Exhibit 10.1

                               PURCHASE AGREEMENT

         THIS PURCHASE AGREEMENT (together with all schedules,  exhibits and all
ancillary  agreements  contemplated  herein,  hereinafter  referred  to as  this
"Agreement"),  is entered  into as of the 17th of  August,  2004 by and among HQ
Sustainable  Maritime  Industries,  Inc.,  a  Delaware  corporation  ("HQSM"  or
"Company"),  Sino-Sult Canada (S.S.C.) Limited, a limited liability  corporation
existing in Canada  ("Owner"),  and Sealink Wealth Limited,  a limited liability
corporation existing in the British Virgin Islands  ("Sealink").  Owner is owned
by the following shareholders and officers of HQSM: Norbert Sporns, Lillian Wang
Li and Harry Wang Hua. Owner is the sole owner of Sealink, which is in turn, the
sole owner of the company  producing  nutraceutical  products in China under the
name of Hainan  Jiahua  Marine  Bio-products  Co.,  Ltd.,  a  limited  liability
corporation  existing in China  ("Hainan").  Hainan is the subject of a fairness
opinion by an independent  valuation  (the  "Appraisal")  by Vigers  Appraisal &
Consulting  Limited,  an  independent  appraiser in Hong Kong.  The Appraisal is
attached as Exhibit A to this Agreement.  Hereinafter,  HQSM,  Owner and Sealink
are each referred to individually as a "Party" and collectively as "Parties".

                                    RECITALS

         A.  Owner  and HQSM  believe  the  acquisition  of  Hainan  is of great
importance to HQSM's expansion.

         B. Hainan maintains title to certain assets, including, but not limited
to: (i) plant  buildings,  (ii)  manufacturing  equipment,  (iii)  environmental
control equipment, (iv) the right to produce products arising from the operation
of Hainan,  (v) the ownership rights to any  intellectual  property arising from
the  operations of Hainan;  and (vi)  customer  list and sales and  distribution
contracts.

         C. Owner owns 100% of the equity  interest in  Sealink,  which in turn,
owns 100% of the equity interest in Hainan.

         NOW THEREFORE,  on the stated premises and for and in  consideration of
the  mutual  covenants  and  agreements  hereinafter  set forth  and the  mutual
benefits to the Parties to be derived herefrom, it is hereby agreed as follows.

                                    ARTICLE I
                   REPRESENTATIONS, COVENANTS, AND WARRANTIES
                              OF OWNER AND SEALINK

         As an  inducement  to, and to obtain the  reliance  of HQSM,  Owner and
Sealink each represents and warrants as follows:

         Section  1.01--OWNERSHIP  OF  SEALINK.  Owner  is the  sole  legal  and
beneficial  owner of Sealink  free and clear of any claims,  charges,  equities,
liens, security interests, or encumbrances whatsoever. Sealink is the sole legal
and beneficial owner of Hainan free and clear of any claims, charges,  equities,
liens, security interests, or encumbrances whatsoever.

         Section  1.02--VALID  TRANSFER OF FULLY VESTED  SHARES.  Owner has full
right,  power,  and  authority  to  transfer,  assign,  convey,  and deliver his
ownership of Sealink. The delivery by Owner of the ownership interest of Sealink

<PAGE>

with all of its assets (the "Company Assets") and liabilities at the Closing (as
described in Section 3.03 herein) will convey to HQSM good and marketable  title
to Sealink,  free and clear of any claims,  charges,  equities,  liens, security
interests, or encumbrances whatsoever.

         Section  1.03--ORGANIZATION  OF OWNER  AND  SEALINK.  Each of Owner and
Sealink has taken,  or will have taken prior to Closing (as described in Section
3.03  herein),  all actions  required  by law, or  otherwise  to  authorize  the
execution and delivery of this Agreement.  Each of Owner and Sealink has or will
have prior to Closing (as  described  in Section 3.03  herein),  the full power,
authority,  and legal right and has or will have prior to Closing (as  described
in Section 3.03  herein),  taken all action  required by law to  consummate  the
transactions herein contemplated.

         Section 1.04--ENFORCEABLE  OBLIGATION. The transactions contemplated by
this  Agreement  are the valid and  binding  obligations  of Owner and  Sealink,
enforceable  against Owner and Sealink,  by HQSM in accordance with the terms of
this Agreement.

         Section  1.05--NO  CONFLICTS.  The  execution and delivery by Owner and
Sealink  of this  Agreement,  the  performance  by Owner  and  Sealink  of their
respective  obligations  under  this  Agreement  and  the  consummation  of  the
transactions  contemplated  hereby and thereby do not and will not: (i) conflict
with or result in a  violation  or breach of, (ii)  constitute  (with or without
notice or lapse of time or both) a default under, (iii) require Owner or Sealink
to obtain any  consent,  approval or action of, make any filing with or give any
notice to any person as a result or under the terms of,  (iv)  result in or give
to  any  person  any  right  of  termination,   cancellation,   acceleration  or
modification  in or with  respect  to,  (v)  result in or give to any person any
additional  rights or  entitlement  to  increased,  additional,  accelerated  or
guaranteed  payments  under, or (vi) result in the creation or imposition of any
lien upon  Owner or  Sealink or any of their  respective  assets and  properties
under,  any contract to which Owner or Sealink is a party or by which any of the
Company Assets is bound.

         Section  1.06--GOVERNMENTAL  AUTHORIZATIONS AND LICENSES. Each of Owner
and  Sealink  has,  or will have upon  Closing  (as  described  in Section  3.03
herein),   all   licenses,   franchises,   permits,   and   other   governmental
authorizations that are legally required to enable it to conduct its business in
all material respects as conducted.  No  authorization,  approval,  consent,  or
order of, or  registration,  declaration,  or  filing  with,  any court or other
governmental  body is required in connection  with the execution and delivery by
Owner and Sealink of this Agreement and consummation by Owner and Sealink of the
transactions contemplated hereby.

         Section 1.07--BINDING  OBLIGATION.  When executed by Owner and Sealink,
this Agreement,  and all exhibits hereto and the  representations and warranties
contained  herein and therein will constitute a valid and binding  obligation of
Owner and Sealink,  jointly and severally,  enforceable  in accordance  with its
respective terms.

         Section 1.08--OPTIONS OR WARRANTS OR SUBSCRIPTIONS. Except as set forth
in Schedule 1.08 to this  Agreement,  there are no existing  options,  warrants,
calls,  subscriptions  or  commitments  of any character  relating to any equity
securities of Owner or Sealink.


<PAGE>

         Section 1.09--COMPLIANCE WITH LAWS AND REGULATIONS.  Owner, Sealink and
Hainan each has complied with all  applicable  statutes and  regulations  in the
relevant  jurisdiction  except to the extent  that  noncompliance  would not (i)
materially and adversely affect the business, operations, properties, assets, or
condition of Owner,  Sealink or Hainan or (ii) result in the  occurrence  of any
material liability for Owner, Sealink or Hainan.

