Document:

Exhibit
          10.7

      

       

      REGISTRATION
        RIGHTS AGREEMENT

       

      THIS
        REGISTRATION RIGHTS AGREEMENT
        (this
“Agreement”) is entered into as of the 15th day of December, 2006, by and among
        Restaurant Acquisition Partners, Inc., a Delaware corporation (the “Company”),
        and Capital Growth Financial, LLC (the “IPO Underwriter”).

       

      WHEREAS,
        in
        connection with the underwriting of the securities of the Company by the
        IPO
        Underwriter, the IPO Underwriter received an option to purchase certain
        securities of the Company pursuant to the Unit Purchase Option Agreement
        between
        the Company and the IPO Underwriter of even date herewith (“Unit Purchase
        Option”);

       

      WHEREAS,
        the IPO
        Underwriter and the Company desire to enter into this Agreement to provide
        the
        IPO Underwriter with certain rights relating to the registration of the
        Registrable Securities (defined below) held by the IPO Underwriter;

       

      NOW,
        THEREFORE,
        in
        consideration of the mutual covenants and agreements set forth herein, and
        for
        other good and valuable consideration, the receipt and sufficiency of which
        are
        hereby acknowledged, the parties hereto agree as follows:

       

      1.
         DEFINITIONS.
        The
        following capitalized terms used herein have the following
        meanings:

       

      “Agreement”
means
        this Agreement, as amended, restated, supplemented or otherwise modified
        from
        time to time.

       

      “Commission”
means
        the Securities and Exchange Commission, or any other federal agency then
        administering the Securities Act or the Exchange Act.

       

      “Common
        Stock”
means
        the common stock, par value $0.0001 per share, of the Company.

       

      “Company”
is
        defined in the preamble to this Agreement.

       

      “Current
        Market Value”
means
        the average of the closing bid and ask prices for the Common Stock during
        the
        five business days immediately the

       

      “Demand
        Registration”
is
        defined in Section 2.1.1.

       

      “Demanding
        Holder”
is
        defined in Section 2.1.1.

       

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended, and the rules and regulations
        of the Commission promulgated thereunder, all as the same shall be in effect
        at
        the time.

       

      “Founders
        Registration Rights Agreement”
means
        the Registration Rights Agreement of even date herewith by and among the
        Company
        and the Founders.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Founders”
are
        Christopher R. Thomas, Clyde E. Culp III and John M. Creed.

       

      “Indemnified
        Party”
is
        defined in Section 4.3.

       

      “Indemnifying
        Party”
is
        defined in Section 4.3.

       

      “Investor
        Indemnified Party”
is
        defined in Section 4.1.

       

      “Maximum
        Number of Shares”
is
        defined in Section 2.1.4.

       

      “Notices”
is
        defined in Section 6.3.

       

      “Piggy-Back
        Registration”
is
        defined in Section 2.2.1.

       

      “Register,”
        “Registered”
and
        “Registration”
mean
        a
        registration effected by preparing and filing a registration statement or
        similar document in compliance with the requirements of the Securities Act,
        and
        the applicable rules and regulations promulgated thereunder, and such
        registration statement becoming effective.

       

      “Registrable
        Securities”
mean
        all of the shares of Common Stock and Warrants or Units composed of shares
        of
        Common Stock and Warrants owned or held by the IPO Underwriter as of the
        date
        hereof. Registrable Securities include any warrants, shares of capital stock
        or
        other securities of the Company issued as a dividend or other distribution
        with
        respect to or in exchange for or in replacement of such shares of Common
        Stock.
        As to any particular Registrable Securities, such securities shall cease
        to be
        Registrable Securities when: (a) a Registration Statement with respect to
        the
        sale of such securities shall have become effective under the Securities
        Act and
        such securities shall have been sold, transferred, disposed of or exchanged
        in
        accordance with such Registration Statement; (b) such securities shall have
        been
        otherwise transferred, new certificates for them not bearing a legend
        restricting further transfer shall have been delivered by the Company; (c)
        such
        securities shall have ceased to be outstanding or (d) the Registrable Securities
        are salable under Rule 144(k).

       

      “Registration
        Statement”
means
        a
        registration statement filed by the Company with the Commission in compliance
        with the Securities Act and the rules and regulations promulgated thereunder
        for
        a public offering and sale of Common Stock (other than a registration statement
        on Form S-4 or Form S-8, or their successors, or any registration statement
        covering only securities proposed to be issued in exchange for securities
        or
        assets of another entity).

       

      “Securities
        Act”
means
        the Securities Act of 1933, as amended, and the rules and regulations of
        the
        Commission promulgated thereunder, all as the same shall be in effect at
        the
        time.

       

      “Underwriter”
means
        a
        securities dealer who purchases any Registrable Securities as principal in
        an
        underwritten offering and not as part of such dealer’s market-making
        activities.

       

      
        
          
          

        

        
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      2.
         REGISTRATION
        RIGHTS.

       

      2.1
         DEMAND
        REGISTRATION.

       

      2.1.1
         REQUEST
        FOR REGISTRATION.
        Subject
        to and in accordance with this Agreement, at any time on or after the later
        of
        (1) the date upon which the Unit Purchase Option becomes exercisable as
        therein provided and (2) the first anniversary of the date hereof and prior
        to the fifth anniversary of the date hereof, the holders of at least 50%
        of the
        Registrable Securities held by the IPO Underwriter or its transferees, may
        make
        a written demand (a “Demand Request”) for registration under the Securities Act
        of all or part of their Registrable Securities (a “Demand Registration”). Any
        demand for a Demand Registration shall specify the number of shares of
        Registrable Securities proposed to be sold and the intended method(s) of
        distribution thereof. The Company will notify all other holders of Registrable
        Securities and the Founders (so long as the Founders or their transferees
        shall
        hold Registrable Securities as defined in the Founders Registration Rights
        Agreement) of the demand, and each holder of Registrable Securities who wishes
        to include all or a portion of such holder’s Registrable Securities in the
        Demand Registration (each such holder including shares of Registrable Securities
        in such registration, a “Demanding Holder”) shall so notify the Company in
        writing within fifteen (15) days after the receipt by the holder of the
        notice from the Company. Upon any such request, the Demanding Holders shall
        be
        entitled to have their Registrable Securities included in the Demand
        Registration, subject to Section 2.1.4 and the provisos set forth in
        Section 3.1.1. The Company shall not be obligated to effect more than one
        (1) Demand Registration under this Section 2.1.1 in respect of
        Registrable Securities. In addition, the Company shall not be obligated to
        effect any Demand Registration under this Section 2.1.1 if, within
        20 days of receipt of a written demand for a Demand Registration, the
        Company agrees to purchase the Registrable Securities from the requesting
        Holders, in the case of the Warrants, at a price equal to the difference
        between
        the exercise price of the Warrants and the Current Market Value on the date
        of
        the Demand Request and in the case of the Common Stock, at the Current Market
        Value on the date of the Demand Request.

