TURBINE SUPPLY AGREEMENT
 

 
By and Between
 
DEWIND, INC.,
 
a Nevada corporation (“Seller”)
 
and
 
XRG DEVELOPMENT PARTNERS, LLC
 
an Idaho limited liability company (“Owner”)
 
Dated as of March 27, 2007
 
 
 
 

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ARTICLE 1 DEFINITIONS
5
1.1
Defined Terms
5
ARTICLE 2 INTERPRETATION
5
2.1
Sections and Exhibits
5
2.2
Headings
5
2.3
Gender
5
2.4
Successors and Assigns
5
2.5
Construction of Agreement
5
ARTICLE 3 SALE AND PURCHASE OF WIND TURBINES
5
3.1
Sale of Wind Turbines
5
3.2
Compliance
6
ARTICLE 4 CONTRACT PRICE AND PAYMENT
6
4.1
Contract Price; Unit Price.
6
4.2
Payment Schedule and Method
7
4.3
Change Orders.
7
ARTICLE 5 DELIVERIES OF WIND TURBINES
9
5.1
Delivery of Notice to Proceed
9
5.2
Delivery of Wind Turbines
9
5.3
Damages for Late Deliveries.
10
5.4
Packing of Wind Turbines
12
5.5
Transfer of Title; Risk of Loss
12
5.6
Other Deliveries By Seller
12
5.7
Storage
12
5.8
Execution and Delivery of the CTC Guaranty
12
5.9
Owner Rights with Respect to the Wind Turbines
13
ARTICLE 6 DESIGN, FOUNDATION REPORT AND MECHANICAL COMPLETION CERTIFICATES
13
6.1
Design.
13
6.2
Power Curve Demonstration and Design Certificates
15
6.3
Mechanical Completion, Mechanical Completion Certificate and Project Mechanical
Completion Certificate.
15
ARTICLE 7 INSURANCE
16
7.1
Insurance.
16
ARTICLE 8 OWNER’S WORKS, SELLER’S TECHNICAL ASSISTANCE AND VARIATION
17
8.1
Owner’s Work
17
8.2
Technical Assistance
17
8.3
Variation and Adjustment
17
8.4
Right of Access
17
8.5
Owner’s Representative
18
8.6
Seller’s Representative
18
8.7
Training
18

 
 
 

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ARTICLE 9 COMMISSIONING AND COMPLETION
18
9.1
Commissioning of WTGs
18
9.2
Commissioning Services
19
ARTICLE 10 WARRANTIES
20
10.1
Warranty
20
10.2
Warranty Period
20
10.3
Correction of Deficiencies.
20
10.4
Conformance of Warranty Service to Specifications
21
10.5
Warranty Service at Seller's Cost; Survival
21
10.6
Availability Warranty
21
10.7
Noise Warranty
22
10.8
Power Curve Guarantee
22
10.9
Limitations
24
10.10
WARRANTY DISCLAIMER
25
ARTICLE 11 INDEMNIFICATION AND INTELLECTUAL PROPERTY
25
11.1
General Indemnification.
25
11.6
Intellectual Property; License.
26
11.7
Indemnification Regarding Infringement
27
ARTICLE 12 REPRESENTATIONS AND WARRANTIES OF OWNER
28
12.1
Owner Representations and Warranties
28
12.2
Seller Representations and Warranties
28
ARTICLE 13 EXCUSABLE DELAY; DEFAULT; CURE
30
13.1
Excusable Delay
30
13.2
Notice.
30
13.3
Default.
30
ARTICLE 14 DISPUTES
31
14.1
Disputes
31
14.2
Jurisdiction
31
ARTICLE 15 GENERAL PROVISIONS
32
15.1
Waiver
32
15.2
Successors and Assigns
32
15.3
Notices
32
15.4
Amendments
33
15.5
Attachments Incorporated
33
15.6
Entire Agreement
33
15.7
No Merger
33
15.8
Attorneys’ Fees
34
15.9
Site Regulations
34

 
 
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15.10
Confidentiality.
34
15.11
Wind Speed Projections
35
15.12
Documentation and Correspondence
35
15.13
Counterparts
35
15.14
Limitation of Liability and Exclusions
35
15.15
Cooperation With Financing Parties
35
EXHIBIT A
Specifications and Documentation for Wind Turbines
 
EXHIBIT A-1
Scope of Work and Parts
 
EXHIBIT B
Site Description
 
EXHIBIT C
Composite Technology Corporation Guaranty
 
EXHIBIT D
Commissioning Procedures
 
EXHIBIT E
Delivery Schedule [to come]
 
EXHIBIT F
Erection and Installation Manuals
 
EXHIBIT G
Intentionally Omitted
 
EXHIBIT H
Description of Owner’s Work
 
EXHIBIT I
Form of GL Certificate
 
EXHIBIT J
Form of Mechanical Completion Certificate
 
EXHIBIT K
[not used]
 
EXHIBIT L
[not used]
 
EXHIBIT M
Insurance
 
EXHIBIT N
Form of Commissioning Certificate
 
EXHIBIT O
Recommended Spare Parts
 
EXHIBIT P
Scope of Technical Services
 
EXHIBIT Q
Form of Final Completion Certificate
 
EXHIBIT R
Availability Warranty Protocols
 
EXHIBIT S
Power Curve -- D8.2
 
EXHIBIT T
Power Curve Test Protocols
 
EXHIBIT U
Reliability Test Protocols
 
 
 
 
APPENDIX I
Definitions
 

 
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Turbine Supply Agreement

This TURBINE SUPPLY AGREEMENT (this “Agreement”), dated as of March 27th, 2007
(the “Effective Date”), is made and entered into by and between XRG DEVELOPMENT
PARTNERS, LLC an Idaho limited liability company (“Owner”) and DEWIND, INC., a
Nevada corporation (“Seller” or “Supplier”). Each of Seller and Owner are
referred to herein individually as, a “Party” as the context requires, and
collectively as, the “Parties.”
 
Recitals
 
A. Seller sells, procures components and assembles Wind Turbines as described in
Exhibit A (the “Wind Turbines”), and Seller and Owner wish to enter into an
agreement pursuant to which Owner agrees to purchase and order from Seller and
to pay for eighteen (18) Wind Turbines.
 
B. The Owner informs Seller that the Wind Turbines to be purchased by Owner
shall be used for the purpose of developing, constructing, building and
installing the Big Blue Windfarm Project, located at the Site, as described in
Exhibit B, in Blue Earth, Minnesota.
 
C. Owner informs Seller that Owner will enter into separate arrangements to
erect and install the Wind Turbines and Towers to be supplied by Seller to Owner
pursuant to this Agreement.
 
D. Seller is a wholly-owned subsidiary of Composite Technology Corporation, a
holding company with its principal place of business located in California, USA,
which has agreed to issue a payment and performance guaranty of Seller’s
obligations under this Agreement, substantially in the form attached as Exhibit
C (“CTC Guaranty”).
 
E. The Parties are concluding and intend to enter into a Master Turbine
Procurement Agreement (“MTPA”) prior to April 30, 2007 whereby Seller will
provide Owner with options to acquire, over a period of five (5) years, wind
turbines manufactured by Seller, the first group of which is the subject of this
Agreement.
 
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Owner agree
as follows intending to be legally bound:
 
 
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Article 1
Definitions
 
1.1 Defined Terms. For purposes of this Agreement, capitalized terms used herein
and not otherwise defined herein shall have the meaning assigned to such terms
in Appendix I hereto.
 
Article 2
Interpretation
 
2.1 Sections and Exhibits. References to sections, subsections, articles,
exhibits and appendices are, unless otherwise indicated, to sections,
subsections and articles of, and exhibits and appendices to, this Agreement.
 
2.2 Headings. The headings of sections, subsections, articles, exhibits and
appendices of this Agreement are for ease of reference only and do not form part
of this Agreement and shall not in any way affect its construction.
 
2.3 Gender. The masculine gender shall include the feminine and neuter and the
singular number shall include the plural and vice versa.
 
2.4 Successors and Assigns. References to Parties to this Agreement shall
include references to their successors and permitted assigns.
 
2.5 Construction of Agreement. Each of the Parties have participated in the
drafting of this Agreement. This Agreement shall, in the event of any dispute
over its meaning or application, be interpreted fairly and reasonably, and
neither more strongly for or against either Party.
 
Article 3
Sale and Purchase of Wind Turbines
 
3.1 Sale of Wind Turbines. Upon the terms and subject to the conditions of this
Agreement, Seller hereby agrees to sell and deliver to Owner (a) the Wind
Turbine blades at the Port of Milwaukee, WI; (b) the Wind Turbine tower
equipment at a factory located in the continental United States or at the Port
of Milwaukee, WI; and (c) the Turbine Nacelles at Seller’s factory in Round
Rock, Texas (together, the “Designated Delivery Location”). Seller also agrees
to deliver at its factory in Round Rock Texas certain ancillary equipment, tools
and documentation for the assembly, erection, maintenance and operation of the
Wind Turbines, and operation and maintenance manuals and other necessary
documentation as specified in Exhibit A hereto, and to perform all procedures
necessary for the Commissioning of such Wind Turbines. Owner hereby agrees to
purchase, pay for and accept from Seller, such Wind Turbines and other equipment
and services. Seller agrees to furnish at its own cost and expense all labor,
materials, services and any other things necessary to perform and complete the
Seller’s Work substantially in accordance with this Agreement, as modified from
time-to-time in accordance with the provisions hereof.
 
 
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3.2 Compliance. In performing the Seller’s Work, Seller shall comply with
Prudent Wind Industry Practices, Applicable Laws and this Agreement.
 
3.3 Wind Turbine Serial Numbers
 
3.4 .Seller shall assign an identity number to each Wind Turbine nacelle, blade,
and tower section at the time of commencing manufacturing in a form and manner
sufficient to allow Owner to track the Wind Turbines and components during
production. Seller shall also assign an identity number to each Wind Turbine,
including correlations to component identity numbers, at the time of
Commissioning Completion and deliver such identity numbers to Owner.
 
3.5 Spare Parts.
 
(a) Recommended Inventory. Attached hereto as Exhibit O is a recommended list of
types and quantities of spare parts for the Project.
 
(b) Sale of Spare Parts. Spare Parts shall be available for purchase by Owner
for the Wind Turbines for a period of twenty (20) years after Commissioning
Completion of the last Wind Turbine. If Seller is no longer in the business of
manufacturing wind turbines, it shall use commercially reasonable efforts to
arrange on behalf of Owner appropriate alternative manufacturers. If Owner
elects to purchase any replacement parts from Seller for the Wind Turbines
within such time period, Seller shall sell such replacement Parts to Owner at
Seller’s then effective list price.
 
Article 4
Contract Price and Payment
 
4.1 Contract Price; Unit Price. In full and complete payment for all of the Wind
Turbines, Towers and ancillary equipment delivered to the Designated Delivery
Locations in accordance with the provisions of this Agreement, and Seller’s
other obligations under this Agreement with respect thereto, Owner shall pay to
Seller in the manner and at the time specified in Section 4.2, and Seller shall
accept as payment in full by Owner, the sum of [ * *] (“Contract Price”), which
price is calculated on a unit price of [ * *] for each Wind Turbine (“Unit
Price”). The Contract price includes any non-unit-specific items included within
the Scope of Work, as more fully described in Exhibit A-1. On Owner’s written
request, delivered not later than May 7, 2007, Seller shall offer to provide the
Cold Weather Extreme Package at a price of [* *] per wind turbine generator. The
Contract Price stated above is inclusive of any Seller financing costs, packing
costs, the costs of insurance for transportation of the Wind Turbines and Towers
to the Designated Delivery Locations, technical advice during erection and
mechanical completion to the extent set forth in Exhibit P, Commissioning
services, customs duties and other Taxes payable by Seller. The Contract Price
does not include any sales or use tax, which sales or use tax, if any, shall be
paid by Owner.
 

