<PAGE>
                                                                     Exhibit 4.1

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THIS ADJUSTMENT
WARRANT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO
BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD
BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR
TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.

                         COMMON STOCK ADJUSTMENT WARRANT

No. AW3

             To Receive Shares of $.00001 Par Value Common Stock of

                             CONSTELLATION 3D, INC.

         THIS CERTIFIES that, for value received, The Gleneagles Fund Company II
(the "Purchaser") is entitled, upon the terms, at the times and subject to the
conditions hereinafter set forth, at any time after the expiration of the
Pricing Period (as defined herein) but prior to 5:00 p.m. New York City time on
August 20, 2006 (the "Termination Date"), to subscribe for and receive from time
to time from CONSTELLATION 3D, INC., a Delaware corporation (the "Company"), all
or any portion of an aggregate number of shares of Common Stock of the Company
determined pursuant to Section 3 hereof (the "Adjustment Shares"). The "Exercise
Price" of this Adjustment Warrant is $0. The number of shares for which this
Adjustment Warrant is exercisable shall be subject to adjustment as provided
herein. This Adjustment Warrant is being issued in connection with the Amended
and Restated Common Stock Purchase dated as of August 16, 2001 (the "Purchase
Agreement") entered into by the Company and the Purchaser. Any capitalized terms
used but not defined in this Adjustment Warrant shall have the meaning specified
in the Purchase Agreement.

1.       Title of Adjustment Warrant. Prior to the expiration hereof and subject
         ---------------------------
         to compliance with applicable laws, this Adjustment Warrant and all
         rights hereunder are transferable, in whole or in respect of the right
         to receive any part of the Adjustment Shares, at the office or agency
         of the Company by the holder hereof in person or by duly authorized
         attorney, upon surrender of this Adjustment Warrant together with (a)
         the Assignment Form annexed hereto properly endorsed, and (b) any other
         documentation reasonably necessary to satisfy the Company that such
         transfer is in compliance with all applicable securities laws.

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

<PAGE>


3.       Exercise of Adjustment Warrant for Adjustment Shares.
         ----------------------------------------------------

(a)      Definitions.
         -----------

         "Adjusted Available Period" for a particular Trading Day during the
         Pricing Period shall mean the full Trading Day less any time during
         such Trading Day that (A) the Registration Statement or any prospectus
         or prospectus supplement is not available for the sale of shares of
         Common Stock by the Purchaser, (B) trading of the Common Stock on the
         Principal Market is suspended or halted while the Principal Market is
         open for trading, (C) trading on the Principal Market in general is
         suspended or halted, and (D) the Common Stock is not listed or included
         for quotation on an Approved Market.

         "Adjusted Dollar Amount" shall mean, for any Trading Day during the
         Pricing Period the lesser of (a) $50,000 and (b) the product of (I) the
         Adjusted Volume Limit for such Trading Day and (II) 94% of the VWAP
         during the Adjusted Available Period of such Trading Day; provided,
         that the Adjusted Dollar Amount for the final Trading Day of the
         Pricing Period shall equal (I) $1,000,000 minus (II) the sum of the
         Adjusted Dollar Amounts for each prior Trading Day during the Pricing
         Period. For the avoidance of doubt, the Adjusted Dollar Amount shall be
         zero for any Trading Day on which the Adjusted Volume Limit is zero or
         on which any one or more of the events described in subsections (A),
         (B), (C) and (D) of the definition of Adjusted Available Period lasts
         for the entire duration of such Trading Day.

         "Adjusted Share Amount" for a particular Trading Day during the Pricing
         Period shall equal (a) the Adjusted Dollar Amount for such Trading Day
         divided by (b) 94% of the VWAP for such Trading Day. For the avoidance
         of doubt, the Adjusted Share Amount shall be zero for any Trading Day
         on which the Adjusted Volume Limit is zero or on which any one or more
         of the events described in subsections (A), (B), (C) and (D) of the
         definition of Adjusted Available Period lasts for the entire duration
         of such Trading Day.

         "Adjusted Volume Limit" for a particular Trading Day during the Pricing
         Period shall mean 10% of the trading volume for the Common Stock on the
         Principal Market during the Adjusted Available Period, as reported by
         Bloomberg Financial L.P. (provided, that for the purpose of determining
         the trading volume (I) individual trades of 20,000 shares or more of
         Common Stock shall not be counted and (II) all transactions other than
         bona fide, arm's length transactions between or among unaffiliated and
         unrelated persons and entities shall not be counted).

