Document:

SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT
      (the
“Agreement”),
      dated
      as of June 11, 2007, by and among Composite Technology Corporation, a Nevada
      corporation (the “Company”),
      and
      the investors listed on the Schedule of Buyers attached hereto (individually,
      a
“Buyer”
and
      collectively, the “Buyers”).

     

    RECITALS

     

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

     

    B. Each
      Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
      conditions stated in this Agreement, that amount of Units (the “Units”)
      of the
      Company with each Unit comprised of one share of the Company’s common stock, par
      value $0.001 per share (the “Common
      Stock”),
      and
      1/4th
      of a
      warrant in substantially the form attached hereto as Exhibit
      A
      (the
“Warrants”)
      to
      purchase one share of Common Stock with an exercise price of $1.40 for a term
      of
      36 months (as exercised, collectively, the “Warrant
      Shares”),
      set
      forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which
      aggregate amount for all Buyers shall be up to $35,000,000).

     

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

     

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

     

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

     

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

    

    1. PURCHASE
      AND SALE OF THE UNITS.

     

    (a) Purchase
      of the Units.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    2. BUYER’S
      REPRESENTATIONS AND WARRANTIES.

     

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

     

    
      
        
        

      

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

     

    (b) Accredited
      Investor Status; No General Solicitation.
      Such
      Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
      Regulation D. The definition of “accredited investor” is annexed hereto. Such
      Buyer is not required to be registered as a broker-dealer under Section 15
      of
      the Exchange Act. Such Buyer is not purchasing the Securities as a result of
      any
      advertisement, article, notice or other communication regarding the Securities
      published in any newspaper, magazine or similar media or broadcast over
      television or radio or presented at any seminar or to such Buyer’s knowledge,
      any general solicitation or advertisement. 

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      
        
        

      

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

     

    (r) Equity
      Capitalization.
      (i) As
      of the date hereof, the authorized capital stock of the Company consists of
      (i)
      300,000,000 shares of Common Stock, of which as of the date hereof, 179,860,419
      are issued and outstanding and (ii) 5,000,000 shares of preferred stock. All
      of
      such outstanding shares have been validly issued and are fully paid and
      nonassessable and were issued in full compliance with applicable state and
      federal securities law and any rights of third parties. All of the issued and
      outstanding shares of capital stock of each Subsidiary have been duly authorized
      and validly issued and are fully paid, nonassessable and free of pre-emptive
      rights, and were issued in full compliance with applicable state and federal
      securities law and any rights of third parties and are owned by the Company,
      beneficially and of record, subject to no lien, encumbrance or other adverse
      claim. None of the Company’s or the Subsidiary’s share capital is subject to
      preemptive rights or any other similar rights or any liens or encumbrances
      suffered or permitted by the Company or any Subsidiary. Except with respect
      to
      the Warrants and the Placement Agent Warrants, there are no outstanding options,
      warrants, scrip, rights to subscribe to, calls or commitments of any character
      whatsoever relating to, or securities or rights convertible into, or exercisable
      or exchangeable for, any share capital of the Company or any of its
      Subsidiaries, or contracts, commitments, understandings or arrangements by
      which
      the Company or any of its Subsidiaries is or may become bound to issue
      additional share capital of the Company or any of its Subsidiaries or options,
      warrants, scrip, rights to subscribe to, calls or commitments of any character
      whatsoever relating to, or securities or rights convertible into, or exercisable
      or exchangeable for, any share capital of the Company or any of its
      Subsidiaries. Except as set forth in the Disclosure Schedule, there are no
      outstanding debt securities, notes, credit agreements, credit facilities or
      other agreements, documents or instruments evidencing Indebtedness of the
      Company or any of its Subsidiaries or by which the Company or any of its
      Subsidiaries is or may become bound. There are no financing statements securing
      obligations in any material amounts, either singly or in the aggregate, filed
      in
      connection with the Company or any of its Subsidiaries. Except as set forth
      in
      the Disclosure Schedule, there are no agreements or arrangements under which
      the
      Company is obligated to register the sale of any of their securities under
      the
      1933 Act (except the Registration Rights Agreement). 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    4. COVENANTS.

