Document:

SECURITIES
        PURCHASE AGREEMENT

       

      SECURITIES
        PURCHASE AGREEMENT
        (the
“Agreement”),
        dated
        as of June 18, 2007, by and among Composite Technology Corporation, a Nevada
        corporation (the “Company”),
        and
        the investors listed on the Schedule of Buyers attached hereto (individually,
        a
“Buyer”
and
        collectively, the “Buyers”).

       

      RECITALS

       

      A. The
        Company and each Buyer is executing and delivering this Agreement in reliance
        upon the exemption from securities registration afforded by Section 4(2)
        of the
        Securities Act of 1933, as amended (the “1933
        Act”),
        and/or Rule 506 of Regulation D (“Regulation D”)
        as
        promulgated by the United States Securities and Exchange Commission (the
        “SEC”)
        under
        the 1933 Act.

       

      B. Each
        Buyer wishes to purchase, and the Company wishes to sell, upon the terms
        and
        conditions stated in this Agreement, that amount of Units (the “Units”)
        of the
        Company with each Unit comprised of one share of the Company’s common stock, par
        value $0.001 per share (the “Common
        Stock”),
        and
        1/4th
        of a
        warrant in substantially the form attached hereto as Exhibit
        A
        (the
“Warrants”)
        to
        purchase one share of Common Stock with an exercise price of $1.40 for a
        term of
        36 months (as exercised, collectively, the “Warrant
        Shares”),
        set
        forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which
        aggregate amount for all Buyers shall be approximately $5,000,000).

       

      C. Contemporaneously
        with the execution and delivery of this Agreement, the parties hereto are
        executing and delivering a Registration Rights Agreement, substantially in
        the
        form attached hereto as Exhibit
        B
        (the
“Registration
        Rights Agreement”)
        pursuant to which the Company will provide certain registration rights with
        respect to the Registrable Securities (as defined in the Registration Rights
        Agreement) under the 1933 Act and the rules and regulations promulgated
        thereunder and applicable state securities laws.

       

      D. The
        Common Stock, the Warrants and the Warrant Shares collectively are referred
        to
        herein as the “Securities”.

       

      E. The
        Company has retained CapStone Investments to act as its placement agent in
        connection with the sale of the securities pursuant to this Agreement (the
        “Placement
        Agent”).

       

      NOW,
        THEREFORE,
        the
        Company and each Buyer hereby agree as follows:

      

      1. PURCHASE
        AND SALE OF THE UNITS.

       

      (a) Purchase
        of the Units.

       

      (i) Subject
        to the satisfaction (or waiver) of the conditions set forth in Sections 5
        and 6
        below, the Company shall hold a closing in which it shall issue and sell
        and the
        applicable Buyer shall purchase, the Units (the “Closing”).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (ii) After
        the
        Closing, a prospective Buyer’s execution of the signature page of this Agreement
        shall constitute its offer to purchase the Units (the “Subscription”).
        The
        Company may accept or reject the Subscription from any Buyer, in whole or
        in
        part in its sole discretion. The Company’s written execution of acceptance of
        the Subscription shall constitute a binding agreement to sell the Units to
        such
        Buyer. The Company shall notify each Buyer of the portion, if any, of such
        Buyer’s offer which has been accepted and, if any portion of a Buyer’s offer is
        rejected, shall cause the Escrow Agent to refund to such Buyer the purchase
        price paid by the Buyer for the Units with respect to which such Buyer’s
        Subscription was rejected, if any.

       

      (iii) At
        the
        Closing, each Buyer severally, but not jointly, shall purchase from the Company
        on the Closing Date (as defined below), a certain amount in Units as set
        forth
        opposite such Buyer’s name in column 3 on the Schedule of Buyers. Prior to the
        Closing, the Company shall deliver to Richardson & Patel LLP, in trust as
        escrow agent, the certificates for the Common Stock and Warrants underlying
        the
        Units to be purchased by the Buyers at the Closing, each registered in such
        name
        or names as each Buyer may designate, with instructions that such certificates
        for the Common Stock and Warrants are to be held for release to such Buyers
        only
        upon payment in full of the Purchase Price to the Company by such Buyers
        as set
        forth in Section 1(b) hereof. 

       

      (iv) The
        date
        and time of the Closing (the “Closing
        Date”)
        shall
        be 10:00 a.m., Pacific Time, on the date hereof (or such later date as is
        mutually agreed to by the Company and each Buyer). The Closing shall occur
        after
        notification of satisfaction (or waiver) of the conditions to the Closing
        set
        forth in Sections 5 and 6 below at the offices of Richardson & Patel LLP,
        10900 Wilshire Boulevard, Suite 500, Los Angeles, California 90024.

       

      (v) The
        aggregate purchase price for the Units to be purchased by each Buyer at the
        Closing (the “Purchase
        Price”)
        shall
        be the amount set forth opposite such Buyer’s name in column (4) of the Schedule
        of Buyers. Each Buyer shall pay $0.99 for each Unit to be purchased by such
        Buyer at the Closing. For purposes of this Agreement, “Initial
        Market Price”
means
        the volume weighted average price (“VWAP”) of the Company’s common stock over
        the ten (10) trading day period prior to close.

       

      (b) Form
        of Payment.
        On the
        Closing Date, each Buyer shall pay its Purchase Price to the Company for
        the
        Units to be issued and sold to such Buyer at the Closing by wire transfer
        of
        immediately available funds for the amount of the Purchase Price to an escrow
        account subject to the Escrow Agreement among the Company, Richardson &
Patel LLP (the “Escrow
        Agent”)
        and
        the Buyers. On the Closing Date and in accordance with the Escrow Agreement,
        the
        Units shall be released to the Buyers who have paid the Purchase Price. If
        the
        Closing does not occur within ten (10) business days of a Buyer paying its
        Purchase Price to the Escrow Agent, then that Buyer may terminate the Agreement
        with respect to such Buyer, subject to Section 7 of this Agreement.

       

      2. BUYER’S
        REPRESENTATIONS AND WARRANTIES.

       

      Each
        Buyer hereby severally, and not jointly, represents and warrants to the Company
        and the Placement Agent that: 

       

      (a) No
        Public Sale or Distribution.
        Such
        Buyer is (i) acquiring the Common Stock and Warrants underlying the Units
        and
        (ii) upon the exercise of the Warrants (other than pursuant to a Cashless
        Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable
        upon exercise of the Warrants, for its own account and not with a view towards,
        or for resale in connection with, the public sale or distribution thereof,
        except pursuant to sales registered or exempted under the 1933 Act; provided,
        however,
        that by
        making the representations herein, such Buyer does not agree to hold any
        of the
        Securities for any minimum or other specific term and reserves the right
        to
        dispose of the Securities at any time in accordance with, or pursuant to,
        or a
        registration statement or an exemption under the 1933 Act. Such Buyer is
        acquiring the Securities hereunder in the ordinary course of its business.
        Such
        Buyer does not presently have any agreement or understanding, directly or
        indirectly, with any Person to distribute any of the Securities.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b) Accredited
        Investor Status; No General Solicitation.
        Such
        Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
        Regulation D. The definition of “accredited investor” is annexed hereto. Such
        Buyer is not required to be registered as a broker-dealer under Section 15
        of
        the Exchange Act. Such Buyer 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 such Buyer’s knowledge,
        any general solicitation or advertisement. 

       

      (c) Reliance
        on Exemptions.
        Such
        Buyer understands that the Securities are being offered and sold to it in
        reliance on specific exemptions from the registration requirements of United
        States federal and state securities laws and that the Company and the Placement
        Agent are relying in part upon the truth and accuracy of, and such Buyer’s
        compliance with, the representations, warranties, agreements, acknowledgments
        and understandings of such Buyer set forth herein in order to determine the
        availability of such exemptions and the eligibility of such Buyer to acquire
        the
        Securities.

       

      (d) Information.
        Such
        Buyer and its advisors, if any, have been furnished with all materials relating
        to the business, finances and operations of the Company and materials relating
        to the offer and sale of the Securities which have been requested by such
        Buyer.
        Such Buyer and its advisors, if any, have been afforded the opportunity to
        ask
        questions of the Company. Neither such inquiries nor any other due diligence
        investigations conducted by such Buyer or its advisors, if any, or its
        representatives shall modify, amend or affect such Buyer’s right to rely on the
        Company’s representations and warranties contained herein. Such Buyer
        understands that its investment in the Securities involves a high degree
        of
        risk. Such Buyer has sought such accounting, legal and tax advice as it has
        considered necessary to make an informed investment decision with respect
        to its
        acquisition of the Securities.

       

      (e) Investment
        Experience.
        Such
        Buyer acknowledges that it can bear the economic risk and complete loss of
        its
        investment in the Securities and has such knowledge and experience in financial
        or business matters that it is capable of evaluating the merits and risks
        of the
        investment contemplated hereby.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (f) No
        Governmental Review.
        Such
        Buyer understands that no United States federal or state agency or any other
        government or governmental agency has passed on or made any recommendation
        or
        endorsement of the Securities or the fairness or suitability of the investment
        in the Securities nor have such authorities passed upon or endorsed the merits
        of the offering of the Securities.

       

      (g) Transfer
        or Resale.
        Such
        Buyer understands that except as provided in the Registration Rights Agreement:
        (i) the Securities have not been and are not being registered under the 1933
        Act
        or any state securities laws, and may not be offered for sale, sold, assigned
        or
        transferred unless (A) subsequently registered thereunder, (B) such Buyer
        shall
        have delivered to the Company an opinion of counsel, in a generally acceptable
        form, to the effect that such Securities to be sold, assigned or transferred
        may
        be sold, assigned or transferred pursuant to an exemption from such
        registration, (C) such Buyer provides the Company with reasonable assurance
        that
        such Securities can be sold, assigned or transferred pursuant to Rule 144
        or
        Rule 144A promulgated under the 1933 Act, as amended (or a successor rule
        thereto) (collectively, “Rule
        144”),
        or
        (D) the sale, assignment, or transfer meets the requirement of Regulation
        S
        under the 1933 Act, as amended; (ii) any sale of the Securities made in reliance
        on Rule 144 may be made only in accordance with the terms of Rule 144 and
        further, if Rule 144 is not applicable, any resale of the Securities under
        circumstances in which the seller (or the Person (as defined in Section 3(s))
        through whom the sale is made) may be deemed to be an underwriter (as that
        term
        is defined in the 1933 Act) may require compliance with some other exemption
        under the 1933 Act or the rules and regulations of the SEC thereunder; and
        (iii)
        neither the Company nor any other Person is under any obligation to register
        the
        Securities under the 1933 Act or any state securities laws or to comply with
        the
        terms and conditions of any exemption thereunder.

       

      (h) Legends.
        Such
        Buyer understands that the certificates or other instruments representing
        the
        Common Stock and the Warrants and, until such time as the resale of the Common
        Stock and the Warrant Shares have been registered under the 1933 Act as
        contemplated by the Registration Rights Agreement, the stock certificates
        representing the Common Stock and the Warrant Shares, except as set forth
        below,
        shall bear any legend as required by the “blue sky” laws of any state and a
        restrictive legend in substantially the following form (and a stop-transfer
        order may be placed against transfer of such stock certificates): 

       

      THE
        ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
        NOT
        BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
        STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
        TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
        STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
        OR
        (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION
        IS
        NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
        144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
        PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
        ARRANGEMENT SECURED BY THE SECURITIES.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      The
        legend set forth above shall be removed and the Company shall issue a
        certificate without such legend to the holder of the Securities upon which
        it is
        stamped, if, unless otherwise required by state securities laws, (i) such
        Securities are registered for resale under the 1933 Act, (ii) in connection
        with
        a sale, assignment or other transfer, such holder provides the Company with
        an
        opinion of counsel, in a generally acceptable form, to the effect that such
        sale, assignment or transfer of the Securities may be made without registration
        under the applicable requirements of the 1933 Act, or (iii) such holder provides
        the Company with reasonable assurance that the Securities can be sold, assigned
        or transferred pursuant to Rule 144 or Rule 144A. 

       

      (i) Validity;
        Enforcement.
        This
        Agreement and the Registration Rights Agreement to which such Buyer is a
        party
        have been duly and validly authorized, executed and delivered on behalf of
        such
        Buyer and shall constitute the legal, valid and binding obligations of such
        Buyer enforceable against such Buyer in accordance with their respective
        terms,
        except as such enforceability may be limited by general principles of equity
        or
        to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
        and other similar laws relating to, or affecting generally, the enforcement
        of
        applicable creditors’ rights and remedies.

       

      (j) Residency;
        Organization.
        If such
        Buyer is an entity, (i) such Buyer is a resident of that jurisdiction specified
        below its address on the Schedule of Buyers and (ii) such Buyer is a validly
        existing corporation, limited partnership or limited liability company and
        has
        all requisite corporate, partnership or limited liability company power and
        authority to invest in the Securities pursuant to this Agreement.

       

      (k) Brokers
        and Finders.
        No
        Person will have, as a result of the transactions contemplated by the
        Transaction Documents, any valid right, interest or claim against or upon
        the
        Company, any Subsidiary or any Buyer for any commission, fee or other
        compensation pursuant to any agreement, arrangement or understanding entered
        into by or on behalf of such Buyer.

       

      (l) Prohibited
        Transactions.
        During
        the last ten (10) Business Days prior to the date hereof, neither such Buyer
        nor
        any Affiliate (as defined below) of such Buyer nor any Person acting on behalf
        of or pursuant to any understanding with such Buyer or Affiliate of such
        Buyer
        has, directly or indirectly, effected or agreed to effect any short sale,
        whether or not against the box, established any “put equivalent position” (as
        defined in Rule 16a-1(h) under the Exchange Act) with respect to the Common
        Stock, granted any other right (including, without limitation, any put or
        call
        option) with respect to the Common Stock or with respect to any security
        that
        includes, relates to or derived any significant part of its value from the
        Common Stock or otherwise sought to hedge its position in the Securities
        (each,
        a “Prohibited
        Transaction”).
        Prior
        to the earliest to occur of (i) the termination of this Agreement or (ii)
        such
        time as the transactions contemplated by this Agreement are publicly disclosed
        by the Company as described in Section 8(n), such Buyer shall not, and shall
        cause any Person acting on behalf of or pursuant to any understanding with
        such
        Buyer not to, engage, directly or indirectly, in a Prohibited Transaction.
        Such
        Buyer acknowledges that the representations, warranties and covenants contained
        in this Section 2(l) are being made for the benefit of the Buyers as well
        as the
        Company and that each of the other Buyers shall have an independent right
        to
        assert any claims against such Buyer arising out of any breach or violation
        of
        the provisions of this Section 2(l). For purposes of this Agreement,
“Affiliate”
means
        with respect to any Person, any other Person which directly or indirectly
        through one or more intermediaries Controls, is controlled by, or is under
        common control with, such Person and “Control”
        (including the terms “controlling”, “controlled by” or “under common control
        with”) means the possession, direct or indirect, of the power to direct or cause
        the direction of the management and policies of a Person, whether through
        the
        ownership of voting securities, by contract or otherwise. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3. REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.

       

      Except
        as
        set forth in the SEC Reports and the Disclosure Schedule hereto, the Company
        represents and warrants to each of the Buyers and the Placement Agent
        that:

       

      (a) Organization
        and Qualification.
        The
        Company and its “Subsidiaries”
(which
        for purposes of this Agreement means any material operating entity in which
        the
        Company, directly or indirectly, owns capital stock or holds an equity or
        similar interest) are entities duly organized and validly existing in good
        standing under the laws of the jurisdiction in which they are formed, and
        have
        the requisite power and authority to own their properties and to carry on
        their
        business as now being conducted. Each of the Company and its Subsidiaries
        is
        duly qualified as a foreign entity to do business and is in good standing
        in
        every jurisdiction in which its ownership of property or the nature of the
        business conducted by it makes such qualification necessary, except to the
        extent that the failure to be so qualified or be in good standing would not
        have
        a Material Adverse Effect. As used in this Agreement, “Material
        Adverse Effect”
means
        any material adverse effect on the business, properties, assets, operations,
        results of operations, condition (financial or otherwise) or prospects of
        the
        Company and its Subsidiaries, taken as a whole, or on the transactions
        contemplated hereby and the other Transaction Documents or by the agreements
        and
        instruments to be entered into in connection herewith or therewith, or on
        the
        authority or ability of the Company to perform its obligations under the
        Transaction Documents (as defined below). The Company has no Subsidiaries
        except
        as set forth on Schedule
        3(a).