       

      2.1.2
         EFFECTIVE
        REGISTRATION.
        A
        registration will not count as a Demand Registration until the Registration
        Statement filed with the Commission with respect to such Demand Registration
        covering all of the Registrable Securities specified in the notice received
        pursuant to Section 2.1.1 has been declared effective and the Company has
        complied with all of its obligations under this Agreement with respect thereto;
        PROVIDED, HOWEVER, that if, after such Registration Statement has been declared
        effective, the offering of Registrable Securities pursuant to a Demand
        Registration is interfered with by any stop order or injunction of the
        Commission or any other governmental agency or court, the Registration Statement
        with respect to such Demand Registration will be deemed not to have been
        declared effective, unless and until, (i) such stop order or injunction is
        removed, rescinded or otherwise terminated and (ii) a majority-in-interest
        of the Demanding Holders thereafter elect to continue the offering.

       

      2.1.3
         UNDERWRITTEN
        OFFERING.
        If a
        majority-in-interest of the Demanding Holders so elect and such holders so
        advise the Company as part of their written demand for a Demand Registration,
        the offering of such Registrable Securities pursuant to such Demand Registration
        shall be in the form of an underwritten offering. In such event, the right
        of
        any holder to include its Registrable Securities in such registration shall
        be
        conditioned upon such holder’s participation in such underwriting and the
        inclusion of such holder’s Registrable Securities in the underwriting to the
        extent provided herein. All Demanding Holders proposing to distribute their
        securities through such underwriting shall enter into an underwriting agreement
        in customary form with the Underwriter or Underwriters selected for such
        underwriting by a majority-in-interest of the holders initiating the Demand
        Registration.

       

      
        
          
          

        

        
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      2.1.4
         REDUCTION
        OF OFFERING.
        If the
        managing Underwriter or Underwriters for a Demand Registration that is to
        be an
        underwritten offering advises the Company and the Demanding Holders in writing
        that the dollar amount or number of shares of Registrable Securities which
        the
        Demanding Holders desire to sell, taken together with all other shares of
        Common
        Stock or other securities which the Company desires to sell and the shares
        of
        Common Stock, if any, as to which registration has been requested pursuant
        to
        written contractual piggy-back registration rights held by other shareholders
        of
        the Company who desire to sell, exceeds the maximum dollar amount or maximum
        number of shares that can be sold in such offering without adversely affecting
        the proposed offering price, the timing, the distribution method, or the
        probability of success of such offering (such maximum dollar amount or maximum
        number of shares, as applicable, the “Maximum Number of Shares”), then the
        Company shall include in such registration: (i) first, the Registrable
        Securities as to which Demand Registration has been requested by the Demanding
        Holders and the securities as to which piggy-back registration has been
        requested under Section 2.2 of the Founders Registration Rights Agreement
        has been made (pro rata in accordance with the number of shares of Registrable
        Securities which such Demanding Holder and securities which Founders have
        requested be included in such registration, regardless of the number of shares
        of Registrable Securities held by such Demanding Holder or securities held
        by
        such Founders Demanding Holder) that can be sold without exceeding the Maximum
        Number of Shares; (ii) second, to the extent that the Maximum Number of
        Shares has not been reached under the foregoing clause (i), the shares of
        Common Stock or other securities that the Company desires to sell that can
        be
        sold without exceeding the Maximum Number of Shares; (iii) third, to the
        extent that the Maximum Number of Shares has not been reached under the
        foregoing clauses (i) and (ii), the shares of Common Stock for the account
        of other persons that the Company is obligated to register pursuant to written
        contractual arrangements with such persons and that can be sold without
        exceeding the Maximum Number of Shares; and (v) fourth, to the extent that
        the Maximum Number of Shares have not been reached under the foregoing clauses
        (i), (ii), and (iii), the shares of Common Stock that other shareholders
        desire
        to sell that can be sold without exceeding the Maximum Number of
        Shares.

       

      2.1.5
         WTHDRAWAL.
        If a
        majority-in-interest of the Demanding Holders disapprove of the terms of
        any
        underwriting or are not entitled to include all of their Registrable Securities
        in any offering, such majority-in-interest of the Demanding Holders may elect
        to
        withdraw from such offering by giving written notice to the Company and the
        Underwriter or Underwriters of their request to withdraw prior to the
        effectiveness of the Registration Statement filed with the Commission with
        respect to such Demand Registration. If the majority-in-interest of the
        Demanding Holders withdraws from a proposed offering relating to a Demand
        Registration, then such registration shall not count as a Demand Registration
        provided for in Section 2.1.1.

       

      
        
          
          

        

        
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      2.2
         PIGGY-BACK
        REGISTRATION.

