EXHIBIT 3.5

                           CERTIFICATE OF DESIGNATION
                                       OF
                     SERIES C 8% CONVERTIBLE PREFERRED STOCK
                                       OF
                                COMPOSITECH LTD.


                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware


     Compositech  Ltd., a corporation  organized and existing  under the General
Corporation Law of the State of Delaware (the  "Corporation"),  hereby certifies
that the  following  resolution  was  adopted by the Board of  Directors  of the
Corporation  on  September  24,  1999  pursuant  to  authority  of the  Board of
Directors as required by Section 151 of the General Corporation Law of the State
of Delaware:

     RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this  Corporation  (the "Board of  Directors" or the "Board") in
accordance with the provisions of its Restated Certificate of Incorporation,  as
amended  to date,  the  Board of  Directors  hereby  authorizes  a series of the
Corporation's  previously  authorized Preferred Stock, par value $0.01 per share
(the "Preferred Stock"), and hereby states the designation and number of shares,
and fixes the relative rights, preferences,  privileges, powers and restrictions
thereof as follows:

     Series C 8% Convertible Preferred Stock:


                                    ARTICLE 1
                                   DEFINITIONS

     The terms  defined in this Article  whenever  used in this  Certificate  of
Designation have the following respective meanings:

     (a)  "Additional  Capital  Shares"  has the  meaning  set forth in  Section
6.1(c).

     (b) "Affiliate"  has the meaning  ascribed to such term in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended.

     (c) "Business  Day" means a day other than  Saturday,  Sunday or any day on
which banks  located in the State of New York are  authorized  or  obligated  to
close.

     (d) "Capital  Shares"  means the Common  Shares (as defined  below) and any
other  shares of any other  class or series  of  common  stock,  whether  now or
hereafter authorized and however designated, which have the right to participate
in the  distribution  of earnings and assets (upon  dissolution,  liquidation or
winding-up) of the Corporation.

     (e) "Common  Shares" or "Common  Stock" means shares of common  stock,  par
value $0.01 per share, of the Corporation.



                                      -1-
<PAGE>

     (f) "Common Stock Issued at  Conversion",  when used with  reference to the
securities  issuable upon conversion of the Series C Preferred Stock,  means all
Common Shares now or hereafter  Outstanding and securities of any other class or
series into which the Series C Preferred Stock hereafter shall have been changed
or substituted, whether now or hereafter created and however designated.

     (g)  "Conversion  Date" means any day on which all or any portion of shares
of the Series C Preferred  Stock is converted in accordance  with the provisions
hereof.

     (h) "Conversion Discount" means on any date of determination the applicable
percentage  of the Market Price for  conversion  of shares of Series C Preferred
Stock into Common Shares on such day as set forth in Section 6.1.

     (i) "Conversion Notice" means a written notice of conversion  substantially
in substantially the form annexed hereto as Annex I.

     (j) "Conversion  Price" means on any date of  determination  the applicable
price for the  conversion  of shares of Series C  Preferred  Stock  into  Common
Shares on such day as set forth in Section 6.1.

     (k) "Corporation" means Compositech Ltd., a Delaware  corporation,  and any
successor  or resulting  corporation  by way of merger,  consolidation,  sale or
exchange of all or substantially all of the Corporation's assets, or otherwise.

     (l) "Current Market Price" means on any date of  determination  the closing
bid price of a Common Share on such day as reported on Nasdaq; provided, if such
security bid is not listed or admitted to trading on Nasdaq,  as reported on the
principal  national security exchange or quotation system on which such security
is quoted  or listed or  admitted  to  trading,  or, if not  quoted or listed or
admitted to trading on any national securities exchange or quotation system, the
closing bid price of such security on the over-the-counter  market on the day in
question as reported by Bloomberg LP, or a similar generally  accepted reporting
service, as the case may be.

     (m)  "Default  Dividend  Rate"  is  equal  to the  Dividend  Rate  plus  an
additional 4% per annum.

     (n)  "Dividend  Period"  means  the  quarterly  period  commencing  on  and
including  the Issue Date or, if a dividend has  previously  been paid,  the day
after the  immediately  preceding  Dividend  Payment  Due Date and ending on and
including the immediately subsequent Dividend Payment Due Date.

     (o) "Dividend  Payment Due Date" means March 31, June 30,  September 30 and
December 31 of each year.

     (p) "Dividend Rate" means 8% per annum,  computed on the basis of a 360-day
year.

     (q)  "Holder"  means The Shaar Fund Ltd.,  any  successor  thereto,  or any
Person  or  Persons  to whom  the  Series  C  Preferred  Stock  is  subsequently
transferred in accordance with the provisions hereof.



                                      -2-
<PAGE>

     (r) "Issue Date" means,  as to any share of Series C Preferred  Stock,  the
date of issuance of such share.

     (s) "Junior  Securities" means all capital stock of the Corporation  except
for the Series C Preferred Stock.

     (t) "Liquidation Preference" means, with respect to a share of the Series C
Preferred  Stock,  an amount equal to the sum of (i) the Stated  Value  thereof,
plus (ii) an amount equal to 30% of such Stated Value,  plus (iii) the aggregate
of all accrued and unpaid  dividends  on such share of Series C Preferred  Stock
until the most recent Dividend Payment Due Date;  provided that, in the event of
an actual liquidation,  dissolution or winding up of the Corporation, the amount
referred to in clause (iii) above shall be calculated  by including  accrued and
unpaid dividends to the actual date of such liquidation,  dissolution or winding
up, rather than the Dividend Payment Due Date referred to above.

     (u) "Mandatory Conversion Date" has the meaning set forth in Section 6.8.