     

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

     

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

     

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

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

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

     

    (e) Fees.
      The
      Company shall reimburse all (i) reasonable costs and expenses (including
      travel-related expenses) of Placement Agent, including without limitation,
      fees,
      expenses, travel expenses and disbursements of outside counsel, consultants
      and
      engineers incurred in connection with due diligence and preparation of the
      Transaction Documents and the administration of the Units and (ii) reasonable
      costs, expenses and travel expenses of Agent (including fees and costs of
      Agent’s outside counsel) in connection with the enforcement or protection of
      their rights and remedies under the Units. These fees shall not exceed $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.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    If
      to
      the Company:

     

     

    Composite
      Technology Corporation

     

    2026
      McGaw Avenue

    Irvine,
      California 92614

    Telephone: (949)
      428-8500

    Facsimile: (949)
      660-1533

    Attention: Chief
      Executive Officer

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    With
      a copy to:

     

    Richardson
      & Patel, LLP

    10900
      Wilshire Blvd., Suite 500

    Los
      Angeles, California 90024

    Telephone: (310)
      208-1182

    Facsimile: (310)
      208-1154

    Attention: Kevin
      Leung, Esq. 

     

    If
      to
      a Buyer or Buyers:

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

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

     

    

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        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:                                                               
                            

              Benton
                H Wilcoxon

              Chief
                Executive Officer

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

     

    
      	 	
              BUYERS:

               

            
	 	
                                                                                                            
                

              Buyer

               

               

                                                                                                            
                

              Signature

               

               

                                                                                                            
                

              Authorized
                Representative

               

               

                                                                                                            
                

              Title

            
	 	 

    

    

    

    SUBSCRIPTION
      ACCEPTANCE 

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

    

    Subscription
      price accepted being $______________

    

    COMPOSITE
      TECHNOLOGY CORPORATION

    

    By:                                                                                                
      

    Name: Benton
      H
      Wilcoxon

    Title: Chief
      Executive Officer

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

    SCHEDULE
      OF BUYERS

    

    
      	
              (1)

            	
              (2)

            	
              (3)

            	
              (4)

            	
              (5)

            
	
              Buyer

            	
              Address
                and

              Facsimile
                Number

            	
              Number
                of Units

            	
              Purchase
                Price

            	
              Legal
                Representative’s Address and Facsimile Number

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBITS

     

    Exhibit
      A Form
      of
      Warrants

    Exhibit
      B Form
      of
      Registration Rights Agreement

    Exhibit
      C Form
      of
      Company Counsel Opinion

    Exhibit
      D Form
      of
      Secretary’s Certificate

    Exhibit
      E Form
      of
      Officer’s Certificate

     

    SCHEDULES

     

    Schedule
      of Buyers

    Disclosure
      Schedule

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SCHEDULE
      OF EXCEPTIONS

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
      3(a) 

    

    Subsidiaries.

    

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

     

    
      	 	
              Correct
                Name

            	
              Principal
                Address

            	
              Jurisdiction
                of Incorporation

            	
              Class
                of Shares

            	
              Percentage
                Ownership

            
	
              1

            	
              CTC
                Cable Corporation

            	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	
              Nevada

            	
              Ordinary

            	
              100%

            
	
              2

            	
              Transmission
                Technology Corporation

            	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	
              Nevada

            	
              Ordinary

            	
              100%

            
	
              3

            	
              CTC
                Towers & Poles Corporation

            	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	
              Nevada

            	
              Ordinary

            	
              100%

            
	
              4

            	
              DeWind
                Inc.

            	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	
              Nevada

            	
              Ordinary

            	
              100%

            
	
              5

            	
              EU
                Energy, Inc.

            	
              2026
                McGaw Avenue,

              Irvine
                CA 92614

            	
              Nevada

            	
              Ordinary

            	
              100%

            
	
              6

            	
              DeWind
                Ltd

            	
              151
                Silsbury Blvd

              Milton
                Keynes, MK9 1LH

              United
                Kingdom

            	
              UK

            	
              Ordinary

            	
              100%

            
	
              7

            	
              DeWind
                Turbines Ltd

            	
              151
                Silsbury Blvd

              Milton
                Keynes, MK9 1LH

              United
                Kingdom

            	
              UK

            	
              Ordinary

            	
              100%

            
	
              8

            	
              DeWind
                Holdings Ltd

            	
              151
                Silsbury Blvd

              Milton
                Keynes, MK9 1LH

              United
                Kingdom

            	
              UK

            	
              Ordinary

            	
              100%

            
	
              9

            	
              DeWind
                GmbH

            	
              Seelandstrasse
                1

              D-23569
                

              Lubeck
                Germany

            	
              Germany

            	
              Ordinary

            	
              100%

            
	
              10

            	
              EU
                Energy Turbines GmbH

            	
              Seelandstrasse
                1

              D-23569
                

              Lubeck
                Germany

            	
              Germany

            	
              Ordinary

            	
              100%

            
	