       

      2.2.1
         PIGGY-BACK
        RIGHTS.
        If at
        any time after the first anniversary hereof and prior to the fifth anniversary
        of the date hereof, the Company proposes to file a Registration Statement
        under the Securities Act with respect to an offering of equity securities,
        or
        securities or other obligations exercisable or exchangeable for, or convertible
        into, equity securities, by the Company for its own account or for shareholders
        of the Company for their account (or by the Company and by shareholders of
        the
        Company including, without limitation, pursuant to Section 2.1), other than
        a Registration Statement (i) filed in connection with any employee stock
        option or other benefit plan, (ii) for an exchange offer or offering of
        securities solely to the Company’s existing shareholders, (iii) for an
        offering of debt that is convertible into equity securities of the Company
        or
        (iv) for a dividend reinvestment plan, then the Company shall (x) give
        written notice of such proposed filing to the holders of Registrable Securities
        as soon as practicable but in no event less than ten (10) days before the
        anticipated filing date, which notice shall describe the amount and type
        of
        securities to be included in such offering, the intended method(s) of
        distribution, and the name of the proposed managing Underwriter or Underwriters,
        if any, of the offering, and (y) offer to the holders of Registrable
        Securities in such notice the opportunity to register the sale of such number
        of
        shares of Registrable Securities as such holders may request in writing within
        five (5) days following receipt of such notice (a “Piggy-Back
        Registration”). The Company shall cause such Registrable Securities to be
        included in such registration and shall use commercially reasonable efforts
        to
        cause the managing Underwriter or Underwriters of a proposed underwritten
        offering to permit the Registrable Securities requested to be included in
        a
        Piggy-Back Registration to be included on the same terms and conditions as
        any
        similar securities of the Company and to permit the sale or other disposition
        of
        such Registrable Securities in accordance with the intended method(s) of
        distribution thereof. All holders of Registrable Securities proposing to
        distribute their securities through a Piggy-Back Registration that involves
        an
        Underwriter or Underwriters shall enter into an underwriting agreement in
        customary form with the Underwriter or Underwriters selected for such Piggy-Back
        Registration.

       

      2.2.2
         REDUCTION
        OF OFFERING.
        If the
        managing Underwriter or Underwriters for a Piggy-Back Registration that is
        to be
        an underwritten offering advises the Company and the holders of Registrable
        Securities in writing that the dollar amount or number of shares of Common
        Stock
        which the Company desires to sell, taken together with shares of Common Stock,
        if any, as to which registration has been demanded pursuant to written
        contractual arrangements with persons other than the holders of Registrable
        Securities hereunder, the Registrable Securities as to which registration
        has
        been requested under this Section 2.2, and the shares of Common Stock, if
        any, as to which registration has been requested pursuant to the written
        contractual piggy-back registration rights of other shareholders of the Company,
        exceeds the Maximum Number of Shares, then the Company shall include in any
        such
        registration:

       

      (i)
         If
        the
        registration is undertaken for the Company’s account: (A) first, the shares of
        Common Stock or other securities that the Company desires to sell that can
        be
        sold without exceeding the Maximum Number of Shares; (B) second, to the extent
        that the Maximum Number of Shares has not been reached under the foregoing
        clause (A), the Registrable Securities as to which registration has been
        requested under this Section 2.2 and the securities as to which piggy-back
        registration has been requested under Section 2.2 of the Founders Registration
        Rights Agreement (pro rata in accordance with the number of shares of
        Registrable Securities and securities each holder has actually requested
        to be
        included in such registration, regardless of the number of shares of Common
        Stock with respect to which such persons have the right to request such
        inclusion) that can be sold without exceeding the Maximum Number of Shares;
        and
        (c) to the extent that the Maximum Number of Shares has not been reached
        under
        the foregoing clauses (A) and (B), the shares of Common Stock as to which
        registration has been requested pursuant to written contractual piggy-back
        registration rights of other security holders (pro rata in accordance with
        the
        number of shares such person has actually requested to be included in such
        registration, regardless of the number of shares of Common Stock with respect
        such person has the right to request inclusion).

       

      
        
          
          

        

        
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      (ii) If
        the
        registration is a “demand” registration undertaken at the demand of persons
        other than the holders of Registrable Securities pursuant to written contractual
        arrangements with such persons, (A) first, the shares of Common Stock for
        the
        account of the demanding persons that can be sold without exceeding the Maximum
        Number of Shares; (B) second, to the extent that the Maximum Number of Shares
        has not been reached under the foregoing clause (A), the shares of Common
        Stock
        or other securities that the Company desires to sell that can be sold without
        exceeding the Maximum Number of Shares; and (C) third, to the extent that
        the
        Maximum Number of Shares has not been reached under the foregoing clauses
        (A)
        and (B), the Registrable Securities as to which registration has been requested
        under this Section 2.2 and the securities as to which piggy-back registration
        has been requested under Section 2.2 of the Founders Registration Rights
        Agreement (pro rata in accordance with the number of shares such person has
        actually requested to be included in such registration, regardless of the
        number
        of shares of Common Stock with respect such person has the right to request
        inclusion); and (D) fourth, to the extent that the Maximum Number of Shares
        has
        not been reached under the foregoing clauses (A), (B) and (C), the shares
        of
        Common Stock, if any, as to which registration has been requested pursuant
        to
        written contractual piggy-back registration rights which other shareholders
        desire to sell that can be sold without exceeding the Maximum Number of
        Shares.

       

      2.2.3  WITHDRAWAL.
        Any
        holder of Registrable Securities may elect to withdraw such holder's request
        for
        inclusion of Registrable Securities in any Piggy-Back Registration by giving
        written notice to the Company of such request to withdraw prior to the
        effectiveness of the Registration Statement. The Company may also elect to
        withdraw a registration statement at any time prior to the effectiveness
        of the
        Registration Statement without thereby incurring any liability to the holders
        of
        Registrable Securities. Notwithstanding any such withdrawal, the Company
        shall
        pay all expenses incurred by the holders of Registrable Securities in connection
        with such Piggy-Back Registration as provided in Section 3.3.

       

      3. REGISTRATION
        PROCEDURES.

       

      3.1 FILINGS;
        INFORMATION.
        Whenever the Company is required to effect the registration of any Registrable
        Securities pursuant to Section 2, the Company shall use commercially
        reasonable efforts to effect the registration and sale of such Registrable
        Securities in accordance with the intended method(s) of distribution thereof
        as
        expeditiously as practicable, and in connection with any such
        request:

       

