Document:

Unassociated Document

    Exhibit
      10.1 

    SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT
      (the
“Agreement”),
      dated
      as of February 12, 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. The
      Company has authorized a new series of senior convertible debentures of the
      Company, which notes shall be convertible into the Company’s common stock, par
      value $0.001 per share (the “Common
      Stock”),
      in
      accordance with the terms of the Debentures.

     

    C. Each
      Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
      conditions stated in this Agreement, (i) that aggregate principal amount of
      senior convertible debentures, in substantially the form attached hereto as
      Exhibit
      A
      (the
“Debentures”),
      set
      forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which
      aggregate amount for all Buyers shall be up to $30,000,000), which Debentures
      shall be convertible into shares of Common Stock at the conversion price set
      forth in the Debentures (as converted, collectively, the “Conversion
      Shares”)
      and
      (ii) warrants in substantially the form attached hereto as Exhibit
      B
      (the
“Warrants”),
      to
      acquire up to that number of additional shares of Common Stock set forth
      opposite such Buyer’s name in column (4) of the Schedule of Buyers (as
      exercised, collectively, the “Warrant
      Shares”).

     

    D. 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
      C
      (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.

     

    E. The
      Debentures, the Conversion Shares, the Warrants and the Warrant Shares
      collectively are referred to herein as the “Securities”.

     

    F. 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 DEBENTURES AND WARRANTS.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a) Purchase
      of Debentures and Warrants.

     

    (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 Debentures and Warrants (the “Initial
      Closing”).
      The
      Company may (but is not obligated to) hold one or more additional closings
      (each, a “Closing”
and
      the
      final Closing, the “Final
      Closing”)
      upon
      the purchase and sale of additional Debentures and Warrants until an aggregate
      amount of up to $30,000,000 of Debentures and Warrants has been sold. No Closing
      may occur after ten (10) business days after the Initial Closing. 

     

    (ii) After
      the
      Initial Closing, a prospective Buyer’s execution of the signature page of this
      Agreement shall constitute its offer to purchase Debentures and Warrants (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 Debentures and
      Warrants 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 Debentures and Warrants with
      respect to which such Buyer’s Subscription was rejected, if any.

     

    (iii) At
      any
      Closing, each Buyer severally, but not jointly, shall purchase from the Company
      on such Closing Date (as defined below), (A) a certain principal amount in
      Debentures as set forth opposite such Buyer’s name in column 3 on the Schedule
      of Buyers, and (B) Warrants to acquire up to that number of Warrant Shares
      as is
      set forth opposite such Buyer’s name in column 4 on the Schedule of Buyers.
      Prior to each Closing, the Company shall deliver to Richardson & Patel LLP,
      in trust as escrow agent, the Debentures and the Warrants to be purchased by
      the
      Buyers at such Closing, each registered in such name or names as each Buyer
      may
      designate, with instructions that such Debentures or 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 Initial Closing (the “Initial 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 date and time of each
      subsequent Closing (a “Closing
      Date”)
      shall
      be 10:00 a.m., Pacific Time, on the date that Buyer executes this Agreement
      or
      (or such later date as is mutually agreed to by the Company and each Buyer).
      Each Closing shall occur after notification of satisfaction (or waiver) of
      the
      conditions to such 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 Debentures and the Warrants to be purchased
      by
      each Buyer at any Closing (the “Purchase
      Price”)
      shall
      be the amount set forth opposite such Buyer’s name in column 6 of the Schedule
      of Buyers. Each Buyer shall pay $1.00 for each $1.00 of principal amount of
      Debentures and related Warrants to be purchased by such Buyer at such Closing.
      

     

    
      
         

      

      
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    (b) Form
      of Payment.
      On each
      applicable Closing Date, each Buyer shall pay its Purchase Price to the Company
      for the Debentures and the Warrants to be issued and sold to such Buyer at
      such
      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 each applicable Closing Date and in accordance with the Escrow
      Agreement, the Debentures and Warrants shall be released to the Buyers who
      have
      paid the Purchase Price. If the applicable Closing does not occur within five
      (5) 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 Debentures and the Warrants and (ii) upon the
      conversion of the Debentures and exercise of the Warrants (other than pursuant
      to a Cashless Exercise (as defined in the Warrants)) will acquire the Conversion
      Shares issuable upon conversion of the Debentures and 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.

     

    
      
         

      

      
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    (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
      Debentures and the Warrants and, until such time as the resale of the Conversion
      Shares and the Warrant Shares have been registered under the 1933 Act as
      contemplated by the Registration Rights Agreement, the stock certificates
      representing Conversion Shares 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): 

     

    
      
         

      

      
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    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE 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.

     

    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.

     

    
      
         

      

      
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    (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) the
      date of the 8-K Filing 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).

     

    
      
         

      

      
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    (b) Authorization;
      Enforcement; Validity.
      The
      Company has the requisite power and authority to enter into and perform its
      obligations under this Agreement, the Debentures, 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 Debentures, the Warrants
      and
      the Placement Agent Warrants (as defined below), the reservation for issuance
      and the issuance of 100% of the Conversion Shares issuable
      upon conversion of the Debentures, 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 Debentures, 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 applicable 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 conversion
      of the Debentures (assuming for purposes hereof, that the Debentures are
      convertible at the initial Conversion Price and without taking into account
      any
      limitations on the conversion of the Debentures set forth in the Debentures)
      and
      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 issuance or conversion in accordance with the Debentures or
      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 Debentures, the Warrants and the Placement Agent Warrants, the Conversion
      Shares, 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. 

     

    
      
         

      

      
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    (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 Debentures and
      the
      Warrants, and reservation for issuance and issuance of the Conversion Shares
      and
      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
      applicable 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.

     

    
      
         

      

      
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    (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 Conversion Shares
      issuable upon conversion of the Debentures, the 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 Conversion Shares
      upon conversion of the Debentures in accordance with this Agreement and the
      Debentures, 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.

     

    
      
         

      

      
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    (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.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (l) Absence
      of Certain Changes.
      Since
      September 30, 2006, 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 September 30, 2006, 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 Annual Report on Form 10-K for the year ended September 30,
      2006, 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 applicable 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.
      

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (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 Debentures and the Warrants 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),
      and no amounts borrowed under this Debenture will be used to purchase or carry
      any margin stock or to extend credit to others for the purpose of purchasing
      or
      carrying any margin stock. 

     

    (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 September 30, 2006, (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.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (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,
      [178,635,325] are issued and outstanding and (ii) no 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
      for Permitted Indebtedness, 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. 

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (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) 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. 

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (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) Ranking
      of Debentures.
      Except
      for Indebtedness outstanding immediately prior to such Closing Date as set
      forth
      in the Disclosure Schedule, no Indebtedness of the Company is senior to or
      ranks
pari
      passu
      with the
      Debentures in right of payment, whether with respect of payment of redemptions,
      interest, damages or upon liquidation or dissolution or otherwise. 

     

    (aa) 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.

     

    (bb) 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.

     

    (cc) 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.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (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 applicable
      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 such 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 such
      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 each Closing
      Date.

     

    (c) Reporting
      Status.
      Until
      the date on which the Investors (as defined in the Registration Rights
      Agreement) shall have sold all the Conversion Shares and the Warrant Shares
      and
      none of the Debentures or 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 Notes 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 Notes. These fees shall not exceed $10,000
      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.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    (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
      conversion of the Debentures (including Interest) and 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 Conversion Shares issuable upon the due
      conversion of 100% of the Debentures, Interest Shares (as defined in the
      Debenture) and 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. 

     

    (j) Independent
      Directors.
      Within
      120 days of this Agreement, the Company’s Board of Directors will use
      commercially reasonable efforts to appoint two additional members to serve
      on
      the Board. Both of these directors shall qualify as “independent directors” as
      defined by NASDAQ Market Place Rule 4350. One of these directors shall be
      proposed by the Required Holders (as defined in the Debenture), subject to
      the
      prior approval of then current Company Board of Directors, which approval may
      not be unreasonably withheld or delayed.

