SC 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. ________)*

National Coal Corp.

(Name of Issuer)

Common Stock, par value $.0001 per share

(Title of Class of Securities)

632381208

(CUSIP Number)

Ann E. Carey, Business Legal Assistant

c/o Howard Rice Nemerovski Canady Falk & Rabkin,

A Professional Corporation

Three Embarcadero Center, Suite 700

San Francisco, CA 94111-4024

415.434.1600

(Name, Address and Telephone Number of Person Authorized to

Receive Notices and Communications)

October 19, 2007

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

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1.	Names of Reporting Persons.			STEELHEAD PARTNERS, LLC
2.	Check the Appropriate Box if a Member of a Group (See Instructions)				(a)          o
					(b)          ý
3.	SEC Use Only
4.	Source of Funds (See Instructions)				OO
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)					o
6.	Citizenship or Place of Organization				Delaware
					4,600,000
Number of		7.	Sole Voting Power
Shares					0
Beneficially		8.	Shared Voting Power
Owned by					4,600,000
Each Reporting		9.	Sole Dispositive Power
Person With					0
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person				4,600,000
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)						o
13.	Percent of Class Represented by Amount in Row (11)				17.8%
14.	Type of Reporting Person (See Instructions)				IA

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1.	Names of Reporting Persons.			THE J-K NAVIGATOR FUND, L.P.
2.	Check the Appropriate Box if a Member of a Group (See Instructions)				(a)          o
					(b)          ý
3.	SEC Use Only
4.	Source of Funds (See Instructions)				WC
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)					o
6.	Citizenship or Place of Organization				Delaware
					2,689,724
Number of		7.	Sole Voting Power
Shares					0
Beneficially		8.	Shared Voting Power
Owned by					2,689,724
Each Reporting		9.	Sole Dispositive Power
Person With					0
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person				2,689,724
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)						o
13.	Percent of Class Represented by Amount in Row (11)				10.4%
14.	Type of Reporting Person (See Instructions)				PN

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1.	Names of Reporting Persons.			STEELHEAD OFFSHORE, LTD.
2.	Check the Appropriate Box if a Member of a Group (See Instructions)				(a)          o
					(b)          ý
3.	SEC Use Only
4.	Source of Funds (See Instructions)				WC
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)					o
6.	Citizenship or Place of Organization				Bermuda
Number of		7.	Sole Voting Power		1,910,276
Shares
Beneficially		8.	Shared Voting Power		0
Owned by
Each Reporting		9.	Sole Dispositive Power		1,910,276
Person With
		10.	Shared Dispositive Power		0
11.	Aggregate Amount Beneficially Owned by Each Reporting Person				1,910,276
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)						o
13.	Percent of Class Represented by Amount in Row (11)				7.4%
14.	Type of Reporting Person (See Instructions)				OO

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1.	Names of Reporting Persons.			JAMES MICHAEL JOHNSTON
2.	Check the Appropriate Box if a Member of a Group (See Instructions)				(a)          o
					(b)          ý
3.	SEC Use Only
4.	Source of Funds (See Instructions)				OO
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)					o
6.	Citizenship or Place of Organization				United States
Number of		7.	Sole Voting Power		0
Shares
Beneficially		8.	Shared Voting Power		4,600,000
Owned by
Each Reporting		9.	Sole Dispositive Power		0
Person With
		10.	Shared Dispositive Power		4,600,000
11.	Aggregate Amount Beneficially Owned by Each Reporting Person				4,600,000
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)						o
13.	Percent of Class Represented by Amount in Row (11)				17.8%
14.	Type of Reporting Person (See Instructions)				IN/HC

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1.	Names of Reporting Persons.			BRIAN KATZ KLEIN
2.	Check the Appropriate Box if a Member of a Group (See Instructions)				(a)          o
					(b)          ý
3.	SEC Use Only
4.	Source of Funds (See Instructions)				OO
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)					o
6.	Citizenship or Place of Organization				United States
Number of		7.	Sole Voting Power		0
Shares
Beneficially		8.	Shared Voting Power		4,600,000
Owned by
Each Reporting		9.	Sole Dispositive Power		0
Person With
		10.	Shared Dispositive Power		4,600,000
11.	Aggregate Amount Beneficially Owned by Each Reporting Person				4,600,000
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)						o
13.	Percent of Class Represented by Amount in Row (11)				17.8%
14.	Type of Reporting Person (See Instructions)				IN/HC

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Item 1. Security and Issuer

This Schedule 13D (“Schedule”) relates to shares of common stock, par value $.0001 per share (the “Common Stock”), of National Coal Corp. (the “Issuer”). The principal executive office of the Issuer is 8915 George Williams Road, Knoxville,

TN 37923

Item 2. Identity and Background

This Schedule is filed on behalf of Steelhead Partners, LLC (“Steelhead”), The J-K Navigator Fund, L.P. (“Navigator”), Steelhead Offshore, Ltd. (“Offshore”), James Michael Johnston and Brian Katz Klein.

The principal business address of Steelhead, Navigator, Mr. Johnston and Mr. Klein is 1301 First Avenue, Suite 201, Seattle, WA 98101. The principal business address of Offshore is c/o Citco Fund Services (Bermuda) Limited, Washington Mall West, 2nd Floor, 7 Reid Street, Hamilton HM 11, Bermuda.

Navigator is an investment limited partnership, whose general partner is Steelhead. Offshore is an offshore investment fund, whose investment manager is Steelhead. Steelhead is an investment adviser registered as such with the SEC. Mr. Johnston and Mr. Klein are Steelhead’s member-managers.

None of Steelhead, Navigator, Offshore, Mr. Johnston or Mr. Klein has during the past five years, been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors).

None of Steelhead, Navigator, Offshore, Mr. Johnston or Mr. Klein has, during the past five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, as a result of which any of them became or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Steelhead is a Delaware limited liability company, Navigator is a Delaware limited partnership, Offshore is a Bermuda exempted company, Mr. Johnston and Mr. Klein are United States citizens.

Item 3. Source and Amount of Funds or Other Consideration

The aggregate purchase price for the 749,342 shares of the Issuer’s Common Stock acquired by Navigator in the private (PIPE) transaction described under Item 5(c) below (the “October 2007 PIPE Financing”) was approximately $2,247,972 and the aggregate purchase price for the 1,050,676 shares of the Issuer’s Common Stock acquired by Offshore in the October 2007 PIPE Financing was approximately $3,152,028. The source of the funds used was working capital of Navigator and Offshore, respectively.

Item 4. Purpose of Transaction

The acquisition of securities in the October 2007 PIPE Financing described in Item 5(c) was made for investment purposes.

On October 19, 2007, the original lenders party to that certain Credit Agreement dated as of October 12, 2006 (as amended) by and among the Issuer, National Coal Corporation, its wholly owned subsidiary (the “Borrower”), Guggenheim Corporate Funding, LLC (“Guggenheim”) and the lenders identified therein (the “Credit Agreement”) assigned to Navigator, Offshore and an unrelated third party (the “Co-Lender”) all of Borrower’s outstanding obligations to repay funds loaned to Borrower pursuant to the Credit Agreement in the aggregate principal amount of $10,000,000 and, to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the original lenders against any person arising under or in connection with the Credit Agreement (the “Debt Assignment”). Guggenheim remains as Administrative Agent under the Credit Agreement.

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Also on October 19, 2007, the parties to the Credit Agreement entered into a Waiver and Amendment No. 3 (the “Waiver and Amendment”) to the Credit Agreement, pursuant to which the parties agreed to waive and amend certain provisions of the Credit Agreement. Pursuant to the Waiver and Amendment, Guggenheim, as Administrative Agent, and Navigator, Offshore and the Co-Lender, as the new lenders under the Credit Agreement, waived certain fees related to amounts outstanding under the Issuer’s term loan facility as of December 31, 2007, the Issuer’s compliance with certain minimum consolidated EBITDA requirements for the fiscal quarters ending September 30, 2007 and December 31, 2007, and the registration and processing fee due to Guggenheim solely with respect to the Debt Assignment and acceptance of the Borrower’s outstanding obligations to Navigator, Offshore and the Co-Lender. The Waiver and Amendment also amended various restrictive covenants in the Credit Agreement, including certain restrictive covenants whose waiver was required in order to permit the Issuer to consummate the acquisition of Mann Steel Products, Inc., as well as certain other contemporaneous transactions, all as described in the Issuer’s Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on October 25, 2007.

In connection with the Debt Assignment and the Waiver and Amendment, the Issuer also agreed, on behalf of itself and the Borrower, at the Issuer’s election and as compensation for the Waiver and Amendment and Debt Assignment: (i) to issue warrants (the “Warrants”) to Navigator, Offshore and the Co-Lender (in their capacities as independent lenders under the Credit Agreement) on or before June 30, 2008 to purchase up to an aggregate of 750,000 shares of the Issuer’s common stock at an exercise price of $3.00 per share with a term through December 31, 2011; or (ii) to make certain cash payments to Navigator, Offshore and the Co-Lender (in their capacities as independent lenders under the Credit Agreement) on or before October 17, 2008 in an aggregate amount equal to the Black-Scholes value of a warrant, exercisable on or before December 31, 2011, for up to 750,000 shares of the Issuer’s common stock at an exercise price of $3.00 per share, obtained using the “OV” function on Bloomberg Financial Markets. If the Issuer elects to issue the Warrants, the Warrants will be allocated 29.50% and 20.50% and 50.00% among Navigator, Offshore and the Co-Lender, respectively.

