Document:

Form of Warrant

 Exhibit 4.1 

COMMON STOCK PURCHASE WARRANT 

HQ SUSTAINABLE MARITIME INDUSTRIES, INC. 
  

			
	Warrant Shares:             	 	Initial Exercise Date: February     , 2011
		
		 	Issue Date: August     , 2010

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
                     or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and
the conditions hereinafter set forth, at any time on or after February     , 2011 (the “Initial Exercise Date”) and on or prior to the close of business on the five year anniversary of Issue Date set forth
above (the “Termination Date”) but not thereafter, to subscribe for and purchase from HQ Sustainable Maritime Industries, Inc., a Delaware corporation (the “Company”), up to
             shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section 1(b). 
 Section 1. Exercise. 

a) Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on
or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise
Price for the shares specified in the applicable Notice of Exercise by wire transfer unless the cashless exercise procedure specified in Section 1(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder
shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any 
  

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objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face
hereof. 
 b) Exercise Price. The exercise price per share of the Common Stock under this Warrant
shall be $4.5156, subject to adjustment hereunder (the “Exercise Price”). 
 c)
Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder and all of the Warrant
Shares are not then registered for resale by Holder into the market at market prices from time to time on an effective registration statement for use on a continuous basis (or the prospectus contained therein is not available for use), then this
Warrant may also be exercised, in whole or in part, 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 VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the
applicable Notice of Exercise;
		
	(B) =	 	the Exercise Price of this Warrant, as adjusted hereunder; and
		
	(X) =	 	the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise
rather than a cashless exercise.

 “VWAP” means, for any date, the price
determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on
the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for
the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so
reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the Company. 
  

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 d) Mechanics of Exercise. 

i. Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the
Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such
system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by
physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant
(if required) and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been
issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 1(d)(vi) prior to the issuance of such shares, having been paid. 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall,
at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase
the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. 

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate
or the certificates representing the Warrant Shares pursuant to Section 1(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. 

iv. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other
rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated 
  

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receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with
the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant
Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms
hereof. 
 v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares
shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share. 

vi. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to 

 

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reimburse it for any transfer tax incidental thereto. The Holder shall be responsible for all other tax liability or expense that may arise as a result of holding or transferring this Warrant or
receiving Warrant Shares upon exercise hereof. 
 vii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. 

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder
shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together
with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). 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 such
determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and
(ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) 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 1(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the
Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 1(e) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be
the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 1(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of 
  

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shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally or 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 Warrant, by the Holder or its
Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be [9.99/4.99%] of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions
of this Section 1(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section 1(e) shall continue to apply. Any such increase or decrease will not be effective until the
61st day after such notice is delivered to the Company.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of
this Warrant. 
 f) Call Provision. Subject to the provisions of Section 1(e) and this
Section 1(f), if, after the 12 month anniversary of the Issue Date, (i) the VWAP for each of 20 consecutive Trading Days (the “Measurement Period,” which 20 consecutive Trading Day period shall not have commenced until
after the Effective Date) exceeds $7.23 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the Issue Date), (ii) the average daily volume for such Measurement Period exceeds
100,000 shares per Trading Day (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the Issue Date) and (iii) the Holder is not in possession of any information that constitutes, or
might constitute, material non-public information which was provided by the Company, then the Company may, within 1 Trading Day of the end of such Measurement Period, call for cancellation of all or any portion of this Warrant for which a Notice of
Exercise has not yet been delivered (such right, a “Call”) for consideration equal to $.001 per Share. To exercise this right, the Company must deliver to the Holder an irrevocable written notice (a “Call Notice”),
indicating therein the portion of unexercised portion of this Warrant to which such notice applies. If the conditions set forth below for such Call are satisfied from the period from the date of the Call Notice through and including the Call Date
(as defined below), then any portion of this Warrant subject to such Call Notice for which a Notice of Exercise shall not have been received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on the tenth Trading Day after the date
the Call Notice is received by the Holder (such date and time, the “Call Date”). Any unexercised portion of this Warrant to which the Call Notice does not pertain will be unaffected by such Call Notice. In furtherance thereof, the
Company covenants and agrees that it will honor all Notices of Exercise with respect to Warrant 
  

