--------------------------------------------------------------------------------
Notice of Grant of Stock Options |   Composite Technology Corporation
and Option Agreement             |   2026 McGaw Avenue, Irvine, CA 92614
---------------------------------|

Name: D. Dean McCormick III          Option Number:  325,000
Address: 9891 Irvine Center Drive,   Optionee ID: must be provided within 3 days
Suite 100,
Irvine 92618
--------------------------------------------------------------------------------

Effective  Monday,  January 9, 2006 (the "Grant Date"),  you have been granted a
Non-Qualified  Stock Option to purchase  325,000 shares of Composite  Technology
Corporation,  a  Nevada  corporation  (the  "Corporation"),  Common  Stock at an
exercise price of $1.04 per share ("Exercise  Price"),  exercisable upon vesting
as set forth below (the "Option"):

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Portion            Number of Months        % of Option       Accumulated % of
Vesting        since vesting start date   Grant Vesting    Option Grant vesting    Number of shares
---------------------------------------------------------------------------------------------------
<S>            <C>                        <C>              <C>                     <C>
1st Portion                           3             8.3%                    8.3%             27,000
2nd Portion                           6             8.3%                   16.6%             27,000
3rd Portion                           9             8.3%                   24.9%             27,000
4th Portion                          12             8.3%                   33.2%             27,000
5th Portion                          15             8.3%                   41.5%             27,000
6th Portion                          18             8.3%                   49.8%             27,000
7th Portion                          21             8.3%                   58.1%             27,000
8th Portion                          24             8.3%                   66.4%             27,000
9th Portion                          27             8.3%                   74.7%             27,000
10th Portion                         30             8.3%                     83%             27,000
11th Portion                         33             8.3%                   91.3%             27,000
12th Portion                         36             8.7%                    100%             28,000
XXXXXXX                              XX             XXX                     XXX            XXXXXXXX
</TABLE>


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The Option  Shares shall vest and become  exercisable  as set forth  above.  The
exercising  and  vesting of the Option  Shares are  subject to the  acceleration
provisions set forth in the  Corporation's  Stock Option  Agreement  referred to
below.  By your signature and the  Corporation's  signature  below,  you and the
Corporation  agree that this option is granted  under and  governed by the terms
and  conditions of the 2002  Non-Qualified  Stock  Compensation  Plan (the "2002
Plan") and Stock Option  Agreement,  all of which are attached hereto and made a
part of this document. If the spousal consent below is not signed, you represent
and warrant that you are not married.
--------------------------------------------------------------------------------
For:  Composite Technology Corporation,              By:   D. Dean McCormick III
      a Nevada corporation


By:   /s/Benton H Wilcoxon                              /s/D. Dean McCormick III
      Benton H Wilcoxon,
      Chief Executive Officer

Date: January 9, 2006                                Date: January 9, 2006

By his or her signature below, the spouse of the Optionee  acknowledges  that he
or she has read the  Agreement  and is  familiar  with the terms and  provisions
thereof,  and  agrees  to be  bound  by all the  terms  and  conditions  of said
Agreement.


_________________________________          _____________________________
Spouse:__________________________          Date


Composite Technology Corporation 2002 Plan Option Agreement Version: 2006/1

<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION

                             STOCK OPTION AGREEMENT

                                R E C I T A L S :
                                -----------------


      WHEREAS  the  Optionee  has  or is to  render  valuable  services  to  the
Corporation (or a Parent or Subsidiary), and the Corporation wishes to grant the
Optionee a stock option pursuant to this Agreement; and

      WHEREAS all  capitalized  terms in this  Agreement  shall have the meaning
assigned to them in the attached Appendix.

      NOW, THEREFORE, it is hereby agreed as follows:

      1. Grant of Option. The Corporation  hereby grants to Optionee,  as of the
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant  Notice.  The Option  Shares  shall be  purchasable  from time to time
during the option term specified in Section 2 hereof at the Exercise Price.

