EXHIBIT 10.3

                       NOTE AND WARRANT PURCHASE AGREEMENT

         THIS NOTE AND WARRANT PURCHASE  AGREEMENT (this  "AGREEMENT"),  is made
and entered into as of the 8th day of March,  2005, by and between National Coal
Corp.,  a Florida  corporation  (the  "COMPANY"),  located at 319 Ebenezer Road,
Knoxville,  TN 37923,  National Coal Corporation,  a Tennessee  corporation also
located at 319 Ebenezer Road, Knoxville,  TN 37923 (the "BORROWER") which is the
wholly-owned  subsidiary  of the Company,  and the  purchaser  identified on the
signature page to this Agreement (the  "PURCHASER"),  located at the address set
forth on the Signature Page to this Agreement.

                                   ARTICLE 1.
                      AUTHORIZATION AND SALE OF SECURITIES

         1.1      AUTHORIZATION.  The Company and the Borrower  have  authorized
the sale and issuance to the Purchaser and others,  in one or more closings,  of
(i)  senior  secured  promissory  notes  due no later  than  August 8, 2005 (the
"MATURITY  DATE") in the form attached hereto as EXHIBIT A (the "NOTES"),  which
Notes are issuable on the Closing Date (as defined  below) as  determined by the
Company,  the Borrower and the  purchasers  thereof,  in an aggregate  principal
amount  not  exceeding  $5,137,726,  and (ii)  warrants  expiring  on the  fifth
anniversary of the Closing Date to purchase Common Stock,  par value $0.0001 per
share of the Company ("COMMON STOCK"),  in the form attached hereto as EXHIBIT B
(the "WARRANTS"),  each at an exercise price per share of $8.50,  which Warrants
are issuable on the Closing  Date.  The shares of capital  stock  issuable  upon
exercise of the Warrants are referred to as the "WARRANT SHARES." The Notes, the
Warrants,   and  the  Warrant  Shares  are  collectively   referred  to  as  the
"Securities."  The Company  shall also  deliver to the  Purchaser as Closing the
Continuing  Corporate  Guaranty of the  Company  guaranteeing  full  payment and
performance of the Notes and the Security  Agreement by the Borrower in the form
of EXHIBIT D hereto (the "GUARANTY").

         1.2      AGREEMENT TO PURCHASE AND SELL NOTES.  The Borrower  agrees to
issue and sell to the Purchaser,  and the Purchaser  agrees to purchase from the
Company,  a Note in the principal amount set forth on the Signature Page to this
Agreement (the "COMMITTED AMOUNT") on the terms and conditions set forth herein.
Additionally,  in further  consideration of the Purchaser's purchase of the Note
hereunder,  the Company  agrees to issue to the  Purchaser  a Warrant  initially
exercisable for a number of Warrant Shares determined by multiplying  140,000 by
a ratio determined by dividing the Commitment Amount by the aggregate  principal
amount of the Notes. The number and type of shares issuable upon exercise of the
Warrant are subject to adjustment as set forth in the Warrant.

         1.3      CLOSING AND  DELIVERY.  The  purchase and sale of the Note and
the Warrant shall occur at 3:00p.m.,  Eastern Time, on March 8, 2005, or at such
other  time on or  before  March  10,  2005 as is  mutually  agreed  upon by the
Company,  the Borrower and the Agent (as defined  below) on behalf of itself and
all  purchasers  of Notes.  Such  purchase and sale is referred to herein as the
"CLOSING,"  and the date of the Closing is  referred  to herein as the  "CLOSING
DATE." The Closing  shall be held at the offices of the Company  first set forth
above.  At the Closing,  the Borrower  shall  deliver to the  Purchaser the Note
being  purchased at such Closing and the Purchaser  shall deliver as directed in
writing by J.D. Fairchild, agent for Superior Highwall


<PAGE>


Miners,  NV for the benefit of the Borrower  one-half of the Committed Amount by
cashier's  check or wire  transfer in  immediately  available  funds,  up to the
amount  necessary  to  purchase  the  Highwall  Miner,  Serial No.  SHM-37-V/800
manufactured  by Superior  Highwall  Miners,  NV. The  balance of the  Committed
Amount shall be paid to Superior  Highwall  Miners,  NV when due pursuant to the
terms of the Purchase  Agreement  described in Section 2.1(c),  unless the Notes
have  been  repaid  in full  prior to such  further  disbursement  date.  At the
Closing,  the  Company  shall  also  deliver  or  cause to be  delivered  to the
Purchaser a Warrant  and a fully  executed  copy of the  Security  Agreement  as
defined below.

         1.4      NATURE OF OFFERING.  The investment in the Securities is being
made in reliance  upon the  provisions of Section 4(2)  ("SECTION  4(2)") of the
United States  Securities Act of 1933, as amended (the  "SECURITIES  ACT"),  and
Regulation D ("REGULATION  D") and the other rules and  regulations  promulgated
under the Securities Act and/or upon such other exemption from the  registration
requirements  of the  Securities  Act as may be  available  with  respect to the
investment to be made hereunder.

         1.5      SECURITY AGREEMENT.  The Company's  obligations under the Note
will be secured by the collateral set forth in that certain  Security  Agreement
(the  "SECURITY  AGREEMENT"),  dated as of the Closing  Date, by and between the
Company  and  Crestview  Capital  Master,  LLC as agent for itself and the other
purchasers of the Notes ("Agent"), in the form attached hereto as EXHIBIT C.

         1.6      USE OF PROCEEDS.  The Company and the  Borrower  shall use the
proceeds of the loans  represented  by the Notes to purchase the Highwall  Miner
and ancillary  equipment  described more particularly in the Security Agreement,
and for no other  purposes.  The  Company  acknowledges  that it will  receive a
direct benefit from the loans to its  subsidiary,  the Borrower,  which shall be
good and valid  consideration for the Company's issuance of the Warrants and for
the Guaranty.

                                   ARTICLE 2.
                         REPRESENTATIONS AND WARRANTIES

         2.1      BY THE COMPANY  AND  BORROWER.  The Company and the  Borrower,
jointly and severally, hereby represent and warrant to the Purchaser as follows:

                  (a)      STATUS.  The Company is a corporation duly organized,
validly  existing and in good  standing  under the laws of the State of Florida,
and the Borrower is a corporation  duly organized,  validly existing and in good
standing  under the laws of the State of  Tennessee,  and each has the corporate
power to own and operate its properties and assets,  to carry on its business as
now conducted and to enter into and to perform its respective  obligations under
this Agreement, the Note, the Warrant, and the Security Agreement (collectively,
the  "TRANSACTION  DOCUMENTS").  The  Company  and the  Borrower  are each  duly
qualified  to do  business  and is in good  standing  in each  state  in which a
failure to be so qualified would have a material adverse effect on the Company's
financial  condition or its ability to own and operate its properties and assets
and conduct its business in the manner now conducted.


                                       2
<PAGE>


                  (b)      AUTHORIZATION. The Company and the Borrower each have
full legal right,  power and authority to conduct its business and affairs.  The
Company and the  Borrower  each have full legal  right,  power and  authority to
enter  into  and  perform  its  obligations  under  the  Transaction  Documents,
including  the issuance of the  Securities.  The  execution and delivery of this
Agreement,  the  borrowing  hereunder,  the  execution and delivery of the other
Transaction  Documents,  and the  performance by the Company and the Borrower of
their  respective  obligations   thereunder,   including  the  issuance  of  the
Securities,  are within the corporate powers of the Company and the Borrower and
have been duly authorized by all necessary  corporate  action properly taken and
the Company and the Borrower have received all necessary governmental approvals,
if any, that are required.  The  officer(s)  executing this Agreement and all of
the other  Transaction  Documents  are duly  authorized  to act on behalf of the
Company and the Borrower, respectively.

                  (c)      VALIDITY AND BINDING  EFFECT.  This Agreement and the
other Transaction  Documents are the legal, valid and binding obligations of the
Company and the Borrower, enforceable in accordance with their respective terms,
subject to limitations  imposed by bankruptcy,  insolvency,  moratorium or other
similar laws affecting the rights of creditors  generally or the  application of
general  equitable  principles.  The  Borrower  is the BUYER as  defined in that
certain  Purchase  Agreement  dated  January  10,  2005  between  National  Mine
Corporation  and  Superior  Highwall  Mining  Systems,  NV with  respect  to the
Borrower's  purchase  of the  Collateral.  The  reference  in such  contract  to
National Mine Corporation is a typographical  error. Neither the Company nor the
Borrower  have any  knowledge  of the  existence of any entity known as National
Mine Corporation.

                  (d)      NO  CONFLICTS.   Consummation  of  the   transactions
contemplated  hereby and the  performance of the  obligations of the Company and
the Borrower  under and by virtue of the  Transaction  Documents,  including the
issuance of the  Securities,  do not conflict  with,  and will not result in any
breach  of, or  constitute  a default  or trigger a lien  under,  any  mortgage,
security deed or agreement, deed of trust, lease, bank loan or credit agreement,
corporate  charter or bylaws,  agreement or certificate of limited  partnership,
partnership agreement,  license,  franchise or any other instrument or agreement
to which the  Company or the  Borrower is a party or by which the  Company,  the
Borrower or their respective properties may be bound or affected or to which the
Company or the Borrower has not obtained an effective waiver.

                  (e)      EXEMPTION FROM REGISTRATION; VALID ISSUANCES. Subject
to the accuracy of the Purchaser's  representations  in SECTION 2.2, the sale of
the Securities will not require registration under the Securities Act and/or any
applicable  state  securities  laws. The Warrant Shares  issuable by the Company
upon  exercise of the Warrant  shall,  if and when the Warrant is  exercised  in
accordance  with  its  terms,  be  duly  and  validly  issued,   fully-paid  and
non-assessable shares of capital stock, free of all liens, claims, encumbrances,
preemptive rights, rights of first refusal and restrictions on transfer,  except
as imposed by applicable  securities  laws. At all times, the Company shall have
reserved for issuance and delivery  upon  exercise of the Warrant such number of
shares of Common  Stock or other  shares of capital  stock of the Company as are
from time to time issuable upon exercise of the Warrant and shall take all steps
necessary to amend its Articles of Incorporation to provide sufficient  reserves
of shares of Common Stock issuable upon exercise of the Warrant.


                                       3
<PAGE>


                  (f)      SEC DOCUMENTS.  The Company has made available to the
Purchaser true and complete copies of the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2003 and each report,  proxy statement or
registration  statement  filed by the Company with the  Securities  and Exchange
Commission  (the "SEC")  pursuant to the  Securities  Exchange  Act of 1934,  as
amended  (the  "EXCHANGE  ACT") or the  Securities  Act since the filing of such
Annual Report through the date hereof  (collectively such documents are referred
to as the "SEC  DOCUMENTS").  As of their  respective  dates,  the SEC Documents
complied in all material respects with the requirements of the Exchange Act, and
rules and  regulations of the SEC  promulgated  thereunder and the SEC Documents
did not  contain  any untrue  statement  of a  material  fact or omit to state a
material  fact  required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading.  The financial  statements  of the Company  included in the SEC
Documents   complied  in  all  material  respects  with  applicable   accounting
requirements  and the  published  rules  and  regulations  of the  SEC or  other
applicable  rules  and  regulations  with  respect  thereto  at the time of such
inclusion.  Such  financial  statements  have been prepared in  accordance  with
generally accepted accounting  principles ("GAAP") applied on a consistent basis
during the periods  involved  (except (i) as may be otherwise  indicated in such
financial  statements  or the  notes  thereto  or (ii) in the case of  unaudited
interim statements,  to the extent they exclude footnotes or may be condensed or
summary  statements)  and fairly present in all material  respects the financial
position  of the Company as of the dates  thereof and the results of  operations
and cash flows for the periods  then ended  (subject,  in the case of  unaudited
interim statements,  to normal year-end audit adjustments).  Neither the Company
nor  any of its  subsidiaries  has any  material  indebtedness,  obligations  or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) that would have been  required to be reflected in,
reserved  against or otherwise  described in the financial  statements or in the
notes thereto in accordance with GAAP and the published rules and regulations of
the SEC,  which  was not fully  reflected  in,  reserved  against  or  otherwise
described in the financial  statements or the notes thereto  included in the SEC
Documents or was not incurred in the ordinary course of business consistent with
the Company's past practices  since the last date of such financial  statements.
There is no information which has not been publicly disclosed which, in the good
faith judgment of the Company, would cause a reasonable investor to not make the
investment contemplated hereby.

                  (g)      NO GENERAL  SOLICITATION  OR ADVERTISING IN REGARD TO
THIS TRANSACTION.  Neither the Company, the Borrower nor any of their affiliates
nor any person  acting on its or their behalf (i) has  conducted or will conduct
any general  solicitation  (as that term is used in Rule 502(c) of Regulation D)
or general  advertising with respect to the Securities,  or (ii) made any offers
or sales of any security or solicited  any offers to buy any security  under any
circumstances  that  would  require  registration  of the  Securities  under the
Securities  Act;  PROVIDED,  that neither the Company nor the Borrower makes any
representation  or warranty with respect to the Purchaser or any other purchaser
of the Notes.

                  (h)      NO MATERIAL ADVERSE EFFECT. Since September 30, 2004,
no  Material  Adverse  Effect (as  defined  below) has  occurred  or exists with
respect to the Company,  except as disclosed in the SEC Documents.  For purposes
hereof,  "MATERIAL  ADVERSE  EFFECT"  shall  mean any  effect  on the  business,
operations, properties, prospects, material agreements or financial condition of
the Company or any  subsidiary  that is material  and adverse to the Company and
its


                                       4
<PAGE>


subsidiaries   and  affiliates,   taken  as  a  whole,   and/or  any  condition,
circumstance,  or situation that would prohibit or otherwise  interfere with the
ability of the Company to enter into and perform  any of its  obligations  under
the Transaction Documents in any material respect.

                  (i)      NO  UNDISCLOSED   EVENTS  OR   CIRCUMSTANCES.   Since
September 30, 2004, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, prospects, operations or financial
condition,  that,  under  applicable  law, rule or regulation,  requires  public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed in the SEC Documents.

                  (j)      NO  INTEGRATED  OFFERING.  Other than as described in
the SEC Documents or pursuant to an effective  registration  statement under the
Securities  Act,  or pursuant  to the  issuance  or  exercise of employee  stock
options, or pursuant to its discussion with the Purchaser or any other purchaser
of the  Notes in  connection  with the  transactions  contemplated  hereby,  the
Company has not issued, offered or sold the Notes or any shares of capital stock
within the  six-month  period  next  preceding  the date hereof in a manner that
would make  unavailable  the exemption from  Securities Act  registration  being
relied upon by the Company for the offer and sale to the Purchaser and the other
purchasers of the Securities as contemplated by this Agreement,  and the Company
shall not  permit any of its  directors,  officers  or  affiliates  directly  or
indirectly to take any action (including,  without  limitation,  any offering or
sale to any person or entity of the Notes or shares of Common  Stock),  so as to
make  unavailable  the exemption from Securities Act  registration  being relied
upon by the  Company  for the  offer  and sale to the  Purchaser  and the  other
purchasers of the Securities as contemplated by this Agreement.

