Exhibit 10.1

                                    AGREEMENT

         AGREEMENT,  dated as of  November  4, 2004 (this  "Agreement"),  by and
between HQ Sustainable  Maritime Industries,  Inc., a corporation  organized and
existing under the laws of the State of Delaware, U.S.A. ("HQSM"), and Sino-Sult
Canada (S.S.C.) Limited, a limited liability  corporation organized and existing
under the laws of the country of Canada ("Sino-Sult").

                                    RECITALS

         A. Pursuant to that certain Purchase Agreement,  dated as of August 17,
2004 (the "Purchase Agreement"), by and among HQSM, Sino-Sult and Sealink Wealth
Limited, a limited liability  corporation  organized and existing under the laws
of the British  Virgin  Islands,  HQSM made in favor of Sino-Sult a  Convertible
Promissory Note, dated August 17, 2004 (the "Note"),  in the original  principal
amount of U.S.  $11,111,345.  In  accordance  with the terms  thereof,  the Note
matured in October of 2004.

         B. Pursuant to a letter dated  November 4, 2004 (the "Demand  Letter"),
Sino-Sult  has  demanded  of HQSM  payment in full of the  principal  amount and
accrued interest due and outstanding  under the Note or, in lieu of such payment
and in full and  complete  satisfaction  of the Note,  has offered to accept (1)
15,730,493  shares (the "Common  Shares") of common stock,  $0.001 par value per
share, of HQSM, (2) 100,000 shares (the "Preferred  Shares") of preferred stock,
$0.001 par value per share,  of HQSM,  issuable  pursuant  to a  certificate  of
designation, substantially in the form attached hereto as Annex 1; provided that
HQSM shall make a cash payment to  Sino-Sult of the accrued and unpaid  interest
on the Note (the "Cash Payment"), all upon the terms set forth herein.

         C. HQSM has agreed to accept such offer from Sino-Sult,  upon the terms
set forth herein.

         NOW  THEREFORE,  in  consideration  of the  foregoing  and  the  mutual
covenants  and  agreements  set forth  below,  and for other  good and  valuable
consideration,  the receipt and adequacy of which are hereby  acknowledged,  the
parties hereto hereby agree as follows:

                                    ARTICLE I
                          AGREEMENT REGARDING THE NOTE

         Section 1.01.  Issuance of HQSM Securities in Satisfaction of the Note.
In lieu of payment of the outstanding  principal  balance of the Note,  together
with accrued and unpaid interest thereon, and in full and complete  satisfaction
of the Note,  the parties  agree that HQSM shall issue to  Sino-Sult  the Common
Shares and the Preferred Shares, and shall make the Cash Payment with respect to
accrued interest on the Note.

                  (a) Common  Shares.  As  promptly as  feasible  following  the
execution and delivery of this Agreement by the parties hereto, but in any event
no later than ten (10) calendar days thereafter, HQSM shall issue and deliver to
Sino-Sult one or more certificates  representing the Common Shares, which Common
Shares will be free and clear of all liens, claims,  charges and encumbrances of
any kind whatsoever.  HQSM shall pay all expenses, and any and all United States



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<PAGE>

federal,  state  and  local  taxes  and other  charges  that may be  payable  in
connection  with the  preparation,  issuance and delivery of stock  certificates
under this  Section  1.01(a) in the name of  Sino-Sult,  or as may be  otherwise
directed by Sino-Sult.

                  (b)  Preferred  Shares.  As promptly as  feasible,  but in any
event no later than the earliest of (x) ten (10) calendar days following receipt
by HQSM of all requisite approvals  (including without  limitation,  shareholder
approvals) for such issuance,  and (y) the six (6) month anniversary of the date
of the Demand  Letter,  HQSM shall  issue and deliver to  Sino-Sult  one or more
certificates  representing the Preferred Shares,  which Preferred Shares will be
free and  clear of all  liens,  claims,  charges  and  encumbrances  of any kind
whatsoever.  HQSM shall pay all expenses, and any and all United States federal,
state and local taxes and other charges that may be payable in  connection  with
the preparation,  issuance and delivery of stock certificates under this Section
1.01(b) in the name of Sino-Sult, or as may be otherwise directed by Sino-Sult.

