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EXHIBIT 10.1

PAYOFF AGREEMENT

THIS PAYOFFAGREEMENT (the “Agreement”) is dated as of June 26, 2014 among the parties identified on Schedule A (each a “Holder” and collectively the “Holders”), and NaturalNano, Inc., a Nevada corporation (together with its wholly owned subsidiary, NaturalNano Research, Inc., the “Company”).

WHEREAS, the Holdersare presently the holders of: (i) outstanding notes and debentures issued by the Company, including all accrued but unpaid interest thereon as of the date hereof, including, but not limited to, those set forth on Schedule A hereto (collectively, the “Notes”); and (ii) 2,587,674 shares of Series C Preferred Stock issued by the Company (the “Preferred Stock” and, collectively with the Notes, the “Securities”) as set forth on Schedule A hereto;

WHEREAS, the Company and the Holders have agreed that the Holders will surrender the Notes to the Company in consideration for a one time aggregate payment of Three Hundred Thousand Dollars ($300,000) in respect of the Notes (the “Payoff Amount”);

WHEREAS, in connection with the payoff of the Notes, the Holders have agreed to surrender the Preferred Stock for cancellation to the Company for no consideration;

WHEREAS, effective upon the consummation of the transactions contemplated hereby, the Company will have no obligation to the Holders pursuant to the terms of the Securities, including any amounts due and payable under the Notes, whether or not past due,pursuant to the terms set forth in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Holders and the Company agree as follows:

ARTICLE I
PURCHASE AND SALE

1. The Closing

(a) The Closing. Subject to the terms and conditions set forth in this Agreement, and as set forth in more detail below, the Holders shall deliver the Notes to the Company in consideration for the Payoff Amount, and shall deem the Notes to be paid in full. Together with the Notes, the Holders shall surrender the Preferred Stock to the Company for cancellation and the Holders will have no rights as holders of the Preferred Stock or any rights pursuant to the Amended and Restated Certificate of Designation of Rights, Preferences, Designations, Qualifications and Limitations of the Series C Preferred Stock, filed with the Secretary of State of the State of Nevada on September 3, 2009. The closing of the purchase and sale of the Securities (the “Closing”) shall take place at such location and as such time as the Holders and the Company shall determine, but in any event prior to June 27, 2014. The date of the Closing is hereinafter referred to as the “Closing Date.”The Company has agreed to deliver the Payoff Amount on the date of execution hereof; in the event the Payoff Amount is not received by the close of business on June 27, 2014, this Agreement shall be null and void and of no further force and effect.

(b) In connection with the Closing, the parties shall deliver or shall cause to be delivered the following:

	 
	
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(A) within 7 days after the closing, the Holders shall deliver the Securities to the Company, together with stock powers for the Preferred Stock executed in blank and, as applicable, affidavits of lost Securities in forms reasonably satisfactory to the Company; and

(B) upon execution of this Agreement, the Company will deliver to Holders the Payoff Amount in United States dollars in immediately available funds by wire transfer to Holders’ counsel pursuant to the wire instructions on Schedule B. The Company acknowledges and agrees that Holders’ counsel shall be permitted to distribute such funds to the Holders pursuant to written instructions of the Holders.

 ARTICLE II
REPRESENTATIONS AND WARRANTIES

2.1 Representations and Warranties of the Holders. Each Holder, for itself only, hereby makes the following representations and warranties to the Company:

(a) Such Holder has full power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by such Holder and constitutes the legal, valid and binding obligation of such Holder, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws from time to time in effect that affect creditors’ rights generally, and by legal and equitable limitations on the availability of specific remedies.

