CONTRIBUTION AGREEMENT
CONTRIBUTION
AGREEMENT, dated as of May __, 2008, is entered into among each of the Obligors
referred to below.
WITNESSETH:
WHEREAS,
contemporaneously herewith, Composite Technology Corporation, a Nevada
corporation (the “Borrower”),
each
subsidiary of the Borrower listed as a “Guarantor” on the signature pages
thereto (together with any other Person that guarantees all or any part of
the
Obligations (as defined in the Financing Agreement), each a “Guarantor”
and
collectively, the “Guarantors”),
the
lenders from time to time party thereto (each a “Lender”
and
collectively, the “Lenders”),
and
ACF CTC, L.L.C., a Delaware limited liability company, as agent for the Lenders
(the “Agent”),
have
entered into a Financing Agreement, dated as of the date hereof (such agreement,
as amended, restated, supplemented or otherwise modified from time to time,
including any replacement agreement therefor, being hereinafter referred to
as
the “Financing
Agreement”);
WHEREAS,
the Guarantors have guaranteed the repayment of the Obligations owing by the
Borrower to the Lenders under the Financing Agreement and each of the other
Loan
Documents (as defined in the Financing Agreement) pursuant to its Guaranty
made
under Article XI of the Financing Agreement or under any other Guaranty (as
defined in the Financing Agreement) to which it is a party; and
WHEREAS,
in order to induce the Lenders to enter into the Financing Agreement and to
effect an equitable sharing of the Obligors' (as defined below) risks thereunder
and to establish certain rights and obligations of contribution among the
Obligors with respect to the Secured Obligations (as defined below), each of
the
Obligors wishes to enter into this Agreement;
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
1.
Defined
Terms.
Any and
all initially capitalized terms used herein shall have the meanings ascribed
thereto in the Financing Agreement, unless specifically defined
herein.
(a)
The
following terms, as used in this Agreement, shall have the following
meanings:
“Agreement”
means
this Contribution Agreement, together with any and all future additions,
alterations, amendments, changes, extensions, modifications, renewals,
substitutions, or supplements hereto or hereof.
“Net
Worth”
has
the
meaning set forth in Section 2 hereof.
“Obligors”
means
the Guarantors and the Borrower.
“Payment
Percentage”
has
the
meaning set forth in Section 2 hereof.
“Secured
Obligations”
shall
mean all liabilities, obligations, or undertakings owing by the Obligors to
the
Agent or the Lenders of any kind or description arising out of or outstanding
under, advanced or issued pursuant to, or evidenced by the Financing Agreement
or any of the other Loan Documents irrespective of whether for the payment
of
money, whether direct or indirect, absolute or contingent, due or to become
due,
voluntary or involuntary, whether now existing or hereafter arising, and
including all interest (including any interest that, but for the provisions
of
the Bankruptcy Code, would have accrued) and any and all costs, fees (including
reasonable attorneys fees), and expenses (including any fees and expenses that,
but for the provisions of the Bankruptcy Code would have accrued) which the
Obligors are required to pay pursuant to any of the foregoing, by law, or
otherwise.
(b)
The
definitions of terms herein shall apply equally to the singular and plural
forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”. The word “will” shall be construed to have the same
meaning and effect as the word “shall”. Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (ii) any reference herein to any Person shall be construed
to
include such Person's successors and assigns, (iii) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof,
(iv)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
to,
this Agreement and (v) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights. All of the exhibits or schedules attached to this Agreement
shall be deemed incorporated herein by reference.
2.
Right
of Contribution.
If any
Obligor makes a payment in respect of the Secured Obligations that is less
than
its Payment Percentage (as calculated below) of the Secured Obligations, then,
upon indefeasible payment in full in cash of the Secured Obligations, the
Obligor making such proportionately smaller payment shall pay to the other
Obligors that amount which is necessary such that the net payments made by
all
Obligors in respect of the Secured Obligations are shared among Obligors pro
rata according to their respective Payment Percentages. If any Obligor receives
any payment in respect of the Secured Obligations that is greater than its
Payment Percentage (as calculated below) of the Secured Obligations, then the
Obligor receiving such proportionately greater payment shall pay to the other
Obligors that amount which is necessary such that the payments received by
all
Obligors shall be shared among all Obligors pro rata according to their
respective Payment Percentages.