                  (k)      LITIGATION AND OTHER PROCEEDINGS. Except as disclosed
in the SEC Documents,  there are no lawsuits or  proceedings  pending or, to the
knowledge of the  Company,  threatened,  against the Company or any  subsidiary,
including the Borrower,  nor has the Company received any written or oral notice
of any such action, suit, proceeding or investigation, which could reasonably be
expected  to either  have a  Material  Adverse  Effect  or result in a  judgment
against the  Company in an amount in excess of  $75,000.  Except as set forth in
the SEC Documents,  no judgment,  order, writ, injunction or decree or award has
been issued by or, to the  knowledge  of the  Company,  requested  of any court,
arbitrator  or  governmental  agency  which could  result in a Material  Adverse
Effect.

                  (l)      NO  MISLEADING OR UNTRUE  COMMUNICATION.  The Company
and, to the knowledge of the Company,  any person  representing the Company,  or
any other person selling or offering to sell the Notes or Warrants in connection
with the transaction contemplated by this Agreement, have not made, at any time,
any oral  communication  in connection  with the offer or sale of the same which
contained  any  untrue  statement  of a  material  fact or  omitted to state any
material  fact  necessary in order to make the  statements,  in the light of the
circumstances under which they were made, not misleading.

         2.2      BY THE PURCHASER. The Purchaser hereby represents and warrants
to the Company and the Borrower as follows:

                  (a)      STATUS.  If Purchaser is a corporation,  partnership,
trust  or  limited  liability  company,  Purchaser  is duly  organized,  validly
existing and in good standing (to the extent


                                       5
<PAGE>


applicable)  under the laws of the state of its formation,  and has the power to
own and operate its properties, to carry on its business as now conducted and to
enter into and to perform its  obligations  under this  Agreement  and the other
Transaction Documents to which it is a party.

                  (b)      AUTHORIZATION.  Purchaser  has the full legal  right,
power  and  authority  to enter  into and  perform  its  obligations  under  the
Transaction  Documents.  The  execution  and  delivery  of this  Agreement,  the
execution and delivery of each Transaction  Document to which the Purchaser is a
party,  and the  performance by the Purchaser of its  obligations  hereunder and
thereunder are within the powers of the Purchaser and have been duly  authorized
by all  necessary  action  properly  taken and the  Purchaser  has  received all
necessary  governmental  approvals,  if  any,  that  are  required.  The  person
executing this Agreement and all of the other Transaction Documents to which the
Purchaser is a party is duly authorized to act on behalf of the Purchaser.

                  (c)      VALIDITY AND BINDING  EFFECT.  This Agreement and the
other Transaction  Documents are the legal, valid and binding obligations of the
Purchaser,  enforceable in accordance with their  respective  terms,  subject to
limitations imposed by bankruptcy,  insolvency, moratorium or other similar laws
affecting  the  rights of  creditors  generally  or the  application  of general
equitable principles.

                  (d)      INVESTMENT REPRESENTATIONS.

                           (i)      Purchaser has such  knowledge and experience
in financial and business matters, including investments of the type represented
by the Note and the Warrant and the capital stock  issuable upon exercise of the
Warrant,  as to be capable of evaluating the merits of investment in the Company
and can bear the economic  risk of an investment in the Note and the Warrant and
the capital stock issuable upon exercise of the Warrant;

                           (ii)     Purchaser  is an  "accredited  investor"  as
such term is defined in Rule 501 of Regulation D under the Securities Act; and

                           (iii)    Purchaser  is  acquiring  the  Note  and the
Warrant  and, to the extent  exercised,  will be  acquiring  the  capital  stock
issuable upon  exercise of the Warrant,  for its own account and not with a view
to, or for resale in connection  with,  the  distribution  or other  disposition
thereof in  contravention  of the  Securities Act or any state  securities  law,
without  prejudice,  however,  to  Purchaser's  right  at all  times  to sell or
otherwise dispose of all or any part of the Securities  pursuant to an effective
registration  statement under the Securities Act and applicable state securities
laws,  or  under  an  exemption  from  such  registration  available  under  the
Securities Act and other applicable state securities laws.

                  (e)      ABSENCE OF  CONFLICTS.  The execution and delivery of
this Agreement and the other  Transaction  Documents to which the Purchaser is a
party,  and the  consummation  of the  transactions  contemplated  thereby,  and
compliance  with the  requirements  thereof,  will not  violate  any law,  rule,
regulation,  order,  writ,  judgment,  injunction,  decree or award  binding  on
Purchaser or (a) violate any provision of any indenture, instrument or agreement
to which Purchaser is a party or is subject, or by which Purchaser or any of its
assets is bound; (b) conflict with or constitute a material default  thereunder;
(c) result in the creation or imposition of any lien


                                       6
<PAGE>


pursuant  to the  terms of any  such  indenture,  instrument  or  agreement,  or
constitute a breach of any fiduciary  duty owed by Purchaser to any third party;
or (d) require the  approval of any  third-party  (which has not been  obtained)
pursuant to any material contract, agreement, instrument,  relationship or legal
obligation  to  which  Purchaser  is  subject  or to  which  any of its  assets,
operations or management may be subject.

                  (f)      DISCLOSURE;  ACCESS TO INFORMATION. The Purchaser has
received all documents,  records, books and other publicly available information
pertaining  to  Purchaser's  investment  in the Company that the  Purchaser  has
requested.  The Company is subject to the periodic reporting requirements of the
Exchange  Act,  and the  Purchaser  has  reviewed or received  copies of all SEC
Documents that the Purchaser has requested.

                  (g)      MANNER OF SALE.  At no time was  Purchaser  presented
with or  solicited  by or  through  any  leaflet,  public  promotional  meeting,
television   advertisement  or  any  other  form  of  general   solicitation  or
advertising.

                                   ARTICLE 3.
                                     LEGEND

         Unless  the  Warrant  Shares  have been  registered  for  resale or are
eligible to be sold pursuant to Rule 144(k),  each certificate  representing the
Warrant  Shares  will bear a legend in  substantially  the  following  form (the
"LEGEND"):

         THE SECURITIES  EVIDENCED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER  APPLICABLE  SECURITIES  LAWS AND HAVE  BEEN  ISSUED IN  RELIANCE  UPON AN
EXEMPTION  FROM THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES ACT AND SUCH
OTHER SECURITIES  LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE  REOFFERED,  SOLD,  ASSIGNED,  TRANSFERRED,  PLEDGED,  ENCUMBERED,
HYPOTHECATED  OR  OTHERWISE   DISPOSED  OF,  EXCEPT  PURSUANT  TO  AN  EFFECTIVE
REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO A TRANSACTION
THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

         Notwithstanding the foregoing,  the Warrants and the Warrant Shares may
be pledged to a financial institution which is an accredited investor as part of
a margin loan account.

                                   ARTICLE 4.
                              DEFAULT AND REMEDIES

         4.1      EVENTS OF  DEFAULT.  The  occurrence  of any of the  following
shall constitute an Event of Default hereunder:

                  (a)      Default  in  the  payment  of  the  principal  of  or
interest on the indebtedness  evidenced by the Note in accordance with the terms
of the Note, which default is not cured


                                       7
<PAGE>


and/or corrected by the Borrower or the Company within five (5) business days of
written notice thereof by Purchaser;

                  (b)      The  Borrower  or the  Company  shall be  liquidated,
dissolved,  partitioned or terminated, or the charter thereof shall expire or be
revoked;

                  (c)      The Borrower or the Company (i) shall  generally  not
pay or shall be unable to pay its debts as such debts  become due, or (ii) shall
make an  assignment  for the  benefit of  creditors  or petition or apply to any
tribunal for the  appointment  of a  custodian,  receiver or trustee for it or a
substantial part of its assets, or (iii) shall commence any proceeding under any
bankruptcy,  reorganization,  arrangement,  readjustment  of debt,  dissolution,
liquidation or other similar law or statute of any jurisdiction,  whether now or
hereafter  in effect,  or (iv) shall have had any such  petition or  application
filed or any such proceeding  commenced  against it that is not dismissed within
sixty (60) days, or (v) shall indicate, by any act or intentional and purposeful
omission,  its consent to,  approval of or  acquiescence  in any such  petition,
application,  proceeding or order for relief or the  appointment of a custodian,
receiver,  trustee or other similar official for it or a substantial part of its
assets, or (vi) shall suffer any such custodianship, receivership or trusteeship
to continue undischarged for a period of sixty (60) days or more; or

                  (d)      A material  default by the Borrower or the Company in
the performance of any of its material  obligations  under this Agreement or any
of the other  Transaction  Documents (other than the payment of the principal of
or interest on the indebtedness evidenced by the Note, which shall be subject to
SECTION 4.1(a) above and not this CLAUSE (d)).

         With respect to any material default  described above in SECTION 4.1(d)
that is capable of being  cured and that does not  already  provide its own cure
procedure, the occurrence of such material default shall not constitute an Event
of Default  hereunder if such material  default is fully cured and/or  corrected
within fifteen (15) days of written notice thereof by Purchaser.

         4.2      ACCELERATION OF MATURITY; REMEDIES. Upon the occurrence of any
Event of Default described in SECTION 4.1(c), the indebtedness  evidenced by the
Note shall be  immediately  due and payable in full;  and upon the occurrence of
any  other  Event of  Default  described  above,  the  Agent,  on  behalf of the
Purchaser,  at any time thereafter may at its option  accelerate the maturity of
the  indebtedness  evidenced  by the Note without  notice of any kind.  Upon the
occurrence of any such Event of Default and the  acceleration of the maturity of
the indebtedness evidenced by the Note:

                  (a)      The  Agent,  on  behalf  of the  Purchaser,  shall be
immediately  entitled to exercise any and all rights and  remedies  possessed by
the Purchaser pursuant to the terms of the Note and all of the other Transaction
Documents; and

                  (b)      The Agent, on behalf of the Purchaser, shall have any
and all other  rights  and  remedies  that the  Purchaser  may now or  hereafter
possess at law, in equity or by statute.

         4.3      REMEDIES  CUMULATIVE;  NO  WAIVER.  No right,  power or remedy
conferred  upon or reserved to the  Purchaser  by this  Agreement  or any of the
other  Transaction  Documents  is intended to be  exclusive  of any other right,
power or  remedy,  but each and every  such  right,  power and  remedy  shall be
cumulative and concurrent and shall be in addition to any other right,


                                       8
<PAGE>


power and remedy given hereunder,  under any of the other Transaction  Documents
or now or  hereafter  existing  at law,  in  equity or by  statute.  No delay or
omission by the Agent to exercise any right,  power or remedy  accruing upon the
occurrence of any Event of Default shall exhaust or impair any such right, power
or remedy or shall be  construed  to be a waiver of any such Event of Default or
an  acquiescence  therein,  and  every  right,  power and  remedy  given by this
Agreement and the other Transaction  Documents to the Agent or the Purchaser may
be  exercised  from time to time and as often as may be deemed  expedient by the
Agent or the Purchaser.

                                   ARTICLE 5.
                              CONDITIONS TO CLOSING

         5.1      CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations of
Purchaser  to  purchase  the Note and the  Warrant at the  Closing and the other
obligations of Purchaser under this Agreement are subject to the satisfaction as
of the  Closing  of the  following  conditions,  any of which  may be  waived in
writing in whole or in part by Purchaser:

                  (a)      REPRESENTATIONS   AND  WARRANTIES.   Each  and  every
representation  and warranty of the Company and the  Borrower  contained in this
Agreement  shall be true and correct as of the date hereof and as of the Closing
Date with the same force and effect as though each and every such representation
and  warranty  had been made at and as of such date  (i.e.,  with  respect  to a
representation that a state of facts exists on or as of the date hereof, it is a
condition that such state of facts exists on or as of the Closing Date, and with
respect to a representation that a state of facts has or has not changed between
a date prior to the date hereof and the date hereof, it is a condition that such
state of facts has or has not  changed  between  such prior date and the Closing
Date),  except as affected by transactions  contemplated  hereby and except that
any such  representation or warranty made as of a specified date (other than the
date of this  Agreement)  shall  only  need to have  been true on and as of such
date.

                  (b)      PERFORMANCE.  The Company and the Borrower shall have
performed  all  obligations  and complied  with all  covenants  required by this
Agreement to be performed or complied  with by the Company or the Borrower on or
prior to the Closing Date.

                  (c)      DELIVERY  OF   GUARANTY.   The  Company   shall  have
delivered to the Purchaser the Guaranty, duly executed by the Company.

                  (d)      DELIVERY OF SECURITY  AGREEMENT.  The Borrower  shall
have  delivered  to the Agent  the  Security  Agreement,  duly  executed  by the
Borrower.

         5.2      CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE BORROWER.
The obligations of the Company and the Borrower to sell the Note and the Warrant
to  Purchaser  at the Closing and the other  obligations  of the Company and the
Borrower under this Agreement are subject to the  satisfaction as of the Closing
of the following  conditions,  any of which may be waived in writing in whole or
in part by the Company and the Borrower:

                  (a)      REPRESENTATIONS   AND  WARRANTIES.   Each  and  every
representation  and warranty of the Purchaser  contained in this Agreement shall
be true and correct as of the date  hereof and as of the  Closing  Date with the
same force and effect as though each and every such


                                       9
<PAGE>


representation  and  warranty  had been made at and as of such date (i.e.,  with
respect to a  representation  that a state of facts  exists on or as of the date
hereof,  it is a  condition  that  such  state of facts  exists  on or as of the
Closing Date, and with respect to a representation  that a state of facts has or
has not changed between a date prior to the date hereof and the date hereof,  it
is a  condition  that such state of facts has or has not  changed  between  such
prior  date  and  the  Closing  Date),   except  as  affected  by   transactions
contemplated  hereby and except that any such representation or warranty made as
of a specified date (other than the date of this  Agreement)  shall only need to
have been true on and as of such date.

                  (b)      PERFORMANCE.  The Purchaser  shall have performed all
obligations  and complied  with all covenants  required by this  Agreement to be
performed or complied with by the Purchaser on or prior to the Closing Date.

                                    ARTICLE 6.
                                   TERMINATION

         6.1      TERMINATION  PRIOR TO  CLOSING.  Any party  (the  "TERMINATING
PARTY") may (but shall not be obligated to) terminate  this  Agreement  prior to
the  Closing  by  giving  written  notice  to the  other  parties  if any of the
conditions to the Terminating Party's obligations provided for in SECTION 5 have
not been satisfied as of the Closing (other than due to the Terminating  Party's
failure to comply with its obligations under this Agreement) and the Terminating
Party has not  expressly  waived  such  condition  in  writing  on or before the
Closing;  PROVIDED,  HOWEVER,  that the right to terminate this Agreement  under
this  SECTION  6.1  shall  not be  available  to a party if the  failure  of the
transactions  contemplated  by this  Agreement to have been  consummated  is the
result of the breach of this Agreement or the bad faith or willful misconduct of
such party; provided,  further, that no party shall be relieved of any liability
or obligation for any breach of this Agreement prior to such  termination or for
any breach of this  Agreement  which  arises out of or results from such party's
bad faith or willful misconduct.