     (v)  "Market  Price"  per Common  Share  means the  arithmetic  mean of the
closing  bid prices of the  Common  Shares as  reported  on Nasdaq for the three
Trading  Days on which the three lowest  closing bid prices are reported  during
any Valuation  Period, it being understood that such three Trading Days need not
be  consecutive;  provided,  if such  security  bid is not listed or admitted to
trading on Nasdaq,  as reported on the principal  national  security exchange or
quotation  system on which  such  security  is quoted or listed or  admitted  to
trading,  or, if not quoted or listed or  admitted  to  trading on any  national
securities  exchange or quotation system, the closing bid price of such security
on the  over-the-counter  market on the day in question as reported by Bloomberg
LP, or a similar generally  accepted  reporting  service,  for the three Trading
Days on which the three  lowest  closing  bid  prices  are  reported  during any
Valuation  Period,  it being understood that such three Trading Days need not be
consecutive.

     (w) "Nasdaq" means the Nasdaq SmallCap Market.

     (x) "Optional Redemption Price" has the meaning set forth in Section 6.5.

     (y)  "Outstanding",  when used with  reference to Common  Shares or Capital
Shares (collectively, "Shares"), means, on any date of determination, all issued
and  outstanding  Shares,  and includes  all such Shares  issuable in respect of
outstanding scrip or any certificates  representing fractional interests in such
Shares; provided,  however, that any such Shares directly or indirectly owned or
held  by or  for  the  account  of the  Corporation  or  any  Subsidiary  of the
Corporation shall not be deemed "Outstanding" for purposes hereof.

     (z)  "Person"  means  an  individual,  a  corporation,  a  partnership,  an
association,   a  limited  liability   company,   an   unincorporated   business
organization,  a trust or other entity or  organization,  and any  government or
political subdivision or any agency or instrumentality thereof.



                                      -3-
<PAGE>

     (aa) "Redemption Date" has the meaning set forth in Section 6.5.

     (bb) "Registration Rights Agreement" means that certain Registration Rights
Agreement dated a date even herewith  between the Corporation and The Shaar Fund
Ltd.

     (cc) "SEC" means the United States Securities and Exchange Commission.

     (dd) "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, all as in effect at the time.

     (ee) "Securities Purchase Agreement" means that certain Securities Purchase
Agreement dated as of a date even herewith between the Corporation and The Shaar
Fund Ltd.

     (ff)  "Series C Preferred  Shares" or "Series C Preferred  Stock" means the
shares of Series C 8%  Convertible  Preferred  Stock of the  Corporation or such
other convertible Preferred Stock exchanged therefor.

     (gg) "Stated Value" has the meaning set forth in Article 2.

     (hh)  "Subsidiary"  means any entity of which securities or other ownership
interests  having  ordinary  voting  power to elect a  majority  of the board of
directors or other persons  performing  similar  functions are owned directly or
indirectly by the Corporation.

     (ii) "Trading Day" means any day on which purchases and sales of securities
authorized  for  quotation on Nasdaq are reported  thereon and on which no event
which  results in a material  suspension  or limitation of trading of the Common
Shares on Nasdaq has occurred.

     (jj) "Valuation Event" has the meaning set forth in Section 6.1.

     (kk)  "Valuation  Period"  means the period of 10 Trading Days  immediately
preceding the Conversion  Date;  provided,  however,  that if a Valuation  Event
occurs  during a Valuation  Period on a date less than 5 Trading Days before the
Conversion Date, the Valuation Period shall be extended until the date 5 Trading
Days after the occurrence of the Valuation Event.

     All  references to "cash" or "$" herein means currency of the United States
of America.


                                    ARTICLE 2
                             DESIGNATION AND AMOUNT

     The  designation  of this  series,  which  consists  of  200,000  shares of
Preferred Stock, shall be Series C 8% Convertible Preferred Stock (the "Series C
Preferred  Stock")  and the stated  value  shall be $10 per share  (the  "Stated
Value").




                                      -4-
<PAGE>

                                    ARTICLE 3
                                      RANK

     The Series C Preferred Stock shall rank prior to any other capital stock of
the Corporation.


                                    ARTICLE 4
                                    DIVIDENDS

     (a) (i) The Holder shall be entitled to receive,  when,  as and if declared
by the Board of  Directors,  out of funds  legally  available for the payment of
dividends,  dividends at the Dividend  Rate on the Stated Value of each share of
Series  C  Preferred  Stock on and as of each  Dividend  Payment  Due Date  with
respect to each Dividend Period; provided,  however, that if any dividend is not
paid in full on any Dividend Payment Due Date, dividends shall thereafter accrue
and be payable at the Default Dividend Rate on the Stated Value of each share of
Series C Preferred Stock until all accrued dividends are paid in full. Dividends
on the Series C  Preferred  Stock  shall be  cumulative  from the date of issue,
whether  or not  declared  for any  reason,  including  if such  declaration  is
prohibited  under any outstanding  indebtedness or borrowings of the Corporation
or any of its Subsidiaries,  or any other  contractual  provision binding on the
Corporation or any of its Subsidiaries,  and whether or not there shall be funds
legally  available for the payment thereof.

          (ii) Each dividend shall be payable in equal quarterly amounts on each
     Dividend Payment Due Date,  commencing December 31, 1999, to the Holders of
     record of shares of the Series C  Preferred  Stock,  as they  appear on the
     stock  records of the  Corporation  at the close of business on such record
     date,  not more than 60 days or less  than 10 days  preceding  the  payment
     dates  thereof,  as shall be fixed by the Board of  Directors.  Accrued and
     unpaid  dividends for any past Dividend  Period may be declared and paid at
     any time, without reference to any Dividend Payment Due Date, to Holders of
     record, not more than 15 days preceding the payment date thereof, as may be
     fixed by the Board of Directors.

          (iii) At the option of the  Corporation,  the  dividend  shall be paid
     either  (x) in  cash or (y)  through  the  issuance  of  duly  and  validly
     authorized and issued, fully paid


                                      -5-
<PAGE>

     and nonassessable, freely tradable shares of the Common Stock valued at the
     Market Price and registered for resale in the open market  transactions  on
     the  Registration   Statement  (as  defined  in  the  Registration   Rights
     Agreement),  which Registration Statement shall then be effective under the
     Securities Act; provided,  however,  that if no funds are legally available
     for  the  payment  of cash  dividends  on the  Series  C  Preferred  Stock,
     dividends  shall be paid as provided  in clause (y) above.  Notwithstanding
     the  foregoing,   until  such  Registration  Statement  has  been  declared
     effective under the Securities Act by the SEC,  payment of dividends on the
     Series C Preferred Stock shall be in cash only.

