Exhibit 10.38


NEITHER  THIS WARRANT NOR THE SHARES  ISSUABLE  UPON  EXERCISE  HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT")
OR ANY OTHER  APPLICABLE  SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES  ISSUABLE UPON EXERCISE  HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED,  ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT.


                             STOCK PURCHASE WARRANT


                  To Purchase 709,849 Shares of Common Stock of

                                COMPOSITECH LTD.

     THIS CERTIFIES that, for value received,  The Gross  Foundation,  Inc. (the
"Holder") and registered assigns, is entitled, upon the terms and subject to the
conditions  hereinafter  set forth,  at any time on or after July 12,  2000 (the
"Initial  Exercise  Date") and on or prior to the close of  business on July 12,
2003 (the  "Termination  Date") but not thereafter (the "Exercise  Period"),  to
subscribe for and purchase from  Compositech  Ltd., a Delaware  corporation (the
"Company"), up to seven hundred nine thousand eight hundred forty-nine (709,849)
shares (the "Warrant  Shares") of Common Stock,  $.01 par value,  of the Company
(the  "Common  Stock").  The  purchase  price of one share of Common  Stock (the
"Exercise  Price")  under this Warrant  shall be $0.7326 (130% of the average of
the closing bid prices of the Common Stock on the Nasdaq  SmallCap Market on the
thirty Trading Days prior to the Closing Date of the Convertible Preferred Stock
and Warrants  Purchase  Agreement,  dated as of July 7, 2000,  pursuant to which
this Warrant has been issued (the "Purchase Agreement")), subject to a reduction
of ten percent (10%) for each month the Company is in a Registration Default (as
that term is defined in the Registration Rights Agreement,  dated July 7, 2000),
pro-rated daily; provided, however, that in no event shall the Exercise Price be
reduced  below $0.01 per Warrant  Share.  The  Exercise  Price and the number of
shares for which the Warrant is exercisable  shall also be subject to adjustment
as  provided  herein.  In the event of any  conflict  between  the terms of this
Warrant and the  Purchase  Agreement,  the  Purchase  Agreement  shall  control.
Capitalized  terms used and not otherwise defined herein shall have the meanings
set forth for such terms in the Purchase Agreement.

<PAGE>

     1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office of the Company by the holder
hereof in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed.

     2. Authorization of Shares. The Company covenants that all shares of Common
Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

     3. Exercise of Warrant. Except as provided in Section 4 herein, exercise of
the purchase rights represented by this Warrant may be made at any time or times
(i) on or after the Initial Exercise Date, as to one-half of the number of
Warrants, and (ii) if and only if the Convertible Preferred Stock issued in
conjunction with this Warrant has not been redeemed in full by the Company in
accordance with its terms on or before the one-hundred twentieth (120th) day
after on or after the Initial Exercise Date, as to one-quarter of the Warrants,
on or after such date, which quarter shall otherwise be void and (iii) if and
only the Convertible Preferred Stock issued in conjunction with this Warrants
has not been redeemed in full by the Company in accordance with its terms on or
before the one-hundred eightieth (180th) day after the Initial Exercise Date, as
to the remaining one-quarter of the Warrants, on or after such date, which
quarter shall otherwise be void, and in all cases before the close of business
on the Termination Date by the surrender of this Warrant and the Notice of
Exercise Form annexed hereto duly executed, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder appearing
on the books of the Company) and upon payment of the Exercise Price of the
shares thereby purchased by wire transfer or cashier's check drawn on a United
States bank, the holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. Certificates
for shares purchased hereunder shall be delivered to the holder hereof within
three (3) Trading Days after the date on which this Warrant shall have been
exercised as aforesaid. This Warrant shall be deemed to have been exercised and
such certificate or certificates shall be deemed to have been issued, and Holder
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by surrender of the Warrant and payment to the
Company of the Exercise Price and all taxes required to be paid by Holder, if
any, pursuant to Section 5 prior to the issuance of such shares, have been paid.

     The  Holder  shall  have the right to a  "cashless  exercise"  in which the
Holder shall be entitled to receive a certificate for the number of shares equal
to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the average of the high and low trading  prices per share of Common  Stock
on the Trading Day preceding the date of such election;

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<PAGE>

(B) =  the Exercise Price of the Warrant; and

(X) = the number of Warrant  Shares to be applied to the "cashless  exercise" in
accordance with the terms of this Warrant.