       

      (b) Authorization;
        Enforcement; Validity.
        The
        Company has the requisite power and authority to enter into and perform its
        obligations under this Agreement, the Registration Rights Agreement, the
        Warrants, and each of the other agreements entered into by the parties hereto
        in
        connection with the transactions contemplated by this Agreement (collectively,
        the “Transaction
        Documents”)
        and to
        issue the Securities in accordance with the terms hereof and thereof. The
        execution and delivery of the Transaction Documents by the Company and the
        consummation by the Company of the transactions contemplated hereby and thereby,
        including, without limitation, the issuance of the Common Stock, the Warrants
        and the Placement Agent Warrants (as defined below), the reservation for
        issuance and issuance of 100% of the Warrant Shares upon exercise of the
        Warrants, the reservation of the shares of Common Stock issuable upon exercise
        of the warrants (the “Placement
        Agent Warrant Shares”) issued
        to
        the Placement Agent (the “Placement
        Agent Warrants”)
        have
        been duly authorized by the Company’s Board of Directors and no further filing,
        consent, or authorization is required by the Company, its Board of Directors
        or
        its stockholders, except for post-closing Securities filings or notifications
        required to be made under federal or state securities laws. This Agreement
        and
        the other Transaction Documents of even date herewith have been duly executed
        and delivered by the Company, and shall constitute the legal, valid and binding
        obligations of the Company, enforceable against the Company in accordance
        with
        their respective terms, except as such enforceability may be limited by general
        principles of equity or applicable bankruptcy, insolvency, reorganization,
        moratorium, liquidation or similar laws relating to, or affecting generally,
        the
        enforcement of applicable creditors’ rights and remedies.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (c) Issuance
        of Securities.
        The
        issuance of the Common Stock, the Warrants and the Placement Agent Warrants
        are
        duly authorized and are free from all taxes, liens and charges with respect
        to
        the issue thereof. As of the Closing, a number of shares of Common Stock
        shall
        have been duly authorized and reserved for issuance which equals at least
        100%
        of the maximum number of shares Common Stock issuable upon exercise of the
        Warrants and the Placement Agent Warrants (without taking into account of
        any
        limitations on the exercise of the Warrants set forth in the Warrants). Upon
        exercise, in accordance with the Warrants and the Placement Agent Warrants,
        as
        the case may be, and payment of the consideration set forth in this Agreement,
        the Warrants and the Placement Agent Warrants, the Warrant Shares and the
        Placement Agent Warrant Shares, respectively, will be validly issued, fully
        paid
        and nonassessable and free from all preemptive or similar rights, taxes,
        liens
        and charges with respect to the issue thereof, with the holders being entitled
        to all rights accorded to a holder of Common Stock. 

       

      (d) No
        Conflicts.
        The
        execution, delivery and performance of the Transaction Documents by the Company
        and the consummation by the Company of the transactions contemplated hereby
        and
        thereby (including, without limitation, the issuance of the Common Stock
        and the
        Warrants, and reservation for issuance and issuance of the Warrant Shares)
        will
        not (i) result in a violation of the Articles of Incorporation (as defined
        in
        Section 3(r)) of the Company or any of its Subsidiaries or Bylaws (as defined
        in
        Section 3(s)) of the Company or any of its Subsidiaries or (ii) conflict
        with,
        or constitute a default (or an event which with notice or lapse of time or
        both
        would become a default) under, or result in termination, amendment, acceleration
        or cancellation of, any agreement, indenture or instrument to which the Company
        or any of its Subsidiaries is a party, or (iii) result in a violation of
        any
        law, rule, regulation, order, judgment or decree (including federal and state
        securities laws and regulations and the rules and regulations of the NASD’s OTC
        Bulletin Board (the “Principal
        Market”))
        applicable to the Company or any of its Subsidiaries or by which any property
        or
        asset of the Company or any of its Subsidiaries is bound or affected, except
        in
        the cases of clauses (ii) and (iii) for any such conflicts, violations or
        defaults which can reasonably be expected to have no Material Adverse
        Effect.

       

      (e) Consents.
        The
        Company is not required to obtain any consent, authorization or order of,
        or
        make any filing or registration with, any court, governmental agency or any
        regulatory or self-regulatory agency or any other Person in order for it
        to
        execute, deliver or perform any of its obligations under or contemplated
        by the
        Transaction Documents, in each case in accordance with the terms hereof or
        thereof, except for post-closing securities filings or notifications to be
        made
        under federal or state securities laws. All consents, authorizations, orders,
        filings and registrations which the Company is required to obtain pursuant
        to
        the preceding sentence have been obtained or effected on or prior to the
        Closing
        Date, except for the filing with the SEC of one or more Registration Statements
        in accordance with the requirements of the Registration Rights Agreement.
        The
        Company and its Subsidiaries are unaware of any facts or circumstances which
        might prevent the Company from obtaining or effecting any of the registration,
        application or filings pursuant to the preceding sentence. The Company is
        not in
        violation of the applicable listing requirements of the Principal Market
        and has
        no knowledge of any facts which would reasonably lead to delisting or suspension
        of the Common Stock. The issuance by the Company of the Securities shall
        not
        have the effect of delisting or suspending the Common Stock from the Principal
        Market.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (f) Acknowledgment
        Regarding Buyer’s Purchase of Securities.
        The
        Company acknowledges and agrees that each Buyer is acting solely in the capacity
        of an arm’s length purchaser with respect to the Transaction Documents and the
        transactions contemplated hereby and thereby and that no Buyer is (i) an
        officer
        or director of the Company, (ii) an Affiliate of the Company or (iii) to
        the
        knowledge of the Company, a “beneficial owner” of more than 10% of the shares of
        Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange
        Act of 1934, as amended (the “1934
        Act”)).
        The
        Company further acknowledges that no Buyer is acting as a financial advisor
        or
        fiduciary of the Company (or in any similar capacity) with respect to the
        Transaction Documents and the transactions contemplated hereby and thereby,
        and
        any advice given by a Buyer or any of its representatives or agents in
        connection with the Transaction Documents and the transactions contemplated
        hereby and thereby is merely incidental to such Buyer’s purchase of the
        Securities. The Company further represents to each Buyer that the Company’s
        decision to enter into the Transaction Documents has been based solely on
        the
        independent evaluation by the Company and its representatives.

       

      (g) No
        General Solicitation; Placement Agent’s Fees.
        Neither
        the Company, nor any of its Affiliates, nor any Person acting on its or their
        behalf, has engaged in any form of general solicitation or general advertising
        (within the meaning of Regulation D) in connection with the offer or sale
        of the
        Securities. The Company shall be responsible for the payment of any placement
        agent’s fees, financial advisory fees, or brokers’ commissions (other than for
        persons engaged by any Buyer or its investment advisor) relating to or arising
        out of the transactions contemplated hereby, including, without limitation,
        placement agent fees payable to the Placement Agent in connection with the
        sale
        of the Securities. The Company shall pay, and hold each Buyer harmless against,
        any liability, loss or expense (including, without limitation, attorney’s fees
        and out-of-pocket expenses) arising in connection with any such claim. Other
        than the Placement Agent, the Company has not engaged any Placement Agent
        or
        other agents in connection with the sale of the Securities.

       

      (h) Private
        Placement; No Integrated Offering.
        Subject
        to the accuracy of the Buyer’s representations and warranties in Section 2 of
        this Agreement, the offer and sale by the Company of the Securities in
        conformity with the terms of this Agreement constitute transactions that
        are
        exempt from registration under the 1933 Act. None of the Company, its
        Subsidiaries, any of their Affiliates, and any Person acting on their behalf
        has, directly or indirectly, made any offers or sales of any security or
        solicited any offers to buy any security, under circumstances that would
        require
        registration of any of the Securities under the 1933 Act or cause this offering
        of the Securities to be integrated with prior offerings by the Company for
        purposes of the 1933 Act or any applicable stockholder approval provisions,
        including, without limitation, under the rules and regulations of any exchange
        or automated quotation system on which any of the securities of the Company
        are
        listed or designated. None of the Company, its Subsidiaries, their Affiliates
        and any Person acting on their behalf will take any action or steps referred
        to
        in the preceding sentence that would require registration of any of the
        Securities under the 1933 Act or cause the offering of the Securities to
        be
        integrated with other offerings.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (i) Dilutive
        Effect.
        The
        Company understands and acknowledges that the number of Warrant Shares issuable
        upon exercise of the Warrants and the Placement Agent Warrant Shares issuable
        upon exercise of the Placement Agent Warrants will increase in certain
        circumstances. The Company further acknowledges that its obligation to issue
        the
        Warrant Shares upon exercise of the Warrants in accordance with this Agreement
        and the Warrants, and its obligation to issue the Placement Agent Warrant
        Shares
        upon exercise of the Placement Agent Warrants in accordance with this Agreement
        and the Placement Agent Warrants in each case, is absolute and unconditional
        regardless of the dilutive effect that such issuance may have on the ownership
        interests of other stockholders of the Company.

       

      (j) Application
        of Takeover Protections; Rights Agreement.
        The
        Company and its board of directors have taken all necessary action, if any,
        in
        order to render inapplicable any control share acquisition, business
        combination, poison pill (including any distribution under a rights agreement)
        or other similar anti-takeover provision under the Articles of Incorporation
        or
        the laws of the jurisdiction of its formation which is or could become
        applicable to any Buyer as a result of the transactions contemplated by this
        Agreement, including, without limitation, the Company’s issuance of the
        Securities and any Buyer’s ownership of the Securities. The Company has not
        adopted a stockholder rights plan or similar arrangement relating to
        accumulations of beneficial ownership of Common Stock or a change in control
        of
        the Company.

       

      (k)  SEC
        Documents; Financial Statements.
        (i)
        During the two (2) years prior to the date hereof, the Company has filed
        all
        reports, schedules, forms, statements and other documents required to be
        filed
        by it with the SEC pursuant to the reporting requirements of the 1934 Act
        with
        respect to such time period (all of the foregoing filed prior to the date
        hereof
        and all exhibits included therein and financial statements, notes and schedules
        thereto and documents incorporated by reference therein being hereinafter
        referred to as the “SEC
        Documents”).
        The
        Company has delivered to the Buyers or their respective representatives true,
        correct and complete copies of the SEC Documents not available on the EDGAR
        system. As of their respective filing dates, the SEC Documents complied in
        all
        material respects with the requirements of the 1934 Act and the rules and
        regulations of the SEC promulgated thereunder applicable to the SEC Documents,
        and none of the SEC Documents, at the time they were filed with the SEC,
        contained any untrue statement of a material fact or omitted to state a material
        fact required to be stated therein or necessary in order to make the statements
        therein, in the light of the circumstances under which they were made, not
        misleading. Each registration statement and any amendment thereto filed by
        the
        Company since January 1, 2005 pursuant to the 1933 Act and the rules and
        regulations thereunder, as of the date such statement or amendment became
        effective, complied as to form in all material respects with the 1933 Act
        and
        did not contain any untrue statement of a material fact or omit to state
        any
        material fact required to be stated therein or necessary in order to make
        the
        statements made therein not misleading; and each prospectus filed pursuant
        to
        Rule 424(b) under the 1933 Act, as of its issue date and as of the closing
        of
        any sale of securities pursuant thereto did not contain any untrue statement
        of
        a material fact or omit to state any material fact required to be stated
        therein
        or necessary in order to make the statements made therein, in the light of
        the
        circumstances under which they were made, not misleading.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (ii)
        As
        of their respective filing dates, the financial statements of the Company
        included in the SEC Documents complied as to form in all material respects
        with
        applicable accounting requirements and the published rules and regulations
        of
        the SEC with respect thereto. Such financial statements have been prepared
        in
        accordance with United States generally accepted accounting principles,
        consistently applied, during the periods involved (except (i) as may be
        otherwise indicated in such financial statements or the notes thereto, or
        (ii)
        in the case of unaudited interim statements, to the extent they may exclude
        footnotes or may be condensed or summary statements) and fairly present in
        all
        material respects the financial position of the Company as of the dates thereof
        and the results of its operations and cash flows for the periods then ended
        (subject, in the case of unaudited statements, to normal year-end audit
        adjustments). No other information provided by or on behalf of the Company
        to
        the Buyers in connection with the transactions contemplated hereby which
        is not
        included in the SEC Documents, including, without limitation, information
        referred to in Section 2(d) of this Agreement or in any disclosure schedules,
        contains any untrue statement of a material fact or omits to state any material
        fact necessary in order to make the statements therein, in the light of the
        circumstance under which they are or were made, not misleading.

       

      (l) Absence
        of Certain Changes.
        Since
        March 31, 2007, there has been no event which has had, or could reasonably
        be
        expected to result, in a Material Adverse Effect on the Company and its
        Subsidiaries taken as a whole. Since March 31, 2007, there has not been:
        

       

      (i) any
        change in the consolidated assets, liabilities, financial condition or operating
        results of the Company from that reflected in the financial statements included
        in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
        March 31, 2007, except for changes in the ordinary course of business which
        have
        not had and could not reasonably be expected to have a Material Adverse Effect,
        individually or in the aggregate;

       

      (ii) any
        declaration or payment of any dividend, or any authorization or payment of
        any
        distribution, on any of the capital stock of the Company, or any redemption
        or
        repurchase of any securities of the Company;

       

      (iii) any
        material damage, destruction or loss, whether or not covered by insurance
        to any
        assets or properties of the Company or its Subsidiaries;

       

      (iv) any
        waiver, not in the ordinary course of business, by the Company or any Subsidiary
        of a material right or of a material debt owed to it;

       

      (v) any
        satisfaction or discharge of any lien, claim or encumbrance or payment of
        any
        obligation by the Company or a Subsidiary, except in the ordinary course
        of
        business and which is not material to the assets, properties, financial
        condition, operating results or business of the Company and its Subsidiaries
        taken as a whole (as such business is presently conducted and as it is proposed
        to be conducted);

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (vi) any
        change or amendment to the Company's Articles of Incorporation or Bylaws,
        or
        material change to any material contract or arrangement by which the Company
        or
        any Subsidiary is bound or to which any of their respective assets or properties
        is subject;

       

      (vii) any
        material transaction entered into by the Company or a Subsidiary other than
        in
        the ordinary course of business; 

       

      (viii) the
        loss
        of the services of any key employee, or material change in the composition
        or
        duties of the senior management of the Company or any Subsidiary;
        or

       

      (ix) the
        loss
        or threatened loss of any customer which has had or could reasonably be expected
        to have a Material Adverse Effect; or

       

      The
        Company and its Subsidiaries, individually and on a consolidated basis, are
        not
        as of the date hereof, and after giving effect to the transactions contemplated
        hereby to occur at the Closing, will not be Insolvent (as defined below).
        For
        purposes of this Section 3(l), “Insolvent”
means,
        with respect to any Person (as defined in Section 3(s)), (i) the present
        fair
        saleable value of such Person’s assets is less than the amount required to pay
        such Person’s total Indebtedness (as defined in Section 3(s)), (ii) such Person
        is unable to pay its debts and liabilities, subordinated, contingent or
        otherwise, as such debts and liabilities become absolute and matured, (iii)
        such
        Person intends to incur or believes that it will incur debts that would be
        beyond its ability to pay as such debts mature or (iv) such Person has
        unreasonably small capital with which to conduct the business in which it
        is
        engaged as such business is now conducted and is proposed to be conducted.
        

       

      (m) No
        Undisclosed Events, Liabilities, Developments or Circumstances.
        No
        material event, liability, development or circumstance has occurred or exists,
        or is contemplated to occur with respect to the Company, its Subsidiaries
        or
        their respective business, properties, prospects, operations or financial
        condition, that would be required to be disclosed by the Company under
        applicable securities laws on a registration statement on Form S-1 filed
        with
        the SEC relating to an issuance and sale by the Company of its Common Stock
        and
        which has not been publicly announced.

       

      (n) Use
        of
        Proceeds.
        The net
        proceeds of the sale of the Units hereunder shall be used by the Company
        for
        working capital and general corporate purposes. The Company is not, nor will
        the
        Company be engaged in, the business of extending credit for the purpose of
        purchasing or carrying margin stock (within the meaning of Regulations T,
        U or X
        of the Board of Governors of the Federal Reserve System). 