     (b) Except as  provided in Section  4(d)  hereof,  the Holder  shall not be
entitled  to any  dividends  in excess of the  cumulative  dividends,  as herein
provided, on the Series C Preferred Stock.

     (c) So long as any shares of the Series C Preferred Stock are  outstanding,
no  dividends  shall be  declared  or paid or set  apart  for  payment  or other
distribution  declared or made upon any Junior Securities,  nor shall any Junior
Securities  be  redeemed,   purchased  or  otherwise   acquired  (other  than  a
redemption,  purchase or other  acquisition  of shares of Common  Stock made for
purposes of an employee  incentive  or benefit  plan  (including  a stock option
plan)  of the  Corporation  or any  Subsidiary),  for any  consideration  by the
Corporation,  directly  or  indirectly,  nor shall any moneys be paid to or made
available  for a sinking  fund for the  redemption  of any  shares of any Junior
Securities, unless in each case (i) the full cumulative dividends required to be
paid in cash on all  outstanding  shares of the Series C  Preferred  Stock shall
have been  paid or set apart for  payment  for all past  Dividend  Periods  with
respect to the Series C  Preferred  Stock and (ii)  sufficient  funds shall have
been paid or set apart for the payment of the dividend for the current  Dividend
Period with respect to the Series C Preferred Stock.

     (d) If the  Corporation  shall at any time or from  time to time  after the
Issue  Date  declare,  order,  pay or  make a  dividend  or  other  distribution
(including, without limitation, any distribution of stock or other securities or
property or rights or warrants to subscribe for securities of the Corporation or
any of its  Subsidiaries by way of dividend or spin-off) on shares of its Common
Stock,  then,  and in each such case, in addition to the dividend  obligation of
the  Corporation  specified in paragraph (a) of this Article 4, the  Corporation
shall declare,  order,  pay and make the same dividend or  distribution  to each
Holder of Series C Preferred  Stock as would have been made with  respect to the
number of Common  Shares the Holder would have  received had it converted all of
its Series C Preferred Shares,  and exercised the Warrant held by it in full for
all the Common Shares then  underlying  the Warrant,  immediately  prior to such
dividend or distribution.


                                    ARTICLE 5
              LIQUIDATION PREFERENCE; MERGERS, CONSOLIDATIONS, ETC.

     (a) If the  Corporation  shall  commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or state bankruptcy,  insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the  appointment of a receiver,  liquidator,  assignee,
custodian,  trustee, sequestrator (or other similar official) of the Corporation
or of any  substantial  part of its  property,  or make  an  assignment  for the
benefit of its  creditors,  or admit in writing its  inability  to pay its debts
generally  as they  become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having  jurisdiction in the premises
in an involuntary case under the Federal bankruptcy laws or any other applicable
Federal  or  state  bankruptcy,  insolvency  or  similar  law  resulting  in the
appointment   of  a  receiver,   liquidator,   assignee,   custodian,   trustee,
sequestrator  (or  other  similar   official)  of  the  Corporation  or  of  any
substantial  part of its property,  or ordering the winding up or liquidation of
its affairs,  and any such decree or order shall be unstayed and in effect for a
period of 30 consecutive days and, on account of any such event, the Corporation
shall  liquidate,  dissolve or wind up, or if the  Corporation  shall  otherwise
liquidate,  dissolve or wind up, no distribution shall be made to the holders of
any shares of capital stock of the Corporation upon liquidation,  dissolution or
winding-up  unless  prior  thereto,  the Holders of shares of Series C Preferred
Stock, subject to this Article 5, shall have received the Liquidation Preference
with respect to each share.



                                      -6-
<PAGE>

     (b) In case the Corporation  shall  reorganize its capital,  reclassify its
capital  stock,  consolidate  or merge with or into  another  Person  (where the
Corporation  is not the  survivor or where there is a change in or  distribution
with respect to the Common Stock of the Corporation),  sell, convey, transfer or
otherwise dispose of all or substantially  all its property,  assets or business
to another Person, or effectuate a transaction or series of related transactions
in which more than 50% of the voting  power of the  Corporation  is  disposed of
(each,  a  "Fundamental  Corporate  Change") and,  pursuant to the terms of such
Fundamental  Corporate  Change,  shares  of  common  stock of the  successor  or
acquiring  corporation,  or any  cash,  shares of stock or other  securities  or
property of any nature whatsoever  (including  warrants or other subscription or
purchase  rights) in addition to or in lieu of common stock of the  successor or
acquiring  corporation ("Other Property"),  are to be received by or distributed
to the holders of Common Stock of the Corporation,  then each Holder of Series C
Preferred Stock shall have the right thereafter,  at its sole option, either (x)
to require the  Corporation to deem such  Fundamental  Corporate  Change to be a
liquidation,  dissolution or winding up of the Corporation pursuant to which the
Corporation  shall be  required to  distribute,  upon  consummation  of and as a
condition  to,  such  Fundamental  Corporate  Change  an  amount  equal  to  the
Liquidation  Preference  with  respect  to each  outstanding  share of  Series C
Preferred  Stock,  (y) to receive  the  number of shares of common  stock of the
successor or acquiring corporation or of the Corporation, if it is the surviving
corporation,  and Other  Property as is  receivable  upon or as a result of such
Fundamental Corporate Change by a holder of the number of shares of Common Stock
into which such  Series C Preferred  Stock may be  converted  at the  Conversion
Price applicable  immediately prior to such Fundamental  Corporate Change or (z)
require the Corporation, or such successor, resulting or purchasing corporation,
as the  case  may  be,  to,  without  benefit  of any  additional  consideration
therefor,  to execute and deliver to the Holder  shares of its  Preferred  Stock
with substantial identical rights, preferences, privileges, powers, restrictions
and other terms as the Series C Preferred Stock equal to the number of shares of
Series  C  Preferred  Stock  held  by  such  Holder  immediately  prior  to such
Fundamental Corporate Change;  provided,  that all Holders of Series C Preferred
Stock  shall be deemed to elect the  option  set forth in clause (i) above if at
least a majority in interest of such Holders  elect such option.  The  foregoing
provisions of this Section 5(b) shall similarly apply to successive  Fundamental
Corporate Changes.