      2. Option  Term.  This Option  shall  terminate  on December 31, 2011 (the
"Expiration  Date") and shall accordingly expire at the close of business on the
Expiration  Date,  unless sooner  terminated in accordance  with Sections 6 or 7
hereof.

      3. Dates of Exercise.  This Option shall become exercisable for the Option
Shares in one or more  installments  as  specified in the Grant  Notice.  As the
Option becomes  exercisable  for such  installments,  those  installments  shall
accumulate  and  the  Option  shall  remain   exercisable  for  the  accumulated
installments  until the Expiration Date subject to the provisions of termination
and accelerated  vesting or sooner termination of the option term under Sections
6 or 7 hereof.

      4. Manner of Exercising Option.

            (a) In order to exercise this Option with respect to all or any part
of the Option Shares for which this Option is at the time exercisable,  Optionee
(or any other person or persons  exercising  the Option) must take the following
actions:

                  (i) Execute and deliver to the Chief Executive  Officer of the
Corporation the Option Exercise Form.

                  (ii) Pay the  aggregate  of the  number of  options  exercised
multiplied by the Exercise Price for the purchased  shares in one or more of the
following  forms: (A) cash or (B) cashiers' check, (C) certified check, (D) bank
draft, (E) money order or (F) wire transfer.

                  (iii) Furnish to the Corporation appropriate documentation (A)
confirming  the identity of the person or persons  exercising the Option and (B)
confirming  that the  person or  persons  exercising  the  Option (if other than
Optionee)  have the right to  exercise  this  Option and (C)  establishing  such
person or persons residency and/or tax status under US applicable laws.

                  (iv) Make  appropriate  arrangements  with the Corporation (or
Parent or Subsidiary  employing or retaining  Optionee) for the  satisfaction of
all Federal, state and local income and employment tax withholding  requirements
applicable to the option  exercise.  In this respect,  however,  the Corporation
shall have the right at its sole  discretion  before the  delivery of any Option
Shares  pursuant  to an  exercise,  the  Company  shall be entitled to deduct or
withhold,  or require an Optionee to remit to the Company,  an amount sufficient
to satisfy any  federal,  state and local taxes  required to be paid or withheld
with respect to such exercise


                                       -1-
<PAGE>

            (b) As soon as practical  after the Exercise Date,  the  Corporation
shall  issue to or on  behalf  of  Optionee  (or any  other  person  or  persons
exercising this Option) a certificate for the purchased Option Shares,  with the
appropriate  legends  (if any)  affixed  thereto.  To the extent any such Option
Shares are unvested,  the certificates for those Option Shares shall be endorsed
with an appropriate  legend evidencing the  Corporation's  repurchase rights and
may be held in escrow with the Corporation until such shares vest.

            (c) In no event may this  Option  be  exercised  for any  fractional
shares.

      5. Limited Transferability.  This Option shall be neither transferable nor
assignable  by  Optionee  other  than  by will or by the  laws  of  descent  and
distribution following Optionee's death and may be exercised,  during Optionee's
lifetime, only by Optionee.

            6. Cessation of Service.

            (a) In the event that the Optionee shall (i) voluntarily resign from
his  position  or,  (ii) in the  case of an  Optionee  who is a  Director,  such
Optionee  shall  either  refuse to stand for  reelection  when  requested by the
Chairman or the Board of  Directors  at any time within a 3 year period from the
date of the Grant Notice or shall not be reelected at the Shareholders'  Meeting
at which such elections are annually scheduled to occur, then any portion of the
Option that has not yet vested in  accordance  with the Grant Notice shall cease
to be  outstanding  and shall  immediately  be  cancelled  as of the date of the
termination Service,  provided however,  that any portion of the Option that has
vested  shall  remain   exercisable  until  the  Expiration  Date.  For  greater
certainty, it is understood,  that in the event of the occurrence of an event of
cessation  of Service  provided  by this  Section  6(a),  this Option may not be
exercised in the  aggregate for more than the number of vested Option Shares for
which the Option is exercisable at the time of Optionee's cessation of Service.