         "Approved Market" shall have the meaning given to such term in the
         Purchase Agreement.

         "Effective Date" shall have the meaning given to such term in the
         Purchase Agreement.

         "Pricing Period" shall mean the period commencing on the first to occur
         of (a) the third Trading Day following the Effective Date or (b) the
         120th calendar day following the date of this Adjustment Warrant, and
         expiring on the date on which the sum of the Adjusted


                                       2

<PAGE>

         Dollar Amounts from and including the date on which the Pricing Period
         commenced equals $1,000,000.

         "Purchased Shares" shall have the meaning given to such term in the
         Purchase Agreement.

         "Registration Statement" shall have the meaning given to such term in
         the Purchase Agreement.

         "Resale Notice" shall have the meaning given to such term in the
         Purchase Agreement.

         "Trading Day" shall have the meaning given to such term in the Purchase
         Agreement.

         "VWAP" shall have the meaning given to such term in the Purchase
         Agreement.

(b)      Adjustment Share Calculations. The number of Adjustment Shares for
         -----------------------------
         which this Adjustment Warrant is exercisable shall be determined by
         subtracting (I) the number of Initial Shares from (II) the sum of the
         Adjusted Share Amounts for each Trading Day during the Pricing Period
         (each such amount as appropriately adjusted for any stock splits,
         reverse stock splits, recapitalizations, stock dividends and other like
         events). If the result of this calculation is zero or a negative
         number, this Adjustment Warrant shall not be exercisable at all.
         Notwithstanding the forgoing, the number of Adjustment Shares for which
         this Adjustment Warrant is exercisable shall not exceed 9,200,000 minus
         the number of Purchased Shares previously issued to the Purchaser under
         the Purchase Agreement.

(c)      Exercise of Adjustment Warrant. Exercise of the rights represented by
         ------------------------------
         this Adjustment Warrant may be made at any time or times, in whole or
         in part, after the expiration of the Pricing Period and prior to 5:00
         p.m. New York City time on the Termination Date, by the surrender on
         any business day of this Adjustment Warrant and a Notice of Exercise in
         the form annexed hereto duly completed and executed, at the principal
         office of the Company (or such other office or agency of the Company as
         it may designate by notice in writing to the registered holder hereof
         at the address of such holder appearing on the books of the Company);
         whereupon the holder of this Adjustment Warrant shall be entitled to
         receive a certificate for the number of Adjustment Shares for which
         this Adjustment Warrant has been so exercised. Certificates for
         Adjustment Shares shall be delivered to the holder hereof within three
         (3) Trading Days after the date on which this Adjustment Warrant shall
         have been exercised as aforesaid. An exercise of this Adjustment
         Warrant shall be deemed for all purposes a "cashless" exercise.

(d)      Failure to Deliver Adjustment Shares. If the Company fails to deliver
         ------------------------------------
         the specified number of Adjustment Shares to the Purchaser within 10
         Trading Days of the time and at the place specified herein therefore,
         then the Purchaser may, without reducing its other rights at law or in
         equity, at any time following such 10th Trading Day (and regardless of
         whether such Adjustment Shares are subsequently delivered by the
         Company) deliver one or more written notices to the Company (each such
         notice being an "Adjustment


                                       3

<PAGE>

         Repurchase Notice") specifying a date and time not sooner than one
         Trading Day following the date of such notice on which there shall be a
         closing with respect to such Adjustment Repurchase Notice. At such
         closing, the Company shall repurchase from the Purchaser for cash all
         or such portion of the Adjustment Shares specified by the Purchaser in
         the Repurchase Notice at a per share price equal to the greater of (I)
         115% of the VWAP on the Trading Day prior to the date on which the
         Adjustment Repurchase Notice is delivered to the Company and (II) 115%
         of the VWAP on the Trading Day on which such Adjustment Shares were
         required to be delivered to the Purchaser pursuant hereto.