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Shares subject to a Call Notice that are tendered through 6:30 p.m. (New York City time) on the Call Date. The parties agree that any Notice of Exercise delivered following a Call Notice which
calls less than all the Warrants shall first reduce to zero the number of Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant Shares available for purchase under this Warrant. For example, if (A) this Warrant then
permits the Holder to acquire 100 Warrant Shares, (B) a Call Notice pertains to 75 Warrant Shares, and (C) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares,
then (x) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be automatically cancelled, (y) the Company, in the time and manner required under this Warrant, will have issued and delivered to the Holder 50
Warrant Shares in respect of the exercises following receipt of the Call Notice, and (z) the Holder may, until the Termination Date, exercise this Warrant for 25 Warrant Shares (subject to adjustment as herein provided and subject to subsequent
Call Notices). Subject again to the provisions of this Section 1(f), the Company may deliver subsequent Call Notices for any portion of this Warrant for which the Holder shall not have delivered a Notice of Exercise. Notwithstanding anything to
the contrary set forth in this Warrant, the Company may not deliver a Call Notice or require the cancellation of this Warrant (and any such Call Notice shall be void), unless, from the beginning of the Measurement Period through the Call Date,
(1) the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by 6:30 p.m. (New York City time) on the Call Date, and (2) the Registration Statement shall be effective as to all Warrant
Shares and the prospectus thereunder available for use by the Company for all such Warrant Shares, and (3) the Common Stock shall be listed or quoted for trading on the Trading Market, and (4) there is a sufficient number of authorized
shares of Common Stock for issuance of all Securities under this Warrant, and (5) the issuance of the shares shall not cause a breach of any provision of Section 1(e) herein. The Company’s right to call the Warrants under this
Section 1(f) shall be exercised ratably among the Holders based on each Holder’s initial purchase of Warrants 

Section 2. Certain Adjustments. 

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays, a
stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant), to which all holders of its Common Stock are entitled, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way
of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate 

 

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Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 2(a) shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. 

b) [Reserved]. 

c) Subsequent Rights Offerings. If the Company, at any time while the Warrant is outstanding, shall issue rights,
options or warrants to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the VWAP on the record date mentioned below, then the Exercise Price shall
be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate offering price of the total
number of shares so offered (assuming receipt by the Company in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be made whenever such rights, options or warrants
are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants. 

d) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all
holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security, then in each such case the Exercise Price shall be adjusted
by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date
mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding
share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. 

e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or
indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or
other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange 

 

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offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the
Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or
group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that
would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 1(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 1(e) on the exercise of this Warrant). For
purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock
are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or
(3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, including, but not limited to, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any
Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the
Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant
based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental

  

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Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public
announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately
following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash
consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company
shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the
provisions of this Section 2(e). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this
Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if
such Successor Entity had been named as the Company herein. 
 f) For the avoidance of doubt and notwithstanding
anything else herein to the contrary, no adjustment shall be made under this Section 2 in connection with the transactions described in the Company’s Schedule 14C filed with the Commission on July 7, 2010. 

g) Calculations. All calculations under this Section 2 shall be made to the nearest cent or the nearest
1/100th of a share, as the case may be. For purposes of this Section 2, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding. 
 h) Notice to Holder. 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this
Section 2, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring
such adjustment. No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least $0.01 in such price; provided, however, that any adjustment which by reason of this Section 2(h)(i)
is not required to be made shall be carried forward and taken into account in any subsequent adjustments under this Section 2. No adjustment need be made for a change in the par value or no par value of the Company’s Common Stock.

  

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 ii. Notice to Allow Exercise by Holder. If (A) the Company
shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the
Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of
the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding the Company or any of its subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this
Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein. 

Section 3. Transfer of Warrant. 

a) Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights)
are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the

  

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name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 3(a), as to
any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued
on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto. 

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that
purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. 
 Section 4.
Miscellaneous. 
 a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1(d)(i). 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of
like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. 
 c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next
succeeding Business Day. 
 d) Authorized Shares. 

 

 12 

 The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance
of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue). 
 Except and to the extent as waived or
consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities 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
actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be
necessary to enable the Company to perform its obligations under this Warrant. 
 Before taking any action which
would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any
public regulatory body or bodies having jurisdiction thereof. 
 e) Jurisdiction. This Warrant shall be
governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This
Warrant shall not be interpreted or construed with any 
  

 13 

 
presumption against the party causing this Warrant to be drafted. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby. 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not
registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws. 

g) Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. 