            (b) In the event that the  Optionee  shall (i) be  removed  from his
position as a Director of the Company for any reason other than  Misconduct,  or
(ii)_not  be asked to stand for  reelection  at any time  within a 3 year period
from the date of the Grant  Notice,  then any portion of the Option that has not
yet vested in accordance with the Grant Notice shall  immediately and fully vest
such that the  entire  Option  to  acquire  all of the  Option  shares  shall be
immediately  exercisable  and  remain  exercisable  until the  Expiration  Date,
provided however,  that the Optionee shall have completed a term of Service with
the Company of more than 6 full calendar months.

            (c) Should  Optionee's  Service be terminated for  Misconduct,  then
this Option shall terminate immediately and cease to remain outstanding.

      7. Special Acceleration of Option.

            (a) In the event of a Change in  Control,  any portion of the Option
to acquire  the Option  Shares that has not yet vested at the time of the Change
in Control shall automatically accelerate so that such Option shall, immediately
prior to the effective date of the Change in Control, become exercisable for all
the  shares  of  Common  Stock at the time  subject  to such  Option  and may be
exercised  for any or all of those shares as fully vested shares of Common Stock
and remain  exercisable until the Expiration Date, unless and to the extent: (i)
this  Option  is, in  connection  with the  Change in  Control,  assumed  by the
successor  corporation (or parent thereof) or otherwise  continued in full force
and effect pursuant to the terms of the Change in Control  transaction;  or (ii)
this  Option  is  replaced  with  a cash  incentive  program  of  the  successor
corporation  which  preserves  the spread  existing at the time of the Change in
Control  on the  shares of Common  Stock for  which the  Option is  granted  and
provides for subsequent  payout of such cash amount within 3 month from the date
of the Change in Control.


                                       -2-
<PAGE>

            (b) If this Option is assumed in connection with a Change in Control
(or  otherwise  continued in full force and  effect),  then this Option shall be
appropriately  adjusted,  immediately after such Change in Control,  to apply to
the number  and class of  securities  or other  property  which  would have been
issuable to Optionee  in  consummation  of such Change in Control had the Option
been  exercised  immediately  prior to such Change in Control,  and  appropriate
adjustments  shall also be made to the Exercise  Price,  provided the  aggregate
Exercise  Price shall remain the same.  To the extent the actual  holders of the
Corporation's  outstanding  Common Stock  receive cash  consideration  for their
Common Stock in consummation of the Change in Control transaction, the successor
corporation  may, in connection  with the assumption of this Option,  substitute
one or more shares of its own common stock with a fair market  value  equivalent
to the cash  consideration  paid per  share of  Common  Stock in such  Change in
Control transaction.

            (c) This Option may also be subject to  acceleration  in  accordance
with the terms of any special Addendum attached to this Agreement.

            (d) This  Agreement  shall  not in any way  affect  the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business  structure  or to merge,  consolidate,  dissolve,  liquidate or sell or
transfer all or any part of its business or assets.

      8.  Adjustment in Option  Shares.  Should any change be made to the Common
Stock  by  reason  of  any  stock  split,   stock  dividend,   recapitalization,
combination  of  shares,  exchange  of  shares  or other  change  affecting  the
outstanding  Common  Stock  as a class  without  the  Corporation's  receipt  of
consideration,  appropriate  adjustments  shall be made to: (i) the total number
and/or class of securities  subject to this Option;  and (ii) the Exercise Price
in order to reflect such change and thereby  preclude a dilution or  enlargement
of benefits hereunder.

      9.  Stockholder  Rights.  The  holder  of this  Option  shall not have any
stockholder  rights with  respect to the Option  Shares  until such person shall
have exercised the Option, paid the Exercise Price and become a holder of record
of the purchased shares.

      10. Compliance with Laws and Regulations.

            (a) The  exercise  of this  Option  and the  issuance  of the Option
Shares upon such exercise shall be subject to compliance by the  Corporation and
Optionee with all applicable  requirements of law relating  thereto and with all
applicable  regulations  of  any  Stock  Exchange  (or a  NASDAQ  market  or the
Over-the-Counter Bulletin Board, as applicable) on which the Common Stock may be
listed for trading at the time of such exercise and issuance.