As an additional inducement for Navigator, Offshore and the Co-Lender (in their capacities as independent lenders under the Credit Agreement) to enter into and deliver the Waiver and Amendment, and in consideration therefor, Jon Nix (a member of the Issuer’s Board of Directors), Jenco Capital Corporation (an affiliate of Mr. Nix) and Crestview Capital Master, LLC, each of whom is a stockholder of the Company (collectively, the “Subject Stockholders”) agreed to enter into a Voting Agreement, also dated as of October 19, 2007, in favor of Navigator, Offshore and the Co-Lender (the “Voting Agreement”). Pursuant to the Voting Agreement, each Subject Stockholder agreed, among other things, to vote all shares of the Issuer’s Common Stock beneficially owned by such Subject Stockholder in connection with any meeting of the stockholders of Issuer: (i) in favor of any stockholder resolutions ratifying or approving the issuance of the Warrants or any shares of the Issuer’s Common Stock for which the Warrants are exercisable; and/or (ii) against any action or agreement which would materially impede or interfere with or prevent, the issuance or the exercise of the Warrants in full.

Each of the reporting persons expressly disclaims membership in a “group” with the Co-Lender or the Subject Stockholders (or any of them) within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder.

Except as described herein, the reporting persons do not currently have any plans or proposals that relate to or would result in any of the following:

(a)           The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer;

(b)           An extraordinary corporate transaction, such as a merger, reorganization, or liquidation, involving the Issuer or any of its subsidiaries;

(c)           A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;

(d)           Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;

(e)           Any material change in the present capitalization or dividend policy of the Issuer;

(f)           Any other material change in the Issuer’s business or corporate structure;

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(g)           Changes in the Issuer’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person;

(h)           Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

(i)           A class of equity securities of the issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or

(j)           Any action similar to those enumerated above.

Depending upon market conditions and other factors, the reporting persons may acquire additional securities of the Issuer or alternatively, may dispose of some or all of the securities of the Issuer beneficially owned by them.

Item 5. Interest in Securities of the Issuer

(a)           Navigator owns 2,689,724 shares of common stock, and the percentage of common stock beneficially owned by Navigator is 10.4%.

Offshore owns 1,910,276 shares of common stock, and the percentage of common stock beneficially owned by Offshore is 7.4%.

Steelhead, as general partner and investment manager of Navigator and investment manager of Offshore, and Mr. Johnston and Mr. Klein, as the member-managers of Steelhead, may be deemed to beneficially own the shares owned by Navigator and Offshore in that they may be deemed to have the power to direct the voting or disposition of the shares. Neither the filing of this Schedule nor any of its contents shall be deemed to constitute an admission that any of Steelhead, Mr. Johnston or Mr. Klein is, for any other purpose, the beneficial owner of any such securities, and Steelhead, Mr. Johnston and Mr. Klein disclaim beneficial ownership as to such securities except to the extent of their respective pecuniary interests therein. The percentage of common stock beneficially owned by Steelhead, Mr. Johnston and Mr. Klein for the purposes of this Schedule is is 17.8%.

The calculation of percentage of beneficial ownership in item 13 of pages 2-6 is based on an assumed 25,878,885 shares outstanding, which number was derived from a representation by the Issuer to Navigator and Offshore that the number of shares of Common Stock outstanding as of October 15, 2007 was 21,878,885 shares, which number did not include an additional 4,000,000 shares of Common Stock issued in connection or contemporaneously with the October 2007 PIPE financing.

(b)           Reference is made hereby to Items 7 to 11 and 13 of pages 2-6 of this Schedule, which Items are incorporated herein by reference.

(c)           On October 19, 2007, Navigator purchased 749,324 of the Issuer’s common stock in a private (PIPE) transaction for $3.00 per share.

On October 19, 2007, Offshore purchased 1,050,676 shares of the Issuer’s common stock in a private (PIPE) transaction for $3.00 per share.

See also the transactions described in Item 4 above.

(d)           Not applicable.

(e)           Not Applicable.

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Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Navigator and the Issuer are parties to a Subscription Agreement dated as of February 28, 2007, pursuant to which the Issuer sold 1,940,400 shares of its common stock to Navigator at a price of $4.65 per share in a private (PIPE) transaction.

Offshore and the Issuer are parties to a Subscription Agreement dated as of February 28, 2007, pursuant to which the Issuer sold 859,600 shares of its common stock to Offshore at a price of $4.65per share in a private (PIPE) transaction.

Navigator and Offshore are parties to a Registration Rights Agreement dated as of February 28, 2007 (the “February 2007 Registration Rights Agreement”) between the Issuer and certain investors entitling it to registration rights with respect to the shares of common stock issued to each pursuant to the February 2007 Subscription Agreements listed above. Under the February 2007 Registration Rights Agreement, the Issuer agrees to register for resale all of the shares of common stock issued to Navigator and Offshore pursuant to the February 2007 Subscription Agreements listed above

Navigator and the Issuer are parties to a Subscription Agreement dated as of October 15, 2007, pursuant to which the Issuer sold 749,324 shares of its common stock to Navigator at a price of $3.00 per share in a private (PIPE) transaction.

Offshore and the Issuer are parties to a Subscription Agreement dated as of October 15, 2007, pursuant to which the Issuer sold 1,050,676 shares of its common stock to Offshore at a price of $3.00 per share in a private (PIPE) transaction.

Navigator and Offshore are parties to a Registration Rights Agreement dated as of October 17, 2007 (the “October 2007 Registration Rights Agreement”) between the Issuer and certain investors entitling it to registration rights with respect to the shares of common stock issued to each pursuant to the October 2007 Subscription Agreements listed above. Under the October 2007 Registration Rights Agreement, the Issuer agrees to register for resale all of the shares of common stock issued to Navigator and Offshore pursuant to the October 2007 Subscription Agreements listed above.

See the description of the Voting Agreement by and among: (i) the Subject Stockholders; and (ii) Navigator, Offshore and the Co-Lender under Item 4 above.

Item 7. Material to Be Filed as Exhibits

No.	Exhibit
1.	Agreement Regarding Joint Filing of Statement on Schedule 13D or 13G.
2.	Form of Subscription Agreement between the Issuer and the Investors named therein, dated as of February 28, 2007.
3.	Form of Registration Rights Agreement, dated as of February 28, 2007, between the Issuer and the investors named therein.
4.	Form of Subscription Agreement between the Issuer and the Investors named therein, dated as of October 15, 2007 (included as Exhibit 10.1 to the Issuer’s Current Report on Form 8-K filed with the Commission on October 25, 2007 and incorporated herein by reference).
5.	Form of Registration Rights Agreement, dated as of October 17, 2007, between the Issuer and the holders named therein (included as Exhibit 4.1 to the Issuer’s Current Report on Form 8-K filed with the Commission on October 25, 2007 and incorporated herein by reference).
6.	Voting Agreement, dated as of October 19, 2007, by and among: (i) the Subject Stockholders; and (ii) Navigator, Offshore and the Co-Lender.

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Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: October 31, 2007	STEELHEAD PARTNERS, LLC By:/s/ James Michael Johnston James Michael Johnston Its Member-Manager
	THE J-K NAVIGATOR FUND, L.P. By: Steelhead Partners, LLC, its General Partner By:/s/ James Michael Johnston James Michael Johnston Its Member-Manager
	STEELHEAD OFFSHORE, LTD. By:/s/ James Michael Johnston James Michael Johnston Its Director
	JAMES MICHAEL JOHNSTON /s/ James Michael Johnston James Michael Johnston
	BRIAN KATZ KLEIN /s/ Brian Katz Klein Brian Katz Klein

EXHIBITS LIST

Exhibit 1.	Agreement Regarding Joint Filing of Statement on Schedule 13D or 13G.
Exhibit 2.	Form of Subscription Agreement between the Issuer and the Investors named therein, dated as of February 28, 2007.
Exhibit 3.	Form of Registration Rights Agreement, dated as of February 28, 2007, between the Issuer and the investors named therein.
Exhibit 6.	Voting Agreement, dated as of October 19, 2007, by and among: (i) the Subject Stockholders; and (ii) Navigator, Offshore and the Co-Lender.

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EXHIBIT

EXHIBIT 1

JOINT FILING UNDERTAKING

The undersigned, being authorized thereunto, hereby execute this agreement as an exhibit to this Schedule 13D to evidence the agreement of the below-named parties, in accordance with rules promulgated pursuant to the Securities Exchange Act of 1934, to file this Schedule, as it may be amended, jointly on behalf of each of such parties.

Dated: October 31, 2007	STEELHEAD PARTNERS, LLC By:/s/ James Michael Johnston James Michael Johnston Its Member-Manager
	THE J-K NAVIGATOR FUND, L.P. By: Steelhead Partners, LLC, its General Partner By:/s/ James Michael Johnston James Michael Johnston Its Member-Manager
	STEELHEAD OFFSHORE, LTD. By:/s/ James Michael Johnston James Michael Johnston Its Director
	JAMES MICHAEL JOHNSTON /s/ James Michael Johnston James Michael Johnston
	BRIAN KATZ KLEIN /s/ Brian Katz Klein Brian Katz Klein

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EX-2

SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT (this “Agreement”) is made and entered into as of February 28, 2007, between NATIONAL COAL CORP., a Florida corporation (the “Company”), and the investor identified on the signature page to this Agreement(the “Investor”).