(b) The execution, delivery and performance by such Holder of this Agreement and consummation by such Holder of the transactions contemplated hereby do not and will not: (i) violate the organizational documents of such Holder, (ii) violate any decree or judgment of any court or other governmental authority which is, to such Holder’s knowledge, applicable to or binding on suchHolder; (iii) violate any provision of any federal or state statute, rule or regulation which is, to such Holder’s knowledge, applicable to suchHolder; or (iv) assuming the truthfulness of the Company’s representations and warranties set forth in Section 2.2(b) hereof, violate any contract to which suchHolder or any of its assets or properties are bound, or conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which suchHolder is a party. Assuming the truthfulness of the Company’s representations and warranties set forth in Section 2.2(b) hereof, no consent or approval of, or filing with, any governmental authority or other person not a party hereto is required for the execution, delivery and performance by such Holder of this Agreement or the consummation of the transaction.

(c) Such Holder is the sole record and beneficial owner of its portion of the Securities, free and clear of any encumbrances created by or through such Holder. The Securities, as set forth on Schedule A hereto, are the only securities of the Company held by such Holder, other than Common Stock of the Company currently held or beneficially owned by the Holders (the “Common Stock”).

(d) There are no outstanding rights, options, subscriptions or other agreements or commitments obligating such Holder with respect to the Securities, other than any agreements to which the Company is party.
 

	 
	
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(e) Such Holder has taken no action that would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments relating to this Agreement or the transactions contemplated hereby payable by any person other than such Holder.

 

(f) No proceedings to which such Holder is a party relating to the Securities are pending or, to the knowledge of such Holder, threatened before any court, arbitrator or administrative or governmental body that would adversely affect the Holder’s right to surrender the Securitiesto the Company.

(g) Effective upon Closing (and receipt of the Payoff Amount by Holders’ counsel), the Holder forever releases and discharges the Company, the Company’s executors, administrators, parent company, holding company, subsidiaries, successors, predecessors, officers, directors, principals, agents, partners, members, shareholders, control persons, past and present employees, insurers, and assigns (collectively, the “Company Releasees”) from all actions, causes of action, suits, debts, dues, sums of money, financial obligations, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law, admiralty or equity, against the Company Releasees that the Holder or its heirs, executors, administrators, successors and assigns ever had, now have or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever, whether or not known or unknown, from the beginning of the world to the day of the date of this Release solely arising from or related to the Securities. The Holder represents, agrees and confirms that the Payoff Amount will be deemed full satisfaction of all obligations the Company will or may herein after have to the Holder solely relating to the Securities, including any amounts past due under the Notes, whether or not such Notes are listed on Schedule A hereto and the Company shall have no further liabilities or obligations to the Holder (except as may arise under this Agreement or in connection with the Common Stock).

 

(h) Upon receipt of the Payoff Amount by Holders’ counsel, such Holder authorizes the Company or its designees to file any UCC-3 financing statement amendments or any other release of termination documentation required (including any filings with the USPTO) to terminate any security interest in the Company in favor of such Holder, including its intellectual property, held by the Holders, it being understood that the Company is obligated to receive the consent of any other lender, including Longview Special Finance, Inc. prior to any such termination of a security interest in favor of such other lenders and take all necessary steps to preserve such security interests and the perfection thereof.

2.2 Representations and Warranties of the Company. Company hereby represents, warrants and agrees as of the date hereof:

(a) Company has full power and authority to enter into this Agreement and to consummate the transaction. This Agreement has been duly and validly executed and delivered by Company and constitutes the legal, valid and binding obligation of Company, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in effect that affect the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies.

(b) The execution, delivery and performance by Company of this Agreement and consummation by Company of the transaction do not and will not: (i) violate the organizational documents of the Company, (ii) violate any decree or judgment of any court or other governmental authority applicable to or binding on Company; (iii) violate any provision of any federal or state statute, rule or regulation which is, to Company’s knowledge, applicable to the Company; or (iv) violate any contract to which the Company or any of its assets or properties are bound, or conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party. No consent or approval of, or filing with, any governmental authority or other person not a party hereto is required for the execution, delivery and performance by Company of this Agreement or the consummation of the transaction. The Company shall take all steps necessary to disclose the contents of this Agreement (including the “leak out” provisions requested by the Company below) pursuant to applicable securities laws.

