EXHIBIT B-1
                                [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.:_______________
Number of Shares of Common Stock:_____________
Date of Issuance: March ___, 2006 ("ISSUANCE DATE")

      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,  [HUDSON  BAY FUND,  LP] [OTHER
BUYERS],  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 11:59 p.m.,  New York
time,  on  the  Expiration  Date  (as  defined  below),   [750,000]  fully  paid
nonassessable  shares of Common Stock (as defined 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 the  Warrants to
purchase Common Stock (the "SPA WARRANTS")  issued pursuant to Section 1 of that
certain  Securities  Purchase  Agreement,  dated  as  of  March  __,  2006  (the
"SUBSCRIPTION  DATE"), by and among the Company and the investors (the "BUYERS")
referred to therein (the "SECURITIES PURCHASE AGREEMENT").

<PAGE>

      1. EXERCISE OF WARRANT.

            (a)  Mechanics  of  Exercise.  Subject  to the terms and  conditions
hereof  (including,  without  limitation,  the  limitations set forth in Section
1(f)),  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  applicable  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  pursuant to a
Cashless Exercise (as defined in Section 1(d)). 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 (X) provided that the Transfer  Agent is  participating  in The Depository
Trust  Company  ("DTC) Fast  Automated  Securities  Transfer  Program,  upon the
request of the Holder, credit such aggregate number of shares of Common Stock to
which the Holder is entitled  pursuant to such  exercise to the  Holder's or its
designee's  balance  account  with DTC  through  its  Deposit  Withdrawal  Agent
Commission  system, or (Y) if the Transfer Agent is not participating in the DTC
Fast  Automated  Securities  Transfer  Program,  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(a) 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-
<PAGE>

            (b) Exercise Price.  For purposes of this Warrant,  "EXERCISE PRICE"
means $1.55, subject to adjustment as provided herein.

            (c) Company's Failure to Timely Deliver  Securities.  If the Company
shall fail for any reason or for no reason to issue to the Holder  within  three
(3) Business Days of receipt of the Exercise Delivery  Documents,  a certificate
for the  number of shares of Common  Stock to which the Holder is  entitled  and
register  such  shares of Common  Stock on the  Company's  share  register or to
credit the Holder's balance account with DTC for such number of shares of Common
Stock to which  the  Holder  is  entitled  upon the  Holder's  exercise  of this
Warrant, then, in addition to all other remedies available to the Holder, and if
on or after such Trading Day the Holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of shares of Common Stock  issuable  upon such  exercise  that the Holder
anticipated  receiving  from the Company (a "BUY-IN"),  then the Company  shall,
within  three (3) Business  Days after the Holder's  request and in the Holder's
discretion, either (i) pay cash to the Holder in an amount equal to the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased  (the "BUY-IN  PRICE"),  at which point the  Company's
obligation  to deliver  such  certificate  (and to issue  such  shares of Common
Stock) shall terminate,  or (ii) promptly honor its obligation to deliver to the
Holder a certificate or  certificates  representing  such shares of Common Stock
and pay cash to the  Holder in an  amount  equal to the  excess  (if any) of the
Buy-In  Price  over the  product  of (A) the  number of  shares of Common  Stock
purchased in the Buy-In, times (B) the actual sale price at the time of the sale
(excluding  brokerage  commissions,  if any) giving rise to the Buy-In  purchase
obligation.

            (d) Cashless Exercise.  Notwithstanding anything contained herein to
the contrary, if at any time after 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.

                                      -3-
<PAGE>

            (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.

            (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 4.99% 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-KSB, Form 10-QSB, 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
SPA Securities and the SPA 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 SPA Warrants.

                                      -4-
<PAGE>

            (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 110% (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.