     

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

     

    The
      obligation of the Company hereunder to issue and sell the Debentures and the
      related Warrants to each Buyer at any Closing is subject to the satisfaction,
      at
      or before the applicable 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.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    (iii) The
      Buyers collectively shall have delivered to the Escrow Agent by wire transfer
      at
      least $15,000,000 of immediately available funds, either at this Closing or
      prior Closings. 

     

    (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 such 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 such Closing Date.

     

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

     

    The
      obligation of each Buyer hereunder to purchase the Debentures and
      the
      related Warrants at any Closing is subject to the satisfaction, at or before
      the
      applicable 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, (B) the Debentures (in such principal amounts as such
      Buyer shall request) being purchased by such Buyer at such Closing pursuant
      to
      this Agreement, and (C) the Warrants (in such amounts as such Buyer shall
      request) being purchased by such Buyer at such 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 such Closing Date, in substantially the
      form of Exhibit
      D 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 applicable 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 such Closing.

     

    (vi) The
      representations and warranties of the Company shall be true and correct as
      of
      the date when made and as of such 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 such
      Closing Date. Such Buyer shall have received a certificate, executed by the
      Chief Executive Officer of the Company, dated as of such Closing Date, to the
      foregoing effect.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    (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 a Closing shall not have occurred with respect to a Buyer on or
      before three (3) Business Days (or, in the case of the Initial Closing, one
      (1)
      Business Day) 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 Initial 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 Initial 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.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    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 Required Holders (as defined in the Debentures) 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
      Debentures) 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
      Debentures 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.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    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
      Debentures 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 applicable 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. 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.

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    (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 Initial 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, on the first Trading Day immediately
      following the Initial 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.

     

    

     

    [Signature
      Page Follows]

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    

    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:  	/s/ Benton
              H
              Wilcoxon 
	 	
              
Benton
              H Wilcoxon
	 	
              Chief
                Executive Officer

            

    

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    

    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

               

               

              ____/s/___________________________________

              Signature

               

               

              ________________________________________

              Authorized
                Representative

               

               

              ________________________________________

              Title

            
	 

    

    

    

    SUBSCRIPTION
      ACCEPTANCE (REGARDING POST-INITIAL CLOSING BUYERS):

    

    Accepted
      as of the ___ day of _________, 2007 as to $_______________ in principal of
      Debentures and the related number of Warrants; 

    

    Subscription
      price accepted being $______________

    

    COMPOSITE
      TECHNOLOGY CORPORATION

    

    By: /s/ Benton
      Wilcoxon

    Name: Benton
      Wilcoxon

    Title: Chief
      Executive Officer

     

    
      
         

      

        27Unassociated Document

    Exhibit
      10.2

    EXHIBIT
      A

    

    FORM
      OF SENIOR CONVERTIBLE DEBENTURE

     

    

     

    NEITHER
      THE ISSUANCE AND SALE OF THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS
      DEBENTURE IS CONVERTIBLE 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. ANY TRANSFEREE OF THIS DEBENTURE SHOULD
      CAREFULLY REVIEW THE TERMS OF THIS DEBENTURE, INCLUDING SECTION 17(a) HEREOF.
      

     

     

    Composite
      Technology Corporation

     

     

    Senior
      Convertible Debenture

     

    
      	
              Issuance
                Date: February 12, 2007

            	
              Original
                Principal Amount: U.S. $___________

            

    

    

    FOR
      VALUE RECEIVED,
      Composite Technology Corporation, a Nevada corporation (the “Company”),
      hereby promises to pay to the order of [NAME OF BUYER] or registered assigns
      (“Holder”)
      the
      amount set out above as the Original Principal Amount (as reduced pursuant
      to
      the terms hereof pursuant to redemption, conversion or otherwise, the
“Principal”)
      when
      due, whether upon the Maturity Date (as defined below), acceleration, redemption
      or otherwise (in each case in accordance with the terms hereof) and to pay
      interest (“Interest”)
      on any
      outstanding Principal at a rate of eight percent (8.0%) per annum (the
“Interest
      Rate”),
      from
      the date set out above as the Issuance Date (the “Issuance Date”)
      until
      the same becomes due and payable, whether upon an Interest Date (as defined
      below), the Maturity Date, acceleration, conversion, redemption or otherwise
      (in
      each case in accordance with the terms hereof). This Senior Convertible
      Debenture (including all Senior Convertible Debentures issued in exchange,
      transfer or replacement hereof, this “Debenture”)
      is one
      of an issue of Senior Convertible Debentures (collectively, the “Debentures”
and
      such other Senior Convertible Debentures, the “Other Debentures”)
      issued
      pursuant to the Securities Purchase Agreement (as defined below). Certain
      capitalized terms are defined in Section 23. 

     

    (1) MATURITY.
      On the
      Maturity Date, the Holder shall surrender this Debenture to the Company and
      the
      Company shall pay to the Holder an amount in cash representing all outstanding
      Principal and accrued and unpaid Interest. The “Maturity Date”
shall
      be January 31, 2010, as may be extended at the option of the Holder (i) in
      the
      event that, and for so long as, an Event of Default (as defined in Section
      4(a))
      shall have occurred and be continuing or any event shall have occurred and
      be
      continuing which with the passage of time and the failure to cure would result
      in an Event of Default and (ii) through the date that is ten (10) Business
      Days
      after the consummation of a Change of Control in the event that a Change of
      Control is publicly announced or a Change of Control Notice (as defined in
      Section 5) is delivered prior to the Maturity Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (2) INTEREST;
      INTEREST RATE.
      

     

    (a) Interest
      on this Note shall commence accruing on the Issuance Date and shall be computed
      on the basis of a 360-day year and actual days elapsed and shall be payable
      in
      arrears for each Calendar Quarter on the first day of the succeeding Calendar
      Quarter during the period beginning on the Issuance Date and ending on, and
      including, the Maturity Date (each, an "Interest Date")
      with
      the first Interest Date being March 31, 2007. Interest shall be payable on
      each
      Interest Date, to the record holder of this Note on the applicable Interest
      Date, in cash ("Cash
      Interest");
      provided however, that the Company may, at its option following notice to the
      Holder, pay shares of Common Stock ("Interest
      Shares")
      so
      long as there is no Equity Conditions Failure; or in a combination of Cash
      Interest and Interest Shares. The Company shall deliver a written notice (each,
      an "Interest
      Election Notice")
      to
      each holder of the Notes on or prior to the Interest Notice Due Date (the date
      such notice is delivered to all of the holder, the "Interest
      Notice Date")
      which
      notice (A) elects that Interest to be paid on such Interest Date shall be paid
      entirely in Interest Shares or (B) confirms to pay Interest as Cash Interest
      or
      a combination of Cash Interest and Interest Shares and specifies the amount
      of
      Interest that shall be paid as Cash Interest and the amount of Interest, if
      any,
      that shall be paid in Interest Shares. Interest to be paid on an Interest Date
      in Interest Shares shall be paid in a number of validly issued, fully paid
      and
      nonassessable shares (rounded to the nearest whole share in accordance with
      Section 3(a)) of Common Stock equal to the quotient of (1) the amount of
      Interest payable on such Interest Date less any Cash Interest paid and (2)
      the
      Interest Conversion Price in effect on the applicable Interest Date. If no
      Interest Election Notice is timely delivered, Interest shall be paid in
      cash.

     

    (b) When
      any
      Interest Shares are to be paid on an Interest Date, the Company shall (i) (X)
      provided that the Company's transfer agent (the "Transfer
      Agent")
      is
      participating in the Depository Trust Company ("DTC")
      Fast
      Automated Securities Transfer Program, credit such aggregate number of Interest
      Shares to which the Holder shall be entitled to the Holder's or its designee's
      balance account with DTC through its Deposit Withdrawal Agent Commission system,
      or (Y) if the foregoing shall not apply, issue and deliver on the applicable
      Interest Date, to the address set forth in the register maintained by the
      Company for such purpose pursuant to the Securities Purchase Agreement or to
      such address as specified by the Holder in writing to the Company at least
      two
      (2) Business Days prior to the applicable Interest Date, a certificate,
      registered in the name of the Holder or its designee, for the number of Interest
      Shares to which the Holder shall be entitled and (ii) with respect to each
      Interest Date, pay to the Holder, in cash by wire transfer of immediately
      available funds, the amount of any Cash Interest. 