         6.2      TERMINATION FOLLOWING THE CLOSING. If the Closing occurs, this
Agreement  shall  remain in full force and effect until the later of (i) payment
in full by the Borrower or the Company of the full principal  amount of the Note
and all accrued interest  thereon,  at which time the Purchaser shall cancel the
Note and deliver it to the Borrower, and (ii) the expiration of the Warrant.

         6.3      EFFECT  OF  TERMINATION.  The  termination  of this  Agreement
pursuant  to  SECTION  6.1 shall not  affect the right of any party to bring any
action for breach of this Agreement.

                                   ARTICLE 7.
                              APPOINTMENT OF AGENT

         7.1      APPOINTMENT. The Purchaser hereby designates Crestview Capital
Master,  LLC as Agent to act as  specified  herein and in the other  Transaction
Documents.  The Purchaser hereby  irrevocably  authorizes the Agent to take such
action  on its  behalf  under  the  provisions  of  this  Agreement,  the  other
Transaction  Documents  and any other  instruments  and  agreements  referred to
herein or  therein  and to  exercise  such  powers and to  perform  such  duties
hereunder


                                       10
<PAGE>


and thereunder as are specifically  delegated to or required of the Agent by the
terms  hereof and thereof  and such other  powers as are  reasonably  incidental
thereto.  The Agent may  perform any of its duties  hereunder  by or through its
officers, directors, agents or employees.

         7.2      NATURE  OF  DUTIES.   The  Agent   shall  have  no  duties  or
responsibilities  except those  expressly  set forth in this  Agreement  and the
other  Transaction  Documents.  Neither  the  Agent  nor  any of  its  officers,
directors,  agents or employees  shall be liable for any action taken or omitted
by any  of  them  hereunder  or  under  any  other  Transaction  Document  or in
connection herewith or therewith, unless caused by its or their gross negligence
or  willful  misconduct.  The  duties  of the  Agent  shall  be  mechanical  and
administrative  in nature;  the Agent shall not have by reason of this Agreement
or any other  Transaction  Document a fiduciary  relationship  in respect of the
Purchaser  and  nothing in this  Agreement  or any other  Transaction  Document,
expressed or implied,  is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement or any other  Transaction
Document except as expressly set forth herein. The Agent shall promptly transmit
to the  Purchaser a copy of each notice  given to it by the Company  pursuant to
the terms of this  Agreement  and shall  give  notice  to the  Purchaser  of any
default or Event of Default of which it becomes aware.

         7.3      LACK OF  RELIANCE  ON THE  AGENT.  Independently  and  without
reliance upon the Agent, the Purchaser, to the extent it deems appropriate,  has
made  (i) its own  independent  investigation  of the  financial  condition  and
affairs of the Company and the  Borrower  in  connection  with the making of the
loan  provided  for  hereunder  and the  taking or not  taking of any  action in
connection  herewith and (ii) its own appraisal of the  creditworthiness  of the
Company and the Borrower and,  except as expressly  provided in this  Agreement,
the  Agent  shall  have no  duty or  responsibility,  either  initially  or on a
continuing  basis, to provide the Purchaser with any credit or other information
with respect  thereto,  whether coming into its possession  before the making of
the loan or at any time or times thereafter.  The Agent shall not be responsible
to the Purchaser for any recitals, statements,  information,  representations or
warranties herein or in any document,  certificate or other writing delivered in
connection herewith or for the execution, effectiveness,  genuineness, validity,
enforceability,  perfection,  collectibility,  priority or  sufficiency  of this
Agreement or any other  Transaction  Document or the financial  condition of the
Company or the Borrower or be required to make any inquiry concerning either the
performance or observance of any of the terms,  provisions or conditions of this
Agreement or any other Transaction  Document,  or the financial condition of the
Company  or the  existence  or  possible  existence  of any  default or Event of
Default.  Purchaser  acknowledges  that  Crestview  Capital  Master,  LLC  is  a
purchaser hereunder.

         7.4      RELIANCE.  The Agent shall be  entitled to rely,  and shall be
fully  protected  in  relying,  upon  any  note,  writing,  resolution,  notice,
statement,  certificate,  telex,  teletype  or  telecopier  message,  cablegram,
radiogram,  order or other document or telephone message signed, sent or made by
any person that the Agent believed to be the proper person, and, with respect to
all  legal  matters  pertaining  to this  Agreement  and any  other  Transaction
Document  and its  duties  hereunder  and  thereunder,  upon  advice of  counsel
selected by it.

         7.5      INDEMNIFICATION. To the extent the Agent is not reimbursed and
indemnified  by the Company or the Borrower,  the Purchaser  will  reimburse and
indemnify the Agent, in proportion to the principal  amount of the amounts owing
to the Purchaser and all other


                                       11
<PAGE>


purchasers  of Notes,  for and  against  any and all  liabilities,  obligations,
losses, damages,  penalties,  claims, actions, judgments, suits, costs, expenses
or  disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Agent in performing its duties hereunder or under any
other Transaction Document;  PROVIDED,  HOWEVER, that the Purchaser shall not be
liable  for any  portion  of such  liabilities,  obligations,  losses,  damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.

         7.6      THE AGENT IN ITS  INDIVIDUAL  CAPACITY.  With  respect  to its
obligation to purchase one or more of the Notes, the Agent shall have the rights
and powers specified in the Agent's respective purchase agreement as a purchaser
thereof  and may  exercise  the same  rights  and  powers  as though it were not
performing the duties specified herein.  Crestview Capital Master,  LLC may lend
money to and  generally  engage in any kind of business  with the Company or the
Borrower or any affiliate of the Company as if it were not performing the duties
specified herein,  and may accept fees and other  consideration from the Company
or the Borrower for services in  connection  with this  Agreement  and otherwise
without having to account for the same to the Purchaser.

         7.7      SUCCESSION.  The Agent may resign from the  performance of all
its functions and duties hereunder and/or under the other Transaction  Documents
at any time by giving  fifteen (15) business  days' prior written  notice to the
Company  and  the  Purchaser.  Such  resignation  shall  take  effect  upon  the
appointment  of a  successor  Agent as provided  below.  Upon any such notice of
resignation,  the holders of at least a majority of the principal  amount of the
Notes  shall  appoint a  successor  Agent  hereunder  which shall be a person or
entity  reasonably  acceptable to the Company and the  Borrower.  If a successor
Agent shall not have been so appointed  within such  fifteen  (15)  business day
period,  the Agent,  with the consent of the Company and the Borrower,  may then
appoint a successor  Agent which shall serve as Agent hereunder until such time,
if any,  as the holders of at least a majority  of the  principal  amount of the
Notes appoint a successor Agent as provided above.

                                    ARTICLE 8.
                                  MISCELLANEOUS

         8.1      SUCCESSORS AND ASSIGNS  INCLUDED IN PARTIES.  Whenever in this
Agreement  one of the parties  hereto is named or referred to, the heirs,  legal
representatives,  successors,  successors-in-title  and assigns of such  parties
shall be included,  and all covenants and agreements contained in this Agreement
by or on  behalf  of the  Company  or the  Borrower  or by or on  behalf  of the
Purchaser shall bind and inure to the benefit of their respective  heirs,  legal
representatives, successors-in-title and assigns, whether so expressed or not.

         8.2      SEVERABILITY.   Wherever   possible  each  provision  of  this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such  provision  shall be  ineffective  to the extent of
such  prohibition  or  invalidity,  without  invalidating  the remainder of such
provision or the remaining provisions of this Agreement and shall be interpreted
so as to be effective and valid.


                                       12
<PAGE>


         8.3      INTEREST  AND LOAN  CHARGES NOT TO EXCEED  MAXIMUM  ALLOWED BY
LAW.  Anything  in this  Agreement,  the  Note or any of the  other  Transaction
Documents to the contrary  notwithstanding,  in no event whatsoever,  whether by
reason of advancement of proceeds of the Committed  Amount,  acceleration of the
maturity  of the unpaid  balance of the  indebtedness  evidenced  by the Note or
otherwise,  shall  the  interest  and  other  charges  agreed  to be paid to the
Purchaser for the use of the money advanced or to be advanced  hereunder  exceed
the maximum  amounts  collectible  under  applicable laws in effect from time to
time.  It is  understood  and  agreed by the  parties  that,  if for any  reason
whatsoever  the interest or loan charges  paid or  contracted  to be paid by the
Borrower or the  Company in respect of the  indebtedness  evidenced  by the Note
shall exceed the maximum  amounts  collectible  under  applicable laws in effect
from time to time,  then IPSO FACTO,  the obligation to pay such interest and/or
loan  charges  shall  be  reduced  to  the  maximum  amounts  collectible  under
applicable  laws in effect from time to time,  and any amounts  collected by the
Purchaser that exceed such maximum  amounts shall be applied to the reduction of
the principal balance of the indebtedness  evidenced by the Note and/or refunded
to the  Company or the  Borrower,  as  applicable,  so that at no time shall the
interest  or loan  charges  paid  or  payable  in  respect  of the  indebtedness
evidenced by the Note exceed the maximum amounts  permitted from time to time by
applicable law.

         8.4      ARTICLE AND SECTION  HEADINGS,  DEFINED  TERMS.  Numbered  and
titled article and section  headings and defined terms are for convenience  only
and shall not be construed as  amplifying  or limiting any of the  provisions of
this Agreement.

         8.5      NOTICES.  Any and all notices,  elections or demands permitted
or required to be made under this Agreement  shall be in writing,  signed by the
party giving such notice,  election or demand and shall be delivered personally,
telecopied,  or sent by certified  mail or overnight via  nationally  recognized
courier service (such as Federal Express), to the other party at the address set
forth in the introductory paragraph to this Agreement,  or at such other address
as may be  supplied in writing and of which  receipt  has been  acknowledged  in
writing.  The date of personal  delivery or  telecopy or two (2)  business  days
after the date of  mailing  (or the next  business  day after  delivery  to such
courier service), as the case may be, shall be the date of such notice, election
or demand.

         8.6      ENTIRE  AGREEMENT.   This  Agreement  and  the  other  written
agreements  between the Company,  the Borrower and the  Purchaser  represent the
entire agreement between the parties  concerning the subject matter hereof,  and
all oral discussions and prior agreements are merged herein;  PROVIDED, if there
is  a  conflict   between  this  Agreement  and  any  other  document   executed
contemporaneously herewith with respect to the obligations described herein, the
provision of this Agreement shall control.

         8.7      GOVERNING LAW. This Agreement  shall be construed and enforced
in  accordance  with,  and  shall  be  governed  by,  the  laws of the  State of
Tennessee, without regard to conflict of law principles thereof.

         8.8      AMENDMENT.  Neither this  Agreement nor any term hereof may be
amended,  waived,  discharged or terminated  other than by a written  instrument
signed by the party  against whom  enforcement  of any such  amendment,  waiver,
discharge or termination  is sought.  Neither the Company nor the Borrower shall
offer any  consideration to any purchaser of Notes in


                                       13
<PAGE>


connection  with any waiver or  modification of their respect Notes or any other
agreement  entered  into in  connection  therewith  unless  the  Company  or the
Borrower offers the same consideration to every other purchaser of Notes.

         8.9      COUNTERPARTS.  This Agreement may be executed in any number of
counterparts   and  by   different   parties  to  this   Agreement  in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.

         8.10     CONSTRUCTION AND INTERPRETATION.  Should any provision of this
Agreement  require  judicial  interpretation,  the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction  that a document is to be more strictly  construed  against
the party that itself or through its agent  prepared  the same,  it being agreed
that the Company,  the Borrower,  the Purchaser and their respective agents have
participated in the preparation hereof.

         8.11     COSTS AND ATTORNEYS' FEES. If any action, suit, arbitration or
other  proceeding  is  instituted  to remedy,  prevent or obtain  relief  from a
default in the  performance  by any party to this  Agreement of its  obligations
under this Agreement,  the prevailing party (as determined by the court or other
fact-finder)  will be entitled to recover from the losing party all actual costs
incurred in each and every such action,  suit,  arbitration or other proceeding,
including  any  and all  appeals  or  petitions  therefrom,  including,  without
limitation,  reasonable  attorneys' fees and  disbursements.  Crestview  Capital
Master,  LLC shall deduct the sum of $15,000 from its purchase price of the Note
to pay the legal fees of the several Purchasers.

         8.12     WAIVER OF JURY TRIAL. The Purchaser and the Company each waive
all right to trial by jury in any action or  proceeding to enforce or defend any
rights or remedies hereunder or relating hereto.

         8.13     SURVIVAL.  All  representations  and  warranties  and,  to the
extent expressly provided herein,  covenants,  shall survive the Closing, and no
such  representations,  warranties and covenants shall merge into any instrument
of conveyance.

                            [SIGNATURE PAGE FOLLOWS]


                                       14
<PAGE>


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

                                    COMPANY:

                                    NATIONAL COAL CORP.,
                                    a Florida corporation

                                    By:       /s/ Jon Nix
                                             -----------------------------------
                                             Jon Nix
                                    Title:   Chief Executive Officer

                                    BORROWER:

                                    NATIONAL COAL CORPORATION,
                                    a Tennessee corporation

                                    By:      /s/ Jon Nix
                                             -----------------------------------
                                             Jon Nix
                                    Title:   Chief Executive Officer


                                    PURCHASER:


                                    --------------------------------------------
                                             (Print Name of Purchaser)


                                    --------------------------------------------
                                                    (Signature)

                                    (Title, if applicable)

                                    (Address)
                                               ---------------------------------

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

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

                                    Committed Amount: $
                                                       -------------------------

Accepted and Acknowledged
as Agent under Article 7 by:


___________________________________
Crestview Capital Master, LLC


                                       15
<PAGE>


                                    EXHIBIT A

                               SECURED CONVERTIBLE
                                 PROMISSORY NOTE


THIS  SENIOR  SECURED  PROMISSORY  NOTE HAS NOT BEEN  REGISTERED  UNDER THE U.S.
SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "SECURITIES  ACT"),  OR ANY  OTHER
APPLICABLE  SECURITIES  LAWS AND HAS BEEN ISSUED IN RELIANCE  UPON AN  EXEMPTION
FROM  THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT  AND  SUCH  OTHER
SECURITIES LAWS. THIS SENIOR SECURED PROMISSORY NOTE MAY NOT BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED,  PLEDGED, ENCUMBERED,  HYPOTHECATED OR OTHERWISE DISPOSED
OF, EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A  TRANSACTION  THAT IS EXEMPT FROM,  OR NOT SUBJECT TO, SUCH
REGISTRATION.