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[* *] This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
 
 
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4.2 Payment Schedule and Method. Subject to the requirements of Section 4.3 and
Section 4.4, Owner shall pay the Contract Price to Seller, by wire transfer, as
follows:
 
(a) A Reservation Payment not later than five (5) Business Days after the
Effective Date in the amount of [* *] for the Wind Turbines for the Big Blue
Windfarm Project.
 
(b) A Notice to Proceed Payment in the amount of [* *] for the Wind Turbines on
or before May 7, 2007, subject to Seller’s delivery of the Certificate of Design
Approval and subject to Seller and Buyer agreeing the Delivery Schedule, as set
forth in Section 5.1.
 
(c) A Progress Payment in the amount of [* *] for the Wind Turbines not later
than 60 days prior to the scheduled Delivery Date.
 
(d) A per-Wind Turbine Delivery Payment equal to forty percent (40%) of the Unit
Price within five (5) Business Days after Seller’s delivery to the Designated
Delivery Location of each item listed in the Delivery Schedule comprising such
Wind Turbine.
 
(e) A per-Wind Turbine payment equal to fifteen percent (15%) of the Unit Price
of a Wind Turbine within five (5) Business Days of Commissioning of each Wind
Turbine.
 
(f) A Final Completion payment in the amount of [* *] for the Wind Turbines
within five (5) Business Days of Final Completion.
 
4.3 Change Orders.
 

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[* *] This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
 
 
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(a) Either Party may make requests for changes within the general scope of work
included in this Agreement (any such change being a "Change Order") by giving
the other Party written notice of any proposed Change Order. Within thirty (30)
days from the other Party’s receipt of any such request, the receiving Party
shall submit to the requesting Party the adjustments required in the Contract
Price and any other terms and conditions of this Agreement that would result
from implementation of such Change Order. Seller and Owner shall enter into a
written agreement as to such modifications prior to the implementation of any
Change Order and no Party shall have an obligation to proceed with any Change
Order until such written agreement has been executed by both Parties.
Notwithstanding the foregoing, Seller shall be entitled to a Change Order to
reflect its increased cost, schedule delays or modifications to the scope of the
Work occasioned by an Excusable Delay or an Owner Caused Delay. Seller shall
have no obligation to consider any Change Order that increases the number of
Wind Turbines to be supplied and delivered pursuant to the terms of this
Agreement, or that would impair Seller’s ability, in its sole discretion, to
achieve any of the performance guarantees, warranties or covenants of Seller set
forth in this Agreement.
 
(b) At any time prior to delivery of the Wind Turbines to Owner, Owner may
notify Seller that some or all of such Wind Turbines shall be installed at
another site. If any Wind Turbines will be installed at another site, the
Parties shall mutually agree upon the impact to the Delivery Schedule, the Wind
Turbine Specifications, the Contract Price (but only to the extent of changes in
such specifications), and other terms and conditions of this Agreement, and
shall amend this Agreement by Change Order to reflect any such changes.
 
4.4 Grant of Security InterestSeller hereby grants to Owner a security interest
in and to the materials and components acquired and fabricated by Seller for the
performance of Seller’s obligations under this Agreement, limited to the amount
that Owner has paid Supplier with respect to the Wind Turbines, including any
modifications thereto or replacements thereof, together with all proceeds of the
foregoing (“Collateral”), as security until title to the Wind Turbines has
passed to Owner pursuant to Section 5.5 of this Agreement. Seller authorizes
Owner to make any and all UCC-1 filings with the appropriate Governmental
Authorities it deems necessary to evidence or to perfect and protect the
security interest granted pursuant to this Section 4.4. If requested by Owner,
Seller shall, at its expense, promptly execute and deliver to Owner, any and all
documents or instruments to enable Owner to exercise and enforce its rights and
remedies hereunder and as a secured party under the Uniform Commercial Code in
effect in any applicable jurisdiction and to perfect and protect the security
interest granted pursuant to this Section 4.4 including the execution of
financing statements (and amendments thereto). Owner may exercise its remedies
against some or all of the Collateral and in such order as it shall choose in
its sole discretion. Upon Seller’s request at any time after passage of title
with respect to any Wind Turbine, and in any event no later than Project
Mechanical Completion, Owner shall deliver UCC-3 termination statements covering
all Wind Turbines for which title has passed to Owner. For the avoidance of
doubt, Seller’s grant of a security interest in the Collateral shall not affect
or be construed as a waiver of any statutory contractor’s liens in favor of
Seller.
 
 
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4.5 Effect of Payment
 
4.6 Payment of the Contract Price or any portion thereof shall not constitute
Owner’s approval or acceptance of any portion of the Wind Turbines or of
Seller’s Work or result in a waiver of any rights or remedies Owner may have
with respect to any portion of the Wind Turbines or Seller’s Work that have
been, or subsequently are, determined not to conform to the Wind Turbine
Specifications and Scope of Supply.
 
4.6 Use of Funds. Seller shall apply not less than 80% of each payment made
pursuant to Sections 4.2 (a), (b), and (c) to the procurement of materials and
components to be incorporated in the manufacture of the Wind Turbines, but
including payments to TECO.
 
Article 5
Deliveries of Wind Turbines
 
5.1 Notice to Proceed and Delivery Schedule. Owner shall be deemed to have
issued to Seller a notice to proceed with the fabrication, delivery, and sale of
the Wind Turbines on the Effective Date (“Notice to Proceed”). On or before May
7, 2007, Owner shall specify Owner’s proposed Delivery Schedule for the Wind
Turbines. On or before [March 15, 2007], Owner shall provide evidence
satisfactory to Seller that it has sufficient financing in place to pay the
Contract Price for the Wind Turbines (including in the consent document a direct
obligation from lenders to fund Owner’s purchase of Wind Turbines hereunder, or
a letter of credit in the amount from time to time of all remaining unpaid
portions of the Contract Price) and to perform Owner’s other obligations under
this Agreement. Within 5 business days of receipt of the Owner’s proposed
Delivery Schedule, Seller shall confirm or reject Owner’s proposed delivery
schedule. With any rejection of Owner’s proposed delivery schedule, Seller shall
propose a delivery schedule acceptable to Seller, provided however, that
Seller’s proposed delivery schedule shall include a Delivery Date not later than
November 30, 2007. Owner shall have no obligation to make the Notice to Proceed
Payment until the parties have mutually confirmed a delivery schedule. The
Delivery Schedule for this Agreement shall be as specified by the Parties
pursuant to this Section 5.1, and shall comprise Exhibit E hereto when agreed.
 
5.2 Delivery of Wind Turbines.
 
(a) Seller shall deliver all Wind Turbines to the Designated Delivery
Location(s) in accordance with the Delivery Schedule. Not less than three (3),
nor more the five (5) Business Days prior to each scheduled Delivery Date,
Seller shall provide Owner with notice confirming expected delivery of the Wind
Turbines. Owner at its own cost and expense may inspect the Wind Turbines at the
Designated Delivery Locations prior to delivery, and may reject any defective
Wind Turbines. Owner’s inspection of the Wind Turbines shall not diminish
Seller’s obligations under Section 3.2, nor shall it constitute an “acceptance”
within the meaning of Section 2606 of the Uniform Commercial Code (“UCC 2606”).
 
 
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(b) Owner shall arrange all shipments and pay all shipment costs and insurance
for transport of the Wind Turbines from Designated Delivery Locations to the
Site. Seller shall at its own cost and expense re-inspect the Wind Turbines upon
delivery at the Site and either (i) accept the Wind Turbines within the meaning
of UCC 2606, which acceptance shall not constitute a waiver of Seller’s
warranties under Article 10 of this Agreement, or (ii) reject the Wind Turbines
as nonconforming goods and provide Owner with written notice of the reasons for
the rejection including the appearance of changes in the condition of the Wind
Turbines during shipment from Seller’s delivery points to the Site.
 
5.3 Liquidated Damages for Late Deliveries.
 
(a) If delivery of any Wind Turbine in accordance with the terms of this
Agreement occurs after the scheduled delivery date for said Wind Turbine as
provided in the Delivery Schedule (“Wind Turbine Delivery Delay”), both Seller
and Owner acknowledge and agree that Owner will suffer damages as a result
thereof and that said damages will be difficult to determine. Accordingly, as a
material element of this Agreement, Owner and Seller hereby agree that Seller
shall be liable for, and shall pay to Owner liquidated damages calculated in
accordance with Section 5.3(b) for each Wind Turbine Delivery Delay other than
delay which constitutes Excusable Delay or Owner Caused Delay, in which case the
Delivery Schedule shall be adjusted to the extent Seller is affected by such
delay. In addition, Owner and Seller hereby agree that such liquidated damages
calculated in accordance with Section 5.3(b) represent a fair and reasonable
estimate by Owner and Seller, at the time this Agreement is made and in light of
the circumstances and their knowledge at such time, of the actual damages Owner
would likely suffer in the event of a Wind Turbine Delivery Delay not exceeding
30 days.
 
(b) For each Day of Wind Turbine Delivery Delay (each such Day being a “WTG
Delay Day”), if Owner suffers additional cost or delay as a result of Seller’s
delay, Seller shall pay to Owner the amounts set forth below as liquidated
damages provided, however, that the amount of liquidated damages for each WTG
Delay Day shall be reduced by 50% if Seller notifies Owner there will be a Wind
Turbine Delivery Delay applicable to particular Wind Turbines not less than 90
Days prior to the scheduled delivery date(s), and provided further, that such
liquidated damages shall be waived if Owner, using commercially reasonable
efforts, is able to avoid additional cost or delay as a result of the advance
notice given by Seller of its anticipated delay. In any such notice, Seller
shall specify the new date for delivery of the Wind Turbines (“Revised Delivery
Date”).
 
 
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Number of WTG Delay Days (for each WTG as to which there is a Wind Turbine
Delivery Delay)
 
Liquidated Damages Payable Per WTG Delay Day Incurred
 
1 to 10 WTG Delay Days
 
US [ * *] per WTG Delay Day
 
11 to 30 WTG Delay Days
 
US [* *] per WTG Delay Day
 

 
(c) Seller shall pay to Owner within ten (10) Business Days following demand by
Owner any and all liquidated damages payable under Section 5.3. If and to the
extent Seller fails to pay to Owner within such ten (10) Business Days any such
damages, Owner shall be entitled to set off the amount of such damages owed by
Seller against the amount of the Contract Price for such Wind Turbines payable
by Owner pursuant to Section 4.2.
 
(d)  If delivery of any Wind Turbine in accordance with the terms of this
Agreement occurs at any time after a Revised Delivery Date, Seller shall pay to
Owner the amounts set forth below as liquidated damages:
 
Number of WTG Delay Days (for each WTG as to which there is a Wind Turbine
Delivery Delay)
 
Liquidated Damages Payable Per WTG Delay Day Incurred
 
1 to 10 WTG Delay Days
 
US$[* *] per WTG Delay Day
 
11 to 60 WTG Delay Days
 
US$[* *] per WTG Delay Day
 

 
(e) If delivery of any Wind Turbine in accordance with the terms of this
Agreement occurs more than sixty (60) days after the Revised Delivery Date for
said Wind Turbine, Seller shall be liable for all resulting damages except as
expressly limited and excluded by this Agreement.
 
(f) Notwithstanding any other provision of this Agreement, Seller agrees that
the first eighteen (18) Wind Turbines manufactured by or on behalf of Seller,
other than test or prototype units, shall be made available to Owner pursuant to
the terms of this Agreement. A breach of this Section 5.3(f) shall not be
remedied by liquidated damages and Seller shall be liable for all resulting
damages except as otherwise expressly limited and excluded by this Agreement.
 