            (b) The  inability of the  Corporation  to obtain  approval from any
regulatory  body having  authority  deemed by the Corporation to be necessary to
the lawful  issuance and sale of any Common Stock  pursuant to this Option shall
relieve the  Corporation  of any liability with respect to the  non-issuance  or
sale of the Common Stock as to which such approval shall not have been obtained.
The  Corporation,  however,  shall  use its  best  efforts  to  obtain  all such
approvals.

      11.  Successors and Assigns.  Except to the extent  otherwise  provided in
Sections 5 and 6 hereof,  the  provisions of this  Agreement  shall inure to the
benefit of, and be binding upon, the  Corporation and its successors and assigns
and  Optionee,  Optionee's  assigns  and the  legal  representatives,  heirs and
legatees of Optionee's estate.

      12.  Notices.  Any  notice  required  to be  given  or  delivered  to  the
Corporation  under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee  shall be in writing and addressed to Optionee at
the address  indicated below  Optionee's  name on the Grant Notice.  All notices
shall be deemed  effective  upon  personal  delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.


                                       -3-
<PAGE>

      13. Construction.  All decisions of the Board with respect to any question
or issue arising  under this  Agreement  shall be conclusive  and binding on all
persons  having an  interest in this  Option.  Nothing in this  Agreement  shall
confer upon Optionee any right to continue in Service for any period of specific
duration or interfere  with or  otherwise  restrict in any way the rights of the
Corporation (or any Parent or Subsidiary  employing or retaining Optionee) or of
Optionee,  which  rights are hereby  expressly  reserved by each,  to  terminate
Optionee's service at any time for any reason, with or without cause.

      14. Governing Law. The interpretation, performance and enforcement of this
Agreement  shall be  governed  by the laws of the  State of  California  without
resort to that State's conflict-of-laws rules.


                                       -4-
<PAGE>

                                   APPENDIX
                                   --------


      The following definitions shall be in effect under the Agreement:

      A. Agreement shall mean this Stock Option Agreement.

      B. Board shall mean the Corporation's Board of Directors.

      C. Change in Control  shall mean a change in  ownership  or control of the
Corporation effected through any of the following transactions:

            (i) a  merger,  consolidation  or  reorganization  approved  by  the
      Corporation's stockholders, unless securities representing more than fifty
      percent  (50%)  of the  total  combined  voting  power  of  the  successor
      corporation are immediately  thereafter  beneficially  owned,  directly or
      indirectly and in substantially  the same  proportion,  by the persons who
      beneficially   owned  the  Corporation's   outstanding  voting  securities
      immediately prior to such transaction,

            (ii) the  acquisition,  directly  or  indirectly,  by any  person or
      related  group of persons  (other  than the  Corporation  or a person that
      directly or  indirectly  controls,  is  controlled  by, or is under common
      control with, the Corporation) of beneficial ownership (within the meaning
      of  Rule  13d-3  of the  1934  Act) of  securities  possessing  more  than
      forty-five  percent  (45%)  of the  total  combined  voting  power  of the
      Corporation's outstanding securities,

            (iii) in the event that either (a) Benton H Wilcoxon  shall cease to
      be a member of the Board of  Directors of the  Corporation  for any reason
      except if he shall 1) freely  resign,  2) be incapable of  fulfilling  his
      role as a director for any reason and such reason is anticipated to extend
      for a  period  of more  than 90 days  or 3) be  legitimately  removed  for
      grossly  negligent  or  willful  misconduct,  or  (b) a  majority  of  the
      Directors  shall be replaced for any reason or a new majority of directors
      shall be  created by new  appointments  that  create a  majority  of newly
      appointed  Directors  and  such new  majority  is not  appointed  with the
      consent of the majority of the existing Directors

            (iv) any transfer or other  disposition of all or substantially  all
      of the Corporation's assets, or

            (v) a change in the control of the  Corporation  occurs as such term
      is defined in Rule 405 under the 1933 Act.