$_______________                                                   March 8, 2005
                                                            Knoxville, Tennessee

                NATIONAL COAL CORPORATION, A TENNESSE CORPORATION

                                     SECURED
                                 PROMISSORY NOTE

         FOR VALUE RECEIVED,  National Coal Corporation, a Tennessee corporation
("BORROWER"),  located at 319 Ebenezer Road, Knoxville,  Tennessee 37923, hereby
unconditionally promises to pay to the order of ____________________ ("LENDER"),
and its successors,  endorsees,  transferees and assigns  (together with Lender,
"HOLDER"),  the principal sum of ________  Dollars  ($________),  and any unpaid
accrued interest thereon,  as set forth below; or such lesser amount as may have
been advanced by Lender to Borrower. The advance under this Note has been offset
by an origination  fee in he amount of 4% of the principal  amount of this loan,
which such amount shall  nevertheless  be a part of the principal  amount of the
loan  evidenced  hereby.  The  principal  amount of this  Note,  and any  unpaid
interest  accrued  thereon,  shall be due and  payable in full on August 8, 2005
(the "MATURITY DATE") in the manner provided for in SECTION 3 below, unless this
Note shall have been previously paid as provided in SECTION 4 below.

         1.       PURCHASE AGREEMENT.  This Note has been executed and delivered
by Borrower pursuant to that certain Note and Warrant Purchase Agreement,  dated
as of March 8, 2005,  between  Borrower and Lender (the  "PURCHASE  Agreement").
Borrower herein agrees with Holder that Borrower will perform and discharge each
of its covenants and agreements contained in the Purchase Agreement as from time
to time amended and supplemented, the provisions of which Purchase Agreement are
hereby incorporated in this Note by reference with the same effect as if it were
set forth in full. The Purchase  Agreement is subject to amendment in the manner
provided  therein,  and any such amendment  shall be binding upon the Holder and
any subsequent  holders of this Note. All capitalized  terms used herein and not
defined  herein  shall  have the  meanings  given  such  terms  in the  Purchase
Agreement.

         2.       INTEREST.  Borrower  agrees  to pay  interest  on  the  unpaid
principal amount hereof.  Interest shall accrue from the 61st day after the date
first  above  set  forth  until  this  Note is paid in full at a rate  equal  to
eighteen percent (18%) per annum. Interest shall be computed on the basis of the
actual number of days elapsed and a year of 365 days.  Interest shall be due and
payable in


                                       A-1
<PAGE>


the manner  provided for in SECTION 3 below. In no event shall the interest paid
hereunder,  together with any other  consideration paid or agreed to be paid for
the use,  forbearance  or  detention  of money  advanced  hereunder,  exceed the
highest  lawful  rate  permissible  under  any law  which a court  of  competent
jurisdiction  may  deem  applicable  hereto.  In the  event  that  such a  court
determines  that the Holder  has  charged,  received  or  contracted  to receive
interest  hereunder  in excess  of the  highest  lawful  rate  permissible,  the
interest  payable  hereunder shall  automatically be reduced to the maximum rate
permitted  by law,  and any  amounts  collected  by the Holder  that exceed such
maximum  amounts shall be applied to the  reduction of the principal  balance of
the indebtedness  evidenced by this Note and/or refunded to the Borrower.  It is
the intent  hereof that Borrower not pay or contract to pay, and that the Holder
not  receive or  contract  to  receive,  directly  or  indirectly  in any manner
whatsoever,  interest  in excess of that which may  lawfully be paid by Borrower
under applicable law.

         3.       PAYMENTS OF PRINCIPAL AND INTEREST. All payments of principal,
accrued but unpaid  interest  and all other  amounts  payable in respect of this
Note shall be made by wire  transfer  in lawful  money of the  United  States of
America in  immediately  available  Federal  funds,  to an account  furnished to
Borrower in writing for that purpose on the Maturity Date. Holder shall,  before
disposing  of this  Note or any  part  hereof,  make a  notation  hereon  of all
principal and interest  payments  previously  made  hereunder and of the date to
which  interest  hereon has been paid;  PROVIDED,  HOWEVER,  that the failure to
correctly  make a notation of any  payment  made on this Note shall not limit or
otherwise  affect the obligation of Borrower under this Note with respect to any
loan evidenced hereby or payments of principal or interest on this Note.  Holder
and Borrower each acknowledge receipt and payment, respectively, of the first 60
days' interest on this Note as of the date of this Note.

         4.       PREPAYMENT.  Borrower  may prepay  this  Note,  in whole or in
part, at any time and from time to time without the prior written consent of the
Holder.  Any partial  prepayment  shall not affect the obligation to continue to
pay in full the  amount  of the  payments  hereunder  until  the  entire  unpaid
principal  balance hereof and all accrued interest hereon has been paid in full.
Any such prepayment shall be applied first to interest and then to principal.

         5.       TRANSFER BY HOLDER.

                  (a)      This Note and all rights hereunder are  transferable,
in  whole or in part,  upon  surrender  of the  Note  with a  properly  executed
assignment,  in the form  prescribed  by Borrower,  at the  principal  office of
Borrower.

                  (b)      Until any  transfer  of this Note is made in the Note
register,  Borrower may treat the registered Holder as the absolute owner hereof
for all  purposes;  PROVIDED,  HOWEVER,  that if and when this Note is  properly
assigned in blank,  Borrower may (but shall not be required to) treat the bearer
hereof as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary.

                  (c)      Borrower  will  maintain  a register  containing  the
names and  addresses  of the  registered  Holders of this Note.  Any  registered
Holder may change such registered Holder's address as shown on the Note register
by written notice to Borrower requesting such change.


                                      A-2
<PAGE>


         6.       TRANSFER BY BORROWER.  Borrower may not assign,  and no person
may assume, any of the obligations of Borrower under this Note without the prior
written consent of Holder,  which consent may be granted or withheld in Holder's
sole discretion, and any attempt to do so without such consent shall be void.

         7.       EVENTS OF DEFAULT; REMEDIES.

                  (a)      EVENTS  OF  DEFAULT.  The  occurrence  of  any of the
following shall constitute an Event of Default hereunder:

                           (i)      Default in the payment of the  principal  of
or interest on the  indebtedness  evidenced by this Note in accordance  with the
terms of this Note,  which  default is not cured  and/or  corrected  by Borrower
within five (5) business days of written notice thereof by Holder;

                           (ii)     Borrower  shall  be  liquidated,  dissolved,
partitioned or terminated, or the charter thereof shall expire or be revoked;

                           (iii)    Borrower  (i)  shall  generally  not  pay or
shall be unable to pay its debts as such debts become due, or (ii) shall make an
assignment for the benefit of creditors or petition or apply to any tribunal for
the appointment of a custodian, receiver or trustee for it or a substantial part
of its assets,  or (iii) shall  commence any  proceeding  under any  bankruptcy,
reorganization,  arrangement,  readjustment of debt, dissolution, liquidation or
other  similar law or statute of any  jurisdiction,  whether now or hereafter in
effect,  or (iv) shall have had any such  petition or  application  filed or any
such  proceeding  commenced  against it that is not dismissed  within sixty (60)
days, or (v) shall indicate,  by any act or intentional and purposeful omission,
its consent to, approval of or  acquiescence in any such petition,  application,
proceeding  or order for relief or the  appointment  of a  custodian,  receiver,
trustee or other similar official for it or a substantial part of its assets, or
(vi)  shall  suffer  any such  custodianship,  receivership  or  trusteeship  to
continue undischarged for a period of sixty (60) days or more; or

                           (iv)     A  material   default  by  Borrower  in  the
performance of any of its material  obligations under the Purchase  Agreement or
any of the other Transaction  Documents (other than the payment of the principal
of or  interest  on the  indebtedness  evidenced  by this Note,  which  shall be
subject to SUBSECTION 7(a)(i) above and not this SUBSECTION (iv)).

         With  respect to any material  default  described  above in  SUBSECTION
7(a)(iv)  that is capable of being cured and that does not  already  provide its
own cure procedure, the occurrence of such material default shall not constitute
an Event of Default  hereunder  if such  material  default is fully cured and/or
corrected within fifteen (15) days of written notice thereof by Holder.

                  (b)      ACCELERATION   OF   MATURITY;   REMEDIES.   Upon  the
occurrence of any


                                      A-3
<PAGE>


Event of Default described in SUBSECTION 7(a)(iii),  the indebtedness  evidenced
by this  Note  shall  be  immediately  due and  payable  in  full;  and upon the
occurrence of any other Event of Default  described above, the Agent at any time
thereafter  may  at its  option  accelerate  the  maturity  of the  indebtedness
evidenced by this Note without  notice of any kind.  Upon the  occurrence of any
such Event of Default and the  acceleration of the maturity of the  indebtedness
evidenced by the Note:

                           (i)      The  Agent,  on behalf of  Holder,  shall be
immediately  entitled to exercise any and all rights and  remedies  possessed by
Holder  pursuant  to the  terms of this  Note and all of the  other  Transaction
Documents; and

                           (ii)     The Agent,  on behalf of Holder,  shall have
any and all other rights and remedies  that Holder may now or hereafter  possess
at law, in equity or by statute.

                  (c)      REMEDIES  CUMULATIVE;  NO WAIVER. No right,  power or
remedy  conferred  upon or  reserved  to Holder by this Note or any of the other
Transaction  Documents is intended to be exclusive of any other right,  power or
remedy,  but each and every such right, power and remedy shall be cumulative and
concurrent  and shall be in addition to any other right,  power and remedy given
hereunder,  under any of the other  Transaction  Documents  or now or  hereafter
existing at law,  in equity or by statute.  No delay or omission by the Agent to
exercise any right, power or remedy accruing upon the occurrence of any Event of
Default  shall  exhaust  or impair any such  right,  power or remedy or shall be
construed  to be a  waiver  of any  such  Event of  Default  or an  acquiescence
therein,  and every  right,  power and  remedy  given by this Note and the other
Transaction  Documents to the Agent or Holder may be exercised from time to time
and as often as may be deemed expedient by the Agent.

         8.       SECURITY.  Borrower's  obligations under this Note are secured
by the collateral set forth in the Security Agreement.

         9.       NOTICES. Any notice required by the provisions of this Note to
be given  to  Holder  shall  be  delivered  personally,  telecopied,  or sent by
certified mail or overnight via a nationally recognized courier service (such as
Federal  Express),  addressed to Holder at the address appearing on the books of
Borrower.  The date of personal  delivery or telecopy or two (2)  business  days
after the date of  mailing  (or the next  business  day after  delivery  to such
courier service), as the case may be, shall be the date of such notice.

         10.      GOVERNING  LAW.  THIS NOTE SHALL BE CONSTRUED  AND ENFORCED IN
ACCORDANCE  WITH,  AND SHALL BE GOVERNED  BY, THE LAWS OF THE STATE OF TENNESSEE
WITHOUT  REGARD TO CONFLICT OF LAW  PRINCIPLES  THEREOF,  EXCEPT THAT  CORPORATE
MATTERS SHALL BE GOVERNED BY FLORIDA CORPORATE LAW.

         11.      WAIVER OF JURY TRIAL. Borrower and Lender each waive all right
to trial by jury in any action or  proceeding to enforce or defend any rights or
remedies hereunder or relating hereto.

         12.      WAIVERS.  Borrower  waives  presentment  for payment,  demand,
notice of  demand,  notice of  nonpayment  or  dishonor,  protest  and notice of
protest of this Note,  and all other  notices in  connection  with the delivery,
acceptance, performance, default or enforcement of the payment of this Note, and
Borrower agrees that its liability shall be unconditional, without regard to the
liability  of any other  party,  and shall not be  affected in any manner by any
indulgence,  extension  of time,  renewal,  waiver or  modification  granted  or
consented to by Holder or Agent.


                                      A-4
<PAGE>


         13.      ATTORNEYS' FEES. Borrower promises to pay all reasonable costs
and expenses,  including reasonable  attorneys' fees, incurred in the collection
and enforcement of this Note, including, without limitation,  enforcement before
any court and including all appellate  proceedings and post-judgment  collection
proceedings.

         14.      SEVERABILITY.  Wherever  possible each  provision of this Note
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law,  but if any  provision of this Note shall be  prohibited  by or
invalid under such law, such  provision  shall be  ineffective  to the extent of
such  prohibition  or  invalidity,  without  invalidating  the remainder of such
provision or the remaining  provisions of this Note and shall be  interpreted so
as to be effective and valid.

                            [SIGNATURE PAGE FOLLOWS]


                                      A-5
<PAGE>


         IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of
the day and year and at the place first written above.

                                         NATIONAL COAL CORPORATION,
                                         a Tennessee corporation

                                         By:
                                                  ------------------------------
                                                  Jon Nix
                                         Title:   Chief Executive Officer



                                      A-6
<PAGE>


                                    EXHIBIT B

                                     WARRANT



THIS WARRANT AND THE  SECURITIES  ISSUABLE  HEREUNDER  HAVE NOT BEEN  REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER  APPLICABLE  SECURITIES  LAWS AND HAVE  BEEN  ISSUED IN  RELIANCE  UPON AN
EXEMPTION  FROM THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES ACT AND SUCH
OTHER  SECURITIES  LAWS.  NEITHER  THIS  WARRANT  NOR  THE  SECURITIES  ISSUABLE
HEREUNDER MAY BE REOFFERED, SOLD, ASSIGNED,  TRANSFERRED,  PLEDGED,  ENCUMBERED,
HYPOTHECATED  OR  OTHERWISE   DISPOSED  OF,  EXCEPT  PURSUANT  TO  AN  EFFECTIVE
REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO A TRANSACTION
THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
------------------------------------------------------------------------------


                        WARRANT TO PURCHASE COMMON STOCK
                                       OF
                               NATIONAL COAL CORP.

NO. ______                                                         March 8, 2005

THIS CERTIFIES  THAT,  for value  received,  ________________,  or its permitted
registered assigns ("HOLDER"), is entitled,  subject to the terms and conditions
of this Warrant,  at any time or from time to time commencing after the issuance
date of this Warrant (the "EFFECTIVE  DATE"),  and before 5:00 p.m. Eastern Time
on the fifth  anniversary  of the Effective  Date (the  "EXPIRATION  DATE"),  to
purchase from National Coal Corp., a Florida corporation (the "COMPANY"),  up to
___________ shares of Common Stock of the Company at an exercise price per share
of $8.50  (the  "PURCHASE  PRICE").  Both the  number of shares of Common  Stock
purchasable  upon exercise of this Warrant and the Purchase Price are subject to
adjustment and change as provided herein.

1.       CERTAIN DEFINITIONS.  As used in this Warrant the following terms shall
         have the following respective meanings:

         1.1      "COMMON  STOCK" shall mean the common stock,  par value $.0001
                  per share, of the Company and any other securities at any time
                  receivable or issuable upon exercise of this Warrant.