RECITALS

A.           Subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated thereunder, the Company proposes to issue and sell up to 3,000,000 shares of Common Stock, par value $0.0001 per share (the “Common Stock”), of the Company at a purchase price per share equal to the closing sales price of the Common Stock on the NASDAQ Global Market on the date immediately preceding the date hereof (the “Offering Price”), in each case pursuant to an offering (the “Offering”) to one or more potential investors, including the Investor.

B.           The Company desires to sell to the Investor, and the Investor desires to buy from the Company, in the Offering the number of shares of the Common Stock (the “Shares”) set forth on the signature page of this Agreement, upon the terms and conditions and subject to the provisions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, for and in consideration of the mutual premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.           Purchase and Sale of Securities.  Subject to the terms and conditions of this Agreement, the Investor subscribes for and agrees to purchase and acquire from the Company, and the Company agrees to sell and issue to the Investor, the Shares in the manner set forth in Section 2 hereof, at the Offering Price and for the aggregate consideration set forth on the signature page of this Agreement (the “Purchase Price”).

2.           Terms of Purchase and Sale of Securities.  The closing of the transactions contemplated hereby (the “Closing”) shall take place at such time and on such date as is mutually determined by the Company and the Investor as soon as practicable following satisfaction of the closing conditions set forth in Section 6. Contemporaneously with the execution and delivery of this Agreement, the Investor shall deliver the Purchase Price to Stubbs, Alderton & Markiles LLP, legal counsel to the Company (the “Escrow Agent”), by wire transfer of immediately available funds in accordance with the following wire transfer instructions:

National Bank of California

14724 Ventura Boulevard

Sherman Oaks, CA  91403

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Account Name:	Stubbs Alderton & Markiles, LLP
Address:	15260 Ventura Blvd, 20th Floor Sherman Oaks, CA 91403
ABA Routing#:	122039360
Account #:	003209873
Ref:	NCC Closing

The Purchase Price will be held by the Escrow Agent and released to the Company at Closing against delivery to the Investor of stock certificates representing the Shares pursuant to the terms and conditions of that certain Closing Escrow Agreement by and among the Investor, the Company and the Escrow Agent in the form attached hereto as Exhibit A (the “Escrow Agreement”). Notwithstanding that the offer and sale of the Securities pursuant to this Agreement is part of the larger Offering, the obligations of the Company and the Investor hereunder are independent of, and not subject to the terms and conditions of, any other agreement between the Company and any other investor in the Offering, and the Closing may occur separate and apart from, and irrespective of, the closing, if any, of any other purchase and sale of securities in the Offering.

3.           Representations and Warranties of the Company.  In order to induce the Investor to enter into this Agreement and consummate the transactions contemplated hereby, the Company represents and warrants to the Investor as follows:

3.1           Incorporation.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and is qualified to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect on the business, condition (financial or otherwise) or prospects of the Company  (a “Material Adverse Effect”). Except for short-term investments and investments that are not material to the Company, the Company does not own any shares of stock or any other equity or long-term debt securities of any corporation or have any equity interest in any firm, partnership, limited liability company, joint venture, association or other entity, except disclosed in the SEC Documents (as defined below).  Complete and correct copies of the articles of incorporation (the “Articles of Incorporation”) and bylaws (the “Bylaws”) of the Company as in effect on the Effective Date have been filed by the Company with the SEC.  The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement, the Escrow Agreement and the Registration Rights Agreement attached hereto as Exhibit B (the “Registration Rights Agreement” and, together with this Agreement and the Escrow Agreement, the “Transaction Documents”) and to carry on its business as now conducted.

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  3.2           Capitalization.  The authorized capital stock of the Company consists of (i) 80,000,000 shares of Common Stock, of which 16,540,744 shares are outstanding on the date hereof; and (ii) 10,000,000 shares of preferred stock, of which 1,611 shares have been designated “Series A Cumulative Convertible Preferred Stock, of which 782.5396 shares are outstanding on the date hereof.  The outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and were not issued in violation of any preemptive or similar rights to subscribe for or purchase securities.  Except for (i) options to purchase Common Stock or other equity awards issued to employees and consultants of the Company pursuant to the employee benefits plans disclosed in the SEC Documents, (ii) warrants to purchase an aggregate of 1,872,632 shares of Common Stock at an exercise price of $8.50 per share, and (iii) the Series A Cumulative Convertible Preferred Stock, there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character obligating the Company to issue, transfer or sell, or cause to be issued, transferred or sold, any shares of the capital stock of the Company or other equity interests in the Company or any securities convertible into or exchangeable for such shares of capital stock or other equity interests, and there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of its capital stock or other equity interests.  There are no voting agreements or other similar arrangements with respect to the Common Stock to which the Company is a party. The issuance of the Shares contemplated hereby will not result in an over-issuance of shares of Common Stock under the Articles of Incorporation.

3.3           Valid Issuance of the Shares.  The Shares being purchased by the Investor hereunder will, upon issuance pursuant to the terms hereof, be duly authorized and validly issued, fully paid and nonassessable.  No preemptive rights or other rights to subscribe for or purchase the Company’s capital stock exist with respect to the issuance and sale of the Shares by the Company pursuant to this Agreement.  Except as disclosed in the SEC Documents, no stockholder of the Company (other than the stockholders who purchase Shares in the Offering) has any right which has not been properly waived or has not expired by reason of lapse of time following the notification of the Company’s intent to file the registration statement to be filed by the Company pursuant to Registration Rights Agreement (the “Registration Statement”) to require the Company to register the sale of any shares owned by such stockholder under the Securities Act in the Registration Statement.  No further approval or authority of the stockholders or the Board of Directors of the Company shall be required for the issuance and sale of the Shares by the Company or the filing of the Registration Statement by the Company.

3.4           Enforceability.  The execution, delivery, and performance of the Transaction Documents by the Company have been duly authorized by all requisite corporate action.  This Agreement has been duly executed and delivered by the Company, and, upon its execution by the Investor, shall constitute the legal, valid, and binding obligation of the Company, enforceable in accordance with its terms, except to the extent that its enforceability is limited by bankruptcy, insolvency, reorganization, or other laws relating to or affecting the enforcement of creditors’ rights generally and by general principles of equity.

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3.5           No Violations.  The execution, delivery, and performance of the Transaction Documents by the Company do not and will not violate or conflict with any provision of the Company’s Articles of Incorporation or Bylaws, each as amended and in effect on the date hereof, and do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default, cause the acceleration of performance, or require any consent under (except such consents as have been obtained as of the date hereof), or result in the creation of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any material instrument or agreement to which the Company is a party or by which the Company or its properties are bound, except such consents as have been obtained as of the date hereof.  The Company is not otherwise in violation of its Articles of Incorporation, Bylaws or other organizational documents, nor is the Company in violation of any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company, which violation, individually or in the aggregate, would be reasonably expected to have a Material Adverse Effect. The Company is not in default (and there exists no condition which, with the passage of time or otherwise, would constitute a default) in the performance of any material bond, debenture, note or any other evidence of indebtedness in any indenture, mortgage, deed of trust or any other material agreement or instrument to which the Company is a party or by which the Company is bound or by which the property of the Company is bound, which would be reasonably expected to have a Material Adverse Effect.

3.6           Approvals.  Neither the execution, delivery, and performance by the Company of the Transaction Documents, nor the offer and sale of the Shares contemplated hereby require the consent of, action by or in respect of, or filing with, any person, governmental body, agency, or official, other than those consents that have been obtained and filings that have been made pursuant to applicable state securities laws (“State Acts”) and post-sale filings pursuant to applicable state and federal securities laws and NASDAQ Global Market listing requirements, which the Company undertakes to file within the applicable time period, and other consents which have been obtained as of the date hereof.

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3.7           SEC Documents.  The Company has made available to Investor true and complete copies of all reports or registration statements the Company has filed with the Securities Exchange Commission (“SEC”) under the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”), for all periods subsequent to December 31, 2005, all in the form so filed (collectively the “SEC Documents”).  The Company has filed in a timely manner all documents that the Company was required to file under the Exchange Act during the 12 months preceding the date of this Agreement.  As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and none of the SEC Documents filed under the Exchange Act contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent corrected by a subsequently filed document with the SEC. None of the SEC Documents filed under the Securities Act contained an untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading at the time such SEC Documents became effective under the Securities Act.  Without limiting the foregoing, the Company meets each of the eligibility requirements for the use of Form S-3 in connection with the resale registration of the Shares as contemplated under the Registration Rights Agreement.

3.8           Financial Statements. The Company’s financial statements, including the notes thereto, included in the SEC Documents (the “Financial Statements”) comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied (except as may be indicated in the notes thereto) and present fairly the Company’s consolidated financial position at the dates thereof and of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal audit adjustments). The Company has implemented and maintains a system of internal controls meeting the requirements of the SEC and the Sarbanes-Oxley Act of 2002 as applicable to the Company on the date hereof.  Since September 30, 2006, there has been no material adverse change (actual or threatened) in the assets, liabilities (contingent or other), affairs, operations, prospects or condition (financial or other) of the Company other than those changes disclosed to the Investor, including with respect to mine closures that occurred following September 30, 2006 and the Company’s operating results from and after September 30, 2006.