                  (c) As  promptly as  feasible,  but in any event no later than
ten (10) calendar days following the execution and delivery of this Agreement by
the parties hereto,  HQSM shall make the Cash Payment to Sino-Sult of all of the
accrued  and  unpaid  interest  on the Note  from the date of  issuance  thereof
through and including the date of payment thereof, which amount shall be payable
in immediately available Unites States dollars.

         Section 1.02   Default by HQSM.

                  (a) General  Default.  In the event that HQSM shall default in
the  performance of any of its obligations  hereunder,  Sino-Sult shall have all
rights and remedies as shall be available thereto under law or at equity, all of
which shall be cumulative.

                  (b) Preferred Shares Default.  In the event that HQSM defaults
in the  performance of its obligation  under the Note and hereunder to issue the
Preferred  Shares,  the  principal  amount of $100,000,  together  with interest
thereon at the rate set forth in the Note,  as  accrued  from  August  17,  2004
through such date of payment,  shall  immediately  become due and payable at the
option and upon demand of Sino-Sult.

                                   ARTICLE II
                                  MISCELLANEOUS

         Section  2.01  Governing  Law.  This  Agreement  shall be governed  by,
enforced,  and  construed  under and in  accordance  with the laws of the United
States of America and,  with respect to the matters of state law,  with the laws
of the State of New York, without regard to its conflicts of law principles.

         Section 2.02 Resolution of Disputes.

                  (a)  Any  dispute,  controversy  or  claim  arising  out of or
relating  to this  Agreement,  or the  interpretation,  breach,  termination  or
validity  hereof,  shall first be resolved  through  friendly  consultation,  if
possible.  Such consultation  shall begin immediately after one party hereto has
delivered  to the  other  party a written  request  for such  consultation  (the
"Consultation Date"). If the dispute cannot be resolved within 30 days following
the  Consultation  Date, the dispute shall be submitted to arbitration  upon the
request of either Party, with written notice to the other Party.



                                       2
<PAGE>

                  (b)  Arbitration.  The  arbitration  shall be conducted in New
York,  New York  under the  auspices  of the  American  Arbitration  Association
("AAA") in accordance with the commercial  arbitration  rules and  supplementary
procedures for international  commercial  arbitration of the AAA. There shall be
three  arbitrators:  one arbitrator shall be chosen by each party to the dispute
and those two  arbitrators  shall choose the third  arbitrator.  All arbitration
proceedings  shall be  conducted  in English.  Each party to the  dispute  shall
cooperate  with the other in making full  disclosure of and  providing  complete
access to all  information  and  documents  requested  by the other party to the
dispute in connection with the arbitration proceedings. Arbitration shall be the
sole, binding,  exclusive and final remedy for resolving any dispute between the
parties  thereto;  either  party  thereto  may apply to any  court of  competent
jurisdiction  in the State of New York for  enforcement  of any award granted by
the arbitrators.

                  (c) During the period when a dispute is being resolved, except
for the matter being disputed,  the Parties shall in all other respects continue
to abide by the terms of this Agreement.

         Section 2.03  Attorney's  Fees. In the event that any party  institutes
any  action or suit to  enforce  this  Agreement  or to secure  relief  from any
default  hereunder or breach  hereof,  the breaching  party shall  reimburse the
non-breaching  party  for  all  costs,  including  reasonable  attorney's  fees,
incurred in connection  therewith  and in enforcing or  collecting  any judgment
rendered therein.

         Section 2.04 Schedules;  Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules  delivered
pursuant to this Agreement.