         Section   1.10--LITIGATION.   There  are  no  claims,  actions,  suits,
proceedings or  investigations  pending or threatened or reasonably  anticipated
against or  affecting  Owner,  Sealink or Hainan or any  assets or  business  of
either Owner,  Sealink or Hainan or this Agreement or any exhibit hereto, at law
or in equity,  by or before any court,  arbitrator  or  governmental  authority,
domestic or foreign.

         Section 1.11--NO  BANKRUPTCY.  There has not been filed any petition or
application, nor any proceeding commenced by or against Owner, Sealink or Hainan
with respect to any assets of Owner,  Sealink or Hainan under any law,  domestic
or  foreign,  relating  to  bankruptcy,  reorganization,   fraudulent  transfer,
compromise, arrangements, insolvency, readjustment of debt or creditors' rights,
and no assignment  has been made by Owner,  Sealink or Hainan for the benefit of
creditors generally.

         Section  1.12--NO OPTION PLAN. There is no share option plan or similar
plan to acquire any additional shares or units or other equity interests, as the
case may be, of Owner or Sealink or securities  convertible or exercisable  into
or exchangeable  for, or which otherwise  confer on the holder thereof any right
to acquire, any such additional shares or units or equity interests, as the case
may be.

         Section 1.13--FINANCIAL STATEMENTS OF HAINAN.

                  (a) Each set of financial statements (including, in each case,
any related  notes  thereto)  contained in the audited  financial  statements of
Hainan as  attached  hereto  as  Schedule  1.13(a)  and  incorporated  herein by
reference and made an integral part hereof (the "Hainan Financial  Statements"),
was  prepared  in  accordance  with China GAAP  applied  on a  consistent  basis
throughout the periods involved.

                  (b) The Hainan  Financial  Statements  are true,  correct  and
complete and  accurately  reflect the  financial  condition of Hainan as of each
period reflected  therein.  The Hainan Financial  Statements  fairly present the
financial  condition of Hainan and the results of its  operations and cash flows
as of the dates thereof. The Hainan Financial Statements include all adjustments
necessary to present fairly the information for such period.

                  (c) To the knowledge of Owner and Sealink, except as disclosed
in the Hainan  Financial  Statements,  there has been no material  change in the
financial condition, operations or business of Hainan since December 31, 2003.

                  (d) Except as  otherwise  disclosed  in the  Hainan  Financial
Statements,  Hainan does not have any material liabilities.  Except as disclosed
in Schedule 1.13(d), Sealink does not have any material liabilities.


<PAGE>

         Section  1.14--TAX  RETURNS.  Except as set forth on Schedule 1.14, all
required tax returns and  information  returns and reports of or relating to any
tax and the  information  and data  contained  therein  have been  properly  and
accurately  compiled and completed in all material respects,  and filed and paid
in a timely manner with the  appropriate  taxation  authority for each of Owner,
Sealink and Hainan.

         Section 1.15--GUARANTEES.  Neither Owner nor Sealink nor Hainan has any
outstanding  contracts or commitments  guaranteeing  (or  indemnifying or making
contribution  to  others  for  breaches  in  connection  with)  the  payment  or
collection or the performance of the obligations of others, and none of them has
entered  into any  deficiency  agreements,  or issued any  comfort  letters,  or
otherwise  granted  any  material  financial  assistance  to any  person,  firm,
corporation or other entity.

         Section  1.16--NO  NON-COMPETITION  AGREEMENT.  There is no restriction
agreement  nor  any  non-solicitation  or  non-competition  agreement  or  other
agreement  restricting  in any way the  carrying  on of the  business  of Owner,
Sealink or Hainan binding upon Owner, Sealink or Hainan.

         Section 1.17--REAL  PROPERTY.  Owner does not own any real or otherwise
immovable property.

         Section 1.18--PERSONAL PROPERTY; INTELLECTUAL PROPERTY.

                  (a) All of the  personal  property  (other  than  Intellectual
Property,  as hereinafter  defined) (the  "Personal  Property") is in existence.
Each of Owner,  Sealink and Hainan has good and  marketable  title to all of its
respective  assets and properties,  free and clear of all  encumbrances or liens
howsoever  defined and such assets and  properties  consist of all of the assets
and  properties  required  by each of Owner,  Sealink  and Hainan to conduct its
respective  businesses  consistent  with past  practice.  There are no  material
defects,  latent or patent, in the Personal Property. The machinery or equipment
of Sealink and Hainan are in proper  operating  condition and repair (subject to
normal wear and tear).

                  (b) Each of Owner, Sealink and Hainan owns or has the right to
use pursuant to license,  sublicense,  agreement, or permission all intellectual
property  used for the  operation of Hainan's  business as presently  conducted,
which intellectual  property shall for purposes of this Agreement  include,  but
not be limited to, all (i) patents and patent  rights,  trademarks and trademark
rights,  trade names and trade name rights,  copyrights  and  copyright  rights,
service  marks and service mark  rights,  and all pending  applications  for and
registration  of the same; (ii) brand names,  trade dress,  business and product
names,  logos and  slogans,  and (iii)  proprietary  technology,  including  all
know-how,  trade secrets,  quality control  standards,  reports  (including test
reports),  designs, processes, market research and other data, computer software
and  programs  (including  source  codes and related  documentation),  formulae,
inventions  and other ideas,  methodologies,  and  technical  information,  (iv)
claims of the owner of any intellectual  property for infringement of its rights
by a third party, no matter when arising,  and (v) other  intellectual  property
(collectively, the "Intellectual Property").


<PAGE>

         Each item of Intellectual  Property owned or used by Owner, Sealink and
Hainan immediately prior to the Closing hereunder will be owned or available for
use by Company on identical terms and conditions  immediately  subsequent to the
Closing hereunder. Each of Owner, Sealink and Hainan has taken all necessary and
desirable action to maintain and protect each item of Intellectual Property that
it owns or uses.  Schedule 1.18(b) sets forth a true,  correct and complete list
(together with description,  registration  number and registration date) of each
item of Intellectual  Property owned by Owner, Sealink and Hainan or used in the
operation  of  Hainan's  business,  and,  to  the  extent  registered  with  any
governmental  authority,  the name, date of registration and registration number
of each such item. To the knowledge of Owner, Sealink and Hainan, no third party
has  interfered  with,  infringed  upon,  misappropriated,  or  violated  in any
material  respect  any   Intellectual   Property.   The  Intellectual   Property
constitutes all the intellectual property that is material to the conduct of the
business  of Hainan as now  conducted.  Hainan  has  taken  reasonable  steps to
protect its confidential information and trade secrets.