	 
	
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(c) The Company has taken no action that would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments relating to this Agreement or the transactions contemplated hereby payable by any person other than the Company.

(d) No proceedings to which the Company is a party relating to the Securities are pending or, to the knowledge of the Company, threatened before any court, arbitrator or administrative or governmental body that would adversely affect the Holders’ right to surrender the Securities to the Company.

(e) Effective upon Closing and delivery of the Securities as contemplated hereby, the Company forever releases and discharges each Holder, each Holder’s, executors, administrators, parent company, holding company, subsidiaries, successors, predecessors, officers, directors, principals, agents, partners, members, shareholders, control persons, past and present employees, insurers, and assigns (collectively, the “Holder Releasees”) from all actions, causes of action, suits, debts, dues, sums of money, financial obligations, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law, admiralty or equity, against any Holder Releasees that the Company or its heirs, executors, administrators, successors and assigns ever had, now have or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever, whether or not known or unknown, from the beginning of the world to the day of the date of this Release, solely arising from or relating to the Securities.The Company represents, agrees and confirms that the Holders have no present or future obligations to the Company, including any obligation to advance any additional funds, and the Holders shall have no further liabilities or obligations to the Company (except as may arise under this Agreement or in connection with the Common Stock).

ARTICLE III
MISCELLANEOUS

3.1  “Leak Out”. The Company has informed the Holders that it may be seeking additional funding, and that the requested “leak out” provisions set forth herein will benefit the Company and its shareholders generally by improving the Company’s prospects of obtaining such funding. The Company has further informed the Holders that it anticipates effecting a reverse split of its Common Stock in a range of not less than 100:1 and not greater than 800:1, with such ratio to be determined at the sole discretion of the Company’s Board of Directors (the “Reverse Split”). In consideration of the foregoing, and effective upon the Closing and the receipt of the Payoff Amount by Holders’ counsel hereunder, for a period of time beginning on the date of such Closing and ending 365 days thereafter, the Holders jointly and severally agree to not, directly or indirectly, sell, convey, assign, pledge or otherwise transfer any shares of Common Stock currently owned by the Holders except that, following the earlier of (i) the date that is 60 days after the Closing Date and (ii) the effectuation of the Reverse Split, the Holders may sell such aggregate number of shares of Common Stock per week as shall not exceed 25,000 shares (giving effect to an assumed post Reverse Split ratio of 200:1)(or such other amount as may be equitably adjusted to reflect the actual split ratio if different from 200:1 or the non-occurrence of the Reverse Split); provided, that, nothing herein shall prevent a Holder from conveying or otherwise transferring the Common Stock to an affiliate of such Holder if such affiliate confirms, in writing, to the Company its obligations to comply with the restrictions set forth herein. The Holders agree to the delivery of the Company’s transfer agent stop-transfer instructions reasonably necessary to prevent transfers of the Common Stock except as in compliance with the restrictions set forth herein.

	 
	
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3.2 Entire Agreement; Amendments. The Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

3.3 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Holders andCompanyor, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

3.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. No party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other parties.

3.5 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person (except as set forth in Sections 2.1(g) and 2.2(e)).

3.6 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York County, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery). Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of the documents contemplated herein, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

3.7 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing.

3.8 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof.

3.9 Severability. In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affecting or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Payoff Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

HOLDERS

	
Platinum Long Term Growth IV, LLC

	
 

	
Merit Consulting, LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
By:

	
Its: 

	
 

	
Its:

COMPANY

 

NaturalNano, Inc.                     

_________________________________
By:
Its:

NaturalNano Research, Inc.

_________________________________
By:
Its:

	 
	
6EXHIBIT 10.2

THIS NOTE AND THE SHARES OF CAPITAL STOCK ISSUABLE UPON ANY CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED TO ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER (A) A REGISTRATION STATEMENT WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES ACT, OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.