         1.2      "FAIR  MARKET  VALUE"  of a  share  of  Common  Stock  as of a
                  particular date shall mean:

                  (a)      If  traded on a  securities  exchange  or the  Nasdaq
                           Stock  Market,  the Fair Market Value shall be deemed
                           to be the average of the closing prices of the Common
                           Stock of the Company on such  exchange or market over
                           the five (5) trading days ending immediately prior to
                           the applicable date of valuation;

                  (b)      If traded  over-the-counter,  the Fair  Market  Value
                           shall be deemed to be the  average of the closing bid
                           and  asked  quotations   averaged  over  the


                                       B-1
<PAGE>

                           fifteen (15)-day period ending  immediately  prior to
                           the applicable date of valuation; and

                  (c)      If there is no public  market,  the Fair Market Value
                           shall be the value  thereof,  as agreed  upon in good
                           faith  by  the  Company  and  the  Holder;  PROVIDED,
                           HOWEVER,  that if the Company  and the Holder  cannot
                           agree on such value,  such value shall be  determined
                           by  an  independent  valuation  firm  experienced  in
                           valuing  businesses jointly selected in good faith by
                           the Company and the Holder.  Fees and expenses of the
                           valuation firm shall be paid for by the Company.

         1.3      "NOTE" shall mean that certain Senior Secured Promissory Note,
                  dated as of March 8, 2005,  issued by the  Company in favor of
                  Holder.

         1.4      "REGISTERED  HOLDER"  shall mean any Holder in whose name this
                  Warrant is registered upon the books and records maintained by
                  the Company.

         1.5      "WARRANT" as used herein,  shall  include this Warrant and any
                  warrant  delivered  in  substitution  or exchange  therefor as
                  provided herein.

2.       EXERCISE OF WARRANT

         2.1      PAYMENT.  Subject to compliance  with the terms and conditions
                  of this Warrant and applicable  securities  laws, this Warrant
                  may be exercised, in whole or in part at any time or from time
                  to  time  after  the  Effective  Date,  and on or  before  the
                  Expiration   Date   by  the   delivery   (including,   without
                  limitation,  delivery by  facsimile)  of the form of Notice of
                  Exercise   attached  hereto  as  EXHIBIT  1  (the  "NOTICE  OF
                  EXERCISE"),  duly  executed  by the Holder,  to the  principal
                  office of the Company,  and as soon as practicable  after such
                  date, surrendering

                  (a)      this Warrant to the principal  office of the Company,
                           and

                  (b)      payment in cash (by check) or by wire  transfer of an
                           amount equal to the product  obtained by  multiplying
                           the number of shares of Common Stock being  purchased
                           upon such  exercise  by the then  effective  Purchase
                           Price (the "EXERCISE AMOUNT").

         2.2      STOCK CERTIFICATES;  FRACTIONAL SHARES. As soon as practicable
                  on or after the date of any  exercise  of this  Warrant but in
                  any event  within 5  business  days  after its  receipt of the
                  Exercise  Amount,  the Company  shall issue and deliver to the
                  person or persons  designated by the Holder a  certificate  or
                  certificates  for the  aggregate  number  of whole  shares  of
                  Common Stock issuable upon such  exercise,  together with cash
                  in lieu of any  fraction of a share equal to such  fraction of
                  the  current  Fair  Market  Value of one whole share of Common
                  Stock as of such date of  exercise.  No  fractional  shares or
                  scrip  representing  fractional shares shall be issued upon an
                  exercise of this Warrant.


                                      B-2
<PAGE>


         2.3      PARTIAL EXERCISE;  EFFECTIVE DATE OF EXERCISE.  In case of any
                  partial  exercise of this  Warrant,  the Company  shall cancel
                  this  Warrant  upon  surrender  hereof and shall  execute  and
                  deliver a new  Warrant of like tenor and date for the  balance
                  of the  shares of Common  Stock  purchasable  hereunder.  This
                  Warrant  shall be deemed to have  been  exercised  immediately
                  prior to the close of  business  on the date of its  surrender
                  for exercise as provided above. The person entitled to receive
                  the shares of Common  Stock  issuable  upon  exercise  of this
                  Warrant  shall be treated  for all  purposes  as the holder of
                  record of such  shares as of the close of business on the date
                  the  Company  receives  the  Notice of  Exercise,  subject  to
                  receipt of the Exercise Amount.

         2.4      VESTING. The warrants shall vest fully upon issuance.

         2.5      LIMITATIONS  ON  EXERCISE.  The  Company  shall not effect any
                  exercise of this  Warrant,  and the Holder  shall not have the
                  right to  exercise  any portion of this  Warrant,  pursuant to
                  SECTION  2.1 or  otherwise,  to the extent  that after  giving
                  effect to such issuance after exercise,  the Holder  (together
                  with the  Holder's  affiliates  and any other person or entity
                  acting as a group  together  with  Holder  or any of  Holder's
                  affiliates)  would  beneficially  own in excess of 9.99%  (the
                  "APPLICABLE PERCENTAGE") of the number of shares of the Common
                  Stock  outstanding  immediately  after  giving  effect to such
                  issuance.  For purposes of the foregoing sentence,  the number
                  of shares of Common Stock beneficially owned by the Holder and
                  its  affiliates  shall  include the number of shares of Common
                  Stock  issuable  upon exercise of this Warrant with respect to
                  which the  determination  of such sentence is being made,  but
                  shall exclude the number of shares of Common Stock which would
                  be issuable upon (A) exercise of the  remaining,  nonexercised
                  portion of this  Warrant  beneficially  owned by the Holder or
                  any of its  affiliates  and (B) exercise or  conversion of the
                  unexercised or nonconverted portion of any other securities of
                  the  Company  (including,   without   limitation,   any  other
                  warrants)  subject to a limitation  on  conversion or exercise
                  analogous  to the  limitation  contained  herein  beneficially
                  owned by the  Holder or any of its  affiliates.  Except as set
                  forth in the preceding sentence,  for purposes of this SECTION
                  2.5,  beneficial  ownership  shall be calculated in accordance
                  with  Section  13(d) of the  Exchange  Act and the  rules  and
                  regulations   promulgated    thereunder.    In   addition,   a
                  determination  as to any group  status as  contemplated  above
                  shall also be determined  in accordance  with Section 13(d) of
                  the  Exchange  Act and the rules and  regulations  promulgated
                  thereunder.  For purposes of this SECTION 2.5, in  determining
                  the number of outstanding  shares of Common Stock,  the Holder
                  may rely on the number of  outstanding  shares of Common Stock
                  as reflected in (x) the  Company's  most recent Form 10-QSB or
                  Form  10-KSB,  as the case may be,  (y) a more  recent  public
                  announcement  by the  Company  or (z) any other  notice by the
                  Company or the  Company's  Transfer  Agent  setting  forth the
                  number of shares of Common Stock outstanding. Upon the written
                  or oral  request of the Holder,  the Company  shall within two
                  trading days  confirm  orally and in writing to the Holder the
                  number  of shares of Common  Stock  then  outstanding.  In any
                  case, the number of  outstanding  shares of Common Stock shall
                  be  determined  after  giving  effect  to  the  conversion  or
                  exercise of securities of the Company, including this


                                      B-3
<PAGE>


                  Warrant,  by the Holder or its affiliates since the date as of
                  which such number of  outstanding  shares of Common  Stock was
                  reported.   The   provisions  of  this   paragraph   shall  be
                  implemented in a manner  otherwise  than in strict  conformity
                  with the terms this SECTION 2.5 to correct this  paragraph (or
                  any portion  hereof)  which may be defective  or  inconsistent
                  with the intended Applicable  Percentage  beneficial ownership
                  limitation  herein contained or to make changes or supplements
                  necessary  or  desirable  to  properly  give  effect  to  such
                  Applicable Percentage limitation. The limitations contained in
                  this  paragraph  shall  apply to a  successor  holder  of this
                  Warrant.  The holders of Common Stock of the Company  shall be
                  third party  beneficiaries of this SECTION 2.5 and the Company
                  may not waive this  SECTION 2.5 without the consent of holders
                  of a majority of its Common Stock.

         2.6      NET  ISSUE  EXERCISE.  If at any time  after one year from the
                  date  of  issuance  of  this  Warrant  there  is no  effective
                  registration  statement  registering the resale of the Warrant
                  Shares by the Holder,  this  Warrant may also be  exercised at
                  such  time by  means of a  "cashless  exercise"  in which  the
                  Holder  shall be  entitled  to receive a  certificate  for the
                  number of Warrant  Shares  equal to the  quotient  obtained by
                  dividing [A-B) (X)] by (A), where:

                  (A) =    the  Closing  Price on the  trading  day  immediately
                           preceding the date of such election;

                  (B) =    the Purchase Price, as adjusted; and

                  (X) =    the number of Warrant  Shares  issuable upon exercise
                           of this Warrant in accordance  with the terms of this
                           Warrant  by means of a cash  exercise  rather  than a
                           cashless exercise.

3.       VALID  ISSUANCE:  TAXES.  All shares of Common  Stock  issued  upon the
         exercise of this  Warrant  shall be duly  authorized,  validly  issued,
         fully paid and non-assessable. The Company shall not be required to pay
         any tax or  other  charge  imposed  in  connection  with  any  transfer
         involved in the issuance of any  certificate for shares of Common Stock
         in any name other than that of the  Registered  Holder of this Warrant,
         and in such case the Company  shall not be required to issue or deliver
         any stock  certificate  or security  until such tax or other charge has
         been  paid,  or it has been  established  to the  Company's  reasonable
         satisfaction that no tax or other charge is due.

4.       ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares
         of Common Stock  issuable  upon exercise of this Warrant (or any shares
         of stock or other  securities  or property  receivable or issuable upon
         exercise  of this  Warrant)  and the  Purchase  Price  are  subject  to
         adjustment upon occurrence of the following events:

         4.1      ADJUSTMENT   FOR   STOCK   SPLITS,   STOCK   SUBDIVISIONS   OR
                  COMBINATIONS   OF  SHARES.   The   Purchase   Price  shall  be
                  proportionally  decreased  and the  number of shares of Common
                  Stock issuable upon exercise of this Warrant (or any shares of
                  stock or


                                      B-4
<PAGE>


                  other  securities  at the time  issuable upon exercise of this
                  Warrant)  shall be  proportionally  increased  to reflect  any
                  stock  split  or other  subdivision  of the  Company's  Common
                  Stock.  The Purchase Price shall be  proportionally  increased
                  and the  number  of  shares  of  Common  Stock  issuable  upon
                  exercise  of this  Warrant  (or any  shares  of stock or other
                  securities at the time issuable upon exercise of this Warrant)
                  shall be proportionally decreased to reflect any reverse stock
                  split,  consolidation  or combination of the Company's  Common
                  Stock.

         4.2      ADJUSTMENT  FOR DIVIDENDS OR  DISTRIBUTIONS  OF STOCK OR OTHER
                  SECURITIES  OR  PROPERTY.  In case the  Company  shall make or
                  issue,  or shall fix a record  date for the  determination  of
                  eligible  holders  entitled  to  receive,  a dividend or other
                  distribution  with  respect to the Common Stock (or any shares
                  of  stock  or  other  securities  at the  time  issuable  upon
                  exercise  of the  Warrant)  payable in (a)  securities  of the
                  Company  (including debt instruments) or (b) assets (excluding
                  cash   dividends  paid  or  payable  solely  out  of  retained
                  earnings), then, in each such case, the Holder of this Warrant
                  on  exercise  hereof  at  any  time  after  the  consummation,
                  effective  date  or  record  date of such  dividend  or  other
                  distribution,  shall  receive,  in  addition  to the shares of
                  Common Stock (or such other stock or  securities)  issuable on
                  such exercise  prior to such date,  and without the payment of
                  additional  consideration  therefor,  the  securities  or such
                  other  assets of the Company to which such  Holder  would have
                  been entitled upon such date if such Holder had exercised this
                  Warrant  on the date  hereof  and had  thereafter,  during the
                  period from the date hereof to and  including the date of such
                  exercise,   retained  such  shares  and  all  such  additional
                  securities  or other assets  distributed  with respect to such
                  shares as aforesaid  during such period  giving  effect to all
                  adjustments called for by this SECTION 4.

         4.3      RECLASSIFICATION.  If  the  Company,  by  reclassification  of
                  securities or otherwise, shall change any of the securities as
                  to which  purchase  rights under this  Warrant  exist into the
                  same or a different number of securities of any other class or
                  classes,  this Warrant shall thereafter represent the right to
                  acquire such number and kind of  securities as would have been
                  issuable  as the  result of such  change  with  respect to the
                  securities that were subject to the purchase rights under this
                  Warrant  immediately prior to such  reclassification  or other
                  change,   and  the   Purchase   Price   therefore   shall   be
                  appropriately  adjusted,  all subject to further adjustment as
                  provided  in this  SECTION  4.  No  adjustment  shall  be made
                  pursuant to this SECTION 4.3 upon any conversion or redemption
                  of the Common Stock which is the subject of SECTION 4.5.

         4.4      ADJUSTMENT    FOR    CAPITAL    REORGANIZATION,    MERGER   OR
                  CONSOLIDATION.  In case of any capital  reorganization  of the
                  capital  stock  of the  Company  (other  than  a  combination,
                  reclassification,  exchange or subdivision of shares otherwise
                  provided for herein),  or any merger or  consolidation  of the
                  Company with or into another  corporation,  or the sale of all
                  or  substantially  all the assets of the Company then,  and in
                  each  such  case,  as a part of such  reorganization,  merger,
                  consolidation,  sale or transfer,  lawful  provision  shall be
                  made so that the Holder of this Warrant  shall  thereafter  be
                  entitled to receive upon exercise of this


                                      B-5
<PAGE>


                  Warrant,  during the period  specified herein and upon payment
                  of the Purchase Price then in effect,  the number of shares of
                  stock or other  securities  or  property  (including  cash) to
                  which the holder of the shares  deliverable  upon  exercise of
                  this  Warrant  would  have been  entitled  to  receive in such
                  reorganization,  consolidation,  merger,  sale or  transfer if
                  this  Warrant  had  been  exercised  immediately  before  such
                  reorganization,  merger, consolidation,  sale or transfer, all
                  subject to further  adjustment  as provided in this SECTION 4.
                  The foregoing  provisions of this SECTION 4.4 shall  similarly
                  apply to successive reorganizations,  consolidations, mergers,
                  sales  and  transfers  and to the stock or  securities  of any
                  other  corporation  that are at the time  receivable  upon the
                  exercise  of  this  Warrant.  If the  per-share  consideration
                  payable to the Holder hereof for shares in connection with any
                  such  transaction  is in a form other than cash or  marketable
                  securities,  then the value of such consideration shall be the
                  value as  agreed  upon in good  faith by the  Company  and the
                  Holder; provided,  however, that if the Company and the Holder
                  cannot agree on such value,  such value shall be determined by
                  an  independent  valuation  firm  experienced  in valuing such
                  property jointly selected in good faith by the Company and the
                  Holder.  All fees and expenses of the valuation  firm shall be
                  paid for by the Company. In all events, appropriate adjustment
                  (as  determined  in  good  faith  by the  Company's  Board  of
                  Directors)  shall be made in the application of the provisions
                  of this Warrant  with  respect to the rights and  interests of
                  the  Holder  after  the  transaction,  to  the  end  that  the
                  provisions  of this  Warrant  shall be  applicable  after that
                  event, as near as reasonably may be, in relation to any shares
                  or other property  deliverable  after that event upon exercise
                  of this Warrant.