      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)  Adjustment  upon  Issuance  of shares of Common  Stock.  If and
whenever on or after the  Subscription  Date the Company issues or sells,  or in
accordance  with this Section 2 is deemed to have issued or sold,  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  by the  Company  in  connection  with any  Excluded
Securities (as defined in the SPA Securities) for a consideration per share (the
"NEW ISSUANCE  PRICE") less than a price (the  "APPLICABLE  PRICE") equal to the
Exercise  Price in  effect  immediately  prior to such  issue or sale or  deemed
issuance 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 the New  Issuance  Price.  Upon  each  such  adjustment  of the
Exercise Price hereunder,  the number of Warrant Shares shall be adjusted to the
number of shares of Common Stock determined by multiplying the Exercise Price in
effect  immediately  prior to such  adjustment  by the number of Warrant  Shares
acquirable  upon exercise of this Warrant  immediately  prior to such adjustment
and  dividing  the product  thereof by the Exercise  Price  resulting  from such
adjustment.  For purposes of determining the adjusted  Exercise Price under this
Section 2(a), the following shall be applicable:

                  (i) Issuance of Options.  If the Company in any manner  grants
                  any Options  (other than Excluded  Securities)  and the lowest
                  price per share for which one share of shares of Common  Stock
                  is  issuable  upon the  exercise  of any such  Option  or upon
                  conversion, exercise or exchange of any Convertible Securities
                  issuable  upon  exercise  of any such  Option is less than the
                  Applicable  Price,  then such shares 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(a)(i),  the  "lowest  price per share for which one share of
                  Common Stock is issuable upon the exercise of any such Options
                  or upon  conversion,  exercise or exchange of any  Convertible
                  Securities issuable upon exercise of any 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 the  granting  or sale of the
                  Option,  upon the exercise of the Option and upon  conversion,
                  exercise or exchange of any Convertible Security issuable upon
                  the exercise of any such Option. No further  adjustment of the
                  Exercise  Price or number of Warrant Shares shall be made upon
                  the actual  issuance of such shares of Common Stock or of such
                  Convertible  Securities  upon the  exercise of such Options or
                  upon the actual  issuance of such shares of Common  Stock upon
                  conversion,   exercise  or   exchange   of  such   Convertible
                  Securities.

                                      -5-
<PAGE>


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

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

                                      -6-
<PAGE>

                  (iv) Calculation of Consideration Received. In case any Option
                  is  issued  in  connection  with  the  issue  or sale of other
                  securities of the Company,  together comprising one integrated
                  transaction in which no specific consideration is allocated to
                  such  Options by the  parties  thereto,  the  Options  will be
                  deemed to have been issued for a  consideration  of $0.01.  If
                  any shares of Common Stock, Options or Convertible  Securities
                  are  issued or sold or deemed to have been  issued or sold for
                  cash, the consideration received therefor will be deemed to be
                  the net amount received by the Company therefor. If any shares
                  of Common Stock, Options or Convertible  Securities are issued
                  or sold for a  consideration  other than  cash,  the amount of
                  such  consideration  received by the Company  will be the fair
                  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 Closing Sale
                  Price of such  security on the date of receipt.  If any shares
                  of Common Stock, Options or Convertible  Securities are issued
                  to the owners of the  non-surviving  entity in connection with
                  any merger in which the Company is the surviving  entity,  the
                  amount of consideration therefor will be deemed to be the fair
                  value of such  portion of the net assets and  business  of the
                  non-surviving  entity  as is  attributable  to such  shares of
                  Common Stock, Options or Convertible  Securities,  as the case
                  may be. The fair value of any consideration other than cash or
                  securities  will be determined  jointly by the Company and the
                  Required  Holders.   If  such  parties  are  unable  to  reach
                  agreement  within  ten (10) days  after the  occurrence  of an
                  event requiring  valuation (the "VALUATION  Event"),  the fair
                  value of such consideration will be determined within five (5)
                  Business  Days  after the tenth day  following  the  Valuation
                  Event by an independent,  reputable appraiser jointly selected
                  by the Company and the Required Holders.  The determination of
                  such  appraiser  shall be final and  binding  upon all parties
                  absent  manifest  error  and the  fees  and  expenses  of such
                  appraiser shall be borne by the Company.

                  (v) Record Date.  If the Company takes a record of the holders
                  of shares of Common  Stock for the purpose of  entitling  them
                  (A) to receive a  dividend  or other  distribution  payable in
                  shares of Common Stock,  Options or in Convertible  Securities
                  or (B) to subscribe  for or purchase  shares of Common  Stock,
                  Options or Convertible Securities,  then such record date will
                  be deemed to be the date of the issue or sale of the shares of
                  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.