NATURALNANO, INC.

8% CONVERTIBLE PROMISSORY NOTE

	
$[___]

	
Original Issuance Date:[___], 2014

 

NATURALNANO, INC., a Nevada corporation (the “Company”), for value received, hereby promises to pay to [___]or its assigns (the “Holder”), the principal amount of [__] Dollars ($____) (the “Principal Amount”), together with interest (computed on the basis of a 365-day year for the actual number of days elapsed) from the date hereof on the unpaid balance of such Principal Amount from time to time outstanding at the rate of eight percent (8%) per annum (“Interest”) until paid in full or converted as provided herein.

1. Repayment of the Note. The Principal Amount outstanding hereunder shall be payable in cash on [__], 2014(the “Maturity Date”). The entire Principal Amount and all accrued and unpaid Interest shall be due and payable on the earlier of (1) the Maturity Date and (2) the occurrence of an Event of Default (as defined below).

2. Prepayment of the Note. The Company may prepay any outstanding amounts owing under this Note, in whole or in part, at any time prior to the Maturity Date, subject to conversions by the Holder, in accordance with Section 3 of this Note.

 3. Conversion.

(a) Optional Conversion. At any time or from time to time and prior to payment in full of the entire Principal Amount, the Holder shall have the right, at the Holder’s option, to convert the Principal Amount and accrued Interest thereon, in whole or in part (the “Conversion Amount”), into shares of common stock, par value $0.001 per share (the “Common Stock”) of the Company. The number of shares of Common Stock to be issued upon a conversion hereunder shall be determined by dividing the Conversion Amount by $0.001.

(b) Conversion Mechanics. In order to convert this Note into Common Stock, the Holder shall give written notice to the Company at its principal corporate office or the notice address provided in this Note (which notice, notwithstanding anything herein to the contrary, may be given via facsimile, email, or other means in the discretion of the Holder) pursuant to the forms attached hereto as Exhibit A (the “Conversion Notice”) of the election to convert the same pursuant to this section (the date on which a Conversion Notice is given, a “Conversion Date”). Such Conversion Notice shall state the Conversion Amount and the number of shares of Common Stock to which the Holder is entitled pursuant to the Conversion Notice (the “Conversion Shares”). The Company shall immediately, but in no event later than three (3) trading days after receipt of a Conversion Notice (the “Required Delivery Date”), deliver the Conversion Shares to the Holder.

	 
	
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(c) No Fractional Shares. No fractional Conversion Shares shall be issued by the Company. In lieu thereof, the shares of Common Stock otherwise issuable shall be rounded up to the nearest whole Conversion Share.

(d) Holder’s Conversion Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, pursuant to Section 3 or otherwise, to the extent that after giving effect to such issuance after conversion as set forth on the applicable Conversion Notice, the Holder (together with the Holder’s affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion of the remaining, nonconverted portion of this Note beneficially owned by the Holder or any of its affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents (as defined below)) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 3(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 3(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Conversion Notice shall be deemed to be the Holder’s determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any affiliates) and of which portion of this Note is convertible, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 3(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note. The Holder, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions of this Section 3(d). The Holder may, at any time, decrease the Beneficial Ownership Limitation, effective immediately. Any increase will not be effective until the 61stday after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.

	 
	