         Section 1.19--NO MATERIALLY ADVERSE UNDISCLOSED FACTS. There is no fact
known to the  management  of Owner,  Sealink or Hainan which has not  previously
been  disclosed  in writing to Company  which may  materially  adversely  affect
Owner, Sealink and Hainan or any such company's  respective assets,  properties,
business,  prospects,  operation or condition (financial or otherwise), or which
should  be  disclosed  to  Company  in order to make any of the  warranties  and
representations  herein true and not  misleading and no state of facts is known,
to the  management of Owner,  Sealink or Hainan,  which would operate to prevent
Owner,  Sealink or Hainan from continuing to carry on either of their businesses
in the manner in which carried on at the date hereof.

         Section 1.20--SARBANES-OXLEY COMPLIANCE.

                  (a) Each of Owner,  Sealink and their  subsidiaries  maintains
accurate books and records  reflecting its assets and  liabilities and maintains
proper and adequate  internal  accounting  controls which provide assurance that
(i) transactions are executed with management's authorization; (ii) transactions
are recorded as  necessary  to permit  preparation  of any  requisite  financial
statements to maintain  accountability for its consolidated assets; (iii) access
to  Sealink's   assets  is  permitted  only  in  accordance  with   management's
authorization; (iv) the reporting of Sealink 's assets is compared with existing
assets at regular intervals;  and (v) accounts,  notes and other receivables and
inventory  are  recorded  accurately,  and proper and  adequate  procedures  are
implemented to effect the collection thereof on a current and timely basis.

                  (b) Neither Owner nor Sealink has,  since  September 30, 2001,
extended or maintained credit,  arranged for the extension of credit, or renewed
an extension of credit, in the form of a personal loan to or for any director or
executive  officer  (or  equivalent  thereof)  of either  Owner,  Sealink or any
subsidiary thereof.  Schedule 1.20(b) identifies any loan or extension of credit
maintained by Owner or Sealink to which the second sentence of Section  13(k)(1)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") applies.

                  (c) On or before  Closing,  each of Owner and Sealink and each
of its directors and its senior  financial  officers  shall have  consulted with
Owner's and Sealink's independent counsel, as appropriate,  with respect to, and
(to the extent  applicable to Owner or Sealink,  as the case may be) is familiar
in all material respects with all of the requirements of the  Sarbanes-Oxley Act
of 2002.  Each of Owner and Sealink is in compliance  with the provisions of the

<PAGE>

Sarbanes-Oxley  Act of  2002  applicable  to it as of the  date  hereof  and has
implemented  such programs and has taken  reasonable  steps,  upon the advice of
Owner's and Sealink's independent counsel,  respectively,  to ensure Owner's and
Sealink's  future  compliance  (not  later  than  the  relevant   statutory  and
regulatory  deadlines therefor) with all provisions of the Sarbanes-Oxley Act of
2002 which shall become  applicable  to Owner and Sealink after the Closing Date
hereof.

                  (d) On or  before  Closing,  each of Owner and  Sealink  shall
maintain  disclosure  controls and procedures  required by Rule 13a-15 or 15d-15
under the  Exchange  Act;  such  controls and  procedures  shall be effective to
ensure  that  all  material  information   concerning  Owner,  Sealink  and  its
subsidiaries is made known on a timely basis to management of Owner and Sealink.
Such  disclosure  controls  will remain in effect on the Closing Date hereof and
made  available  to the parties  responsible  for the  preparation  of Company's
filings with the  Commission  and other public  disclosure  documents.  Schedule
1.20(d) lists, and each of Owner and Sealink has delivered to Company copies of,
all written  descriptions  of, and all  policies,  manuals  and other  documents
promulgating, such disclosure controls and procedures.

         Section   1.21--ABSENCE  OF  CERTAIN  CHANGES  OR  EVENTS.   Except  as
contemplated by this Agreement or any transactions or developments  contemplated
thereby,  from the date of this  Agreement  until the completion of the Closing,
neither Owner nor Sealink will,  other than as has been  disclosed in writing to
Company: (i) incur any liability or obligation whatsoever, secured or unsecured,
direct or indirect, other than in the ordinary and usual course of its business;
(ii)  enter  into any  contracts  or  agreements  whatsoever,  other than in the
ordinary and usual conduct and course of either of its businesses;  (iii) change
any of its accounting methods, principles,  practices or policies; (iv) cease to
operate  its  properties,  if any, or fail to  maintain  any of its  properties,
rights and assets consistently with past practices; (v) sell or otherwise in any
way alienate or dispose of any of its assets  other than in the ordinary  course
of business  and in a manner  consistent  with past  practices;  (vi) modify its
charter  documents or capital  structure;  (vii) make any dividend to any of its
shareholders or to any affiliate or associate thereof, or reserve or declare any
dividend;  (viii)  other than in the ordinary  course of business,  grant to any
customer any special  allowance or  discount,  or change its pricing,  credit or
payment  policies;  (ix)  make any loan or  advance,  or  assume,  guarantee  or
otherwise  become liable with respect to the  liabilities  or obligations of any
person,  or (x)  purchase  or  otherwise  acquire  any  shares  or other  equity
security, as the case may be, in any person.

         Section  1.22--INFORMATION  SUPPLIED. The information supplied by Owner
and Sealink  specifically for inclusion in the information  statement to be sent
to the  shareholders  of  Company  shall not  contain  any untrue  statement  of
material fact or omit to state any material  fact required to be stated  therein
or  necessary  in order  to make the  statements  therein,  in the  light of the
circumstances  under  which it was  made,  not  misleading  or omit to state any
material fact necessary to correct any statement in any earlier communication to
the shareholders of Company with respect to this Agreement or any transaction or
development   contemplated   thereby  or  hereby,  which  has  become  false  or
misleading.

         Section 1.23--RELIANCE. All representations and warranties of Owner and
Sealink  contained  herein,  shall be deemed to have been relied upon by Company
notwithstanding any investigation  heretofore or hereafter made by Company or by
its  counsel and shall  survive  the date hereof and  continue in full force and
effect  for the  benefit  of  Company  until  the  limitation  period  under any
applicable  tax  statute has  expired  or, in all other  cases,  until the first
anniversary of the date hereof.


<PAGE>

         Section 1.24--FULL  DISCLOSURE.  The  representations and warranties of
Owner  and  Sealink  contained  in this  Article  I of this  Agreement  or to be
furnished in or in connection with documents  mailed or delivered to the Company
in connection with the  consummation  of this Agreement,  do not contain or will
not  contain,  any  untrue  statement  of a  material  fact,  or omit to state a
material  fact  required to be stated herein or therein or necessary to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading.