     

    (c) 
      From and
      after the occurrence and during the continuance of an Event of Default, the
      Interest Rate shall be increased to twelve percent (12.0%). In the event that
      such Event of Default is subsequently cured, the adjustment referred to in
      the
      preceding sentence shall cease to be effective as of the date of such cure;
      provided that the Interest as calculated and unpaid at such increased rate
      during the continuance of such Event of Default shall continue to apply to
      the
      extent relating to the days after the occurrence of such Event of Default
      through and including the date of cure of such Event of Default.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (3) CONVERSION
      OF NOTES.
      This
      Debenture shall be convertible into shares of Common Stock of the Company,
      on
      the terms and conditions set forth in this Section 3.

     

    (a) Conversion
      Right.
      Subject
      to the provisions of Section 3(d), at any time or times on or after the Issuance
      Date, the Holder shall be entitled to convert any portion of the outstanding
      and
      unpaid Conversion Amount (as defined below) into validly issued, fully paid
      and
      nonassessable shares of Common Stock in accordance with Section 3(c), at the
      Conversion Rate (as defined below). The Company shall not issue any fraction
      of
      a share of Common Stock upon any conversion. If the issuance would result in
      the
      issuance of a fraction of a share of Common Stock, the Company shall round
      such
      fraction of a share of Common Stock up to the nearest whole share. The Company
      shall pay any and all taxes that may be payable with respect to the issuance
      and
      delivery of Common Stock upon conversion of any Conversion Amount.

     

    (b) Conversion
      Rate.
      The
      number of shares of Common Stock issuable upon conversion of any Conversion
      Amount pursuant to Section 3(a) shall be determined by dividing (x) such
      Conversion Amount by (y) the Conversion Price (the “Conversion
      Rate”).

     

    (i) “Conversion
      Amount”
means
      the portion of the Principal to be converted, redeemed or otherwise with respect
      to which this determination is being made.

     

    (ii) “Conversion
      Price”
means,
      as of any Conversion Date (as defined below) or other date of determination,
      $_____1 ,
      subject
      to adjustment as provided herein.

     

    (c) Mechanics
      of Conversion.

     

    (i) Optional
      Conversion.
      To
      convert any Conversion Amount into shares of Common Stock on any date (a
“Conversion
      Date”),
      the
      Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
      on or
      prior to 5:00 p.m., Pacific Time, on such date, a copy of an executed notice
      of
      conversion in the form attached hereto as Exhibit
      I
      (the
“Conversion
      Notice”)
      to the
      Company and (B) if required by Section 3(c)(iii), surrender this Debenture
      to a
      common carrier for delivery to the Company as soon as practicable on or
      following such date (or an indemnification undertaking with respect to this
      Debenture in the case of its loss, theft or destruction). On or before the
      second (2nd)
      Business Day following the date of receipt of a Conversion Notice, the Company
      shall transmit by facsimile a confirmation of receipt of such Conversion Notice
      to the Holder and the Company’s transfer agent, (the “Transfer
      Agent”).
      On or
      before the third (3rd) Business Day following the date of receipt by the Company
      and its counsel of a Conversion Notice (the “Share
      Delivery Date”),
      the
      Company shall issue and deliver to the address as specified in the Conversion
      Notice, a certificate or certificates, registered in the name of the Holder
      or
      its designee, for the number of shares of Common Stock to which the Holder
      shall
      be entitled. Any accrued and unpaid Interest as of the applicable Conversion
      Date on any Conversion Amount converted hereunder shall be paid to the Holder
      on
      the next succeeding Interest Date following such Conversion Date. If this
      Debenture is physically surrendered for conversion as required by Section
      3(c)(iii) and the outstanding Principal of this Debenture is greater than the
      Principal portion of the Conversion Amount being converted, then the Company
      shall as soon as practicable and in no event later than ten (10) Business Days
      after receipt of this Debenture and at its own expense, issue and deliver to
      the
      holder a new Debenture (in accordance with Section 15(d)) representing the
      outstanding Principal not converted. The Person or Persons entitled to receive
      the shares of Common Stock issuable upon a conversion of this Debenture shall
      be
      treated for all purposes as the record holder or holders of such shares of
      Common Stock on the Conversion Date.

     

      
        

      

    

    
      1
        The
        lower of (i) 110% of VWAP of Company’s Common Stock over the last 10 trading
        days before closing or (ii) 120% of the Trading Price on the day prior to
        closing.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (ii) Book-Entry.
      Notwithstanding anything to the contrary set forth herein, upon conversion
      of
      any portion of this Debenture in accordance with the terms hereof, the Holder
      shall not be required to physically surrender this Debenture to the Company
      unless (A) the full Conversion Amount represented by this Debenture is being
      converted or (B) the Holder has provided the Company with prior written notice
      (which notice may be included in a Conversion Notice) requesting physical
      surrender and reissue of this Debenture. The Holder and the Company shall
      maintain records showing the Principal converted and the dates of such
      conversions or shall use such other method, reasonably satisfactory to the
      Holder and the Company, so as not to require physical surrender of this
      Debenture upon conversion.

     

    (iii) Pro
      Rata Conversion; Disputes.
      In the
      event that the Company receives a Conversion Notice from more than one holder
      of
      Debentures for the same Conversion Date and the Company may be able to convert
      some, but cannot convert all, of such portions of the Debentures submitted
      for
      conversion (e.g., because the Company lacks a sufficient number of authorized
      but unissued common stock in order to convert the Debentures in accordance
      with
      the Conversion Notice), the Company, subject to Section 3(d), shall convert
      from
      each holder of Debentures electing to have Debentures converted on such date
      a
      pro rata amount of such holder’s portion of its Debentures submitted for
      conversion based on the principal amount of Debentures submitted for conversion
      on such date by such holder relative to the aggregate principal amount of all
      Debentures submitted for conversion on such date. In the event of a dispute
      as
      to the number of shares of Common Stock issuable to the Holder in connection
      with a conversion of this Debenture, the Company shall issue to the Holder
      the
      number of shares of Common Stock not in dispute and resolve such dispute in
      accordance with Section 18.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (d) Limitations
      on Conversions.
      The
      Company shall not effect any conversion of this Debenture, and the Holder of
      this Debenture shall not have the right to convert any portion of this Debenture
      pursuant to Section 3(a), to the extent that after giving effect to such
      conversion, the Holder (together with the Holder’s affiliates) would
      beneficially own in excess of 9.99% (the “Maximum Percentage”)
      of the
      number of shares of Common Stock outstanding immediately after giving effect
      to
      such conversion. For purposes of the foregoing sentence, the number of shares
      of
      Common Stock beneficially owned by the Holder and its affiliates shall include
      the number of shares of Common Stock issuable upon conversion of this Debenture
      with respect to which the determination of such sentence is being made, but
      shall exclude the number of shares of Common Stock which would be issuable
      upon
      (A) conversion of the remaining, nonconverted portion of this Debenture
      beneficially owned by the Holder or any of its affiliates and (B) exercise
      or
      conversion of the unexercised or nonconverted portion of any other securities
      of
      the Company (including, without limitation, any Other Debentures or warrants)
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein beneficially owned by the Holder or any of its affiliates.
      Except as set forth in the preceding sentence, for purposes of this Section
      3(d)(i), beneficial ownership shall be calculated in accordance with Section
      13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this
      Section 3(d)(i), 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 (x) the Company’s most recent Form 10-KSB, Form 10-K, Form
      10-QSB, Form 10-Q or Form 8-K, as the case may be (y) a more recent public
      announcement by the Company or (z) 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 five (5) 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
      this Debenture, by the Holder or 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 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
      Debentures. 

     

    (4) RIGHTS
      UPON EVENT OF DEFAULT.