3.9           NASDAQ Global Market.  The Common Stock is listed on the NASDAQ Global Market. The Company has taken no action designed to de-list, or which, to the Company's knowledge, is likely to have the effect of, suspending or terminating the listing of the Common Stock on NASDAQ Global Market.  The Company is in compliance with all corporate governance requirements of NASDAQ Global Market.  The Company shall comply with all requirements of the National Association of Securities Dealers, Inc. (the “NASD”) with respect to the issuance of the Shares and the listing of the Shares on the NASDAQ Global Market .

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3.10       Intellectual Property.

(a)           To the knowledge of the Company, the Company has ownership of or license or legal right to use all patent, copyright, trade secret, trademark, customer lists, designs, manufacturing or other processes, computer software, systems, data compilation, research results or other proprietary rights used in the business of the Company and material to the Company (collectively, “Intellectual Property”), other than Intellectual Property generally available on commercial terms from other sources.

(b)           There is no material default by the Company under any material licenses or other material agreements under which (i) the Company is granted rights in Intellectual Property or (ii) the Company has granted rights to others in Intellectual Property owned or licensed by the Company.

(c)           The Company believes it has taken those steps required in accordance with sound business practice and commercially reasonable business judgment to establish and preserve its ownership of all material patent, copyright, trade secret and other proprietary rights with respect to its products and technology.

(d)           To the knowledge of the Company, the present business, activities and products of the Company do not infringe any intellectual property of any other person, except where such infringement would not have a Material Adverse Effect.  The Company has not been notified that any proceeding charging the Company with infringement of any adversely held Intellectual Property has been filed.  To the Company’s knowledge, there exists no patent or patent application held by any other person which includes claims that would be infringed by the Company in the conduct of its business as currently conducted and as proposed to be conducted in the SEC Documents, where such infringement would have a Material Adverse Effect.  To the knowledge of the Company, the Company is not making unauthorized use of any confidential information or trade secrets of any person.  Neither the Company nor, to the knowledge of the Company, any of its employees have any agreements or arrangements with any persons other than the Company restricting the Company’s or any such employee’s engagement in business activities that are material aspects of the Company’s business as currently conducted or as proposed to be conducted in the SEC Documents.

3.11        Absence of Litigation.  Except as disclosed in the SEC Documents, there is no action, suit or proceeding or, to the Company’s knowledge, any investigation, pending, or to the Company’s knowledge, threatened by or before any court, governmental body or regulatory agency against the Company that is required to be disclosed in the SEC Documents and is not so disclosed.  The Company has not received any written or oral notification of, or request for information in connection with, any formal or informal inquiry, investigation or proceeding from the SEC or the NASD.  The foregoing includes, without limitation, any such action, suit, proceeding or investigation that questions any of the Transaction Documents or the right of the Company to execute, deliver and perform under same.

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3.12        Environmental and Safety Laws. The Company is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and no material expenditures are or, to the Company’s knowledge, will be required in order to comply with any such existing statute, law or regulation.  No Hazardous Materials (as defined below) are used or have been used, stored, or disposed of by the Company or by any other person or entity on any property owned, leased or used by the Company, other than Hazardous Materials used, stored, or disposed of by the Company in the ordinary course of business and in accordance with customary standards in the coal mining industry.  For the purposes of the preceding sentence, “Hazardous Materials” shall mean (a) materials which are listed or otherwise defined as “hazardous” or “toxic” under any applicable local, state, federal and/or foreign laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving hazardous substances, including building materials, or (b) any petroleum products or nuclear materials.

3.13        Investment Company. The Company is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

3.14        No Manipulation of Stock. The Company has not taken and will not, in violation of applicable law, take, any action designed to or that might reasonably be expected to cause or result in unlawful manipulation of the price of the Common Stock.

3.15        Accountants.  Gordon, Hughes & Banks, LLP, who issued their report with respect to the financial statements to be incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 2005, are independent registered public accounting firm as required by the Securities Act.

3.16        Taxes.  The Company has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been or might be asserted or threatened against it which would have a Material Adverse Effect.

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3.17        Brokers or Finders.  The Company has not dealt with any broker or finder in connection with the transactions contemplated by this Agreement, and the Company has not incurred, and shall not incur, directly or indirectly, any liability for any brokerage or finders' fees or agents commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

3.18        Securities Laws.  Assuming that all of the representations and warranties of the Investor set forth in Section 4, and all of the representations and warranties of the other Investors participating in the Offering, are true and correct, the offer and sale of the Shares in the Offering was conducted and completed in compliance with the Securities Act.

4.           Representations and Warranties of the Investor.  In order to induce the Company to enter into this Agreement and consummate the transaction contemplated hereby, the Investor represents and warrants to the Company the following:

4.1           Authority.  If a corporation, partnership, limited partnership, limited liability company, or other form of entity, the Investor is duly organized or formed, as the case may be, validly existing, and in good standing under the laws of its jurisdiction of organization or formation, as the case may be.  The Investor has all requisite individual or entity right, power, and authority to execute, deliver, and perform the Transaction Documents to which it is a party.

4.2           Enforceability.  The execution, delivery, and performance by the Investor of the Transaction Documents to which it is a party have been duly authorized by all requisite partnership or corporate action, as the case may be.  This Agreement has been duly executed and delivered by the Investor, and, upon its execution by the Company, shall constitute the legal, valid, and binding obligation of the Investor, enforceable in accordance with its terms, except to the extent that its enforceability is limited by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or affecting the enforcement of creditors’ rights generally and by general principles of equity.

4.3           No Violations.  The execution, delivery, and performance by the Investor of the Transaction Documents to which it is a party do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default, cause the acceleration of performance, or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Investor pursuant to, any material instrument or agreement to which the Investor is a party or by which the Investor or its properties may be bound or affected, and, do not or will not violate or conflict with any provision of the articles of incorporation or bylaws, partnership agreement, operating agreement, trust agreement, or similar organizational or governing document of the Investor, as applicable.

4.4           Knowledge of Investment and its Risks.  The Investor has knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of Investor’s investment in the Shares.  The Investor understands that an investment in the Company represents a high degree of risk and there is no assurance that the Company’s business or operations will be successful.  The Investor has considered carefully the risks attendant to an investment in the Company, and that, as a consequence of such risks, the Investor could lose Investor’s entire investment in the Company.

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4.5           Investment Intent.  The Investor hereby represents and warrants that (i) the Shares are being acquired for investment for the Investor’s own account, and not as a nominee or agent and not with a view to the resale or distribution of all or any part of the Shares, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing any of the Shares within the meaning of and in violation of the Securities Act, and (ii) the Investor does not have any contracts, understandings, agreements, or arrangements, directly or indirectly, with any person and/or entity to distribute, sell, transfer, or grant participations to such person and/or entity with respect to, any of the Shares.  The Investor is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

4.6           Investor Status.  The Investor is an “accredited investor” as that term is defined by Rule 501 of Regulation D promulgated under the Securities Act and the information provided by the Investor in the Investor Questionnaire, a copy of which is attached hereto as Exhibit C, is truthful, accurate, and complete.

4.7           No Registration.  The Investor understands that Investor may be required to bear the economic risk of Investor’s investment in the Company for an indefinite period of time.  The Investor further understands that (i) neither the offering nor the sale of the Shares has been registered under the Securities Act or any applicable State Acts in reliance upon exemptions from the registration requirements of such laws, (ii) the Shares must be held by he, she or it indefinitely unless the sale or transfer thereof is subsequently registered under the Securities Act and any applicable State Acts, or an exemption from such registration requirements is available, (iii) except as set forth in the Registration Rights Agreement, the Company is under no obligation to register any of the Shares on the Investor’s behalf or to assist the Investor in complying with any exemption from registration, and (iv) the Company will rely upon the representations and warranties made by the Investor in this Agreement in order to establish such exemptions from the registration requirements of the Securities Act and any applicable State Acts.

4.8           Transfer Restrictions.  The Investor will not transfer any of the Shares unless such transfer is registered or exempt from registration under the Securities Act and such State Acts, and, if requested by the Company in the case of an exempt transaction, the Investor has furnished an opinion of counsel reasonably satisfactory to the Company that such transfer is so exempt.  The Investor understands and agrees that (i) the certificates evidencing the Shares will bear appropriate legends indicating such transfer restrictions placed upon the Shares, (ii) the Company shall have no obligation to honor transfers of any of Shares in violation of such transfer restrictions, and (iii) the Company shall be entitled to instruct any transfer agent or agents for the securities of the Company to refuse to honor such transfers.

4.9           Principal Address.  The Investor’s principal residence, if an individual, or principal executive office, if an entity, is set forth on the signature page of this Agreement.

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5.           Independent Nature of Investor’s Obligations and Rights.  The obligations of the Investor under the Transaction Documents to which it is a party are several and not joint with the obligations of any other purchaser of Shares, and the Investor shall not be responsible in any way for the performance of the obligations of any other purchaser of Shares under any Transaction Document or otherwise.  The decision of the Investor to purchase Shares pursuant to the Transaction Documents has been made by the Investor independently of any other purchaser of Shares.  Nothing contained herein or in any other Transaction Document, and no action taken by any purchaser of Shares pursuant thereto, shall be deemed to constitute such purchasers as a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the purchasers of Shares are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document.  The Investor acknowledges that no other purchaser of Shares has acted as agent for the Investor in connection with making its investment hereunder and that no other purchaser of Shares will be acting as agent of the Investor in connection with monitoring its investment in the Shares or enforcing its rights under the Transaction Documents.  The Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other purchaser of Shares to be joined as an additional party in any proceeding for such purpose.