       

      (o) Conduct
        of Business; Regulatory Permits.
        Neither
        the Company nor its Subsidiaries is in violation of any term of or in default
        under its Articles of Incorporation or Bylaws or their organizational charter
        or
        articles of incorporation or bylaws, respectively. Neither the Company nor
        any
        of its Subsidiaries is in violation of any judgment, decree or order or any
        statute, ordinance, rule or regulation that are currently necessary or
        applicable to the operation of the Company or its Subsidiaries as currently
        conducted and neither the Company nor any of its Subsidiaries will conduct
        its
        business in violation of the foregoing except for possible violations which
        would not, individually or in the aggregate, have a Material Adverse Effect.
        Without limiting the generality of the foregoing, the Company is not in
        violation of any of the rules, regulations or requirements of the Principal
        Market or the SEC or other state or federal securities laws and has no knowledge
        of any facts or circumstances which would reasonably lead to delisting or
        suspension of the Common Stock by the Principal Market in the foreseeable
        future. Since March 31, 2007, (i) the Common Stock has been designated for
        quotation on the Principal Market, (ii) trading in the Common Stock has not
        been
        suspended by the SEC or the Principal Market and (iii) the Company has received
        no communication, written or oral, from the SEC or the Principal Market
        regarding the suspension or delisting of the Common Stock from the Principal
        Market. The Company and its Subsidiaries possess all certificates,
        authorizations and permits issued by the appropriate regulatory authorities
        necessary to conduct their respective businesses, except where the failure
        to
        possess such certificates, authorizations or permits would not have,
        individually or in the aggregate, a Material Adverse Effect, and neither
        the
        Company nor any such Subsidiary has received any notice of proceedings relating
        to the revocation or modification of any such certificate, authorization
        or
        permit.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (p) Sarbanes-Oxley
        Act; Internal Controls.
        The
        Company is in compliance with any and all applicable requirements of the
        Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and
        any and
        all applicable rules and regulations promulgated by the SEC thereunder that
        are
        effective as of the date hereof, except where such noncompliance would not
        have,
        individually or in the aggregate, a Material Adverse Effect. The Company
        and the
        Subsidiaries maintain a system of internal accounting controls sufficient
        to
        provide reasonable assurance that (i) transactions are executed in accordance
        with management's general or specific authorizations, (ii) transactions are
        recorded as necessary to permit preparation of financial statements in
        conformity with GAAP and to maintain asset accountability, (iii) access to
        assets is permitted only in accordance with management's general or specific
        authorization, and (iv) the recorded accountability for assets is compared
        with
        the existing assets at reasonable intervals and appropriate action is taken
        with
        respect to any differences. To the extent necessary to comply with applicable
        SEC rules, the Company has established disclosure controls and procedures
        (as
        defined in 1934 Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
        such disclosure controls and procedures to ensure that material information
        relating to the Company, including the Subsidiaries, is made known to the
        certifying officers by others within those entities, particularly during
        the
        period in which the Company’s most recently filed period report under the 1934
        Act, as the case may be, is being prepared. The Company's certifying officers
        have evaluated the effectiveness of the Company's controls and procedures
        as of
        the end of the period covered by the most recently filed periodic report
        under
        the 1934 Act (such date, the "Evaluation
        Date").
        The
        Company presented in its most recently filed periodic report under the 1934
        Act
        the conclusions of the certifying officers about the effectiveness of the
        disclosure controls and procedures based on their evaluations as of the
        Evaluation Date. Since the Evaluation Date, there have been no significant
        changes in the Company's internal controls (as such term is defined in Item
        308
        of Regulation S-K) or, to the best of the Company's knowledge, in other factors
        that could significantly affect the Company's internal controls. The Company
        maintains and will continue to maintain a standard system of accounting
        established and administered in accordance with United States GAAP and the
        applicable requirements of the 1934 Act.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (q) Transactions
        With Affiliates.
        Except
        as set forth in the SEC Documents filed at least ten (10) Business Days prior
        to
        the date hereof, none of the officers, directors or employees of the Company
        is
        presently a party to any transaction with the Company or any of its Subsidiaries
        (other than for ordinary course services as employees, officers or directors),
        including any contract, agreement or other arrangement providing for the
        furnishing of services to or by, providing for rental of real or personal
        property to or from, or otherwise requiring payments to or from any such
        officer, director or employee or, to the knowledge of the Company, any
        corporation, partnership, trust or other entity in which any such officer,
        director, or employee has a substantial interest or is an officer, director,
        trustee or partner.

       

      (r) Equity
        Capitalization.
        (i) As
        of the date hereof, the authorized capital stock of the Company consists
        of (i)
        300,000,000 shares of Common Stock, of which as of the date hereof, 200,283,465
        are issued and outstanding and (ii) 5,000,000 shares of preferred stock.
        All of
        such outstanding shares have been validly issued and are fully paid and
        nonassessable and were issued in full compliance with applicable state and
        federal securities law and any rights of third parties. All of the issued
        and
        outstanding shares of capital stock of each Subsidiary have been duly authorized
        and validly issued and are fully paid, nonassessable and free of pre-emptive
        rights, and were issued in full compliance with applicable state and federal
        securities law and any rights of third parties and are owned by the Company,
        beneficially and of record, subject to no lien, encumbrance or other adverse
        claim. None of the Company’s or the Subsidiary’s share capital is subject to
        preemptive rights or any other similar rights or any liens or encumbrances
        suffered or permitted by the Company or any Subsidiary. Except with respect
        to
        the Warrants and the Placement Agent Warrants, there are no outstanding options,
        warrants, scrip, rights to subscribe to, calls or commitments of any character
        whatsoever relating to, or securities or rights convertible into, or exercisable
        or exchangeable for, any share capital of the Company or any of its
        Subsidiaries, or contracts, commitments, understandings or arrangements by
        which
        the Company or any of its Subsidiaries is or may become bound to issue
        additional share capital of the Company or any of its Subsidiaries or options,
        warrants, scrip, rights to subscribe to, calls or commitments of any character
        whatsoever relating to, or securities or rights convertible into, or exercisable
        or exchangeable for, any share capital of the Company or any of its
        Subsidiaries. Except as set forth in the Disclosure Schedule, there are no
        outstanding debt securities, notes, credit agreements, credit facilities
        or
        other agreements, documents or instruments evidencing Indebtedness of the
        Company or any of its Subsidiaries or by which the Company or any of its
        Subsidiaries is or may become bound. There are no financing statements securing
        obligations in any material amounts, either singly or in the aggregate, filed
        in
        connection with the Company or any of its Subsidiaries. Except as set forth
        in
        the Disclosure Schedule, there are no agreements or arrangements under which
        the
        Company is obligated to register the sale of any of their securities under
        the
        1933 Act (except the Registration Rights Agreement). 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (ii)
        The
        issuance and sale of the Securities hereunder will not obligate the Company
        to
        issue or offer to issue shares of Common Stock or other securities to any
        other
        Person (other than the Buyers) and will not result in the adjustment of the
        exercise, conversion, exchange or reset price of any outstanding
        security.

      

      (iii)
        The
        Company has furnished to the Buyers true, correct and complete copies of
        the
        Company’s Articles of Incorporation, as amended and as in effect on the date
        hereof (the “Articles
        of Incorporation”),
        and
        the Company’s Bylaws, as amended and as in effect on the date hereof (the
“Bylaws”),
        and
        the terms of all securities convertible into, or exercisable or exchangeable
        for, shares of Common Stock and the material rights of the holders thereof
        in
        respect thereto. 

      

      (s) Indebtedness
        and Other Contracts.
        Except
        as set forth in the Disclosure Schedule, the Company (i) has no outstanding
        Indebtedness (as defined below), (ii) is not a party to any contract, agreement
        or instrument, the violation of which, or default under which, by the other
        party(ies) to such contract, agreement or instrument would result in a Material
        Adverse Effect, (iii) is not in violation of any term of or in default under
        any
        material contract, agreement or instrument, except where such violations
        and
        defaults would not result, individually or in the aggregate, in a Material
        Adverse Effect, and (iv) is not a party to any contract, agreement or
        instrument, the performance of which, in the judgment of the Company’s officers,
        has or is expected to have a Material Adverse Effect. 

       

      For
        purposes of this Agreement: (x) “Indebtedness”
of
        any
        Person means, without duplication (A) all indebtedness for borrowed money,
        (B)
        all obligations issued, undertaken or assumed as the deferred purchase price
        of
        property or services (other than trade payables entered into in the ordinary
        course of business), (C) all reimbursement or payment obligations with respect
        to letters of credit, surety bonds and other similar instruments, (D) all
        obligations evidenced by notes, bonds, debentures or similar instruments,
        including obligations so evidenced incurred in connection with the acquisition
        of property, assets or businesses, (E) all indebtedness created or arising
        under
        any conditional sale or other title retention agreement, or incurred as
        financing, in either case with respect to any property or assets acquired
        with
        the proceeds of such indebtedness (even though the rights and remedies of
        the
        seller or bank under such agreement in the event of default are limited to
        repossession or sale of such property), (F) all monetary obligations under
        any
        leasing or similar arrangement which, in connection with generally accepted
        accounting principles, consistently applied for the periods covered thereby,
        is
        classified as a capital lease, (G) all indebtedness referred to in clauses
        (A)
        through (F) above secured by (or for which the holder of such Indebtedness
        has
        an existing right, contingent or otherwise, to be secured by) any mortgage,
        lien, pledge, charge, security interest or other encumbrance upon or in any
        property or assets (including accounts and contract rights) owned by any
        Person,
        even though the Person which owns such assets or property has not assumed
        or
        become liable for the payment of such indebtedness, and (H) all Contingent
        Obligations in respect of indebtedness or obligations of others of the kinds
        referred to in clauses (A) through (G) above; (y) “Contingent
        Obligation”
means,
        as to any Person, any direct or indirect liability, contingent or otherwise,
        of
        that Person with respect to any indebtedness, lease, dividend or other
        obligation of another Person if the primary purpose or intent of the Person
        incurring such liability, or the primary effect thereof, is to provide assurance
        to the obligee of such liability that such liability will be paid or discharged,
        or that any agreements relating thereto will be complied with, or that the
        holders of such liability will be protected (in whole or in part) against
        loss
        with respect thereto; and (z) “Person”
means
        an individual, a limited liability company, a partnership, a joint venture,
        a
        corporation, a trust, an unincorporated organization and a government or
        any
        department or agency thereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (t) Absence
        of Litigation.
        There
        is no material action, suit, proceeding, inquiry or investigation before
        or by
        the Principal Market, any court, public board, government agency,
        self-regulatory organization or body pending or, to the knowledge of the
        Company, threatened against or affecting the Company, the Common Stock or
        any of
        the Company’s Subsidiaries, any of the Company’s or its Subsidiaries’ officers
        or directors or the transactions contemplated by the Transaction
        Documents.

       

      (u) Employee
        Relations.
        (i) The
        Company is not a party to or bound by any collective bargaining agreements
        or
        other agreements with labor organizations. The Company has not violated in
        any
        material respect any laws, regulations, orders or contract terms, affecting
        the
        collective bargaining rights of employees, labor organizations or any laws,
        regulations or orders affecting employment discrimination, equal opportunity
        employment, or employees’ health, safety, welfare, wages and hours.

       

      (ii)
        (a)
        There are no labor disputes existing, or to the Company's knowledge, threatened,
        involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts
        or any other disruptions of or by the Company's employees, (b) there are
        no
        unfair labor practices or petitions for election pending or, to the Company's
        knowledge, threatened before the National Labor Relations Board or any other
        foreign, federal, state or local labor commission relating to the Company's
        employees, (c) no demand for recognition or certification heretofore made
        by any
        labor organization or group of employees is pending with respect to the Company
        and (d) to the Company's best knowledge, the Company enjoys good labor and
        employee relations with its employees and labor organizations.

       

      (iii) The
        Company is, and at all times has been, in compliance in all material respects
        with all applicable laws respecting employment (including laws relating to
        classification of employees and independent contractors) and employment
        practices, terms and conditions of employment, wages and hours, and immigration
        and naturalization. 

       

      (iv) The
        Company is not a party to, or bound by, any employment or other contract
        or
        agreement that contains any severance, termination pay or change of control
        liability or obligation, including, without limitation, any “excess parachute
        payment,” as defined in Section 2806(b) of the Internal Revenue
        Code.

       

      (v) No
        executive officer or key employee, or any group thereof, intends to terminate
        their employment with the Company, nor does the Company have a present intention
        to terminate the employment of any of the foregoing. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (v) Title.
        The
        Company and its Subsidiaries have good and marketable title in fee simple
        to all
        real property and good and marketable title to all personal property owned
        by
        them which is material to the business of the Company and its Subsidiaries,
        in
        each case free and clear of all liens, encumbrances and defects except such
        as
        do not materially affect the value of such property and do not interfere
        with
        the use made and proposed to be made of such property by the Company and
        any of
        its Subsidiaries. Any real property and facilities and personal property
        held
        under lease by the Company and any of its Subsidiaries are held by them under
        valid, subsisting and enforceable leases with such exceptions as are not
        material and do not interfere with the use made and proposed to be made of
        such
        property and buildings by the Company and its Subsidiaries.

       

      (w) Intellectual
        Property.
        The
        Company and the Subsidiaries have, or have rights to use, all patents,
        trademarks, trademark applications, service marks, trade names, copyrights,
        licenses and other intellectual property rights necessary or material for
        use in
        connection with its business as described in the SEC Reports and which the
        failure to so have could have a Material Adverse Effect (collectively, the
        “Intellectual
        Property Rights”).
        Neither the Company nor any Subsidiary has received a written notice that
        the
        use of the Intellectual Property Rights by the Company or any Subsidiary
        violates or infringes upon the rights of any Person. To the knowledge of
        the
        Company, (i) use of the Intellectual Property Rights by the Company or any
        Subsidiary does not violate or infringe upon the rights of any Person, and
        (ii)
        no third Party is infringing upon the Intellectual Property Rights of the
        Company or any Subsidiary. To the knowledge of the Company, all such
        Intellectual Property Rights are enforceable. 

       

      (x) Tax
        Status.
        The
        Company and each of its Subsidiaries (i) has made or filed all foreign, federal
        and state income and all other tax returns, reports and declarations required
        by
        any jurisdiction to which it is subject, (ii) has paid all taxes and other
        governmental assessments and charges that are material in amount, shown or
        determined to be due on such returns, reports and declarations, except those
        being contested in good faith and (iii) has set aside on its books provision
        reasonably adequate for the payment of all taxes for periods subsequent to
        the
        periods to which such returns, reports or declarations apply. There are no
        unpaid taxes in any material amount claimed to be due by the taxing authority
        of
        any jurisdiction, and the officers of the Company know of no basis for any
        such
        claim. All taxes and other assessments and levies that the Company or any
        Subsidiary is required to withhold or to collect for payment have been duly
        withheld and collected and paid to the proper governmental entity or third
        party
        when due. There are no tax liens or claims pending or, to the Company’s
        knowledge, threatened against the Company or any Subsidiary or any of their
        respective assets or property. There are no outstanding tax sharing agreements
        or other such arrangements between the Company and any Subsidiary or other
        corporation or entity. 

       

      (y)  Insurance
        Coverage.
        The
        Company and each Subsidiary maintains in full force and effect insurance
        coverage that is customary for comparably situated companies for the business
        being conducted and properties owned or leased by the Company and each
        Subsidiary, and the Company reasonably believes such insurance coverage to
        be
        adequate against all liabilities, claims and risks against which it is customary
        for comparably situated companies to insure.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (z) Off
        Balance Sheet Arrangements.
        There
        is no transaction, arrangement, or other relationship between the Company
        and an
        unconsolidated or other off balance sheet entity that is required to be
        disclosed by the Company in its 1934 Act filings and is not so disclosed
        or that
        otherwise would be reasonably likely to have a Material Adverse
        Effect.

       

      (aa) Manipulation
        of Price.
        The
        Company has not, and to its knowledge no one acting on its behalf has, (i)
        taken, directly or indirectly, any action designed to cause or to result
        or that
        could reasonably be expected to cause or result, in the stabilization or
        manipulation of the price of any security of the Company to facilitate the
        sale
        or resale of any of the Securities or (ii) other than the Placement Agent,
        sold,
        bid for, purchased, or paid any compensation for soliciting purchases of,
        any of
        the Securities.

       

      (bb) Company’s
        Knowledge.
        For
        purposes of this Agreement, “knowledge of the Company” or the “Company’s
        knowledge” means the actual knowledge of the executive officers (as defined in
        Rule 405 under the 1933 Act) of the Company.

       

      4. COVENANTS.

       

      (a) Best
        Efforts.
        Each
        party shall use its best efforts timely to satisfy each of the conditions
        to be
        satisfied by it as provided in Sections 5 and 6 of this Agreement.

       

      (b) Form
        D
        and Blue Sky.
        The
        Company agrees to file a Form D with respect to the Securities as required
        under
        Regulation D and to provide a copy thereof to each Buyer and the Placement
        Agent
        promptly after such filing. The Company shall, on or before the Closing Date,
        take such action as the Company shall reasonably determine is necessary in
        order
        to obtain an exemption for or to qualify the Securities for sale to the Buyers
        at Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
        qualification), and shall provide evidence of any such action so taken to
        the
        Buyers and the Placement Agent on or prior to Closing Date. The Company shall
        make all filings and reports relating to the offer and sale of the Securities
        required under applicable securities or “Blue Sky” laws of the states of the
        United States following the Closing Date.

       

      (c) Reporting
        Status.
        Until
        the date on which the Investors (as defined in the Registration Rights
        Agreement) shall have sold all the Common Stock and none of the Warrants
        is
        outstanding (the “Reporting
        Period”),
        the
        Company shall file all reports required to be filed with the SEC pursuant
        to the
        1934 Act, and the Company shall not terminate its status as an issuer required
        to file reports under the 1934 Act even if the 1934 Act or the rules and
        regulations thereunder would otherwise permit such termination. The Company
        will
        furnish to the Buyers and/or their assignees such information relating to
        the
        Company and its Subsidiaries as from time to time may reasonably be requested
        by
        the Buyers and/or their assignees; provided, however, that the Company shall
        not
        disclose material nonpublic information to the Buyers, or to advisors to
        or
        representatives of the Buyers, unless prior to disclosure of such information
        the Company identifies such information as being material nonpublic information
        and provides the Buyers, such advisors and representatives with the opportunity
        to accept or refuse to accept such material nonpublic information for review
        and
        any Buyer wishing to obtain such information enters into an appropriate
        confidentiality agreement with the Company with respect thereto.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (d) Listing.
        The
        Company shall promptly secure the listing of all of the Registrable Securities
        (as defined in the Registration Rights Agreement) upon each national securities
        exchange and automated quotation system, if any, upon which the Common Stock
        is
        then listed (subject to official notice of issuance) and shall maintain such
        listing of all Registrable Securities from time to time issuable under the
        terms
        of the Transaction Documents. The Company shall maintain the Common Stocks’
authorization for quotation on the Principal Market. Neither the Company
        nor any
        of its Subsidiaries shall take any action which would be reasonably expected
        to
        result in the delisting or suspension of the Common Stock on the Principal
        Market. The Company shall pay all fees and expenses in connection with
        satisfying its obligations under this Section 4(d).