         Section  2.05 Entire  Agreement.  This  Agreement  and any  agreements,
documents  and  instruments  to be executed and  delivered  pursuant  hereto are
intended to embody the final, complete and exclusive agreement among the parties
with  respect to the  subject  matter of this  Agreement,  and are  intended  to
supersede all prior agreements,  understandings and  representations  written or
oral, with respect thereto.

         Section 2.06 Agreement  Binding on Successors  and Assigns.  All rights
and obligations  under this entire  Agreement shall be binding upon and inure to
the benefit of the heirs, executors,  administrators,  successors and assigns of
the parties hereto.

         Section 2.07  Counterparts.  This Agreement may be executed in multiple
counterparts,  each of which shall be deemed an original  and all of which taken
together  shall be but a single  instrument.  For  purposes  of this  Agreement,
facsimile signatures may be deemed originals.

         Section  2.08  Amendment  or Waiver.  Every  right and remedy  provided
herein shall be cumulative with every other right and remedy,  whether conferred
herein, at law, or in equity, and may be enforced concurrently  herewith, and no
waiver by any party of the  performance  of any obligation by the other shall be
construed as a waiver of the same of any other  default  then,  theretofore,  or
thereafter  occurring  or  existing.  This  Agreement  may be amended  only by a
writing  signed  by  both  parties  hereto,  with  respect  to any of the  terms
contained  herein,  and any term or condition of this Agreement may be waived or
the time for  performance  may be extended by a writing  signed by the party for
whose benefit the provision is intended.



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<PAGE>

         Section 2.09 Third Party Consents and  Certificates.  The parties agree
to  cooperate  with  each  other in order to obtain  any  required  third  party
consents to this Agreement and the transactions herein contemplated.

         Section 2.10 Notice. Any notice or other  communication given hereunder
shall be deemed  sufficient  if in writing and sent by  registered  or certified
mail, return receipt requested, addressed to HQSM, at its principal office, Wall
Street Center, 14 Wall Street - 20th Floor, New York, New York 10005, Attention:
President, and to Sino-Sult at the following address: 7305 Marie-Victorin, Suite
100, Brossard,  Quebec, Canada J4W 1A6, Attention:  President.  Notices shall be
deemed to have been given on the date of  mailing,  except  notices of change of
address, which shall be deemed to have been given when received.

         Section 2.11 Severability.  In the event that any provision or any part
of any provision of this Agreement shall be void or unenforceable for any reason
whatsoever,  then such  provision  shall be stricken and of no force and effect.
However, unless such stricken provision goes to the essence of the consideration
bargained for by a party,  the  remaining  provisions  of this  Agreement  shall
continue in full force and effect, and to the extent required, shall be modified
to preserve their validity.

         Section 2.12 No Third Party Rights. Nothing in this Agreement,  whether
express or implied,  is  intended  to confer any rights or remedies  under or by
reason of this  Agreement  on any  persons  other than the parties to it and the
respective  successors  and  assigns of the  foregoing,  nor is anything in this
Agreement  intended to relieve or discharge  the  obligation or liability of any
third  persons  to any  party,  nor shall any  provision  hereof  give any third
persons any right of subrogation or action over or against any party.

         Section 2.13 Construction.  The language in all parts of this Agreement
shall in all cases be construed simply,  according to its fair meaning,  and not
strictly for or against any of the parties  hereto.  Without  limitation,  there
shall be no  presumption  against  any party on the  ground  that such party was
responsible for drafting this Agreement or any part thereof.

         Section 2.14 Section  Headings.  The section headings of this Agreement
are for convenience of reference only and shall not be deemed to alter or affect
any provision hereof.



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<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.




HQ SUSTAINABLE MARITIME INDUSTRIES, INC.



By:  /s/ Norbert Sporns
   ----------------------
Name: Norbert Sporns
Title: CEO and President



SINO-SULT CANADA (S.S.C.) LIMITED



By:  /s/ Lillian Wang Li
   ----------------------
Name: Lillian Wang Li
Title: Director















                                       5
<PAGE>

                                     ANNEX 1

                           CERTIFICATE OF DESIGNATION


                    HQ SUSTAINABLE MARITIME INDUSTRIES, INC.

