meeting
      could (i) adversely affect the attorney-client privilege between the Company
      and
      its counsel, (ii) result in disclosure of trade secrets or a conflict of
      interest, or (iii) if the Investor or a representative is a competitor of the
      Company.

    


    2.  Each
      of
      the Investor, Weiner and Kenzie, severally and not jointly, agrees that it
      or he
      will keep confidential and will not disclose, divulge or use for any purpose,
      other than to monitor the Investor’s investment in the Company, and
      otherwise to act in a fiduciary manner with respect to, any confidential
      information obtained from the Company, unless such confidential information
      (i)
      is known or becomes known to the
      public in general (other than as a result of a breach of this Section 2 by
      the
      Investor, Weiner or Kenzie), (ii) is or has been independently developed or
      conceived by the Investor, Weiner or Kenzie without use of the Company's
      confidential information or (iii) is or has been made known or disclosed to
      the
      Investor, Weiner or Kenzie by a third party without a breach of any obligation
      of confidentiality such third party may have to the Company; provided, however,
      that (a) the Investor may disclose confidential information to the
      Investor’s attorneys, accountants, consultants, and other professional advisers
      to the extent necessary to obtain their services in connection with monitoring
      the Investor’s investment in the Company and (b) the Investor, Weiner and Kenzie
      may disclose confidential information  as may be required by law, provided
      that the Investor, Weiner and Kenzie give the Company at least 48 hours’ notice
      prior to making any such required disclosure and take reasonable steps to
      minimize the extent of any such required disclosure.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.  This
      Agreement shall be governed by, and shall be interpreted in accordance with,
      the
      laws of the State of New York. This Agreement shall be binding upon, and shall
      inure to the benefit of, the parties hereto and their respective successors,
      assigns, heirs and personal representatives. This Agreement may be amended,
      and
      any provision hereof may be waived, only by a written instrument executed by
      all
      parties hereto.

    


    In
      witness whereof the Company, the Investor, Weiner and Kenzie have executed
      this
      Agreement as of the date first above set forth.

     

    
      	 	 	 
	 	
              NATURALNANO,
                INC.

            
	 
 	 
 	 
 
	 	By:  	/s/
              Cathy A. Fleischer, Ph.D.
	 	
              
Cathy
              A. Fleischer, Ph.D.
	 	President




    
      	 	 	 
	 	
              TECHNOLOGY
                INNOVATIONS, LLC

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


    

    
 

    
      	 	
              /s/
                Michael L. Weiner

            
	 	
              
                
Michael
                L. Weiner

            
	 	
              (in
                his individual capacity) 

            


    

    


    


    
      	 	
              /s/
                Ross B. Kenzie 

            
	 	
              
                
Ross
                B. Kenzie

            
	 	
              (in
                his individual capacity)