                                   ARTICLE II
                         REPRESENTATIONS, COVENANTS, AND
                               WARRANTIES OF HQSM

         As an  inducement  to, and to obtain the reliance of Owner and Sealink,
HQSM represents and warrants as follows:

         Section 2.01--ORGANIZATION AND DUE AUTHORIZATION. HQSM is a corporation
duly  organized,  validly  existing,  and in good standing under the laws of the
state of Delaware and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders  of public  authorities  to own all of its  properties  and  assets.  The
execution and delivery of this Agreement does not, and the  consummation  of the
transactions  contemplated  hereby  will not  violate  any  provision  of HQSM's
certificate of  incorporation  or bylaws.  HQSM has taken all action required by
law, its certificate of incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this  Agreement,  and HQSM has full power,  authority,
and legal right and has taken all action  required by law,  its  certificate  of
incorporation,  bylaws,  or  otherwise to  consummate  the  transactions  herein
contemplated.

         Section  2.02--CAPITALIZATION  AND OUTSTANDING SHARES. As of August 17,
2004, HQSM'S  authorized  capital  currently  consists of 200,000,000  shares of
common stock, par value $0.001 (the "Common Stock"),  of which 63,809,437 shares
of Common Stock are issued and  outstanding.  All issued and outstanding  shares
are legally issued,  fully paid,  non-assessable  and not issued in violation of
the pre-emptive or other rights of any person.

         Section 2.03--APPROVAL OF AGREEMENT. The board of directors of HQSM has
approved this Agreement and the transactions contemplated herein.

                                   ARTICLE III
                  PURCHASE AND SALE, PURCHASE PRICE AND CLOSING

         Section  3.01--PURCHASE AND SALE, THE PURCHASE PRICE. At Closing, Owner
agrees to assign,  transfer,  and deliver to HQSM,  free and clear of all liens,
pledges,  encumbrances,  charges,  restrictions  or known  claims  of any  kind,
nature, or description,  the whole ownership interest (represented by shares) of
Sealink   against  a  total   purchase   price  of  twenty  million  US  Dollars
(US$20,000,000) ("Purchase Price"), and HQSM agrees to issue and deliver: (i) an

<PAGE>

aggregate   consideration   of  twenty   million  US  Dollars   (US$20,000,000),
representing  the fair  market  value of Hainan  as set  forth in the  Appraisal
discounted by 15%, in the following manner: $8,888,655 in the form of 12,698,078
shares of HQSM's Common Stock up to but not exceeding  19.9% of the  outstanding
shares of HQSM's Common Stock on a fully-diluted  basis immediately prior to the
Closing  Date,  shall  be  issued  by HQSM in a  private  placement  transaction
pursuant to Section 4(2) of the Securities Act of 1933, as amended and delivered
to the  shareholder  listed in Schedule 3.04 hereto (the "Share  Recipient") and
(ii) the remaining  balance of  $11,111,345  shall be delivered in the form of a
convertible  promissory note issued to Owner by HQSM (the  "Convertible  Note"),
substantially  in the form attached  hereto as Exhibit B. The  Convertible  Note
shall accrue interest at the rate of 5% per annum and shall be convertible into:
first one hundred thousand US Dollars  (US$100,000) for 100,000 shares of HQSM's
preferred stock, $0.001 par value per share,  issuable pursuant to a certificate
of  designation,  substantially  in the form  attached  hereto as Exhibit C, and
thereafter  the  remaining  value  of the  Convertible  Note  in the  amount  of
US$11,011,345  into  15,730,493  shares of HQSM's Common Stock.  The Convertible
Note shall be convertible  only upon  completion of an audit of the  acquisition
that is the subject of this Agreement, performed to the satisfaction of HQSM and
receipt of all necessary shareholder consents and approvals.

         Section 3.02--[RESERVED]

         Section  3.03--CLOSING.  The closing  ("Closing")  of the  transactions
contemplated  by  this  Agreement  shall  be at a  mutually  convenient  time as
determined by the Parties ("Closing Date").

         Section  3.04--CLOSING  EVENTS.  At the  Closing,  each of the  Parties
hereto shall execute,  acknowledge, and deliver (or shall ensure to be executed,
acknowledged, and delivered) the following:

                  (a) in the case of Owner, a share certificate representing the
whole ownership interest of Sealink duly endorsed for transfer or accompanied by
a stock power; and

                  (b) in the case of HQSM,  (i) a stock  certificate  evidencing
the share  ownership of the Share Recipient as set forth on Schedule 3.04 hereto
and (ii) the Convertible Note.

         Each Party shall also  deliver  such other  items as may be  reasonably
requested by the other Party and/or their  respective  legal counsel in order to
effectuate or evidence the transactions contemplated hereby.

                                   ARTICLE IV
                   CONDITIONS PRECEDENT TO OBLIGATIONS OF HQSM

         The  obligations  of HQSM  under  this  Agreement  are  subject  to the
satisfaction, at or before the Closing Date, of the following conditions:

         Section  4.01--ACCURACY OF  REPRESENTATIONS.  The  representations  and
warranties  made by Owner and Sealink in this  Agreement were true when made and
shall be true at the  Closing  Date with the same  force  and  effect as if such
representations  and warranties  were made at and as of the Closing Date (except

<PAGE>

for changes therein  permitted by this Agreement),  and Owner,  Sealink and each
Share  Recipient  shall  have  performed  or  complied  with all  covenants  and
conditions  required by this  Agreement to be performed or complied with by them
prior to or at the Closing.

         Section 4.02--NO  MATERIAL  ADVERSE CHANGE.  Prior to the Closing Date,
there shall not have  occurred  any  material  adverse  change in the  financial
condition, business, or operations of Sealink or Hainan nor shall any event have
occurred  which,  with the lapse of time or the giving of  notice,  may cause or
create any  material  adverse  change in the  financial  condition,  business or
operations of Sealink or Hainan.

         Section  4.03--AUDIT  OF  ACQUISITION.  Sealink  shall have  caused the
preparation and subsequent  audit of the  consolidated  financial  statements of
Sealink and Hainan for the annual period ended December 31, 2003 to be performed
in  accordance  with US  GAAP to the  reasonable  satisfaction  of HQSM  for the
purposes of the transactions herein contemplated.

         Section 4.04--CONSENTS, ETC. HQSM shall have received evidence, in form
and  substance  reasonably  satisfactory  to it,  that such  licenses,  permits,
consents, approvals,  authorizations,  qualifications and orders of governmental
authorities,  shareholders  and other third  parties as necessary in  connection
with the transactions contemplated hereby have been obtained.