6.           Conditions Precedent.

6.1           Conditions to the Obligation of the Investor to Consummate the Closing.  The obligation of the Investor to consummate the Closing and to purchase and pay for the Shares being purchased by it pursuant to this Agreement is subject to the satisfaction of the following conditions precedent:

(a)           The representations and warranties of the Company contained herein shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date.

(b)           The Investor shall have received a certificate in form and substance acceptable to the Investor signed by an appropriate officer of the Company: (i) certifying to the fulfillment of the condition set forth in Sections 6.1(a); and (ii) attaching true and correct copies of the resolutions adopted by the board of directors of the Company approving the transactions contemplated hereby, and certifying that such resolutions have not been in any way amended, annulled, rescinded or revoked and are in full force and effect as of the Closing Date.

(c)           The Registration Rights Agreement and the Escrow Agreement shall have been executed and delivered by the Company.

(d)           The Company shall have performed all obligations and conditions required to be performed or observed by the Company under this Agreement and the other Transaction Documents on or prior to the Closing Date.

(e)           Daniel Roling shall have acquired 200,000 shares of Common Stock from the Company in the Offering at the Offering Price.

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6.2           Conditions to the Obligation of the Company to Consummate the Closing.  The obligation of the Company to consummate the Closing and to issue and sell to the Investor the Shares to be purchased by it at the Closing is subject to the satisfaction of the following conditions precedent:

(a)           The representations and warranties of the Investor contained herein shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date.

(b)           The Registration Rights Agreement and the Escrow Agreement shall have been executed and delivered by the Investor.

(c)           The Investor shall have performed all obligations and conditions required to be performed or observed by the Investor under this Agreement and the other Transaction Documents on or prior to the Closing Date.

7.           Prospectus Delivery Requirement.  The Investor hereby covenants with the Company not to make any sale of the Shares without complying with the provisions hereof and of the Registration Rights Agreement, and without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied (unless the Investor is selling such Shares in a transaction not subject to the prospectus delivery requirement).

8.           Further Assurances.  The parties hereto will, upon reasonable request, execute and deliver all such further assignments, endorsements and other documents as may be necessary in order to perfect the purchase by the Investor of the Shares.

9.           Entire Agreement; No Oral Modification.  This Agreement contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings with respect thereto and may not be amended or modified except in a writing signed by both of the parties hereto.

10.           Binding Effect; Benefits.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and assigns; however, nothing in this Agreement, expressed or implied, is intended to confer on any other person other than the parties hereto, or their respective heirs, successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

11.           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

12.           Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the United States of America and the State of Tennessee, both substantive and remedial.

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13.           Prevailing Parties.  In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party shall be entitled to receive and the nonprevailing party shall pay upon demand reasonable attorneys’ fees in addition to any other remedy.

14.           Notices.  All communication hereunder shall be in writing and, if sent to you shall be mailed, delivered, telegraphed or sent by facsimile or electronic mail, and confirmed to an Investor at the address set forth on the signature page of this Agreement, or if sent to the Company, shall be mailed, delivered, telegraphed or sent by facsimile or electronic mail and confirmed to the Company at National Coal Corporation, 8915 George Williams Rd., Knoxville, TN  37923, Attention: Chief Financial Officer, facsimile number (865) 691-9982.

15.           Headings.  The section headings herein are included for convenience only and are not to be deemed a part of this Agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

COMPANY:

NATIONAL COAL CORP.,

a Florida corporation

By: _________________________

Name:Daniel Roling

Its: Chief Executive Officer

INVESTOR:

______________________________

Print Name of Investor

By: _________________________

Name:_________________________

Title: _________________________

_________________________

_________________________

_________________________

(Address)

_________________________

IRS Tax Identification No. (if applicable)

_________________________

Telephone Number

_________________________

Fax Number

_________________________

E-Mail Address

	X	$4.65	=
Number of Shares		Offering Price		Purchase Price

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EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

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EXHIBIT B

ESCROW AGREEMENT

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EXHIBIT C

INVESTOR QUESTIONNAIRE

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EX-3

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the “Agreement”) is made and entered into as of the 28^th day of February, 2007 (the “Effective Date”), by and among National Coal Corp., a Florida corporation (the “Company”), and the parties set forth on the signature page and Exhibit A hereto (each, a “Purchaser” and collectively, the “Purchasers”).

RECITALS

A.           The Purchasers have purchased shares of the Company’s Common Stock entitling the holders thereof to purchase shares of Common Stock, pursuant to Subscription Agreements (each, a “Subscription Agreement” and collectively, the “Subscription Agreements”) by and between the Company and each Purchaser.

B.           The Company and the Purchasers desire to set forth the registration rights to be granted by the Company to the Purchasers.

Now, Therefore, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein and in the Subscription Agreements, the parties mutually agree as follows:

AGREEMENT

1.           Certain Definitions.  As used in this Agreement, the following terms shall have the following respective meanings:

“Approved Market” means the NASDAQ Global Market, the NASDAQ Capital Market, the New York Stock Exchange, Inc., the American Stock Exchange, Inc. or the NASD’s OTC Bulletin Board.

“Blackout Period” means, with respect to a registration, a period:

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(a)           in each case commencing on the day immediately after the Company notifies the Holders that they are required, pursuant to Section 4(f), to suspend offers and sales of Registrable Securities during which the Company, in the good faith judgment of its Board of Directors, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company’s control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such registration statement, if any, would be seriously detrimental to the Company and its shareholders and ending on the earlier of (1) the date upon which the material non-public information commencing the Blackout Period is disclosed to the public or ceases to be material and (2) such time as the Company notifies the selling Holders that the Company will no longer delay such filing of the Registration Statement, recommence taking steps to make such Registration Statement effective, or allow sales pursuant to such Registration Statement to resume; provided, however, that (i) the Company shall limit its use of Blackout Periods described in the clause (a), in the aggregate, to 30 Trading Days in any 12-month period and (ii) no Blackout Period pursuant to this clause (a) may commence sooner than 60 days after the end of a prior such Blackout Period; or

(b)           commencing on the day immediately after the Company notifies the Holders that they are required pursuant to Section 5 to suspend offers and sales of Registrable Securities because, with respect to a registration statement on a form other than Form S-3, the Company reasonably determines that, based on the advice of counsel, a post-effective amendment to the registration statement must be filed with the Commission in order to update the audited financial statements in the registration statement, or the Company elects, in its discretion, to file a post-effective amendment to such registration statement for the purpose of converting it to a Form S-3 after such form becomes available for use by the Company, and, in either case, such post-effective amendment is reviewed by the Commission, and ending at such time as the post-effective amendment is declared effective by the Commission; provided, however, that (i) the Company shall use its reasonable best efforts to promptly cause such post-effective amendment to be declared effective by the Commission and (ii) the Company may suspend effectiveness of a registration statement for a period not to exceed 60 consecutive days, provided that the Company may not suspend its obligation under this clause (b) for more than 90 days in the aggregate during any 12-month period.

“Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which the Commission is required or authorized to close.

“Closing Date” means March 1, 2007, or such other time as is mutually agreed between the Company and the Purchasers for the closing of the sale referred to in Recital A above.

“Commission” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

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“Common Stock” means the common stock, par value $0.0001 per share, of the Company and any and all shares of capital stock or other equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which the Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own equity securities having in the aggregate more than 50% of the total voting power of such other corporation.

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

“Family Member” means (a) with respect to any individual, such individual’s spouse, any descendants (whether natural or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust.

“Holder” means each Purchaser or any of such Purchaser’s respective successors and Permitted Assigns who acquire rights in accordance with this Agreement with respect to the Registrable Securities directly or indirectly from a Purchaser, including from any Permitted Assignee.

“Inspector” means any attorney, accountant, or other agent retained by a Purchaser for the purposes provided in Section 4(j).

“Majority Holders” means at any time Holders of a majority of the Registrable Securities outstanding at such time.

“Offering Price” means the Offering Price set forth in the Subscription Agreements.

“Permitted Assignee” means (a) with respect to a partnership, its partners or former partners in accordance with their partnership interests, (b) with respect to a corporation, its shareholders in accordance with their interest in the corporation, (c) with respect to a limited liability company, its members or former members in accordance with their interest in the limited liability company, (d) with respect to an individual party, any Family Member of such party, (e) an entity that is controlled by, controls, or is under common control with a transferor, or (f) a party to this Agreement.

The terms “register,” “registered,” and “registration” refers to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

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“Registrable Securities” means shares of Common Stock issued to each Purchaser pursuant to the Subscription Agreements, but excluding (i) any Registrable Securities that have been publicly sold or may be sold immediately without registration under the Securities Act either pursuant to Rule 144 of the Securities Act or otherwise; (ii) any Registrable Securities sold by a person in a transaction pursuant to a registration statement filed under the Securities Act; or (iii) any Registrable Securities that are at the time subject to an effective registration statement under the Securities Act.

“Registration Default Date” means July 30, 2007.

“Registration Default Period” means the period during which any Registration Event occurs and is continuing.