     

    (a) Event
      of Default.
      Notwithstanding the provisions of Section 362 of the Bankruptcy Code and without
      notice, application or motion to, hearing before, or order of the Bankruptcy
      Court or any notice to the Company, the occurrence of any one or more of the
      following events (regardless of the reason therefor) shall constitute an
“Event
      of Default”
      hereunder:

     

    (i) the
      Company’s failure to pay to the Holder any amount of Principal, Interest or
      other amounts when and as due under this Debenture, but only if such failure
      continues for a period of at least five (5) Business Days (a “Payment
      Default”);

     

    (ii) after
      the
      Issuance Date, the Company or any of its Subsidiaries, pursuant to or within
      the
      meaning of the Bankruptcy Code or any similar Federal, foreign or state law
      for
      the relief of debtors (collectively, “Bankruptcy
      Law”),
      (A)
      commences a voluntary case, (B) consents to the entry of an order for relief
      against it in an involuntary case, (C) petitions or applies to any tribunal
      for
      the appointment of a receiver, trustee, assignee, liquidator or similar official
      (a “Custodian”),
      (D)
      makes a general assignment for the benefit of its creditors or (E) admits in
      writing that it is generally unable to pay its debts as they become
      due;

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (iii) a
      court
      of competent jurisdiction shall enter a decree or order for relief in respect
      of
      the Company or any of its Subsidiaries in an involuntary case under any
      Bankruptcy Law hereafter in effect, which decree or order is not stayed; or
      any
      other similar relief shall be granted under any applicable federal or state
      law;
      or (ii) an involuntary case shall be commenced against the Company or any of
      its
      Subsidiaries under any Bankruptcy Law now or hereafter in effect; or a decree
      or
      order of a court having jurisdiction in the premises for the appointment of
      a
      Custodian or other officer having similar powers over the Company or any of
      its
      Subsidiaries, or over all or a substantial part of its property, shall have
      been
      entered; or there shall have occurred the involuntary appointment of an interim
      Custodian of the Company or any of its Subsidiaries for all or a substantial
      part of its property; or a warrant of attachment, execution or similar process
      shall have been issued against any substantial part of the property of the
      Company or any of its Subsidiaries, and any such event described in this clause
      (ii) shall continue for sixty (60) days without having been dismissed, bonded
      or
      discharged; 

     

    (iv) other
      than under Section 4(a)(i), the Company breaches any material representation,
      warranty, covenant or other term or condition of any Transaction Document,
      except, in the case of a breach of a covenant which is curable, only if such
      breach continues for a period of at least ten (10) consecutive Business Days
      following
      the earlier of (A) the day on which the Company becomes, or should have become,
      aware of such breach and (B) the day on which the Company receives written
      notice of such breach from the Holder or any holder of Other
      Debentures;

     

    (v) any
      breach or failure in any respect to comply with any other provision of this
      Debenture (including without limitation, breach of Section 12(a)(vii) of this
      Debenture) except, in the case of a breach which is curable, only if such breach
      continues for a period of at least ten (10) Business Days;

     

    (vi) any
      Event
      of Default (as defined in the Other Debentures) occurs with respect to any
      Other
      Debentures, which continues uncured for a period of ten (10) Business Days;
      and

     

    (vii) a
      final,
      non-appealable judgment which, in the aggregate with other outstanding final
      judgments against the Company and its Subsidiaries, exceeds $4,000,000 shall
      be
      rendered against the Company or a Subsidiary and within sixty (60) days after
      entry thereof, such judgment is not discharged or execution thereof stayed
      pending appeal, or within sixty (60) days after the expiration of such stay,
      such judgment is not discharged.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (5) RIGHTS
      UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

     

    (a) Assumption.
      The
      Company shall not enter into or be party to a Fundamental Transaction unless
      (i)  the Successor Entity assumes in writing all of the obligations of the
      Company under this Debenture and the other Transaction Documents in accordance
      with the provisions of this Section 5(a) pursuant to written agreements in
      form
      and substance satisfactory to the Required Holders and approved by the Required
      Holders prior to such Fundamental Transaction (such satisfaction and approval
      not to be unreasonably withheld), including agreements to deliver to each holder
      of Debentures in exchange for such Debentures a security of the Successor Entity
      evidenced by a written instrument substantially similar in form and substance
      to
      the Debentures, including, without limitation, having a principal amount and
      interest rate equal to the principal amounts and the interest rates of the
      Debentures held by such holder and having similar ranking to the Debentures,
      and
      satisfactory to the Required Holders and (ii) the Successor Entity
      (including its Parent Entity) is a publicly traded corporation whose common
      stock is quoted on or listed for trading on an Eligible Market. Upon the
      occurrence of any Fundamental Transaction, the Successor Entity shall succeed
      to, and be substituted for (so that from and after the date of such Fundamental
      Transaction, the provisions of this Debenture referring to the “Company” shall
      refer instead to the Successor Entity), and may exercise every right and power
      of the Company and shall assume all of the obligations of the Company under
      this
      Debenture with the same effect as if such Successor Entity had been named as
      the
      Company herein. Upon consummation of the Fundamental Transaction, the Successor
      Entity shall deliver to the Holder confirmation that there shall be issued
      upon
      conversion or redemption of this Debenture at
      any
      time after the consummation of the Fundamental Transaction, in lieu of the
      shares of the Company’s Common Stock (or
      other
      securities, cash, assets or other property) purchasable
      upon the conversion or redemption of the Debentures prior to such Fundamental
      Transaction,
      such
      shares of publicly traded common stock (or their equivalent) of the Successor
      Entity, as adjusted in accordance with the provisions of this Debenture.
The
      provisions of this Section shall apply similarly and equally to successive
      Fundamental Transactions and shall be applied without regard to any limitations
      on the conversion or redemption of this Debenture.

     

    (6) RIGHTS
      UPON OTHER CORPORATE EVENTS.
      In
      addition to and not in substitution for any other rights hereunder, prior to
      the
      consummation of any Fundamental Transaction pursuant to which holders of shares
      of Common Stock are entitled to receive securities or other assets with respect
      to or in exchange for shares of Common Stock (a “Corporate
      Event”),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon a conversion of this Debenture, such
      securities or other assets received by the holders of shares of Common Stock
      in
      connection with the consummation of such Corporate Event in such amounts as
      the
      Holder would have been entitled to receive had this Debenture initially been
      issued with conversion rights for the form of such consideration (as opposed
      to
      shares of Common Stock) at a conversion rate for such consideration commensurate
      with the Conversion Rate. Provision made pursuant to the preceding sentence
      shall be in a form and substance satisfactory to the Required Holders. The
      provisions of this Section shall apply similarly and equally to successive
      Corporate Events and shall be applied without regard to any limitations on
      the
      conversion or redemption of this Debenture.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (7) RIGHTS
      UPON ISSUANCE OF OTHER SECURITIES.

     

    (a) Weighted
      Average Adjustment of Conversion 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) (“Additional
      Stock”)
      for a
      consideration per share (the “New
      Issuance Price”)
      less
      than the applicable Conversion Price (“Applicable
      Price”)
      in
      effect immediately prior to such issue or sale (the foregoing, a “Dilutive
      Issuance”),
      then
      immediately after such Dilutive Issuance, the Conversion Price then in effect
      shall be reduced to an amount equal to a price determined by multiplying such
      Conversion Price by a fraction, the numerator of which shall be the number
      of
      shares of Common Stock outstanding 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 Conversion Price; and
      the
      denominator of which shall be the number of shares of Common Stock outstanding
      immediately prior to such issuance plus the number of shares of such Additional
      Stock. An example of a calculation of weighted average adjustment is set forth
      in Exhibit II.

     

    (b)  Provisions
      Applicable to Conversion Price Adjustments.
      For
      purposes of determining the adjusted Conversion Price under Section 7(a) above,
      the following provisions shall apply:

     

    (i) 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 Applicable 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 7(b)(i), 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 Conversion 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.

     

    
      
         

      

      
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    (ii) 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 Applicable 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 7(b)(ii), 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 Conversion 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
      Conversion Price had been or are to be made pursuant to other provisions of
      this
      Section 7(b), no further adjustment of the Conversion Price shall be made by
      reason of such issue or sale.