                                    ARTICLE 6
                          CONVERSION OF PREFERRED STOCK

                    Section 6.1 Conversion; Conversion Price

     At the option of the Holder,  the shares of Series C Preferred Stock may be
converted, either in whole or in part, into Common Shares (calculated as to each
such  conversion to the nearest 1/100th of a share) at any time and from time to
time  following  the Issue Date at a Conversion  Price per share of Common Stock
equal to the lesser of: (i) 110% of the Current  Market  Price on the Issue Date
or (ii)  82.5% of the  Market  Price;  provided  that any  unconverted  Series C
Preferred Stock remaining 180 days after the Issue Date may be converted, at the
sole option of the Holder, at a Conversion Price per share of Common Stock equal
to 78.5% of the Market Price;  provided,  further, that any unconverted Series C
Preferred Stock remaining 270 days after the Issue Date may be converted, at the
sole option of the Holder, at a Conversion Price per share of Common Stock equal
to 75% of the Market Price; and provided, further, that any unconverted Series C
Preferred  Stock remaining 360 days after the Issue Date may be


                                      -7-
<PAGE>

converted at the sole option of the Holder,  at a Conversion  Price per share of
Common Stock equal to 70% of the Market Price;  and provided,  further,  that if
the Corporation's  Common Stock is delisted off Nasdaq for any reason,  then any
remaining  unconverted  Series C Preferred  Stock may be converted,  at the sole
option of the Holder,  at a Conversion  Price per share of Common Stock equal to
50% of the Market Price. At the Corporation's  option, the amount of accrued and
unpaid  dividends as of the  Conversion  Date shall not be subject to conversion
but instead may be paid in cash as of the  Conversion  Date; if the  Corporation
elects to convert the amount of accrued and unpaid  dividends at the  Conversion
Date into Common Stock, the Common Stock issued to the Holder shall be valued at
the applicable Conversion Price.

     The  number  of shares of  Common  Stock  due upon  conversion  of Series C
Preferred Stock shall be (i) the number of shares of Series C Preferred Stock to
be  converted,  multiplied  by (ii) the  Stated  Value plus  accrued  and unpaid
dividends, to the extent the Corporation does not elect to pay, and pay, accrued
and unpaid  dividends in cash,  and divided by (iii) the  applicable  Conversion
Price.

     Within two  Business  Days of the  occurrence  of a  Valuation  Event,  the
Corporation  shall send notice  thereof to each  Holder,  except that  Holder(s)
shall send notice to the Corporation with respect to events set forth in Section
6.1(h) below.  Notwithstanding  anything to the contrary  contained herein, if a
Valuation Event occurs during any Valuation Period,  the Holder may convert some
or all of its Series C Preferred  Stock,  at its sole  option,  at a  Conversion
Price equal to the Current  Market Price on any Trading Day during the Valuation
Period.

     For purposes of this  Section 6.1, a "Valuation  Event" shall mean an event
in which the Corporation takes any of the following actions:

     (a) subdivides or combines its Capital Shares;

     (b) makes any distribution on its Capital Shares;

     (c) issues any additional Capital Shares (the "Additional Capital Shares"),
otherwise than as provided in the foregoing Sections 6.1(a) and 6.1(b) above, at
a price per share  less,  or for other  consideration  lower,  than the  Current
Market  Price  in  effect  immediately  prior  to  such  issuances,  or  without
consideration, except for issuances under employee benefit plans consistent with
those presently in effect and issuances under  presently  outstanding  warrants,
options or convertible securities;

     (d)  issues  any  warrants,  options or other  rights to  subscribe  for or
purchase  any  Additional  Capital  Shares  and the  price  per  share for which
Additional  Capital  Shares may at any time  thereafter be issuable  pursuant to
such  warrants,  options or other rights  shall be less than the Current  Market
Price in effect immediately prior to such issuance;

     (e) issues any securities  convertible  into or exchangeable or exercisable
for  Additional  Capital  Shares  and the  consideration  per  share  for  which
Additional Capital Shares may at any time thereafter be issuable pursuant to the
terms of such convertible,  exchangeable or exercisable securities shall be less
than the Current Market Price in effect immediately prior to such issuance;



                                      -8-
<PAGE>

     (f) announce a Fundamental Corporate Change;

     (g) makes a distribution  of its assets or evidences of indebtedness to the
holders of its Capital  Shares as a dividend in  liquidation or by way of return
of  capital  or other  than as a dividend  payable  out of  earnings  or surplus
legally  available  for the payment of  dividends  under  applicable  law or any
distribution to such holders made in respect of the sale of all or substantially
all of the Corporation's assets (other than under the circumstances provided for
in the foregoing Sections 6.1(a) through 6.1(e)); or

     (h) takes any action  affecting the number of Outstanding  Capital  Shares,
other than an action  described in any of the foregoing  Sections 6.1(a) through
6.1(g) hereof, inclusive, which in the opinion of the Holder, determined in good
faith, would have a material adverse effect upon the rights of the Holder at the
time of a conversion of the Preferred Stock or is reasonably likely to result in
a decrease in the Market Price.