                                      -7-
<PAGE>

            (b) Adjustment  upon  Subdivision or Combination of Common Stock. If
the Company at any time on or after the  Subscription  Date  subdivides  (by any
stock split, stock dividend,  recapitalization or otherwise) one or more classes
of its outstanding  shares of Common Stock into a greater number of shares,  the
Exercise  Price  in  effect  immediately  prior  to  such  subdivision  will  be
proportionately reduced and the number of Warrant Shares will be proportionately
increased. If the Company at any time on or after the Subscription Date combines
(by  combination,  reverse stock split or otherwise)  one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect  immediately  prior to such combination will be  proportionately
increased and the number of Warrant  Shares will be  proportionately  decreased.
Any  adjustment  under this Section 2(b) shall become  effective at the close of
business on the date the subdivision or combination becomes effective.

            (c) Other Events.  If any event occurs of the type  contemplated  by
the  provisions  of  this  Section  2 but  not  expressly  provided  for by such
provisions  (including,  without limitation,  the granting of stock appreciation
rights,  phantom  stock rights or other rights with equity  features),  then the
Company's Board of Directors will make an appropriate adjustment in the Exercise
Price  and the  number of  Warrant  Shares so as to  protect  the  rights of the
Holder;  provided  that no such  adjustment  pursuant to this  Section 2(c) will
increase  the  Exercise  Price or  decrease  the  number  of  Warrant  Shares as
otherwise determined pursuant to this Section 2.

      3. RIGHTS UPON DISTRIBUTION OF ASSETS.  Other than events  contemplated in
Section  2(b),  if the  Company  shall  declare  or make any  dividend  or other
distribution  of its  assets (or  rights to  acquire  its  assets) to holders of
shares of Common  Stock,  by way of return of capital or  otherwise  (including,
without  limitation,  any  distribution  of cash,  stock  or  other  securities,
property or options by way of a dividend, spin off, reclassification,  corporate
rearrangement,   scheme  of  arrangement  or  other  similar   transaction)   (a
"Distribution"),  at any time after the issuance of this Warrant,  then, in each
such case:

            (a) any Exercise Price in effect  immediately  prior to the close of
business on the record date fixed for the  determination of holders of shares of
Common Stock entitled to receive the Distribution shall be reduced, effective as
of the  close  of  business  on  such  record  date,  to a price  determined  by
multiplying  such Exercise Price by a fraction of which (i) the numerator  shall
be the  Closing  Bid  Price of the  shares of Common  Stock on the  trading  day
immediately  preceding such record date minus the value of the  Distribution (as
determined in good faith by the Company's Board of Directors)  applicable to one
share of Common Stock,  and (ii) the denominator  shall be the Closing Bid Price
of the shares of Common  Stock on the trading  day  immediately  preceding  such
record date; and


            (b) the number of Warrant  Shares  shall be increased to a number of
shares  equal to the  number of shares of Common  Stock  obtainable  immediately
prior to the close of business on the record date fixed for the determination of
holders  of  shares  of  Common  Stock  entitled  to  receive  the  Distribution
multiplied  by the  reciprocal  of the  fraction  set  forth in the  immediately
preceding  paragraph (a); provided that in the event that the Distribution is of
shares of Common Stock (or common stock)  ("OTHER  SHARES OF COMMON STOCK") of a
company  whose common shares are traded on a national  securities  exchange or a
national  automated  quotation  system,  then the  Holder may elect to receive a
warrant to purchase  Other  Shares of Common Stock in lieu of an increase in the
number of Warrant Shares, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the number of shares
of Other  Shares of Common  Stock  that  would  have been  payable to the Holder
pursuant to the Distribution  had the Holder exercised this Warrant  immediately
prior to such  record  date and with an  aggregate  exercise  price equal to the
product of the amount by which the exercise  price of this Warrant was decreased
with  respect  to the  Distribution  pursuant  to the  terms of the  immediately
preceding  paragraph  (a)  and  the  number  of  Warrant  Shares  calculated  in
accordance with the first part of this paragraph (b).

                                      -8-
<PAGE>

      4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

            (a)  Purchase  Rights.  In addition to any  adjustments  pursuant to
Section 2 above, if at any time the Company grants, issues or sells any Options,
Convertible  Securities  or rights to purchase  stock,  warrants,  securities or
other  property pro rata to the record  holders of any class of shares of Common
Stock (the "PURCHASE RIGHTS"), then the Holder will be entitled to acquire, upon
the terms  applicable to such Purchase  Rights,  the aggregate  Purchase  Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock  acquirable  upon  complete  exercise of this  Warrant  (without
regard to any  limitations on the exercise of this Warrant)  immediately  before
the date on which a record  is taken  for the  grant,  issuance  or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined  for the grant,  issue or
sale of such Purchase Rights.