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(e) Adjustments for Issuance of Additional Securities. In the event that the Company shall, at any time, from time to time, issue or sell any additional shares of Common or pursuant to Common Stock Equivalents (hereafter defined) (“Additional Shares of Common Stock”), at a price per share less than the Conversion Price then in effect or without consideration, then the Conversion Price upon each such issuance shall be reduced to a price equal to the consideration per share paid for such Additional Shares of Common Stock. The provisions of this Section 3(e) shall apply if (a) the Company, at any time after the Issuance Date, shall issue any securities convertible into or exchangeable for, directly or indirectly, Common Stock (“Convertible Securities”), or (b) any rights or warrants or options to purchase any such Common Stock or Convertible Securities (collectively, the “Common Stock Equivalents”) shall be issued or sold. If the price per share for which Additional Shares of Common Stock may be issuable pursuant to any such Common Stock Equivalent shall be less than the applicable Conversion Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the applicable Conversion Price in effect at the time of such amendment or adjustment, then the applicable Conversion Price upon each such issuance or amendment shall be adjusted as provided in the first sentence of this Section 3(e). Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 3(e) with respect to an Excepted Issuance. “Excepted Issuance” means (i) securities issued as full or partial consideration in connection with a strategic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other entity which holders of such securities or debt are not at any time granted registration rights equal to or greater than those granted to the Holder, (ii) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not primarily for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights equal to or greater than those granted to the Holder, (iii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to plans that have been approved by a majority of the stockholders and a majority of the independent members of the board of directors of the Company or in existence as such plans are constituted on the original issuance date of this Note, (iv) the Company’s issuance of securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the original issuance date of this Note on the terms then in effect and (v) any and all securities required to be assumed by the Company by the terms thereof as a result of any of the foregoing even if issued by a predecessor acquired in connection with a business combination, merger or share exchange.

(f)  Other Adjustments. If the Company shall at any time or from time to time after the original issuance date of this Note, effect a stock split of the outstanding Common Stock, the applicable Conversion Price in effect immediately prior to the stock split shall be proportionately decreased. If the Company shall at any time or from time to time after the original issuance date of this Note, combine the outstanding shares of Common Stock, the applicable Conversion Price in effect immediately prior to the combination shall be proportionately increased. Any adjustments under this Section 3(f) shall be effective at the close of business on the date the stock split or combination occurs. If the Company shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the applicable Conversion Price in effect immediately prior to such event shall be decreased as of the time of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying, the applicable Conversion Price then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; and

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

If the Company shall at any time or from time to time after the original issuance date of this Note, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in other than shares of Common Stock, then, and in each event, an appropriate revision to the applicable Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the holders of this Note shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the number of securities of the Company which they would have received had this Note been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities (together with any distributions payable thereon during such period), giving application to all adjustments called for during such period under this Section 3(f) with respect to the rights of the Holder; provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.

	 
	
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If at any time or from time to time after the original issuance date of this Note there shall be a capital reorganization of the Company (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in this Section 3(f), or a reclassification, exchange or substitution of shares, or a merger or consolidation of the Company with or into another person where the holders of outstanding voting securities prior to such merger or consolidation do not own over fifty percent (50%) of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or the sale of all or substantially all of the Company’s properties or assets to any other person (an “Organic Change”), then as a part of such Organic Change, an appropriate revision to the Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the Holder shall have the right thereafter to convert such Note into the kind and amount of shares of stock and other securities or property of the Company or any successor corporation resulting from Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3(f) with respect to the rights of the Holder after the Organic Change to the end that the provisions of this Section 3(f) (including any adjustment in the applicable Conversion Price then in effect and the number of shares of stock or other securities deliverable upon conversion of this Note) shall be applied after that event in as nearly an equivalent manner as may be practicable.

Other Events. If any event occurs of the type contemplated by the provisions of this Section 3(f) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights or phantom stock rights), then the Company’s Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 3(f) will increase the Conversion Price as otherwise determined pursuant to this Section 3.

(g)  Buy-In. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit via DWAC or transmit to the Holder a certificate or certificates representing the shares of Common Stock issuable upon conversion of this Note on or before the Required Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the shares of Common Stock issuable upon conversion of this Note which the Holder anticipated receiving upon such conversion (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Common Stock issuable upon conversion of this Note that the Company was required to deliver to the Holder in connection with the conversion at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Note and equivalent number of shares of Common Stock for which such conversion was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its conversion and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

4. Termination of Rights Under this Note. This Note shall no longer be deemed to be outstanding, and all rights with respect to this Note shall immediately cease and terminate, upon receipt by the Holder of (i) the Principal Amount outstanding and all accrued and unpaid Interest thereon, on the Maturity Date or (ii) the conversion of the entire Principal Amount and Interest then due hereunder.