h) Notices. Any and all notices or other communications or deliveries hereunder (including, without limitation, any
Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at or prior to 5:00 p.m. (New York City time) on a Trading
Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile on a day that is not a Trading Day or later than 5:00 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such notices or communications shall be:
(a) if to the Company, to Melbourne Towers, 1511 Third Avenue, Suite 788, Seattle, Washington 98101, Attention: Chief Financial Officer, Facsimile No.: (206) 621-0318 (or such other address as the Company shall indicate in writing in
accordance with this Section 4) or (b) if to the Holder, to the address or facsimile number appearing on the Warrant Register (or such other address as the Holder shall indicate in writing in accordance with this Section 4).

 i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder
to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company. 
 j) Remedies. The
Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate. 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors 

 

 14 

 
and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder
of Warrant Shares. 
 l) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder. 
 m) Severability. Wherever possible, each
provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant. 
 Section 5. Definitions. For the purposes of this Warrant, the
following terms have the following meanings: 
 “Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in
the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 “Commission” means the United States Securities and Exchange Commission. 

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of
securities into which such securities may hereafter be reclassified or changed. 
 “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder. 
  

 15 

 “Person” means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 

“Registration Statement” means the effective registration statement with Commission File
No. 333-163454, which registers the sale of the Warrants and the Warrant Shares. 

“Securities” means the Warrants and the Warrant Shares. 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder. 
 “Trading Day” means a day on which the principal Trading Market is open for
trading. 
 “Trading Market” means any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of
the foregoing). 
 “Transfer Agent” means American Stock Transfer & Trust Company, LLC,
the current transfer agent of the Company, with a mailing address of 59 Maiden Lane, Plaza Level, New York, New York 10038 and a facsimile number of (718) 921-8334, and any successor transfer agent of the Company. 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants. 

******************** 

(Signature Page Follows) 
  

 16 

 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the date first above indicated. 
  

					
	HQ SUSTAINABLE MARITIME INDUSTRIES, INC.
		
	By:	 	  

		 	Name:	 	  

		 	Title:	 	Chief Executive Officer

  

 17 

 NOTICE OF EXERCISE 

TO: HQ SUSTAINABLE MARITIME INDUSTRIES, INC. 

(1) The undersigned hereby elects to purchase
                     Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders
herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. 
 (2) Payment shall take
the form of (check applicable box): 
 [    ] in lawful money of the United States; or 

[    ] [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the
formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c). 

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as
is specified below: 
  

			
	 	  	

 The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate
to: 

			
		
	 	  	
		
	 	  	
		
	 	  	

 [SIGNATURE OF HOLDER] 
  

					
	Name of Investing Entity:	 	 
	Signature of Authorized Signatory of Investing Entity:	 	 

			
	Name of Authorized Signatory:	 	 

			
	Title of Authorized Signatory:	 	 

			
	Date:	 	 

 ASSIGNMENT FORM 

(To assign the foregoing warrant, execute 

this form and supply required information. 

Do not use this form to exercise the warrant.) 

FOR VALUE RECEIVED, [            ] all of or
[            ] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to 

 

			
	 	 	whose address is

					
			
	 	 	.	 	
			
	 	 		 	

 Dated:
            ,          
  

			
	Holder’s Signature:	 	  

		
	Holder’s Address:	 	  

		
		 	  

 

					
	Signature Guaranteed:	  	  
	  	

 NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant,
without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to
assign the foregoing Warrant.Equipment Purchase Agreement, dated June 30, 2010

 Exhibit 10.1 

EQUIPMENT PURCHASE AGREEMENT 

This Equipment Purchase Agreement (“Agreement”) is made and entered into as of the 29th day of June,
2010, by and between SEACAP Leasing Associates II LLC, a Delaware limited liability company, (hereinafter, “Purchaser”), and National Coal Corporation, a Tennessee corporation (hereinafter, “Seller”)
(collectively, the “Parties”). 
 RECITALS: 

WHEREAS, Seller desires to sell the “Equipment,” the “Supplies” and the
“Records” (each as hereinafter defined) to Purchaser upon the terms and subject to the conditions set forth in this Agreement. 

WHEREAS, Purchaser desires to purchase the Equipment, the Supplies, and the Records from Seller upon
the terms and subject to the conditions set forth in this Agreement. 
 AGREEMENT: 

NOW, THEREFORE, in consideration of the premises and for other valuable consideration, the receipt
of which is hereby acknowledged, the Parties agree as follows: 
 A. PURCHASE AND SALE OF EQUIPMENT. 