         4.5      CONVERSION OF COMMON STOCK.  In case all or any portion of the
                  authorized  and  outstanding  shares  of  Common  Stock of the
                  Company are redeemed or converted or  reclassified  into other
                  securities or property  pursuant to the Company's  Articles of
                  Incorporation  or  otherwise,  or the Common  Stock  otherwise
                  ceases  to  exist,  then,  in such  case,  the  Holder of this
                  Warrant,  upon  exercise  hereof at any time after the date on
                  which  the  Common   Stock  is  so  redeemed   or   converted,
                  reclassified  or ceases  to exist  (the  "TERMINATION  DATE"),
                  shall receive, in lieu of the number of shares of Common Stock
                  that would have been issuable  upon such exercise  immediately
                  prior to the Termination Date, the securities or property that
                  would have been received if this Warrant had been exercised in
                  full  and  the  Common  Stock  received   thereupon  had  been
                  simultaneously  converted immediately prior to the Termination
                  Date,  all subject to further  adjustment  as provided in this
                  Warrant. Additionally, the Purchase Price shall be immediately
                  adjusted such that the aggregate Purchase Price of the maximum
                  number of securities or other  property for which this Warrant
                  is exercisable immediately after the Termination Date is equal
                  to the  aggregate  Purchase  Price of the  maximum  number  of
                  shares of Common Stock for which this Warrant was  exercisable
                  immediately  prior to the  Termination  Date,  all  subject to
                  further adjustment as provided herein.

         4.6      SUBSEQUENT  EQUITY  SALES.  If the  Company or any  Subsidiary
                  thereof,  as  applicable,  at any time while  this  Warrant is
                  outstanding,  shall offer,  sell, grant any option to


                                      B-6
<PAGE>


                  purchase  or offer,  sell or grant any  right to  reprice  its
                  securities,  or otherwise dispose of or issue (or announce any
                  offer,  sale,  grant  or  any  option  to  purchase  or  other
                  disposition)  any  Common  Stock or common  stock  equivalents
                  entitling any person to acquire shares of Common Stock,  at an
                  effective  price per share less than $6.65  (adjusted  for any
                  stock  splits  and the like  after  the date of this  Warrant)
                  (such lower price,  the "BASE SHARE PRICE" and such  issuances
                  collectively,  a "DILUTIVE  ISSUANCE"),  as adjusted hereunder
                  (if the holder of the Common Stock or common stock equivalents
                  so issued shall at any time,  whether by operation of purchase
                  price  adjustments,  reset  provisions,  floating  conversion,
                  exercise or exchange prices or otherwise,  or due to warrants,
                  options or rights per share which is issued in connection with
                  such  issuance,  be entitled to receive shares of Common Stock
                  at an  effective  price  per  share  which  is less  than  the
                  Purchase Price, such issuance shall be deemed to have occurred
                  for less than the Purchase  Price),  then,  the Purchase Price
                  shall be  multiplied  by a fraction,  the  numerator  of which
                  shall be the  number  of shares of  Common  Stock  issued  and
                  outstanding prior to such Dilutive Issuance plus the number of
                  shares  of Common  Stock  which  the  aggregate  consideration
                  received for the Dilutive Issuance would have purchased at the
                  Exercise  Price,  and the  denominator  of which  shall be the
                  numbers of shares of Common Stock issued and outstanding after
                  such  Dilutive  Issuance,  and the  number of  Warrant  Shares
                  issuable  hereunder shall be increased such that the aggregate
                  Purchase  Price payable  hereunder,  after taking into account
                  the  decrease  in the  Purchase  Price,  shall be equal to the
                  aggregate  Purchase  Price  prior  to  such  adjustment.  Such
                  adjustment  shall be made whenever such Common Stock or common
                  stock equivalents are issued. In addition to the foregoing, if
                  the  Dilutive  Issuance  consists  of options or  warrants  to
                  purchase  Common  Stock or a  common  stock  equivalent  at an
                  exercise  price of less than $8.50 (as  adjusted for any stock
                  splits and the like after the date of this Warrant),  then the
                  Purchase  Price  shall be  adjusted  to equal  the Base  Share
                  Price,  and  shall  not be  adjusted  by the  weighted-average
                  formula  set forth  above,  and the number of  Warrant  Shares
                  issuable  hereunder shall be increased such that the aggregate
                  Purchase  Price payable  hereunder,  after taking into account
                  the  decrease  in the  Purchase  Price,  shall be equal to the
                  aggregate Purchase Price prior to such adjustment. The Company
                  shall not be required to make any  adjustment  of the Exercise
                  Price pursuant to this Section 4.6 in the case of the issuance
                  from and  after the date of this  Warrant  of shares of Common
                  Stock or common stock  equivalents  (A) in  connection  with a
                  bona-fide  strategic  transaction  (B) in connection  with any
                  stock-based  compensation plans of the Corporation approved by
                  the Board of Directors  including all (which shall be at least
                  three) independent directors and the value assigned upon grant
                  not to be less than 85% of the  then-current  market  price or
                  (C) pursuant to the  conversion or exercise of  convertible or
                  exercisable securities outstanding on the date of this Warrant
                  (provided  that  the  conversion  or  exercise  price  of such
                  security has not been amended since the date of this Warrant).
                  The Company shall notify the Holder in writing,  no later than
                  the business day following the issuance of any Common Stock or
                  common stock equivalents  subject to this section,  indicating
                  therein the applicable  issuance price, or of applicable reset
                  price,  exchange  price,  conversion  price and other  pricing
                  terms  (such  notice  the  "DILUTIVE  ISSUANCE  NOTICE").  For
                  purposes of clarification, whether or not the Company provides
                  a Dilutive  Issuance Notice pursuant to this Section 4.6, upon
                  the  occurrence  of any Dilutive  Issuance,  after the date of
                  such  Dilutive  Issuance  the


                                      B-7
<PAGE>


                  Holder is entitled to receive a number of Warrant Shares based
                  upon the Base Share  Price  regardless  of whether  the Holder
                  accurately  refers to the Base  Share  Price in the  Notice of
                  Exercise.

5.       CERTIFICATE  AS TO  ADJUSTMENTS.  In each case of any adjustment in the
         Purchase  Price,  or number or type of shares issuable upon exercise of
         this Warrant,  the Chief Financial Officer or Controller of the Company
         shall  compute such  adjustment  in  accordance  with the terms of this
         Warrant and prepare a  certificate  setting forth such  adjustment  and
         showing  in detail  the facts  upon  which  such  adjustment  is based,
         including a statement of the adjusted Purchase Price. The Company shall
         promptly  send (by  facsimile  and by either first class mail,  postage
         prepaid or overnight  delivery) a copy of each such  certificate to the
         Holder. In addition, if at any time prior to the Expiration Date:

         5.1      the  Company  shall  declare  any  dividend   payable  in  any
                  securities or make any distribution to its stockholders;

         5.2      the  Company  shall offer to its  stockholders  as a class any
                  additional  shares of Common Stock or  securities  convertible
                  into Common Stock or any right to  subscribe  for Common Stock
                  or securities  convertible or exchangeable  into Common Stock;
                  or

         5.3      a  dissolution  or winding up of the  Company  (other  than in
                  connection  with a  consolidation,  merger  or  sale of all or
                  substantially  all of its property,  assets and business as an
                  entirety) shall be proposed;

         then in any one or more of such events,  the Company  shall give notice
         in  writing  of such  event to the Holder at least 10 days prior to the
         date fixed as a record date or the date of closing the  transfer  books
         for the  determination of the  stockholders  entitled to such dividend,
         distribution  or  subscription  rights,  or for  the  determination  of
         stockholders entitled to vote on such proposed dissolution, liquidation
         or winding up. Such notice  shall  specify  such record date or date of
         the closing of the transfer books, as the case may be.

6.       LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to
         the Company of the  ownership of and the loss,  theft,  destruction  or
         mutilation of this Warrant, and of indemnity reasonably satisfactory to
         it (and in the case of mutilation,  upon surrender and  cancellation of
         this  Warrant),  the Company will execute and deliver in lieu thereof a
         new Warrant of like tenor as the lost,  stolen,  destroyed or mutilated
         Warrant.

7.       RESERVATION OF COMMON STOCK.  The Company hereby  covenants that at all
         times there shall be reserved for issuance and delivery  upon  exercise
         of this  Warrant  such number of shares of Common Stock or other shares
         of capital  stock of the Company as are from time to time issuable upon
         exercise of this  Warrant and,  from time to time,  will take all steps
         necessary to amend its Articles of Incorporation to provide  sufficient
         reserves  of shares of Common  Stock  issuable  upon  exercise  of this
         Warrant. All such


                                      B-8
<PAGE>


         shares shall be duly  authorized,  and when issued upon such  exercise,
         shall be validly issued, fully paid and non-assessable,  free and clear
         of all liens,  security  interests,  charges and other  encumbrances or
         restrictions  on sale  and free and  clear  of all  preemptive  rights,
         except  encumbrances  or  restrictions  arising  under federal or state
         securities  laws.  Issuance  of  this  Warrant  shall  constitute  full
         authority  to the  Company's  Officers who are charged with the duty of
         executing  stock  certificates  to  execute  and  issue  the  necessary
         certificates  for  shares of Common  Stock  upon the  exercise  of this
         Warrant.

8.       TRANSFER  AND  EXCHANGE.  Subject to the terms and  conditions  of this
         Warrant  and  compliance  with all  applicable  securities  laws,  this
         Warrant  and  all  rights  hereunder  may be  transferred  only  to any
         Registered Holder's parent,  subsidiary or affiliate or to any officer,
         director,  partner,  investment advisor,  member or manager of any such
         parent,  subsidiary or affiliate,  in whole or in part, on the books of
         the Company  maintained for such purpose at the principal office of the
         Company  referred to above, by the Registered  Holder hereof in person,
         or by duly authorized attorney, upon surrender of this Warrant properly
         endorsed  and  upon  payment  of any  necessary  transfer  tax or other
         governmental  charge  imposed upon such transfer.  Notwithstanding  the
         foregoing,  the registration  rights provided for in EXHIBIT 3 attached
         hereto  shall not be  transferable  unless  the  transferee  receives a
         portion of this  Warrant to purchase at least  25,000  shares of Common
         Stock  (subject to  adjustment  for reverse and forward  stock  splits,
         stock dividends,  stock combinations and other similar  transactions of
         the Common Stock that occur after the date of this  Warrant).  Upon any
         permitted partial  transfer,  the Company will issue and deliver to the
         Registered  Holder a new Warrant or Warrants with respect to the shares
         of  Common  Stock not so  transferred.  Each  taker and  holder of this
         Warrant,  by taking or holding the same,  consents and agrees that when
         this Warrant  shall have been so endorsed,  the person in possession of
         this  Warrant  may be treated  by the  Company,  and all other  persons
         dealing with this Warrant, as the absolute owner hereof for any purpose
         and as the person entitled to exercise the rights  represented  hereby,
         any notice to the  contrary  notwithstanding;  provided,  however  that
         until a transfer of this Warrant is duly registered on the books of the
         Company,  the Company  may treat the  Registered  Holder  hereof as the
         owner for all purposes.

9.       RESTRICTIONS ON TRANSFER. By acceptance hereof, the Holder acknowledges
         that this  Warrant  and the capital  stock of the  Company  that may be
         issued upon its exercise have not been registered  under the Securities
         Act, and Holder agrees not to sell, pledge, distribute, offer for sale,
         transfer or  otherwise  dispose of this  Warrant or any  capital  stock
         issued  upon  its   exercise  in  the  absence  of  (i)  an   effective
         registration  statement  under the Securities Act as to this Warrant or
         such securities and  registration or  qualification  of this Warrant or
         such securities  under any applicable Blue Sky or state securities laws
         then in effect, or (ii) an opinion of counsel,  reasonably satisfactory
         to the  Company,  that  such  registration  and  qualification  are not
         required.  In the reasonable discretion of the Company, the Company may
         condition  any  transfer of all or any  portion of this  Warrant or the
         capital  stock of the  Company  that may be  issued  upon its  exercise
         (other than a disposition satisfying the conditions set forth in clause
         (i) of  SECTION  9(i)  above)  upon the  transferee's  delivery  to the
         Company  of a  written  agreement,  in form  and  substance  reasonably
         satisfactory  to  the  Company,   whereby  the  transferee  makes  such


                                      B-9
<PAGE>


         representations and warranties to and for the benefit of the Company as
         are comparable to the  representations and warranties of the Holder set
         forth in SECTION 10 below.

10.      COMPLIANCE  WITH SECURITIES  LAWS. By acceptance of this Warrant,  upon
         each exercise  hereof,  the Holder  represents,  warrants and covenants
         that any shares of stock  purchased upon exercise of this Warrant shall
         be  acquired  for the  account of the Holder and not with a view to, or
         for sale in connection with, any distribution  thereof; that the Holder
         has had such  opportunity as such Holder has deemed  adequate to obtain
         from representatives of the Company such information as is necessary to
         permit the Holder to evaluate the merits and risks of its investment in
         the Company;  that the Holder is an "accredited  investor" as such term
         is defined in Rule 501 of Regulation D under the  Securities  Act; that
         the Holder is able to bear the economic  risk of holding such shares as
         may be  acquired  pursuant  to the  exercise  of  this  Warrant  for an
         indefinite period; that the Holder understands that the shares of stock
         acquired  pursuant  to  the  exercise  of  this  Warrant  will  not  be
         registered  under  the  Securities  Act  (unless  otherwise  registered
         pursuant to exercise by the Holder of the registration  rights, if any,
         granted to the Registered  Holder) and will be "restricted  securities"
         within the meaning of Rule 144 under the Securities Act and will not be
         available  unless a public  market then exists for the stock,  adequate
         information concerning the Company is then available to the public, and
         other terms and  conditions of Rule 144 are complied with; and that all
         stock  certificates  representing  shares of stock issued to the Holder
         upon  exercise of this  Warrant or upon  conversion  of such shares may
         have affixed thereto a legend substantially in the following form:

                  THE  SECURITIES  EVIDENCED BY THIS  CERTIFICATE  HAVE NOT BEEN
                  REGISTERED  UNDER THE U.S.  SECURITIES ACT OF 1933, AS AMENDED
                  (THE  "SECURITIES  ACT"), OR ANY OTHER  APPLICABLE  SECURITIES
                  LAWS AND HAVE BEEN ISSUED IN RELIANCE  UPON AN EXEMPTION  FROM
                  THE  REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND SUCH
                  OTHER SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST
                  OR  PARTICIPATION  HEREIN MAY BE  REOFFERED,  SOLD,  ASSIGNED,
                  TRANSFERRED,  PLEDGED,  ENCUMBERED,  HYPOTHECATED OR OTHERWISE
                  DISPOSED  OF,  EXCEPT  PURSUANT TO AN  EFFECTIVE  REGISTRATION
                  STATEMENT   UNDER  THE   SECURITIES   ACT  OR  PURSUANT  TO  A
                  TRANSACTION  THAT IS EXEMPT  FROM,  OR NOT  SUBJECT  TO,  SUCH
                  REGISTRATION.