       

      (e) Fees.
        The
        Company shall reimburse all (i) reasonable costs and expenses (including
        travel-related expenses) of Placement Agent, including without limitation,
        fees,
        expenses, travel expenses and disbursements of outside counsel, consultants
        and
        engineers incurred in connection with due diligence and preparation of the
        Transaction Documents and the administration of the Units and (ii) reasonable
        costs, expenses and travel expenses of Agent (including fees and costs of
        Agent’s outside counsel) in connection with the enforcement or protection of
        their rights and remedies under the Units. These fees shall not exceed $2,000
        unless prior approval has been granted by the Company. Except as otherwise
        set
        forth in the Transaction Documents, each party to this Agreement shall bear
        its
        own expenses in connection with the sale of the Securities to the
        Buyers.

       

      (f) Conduct
        of Business.
        The
        business of the Company and its Subsidiaries shall not be conducted in violation
        of any law, ordinance or regulation of any state or federal governmental
        entity,
        administrative agency or other regulatory agency, except where such violations
        would not result, either individually or in the aggregate, in a Material
        Adverse
        Effect. 

       

      (g) No
        Conflicting Agreements.
        The
        Company will not take any action, enter into any agreement or make any
        commitment that would conflict or interfere in any material respect with
        the
        Company’s obligations to the Buyers under the Transaction
        Documents.

       

      (h) Compliance
        with Laws.
        The
        Company will comply in all material respects with all applicable laws, rules,
        regulations, orders and decrees of all state or federal governmental entities,
        administrative agencies or other regulatory agencies.

       

      (i) Reservation
        of Common Stock.
        The
        Company shall at all times reserve and keep available out of its authorized
        but
        unissued shares of Common Stock, solely for the purpose of providing for
        the
        exercise of the Warrants and the Placement Agent Warrants, such number of
        shares
        of Common Stock as shall from time to time equal the Warrant Shares and the
        Placement Agent Warrant Shares issuable upon the due exercise of the Warrants
        and the Placement Agent Warrants, as the case may be, in accordance with
        their
        respective terms. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      5. CONDITIONS
        TO THE COMPANY’S OBLIGATION TO SELL.

       

      The
        obligation of the Company hereunder to issue and sell the Units to each Buyer
        at
        the Closing is subject to the satisfaction, at or before the Closing Date,
        of
        each of the following conditions, provided that these conditions are for
        the
        Company’s sole benefit and may be waived by the Company at any time in its sole
        discretion by providing such Buyer with prior written notice
        thereof:

       

      (i) Such
        Buyer shall have executed each of the Transaction Documents to which it is
        a
        party and delivered the same to the Company. 

       

      (ii) Such
        Buyer shall have delivered to the Escrow Agent the Purchase Price by wire
        transfer of immediately available funds.

       

      (iii) The
        Buyers collectively shall have delivered to the Escrow Agent by wire transfer
        at
        least $2,500,000 of immediately available funds. 

       

      (iv) The
        representations and warranties of such Buyer shall be true and correct in
        all
        material respects as of the date when made and as of the Closing Date as
        though
        made at that time (except for representations and warranties that speak as
        of a
        specific date), and such Buyer shall have performed, satisfied and complied
        in
        all material respects with the covenants, agreements and conditions required
        by
        this Agreement to be performed, satisfied or complied with by such Buyer
        at or
        prior to the Closing Date.

       

      6. CONDITIONS
        TO EACH BUYER’S OBLIGATION TO PURCHASE.

       

      The
        obligation of each Buyer hereunder to purchase the Units at the Closing is
        subject to the satisfaction, at or before the Closing Date, of each of the
        following conditions, provided that these conditions are for each Buyer’s sole
        benefit and may be waived by such Buyer at any time in its sole discretion
        by
        providing the Company with prior written notice thereof:

       

      (i) The
        Company shall have executed and delivered to such Buyer (A) each of the
        Transaction Documents, and (B) the Units (in such amounts as such Buyer shall
        request) being purchased by such Buyer at the Closing pursuant to this
        Agreement.

       

      (ii) Such
        Buyer shall have received the opinion of Richardson & Patel LLP, the
        Company’s corporate counsel, dated as of the Closing Date, in substantially the
        form of Exhibit
        C attached
        hereto. 

       

      (iii) The
        Company shall have delivered to such Buyer a certificate evidencing the
        formation and good standing of the Company and each of its Subsidiaries in
        such
        entity’s jurisdiction of formation issued by the Secretary of State (or
        comparable office) of such jurisdiction.

       

      (iv) The
        Company shall have delivered to such Buyer a certified copy of the Articles
        of
        Incorporation as certified by the Secretary of State of the State of
        Nevada.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (v) The
        Company shall have delivered to such Buyer a certificate, executed by the
        Chief
        Executive Officer of the Company and dated as of the Closing Date, as to
        (i)
        resolutions adopted by the Company’s Board of Directors to approve the
        transactions contemplated by this Agreement, (ii) the Articles of Incorporation
        and (iii) the Bylaws, each as in effect at the Closing.

       

      (vi) The
        representations and warranties of the Company shall be true and correct as
        of
        the date when made and as of the Closing Date as though made at that time
        (except for representations and warranties that speak as of a specific date)
        and
        the Company shall have performed, satisfied and complied in all respects
        with
        the covenants, agreements and conditions required by the Transaction Documents
        to be performed, satisfied or complied with by the Company at or prior to
        the
        Closing Date. Such Buyer shall have received a certificate, executed by the
        Chief Executive Officer of the Company, dated as of the Closing Date, to
        the
        foregoing effect.

       

      (vii) The
        Company shall have obtained all governmental, regulatory or third party consents
        and approvals, if any, necessary for the sale of the Securities, except for
        post-closing securities filings or notifications required to be made under
        federal or state securities laws.

       

      (viii) No
        judgment, writ, order, injunction, award or decree of or by any court, or
        judge,
        justice or magistrate, including any bankruptcy court or judge, or any order
        of
        or by any governmental authority, shall have been issued, and no action or
        proceeding shall have been instituted by any governmental authority, enjoining
        or preventing the consummation of the transactions contemplated hereby or
        by the
        other Transaction Documents.

       

      (ix) No
        stop
        order or suspension of trading shall have been imposed by the Principal Market,
        the SEC or any other governmental or regulatory body with respect to public
        trading in the Common Stock.

       

      (x) The
        Company shall have delivered to such Buyer such other documents relating
        to the
        transactions contemplated by this Agreement as such Buyer or its counsel
        may
        reasonably request.

       

      7. TERMINATION.
        In
        the
        event that the Closing shall not have occurred with respect to a Buyer on
        or
        before ten (10) Business Days from the date Buyer executed such Agreement
        due to
        the Company’s or such Buyer’s failure to satisfy the conditions set forth in
        Sections 5 and 6 above (and the nonbreaching party’s failure to waive such
        unsatisfied condition(s)), the nonbreaching party shall have the option to
        terminate this Agreement with respect to such breaching party (but in the
        case
        that a Buyer is the breaching party, only with respect to such breaching
        Buyer)
        at the close of business on such date without liability of any party to any
        other party.
        In
        the
        event of termination by the Company or any Buyer of its obligations to effect
        the Closing pursuant to this Agreement, written notice thereof shall forthwith
        be given to the other Buyers and the other Buyers shall have the right to
        terminate their obligations to effect the Closing upon written notice to
        the
        Company and the other Buyers. Nothing in this Section 7 shall be deemed to
        release any party from any liability for any breach by such party of the
        terms
        and provisions of this Agreement or the other Transaction Documents or to
        impair
        the right of any party to compel specific performance by any other party
        of its
        obligations under this Agreement or the other Transaction
        Documents.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      8. MISCELLANEOUS.

       

      (a) Governing
        Law; Consent to Jurisdiction; Waiver of Jury Trial.
        This
        Agreement shall be governed by, and construed in accordance with, the internal
        laws of the State of New York without regard to the choice of law principles
        thereof. Each of the parties hereto irrevocably submits to the exclusive
        jurisdiction of the courts of the State of New York located in New York County
        and the United States District Court for the Southern District of New York
        for
        the purpose of any suit, action, proceeding or judgment relating to or arising
        out of this Agreement and the transactions contemplated hereby. Service of
        process in connection with any such suit, action or proceeding may be served
        on
        each party hereto anywhere in the world by the same methods as are specified
        for
        the giving of notices under this Agreement. Each of the parties hereto
        irrevocably consents to the jurisdiction of any such court in any such suit,
        action or proceeding and to the laying of venue in such court. Each party
        hereto
        irrevocably waives any objection to the laying of venue of any such suit,
        action
        or proceeding brought in such courts and irrevocably waives any claim that
        any
        such suit, action or proceeding brought in any such court has been brought
        in an
        inconvenient forum. EACH
        OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
        LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS
        BEEN
        CONSULTED SPECIFICALLY AS TO THIS WAIVER.

       

      (b) Counterparts.
        This
        Agreement may be executed in two or more identical counterparts, all of which
        shall be considered one and the same agreement and shall become effective
        when
        counterparts have been signed by each party and delivered to the other party;
        provided that a facsimile signature shall be considered due execution and
        shall
        be binding upon the signatory thereto with the same force and effect as if
        the
        signature were an original, not a facsimile signature.

       

      (c) Headings.
        The
        headings of this Agreement are for convenience of reference and shall not
        form
        part of, or affect the interpretation of, this Agreement.

       

      (d) Severability.
        If any
        provision of this Agreement shall be invalid or unenforceable in any
        jurisdiction, such invalidity or unenforceability shall not affect the validity
        or enforceability of the remainder of this Agreement in that jurisdiction
        or the
        validity or enforceability of any provision of this Agreement in any other
        jurisdiction.

       

      (e) Entire
        Agreement; Amendments.
        This
        Agreement and the other Transaction Documents supersede all other prior oral
        or
        written agreements between the Buyers, the Company, their Affiliates and
        Persons
        acting on their behalf with respect to the matters discussed herein and therein,
        and this Agreement, the other Transaction Documents and the instruments
        referenced herein contain the entire understanding of the parties with respect
        to the matters covered herein and therein and, except as specifically set
        forth
        herein or therein, neither the Company nor any Buyer makes any representation,
        warranty, covenant or undertaking with respect to such matters. No provision
        of
        this Agreement may be amended other than by an instrument in writing signed
        by
        the Company and the holders of a majority of outstanding common stock issued
        through this offering and any amendment to this Agreement made in conformity
        with the provisions of this Section 9(e) shall be binding on all Buyers and
        holders of Securities, as applicable; provided that any amendment of Sections
        1(a)(iii), 4(a) through 4(d), and 5 shall require the consent of all Buyers;
        provided, further, however, that any amendment that disproportionately affects
        a
        Buyer in a materially and adversely manner (except as a result of holding
        a
        greater percentage of Common Stock) shall require prior written consent of
        such
        Buyer; provided further, however, that any Buyer may be added as a party
        to this
        Agreement in accordance with Section 1 of this Agreement by the Company without
        the consent of the prior Buyers. No provision hereof may be waived other
        than by
        an instrument in writing signed by the party against whom enforcement is
        sought.
        No such amendment shall be effective to the extent that it applies to less
        than
        all of the holders of the applicable Securities then outstanding. No
        consideration shall be offered or paid to any Person to amend or consent
        to a
        waiver or modification of any provision of any of the Transaction Documents
        unless the same consideration also is offered to all of the parties to the
        Transaction Documents, holders of Common Stock or holders of the Warrants,
        as
        the case may be. The Company has not, directly or indirectly, made any
        agreements with any Buyers relating to the terms or conditions of the
        transactions contemplated by the Transaction Documents except as set forth
        in
        the Transaction Documents. Without limiting the foregoing, the Company confirms
        that, except as set forth in this Agreement, no Buyer has made any commitment
        or
        promise or has any other obligation to provide any financing to the Company
        or
        otherwise.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (f) Notices.
        Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms of this Agreement must be in writing and will be deemed
        to
        have been delivered: (i) upon receipt, when delivered personally; (ii) upon
        receipt, when sent by facsimile (provided confirmation of transmission is
        mechanically or electronically generated and kept on file by the sending
        party);
        or (iii) one Business Day after deposit with an overnight courier service,
        in
        each case properly addressed to the party to receive the same. The addresses
        and
        facsimile numbers for such communications shall be:

       

      If
        to
        the Company:

       

       

      Composite
        Technology Corporation

      2026
        McGaw Avenue

      Irvine,
        California 92614

      Telephone: (949)
        428-8500

      Facsimile: (949)
        660-1533

      Attention: Chief
        Executive Officer

       

      With
        a copy to:

       

      Richardson
        & Patel, LLP

      10900
        Wilshire Blvd., Suite 500

      Los
        Angeles, California 90024

      Telephone: (310)
        208-1182

      Facsimile: (310)
        208-1154

      Attention: Kevin
        Leung, Esq. 

       

      If
        to
        a Buyer or Buyers:

       

      to
        its
        address and facsimile number set forth on the Schedule of Buyers, with copies
        to
        such Buyer’s representatives as set forth on the Schedule of Buyers.

       

      or
        to
        such other address and/or facsimile number and/or to the attention of such
        other
        Person as the recipient party has specified by written notice given to each
        other party five (5) Business Days prior to the effectiveness of such change.
        Written confirmation of receipt (A) given by the recipient of such notice,
        consent, waiver or other communication, (B) mechanically or electronically
        generated by the sender’s facsimile machine containing the time, date, recipient
        facsimile number and an image of the first page of such transmission or (C)
        provided by an overnight courier service shall be rebuttable evidence of
        personal service, receipt by facsimile or receipt from an overnight courier
        service in accordance with clause (i), (ii) or (iii) above,
        respectively.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (g) Successors
        and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their respective successors and assigns, including any purchasers of the
        Common
        Stock or the Warrants. 

       

      (h) No
        Third Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and is not for the benefit of, nor may
        any
        provision hereof be enforced by, any other Person.

       

      (i) Survival.
        The
        representations and warranties of the Company and the Buyers contained in
        Sections 2 and 3 and the agreements and covenants set forth in Sections 4
        and 8
        shall survive the Closing. Each Buyer shall be responsible only for its own
        representations, warranties, agreements and covenants hereunder.

       

      (j) Further
        Assurances.
        Each
        party shall do and perform, or cause to be done and performed, all such further
        acts and things, and shall execute and deliver all such other agreements,
        certificates, instruments and documents, as any other party may reasonably
        request in order to carry out the intent and accomplish the purposes of this
        Agreement and the consummation of the transactions contemplated
        hereby.

       

      (k) No
        Strict Construction.
        The
        language used in this Agreement will be deemed to be the language chosen
        by the
        parties to express their mutual intent, and no rules of strict construction
        will
        be applied against any party.

       

      (l) Independent
        Nature of Buyers’ Obligations and Rights.
        The
        obligations of each Buyer under any Transaction Document are several and
        not
        joint with the obligations of any other Buyer, and no Buyer shall be responsible
        in any way for the performance of the obligations of any other Buyer under
        any
        Transaction Document. Nothing contained herein or in any other Transaction
        Document, and no action taken by any Buyer pursuant hereto or thereto, shall
        be
        deemed to constitute the Buyers as a partnership, an association, a joint
        venture or any other kind of entity, or create a presumption that the Buyers
        are
        in any way acting in concert or as a group with respect to such obligations
        or
        the transactions contemplated by the Transaction Documents. Each Buyer confirms
        that it has independently participated in the negotiation of the transaction
        contemplated hereby with the advice of its own counsel and advisors. Each
        Buyer
        shall be entitled to independently protect and enforce its rights, including,
        without limitation, the rights arising out of this Agreement or out of any
        other
        Transaction Documents, and it shall not be necessary for any other Buyer
        to be
        joined as an additional party in any proceeding for such purpose. Subject
        to the
        foregoing, the Company shall not offer or pay any consideration to any Buyer
        to
        secure such Buyer’s agreement to amend, or consent to a waiver or modification
        of, any provision of any of the Transaction Documents unless the Company
        offers
        the same consideration to all of the Buyers for such purpose. The Company
        acknowledges that each of the Buyers has been provided with the same Transaction
        Documents for the purpose of closing a transaction with multiple Buyers and
        not
        because it was required or requested to do so by any Buyer.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (m) Further
        Assurances.
        The
        parties shall execute and deliver all such further instruments and documents
        and
        take all such other actions as may reasonably be required to carry out the
        transactions contemplated hereby and to evidence the fulfillment of the
        agreements herein contained.