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[* *] This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
 
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5.4  Packing of Wind Turbines. The Wind Turbines shall be properly packed in
accordance with the standard practice of Seller, consistent with Prudent Wind
Industry Practice, and in such a manner as is necessary for safe intermodal
transport and delivery to the Site pursuant to Section 5.2 and as required by
the contract or contracts of carriage and policy or policies of insurance. The
Wind Turbine packaging shall be marked appropriately.
 
5.5 Transfer of Title; Risk of Loss. Risk of loss of and damage to each Wind
Turbine shall be transferred to Owner when it has been delivered to Owner at the
Designated Delivery Location. Title to each Wind Turbine shall be transferred to
Owner upon payment of the amount required to be paid for such Wind Turbine
pursuant to Section 4.2(e). Seller expressly agrees to cooperate with Owner and
take such action as shall be reasonably requested to permit the Financing
Parties to acquire security interests in the Wind Turbines and in this Agreement
as required under any loan documentation entered into with the Financing
Parties.
 
5.6 Other Deliveries By Seller. Seller shall deliver to Owner the following
documents:
 
(a) Not later than the thirty (30) days following the Notice to Proceed Payment,
Seller shall deliver five (5) complete copies of the Erection and Installation
Manuals. In addition, if Seller modifies, amends or expands the Erection and
Installation Manuals, Seller shall promptly provide to Owner five (5) complete
copies of any such modification, amendment or expansion.
 
(b) Not later than the thirty (30) days prior to the first scheduled Delivery of
a 2007 Wind Turbine, Seller shall deliver five (5) complete copies of the
Seller’s O&M Procedures Manual. In addition, if Seller modifies, amends or
expands the Seller’s O&M Procedures Manual, Seller shall provide to Owner,
within thirty (30) Days of adoption, five (5) complete copies of any such
modification, amendment or expansion.
 
(c) Prior to or with delivery of each Wind Turbine component to the Site, Seller
shall deliver to Owner the quality assurance and quality control documentation
with respect to each such Wind Turbine component.
 
5.7 Storage. If Owner declines, or is unable, to accept delivery of any Wind
Turbine at the date established in the Delivery Schedule, Seller shall store or
caused to be stored the Wind Turbines at Owner’s risk and at Owner’s expense.
 
 
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5.8 Execution and Delivery of the CTC Guaranty. Concurrently with execution of
this Agreement, Seller shall cause Composite Technology Corporation to issue the
CTC Guaranty.
 
5.9 Owner Rights with Respect to the Wind Turbines. During the period from the
time of delivery of each Wind Turbine to the Site until the commencement of the
Warranty Period, if such Wind Turbine or any Part or Parts thereof shall not
conform to the Warranty, Seller shall, at its own cost and expense, repair or
replace each Wind Turbine or Part or Parts for which a defect in design,
material and workmanship is apparent or that would not otherwise meet the
requirements for such Wind Turbine or Parts pursuant to the Warranty, and
otherwise undertake the work that would otherwise constitute Warranty Work.
 
5.10 Financing CooperationSeller shall provide such assistance as Owner may
reasonably request in connection with obtaining financing for the Project.
Seller agrees that it shall make available to Owner and any Financing Parties
information relating to the status of Seller’s Work, including non-proprietary
information relating to the design, engineering, fabrication, delivery,
Commissioning and testing of the Turbine Equipment, the performance of Seller’s
Work, and such other matters as Owner may reasonably request. Seller shall
furnish such consents to assignment, estoppel certificates, certifications and
representations and opinions of counsel addressed to Owner and such Financing
Parties, as may be reasonably requested by Owner or such Financing Parties, and
all reasonable costs incurred by Seller in executing and delivering such
documents or providing other support shall be borne by Owner. At Owner’s
request, Seller shall cooperate with the independent engineer and technical
advisors, if any, of any Financing Parties.
 
Article 6
Design, Foundation Report and Mechanical Completion Certificates
 
6.1 Design.
 
(a) On or before June 1, 2007, Owner will provide Seller with drawings
illustrating the Site layout and placement of crane pads. Within ten (10)
Business Days of Seller’s receipt of the Site layout drawings, Seller shall
provide to Owner, in writing, any comments it may have on such drawings,
including any suggested modifications or adjustments. Seller’s failure to
provide suggested modifications or comments pursuant to this section shall
preclude Seller from raising the consequences of the Site layout as a defense to
any claim under the Warranty.
 
(b) On or before May 1, 2007, (a) Seller shall provide Owner with loading data
on the WTGs and technical information necessary for the design of the
foundations on which the WTGs shall be installed (“Foundation Design”), and (b)
Owner shall provide Seller with copies of geotechnical borings or other soil
data reports obtained by Owner for the Site. Owner shall provide to Seller the
Foundation Design within ten (10) Days of receipt of same by Owner. Within ten
(10) Business Days following Seller’s receipt from Owner of the Foundation
Design, including the dimension data, Seller shall review, approve or take other
appropriate action regarding the conformity of the Foundation Designs with the
loading data in the Wind Turbine Specifications, and shall notify Owner of
Seller’s conclusions, repeating the process with respect to any revised
Foundation Designs Owner may provide to Seller for its review. Seller shall not
be required to employ any soil specialists, engineers or other professionals to
review the design of the foundation for compliance to Applicable Laws.
 
 
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(c) Not later than 90 Days following the Effective Date, Seller shall
demonstrate, to the reasonable satisfaction of Owner which shall not be
unreasonably withheld, that it has secured a sufficient supply of Wind Turbine
components and material to satisfy the requirements of this Agreement.
Components and material include, but are not limited to: steel, carbon fiber,
Voith WinDrive’s Gearboxes, Towers, and Blades.
 
(d) Acceptance or approval by Owner of drawings or other documents provided by
Seller in respect of work proposed and/or designed by Seller or its
Subcontractor(s) (“Seller’s Documents”) shall not relieve Seller of
responsibility for any errors or omissions therein, nor for any of its other
contractual and legal obligations. If Owner identifies any discrepancy between
Seller’s Documents and documents related to the Owner’s Work, Owner shall notify
Seller as soon as possible, and in any event before the relevant Owner’s Work is
undertaken.
 
(e) Any major material changes to the WTGs or other equipment or materials made
by Seller or its affiliates, after having been confirmed to Owner, are to be
marked on the drawings with relevant dimensions, and provided to Owner as soon
as reasonably possible. A complete list of such supplier approved changes,
together with any changes to the related drawings, shall be provided to Owner on
or before completion of the Seller’s Work.
 
(f) Both Seller and Owner shall have a representative attend weekly Project
meetings (which meetings may be held telephonically) to discuss, in part:
 
(i) anticipated requests to change the Project schedule and the reasons for each
request;
 
(ii) delays and the reasons therefore and actions being taken;
 
(iii) shortages of labor, plant or materials, and actions being taken;
 
 
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(iv) difficulties in the execution of subcontracts, if any, and actions being
taken; and
 
(v) any outstanding information previously requested by Owner or Seller,
respectively.
 
(g) Both Seller and Owner shall have a representative attend monthly (or as
otherwise agreed) meetings and each shall inform their respective Subcontractors
when their presence at such meeting is required.
 
6.2 Power Curve Demonstration and Design Certificates. Seller shall deliver to
Owner a Certificate of Design Approval. Owner will work with Supplier to ensure
that owner’s Financing Parties will accept DEWI-OCC Certificate. Seller shall
use its reasonable efforts to provide a site specific certification of the Wind
Turbines in accordance with IEC Standard 61400-1 Ed.3 (2005) provided,
however, the delivery of said site specific certificate shall not be a condition
precedent to Owner’s obligation to make any payment hereunder.
 
6.3 Mechanical Completion, Mechanical Completion Certificate and Project
Mechanical Completion Certificate. 
 
(a) Owner shall be responsible for achieving Mechanical Completion of each
individual WTG delivered to the Site including making available for its own use
all tools and necessary equipment that is required to achieve Mechanical
Completion, including, without limitation, cranes. Seller also agrees to lend to
Owner free of charge at the Designated Delivery Location one (1) set of special
tools necessary for the assembly and erection of the Wind Turbines, provided
that Owner at its expense shall return the special tools on the Final Completion
Date to Seller at Seller’s factory in Round Rock, Texas in the same condition
tendered, normal wear and tear excepted.
 
(b) Beginning on the date on which the first WTG achieves Mechanical Completion
and on every date thereafter on which a WTG has achieved Mechanical Completion,
Owner shall submit to Seller a certificate (“Mechanical Completion Certificate”)
which has been prepared by Owner’s Subcontractor, substantially in the form
attached as Exhibit J, with respect to each such WTG as of such date.
 
(c) Within one (1) Business Day following the date on which a Mechanical
Completion Certificate is received by Seller, Seller shall inspect each
referenced WTG for compliance with the Mechanical Completion Checklist attached
to such Mechanical Completion Certificate and with the Erection and Installation
Manuals. Within two (2) Business Days following the date on which such
Mechanical Completion Certificate was received, Seller shall either:
(i) countersign and deliver to Owner the Mechanical Completion Certificate for
such WTG to indicate its agreement that such Mechanical Completion has been
achieved; or (ii)  notify Owner of Seller’s belief that Mechanical Completion
has not been achieved with respect to a WTG specified therein. Any notice issued
pursuant to clause (ii) above shall state in detail Seller’s reasons for
believing that any such WTG has not achieved Mechanical Completion. In the event
Seller delivers the notice under the preceding clause (ii), Seller shall,
pursuant to Section 8.2, advise Owner of the actions required to achieve
Mechanical Completion of such WTGs and Owner shall diligently complete the same
in a professional and workmanlike manner. Seller shall not unreasonably withhold
its signature to the Mechanical Completion Certificate and Seller’s failure to
either countersign such certificate or notify Owner of Seller’s reasons for the
failure to do so within such two (2) Business Day period shall constitute a
deemed countersignature by Seller of the Mechanical Completion Certificate. By
providing notice of Seller’s belief that Mechanical Completion is not achieved,
or providing such technical support services, Seller does not assume any
liability or responsibility with respect to any Owner’s Work or other matter for
which Owner requests technical support services. Upon completing such actions,
Owner shall issue a new Mechanical Completion Certificate for such WTG for
reconsideration by Seller. Such procedures shall be repeated as necessary until
Mechanical Completion has been achieved for such WTG. For the purpose of this
Agreement, the date of achievement of Mechanical Completion for any individual
WTG shall be the date on which both Owner and Seller have signed the respective
Mechanical Completion Certificate.
 
 
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Article 7
Insurance
 
7.1 Insurance. 
 
(a) Seller and Owner shall maintain the insurance policies set forth in Exhibit
M, hereto, in accordance with Prudent Wind Industry Practices, and Seller shall
provide the insurance required under the terms of the MTPA. Such insurance
policies shall be in place no later than the Delivery of the first Wind Turbine
component.
 
(b) Owner and Seller intend that all policies purchased in accordance with
Section 7.1(a) will protect Owner, Seller and all other customary parties as
insureds or additional insureds in such policies and will provide primary
coverage for all losses and damages caused by the perils or causes of loss
covered thereby. All such policies shall contain waivers of subrogation in favor
of the other Party.
 
(c) Seller and Owner each shall, within thirty (30) days following a request for
same, deliver to the other Party certificates of insurance evidencing the
coverages specified in this Section 7. All policies of insurance to be procured
and maintained hereunder shall be procured from an insurer carrying a Best’s
Insurance rating of A or higher or a financial institution carrying a Moody’s or
Standard & Poor’s bond rating of AA or higher, and shall provide, by
endorsement, that the other Party and any additional insured shall be provided
thirty (30) days' prior written notice of any material policy changes or
cancellations, and that no such cancellation or change shall be effective
without such notice. 
 