(e)      Failure to Register Adjustment Shares. If the Company fails to have a
         -------------------------------------
         Registration Statement covering the resale by the Purchaser of all of
         the Adjustment Shares declared effective by the SEC in accordance with
         the Registration Rights Agreement by the date which is 120 calendar
         days from the date of this Adjustment Warrant, the Purchaser may at any
         time following the expiration of the Pricing Period (regardless of
         whether such a Registration Statement is declared effective subsequent
         to such 120th day) deliver an Adjustment Repurchase Notice to the
         Company specifying a date and time not sooner than one Trading Day
         following the date of such notice on which there shall be a closing
         with respect to such Adjustment Repurchase Notice. At such closing, the
         Company shall repurchase from the Purchaser for cash this Adjustment
         Warrant at a price equal to the number of Adjustment Shares for which
         this Adjustment Warrant is exercisable following the expiration of the
         Purchase Period multiplied by the greater of (I) 115% of the VWAP on
         the Trading Day prior to the date on which the Adjustment Repurchase
         Notice is delivered to the Company and (II) 115% of the average of the
         VWAPs for each Trading Day of the Pricing Period.

(f)      Adjustments. The number of Adjustment Shares shall be appropriately
         -----------
         adjusted to reflect any stock split, reverse stock split, stock
         dividend, recapitalization or similar event so that the Purchaser
         receives the same economically equivalent value of Adjustment Shares as
         it would in the absence of such event.

(g)      Miscellaneous. The Adjustment Shares shall upon delivery to the
         -------------
         Purchaser be fully-paid, nonassessable, shares of Common Stock, and,
         provided that (I) the Purchaser has delivered a Resale Notice to the
         Company or the Company's transfer agent prior to or on the date of
         delivery of such Adjustment Shares and (II) there was an effective
         Registration Statement covering the resale of such Adjustment Shares at
         the time they were resold by the Purchaser, such Adjustment Shares
         shall be freely tradable and the certificates representing such
         Adjustment Shares shall be free of any legends or stop transfer
         restrictions.

(h)      Transfer or Resale. The Purchaser understands that the sale of the
         ------------------
         Adjustment Shares to the Purchaser has not been registered under the
         1933 Act or any state securities laws, and such shares may not be
         offered for sale, sold, assigned or transferred unless (1) subsequently
         registered thereunder pursuant to the Registration Rights Agreement or
         otherwise or (2) an exemption exists permitting such shares to be sold,
         assigned or


                                       4

<PAGE>

         transferred without such registration. Accordingly, absent such
         registration, the Adjustment Shares will be issued to the Purchaser
         with a legend to such effect.

4.       Non-Certificated Shares. In lieu of delivering physical certificates
         -----------------------
         representing the Adjustment Shares, provided the Company's transfer
         agent is participating in the Depository Trust Company ("DTC") Fast
         Automated Securities Transfer ("FAST") program, upon request of the
         Adjustment Warrant holder, the Company shall use its best efforts to
         cause its transfer agent to electronically transmit the Adjustment
         Shares to the Adjustment Warrant holder by crediting the account of the
         Adjustment Warrant holder's prime broker with DTC through its Deposit
         Withdrawal Agent Commission ("DWAC") system. The time periods for
         delivery described in the immediately preceding paragraph shall apply
         to the electronic transmittals described herein.

5.       No Fractional Shares or Scrip. No fractional shares or scrip
         -----------------------------
         representing fractional shares shall be issued upon the issuance of the
         Adjustment Shares

6.       Charges, Taxes and Expenses. Issuance of certificates for shares of
         Common Stock upon the exercise of this Adjustment Warrant shall be made
         without charge to the holder hereof for any issue or transfer tax or
         other incidental expense in respect of the issuance of such
         certificate, all of which taxes and expenses shall be paid by the
         Company, and such certificates shall be issued in the name of the
         holder of this Adjustment Warrant or in such name or names as may be
         directed by the holder of this Adjustment Warrant; provided, however,
                                                            --------  -------
         that in the event certificates for shares of Common Stock are to be
         issued in a name other than the name of the holder of this Adjustment
         Warrant, this Adjustment Warrant when surrendered for exercise shall be
         accompanied by the Assignment Form attached hereto duly executed by the
         holder hereof; and provided further, that the Company shall not be
                            ----------------
         required to pay any tax or taxes which may be payable in respect of any
         transfer involved in the issuance of any Adjustment Warrant
         certificates or any certificates for the Adjustment Shares other than
         the issuance of a Adjustment Warrant certificate to the Purchaser in
         connection with its surrender of a Adjustment Warrant certificate upon
         the exercise of less than all of the Adjustment Warrants evidenced
         thereby, and the Company shall not be required to issue or deliver such
         certificates unless or until the person or persons requesting the
         issuance thereof shall have paid to the Company the amount of such tax
         or shall have established to the satisfaction of the Company that such
         tax has been paid.