       

      (n) Publicity.
        Except
        as set forth below, no public release or announcement concerning the
        transactions contemplated hereby shall be issued by the Company or the Buyers
        without the prior consent of the Company (in the case of a release or
        announcement by the Buyers) or the Buyers (in the case of a release or
        announcement by the Company) (which consents shall not be unreasonably
        withheld), except as such release or announcement may be required by law
        or the
        applicable rules or regulations of any securities exchange or securities
        market,
        in which case the Company or the Buyers, as the case may be, shall allow
        the
        Buyers or the Company, as applicable, to the extent reasonably practicable
        in
        the circumstances, reasonable time to comment on such release or announcement
        in
        advance of such issuance. By 8:30 a.m. (New York City time) on the Trading
        Day
        (as defined below) immediately following the Closing Date, the Company shall
        issue a press release disclosing the consummation of the transactions
        contemplated by this Agreement. The Company will file a Current Report on
        Form
        8-K attaching the press release described in the foregoing sentence as well
        as
        copies of the Transaction Documents (including the Disclosure Schedule),
        on the
        first Trading Day immediately following the Closing. In addition, the Company
        will make such other filings and notices in the manner and time required
        by the
        SEC or the Principal Market. Notwithstanding the foregoing, the Company shall
        not publicly disclose the name of any Buyer, or include the name of any Buyer
        in
        any filing with the SEC (other than the Registration Statement and any exhibits
        to filings made in respect of this transaction in accordance with periodic
        filing requirements under the 1934 Act) or any regulatory agency or the
        Principal Market, without the prior written consent of such Buyer, except
        to the
        extent such disclosure is required by law or trading market regulations,
        in
        which case the Company shall provide the Buyers with prior notice of such
        disclosure. For purposes of this Agreement, “Trading
        Day”
means
        (i) if the relevant stock or security is listed or admitted for trading on
        The
        New York Stock Exchange, Inc., the Nasdaq Global Market, the Nasdaq Capital
        Market, any other national securities exchange, or the OTC Bulletin Board,
        a day
        on which such exchange is open for business; or (ii) if the relevant stock
        or
        security is quoted on a system of automated dissemination of quotations of
        securities prices, a day on which trades may be effected through such
        system.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (o) Material
        Non-Public Information.
        Following the consummation of the transactions contemplated by this Agreement,
        the Company shall not, and shall cause its and its Subsidiaries' officers,
        directors, employees and agents, not to, provide any Buyer with any material
        non-public information regarding the Company without the express prior consent
        of such Buyer. 

       

      [Signature
        Page Follows]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF, each Buyer and the Company have caused their respective
        signature page to this Securities Purchase Agreement to be duly executed
        as of
        the date first written above.

       

      
        	 	 	 
	 	
                COMPANY:

                 

                
                  COMPOSITE
                    TECHNOLOGY CORPORATION

                

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                

                Benton
                  H Wilcoxon

                Chief
                  Executive Officer

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF, each Buyer and the Company have caused their respective
        signature page to this Securities Purchase Agreement to be duly executed
        as of
        the date first written above.

       

      
        	 	 	
                BUYERS:

                 

              
	 	 	
                
                  
Buyer

                 

                
                  
Signature

                 

                
                  
Authorized
                  Representative

                 

                
                  
Title

              

      

       

       

      SUBSCRIPTION
        ACCEPTANCE 

       

      Accepted
        as of the ___ day of _________, 2007 as to $_______________ in purchase price
        of
        Units; 

      

      Subscription
        price accepted being $______________

       

       

      COMPOSITE
        TECHNOLOGY CORPORATION

       

      By: 

      
        

      

      Name: Benton
        H
        Wilcoxon

      Title: Chief
        Executive Officer

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        OF BUYERS

      

      
        	
                (1)

              	
                 

              	
                (2)

              	
                 

              	
                (3)

              	
                 

              	
                (4)

              	
                 

              	
                (5)

              	
                 

              
	
                Buyer

              	
                 

              	
                Address
                  and

                Facsimile
                  Number

              	
                 

              	
                Number
                  of Units

              	
                 

              	
                Purchase
                  Price

              	
                 

              	
                Legal
                  Representative’s Address and Facsimile Number

              	
                 

              
	
                Third
                  Point Offshore Fund Ltd

              	 	 	 	 	 	 	 	
                $

              	
                3,634,000.00

              	 	 	 	 
	
                Third
                  Point Partners LP

              	 	 	 	 	 	 	 	
                $

              	
                453,500.00

              	 	 	 	 
	
                Third
                  Point Partners Qualified LP

              	 	 	 	 	 	 	 	
                $

              	
                436,100.00

              	 	 	 	 
	
                Third
                  Point Ultra

              	 	 	 	 	 	 	 	
                $

              	
                476,400

              	 	 	 	 

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      EXHIBITS

      

        
          	
                  Exhibit
                    A

                	 	
                  Form
                    of Warrants

                
	
                  Exhibit
                    B

                	 	
                  Form
                    of Registration Rights Agreement

                
	
                  Exhibit
                    C

                	 	
                  Form
                    of Company Counsel Opinion

                
	
                  Exhibit
                    D

                	 	
                  Form
                    of Secretary’s Certificate

                
	
                  Exhibit
                    E

                	 	
                  Form
                    of Officer’s Certificate

                

        

      

       

      SCHEDULES

       

      Schedule
        of Buyers

      Disclosure
        Schedule

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Definition
        of “Accredited Investor”

      

      Category
        A  The
        undersigned is an individual (not a partnership, corporation, etc.) whose
        individual net worth, or joint net worth with his or her spouse, presently
        exceeds $1,000,000.

      

      Category
        B  The
        undersigned is an individual (not a partnership, corporation, etc.) who had
        an
        income in excess of $200,000 in each of the two most recent years, or joint
        income with his or her spouse in excess of $300,000 in each of those years
        (in
        each case including foreign income, tax exempt income and full amount of
        capital
        gains and losses but excluding any income of other family members and any
        unrealized capital appreciation) and has a reasonable expectation of reaching
        the same income level in the current year.

      

      Category
        C  The
        undersigned is a director or executive officer of the Company which is issuing
        and selling the securities.

      

      Category
        D  The
        undersigned is a bank; a savings and loan association; insurance company;
        registered investment company; registered business development company; licensed
        small business investment company (“SBIC”); or employee benefit plan within the
        meaning of Title 1 of ERISA and (a) the investment decision is made by a
        plan
        fiduciary which is either a bank, savings and loan association, insurance
        company or registered investment advisor, or (b) the plan has total assets
        in
        excess of $5,000,000 or (c) is a self directed plan with investment decisions
        made solely by persons that are accredited investors. 

       

      Category
        E  The
        undersigned is a private business development company as defined in section
        202(a)(22) of the Investment Advisors Act of 1940. 

       

      Category
        F  The
        undersigned is either a corporation, partnership, Massachusetts business
        trust,
        or non-profit organization within the meaning of Section 501(c)(3) of the
        Internal Revenue Code, in each case not formed for the specific purpose of
        acquiring the Securities and with total assets in excess of
        $5,000,000.

       

      Category
        G  The
        undersigned is a trust with total assets in excess of $5,000,000, not formed
        for
        the specific purpose of acquiring the Securities, where the purchase is directed
        by a “sophisticated investor“ as defined in Regulation 506(b)(2)(ii) under the
        Act.

      

      Category
        H  The
        undersigned is an entity (other than a trust) in which all of the equity
        owners
        are “accredited investors” within one or more of the above categories. If
        relying upon this Category alone, each equity owner must complete a separate
        copy of this Agreement.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    SCHEDULE
      OF EXCEPTIONS

     

    The
      following exceptions are hereby made to the representations and warranties
      made
      by Composite Technology Corporation (the “Company”) contained in the Section 3
      of the Securities Purchase Agreement, dated as of June 11, 2007 (the
“Agreement”) by and among the Company and the investors set forth therein. All
      exhibits attached hereto are incorporated by reference where indicated. Any
      terms defined in the Agreement shall have the same meaning when used in this
      Schedule of Exceptions as when used in the Agreement, unless the content
      otherwise requires. 

     

    Notwithstanding
      any material qualifications in any of the Company’s representations and
      warranties in the Agreement, for administrative ease, certain items have been
      included which are not considered by the Company to be material to the business,
      assets, or results of operations of the Company. The inclusion of any item
      is
      not an admission by the Company that the item is material to the business,
      assets (including intangible assets), financial condition or results of
      operations of the Company and is not an admission of any obligation or liability
      to any third party.

    
      
         

      

      
         

        
          

        

      

       

    

    Schedule
      3(a) 

    

    Subsidiaries.

    

    The
      following are the Subsidiaries of the Company as that term is described in
      Section 3a of the Agreement:

     

    
      	 	 	
              Correct
                Name

            	 	
              Principal
                Address

            	
               

            	
              Jurisdiction
                of Incorporation

            	
               

            	
              Class
                of Shares

            	
               

            	
              Percentage
                Ownership

            
	
              1

            	 	
              CTC
                Cable Corporation

            	 	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	 	
              Nevada

            	 	
              Ordinary

            	 	
              100%

            
	
              2

            	 	
              Transmission
                Technology Corporation

            	 	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	 	
              Nevada

            	 	
              Ordinary

            	 	
              100%

            
	
              3

            	 	
              CTC
                Towers & Poles Corporation

            	 	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	 	
              Nevada

            	 	
              Ordinary

            	 	
              100%

            
	
              4

            	 	
              DeWind
                Inc.

            	 	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	 	
              Nevada

            	 	
              Ordinary

            	 	
              100%

            
	
              5

            	 	
              EU
                Energy, Inc.

            	 	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	 	
              Nevada

            	 	
              Ordinary

            	 	
              100%

            
	
              6

            	 	
              DeWind
                Ltd

            	 	
              151
                Silsbury Blvd

              Milton
                Keynes, MK9 1LH

              United
                Kingdom

            	 	
              UK

            	 	
              Ordinary

            	 	
              100%

            
	
              7

            	 	
              DeWind
                Turbines Ltd

            	 	
              151
                Silsbury Blvd

              Milton
                Keynes, MK9 1LH

              United
                Kingdom

            	 	
              UK

            	 	
              Ordinary

            	 	
              100%

            
	
              8

            	 	
              DeWind
                Holdings Ltd

            	 	
              151
                Silsbury Blvd

              Milton
                Keynes, MK9 1LH

              United
                Kingdom

            	 	
              UK

            	 	
              Ordinary

            	 	
              100%

            
	
              9

            	 	
              DeWind
                GmbH

            	 	
              Seelandstrasse
                1

              D-23569
                

              Lubeck
                Germany

            	 	
              Germany

            	 	
              Ordinary

            	 	
              100%

            
	
              10

            	 	
              EU
                Energy Turbines GmbH

            	 	
              Seelandstrasse
                1

              D-23569
                

              Lubeck
                Germany

            	 	
              Germany

            	 	
              Ordinary

            	 	
              100%

            
	
              11

            	 	
              E
                Energy Service GmbH

            	 	
              Seelandstrasse
                1

              D-23569
                

              Lubeck
                Germany

            	 	
              Germany

            	 	
              Ordinary

            	 	
              24.9%

            

    

     

    
      
         

      

      
         

        
          

        

      

       

    

    Schedule
      3(b) 

    

    Authorization;
      Enforcement: None

     

    
      
         

      

      
         

        
          

        

      

       

    

    Schedule
      3 (c) Issuance of Shares: None

    

    (d)
      No
      Conflicts: None

    

    (e)
      Consents: None

    

    Schedule
      3(f) Acknowledgement Regarding Buyers Purchase of Securities: None except that
      the Company is relying upon the representations made by the buyers that no
      buyer
      is purchasing the Company securities for its own account and that no buyer
      represents a beneficial owner.

    

    (g)
      No
      General Solicitation: None

    

    (h)
      Private Placement: None

    

    (i)
      Dilutive effect: The impacts of the antidilution related to this transaction
      are
      currently limited to the following instruments:

    

    1.
      $5,013,200 of Convertible Debt (due 8/07) currently convertible at $1.47 prior
      to the issuance of the common stock and related warrants. Antidilution is a
      weighted average conversion price reset that is dependent on the total value
      of
      the common stock and intrinsic value of the warrants issued. Included in the
      terms and conditions of the Auguat, 2004 Convertible Debt is a clause that
      states, in effect that if the Company uses the proceeds to redeem the entire
      remaining outstanding principal balance that there will be no anti-dilution
      impact for the debt or for the related warrants as discussed in 2. below. We
      are
      currently evaluating the impact of this clause on this investment issuance.
      If
      it is determined that there will be an anti-dilution impact and we complete
      the
      proposed financing of $15,000,000 at a VWAP price of $1.25 per unit, the
      estimated price reset would be approximately $0.02 per share to $1.45. The
      additional shares issuable on a $0.02 conversion price change are
      47,039.

    

    2.
      A
      total of 4,307,275 warrants issued in 2004, related to the Convertible Debt,
      with a current exercise price of $1.47 per warrant, expiring in 2008 have price
      reset provisions that are calculated in the same manner as the price reset
      of
      the convertible debt listed in 1. above. A $0.02 price reset will result in
      a
      reduction of cash proceeds upon the exercise of these warrants in the amount
      of
      $86,146.

    

    As
      long
      as the price per share and exercise price per warrant is greater than $1.13
      per
      share or warrant, there are no anti-dilution impacts for any of the remaining
      securities with anti-dilution protection. 

    

    (j)
      Application of Takeover Protections: None

    

    (k)
      SEC
      Documents; Financial Statements: None

    

    (l)
      Absence of Certain Changes: 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Operational
      update from 3/31/07:

    

    In
      May,
      2007 we announced the potential settlement of certain litigation with FKI
      related to our DeWind subsidiaries and as described in our Form 10Q filed May
      10, 2007. Under the terms of the settlement we have accrued for and tentatively
      agreed to pay 1.5 million Euros to compensate FKI for cash claims made by DeWind
      customers shortly after the acquisition of DeWind from FKI by EU Energy. The
      tentative settlement and the payment of these funds are contingent on the
      successful resolution of the German capital account issues. Such resolution
      requires that Ernst and Young complete and approve their audits of DeWind for
      the years ending March 31, 2003, 2004, and 2005. Upon the completion of these
      audits, expected no earlier than September, 2007, we will then review the
      capital account structure and paid in capital balances of the German
      subsidiaries to agree to a settlement figure with FKI regarding the capital
      accounts with and between FKI. Our maximum exposure on this issue is 1.5 million
      Euros or approximately $2.0 million with payment to be in equal installments
      28
      days after final resolution and 90 days after the payment of the first
      installment. We have potential recovery on this figure as follows: 1) in cash
      to
      the extent that FKI is required to return capital that we claim they improperly
      repaid themselves through inter-company loans and which we believe could be
      in
      excess of the 1.5 million Euros and 2) as a potential misrepresentation of
      the
      true and accurate value of the assets and liabilities under the “carve-back”
clause of the acquisition documents between EU Energy by Composite Technology
      Corporation. Under such a carve-back clause, we are allowed to recover common
      shares at $1.55 per share for material misrepresentations made by the owners
      and
      management of EU Energy. We have not filed a claim to date under this
      clause.

    

    On
      May
      11, 2007 we formally noticed XRG Development Partners, LLC (XRG) that under
      their Turbine Supply Agreement (TSA) dated March 27, 2007 that they were in
      default of the agreement due to non-payment of scheduled monies due Composite
      Technology Corporation. Under the terms of the TSA, XRG has a 30 day cure period
      to remedy the payment issue before the contract is considered to be in default
      and CTC is released from our obligations, including delivery of the turbines.
      We
      have received continued representations from XRG that they are working
      diligently to secure funding and they have repeatedly represented to CTC that
      they intend to remit payment prior to the 30 day cure period ending June 10,
      2007.

    

    On
      May
      14, 2007 we announced additional orders totaling approximately 180 kilometers
      of
      ACCC cable orders from Jiang-su Far East, our China distributor under their
      contract dated January, 2007. The approximate value of these orders was $2.2
      million. 

    

    On
      May
      15, 2007 we were served notice under the Supreme Court of the State of New
      York,
      County of New York by Enable Growth Partners, LP, Enable Opportunity Partners,
      LP and Pierce Diversified Strategy Master Fund, LLC (collectively “Enable”) of
      legal action against Composite Technology Corporation pertaining to certain
      anti-dilution provisions of our March 2006 Bridge Note warrants and our October,
      2005 Debtor in Possession warrants. The complaint claims that CTC improperly
      calculated the fair value of consideration provided to certain investors who
      elected to convert their March, 2006 Bridge Notes in September, 2006. The
      series’ of warrants in question carry “full ratchet” anti-dilution provisions.
      Enable represents that the effective value of the stock issuance was $0.02
      per
      share and as such should result in a total of approximately 40,300,000 warrants
      at an exercise price of approximately $0.02 per share. CTC records show that
      the
      Enable group currently has 774,000 warrants subject to anti-dilution protection
      with exercise prices ranging from $1.04 to $1.32 per warrant. CTC represents
      the
      fair value was $1.06 per share issued which is equivalent to the market price
      on
      the date in question and maintains that that anti-dilution was properly
      calculated. CTC believes it has sufficient defenses to this claim and intends
      to
      vigorously defend its position.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Between
      April 14, 2007 and April 24, 2007 a total of $1.3 million of convertible debt
      was converted by two investors into approximately 976,000 shares of Common
      Stock.

    

    Section
      (l) (viii)

    On
      April
      4, 2007 Michael Porter resigned as President of Composite Technology Corporation
      and agreed to a consultancy agreement expiring March 31, 2008. 

    

    On
      April
      4, 2007 the Company promoted Marvin Sepe to the position of Chief Operating
      Officer and promoted Domonic (DJ) Carney to the position of Chief Financial
      officer.

