Unassociated Document


    WARRANT
PURCHASE AGREEMENT

    


    Composite
Technology Corporation

    2026
McGaw Avenue

    Irvine,
CA 92614

    


    Ladies
& Gentlemen:

    


    This Warrant Purchase Agreement (the
"Agreement") is made as of April 12, 2010 (the “Closing Date”) by and between
Composite Technology Corporation, a Nevada corporation, with its principal place
of business at 2026 McGaw Avenue, Irvine, CA 92614 (the “Company”), and Partners
For Growth II, L.P., a Delaware limited
partnership  (“Purchaser”).

    


    1.           Authorization and Purchase
of the Warrants.


     

    (A)  Authorization of the
Warrants.  As
of the Closing Date,  the Company's Board of Directors has authorized
the issuance by the Company and the sale to the Purchaser of a two warrants (the
“Warrants”) to purchase 10,000,000 shares in the aggregate of the Company’s
Common Stock (OTC:CPTC), all as more fully described, and subject to the
conditions set forth below and in the forms of Warrants annexed hereto as Exhibit
1.  The Company securities issuable upon exercise of the
Warrants are herein referred to as the “Warrant Stock,” and the Warrants and the
Warrant Stock are sometimes together referred to as the
“Securities.”

    


    (B)  Purchase of Warrant.  Subject
to the terms and conditions set forth below and in the Warrants, the
Company shall issue to Purchaser the Warrant in consideration of the
payment of $4,834 and $1,374, respectively, which the parties agree is fair
consideration for the Warrants.

    


    2.           The Closing. The
closing of the purchase and sale of the Warrants to Purchaser (the “Closing”)
shall be held at the offices of Partners for Growth II, L.P., 180 Pacific
Avenue, San Francisco, CA 94111, or at such other location as may
be mutually agreed upon by the parties hereto.  On
the Closing Date, the Company shall deliver to Purchaser the Warrants
registered in the name of Purchaser.

    


    3.           Representations, Warranties and Covenants of the
Company.  The Company represents and warrants to, and
covenants with, the Purchaser that:

    


    (A)   Corporate Power;
Authorization.  The Company has all requisite corporate
power and has taken all requisite corporate action to execute and deliver
each of this Agreement and the Warrants, to sell and issue the Securities and to
carry out and perform all of its obligations hereunder and
thereunder. Each of this Agreement and the Warrants has been
duly authorized, executed and delivered on behalf of the Company
and constitutes the valid and binding agreement of the
Company, enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) as limited by equitable
principles generally.  The person executing this Agreement and
the Warrants is a duly authorized officer of the Company with all necessary
legal authority to bind the Company generally and with the specific legal
authority to cause the Company to enter into this Agreement and to execute and
deliver the Warrants.


    
      
         


      

      
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    (B)  Validity of
Securities.  The Warrants, when sold against
the consideration therefor as provided therein, will be
validly authorized, issued and fully paid.  The issuance and
delivery of the Warrants are not subject to preemptive or any similar
rights of the stockholders of the Company (which have not been duly waived) or
any liens or encumbrances except for restrictions on transfer provided for
herein or under applicable federal and state securities laws; and when the
Warrant Stock is issued upon exercise and in accordance with the terms of
the Warrants, and such Warrants are converted into Warrant Stock, such
securities will be, at each such issuance, validly issued and outstanding, fully
paid and nonassessable, in compliance with all applicable securities laws and
free of any liens or encumbrances except for restrictions on transfer provided
for herein or under applicable federal and state securities laws.

     

    (C)  Capitalization. The
authorized capital stock of the Company consists of 605,000,000. All such issued
and outstanding shares have been duly authorized and validly issued and are
fully paid and nonassessable. As of the date hereof, there are: (1) 5,000,000
shares of Preferred Stock, par value $0.001 each, authorized, none of which are
issued or outstanding; (2) 600,000,000 shares Common Stock, par value $0.001
each, authorized, of which approximately 288,269,660 shares are issued and
outstanding; and (3) warrants to purchase 14,055,001 shares of Common Stock. As
of the date hereof, the Company has reserved a total of 39,000,000 shares of its
Common Stock for issuance under its 2002 Plan and a total of 25,000,000 shares
of its Common Stock for issuance under its 2008 plan and of which a total of
28,396,797 shares are reserved for issuance upon exercise of all currently
existing and outstanding options. A true, correct and current copy of the
Company’s current Articles of Incorporation is set forth in Schedule B hereto.
Except as specified in this Agreement, there are no other options, warrants,
conversion privileges or other contractual rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities.  Schedule C hereto
sets forth a capitalization table of the Company which is true, correct,
materially accurate (as to public float) and complete as of the date
hereof.