              11

            	
              E
                Energy Service GmbH

            	
              Seelandstrasse
                1

              D-23569
                

              Lubeck
                Germany

            	
              Germany

            	
              Ordinary

            	
              24.9%

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Schedule
      3(b) 

    

    Authorization;
      Enforcement: None

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
      3 (c) Issuance of Shares: None

    

    (d)
      No
      Conflicts: None

    

    (e)
      Consents: None

    

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

    

    (g)
      No
      General Solicitation: None

    

    (h)
      Private Placement: None

    

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

    

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

    

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

    

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

    

    (j)
      Application of Takeover Protections: None

    

    (k)
      SEC
      Documents; Financial Statements: None

    

    (l)
      Absence of Certain Changes: 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Operational
      update from 3/31/07:

    

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

    

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

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

    

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

    

    Section
      (l) (viii)

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

    

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

     

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

    

    (n)
      Use
      of proceeds: None

    

    (o)
      Conduct of Business; Regulatory Permits: None

    

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

    

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

    

    Fiscal
      2006 Assessment.

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

    

    
      	 	
              i)

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

            
	 	
              ii)

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

            
	 	
              iii)

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

            

    

    
      	 	
              iv)

            	
              There
                were inadequate vendor management duties and responsibilities during the
                year

            
	 	
              v)

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

            

    

     

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

    

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

    

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

    

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

     

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

    

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

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (s)
      Indebtedness and other Contracts:

    

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

     

    
      
        
          	
                  Convertible
                    Notes due August, 2007

                	
                  $5,013,200

                	 
	
                  Convertible
                    Notes due January, 2010

                	
                  $22,525,000

                	
                   

                
	
                  Capital
                    Leases - US

                	
                   $
                    245,000

                	
                   (secured
                    by certain US
                    assets)

                
	
                  Total

                	
                  $27,783,200

                	 

        

      

    

     

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

    

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

    

    Steven
      Bircher - 6 months (VP of Business Development)

    Joerg
      Kubitza - 3 months (DeWind General Manager)

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

    Stuart
      Jackson - 3 months (Finance Director)

    Alexander
      Senge - 3 months (Legal Counsel)

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

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

     

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

    

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

    

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

    

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

    

    The
      essential terms of his employment agreement are as follows:

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

    

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

    

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

    

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

    

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

    

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

    

      
        	
                Asset

              	
                Description

              	
                Cost

              
	 	 	 
	
                IFC
                  Lease 1

              	
                Five
                  (5) Laptops; Ten (10) Desktops; Great Plains Software;

                Power
                  Line Systems Software; Dynamic Methods Software;

                Network
                  Servers, Routers, Equip; Desktop Software-various;

                HP
                  DesignJest Plotter

              	
                $100,000.00

              
	 	 	 
	
                IFC
                  Lease 2

              	
                Office
                  chairs; Phone; Office Furniture Outlet; House to Office;

                Telephone
                  Equipment; Telephone Equipment-ROI Networks;

                Furniture;
                  House to Office Furniture Warehouse

              	
                $100,000.00

              
	 	 	
                 

              
	
                IFC
                  Lease 3

              	
                Durapul
                  1204 Pultrusion Machine, parts, attachments, and

                accessories

              	
                $100,000.00

              
	 	 	 
	
                IFC
                  Lease 4

              	
                Durapul
                  1204 Pultrusion Machine & Frame with all parts, 

                attachments,
                  and accessories; Wet Tanks; Pultrusion Tools; 

                Metal
                  Dies; Parts and setup

              	
                $100,000.00

              
	 	 	 
	
                IFC
                  Lease 5

              	
                Torque
                  Control Conversion Kit; Dies; Epacio Burndy; Dispensing

                Unit/Reller;
                  Bending Clamp Kit; Air Compressor; Clark Forklift;

                Computer
                  Network Equip; Ashman Lathe; Ashman Welder; Air

                Compressor;
                  Haas Tool Room Lathe

              	
                $100,000.00

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      
        	
                IFC
                  Lease 6

              	
                Goldsworthy
                  Pullmaster Machine with 24 x 8 inch Puller Envelope

                with
                  all parts, attachments, and accessories

              	
                $60,000.00

              
	 	 	 
	
                IFC
                  Lease 7

              	
                CPE
                  Machine with 50 x 18 inch Envelope with all parts, 

                attachments,
                  and accessories

              	
                $240,000.00

              
	 	 	 
	
                IFC
                  Lease 8

              	
                Durapul
                  1204 Pultrusion Machine, parts, attachments, and

                accessories

              	
                $99,750.00

              
	 	 	 