     

    (m)
      No
      undisclosed events, liabilities, developments, or circumstances:
      None

    

    (n)
      Use
      of proceeds: None

    

    (o)
      Conduct of Business; Regulatory Permits: None

    

    (p)
      Sarbanes-Oxley Act; Internal Controls: The Company has not completed its
      assessment of the internal operating and disclosure controls relating to its
      DeWind business and related European operations. The Company expects that
      additional significant deficiencies and possibly material control weaknesses
      exist in the European operations and the Company expects to continue to
      identify, document, assess, and test the internal control structure in Europe
      and the U.S. during the remainder of fiscal 2007 and that on-going remediation
      of internal control and disclosure control weaknesses for both Europe and the
      US
      will continue during 2007.

    

    The
      Company disclosed the following internal control weaknesses in Form 10-K filed
      December 26, 2006:

    

    Fiscal
      2006 Assessment.

    

    We
      have
      excluded the internal control structure of our acquired subsidiary DeWind,
      Ltd.
      from the scope of our fiscal 2006 assessment since the acquisition was made
      on
      July 3, 2006, less than 90 days prior to our fiscal year end.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    During
      management's review of our internal control structure under Sarbanes-Oxley
      section 404, for the fiscal year ending September 30, 2006, we determined the
      following to be material weaknesses:

    

    Entity
      level Processes and weaknesses. As of September 30, 2006, the following material
      weaknesses existed related to general processes and weaknesses for the entity
      taken as a whole:

    

    o
      Proper
      segregation of duties and inadequate training did not exist as well as an
      inadequate number of accounting and finance personnel staff at fiscal year
      end.

    

    o
      The
      Company had one member Audit Committee, a one member Compensation Committee,
      and
      had a designated financial expert on the Board of Directors since January of
      2006. Until December, 2005 we only had a two person non-independent Board of
      Directors and from January, 2006 through November, 2006 we had one independent
      director and two non-independent directors comprising our Board of
      Directors.

    

    o
      The
      Company did not have an independent internal audit function due to the small
      size of the organization.

    

    These
      material weaknesses related to the entity as a whole affect all of our
      significant accounts and could result in a material misstatement to our annual
      or interim consolidated financial statements that would not be prevented or
      detected.

    

    Information
      Technology Controls (ITCs). ITCs are policies and procedures that relate to
      many
      applications and support the effective functioning of application controls
      by
      helping to ensure the continued proper operation of information systems. ITGCs
      include four basic information technology (IT) areas relevant to internal
      control over financial reporting: program development, program changes, computer
      operations, and access to programs and data. As of September 30, 2006, a
      material weakness existed relating to our information technology general
      controls, including ineffective controls relating to:

    

    o
      Access
      to programs and data including (1) user administration, (2) application and
      system configurations, and (3) periodic user access validation

    

    Inventory
      Processes. As of September 30, 2006, the following material weaknesses existed
      related to ineffective controls over our inventory processes:

    

    o
      Perpetual Inventory records: Ineffective controls to (a) accurately record
      the
      raw materials inventory moved out of inventory stores and into manufacturing
      production and later into finished goods and, (b) accurately record
      manufacturing variances.

    

    Procure
      to Pay process. During our fiscal 2006 assessment of the Company’s procure to
      pay (cash payments and disbursements) cycle, we determined that there were
      numerous significant control deficiencies relating primarily to inventory
      purchasing and related purchasing and payable system control deficiencies.
      If
      assessed on an individual basis, none of these deficiencies were determined
      to
      be material weaknesses. However, taken in the aggregate we believe the following
      constitute a material weakness:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        	 	
                i)

              	
                An
                  effective purchasing function did not exist during the entire fiscal
                  year.

              
	 	 	 
	 	
                ii)

              	
                There
                  were inadequate system driven matching controls over the receiving
                  function for inventory parts and supplies. Receiving tolerances
                  for
                  inventory related pricing and quantities received are not established
                  systematically.

              
	 	 	 
	 	
                iii)

              	
                There
                  was a lack of segregation of duties between the purchasing and
                  payable
                  processing functions.

              
	 	 	 
	 	
                iv)

              	
                There
                  were inadequate vendor management duties and responsibilities during
                  the
                  year

              
	 	 	 
	 	
                v)

              	
                There
                  was a lack of sufficient purchasing reports for management
                  review.

              

      

       

    

    (q)
      Transactions with Affiliates: Refer to footnote 17, page 89 and footnote 19,
      page 94 of the 10-K filed December 26, 2006 for explanation of our current
      transactions with affiliates and footnote 12, page 27 of the 10-Q filed May
      10,
      2007. We have ongoing consulting arrangements with firms owned by Mike McIntosh
      for our Intellectual Property services and strategic advisory
      services.

    

    (r)
      Equity Capitalization: Current issued and outstanding shares are 179,860,419
      as
      of May 15, 2007. See also securities convertible or exercisable into common
      stock listed below:

    

    As
      of May
      15, 2007 we have $5,013,200 of convertible debt outstanding that is convertible
      at $1.47 (subject to price resets listed in i) above) into 3,410,340
      shares.

    

    As
      of May
      15, 2007 we have $22,525,000 of convertible debt outstanding that is convertible
      at $1.04 into 21,658,654 shares.

    

    

    As
      of May
      15, 2007 we have 15,029,336 options issued to employees and consultants at
      an
      average exercise price of $0.82 of which 6,,599,907 are vested with an average
      exercise price of $0.52.

    

    As
      of May
      15, 2007 we have 26,580,275 warrants outstanding at an average strike price
      of
      $1.28 per warrant. 

    

    Refer
      to
      10-Q Notes 7 and 8 pages 16-21 for a listing of options and warrants outstanding
      as at March 31, 2007. Since March 31, 2007, we issued 1,000,000 options to
      employees and cancelled 1,500,000 options granted to employees

    

    (s)
      Indebtedness and other Contracts:

    

    Our
      total
      indebtedness as of April 30, 2007 consists of:

    

      
        	
                Convertible
                  Notes due August, 2007

              	
                $5,013,200

              
	
                Convertible
                  Notes due January, 2010

              	
                $22,525,000

              
	
                Capital
                  Leases - US

              	
                $
                  245,000 (secured by certain US assets)

              
	
                Total

              	
                $27,783,200

              

      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (t)
      Absence of litigation: See litigation footnote disclosure in form 10-Q Note
      11,
      page 23 and the operational update in (l) above.

    

    (u)
      Employee relations: for section iv: We are required to pay statutory minimum
      “redundant” (severance) pay for German and UK employees in the event that we
      were to terminate their services. In addition, we have employment agreements
      for
      the following individuals located in Europe which contain the following minimum
      notice prior to termination, or payment at existing service rates if terminated
      without notice. No payments required for termination with cause.

    

    Steven
      Bircher - 6 months (VP of Business Development)

    Joerg
      Kubitza - 3 months (DeWind General Manager)

    Victor
      Lilly - 3 months (Chief Technology Officer and VP of Engineering)

    Stuart
      Jackson - 3 months (Finance Director)

    Alexander
      Senge - 3 months (Legal Counsel)

    

    The
      following was disclosed in our Form 10-K regarding employee relations and
      severance payments related to our executive officers with employment agreements
      consisting of Dominic Majendie and Michael Porter:

    

    Mr.
      Dominic Majendie was originally employed in October 2002 as Director of
      Operations, EMEA (Europe, Middle East, and Africa) of CTC.  This
      arrangement was replaced by an employment agreement dated October 1, 2003,
      which
      expires on September 30, 2008. He now occupies the position of Vice
      President,  Legal and Business Development.  The essential terms of
      his employment agreement are as follows:

    

    o
      Mr.
      Majendie's annual base compensation, which was initially $120,000, increases
      at
      a minimum of 10% per year.

    

    o
      Mr.
      Majendie is eligible for annual bonuses and bonuses based on revenue from
      specific projects and sales he brings us.

    

    o
      Mr.
      Majendie received an initial option to purchase up to 1,000,000 shares of common
      stock, vesting with respect to 85,000 shares each quarter, issued as of August
      11, 2003.

    

    o
      CTC
      reimburses Mr. Majendie for all reasonable business expenses, and provides
      him
      with a $150 per month telephone allowance and a company car or car
      allowance.

    

    o
      Mr.
      Majendie is entitled to 18 months salary in the event that CTC merges, sells
      a
      controlling interest, or sells a majority of its assets.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    o
      In the
      event that Mr. Majendie's employment is terminated due to his death, his
      beneficiaries are entitled to his then current Base Salary through 60 days
      after
      his death.

     

    o
      In the
      event the agreement is terminated prior to its expiration for any other reason,
      Mr. Majendie will be entitled to receive his then current base salary and all
      accrued, earned but unpaid bonuses or benefits.

    

    o
      Mr.
      Majendie is required to maintain the confidentiality of CTC proprietary
      information.

    

    Mr.
      Majendie was paid compensation of $120,000 per year for fiscal 2006.

    

    Mr.
      Michael Porter was appointed President of the Company and his relationship
      with
      the Company is governed by an employment agreement dated July 3, 2006, which
      expires on July 2, 2007. The agreement will be automatically renewed unless
      the
      Company gives Mr Porter not less than 30 days advance notice of its intention
      not to continue the employment. In April, 2007 Mr. Porter retired from his
      position.

    

    The
      essential terms of his employment agreement are as follows:

    

    o
      Mr.
      Porter’s base salary is $400,000 per year; which may increase at the sole
      discretion of the board.

    

    o
      Mr.
      Porter is eligible to earn an annual bonus based upon the achievement, as
      determined by the Company in its sole discretion.

    

    o
      Mr.
      Porter’s term of employment is one year, automatically renewable unless the
      Company provides 30 days written notice.

    

    o
      Mr.
      Porter is eligible to participate in and shall be covered by any and all
      medical, disability, life and other insurance plans, stock option incentive
      programs, 401K plans and other benefits generally available to other employees
      of the Company in similar employment positions. If medical insurance benefits
      cannot be arranged for Mr. Porter and his wife, the Company agrees to pay his
      medical expenses.

    

    o
      Mr.
      Porter is eligible for four weeks of vacation per year.

    

    o
      In the
      event of termination for cause, resignation or termination due to death or
      disability, Mr. Porter is entitled to receive the Base Salary then in effect
      and
      the benefits set forth above through the effective date of the termination
      or
      resignation. No other payments or compensation of any kind.

    

    o
      In the
      event of termination without cause or non-renewal by the company Mr. Porter
      is
      entitled to receive the Base Salary then in effect and the benefits set forth
      above through the effective date of the termination or resignation, payments
      at
      the Base Salary for a period of six months and no other payments or compensation
      of any kind.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    o
      Mr.
      Porter is required to maintain the confidentiality of CTC proprietary
      information.

    

    o
      Mr.
      Porter is required to assign inventions, made or conceived or reduced to
      practice during his employment with CTC.

    

    o
      For a
      period of two years after employment, Mr. Porter is subject to non-solicitation
      of employees, agents or representatives of the company and customers and clients
      of the company.

    

    o
      Additionally, for a period of two years after employment, Mr. Porter is required
      not to interfere in any way that would have an adverse effect on the business,
      assets or financial condition of the Company.

    

    o
      During
      the term of employment, Mr. Porter is required not to directly or indirectly
      be
      involved with any person or entity competitive with the company.

    

    (v)
      Title
      to Property: The Company has leased certain equipment and other long lived
      assets under leases with a cost basis of $1,282,339.40 on which there are
      perfected security interests and for which the Company does not hold clear
      title.

     

    
      
        	
                Asset

              	 	
                Description

              	 	
                 Cost

              
	 	 	 	 	 	 
	
                IFC
                  Lease 1

              	 	
                Five
                  (5) Laptops; Ten (10) Desktops; Great Plains Software; Power Line
                  Systems
                  Software; Dynamic Methods Software; Network Servers, Routers, Equip;
                  Desktop Software-various; HP DesignJest Plotter

              	 	$	
                100,000.00

              
	 	 	 	 	 	 
	
                IFC
                  Lease 2

              	 	
                Office
                  chairs; Phone; Office Furniture Outlet; House to Office; Telephone
                  Equipment; Telephone Equipment-ROI Networks; Furniture; House to
                  Office
                  Furniture Warehouse

              	 	$	
                100,000.00

              
	 	 	 	 	 	 
	
                IFC
                  Lease 3

              	 	
                Durapul
                  1204 Pultrusion Machine, parts, attachments, and
                  accessories

              	 	$	
                100,000.00

              
	 	 	 	 	 	 
	
                IFC
                  Lease 4

              	 	
                Durapul
                  1204 Pultrusion Machine & Frame with all parts, attachments, and
                  accessories; Wet Tanks; Pultrusion Tools; Metal Dies; Parts and
                  setup

              	 	$	
                100,000.00

              
	 	 	 	 	 	 
	
                IFC
                  Lease 5

              	 	
                Torque
                  Control Conversion Kit; Dies; Epacio Burndy; Dispensing Unit/Reller;
                  Bending Clamp Kit; Air Compressor; Clark Forklift; Computer Network
                  Equip;
                  Ashman Lathe; Ashman Welder; Air Compressor; Haas Tool Room
                  Lathe

              	 	$	
                100,000.00

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      
        	
                IFC
                  Lease 6

              	 	
                Goldsworthy
                  Pullmaster Machine with 24 x 8 inch Puller Envelope with all parts,
                  attachments, and accessories

              	 	$	
                60,000.00

              
	 	 	 	 	 	 
	
                IFC
                  Lease 7

              	 	
                CPE
                  Machine with 50 x 18 inch Envelope with all parts, attachments,
                  and
                  accessories

              	 	$	
                240,000.00

              
	 	 	 	 	 	 
	
                IFC
                  Lease 8

              	 	
                Durapul
                  1204 Pultrusion Machine, parts, attachments, and
                  accessories

              	 	$	
                99,750.00

              
	 	 	 	 	 	 
	
                IFC
                  Lease 9

              	 	
                Electromechanical
                  Testing Machine & Load Frame Height with all parts, attachments, and
                  accessories; Tufting Heads with all parts, attachments, and
                  accessories

              	 	$	
                108,820.00

              
	 	 	 	 	 	 
	
                IFC
                  Lease 10

              	 	
                Two
                  (2) Reel-O-Matic Fractional HP Polyspeed Variable Speed and Torque
                  Control
                  Drives; Two (2) Reel-O-Matic Extra Guide Boxes with rollers and
                  hardware;
                  Integrated Tech, Inc. Manufacturing Software system with all parts,
                  attachments, and accessories

              	 	$	
                97,390.40

              
	 	 	 	 	 	 
	
                IFC
                  Lease 11

              	 	
                Durapul
                  1204 Pultrusion Machines, parts,attachments, and
                  accessories

              	 	$	
                150,000.00

              
	 	 	 	 	 	 
	
                CNC
                  Lease

              	 	
                One
                  (1) Haas CNC Manual Tool Room Lathe with all parts, attachments,
                  and
                  accessories

              	 	$	
                26,379.00

              

      

    

    

    Note:
      A
      total of four (4) Durapul 1204 Pultrusion Machines and related parts,
      attachments, and accessories are included in the above-mentioned leases with
      a
      combined total cost of approximately $559,000.

    

    In
      addition, all assets related to the E. Service entity which are consolidated
      with the operations and financial statements of the Company as at December
      31,
      2006 and September 30, 2006 are currently owned 75.1% by Enertrag as a result
      of
      the activity represented in the 8-K disclosure of January 27, 2007. Total assets
      consolidated with and into CTC on December 31, 2006, including amounts
      receivable from related parties (DeWind) were approximately $8.7 million at
      December 31, 2006 and net assets (assets net of all liabilities) of negative
      $200,000.

    

    (w)
      Intellectural Property: None

    

    (x)
      Tax
      Status: None

    

    (y)
      Insurance: None

    

    (z)
      Ranking of Debentures: None

    

    (aa)
      Off
      Balance Sheet Arrangements: None

    

    (bb)
      Manipulation of Price: None

    

    (cc)
      Company’s knowledge: NoneFORM
      OF WARRANT

    

    

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
      IN A
      GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
      NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH
      A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
      THE
      SECURITIES.

    

    COMPOSITE
      TECHNOLOGY CORPORATION

     

    
      WARRANT
        TO PURCHASE COMMON STOCK

    

    

    Warrant
      No.: [__] 

    Date
      of
      Issuance: June __, 2007 (“Issuance
      Date”)

    

    
      	Warrant
              Shares:	
              This
                Warrant shall be exercisable for _____ shares of Common Stock with
                the
                exact number of shares determined as follows:

            

    

    

    Number
      of
      Units purchased under the Securities Purchase Agreement dated June 18, 2007
      multiplied by 25%.

    

    Composite
      Technology Corporation, a Nevada corporation (the “Company”),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, [NAME
      OF BUYER], the
      registered holder hereof or its permitted assigns (the “Holder”),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      the Exercise Price (as defined below) then in effect, upon surrender of this
      Warrant to Purchase Common Stock (including any Warrants to Purchase Common
      Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
      at
      any time or times on or after the date hereof, but not after 5:00 p.m., Pacific
      time, on the Expiration Date (as defined below), the number of validly issued,
      fully paid nonassessable shares of Common Stock (as defined below) determined
      in
      accordance with Section 1(a) below (the
      “Warrant
      Shares”).
      Except as otherwise defined herein, capitalized terms in this Warrant shall
      have
      the meanings set forth in Section 15. This Warrant is one of a series of
      warrants to purchase Common Stock (the “Warrants”)
      issued
      pursuant to Section 1 of that certain Securities Purchase Agreement, dated
      as of
      June 18, 2007 (the “Subscription
      Date”),
      by
      and among the Company and the investors (the “Buyers”)
      referred to therein (the “Securities
      Purchase Agreement”).