     

    (iii) 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 Conversion Price in effect
      at
      the time of such change shall be adjusted to the Conversion 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 7(b)(iii), 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 Conversion Price then in effect.

     

    (iv) 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 7(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;

     

    (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
      Debentures, the Warrants and the Placement Agent Warrants (as defined in the
      Securities Purchase Agreement) or subsequently issued pursuant to this Section
      7(b)(iv); 

     

    
      
         

      

      
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    (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;

     

    (F) shares
      of
      Common Stock issued pursuant to the payment of interest accrued under the
      Debentures; or 

     

    (G) 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.

     

    (v) 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.

     

    (vi) 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 Conversion Price as a result
      of
      a declaration of a dividend and such dividend is rescinded, the Conversion
      Price
      shall be appropriately readjusted to the Conversion Price in effect had such
      dividend not been declared;

     

    (vii) 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.
      

     

    
      
         

      

      
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    (c) Adjustment
      of Conversion Price upon Subdivision or Combination of Common
      Stock.
      If the
      Company at any time on or after the Closing Date subdivides (by any stock split,
      stock dividend, recapitalization or otherwise) one or more classes of its
      outstanding shares of Common Stock into a greater number of shares, the
      Conversion Price in effect immediately prior to such subdivision will be
      proportionately reduced. If the Company at any time on or after the Closing
      Date
      combines (by combination, reverse stock split or otherwise) one or more classes
      of its outstanding shares of Common Stock into a smaller number of shares,
      the
      Conversion Price in effect immediately prior to such combination will be
      proportionately increased.

     

    (8) COMPANY’S
      RIGHT OF OPTIONAL REDEMPTION.
      

     

    (a) Optional
      Redemption by Company.
      At any
      time from and after the Issuance Date and prior to the Maturity Date:
      

     

    (i) Prior
      to
      the first anniversary of the Closing, the Company shall have the right to redeem
      all of the outstanding Principal then remaining under this Debenture as
      designated in the Optional Redemption Notice, as of the Optional Redemption
      Date
      (an “Optional
      Redemption”)
      in
      cash at a price equal to 108% of the outstanding Principal amount being redeemed
      plus any accrued and unpaid Interest thereon only if the arithmetic average
      of
      the Weighted Average Price of the Common Stock on each of the 20 consecutive
      Trading Days ending on the Trading Day immediately preceding the date the
      Optional Redemption Notice is sent by the Company to Holders (“the Company’s 20
      Day WAP”) has a price per share of at least two times the Conversion Price.

     

    (ii) At
      any
      time on or after the first anniversary but before the second anniversary of
      the
      Closing, the Company shall have the right to make an Optional Redemption in
      cash
      at a price equal to 106% of the outstanding Principal amount being redeemed
      plus
      any accrued and unpaid Interest thereon only if the Company’s 20 Day WAP has a
      price per share of at least 150% of the Conversion Price. 

     

    (iii) At
      any
      time on or after the second anniversary of the Closing, the Company shall have
      the right to make an Optional Redemption in cash at a price equal to 103% of
      the
      outstanding Principal amount being redeemed plus any accrued and unpaid Interest
      thereon only if the Company’s 20 Day WAP has a price per share of at least 125%
      of the Conversion Price. 

     

    (iv) The
      Company may exercise its right to require redemption under this Section 8(a)
      by
      delivering a written notice thereof by facsimile and overnight courier to all,
      but not less than all, of the holders of Debentures and the Transfer Agent
      (the
“Optional
      Redemption Notice”
and
      the
      date all of the holders received such notice is referred to as the “Optional
      Redemption Notice Date”).
      The
      Optional Redemption Notice shall state the date on which the Optional Redemption
      shall occur (the “Optional
      Redemption Date”)
      which
      date shall be thirty (30) days after the Optional Redemption Notice Date. The
      Holder may convert all of the Conversion Amount at any time prior to the
      Optional Redemption Date pursuant to Section 3 of this Debenture.

     

    
      
         

      

      
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    (v) If
      the
      Company elects to cause an Optional Redemption pursuant to Section 8(a)(i),
      then
      it must simultaneously take the same action with respect to the Other
      Debentures. 

     

    (9) 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 Debenture, and will at
      all
      times in good faith carry out all of the provisions of this Debenture and take
      all action as may be required to protect the rights of the Holder of this
      Debenture. 

     

    (10) RESERVATION
      OF AUTHORIZED SHARES.

     

    (a) Reservation.
      The
      Company initially shall reserve out of its authorized and unissued Common Stock
      a number of shares of Common Stock for each of the Debentures equal to at least
      100% of the Conversion Rate with respect to the Conversion Amount of each such
      Debenture as of the Issuance Date.
      So
      long as any of the Debentures are outstanding, the Company shall take all action
      necessary to reserve and keep available out of its authorized and unissued
      Common Stock, solely for the purpose of effecting the conversion of the
      Debentures and payment of the Interest in Company common stock, 100% of the
      number of shares of Common Stock as shall from time to time be necessary to
      effect the conversion of all of the Debentures plus accrued interest then
      outstanding; provided that at no time shall the number of shares of Common
      Stock
      so reserved be less than the number of shares required to be reserved of the
      previous sentence (without regard to any limitations on conversions) (the
“Required
      Reserve Amount”).
      The
      initial number of shares of Common Stock reserved for conversions of the
      Debentures and each increase in the number of shares so reserved shall be
      allocated pro rata among the holders of the Debentures based on the principal
      amount of the Debentures held by each holder at the Closing (as defined in
      the
      Securities Purchase Agreement) or increase in the number of reserved shares,
      as
      the case may be (the “Authorized
      Share Allocation”).
      In
      the event that a holder shall sell or otherwise transfer any of such holder’s
      Debentures, each transferee shall be allocated a pro rata portion of such
      holder’s Authorized Share Allocation. Any shares of Common Stock reserved and
      allocated to any Person which ceases to hold any Debentures shall be allocated
      to the remaining holders of Debentures, pro rata based on the principal amount
      of the Debentures then held by such holders.

     

    (b) Insufficient
      Authorized Shares.
      If at
      any time while any of the Debentures 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 conversion of the Debentures
      at least a number of shares of Common Stock equal to the Required Reserve Amount
      (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 Debentures 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 60 days after the occurrence of such Authorized
      Share
      Failure, the Company shall obtain stockholder approval for an increase in the
      number of authorized shares of Common Stock. In connection with obtaining such
      approval, the Company 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.

     

    
      
         

      

      
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    (11) VOTING
      RIGHTS.
      The
      Holder shall have no voting rights as the holder of this Debenture, except
      as
      required by law and as expressly provided in this Debenture.

     

    (12) COVENANTS.
      

     

    (a) Affirmative
      Covenants: So
      long
      as any amount due under this Debenture is outstanding and until the earlier
      of
      (i) the indefeasible payment in full of all amounts payable by the Company
      hereunder and (ii) the conversion in full of this Debenture:

     

    (i) The
      Company shall and shall cause each of its Subsidiaries to (A) do all things
      necessary to remain duly organized, validly existing, and in good standing
      and
      (B) maintain all requisite authority to conduct its business in those
      jurisdictions in which its business is conducted.

     

    (ii) The
      Company shall promptly notify the Holder of the occurrence of any Event of
      Default or any event which, with the giving of notice, the lapse of time or
      both
      would constitute an Event of Default, which notice shall include a written
      statement as to such occurrence, specifying the nature thereof and the action
      (if any) which is proposed to be taken with respect thereto.

     

    (iii) The
      Company shall and shall cause each Subsidiary to pay when due all taxes,
      assessments and governmental charges and levies upon it or its income, profits
      or property, except those that are being contested in good faith by appropriate
      proceedings and with respect to which adequate reserves have been set
      aside.

     

    (iv) The
      Company shall and shall cause each Subsidiary to all times maintain with
      financially sound and reputable insurance companies insurance covering its
      assets and its businesses in such amounts and covering such risks as is
      consistent with sound business practice and as may be obtained at commercially
      reasonable rates. 