7.       Closing of Books. The Company will at no time close its shareholder
         ----------------
         books or records in any manner which interferes with the timely
         exercise of this Adjustment Warrant.

8.       No Rights as Shareholder until Exercise. Subject to Section 13 of this
         ---------------------------------------
         Adjustment Warrant and the provisions of any other written agreement
         between the Company and the Purchaser, the Purchaser shall not be
         entitled to vote or receive dividends or be deemed the holder of
         Adjustment Shares or any other securities of the Company that may at
         any time be issuable on the exercise hereof for any purpose, nor shall
         anything contained herein be construed to confer upon the Purchaser, as
         such, any of the rights of a stockholder of the Company or any right to
         vote for the election of directors or upon any


                                       5

<PAGE>


         matter submitted to stockholders at any meeting thereof, or to give or
         withhold consent to any corporate action (whether upon any
         recapitalization, issuance of stock, reclassification of stock, change
         of par value, or change of stock to no par value, consolidation,
         merger, conveyance or otherwise) or to receive notice of meetings, or
         to receive dividends or subscription rights or otherwise until the
         Adjustment Warrant shall have been exercised as provided herein.
         However, at the time of the exercise of this Adjustment Warrant
         pursuant to Section 3 hereof, the Adjustment Shares received hereunder
         shall be deemed to be issued to such holder as the record owner of such
         shares as of the close of business on the date on which this Adjustment
         Warrant shall have been exercised.

9.       Assignment and Transfer of Adjustment Warrant. This Adjustment Warrant
         ---------------------------------------------
         may be assigned in whole or in part by the surrender of this Adjustment
         Warrant and the Assignment Form annexed hereto duly executed at the
         office of the Company (or such other office or agency of the Company as
         it may designate by notice in writing to the registered holder hereof
         at the address of such holder appearing on the books of the Company);
         provided, however, that this Adjustment Warrant may not be resold or
         --------  -------
         otherwise transferred except (i) in a transaction registered under the
         Securities Act of 1933, as amended (the "Act"), or (ii) in a
         transaction pursuant to an exemption, if available, from registration
         under the Act and whereby, if requested by the Company, an opinion of
         counsel reasonably satisfactory to the Company is obtained by the
         holder of this Adjustment Warrant to the effect that the transaction is
         so exempt.

10.      Loss, Theft, Destruction or Mutilation of Adjustment Warrant. Upon
         ------------------------------------------------------------
         receipt by the Company of evidence reasonably satisfactory to it of the
         loss, theft, destruction or mutilation of any Adjustment Warrant or
         stock certificate representing the Adjustment Shares, and in case of
         loss, theft or destruction, of indemnity reasonably satisfactory to it,
         and upon reimbursement to the Company of all reasonable expenses
         incidental thereto. Upon surrender and cancellation of such Adjustment
         Warrant or stock certificate, if mutilated, the Company will make and
         deliver a new Adjustment Warrant or stock certificate of like tenor and
         dated as of such cancellation, in lieu of this Adjustment Warrant or
         stock certificate.

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

12.      Effect of Certain Events. If at any time after the date hereof there
         ------------------------
         shall be a merger or consolidation of the Company with or into, or a
         transfer of all or substantially all of the assets of the Company to,
         another entity (collectively, a "Sale or Merger Transaction"), the
         holder of this Adjustment Warrant shall have the right thereafter to
         purchase, by exercise of this Adjustment Warrant, the kind and amount
         of cash, shares and other securities and property which it would have
         owned or have been entitled to receive after the happening of such
         transaction had this Adjustment Warrant been exercised immediately
         prior thereto, subject to further adjustment as provided in Section 13.


                                       6

<PAGE>

         Notwithstanding the above, a Sale or Merger Transaction shall not be
         deemed to occur in the event the Company is the acquiring entity in
         connection with an acquisition by the Company.