                                    ARTICLE V
            CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER AND SEALINK

         The  obligations  of Owner and Sealink under this Agreement are subject
to the satisfaction, at or before the Closing Date, of the following conditions:

         Section  5.01--ACCURACY OF  REPRESENTATIONS.  The  representations  and
warranties  made by HQSM in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein  permitted by this Agreement)
with the same force and effect as if such  representations  and warranties  were
made at and as of the Closing Date,  and HQSM shall have  performed and complied
with all covenants and conditions  required by this Agreement to be performed or
complied with by HQSM prior to or at the Closing.

         Section 5.02--NO  MATERIAL  ADVERSE CHANGE.  Prior to the Closing Date,
there shall not have  occurred  any  material  adverse  change in the  financial
condition,  business,  or  operations  of HQSM nor shall any event have occurred
which,  with the lapse of time or the giving of notice,  may cause or create any
material  adverse change in the financial  condition,  business or operations of
HQSM.

                                   ARTICLE VI
                                  MISCELLANEOUS

         Section  6.01--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.


<PAGE>

         Section 6.02--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  has
delivered to the respective 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.

                  (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  6.03--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 or  Parties  shall
reimburse the non-breaching Party or Parties for all costs, including reasonable
attorney's fees, incurred in connection therewith and in enforcing or collecting
any judgment rendered therein.

         Section 6.04--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  6.05--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 6.06--SURVIVAL;  TERMINATION. The representations,  warranties,
and covenants of the  respective  Parties shall survive the Closing Date and the
consummation  of the  transactions  herein  contemplated  for a period  of three
months.  All rights and obligations under this entire Agreement shall be binding
upon and  inure to the  benefit  of the  heirs,  executors,  administrators  and
assigns of the Parties.


<PAGE>

         Section 6.07--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  6.08--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.  At any time prior to the Closing Date,  this
Agreement may be amended by a writing signed by all 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 or Parties for whose benefit the provision is intended.

         Section 6.09--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 6.10--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,  NY 10005,  Attention:
President,  to Owner at the following address:  7305 Marie-Victorin,  Suite 100,
Brossard,  Quebec, Canada J4W 1A6, Attention:  President, and to Sealink at Unit
1105, 11th Floor,  Tower 1, Enterprise  Square, #9 Sheun Yuet Road, Kowloon Bay,
Hong Kong, 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 6.11--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 6.12--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 6.13--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.  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.


<PAGE>

         Section 6.14--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.



         [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]




























<PAGE>

         IN WITNESS  WHEREOF,  the Parties  hereto  have  caused  this  Purchase
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



SEALINK WEALTH LIMITED

By: /s/ Harry Wang Hua
   --------------------------
Name: Harry Wang Hua
Title: Director








<PAGE>

                                  SCHEDULE 3.04

         Name of Share  Recipient  and the  number of  shares  it is to  receive
pursuant to this Agreement:
























<PAGE>

                                    EXHIBIT A
                                    ---------

                                FAIRNESS OPINION
                                ----------------

               [Vigers Appraisal & Consulting Limited letterhead]




--------------------------------------------------------------------------------

                                     REPORT

                                   CONSIDERING

                              THE FAIR MARKET VALUE

                                       of

                             A 100% equity interest

                                       in

                    HAINAN JIAHUA MARINE BIOPRODUCTS CO. LTD.

                                      AS OF

                                  30 JUNE 2004









Client            :        Hainan Jiahua Marine Bioproducts Co. Ltd.

Ref. No.          :        RHKK/EC/jcsf/VA 3601-2004

Report Date       :        2 August 2004


--------------------------------------------------------------------------------


<PAGE>

Ref No.:          RHKK/EC/jcsf/VA 3601-2004
Date:             2 August 2004

The Board of Directors
Hainan Jiahua Marine Bioproducts Company Limited
Unit C, Dacheng Commercial Bldg.,
No.14 Haidian Si Dong Road,
Haikou, Hainan, the PRC


Dear Sirs / Madams,

In accordance with the instruction from Hainan Jiahua Marine Bioproducts Company
Limited  ("the  Company"),  we have  carried out a valuation  of a 100 per cent.
equity interest in the Company as at 30 June 2004 (the "Valuation  Date").  This
letter summarizes the principal conclusions of our valuation. We understand this
valuation is required as a reference  for the  acquisition  of the Company by HQ
Sustainable  Maritime  Industries,  Inc. ("HQSM"),  a listed company in the U.S.
NASDAQ stock market.


Background

Initially  established as a Sino-Canadian joint venture enterprise in the PRC in
February  2001 with a  registered  capital of  US$3.0million,  the  Company  was
previously  held 60% in common  equity by a Canadian  company  called  Sino-Sult
Investment  Consulting Company Limited ("Sino-Sult") and 40% in common equity by
a PRC company  called [name of entity in Chinese  omitted]  (Hainan Jiahua Ocean
Product and Biopharmacy (Group) Company Limited) ("JOPB").  In 2004, the Company
was  transformed  into a 100%  foreign-invested  enterprise in the PRC having an
operating  term of 20 years upon the approval of the  Department  of Commerce of
Hainan  Province on the transfer of JOPB's 40% share ownership in the Company to
Sino-Sult  on 26 July 2004.  The  Company is now  wholly-own  by Sealink  Wealth
Limited ("Sealink Wealth"), a company incorporated in the British Virgin Islands
upon the approval of the  Department  of Commerce of Hainan  Province  (document
serial no. GengZi (2004) 142) on the transfer of the 100% share ownership in the
Company from Sino-Sult to Sealink Wealth on 4 August 2004.


THE BUSINESS

The  Company is  located in  Wenchang  City of Hainan  Province,  the PRC and is
principally  engaged  in the  production  and sales of marine  bio-products  and
healthcare  products in the PRC. It currently holds two  subsidiaries,  a marine
bio-products  factory and the Marine  Organism  Research  Institute.  The marine
bio-products  factory is located in Wenchang  City of Hainan  Province  having a


                                       1
<PAGE>


ground  floor area of 16,667  sq. m. and a  construction  area of  approximately
8,000 sq. m., and consists of two production lines: the powder-product  line and
the oil-product  line. We understand that the bio-products  factory has obtained
the HACCP certification from the CIQ (China Entry-Exit Inspection and Quarantine
Bureau).  The Marine Organism Research Institute is leaded by a group of science
experts  specializing  in the research and  development  of marine  organisms in
China. It is our understanding that most of them have fruitful experience in the
research and  development of shark  cartilage,  shark liver oil and seal derived
healthcare  products and most are the winners of Science and Technology Progress
Awards at the national or provincial  standards in the PRC. Besides, the Company
has  established   long-term   relationship  with  the  Qingdao   University  of
Oceanography   in  terms  of   production-research-training.   Furthermore   the
production  lines  are  ideally  suited  for the  manufacture  of  nutraceutical
components.  The specific gravity molecular separator and accessory equipment in
the plant is required for the  manufacture of  nutraceutical  products which can
serve as feed additives in feed production such as Tilapia and shrimp feed.