                           CERTIFICATE OF DESIGNATION
                           OF SERIES A PREFERRED STOCK

                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware


         HQ  Sustainable  Maritime  Industries,  Inc.  (the  "Corporation"),   a
corporation  organized  and existing  under the General  Corporation  Law of the
State of Delaware, does hereby certify:

         FIRST:  Pursuant to authority  conferred upon the Board of Directors by
its Certificate of Incorporation,  and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, said Board of Directors
is authorized to issue  Preferred Stock of the Company in one or more series and
has adopted the resolution set forth below on August 17, 2004:

         RESOLVED,  that  pursuant  to the  authority  expressly  granted to and
vested in the Board of Directors of the  Corporation  by the  provisions  of the
Certificate  of  Incorporation  of  the  Corporation,  as  amended,  out  of the
authorized but unissued shares of Preferred Stock of the Corporation  this Board
of Directors hereby creates a series of the Preferred Stock, par value $.001 per
share (the "Preferred Stock"),  of the Corporation,  and this Board of Directors
hereby fixes the powers, designations,  preferences and relative, participating,
optional  or  other  special  rights  of the  shares  of  such  series,  and the
qualifications,  limitations or restrictions thereof (in addition to the powers,
designations, preferences and relative, participating, optional or other special
rights, and the qualifications,  limitations or restrictions  thereof, set forth
in the Certificate of Incorporation  of the Corporation  which are applicable to
Preferred Stock of all series) as follows:



<PAGE>

1.       Designation. The designation of the series shall be "Series A Preferred
         Stock" (the "Series A Preferred Stock").

2.       Number. The number of shares  constituting the Series A Preferred Stock
         shall be 100,000.

3.       Voting Rights.

         a.  General  Voting  Rights.  The  holder  of each  share  of  Series A
         Preferred  Stock shall have the right to the voting power equal to that
         of one thousand  shares of the  Corporation's  common stock,  par value
         $.001 per share (the  "Common  Stock")  and with  respect to such vote,
         each such holder shall have full voting  rights and powers equal to the
         voting rights and powers of the holders of Common  Stock,  and shall be
         entitled,  notwithstanding  any  provision  hereof,  to  notice  of any
         stockholders'   meeting  in   accordance   with  the   by-laws  of  the
         Corporation,  and shall be entitled to vote,  together  with holders of
         Common Stock, with respect to any question upon which holders of Common
         Stock have the right to vote.

         b. Consent Needed for Authorization. Without the vote or consent of the
         holders  of at least a  majority  of the  shares of Series A  Preferred
         Stock then outstanding,  the Corporation may not (i) authorize,  create
         or issue, or increase the authorized  number of shares of, any class or
         series of capital stock ranking prior to or on a parity with the Series
         A  Preferred  Stock  either  as  to  dividends  or  liquidation,   (ii)
         authorize,  create or issue any class or series of common  stock of the
         Corporation   other  than  the  Common  Stock,   (iii)   authorize  any
         reclassification  of the  Series A  Preferred  Stock,  (iv)  authorize,
         create or issue any  securities  convertible  into or  exercisable  for
         capital  stock  prohibited by Section  3(b)(i) or (ii),  (v) amend this
         Certificate or (vi) enter into any disposal,  merger or  reorganization
         involving 20% of the total capitalization of the Corporation.