      3.1.1 FILING
        REGISTRATION STATEMENT. The Company shall, as expeditiously as possible and
        in any event within sixty (60) days after receipt of a request for a Demand
        Registration pursuant to Section 2.1, prepare and file with the Commission
        a Registration Statement on any form for which the Company then qualifies
        or
        which counsel for the Company shall deem appropriate and which form shall
        be
        available for the sale of all Registrable Securities to be registered thereunder
        in accordance with the intended method(s) of distribution thereof, and shall
        use
        commercially reasonable efforts to cause such Registration Statement to become
        and remain effective for the period required by Section 3.1.3; PROVIDED,
        HOWEVER, that the Company shall have the right to defer any Demand Registration
        for up to one hundred twenty (120) days, and any Piggy-Back Registration
        for such period as may be applicable to deferment of any demand registration
        to
        which such Piggy-Back Registration relates, in each case if the Company shall
        furnish to the holders a certificate signed by the Chief Executive Officer
        of
        the Company stating that, in the good faith judgment of the Board of Directors
        of the Company, (x) such registration statement would require disclosure of
        a material fact or plan that the Company believes would have a material adverse
        effect on any proposal or plan by the Company to engage in any acquisition,
        merger or other significant transaction or (y) the Company has filed a
        registration statement relating to any of the Company’s securities and the
        Company believes that the filing of the registration statement relating to
        the
        Registrable Securities would materially adversely effect the offering by
        the
        Company or the market for the Company’s securities after such an offering;
        PROVIDED FURTHER, HOWEVER, that the Company shall not have the right to exercise
        the right set forth in the immediately preceding proviso more than twice
        or for
        more than an aggregate of one hundred eighty (180) days in any 365-day
        period in respect of a Demand Registration hereunder.

       

      
        
          
          

        

        
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      3.1.2 COPIES.
        The
        Company shall, prior to filing a Registration Statement or prospectus, or
        any
        amendment or supplement thereto, furnish without charge to the holders of
        Registrable Securities included in such registration, and such holders’ legal
        counsel, copies of such Registration Statement as proposed to be filed, each
        amendment and supplement to such Registration Statement (in each case including
        all exhibits thereto and documents incorporated by reference therein), the
        prospectus included in such Registration Statement (including each preliminary
        prospectus), and such other documents as the holders of Registrable Securities
        included in such registration or legal counsel for any such holders may request
        in order to facilitate the disposition of the Registrable Securities owned
        by
        such holders.

       

      3.1.3 AMENDMENTS
        AND SUPPLEMENTS.
        The
        Company shall prepare and file with the Commission such amendments, including
        post-effective amendments, and supplements to such Registration Statement
        and
        the prospectus used in connection therewith as may be necessary to keep such
        Registration Statement effective and in compliance with the provisions of
        the
        Securities Act until all Registrable Securities and other securities covered
        by
        such Registration Statement have been disposed of in accordance with the
        intended method(s) of distribution set forth in such Registration Statement
        (which period shall not exceed the sum of three hundred sixty-five
        (365) days plus any period during which any such disposition is interfered
        with by any stop order or injunction of the Commission or any governmental
        agency or court) or such securities have been withdrawn.

       

      3.1.4 NOTIFICATION.
        After
        the filing of a Registration Statement, the Company shall promptly, and in
        no
        event more than two (2) business days after such filing, notify the holders
        of Registrable Securities included in such Registration Statement of such
        filing, and shall further notify such holders promptly and confirm such advice
        in writing in all events within two (2) business days of the occurrence of
        any of the following: (i) when such Registration Statement becomes
        effective; (ii) when any post-effective amendment to such Registration
        Statement becomes effective; (iii) the issuance or threatened issuance by
        the Commission of any stop order (and the Company shall take all actions
        required to prevent the entry of such stop order or to remove it if entered);
        and (iv) any request by the Commission for any amendment or supplement to
        such Registration Statement or any prospectus relating thereto or for additional
        information or of the occurrence of an event requiring the preparation of
        a
        supplement or amendment to such prospectus so that, as thereafter delivered
        to
        the purchasers of the securities covered by such Registration Statement,
        such
        prospectus will not contain an untrue statement of a material fact or omit
        to
        state any material fact required to be stated therein or necessary to make
        the
        statements therein not misleading, and promptly make available to the holders
        of
        Registrable Securities included in such Registration Statement any such
        supplement or amendment; except that before filing with the Commission a
        Registration Statement or prospectus or any amendment or supplement thereto,
        including documents incorporated by reference, the Company shall furnish
        to the
        holders of Registrable Securities included in such Registration Statement
        and to
        the legal counsel for any such holders, copies of all such documents proposed
        to
        be filed sufficiently in advance of filing to provide such holders and legal
        counsel with a reasonable opportunity to review such documents and comment
        thereon.

       

      
        
          
          

        

        
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      3.1.5 STATE
        SECURITIES LAWS COMPLIANCE.
        The
        Company shall use commercially reasonable efforts to (i) register or
        qualify the Registrable Securities covered by the Registration Statement
        under
        such securities or “blue sky” laws of such jurisdictions in the United States as
        the holders of Registrable Securities included in such Registration Statement
        (in light of their intended plan of distribution) may request and (ii) take
        such action necessary to cause such Registrable Securities covered by the
        Registration Statement to be registered with or approved by such other
        Governmental Authorities as may be necessary by virtue of the business and
        operations of the Company and do any and all other acts and things that may
        be
        necessary or advisable to enable the holders of Registrable Securities included
        in such Registration Statement to consummate the disposition of such Registrable
        Securities in such jurisdictions; PROVIDED, HOWEVER, that the Company shall
        not
        be required to qualify generally to do business in any jurisdiction where
        it
        would not otherwise be required to qualify but for this Section 3.1.5 or
        subject itself to taxation in any such jurisdiction.

       

      3.1.6 AGREEMENTS
        FOR DISPOSITION.
        The
        Company shall enter into customary agreements (including, if applicable,
        an
        underwriting agreement in customary form) and take such other actions as
        are
        reasonably required in order to expedite or facilitate the disposition of
        such
        Registrable Securities. The representations, warranties and covenants of
        the
        Company in any underwriting agreement which are made to or for the benefit
        of
        any Underwriters, to the extent applicable, shall also be made to and for
        the
        benefit of the holders of Registrable Securities included in such registration
        statement. No holder of Registrable Securities included in such registration
        statement shall be required to make any representations or warranties in
        the
        underwriting agreement except, if applicable, with respect to such holder’s
        organization, good standing, authority, title to Registrable Securities,
        lack of
        conflict of such sale with such holder’s material agreements and organizational
        documents, and with respect to written information relating to such holder
        that
        such holder has furnished in writing expressly for inclusion in such
        Registration Statement.