Six  healthcare  products are currently sold under the brand name "Jiahua" [name
of brand name in Chinese omitted] of the Company, namely, Jiahua Shark Cartilage
Capsule  [name of product in Chinese  omitted],  Jiahua  Shark Liver Oil Capsule
[name of product in Chinese  omitted],  Jiahua  Shark  Liver (soft gel) [name of
product  in  Chinese  omitted],  Jiahua  Seal Oil (soft gel) [name of product in
Chinese  omitted],  Jiahua  Seal  Genitals  Capsule  [name of product in Chinese
omitted] and Jiahua Runlizi Tablet [name of product in Chinese  omitted].  Shark
liver oil contains elements like Alkoxy-glycerols  which are believed beneficial
to human  immune  system  whereas  shark liver also  contains  ingredients  like
squalene, vitamin D and vitamin E that are helpful for maintaining human health.
Seal oil, obtained from fresh seal blubbers,  is found to contain chemicals like
EPA, DHA and DPA  (poly-unsaturated  fatty acids of Omega  series) that are also
proven  beneficial  to our health.  Seal  genitals are directly  imported by the
Company  from  Canada  and  are  purified   through  special   bio-technological
processes. Its active ingredients are believed beneficial to human immune system
and reproductive system.


Basis and Methodology of Valuation

Our Valuation was carried out on a fair market value basis. Fair market value is
defined as "the  estimated  amount for which an asset should be exchanged on the
date of  valuation  between  a willing  buyer  and a willing  seller in an arm's
length  transaction  after proper  marketing  wherein the parties had each acted
knowledgeably, prudently and without compulsion."

The  value of the  Company  was  developed  through  the  application  of Income
Approach with the technique known as the Discounted Cash Flow Method to discount
the future  economic  benefits of the Company into a present market value.  This
method eliminates the discrepancy in the time value of money by using a discount
rate to reflect all business risks including  systematic and unsystematic  risks
in relation to the business.



                                       2
<PAGE>

In applying the discounted  cashflow  method,  we have determined an appropriate
discount rate for the assets under  review.  The cost of equity  explaining  the
systematic risks was developed  through the Capital Asset Pricing Model ("CAPM")
whereas the  unsystematic  risk including size risk, lack of  marketability  and
specific risk of the business were also taken into account by making appropriate
adjustments  in the  determination  of the discount  rate of the  business.  The
discount  rate and  long-term  growth rate used in this  valuation  exercise are
15.5% and 1.5%  respectively and we believe these figures are reasonable for the
business under concern.

Our  valuation  requires  consideration  of all relevant  factors  affecting the
operation of the business and its ability to generate future investment returns.
The factors considered in the valuation  included,  but were not limited to, the
followings:

     -    present business nature and future development of the Company;
     -    global  economic   outlook  in  general  and  the  specific   economic
          environment related to the business of the Company;
     -    historical and projected operating results of the Company;
     -    the  financial  and  business  risk  of  the  Company   including  the
          continuity of income and the projected future results;
     -    competitive  advantages  and  disadvantages  of the Company in related
          industries;

As part of our  analysis,  we are  furnished  with  information  prepared by the
Company that includes related  operational  information and documents  regarding
the subject business.

We have reviewed the information  required and we believe no material factor has
been  intentionally  omitted or withheld from the given  information in order to
reach an informed view.


MAJOR CONSIDERATIONS & ASSUMPTIONS

Assumptions considered to have significant sensitivity effects in this valuation
were  evaluated and validated in order to provide a more accurate and reasonable
basis for arriving at our assessed  value.  Based on our  experience  in valuing
businesses of similar nature, we consider the assumptions made in this valuation
report to be reasonable.

Our major considerations and assumptions are listed as follows:



                                       3
<PAGE>

     -    There will be no  material  adverse  change in the  political,  legal,
          fiscal or economic  condition  in the  countries  in which the Company
          carry on its business;

     -    Currency  exchange  rates in countries  related to the business of the
          Company will not differ materially from their current rates;

     -    The Company will retain its key  management,  competent  personnel and
          staff to support its ongoing operation;

     -    Market  trend  and  conditions  for  the  biopharmaceutical  industry,
          healthcare  industry  and  other  related  industries  in the  regions
          related to the business of the Company will not deviate  significantly
          from the economic forecasts in general;

     -    The regulatory  policies concerning  biopharmaceutical  and healthcare
          industries,  hunting of sharks and seals,  and export of seal genitals
          in countries  related to the business of the Company will not have any
          adverse impact on the Company;

     -    We have estimated the future cashflow up to year 2009 and the cashflow
          after year 2009 will be summed up as a terminal value;

     -    We have  considered in this  valuation the revenue of the Company from
          the  sales of six  major  products,  namely,  Jiahua  Shark  Cartilage
          Capsule [name of product in Chinese  omitted],  Jiahua Shark Liver Oil
          Capsule [name of product in Chinese omitted], Jiahua Shark Liver (soft
          gel) [name of product in Chinese omitted],  Jiahua Seal Oil (soft gel)
          [name of product in Chinese  omitted],  Jiahua Seal  Genitals  Capsule
          [name of product in Chinese  omitted] and Jiahua  Runlizi Tablet [name
          of product in Chinese  omitted] during the valuation  period.  We have
          also  estimated  the revenue  contribution  from its new products that
          will possibly be launched during the valuation period;

     -    We have only  considered in this  valuation the revenue from the sales
          of the Company's major products and new products in the PRC;

     -    We have  assumed  that the  bio-products  factory of the Company  will
          continue  to  meet  the  required  standards  specified  in the  HACCP
          certification during the valuation period;

     -    As per the management of the Company, we have assumed the Company will
          not incur any  substantial  capital  expenditure  during the valuation
          period;

     -    We have only  considered a collection of operating  income and related
          expenses such as direct costs, management costs and taxes. We have not
          made  provision  for  non-operating  cash flow items such as  interest
          income, investment income, subsidized income, exchange rate gain/loss,
          provision for bad debt, etc. in the valuation model;


                                       4
<PAGE>

We have  assumed the  reasonableness  of  information  provided  and relied to a
considerable extent on such information in arriving at our opinion of value.






















                                       5

<PAGE>

OPINION OF VALUE

The conclusion of value is based on accepted valuation  procedures and practices
that rely substantially on the use of numerous assumptions and the consideration
of many uncertainties, not all of which can be easily quantified or ascertained.
While the  assumptions  and  consideration  of such matters are considered to be
reasonable,  they are inherently subject to significant  business,  economic and
competitive  uncertainties  and  contingencies,  many of which  are  beyond  the
control of the Company.