4.       Liquidation.

         a. Preference. Subject to the rights of the holders of any other series
         of Preferred  Stock ranking  senior to or on a parity with the Series A
         Preferred  Stock with  respect to  liquidation  and any other  class or
         series of capital stock of the  Corporation  ranking  senior to or on a
         parity with the Series A Preferred  Stock with respect to  liquidation,
         in the  event of any  liquidation,  dissolution  or  winding  up of the
         affairs of the  Corporation,  whether  voluntary  or  involuntary,  the
         holders  of record of the  issued  and  outstanding  shares of Series A
         Preferred Stock shall be entitled to receive,  out of the assets of the
         Corporation  available  for  distribution  to the  holders of shares of
         Series A Preferred  Stock,  prior and in preference to any distribution
         of any of the assets of the  Corporation to the holders of Common Stock
         and any other series of Preferred  Stock ranking junior to the Series A
         Preferred  Stock with  respect to  liquidation  and any other  class or
         series of capital stock of the Corporation ranking junior to the Series
         A Preferred  Stock with respect to  liquidation,  an amount in cash per
         share equal to $1.00, plus an amount equal to all dividends accrued and

<PAGE>

         unpaid on each such  share  (whether  or not  declared)  up to the date
         fixed for  distribution.  If,  upon such  liquidation,  dissolution  or
         winding  up of  the  affairs  of the  Corporation,  the  assets  of the
         Corporation distributable among the holders of Series A Preferred Stock
         and any other series of Preferred  Stock ranking on a parity  therewith
         in  respect  thereto  or any class or series  of  capital  stock of the
         Corporation  ranking on a parity  therewith in respect thereto shall be
         insufficient  to permit  the  payment  in full to all such  holders  of
         shares of the  preferential  amounts  payable to them,  then the entire
         assets of the Corporation available for distribution to such holders of
         shares shall be distributed ratably among such holders in proportion to
         the  respective  amounts that would be payable per share if such assets
         were  sufficient to permit  payment in full.  After payment of the full
         amount to which they are  entitled  upon  liquidation  pursuant to this
         Section  4(a),  the holders of shares of Series A Preferred  Stock will
         not be entitled to any further  participation  in any  distribution  of
         assets by the  Corporation.  Neither a  consolidation  or merger of the
         Corporation  with  another  corporation  or  other  entity  nor a sale,
         transfer,  lease or exchange of all or part of the Corporation's assets
         will be  considered  a  liquidation,  dissolution  or winding up of the
         affairs of the Corporation for purposes of this Section 4(a).

         b.  Adjustments.  The liquidation  preference  provided for herein with
         respect to the Series A Preferred Stock shall be equitably  adjusted to
         reflect any stock dividend, stock distribution,  stock split or reverse
         stock  split,   combination   of  shares,   subdivision  of  shares  or
         reclassification  of shares  with  respect  to the  Series A  Preferred
         Stock.

5.       Optional  Conversion  Rights.  The Series A  Preferred  Stock  shall be
         convertible as follows:

         a.  Optional  Conversion.  Subject  to and  upon  compliance  with  the
         provisions  of this  Section  5, the  holder of any  shares of Series A
         Preferred  Stock  shall  have the  right at such  holder's  option  (an
         "Optional  Conversion"),  at any time or from time to time, and without
         the payment of any additional consideration therefor, to convert any of
         such  shares  of  Series  A   Preferred   Stock  into  fully  paid  and
         nonassessable  shares  of  Common  Stock at the  ratio of one  share of
         Series A  Preferred  Stock for two  shares of the  Common  Stock of the
         Corporation  ("Optional  Conversion  Price").  In case the  Corporation
         shall (i) declare a dividend or make a distribution  on its outstanding
         shares of Common Stock or (ii) subdivide or reclassify its  outstanding
         shares of Common  Stock into a smaller  number of shares,  the Optional
         Conversion  Price in  effect  at the time of the  record  date for such
         dividend or distribution or of the effective date of such  subdivision,
         combination  or  reclassification  shall be  adjusted  so that it shall
         equal the price  determined by multiplying  such conversion  price by a
         fraction,  the  denominator  of which  shall be the number of shares of
         Common Stock  outstanding  after  giving  effect to such action and the
         numerator  of which  shall be the  number of  shares  of  Common  Stock
         outstanding  immediately  prior to such action.  The number and kind of
         securities  shall also be  proportionately  adjusted.  Such  adjustment
         shall be made successively whenever any event listed above shall occur.