1. PURCHASE AND SALE. In consideration of the payment by Purchaser to Seller on the
date hereof of the sum of FOUR MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($4,100,000.00) (the
“Purchase Price”), the receipt of which is hereby acknowledged by Seller, Seller hereby sells, conveys, assigns, transfers and delivers unto Purchaser, its successors and assigns, free and clear of all mortgages, liens, security interests,
pledges, claims, charges or other encumbrances of any nature whatsoever (other than the lien for ad valorem property taxes not yet due and payable), and Purchaser hereby purchases and accepts, all of Seller’s rights, title and interests under,
in and to: 
 (a) all machinery, equipment, vehicles, computer hardware and software, furnishings
and fixtures of Seller wherever located, including without limitation, the machinery, equipment and other items of tangible personal property set forth or identified on Exhibit A attached hereto and made a part hereof (collectively, the
“Equipment”); 
 (b) all supplies, spare parts, tools, accessories and
maintenance equipment, including without limitation, any of the same that may be set forth or identified on Exhibit A (collectively, “Supplies”); and 

(c) all books, records, operating manuals, maintenance logs, owner’s manuals and other similar
information relating to any of the foregoing items of Equipment or Supplies (collectively, the “Records”). 

TO HAVE AND TO HOLD the above described
Equipment, Supplies and Records unto Purchaser, its successors and assigns, for its and their own use, forever. To further evidence the foregoing sale, conveyance, assignment and transfer of the Equipment, Supplies and Records to

 
Purchaser, Seller executed and delivered to Purchaser on the date hereof a Bill of Sale in the form attached hereto as Exhibit B. Purchaser shall be solely responsible for the payment of
any transfer taxes that may result from any of the transactions contemplated in this Article A, Section 1. 
 Purchaser
shall take possession of the Equipment, Supplies and Records a NCC Mine #3, 7653 New River Hwy, Devonia, TN 37710, where such Equipment, Supplies and Records currently are located, and Purchaser shall, at Purchaser’s expense, remove the
Equipment, Supplies and Records from such locations as soon as practicable following the date of hereof, but in any event within 30 days following the date hereof. Seller shall cooperate with Purchaser in relocating the Equipment, Supplies and
Records, including by providing Purchaser with access to its premises during normal business hours to allow Purchaser to remove the Equipment, Supplies and Records. 

2. ASSIGNMENT OF RIGHTS; ENFORCEMENT. In consideration of the
payment by Purchaser to Seller of the Purchase Price, Seller hereby further irrevocably assigns to Purchaser, its successors and assigns, any and all product warranties, vendor warranties or guarantees and/or service contracts or the like to which
Seller may be a party or beneficiary, covering or relating to any of the Equipment or Supplies, or relating to the use, condition, servicing, repair or upkeep thereof (collectively, the “Related Rights”), in each case to the extent the
Related Rights are either freely assignable by Seller to Purchaser without the prior consent or approval of the vendor or other party extending or obligated for the same, or are the subject of a written consent to such assignment granted by that
vendor or other party. In the event a particular vendor or other party fails or refuses for any reason to consent to the assignment to Purchaser of any Related Rights, or otherwise objects to the enforcement of such Related Right or the validity
thereof following the date hereof on the basis that the assignment to Purchaser contemplated herein was not authorized or is invalid, Seller nonetheless agrees to fully enforce (for the sole benefit of Purchaser) any and all rights that Seller may
have against that vendor or third party pursuant to that Related Right upon the reasonable request of Purchaser or its successor or assign from time-to-time, and agrees to remit and pay solely to Purchaser any recoveries that may be made by Seller
as a result thereof, without set-off, deduction or counterclaim. 
 3. SPECIFIC
WARRANTIES. Seller hereby represents and warrants to Purchaser that: 
 (a) Title and
Authority. Seller is the sole record and beneficial owner of the Equipment, Supplies and Records, with the absolute power and authority to sell, convey, assign, transfer and deliver the same to Purchaser as contemplated herein, and has good
and marketable title to those assets and properties, free and clear of all mortgages, liens, security interests, pledges, claims and charges of any nature whatsoever, other than the lien for ad valorem taxes not yet due and payable. 

(b) Condition. The Equipment and Supplies are in good working order, condition and state of repair, ordinary wear and tear
excepted. 
  