     

    (v) The
      Company shall and shall cause each Subsidiary to comply with all laws, rules,
      regulations, orders, writs, judgments, injunctions, decrees or awards to which
      they may be subject except where the failure to so comply could not reasonably
      be expected to have a Material Adverse Effect. 

     

    (vi) The
      Company shall and shall cause each Subsidiary to use commercially reasonable
      efforts to do all things necessary to maintain, preserve, protect and keep
      its
      properties in good repair, working order and condition and use commercially
      reasonable efforts to make all necessary and proper repairs, renewals and
      replacements so that its business carried on in connection therewith may be
      properly conducted. 

     

    
      
         

      

      
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    (vii) The
      Company shall use its commercially reasonable efforts to cure any breach of
      a
      non-material covenant of any Transactional Document.

     

    (b) Negative
      Covenants.
      So long
      as any amount due under this Debenture is outstanding and until the earlier
      of
      (i) the indefeasible payment in full of all amounts payable by the Company
      hereunder and (ii) the conversion of this Debenture, without the prior written
      consent of the Required Holders (for purposes of this Section 12(b), any
      Debentures held by any employee, director or officer of the Company or any
      Subsidiary shall not be deemed to be outstanding):

     

    (i) The
      Company shall not and shall cause each Subsidiary not to create, incur,
      guarantee, issue, assume or in any manner become liable in respect of any senior
      Indebtedness or any Indebtedness secured by any property of the Company or
      any
      of its Subsidiaries, other than Permitted Indebtedness.

     

    (ii) The
      Company shall not, and the Company shall not permit any of its Subsidiaries
      to,
      directly or indirectly, redeem, defease, repurchase, repay or make any payments
      in respect of, by the payment of cash or cash equivalents (in whole or in part,
      whether by way of open market purchases, tender offers, private transactions
      or
      otherwise), all or any portion of any Permitted Indebtedness, whether by way
      of
      payment in respect of principal of (or premium, if any) or interest on, such
      Indebtedness if at the time such payment is due or is otherwise made or, after
      giving effect to such payment, an event constituting, or that with the passage
      of time and without being cured would constitute, an Event of Default has
      occurred and is continuing.

     

    (iii) The
      Company shall not, directly or indirectly, declare or pay any dividends on
      account of any shares of any class or series of its capital stock now or
      hereafter outstanding, or set aside or otherwise deposit or invest any sums
      for
      such purpose, or redeem, retire, defease, purchase or otherwise acquire any
      shares of any class of its capital stock (or set aside or otherwise deposit
      or
      invest any sums for such purpose) for any consideration or apply or set apart
      any sum, or make any other distribution (by reduction of capital or otherwise)
      in respect of any such shares. 

     

    (c) Rank.
      All
      payments due under this Debenture shall rank pari
      passu
      with all
      Other Debentures.

     

    (13) AMENDMENTS
      TO TERMS OF DEBENTURES.
      The
      affirmative vote at a meeting duly called for such purpose or the written
      consent without a meeting of the Required Holders shall be required for any
      change or amendment to terms of this Debenture or the Other Debentures;
      provided, however, that no amendment may (i) disproportionately affect the
      Holder in a materially and adversely manner (except as a result of holding
      a
      greater percentage of the principal amount of Debentures) or (ii) change the
      principal amount of the Debenture, the Interest Rate, the Interest Date, the
      Maturity Date, the Conversion Price or Interest Conversion Price, form of
      payment of Interest or principal under the Debenture, without such Holder’s
      consent. Any change or amendment so approved shall be binding upon all existing
      and future holders of this Debenture and any Other Debentures.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (14) TRANSFER.
      This
      Debenture may be offered, sold, assigned or transferred by the Holder without
      the consent of the Company, subject only to the provisions of Section 2(f)
      of
      the Securities Purchase Agreement.

     

    (15) REISSUANCE
      OF THIS DEBENTURE.

     

    (a) Transfer.
      If this
      Debenture is to be transferred, the Holder shall surrender this Debenture to
      the
      Company, whereupon the Company will forthwith issue and deliver upon the order
      of the Holder a new Debenture (in accordance with Section 15(d)), registered
      as
      the Holder may request, representing the outstanding Principal being transferred
      by the Holder and, if less then the entire outstanding Principal is being
      transferred, a new Debenture (in accordance with Section 15(d)) to the Holder
      representing the outstanding Principal not being transferred. The Holder and
      any
      assignee, by acceptance of this Debenture, acknowledge and agree that, by reason
      of the provisions of Section 3(c)(iii) and this Section 15(a), following
      conversion or redemption of any portion of this Debenture, the outstanding
      Principal represented by this Debenture may be less than the Principal stated
      on
      the face of this Debenture.

     

    (b) Lost,
      Stolen or Mutilated Debenture.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Debenture, 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 Debenture, the Company shall execute and deliver to the
      Holder a new Debenture (in accordance with Section 15(d)) representing the
      outstanding Principal.

     

    (c) Debenture
      Exchangeable for Different Denominations.
      This
      Debenture is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Debenture or Debentures (in
      accordance with Section 15(d) and in principal amounts of at least $2,000,000)
      representing in the aggregate the outstanding Principal of this Debenture,
      and
      each such new Debenture will represent such portion of such outstanding
      Principal as is designated by the Holder at the time of such
      surrender.

     

    (d) Issuance
      of New Debentures.
      Whenever the Company is required to issue a new Debenture pursuant to the terms
      of this Debenture, such new Debenture (i) shall be of like tenor with this
      Debenture, (ii) shall represent, as indicated on the face of such new Debenture,
      the Principal remaining outstanding (or in the case of a new Debenture being
      issued pursuant to Section 15(a) or Section 15(c), the Principal designated
      by
      the Holder which, when added to the principal represented by the other new
      Debentures issued in connection with such issuance, does not exceed the
      Principal remaining outstanding under this Debenture immediately prior to such
      issuance of new Debentures), (iii) shall have an issuance date, as indicated
      on
      the face of such new Debenture, which is the same as the Issuance Date of this
      Debenture, (iv) shall have the same rights and conditions as this Debenture,
      and
      (v) shall represent accrued Interest on the Principal and Interest of this
      Debenture, from the Issuance Date.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (16) CONSTRUCTION;
      HEADINGS.
      This
      Debenture shall be deemed to be jointly drafted by the Company and all the
      Purchasers (as defined in the Securities Purchase Agreement) and shall not
      be
      construed against any person as the drafter hereof. The headings of this
      Debenture are for convenience of reference and shall not form part of, or affect
      the interpretation of, this Debenture.

     

    (17) FAILURE
      OR INDULGENCE NOT WAIVER.
      No
      failure or delay on the part of the Holder in the exercise of any power, right
      or privilege hereunder shall operate as a waiver thereof, nor shall any single
      or partial exercise of any such power, right or privilege preclude other or
      further exercise thereof or of any other right, power or privilege.

     

    (18) DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Closing Bid Price, the Closing
      Sale Price or the Weighted Average Price or the arithmetic calculation of the
      Conversion Rate or the Redemption Price, the Company shall submit the disputed
      determinations or arithmetic calculations via facsimile within two (2) Business
      Days of receipt of the Conversion Notice or Redemption Notice or other event
      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
      within one (1) Business Day 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
      Closing Bid Price, the Closing Sale Price or the Weighted Average Price to
      an
      independent, reputable investment bank selected by the Company and approved
      by
      Holders representing a majority of the then outstanding Principal or (b) the
      disputed arithmetic calculation of the Conversion Rate or the Redemption Price
      to the Company’s independent, outside accountant. The Company, at the Company’s
      expense, shall cause 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 five (5) Business Days from the time such
      investment bank or accountant 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.

     

    (19) NOTICES;
      PAYMENTS.

     

    (a) Notices.
      Whenever notice is required to be given under this Debenture, 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 Debenture, 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) as soon as practicable upon any adjustment of the
      Conversion Price, setting forth in reasonable detail, and certifying, the
      calculation of such adjustment and (ii) at least twenty (20) 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 Common Stock, (B) with respect to any
      pro
      rata subscription offer to holders 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.