<PAGE>

         b. Costs. The Corporation shall pay all documentary, stamp, transfer or
         other  transactional  taxes attributable to the issuance or delivery of
         shares  of  Common  Stock  upon  conversion  of any  shares of Series A
         Preferred Stock; provided that the Corporation shall not be required to
         pay any taxes which may be payable in respect of any transfer  involved
         in the  issuance or delivery  of any  certificate  for such shares in a
         name other than that of the holder of the shares of Series A  Preferred
         Stock in respect of which such shares are being issued.

         c.  Dividends  Upon  Conversion.  In connection  with any conversion of
         shares of Series A Preferred Stock,  the Corporation  shall pay accrued
         and unpaid  dividends  thereon in  accordance  with the  provisions  of
         Section 6.

6.       Dividends.

         a. Dividends.

                  (i) Subject to the rights of the  holders of any other  series
                  of Preferred  Stock ranking  senior to or on a parity with the
                  Series A Preferred  Stock with  respect to  dividends  and any
                  other  class or series  of  capital  stock of the  Corporation
                  ranking  senior to or on a parity  with the Series A Preferred
                  Stock with respect to dividends,  other than the Common Stock,
                  the holders of the Series A Preferred  Stock shall be entitled
                  to receive,  when and as  declared by the Board of  Directors,
                  cumulative  dividends per share of Series A Preferred Stock at
                  a rate  per  annum as  determined  by the  Board of  Directors
                  during  the  period  commencing  after  the  date of  original
                  issuance  of any  shares of  Series A  Preferred  Stock  until
                  converted pursuant to Section 5 above;  provided,  however, in
                  the event of an Optional Conversion, all accumulated dividends
                  will automatically be eliminated and no such dividends will be
                  due or payable to holders of Series A Preferred Stock.

                  (ii) Dividends on the Series A Preferred  Stock will accrue on
                  each  December  15,  March  15,  June 15,  and  September  15,
                  occurring after the date of original  issuance,  provided that
                  the  Corporation  shall have the option to pay dividends  when
                  and as declared by the Board of Directors of the  Corporation.
                  The party  that  holds the  Preferred  Stock on an  applicable
                  record  date for any  dividend  payment  will be  entitled  to
                  receive such dividend payment and any other accrued and unpaid
                  dividends  which accrued prior to such dividend  payment date,
                  without  regard to any sale or  disposition  of such shares of
                  Series A Preferred Stock  subsequent to the applicable  record
                  date but prior to the applicable dividend payment date.

<PAGE>

                  (iii) The Corporation  shall pay the dividends on the Series A
                  Preferred   Stock  described  in  Section   6(a)(i),   at  the
                  Corporation's option and in its sole discretion,  out of funds
                  legally  available  therefor  (A) in cash,  (B) in  shares  of
                  Common  Stock,  such that the number of shares of Common Stock
                  to be  distributed  as a dividend  to each  holder of Series A
                  Preferred  Stock  shall be equal  to the cash  amount  of such
                  dividend  payable to such holder on such dividend payment date
                  divided  by the  average  quote  per  share  of  Common  Stock
                  reported by OTC Bulletin  Board or any other stock exchange on
                  which the Common Stock is traded, as determined by the Company
                  (the "Per Share  Market  Value") for the fifteen  (15) trading
                  days immediately  preceding such dividend payment date, or (C)
                  in any combination of cash and shares of Common Stock that the
                  Corporation  may  determine in its sole  discretion,  with the
                  number  of  shares  of  Common  Stock  to  be  distributed  in
                  connection  therewith to be  calculated on the basis set forth
                  in Section 6(a)(iii)(B).