      D. Code shall mean the Internal Revenue Code of 1986, as amended.

      E.  Common  Stock  shall mean  shares of the  shares of the  Corporation's
common stock.

      F.  Corporation  shall mean  Composite  Technology  Corporation,  a Nevada
corporation.

      G.  Director  shall  mean an  individual  who is a member  of the Board of
Directors of the Corporation (or any Parent or Subsidiary).

      H.  Employee  shall  mean  an  individual  who  is in  the  employ  of the
Corporation (or any Parent or Subsidiary),  subject to the control and direction
of the employer  entity as to both the work to be  performed  and the manner and
method of performance.

      I.  Exercise  Date shall mean the date on which the Option shall have been
exercised in accordance with Section 4 of the Agreement.


                                    APPENDIX
                                       -1-
<PAGE>

      J.  Exercise  Price  shall mean the  exercise  price per  Option  Share as
specified in to Notice of Grant of Stock Option.

      K.  Expiration  Date shall  mean the date on which the  Option  expires as
specified in Section 2 of the Agreement.

      L. Fair Market Value per share of Common Stock on any relevant  date shall
be determined in accordance with the following provisions:

            (i) If the Common Stock is at the time traded on any Nasdaq  market,
      national  quotation system, or  Over-the-Counter  Bulletin Board, then the
      Fair Market Value shall be deemed equal to the closing  selling  price per
      share of Common Stock on the date in  question,  as such price is reported
      on thereon.  If there is no closing  selling price for the Common Stock on
      the date in  question,  then the Fair  Market  Value  shall be the closing
      selling price on the last preceding date for which such quotation exists.

            (ii)  If  the  Common  Stock  is at the  time  listed  on any  Stock
      Exchange,  then the Fair Market Value shall be deemed equal to the closing
      selling  price per share of Common  Stock on the date in  question  on the
      Stock  Exchange  determined by the Board to be the primary  market for the
      Common Stock, as such price is officially  quoted in the composite tape of
      transactions  on such exchange.  If there is no closing  selling price for
      the Common Stock on the date in question, then the Fair Market Value shall
      be the closing  selling  price on the last  preceding  date for which such
      quotation exists.

            (iii) If the  Common  Stock can not be  determined  pursuant  to the
      foregoing sections,  then the Fair Market Value shall be determined by the
      Board  after  taking  into  account  such  factors as the Board shall deem
      appropriate.

      M. Grant Date shall mean the date of grant of the Option as  specified  in
the Grant Notice.

      N.  Grant   Notice  shall  mean  the  Notice  of  Grant  of  Stock  Option
accompanying the Agreement,  pursuant to which Optionee has been informed of the
basic terms of the Option evidenced hereby.

      O. Immediate Family shall mean any child, stepchild,  grandchild,  parent,
stepparent,   grandparent,   spouse,  sibling,   mother-in-law,   father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.

      P. Incentive  Option shall mean an option which satisfies the requirements
of Code Section 422.

      Q.  Involuntary  Termination  shall  mean the  termination  of  Optionee's
Service by reason of:

            (i) Optionee's involuntary dismissal or discharge by the Corporation
      for reasons other than Misconduct, or

            (ii)  Optionee's  voluntary  resignation  following  (A) a change in
      Optionee's   position  with  the  Corporation  (or  Parent  or  Subsidiary
      employing   Optionee)  which  materially  reduces  Optionee's  duties  and
      responsibilities or the level of management to which Optionee reports, (B)
      a reduction in Optionee's  level of  compensation  (including base salary,
      fringe  benefits and target bonus under any  corporate  performance  based
      bonus or incentive  programs) by more than fifteen  percent (15%) or (C) a
      relocation  of  Optionee's  place of  employment  by more than  fifty (50)
      miles,  provided  and only if such  change,  reduction  or  relocation  is
      effected by the Corporation without Optionee's consent.


