ESCROW AND SECURITY AGREEMENT

This ESCROW AND SECURITY AGREEMENT (this “ Agreement ”) is made and entered into as of September 4, 2009 (the “ Effective Date ”), by and among DeWind Turbine, Co., a California corporation (“ DeWind Turbine ”), DeWind, Inc., a Nevada corporation (“ Seller ”), and U.S. Bank National Association, a national banking association, as Escrow Agent (the “ Escrow Agent ”).

RECITALS

A.           This Agreement is entered into pursuant to that certain Asset Purchase Agreement, dated as of August 10, 2009 (as amended, the “ Purchase Agreement ”) by and among Daewoo Shipbuilding & Marine Engineering Co., Ltd. (“ DSME ”), Seller and Composite Technology Corporation.  Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings given to them in the Purchase Agreement.

B.           DeWind Turbine, as an Affiliate of DSME, has assumed all of DSME’s rights and benefits under the Purchase Agreement, pursuant to that Assignment of Agreement between DSME and DeWind Turbine, dated August 31, 2009.

C.           Section 3.3(a) of the Purchase Agreement provides that DSME or its Affiliates will be entitled to withhold from the amounts payable to Seller at Closing cash in the amount of Seventeen Million One Hundred Seventy-Five Thousand Dollars ($17,175,000) (the “ Escrow Funds ”).  The Escrow Funds are to be placed in an escrow account (the “ Escrow Account ”) for the purpose of reimbursing DSME or its Affiliates, at least in part, for any and all Losses DSME or its Affiliates might incur related to the Purchase Agreement and the transactions thereunder.

D.           DeWind Turbine and Seller are entering into this Agreement to consummate the transactions contemplated in the Purchase Agreement and as a condition precedent to consummation of the Closing, and the parties desire to set forth in this Agreement the terms and conditions pursuant to which the Escrow Funds shall be deposited, held in and disbursed from the Escrow Account.

NOW, THEREFORE, the parties hereby agree as follows:

1.       Escrow.

(i)            Escrow Funds .  At the Closing, DeWind Turbine shall deposit the Escrow Funds with the Escrow Agent in the manner contemplated by Section 2(a) of this Agreement.

(ii)            Agreement to Hold Escrow Funds .  The Escrow Agent shall hold the Escrow Funds delivered to it pursuant to Section 1(a)(i) above in escrow for the purpose of paying, at least in part, any Claims (defined below) which might be made against the Escrow Funds by DeWind Turbine, until the Escrow Agent is required to release such Escrow Funds in accordance with the terms of this Agreement.  The Escrow Agent agrees to accept delivery of such Escrow Funds and to hold such Escrow Funds in escrow for the benefit of DeWind Turbine and Seller subject to the terms and conditions of this Agreement.

(b)               Notice of Claim .  As used herein, the term “ Claim ” means a claim for any Losses under Section 10.2 of the Purchase Agreement.  DeWind Turbine shall deliver a written notice of the Claim (the “ Notice of Claim ”) to the Seller and the Escrow Agent in compliance with Section 3 below.  Except as set forth in Section 2(c)(i), DeWind Turbine will make a Claim against the Escrow Funds only as contemplated by Section 10 of the Purchase Agreement.  DeWind Turbine may give the Notice of Claim after the determination of any Claims in accordance with Section 10 of the Purchase Agreement.

(c)               Escrow Period .  As used herein, the term “ Escrow Period ” means that time period beginning on the Closing Date and ending on the third anniversary thereafter at 5:00 p.m. (Pacific Standard Time), unless and to the extent extended under Section 2(c)(ii) below.

2.       Deposit of Escrow Funds; Release from Escrow.

(a)               Delivery of Escrow Funds .  On the Closing Date, the Escrow Funds shall be delivered by DeWind Turbine to the Escrow Agent by wire transfer.

(b)               Investment of Escrow Funds .  The Escrow Funds shall be placed by the Escrow Agent into a U.S. Bank Money Market Account as described in Exhibit A attached hereto.  All interest or appreciation accrued on the Escrow Funds (the “ Additional Escrow Funds ”) shall be deemed to be Escrow Funds for the purposes contemplated in this Agreement.

(d)               Release of Escrow Funds .  The Escrow Funds shall be held by the Escrow Agent for the benefit of DeWind Turbine and Seller until such Escrow Funds are required to be released pursuant to either:  (i) Section 2(c) above; or (ii) when required under applicable provisions of Section 4 below.  The Escrow Agent shall deliver to Seller or to DeWind Turbine, as applicable hereunder, the requisite amount of Escrow Funds to be released on such applicable date(s) by wire transfer to such account(s) as have been designed in writing to the Escrow Agent by Seller or DeWind Turbine, respectively.

(e)               Nature of Interest in Escrow Funds .  The parties acknowledge and agree that DeWind Turbine’s and Seller’s payment interests in the Escrow Funds are contingent rights to payment from the Escrow Funds, and that neither a voluntary or involuntary case under any applicable bankruptcy, insolvency or similar law, nor the appointment of a receiver, trustee, custodian or similar official in respect of DeWind Turbine or Seller shall increase its respective payment interest in the Escrow Funds or affect, modify, convert or otherwise change any right it may have to the Escrow Funds.

(f)               No Transfer or Encumbrance of Escrow Funds .  Both parties have not, and agree that they will not, subject the Escrow Funds to a Lien or otherwise encumber the Escrow Funds, except as permitted by this Agreement.

*** This material has been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

(g)               Grant of Security Interest to DeWind Turbine .  In order to secure Seller’s obligations and enhance DeWind Turbine’s rights and remedies under this Agreement and under the Purchase Agreement, Seller hereby grants to DeWind Turbine, effective as of the date hereof, a security interest in all of Seller’s right, title and interest in and to the Escrow Account and the Escrow Funds, including, without limitation, all accounts, certificates of deposit, cash, funds and investments established or made with the Escrow Funds and any replacements or proceeds thereof.  The Escrow Agent acknowledges that DeWind Turbine has a security interest in the Escrow Account, the Escrow Funds and Additional Escrow Funds, and all assets and investments which may be held in the Escrow Account from time to time, and shall maintain and preserve such assets subject to this security interest.  The parties hereto agree that this Agreement including Section 2(g) shall establish “control,” as defined in Sections 9-104 and 8-106 of the Uniform Commercial Code, as enacted in the State of California, and as amended from time to time (the “ UCC ”), of the Escrow Funds, which control is effective to perfect DeWind Turbine’s security interest in the Escrow Funds.  The Escrow Agent and Seller shall take all actions as may be reasonably requested in writing by DeWind Turbine to perfect or maintain the security interest created by Seller hereunder in the Escrow Funds.  DeWind Turbine is authorized by the other parties hereto to file UCC financing statements naming Seller as “Debtor” and DeWind Turbine as “Secured Party” and take such other and further actions as DeWind Turbine may reasonably determine to perfect DeWind Turbine’s security interest granted herein, with or without execution by the other parties hereto, to the extent permitted by applicable law