                                      -9-
<PAGE>

                  Section 6.2 Exercise of Conversion Privilege

     (a) Conversion of the Series C Preferred  Stock may be exercised,  in whole
or in part, by the Holder by  telecopying  an executed and completed  Conversion
Notice to the Corporation.  Each date on which a Conversion Notice is telecopied
to the  Corporation in accordance  with the provisions of this Section 6.2 shall
constitute a Conversion Date. The Corporation  shall convert the Preferred Stock
and issue the Common Stock Issued at Conversion, and all voting and other rights
associated  with  the  beneficial  ownership  of  the  Common  Stock  Issued  at
Conversion  shall vest with the Holder,  effective as of the Conversion  Date at
the time specified in the Conversion  Notice.  The Conversion  Notice also shall
state the name or names  (with  addresses)  of the Persons who are to become the
holders  of the  Common  Stock  Issued at  Conversion  in  connection  with such
conversion.  The Holder shall deliver the shares of Series C Preferred  Stock to
the  Corporation  by express  courier within 30 days following the date on which
the telecopied  Conversion Notice has been transmitted to the Corporation.  Upon
surrender for  conversion,  the Preferred Stock shall be accompanied by a proper
assignment  thereof to the  Corporation or be endorsed in blank.  As promptly as
practicable after the receipt of the Conversion Notice as aforesaid,  but in any
event not more than five Business Days after the  Corporation's  receipt of such
Conversion  Notice,  the Corporation  shall (i) issue the Common Stock issued at
Conversion in accordance  with the  provisions of this Article 6, and (ii) cause
to be mailed for delivery by overnight  courier to the Holder (x) a  certificate
or  certificate(s)  representing the number of Common Shares to which the Holder
is entitled by virtue of such conversion,  (y) cash, as provided in Section 6.3,
in respect of any fraction of a Common Share  issuable upon such  conversion and
(z) if the Corporation chooses to pay accrued and unpaid dividends in cash, cash
in the amount of accrued and unpaid  dividends as of the Conversion  Date.  Such
conversion  shall be  deemed  to have  been  effected  at the time at which  the
Conversion  Notice  indicates so long as the Series C Preferred Stock shall have
been  surrendered  as aforesaid at such time, and at such time the rights of the
Holder of the Series C Preferred  Stock, as such,  shall cease and the Person or
Persons in whose name or names the Common  Stock Issued at  Conversion  shall be
issuable  shall be deemed to have  become the holder or holders of record of the
Common  Shares  represented  thereby and all voting and other rights  associated
with the beneficial ownership of such Common Shares shall at such time vest with
such  Person or Persons.  The  Conversion  Notice  shall  constitute  a contract
between the Holder and the  Corporation,  whereby the Holder  shall be deemed to
subscribe  for the number of Common  Shares which it will be entitled to receive
upon such conversion and, in payment and satisfaction of such  subscription (and
for any cash  adjustment  to which it is entitled  pursuant to Section  6.3), to
surrender the Series C Preferred Stock and to release the  Corporation  from all
liability thereon. No cash payment aggregating less than $1.00 shall be required
to be given unless specifically requested by the Holder.


                                      -10-
<PAGE>

     (b) If, at any time (i) the Corporation challenges,  disputes or denies the
right of the Holder  hereof to effect the  conversion  of the Series C Preferred
Stock into Common Shares or otherwise dishonors or rejects any Conversion Notice
delivered in accordance  with this Section 6.2 or (ii) any third party commences
any lawsuit or  proceeding  or  otherwise  asserts any claim before any court or
public or governmental authority which seeks to challenge,  deny, enjoin, limit,
modify, delay or dispute the right of the Holder hereof to effect the conversion
of the Series C Preferred  Stock into Common Shares,  then the Holder shall have
the right, by written notice to the  Corporation,  to require the Corporation to
promptly  redeem the Series C  Preferred  Stock for cash at a  redemption  price
equal to 130% of the Stated Value  thereof  together with all accrued and unpaid
dividends  thereon  (the  "Mandatory   Purchase  Amount").   Under  any  of  the
circumstances  set forth above,  the  Corporation  shall be responsible  for the
payment of all costs and expenses of the Holder, including reasonable legal fees
and expenses,  as and when incurred in disputing any such action or pursuing its
rights hereunder (in addition to any other rights of the Holder).

     (c) The Holder  shall be  entitled  to exercise  its  conversion  privilege
notwithstanding  the  commencement  of any case under 11 U.S.C.  ss. 101 et seq.
(the  "Bankruptcy  Code").  In the event the  Corporation  is a debtor under the
Bankruptcy  Code, the Corporation  hereby waives to the fullest extent permitted
any  rights to relief it may have  under 11 U.S.C.  ss.  362 in  respect  of the
Holder's  conversion  privilege.  The  Corporation  hereby waives to the fullest
extent  permitted  any rights to relief it may have  under 11 U.S.C.  ss. 362 in
respect of the  conversion  of the Series C  Preferred  Stock.  The  Corporation
agrees, without cost or expense to the Holder, to take or consent to any and all
action necessary to effectuate relief under 11 U.S.C. ss. 362.

                          Section 6.3 Fractional Shares

     No fractional Common Shares or scrip representing  fractional Common Shares
shall be issued upon conversion of the Series C Preferred Stock.  Instead of any
fractional  Common Shares which  otherwise  would be issuable upon conversion of
the Series C Preferred  Stock,  the  Corporation  shall pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction.



                                      -11-
<PAGE>

                 Section 6.4 Adjustments to Conversion Discount

     For so long as any shares of the Series C Preferred Stock are  outstanding,
if the Corporation  issues and sells pursuant to an exemption from  registration
under the  Securities  Act (A) Common Shares (unless they have been disclosed in
the Schedules to the Securities  Purchase  Agreement) at a purchase price on the
date of issuance  thereof that is lower than the Conversion  Price, (B) warrants
or options  (unless they have been  disclosed in the Schedules to the Securities
Purchase  Agreement) with an exercise price on the date of issuance thereof that
is lower  than the  agreed  upon  Conversion  Price for the Holder on such date,
except  for  warrants  or options  issued  pursuant  to  employee  stock  option
agreements or stock incentive agreements of the Corporation, or (C) convertible,
exchangeable or exercisable  securities  (unless they have been disclosed in the
Schedules  to the  Securities  Purchase  Agreement)  with a right to exchange at
lower than the Current  Market Price on the date of issuance or  conversion,  as
applicable, of such convertible,  exchangeable or exercisable securities, except
for stock option agreements or stock incentive  agreements,  then the Conversion
Discount shall be reduced to equal the lowest of any such lower rates.