                  (iv) No  fractional  shares of Common  Stock or scrip shall be
                  issued  upon  payment  of any  dividends  in  shares of Common
                  Stock.  If more  than one share of  Series A  Preferred  Stock
                  shall be held by the same  holder at the time of any  dividend
                  payment  date,  the  number of full  shares  of  Common  Stock
                  issuable upon payment of such  dividends  shall be computed on
                  the  basis  of  the   aggregate   dividend   amount  that  the
                  Corporation  has  determined  to pay in Common  Stock  shares.
                  Instead of any  fractional  shares of Common Stock which would
                  otherwise  be issuable  upon  payment of such  dividends,  the
                  Corporation shall pay out of funds legally available  therefor
                  a cash  adjustment  in  respect of such  fractional  interest,
                  rounded to the nearest one hundredth  (1/100th) of a share, in
                  an amount equal to that fractional interest of the average Per
                  Share   Market   Value  for  the  fifteen  (15)  trading  days
                  immediately  preceding such dividend payment date,  rounded to
                  the nearest cent ($.01).

         b. Allocation of Dividends.  Dividends on the Series A Preferred Stock,
         if paid,  or if  declared  and set apart for  payment,  must be paid or
         declared and set apart for payment on all outstanding  shares of Series
         A Preferred  Stock  contemporaneously.  In the event  dividends  on the
         Series A  Preferred  Stock and any  other  series  of  Preferred  Stock
         ranking on a parity  therewith in respect thereto or any other class or
         series  of  capital  stock  of  the  Corporation  ranking  on a  parity
         therewith  in respect  thereto are  declared and paid in an amount less
         than all accumulated and current  dividends on all of such shares,  the
         total amount  declared  and paid shall be  allocated  among all of such
         shares so that the per share  dividend to be declared  and paid on each
         share is the same  percentage of the sum of the  accumulated  dividends
         for each such share.  In the event  dividends  are declared and paid on
         the Series A  Preferred  Stock in a  combination  of cash and shares of
         Common  Stock,  the  percentage  of the  dividend  paid in cash and the
         percentage  of the  dividend  paid in  stock  must be the same for each
         share of Series A Preferred Stock.


<PAGE>

         c. Dividend  Priorities.  The Corporation  shall not declare or pay any
         distributions  to the holders of the Common Stock or any other class or
         series of capital stock ranking junior to the Series A Preferred  Stock
         in respect of  dividends  during any period of time in which any shares
         of Series A Preferred  Stock are  outstanding or in which any dividends
         payable  on any  shares  of  Series  A  Preferred  Stock  have not been
         declared and paid in full. In this Section 6(c),  "distribution"  means
         the transfer of cash or property without consideration,  whether by way
         of dividend or otherwise  (except a dividend solely in shares of Common
         Stock),  or the purchase or redemption by the  Corporation of shares of
         Common  Stock or any other shares of capital  stock of the  Corporation
         ranking junior to the Series A Preferred  Stock in respect of dividends
         for cash or  property,  but  does not  include  the  repurchase  by the
         Corporation of shares from an officer, director, employee or consultant
         of the Corporation.

7.       Reacquired  Shares.  Any shares of Series A Preferred Stock  purchased,
         converted  or  otherwise  acquired  by the  Corporation  in any  manner
         whatsoever  shall not be  reissued  as part of such series and shall be
         retired promptly after the acquisition  thereof.  All such shares shall
         upon  their  retirement   become  authorized  but  unissued  shares  of
         Preferred Stock.

         SECOND: That said determination of the powers, designation, preferences
and  the   relative,   participating,   optional  or  other   rights,   and  the
qualifications,  limitations or restrictions thereof, relating to said series of
Preferred  Stock,  was duly made by the Board of  Directors  of the  Corporation
pursuant  to  the  provisions  of  the  Certificate  of   Incorporation  of  the
Corporation, as amended, and in accordance with the provisions of Section 151 of
the General Corporation Law of the State of Delaware.

         IN WITNESS WHEREOF,  said Corporation has caused this Certificate to be
signed by Norbert Sporns, its President, on the ___ day of ____________, _____.


                                        HQ SUSTAINABLE MARITIME INDUSTRIES, INC.



                                        By: ____________________________________
                                        Name: Norbert Sporns
                                        Title: President