	 
	
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5. Taxes or other Issuance Charges. The Company shall pay any and all taxes or other expenses that may be payable in respect of any issuance or delivery of the Conversion Shares.

6. Event of Default. (a) Each of the following events, individually, shall constitute an “Event of Default”:

(i) the Company shall fail to pay any amount under the Note when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(ii) the Company shall fail to pay any accrued but unpaid interest when and as the same shall become due and payable;

(iii) any representation or warranty made by or on behalf of the Company in or in connection with the issuance of this Note, or in any report, certificate or other document furnished pursuant to or in connection with the issuance of this Note, shall prove to have been incorrect in any material respect when made or deemed made or shall be breached;

(iv) the Company shall fail to observe or perform any covenant, condition or agreement contained in this Note (other than those specified in clause (i), (ii), and (iii) of this Section 6 and such failure shall continue unremedied for a period of ten (10) days after notice thereof from Holder to the Company;

(v) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Company or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for ninety (90) days or an order or decree approving or ordering any of the foregoing shall be entered;

(vi)  the Company shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (v) of this Section 6, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(vii) the Company shall be unable, admit in writing its inability, or fail generally, to pay its debts as they become due;

(viii) one or more final judgments for the payment of money in an aggregate amount in excess of $25,000 shall be rendered against the Company and the same shall remain undischarged for a period of twenty (20) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Company to enforce any such judgment;

(ix) any default by the Company under, or the occurrence of any event of default as defined in, any other indebtedness owed by the Company;

 (x) any event, transaction, action or omission of or involving the Company shall occur which Holder reasonably believes will result in a material adverse effect on the Company’s business and operations;

(xi) this Note shall cease to be, or shall be asserted by the Company or other obligor thereunder not to be, in full force and effect

	 
	
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(b) Remedies. Upon the occurrence of an Event of Default, and in every such event (other than an event with respect to the Company described in clauses (v), (vi) or (vii) of Section 6(a), at any time during the continuance of such event, Holder may, at its sole election, by notice to the Company, declare all amounts under the Note then outstanding to be due and payable in whole (or in part, in which case any amounts under the Note not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the outstanding amount under the Note so declared to be due and payable, together with all fees and other payment obligations of the Company accrued but unpaid under the Note, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company, and in case of any event with respect to the Company described in clauses (v), (vi) or (vii) of Section 6(a), amounts under the Note then outstanding, together with all fees and other payment obligations of the Company accrued but unpaid under the Note, shall automatically become due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Company.

7. Non-Waiver. The failure of the Holder to enforce or exercise any right or remedy provided in this Note or at law or in equity upon any default or breach shall not be construed as waiving the rights to enforce or exercise such or any other right or remedy at any later date. No exercise of the rights and powers granted in or held pursuant to this Note by the Holder, and no delays or omission in the exercise of such rights and powers shall be held to exhaust the same or be construed as a waiver thereof, and every such right and power may be exercised at any time and from time to time.

8. Waiver by the Company. The Company hereby waives presentment, protest, notice of protest, notice of nonpayment, notice of dishonor and any and all other notices or demands relative to this Note, except as specifically provided herein.

9. Usury Savings Clause. The Company and the Holder intend to comply at all times with applicable usury laws. If at any time such laws would render usurious any amounts due under this Note under applicable law, then it is the Company’s and Holder’s express intention that the Company not be required to pay Interest on this Note at a rate in excess of the maximum lawful rate, that the provisions of this Section 9 shall control over all other provisions of this Note which may be in apparent conflict hereunder, that such excess amount shall be immediately credited to the balance of the Principal Amount of this Note, and the provisions hereof shall immediately be reformed and the amounts thereafter decreased, so as to comply with the then applicable usury law, but so as to permit the recovery of the fullest amount otherwise due under this Note.