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    1. EXERCISE
      OF WARRANT. 

     

    (a) Warrant
      Shares.
      This
      Warrant shall be exercisable for the number of shares of Common Stock of the
      Company as set forth in the formula on the cover page of this Warrant
      (“Warrant
      Shares”).
      

     

    (b) Mechanics
      of Exercise.
      Subject
      to the terms and conditions hereof (including, without limitation, the
      limitations set forth in Section 1(g)), this Warrant may be exercised by the
      Holder on any day on or after the date hereof, in whole or in part, by
      (i) delivery of a written notice, in the form attached hereto as
Exhibit
      A
      (the
“Exercise
      Notice”),
      of
      the Holder’s election to exercise this Warrant and (ii) (A) payment to the
      Company of an amount equal to the Exercise Price multiplied by the number of
      Warrant Shares as to which this Warrant is being exercised (the “Aggregate
      Exercise Price”)
      in
      cash or wire transfer of immediately available funds or (B) by notifying the
      Company that this Warrant is being exercised in a Cashless Exercise pursuant
      to
      and subject to the conditions set forth in Section 1(d); provided, however,
      that
      this Warrant may not be exercised in a Cashless Exercise during the first year
      of the Warrant or if the Warrant Shares have been registered under the Act
      (as
      defined below). The Holder shall not be required to deliver the original Warrant
      in order to effect an exercise hereunder. Execution and delivery of the Exercise
      Notice with respect to less than all of the Warrant Shares shall have the same
      effect as cancellation of the original Warrant and issuance of a new Warrant
      evidencing the right to purchase the remaining number of Warrant Shares. On
      or
      before the first Business Day following the date on which the Company has
      received each of the Exercise Notice and the Aggregate Exercise Price (or notice
      of a Cashless Exercise) (the “Exercise
      Delivery Documents”),
      the
      Company shall transmit by facsimile an acknowledgment of confirmation of receipt
      of the Exercise Delivery Documents to the Holder and the Company’s transfer
      agent (the “Transfer
      Agent”).
      On or
      before the third Business Day following the date on which the Company has
      received all of the Exercise Delivery Documents (the “Share
      Delivery Date”),
      the
      Company shall issue and dispatch by overnight courier to the address as
      specified in the Exercise Notice, a certificate, registered in the Company’s
      share register in the name of the Holder or its designee, for the number of
      shares of Common Stock to which the Holder is entitled pursuant to such
      exercise. Upon delivery of the Exercise Notice and Aggregate Exercise Price
      referred to in clause (ii)(A) above or notification to the Company of a Cashless
      Exercise referred to in Section 1(d), the Holder shall be deemed for all
      corporate purposes to have become the holder of record of the Warrant Shares
      with respect to which this Warrant has been exercised, irrespective of the
      date
      of delivery of the certificates evidencing such Warrant Shares. If this Warrant
      is submitted in connection with any exercise pursuant to this Section 1(b)
      and
      the number of Warrant Shares represented by this Warrant submitted for exercise
      is greater than the number of Warrant Shares being acquired upon an exercise,
      then the Company shall as soon as practicable and in no event later than three
      Business Days after any exercise and at its own expense, issue a new Warrant
      (in
      accordance with Section 7(d)) representing the right to purchase the number
      of
      Warrant Shares purchasable immediately prior to such exercise under this
      Warrant, less the number of Warrant Shares with respect to which this Warrant
      is
      exercised. No fractional shares of Common Stock are to be issued upon the
      exercise of this Warrant, but rather the number of shares of Common Stock to
      be
      issued shall be rounded up to the nearest whole number. The Company shall pay
      any and all taxes which may be payable with respect to the issuance and delivery
      of Warrant Shares upon exercise of this Warrant. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c) Exercise
      Price.
      For
      purposes of this Warrant, “Exercise
      Price”
means
      $1.40 per share, subject to adjustment as provided herein.

     

    (d) Cashless
      Exercise.
       Notwithstanding
      anything contained herein to the contrary, if at any time after the one (1)
      year
      anniversary of the Closing Date a registration statement covering the Warrant
      Shares that are the subject of an Exercise Notice (the “Unavailable
      Warrant Shares”)
      is not
      available for the resale of such Unavailable Warrant Shares at the time of
      exercise, the Holder may, in its sole discretion, exercise this Warrant in
      whole
      or in part and, in lieu of making the cash payment otherwise contemplated to
      be
      made to the Company upon such exercise in payment of the Aggregate Exercise
      Price, elect instead to receive upon such exercise the “Net Number” of shares of
      Common Stock determined according to the following formula (a “Cashless
      Exercise”):

     

    Net
      Number = (A
      x
      B) - (A x C)

    B

     

    For
      purposes of the foregoing formula:

     

    A=
      the
      total number of shares with respect to which this Warrant is then being
      exercised.

     

    B=
      the
      Closing Sale Price of the shares of Common Stock (as reported by Bloomberg)
      on
      the date immediately preceding the date of the Exercise Notice.

     

    
      C=
        the
        Exercise Price then in effect for the applicable Warrant Shares at the time
        of
        such exercise.

    

    

    (e) Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 12.

     

    (f) Limitations
      on Exercises; Beneficial Ownership.
      The
      Company shall not effect the exercise of this Warrant, and the Holder shall
      not
      have the right to exercise this Warrant, to the extent that after giving effect
      to such exercise, such Person (together with such Person’s affiliates) would
      beneficially own in excess of 9.99% of the shares of Common Stock outstanding
      immediately after giving effect to such exercise. For purposes of the foregoing
      sentence, the aggregate number of shares of Common Stock beneficially owned
      by
      such Person and its affiliates shall include the number of shares of Common
      Stock issuable upon exercise of this Warrant with respect to which the
      determination of such sentence is being made, but shall exclude shares of Common
      Stock which would be issuable upon (i) exercise of the remaining, unexercised
      portion of this Warrant beneficially owned by such Person and its affiliates
      and
      (ii) exercise or conversion of the unexercised or unconverted portion of any
      other securities of the Company beneficially owned by such Person and its
      affiliates (including, without limitation, any convertible notes or convertible
      preferred stock or warrants) subject to a limitation on conversion or exercise
      analogous to the limitation contained herein. Except as set forth in the
      preceding sentence, for purposes of this paragraph, beneficial ownership shall
      be calculated in accordance with Section 13(d) of the Securities Exchange Act
      of
      1934, as amended. For purposes of this Warrant, in determining the number of
      outstanding shares of Common Stock, the Holder may rely on the number of
      outstanding shares of Common Stock as reflected in (1) the Company’s most recent
      Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with
      the
      Securities and Exchange Commission, as the case may be, (2) a more recent public
      announcement by the Company or (3) any other notice by the Company or the
      Transfer Agent setting forth the number of shares of Common Stock outstanding.
      For any reason at any time, upon the written or oral request of the Holder,
      the
      Company shall within two Business Days confirm orally and in writing to the
      Holder the number of shares of Common Stock then outstanding. In any case,
      the
      number of outstanding shares of Common Stock shall be determined after giving
      effect to the conversion or exercise of securities of the Company, including
      the
      Securities issued under the Securities Purchase Agreement and the Warrants,
      by
      the Holder and its affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported. By written notice to the
      Company, the Holder may from time to time increase or decrease the Maximum
      Percentage to any other percentage not in excess of 9.99% specified in such
      notice; provided that (i) any such increase will not be effective until the
      sixty-first (61st)
      day
      after such notice is delivered to the Company, and (ii) any such increase or
      decrease will apply only to the Holder and not to any other holder of
      Warrants.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (g) Insufficient
      Authorized Shares.
      If at
      any time while any of the Warrants remain outstanding the Company does not
      have
      a sufficient number of authorized and unreserved shares of Common Stock to
      satisfy its obligation to reserve for issuance upon exercise of the Warrants
      at
      least a number of shares of Common Stock equal to 100% (the “Required
      Reserve Amount”)
      of the
      number of shares of Common Stock as shall from time to time be necessary to
      effect the exercise of all of the Warrants then outstanding (an “Authorized
      Share Failure”),
      then
      the Company shall immediately take all action necessary to increase the
      Company’s authorized shares of Common Stock to an amount sufficient to allow the
      Company to reserve the Required Reserve Amount for the Warrants then
      outstanding. Without limiting the generality of the foregoing sentence, as
      soon
      as practicable after the date of the occurrence of an Authorized Share Failure,
      but in no event later than sixty (60) days after the occurrence of such
      Authorized Share Failure, the Company shall hold a meeting of its stockholders
      for the approval of an increase in the number of authorized shares of Common
      Stock. In connection with such meeting, the Company shall provide each
      stockholder with a proxy statement and shall use its best efforts to solicit
      its
      stockholders’ approval of such increase in authorized shares of Common Stock and
      to cause its board of directors to recommend to the stockholders that they
      approve such proposal.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2. ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
      The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (a) Weighted
      Average Adjustment of Exercise Price upon Issuance of Common
      Stock.
      If the
      Company issues any shares
      of
Common
      Stock (including the issuance or sale of shares
      of
Common
      Stock owned or held by or for the account of the Company, but excluding
shares
      of
Common
      Stock deemed to have been issued or sold by the Company in connection with
      any
      Excluded Securities) for a consideration per share (the “New
      Issuance Price”)
      less
      than the Exercise Price in effect immediately prior to such issue or sale (the
      foregoing a “Dilutive
      Issuance”),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to a price determined by multiplying such
      Exercise Price by a fraction, the numerator of which shall be a sum equal to
      the
      number of shares of Common Stock outstanding and deemed issued pursuant to
      Section 2(b) immediately prior to such issuance, plus the number of shares
      of
      Common Stock that the aggregate consideration received by this Company for
      such
      issuance would purchase at such Exercise Price; and the denominator of which
      shall be the number of shares of Common Stock outstanding and deemed issued
      pursuant to Section 2(b) immediately prior to such issuance plus the number
      of
      shares of such Additional Stock. 

     

    (b) Provisions
      Applicable to Exercise Price Adjustments.
      For
      purposes of determining the adjusted Exercise Price under Section 2(a) above,
      the following provisions shall apply: 

     

    (1) Issuance
      of Options.
      If the
      Company in any manner grants or sells any Options (other than any Excluded
      Securities) and the lowest price per share for which one share
      of
Common
      Stock is issuable upon the exercise of any such Option or upon conversion or
      exchange or exercise of any Convertible Securities issuable upon exercise of
      such Option is less than the Exercise Price, then such share
      of
Common
      Stock shall be deemed to be outstanding and to have been issued and sold by
      the
      Company at the time of the granting or sale of such Option for such price per
      share. For purposes of this Section 2(b)(1), the “lowest price per share for
      which one share
      of
Common
      Stock is issuable upon the exercise of any such Option or upon conversion or
      exchange or exercise of any Convertible Securities issuable upon exercise of
      such Option” shall be equal to the sum of the lowest amounts of consideration
      (if any) received or receivable by the Company with respect to any one
share
      of
Common
      Stock upon granting or sale of the Option, upon exercise of the Option and
      upon
      conversion or exchange or exercise of any Convertible Security issuable upon
      exercise of such Option. No further adjustment of the Exercise Price shall
      be
      made upon the actual issuance of such share of Common Stock or of such
      Convertible Securities upon the exercise of such Options or upon the actual
      issuance of such Common Stock upon conversion or exchange or exercise of such
      Convertible Securities.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (2) Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities (other than
      Excluded Securities) and the lowest price per share for which one share of
      Common Stock is issuable upon such conversion or exchange or exercise thereof
      is
      less than the Exercise Price, then such share of Common Stock shall be deemed
      to
      be outstanding and to have been issued and sold by the Company at the time
      of
      the issuance of sale of such Convertible Securities for such price per share.
      For the purposes of this Section 2(b)(2), the “price per share for which one
      share of Common Stock is issuable upon such conversion or exchange or exercise”
shall be equal to the sum of the lowest amounts of consideration (if any)
      received or receivable by the Company with respect to any one share of Common
      Stock upon the issuance or sale of the Convertible Security and upon the
      conversion or exchange or exercise of such Convertible Security. No further
      adjustment of the Exercise Price shall be made upon the actual issuance of
      such
      share of Common Stock upon conversion or exchange or exercise of such
      Convertible Securities, and if any such issue or sale of such Convertible
      Securities is made upon exercise of any Options for which adjustment of the
      Exercise Price had been or are to be made pursuant to other provisions of this
      Section 2(b), no further adjustment of the Exercise Price shall be made by
      reason of such issue or sale.

     

    (3) Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options (other than Excluded Securities),
      the
      additional consideration, if any, payable upon the issue, conversion, exchange
      or exercise of any Convertible Securities, or the rate at which any Convertible
      Securities (other than Excluded Securities) are convertible into or exchangeable
      or exercisable for Common Stock is changed, the Exercise Price in effect at
      the
      time of such change shall be adjusted to the Exercise Price which would have
      been in effect at such time had such Options or Convertible Securities provided
      for such changed purchase price, additional consideration or changed conversion
      rate, as the case may be, at the time initially granted, issued or sold. For
      purposes of this Section 2(b)(3), if the terms of any Option or Convertible
      Security that was outstanding as of the Closing Date are changed in the manner
      described in the immediately preceding sentence, then such Option or Convertible
      Security and the Common Stock deemed issuable upon exercise, conversion or
      exchange thereof shall be deemed to have been issued as of the date of such
      change. No adjustment shall be made if such adjustment would result in an
      increase of the Exercise Price then in effect.

     

    (4) Definition
      of Excluded Securities.
      For
      purposes of this Agreement, “Excluded
      Securities”
shall
      mean: 

     

    (A) shares
      of
      Common Stock issued pursuant to a transaction described in Section 2(c)
      hereof;

     

    (B) shares
      of
      Common Stock issued or deemed issued to employees, consultants, attorneys,
      officers or directors (if in transactions with primarily non-financing purposes)
      of this Company directly or pursuant to an Approved Stock Plan (as defined
      in
      the Securities Purchase Agreement);

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (C) shares
      of
      Common Stock issued or issuable (1) in a bona fide, underwritten public offering
      under the Act resulting in aggregate gross proceeds of at least $10,000,000,
      or
      (2) upon exercise of warrants or rights granted to underwriters in
      connection with such a public offering;

     

    (D) shares
      of
      Common Stock issued pursuant to the conversion or exercise of convertible or
      exercisable securities outstanding as of the date hereof including the Warrants
      and the Placement Agent Warrants (as defined in the Securities Purchase
      Agreement) or subsequently issued, provided such securities are not amended
      after the date hereof to increase the number of shares of Common Stock issuable
      thereunder or to lower the exercise price thereof;

     

    (E) shares
      of
      Common Stock issued or issuable in connection with a bona fide business
      acquisition of or by this Company, whether by merger, consolidation, sale of
      assets, sale or exchange of stock or otherwise, each as approved by the Board
      of
      Directors of this Company, however, excluding shares issued or issuable in
      connection with a transaction between the Company and an Affiliate;
      or

     

    (F) shares
      of
      Common Stock issued or issuable in connection with any transaction where such
      securities so issued are deemed included in the definition of “Excluded
      Securities” by the affirmative vote or written consent of the Required Holders.

     

    (5) Record
      Date.
      If the
      Company takes a record of the holders of Common Stock for the purpose of
      entitling them (A) to receive a dividend or other distribution payable in Common
      Stock, Options or in Convertible Securities or (B) to subscribe for or purchase
      Common Stock, Options or Convertible Securities, then such record date will
      be
      deemed to be the date of the issue or sale of the Common Stock deemed to have
      been issued or sold upon the declaration of such dividend or the making of
      such
      other distribution or the date of the granting of such right of subscription
      or
      purchase, as the case may be.

     

    (6) Dividends.
      In case
      the Company shall declare a dividend or make any other distribution upon any
      stock of the Company (other than the Common Stock) payable in Common Stock,
      Options or Convertible Securities, then any Common Stock, Options or Convertible
      Securities, as the case may be, issuable in payment of such dividend or
      distribution shall be deemed to have been issued or sold without consideration;
      provided, that if any adjustment is made to the Exercise Price as a result
      of a
      declaration of a dividend and such dividend is rescinded, the Exercise Price
      shall be appropriately readjusted to the Exercise Price in effect had such
      dividend not been declared;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (7) Calculation
      of Consideration.
      In case
      any shares of Common Stock, Options or Convertible Securities shall be issued
      or
      sold for cash, the consideration received therefor shall be deemed to be the
      net
      amount received by the Company therefor, after deduction therefrom of any
      expenses incurred or any underwriting commissions or concessions paid or allowed
      by the Company in connection therewith. In case any shares of Common Stock,
      Options or Convertible Securities shall be issued or sold for a consideration
      other than cash, the amount of the consideration other than cash received by
      the
      Company shall be deemed to be the fair value of such consideration as determined
      in good faith by the Board, after deduction of any expenses incurred or any
      underwriting commissions or concessions paid or allowed by the Company in
      connection therewith. In case any Options shall be issued in connection with
      the
      issuance and sale of other securities of the Company, together comprising one
      integral transaction in which no specific consideration is allocated to such
      Options by the parties thereto, such Options shall be deemed to have been issued
      for such consideration as determined in good faith by the Board of Directors
      of
      the Company. If Common Stock, Options or Convertible Securities shall be issued
      or sold by the Company and, in connection therewith, other Options or
      Convertible Securities (the “Additional Rights”) are issued, then the
      consideration received or deemed to be received by the Company shall be reduced
      by the fair market value of the Additional Rights (as determined using the
      Black-Scholes option pricing model or another method mutually agreed to by
      the
      Company and the Holder). The Board shall respond promptly, in writing, to an
      inquiry by the Holder as to the fair market value of the Additional Rights.
      