     

    
      
         

      

      
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    (b) Payments.
      Whenever any payment of cash is to be made by the Company to any Person pursuant
      to this Debenture, such payment shall be made in lawful money of the United
      States of America by a check drawn on the account of the Company and sent via
      overnight courier service to such Person at such address as previously provided
      to the Company in writing (which address, in the case of each of the Purchasers,
      shall initially be as set forth on the Schedule of Buyers attached to the
      Securities Purchase Agreement); provided that the Holder may elect to receive
      a
      payment of cash via wire transfer of immediately available funds by providing
      the Company with prior written notice setting out such request and the Holder’s
      wire transfer instructions. Whenever any amount expressed to be due by the
      terms
      of this Debenture is due on any day which is not a Business Day, the same shall
      instead be due on the next succeeding day which is a Business Day and, in the
      case of any Interest Date which is not the date on which this Debenture is
      paid
      in full, the extension of the due date thereof shall not be taken into account
      for purposes of determining the amount of Interest due on such date.

     

    (20) CANCELLATION.
      After
      all Principal, accrued Interest and other amounts at any time owed on this
      Debenture has been paid in full, this Debenture shall automatically be deemed
      canceled, shall be surrendered to the Company for cancellation and shall not
      be
      reissued.

     

    (21) WAIVER
      OF NOTICE.
      To the
      extent permitted by law, the Company hereby waives demand, notice, protest
      and
      all other demands and notices in connection with the delivery, acceptance,
      performance, default or enforcement of this Debenture and the Securities
      Purchase Agreement.

     

    (22) 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.

     

    (23) CERTAIN
      DEFINITIONS.
      For
      purposes of this Debenture, the following terms shall have the following
      meanings:

     

    (a) “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.

     

    (b) “Approved
      Stock Plan”
means
      any equity compensation plan which has been approved by the Board of Directors
      of the Company, pursuant to which the Company’s securities may be issued to any
      employee, officer, consultant or director for services provided to the
      Company.

     

    (c) “Bloomberg”
means
      Bloomberg Financial Markets.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (d) “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.

     

    (e) “Calendar
      Quarter”
means
      each of: the period beginning on and including January 1 and ending on and
      including March 31; the period beginning on and including April 1 and ending
      on
      and including June 30; the period beginning on and including July 1 and ending
      on and including September 30; and the period beginning on and including October
      1 and ending on and including December 31.

     

    (f) “Change
      of Control”
means
      any Fundamental Transaction other than (A) any reorganization, recapitalization
      or reclassification of the Common Stock in which holders of the Company’s voting
      power immediately prior to such reorganization, recapitalization or
      reclassification continue after such reorganization, recapitalization or
      reclassification to hold publicly traded securities and, directly or indirectly,
      the voting power of the surviving entity or entities necessary to elect a
      majority of the members of the board of directors (or their equivalent if other
      than a corporation) of such entity or entities, or (B) pursuant to a migratory
      merger effected solely for the purpose of changing the jurisdiction of
      incorporation of the Company.

     

    (g) “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 4:00:00 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 18. All such determinations to be appropriately adjusted for any stock
      dividend, stock split, stock combination or other similar transaction during
      the
      applicable calculation period.

     

    (h) “Closing
      Date”
shall
      have the meaning set forth in the Securities Purchase Agreement, which date
      is
      the date the Company initially issued Debentures pursuant to the terms of the
      Securities Purchase Agreement.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    (i) “Common
      Stock”
means
      the shares of common stock, par value $0.001 per share, of the
      Company.

     

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

     

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

     

    (l) "Equity
      Conditions"
      means:
      (i) either
      (x) the Registration Statement filed pursuant to the Registration Rights
      Agreement shall be effective and available for the resale of all remaining
      Registrable Securities in accordance with the terms of the Registration Rights
      Agreement and
      there
      shall not have been any Grace Periods (as
      defined in the Registration Rights Agreement) or (y)
      all
      shares of Common Stock issuable upon conversion of the Notes shall be eligible
      for sale without restriction and without the need for registration under any
      applicable federal or state securities laws; and (ii) the
      Common
      Stock
      is
      designated for quotation on the Principal Market or an Eligible Market and
      shall
      not have been suspended from trading on such exchange or market (other than
      suspensions of not more than two (2) days and occurring prior to the applicable
      date of determination due to business announcements by the Company) nor shall
      delisting or suspension by such exchange or market been threatened or pending
      either (A) in writing by such exchange or market or (B) by falling below the
      minimum listing maintenance requirements of such exchange or
      market.

     

    (m) "Equity
      Conditions Failure"
      means
      that (i) on any day during the period commencing ten (10) Trading Days prior
      to
      the applicable Interest Notice Date through the applicable Interest Date and
      (ii) on any day during the period commencing ten (10) Trading Days prior to
      the
      applicable Company Installment Notice Date through the applicable Installment
      Date, the Equity Conditions have not been satisfied (or waived in writing by
      the
      Holder).

     

    (n) “Excluded
      Securities”
shall
      have the meaning set forth in Section 7(b)(iv) hereof. 

     

    (o) “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 the 50% of 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 the 50% of either
      the outstanding shares of Common Stock or 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 reverse of forward 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 50% of the aggregate ordinary voting
      power represented by issued and outstanding Common Stock.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    (p) “GAAP”
means
      United States generally accepted accounting principles, consistently
      applied.

     

    (q) "Interest
      Conversion Price"
      means,
      with respect to any Interest Date that
      price which shall be the
      price
      computed as 92% of the arithmetic average of the Weighted Average Price of
      the
      Common Stock on each of the twenty (20) consecutive Trading Days ending on
      the
      Trading Day immediately preceding the applicable Interest Date (each, an
      "Interest
      Measuring Period");
      provided, however, that the Interest Conversion Price shall be no more than
      the
      closing price of the Company’s common stock on the Trading Day immediately
      preceding the applicable Interest Date. All such determinations to be
      appropriately adjusted for any stock split, stock dividend, stock combination
      or
      other similar transaction during such Interest Measuring Period.

     

    (r) “Liens”
shall
      mean any mortgage, lien, pledge, charge, security interest or other encumbrance
      upon or in any property or assets (including accounts and contract rights)
      owned
      by the Company or any of its Subsidiaries.

     

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

     

    (t) “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.

     

    (u) “Permitted
      Indebtedness”
means
      (i) Indebtedness incurred by the Company , up an aggregate principal amount
      of
      $75,000,000 that is pari passu to these Debentures (ii) Indebtedness that is
      made expressly subordinate in right of payment to the Indebtedness evidenced
      by
      this Debenture, up to an aggregate principal amount of $50,000,000, (iii)
      Indebtedness evidenced by the Other Debentures, (iv) Indebtedness secured by
      Permitted Liens, (v) Indebtedness existing on or prior to the date of the
      Closing; (vi) Indebtedness incurred in the ordinary course of business,
      including without limitation Indebtedness necessary to acquire, develop, operate
      or implement wind farms, and (vii) extensions, refinancings and renewals of
      any
      items of Permitted Indebtedness.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    (v) 
      "Permitted
      Liens"
      means
      (i) any Lien for taxes not yet due or delinquent or being contested in good
      faith by appropriate proceedings for which adequate reserves have been
      established in accordance with GAAP, (ii) any statutory Lien arising in the
      ordinary course of business by operation of law with respect to a liability
      that
      is not yet due or delinquent, (iii) any Lien created by operation of law, such
      as materialmen's liens, mechanics' liens and other similar liens, arising in
      the
      ordinary course of business with respect to a liability that is not yet due
      or
      delinquent or that are being contested in good faith by appropriate proceedings,
      (iv) Liens (A) upon or in any equipment acquired or held by the Company or
      any
      of its Subsidiaries to secure the purchase price of such equipment or
      indebtedness incurred solely for the purpose of financing the acquisition or
      lease of such equipment, or (B) existing on such equipment at the time of its
      acquisition, provided that the Lien is confined solely to the property so
      acquired and improvements thereon, and the proceeds of such equipment, (v)
      Liens
      incurred in connection with the extension, renewal or refinancing of the
      indebtedness secured by Liens of the type described in clauses (i) and (iv)
      above, (vi) leases or subleases and licenses and sublicenses granted to others
      in the ordinary course of the Company's business, not interfering in any
      material respect with the business of the Company and its Subsidiaries taken
      as
      a whole, (vii) Liens in favor of customs and revenue authorities arising as
      a
      matter of law to secure payments of custom duties in connection with the
      importation of goods, (viii) Liens against the Company’s accounts receivable to
      secure payment of debt incurred from a banking institution or other similar
      entity specifically to fulfill customer orders, (ix) Liens arising from
      judgments, decrees or attachments in circumstances not constituting an Event
      of
      Default and (x) other Liens, when taken as a whole, that are used to support
      financing transactions, provided that the financing transactions do not exceed
      10% of the Company’s total assets as reported on the Company’s most recent
      balance sheet filed with the SEC.