11.      NO  RIGHTS OR  LIABILITIES  AS  STOCKHOLDERS.  This  Warrant  shall not
         entitle  the  Holder  to  any  voting  rights  or  other  rights  as  a
         stockholder  of the Company.  In the absence of  affirmative  action by
         such Holder to  purchase  Common  Stock by exercise of this  Warrant or
         Common Stock upon  conversion  thereof,  no provisions of this Warrant,
         and no  enumeration  herein of the rights or  privileges  of the Holder
         hereof  shall  cause  such  Holder  hereof to be a  stockholder  of the
         Company for any purpose.


                                      B-10
<PAGE>


12.      NOTICES.  Except as may be  otherwise  provided  herein,  all  notices,
         requests,  waivers  and  other  communications  made  pursuant  to this
         Agreement shall be in writing and shall be conclusively  deemed to have
         been duly given (a) when hand  delivered to the other  party;  (b) when
         received  when sent by  facsimile  at the  address and number set forth
         below;  (c) three  business  days after  deposit in the U.S.  mail with
         first class or certified  mail receipt  requested  postage  prepaid and
         addressed  to the  other  party  as set  forth  below;  or (d) the next
         business day after deposit with a national  overnight delivery service,
         postage  prepaid,  addressed  to the  parties  as set forth  below with
         next-business-day delivery guaranteed,  provided that the sending party
         receives a confirmation of delivery from the delivery service provider.

         To Holder:                             To the Company:
                                                NATIONAL COAL CORP.
                                                319 Ebenezer Road
                                                Knoxville, TN 37923
         Attn:                                  Attn: Chief Executive Officer
         Fax Number:                            Fax Number: (865) 769-3759

         Each  person  making  a  communication  hereunder  by  facsimile  shall
         promptly confirm by telephone to the person to whom such  communication
         was  addressed  each  communication  made by it by  facsimile  pursuant
         hereto.  A party may change or supplement the addresses given above, or
         designate  additional  addresses,  for  purposes of this  SECTION 12 by
         giving the other party written  notice of the new address in the manner
         set forth above.

13.      Intentionally Omitted.

14.      HEADINGS.  The headings in this Warrant are for purposes of convenience
         in reference only, and shall not be deemed to constitute a part hereof.

15.      LAW  GOVERNING.  This  Warrant  shall  be  construed  and  enforced  in
         accordance with, and governed by, the laws of the State of Florida.

16.      WAIVER OF JURY TRIAL.  The Company and, by  acceptance of this Warrant,
         the  Holder  each  waive  all  right to trial by jury in any  action or
         proceeding  to enforce or defend any rights or  remedies  hereunder  or
         relating hereto.

17.      NO  IMPAIRMENT.  The Company  will not, by amendment of its Articles of
         Incorporation  or  bylaws,  or through  reorganization,  consolidation,
         merger, dissolution, issue or sale of securities, sale of assets or any
         other  voluntary  action,  avoid or seek to  avoid  the  observance  or
         performance of any of the terms of this Warrant,  but will at all times
         in good faith  assist in the  carrying out of all such terms and in the
         taking of all such action as may be necessary or  appropriate  in order
         to protect the rights of the Registered  Holder of this Warrant against
         impairment.  Without  limiting the  generality  of the  foregoing,  the
         Company  (a) will not  increase  the par  value of any  shares of stock
         issuable  upon the  exercise of this Warrant  above the amount  payable
         therefore upon such exercise,  and (b) will take all such action as may
         be necessary or  appropriate  in order that the


                                      B-11
<PAGE>


         Company may validly  and  legally  issue fully paid and  non-assessable
         shares of Common Stock upon exercise of this Warrant.

18.      SEVERABILITY.  If any term, provision,  covenant or restriction of this
         Warrant is held by a court of  competent  jurisdiction  to be  invalid,
         void  or  unenforceable,   the  remainder  of  the  terms,  provisions,
         covenants and  restrictions  of this Warrant shall remain in full force
         and effect and shall in no way be affected, impaired or invalidated.

19.      COUNTERPARTS.  For  the  convenience  of the  parties,  any  number  of
         counterparts  of this Warrant may be executed by the parties hereto and
         each such executed  counterpart shall be, and shall be deemed to be, an
         original instrument.

20.      REGISTRATION  RIGHTS. All shares of Common Stock issuable upon exercise
         of this  Warrant  shall  be  "Registrable  Securities"  or  such  other
         definition of securities  entitled to  registration  rights pursuant to
         EXHIBIT 3 to this Warrant.

                            [SIGNATURE PAGE FOLLOWS]


                                      B-12
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the date first set forth above.

                                            National Coal Corp.


----------------------------------          ------------------------------------
By                                          By

                                            Jon Nix
----------------------------------          ------------------------------------
Printed Name                                Printed Name

                                            Chief Executive Officer
----------------------------------          ------------------------------------
Title                                       Title






                                SIGNATURE PAGE TO
                        WARRANT TO PURCHASE COMMON STOCK



                                      B-13
<PAGE>


                                    EXHIBIT 1

                               NOTICE OF EXERCISE

                    (To be executed upon exercise of Warrant)

TO:      NATIONAL COAL CORP.


The  undersigned  hereby  irrevocably  elects to exercise  the right of purchase
represented by the within Warrant  Certificate for, and to purchase  thereunder,
the securities of National Coal Corp.,  as provided for therein,  and (check the
applicable box):

|_|      tenders  herewith  payment of the exercise price in full in the form of
         cash or a certified or official bank check or wire transfer in same-day
         funds in the amount of $____________ for _________ such securities.

|_|      Elects the Net Issue  Exercise  option  pursuant  to Section 2.6 of the
         Warrant,  and accordingly  requests delivery of a net of ______________
         of such securities.

Please issue a certificate or  certificates  for such securities in the name of,
and pay any cash for any  fractional  share to (please  print name,  address and
social security number):

Name:
               -----------------------------------------------------------------
Address:
               -----------------------------------------------------------------
Signature:
               -----------------------------------------------------------------

Note: The above signature should  correspond  exactly with the name on the first
page of this Warrant Certificate.

If said  number of  shares  shall not be all the  shares  purchasable  under the
within  Warrant  Certificate,  a new Warrant  Certificate is to be issued in the
name of said  undersigned  for the balance  remaining of the shares  purchasable
thereunder rounded up to the next higher whole number of shares.


                                      B-14
<PAGE>


                                    EXHIBIT 2

                                   ASSIGNMENT
          (To be executed only upon assignment of Warrant Certificate)

For value received, the undersigned hereby sells, assigns and transfers unto the
parties set forth below all or such portion of the Warrants  represented  by the
within Warrant  Certificate set forth below,  together with all right, title and
interest   therein,   and  does  hereby   irrevocably   constitute  and  appoint
____________________________  attorney,  to transfer said Warrant Certificate on
the books of the within-named Company with respect to the number of Warrants set
forth below, with full power of substitution in the premises:

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

  NAME(S) OF ASSIGNEE(S)             ADDRESS                  # OF WARRANTS
--------------------------- ---------------------------- -----------------------

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

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

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

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

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

And if said number of Warrants shall not be all the Warrants  represented by the
Warrant  Certificate,  a new Warrant  Certificate is to be issued in the name of
said  undersigned for the balance  remaining of the Warrants  registered by said
Warrant Certificate.


Dated:
              ------------------------------------------------------------------

Signature:
              ------------------------------------------------------------------

Notice: The signature to the foregoing Assignment must correspond to the name as
written upon the face of this security in every particular,  without  alteration
or any change whatsoever.


                                      B-15
<PAGE>


                                    EXHIBIT 3

                               REGISTRATION RIGHTS

1. REGISTRATION RIGHTS.

         1.1      DEFINITIONS.  For purposes of this Section 1:

                  (a)      REGISTRATION. The terms "REGISTER," "REGISTERED," and
                           "REGISTRATION"  refer to a  registration  effected by
                           preparing  and  filing a  registration  statement  in
                           compliance  with  the  Securities  Act  of  1933,  as
                           amended,  (the "SECURITIES ACT"), and the declaration
                           or ordering  of  effectiveness  of such  registration
                           statement

                  (b)      REGISTRABLE   SECURITIES.   The   term   "REGISTRABLE
                           SECURITIES"  means:  (1)  any  Common  Stock  of  the
                           Company  issued or to be issued upon  exercise of the
                           Warrant  and (2) any  shares of  Common  Stock of the
                           Company issued as (or issuable upon the conversion or
                           exercise  of any  warrant,  right or  other  security
                           which is issued as) a dividend or other  distribution
                           with respect to, or in exchange for or in replacement
                           of, any shares of Common  Stock  described  in clause
                           (1)  of  this  subsection  (b).  Notwithstanding  the
                           foregoing, "Registrable Securities" shall exclude any
                           Registrable   Securities   sold  by  a  person  in  a
                           transaction  in which rights under this Section 1 are
                           not assigned in accordance with this Agreement or any
                           Registrable  Securities  sold in a  public  offering,
                           whether sold pursuant to Rule 144  promulgated  under
                           the Securities Act, or in a registered  offering,  or
                           otherwise.

                  (c)      REGISTRABLE  SECURITIES THEN OUTSTANDING.  The number
                           of   shares   of    "REGISTRABLE    SECURITIES   THEN
                           OUTSTANDING"  shall  mean the  number  of  shares  of
                           Common  Stock of the  Company  that  are  Registrable
                           Securities and (l) are then issued and outstanding or
                           (2) are then issuable  pursuant to an exercise of the
                           Warrant or pursuant  to a  conversion  of  securities
                           issuable pursuant to an exercise of the Warrant.

                  (d)      HOLDER.  For  purposes  of this  Section  1, the term
                           "HOLDER"   means   any   person   owning   of  record
                           Registrable Securities that have not been sold to the
                           public or pursuant to Rule 144 promulgated  under the
                           Securities Act or any permitted assignee of record of
                           such Registrable Securities to whom rights under this
                           Section 1 have been duly assigned in accordance  with
                           this Agreement.

                  (e)      FORM S-3.  The term  "FORM S-3" means such form under
                           the Securities Act as is in effect on the date hereof
                           or  any   successor   registration   form  under  the
                           Securities Act subsequently  adopted by the SEC which
                           permits  inclusion or  incorporation  of  substantial
                           information by reference to other  documents filed by
                           the Company with the SEC.


                                      B-16
<PAGE>


                  (f)      SEC.  The term "SEC" or  "COMMISSION"  means the U.S.
                           Securities and Exchange Commission.

         1.2      [INTENTIONALLY OMITTED].

         1.3      PIGGYBACK REGISTRATIONS.  The Company shall notify all Holders
                  of Registrable Securities in writing at least twenty (20) days
                  prior  to  filing  any   registration   statement   under  the
                  Securities Act for purposes of effecting a public  offering of
                  securities  of the  Company  (including,  but not  limited to,
                  registration  statements  relating to  secondary  offerings of
                  securities  of  the  Company,   but   EXCLUDING   registration
                  statements   relating  to  any  employee  benefit  plan  or  a
                  corporate  reorganization) and will afford each such Holder an
                  opportunity to include in such  registration  statement all or
                  any  part  of the  Registrable  Securities  then  held by such
                  Holder.   Each   Holder   desiring  to  include  in  any  such
                  registration  statement  all or any  part  of the  Registrable
                  Securities  held by such  Holder  shall  within  ten (10) days
                  after receipt of the above-described  notice from the Company,
                  so notify the  Company in writing,  and in such  notice  shall
                  inform the  Company of the  number of  Registrable  Securities
                  such Holder wishes to include in such registration  statement.
                  If a Holder  decides  not to  include  all of its  Registrable
                  Securities in any registration  statement  thereafter filed by
                  the Company,  such Holder shall nevertheless  continue to have
                  the  right  to  include  any  Registrable  Securities  in  any
                  subsequent  registration statement or registration  statements
                  as may be filed by the Company  with  respect to  offerings of
                  its  securities,  all upon the terms and  conditions set forth
                  herein.

                  (a)      UNDERWRITING. If a registration statement under which
                           the Company  gives  notice  under this SECTION 1.3 is
                           for an underwritten offering,  then the Company shall
                           so advise the Holders of Registrable  Securities.  In
                           such   event,   the   right  of  any  such   Holder's
                           Registrable   Securities   to   be   included   in  a
                           registration  pursuant  to this  SECTION 1.3 shall be
                           conditioned upon such Holder's  participation in such
                           underwriting  and  the  inclusion  of  such  Holder's
                           Registrable  Securities  in the  underwriting  to the
                           extent  provided  herein.  All Holders  proposing  to
                           distribute their Registrable  Securities through such
                           underwriting   shall   enter  into  an   underwriting
                           agreement  in   customary   form  with  the  managing
                           underwriter   or   underwriters   selected  for  such
                           underwriting  (including a market stand-off agreement
                           of up to 180 days if required by such  underwriters).
                           Notwithstanding   any   other   provision   of   this
                           Agreement,    if    the    managing    underwriter(s)
                           determine(s)  in good  faith that  marketing  factors
                           require a  limitation  of the  number of shares to be
                           underwritten,  then the Company shall include in such
                           offering (i) first,  all the  securities  the Company
                           proposes to register  for its own  account,  and (ii)
                           second,  Holder's  Registrable  Securities  and other
                           shares of Common Stock of the Company requested to be
                           included   by   other   investors    having   written
                           registration   rights  agreements  with  the  Company
                           respecting  such  shares (or such other  shares,  the
                           "OTHER REGISTRABLE SECURITIES"), with Holder and each
                           such   investor   proposing   to  sell  such   shares
                           participating  in  such  registration  on a pro  rata
                           basis, such


                                      B-17
<PAGE>


                           participation  to be based  upon the number of shares
                           of  Registrable   Securities  and  Other  Registrable
                           Securities  then  held by the  Holder  and each  such
                           investor,  respectively. If any Holder disapproves of
                           the terms of any such  underwriting,  such Holder may
                           elect to withdraw  therefrom by written notice to the
                           Company and the underwriter(s), delivered at five (5)
                           business  days  prior  to the  effective  date of the
                           registration  statement.  Any Registrable  Securities
                           excluded or withdrawn from such underwriting shall be
                           excluded and withdrawn from the registration. For any
                           Holder  that is a  partnership,  the  Holder  and the
                           partners and retired partners of such Holder,  or the
                           estates and family  members of any such  partners and
                           retired  partners  and any trusts for the  benefit of
                           any of the foregoing persons, and for any Holder that
                           is a  corporation,  the Holder  and all  corporations
                           that are  affiliates of such Holder,  shall be deemed
                           to be a single  "Holder," and any pro rata  reduction
                           with respect to such "Holder" shall be based upon the
                           aggregate  amount  of  shares  carrying  registration
                           rights owned by all entities and individuals included
                           in such "Holder," as defined in this sentence.