    


    (D)  No Conflict. The
execution and delivery of this Agreement and the Warrants do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit, under, any provision of its Articles of Incorporation or Bylaws, as
amended, or any mortgage, indenture, lease or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, its properties or
assets, the effect of which would have a material adverse effect on the Company
or materially impair or restrict its power to perform its obligations as
contemplated hereby or thereby.


    
      
         


      

      
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    (E)  Governmental and other
Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
governmental authority or other person or entity is required on the part of the
Company in connection with the execution, delivery and performance of this
Agreement and the  issuance, sale and delivery of the Warrants and the
Warrant Stock, except such filings as shall have been made prior to and shall be
effective on and as of the date hereof. All stockholder consents required in
connection with issuance of the Warrants and Warrant Stock have either been
obtained by Borrower or no such consents are required.

    


    (F)  Authorized and Unissued
Shares of Common Stock. During the period within which
the Warrants may be exercised, the Company will at all times have
authorized and reserved, for the purpose of issue or transfer upon exercise
of the Warrants, a sufficient number of authorized but unissued shares
of Common Stock when and as required to provide for the exercise of
the rights represented by the Warrants.

    


    (G)  Exempt from
Registration. Assuming the accuracy of the representations and warranties
of the Purchaser in Section 4 hereof, the offer, sale and issuance of
the Warrants and the Warrant Stock will be exempt from the registration
requirements of the Securities Act pursuant to 506 of Regulation D under the
Securities Act and from the registration and qualification requirements of
applicable state securities laws.  Neither the Company nor any agent
on its behalf has solicited or will solicit any offers to sell or has offered to
sell or will offer to sell all or any part of Securities to any person or
persons so as to bring the sale of such Shares by the Company within the
registration provisions of the Securities Act.

    


    (H)  Reporting
Obligations. Borrower is and will remain subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act and  (i) has
filed and will file all required reports under Section 13 or 15(d) of the
Exchange Act, as applicable, during the 12 months preceding the initial issuance
of any Notes,  other than Form 8-K reports; and (ii) has submitted and
will submit electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T, during the 12 months preceding such sale (a “Reporting
Issuer”). Without limiting the foregoing, if the Company ceases to timely file
periodic reports under the Exchange Act, the Company shall from time to time
promptly provide a copy of its most recent annual, quarterly and other interim
reports to Purchaser.

    


    (I) Non-Public
Information. The Company will publicly disclose the terms of this
Agreement on Form 8-K under the Exchange Act (without including it as an exhibit
thereto) promptly following the date hereof. At any time and from time to time,
the Company shall comply with Purchaser’s instructions regarding delivery of
information that Purchaser may be entitled to receive under the Loan and
Security Agreement of even date herewith among Purchaser, the Company and
certain of the Company’s affiliates.


    
      
         


      

      
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    (J)  Delivery of Information;
Accuracy.  The Company acknowledges its delivery of certain
Representations and Warranties dated April 12, 2010 (the “Representation
Letter”), to the Purchaser, which Representations and Warranties form the basis
for the Purchaser purchasing the Warrants. The information contained in Part B
of the Representation Letter and all documents, instruments and other
information delivered to the Purchaser in connection therewith are true,
correct, accurate and complete in all material respects.

    


    (K)  Legends.  Assuming
no changes in the securities laws applicable to resales of restricted securities
by non-affiliates that would prohibit the same, and so long as PFG is not then
an Affiliate, the Company shall remove any restrictive securities legends on
Warrant Stock resulting from exchange of the Warrants six (6) months following
the issuance of the Warrants.

    


    4.           Representations and
Warranties of Purchaser.  Purchaser hereby represents
and  warrants to the Company as of the Closing Date as
follows:

    


    (A)  Investment
Experience.  Purchaser is an “accredited investor” within
the meaning of Rule 501 under the Securities Act, and was not organized for
the specific purpose of acquiring the Securities.  Purchaser is
aware of the Company's business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities.  Purchaser has
such business and financial experience as is required to give it the
capacity to protect its own interests in connection with the purchase of
the Securities.

    


    (B)  Investment
Intent.  Purchaser is purchasing the Warrants
for investment for its own account only and not with a view to, or for
resale in connection with, any “distribution” thereof within the meaning of
the Securities Act.  Purchaser understands that the Warrants has
not been registered under the Securities Act or registered or qualified
under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona
fide nature of Purchaser's investment intent as expressed
herein.

    


    (C)  Authorization.  Purchaser
has all requisite power and has taken all requisite action to execute and
deliver each of this Agreement and to carry out and perform all of its
obligations hereunder.  This Agreement has been duly authorized,
executed and delivered on behalf of Purchaser and constitutes the valid and
binding agreement of Purchaser, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy,
insolvency,  reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally and (ii) as
limited by equitable principles generally.  The consummation of
the transactions contemplated herein and the fulfillment of the terms
herein will not result in a breach of any of the terms or provisions of
Purchaser's partnership agreement or other relevant organizational
documents.