 
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Article 8
Owner’s Works, Seller’s Technical Assistance and Variation
 
8.1 Owner’s Work. Owner shall undertake and complete the Owner’s Work set forth
in Exhibit H in accordance with the Wind Turbine Specifications and the Erection
and Installation Manuals.
 
8.2 Technical Assistance. Seller’s representative shall be present at the Site
for reasonable periods, at Seller’s expense (to the extent of the scope set
forth in Exhibit P, but otherwise at Owner’s expense at pricing to be agreed by
the Parties), during the assembly, erection and installation of the WTGs by
Owner in order to observe, monitor and technically assist in the assembly,
erection and installation of the WTGs in compliance with the Wind Turbine
Specifications and the Erection and Installation Manuals. Seller’s
representative shall reasonably cooperate and coordinate with Owner and Owner’s
contractors with respect to Seller’s technical assistance, Seller’s
commissioning of the Wind Turbines and the construction of the balance of plant.
Upon reasonable request by Owner, Seller shall provide clarification or other
instructions regarding procedures for assembly and erection. Seller shall
forthwith notify Owner in writing if it obtains actual knowledge that any
assembly, installation or erection of any WTG is not being performed in
accordance with the Wind Turbine Specifications or the Erection and Installation
Manuals and advise Owner of the same in writing and as to those procedures of
the Wind Turbine Specifications or Erection and Installation Manuals that have
not been correctly performed. In the event that Owner, Owner’s employees or
Subcontractors fail to comply with any such advice given by Seller, Seller shall
not have any liability or responsibility with respect to any subsequent
malfunction of that WTG to the extent attributable to such failure to follow
Seller’s advice. 
 
8.3 Variation and Adjustment. If the progress of Seller’ Work, or any part
thereof, shall be delayed as a result of any variation (“Variation”) in Seller’s
Work agreed to by Owner and Seller, or any Excusable Delay, or a change of
Applicable Laws, then provided that Seller and Owner have taken all reasonable
steps to avoid or minimize the delay or the effects of such Variation, Excusable
Delay, or change of Applicable Laws, Owner and Seller shall negotiate in good
faith and mutually agree on an extension of the scheduled delivery and
Commissioning dates as necessary to accommodate the Variation, Excusable Delay,
or change in Applicable Laws while preserving, to the extent reasonably possible
and economically feasible, the parties’ respective benefits hereunder. Such
mutual agreement shall include an adjustment in the Contract Price to reflect
any increased or decreased costs of performance resulting from the Variation,
Excusable Delay or change in Applicable Laws.
 
 
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8.4 Right of Access. Owner hereby grants to Seller and to such persons or
entities as Seller may reasonably designate in connection with the performance
of Seller’s Work under this Agreement, full right of access to the Site during
the performance of Seller’s Work hereunder; provided, however, that Seller shall
be obligated to abide by the applicable Site safety, security and access rules.
 
8.5 Owner’s Representative. Owner shall appoint an individual to act as the
representative and coordinator with respect to this Agreement and the Site on
Owner’s behalf (“Owner’s Representative”) and shall so notify Seller in writing.
The Owner’s Representative shall act as the agent for Owner’s communications
with Seller.
 
8.6 Seller’s Representative. Seller shall appoint an individual to act as the
representative and coordinator with respect to this Agreement and the Site on
Seller’s behalf (“Seller’s Representative”) and shall so notify Owner in
writing. The Seller’s Representative shall act as the agent for Seller’s
communications with Owner.
 
8.7 Training. Seller shall, within the scope of Exhibit P, provide at least
seven (7) Days of operations and maintenance training for Owner’s designated
personnel at the Site and/or at Seller’s facility near the Site. Such training
shall begin at a mutually agreed time, but not later than commencement of
Commissioning of the Wind Turbines and shall be completed before the Final
Completion Date. Travel and living expenses incurred for Owner’s personnel in
connection with the training shall be borne by Owner.
 
Article 9
Commissioning and Completion
 
9.1 Commissioning of WTGs. Upon confirmation of the Mechanical Completion of
each WTG, Seller shall promptly commence Commissioning of such WTG. Upon
completion of Commissioning of such WTG, Seller shall submit a Commissioning
certificate (“Commissioning Certificate”) to Owner in accordance with the form
attached as Exhibit N, and Owner or Owner’s representatives shall either:
(a) deliver to Seller such Commissioning Certificate countersigned; or (b)
notify Seller that Commissioning has not been achieved with respect to the
specified WTG. Any notice issued pursuant to clause (b) above shall state in
detail the reasons for the failure to countersign the Commissioning Certificate
and advise Seller of the actions Owner believes necessary to achieve
Commissioning. In the event Owner delivers notice under the preceding clause
(b), Seller promptly shall take such action as to achieve Commissioning with
respect to any WTG. Upon completing such actions, Seller shall submit a new
Commissioning Certificate for the applicable WTG for reconsideration by Owner.
Such procedures shall be repeated as necessary until Commissioning is achieved
with respect to such WTG. For purposes of this Agreement, the date of
achievement of Commissioning for any individual WTG shall be the submission date
of the Commissioning Certificate that is countersigned by Owner with respect to
a WTG. Seller shall cause Commissioning to occur in accordance with the
milestone date specified in the Delivery Schedule. Seller shall have the right
to use its own employees or any Subcontractor for purposes of completing the
Commissioning. Owner shall not unreasonably withhold its signature to the
Commissioning Certificate and Owner’s failure to either countersign such
certificate or notify Seller of Owner’s reasons for the failure to do so within
such two (2) Business Day period shall constitute a deemed countersignature by
Owner of the Commissioning Certificate.
 
 
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9.2 Commissioning Services. Seller shall provide qualified individuals for
Commissioning services on the WTGs sufficient to complete Commissioning by the
scheduled Commercial Operation Date, it being understood that Owner shall
deliver Wind Turbines to Seller for Commissioning at a uniform rate, and shall
deliver no more than two (2) Wind Turbines per day for Commissioning. If Owner’s
personnel are required by Seller to assist Seller’s personnel in satisfying
Seller’s Commissioning obligations under this Agreement, such services shall be
performed by both Seller’s personnel and Owner’s personnel under the direct
control and supervision of Seller’s personnel, provided, however, that the
foregoing shall not diminish Seller’s obligations or liabilities under this
Agreement. Seller’s personnel shall also have the capability to train Owner’s
personnel for such Commissioning services.
 
9.3 Final Completion
 
9.4. “Final Completion” shall be achieved when all of the following have been
achieved in accordance with this Agreement:
 
(a) Commissioning Completion has been achieved;
 
(b) All punch list items have been completed;
 
(c) the Reliability Test has been successfully completed;
 
(d) All Seller Documents required to be delivered hereunder to Owner have been
delivered to Owner; and
 
(e) The Final Completion Certificate described below has been executed and
delivered by both Parties.
 
(f) Upon achieving Final Completion, Seller shall submit to Owner a certificate
(“Final Completion Certificate”) which has been prepared by Owner’s
Subcontractor, substantially in the form attached as Exhibit Q. Within two (2)
Business Days following the date on which the Final Completion Certificate is
received by Owner, Owner shall either: (i) countersign and deliver to Seller the
Final Completion Certificate; or (ii) notify Seller of Owner’s belief that Final
Completion has not been achieved, specifying Owner’s reasons therefor. Seller
shall undertake such action necessary to address Owner’s concern and issue a new
Final Completion Certificate to Owner for countersignature. Owner shall not
unreasonably withhold its signature to the Final Completion Certificate and
Owner’s failure to either countersign such certificate or notify Seller of
Owner’s reasons for the failure to do so within such two (2) Business Day period
shall constitute a deemed countersignature by Owner of the Final Certificate.
 
 
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Article 10
Warranties
 
10.1 Warranty. Seller warrants that the Wind Turbines shall be (i) made of new
materials in compliance with the terms of this Agreement, Prudent Wind Industry
Practices and the Wind Turbine Specifications, (ii) free of all material defects
in design, engineering, materials, manufacture, assembly and workmanship, and in
compliance with the Wind Turbine Specifications under the climatic and normal
operating conditions described in the Wind Turbine Specifications, and (iii)
free of liens and encumbrances except as otherwise permitted in this Agreement
(the “Warranty”). Any portion of the Turbine Equipment or other services
required of Seller under this Agreement which fail to meet this standard shall
be deemed “Defective Work”. Further, Seller warrants that Commissioning work
shall be performed in a good and workmanlike manner and in accordance with the
requirements of this Agreement and the Type Certificate.
 
10.2 Warranty Period. The Warranty shall continue for a period (the “Warranty
Period”) that commences on the Final Completion Date and ends on the date that
is the second (2nd) anniversary thereof. Owner may extend the Warranty Period to
a total of five (5) years from the Final Completion Date (“Extended Warranty”).
The cost of the Extended Warranty shall be US[ * *] per Turbine per year for
year 3, payable ninety (90) days prior to the beginning of the second
anniversary of the Final Completion Date. For years 4 and 5, the price of the
Extended Warranty shall be adjusted by the Consumer Price Index and will be
payable in ninety (90) days prior to the beginning of the each anniversary of
the Final Completion Date. To exercise its right to extend the Warranty Period,
Owner shall notify Seller of its intent to exercise the extension no later than
180 days prior to the scheduled expiration of the initial two year period.
 
10.2.1 Service Agreement. As a condition to the effectiveness of the Warranty,
Owner must execute and maintain in effect a Service Agreement, in form
reasonably agreeable to Owner and Seller (the “Service Agreement”), for a term
that coincides with the Warranty Period and any Extended Warranty Period. The
Warranty shall be void if the Service Agreement between Seller and Owner expires
or terminates for any reason during the Extended Warranty Period. If the Service
Agreement is terminated, and provided the Warranty Period or any Extended
Warranty period has not expired of its own terms, the Warranty shall be
automatically reinstated if the Service Agreement is reinstated. 
 

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10.3 Correction of Deficiencies.
 
(a) Seller shall, upon discovery or other notification of any Defective Work, at
its sole cost and expense (including the cost of labor and equipment), use all
commercially reasonable efforts to correct the Defective Work and repair or
replace any defective part or equipment with materials of new and good quality
(the “Warranty Service”). If Seller fails to complete the correction of any
Defective Work of which it has been notified or which it has discovered,
including the repair or replacement of defective parts or equipment, within a
reasonable period of time, which shall not in any case be less than __ weeks,
Owner may notify Seller in writing that it intends to initiate required repairs
one week after the date of notice. If Seller fails to promptly initiate the
required Warranty Service after such notice, Owner may proceed to have the
necessary repairs made and Seller shall be responsible for the reasonable costs
and expenses incurred by Owner for such repairs. Any part or equipment that is
repaired or replaced under the Warranty and all associated labor shall be
covered by the Warranty for a term equal to the greater of one (1) year from
completion of repairs or the remaining Warranty Period.
 
(b) In the event Seller becomes aware during the Warranty Period of a design,
manufacturing, component or other defect occurring in twenty percent (20%) or
more of the Wind Turbines installed at the Site, or twenty percent (20%) or more
of wind turbine generators in operation which are manufactured by Seller,
covered by a warranty from Seller similar to the Warranty, and have the same
design or components as the Wind Turbines, and which defect, if occurring in any
of the Wind Turbines would constitute Defective Work, Seller shall devise a plan
for correction of the defect or possible defect in all of the Wind Turbines if
it would reasonably be expected to be present therein, at Seller’s expense, and
the Parties shall agree on the means for implementation of the plan. All such
work performed shall be at Seller’s expense.
 
10.4 Conformance of Warranty Service to Specifications. Seller warrants in favor
of Owner that all Warranty Service, including all repaired or replace parts or
equipment, shall meet and conform to the requirements of the Wind Turbine
Specifications, Prudent Wind Industry Practices and this Agreement.
 