                         Section 6.5 Optional Redemption

     At any time after the Issue Date until the  Mandatory  Conversion  Date (as
defined below), the Corporation, upon notice delivered to the Holder as provided
in Section 6.6, may redeem, in cash, the Series C Preferred Stock (but only with
respect to such  shares as to which the Holder has not  theretofore  furnished a
Conversion  Notice in compliance  with Section 6.2), at 130% of the Stated Value
thereof (the "Optional Redemption Price"),  together with all accrued and unpaid
dividends thereon to the date of redemption (the "Redemption  Date").  Except as
set  forth in this  Section  6.5,  the  Corporation  shall not have the right to
redeem the Series C Preferred Stock.

                        Section 6.6 Notice of Redemption

     Notice of  redemption  pursuant  to Section  6.5 shall be  provided  by the
Corporation to the Holder in writing (by registered mail or overnight courier at
the Holder's last address appearing in the Corporation's  security registry) not
less than 10 nor more than 15 days prior to the  Redemption  Date,  which notice
shall  specify  the  Redemption  Date and  refer to  Section  6.5  (including  a
statement of the Current Market Price per Common Share) and this Section 6.6.

                    Section 6.7 Surrender of Preferred Stock

     Upon any  redemption of the Series C Preferred  Stock  pursuant to Sections
6.5 and 6.6,  the Holder shall  either  deliver the Series C Preferred  Stock by
hand to the Corporation at its principal executive offices or surrender the same
to the  Corporation at such address by express  courier within 14 days after the
date  that  the  Buyer  receives  payment  therefore.  Payment  of the  Optional
Redemption Price shall be made by the Corporation to the Holder by wire transfer
of immediately available funds to such account(s) as the Holder shall specify to
the  Corporation.  If payment of such Optional  Redemption  Price is not made in
full by the  Redemption  Date,  the Holder shall again have the right to convert
the Series C Preferred Stock as provided in Article 6 hereof.



                                      -12-
<PAGE>

                        Section 6.8 Mandatory Conversion

     On the third  anniversary  of the date of this  Agreement  (the  "Mandatory
Conversion  Date"),  the Corporation  shall convert all Series C Preferred Stock
outstanding at the Conversion Price utilizing the Stated Value (plus accrued and
unpaid  dividends) as the value of each share of Series C Preferred Stock,  into
Common Stock which is registered for resale in open market  transactions  on the
Registration Statement (as defined in the Registration Rights Agreement),  which
Registration Statement shall then be effective under the Securities Act.

                   Section 6.9 Certain Conversion Limitations

     (a) Notwithstanding  anything herein to the contrary,  the Holder shall not
have the right,  and the Corporation  shall not have the obligation,  to convert
all or any portion of the Series C Preferred  Stock (and the  Corporation  shall
not have the right to pay dividends on the Series C Preferred Stock in shares of
Common  Stock) if and to the extent that the issuance to the Holder of shares of
Common Stock upon such conversion (or payment of dividends)  would result in the
Holder  being  deemed  the  "beneficial  owner"  of  more  than  5% of the  then
Outstanding  shares of Common Stock  within the meaning of Section  13(d) of the
Securities  Exchange  Act  of  1934,  as  amended,  and  the  rules  promulgated
thereunder.  If any court of competent  jurisdiction  shall  determine  that the
foregoing  limitation is  ineffective  to prevent a Holder from being deemed the
beneficial owner of more than 5% of the then Outstanding shares of Common Stock,
then  the  Corporation  shall  redeem  so  many  of such  Holder's  shares  (the
"Redemption  Shares") of Series C Preferred Stock as are necessary to cause such
Holder  to be  deemed  the  beneficial  owner  of not  more  than 5% of the then
Outstanding  shares  of Common  Stock.  Upon  such  determination  by a court of
competent  jurisdiction,  the Redemption  Shares shall  immediately  and without
further  action be deemed  returned  to the status of  authorized  but  unissued
shares of Series C Preferred  Stock, and the Holder shall have no interest in or
rights under such Redemption  Shares.  Any and all dividends paid on or prior to
the date of such  determination  shall be deemed dividends paid on the remaining
shares of Series C Preferred Stock held by the Holder.  Such redemption shall be
for cash at a redemption  price equal to the sum of (i) 125% of the Stated Value
of the Redemption  Shares and (ii) any accrued and unpaid  dividends to the date
of such redemption.

     (b) Unless the  Corporation  shall have obtained the approval of its voting
stockholders  to such  issuance in  accordance  with the rules of Nasdaq or such
other stock market with which the Corporation  shall be required to comply,  but
only to the extent required  thereby,  the Corporation shall not issue shares of
Common Stock (i) upon  conversion  of any shares of Series C Preferred  Stock or
(ii) as a dividend on the Series C Preferred  Stock,  if such issuance of Common
Stock,  when added to the number of shares of Common Stock previously  issued by
the Corporation  (i) upon conversion of shares of the Series C Preferred  Stock,
(ii)  upon  exercise  of  the  Warrants  issued  pursuant  to the  terms  of the
Securities  Purchase Agreement and (iii) in payment of dividends on the Series C
Preferred  Stock,  would  equal or  exceed  20% of the  number  of shares of the
Corporation's  Common Stock which were issued and  Outstanding on the Issue Date
(the  "Maximum  Issuance  Amount").  In  the  event  that  a  properly  executed
Conversion  Notice is  received  by the  Corporation  which  would  require  the
Corporation to issue shares of Common Stock equal to or in excess of the Maximum
Issuance  Amount,  the Corporation  shall honor such  conversion  request by (i)
converting  the  number  of shares of  Series C  Preferred  Stock  stated in the
Conversion  Notice  not in  excess  of the  Maximum  Issuance  Amount  and  (ii)

                                      -13-
<PAGE>

redeeming  the  number  of  shares of  Series C  Preferred  Stock  stated in the
Conversion  Notice equal to or in excess of the Maximum  Issuance Amount in cash
at a price equal to 125% of the Stated Value of the shares of Series C Preferred
Stock to be so redeemed, together with all accrued and unpaid dividends thereon.
In the event that the  Corporation  shall  elect to pay a dividend  in shares of
Common Stock which would require the Corporation to issue shares of Common Stock
equal to or in excess of the Maximum Issuance Amount,  the Corporation shall pay
(i) a dividend in shares of Common  Stock equal to one less than an amount which
would result in the  Corporation  issuing  shares equal to the Maximum  Issuance
Amount and (ii) the balance of the dividend in cash.