    
      
         


      

      
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    (D)  Broker-Dealer; No General
Solicitation.  Purchaser is not required to be registered as a
broker dealer under Section 15 of the Exchange Act.  Purchaser is not
purchasing the Securities as a result of any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or to Purchaser’s knowledge, any general solicitation or
advertisement.

    


    5.   Restrictions on Transfer of
Securities; Registrable Securities.  The
restrictions on transfer of the Securities are as set forth in the
Warrants.

    


    6.   Miscellaneous.

    


    (A)  Waivers and
Amendments.  This Agreement and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.

    


    (B)  Governing Law;
Venue.  This Agreement and the Warrants shall each
be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the State of Delaware without
regard to conflict of laws.  The parties each irrevocably submit to
the exclusive jurisdiction of the U.S. state and federal courts located in San
Francisco, California in connection with any dispute arising under this
Agreement or the Warrants.

    


    (C)  Survival.  The
representations, warranties, covenants and agreements made herein shall
survive any investigation made by the Company or Purchaser and the
Closing.

    


    (D)  Successors and
Assigns.  The provisions hereof shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto (specifically including any person
that becomes a holder of a Warrant through transfer thereof from the Purchaser,
and any other successors in interest to the Securities).  In the
event of any merger, consolidation or acquisition involving the Company
in which the Company is not the surviving entity, the
Company's obligations hereunder and under the Warrants shall be expressly
or by operation of law assumed by the surviving entity.

    


    (E)  Entire Agreement;
Construction.  This Agreement and the Warrants constitute the
full and entire understanding and agreement between the parties
with regard to the subject hereof.  In the event of any conflict
between the terms of this Agreement and the terms of the Warrants (including any
Schedule attached thereto), the terms of the Warrants shall
prevail.  The term “$” or “dollars” means United States dollars; the
term “including” means “including without limitation”; “days” means business
days in the United States.  Any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement or the
Warrants.


    
      
         


      

      
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    (F)  Notices,
etc.  Any notice or other communication given under this
Agreement shall be sufficient if in writing and sent by personal service,
facsimile, courier service promising overnight delivery or registered or
certified mail, return receipt requested, postage prepaid, to a party at its
address set forth below (or at such other address as shall be designated for
such purpose by such party in a written notice to the other party
hereto):

    


         if
to Purchaser, at

    


    Partners for Growth II,
L.P.

    180 Pacific Avenue

    San Francisco, California
94111

    Attention:  Lorraine
Nield

    Fax:  (415)
781-0510

    


    with a
copy to

    


    Benjamin Greenspan

    Greenspan Law Office

    620 Laguna Road

    Mill Valley, CA 94941

    Fax: (415) 738-5371

    Email: ben@greenspan-law.com

    


         or

    


         if
to the Company, at

    


    Composite
Technology Corporation

    2026
McGaw Avenue

    Irvine,
CA 92614

    Attn: DJ
Carney, CFO

    Fax:   ***

    Email:
***

    


         with
a copy to:

    


    Richardson Patel LLP

    Attn:
Ryan Hong

    10900
Wilshire Boulevard

    Suite
500

    Los
Angeles, California 90024-6525

    Facsimile:
(310) 208-1154

    Email:
rhong@richardsonpatel.com

    


    or in any
case at such other address as Purchaser or the Company shall have furnished
to the other in writing. The term “notify” means to give notice in writing as
specified above.

     

    
      ***
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment.


    

    
      
         


      

      
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    (G)  Severability of this
Agreement.  If any provision of this Agreement shall
be  judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or
impaired thereby.

    


    (H)  Titles and
Subtitles.  The titles of the paragraphs and subparagraphs of
this Agreement are for convenience of reference and shall not, by themselves,
determine the construction of this Agreement.

    


    (I)  Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one
instrument.


    
      
         


      

      
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    Please confirm that the foregoing
correctly sets forth the agreement between us by signing in the space provided
below for that purpose.

    


    PARTNERS
FOR GROWTH II, L.P.

     

    ________________________________

    By:  _________________,
Manager of

    Partners
for Growth II, LLC, its General

    Partner

    


    AGREED
AND ACCEPTED,

    as of the
date first above written:


     

    
      
        
          
            	
                    By:

                  	
                      

                  
	
                    Its:

                  	
                      

                  


          

        

      

    

     

    Signature
Page to Warrant Purchase Agreement



    
      
         


      

      
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    Schedule
A – Exceptions to Representations and Warranties


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

    


    Schedule
B – Restated Certificate


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    Schedule
C - Capitalization Table


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

    


    Exhibit
1 - Form of Warrant