10.5 Warranty Service at Seller's Cost; Survival. Seller shall perform all
Warranty Service at its own cost and expense. Seller's obligation to correct,
repair, replace or re-perform Defective Work pursuant to this Section 10 shall
survive the termination or expiration of this Agreement, so long as the
Defective Work was identified to Seller in accordance with the provisions of
this Section 10 and within the Warranty Period.
 
 
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10.6 Availability Warranty. During the Warranty Period, Seller warrants that the
Wind Turbines, when installed in accordance with the Erection and Installation
Manual, will achieve not less than [ * *] percent Availability for the six-month
period after the Final Completion Date and not less than [* *] Availability for
the six-month period thereafter, and for each of the subsequent years of the
Warranty Period (“Guaranteed Availability”). Availability shall be measured in
accordance with Exhibit R. To the extent the Wind Turbines fail to achieve the
minimum levels of Availability stated in this Section 10.6 during any applicable
period, Seller agrees and acknowledges that Owner will suffer damages in the
form of lost revenues and income and agrees to pay Owner damages in amounts
calculated in the manner set forth in Exhibit R (the “Availability Liquidated
Damages”). The parties agree that the Availability Liquidated Damages are a
reasonable approximation of the losses and damages likely to be suffered by
Owner and are not intended to be punitive or excessive, and shall be payable
notwithstanding any provision of this Agreement otherwise limiting consequential
damages. Seller’s aggregate liability for liquidated damages under this Section
10.6 shall not exceed an amount equal to [* *] of the Contract Price actually
paid by Owner to Seller.
 
10.7 Noise Warranty.
 
(a) Seller warrants that the noise created by each Wind Turbine, measured at the
Turbine Nacelle, shall not at any time exceed a sound pressure level of 106
dB(A) at a wind speed of 10 meters per second. In addition, the Turbine
Equipment shall emit no pure tones (all such requirements the “Noise Warranty”).
 
(b) The first test of noise levels at any one or more Turbines shall be
conducted by a qualified expert at Owner’s expense. Testing protocols shall be
as set forth in IEC 61400-11. Ed. 12-2002, amended and revised.
 
(c) If testing reveals that any Wind Turbine fails to meet the Noise Warranty
established in Section 10.7(a), Seller shall undertake, at its expense, to make
such improvements to the applicable Wind Turbine(s) as are necessary to cause
each such Wind Turbine to meet the warranted noise level. Seller shall make its
improvements as soon as practicable. Seller shall be responsible for the
subsequent noise testing of any such Wind Turbines until compliance is attained
with the Noise Warranty, and all related expenses.
 
(d) In the event that any Wind Turbine is required to cease or curtail
operations to meet the requirements of Permits or Applicable Laws, and the
cessation or curtailment is required due to the failure of the Wind Turbine to
meet the Noise Warranty, any such lost operating hours shall be considered to be
hours during which the Wind Turbine is unavailable for purposes of calculating
the Availability Warranty.
 

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[* *] This material has been omitted pursuant to a request for confidential
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10.8 Power Curve Guarantee. Seller hereby guarantees, based on the performance
of a Power Curve Test and at the time thereof, that the Turbine Measured Power
Curve of the Nominated Turbine will be not less than [ * *] of the power curve
for the Wind Turbines set forth in Exhibit S, calculated and adjusted in
accordance with the testing protocol set forth in Exhibit T (the “Power Curve
Guarantee”).
 
(a) Performance of Power Curve Test. Owner may retain a third party, qualified
engineer acceptable to Seller to perform the Power Curve Test in accordance with
Exhibit T on one (1) Wind Turbine designated by Seller and Owner (the “Nominated
Turbine”). Owner shall pay all costs of any such Power Curve Test if the Wind
Turbine passes the test, and Seller shall pay the costs of any such Power Curve
Test if the Wind Turbine fails the test. The Power Curve Test shall be performed
under normal operating conditions in accordance with the Power Curve Test
Procedures. If Owner elects to conduct the Power Curve Test, it shall begin no
earlier than the date of Final Completion, and shall be concluded no later than
twelve (12) months thereafter. Owner will give Seller at least fourteen (14)
days prior written notice of its intent to perform any Power Curve Test. No
later than fourteen (14) days following the administration of the initial Power
Curve Test, Owner shall notify Seller in writing whether the Wind Turbines have
met or failed the Power Curve Test. Seller shall have the right to be present at
each Power Curve Test. The Power Curve Test for the Nominated Turbine shall
determine the compliance of all Wind Turbines with the Power Curve Guarantee.
 
(b) Failure to Perform the Power Curve Test. If Owner does not complete the
Power Curve Test on the Turbines on or before the end of the period specified in
Section 10.8(a), the Wind Turbines shall be deemed to have satisfied the Power
Curve Test and Owner will not be entitled to any damages as a result of any
failure of the Wind Turbines to meet the Power Curve Guarantee.
 
(c) Procedures on Power Curve Test Failure. If the Wind Turbines fail the
initial Power Curve Test, then for up to ninety (90) days after Owner notifies
Seller of such failure, Seller shall have the right to cause repairs or
replacements to be made to the Turbine Equipment designed to cause the Turbines
to pass the Power Curve Test, at Seller’s expense. Seller may request in writing
at any time during such ninety (90) day period that Owner cause an additional
Power Curve Test to be conducted as soon as practicable following the expiration
of such ninety (90) day period. If the Turbines fail any such second Power Curve
Test, then for up to ninety (90) days after Owner notifies Seller of such
failure, Seller shall have the right to cause repairs or replacements to be made
to the Turbine Equipment designed to cause the Turbines to pass the Power Curve
Test, at Seller’s expense. Any such repairs or replacements elected to be made
by Seller shall be made as soon as is practicable. Upon completion of such
repairs and replacements, Seller may (within 90 days of the failure of the
second Power Curve Test) request Owner to conduct a third Power Curve Test. Each
Power Curve Test shall be conducted in accordance with the requirements of this
section and Exhibit T, and shall be conducted by the same engineer as conducted
the first Power Curve Test. Not later than twenty-one (21) days following the
completion of the third Power Curve Test, Owner shall notify Seller in writing
whether the Wind Turbines have passed or failed to pass the Power Curve Test. If
Seller fails to request a second or third Power Curve Test within the applicable
ninety (90) day period, then no later than ten (10) Business Days following the
expiration of the applicable ninety (90) day period, Seller shall pay to Owner
the Power Curve Liquidated Damages in accordance with the provisions of Section
10.8(d) based on the results of the immediately preceding Power Curve Test. If a
second or third Power Curve Test is conducted at Seller’s request, and the Wind
Turbines fail the second Power Curve Test (and Seller does not timely exercise
its right for a third Power Curve Test) or the Wind Turbines fail the third
Power Curve Test, then Seller shall pay to Owner, no later than thirty (30)
Business Days following receipt of notice of such failure, the Power Curve
Liquidated Damages due to Owner in accordance with the provisions of Section
10.8(d) based on the results of the second or third, as applicable, Power Curve
Test. If the nominated Wind Turbine passes the second or third Power Curve Test,
Seller shall perform the same repair to all other Wind Turbines having the same
defect, but no further testing of the Wind Turbines shall be required.
 

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(d) Damages for Failure to Achieve Power Curve Guarantees. If the Turbine
Measured Power Curve (as determined pursuant to Exhibit T) for the Nominated
Turbine with respect to the applicable Power Curve Test is less than [ * *] of
the Turbine Guaranteed Power Curve, Seller shall pay Owner, for each year until
the Wind Turbines pass the Power Curve Test, subject to the limitation set forth
below and as liquidated damages, the sum of [* *] for each percent, pro-rated
for each fraction of a percent (to one one-thousandth of a percent), that the
Turbine Measured Power Curve is less than [* *] of the Power Curve Guarantee;
and, to the extent the Turbine Measured Power Curve (as determined pursuant to
Exhibit T) for the Nominated Turbine with respect to the applicable Power Curve
Test is less than [* *]of the Turbine Guaranteed Power Curve, Seller shall pay
Owner, for each year until the Wind Turbines pass the Power Curve Test, subject
to the limitation set forth below and as liquidated damages, the sum of [* *]
for each percent, pro-rated for each fraction of a percent (to one
one-thousandth of a percent), that the Turbine Measured Power Curve is less than
[* *] of the Power Curve Guarantee (collectively, the “Power Curve Liquidated
Damages”). The Power Curve Liquidated Damages shall be based on the applicable
Power Curve Test referenced in Section 10.8(c). This Section 10.8 (d) and the
repairs contemplated by Section 10.8 (c), represent Owner’s sole and exclusive
remedies for Seller’s failure to achieve the Power Curve Guarantee. Seller’s
aggregate liability hereunder for Power Curve Liquidated Damages shall not
exceed an amount equal to [ * *] of the Contract Price actually paid by Owner to
Seller.
 

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

[* *] This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
 
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10.9 Limitations. The duties, liabilities and obligations of Seller under
Sections 10.1 through 10.8 apply only to failures relating to the applicable
warranties and do not extend to any correction, repair or replacement caused or
necessitated by: (a) the failure of the Wind Turbines to be constructed and
installed by Owner at the Site in accordance with the Wind Turbine
Specifications and the Erection and Installation Manual; (b) the failure of the
Site infrastructure to be installed or constructed in accordance with Prudent
Wind Industry Practices; (c) the failure by Owner to operate and maintain the
Wind Turbines in accordance with the Erection and Installation Manual and the
O&M Procedures Manual; and/or (d) any changes in the Permits and/or Applicable
Laws that occur or take effect after the Effective Date. In connection with
satisfaction of the Warranty or the Availability Warranty, Seller shall be given
an opportunity to make such diagnostic tests and perform such remedial services
as Seller deems appropriate in connection with the satisfaction of any warranty
claim made by Owner hereunder; provided that any such tests and services shall
not permit Seller to delay or avoid its correction obligations under Section
10.3, and the results of any such tests shall be shared with Owner.
 
10.10 WARRANTY DISCLAIMER. OWNER ACKNOWLEDGES AND AGREES THAT SELLER’S
WARRANTIES SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, FOR TITLE, PERFORMANCE,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR OTHERWISE. ON THAT BASIS, THERE ARE NO OTHER WARRANTIES,
AGREEMENTS, ORAL OR WRITTEN, OR UNDERSTANDINGS WHICH EXTEND BEYOND THOSE SET
FORTH IN THIS AGREEMENT WITH RESPECT TO THE MATERIALS, EQUIPMENT AND SERVICES
PROVIDED BY SELLER.
 
10.11  Assignment of Manufacturer Warranties Seller agrees to assign to Owner,
effective as of the expiration of the Warranty Period, any and all beneficial
interest in, to and under any warranties for the Wind Turbine components
received by Seller from the relevant manufacturer, in each case to the extent
still in effect, and to the extent permitted pursuant to the terms of such
warranties.
 

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

[* *] This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
 
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Article 11
Indemnification and Intellectual Property
 
11.1 General Indemnification.
 
(a) Seller shall indemnify Owner and their successors and permitted assigns, and
their officers, directors, members, partners, agents and employees, and shall
defend, save and hold each of them harmless from and against all losses and
claims for bodily injury to or death of any individual or damage to any tangible
property of a third party and against all losses, claims, demands, proceedings,
damages, liabilities, costs, charges and expenses (including, but not limited
to, reasonable attorneys’ fees) whatsoever incurred by or asserted against any
of them arising out of or in consequence of the conduct of Seller or of Seller’s
employees, agents, or Subcontractors on the Site.
 