13.      Adjustment of Number of Adjustment Warrant Shares. The number of and
         -------------------------------------------------
         kind of securities purchasable upon exercise of this Adjustment Warrant
         shall be subject to adjustment from time to time as follows:

(a)      Subdivisions, Combinations and other Issuances. If the Company shall at
         ----------------------------------------------
         any time after the date hereof but prior to the expiration of this
         Adjustment Warrant subdivide its outstanding securities as to which
         purchase rights under this Adjustment Warrant exist, by split-up,
         spin-off, or otherwise, or combine its outstanding securities as to
         which purchase rights under this Adjustment Warrant exist, the number
         of Adjustment Shares as to which this Adjustment Warrant is exercisable
         as of the date of such subdivision, split-up, spin-off or combination
         shall forthwith be proportionately increased in the case of a
         subdivision, or proportionately decreased in the case of a combination.

(b)      Stock Dividend. If at any time after the date hereof the Company
         --------------
         declares a dividend or other distribution on Common Stock payable in
         Common Stock or other securities or rights convertible into Common
         Stock ("Common Stock Equivalents") without payment of any consideration
         by holders of Common Stock for the additional shares of Common Stock or
         the Common Stock Equivalents (including the additional shares of Common
         Stock issuable upon exercise or conversion thereof), then the number of
         shares of Common Stock for which this Adjustment Warrant may be
         exercised shall be increased as of the record date (or the date of such
         dividend distribution if no record date is set) for determining which
         holders of Common Stock shall be entitled to receive such dividends, in
         proportion to the increase in the number of outstanding shares (and
         shares of Common Stock issuable upon conversion of all such securities
         convertible into Common Stock) of Common Stock as a result of such
         dividend.

(c)      Other Distributions. If at any time after the date hereof the Company
         -------------------
         distributes to holders of Common Stock, other than as part of its
         dissolution, liquidation or the winding up of its affairs, any shares
         of its capital stock, any evidence of indebtedness or any of its assets
         (other than Common Stock), then the number of Adjustment Shares for
         which this Adjustment Warrant is exercisable shall be increased to
         equal: (i) the number of Adjustment Shares for which this Adjustment
         Warrant is exercisable immediately prior to such event, (ii) multiplied
         by a fraction, (A) the numerator of which shall be the Fair Market
         Value (as defined below) per share of Common Stock on the record date
         for the dividend or distribution, and (B) the denominator of which
         shall be the Fair Market Value price per share of Common Stock on the
         record date for the dividend or distribution minus the amount allocable
         to one share of Common Stock of the value (as jointly determined in
         good faith by the Board of Directors of the Company and the Adjustment
         Warrant holder) of any and all such evidences of indebtedness, shares
         of capital stock, other securities or property, so distributed. In lieu
         of such change to the number of Adjustment Shares for which this
         Adjustment Warrant is exercisable, the Purchaser may elect, in its sole
         discretion, to participate in such distribution and receive the shares
         of


                                       7

<PAGE>

         capital stock, evidence of indebtedness or other assets on an "as
         exercised" basis as if the Adjustment Warrant had been exercised in
         full for Adjustment Shares as of the record date for such distribution,
         without regard to the restrictions contained in Section 14.


         For purposes of this Adjustment Warrant, "Fair Market Value" shall
         equal the 10 Trading Day average closing trading price of the Common
         Stock on the Principal Market for the 10 Trading Days preceding the
         date of determination or, if the Common Stock is not listed or admitted
         to trading on any Principal Market, the average of the closing bid and
         asked prices on the over-the-counter market as furnished by any New
         York Stock Exchange member firm reasonably selected from time to time
         by the Company for that purpose and reasonably acceptable to the
         Holder, or, if the Common Stock is not listed or admitted to trading on
         the Principal Market or traded over-the-counter and the average price
         cannot be determined as contemplated above, the Fair Market Value of
         the Common Stock shall be as reasonably determined in good faith by the
         Company's Board of Directors with the concurrence of the Holder.

(d)      Merger. The Company will not merge or consolidate with or into any
         ------
         other corporation, or sell or otherwise transfer its property, assets
         and business substantially as an entirety to another corporation,
         unless the corporation resulting from such merger or consolidation (if
         not the Company), or such transferee corporation, as the case may be,
         shall expressly assume in writing the due and punctual performance and
         observance of each and every covenant and condition of this Adjustment
         Warrant to be performed and observed by the Company.

