Re: FORBEARANCE AGREEMENT

[LENDER NAME]

[LENDER ADDRESS]

VIA FACSIMILE AND FIRST CLASS MAIL

Ladies and Gentlemen:

Reference is made to the $ o 8% Senior Secured Promissory Note due March 6, 2009, issued on or about March 6, 2007 (together the “Notes”) from NaturalNano, Inc. and NaturalNano Research, Inc. (jointly and severally, the “Borrower”) to [Lender] (the “Lender”). Capitalized terms used herein and not otherwise defined shall have the respective meanings given in the Notes.

As of the date hereof, the principal amount of the indebtedness evidenced by the Notes is $ o , plus interest accruing on and after the date hereof at rate set forth in the Notes. The Borrower has requested that the Lender forbear from exercising its various rights and remedies under the Notes and other related documents (collectively, the “Loan Documents”) that may otherwise be exercised by the Lender on the maturity date of the Notes (March 6, 2009) (the “Maturity Date”), in order to provide the Borrower with additional time during which it may resolve its current financial problems.

The Lender is prepared to forbear from demanding payment of principal on the Notes on the Maturity Date of the Notes, or taking any other action to collect the principal amount of the Notes due on the Maturity Date until the earlier of January 31, 2010 (unless extended by the Lender in its discretion) or the termination of the Forbearance Period pursuant to the terms of this Letter Agreement (such period, the “Forbearance Period”), provided the Borrower accepts and agrees to the terms, conditions and covenants set forth herein, and communicates such acceptance (by delivering a signed copy of this Letter Agreement) to the Lender no later than 5:00 p.m. on September 29, 2008; provided further it is understood that Borrower is obligated to make all interest payments required under the Notes during the Forbearance Period.

Upon execution by the Borrower, this letter shall be a binding agreement among the respective parties hereto (referred to as the “Letter Agreement”).

By its execution, the Borrower represents, warrants and covenants as follows:

1.         No Duress.      The Borrower has freely and voluntarily entered into this Letter Agreement after an adequate opportunity to review and discuss the terms and conditions and all

factual and legal matters relevant hereto with counsel freely and independently chosen by it and this Letter Agreement is being executed without fraud, duress, undue influence or coercion of any kind or nature whatsoever having been exerted by or imposed upon any party.

2.         Amount Due.  The Borrower acknowledges and agrees that, excluding any Indebtedness incurred by the Borrower pursuant to the Loan and Security Agreement, dated as of September 29, 2008, as of the date hereof, pursuant to the Notes and the other Loan Documents, the Borrower owes the Lender $ o (the “Outstanding Amount”). The Borrower shall also be responsible for reimbursing the Lender for all costs and expenses, including the fees and expenses of legal counsel that may be incurred in connection with the enforcement of this Letter Agreement, which, if incurred, shall be added to the Outstanding Amount. The Borrower acknowledges and agrees that the Outstanding Amount (as reduced by payments made pursuant hereto), plus interest accrued thereon, shall be due and owing upon termination of the Forbearance Period.

3.         No Defenses.  The Borrower has no defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, or causes of action of any kind or nature whatsoeve