     If this Warrant shall have been exercised in part,  the Company  shall,  at
the time of delivery of the  certificate or  certificates  representing  Warrant
Shares,  deliver  to Holder a new  Warrant  evidencing  the  rights of Holder to
purchase the  unpurchased  shares of Common  Stock  called for by this  Warrant,
which new Warrant shall in all other respects be identical with this Warrant.

     4.  No  Fractional   Shares  or  Scrip.  No  fractional   shares  or  scrip
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant.  As to any fraction of a share which Holder would otherwise be entitled
to purchase  upon such  exercise,  the Company  shall pay a cash  adjustment  in
respect of such final fraction in an amount equal to the Exercise Price.

     5. Charges,  Taxes and  Expenses.  Issuance of  certificates  for shares of
Common Stock upon the exercise of this Warrant  shall be made without  charge to
the holder hereof for any issue or transfer tax or other  incidental  expense in
respect of the  issuance of such  certificate,  all of which taxes and  expenses
shall be paid by the Company,  and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant;  provided,  however,  that in the event certificates for
shares of Common  Stock  are to be issued in a name  other  than the name of the
holder of this  Warrant,  this Warrant when  surrendered  for exercise  shall be
accompanied by the Assignment  Form attached  hereto duly executed by the holder
hereof; and the Company may require,  as a condition  thereto,  the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.

     6. Closing of Books.  The Company will not close its  shareholder  books or
records in any manner which prevents the timely exercise of this Warrant.

     7. Transfer,  Division and Combination.  (a) Subject to compliance with any
applicable  securities laws,  transfer of this Warrant and all rights hereunder,
in whole or in part,  shall be  registered  on the  books of the  Company  to be
maintained  for such  purpose,  upon  surrender of this Warrant at the principal
office of the  Company,  together  with a  written  assignment  of this  Warrant
substantially  in the form attached  hereto duly executed by Holder or its agent
or attorney  and funds  sufficient  to pay any transfer  taxes  payable upon the
making of such transfer. Upon such surrender and, if required, such payment, the
Company  shall  execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations specified in such
instrument  of  assignment,  and  shall  issue  to the  assignor  a new  Warrant
evidencing  the portion of this Warrant not so assigned,  and this Warrant shall
promptly be cancelled.  A Warrant,  if properly assigned,  may be exercised by a
new holder  for the  purchase  of shares of Common  Stock  without  having a new
Warrant issued.

     (b) This  Warrant  may be divided or  combined  with  other  Warrants  upon
presentation  hereof at the  aforesaid  office of the Company,  together  with a
written notice  specifying the names and denominations in which new Warrants are
to be issued,  signed by Holder.  Subject to compliance with Section 7(a), as to
any transfer which may be involved in

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<PAGE>

such  division  or  combination,  the  Company  shall  execute and deliver a new
Warrant or  Warrants  in  exchange  for the Warrant or Warrants to be divided or
combined in accordance with such notice.

     (c) The Company shall prepare,  issue and deliver at its own expense (other
than transfer taxes) the new Warrant or Warrants under this Section 7.

     (d) The Company agrees to maintain,  at its aforesaid office, books for the
registration and the registration of transfer of the Warrants.

     8. No Rights as Shareholder  until Exercise.  This Warrant does not entitle
the holder hereof to any voting  rights or other rights as a shareholder  of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate  Exercise Price,  the Warrant Shares so purchased shall
be and be deemed to be issued to such holder as the record  owner of such shares
as of the  close of  business  on the  later of the  date of such  surrender  or
payment.

     9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence  reasonably  satisfactory  to it of
the loss,  theft,  destruction or mutilation of this Warrant  certificate or any
stock certificate  relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond),  and upon  surrender and  cancellation  of
such  Warrant or stock  certificate,  if  mutilated,  the Company  will make and
deliver a new  Warrant or stock  certificate  of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

     10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the  expiration of any right  required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.

     11.  Anti-Dilution  Provisions.  During the Exercise  Period,  the Exercise
Price and the number of Warrant  Shares  issuable  hereunder  and for which this
Warrant  is then  exercisable  pursuant  to this  Warrant  shall be  subject  to
adjustment from time to time as provided in this Section 11.

     In the event that any adjustment of the Exercise  Price as required  herein
results in a fraction of a cent, such Exercise Price shall be rounded up or down
to the nearest cent.