“Registration Event” means the occurrence of any of the following events:

(a) the Company fails to file with the SEC the Registration Statement on or before the Registration Filing Date pursuant to Section 3(a);

(b) the Registration Statement covering Registrable Securities is not declared effective by the Commission on or before the Registration Default Date; or

(c) after the SEC Effective Date, sales cannot be made pursuant to the Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement) but except as (i) excused pursuant to Section 3(a), or (ii) as otherwise permitted by this Agreement, including pursuant to a Blackout Period and as provided in Section 5.

“Registration Statement” means the registration statement required to be filed by the Company pursuant to Section 3(a).

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

“SEC Effective Date” means the date the Registration Statement is declared effective by the Commission.

“Trading Day” means a day on whichever (a) the national securities exchange, (b) the NASDAQ Global Market, or (c) such other securities market, in any such case which at the time constitutes the principal securities market for the Common Stock, is open for general trading of securities.

2.           Term.  This Agreement shall continue in full force and effect for a period of two (2) years from the Effective Date, unless terminated sooner hereunder.

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3.           Registration.

(a)           Registration on Form S-3.  As promptly as reasonably practicable after the date hereof, but in any event not later than April 30, 2007 (the “Registration Filing Date”), the Company shall file with the Commission a shelf registration statement on Form S-3 relating to the resale by the Holders of all of the Registrable Securities; provided, however, that the Company shall not be obligated to effect any such registration, qualification, or compliance pursuant to this Section 3(a), or keep such registration effective pursuant to Section 4: (i) in any particular jurisdiction in which the Company would be required to qualify to do business as a foreign corporation or as a dealer in securities under the securities or blue sky laws of such jurisdiction or to execute a general consent to service of process in effecting such registration, qualification or compliance, in each case where it has not already done so; or (ii) during any Blackout Period, in which case the Registration Filing Date shall be extended to the date immediately following the last day of such Blackout Period.

(b)           Piggyback Registration.  If the Company shall determine to register for sale for cash any of its Common Stock, for its own account or for the account of others (other than the Holders), other than (i) a registration relating solely to employee benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8) or any of their Family Members (including a registration on Form S-8) or (ii) a registration relating solely to a Commission Rule 145 transaction, a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization, or similar event, the Company shall promptly give to the Holders written notice thereof (and in no event shall such notice be given less than 20 calendar days prior to the filing of such registration statement), and shall, subject to Section 3(c), include in such registration (and any related qualification under blue sky laws or other compliance) (a “Piggyback Registration”), all of the Registrable Securities specified in a written request or requests, made within 10 calendar days after receipt of such written notice from the Company, by any Holder or Holders.  However, the Company may, without the consent of the Holders, withdraw such registration statement prior to its becoming effective if the Company or such other stockholders have elected to abandon the proposal to register the securities proposed to be registered thereby.

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(c)           Underwriting.  If a Piggyback Registration is for a registered public offering involving an underwriting, the Company shall so advise the Holders in writing or as a part of the written notice given pursuant to Section 3(b).  In such event the right of any Holder to registration pursuant to Section 3(b) 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 securities through such underwriting shall (together with the Company and any other stockholders of the Company distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company or selling stockholders, as applicable.  Notwithstanding any other provision of this Section 3(c), if the underwriter or the Company determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting.  The Company shall so advise all Holders (except those Holders who failed to timely elect to distribute their Registrable Securities through such underwriting or have indicated to the Company their decision not to do so), and the number of shares of Registrable Securities that may be included in the registration and underwriting, if any, shall be allocated among such Holders as follows:

(i)           In the event of a Piggyback Registration that is initiated by the Company, the number of shares that may be included in the registration and underwriting shall be allocated first to the Company and then, subject to obligations and commitments existing as of the date hereof, to all selling stockholders, including the Holders, who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included; and

(ii)                      In the event of a Piggyback Registration that is initiated by the exercise of demand registration rights by a stockholder or stockholders of the Company (other than the Holders), then the number of shares that may be included in the registration and underwriting shall be allocated first to such selling stockholders who exercised such demand and then, subject to obligations and commitments existing as of the date hereof, to all other selling stockholders, including the Holders, who have requested to sell in the registration, on a pro rata basis according to the number of shares requested to be included.

No Registrable Securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration.  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.  The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportion used above in determining the underwriter limitation.

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(d)           Other Registrations.  Prior to the SEC Effective Date the Company will not, without the prior written consent of the Majority Holders, file or request the acceleration of any other registration statement filed with the Commission, and during any time subsequent to the SEC Effective Date when the Registration Statement for any reason is not available for use by any Holder for the resale of any Registrable Securities, the Company shall not, without the prior written consent of the Majority Holders, file any other registration statement or any amendment thereto with the Commission under the Securities Act or request the acceleration of the effectiveness of any other registration statement previously filed with the Commission, other than (A) any registration statement on Form S-8 or Form S-4 and (B) any registration statement or amendment which the Company is required to file or as to which the Company is required to request acceleration pursuant to any obligation in effect on the date of execution and delivery of this Agreement.  Notwithstanding the foregoing, the Holders acknowledge and agree that the Company may include shares to be registered for resale by other stockholders of the Company in any registration statement filed pursuant to this Agreement.

(e)           Default.  If a Registration Event occurs, then the Company will make payments to each Purchaser, as partial liquidated damages for the minimum amount of damages to the Purchaser by reason thereof, and not as a penalty, at a rate equal to one percent (1%) of the Offering Price per share of Common Stock held by such Purchaser per month, for each calendar month of the Registration Default Period (pro rated for any period less than 30 days); provided, however, if a Registration Event occurs (or is continuing) on a date more than one year after the Purchaser acquired the Registrable Securities (and thus the one year holding period under Rule 144(d) has elapsed), liquidated damages shall be paid only with respect to that portion of a Purchaser’s Registrable Securities that cannot then be immediately resold in reliance on Rule 144; and provided, further, that in no event shall the aggregate liquidated damages payable by the Company to any Purchaser exceed 20% of the aggregate Offering Price paid by such Purchaser for all shares of Common Stock acquired by such Purchaser pursuant to the Subscription Agreement.  Each such payment shall be due and payable within five days after the end of each calendar month of the Registration Default Period until the termination of the Registration Default Period and within five days after such termination.  Such payments shall be in partial compensation to the Purchaser, and shall not constitute the Purchaser’s exclusive remedy for such events.  The Registration Default Period shall terminate upon (i) the filing of the Registration Statement in the case of clause (a) of the definition of “Registration Event,” (ii) the SEC Effective Date in the case of clause (b) of the definition of “Registration Event,” and (iii) the ability of the Purchaser to effect sales pursuant to the Registration Statement in the case of clause (c) of the definition of “Registration Event,” and (iv) in the case of the events described in clauses (b) and (c) of the definition of “Registration Event,” the earlier termination of the Registration Default Period.  The amounts payable as partial liquidated damages pursuant to this paragraph shall be payable in lawful money of the United States.  Amounts payable as partial liquidated damages to each Purchaser hereunder with respect to each share of Registrable Securities shall cease when the Purchaser no longer holds such share of Registrable Securities or such share of Registrable Securities can be immediately sold by the Purchaser in reliance on Rule 144.

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4.           Registration Procedures.  In the case of each registration, qualification, or compliance effected by the Company pursuant to Section 3 hereof, the Company will keep each Holder including securities therein reasonably advised in writing (which may include e-mail) as to the initiation of each registration, qualification, and compliance and as to the completion thereof.  At its expense with respect to any registration statement filed pursuant to Section 3, the Company will:

(a)           prepare and file with the Commission with respect to such Registrable Securities, a registration statement on Form S-3 or any other form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended method(s) of distribution thereof, and use its reasonable best efforts to cause such registration statement to become and remain effective at least for a period ending with the first to occur of (i) the sale of all Registrable Securities covered by the registration statement and (ii) the availability under Rule 144 for the Holder to immediately and freely resell without restriction all Registrable Securities covered by the registration statement (in either case, the “Effectiveness Period”).

(b)           if a registration statement is subject to review by the Commission, promptly respond to all comments and use reasonable best efforts to diligently pursue resolution of any comments to the satisfaction of the Commission;

(c)           prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective during the Effectiveness Period (but in any event at least until expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto, thereunder, if applicable), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended method(s) of disposition by the sellers thereof set forth in such registration statement;

(d)           furnish, without charge, to each Holder of Registrable Securities covered by such registration statement (i) a reasonable number of copies of such registration statement (including any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement thereto as such Holder may request, (ii)  such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any other prospectus filed under Rule 424 under the Securities Act) as such Holders may request, in conformity with the requirements of the Securities Act, and (iii) such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder, but only during the Effectiveness Period;

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(e)           use its reasonable best efforts to register or qualify such Registrable Securities under such other applicable securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by such registration statement reasonably requests as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable registration statement is deemed effective by the Commission) and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction;

(f)           as promptly as practicable after becoming aware of such event, notify each Holder of such Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to the Company’s attention if as a result of such event the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading and the Company shall promptly prepare and furnish to such Holder a supplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of a Blackout Period, in which case no supplement or amendment need be furnished (or Exchange Act filing made) until the termination of such suspension or Blackout Period;

(g)           comply, and continue to comply during the period that such registration statement is effective under the Securities Act, in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such registration statement, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first full calendar month after the SEC Effective Date, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act.