(b) Owner shall indemnify Seller, its successors and permitted assigns, and
their officers, directors, agents and employees, and shall defend, save and hold
each of them harmless from and against all losses and claims for bodily injury
to or death of any individual or damage to any tangible property of a third
party and against all claims, demands, proceedings, damages, liabilities, costs,
charges and expenses (including reasonable legal fees) whatsoever in respect
thereof or in relation thereto incurred by or asserted against any of them
arising out of or in consequence of the conduct of Owner or of Owner’s
employees, agents or Subcontractors on the Site.
 
11.2 Owner’s Hazardous Substance Indemnity
 
11.3 . Owner shall indemnify, defend and hold harmless Seller, its officers,
directors, employees, agents, Affiliates, and representatives, from and against
any and all claims, demands, suits, liabilities, injuries (personal or bodily),
property damage, causes of action, losses, costs, expenses, damages or
penalties, including court costs and reasonable attorneys’ fees, arising out of,
or resulting from, or occasioned by or in connection with any Hazardous
Substance existing at the Site as of the Effective Date, or introduced to the
Site after the Effective Date by any Person other than Seller, its Affiliates,
or their respective agents and employees.
 
11.4 Seller’s Hazardous Substance Indemnity
 
 
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11.5 . Seller shall indemnify, defend and hold harmless Owner, its officers,
directors, employees, agents, Affiliates, and representatives, from and against
any and all claims, demands, suits, liabilities, injuries (personal or bodily),
property damage, causes of action, losses, costs, expenses, damages or
penalties, including court costs and reasonable attorneys’ fees, arising out of,
or resulting from, or occasioned by or in connection with any Hazardous
Substance introduced to and released at the Site by Seller, its Affiliates or
their respective agents and employees.
 
11.6 Intellectual Property; License.
 
(a) Seller agrees to procure and acquire all necessary patents, copyrights,
trade names, trademarks, trade dress service marks, trade secrets, and
applications for any of the foregoing, software, firmware, mask works,
industrial design rights, rights of priority, know-how, design flows,
methodologies and any and all other intangible proprietary information whose
protection is legally recognized (the “Intellectual Property”) which to Seller’s
knowledge is necessary for it to meet its obligations under this Agreement,
including the obligations to sell and Deliver the Turbine Equipment free of any
adverse claims by any other Person, or which is necessary for Owner to install,
use, operate and maintain the Turbine Equipment. Seller expressly reserves all
other intellectual property rights with respect to the Turbine Equipment and
otherwise.
 
(b) The Intellectual Property and any other drawings, specifications, designs,
plans and other documents prepared by or on behalf of Seller and/or its
Subcontractors in connection with the Turbine Equipment (collectively, the
“Design Materials”) are and shall remain the exclusive property of Seller or the
Subcontractors, as the case may be. Effective upon execution of this Agreement
with respect to Design Materials necessary for installation of the Turbine
Equipment, and upon Commissioning with respect to all other Design Materials,
Seller hereby grants and will cause to be granted and delivered to Owner from
Subcontractors, whichever is appropriate, a paid-up, non-exclusive license for
Owner to use, reproduce and have reproduced such Design Materials, subject to
the restrictions set forth below:
 
(i)  All rights with respect to the Intellectual Property or any of the Design
Materials shall remain the property of Seller or the appropriate subcontractor,
whether or not the Turbine Equipment is installed, and Owner recognizes that
Seller may be entitled to injunctive or other equitable or preliminary relief in
order to protect the integrity or confidentiality of the Design Materials; and
 
(ii)  Owner shall not, without the prior written consent of Seller, use such
Design Materials, in whole or in part, in relation to any project other than the
facilities for Owner on and near the Project Site. Owner may only use that
portion of the Design Materials related solely to the operation, maintenance and
repair of the Turbine Equipment after Commissioning.
 
(iii) Owner shall provide to Seller prompt access to all technical, operational
and maintenance and other information it receives or collects in connection with
the Turbines.
 
 
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11.7 Indemnification Regarding Infringement. Seller warrants and represents that
the Wind Turbines provided to Owner for use at the Site and the Intellectual
Property will not infringe on any patent, trademark, copyright or other
intellectual property right of any other Person. In the event any Person brings
a claim, suit or proceeding against Owner or Owner’s Subcontractors alleging any
such infringement, Seller shall indemnify, defend and hold Owner and Owner’s
Subcontractors harmless against any and all losses, damages, charges, costs and
expenses (including reasonable attorneys’ fees) incurred by Owner or Owner’s
Subcontractors as a result of or arising from any such claim of infringement,
whether rightful or otherwise. In the event any Intellectual Property or Wind
Turbine is held to constitute infringement and/or its use is enjoined, Seller
shall, at its sole expense, either procure for Owner an irrevocable,
royalty-free license to continue using such Intellectual Property or Turbine
Equipment, replace the applicable rights or equipment with substantially equal
but noninfringing rights or equipment, or modify the infringing equipment so as
to make it noninfringing, provided that no such replacement or modification
shall in any way relieve Seller of its obligations under this Agreement. Seller
shall assume on behalf of Owner and control and conduct with due diligence and
in good faith the defense and settlement of any such claim against Owner,
whether or not Seller shall be joined therein, and Owner shall cooperate with
Seller in such defense and settlement. Owner shall notify Seller within a
reasonable period of time of receipt of knowledge of such claim and Owner shall
promptly provide to Seller all information that it has received with respect to
such claim.
 
11.8 Escrow AgreementWithin ninety (90) days following the Effective Date, Owner
and Supplier shall enter into the Escrow Agreement and Supplier shall deliver
all documents required thereunder.
 
Article 12
Representations and Warranties of Owner
 
12.1 Owner Representations and Warranties. Owner represents and warrants to
Seller as follows:
 
(a) Due Organization: Good Standing. Owner is an Idaho limited liability company
duly organized, validly existing and in respect of which no action relating to
insolvency, liquidation or suspension of payments has, to the knowledge of
Owner, been taken.
 
(b) Due Authorization. The execution, delivery and performance of this Agreement
by Owner have been duly authorized by all necessary action on the part of Owner
in accordance with Owner’s charter documents and do not and shall not require
the consent of any trustee or holder of any indebtedness or other obligation of
Owner or any other Party to any other agreement with Owner.
 
 
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(c) Execution and Delivery. This Agreement has been duly executed and delivered
by Owner, and constitutes the legal, valid, binding and enforceable obligations
of Owner.
 
(d) Governmental Approvals. No governmental authorization, approval, order,
license, permit, franchise or consent, and no registration, declaration or
filing with any Governmental Authority is required on the part of Owner in
connection with the execution, delivery and performance of this Agreement which
has not already been obtained or which Owner anticipates shall be timely
obtained in the ordinary course of performance of this Agreement.
 
(e) Site Access. No lease, easement or right of way from any third party is
required on the part of Owner in connection with the execution, delivery and
performance of this Agreement which has not already been obtained or which Owner
anticipates shall be timely obtained in the ordinary course of performance of
this Agreement.
 
12.2 Seller Representations and Warranties. Seller hereby represents and
warrants to Owner as follows:
 
(a) Due Organization Good Standing. Seller is a corporation duly organized and
validly existing under the laws of the State of Nevada and in respect of which
no action relating to insolvency, liquidation or suspension of payments has, to
the knowledge of Seller, been taken.
 
(b) Due Authorization. The execution, delivery and performance of this Agreement
by Seller have been duly authorized by all necessary corporate action on the
part of Seller and do not and shall not require the consent of any trustee or
holder of any indebtedness or other obligation of Seller or any other Party to
any other agreement with Seller.
 
(c) Execution and Delivery. This Agreement has been duly executed and delivered
by Seller, and constitutes the legal, valid, binding and enforceable obligations
of Seller.
 
(d) Governmental Approvals. No governmental authorization, approval, order,
license, permit, franchise or consent, and no registration, declaration or
filing with any Governmental Authority is required on the part of Seller in
connection with the execution, delivery and performance of this Agreement which
has not already been obtained or which Seller anticipates shall be timely
obtained in the ordinary course of performance of this Agreement.
 
(e) Title to Wind Turbines. When the title of the Wind Turbines is transferred
to Owner from Seller under Section 5.5: (a) Owner shall have good and marketable
title to the Wind Turbines free and clear of all claims, liens or other
encumbrances, other than any such liens or other encumbrances arising in
connection with the performance of the Owner’s Work and any security interest
granted in favor of Seller as described in Section 5.5; (b) no instrument or
other document shall be required to be delivered to Owner in order to effect the
sale of the Wind Turbines from Seller to Owner, or if any such instrument or
other document is so required, then Seller shall have delivered such instrument
or other document to Owner; and (c) no component Part or the whole of any Wind
Turbine shall be the subject of any retention of title in favor of any supplier
thereof.
 
 
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Article 13
Excusable Delay; Default; Cure
 
13.1 Excusable Delay. Except as specified in Section 5.2 with respect to the
Delivery Schedule, no delay in performance by any Party hereunder shall
constitute a default under this Agreement if, and to the extent, such delay is
caused by an Excusable Delay. In the event of an Excusable Delay, the Parties
shall negotiate in good faith for equitable adjustments in price and schedule
necessary and appropriate to mitigate as much as possible the effect of such
Excusable Delay.
 
13.2 Notice. 
 
(a) Any Party delaying performance hereunder as a result of an Excusable Delay
shall give written notice to the other Party as soon after becoming aware of the
Force Majeure Event constituting such Excusable Delay as is reasonably possible,
but in all events within five (5) Business Days after the Party delaying
performance becomes aware of such event.
 
(b) Seller shall give written notice to Owner as soon after Seller becomes aware
of any strikes, lockouts or other labor disputes occurring, or threatened or
scheduled to occur, with respect to any of the factories, offices or other
facilities of any of Seller’s or its Affiliates’ suppliers or subvendors.
 
13.3 Default.
 
(a) Event of Default. If during the term of this Agreement, either Party
breaches any of the material covenants or conditions of this Agreement, or if
Composite Technology Corporation breaches any of its material obligations under
the Composite Technology Corporation Guaranty, and as a direct and proximate
result of any such material breach another Party hereunder (the Owner, in the
case of such a breach by Composite Technology Corporation under the Composite
Technology Corporation Guaranty) suffers material harm or damage (except in the
case of an Excusable Delay of such Party), then the other Party shall give
notice to such breaching Party (including the Seller in the case of such a
breach by Composite Technology Corporation under the Composite Technology
Corporation Guaranty) of the material event of default, specifying in detail the
nature thereof, and the amount thereof if it is a default which may be cured by
the payment of money.
 
 
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(b) Bankruptcy Event of Default. It shall be an event of default hereunder with
respect to a Party hereto if such Party (and, in the case of Seller, if
Composite Technology Corporation) becomes insolvent, or generally does not pay
its debts as they become due, or admits in writing its inability to pay its
debts, or makes a general assignment for the benefit of creditors, or if
insolvency, receivership, reorganization or bankruptcy proceedings are commenced
by or against such Party (or, in the case of Seller, against Composite
Technology Corporation).
 
(c) Cure Rights. In the case of an event of default under Section 13.3(a), if,
after the expiration of a grace period of thirty (30) Days after the service of
notice as provided therein, the event of default upon which such notice was
based shall continue to exist (or in the case of an event of default which
cannot with due diligence be remedied within a period of thirty (30) Days, the
breaching Party fails to commence within a period of thirty (30) Days after the
service of such notice to remedy such event of default and to proceed with all
due diligence thereafter to remedy such event of default within a reasonable
period of time), then the breaching Party (including Seller in the case of such
a breach by Composite Technology Corporation under the Composite Technology
Corporation Guaranty) shall be in default under this Agreement, and the
non-breaching Party shall be entitled to the remedies set forth in Section
13.3(d).
 