                                    ARTICLE 7
                                  VOTING RIGHTS

     The Holders of the Series C Preferred Stock have no voting power, except as
otherwise  provided  by the  General  Corporation  Law of the State of  Delaware
("DGCL"), in this Article 7, and in Article 8 below.


                                      -14-
<PAGE>

     Notwithstanding  the above,  the  Corporation  shall provide each Holder of
Series  C  Preferred  Stock  with  prior  notification  of  any  meeting  of the
shareholders  (and  copies  of proxy  materials  and other  information  sent to
shareholders).  In the event of any taking by the Corporation of a record of its
shareholders  for the purpose of  determining  shareholders  who are entitled to
receive  payment of any dividend or other  distribution,  any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation or
recapitalization) any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining  shareholders  who
are entitled to vote in connection with any proposed liquidation, dissolution or
winding  up of the  Corporation,  the  Corporation  shall  mail a notice to each
Holder,  at least 30 days prior to the consummation of the transaction or event,
whichever is  earlier),  of the date on which any such action is to be taken for
the purpose of such dividend,  distribution,  right or other event,  and a brief
statement  regarding,  the amount and character of such dividend,  distribution,
right or other event to the extent known at such time.

     To the extent  that under the DGCL the vote of the  Holders of the Series C
Preferred  Stock,  voting  separately  as a class or  series as  applicable,  is
required to authorize a given action of the Corporation, the affirmative vote or
consent  of the  Holders  of at least a majority  of the  outstanding  shares of
Series C Preferred Stock represented at a duly held meeting at which a quorum is
present or by written consent of a majority of the outstanding  shares of Series
C Preferred  Stock  (except as otherwise  may be required  under the DGCL) shall
constitute  the  approval of such action by the class.  To the extent that under
the DGCL  Holders  of the Series C  Preferred  Stock are  entitled  to vote on a
matter with holders of Common Stock, voting together as one class, each share of
Series C  Preferred  Stock  shall be  entitled to a number of votes equal to the
number of shares of Common  Stock  into which it is then  convertible  using the
record date for the taking of such vote of  shareholders as the date as of which
the  Conversion  Price is  calculated.  Holders of the Series C Preferred  Stock
shall be entitled to notice of all shareholder meetings or written consents (and
copies of proxy  materials  and other  information  sent to  shareholders)  with
respect to which they would be entitled to vote,  which notice would be provided
pursuant to the Corporation's bylaws and the DGCL.


                                    ARTICLE 8
                              PROTECTIVE PROVISIONS

     So long as  shares  of  Series  C  Preferred  Stock  are  outstanding,  the
Corporation  shall not, without first obtaining the approval (by vote or written
consent,  as  provided by the DGCL) of the Holders of at least a majority of the
then outstanding shares of Series C Preferred Stock:

     (a) alter or change the rights,  preferences  or privileges of the Series C
Preferred Stock;

     (b)  create any new class or series of capital  stock  having a  preference
over the Series C Preferred Stock as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation  ("Senior  Securities") or alter or
change the rights,  preferences or privileges of any Senior  Securities so as to
affect adversely the Series C Preferred Stock;

     (c) increase the authorized  number of shares of Series C Preferred  Stock;
or



                                      -15-
<PAGE>

     (d) do any act or thing not authorized or contemplated by this  Certificate
of  Designation  which would  result in taxation of the Holders of shares of the
Series C Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as  amended  (or  any  comparable  provision  of the  Internal  Revenue  Code as
hereafter from time to time amended).

     In the event Holders of least a majority of the then outstanding  shares of
Series C Preferred  Stock agree to allow the  Corporation to alter or change the
rights,  preferences  or  privileges  of the shares of Series  Preferred  Stock,
pursuant to subsection (a) above, so as to affect the Series C Preferred  Stock,
then the Corporation  will deliver notice of such approved change to the Holders
of the Series  Preferred  Stock that did not agree to such  alteration or change
(the  "Dissenting  Holders") and  Dissenting  Holders shall have the right for a
period  of 30 days to  convert  pursuant  to the  terms of this  Certificate  of
Designation as in effect prior to such  alteration or change or continue to hold
their shares of Series C Preferred Stock.

     Notwithstanding  anything  to  the  contrary  herein,  if at any  time  the
Corporation   shall   "spin-off"   certain  of  its  assets  or   businesses  by
transferring,  directly or indirectly, such assets or businesses to a Subsidiary
of the Corporation ("Spinco") and making a dividend (the "Spin-off Dividend") to
the  Corporation's  stockholders of the shares of capital stock of Spinco,  then
prior to making the Spin-off  Dividend,  the  Corporation  shall cause Spinco to
issue to each  Holder that  number of shares of  preferred  stock of Spinco with
substantially identical rights,  preferences,  privileges,  powers, restrictions
and other terms as the Series C Preferred Stock equal to the number of shares of
Series C Preferred Shares held by such Holder  immediately prior to the Spin-off
Dividend.


                                    ARTICLE 9
                                  MISCELLANEOUS

             Section 9.1 Loss, Theft, Destruction of Preferred Stock

     Upon  receipt of  evidence  satisfactory  to the  Corporation  of the loss,
theft,  destruction or mutilation of shares of Series C Preferred  Stock and, in
the case of any such loss,  theft or  destruction,  upon receipt of indemnity or
security reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of the Series C Preferred Stock, the
Corporation  shall  make,  issue  and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated  shares of Series C Preferred Stock, new shares of Series
C Preferred Stock of like tenor.  The Series C Preferred Stock shall be held and
owned upon the express  condition  that the  provisions  of this Section 9.1 are
exclusive  with respect to the  replacement  of  mutilated,  destroyed,  lost or
stolen shares of Series C Preferred  Stock and shall  preclude any and all other
rights and  remedies  notwithstanding  any law or statute  existing or hereafter
enacted  to  the  contrary  with  respect  to  the   replacement  of  negotiable
instruments or other securities without the surrender thereof.