(h)           as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance by the Commission of any stop order or other suspension of effectiveness of the Registration Statement at the earliest possible time;

(i)           permit the Holders of Registrable Securities being included in the Registration Statement and their legal counsel, at such Holders’ sole cost and expense (except as otherwise specifically provided in Section 6) to review and have a reasonable opportunity to comment on the Registration Statement and all amendments and supplements thereto at least two Business Days prior to their filing with the Commission and refrain from filing any such document to which the Majority Holders reasonably object;

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(j)           make available for inspection by any Holder and any Inspector retained by such Holder, at such Holder’s sole expense, all Records as shall be reasonably necessary to enable such Holder to exercise its due diligence responsibility, and cause the Company’s officers, directors, and employees to supply all information which such Holder or any Inspector may reasonably request for purposes of such due diligence; provided, however, that such Holder shall hold in confidence and shall not make any disclosure of any record or other information which the Company determines in good faith to be confidential, and of which determination such Holder is so notified at the time such Holder receives such information, unless (i) the disclosure of such record is necessary to avoid or correct a misstatement or omission in the Registration Statement and a reasonable time prior to such disclosure the Holder shall have informed the Company of the need to so correct such misstatement or omission and the Company shall have failed to correct such misstatement of omission, (ii) the release of such record is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction or (iii) the information in such record has been made generally available to the public other than by disclosure in violation of this or any other agreement.  The Company shall not be required to disclose any confidential information in such records to any Inspector until and unless such Inspector shall have entered into a confidentiality agreement with the Company with respect thereto, substantially in the form of this Section 4(j), which agreement shall permit such Inspector to disclose records to the Holder who has retained such Inspector.  Each Holder agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the records deemed confidential.  The Company shall hold in confidence and shall not make any disclosure of information concerning a Holder provided to the Company pursuant to this Agreement unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) disclosure of such information to the Staff of the Division of Corporation Finance is necessary to respond to comments raised by the Staff in its review of the Registration Statement, (iii) disclosure of such information is necessary to avoid or correct a misstatement or omission in the Registration Statement, (iv) release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, or (v) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement.  The Company agrees that it shall, upon learning that disclosure of such information concerning a Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to such Holder and allow such Holder, at such Holder’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information;

(k)           use its reasonable best efforts to cause all the Registrable Securities covered by the Registration Statement to be quoted on the NASDAQ Global Market or such other principal securities market on which securities of the same class or series issued by the Company are then listed or traded;

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(l)           provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities at all times;

(m)         cooperate with the Holders of Registrable Securities being offered pursuant to the Registration Statement to issue and deliver certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to the Registration Statement after delivery of certificates to the Company and enable such certificates to be in such denominations or amounts as the Holders may reasonably request and registered in such names as the Holders may request;

(n)           during the Effectiveness Period, refrain from bidding for or purchasing any Common Stock or any right to purchase Common Stock or attempting to induce any Person to purchase any such security or right if such bid, purchase or attempt would in any way limit the right of the Holders to sell Registrable Securities by reason of the limitations set forth in Regulation M under the 1934 Act; and

(o)           take all other reasonable actions necessary to expedite and facilitate disposition by the Holders of the Registrable Securities pursuant to the Registration Statement.

5.           Suspension of Offers and Sales.  Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f) hereof or of the commencement of a Blackout Period, such Holder shall discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(f) hereof or notice of the end of the Blackout Period, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.  In the event the Company shall give any such notice, the period mentioned in Section 4(a)(iii) hereof shall be extended by the greater of (i) ten business days or (ii) the number of days during the period from and including the date of the giving of such notice pursuant to Section 4(f) hereof to and including the date when each Holder of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(f) hereof.

6.           Registration Expenses.  The Company shall pay all expenses in connection with any registration, including, without limitation, all registration, filing, stock exchange fees, printing expenses, all fees and expenses of complying with securities or blue sky laws, and the fees and disbursements of counsel for the Company and of its independent accountants; provided that, in any underwritten registration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. Except as provided above in this Section 6 and Section 9, the Company shall not be responsible for the expenses of any attorney or other advisor employed by a Holder of Registrable Securities.

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7.           Assignment of Rights. No Holder may assign its rights under this Agreement to any party without the prior written consent of the Company; provided, however, that a Holder may assign its rights under this Agreement without such restrictions to a Permitted Assignee as long as (a) such transfer or assignment is effected in accordance with applicable securities laws; (b) such transferee or assignee agrees in writing to become subject to the terms of this Agreement; and (c) the Company is given written notice by such Holder of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned.

8.           Information by Holder.  The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing.

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9.           Indemnification.

(a)           In the event of the offer and sale of Registrable Securities held by Holders under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, each other person who participates as an underwriter in the offering or sale of such securities, and each other person, if any, who controls or is under common control with such Holder or any such underwriter within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such shares were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided that the Company shall not be liable in any such case (i) to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of such Holder specifically stating that it is for use in the preparation thereof or (ii) if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder or underwriter to so provide such amended preliminary or final prospectus and the untrue statement or alleged untrue statement or omission or alleged omission of a material fact made in such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder.

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(b)           As a condition to including any Registrable Securities to be offered by a Holder in any registration statement filed pursuant to this Agreement, each such Holder agrees to be bound by the terms of this Section 9 and to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information about such Holder as a Holder of the Company furnished to the Company, and such Holder shall reimburse the Company, and each such director, officer, and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating, defending, or settling and such loss, claim, damage, liability, action, or proceeding; provided, however, that such indemnity agreement found in this Section 9(b) shall in no event exceed the gross proceeds from the offering received by such Holder.  Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer by any Holder of such shares.

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(c)           Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 9(a) or (b) hereof (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 9(a) or (b) hereof, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice.  In case any such action is brought against an indemnified party, unless in the reasonable judgment of counsel to such indemnified party a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a diligent manner, other than reasonable costs of investigation.  Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent.  No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement, which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.  Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim.

(d)           In the event that an indemnifying party does or is not permitted to assume the defense of an action pursuant to Section 9(c) or in the case of the expense reimbursement obligation set forth in Section 9(a) and (b), the indemnification required by Section 9(a) and (b) hereof shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills received or expenses, losses, damages, or liabilities are incurred.

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(e)           If the indemnification provided for in this Section 9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall (i) contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations.  No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation.

(f)           Indemnification similar to that specified in the preceding subsections of this Section 9 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.

10.           Rule 144. For a period of at least 24 months following the Closing Date, the Company will use its reasonable best efforts (a) to timely file all reports required to be filed by the Company after the date hereof under the Securities Act and the Exchange Act (including the reports pursuant to Section 13(a) or 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144) and the rules and regulations adopted by the Commission thereunder), (b) if the Company is not required to file reports pursuant to such sections, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell shares of Common Stock under Rule 144, and (c) to take such further action as any holder of shares of Common Stock may reasonably request, all to the extent required from time to time to enable the Purchasers to sell shares of Common Stock without registration under the Securities Act within the limitation of the exemptions provided by Rule 144, including causing its attorneys to issue and deliver any appropriate legal opinion required to permit a Purchaser to sell shares of Common Stock under Rule 144 upon receipt of appropriate documentation relating to such sale.

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11.           Independent Nature of Each Purchaser’s Obligations and Rights.  The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and each Purchaser shall not be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement.  The decision of each Purchaser to purchase Common Stock and enter into this Agreement has been made by each Purchaser independently of any other Purchaser.  Nothing contained herein and no action taken by any Purchaser pursuant hereto, shall be deemed to constitute such Purchasers as a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser acknowledges that no other Purchaser has acted as agent for the Purchaser in connection with making its investment in Common Stock and that no other Purchaser will be acting as agent of the Purchaser in connection with monitoring its investment in the Common Stock or enforcing its rights under this Agreement.  Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

12.           Miscellaneous

(a)           Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee and the United States of America, both substantive and remedial. Any judicial proceeding brought against either of the parties to this agreement or any dispute arising out of this Agreement or any matter related hereto shall be brought in the courts of the State of Tennessee, Knox County, or in the United States District Court for the Eastern District of Tennessee and, by its execution and delivery of this agreement, each party to this Agreement accepts the jurisdiction of such courts. The foregoing consent to jurisdiction shall not be deemed to confer rights on any person other than the parties to this Agreement.

(b)           Successors and Assigns.  Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, Permitted Assigns, executors and administrators of the parties hereto.  In the event the Company merges with, or is otherwise acquired by, a direct or indirect subsidiary of a publicly traded company, the Company shall condition the merger or acquisition on the assumption by such parent company of the Company’s obligations under this Agreement.

(c)           Entire Agreement.  This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof.

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(d)           Notices, etc. All notices or other communications which are required or permitted under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:

If to the Company:	National Coal Corp. 8915 George Williams Rd. Knoxville, TN  37923 Attention: Chief Financial Officer Facsimile:  (865) 691-9982
If to the Purchasers:	To each Purchaser at the address set forth on Exhibit A

or at such other address as any party shall have furnished to the other parties in writing.

(e)           Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any Holder of any Registrable Securities, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative.

(f)           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

(g)           Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(h)           Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and by the Majority Holders.  The Purchasers acknowledge that by the operation of this Section 12(h), the Majority Holders may have the right and power to diminish or eliminate all rights of the Purchasers under this Agreement.