       

      3.1.7 COOPERATION.
        The
        principal executive officer of the Company, the principal financial officer
        of
        the Company, the principal accounting officer of the Company and all other
        officers and members of the management of the Company shall cooperate fully
        in
        any offering of Registrable Securities hereunder, which cooperation shall
        include, without limitation, the preparation of the Registration Statement
        with
        respect to such offering and all other offering materials and related documents,
        and participation in meetings with Underwriters, attorneys, accountants and
        potential investors.

       

      
        
          
          

        

        
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      3.1.8 RECORDS.
        The
        Company shall make available for inspection by the holders of Registrable
        Securities included in such Registration Statement, any Underwriter
        participating in any disposition pursuant to such registration statement
        and any
        attorney, accountant or other professional retained by any holder of Registrable
        Securities included in such Registration Statement or any Underwriter, all
        financial and other records, pertinent corporate documents and properties
        of the
        Company, as shall be reasonably necessary to enable them to exercise their
        due
        diligence responsibility, and cause the Company’s officers, directors and
        employees to supply all information reasonably requested by any of them in
        connection with such Registration Statement, in all cases, subject to all
        such
        persons’ respective agreements to maintain the confidentiality of all non-public
        information furnished thereto pursuant to this Section .3.1.8.

       

      3.1.9 OPINIONS
        AND COMFORT LETTERS.
        The
        Company shall furnish to each holder of Registrable Securities included in
        any
        Registration Statement a signed counterpart, addressed to such holder, of
        (i) any opinion of counsel to the Company delivered to any Underwriter and
        (ii) any comfort letter from the Company’s independent public accountants
        delivered to any Underwriter.

       

      3.1.10 EARNINGS
        STATEMENT.
        The
        Company shall comply with all applicable rules and regulations of the Commission
        and the Securities Act, and make available to its shareholders, as soon as
        practicable, an earnings statement covering a period of twelve (12) months,
        beginning within three (3) months after the effective date of the
        registration statement, which earnings statement shall satisfy the provisions
        of
        Section 11(a) of the Securities Act and Rule 158
        thereunder.

       

      3.1.11 LISTING.
        The
        Company shall use commercially reasonable efforts to cause all Registrable
        Securities included in any registration to be listed on such exchanges or
        otherwise designated for trading in the same manner as similar securities
        issued
        by the Company are then listed or designated or, if no such similar securities
        are then listed or designated, in a manner satisfactory to the holders of
        a
        majority of the Registrable Securities included in such
        registration.

       

      3.2 OBLIGATION
        TO SUSPEND DISTRIBUTION.
        Upon
        receipt of any notice from the Company of the happening of any event of the
        kind
        described in Section 3.1.4(iv), upon any suspension by the Company, each
        holder of Registrable Securities included in any registration shall immediately
        discontinue disposition of such Registrable Securities pursuant to the
        Registration Statement covering such Registrable Securities until such holder
        receives the supplemented or amended prospectus contemplated by
        Section 3.1.4(iv) or the restriction on the ability of “insiders” to
        transact in the Company’s securities is removed, as applicable, and, if so
        directed by the Company, each such holder will deliver to the Company all
        copies, other than permanent file copies then in such holder’s possession, of
        the most recent prospectus covering such Registrable Securities at the time
        of
        receipt of such notice.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      3.3 REGISTRATION
        EXPENSES.
        The
        Company shall bear all costs and expenses incurred in connection with any
        Demand
        Registration pursuant to Section 2.1 and any Piggy-Back Registration
        pursuant to Section 2.2, and all expenses incurred in performing or
        complying with its other obligations under this Agreement, whether or not
        the
        Registration Statement becomes effective, including, without limitation:
        (i) all registration and filing fees; (ii) fees and expenses of
        compliance with securities or “blue sky” laws (including fees and disbursements
        of counsel in connection with blue sky qualifications of the Registrable
        Securities); (iii) printing expenses; (iv) the Company’s internal
        expenses (including, without limitation, all salaries and expenses of its
        officers and employees); (v) the fees and expenses incurred in connection
        with the listing of the Registrable Securities as required by
        Section 3.1.11; (vi) National Association of Securities
        Dealers, Inc. fees; (vii) fees and disbursements of counsel for the
        Company and fees and expenses for independent certified public accountants
        retained by the Company (including the expenses or costs associated with
        the
        delivery of any opinions or comfort letters requested pursuant to
        Section 3.1.9); (viii) the fees and expenses of any special experts
        retained by the Company in connection with such registration and (ix) the
        fees and expenses (not to exceed $15,000) of one legal counsel selected by
        the
        holders of a majority-in-interest of the Registrable Securities included
        in such
        registration. The Company shall have no obligation to pay any underwriting
        discounts or selling commissions attributable to the Registrable Securities
        being sold by the holders thereof, which underwriting discounts or selling
        commissions shall be borne by such holders. Additionally, in an underwritten
        offering, all selling shareholders and the Company shall bear the expenses
        of
        the underwriter pro rata in proportion to the respective amount of shares
        each
        is selling in such offering.

       

      3.4 INFORMATION.
        The
        holders of Registrable Securities shall provide such information as may
        reasonably be requested by the Company, or the managing Underwriter, if any,
        in
        connection with the preparation of any Registration Statement, including
        amendments and supplements thereto, in order to effect the registration of
        any
        Registrable Securities under the Securities Act pursuant to Section 2 and
        in connection with the Company’s obligation to comply with federal and
        applicable state securities laws.

       

      4. INDEMNIFICATION
        AND CONTRIBUTION.

       