                  (b)      EXPENSES.  All expenses incurred in connection with a
                           registration  pursuant to this SECTION 1.3 (excluding
                           underwriters' and brokers'  discounts and commissions
                           relating to shares sold by the Holders and legal fees
                           of  counsel  for  the  Holders),  including,  without
                           limitation,  all federal and "blue sky" registration,
                           filing  and   qualification   fees,   printers'   and
                           accounting  fees,  and  fees  and   disbursements  of
                           counsel  for  the  Company,  shall  be  borne  by the
                           Company.

                  (c)      NO  LIMIT  ON  REGISTRATIONS.   Except  as  otherwise
                           provided  herein,  there  shall  be no  limit  on the
                           number of times the Holders may request  registration
                           of Registrable Securities under this SECTION 1.3.

         1.4      [INTENTIONALLY OMITTED]

         1.5      OBLIGATIONS  OF THE COMPANY.  Whenever  required to effect the
                  registration   of  any  Registrable   Securities   under  this
                  Agreement the Company shall,  as  expeditiously  as reasonably
                  possible:

                  (a)      REGISTRATION STATEMENT. Prepare and file with the SEC
                           a   registration   statement  with  respect  to  such
                           Registrable  Securities  and use its best  efforts to
                           cause   such   registration   statement   to   become
                           effective,  PROVIDED, HOWEVER, that the Company shall
                           not  be  required  to  keep  any  such   registration
                           statement effective after March 8, 2007.

                  (b)      AMENDMENTS AND SUPPLEMENTS. Prepare and file with the
                           SEC  such   amendments   and   supplements   to  such
                           registration  statement  and the  prospectus  used in
                           connection with such registration statement as may be
                           necessary  to  comply  with  the  provisions  of  the
                           Securities Act with respect to the disposition of all
                           securities covered by such registration statement.


                                      B-18
<PAGE>


                  (c)      PROSPECTUSES.  Furnish to the Holders  such number of
                           copies  of  a  prospectus,  including  a  preliminary
                           prospectus,  in conformity  with the  requirements of
                           the Securities  Act, and such other documents as they
                           may  reasonably  request in order to  facilitate  the
                           disposition of the  Registrable  Securities  owned by
                           them that are included in such registration.

                  (d)      BLUE  SKY.  Use its  best  efforts  to  register  and
                           qualify the securities  covered by such  registration
                           statement  under such other  securities or "blue sky"
                           laws of such  jurisdictions  as shall  be  reasonably
                           requested by the Holders,  provided  that the Company
                           shall not be required in connection therewith or as a
                           condition  thereto to qualify  to do  business  or to
                           file a general  consent  to service of process in any
                           such states or jurisdictions.

                  (e)      UNDERWRITING. In the event of any underwritten public
                           offering,  enter  into and  perform  its  obligations
                           under  an   underwriting   agreement   in  usual  and
                           customary form, with the managing  underwriter(s)  of
                           such  offering.  Each  Holder  participating  in such
                           underwriting  shall also enter into and  perform  its
                           obligations under such an agreement.

                  (f)      NOTIFICATION.   Notify  each  Holder  of  Registrable
                           Securities covered by such registration  statement at
                           any  time  when  a  prospectus  relating  thereto  is
                           required to be delivered  under the Securities Act of
                           the  happening  of any event as a result of which the
                           prospectus  included in such registration  statement,
                           as then in effect,  includes an untrue statement of a
                           material  fact or  omits  to  state a  material  fact
                           required to be stated  therein or  necessary  to make
                           the statements therein not misleading in the light of
                           the circumstances then existing.

         1.6      FURNISH INFORMATION.  It shall be a condition precedent to the
                  obligations  of the  Company  to take any action  pursuant  to
                  SECTION  1.3 that the  selling  Holders  shall  furnish to the
                  Company such information regarding themselves, the Registrable
                  Securities   held  by  them,   and  the  intended   method  of
                  disposition of such securities as shall be reasonably required
                  to  timely  effect  the  registration  of  their   Registrable
                  Securities.

         1.7      INDEMNIFICATION.  In the event any Registrable  Securities are
                  included in a registration statement under SECTION 1.3:

                  (a)      BY THE COMPANY.  To the extent  permitted by law; the
                           Company will indemnify and hold harmless each Holder,
                           the   partners,   officers,   directors,   employees,
                           managers,  members,  and stockholders of each Holder,
                           any underwriter (as determined in the Securities Act)
                           for such Holder and each person, if any, who controls
                           such Holder or underwriter  within the meaning of the
                           Securities  Act or  the  Securities  Exchange  Act of
                           1934,  as  amended,  (the "1934  ACT"),  against  any
                           losses,  claims,  damages,  or liabilities  (joint or
                           several) to which they may become  subject  under the
                           Securities  Act,  the 1934 Act or  other  federal  or
                           state law, insofar as such


                                      B-19
<PAGE>


                           losses,  claims,  damages, or liabilities (or actions
                           in  respect  thereof)  arise out of or are based upon
                           any  of  the  following   statements,   omissions  or
                           violations (collectively a "VIOLATION"):

                           (i)      any  untrue   statement  or  alleged  untrue
                                    statement  of a material  fact  contained in
                                    such registration  statement,  including any
                                    preliminary  prospectus or final  prospectus
                                    contained   therein  or  any  amendments  or
                                    supplements thereto;

                           (ii)     the  omission  or alleged  omission to state
                                    therein  a  material  fact  required  to  be
                                    stated  therein,  or  necessary  to make the
                                    statements therein not misleading, or

                           (iii)    any  violation  or alleged  violation by the
                                    Company of the Securities Act, the 1934 Act,
                                    any federal or state  securities  law or any
                                    rule or  regulation  promulgated  under  the
                                    Securities  Act, the 1934 Act or any federal
                                    or state  securities law in connection  with
                                    the  offering  covered by such  registration
                                    statement;

                           and the  Company  will  reimburse  each such  Holder,
                           partner,   officer  or   director,   underwriter   or
                           controlling  person  for any legal or other  expenses
                           reasonably   incurred  by  them,   as  incurred,   in
                           connection with  investigating  or defending any such
                           loss, claim, damage,  liability or action;  PROVIDED,
                           HOWEVER,  that the indemnity  agreement  contained in
                           this  subsection  1.7(a)  shall not apply to  amounts
                           paid in settlement of any such loss,  claim,  damage,
                           liability  or action if such  settlement  is effected
                           without  the consent of the  Company  (which  consent
                           shall not be  unreasonably  withheld),  nor shall the
                           Company be liable in any such case for any such loss,
                           claim, damage, liability or action to the extent that
                           it arises out of or is based upon a  Violation  which
                           occurs  in  reliance  upon  and  in  conformity  with
                           written  information  furnished  expressly for use in
                           connection  with such  registration  by such  Holder,
                           partner,  officer,   director,   employee,   manager,
                           member,   stockholder,   underwriter  or  controlling
                           person of such Holder.

                  (b)      BY SELLING  HOLDERS.  To the extent permitted by law,
                           each selling  Holder will indemnify and hold harmless
                           the  Company,  each  of its  directors,  each  of its
                           officers who have signed the registration  statement,
                           each person,  if any, who controls the Company within
                           the meaning of the  Securities  Act, any  underwriter
                           and any other Holder  selling  securities  under such
                           registration  statement or any of such other Holder's
                           partners, officers, directors,  employees,  managers,
                           members, stockholders or any person who controls such
                           Holder  within the meaning of the  Securities  Act or
                           the 1934 Act, against any losses,  claims, damages or
                           liabilities  (joint or  several) to which the Company
                           or any such director,  officer,  controlling  person,
                           underwriter or other such Holder,  partner,  officer,
                           director,  employee,  manager, member, stockholder or
                           controlling  person of such  other  Holder


                                      B-20
<PAGE>


                           may become subject under the Securities Act, the 1934
                           Act or other  federal or state  law,  insofar as such
                           losses, claims, damages or liabilities (or actions in
                           respect  thereto)  arise out of or are based upon any
                           Violation,  in each case to the  extent  (and only to
                           the extent)  that such  Violation  occurs in reliance
                           upon  and  in  conformity  with  written  information
                           furnished  by  such  Holder   expressly  for  use  in
                           connection  with  such  registration;  and each  such
                           Holder  will  reimburse  any legal or other  expenses
                           reasonably  incurred  by  the  Company  or  any  such
                           director, officer, controlling person, underwriter or
                           other Holder, partner, officer,  director,  employee,
                           manager, member, stockholder or controlling person of
                           such other Holder in connection with investigating or
                           defending any such loss, claim, damage,  liability or
                           action:   PROVIDED,   HOWEVER,   that  the  indemnity
                           agreement  contained in this subsection  1.7(b) shall
                           not apply to amounts paid in  settlement  of any such
                           loss,  claim,  damage,  liability  or  action if such
                           settlement  is  effected  without  the consent of the
                           Holder,  which  consent  shall  not  be  unreasonably
                           withheld;  and  PROVIDED,  FURTHER,  that  the  total
                           amounts  payable in  indemnity by a Holder under this
                           Section 1.7(b) in respect of any Violation  shall not
                           exceed the net  proceeds  received  by such Holder in
                           the  registered  offering out of which such Violation
                           arises.

                  (c)      NOTICE.  Promptly  after  receipt  by an  indemnified
                           party  under  this  SECTION  1.7  of  notice  of  the
                           commencement    of   any   action    (including   any
                           governmental action), such indemnified party will, if
                           a claim in respect  thereof is to be made against any
                           indemnifying party under this SECTION 1.7, deliver to
                           the  indemnifying  party  a  written  notice  of  the
                           commencement thereof and the indemnifying party shall
                           have the right to participate  in, and, to the extent
                           the indemnifying  party so desires,  jointly with any
                           other indemnifying party similarly noticed, to assume
                           the   defense    thereof   with   counsel    mutually
                           satisfactory to the parties; PROVIDED,  HOWEVER, that
                           an  indemnified  party shall have the right to retain
                           its own  counsel,  with the fees and  expenses  to be
                           paid by the indemnifying  party, if representation of
                           such indemnified party by the counsel retained by the
                           indemnifying  party  would  be  inappropriate  due to
                           actual or  potential  conflict of  interests  between
                           such   indemnified   party   and  any   other   party
                           represented by such counsel in such  proceeding.  The
                           failure to deliver written notice to the indemnifying
                           party within a reasonable time of the commencement of
                           any such action shall relieve such indemnifying party
                           of  liability  to the  indemnified  party  under this
                           SECTION 1.7 to the extent the  indemnifying  party is
                           prejudiced as a result  thereof,  but the omission so
                           to deliver written notice to the  indemnifying  party
                           will not relieve it of any liability that it may have
                           to any  indemnified  party  otherwise than under this
                           SECTION 1.7.

                  (d)      DEFECT ELIMINATED IN FINAL PROSPECTUS.  The foregoing
                           indemnity  agreements  of the Company and Holders are
                           subject to the condition that, insofar as they relate
                           to any Violation made in a preliminary prospectus


                                      B-21
<PAGE>


                           but eliminated or remedied in the amended  prospectus
                           on file  with the SEC at the  time  the  registration
                           statement  in  question  becomes   effective  or  the
                           amended prospectus filed with the SEC pursuant to SEC
                           Rule 424(b) (the "FINAL PROSPECTUS"),  such indemnity
                           agreement  shall  not  inure  to the  benefit  of any
                           person if a copy of the Final  Prospectus  was timely
                           furnished  to  the  indemnified  party  and  was  not
                           furnished   to  the   person   asserting   the  loss,
                           liability,  claim or  damage  at or prior to the time
                           such action is required by the Securities Act.

                  (e)      CONTRIBUTION.  In  order  to  provide  for  just  and
                           equitable  contribution  to joint liability under the
                           Securities  Act in any case in which  either  (i) any
                           Holder exercising rights under this Agreement, or any
                           controlling person of any such Holder,  makes a claim
                           for indemnification  pursuant to this SECTION 1.7 but
                           it is judicially  determined (by the entry of a final
                           judgment   or   decree   by  a  court  of   competent
                           jurisdiction  and the expiration of time to appeal or
                           the  denial of the last  right of  appeal)  that such
                           indemnification  may not be  enforced  in  such  case
                           notwithstanding   the  fact  that  this  SECTION  1.7
                           provides for  indemnification  in such case,  or (ii)
                           contribution under the Securities Act may be required
                           on the part of any such  selling  Holder  or any such
                           controlling   person  in   circumstances   for  which
                           indemnification  is provided  under this SECTION 1.7;
                           then,  and in each such case,  the  Company  and such
                           Holder  will  contribute  to  the  aggregate  losses,
                           claims,  damages or  liabilities to which they may be
                           subject  (after  contribution  from  others)  in such
                           proportion so that such Holder is responsible for the
                           portion represented by the percentage that the public
                           offering price of its Registrable  Securities offered
                           by and sold under the registration statement bears to
                           the public  offering price of all securities  offered
                           by and sold under such  registration  statement,  and
                           the Company and other selling Holders are responsible
                           for the remaining portion;  PROVIDED,  HOWEVER, that,
                           in any such case: (A) no such Holder will be required
                           to  contribute  any  amount in  excess of the  public
                           offering  price  of all such  Registrable  Securities
                           offered  and  sold by such  Holder  pursuant  to such
                           registration  statement;  and (B) no person or entity
                           guilty of  fraudulent  misrepresentation  (within the
                           meaning of Section 11(f) of the Securities  Act) will
                           be entitled to contribution from any person or entity
                           who   was    not    guilty    of   such    fraudulent
                           misrepresentation.

                  (f)      SURVIVAL.  The obligations of the Company and Holders
                           under this SECTION 1.7 shall  survive until the fifth
                           anniversary  of the  completion  of any  offering  of
                           Registrable  Securities in a registration  statement,
                           regardless  of  the  expiration  of any  statutes  of
                           limitation or extensions of such statutes.

         1.8      TERMINATION  OF THE COMPANY'S  OBLIGATIONS.  The Company shall
                  have no  obligations  pursuant to SECTION 1.3 with  respect to
                  any Registrable  Securities proposed to be sold by a Holder in
                  a registration pursuant to SECTION 1.3 more than two years (2)
                  years after the date of this  Warrant,  or, if, in the opinion
                  of


                                      B-22
<PAGE>


                  counsel  to  the  Company,  all  such  Registrable  Securities
                  proposed  to be sold by a Holder  may then be sold  under Rule
                  144  in  one   transaction   without   exceeding   the  volume
                  limitations thereunder.


                                      B-23
<PAGE>


                                    EXHIBIT C

                               SECURITY AGREEMENT



<PAGE>


                                    EXHIBIT D

                                    GUARANTY