Document:

Exhibit
      4.1

    

    

    NON-QUALIFIED
      STOCK OPTION AGREEMENT

    

    This
      Non-Qualified Stock Option Agreement (the “Agreement”) is made as of July 24,
      2006 (the “Date of Grant”) between NaturalNano, Inc., a Nevada corporation (the
“Company”), and Cathy A. Fleischer, an employee of the Company or one of its
      Subsidiaries (the “Option Holder”), to record the granting of a non-qualified
      stock option. This Agreement and the option granted hereby are not being made
      pursuant to the Company’s 2005 Stock Option Plan (the “Plan”); however, to the
      extent not inconsistent with the terms of this Agreement, the Plan’s terms are
      hereby incorporated in this Agreement by reference. Terms used herein that
      are
      defined in the Plan shall have the meanings ascribed to them in the Plan. If
      there is any inconsistency between the terms of this Agreement and the terms
      of
      the Plan, the terms of this Agreement shall, for purposes of this Agreement,
      supersede and replace the conflicting terms in the Plan.

    

    
      	
               

            	
              1.

            	
              Grant
                of Option.
                The Company hereby grants to the Option Holder, subject to and pursuant
                to
                the terms and conditions of this Agreement, the option to purchase
                from
                the Company an aggregate of 40,000 shares of common stock of the
                Company
                (the “Shares”) at an exercise price of $0.10 per Share. The parties intend
                this Option to be treated as a non-qualified stock option under the
                Code.

            

    

    

    
      	
               

            	
              2.

            	
              Expiration
                Date.
                This Option shall expire on July 24, 2016 (the “Expiration Date”) unless
                this Option expires earlier as provided in Sections 5, 6 or 7 of
                this
                Agreement.

            

    

    

    
      	
               

            	
              3.

            	
              Exercisability.
                No Shares may be purchased under this Option and this Option shall
                not be
                exercisable until the Option has vested pursuant to the vesting schedule.
                Under the vesting schedule, a portion of this Option representing
                the
                right to purchase one third of the Shares shall vest on the first
                anniversary of the Date of Grant, the right to purchase an additional
                one-third of the Shares shall vest on the second anniversary of the
                Date
                of Grant, and the right to purchase the remaining Shares shall vest
                on the
                third anniversary of the Date of Grant, provided that the Option
                Holder
                remains in continuous employment with the Company or its Subsidiaries
                until such anniversary dates. If the Option Holder’s employment is
                terminated, Section 5 shall govern the Option Holder’s rights under
                this Option. Notwithstanding the foregoing or any other provision
                of the
                Plan or this Agreement, this Option may not be exercised after the
                Expiration Date.

            

    

    

    
      	
               

            	
              4.

            	
              Method
                of Exercising Options.
                The Option may be exercised from time to time by written or electronic
                notice (in the form prescribed by the Company) delivered to and received
                by the Company, which notice shall be signed or electronically confirmed
                by the Option Holder and shall state the election to exercise the
                Option
                and the number of whole Shares with respect to which the Option is
                being
                exercised. Such notice must be accompanied by a check payable to
                the
                Company or, subject to the Committee’s approval, such other consideration
                as the Committee may determine (including cashless exercise), in
                payment
                of the full Option Price for the number of Shares purchased. As soon
                as
                practicable after it receives such notice and payment, as applicable,
                and
                following receipt from the Option Holder of payment for any taxes
                which
                the Company is required by law to withhold by reason of such exercise,
                the
                Company will deliver to the Option Holder a certificate or certificates
                for the Shares so purchased. The Committee, in its sole discretion,
                may
                permit an Option Holder to exercise the Option pursuant to a “cashless
                exercise” procedure (subject to securities law restrictions), or by any
                other means the Committee determines is consistent with the Plan’s purpose
                and applicable law.

            

    

     

    
      	 	
              5.

            	
              Cancellation
                of Options.

            

    

    

    
      	
               

            	
              (a)

            	
              Expiration
                of Term.
                On the Expiration Date, the unexercised Options shall be cancelled
                automatically.