      4.1 INDEMNIFICATION
        BY THE COMPANY.
        The
        Company agrees to indemnify and hold harmless the IPO Underwriter and each
        other
        holder of Registrable Securities, and each of their respective officers,
        employees, affiliates, directors, partners, members, attorneys and agents,
        and
        each person, if any, who controls an IPO Underwriter and each other holder
        of
        Registrable Securities (within the meaning of Section 15 of the Securities
        Act or Section 20 of the Exchange Act) (each, an “Investor Indemnified
        Party”), from and against any expenses, losses, judgments, claims, damages or
        liabilities, whether joint or several, arising out of or based upon any untrue
        statement (or allegedly untrue statement) of a material fact contained in
        any
        Registration Statement under which the sale of such Registrable Securities
        was
        registered under the Securities Act, any preliminary prospectus, final
        prospectus or summary prospectus contained in the Registration Statement,
        or any
        amendment or supplement thereto, or arising out of or based upon any omission
        (or alleged omission) to state a material fact required to be stated therein
        or
        necessary to make the statements therein not misleading, or any violation
        by the
        Company of the Securities Act or any rule or regulation promulgated thereunder
        applicable to the Company and relating to action or inaction required of
        the
        Company in connection with any such registration; and the Company shall promptly
        reimburse the Investor Indemnified Party for any legal and any other expenses
        reasonably incurred by such Investor Indemnified Party in connection with
        investigating and defending any such expense, loss, judgment, claim, damage,
        liability or action; PROVIDED, HOWEVER, that the Company will not be liable
        in
        any such case to the extent that any such expense, loss, claim, damage or
        liability arises out of or is based upon any untrue statement or allegedly
        untrue statement or omission or alleged omission made in such Registration
        Statement, preliminary prospectus, final prospectus, or summary prospectus,
        or
        any such amendment or supplement, in reliance upon and in conformity with
        information furnished to the Company, in writing, by such selling holder
        expressly for use therein.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      4.2
         INDEMNIFICATION
        BY HOLDERS OF REGISTRABLE SECURITIES.
        Each
        selling holder of Registrable Securities will, in the event that any
        registration is being effected under the Securities Act pursuant to this
        Agreement of any Registrable Securities held by such selling holder, indemnify
        and hold harmless the Company, each of its directors and officers and each
        underwriter (if any), and each other person, if any, who controls the Company
        or
        such underwriter within the meaning of the Securities Act, against any losses,
        claims, judgments, damages or liabilities, whether joint or several, insofar
        as
        such losses, claims, judgments, damages or liabilities (or actions in respect
        thereof) arise out of or are based upon any untrue statement or allegedly
        untrue
        statement of a material fact contained in any Registration Statement under
        which
        the sale of such Registrable Securities was registered under the Securities
        Act,
        any preliminary prospectus, final prospectus or summary prospectus contained
        in
        the Registration Statement, or any amendment or supplement thereto, or arise
        out
        of or are based upon any omission or the alleged omission to state a material
        fact required to be stated therein or necessary to make the statement therein
        not misleading, if the statement or omission was made in reliance upon and
        in
        conformity with information furnished in writing to the Company by such selling
        holder expressly for use therein, and shall reimburse the Company, its directors
        and officers, and each such controlling person for any legal or other expenses
        reasonably incurred by any of them in connection with investigation or defending
        any such loss, claim, damage, liability or action. Each selling holder's
        indemnification obligations hereunder shall be several and not joint and
        shall
        be limited to the amount of any net proceeds actually received by such selling
        holder.

       

      4.3
         CONDUCT
        OF INDEMNIFICATION PROCEEDINGS.
        Promptly after receipt by any person of any notice of any loss, claim, damage
        or
        liability or any action in respect of which indemnity may be sought pursuant
        to
        Section 4.1 or 4.2, such person (the “Indemnified Party”) shall, if a claim
        in respect thereof is to be made against any other person for indemnification
        hereunder, notify such other person (the "Indemnifying Party") in writing
        of the
        loss, claim, judgment, damage, liability or action; PROVIDED, HOWEVER, that
        the
        failure by the Indemnified Party to notify the Indemnifying Party shall not
        relieve the Indemnifying Party from any liability which the Indemnifying
        Party
        may have to such Indemnified Party hereunder, except and solely to the extent
        the Indemnifying Party is actually prejudiced by such failure. If the
        Indemnified Party is seeking indemnification with respect to any claim or
        action
        brought against the Indemnified Party, then the Indemnifying Party shall
        be
        entitled to participate in such claim or action, and, to the extent that
        it
        wishes, jointly with all other Indemnifying Parties, to assume control of
        the
        defense thereof with counsel reasonably satisfactory to the Indemnified Party.
        After notice from the Indemnifying Party to the Indemnified Party of its
        election to assume control of the defense of such claim or action, the
        Indemnifying Party shall not be liable to the Indemnified Party for any legal
        or
        other expenses subsequently incurred by the Indemnified Party in connection
        with
        the defense thereof other than reasonable costs of investigation; PROVIDED,
        HOWEVER, that in any action in which both the Indemnified Party and the
        Indemnifying Party are named as defendants, the Indemnified Party shall have
        the
        right to employ separate counsel (but no more than one such separate counsel)
        to
        represent the Indemnified Party and its controlling persons who may be subject
        to liability arising out of any claim in respect of which indemnity may be
        sought by the Indemnified Party against the Indemnifying Party, with the
        fees
        and expenses of such counsel to be paid by such Indemnifying Party if, based
        upon the written opinion of counsel of such Indemnified Party, representation
        of
        both parties by the same counsel would be inappropriate due to actual or
        potential differing interests between them. No Indemnifying Party shall,
        without
        the prior written consent of the Indemnified Party, consent to entry of judgment
        or effect any settlement of any claim or pending or threatened proceeding
        in
        respect of which the Indemnified Party is or could have been a party and
        indemnity could have been sought hereunder by such Indemnified Party, unless
        such judgment or settlement includes an unconditional release of such
        Indemnified Party from all liability arising out of such claim or
        proceeding.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      4.4 CONTRIBUTION.

       

      4.4.1 If
        the
        indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is
        unavailable to any Indemnified Party in respect of any loss, claim, damage,
        liability or action referred to herein, then each such Indemnifying Party,
        in
        lieu of indemnifying such Indemnified Party, shall contribute to the amount
        paid
        or payable by such Indemnified Party as a result of such loss, claim, damage,
        liability or action in such proportion as is appropriate to reflect the relative
        fault of the Indemnified Parties and the Indemnifying Parties in connection
        with
        the actions or omissions which resulted in such loss, claim, damage, liability
        or action, as well as any other relevant equitable considerations. The relative
        fault of any Indemnified Party and any Indemnifying Party shall be determined
        by
        reference to, among other things, whether the untrue or alleged untrue statement
        of a material fact or the omission or alleged omission to state a material
        fact
        relates to information supplied by such Indemnified Party or such Indemnifying
        Party and the parties’ relative intent, knowledge, access to information and
        opportunity to correct or prevent such statement or omission.

