NON-QUALIFIED STOCK OPTION AGREEMENT
This
Non-Qualified Stock Option Agreement (the “Agreement”) is made as of December 7,
2006 (the “Date of Grant”) between NaturalNano, Inc., a Nevada corporation (the
“Company”), and Xxx Xxxxxx Xxxxx, an consultant 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 Incentive Stock 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.
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1.
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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 50,000 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.
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2.
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Expiration
Date.
This Option shall expire on December 7, 2011 (the “Expiration Date”)
unless this Option expires earlier as provided in Sections 5, 6 or
7 of
this Agreement.
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3.
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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, all shares issued in this grant are vested
as
of the grant date, December 7, 2006. If the Option Holder’s services are
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.
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4.
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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 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.
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5.
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Cancellation
of Options.
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(a)
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Expiration
of Term.
On the Expiration Date, the unexercised Options shall be cancelled
automatically.
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(b)
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Termination
of Consulting Services.
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
consulting services 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., the consultant ceases to provide the prescribed services to
the
Company).
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6.
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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 three
(3)
months after the date of the Option Holder’s death. Any portion of the
Option not exercised within such time period will be
cancelled.
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7.
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Disability.
Upon termination of the Option Holder’s agreement 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 90 days
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
perform the services required by the Holder’s consulting agreement for a
period of 30 days as determined by the Company in its reasonable
discretion.
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8.
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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.
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9.
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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.
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10.
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Employment.
This Agreement shall not create in the Option Holder a right to 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.
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11.
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Notice.
Notices hereunder shall be in writing and if to the Company shall
be
addressed to the Secretary of the Company at NaturalNano, Inc., 000
Xxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxxx, Xxx Xxxx 00000 and if to
the
Option Holder shall be addressed to the Option Holder at her address
as it
appears on the Company’s records.
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12.
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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.
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13.
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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.
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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.
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NaturalNano,
Inc.
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| Date: December 7, 2006 | By: | /s/ Xxxxxxxx X. Xxxxxx |
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Xxxxxxxx X. Xxxxxx CFO |
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Option
Holder
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| Date: December 7, 2006 | /s/ Xxxxxx Xxxxx | |
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Xxxxxx Xxxxx |
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