[Signatures on following page]

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This Registration Rights Agreement is hereby executed as of the date first above written.

COMPANY:

NATIONAL COAL CORP.

By:          _________________________

Name:     Dan Roling

Its:           Chief Executive Officer

PURCHASER:

______________________________

(Print Name)

By:          _________________________

Name:     _________________________

Its:          _________________________

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EXHIBIT A

PURCHASER INFORMATION

Name	Address
The J-K Navigator Fund, L.P.	c/o Steelhead Partners, LLC 1301 First Avenue, Suite 201 Seattle, WA 98101
Steelhead Offshore, Ltd.	c/o Steelhead Partners, LLC 1301 First Avenue, Suite 201 Seattle, WA 98101
Daniel Roling	c/o National Coal Corp. 8915 George Williams Rd. Knoxville, TN  37923

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EX-7

VOTING AGREEMENT

This VOTING AGREEMENT, dated as of October 19, 2007 (this “Agreement”), is made by and among: (i) each of the persons and entities identified on Exhibit A attached hereto (the “Subject Stockholders”); and (ii) each of the persons and entities identified on Exhibit B attached hereto (the “Lenders”).

R E C I T A L S

A.           Reference is hereby made to: (i) that certain Waiver and Amendment No. 3 dated of even date herewith to that certain Credit Agreement, dated as of October 12, 2006, by and among NATIONAL COAL CORP., a Florida corporation (“Holdings”), NATIONAL COAL CORPORATION, a Tennessee corporation, the several Lenders party thereto from time to time (including the Lenders), and the Administrative Agent named therein (the “Waiverand Amendment”); and (ii) the warrants to be issued to the Lenders thereunder (the “Warrants”).  Capitalized but undefined terms used herein shall have the meanings ascribed thereto under the Warrants.

B.           As of the date hereof, the Subject Stockholders beneficially own 9,070,476 shares of Common Stock in the aggregate (such shares of Common Stock, together with any other shares of capital stock of Holdings acquired (whether held beneficially or of record) by the Subject Stockholders after the date hereof and prior the termination of all of the Subject Stockholders’ obligations under this Agreement, including any shares of Common Stock acquired by means of purchase, dividend or distribution, or issued upon the exercise of any warrants or options, or the conversion of any convertible securities or otherwise, being collectively referred to herein as the “Shares”).

C.           As an additional inducement for the Lenders to enter into and deliver the Waiver and Amendment, and in consideration therefor, the Subject Stockholders have agreed to enter into this Agreement.

A G R E E M E N T

NOW, THEREFORE, intending to be legally bound, the parties hereto agree as follows:

1.           Voting Agreement.  Until this Agreement is terminated in accordance with its terms, each Subject Stockholder agrees to vote the Shares beneficially owned by such Subject Stockholder (or, if permitted under the organizational documents of Holdings to provide a written consent in respect of such Shares), in connection with any meeting of the stockholders of Holdings (or any action by written consent in lieu of a meeting of stockholders of Holdings): (i) in favor of any stockholder resolutions ratifying or approving the issuance of the Warrants or any shares of Common Stock for which the Warrants are exercisable; and/or (ii) against any action or agreement which would materially impede or interfere with or prevent, the issuance or the exercise of the Warrants in full.

2.           Representations and Warranties of the Subject Stockholder.  Each of the Subject Stockholders hereby represents and warrants, severally and not jointly, for the benefit of the Lenders, severally and not jointly, as of the date hereof as follows:

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a.           Ownership of Shares.  Such Subject Stockholder is the record and beneficial owner of and has the sole right to vote or direct the voting of the Shares set forth opposite such Subject Stockholder’s name on Exhibit A. Such Subject Stockholder holds such Shares free and clear of any liens, claims, options, charges or other encumbrances.¹

b.           No Conflict.  The execution and delivery of this Agreement by such Subject Stockholder does not, and the performance by such Subject Stockholder of his, her or its obligations under this Agreement will not:  (a) conflict with or violate any legal requirement, order, decree or judgment applicable to such Subject Stockholder or by which such Subject Stockholder or any of the Subject Stockholder’s assets (including the Shares beneficially owned by such Subject Stockholder) are bound or affected; or (b) result in any breach of or constitute a default (with or without notice or lapse of time, or both) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of an encumbrance on or otherwise affecting any of the Shares beneficially owned by such Subject Stockholder pursuant to any contract to which such Subject Stockholder is a party or by which such Subject Stockholder or any of such Subject Stockholder’s assets are bound or affected.  The execution and delivery of this Agreement by such Subject Stockholder does not, and the performance by such Subject Stockholder of his, her or its obligations under this Agreement will not, require any consent of any person not a party hereto. In particular (and without limiting the foregoing), such Subject Stockholder has not appointed or granted any proxy, which appointment or grant is still effective, with respect to the Shares beneficially owned by such Shareholder.

c.           Enforceability.  Such Subject Stockholder has all requisite power and capacity to execute and deliver this Agreement and to perform his obligations hereunder.  This Agreement has been duly authorized, executed and delivered by such Subject Stockholder and constitutes a legal, valid and binding obligation of such Subject Stockholder, enforceable against such Subject Stockholder in accordance with its terms, except to the extent that enforcement hereof may be limited by (a) applicable bankruptcy, insolvency or other laws affecting creditors’ rights generally or (b) general equitable principles (whether considered at law or in equity).

3.           Termination.  This Agreement shall terminate automatically, and without any further action on the part of any party hereto, upon the earliest of: (i) the date on which Holdings is advised by the NASDAQ that the Warrants may be issued and exercised in full without requiring stockholder approval; (ii) if such stockholder approval is required by NASDAQ, the date on which such stockholder approval is obtained; or (iii) the date on which Holdings is no longer obligated to issue the Warrants.

4.           No Restraint on Officer or Director Action.  This Agreement is intended to bind each Subject Stockholder solely in his, her or its capacity as a stockholder of Holdings and only with respect to the specific matters set forth herein, and shall not prohibit the Subject Stockholder who is a natural person from acting in accordance with his or her fiduciary duties as an officer or director of Holdings.

 

1 For J. Nix and Jenco only: Part of the Shares are used as collateral for personal revolvers/loans (i.e. buyout of chairman shares with 2M in 2004 and exercises of employee options in 2004).

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5.           Miscellaneous.

a.           Further Assurances. Each Subject Stockholder will execute and deliver such further documents and instruments and take all further action as may be reasonably necessary in order to consummate the transactions contemplated hereby.

b.           Amendments and Modification.  Subject to applicable law, this Agreement may not be amended, modified, or supplemented except upon the execution and delivery of a written agreement executed by each of the parties hereto.

c.           Counterparts.  This Agreement may be executed in one or more counterparts (whether delivered by facsimile or otherwise), each of which shall be considered one and the same agreement.

d.           Entire Agreement.  This Agreement (including the documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements, negotiations, arrangements and understandings, whether written, electronic or oral, between the parties with respect to the subject matter hereof.

e.           Severability.  Any invalidity, illegality, or limitation of the enforceability of any one or more of the provisions of this Agreement, or any part thereof, shall in no way affect or impair the validity, legality, or enforceability of this Agreement with respect to any other term or provision.  In case any provision of this Agreement shall be invalid, illegal, or unenforceable, it shall, to the extent practicable, be modified so as to make it valid, legal and enforceable and to retain as nearly as practicable the intent of the parties, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

f.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without application of conflicts of laws principles.

g.           Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that any Lender (without being joined by any other Lender) shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity. Any Lender shall be entitled to its reasonable attorneys’ fees in any action brought to enforce this Agreement in which it is the prevailing party.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, this Voting Agreement has been duly executed by each of the Subject Stockholders and each of the Lenders as of the date first written above.

Subject Stockholder:

___________________

Jon Nix

Subject Stockholder:

Jenco Capital Corporation

By:___________________                                                                

Name:      Jon Nix

Its:           President and CEO

Subject Stockholder:

Crestview Capital Master, LLC

By:           Crestview Capital Partners, LLC

Its:           Manager

By: ____________________                                                    

Name:      Stewart R. Flink

Its:           Manager

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IN WITNESS WHEREOF, this Voting Agreement has been duly executed by each of the Subject Stockholders and each of the Lenders as of the date first written above.

Lender:

J-K NAVIGATOR FUND, L.P.

By:           Steelhead Partners, LLC

Its:           General Partner

By:/s/ J. Michael Johnston                                                      

Name:       Michael Johnston

Title:          Manager

Lender:

STEELHEAD OFFSHORE CAPITAL, LP

By:           Steelhead Partners, LLC

Its:           Investment Manager

By:/s/ J.Michael Johnston                                                      

Name:     Michael Johnston

Title:       Manager

Lender:

BIG BEND 38 INVESTMENTS L.P.

By:           The 2M Companies, Inc., General Partner

By: _______________________                                                     

Name:      Ian Trumpower

Title:         Vice President

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Exhibit A

SUBJECT STOCKHOLDERS

Name	Shares of Common Stock Beneficially Owned
Jon Nix	3,667,500
Jenco Capital Corporation	2,161,133
Crestview Capital Master, LLC	3,241,843
TOTAL:	9,070,476

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Exhibit B

LENDERS

J-K Navigator Fund, L.P.

Steelhead Offshore Capital, LP

Big Bend 38 Investments, L.P.

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