       

      4.4.2 The
        parties hereto agree that it would not be just and equitable if contribution
        pursuant to this Section 4.4 were determined by PRO RATA allocation or by
        any
        other method of allocation which does not take account of the equitable
        considerations referred to in the immediately preceding Section.

       

      4.4.3 The
        amount paid or payable by an Indemnified Party as a result of any loss, claim,
        damage, liability or action referred to in the immediately preceding paragraph
        shall be deemed to include, subject to the limitations set forth above, any
        legal or other expenses incurred by such Indemnified Party in connection
        with
        investigating or defending any such action or claim. Notwithstanding the
        provisions of this Section 4.4, no holder of Registrable Securities shall
        be
        required to contribute any amount in excess of the dollar amount of the net
        proceeds (after payment of any underwriting fees, discounts, commissions
        or
        taxes) actually received by such holder from the sale of Registrable Securities
        which gave rise to such contribution obligation. No person guilty of fraudulent
        misrepresentation (within the meaning of Section 11(f) of the Securities
        Act)
        shall be entitled to contribution from any person who was not guilty of such
        fraudulent misrepresentation.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      5. UNDERWRITING
        AND DISTRIBUTION.

       

      5.1 RULE
        144.
        The
        Company covenants that it shall use commercially reasonable efforts to file
        any
        reports required to be filed by it under the Securities Act and the Exchange
        Act
        and to take such further action as the holders of Registrable Securities
        may
        reasonably request, all to the extent required from time to time to enable
        such
        holders to sell Registrable Securities without registration under the Securities
        Act within the limitation of the exemptions provided by Rule 144 under the
        Securities Act, as such Rules may be amended from time to time, or any similar
        Rule or regulation hereafter adopted by the Commission.

       

      6. MISCELLANEOUS.

       

      6.1 OTHER
        REGISTRATION RIGHTS.
        The
        Company represents and warrants that no person, other than the IPO Underwriter
        (and any other holder of Registrable Securities) and the Founders,
        has any
        right to require the Company to register any shares of the Company's capital
        stock for sale or to include shares of the Company's capital stock in any
        registration filed by the Company for the sale of shares of capital stock
        for
        its own account or for the account of any other person.

       

      6.2 ASSIGNMENT;
        NO THIRD PARTY BENEFICIARIES.
        This
        Agreement and the rights, duties and obligations of the Company hereunder
        may
        not be assigned or delegated by the Company in whole or in part. This Agreement
        and the rights, duties and obligations of the holders of Registrable Securities
        hereunder may be freely assigned or delegated by such holder of Registrable
        Securities in conjunction with and to the extent of any transfer of Registrable
        Securities by any such holder. This Agreement and the provisions hereof shall
        be
        binding upon and shall inure to the benefit of each of the parties and their
        respective successors and the permitted assigns of the IPO Underwriter or
        holder
        of Registrable Securities or of any assignee of the Investor or holder of
        Registrable Securities. This Agreement is not intended to confer any rights
        or
        benefits on any persons that are not party hereto other than as expressly
        set
        forth in Article 4 and this Section 6.2.

       

      6.3 NOTICES.
        All
        notices, demands, requests, consents, approvals or other communications
        (collectively, “NOTICES”) required or permitted to be given hereunder or which
        are given with respect to this Agreement shall be in writing and shall be
        personally served, delivered by reputable air courier service with charges
        prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
        addressed as set forth below, or to such other address as such party shall
        have
        specified most recently by written notice. Notice shall be deemed given on
        the
        date of service or transmission if personally served or transmitted by telegram,
        telex or facsimile; PROVIDED, that if such service or transmission is not
        on a
        business day or is after normal business hours, then such notice shall be
        deemed
        given on the next business day. Notice otherwise sent as provided herein
        shall
        be deemed given on the next business day following timely delivery of such
        notice to a reputable air courier service with an order for next-day
        delivery.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      To
        the
        Company:

      

      if
        to the
        Company, to:

      

      Restaurant
        Acquisition Partners, Inc.

      5950
        Hazeltine National Drive, Suite 290

      Orlando,
        Florida 32822

      Attn:
        Christopher R. Thomas, Chief Executive Officer and President

      Tel:
        (407) 240-9190

      Fax:
        (407) 240-9176

      

      With
        a
        copy to:

      

      Pillsbury
        Winthrop Shaw Pittman LLP

      1540
        Broadway

      New
        York,
        New York 10036

      Attn:
        Ronald A. Fleming, Jr., Esq.

      Tel:
        (212) 858-1000

      Fax:
        (212) 298-9931

      

      To
        a
        Founder, to:

      

      Christopher
        R. Thomas

      Restaurant
        Acquisition Partners, Inc.

      5950
        Hazeltine National Drive, Suite 290

      Orlando,
        Florida 32822

      

      Clyde
        E.
        Culp III

      Restaurant
        Acquisition Partners, Inc.

      5950
        Hazeltine National Drive, Suite 290

      Orlando,
        Florida 32822

      

      John
        M.
        Creed

      Restaurant
        Acquisition Partners, Inc.

      5950
        Hazeltine National Drive, Suite 290

      Orlando,
        Florida 32822

      

      To
        Capital Growth Financial, LLC:

      

      Capital
        Growth Financial, LLC

      225
        NE
        Mizner Boulevard, Suite 750

      Boca
        Raton, Florida 33432

      Attn:
        Alan L. Jacobs

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      With
        a
        copy to:

      

      Greenberg
        Traurig LLP

      777
        South
        Flagler Drive, Suite 300 East

      West
        Palm
        Beach, Florida 33401

      Attn:
        Morris C. Brown, Esq.

      Tel:
        (561) 650-7900

      Fax:
        (561) 655-6222

      

      6.4 SEVERABILITY.
        This
        Agreement shall be deemed severable, and the invalidity or unenforceability
        of
        any term or provision hereof shall not affect the validity or enforceability
        of
        this Agreement or of any other term or provision hereof. Furthermore, in
        lieu of
        any such invalid or unenforceable term or provision, the parties hereto intend
        that there shall be added as a part of this Agreement a provision as similar
        in
        terms to such invalid or unenforceable provision as may be possible and be
        valid
        and enforceable.

       

      6.5 COUNTERPARTS.
        This
        Agreement may be executed in multiple counterparts, each of which shall be
        deemed an original, and all of which taken together shall constitute one
        and the
        same instrument.