            (b) Fundamental Transactions. The Company shall not enter into or be
party to a Fundamental  Transaction  unless (i) the Successor  Entity assumes in
writing all of the  obligations  of the Company under this Warrant and the other
Transaction  Documents in accordance  with the provisions of this Section (4)(b)
pursuant  to  written  agreements  in form  and  substance  satisfactory  to the
Required  Holders and approved by the Required Holders prior to such Fundamental
Transaction,  including  agreements  to deliver to each  holder of  Warrants  in
exchange for such  Warrants a security of the  Successor  Entity  evidenced by a
written instrument  substantially similar in form and substance to this Warrant,
including, without limitation, an adjusted exercise price equal to the value for
the  shares  of  Common  Stock  reflected  by  the  terms  of  such  Fundamental
Transaction,  and exercisable  for a  corresponding  number of shares of capital
stock  equivalent to the shares of Common Stock  acquirable and receivable  upon
exercise of this Warrant  (without  regard to any limitations on the exercise of
this Warrant) prior to such  Fundamental  Transaction,  and  satisfactory to the
Required  Holders and (ii) subject to Section 4(c) below,  the Successor  Entity
(including  its Parent  Entity) is a publicly  traded  corporation  whose common
stock is  quoted on or listed  for  trading  on an  Eligible  Market (a  "PUBLIC
SUCCESSOR").  Upon the occurrence of any Fundamental Transaction,  the Successor
Entity shall succeed to, and be substituted for (so that from and after the date
of such Fundamental Transaction, the provisions of this Warrant referring to the
"Company" shall refer instead to the Successor  Entity),  and may exercise every
right and power of the Company and shall  assume all of the  obligations  of the
Company under this Warrant with the same effect as if such Successor  Entity had
been  named  as  the  Company  herein.  Upon  consummation  of  the  Fundamental
Transaction,  the Successor Entity shall deliver to the Holder confirmation that
there  shall be issued  upon  exercise  of this  Warrant  at any time  after the
consummation of the Fundamental Transaction, in lieu of the shares of the Common
Stock (or other securities, cash, assets or other property) purchasable upon the
exercise of the Warrant prior to such  Fundamental  Transaction,  such shares of
publicly traded common stock (or their equivalent) of the Public  Successor,  as
adjusted in accordance  with the provisions of this Warrant.  In addition to and
not in substitution for any other rights hereunder, prior to the consummation of
any Fundamental  Transaction pursuant to which holders of shares of Common Stock
are  entitled  to  receive  securities  or other  assets  with  respect to or in
exchange for shares of Common Stock (a  "CORPORATE  EVENT"),  the Company  shall
make  appropriate  provision to insure that the Holder will  thereafter have the
right  to  receive  upon an  exercise  of this  Warrant  at any time  after  the
consummation of the Fundamental Transaction but prior to the Expiration Date, in
lieu of the shares of the Common  Stock (or other  securities,  cash,  assets or
other  property)  purchasable  upon the  exercise of the  Warrant  prior to such
Fundamental Transaction,  such shares of stock, securities,  cash, assets or any
other property whatsoever  (including warrants or other purchase or subscription
rights)  which the Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had the Warrant been exercised immediately prior
to such  Fundamental  Transaction.  Provision  made  pursuant  to the  preceding
sentence  shall  be in a  form  and  substance  reasonably  satisfactory  to the
Required  Holders.  The  provisions  of this Section  shall apply  similarly and
equally to successive Fundamental Transactions and Corporate Events and shall be
applied without regard to any limitations on the exercise of this Warrant

                                      -9-
<PAGE>

            (c) Notwithstanding the foregoing and the provisions of Section 4(b)
above, in the event of a Fundamental  Transaction  where the Successor Entity is
not a Public  Successor,  if the Holder has not  exercised  the  Warrant in full
prior to the consummation of the Fundamental  Transaction,  then the Company may
enter into a Fundamental Transaction pursuant to which the Holder shall receive,
simultaneously with the consummation of the Fundamental Transaction,  in lieu of
the warrant referred to in Section 4(b) cash in the amount equal to the value of
the  remaining  unexercised  portion  of  this  Warrant  on  the  date  of  such
consummation,  which value shall be  determined  by use of the Black and Scholes
Option Pricing Model reflecting (A) a risk-free  interest rate  corresponding to
the U.S.  Treasury rate for a period equal to the remaining term of this Warrant
as of such date of request and (B) an expected  volatility  equal to the greater
of 60% and the 100 day volatility obtained from the HVT function on Bloomberg.