10. Holder Not a Stockholder. The Holder shall not have, solely on account of such status as a holder of this Note, any rights of a stockholder of the Company, either at law or in equity, or any right to any notice of meetings of stockholders or of any other proceedings of the Company until such time as this Note has been converted, at which time the Holder shall be deemed to be the holder of record of the Conversion Shares, as applicable, notwithstanding that the transfer books of the Company shall then be closed or certificates representing such Conversion Shares shall not then have been actually delivered to the Holder.

11. Miscellaneous.

(a) Use of Proceeds. The Company covenants to use the proceeds from the sale of this Note for the payment and full satisfaction of the Company’s obligations under certain outstanding indebtedness of the Company to be approved by the Holder.

(b) Governing Law; Venue. This Note shall be enforced, governed and construed in all respects in accordance with the laws of the State of New York as such laws are applied by the New York courts to contracts solely performed within its borders, except with respect to the conflicts of law provisions thereof. Any legal suit, action or proceeding arising out of or relating to this Note or the transactions contemplated hereby shall be instituted exclusively in New York County, New York. The parties hereto hereby: (i) waive any objection which they may now have or hereafter have to the venue of any such suit, action or proceeding, and (ii) irrevocably consent to the jurisdiction of the federal and state courts located in New York County, New York in any such suit, action or proceeding. The parties further agree to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the federal and state courts located in New York County, New York. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

	 
	
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(c) Successors and Assigns. This Note and the obligations hereunder shall inure to the benefit of and be binding upon the respective successors and assigns of the parties; provided, however, that the Holder may assign all or any portion of this Note without the consent of the Company.

(d) Notices.Any notice or other document required or permitted to be given or delivered to the parties hereto shall be in writing and sent: (i) by fax, if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail, with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid), to the following addresses:

(i) If to the Company, at:
763 Linden Ave.
Rochester, New York 14625

(ii) If to a Holder, at:

(e) Amendment; Waiver. No modification, amendment or waiver of any provision of this Note shall be effective unless in writing and approved by the Company and the Holder.

(f) Invalidity. Any provision of this Note which may be determined by a court of competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invaliding the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(g) Section and Paragraph Headings. The section and paragraph headings contained herein are for convenience only and shall not be construed as part of this Note.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOLLOWS]

	 
	
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IN WITNESS WHEREOF, this Note has been executed and delivered on the date first above written by the duly authorized representative of the Company.

 

	 	NATURALNANO, INC.	 
	 	 	 	 
		By		 
	 	Name:	James Wemett	 
	 	Title:	President	 

 

	 
	
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EXHIBIT A

 

	
Date:_______________________________

	
 

	
 

	
 

	
NATURALNANO, INC. 

	
 

	
 

	
 

	
 

	
 

	
Attn:

	
 

CONVERSION NOTICE

The above-captioned Holder hereby gives notice to NaturalNano, Inc., a Nevada corporation (the “Company”), pursuant to that certain Convertible Promissory Note made by the Company in favor of the Holder in the principal amount of $[___]by the Company (the “Note”); that the Holder elects to convert the portion of the Note balance set forth below into fully paid and non-assessable shares of Common Stock of the Company as of the date of conversion specified below.

 

	
A.

	
Date of conversion:

	
 

	
 

	
B.

	
Conversion #:

	
 

	
 

	
C.

	
Conversion Amount:

	
 

	
 

	
D.

	
Conversion Price:  

	
 

	
 

	
E.

	
Conversion Shares:

	
 

	
 

	
F.

	
Remaining Note Balance:

	
 

	
 

 

Please transfer the Conversion Shares to the undersigned at:

	
Address:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Sincerely,

	
 

	
 

	
 

		
 

	
By:

	
 

	
 

	
Name:

	
 

	
 

 

	 
	
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