            

    

    

    
      	
               

            	
              (b)

            	
              Termination
                of Employment.
                Except as provided in Sections 6 and 7 below, any unvested portion
                of the
                Option shall automatically be cancelled in the event the Option Holder’s
                employment with the Company or any of its Subsidiaries is terminated
                for
                any reason. Any portion of the Option vested at the time of termination
                may be exercised by the Option Holder at any time on or prior to
                the
                earlier of the Expiration Date or the expiration of three (3) months
                after
                the date of termination. Any vested portion of the Option that is
                not
                exercised within such time period shall be automatically cancelled.
                A
                “termination” includes any event which would causes the Option Holder to
                lose his or her eligibility to participate in the Plan (e.g., an
                individual is employed by a company that ceases to be a Subsidiary
                of the
                Company). 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              6.

            	
              Death
                of Option Holder.
                Upon the death of the Option Holder while the Option Holder is an
                employee
                of the Company or a Subsidiary, any unvested portion of the Option
                shall
                fully vest. The Option may be exercised by the Option Holder’s estate, or
                by a person who acquires the right to exercise the Option by bequest
                or
                inheritance or by reason of the death of the Option Holder, provided
                that
                such exercise occurs both before the Expiration Date and within six
                (6)
                months after the date of the Option Holder’s death. Any portion of the
                Option not exercised within such time period will be
                cancelled.

            

    

    

    
      	
               

            	
              7.

            	
              Disability.
                Upon termination of the Option Holder’s employment by reason of the Option
                Holder’s Disability, any unvested portion of the Option shall fully vest.
                The Option may be exercised by the Option Holder, provided that such
                exercise occurs both before the Expiration Date and within 6 months
                after
                the Option Holder’s termination due to a Disability. Any portion of the
                Option not exercised within such time period will be cancelled.
                “Disability” shall mean a condition whereby the Option Holder 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 thirty-six (36) months, all as verified by a physician acceptable
                to,
                or selected by, the Company.

            

    

    

    
      	
               

            	
              8.

            	
              Non-Assignability.
                The Option shall not be assignable or transferable by the Option
                Holder,
                except by will or by the laws of descent and distribution. During
                the life
                of the Option Holder, the Option shall be exercisable only by the
                Option
                Holder.

            

    

    

    
      	
               

            	
              9.

            	
              Rights
                as a Shareholder.
                The Option Holder shall have no rights as a shareholder by reason
                of the
                Option unless and until certificates for shares of Common Stock are
                issued
                to her.

            

    

    

    
      	
               

            	
              10.

            	
              Employment.
                This Agreement shall not create in the Option Holder a right to further
                or
                continued employment with the Company or any Subsidiary and shall
                not
                interfere with the ability of the Company to terminate the Option
                Holder’s
                employment relationship at any time with or without cause; the Option
                is
                not part of normal and expected compensation for purposes of calculating
                any severance, resignation, redundancy, end of service payment, bonuses,
                long-service awards, pension or retirement benefits, or similar
                payments.

            

    

     

    
      	
               

            	
              11.

            	
              Notice.
                Notices hereunder shall be in writing and if to the Company shall
                be
                addressed to the Secretary of the Company at NaturalNano, Inc., 150
                Lucius
                Gordon Drive, Suite 115, West Henrietta, New York 14586 and if to
                the
                Option Holder shall be addressed to the Option Holder at her address
                as it
                appears on the Company’s records.

            

    

    

    
      	
               

            	
              12.

            	
              Successors
                and Assigns.
                This Agreement shall be binding upon and inure to the benefit of
                the
                successors and assigns of the Company and, to the extent provided
                in
                Section 6 hereof, to the heirs or legatees of the Option
                Holder.

            

    

    

    
      	
               

            	
              13.