(d) Remedies. In the case of a bankruptcy event of default pursuant to
Section 13.3(b) or a default after any applicable cure period pursuant to
Section 13.3(c), the non-breaching Party shall be entitled to all remedies in
law or in equity on account of such default, including, without limitation, the
right, in the non-breaching Party’s sole discretion, to either continue its
rights and obligations under this Agreement in full force and effect or, by
written notice to the breaching Party, to terminate its obligations under this
Agreement and all obligations of the non-breaching Party hereunder. In any
event, the non-breaching Party shall continue to be entitled to any and all
remedies under this Agreement or at law or in equity.
 
(e) Financing Party Cure Rights. Seller shall, conditioned upon prior receipt of
the name and address of the Financing Parties for the Project, give such Party
or Parties notice of any default at the same time as providing notice to the
defaulting Party under Section 13.3(a). Following receipt of such notice, the
Financing Parties shall, for the same period provided to the defaulting Party,
have the right (but not the obligation) to cure such default, and if so cured,
this Agreement shall continue in full force and effect.
 
 
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Article 14
Disputes
 
14.1 Dispute Resolution. Any controversy or claim arising out of, or relating
to, this Agreement, or to the making, performance, or interpretation thereof,
shall be tried by a single referee in San Francisco, California, pursuant to the
provisions of Title 8, Chapter 6 of the California Code of Civil Procedure
(commencing with Section 638).
 
14.2 Applicable Law. This Agreement shall be interpreted and governed by the
laws of the State of California and/or the laws of the United States, as
applicable..
 
Article 15
General Provisions
 
15.1 Waiver. Unless expressly provided herein no delay or omission by the
Parties hereto in exercising any right or remedy provided for herein shall
constitute a waiver of such right or remedy nor shall it be construed as a bar
to or waiver of any such right or remedy on any future occasion.
 
15.2 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Parties’ successors and assigns. Seller agrees that
Owner may, at any time, grant Financing Parties a security interest in this
Agreement. Owner may, at any time, assign this Agreement to an Affiliate of
Owner, provided the requirements of Section 5.1 for a lender’s funding
obligation or a letter of credit are satisfied. Except as expressly provided in
this Section 15.2, no Party may assign or transfer this Agreement, in whole or
in part, except upon the prior written consent of the other Party hereto, which
consent shall not be unreasonably withheld. It shall be deemed reasonable for
Owner to withhold consent to an assignment by Seller absent any agreement by
Composite Technology Corporation to guarantee performance by Seller’s assignee
or the provision by the assignee of a replacement guaranty in form and substance
and from an entity reasonably acceptable to Owner and the Financing Parties. In
connection with any permitted full or partial assignment under this Section
15.2, the Parties agree to execute one or more consents to assignment with terms
and conditions as may be reasonably requested by such assignee; provided that no
Party shall be under an obligation to amend or modify this Agreement as a
condition to such assignment; and provided further that each such assignee of
this Agreement shall expressly acknowledge the rights and remedies of the
Financing Parties hereunder (to the extent applicable) and shall assume any of
the assigning Party’s obligations related thereto. In the event Financing
Parties, whether pursuant to a security interest or otherwise, succeed to the
rights and obligations of Owner hereunder, Seller shall recognize such Financing
Parties as a Party to this Agreement.
 
15.3 Notices. Any notice required or authorized to be given hereunder or any
other communications between the Parties provided for under the terms of this
Agreement shall be in writing (unless otherwise provided) and shall be served
personally or by reputable express courier service or by facsimile addressed to
the relevant Party at the address stated below herein or at any other address
notified by that Party to the other as its address for service. Any notice so
given personally shall be deemed to have been served on delivery, any notice so
given by express courier service shall be deemed to have been served two (2)
Business Days after the same shall have been delivered to the relevant courier,
and any notice so given by facsimile shall be deemed to have been served on
dispatch. As proof of such service it shall be sufficient to produce a receipt
showing personal service, the receipt of a reputable courier company showing the
correct address of the addressee or an activity report of the sender’s facsimile
machine showing the correct facsimile number of the Party on whom notice is
served and the correct number of pages transmitted. The Parties’ addresses for
service are:
 
 
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To Owner:
XRG Development Partners, LLC

   
c/o Exergy Development Group of Idaho, LLC

   
802 W Bannock Street, Suite 1200

   
Boise, ID 83702

   
Attn: James T. Carkulis

   
Facsimile: (208) 336-9431

    Telephone: (208) 336-9793

   
Email: jcarkulis@xrgdevelopment.com

 
To Seller:
DEWIND, Inc.

     

   
2026 McGraw Avenue

   
Irvine, CA 92614

   
Attn: Andrew Lockhart

    Facsimile: (949) 660-1533

    Telephone: (949) 428-8500

   
Email: alockhart@compositetechcorp.com

15.4 Amendments. This Agreement may be modified or amended only by an instrument
in writing signed by all Parties hereto.
 
15.5 Attachments Incorporated. The exhibits and appendices attached hereto are
hereby incorporated and made a part of this Agreement.
 
15.6 Entire Agreement. The terms and conditions set forth herein, together with
those set forth on all exhibits and appendices attached hereto, constitute the
complete statement of the agreement between Owner and Seller relating to the
subject matter hereof and thereof. No prior statement, correspondence or parole
evidence shall modify or affect the terms and conditions hereof or thereof nor
shall such prior statements, correspondence or parole evidence be introduced or
considered in any judicial or arbitral proceeding. Prior representations,
promises, warranties or statements by any agent or employee of Seller or Owner
that differ in any way from the terms and conditions hereof or thereof shall be
given no effect.
 
 
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15.7 No Merger. All covenants, representations and warranties of the Parties
hereto provided in this Agreement shall survive, and shall not merge into the
conveyances, assigns, deeds or any other documents or transactions.
 
15.8 Attorneys’ Fees. In any proceeding to enforce the provisions of this
Agreement, the prevailing Party in such proceeding shall be entitled to recover
reasonable legal fees, costs and expenses (including at trial and appellate
levels and in bankruptcy proceedings) from the losing Party.
 
15.9 Site Regulations. All pertinent regulations and rules which may be in
effect at the Site regarding passes, badges, safety and proper conduct on the
property shall be observed by Seller and its agents and employees.
 
15.10 Confidentiality.
 
(a) Seller hereby undertakes to keep confidential, except as may be explicitly
approved by Owner, or as may be necessary for the proper discharge by Seller of
its duties under this Agreement, or as may be necessary to be disclosed to
taxing authorities and accountants preparing Seller’s tax reports and filings or
as may be necessary to respond to legal process, all details of Owner’s
business, the location and identification of the Project and the Site or any
potential Site, the progress of any construction activities, and the business of
any member of Owner.
 
(b) Owner hereby undertakes to keep confidential, except as may be explicitly
approved by Seller, or as may be necessary for the proper discharge by Owner of
its duties under this Agreement, or as may be necessary to be disclosed to
taxing authorities and accountants preparing Owner’s tax reports and filings or
as may be necessary to respond to legal process, or as previously disclosed to
the public, this Agreement and all documentation and data, including but not
limited to all Intellectual Property and Design Data.
 
(c) Notwithstanding the provisions of subsections (a) and (b) above, Seller and
Owner shall be entitled to the extent necessary for the performance of its
respective duties hereunder to allow access to details relating to the business
of the other Party exclusively to such of its employees and consultants who are
directly concerned with the carrying out of its duties under this Agreement
provided that each Party shall inform each of such persons of the confidential
nature of such information and of that Party’s obligations of confidentiality in
respect thereof and such Party shall be responsible for any breach of such
obligations by any of its employees or consultants.
 
 
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(d) All public announcements in relation to the subject matter of this Agreement
shall be subject to the prior notification to the other Party by the Party
desiring to make such announcement and such other Party shall have three (3)
Business Days to comment on and/or approve such announcement (such approval not
to be unreasonably withheld); provided that such approval shall be deemed given
if such approval, comment or other response is not received by the announcing
Party within such three (3) Business Day period. The Parties consent in advance
to the reference to the Project and/or the use of the Seller’s Wind Turbines in
such Project in each Party’s publicly distributed materials.
 
15.11 Wind Speed Projections. Seller shall have no responsibility or liability
for any purposes hereunder for the collection or evaluation of the wind data
collected prior to the Effective Date, or for the accuracy of the wind speed
projections and financial projections.
 
15.12 Documentation and Correspondence. All documentation and correspondence to
be delivered between the Parties pursuant to this Agreement shall be in the
English language.
 
15.13 Counterparts. This Agreement may be executed by the Parties in one or more
counterparts, all of which taken together, shall constitute one and the same
instrument. Facsimile signatures shall have the same effect as original
signatures. A Party delivering facsimile counterpart signature pages shall
promptly thereafter deliver original counterpart signature pages.
 
15.14 Limitation of Liability and Exclusions. Except as otherwise provided in
this Agreement the following limitations of liability apply: no Party shall be
liable for any indirect, special, incidental or consequential damages, including
without limitation, loss of profit, loss of revenue, loss of use, loss of power,
cost of replacement power, or cost of capital, or for punitive damages, arising
out of or in relation to the performance of this Agreement whether or not such
liability is claimed in contract, equity, tort or otherwise. The foregoing
limitation shall not: (x) preclude recovery, where applicable, of liquidated
amounts or refunds hereunder; (y) limit recovery under any indemnity in Article
11, or (z) limit Owner’s recovery of actual damages under Sections 5.3 (e) and
(f). Seller’s entire liability to Owner under this Agreement (including, without
limitation, liability for breach of contract, breach of warranty, negligence or
any other legal or equitable theory) shall in no event exceed the Contract Price
for whatever and all reasons whatsoever. Notwithstanding the foregoing, in the
case of liquidated damages payable under this Agreement pursuant to Sections
5.3, 10.6 or 10.8, the aggregate liability of Seller for all such damages shall
not exceed [ * *] of the Contract Price, as adjusted pursuant to this Agreement.
Owner hereby expressly waives and releases Seller from any and all losses,
damages or remedies in excess of such amounts.
 
 
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15.15 Cooperation With Financing Parties. Seller shall, at the Financing Parties
request: (a) enter into and deliver to Owner a customary consent agreement and
related documentation; and (b) procure the legal opinion of its counsel, each in
a form and substance reasonably acceptable to the Financing Parties.
 

 

 
[SIGNATURE PAGE FOLLOWS]
 
 

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[* *] This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.

 
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the duly
authorized representatives of Owner and Seller as of the date of the first
written above.
 
 
XRG DEVELOPMENT PARTNERS, LLC
an Idaho limited liability company
 
DEWIND, INC.,
a Nevada corporation
                            By:   /s/    By:   /s/  Name:  

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

James T. Carkulis   Name:  

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

Michael Porter Title:   Manager   Title:   President

 
 
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APPENDIX I TO TURBINE SUPPLY AGREEMENT

 
DEFINITIONS
 
“Affiliate” means any Person who (whether through one or more intermediaries)
directly or indirectly controls, is controlled by, or is under common control
with, any other Person.
 
“Agreement” means this Turbine Supply Agreement.
 
“Applicable Laws” means all laws, treaties, ordinances, codes, judgments,
decrees, directives, guidelines, policies, injunctions, writs, orders, rules,
regulations, interpretations, Permits and all similar forms of decisions of any
Governmental Authority having jurisdiction over the Wind Turbines, the Site, or
affecting the performance of the obligations of the Parties hereunder.
 
“Availability” shall have the meaning ascribed to such term in Exhibit R.
 
“Availability Liquidated Damages” shall have the meaning ascribed to such term
in Section 10.6.
 
“Business Day” means every Day other than a Saturday, Sunday or a Day on which
the Federal Reserve Bank of New York is closed for a scheduled holiday.
 