       

      6.6 ENTIRE
        AGREEMENT.
        This
        Agreement (including all agreements entered into pursuant hereto and all
        certificates and instruments delivered pursuant hereto and thereto) constitute
        the entire agreement of the parties with respect to the subject matter hereof
        and supersede all prior and contemporaneous agreements, representations,
        understandings, negotiations and discussions between the parties, whether
        oral
        or written.

       

      6.7
        MODIFICATIONS
        AND AMENDMENTS.
        No
        amendment, modification or termination of this Agreement shall be binding
        upon
        any party unless executed in writing by such party.

       

      6.8 TITLES
        AND HEADINGS.
        Titles
        and headings of sections of this Agreement are for convenience only and shall
        not affect the construction of any provision of this Agreement.

       

      6.9 WAIVERS
        AND EXTENSIONS.
        Any
        party to this Agreement may waive any right, breach or default which such
        party
        has the right to waive, PROVIDED that such waiver will not be effective against
        the waiving party unless it is in writing, is signed by such party, and
        specifically refers to this Agreement. Waivers may be made in advance or
        after
        the right waived has arisen or the breach or default waived has occurred.
        Any
        waiver may be conditional. No waiver of any breach of any agreement or provision
        herein contained shall be deemed a waiver of any preceding or succeeding
        breach
        thereof nor of any other agreement or provision herein contained. No waiver
        or
        extension of time for performance of any obligations or acts shall be deemed
        a
        waiver or extension of the time for performance of any other obligations
        or
        acts.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      6.10 REMEDIES
        CUMULATIVE.
        In the
        event that the Company fails to observe or perform any covenant or agreement
        to
        be observed or performed under this Agreement, the IPO Underwriter or any
        other
        holder of Registrable Securities may proceed to protect and enforce its rights
        by suit in equity or action at law, whether for specific performance of any
        term
        contained in this Agreement or for an injunction against the breach of any
        such
        term or in aid of the exercise of any power granted in this Agreement or
        to
        enforce any other legal or equitable right, or to take any one or more of
        such
        actions, without being required to post a bond. None of the rights, powers
        or
        remedies conferred under this Agreement shall be mutually exclusive, and
        each
        such right, power or remedy shall be cumulative and in addition to any other
        right, power or remedy, whether conferred by this Agreement or now or hereafter
        available at law, in equity, by statute or otherwise.

       

      6.11 GOVERNING
        LAW.
        This
        Agreement shall be governed by, interpreted under, and construed in accordance
        with the internal laws of the State of New York applicable to agreements
        made
        and to be performed within the State of New York, without giving effect to
        any
        choice-of-law provisions thereof that would compel the application of the
        substantive laws of any other jurisdiction.

       

      6.12 WAIVER
        OF TRIAL BY JURY.
        Each
        party hereby irrevocably and unconditionally waives the right to a trial
        by jury
        in any action, suit, counterclaim or other proceeding (whether based on
        contract, tort or otherwise) arising out of, connected with or relating to
        this
        Agreement, the transactions contemplated hereby, or the actions of the parties
        in the negotiation, administration, performance or enforcement
        hereof.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF,
        the
        parties have caused this Registration Rights Agreement to be executed and
        delivered by their duly authorized representatives as of the date first written
        above.

       

      
        	 	 	 
	 	
                RESTAURANT
                  ACQUISITION PARTNERS, INC.,
                  a
                  Delaware corporation

              
	 
 	 
 	 
 
	
              	By:  	/s/
                Christopher R. Thomas
	 	
                

                Name:
                  Christopher R. Thomas

              
	 	
                Title:
                  Chief Executive Officer and
                  President

              

      

      

      
        	 	 	 
	 	
                CAPITAL
                  GROWTH FINANCIAL, LLC

              
	 
 	 
 	 
 
	 	By:  	
                /s/
                  Alan L.
                  Jacobs                                    

              
	 	
                

                Name:
                  Alan L. Jacobs

              
	 	
                Title:
                  Chairman/CEO

              

      

       

      
        [Signature
          Page to Registration Rights Agreement with Underwriter]Exhibit
      4.1

     

    NaturalNano,
      Inc.

    2007
      Incentive 

     

    Stock
      Plan

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
      OF CONTENTS

    

    
      	 	 	Page
	 	 	 
	
              Article
                1.

            	
              Establishment,
                Objectives, and Duration

            	
              1

            
	 	 	 
	
              Article
                2.

            	
              Definitions

            	
              1

            
	 	 	 
	
              Article
                3.

            	
              Administration

            	
              4

            
	 	 	 
	
              Article
                4.

            	
              Shares
                Subject to the Plan and Maximum Awards

            	
              5

            
	 	 	 
	
              Article
                5.

            	
              Eligibility
                and Participation

            	
              6

            
	 	 	 
	
              Article
                6.

            	
              Stock
                Options

            	
              7

            
	 	 	 
	
              Article
                7.

            	
              Stock
                Appreciation Rights

            	
              9

            
	 	 	 
	
              Article
                8.

            	
              Restricted
                Stock

            	
              10

            
	 	 	 
	
              Article
                9.

            	
              Performance
                Units and Performance Shares

            	
              11

            
	 	 	 
	
              Article
                10.

            	
              Performance
                Measures

            	
              12

            
	 	 	 
	
              Article
                11.

            	
              Rights
                of Participants

            	
              12

            
	 	 	 
	
              Article
                12.

            	
              Termination
                of Employment/Directorship

            	
              13

            
	 	 	 
	
              Article
                13.

            	
              Change
                in Control

            	
              13

            
	 	 	 
	
              Article
                14.

            	
              Amendment,
                Modification, and Termination

            	
              14

            
	 	 	 
	
              Article
                15.

            	
              Withholding

            	
              14

            
	 	 	 
	
              Article
                16.

            	
              Successors

            	
              14

            
	 	 	 
	
              Article
                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 (10th)
      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.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    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 be 1,500,000.

            

    

     

    
      	 	
              (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.

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    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.

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    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.

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    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.

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    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;

      

    

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    (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.
              Fleischer 
	 	
              
President 

    

    

    

    Date
      of
      Shareholder Approval: _______________

    
      
         

      

      
        -16-

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