 2 

 EXCEPT AS EXPRESSLY PROVIDED ABOVE, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, WHETHER
EXPRESSED OR IMPLIED REGARDING THE EQUIPMENT, THE SUPPLIES OR THE RECORDS, OR THE CONDITION THEREOF, AND HEREBY DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS OR WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. THE EQUIPMENT IS BEING SOLD “AS IS, WHERE IS”. 
 4. ADDITIONAL
REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to Purchaser that: Seller is an entity legally formed and validly existing, in good standing,
under the laws of the state of its formation, with full power to enter into this Agreement and to pay and perform all of its obligations hereunder; this Agreement has been duly authorized, executed and delivered by Seller and constitutes the valid,
legal and binding obligation of Seller, enforceable in accordance with its terms; no approval is required from any governmental unit nor from any other person, firm or corporation with respect to the execution or performing this Agreement; and no
lien which now or may hereafter cover or attach to any property of Seller attaches or will attach to the Equipment, Supplies or Records, or affects or will affect adversely Purchaser’s right, title and interest therein. 

B. MISCELLANEOUS 

1. DEFAULT. The occurrence of any one or more of the following shall be a default under this Agreement:
(i) Seller fails to observe or perform any other covenant, condition or agreement under this Agreement; and/or (ii) Seller makes or gives any inaccurate or false statement to Purchaser in connection with this Agreement; 

2. REMEDIES. Upon the occurrence of any default, at its option, Purchaser may do any or all of the following:
recover from Seller any and all damages that may have been incurred by Purchaser as a result of the default; and recover all other costs and expenses incurred by Purchaser on account of such default, including, but not limited to, all court costs,
attorneys’ fees and collection agency fees. The rights of Purchaser hereunder are not exclusive, but are in addition to any rights or remedies provided by law or in equity. 

3. WAIVERS BY PURCHASER. Neither any failure nor any delay on the part of Purchaser
in exercising any right, power or remedy hereunder or under applicable law shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or
remedy. 
 4. MODIFICATIONS. No modifications or waiver of any provision of this Agreement and no consent
by Purchaser to any departure by Seller therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice
to or demand upon Seller in any case shall entitle Seller to any other or further notice or demand in the same, similar or other circumstances. 
  

 3 

 5. NOTICES. Any notice, request or other communication in connection
with this Agreement shall be in writing and, if sent by registered or certified mail, shall be deemed to have been given when received by the party to whom directed, or, if sent by mail but not registered or certified, when deposited in the mail,
postage prepaid, provided that any such notice or communication shall be addressed to a party hereto as provided below (or at such other address as such party shall specify in writing to the other parties hereto): 

 

			
	 If to Purchaser:
	  	National Coal Corporation
		  	8915 George Williams Road
		  	Knoxville, TN 37923
		  	Attn: Daniel A. Roling
		  	Fax: (865) 691-9982
		  	Email: droling@nationalcoal.com
		
	 If to Purchaser:
	  	SEACAP Leasing Associates II LLC
		  	2200 Eller Drive
		  	Ft Lauderdale, FL 33316
		  	Attn: Legal Department
		  	Fax:
                                        
                                         
                                        

 Notwithstanding anything to the contrary, all notices and demands for payment from Purchaser actually received
in writing by Seller shall be considered to be effective upon receipt thereof by Seller regardless of the procedure or method utilized to accomplish such delivery thereof to Seller. 

6. APPLICABLE LAW AND CONSENT TO
JURISDICTION. The performance and construction of this Agreement shall be governed by the internal laws of the Commonwealth of Kentucky. Seller agrees that any suit, action or proceeding instituted against Seller with respect to
this Agreement may be brought in any court of competent jurisdiction located in the Commonwealth of Kentucky. By its execution hereof, Seller hereby irrevocably waives any objection and any right of immunity on the ground of venue, the convenience
of the forum or the jurisdiction of such courts or from the execution of judgments resulting therefrom. Seller hereby irrevocably accepts and submits to the jurisdiction of the aforesaid courts in any such suit, action or proceeding. 

7. SURVIVAL. All of Seller’s covenants, agreements, representations and warranties made herein shall survive
the execution and delivery hereof and all of Purchaser’s rights, privileges and indemnities under this Agreement, to the extent they are fairly attributable to events or conditions occurring or existing on or prior to the termination of this
Agreement, shall survive and continue in full force and effect after termination of this Agreement. 
 8.
SEVERABILITY. If any term, provision or condition, or any part thereof, of this Agreement shall for any reason be found or held invalid or unenforceable by any court or governmental agency of competent jurisdiction, such
invalidity or unenforceability shall not affect the remainder of such term, provision or condition nor any other term, provision or condition, and this Agreement shall survive and be construed as if such invalid or unenforceable term, provision or
condition had not been contained therein. 
  