     (a) Adjustment of Exercise Price.  Except as otherwise provided in Sections
11(c) and 11(e) hereof,  if the Company issues or sells,  or in accordance  with
Section  11(b)  hereof is deemed to have  issued or sold,  any  shares of Common
Stock for a consideration per share of less than the Exercise Price per share or
for no  consideration  (collectively,  a "Dilutive  Issuance"),  then  effective
immediately upon the Dilutive  Issuance,  the Exercise Price will be adjusted in
accordance with the following formula:

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<PAGE>

                           E(1)        = E x    O + P/E
                                            --------------
                                                  CSDO
                           where:

                           E(1)        = the adjusted Exercise Price;

                           E           = the then current Exercise Price;

                           O           = the number of shares of Common Stock
                                         outstanding immediately prior to the
                                         Dilutive Issuance;

                           P           = the aggregate consideration, calculated
                                         as set forth in Section 11(b) hereof,
                                         received by the Company upon such
                                         Dilutive Issuance; and

                           CSDO        = the total number of shares of Common
                                         Stock deemed outstanding immediately
                                         after the Dilutive Issuance.

     (b) Effect of Exercise Price of Certain Events. For purposes of determining
the adjusted  Exercise  Price under Section 11(a) hereof,  the following will be
applicable:

          (i) Issuance of Rights or Options. If the Company in any manner issues
     or grants any  warrants,  rights or  options,  whether  or not  immediately
     exercisable,  to  subscribe  for  or to  purchase  Common  Stock  or  other
     securities  exercisable,  convertible into or exchangeable for Common Stock
     ("Convertible  Securities") (such warrants,  rights and options to purchase
     Common  Stock or  Convertible  Securities  are  hereinafter  referred to as
     "Options")  and the price per share for which Common Stock is issuable upon
     the exercise of such Options is less than the Exercise  Price  ("Below Base
     Price  Options"),  then the maximum  total number of shares of Common Stock
     issuable upon the exercise of all such Below Base Price  Options  (assuming
     full  exercise,  conversion  or  exchange  of  Convertible  Securities,  if
     applicable)  will,  as of the date of the  issuance  or grant of such Below
     Base Price Options, be deemed to be outstanding and to have been issued and
     sold by the Company for such price per share. For purposes of the preceding
     sentence,  the "price per share for which Common Stock is issuable upon the
     exercise of such Below Base Price  Options" is  determined  by dividing (A)
     the  total  amount,  if any,  received  or  receivable  by the  Company  as
     consideration  for the  issuance  or  granting of all such Below Base Price
     Options, plus the minimum aggregate amount of additional consideration,  if
     any,  payable to the Company upon the exercise of all such Below Base Price
     Options,  plus,  in the case of  Convertible  Securities  issuable upon the
     exercise of such Below Base Price Options,  the minimum aggregate amount of
     additional consideration payable upon the exercise,  conversion or exchange
     thereof at the time such Convertible  Securities first become  exercisable,
     convertible or  exchangeable,  by (B) the maximum total number of shares of
     Common  Stock  issuable  upon the  exercise  of all such  Below  Base Price
     Options   (assuming   full   conversion  of  Convertible   Securities,   if
     applicable).  No further adjustment to the Exercise Price will be made upon
     the actual  issuance of such Common  Stock upon the  exercise of such Below
     Base  Price  Options  or upon  the  exercise,  conversion  or  exchange  of
     Convertible  Securities  issuable  upon  exercise  of such Below Base Price
     Options.

          (ii) Issuance of Convertible Securities.  If the Company in any manner
     issues or sells any  Convertible  Securities,  whether  or not  immediately
     convertible  (other than where the same are  issuable  upon the exercise of
     Options) and the price per share for which  Common  Stock is issuable  upon
     such exercise, conversion or exchange is less than the Exercise Price, then
     the  maximum  total  number of shares of  Common  Stock  issuable  upon the
     exercise,  conversion or exchange of all such Convertible  Securities will,
     as of the date of the issuance of such Convertible Securities, be deemed to
     be  outstanding  and to have been  issued and sold by the  Company for such
     price per share. For the purposes of the preceding sentence, the "price per
     share for which Common Stock is issuable upon such exercise,  conversion or
     exchange" is determined by dividing (A) the total amount,  if any, received
     or receivable by the Company as  consideration  for the issuance or sale of
     all such  Convertible  Securities,  plus the  minimum  aggregate  amount of
     additional consideration, if any, payable to the Company upon the exercise,
     conversion  or  exchange  thereof at the time such  Convertible  Securities
     first become exercisable,  convertible or exchangeable,  by (B) the maximum
     total number of shares of Common Stock issuable upon the

                                       5
<PAGE>

     exercise,  conversion or exchange of all such  Convertible  Securities.  No
     further  adjustment  to the  Exercise  Price  will be made upon the  actual
     issuance of such Common Stock upon exercise, conversion or exchange of such
     Convertible Securities.