     

    (w) “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. 

     

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

     

    (y) “Required
      Holders”
means
      the holders of Debentures representing over 50% of the aggregate principal
      amount of the Debentures then outstanding.

     

    (z) “SEC”
means
      the United States Securities and Exchange Commission.

     

    (aa) “Securities
      Purchase Agreement”
means
      that certain securities purchase agreement by and among the Company and the
      initial holders of the Debentures pursuant to which the Company issued the
      Debentures. 

     

    (bb) “Successor
      Entity”
means
      the Person, which may be the Company, formed by, resulting from or surviving
      any
      Fundamental Transaction or the Person with which such Fundamental Transaction
      shall have been made, provided that if such Person is not a publicly traded
      entity whose common stock or equivalent equity security is quoted or listed
      for
      trading on an Eligible Market, Successor Entity shall mean such Person’s Parent
      Entity.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    (cc) “Trading
      Day”
means
      any day on which the Common Stock are traded on the Principal Market, or, if
      the
      Principal Market is not the principal trading market for the Common Stock,
      then
      on the principal securities exchange or securities market on which the Common
      Stock are then traded; provided that “Trading Day” shall not include any day on
      which the Common Stock are scheduled to trade on such exchange or market for
      less than 4.5 hours or any day that the Common Stock are suspended from trading
      during the final hour of trading on such exchange or market (or if such exchange
      or market does not designate in advance the closing time of trading on such
      exchange or market, then during the hour ending at 4:00 p.m., New York
      Time).

     

    (dd) “Transaction
      Documents”
has
      the
      meaning ascribed to such term in the Securities Purchase Agreement.

     

    (ee) “Warrants”
has
      the
      meaning ascribed to such term in the Securities Purchase Agreement, and shall
      include all warrants issued in exchange therefor or replacement
      thereof.

     

    (ff) “Weighted
      Average Price”
means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the Principal Market during the period beginning at 9:30:01
      a.m., New York Time (or such other time as the Principal Market publicly
      announces is the official open of trading), and ending at 4:00:00 p.m., New
      York
      Time (or such other time as the Principal Market publicly announces is the
      official close of trading) as reported by Bloomberg through its “Volume at
      Price” functions, or, if the foregoing does not apply, the dollar
      volume-weighted average price of such security in the over-the-counter market
      on
      the electronic bulletin board for such security during the period beginning
      at
      9:30:01 a.m., New York Time (or such other time as such market publicly
      announces is the official open of trading), and ending at 4:00 p.m., New York
      Time (or such other time as such market publicly announces is the official
      close
      of trading) as reported by Bloomberg, or, if no dollar volume-weighted average
      price is reported for such security by Bloomberg for such hours, the average
      of
      the highest closing bid price and the lowest closing ask price of any of the
      market makers for such security as reported in the “pink sheets” by Pink Sheets
      LLC (formerly the National Quotation Bureau, Inc.). If the Weighted Average
      Price cannot be calculated for a security on a particular date on any of the
      foregoing bases, the Weighted Average Price 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 18.
      All
      such determinations to be appropriately adjusted for any stock dividend, stock
      split, stock combination or other similar transaction during the applicable
      calculation period.

     

    

     

    [Signature
      Page Follows]

     

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

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

     

    
      	 	 	 
	 	
              COMPOSITE
                TECHNOLOGY CORPORATION

            
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              

              Benton
                H. Wilcoxon

            
	 	
              Chief
                Executive Officer

            

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    EXHIBIT
      I

    

    COMPOSITE
      TECHNOLOGY CORPORATION

    CONVERSION
      NOTICE

     

    Reference
      is made to the Senior Convertible Debenture (the “Debenture”)
      issued
      to the undersigned by Composite Technology Corporation (the “Company”).
      In
      accordance with and pursuant to the Debenture, the undersigned hereby elects
      to
      convert the Conversion Amount (as defined in the Debenture) of the Debenture
      indicated below into shares of Common Stock (as defined in the Debenture),
      as of
      the date specified below.

     

    
      	
              Date
                of Conversion:

            	 
	
              Aggregate
                Conversion Amount to be converted:

            	 
	
              Please
                confirm the following information:

            
	
              Conversion
                Price:

            	 
	
              Number
                of shares of Common Stock to be issued:

            	 
	
              Please
                issue the Common Stock into which the Debenture is being converted
                in the
                following name and to the following address:

            
	
              Issue
                to:

            	 
	 	 
	 	 
	
              Facsimile
                Number:

            	 
	
              Authorization:

            	 
	
              By:

            	 
	
              Title:

            	 
	
              Dated:

            	 
	
              Account
                Number:

            	 
	
                (if
                electronic book entry transfer)

            	 
	
              Transaction
                Code Number:

            	 
	
                (if
                electronic book entry transfer)

            	 
	 	 

    

    

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    ACKNOWLEDGMENT

     

    The
      Company hereby acknowledges this Conversion Notice and hereby directs
[Insert
      Name of Transfer Agent] to
      issue
      the above indicated number of shares of Common Stock from the Company and
      acknowledged and agreed to by [Insert
      Name of Transfer Agent].

     

    
      	 	 	 
	 	
              COMPOSITE
                TECHNOLOGY CORPORATION\

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

            
	 	Title:

    

    

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    EXHIBIT
      II

    EXAMPLE
      OF WEIGHTED AVERAGE ADJUSTMENT

    UPON
      DILUTIVE ISSUANCE

    

    Pre-Existing
      Assumptions Prior to Dilutive Issuance:

    Common
      Shares of Company (excluding warrants, convertible debentures, etc.) outstanding
      prior to Dilutive Issuance: 1,000,000

    

    Current
      Transaction:

    Debtholder
      convertible debt: $500,000 convertible at $5.00/share (100,000
      shares)

    Debtholder
      warrants issued: 50,000 warrants at $5.00/share

    

    Future
      Dilutive Issuance:

    $800,000
      convertible debt at $4/share (200,000 shares)

    100,000
      warrants at $4/share ($400,000)

    

    Conversion
      Price Adjustment

    New
      Conversion Price is equal to previous Conversion Price times a fraction, of
      which:

    

    Numerator
      = 1,000,000 (Common Stock outstanding prior to Dilutive Issuance) + 240,000
      (amount of shares that would have been issued if Dilutive Issuance was done
      at
      original Conversion Price or ($800,000 + $400,000)/$5/share = 240,000
      shares)

    

    =
      1,240,000 shares

    

    Denominator
      = 1,000,000 (Common Stock outstanding prior to Dilutive Issuance) + 300,000
      (Additional Shares = 200,000 shares pursuant to new convertible debt + 100,000
      shares pursuant to new warrants)

    

    =
      1,300,000 shares

    

    Ratio
      =
      1,240,000/1,300,000 = 0.954

    

    New
      Conversion Price = (0.9538) $5/share = $4.77/share

    

    Resulting
      Impact on Debtholder Debentures and Warrants

    

    Debentures:

    Conversion
      Price reduced from $5/share to $4.77/share

    Convertible
      shares increased from 100,000 to 104,822*

    

    *note:
      $500,000 ÷ $4.77/share = 104,822 shares

    

    Warrants: Exercise
      Price reduced from $5/share to $4.77/share

      
      Number of warrants unchanged at 50,000

     

    
      
         

      

        26

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