      5.  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 SPA 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
SPA Warrants, 110% of the number of shares of Common Stock as shall from time to
time be necessary to effect the  exercise of the SPA Warrants  then  outstanding
(without regard to any limitations on exercise).

                                      -10-
<PAGE>

      6.  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  shareholder  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  shareholder  of  the  Company,  whether  such
liabilities  are  asserted  by the  Company  or by  creditors  of  the  Company.
Notwithstanding this Section 6, the Company shall provide the Holder with copies
of the same  notices  and other  information  given to the  shareholders  of the
Company   generally,   contemporaneously   with  the   giving   thereof  to  the
shareholders.

      7. 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   7(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 7(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 7(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  7(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.

                                      -11-
<PAGE>

            (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 7(a) or Section  7(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),  (iii) shall have an issuance
date,  as  indicated  on the face of such new  Warrant  which is the same as the
Issuance  Date,  and (iv) shall  have the same  rights  and  conditions  as this
Warrant.

      8.  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.

      9.  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 increase the exercise price of any SPA
Warrant  or  decrease  the  number of shares or class of stock  obtainable  upon
exercise of any SPA Warrant 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 SPA Warrants then outstanding.

      10.  GOVERNING  LAW.  This Warrant  shall be governed by and construed and
enforced in accordance  with,  and all questions  concerning  the  construction,
validity,  interpretation  and performance of this Warrant shall be governed by,
the internal laws of the State of New York,  without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other  jurisdictions)  that would cause the  application  of the laws of any
jurisdictions other than the State of New York.

      11.  CONSTRUCTION;  HEADINGS.  This Warrant  shall be deemed to be jointly
drafted by the Company and all the Buyers 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.

                                      -12-
<PAGE>

      12. 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 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 Business Days of such disputed
determination or arithmetic  calculation being submitted to the Holder, then the
Company  shall,  within two 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  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.

      13.  REMEDIES,  OTHER  OBLIGATIONS,  BREACHES AND INJUNCTIVE  RELIEF.  The
remedies  provided in this Warrant  shall be  cumulative  and in addition to all
other remedies available under this Warrant and the other Transaction Documents,
at law or in equity  (including  a decree of specific  performance  and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right
to pursue actual damages for any failure by the Company to comply with the terms
of this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder will cause  irreparable  harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened  breach, the holder of this Warrant shall
be  entitled,  in addition to all other  available  remedies,  to an  injunction
restraining  any breach,  without the  necessity  of showing  economic  loss and
without any bond or other security being required.

      14. 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(f) of the Securities Purchase Agreement.

      15. 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.

                                      -13-
<PAGE>

            (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 4:00:00 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 12. 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  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(g).

            (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 to another Person,
or (iii) allow another Person to make a purchase,  tender or exchange offer that
is accepted by the holders of more than the 50% of 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
the 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
50% of the aggregate ordinary voting power represented by issued and outstanding
Common Stock.

                                      -14-
<PAGE>

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

            (j) "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.

            (k) "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.

            (l) "PRINCIPAL MARKET" means the OTC Bulletin Board.

            (m) "REGISTRATION  RIGHTS AGREEMENT" means that certain registration
rights agreement by and among the Company and the Buyers.

            (n)  "REQUIRED  HOLDERS"  means  the  holders  of the  SPA  Warrants
representing  at least a majority of shares of Common Stock  underlying  the SPA
Warrants then outstanding.

            (o)  "SPA  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]


                                      -15-
<PAGE>



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


<PAGE>


                                                                       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. 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(f) of the  Warrant,  as  increased  or  decreased  pursuant  to terms
contained therein.


Date: _______________ __, ______


-----------------------------------
   Name of Registered Holder


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


<PAGE>



                                 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 March __,
2006 from the Company and acknowledged and agreed to by [INSERT NAME OF TRANSFER
AGENT].

                                                COMPOSITE TECHNOLOGY CORPORATION


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