          (iii) Change in Option Price or Conversion  Rate. If there is a change
     at any time in (A) the amount of  additional  consideration  payable to the
     Company  upon the  exercise of any  Options;  (B) the amount of  additional
     consideration, if any, payable to the Company upon the exercise, conversion
     or exchange  of any  Convertible  Securities;  or (C) the rate at which any
     Convertible  Securities are  convertible  into or  exchangeable  for Common
     Stock (in each  such  case,  other  than  under or by reason of  provisions
     designed to protect against dilution),  the Exercise Price in effect at the
     time of such change will be  readjusted  to the Exercise  Price which would
     have been in effect at such time had such Options or Convertible Securities
     still  outstanding  provided for such changed  additional  consideration or
     changed conversion rate, as the case may be, at the time initially granted,
     issued or sold.

          (iv)  Treatment  of  Expired  Options  and   Unexercised   Convertible
     Securities.  If, in any case,  the total  number of shares of Common  Stock
     issuable  upon  exercise  of any  Option or upon  exercise,  conversion  or
     exchange of any  Convertible  Securities  is not,  in fact,  issued and the
     rights to exercise  such Option or to  exercise,  convert or exchange  such
     Convertible Securities shall have expired or terminated, the Exercise Price
     then in effect will be  readjusted  to the Exercise  Price which would have
     been in  effect  at the time of such  expiration  or  termination  had such
     Option or Convertible  Securities,  to the extent  outstanding  immediately
     prior to such  expiration  or  termination  (other  than in  respect of the
     actual  number of shares of Common Stock issued upon exercise or conversion
     thereof), never been issued.

                                       6
<PAGE>

          (v)  Calculation  of  Consideration  Received.  If any  Common  Stock,
     Options or Convertible Securities are issued, granted or sold for cash, the
     consideration  received  therefor  for purposes of this Warrant will be the
     amount  received by the Company  therefor,  before  deduction of reasonable
     commissions,  underwriting  discounts  or  allowances  or other  reasonable
     expenses paid or incurred by the Company in connection  with such issuance,
     grant or sale. In case any Common Stock, Options or Convertible  Securities
     are issued or sold for a consideration  part or all of which shall be other
     than cash, the amount of the consideration  other than cash received by the
     Company will be the fair market value of such  consideration,  except where
     such  consideration  consists  of  securities,  in which case the amount of
     consideration  received by the Company will be the Market Price  thereof as
     of the date of receipt.  In case any Common Stock,  Options or  Convertible
     Securities  are issued in connection  with any merger or  consolidation  in
     which the Company is the surviving corporation, the amount of consideration
     therefor  will be deemed to be the fair market value of such portion of the
     net assets and business of the non-surviving corporation as is attributable
     to such Common Stock,  Options or Convertible  Securities,  as the case may
     be.  The  fair  market  value  of any  consideration  other  than  cash  or
     securities  will be  determined  in good faith by an  investment  banker or
     other appropriate expert of national reputation selected by the Company and
     reasonably  acceptable  to the  holder  hereof,  with  the  costs  of  such
     appraisal to be borne by the Company.

          (vi)  Exceptions to Adjustment of Exercise Price. No adjustment to the
     Exercise  Price will be made (A) upon the  exercise of this  Warrant or any
     other warrant of this series or of any other series,  (B) upon the issuance
     by the Company of any security in connection  with the proposed merger with
     The Aeon  Group,  Inc.,  or (C)  upon the  exercise  or  conversion  of any
     Convertible  Securities or Options  issued and  outstanding  as of the date
     hereof.

     (c) Subdivision or Combination of Common Stock. If the Company, at any time
during the Exercise  Period,  subdivides  (by any stock split,  stock  dividend,
recapitalization,  reorganization,  reclassification or otherwise) its shares of
Common Stock into a greater number of shares, then, after the date of record for
effecting such  subdivision,  the Exercise Price in effect  immediately prior to
such subdivision will be proportionately  reduced.  If the Company,  at any time
during the Exercise Period, combines (by reverse stock split,  recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into a
smaller  number of shares,  then,  after the date of record for  effecting  such
combination,  the Exercise Price in effect immediately prior to such combination
will be proportionately increased.

