March 7, 2007
Exhibit
10.4
March
7,
2007
The
Investors described below
Platinum
Advisors, LLC, as Agent
000
Xxxx
00xx
Xxxxxx
New
York,
New York 10019
| Re: | Proposed Loan and Security Agreement with NaturalNano, Inc. |
Ladies
and Gentlemen:
The
undersigned Technology Innovations, llc,
a
stockholder of NaturalNano, Inc., a Nevada corporation (the “Company”),
understands that, pursuant to a Loan and Security Agreement (the “Agreement”)
dated the date of this letter, among the Company, NaturalNano Research, Inc.,
the Company’s wholly-owned subsidiary, the Investors named therein (the
“Investors”), and Platinum Advisers llc,
as
agent
(the “Agent”), the Company is issuing to the Investors its 8% Senior Secured
Convertible Notes in the principal amount of $3,347,500 (the “Notes”) and Common
Stock Purchase Warrants for the purchase of an aggregate of 25,106,253 shares
of
the Company’s Common Stock, par value $0.001 per share (the “Common Stock”)
(together, the “Securities”). In recognition of the benefit that such a purchase
will confer upon the undersigned as a major stockholder of the Company, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the undersigned agrees with the Investors and the Agent
that, during a period of two years from the date of the Agreement (the "Lock-Up
Period"), the undersigned will not, without the prior written consent of the
Agent, directly or indirectly and except as provided below: (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale
of,
or otherwise dispose of or transfer (a “Transfer”) any shares of Common Stock or
any securities convertible into or exchangeable or exercisable for shares of
Common Stock, whether now owned or hereafter acquired by the undersigned or
with
respect to which the undersigned has or hereafter acquires the power of
disposition (collectively, the “Lock-Up Securities”) or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Lock-Up
Securities, whether any such swap or transaction is to be settled by delivery
of
shares of Common Stock or other securities, in cash or otherwise.
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may Transfer
the Lock-Up Securities during the Lock-Up Period, provided that, in any such
case it shall be a condition to such Transfer (other than a Transfer described
in clauses (ii) and (iii) below) that the transferee execute and deliver to
the
Agent an agreement stating that the transferee is receiving and holding the
Lock-Up Securities and any shares of Common Stock issuable upon the conversion,
exercise or exchange of any Lock-Up Securities, subject to the provisions of
this Agreement, that there shall
be
no further Transfer of such Lock-Up Securities or any shares of Common Stock
issuable upon the conversion, exercise or exchange of any Lock-Up Securities,
except in accordance with this Agreement:
|
(i)
|
as
a bona fide gift or gifts to an educational, charitable, religious
or
other not-for-profit entity; or
|
|
(ii)
|
in
dispositions of shares of Common Stock to the Company;
or
|
|
(iii)
|
to
the persons and entities identified on Exhibit A attached hereto,
in the
amounts and at the prices set forth opposite the names of such persons
and
entities on said Exhibit A, pursuant to contractual obligations in
effect
on the date hereof, it being understood that the undersigned in an
affiliate of the Company and, pursuant to Rule 144, the holding period
of
such named transferees will start with their acquisition of shares
from
the undersigned; or
|
|
(iv)
|
in
a private transaction;
|
Further,
after the first anniversary of the closing date under the Agreement, the
undersigned and its transferees may also Transfer such Lock-Up Securities,
if,
and only if, on the date of such Transfer, shares of the Common Stock (x) are
traded on the OTC Bulletin Board or the Nasdaq Stock Market or the New York
or
American Stock Exchange and (y) shall have traded at price of $0.50 per share
or
greater (as reported by Bloomberg L.P. or, if the Common Stock is then traded
on
the Nasdaq Stock Market or the New York or American Stock Exchange, as reported
by such market or exchange); provided, however, that in the event that the
registration statement required by the Agreement and the registration rights
agreement executed pursuant to the Agreement has not been declared effective
(or, having been declared effective, in no longer current and effective) twelve
months from the closing date, the period referred to in the preceding sentence
shall be 13 months from the closing date instead of the first anniversary of
the
closing date.
The
undersigned further agrees that, during the Lock-Up Period, the undersigned
will
not and will not permit any permitted transferee, without the prior written
consent of the Agent and Investors holding, in the aggregate, Notes representing
at least 75% of the principal amount then outstanding under all of the Notes,
make any demand for, or exercise any right with respect to, the registration
under the Securities Act of 1933 of any Lock-Up Securities or any shares of
Common Stock issuable upon the conversion, exercise or exchange of any Lock-Up
Securities. For purpose of computing the 75% of the principal amount of the
Notes, if any Investor shall have converted the Notes and shall not have sold
the underlying shares pursuant to an effective registration statement, the
Notes
upon conversion of which the shares of common stock were issued shall be deemed
to be outstanding.
| Very truly yours, | ||
| Technology Innovations, llc | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxx | |
|
Xxxxxxx X. Xxxxxx, Manager |
||
Exhibit
A
|
Option
Holder
|
Number
of Shares
|
Price
per Share
|
|||||
|
Xinhua
Financial Network
|
728,155
|
$
|
3.00
|
||||
|
Xinhua
Financial Network
|
2,000,000
|
$
|
4.00
|
||||
|
Xxxxxxx
Xxxxx
|
2,600,000
|
$
|
0.10
|
||||
|
Xxxxx
XxXxxxxx
|
100,000
|
$
|
0.10
|
||||