            	
              Applicable
                Laws and Consent to Jurisdiction.
                The validity, construction, interpretation and enforceability of
                this
                Agreement shall be determined and governed by the laws of the New
                York
                without giving effect to the principles of conflicts of law. For
                the
                purpose of litigating any dispute that arises under this Agreement,
                the
                parties hereby consent to exclusive jurisdiction in New York and
                agree
                that such litigation shall be conducted in the federal or state courts
                located in Rochester, New York.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF,
      the
      Company and the Option Holder have caused this Agreement to be executed on
      the
      date set forth opposite their respective signatures, it being further understood
      that the date of grant may differ from the date of signature.

     

    

    
      	
              Dated:

            	
              July
                24, 2006

            	
              NaturalNano,
                Inc.

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
              By: 
                /s/
                Michael D.
                Riedlinger           

            
	
               

            	
               

            	
              Michael
                D. Riedlinger, President

            
	 	 	 
	
               

            	
               

            	
               

            
	
              Dated:

            	
              July
                24, 2006

            	
              Option
                Holder

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
              /s/
                Cathy A.
                Fleischer                 

            
	 	 	
              Cathy
                A. FleischerExhibit
      10.1

    

    

                        June
      19,
      2006

    

    

    

    Cathy
      A.
      Fleischer, Ph.D.

    281
      Grosvenor Road

    Rochester,
      NY 14610

    

    Dear
      Ms.
      Fleischer,

    

    We
      are
      pleased to extend to you an offer of employment as the Senior Research Scientist
      of NaturalNano, Inc. (“the Company”) effective July 24, 2006 (the
“Employment Date”). Your annual full time salary will be $120,000 which will be
      paid on a bi-weekly basis at the rate of $4,615.38 in gross wages every two
      weeks. You will be entitled to three weeks vacation (15 days) annually,
      earned on a pro-rata basis of ten hours each month. It is anticipated that
      after
      90 days you will be promoted to Chief Technology Officer
      (CTO).

    

    In
      addition to the statutory benefits defined by federal and local laws, (FICA,
      FUTA, applicable State Disability Insurance and Workers Compensation) you will
      be entitled to the benefits available to other NaturalNano officers and
      employees. Currently this includes employer paid health and dental insurance
      coverage. You will receive two options. The first option allows you to purchase
      up to 100,000 shares of NaturalNano common stock with an exercise price equal
      to
      the fair market value of the shares on the Employment Date. This option grant
      will be governed pursuant to the “NaturalNano, Inc. 2005 Incentive Stock Option
      Plan.” The second option, which is not governed pursuant to the “NaturalNano,
      Inc. 2005 Incentive Stock Option Plan”, entitles you to purchase up to an
      additional 40,000 shares of NaturalNano common stock with an exercise price
      of
      $0.10 per share. Both of these option grants will vest annually over three
      years
      commencing on the first anniversary of the Employment Date and continuing each
      year thereafter until the entire grant has vested. Notwithstanding any provision
      herein to the contrary, any unvested portion of the option shall immediately
      expire upon termination of employment for any reason. 

     

    
      Your
        job
        responsibilities will include developing the vision, strategy and goals for
        the
        use of naturally occurring nanomaterials in medical and non-medical fields.
        This
        will include development of technology applications, developing patent strategy,
        writing and submitting related patent applications, developing relationships
        with strategic industrial and university partners, and attending relevant
        external conferences.

    

     

    This
      agreement is terminable by you or the company upon ninety (90) days’ written
      notice or by us for cause or upon your death or disability. As a condition
      of
      your employment, you will be required to sign our standard Confidential
      Information, Invention and Non-Competition Agreement. A copy of this agreement
      is attached to this letter for your reference.

    

    Please
      indicate your acceptance by signing below and returning a signed copy to my
      attention. I look forward to working with you at
      NaturalNano-WELCOME!!

    

    Regards,

    

    /s/
      Kathleen A. Browne

    

    Kathleen
      A. Browne

    Chief
      Financial Officer

    

    

    

    

    Agreed
      to
      and accepted /s/
      Cathy A.
      Fleischer             
Date: 
      07/24/2006

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