     (d)  Adjustment in Number of Shares.  Upon each  adjustment of the Exercise
Price  pursuant to the  provisions  of this Section 11 (except for Section 11(e)
hereof),  the number of shares of Common Stock  issuable  upon  exercise of this
Warrant  and for  which  this  Warrant  is or may  become  exercisable  shall be
adjusted  by  multiplying  a  number  equal  to the  Exercise  Price  in  effect
immediately  prior to such  adjustment  by the number of shares of Common  Stock
issuable or for which this Warrant is or may become  exercisable (as applicable)
upon exercise of this Warrant  immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.

                                       7
<PAGE>

     (e)  Consolidation,  Merger or Sale.  In case of any  consolidation  of the
Company  with, or merger of the Company into any other  corporation  (except for
the merger with The Aeon Group,  Inc.),  or in case of any sale or conveyance of
all or  substantially  all of the assets of the Company other than in connection
with a plan of  complete  liquidation  of the  Company  at any time  during  the
Exercise Period,  then as a condition of such  consolidation,  merger or sale or
conveyance,  adequate  provision will be made whereby the holder of this Warrant
will have the right to acquire and receive upon exercise of this Warrant in lieu
of the  shares of  Common  Stock  immediately  theretofore  acquirable  upon the
exercise of this Warrant,  such shares of stock,  securities,  cash or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately  theretofore acquirable and receivable upon exercise
of this Warrant had such  consolidation,  merger or sale or conveyance not taken
place. In any such case, the Company will make  appropriate  provision to insure
that the  provisions of this Section 11 hereof will  thereafter be applicable as
nearly as may be in  relation  to any shares of stock or  securities  thereafter
deliverable  upon the exercise of this Warrant.  The Company will not effect any
consolidation,  merger or sale or  conveyance  unless prior to the  consummation
thereof,  the  successor  corporation  (if other  than the  Company)  assumes by
written  instrument the  obligations  under this Warrant and the  obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing  provisions,  the holder may be entitled to
acquire.  Notwithstanding  the  foregoing,  in the  event  of any  such  sale or
conveyance,  the holder of this Warrant shall, at its option,  have the right to
receive, and, in the event of any such merger, consolidation, sale or conveyance
which  involves the receipt of cash  consideration  by the equity holders of the
Company's  capital stock or in which the surviving or continuing entity is not a
publicly traded  corporation whose common stock is listed for trading on the New
York Stock Exchange,  the American Stock Exchange, the Nasdaq National Market or
the Nasdaq  SmallCap  Market,  the holder of this  Warrant  shall be entitled to
receive,  in connection with such transaction,  cash consideration  equal to the
fair market value (as determined in good faith by the holder of this Warrant) of
this Warrant.

     (f)  Distribution of Assets.  In case the Company shall declare or make any
distribution  of its  assets (or  rights to  acquire  its  assets) to holders of
Common  Stock as a partial  liquidating  dividend,  stock  repurchase  by way of
return of capital or otherwise  (including any dividend or  distribution  to the
Company's  shareholders  of cash or shares  (or  rights to  acquire  shares)  of
capital  stock of a  subsidiary)  (a  "Distribution"),  at any time  during  the
Exercise Period, then the holder of this Warrant shall be entitled upon exercise
of this  Warrant for the  purchase  of any or all of the shares of Common  Stock
subject  hereto,  to receive the amount of such  assets (or rights)  which would
have been  payable to the holder had such  holder been the holder of such shares
of  Common  Stock on the  record  date  for the  determination  of  shareholders
entitled to such Distribution.

     (g) Notice of  Adjustment.  Upon the occurrence of any event which requires
any adjustment of the Exercise  Price,  then, and in each such case, the Company
shall give notice  thereof to the holder of this  Warrant,  which  notice  shall
state the Exercise  Price  resulting  from such  adjustment  and the increase or
decrease  in the  number  of  Warrant  Shares  purchasable  at such  price  upon
exercise, setting forth in reasonable detail the method of

                                       8
<PAGE>

calculation  and the facts upon which such  calculation is based,  provided that
such  notice  shall  not  contain  any  material  nonpublic  information.   Such
calculation shall be certified by the chief financial officer of the Company.

     (h) Minimum  Adjustment  of Exercise  Price.  No adjustment of the Exercise
Price shall be made in an amount of less than 1% of the Exercise Price in effect
at the time such  adjustment  is  otherwise  required  to be made,  but any such
lesser  adjustment  shall be carried  forward  and shall be made at the time and
together  with  the  next  subsequent   adjustment  which,   together  with  any
adjustments  so  carried  forward,  shall  amount  to not  less  than 1% of such
Exercise Price.