“Certificate of Design Approval” means a DEWI-OCC certificate based on
Germanischer Lloyd’s 2004 standards (GL Wind Guideline for the Certification of
Wind Turbines - Edition 2003 with Supplement 2004)) and on IEC 61400-1 Third
Edition 2005 for Class IIa conditions.
 
“Change Order” shall have the meaning ascribed to such term in Section 4.3(a).
 
“Commissioned” and “Commissioning” means, with respect to each WTG:
(i) Mechanical Completion for such WTG has occurred; and (ii) Owner or Owner’s
representative has countersigned the Commissioning Certificate for such WTG.
 
“Commissioning Certificate” has the meaning ascribed to such term in
Section 9.1.
 
“Commissioning Procedures” means the Commissioning Procedures set forth in
Exhibit D.
 
“Contract Price” has the meaning ascribed to such term in Section 4.1.
 
 
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“Consumer Price Index” means…
 
“Day” or “Days” means a calendar day or days.
 
“Defective Work” has the meaning ascribed to such term in Section 10.1.
 
“Delivery Date” means the date for delivery of the Wind Turbines to the
Designated Delivery Locations as set forth in the Delivery Schedule.
 
“Delivery Schedule” means the detailed Wind Turbine delivery shipment schedule
to be set forth in Exhibit E.
 
“Design Materials” has the meaning ascribed to such term in Section 11.2(b).
 
“Designated Delivery Location” has the meaning ascribed to such term in Section
3.1.
 
“DEWI” means Deutsches Windenergie-Institute.
 
“DEWI-OCC” means DEWI Offshore Certification Center.
 
“Effective Date” has the meaning ascribed to it in the preamble of this
Agreement.
 
“Erection and Installation Manuals” means the Seller’s erection and installation
manuals attached as Exhibit F.
 
“Composite Technology Corporation Guaranty” has the meaning set forth in the
recitals.
 
“Excusable Delay” means a delay in performance resulting from a Force Majeure
Event, provided that:
 
(i) the affected Party gives the other Party written notice describing the Force
Majeure Event promptly after the affected Party becomes aware of such
occurrence, the affected Party shall give the other Party as soon as reasonably
possible after the Force Majeure Event written notice estimating the Force
Majeure Event’s expected duration and probable impact on the performance of such
Party’s obligations under this Agreement, and such affected Party shall
periodically furnish timely reports of any material developments with respect
thereto during the continuation of the Force Majeure Event;
 
(ii) the suspension of performance shall be of no greater scope and of no longer
duration than is reasonably required by the Force Majeure Event;
 
 
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(iii) no liability of either Party which arose before the occurrence of the
Force Majeure Event shall be excused as a result of the occurrence;
 
(iv) the affected Party shall exercise all reasonable efforts to mitigate or
limit damages to the other Party;
 
(v) the affected Party shall use all reasonable efforts to continue to perform
its obligations under this Agreement and to correct or cure the event or
condition excusing performance; and
 
(vi) when the affected Party is able to resume performance of the affected
obligations under this Agreement, that Party shall give the other Party written
notice to that effect, and the affected Party promptly shall resume performance
under this Agreement.
 
“Final Completion” has the meaning set forth in Section 9.3.
 
“Final Completion Certificate” has the meaning set forth in Section 9.3(e).
 
“Final Completion Date” means the date on which Final Completion is achieved.
 
“Financing Parties” means any parties providing interim or permanent financing
for the Project or for its development or construction, and any trustee or agent
acting on behalf of any of them.
 
“Force Majeure Event” means any event that wholly or partly prevents or delays
the performance of any obligation arising under this Agreement, but only if and
to the extent: (i) such event is not within the reasonable control, directly or
indirectly, of the Party affected; (ii) such event cannot be or be caused to be
prevented, avoided or removed by such Party by the exercise of reasonable care;
and (iii) such event is not the direct or indirect result of a Party’s fault,
negligence or the failure of such Party to perform any of its obligations under
this Agreement; and shall also include, without limitation: acts of war,
sabotage, terrorism, rebellion, insurrection, acts of foreign enemies, military
or usurped power or martial law, expropriation or confiscation of facilities or
property by order of any Governmental Authority, fires, floods, hail,
explosions, winds over twenty-five (25) meters per second, lightning,
lightning-induced surges, unexpected high and low voltage, transmission outages
or sudden or disruptive electrical events or disturbances on the Grid or delays
in the Project’s interconnection to the Grid, extraordinary airborne debris,
surface water, waves, tidal water or tidal wave, overflow of streams or other
bodies of water, water below the surface of the ground, earth movement
including, but not limited to, earthquake, landslide, mud flow, earth sinking,
earth rising or shifting, and other acts of God, strikes, crashing vehicles or
aircraft, unavoidable casualties, vandalism, malicious mischief, theft and
attempted theft, but expressly excluding, as to Seller or any of its affiliates,
any failure of performance of any contractual provision by Seller (except to the
extent caused by a Force Majeure Event), unavailability, late delivery or
breakage of equipment or materials (except to the extent caused by a Force
Majeure Event) and economic hardship.
 
 
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“Germanischer Lloyd” means Germanischer Lloyd AG, with headquarters in Hamburg,
Germany (or if Germanischer Lloyd AG ceases to exist or to perform design
assessments and certifications for wind turbine generators, another reputable
wind turbine generator certification agency or entity mutually, reasonably
approved by Owner and Seller).
 
“Governmental Authority” means any federal, state, local or other governmental,
judicial, public or statutory instrumentality, tribunal, agency, authority, body
or entity, or any political subdivision thereof, having legal jurisdiction over
the matter or person in question.
 
“Guaranteed Availability” shall have the meaning set forth in Section 10.6.
 
“Guarantor” means Composite Technology Corporation.
 
“Intellectual Property” shall have the meaning set forth in Section 11.2(a).
 
“MTPA” shall have the meaning set forth in Recital E.
 
“Mechanical Completion” means with respect to an individual WTG, that a
Mechanical Completion Certificate has been issued in respect of such WTG by the
Owner and confirmed by Seller without any outstanding work indicated pursuant to
Section 6.3(c).
 
“Mechanical Completion Certificate” means the certificate to be issued by Owner
pursuant to Section 6.3(b).
 
“Noise Warranty” shall have the meaning ascribed to such term in Section 10.7.
 
“Notice to Proceed” has the meaning ascribed to such term in Section 5.1.
 
“O&M Procedures Manual” means the O&M procedures manual prepared by Owner as
well as all operating manuals supplied by all vendors or manufacturers for all
material Parts, components and systems of the Project.
 
“Owner” means Big Blue Windfarm, LLC, an Idaho limited liability company.
 
“Owner Caused Delay” means an event that wholly or partly prevents or delays
Seller’s performance of any obligation arising under this Agreement due to any
suspension for convenience by Owner, or due to the delay or default of any Owner
obligation hereunder, whether by Owner or by any of Owner’s Subcontractors.
 
 
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“Owner’s Representative” has the meaning ascribed to such term in Section 8.5.
 
“Owner’s Work” means the design, supply, and construction of all improvements to
and components of the Project other than Seller’s Work.
 
“Parts” means all appliances, parts, instruments, appurtenances, accessories,
furnishings, materials and other equipment described in Exhibit A-1.
 
“Party” or “Parties” refer to the entities identified as such in the preamble to
the agreement in which the term is used.
 
“Permits” means a waiver, exemption, variance, certificate, franchise, permit,
authorization, license or similar order of or from, or filing or registration
with, or notice to, any Governmental Authority having jurisdiction over the
Project, the Site, or the operations related thereto.
 
“Person” means any individual, corporation, association, partnership, limited
liability company, joint stock company, trust, unincorporated organization,
joint venture, government or political subdivision or agency thereof.
 
“Power Curve Guarantee” shall have the meaning set forth in Section 10.8.
 
“Power Curve Liquidated Damages” shall have the meaning set forth in Section
10.8(d).
 
“Power Curve Test” means the test conducted in accordance with Section 10.8 to
determine the output performance of the Wind Turbines.
 
“Project” means the integrated 36 megawatt wind-powered electricity generating
plant to be located on the Site, consisting of all structures, facilities,
appliances, lines, conductors, instruments, equipment, apparatus, components,
roads and other property comprising and integrating the entire facility
described in the Wind Turbine Specifications and all other equipment, labor,
services and materials to be furnished under this Agreement and the
balance-of-plant agreement for the Project
 
“Project Mechanical Completion” means that Mechanical Completion has been
achieved with respect to all of the WTGs included in the Project.
 
“Project Mechanical Completion Certificate” has the meaning ascribed to such
term in Section 6.3(d).
 
“Prudent Wind Industry Practices” means those practices, methods, standards and
acts that are generally accepted in the wind power industry in the United States
that at a particular time in the exercise of reasonable judgment in light of the
facts known at the time a decision was made, would have been expected to
accomplish the desired result in a manner consistent with Applicable Laws and
the Wind Turbine Specifications.
 
 
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“Reliability Test” means the 100-hour test to be performed on the Wind Turbines,
in accordance with Exhibit U. 
 
“Seller” means DeWind, Inc., a Nevada corporation, in its capacity as Seller
under this Agreement.
 
“Seller’s Documents” has the meaning ascribed to such term in Section 6.1(d).
 
“Seller’s Representative” has the meaning ascribed to such term in Section 8.6.
 
“Seller’s Work” means the design, manufacture, delivery, technical assistance,
and Commissioning of the Wind Turbines pursuant to this Agreement.
 
“Service Agreement” has the meaning ascribed to such term in Section 10.2 of
this Agreement.
 
“Site” has the meaning ascribed to such term in Exhibit B to this Agreement.
 
“Subcontractor” means any Person which performs work for, or provides materials
or equipment to, Seller or Owner, as the case may be, in connection with the
such Party’s respective work to be performed under this Agreement.
 
“Taxes” means any and all forms of taxation, charges, duties, imposts, levies
and rates whenever imposed by the United States, any U.S. State, or any other
governmental entity, including without limitation, income tax, withholding
taxes, corporation tax, capital gains tax, capital transfer tax, inheritance
tax, rates, water rates, value added tax, customs duties, capital duty, excise
duties, betterment levy, community charges, development land tax, stamp duty,
stamp duty reserve tax, national insurance, social security or other similar
contributions, and generally any tax, duty, impost, levy or rate or other amount
and any interest, penalty or fine in connection therewith.
 
“TECO” means TECO Westinghouse, a subcontractor to Seller.
 
“Tower” means each steel tubular tower with a hub height of approximately eighty
(80) meters on which a Wind Turbine shall be mounted, including all ladders,
platforms, internal lighting, safety equipment and all parts and assemblies
necessary for a complete turbine tower, all as further described in Exhibit A.
 
 
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“Turbine Measured Power Curve” means the tested power curve of the Nominated
Turbine, as measured during the Power Curve Test.
 
“Turbine Nacelle” means the turbine nacelle component of a Wind Turbine
Generator, including gearbox, generator and nacelle yaw controls, and associated
control and ancillary equipment.
 
“Unit Price” has the meaning ascribed to such term in Section 4.1.
 
“Warranty” has the meaning ascribed to such term in Section 10.1.
 
“Warranty Period” has the meaning ascribed to such term in Section 10.2.
 
“Warranty Service” has the meaning ascribed to such term in Section 10.3(a).
 
“Wind Turbine”, “Wind Turbine Generator” or “WTG” has the meaning ascribed to
such term in Recital A.
 
“Wind Turbine Delivery Delay” has the meaning ascribed to such term in
Section 5.3(a).
 
“Wind Turbine Specifications” or “WTG Specifications” mean the technical design
and manufacturing specifications for the Wind Turbines upon which the
Certificate of Design Approval is based, summarized in Exhibit A.
 
“WTG Delay Day” has the meaning ascribed to such term in Section 5.3(b).
 
 
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