 4 

 9. MERGER AND INTEGRATION. This
Agreement contains the entire agreement of the parties hereto with respect to the matters covered and the transactions contemplated hereby, and no other agreement, statement or promise made by any party hereto, or by any employee, officer, agent or
attorney of any party hereto, which is not contained herein shall be valid or binding. 
 10. HEADINGS.
The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and shall not be used or deemed to limit or diminish any of the provisions hereof. 

IN WITNESS WHEREOF, Purchaser and Seller have executed or caused this Agreement to be
executed as of the date first written above. 
  

			
	SEACAP LEASING ASSOCIATES II LLC
		
	By:	 	 /s/ Dan Arlehten

		
	Title:	 	 Vice President

		 	(“PURCHASER”)
	
	NATIONAL COAL CORPORATION
		
	By:	 	 /s/ Daniel A. Roling

		 	DANIEL A. ROLING
		
	Title:	 	 PRESIDENT AND CEO

		 	(“SELLER”)

  

 5 

 EXHIBIT A 

EQUIPMENT DESCRIPTION 

Superior Highwall Mining System with serial number of SHM-37V/800, including, without limitation, all attachments, accessions, additions,
enhancements and replacements thereto or therefore, further including, without limitation, the components listed below, together with any and all repair or spare parts, replacement parts, software, hardware, manuals, service logs, and books and
records related to any or all of the foregoing: 
  

	 	1.	Cab 

  

	 	2.	Baseframe 

  

	 	3.	Powerhead 

  

	 	4.	Vertical Auger, including Conveyor Belt 

  

	 	5.	Superbeam Structures including Tracks 

  

	 	6.	BPM Room 

  

	 	7.	ECM Room 

  

	 	8.	Hose Reel and Components 

  

	 	9.	PTM 1 

  

	 	10.	Pushbeams (40) 

  

	 	11.	Low Profile Cutter Module (Short) 

  

	 	12.	Low Profile Cutter Module (Long) 

  

	 	13.	Parts Trailer and Components 

  

	 	14.	995V Track Generator 

 EXHIBIT B 

FORM OF BILL OF SALE 

For valuable consideration, the receipt of which is hereby acknowledged, NATIONAL COAL
CORPORATION (hereinafter the “Seller”), having its principal place of business at 8915 George Williams Road, Knoxville, TN 37923, hereby sells, assigns and transfers all of its right, title and interest in
and to the Property described herein to: 
 SEACAP Leasing Associates II LLC (hereinafter the “Buyer”) 

2200 Eller Drive 

Ft Lauderdale, FL 33316 

Property: Superior High Wall Mining System S/N SHM-37V/800, as described more particularly on Exhibit A attached hereto and
incorporated herein by reference, located at NCC Mine #3, 7653 New River Hwy, Devonia, TN 37710, (hereinafter the “Property”). 

Seller hereby represents and warrants to Buyer that Seller is the absolute owner of said Property, that said Property is free and clear
of all liens, charges and encumbrances, and that Seller has full right and power and authority to sell, assign and transfer said Property, and to make this Bill of Sale, an that said sale has been duly authorized by all necessary action of Seller.
Seller hereby assigns to Buyer all manufacturer, vendor and licensor representations, warranties and indemnities with respect to the Property. 
  

			
	NATIONAL COAL CORPORATION
		
	By:	 	 /s/ Daniel A. Roling

		 	Daniel A. Roling, President & CEO

Date: June 29, 2010 

 EXHIBIT A 

EQUIPMENT DESCRIPTION 

Superior Highwall Mining System with serial number of SHM-37V/800, including, without limitation, all attachments, accessions, additions,
enhancements and replacements thereto or therefore, further including, without limitation, the components listed below, together with any and all repair or spare parts, replacement parts, software, hardware, manuals, service logs, and books and
records related to any or all of the foregoing: 
  

	 	1.	Cab 

  

	 	2.	Baseframe 

  

	 	3.	Powerhead 

  

	 	4.	Vertical Auger, including Conveyor Belt 

  

	 	5.	Superbeam Structures including Tracks 

  

	 	6.	BPM Room 

  

	 	7.	ECM Room 

  

	 	8.	Hose Reel and Components 

  

	 	9.	PTM 1 

  

	 	10.	Pushbeams (40) 

  

	 	11.	Low Profile Cutter Module (Short) 

  

	 	12.	Low Profile Cutter Module (Long) 

  

	 	13.	Parts Trailer and Components 

  

	 	14.	995V Track Generator 

  

 2

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