     (i) Other Notices. In case at any time:

          (i) the Company  shall  declare  any  dividend  upon the Common  Stock
     payable  in shares  of stock of any  class or make any  other  distribution
     (other  than  dividends  or  distributions  payable in cash out of retained
     earnings  consistent  with the  Company's  past  practices  with respect to
     declaring dividends and making  distributions) to the holders of the Common
     Stock;

          (ii) the Company shall offer for subscription pro rata to the holders
     of the Common Stock any additional shares of stock of any class or other
     rights;

          (iii) there shall be any capital  reorganization  of the  Company,  or
     reclassification  of the Common Stock,  or  consolidation  or merger of the
     Company with or into, or sale of all or substantially all of its assets to,
     another corporation or entity; or

          (iv)  there  shall  be  a  voluntary   or   involuntary   dissolution,
     liquidation or winding-up of the Company;

then,  in each such case,  the Company  shall give to the holder of this Warrant
(A) notice of the date on which the books of the Company shall close or a record
shall be taken for  determining  the holders of Common Stock entitled to receive
any such dividend,  distribution,  or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such  reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding-up  and (B) in the  case of any such  reorganization,  reclassification,
consolidation,  merger, sale, dissolution,  liquidation or winding-up, notice of
the date (or, if not then known, a reasonable  estimate  thereof by the Company)
when the same shall take place. Such notice shall also specify the date on which
the  holders  of Common  Stock  shall be  entitled  to  receive  such  dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or  other  securities  or  property   deliverable   upon  such   reorganization,
reclassification,  consolidation,  merger, sale,  dissolution,  liquidation,  or
winding-up, as the case may be. Except for The Aeon Group, Inc. merger (of which
the Corporation shall provide the legally required notice), such notice shall be
given at least  thirty  (30) days prior to the record  date or the date on which
the Company's books are closed in respect thereto,  but in no event prior to the
public disclosure thereof. Failure to give any such notice or any defect therein
shall not affect the  validity of the  proceedings  referred to in clauses  (i),
(ii), (iii) and (iv) above.

     (j) Certain Events.  If, at any time during the Exercise Period,  any event
occurs of the type contemplated by the adjustment  provisions of this Section 11
but not expressly provided for by such provisions,  the Company will give notice
of such event as provided in

                                       9
<PAGE>

Section  11(g)  hereof,  and the  Company's  Board  of  Directors  will  make an
appropriate  adjustment in the Exercise Price and the number of shares of Common
Stock  acquirable upon exercise of this Warrant so that the rights of the holder
shall be neither enhanced nor diminished by such event.

     (k) Certain Definitions.

          "Common Stock Deemed  Outstanding"  shall mean the number of shares of
     Common Stock actually  outstanding  (not  including  shares of Common Stock
     held  in the  treasury  of the  Company),  plus  (A)  in  the  case  of any
     adjustment  required by Section 11(a) and 11(b) resulting from the issuance
     of any Options, the maximum total number of shares of Common Stock issuable
     upon the  exercise  of the  Options  for which the  adjustment  is required
     (including  any Common Stock  issuable upon the  conversion of  Convertible
     Securities issuable upon the exercise of such Options), and (B) in the case
     of any adjustment  required by Section 11(a) resulting from the issuance of
     any  Convertible  Securities,  the maximum total number of shares of Common
     Stock issuable upon the exercise, conversion or exchange of the Convertible
     Securities for which the adjustment is required, as of the date of issuance
     of such Convertible Securities, if any.

          "Common  Stock" for purposes of this  Section 11,  includes the Common
     Stock and any additional class of stock of the Company having no preference
     as to dividends or distributions  on liquidation,  provided that the shares
     purchasable  pursuant to this  Warrant  shall  include only Common Stock in
     respect of which this Warrant is exercisable,  or shares resulting from any
     subdivision  or  combination  of such Common  Stock,  or in the case of any
     reorganization,  reclassification,  consolidation,  merger,  or sale of the
     character  referred  to  in  Section  11(e)  hereof,  the  stock  or  other
     securities or property provided for in such Section.

     12. Voluntary Adjustment by the Company. The Company may at any time during
the term of this Warrant,  reduce the then current  Exercise Price to any amount
and for any period of time deemed  appropriate  by the Board of Directors of the
Company.