                                      -16-
<PAGE>

                      Section 9.2 Who Deemed Absolute Owner

     The  Corporation  may deem the Person in whose name the Series C  Preferred
Stock shall be registered  upon the registry books of the Corporation to be, and
may treat it as,  the  absolute  owner of the Series C  Preferred  Stock for the
purpose of receiving  payment of dividends on the Series C Preferred  Stock, for
the conversion of the Series C Preferred Stock and for all other  purposes,  and
the  Corporation  shall not be affected by any notice to the contrary.  All such
payments  and such  conversion  shall be valid  and  effectual  to  satisfy  and
discharge the liability  upon the Series C Preferred  Stock to the extent of the
sum or sums so paid or the conversion so made.

                      Section 9.3 Notice of Certain Events

     In the case of the occurrence of any event  described in Sections 5(b), 6.5
or 6.6 of this  Certificate of Designation,  the  Corporation  shall cause to be
mailed to the Holder of the Series C Preferred  Stock at its last  address as it
appears in the Corporation's  security  registry,  at least 20 days prior to the
applicable  record,  effective or expiration date hereinafter  specified (or, if
such 20 days notice is not possible,  at the earliest possible date prior to any
such record,  effective or expiration  date),  a notice  stating (x) the date on
which a record is to be taken for the purpose of such corporate  action, or if a
record is not to be taken,  the date as of which the Holders of record of Series
C Preferred  Stock to be entitled to such  dividend,  distribution,  issuance or
granting of rights,  options or warrants are to be  determination or the date on
which such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become  effective,  and (y) the date as
of which it is expected that Holders of record of Series C Preferred  Stock will
be entitled to exchange  their  shares for  securities,  cash or other  property
deliverable upon such  reclassification,  consolidation,  merger, sale transfer,
dissolution, liquidation or winding-up.

                              Section 9.4 Register

     The Corporation  shall keep at its principal office a register in which the
Corporation  shall provide for the registration of the Series C Preferred Stock.
Upon any  transfer  of the  Series C  Preferred  Stock  in  accordance  with the
provisions  hereof, the Corporation shall register such transfer on the Series C
Preferred Stock register.

                             Section 9.5 Withholding

     To the extent  required by  applicable  law, the  Corporation  may withhold
amounts for or on account of any taxes  imposed or levied by or on behalf of any
taxing authority in the United States having  jurisdiction  over the Corporation
from any payments made pursuant to the Series C Preferred Stock.

                              Section 9.6 Headings

     The  headings  of  the  Articles  and  Sections  of  this   Certificate  of
Designation  are inserted for  convenience  only and do not constitute a part of
this Certificate of Designation.




                                      -17-
<PAGE>

                            Section 9.7 Severability

     If any provision of this  Certificate of  Designation,  or the  application
thereof   to  any  person  or  entity  or  any   circumstance,   is  invalid  or
unenforceable,  (i) a suitable  and  equitable  provision  shall be  substituted
therefor  in order to carry  out,  so far as may be valid and  enforceable,  the
intent and  purpose of such  invalid or  unenforceable  provision,  and (ii) the
remainder  of  this  Certificate  of  Designation  and the  application  of such
provision to other persons,  entities or circumstances  shall not be affected by
such   invalidity   or   unenforceability,   nor  shall   such   invalidity   or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.


                            [SIGNATURE PAGE FOLLOWS.]


                                      -18-
<PAGE>


     IN  WITNESS  WHEREOF,  the  Corporation  has  caused  this  Certificate  of
Designation to be signed by its duly authorized officer on October 29, 1999.


                                        COMPOSITECH LTD.


                                        By:   /s/ Christopher F. Johnson
                                              --------------------------------
                                              Name:  Christopher F. Johnson
                                              Title: President and CEO


                                      -19-
<PAGE>



                                                                         ANNEX I

                            FORM OF CONVERSION NOTICE

             To:  Compositech Ltd.
                  120 Ricefield Ltd.
                  Hauppauge, New York  11788
                  Attention:

     The undersigned owner of this Series C 8% Convertible  Preferred Stock (the
"Series C Preferred  Stock")  issued by  Compositech  Ltd.  (the  "Corporation")
hereby  irrevocably  exercises  its option to convert  __________  shares of the
Series C Preferred  Stock into shares of the common  stock,  par value $0.01 per
share ("Common  Stock"),  of the Corporation in accordance with the terms of the
Certificate of Designation.  The undersigned hereby instructs the Corporation to
convert the number of shares of the Series C  Preferred  Stock  specified  above
into  Shares of  Common  Stock  Issued  at  Conversion  in  accordance  with the
provisions  of Article 6 of the  Certificate  of  Designation.  The  undersigned
directs that the Common Stock  issuable and  certificates  therefor  deliverable
upon conversion, the Series C Preferred Stock recertificated,  if any, not being
surrendered  for  conversion  hereby,  together  with any check in  payment  for
fractional  Common  Stock,  be  issued  in  the  name  of and  delivered  to the
undersigned  unless a different name has been indicated  below.  All capitalized
terms used and not defined herein have the respective  meanings assigned to them
in the Certificate of Designation. So long as the Series C Preferred Stock shall
have been  surrendered  for conversion  hereby,  the conversion  pursuant hereto
shall be deemed to have been effected at the date and time specified  below, and
at such time the rights of the undersigned as a Holder of the Series C Preferred
Stock  shall  cease and the  Person or Persons in whose name or names the Common
Stock Issued at Conversion  shall be issuable shall be deemed to have become the
holder or holders of record of the Common  Shares  represented  thereby  and all
voting and other rights associated with the beneficial  ownership of such Common
Shares shall at such time vest with such Person or Persons.

Date and time:



                                                       Signature

Fill in for registration of Series C Preferred Stock:




            Please print name and address (including zip code number)



                                      -20-