Each
Obligor's “Payment Percentage” shall be the percentage calculated by dividing
(a) the Net Worth of such Obligor by (b) the sum of the Net Worth of
all of the Obligors, which Payment Percentage is subject to redetermination
or
adjustment as hereinafter set forth. Notwithstanding anything to the contrary
contained herein, (i) the Guarantors shall have no contribution obligations
under this Section 2 unless a Guarantor makes a payment in respect of the
Secured Obligations, and (ii) the Net Worth of each Guarantor shall be included
in the calculation of each Obligor's Payment Percentage only to the extent
a
Guarantor makes a payment in respect of the Secured Obligations.
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For
purposes of the calculation (and any recalculation) of any particular Obligor's
Payment Percentage, such Obligor's “Net Worth” shall mean the amount, calculated
as of the date such Obligor became a signatory to this Agreement, by which
the
sum of all of such Obligor's assets is
greater than the sum of all of such Obligor's debts, at fair valuations, and
after giving effect to the inclusion and exclusion of the matters included
and
excluded in determining whether a debtor is insolvent according to Section
548
of Title 11 of the United States Code; provided,
however,
that
for the purpose of determining the “Net Worth” of any Obligor, no value shall be
given to such Obligor's equity interest in any other Obligor.
This
Section 2 shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, any
of
the Secured Obligations, and such provisions are made for the benefit of the
holders of any of the Secured Obligations, and such holders are made obligees
hereunder and any of them may enforce the provisions of this Section
2.
3.
Right
of Contribution Constitutes an Asset.
Each of
the Obligors hereto acknowledges that the right to contribution hereunder shall
constitute an asset of the Obligor to which such right is owing, but shall
not
be considered part of such Obligor's “Net Worth” for the purposes of the
calculation of such Obligor's Payment Percentage pursuant to Section 2
hereof.
4.
Representations
and Warranties.
Each
Obligor hereto represents and warrants to each other party hereto and to their
respective successors and assigns that:
(a)
the
execution, delivery, and performance by such Obligor of this Agreement (i)
have
been duly authorized by all necessary action, (ii) do not and will not
contravene its charter or by-laws, its limited liability company or operating
agreement or its certificate of partnership or partnership agreement, as
applicable, or any applicable law or any contractual restriction binding on
or
otherwise affecting it or any of its properties, (iii) do not and will not
result in or require the creation of any Lien (other than pursuant to any Loan
Document) upon or with respect to any of its properties, and (iv) do not and
will not result in any default, noncompliance, suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization
or
approval applicable to its operations or any of its properties, and
(b)
this
Agreement constitutes the legal, valid and binding obligation of such Obligor
hereto, enforceable against such party in accordance with its terms, except
as
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws and principles of equity and (ii) the fact that rights to
contribution thereunder may be limited by federal or state securities
laws.
5.
No
Waivers; Remedies.
No
failure on the part of any Obligor to exercise, and no delay in exercising,
any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The rights and remedies of any
Obligor or any other Person hereunder provided herein are cumulative and are
in
addition to, and not exclusive of, any rights or remedies provided by law.
The
rights of any Obligor hereunder against any party hereto are not conditional
or
contingent on any attempt by such Obligor to exercise any of its rights under
any other document, agreement or instrument against such party or against any
other Person.
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6.
Amendments.
No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Obligor therefrom, shall in any event be effective unless
the
same shall be in writing and signed by the Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
7.
Successors
and Assigns.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns.
8.
GOVERNING
LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE
OF NEW YORK.
9.
CONSENT
TO JURISDICTION; SERVICE OF PROCESS AND VENUE.
ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN
XXX
XXXXXX XX XXX XXXXX XX XXX XXXX IN THE COUNTY OF NEW YORK OR OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OBLIGOR HEREBY IRREVOCABLY ACCEPTS IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE
AFORESAID COURTS.
EACH OF
THE OBLIGORS HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE
OF
NEW YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION
OR
PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY
OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, CARE OF
THE
BORROWER AT ITS ADDRESS FOR NOTICES AS SET FORTH IN SECTION 12.01 OF THE
FINANCING AGREEMENT AND TO THE SECRETARY OF STATE OF THE STATE OF NEW YORK,
SUCH
SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT AND THE LENDERS TO SERVICE OF PROCESS IN
ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY OBLIGOR IN ANY OTHER JURISDICTION. EACH OBLIGOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING
OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE
EXTENT THAT ANY OBLIGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE
OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH OBLIGOR HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
4
10.
WAIVER
OF JURY TRIAL, ETC. EACH
OBLIGOR,
THE
AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, OR UNDER
ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT
DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH,
OR
ARISING FROM OR EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT
ANY
SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY. EACH
OBLIGOR
CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR
ANY
LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY LENDER
WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO
ENFORCE THE FOREGOING WAIVERS. EACH
OBLIGOR
HEREBY
ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND
THE
LENDERS ENTERING INTO THIS AGREEMENT.
11.
Headings.
Headings used in this Agreement are for convenience of reference only and shall
neither constitute a part of this Agreement for any other purpose nor affect
the
construction of this Agreement.
12.
No
Inconsistent Requirements.
In the
event of a direct conflict between the terms and provisions contained in this
Agreement and the terms and provisions contained in the Financing Agreement,
it
is the intention of the parties hereto that such terms and provisions in such
documents shall be read together and construed, to the fullest extent possible,
to be in concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions of
the
Financing Agreement shall control and govern.
13.
Reliance.
Each of
the Obligors hereby agrees that this Agreement may be relied upon by the Agent
and the Lenders, that the Agent and the Lenders shall be intended third party
beneficiaries hereof, enforceable by the Agent and the Lenders against the
Obligors and that this Agreement shall constitute a Loan Document for all
purposes.
14.
Counterparts.
This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement by telecopier
or electronic transmission shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telecopier or electronic transmission
also shall deliver an original executed counterpart of this Agreement but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement.
5
15.
Additional
Obligor.
Pursuant to Section 7.01(b) of the Financing Agreement, certain additional
Subsidiaries of Parent may be required to guarantee the Obligations and, in
connection therewith, to enter into this Agreement as a Guarantor and an
Obligor. Upon execution and delivery, after the date hereof, by such Subsidiary
of a supplement to this Agreement, in form and substance satisfactory to the
Agent, such Subsidiary shall become a Guarantor and an Obligor hereunder with
the same force and effect as if originally named as an Obligor hereunder. The
execution and delivery of any such instrument shall not require the consent
of
any of the existing Obligors hereunder. The rights and obligations of each
Obligor hereunder shall remain in full force and effect notwithstanding the
addition of any new Obligor as a party to this Agreement.
[Remainder
of this Page Intentionally Left Blank.]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their respective officers thereunto duly authorized, as of the date first above
written.
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OBLIGORS:
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BORROWER:
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COMPOSITE
TECHNOLOGY CORPORATION
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By:
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Name:
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Title:
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GUARANTORS:
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CTC
CABLE CORPORATION
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By:
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Name:
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Title:
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TRANSMISSION
TECHNOLOGY CORPORATION
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By:
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Name:
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Title:
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CTC
TOWERS & POLES CORPORATION
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By:
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Name:
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Title:
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XXXXXX,
INC.
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By:
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Name:
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Title:
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EU
ENERGY INC.
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By:
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Name:
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Title:
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EU
ENERGY NORTH AMERICA, INC
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By:
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Name:
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Title:
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