     13.  Authorized  Shares.  The Company  covenants that during the period the
Warrant is outstanding,  it will reserve from its authorized and unissued Common
Stock a  sufficient  number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant.  The Company
further  covenants  that its  issuance of this  Warrant  shall  constitute  full
authority  to its  officers  who are charged  with the duty of  executing  stock
certificates  to execute and issue the  necessary  certificates  for the Warrant
Shares upon the exercise of the purchase rights under this Warrant.  The Company
will take all such  reasonable  action as may be  necessary  to assure that such
Warrant  Shares  may be issued  as  provided  herein  without  violation  of any
applicable law or regulation,  or of any  requirements  of the Principal  Market
upon which the Common Stock may be listed.

     The  Company  shall  not  by any  action,  including,  without  limitation,
amending  its  certificate  of  incorporation  or  through  any  reorganization,
transfer  of  assets,  consolidation,  merger,  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, but will at all

                                       10
<PAGE>

times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such  actions as may be necessary  or  appropriate  to protect the
rights of Holder  against  impairment.  Without  limiting the  generality of the
foregoing,  the  Company  will (a) not  increase  the par value of any shares of
Common  Stock  receivable  upon the  exercise of this  Warrant  above the amount
payable  therefor upon such exercise  immediately  prior to such increase in par
value, (b) take all such action 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 (c) use its best efforts to
obtain  all  such  authorizations,   exemptions  or  consents  from  any  public
regulatory  body having  jurisdiction  thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.

     Upon the request of Holder,  the Company will at any time during the period
this  Warrant  is  outstanding   acknowledge  in  writing,  in  form  reasonably
satisfactory  to  Holder,  the  continuing  validity  of  this  Warrant  and the
obligations of the Company hereunder.

     Before  taking any action  which would  cause an  adjustment  reducing  the
current Exercise Price below the then par value, if any, of the shares of Common
Stock  issuable  upon  exercise  of the  Warrants,  the  Company  shall take any
corporate  action  which may be  necessary in order that the Company may validly
and legally issue fully paid and  non-assessable  shares of such Common Stock at
such adjusted Exercise Price.

     Before  taking any action which would result in an adjustment in the number
of shares  of Common  Stock for which  this  Warrant  is  exercisable  or in the
Exercise Price, the Company shall obtain all such  authorizations  or exemptions
thereof,  or consents  thereto,  as may be necessary from any public  regulatory
body or bodies having jurisdiction thereof.

     14. Miscellaneous.

     (a)  Jurisdiction.  This Warrant  shall be binding upon any  successors  or
assigns of the Company.  This Warrant shall constitute a contract under the laws
of New York without regard to its conflict of law,  principles or rules,  and be
subject  to  arbitration  pursuant  to the  terms  set  forth  in  the  Purchase
Agreement.

     (b)  Restrictions.  The holder hereof  acknowledges that the Warrant Shares
acquired  upon the  exercise  of this  Warrant,  if not  registered,  will  have
restrictions upon resale imposed by state and federal securities laws.

     (c) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right  hereunder on the part of Holder shall operate as a waiver of
such  right  or  otherwise  prejudice  Holder's  rights,   powers  or  remedies,
notwithstanding  all rights hereunder  terminate on the Termination Date. If the
Company fails to comply with any  provision of this  Warrant,  the Company shall
pay to  Holder  such  amounts  as shall be  sufficient  to cover  any  costs and
expenses including,  but not limited to, reasonable  attorneys' fees,  including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights,  powers or remedies
hereunder.

                                       11
<PAGE>

     (d) Notices. Any notice, request or other document required or permitted to
be given or delivered to the holder  hereof by the Company shall be delivered in
accordance with the notice provisions of the Purchase Agreement.

     (e)  Limitation  of  Liability.  No  provision  hereof,  in the  absence of
affirmative  action by  Holder  to  purchase  shares  of  Common  Stock,  and no
enumeration herein of the rights or privileges of Holder hereof, shall give rise
to any  liability of Holder for the  purchase  price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

     (f) Remedies.  Holder, in addition to being entitled to exercise all rights
granted by law,  including  recovery  of  damages,  will be entitled to specific
performance  of its rights under this Warrant.  The Company agrees that monetary
damages would not be adequate  compensation for any loss incurred by reason of a
breach by it of the  provisions  of this Warrant and hereby  agrees to waive the
defense  in any action for  specific  performance  that a remedy at law would be
adequate.

     (g) Successors and Assigns.  Subject to applicable  securities  laws,  this
Warrant  and the rights and  obligations  evidenced  hereby  shall  inure to the
benefit of and be binding upon the  successors of the Company and the successors
and permitted assigns of Holder.  The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.