     

    (c) If
      the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise makes a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company upon exercise of this Warrant),
      (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be adjusted by multiplying the Exercise
      Price by a fraction, of which the numerator shall be the number of shares of
      Common Stock (excluding treasury shares, if any) outstanding immediately before
      such event and of which the denominator shall be the number of shares of Common
      Stock outstanding immediately after such event, and the number of shares
      issuable upon exercise of this Warrant shall be proportionately adjusted to
      result in the same Aggregate Exercise Price as existed immediately prior to
      such
      event. Any adjustment made pursuant to this Section 2(c) shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution or shall become effective immediately
      after the effective date of such subdivision, combination or re classification,
      as applicable.

     

    (d) Organic
      Change. If, at any time while this Warrant is outstanding, (A) the Company
      effects any merger or consolidation of the Company with or into another Person,
      (B) the Company effects any sale of all or substantially all of its assets
      in
      one or a series of related transactions, (C) any tender offer or exchange offer
      (whether by the Company or another Person) is completed pursuant to which
      holders of Common Stock are permitted to tender or exchange their shares for
      other securities, cash or property, or (D) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property (each “Organic Change”), then, upon any subsequent
      exercise of this Warrant, the Holder shall have the right to receive, for each
      Warrant Share that would have been issuable upon such exercise immediately
      prior
      to the occurrence of such Organic Change, the number of shares of Common Stock
      of the successor or acquiring corporation or of the Company, if it is the
      surviving corporation, and/or any additional consideration (the “Alternate
      Consideration”) receivable as a result of such merger, consolidation or
      disposition of assets by a Holder of the number of shares of Common Stock for
      which this Warrant is exercisable immediately prior to such event. For purposes
      of any such exercise, the determination of the Exercise Price shall be
      appropriately adjusted to apply to such Alternate Consideration based on the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Organic Change (if applicable), and the Company shall apportion
      the Exercise Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Organic Change, then the Holder
      shall be given the same choice (no later than the time of the Organic Change)
      as
      to the Alternate Consideration it receives upon any exercise of this Warrant
      following such Organic Change. To the extent necessary to effectuate the
      foregoing provisions, any successor to the Company or surviving entity in such
      Organic Change shall issue to the Holder a new warrant consistent with the
      foregoing provisions and evidencing the Holder’s right to exercise such warrant
      into Alternate Consideration. The terms of any agreement pursuant to which
      an
      Organic Change is effected shall include terms requiring any such successor
      or
      surviving entity to comply with the provisions of this Section 3(e) and insuring
      that this Warrant (or any such replacement security) will be similarly adjusted
      upon any subsequent transaction analogous to an Organic Change. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    3. NONCIRCUMVENTION.
      The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Articles of Incorporation, Bylaws or through any reorganization, transfer
      of
      assets, consolidation, merger, scheme of arrangement, dissolution, issue or
      sale
      of securities, or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, and will at
      all
      times in good faith carry out all the provisions of this Warrant and take all
      action as may be required to protect the rights of the Holder. Without limiting
      the generality of the foregoing, the Company (i) shall not increase the par
      value of any shares of Common Stock receivable upon the exercise of this Warrant
      above the Exercise Price then in effect, (ii) shall take all such actions
      as may be necessary or appropriate in order that the Company may validly and
      legally issue fully paid and nonassessable shares of Common Stock upon the
      exercise of this Warrant, and (iii) shall, so long as any of the Warrants are
      outstanding, take all action necessary to reserve and keep available out of
      its
      authorized and unissued shares of Common Stock, solely for the purpose of
      effecting the exercise of the Warrants, 100% of the number of shares of Common
      Stock as shall from time to time be necessary to effect the exercise of the
      Warrants then outstanding (without regard to any limitations on exercise).
      

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    4. WARRANT
      HOLDER NOT DEEMED A STOCKHOLDER.
      Except
      as otherwise specifically provided herein, the Holder, solely in such Person’s
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
      any of the rights of a stockholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, receive dividends or subscription
      rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
      which such Person is then entitled to receive upon the due exercise of this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on the Holder to purchase any securities (upon exercise
      of this Warrant or otherwise) or as a stockholder of the Company, whether such
      liabilities are asserted by the Company or by creditors of the Company.
      Notwithstanding this Section 4, the Company shall provide the Holder with copies
      of the same notices and other information given to the stockholders of the
      Company generally, contemporaneously with the giving thereof to the
      stockholders.

     

    5. REISSUANCE
      OF WARRANTS.

     

    (a) Transfer
      of Warrant.
      If this
      Warrant is to be transferred, the Holder shall surrender this Warrant to the
      Company, whereupon the Company will forthwith issue and deliver upon the order
      of the Holder a new Warrant (in accordance with Section 5(d)), registered as
      the
      Holder may request, representing the right to purchase the number of Warrant
      Shares being transferred by the Holder and, if less then the total number of
      Warrant Shares then underlying this Warrant is being transferred, a new Warrant
      (in accordance with Section 5(d)) to the Holder representing the right to
      purchase the number of Warrant Shares not being transferred. Applicable transfer
      taxes, if any, shall be paid by the Holder.

     

    (b) Lost,
      Stolen or Mutilated Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Warrant, and, in the case of
      loss, theft or destruction, of any indemnification undertaking by the Holder
      to
      the Company in customary form and, in the case of mutilation, upon surrender
      and
      cancellation of this Warrant, the Company shall execute and deliver to the
      Holder a new Warrant (in accordance with Section 5(d)) representing the right
      to
      purchase the Warrant Shares then underlying this Warrant.

     

    (c) Exchangeable
      for Multiple Warrants.
      This
      Warrant is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Warrant or Warrants (in accordance
      with Section 5(d)) representing in the aggregate the right to purchase the
      number of Warrant Shares then underlying this Warrant, and each such new Warrant
      will represent the right to purchase such portion of such Warrant Shares as
      is
      designated by the Holder at the time of such surrender; provided, however,
      that
      no Warrants for fractional shares of Common Stock shall be given.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (d) Issuance
      of New Warrants.
      Whenever the Company is required to issue a new Warrant pursuant to the terms
      of
      this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
      (ii) shall represent, as indicated on the face of such new Warrant, the right
      to
      purchase the Warrant Shares then underlying this Warrant (or in the case of
      a
      new Warrant being issued pursuant to Section 5(a) or Section 5(c), the Warrant
      Shares designated by the Holder which, when added to the number of shares of
      Common Stock underlying the other new Warrants issued in connection with such
      issuance, does not exceed the number of Warrant Shares then underlying this
      Warrant), and (iii) shall have an issuance date, as indicated on the face of
      such new Warrant which is the same as the Issuance Date.

     

    6. NOTICES.
      Whenever notice is required to be given under this Warrant, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement. The Company shall provide the Holder with
      prompt written notice of all actions taken pursuant to this Warrant, including
      in reasonable detail a description of such action and the reason therefore.
      Without limiting the generality of the foregoing, the Company will give written
      notice to the Holder (i) immediately upon any adjustment of the Exercise Price,
      setting forth in reasonable detail, and certifying, the calculation of such
      adjustment and (ii) at least fifteen days prior to the date on which the Company
      closes its books or takes a record (A) with respect to any dividend or
      distribution upon the shares of Common Stock, (B) with respect to any grants,
      issuances or sales of any Options, Convertible Securities or rights to purchase
      stock, warrants, securities or other property to holders of shares of Common
      Stock or (C) for determining rights to vote with respect to any Fundamental
      Transaction, dissolution or liquidation, provided in each case that such
      information shall be made known to the public prior to or in conjunction with
      such notice being provided to the Holder.

     

    7. AMENDMENT
      AND WAIVER.
      Except
      as otherwise provided herein, the provisions of this Warrant may be amended
      and
      the Company may take any action herein prohibited, or omit to perform any act
      herein required to be performed by it, only if the Company has obtained the
      written consent of the Required Holders; provided that no such action may (i)
      increase the exercise price of any Warrants issued under the Securities Purchase
      Agreement or decrease the number of shares or change the class of stock
      obtainable upon exercise of any Warrants issued under the Securities Purchase
      Agreement, (ii) modify Section 1(d) or 1(g) of this Warrant or (iii)
      disproportionately affect the Holder in a materially and adversely manner
      (except as a result of holding a greater percentage of Warrant Shares) without
      the written consent of the Holder. No such amendment shall be effective to
      the
      extent that it applies to less than all of the holders of the Warrants then
      outstanding.

     

    8. GOVERNING
      LAW.
      This
      Agreement shall be governed by, and construed in accordance with, the internal
      laws of the State of New York without regard to the choice of law principles
      thereof.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    9. CONSTRUCTION;
      HEADINGS.
      This
      Warrant shall be deemed to be jointly drafted by the Company and all the Holders
      and shall not be construed against any person as the drafter hereof. The
      headings of this Warrant are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Warrant. 

     

    10. DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      (2)
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three (3) Business Days of such disputed determination
      or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two (2) Business Days submit via facsimile (a) the disputed determination
      of the Exercise Price to an independent, reputable investment bank selected
      by
      the Company and approved by the Holder or (b) the disputed arithmetic
      calculation of the Warrant Shares to the Company’s independent, outside
      accountant. The Company shall cause at its expense the investment bank or the
      accountant, as the case may be, to perform the determinations or calculations
      and notify the Company and the Holder of the results no later than ten (10)
      Business Days from the time it receives the disputed determinations or
      calculations. Such investment bank’s or accountant’s determination or
      calculation, as the case may be, shall be binding upon all parties absent
      demonstrable error.

     

    11. TRANSFER. This
      Warrant may be offered for sale, sold, transferred or assigned without the
      consent of the Company, except as may otherwise be required by Section 2(g)
      of
      the Securities Purchase Agreement.

     

    12. CERTAIN
      DEFINITIONS.
      For
      purposes of this Warrant, the following terms shall have the following
      meanings:

     

    (a) “Bloomberg”
means
      Bloomberg Financial Markets.

     

    (b) “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      the City of New York are authorized or required by law to remain
      closed.

     

    (c) “Closing
      Bid Price”
and
      “Closing
      Sale Price”
means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or last trade price,
      respectively, of such security prior to 4:00 p.m., New York Time, as reported
      by
      Bloomberg, or, if the Principal Market is not the principal securities exchange
      or trading market for such security, the last closing bid price or last trade
      price, respectively, of such security on the principal securities exchange
      or
      trading market where such security is listed or traded as reported by Bloomberg,
      or if the foregoing do not apply, the last closing bid price or last trade
      price, respectively, of such security in the over-the-counter market on the
      electronic bulletin board for such security as reported by Bloomberg, or, if
      no
      closing bid price or last trade price, respectively, is reported for such
      security by Bloomberg, the average of the bid prices, or the ask prices,
      respectively, of any market makers for such security as reported in the “pink
      sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
      the Closing Bid Price or the Closing Sale Price cannot be calculated for a
      security on a particular date on any of the foregoing bases, the Closing Bid
      Price or the Closing Sale Price, as the case may be, of such security on such
      date shall be the fair market value as mutually determined by the Company and
      the Holder. If the Company and the Holder are unable to agree upon the fair
      market value of such security, then such dispute shall be resolved pursuant
      to
      Section 10. All such determinations to be appropriately adjusted for any stock
      dividend, stock split, stock combination or other similar transaction during
      the
      applicable calculation period.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (d) “Common
      Stock”
means
      (i) the Company’s shares of Common Stock, par value $0.001 per share, and
      (ii) any share capital into which such Common Stock shall have been changed
      or any share capital resulting from a reclassification of such Common
      Stock.

     

    (e) “Convertible
      Securities”
means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for shares of Common Stock.

     

    (f) “Eligible
      Market”
means
      the Principal Market, the American Stock Exchange, The New York Stock Exchange,
      Inc., the Nasdaq National Market or The Nasdaq SmallCap Market.

     

    (g) “Expiration
      Date”
means
      the date thirty six (36) months after the Issuance Date or, if such date falls
      on a day other than a Business Day or on which trading does not take place
      on
      the Principal Market (a “Holiday”),
      the
      next date that is not a Holiday; provided, that the Expiration Date may be
      accelerated pursuant to the provisions of Section 1(h).

     

    (h) “Fundamental
      Transaction”
means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into (whether or not the Company
      is the surviving corporation) another Person, or (ii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company, including intellectual property, to another Person, or
      (iii) allow another Person to make a purchase, tender or exchange offer that
      is
      accepted by the holders of more than fifty percent (50%) of either the
      outstanding shares of Common Stock (not including any shares of Common Stock
      held by the Person or Persons making or party to, or associated or affiliated
      with the Persons making or party to, such purchase, tender or exchange offer),
      or (iv) consummate a stock purchase agreement or other business combination
      (including, without limitation, a reorganization, recapitalization, spin-off
      or
      scheme of arrangement) with another Person whereby such other Person acquires
      more than fifty percent (50%) of the outstanding shares of Common Stock (not
      including any shares of Common Stock held by the other Person or other Persons
      making or party to, or associated or affiliated with the other Persons making
      or
      party to, such stock purchase agreement or other business combination), (v)
      reorganize, recapitalize or reclassify its Common Stock (other than a forward
      or
      reverse stock split), or (vi) any “person” or “group” (as these terms are used
      for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become
      the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
      directly or indirectly, of fifty percent (50%) of the aggregate ordinary voting
      power represented by issued and outstanding Common Stock.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (i) “Options”
means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities.

     

    (j) “Organic
      Change”
means
      a
      transaction as described in section 2(d).

     

    (k) “Parent
      Entity”
of
      a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

     

    (l) “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity and
      a
      government or any department or agency thereof.

     

    (m) “Principal
      Market”
means
      the OTC Bulletin Board.

     

    (n) “Required
      Holders”
means
      the holders of the Warrants representing at least a majority of shares of Common
      Stock underlying the Warrants then outstanding.

     

    (o) “Securities”
means
      the Notes issued pursuant to the Securities Purchase Agreement.

     

    (p) “Successor
      Entity”
means
      the Person (or, if so elected by the Required Holders, the Parent Entity) formed
      by, resulting from or surviving any Fundamental Transaction or the Person (or,
      if so elected by the Required Holders, the Parent Entity) with which such
      Fundamental Transaction shall have been entered into.

     

    

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
      to
      be duly executed as of the Issuance Date set out above.

    

    
      	 	 	 
	 	COMPOSITE
              TECHNOLOGY CORPORATION 
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Benton
                H Wilcoxon 

              Chief
                Executive Officer

            
	 	
            

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    

    EXERCISE
      NOTICE

    TO
      BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

    WARRANT
      TO PURCHASE COMMON STOCK

    COMPOSITE
      TECHNOLOGY CORPORATION

     

    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock (“Warrant
      Shares”)
      of
      Composite Technology Corporation, a Nevada corporation (the “Company”),
      evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

    

    1.
      Form
      of Exercise Price.
      The
      Holder intends that payment of the Exercise Price shall be made as:

    

    __________ a
      “Cash
      Exercise”
      with
      respect to _________________ Warrant Shares; and/or

    

    __________ a
      “Cashless
      Exercise”
      with
      respect to _______________ Warrant Shares.

    

    2.
      Payment
      of Exercise Price.
      In the
      event that the holder has elected a Cash Exercise with respect to some or all
      of
      the Warrant Shares to be issued pursuant hereto, the holder shall pay the
      Aggregate Exercise Price in the sum of $___________________ to the Company
      in
      accordance with the terms of the Warrant.

    

    3.
      Delivery
      of Warrant Shares.
      The
      Company shall deliver to the holder __________ Warrant Shares in accordance
      with
      the terms of the Warrant.

    

    4.
      Acknowledgement.
      The
      undersigned holder hereby represents and warrants that after giving effect
      to
      the exercise of the Warrant contemplated by this Exercise Notice, such holder
      will not be in violation of the beneficial ownership limits specified in Section
      1(g) of the Warrant, as increased or decreased pursuant to terms contained
      therein.

    

    Date:
      _______________ __, ______

    

    __________________________

    Name
      of
      Registered Holder

     

    
      	 	 	 	 
	By:	 	 	
            
	
              
                

              

              Name:
Title:

            	 	 	
            
	
	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

    

    ACKNOWLEDGMENT

    

    The
      Company hereby acknowledges this Exercise Notice and hereby directs [Insert
      Name of Transfer Agent]
      to issue
      the above indicated number of shares of Common Stock in accordance with the
      Transfer Agent Instructions dated _______________ from the Company and
      acknowledged and agreed to by [Insert
      Name of Transfer Agent].

     

    
      
        	 	 	 
	 	COMPOSITE
                TECHNOLOGY CORPORATION 
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                

                Benton
                  H Wilcoxon 

                Chief
                  Executive Officer

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