                                    APPENDIX
                                       -2-
<PAGE>

      R. Misconduct shall mean the commission of any act of fraud,  embezzlement
or dishonesty  by Optionee,  any  unauthorized  use or disclosure by Optionee of
confidential  information or trade secrets of the  Corporation (or any Parent or
Subsidiary),  or any intentional wrongdoing by Optionee or the causing of damage
by gross negligence,  whether by omission or commission, which adversely affects
the business or affairs of the  Corporation  (or any Parent or  Subsidiary) in a
material manner. This shall not limit the grounds for the dismissal or discharge
of Optionee or any other  individual in the Service of the  Corporation  (or any
Parent or Subsidiary).

      S. 1933 Act shall mean the Securities Exchange Act of 1933, as amended.

      T. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

      U.  Non-Statutory  Option shall mean an option not intended to satisfy the
requirements of Code Section 422.

      V. Option  shall mean the Option  granted  pursuant to the decision of the
Committee  or, in the  absence of a  Committee,  the Board of  Directors  of the
Corporation and the terms of this Agreement.

      W.  Option  Exercise  Form shall mean the notice of  exercise  in the form
attached as Exhibit 1.

      X. Option  Shares shall mean the number of shares of Common Stock  subject
to the Option as specified in the Grant Notice.

      Y.  Optionee  shall  mean the  person  to whom the  Option is  granted  as
specified in the Grant Notice.

      Z. Parent shall mean any  corporation  (other than the  Corporation) in an
unbroken  chain of  corporations  ending  with the  Corporation,  provided  each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination,  stock possessing fifty percent (50%) or more of the total
combined  voting power of all classes of stock in one of the other  corporations
in such chain.

      AA. Permanent Disability shall mean the inability of Optionee to engage in
any  substantial  gainful  activity  by  reason  of any  medically  determinable
physical  or mental  impairment  which can be expected to result in death or has
lasted or can be expected to last for a continuous  period of twelve (12) months
or more.

      BB. 2002 Plan shall mean the 2002  Non-Qualified  Stock  Compensation Plan
attached  hereto as Exhibit 2 and as may be modified  from time to time provided
that  such  modifications  shall  have been  approved  and  registered  with the
Securities Exchange Commission.

      CC.  Service  shall mean the  Optionee's  performance  of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee  member  of the  board of  directors  or a  consultant  or  independent
advisor.

      DD. Subsidiary shall mean any corporation  (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation,  provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the  determination,  stock possessing fifty percent (50%) or more of the
total  combined  voting  power  of all  classes  of  stock  in one of the  other
corporations in such chain.


                                    APPENDIX
                                       -3-
<PAGE>

                                    EXHIBIT 1
                                    ---------

                              OPTION EXERCISE FORM

      Subject to the foregoing,  Optionee  hereby  purchases  __________________
shares of Common  Stock  (the  "Shares")  of the  Corporation  pursuant  to that
certain  option  (the  "Option")  granted  to  Optionee  under the Stock  Option
Agreement  (the  "Option  Agreement")  between the  Corporation  and Optionee on
___________.  Such shares are  purchased  at the  exercise  price of $______ per
share for an aggregate  exercise  price of  $__________________  (the  "Exercise
Price").

      Concurrently  upon the  delivery  of this  Agreement  to the  Corporation,
Optionee is delivering the Exercise Price to the  Corporation in accordance with
and in the manner set forth in the Option  Agreement and Optionee  shall deliver
whatever  additional  documents  may be  required by the Option  Agreement  as a
condition for exercise.

      Dated: __________________


             ___________________________________________________
             Name of Optionee:


             ___________________________________________________
             address of residence:


                              __________________________________


             ___________________________________________________
             Optionee's social security number ("SS/N") or if no
             SS/N, his TIN or if no TIN his passport information
             including Nationality, Number of passport, date of
             issue and expiry, and issuing authority (a copy of
             the passport must also be attached)



                                    _________________________________
                                    SIGNATURE OF SPOUSE

                                    _________________________________
                                    NAME:

ACKNOWLEDGED BY:

Composite Technology Corporation,
a Nevada corporation


By:
   ________________________________
   Benton H Wilcoxon,
   Chief Executive Officer


                                     EXHIBIT 1
                                       -1-