     (h)  Indemnification.  The Company  agrees to indemnify  and hold  harmless
Holder  from  and  against  any  liabilities,   obligations,   losses,  damages,
penalties,  actions,  judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against  Holder in any manner  relating  to or arising out of any failure by the
Company to perform or observe  in any  material  respect  any of its  covenants,
agreements,  undertakings  or obligations  set forth in this Warrant;  provided,
however,  that the Company  will not be liable  hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims,  costs,  attorneys' fees, expenses or disbursements are found in a final
non-appealable  judgment by a court to have resulted  from Holder's  negligence,
bad  faith  or  willful   misconduct  in  its  capacity  as  a  stockholder   or
warrantholder of the Company.

     (i)  Amendment.  This Warrant may be modified or amended or the  provisions
hereof waived with the written consent of the Company and the Holder.

     (j) Severability.  Wherever possible,  each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any  provision of this Warrant  shall be  prohibited  by or invalid under
applicable  law,  such  provision  shall be  ineffective  to the  extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

     (k) Headings.  The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

                                       12
<PAGE>

     IN WITNESS  WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.


Dated: July __, 2000
                                            Compositech Ltd.


                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                       13
<PAGE>

                               NOTICE OF EXERCISE



To:      Compositech Ltd.


     (1)______The  undersigned  hereby  elects to  purchase  ________  shares of
Common Stock (the "Common Stock"),  of Compositech Ltd. pursuant to the terms of
the attached  Warrant,  and tenders  herewith  payment of the exercise  price in
full, together with all applicable transfer taxes, if any.

     (2)______Please  issue a  certificate  or  certificates  representing  said
shares of Common Stock in the name of the  undersigned  or in such other name as
is specified below:


                  ----------------------------------------
                  (Name)

                  ----------------------------------------
                  (Address)

                  ----------------------------------------




Dated:


                                                 ------------------------------
                                                 Signature

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)



     FOR VALUE RECEIVED,  the foregoing Warrant and all rights evidenced thereby
are hereby assigned to


_______________________________________________ whose address is


---------------------------------------------------------------.



---------------------------------------------------------------

                                                 Dated:  ______________, _______


                  Holder's Signature:
                                       -----------------------------

                  Holder's Address:
                                       -----------------------------


                                       -----------------------------


Signature Guaranteed:  ___________________________________________




NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.


<PAGE>

                   NOTICE OF EXERCISE OF COMMON STOCK WARRANT
             PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS



                                       DATE:


___________________________________    Aggregate Price of Warrant
___________________________________    Before Exercise:  $
                                                          ----------------------
___________________________________    Aggregate Price
Attention:  Chief Financial Officer    Being Exercised:  $
                                                          ----------------------

                                       Warrant Price:  $               per share
                                                        ---------------

                                       Number of Shares of Common Stock to be
                                       Issued Under this Notice:
                                                                ----------------

                                       Remained Aggregate
                                       Price (if any) After Issuance:  $
                                                                        --------


                                CASHLESS EXERCISE

Gentlemen:

     The undersigned,  registered  Holder of the Common Stock Warrant  delivered
herewith (the  "Warrant"),  hereby  irrevocably  exercises such Warrant for, and
purchases  thereunder,  shares  of the  Common  Stock of  Compositech  Ltd.,  as
provided below.  Capitalized terms used herein, unless otherwise defined herein,
shall have the meanings given in the Warrant. Such exercise shall be pursuant to
the  "cashless  exercise"  provisions  of Section 3 of the  Warrant;  therefore,
Holder makes no payment with this Notice of Exercise. The number of shares to be
issued pursuant to this exercise shall be determined by reference to the formula
in Section 3 of the Warrant  which  requires the use of the high and low trading
price of the  Company's  Common Stock on the Trading Day  preceding  the date of
such election.  The high and low trading price of the Company's Common Stock has
been  determined  or agreed to by  Holder  and the  Company  to be  $______  and
$_________,  respectively, which figure is acceptable to Holder for calculations
of the number of shares of Common  Stock  issuable  pursuant  to this  Notice of
Exercise.  Holder  requests that the  certificates  for the purchased  shares of
Common    Stock    be    issued    in   the   name   of   and    delivered    to
_________________________. To the extent the foregoing exercise is for less than
the full Aggregate Price of the Warrant, a replacement Warrant  representing the
remainder of the Aggregate Price (and otherwise of like form,  tenor and effect)
shall be  delivered to Holder along with the share  certificate  evidencing  the
Common Stock issued in response to this Notice of Exercise.

                                                 By:
                                                    ----------------------------
                                                     [NAME]