Based on the aforesaid investigation, analysis and valuation method employed, it
is our opinion that as of the Valuation Date, the fair market value of a 100 per
cent.  equity  interest  in the  Company is  reasonably  stated by the amount of
(RENMINBI ONE HUNDRED AND NINETY EIGHT MILLION TWO HUNDRED THOUSAND ONLY).

We have not  investigated  the title to or any liabilities  against the business
being valued.  We hereby  certify that we have neither  present nor  prospective
interests in the Company or value reported.



Yours faithfully,
For and on behalf of
Vigers Appraisal & Consulting Limited





/s/ Raymond K. K. Ho
--------------------
Raymond K.K. Ho
MRICS  MHKIS  MSc (e-com)
Registered Professional Surveyor
Executive Director



Note:
Mr. Raymond K.K. Ho is a registered  professional  surveyor who has over 8 years
of experience in business valuation and intangible asset valuation in Hong Kong,
Macau and the PRC.




                                       6
<PAGE>

                               LIMITING CONDITIONS


1.   Vigers  Appraisal  and  Consulting  Limited  shall not be  required to give
     testimony or attendance in court or to any  government  agency by reason of
     this  valuation,  with reference to the project  described  herein,  unless
     prior arrangements have been made.


2.   No opinion is intended to express for matters that  require  legal or other
     specialized  expertise or knowledge,  beyond that  customarily  employed by
     valuers.


3.   As  part  of  our  analysis,   we  have  reviewed  financial  and  business
     information from public sources  together with such financial  information,
     project  documentation  and other  pertinent data concerning the project as
     has been made available to us. Such information was provided by the Company
     and related parties acting in concert. We assumed such information reliable
     and legitimate. We have relied to a considerable extent on such information
     provided in arriving at our opinion of value.


4.   Our conclusions assume a continuation of prudent  management  policies over
     whatever period of time,  which is believed  reasonable and is necessary to
     maintain the character and integrity of the assets valued.


5.   We assume that there are no hidden or unexpected conditions associated with
     the assets valued that might adversely affect the reported value.  Further,
     we assume no  responsibility  for changes in market  conditions,  which may
     require an adjustment in the valuation.


6.   Neither  the  whole  nor any part of this  report  and  valuation,  nor any
     reference thereto,  may be included in any document,  circular or statement
     without  our  written  approval  of the form and  content  in which it will
     appear.


7.   This report is confidential to the client for the specific purpose to which
     it refers.  In accordance  with our standard  practice,  we must state that
     this  report and  valuation  is for the use only of the party to whom it is
     addressed  and no  responsibility  is  accepted  to any third party for the
     whole or any part of its contents.





                                       7
<PAGE>

                           GENERAL SERVICE CONDITIONS

The  service(s)  provided by Vigers  Appraisal  and  Consulting  Limited will be
performed in accordance with professional  appraisal standard.  Our compensation
is not contingent in any way upon our conclusions of value.  We assume,  without
independent  verification,  the accuracy of all data provided to us. We will act
as an independent  contractor and reserve the right to use  subcontractors.  All
files,  working  papers or  documents  developed  by us during the course of the
engagement  will be our  property.  We will  retain  this data for as long as we
wish.

Our report is to be used only for the  specific  purpose  stated  herein and any
other use is  invalid.  No reliance  may be made by any third party  without our
prior  written  consent.  You may show our report in its entirety to those third
parties who need to review the information  contained herein. No one should rely
on our report as a substitute for his or her own due diligence.  No reference to
our name or our report,  in whole or in part, in any document you prepare and/or
distribute to third parties may be made without our written consent.

You agree to indemnify and hold us harmless against and from any and all losses,
claims,  actions,  damages,  expenses,  or  liabilities,   including  reasonable
attorneys'  fees,  to which we may  become  subjects  in  connection  with  this
engagement.  You will not be liable  for our  negligence.  Your  obligation  for
indemnification  and  reimbursement  shall extend to any  controlling  person of
Vigers  Hong  Kong  Limited,   including  any   director,   officer,   employee,
subcontractor,  affiliate or agent. In the event we are subject to any liability
in connection with this engagement,  regardless of legal theory  advanced,  such
liability will be limited to the amount of fees we received for this engagement.

We reserve the right to include your  company/firm  name in our client list, but
we will maintain the confidentiality of all conversations, documents provided to
us, and the contents of our reports,  subject to legal or administrative process
or proceedings. These conditions can only be modified by written






                                       8
<PAGE>

                                    EXHIBIT B
                                    ---------

THIS NOTE AND THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL  REASONABLY  SATISFACTORY  TO THE  CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED.


                           CONVERTIBLE PROMISSORY NOTE
                           ---------------------------


U.S.$ 11,111,345
                                                                 August 17, 2004




1.       FOR  VALUE  RECEIVED,   the   undersigned,   HQ  Sustainable   Maritime
         Industries,  Inc.,  a Delaware  corporation  (the  "Borrower"),  hereby
         unconditionally  promises  to pay  to the  order  of  SINO-SULT  CANADA
         (S.S.C.) LIMITED,  a limited liability  corporation  existing in Canada
         (the "Lender") at the Lender's  offices at 1460-555 Rene Levesque Blvd.
         W.  Montreal,  Quebec H2Z 1B1, the principal sum of ELEVEN  MILLION ONE
         HUNDRED AND ELEVEN  THOUSAND THREE HUNDRED AND FORTY FIVE United States
         Dollars  (US$11,111,345) as hereinafter provided and to pay interest on
         the  principal   balance  hereof  from  time  to  time  outstanding  as
         hereinafter provided.

2.       The principal hereof shall be paid upon maturity, 90 days from the date
         above first  written or such date when the Lender shall have caused the
         audited financial statements to be completed to the satisfaction of the
         Borrower pursuant to Section 4.03 of the Purchase  Agreement,  dated as
         of the date hereof,  between the Borrower and the Lender (the "Purchase
         Agreement"),   whichever  comes  earlier  (the  "Maturity  Date").  The
         Borrower hereby agrees to grant to the Lender the right to convert all,
         but not less than all, of the Note into common stock,  $0.001 par value
         per share of the  Borrower  ("Common  Stock")  and  Series A  Preferred
         Stock,  $0.001  par  value per share of the  Borrower  (the  "Preferred
         Stock") on terms and subject to the  conditions set forth in this Note.
         At the  Borrower's  option,  the  Maturity  Date may be extended for an
         additional  90 days,  provided  that 10 Business  Days'  prior  written
         notice is given to the Lender by the Borrower.  Whenever any payment of
         principal or interest  falls due on a day which is not a Business  Day,
         the due  date  for  payment  shall be  extended  to the next  following
         Business Day.  "Business Day" shall mean any day on which banks are not
         required or authorized by law to close in New York, New York or Canada.
         The  monetary   obligations   of  the  Borrower   hereunder   shall  be
         dischargeable  only by payment in immediately  available  United States



<PAGE>

         dollars or other lawful  currency of the United  States,  regardless of
         any law,  rule,  regulation  or statute,  whether now or  hereafter  in
         existence or in effect in any  jurisdiction,  which affects or purports
         to affect such obligations.