	
                IFC
                  Lease 9

              	
                Electromechanical
                  Testing Machine & Load Frame Height with

                all
                  parts, attachments, and accessories; Tufting Heads with all parts,
                  

                attachments,
                  and accessories

              	
                $108,820.00

              
	 	 	 
	
                IFC
                  Lease 10

              	
                Two
                  (2) Reel-O-Matic Fractional HP Polyspeed Variable Speed 

                and
                  Torque Control Drives; Two (2) Reel-O-Matic Extra Guide

                Boxes
                  with rollers and hardware; Integrated Tech, Inc.
                  Manufacturing

                Software
                  system with all parts, attachments, and accessories

              	
                $97,390.40

              
	 	 	 
	
                IFC
                  Lease 11

              	
                Durapul
                  1204 Pultrusion Machines, parts, attachments, and

                accessories

              	
                $150,000.00

              
	 	 	 
	
                CNC
                  Lease

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

                attachments,
                  and accessories

              	
                $26,379.00

              
	
              

      

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

    

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

    

    (w)
      Intellectural Property: None

    

    (x)
      Tax
      Status: None

    

    (y)
      Insurance: None

    

    (z)
      Ranking of Debentures: None

    

    (aa)
      Off
      Balance Sheet Arrangements: None

    

    (bb)
      Manipulation of Price: None

    

    (cc)
      Company’s knowledge: None

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Definition
      of “Accredited Investor”

    

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

    

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

    

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

    

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

     

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

     

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

     

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

    

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

    

    

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

    

    COMPOSITE
      TECHNOLOGY CORPORATION

    

    Warrant
      To Purchase Common Stock

    

    Warrant
      No.: [__] 

    Date
      of
      Issuance: __________,
      2007
      (“Issuance
      Date”)

    

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

            

    

    

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

    

    Composite
      Technology Corporation, a Nevada corporation (the “Company”),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, [NAME
      OF BUYER], the
      registered holder hereof or its permitted assigns (the “Holder”),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      the Exercise Price (as defined below) then in effect, upon surrender of this
      Warrant to Purchase Common Stock (including any Warrants to Purchase Common
      Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
      at
      any time or times on or after the date hereof, but not after 5:00 p.m., Pacific
      time, on the Expiration Date (as defined below), the number of validly issued,
      fully paid nonassessable shares of Common Stock (as defined below) determined
      in
      accordance with Section 1(a) below (the
      “Warrant
      Shares”).
      Except as otherwise defined herein, capitalized terms in this Warrant shall
      have
      the meanings set forth in Section 15. This Warrant is one of a series of
      warrants to purchase Common Stock (the “Warrants”)
      issued
      pursuant to Section 1 of that certain Securities Purchase Agreement, dated
      as of
      June 11, 2007 (the “Subscription
      Date”),
      by
      and among the Company and the investors (the “Buyers”)
      referred to therein (the “Securities
      Purchase Agreement”).

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    1. EXERCISE
      OF WARRANT. 

     

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

     

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

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (c) Exercise
      Price.
      For
      purposes of this Warrant, “Exercise
      Price”
means
      120% of the Initial Market Price as defined in the Securities Purchase Agreement
      dated June 11, 2007, subject to adjustment as provided herein.

     

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

     

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

      B

     

    For
      purposes of the foregoing formula:

     

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

     

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

     

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

    

    

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

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

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

     

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

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

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

     

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

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

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

     

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

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

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

     

    5. REISSUANCE
      OF WARRANTS.

     

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

     

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

     

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

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

    (a) “Bloomberg”
means
      Bloomberg Financial Markets.

     

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

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    

    

    [Signature
      Page Follows]

     

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    
 

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

    

     

    
      	 	 	 
	 	COMPOSITE
              TECHNOLOGY CORPORATION 
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Benton
                H. Wilcoxon 

              Chief
                Executive Officer

            
	 	 

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

    

    EXERCISE
      NOTICE

    TO
      BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

    WARRANT
      TO PURCHASE COMMON STOCK

    COMPOSITE
      TECHNOLOGY CORPORATION

     

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    Date:
      _______________ __, ______

    

                                                                            

    Name
      of
      Registered Holder

     

    

    By:                                                                       

    Name:

    Title:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ACKNOWLEDGMENT

    

    

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

    

    

     

    
       

      
        	 	 	 
	 	COMPOSITE
                TECHNOLOGY CORPORATION 
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Benton
                  H. Wilcoxon 

                Chief
                  Executive Officer

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