3.       The  principal  balance of this Note shall bear interest at the rate of
         five percent (5%) per annum payable at Maturity or upon satisfaction or
         discharge  of this Note.  This Note shall bear  interest  on the unpaid
         principal  amount  from the date hereof  until  payment in full of such
         principal  amount.  All  payments to the Lender in respect of this Note
         shall be applied to  interest  and to  principal,  in such order as the
         Lender shall determine in its sole discretion.  Interest for any period
         will be  calculated  on the basis of the actual  number of days elapsed
         (including  the first day but excluding the last day) and a year of 360
         days.  Notwithstanding  anything  in this Note to the  contrary,  in no
         event shall the  Borrower  be required to make  payments of interest in
         excess of the maximum amount permitted by law.

4.       This Note may be prepaid at any time  without  premium or penalty,  but
         with interest through the date of prepayment.

                  (a) This Note is  referenced  in the Purchase  Agreement,  and
         memorializes  the  intent  of the  parties  therein.  No  amendment  or
         modification  of this Note shall be effective  unless such amendment or
         modification is permitted under the terms of the Purchase Agreement and
         is executed in writing and signed by the Borrower and the Lender.

                  (b)  The  Lender   has  agreed  to  cause  its  wholly   owned
         subsidiary, Sealink Wealth Limited ("Sealink") to cause the preparation
         and  subsequent  audit  of the  consolidated  financial  statements  of
         Sealink and  Sealink's  wholly owned  subsidiary,  Hainan Jiahua Marine
         Bio-products Co., Ltd. for the annual period ended December 31, 2003 to
         be performed in accordance with US GAAP to the reasonable  satisfaction
         of the Borrower pursuant to Section 4.03 of the Purchase Agreement.

                  (c) The Lender has agreed to furnish to the Borrower evidence,
         in form and substance  reasonably  satisfactory  to the Borrower,  that
         such   licenses,   permits,   consents,   approvals,    authorizations,
         qualifications and orders of governmental authorities, shareholders and
         other third  parties as necessary in connection  with the  transactions
         contemplated hereby have been obtained.

                  (d) The  Borrower  and the Lender agree that at any time after
         the Lender has performed its  obligations  under Section 4 above to the
         reasonable  satisfaction of the Borrower, but before the Maturity Date,
         the Lender  shall have the right,  but not the  obligation,  to convert
         all, but not less than all, of the outstanding principal amount of this
         Note  into the  shares  of  Common  Stock  and  Preferred  Stock of the
         Borrower, at the Conversion Price (as defined below).

                  (e)  For  purposes  of  Section  4(d)  above  and  adjustments
         thereunder,  the per  share  conversion  price  shall be  deemed  to be
         US$1.00 (One United States Dollar) per one (1) share of Preferred Stock
         (the  "Preferred  Conversion  Price") and US$.70 (Seventy United States
         Cents) per one (1) share of Common Stock ("Common  Conversion  Price"),
         subject to further  adjustment  as provided  below.  The  Preferred and

<PAGE>

         Common  Conversion Price shall be applied under this Note: (i) first to
         100,000 shares of Preferred  Stock,  whereby the Lender shall be issued
         100,000  shares of the  Borrower's  Preferred  Stock within 10 Business
         Days following  conversion and the outstanding  principal  amount under
         this  Note  shall  be  reduced  by  $100,000;  and (ii)  thereafter  to
         15,730,493  shares of Common  Stock,  until the  remaining  outstanding
         principal balance hereunder has been converted. Any accrued interest on
         this Note shall  thereafter be payable in immediately  available United
         States  dollars or other  lawful  currency  of the United  States.  The
         Common  Conversion  Price in effect at any time and the number and kind
         of  securities  to be received  by the Lender upon the  exercise of the
         Lender's conversion rights, shall be subject to adjustment from time to
         time upon the happening of certain events as provided  herein.  In case
         the Borrower 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
         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.

5.       Upon  default  in the prompt and full  payment  of any  amounts  due at
         Maturity or upon  satisfaction  or discharge  of this Note,  the entire
         outstanding  principal  hereof  and  interest  thereon  to the  date of
         payment shall immediately become due and payable at the option and upon
         demand of the holder hereof.

                  (a) The Borrower hereby waives diligence, presentment, demand,
         protest or notice of nonpayment or dishonor with respect to this Note.

                  (b) The failure of the holder  hereof to  exercise  any of its
         rights  hereunder in any instance shall not constitute a waiver thereof
         in that or any other instance.

                  (c) The Borrower  hereby agrees to reimburse the holder hereof
         for  reasonable  and  documented  costs and  expenses  incurred by such
         holder in enforcing its rights under this Note.

                  (d) This Note shall be governed by and construed in accordance
         with the laws of the  State of New York  without  giving  effect to the
         conflicts of laws principles thereof.

                  (e) Any failure or delay of the Lender to  exercise  any right
         hereunder  shall not be  construed as a waiver of the right to exercise
         the same or any other right at any other time. The waiver by the Lender
         of a breach or default of any  provision of this Note shall not operate
         or be  construed  as a  waiver  of any  subsequent  breach  or  default
         hereunder.   The  provisions  of  this  Note  are  severable,  and  the
         invalidity  or  unenforceability  of any  provision  shall not alter or
         impair the remaining provisions of this Note.

<PAGE>

                  (f) All  payments  due to the  Lender  will  be  made  without
         set-off or counterclaim, free and clear of any deduction or withholding
         on account of any present or future  taxes,  duties,  or other  charges
         imposed by the United States of America or any political subdivision or
         taxing  authority  thereof or therein  (other than taxes  imposed on or
         measured by the net income of the Lender), all of which will be for the
         account of Borrower and paid by it when due.

                  (g) 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 the  Borrower,  at its
         principal  office,  Wall Street Center, 14 Wall Street - 20th Floor New
         York,  NY  10005,  Attention:  President,  and  to  the  Lender  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.

                  (h) This Note shall be binding  upon the Borrower and inure to
         the benefit of the Lender and its successors and assigns.

                  (i) After the  conversion,  this Note shall be considered paid
         in full and retired and cancelled.


         IN WITNESS WHEREOF, the undersigned has caused this Note, consisting of
four (4) pages, this being the fourth page, to be duly executed and delivered by
its duly authorized officer.

                                        HQ Sustainable Maritime Industries, Inc.


                                        By:_____________________________________
                                        Name:
                                        Title:




<PAGE>

                                    EXHIBIT C
                                    ---------

                    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