(e)      Reclassification, etc. If at any time after the date hereof there shall
         ---------------------
         be a reorganization or reclassification of the securities as to which
         purchase rights under this Adjustment Warrant exist into the same or a
         different number of securities of any other class or classes, then the
         Adjustment Warrant Holder shall thereafter be entitled to receive upon
         exercise of this Adjustment Warrant, during the period specified
         herein, the number of shares or other securities or property resulting
         from such reorganization or reclassification, which would have been
         received by the Adjustment Warrant Holder for the shares of stock
         subject to this Adjustment Warrant had this Adjustment Warrant at such
         time been exercised.

14.      9.99% Limitation.
         ----------------

(a)      Notwithstanding anything to the contrary contained herein, the number
         of shares of Common Stock that may be acquired by the holder upon
         exercise pursuant to the terms hereof shall not exceed a number that,
         when added to the total number of shares of Common Stock deemed
         beneficially owned by such holder (other than by virtue of the
         ownership of securities or rights to acquire securities (including the
         Warrants) that have limitations on the holder's right to convert,
         exercise or purchase similar to the limitation set forth herein),
         together with all shares of Common Stock deemed beneficially owned
         (other than by virtue of the ownership of securities or rights to
         acquire securities that have limitations on the right to convert,
         exercise or purchase similar to the limitation set forth herein) by the
         holder's "affiliates" (as defined Rule 144 of the Act) ("Aggregation


                                       8

<PAGE>

         Parties") that would be aggregated for purposes of determining whether
         a group under Section 13(d) of the Securities Exchange Act of 1934, as
         amended, exists, would exceed 9.99% of the total issued and outstanding
         shares of the Company's Common Stock (the "Restricted Ownership
         Percentage"). Each holder shall have the right (w) at any time and from
         time to time to reduce its Restricted Ownership Percentage immediately
         upon notice to the Company and (x) at any time and from time to time,
         to increase its Restricted Ownership Percentage immediately in the
         event of the announcement as pending or planned of an event of:

                  (i) any consolidation or merger of the Company with or into
         any other corporation or other entity or person (whether or not the
         Company is the surviving corporation), or any other corporate
         reorganization or transaction or series of related transactions in
         which in excess of 50% of the Company's voting power is transferred
         through a merger, consolidation, tender offer or similar transaction,

                  (ii) any person (as defined in Section 13(d) of the Exchange
         Act), together with its affiliates and associates (as such terms are
         defined in Rule 405 under the 1933 Act), beneficially owns or is deemed
         to beneficially own (as described in Rule 13d-3 under the Exchange Act
         without regard to the 60-day exercise period) in excess of 50% of the
         Company's voting power,

                  (iii) there is a replacement of more than one-half of the
         members of the Company's Board of Directors which is not approved by
         those individuals who are members of the Company's Board of Directors
         on the date thereof, in one or a series of related transactions, or

                  (iv) a sale or transfer of all or substantially all of the
         assets of the Company, determined on a consolidated basis.

(b)      The holder covenants at all times on each day (each such day being
         referred to as a "Covenant Day") as follows: During the balance of such
         Covenant Day and the succeeding sixty-one (61) days (the balance of
         such Covenant Day and the succeeding 61 days being referred to as the
         "Covenant Period") such holder will not acquire shares of Common Stock
         pursuant to any right (including the exercise of the Adjustment
         Warrant) existing at the commencement of the Covenant Period to the
         extent the number of shares so acquired by such holder and its
         Aggregation Parties (ignoring all dispositions) would exceed:

         (x)  the Restricted Ownership Percentage of the total number of shares
              of Common Stock outstanding at the commencement of the Covenant
              Period,

         minus
         -----

         (y)  the number of shares of Common Stock owned by such holder and its
              Aggregation Parties at the commencement of the Covenant Period.


                                       9

<PAGE>

                  A new and independent covenant will be deemed to be given by
         the holder as of each moment of each Covenant Day. No covenant will
         terminate, diminish or modify any other covenant. The holder agrees to
         comply with each such covenant. This Section 14 controls in the case of
         any conflict with any other provision of the Transaction Documents.

                  The Company's obligation to issue shares of Common Stock which
         would exceed such limits referred to in this Section 14 shall be
         suspended to the extent necessary until such time, if any, as shares of
         Common Stock may be issued in compliance with such restrictions.

15.      Miscellaneous.
         -------------

(a)      Choice Of Law; Venue; Jurisdiction. THE PROVISIONS OF THIS ADJUSTMENT
         ----------------------------------
         WARRANT SHALL BE CONSTRUED AND SHALL BE GIVEN EFFECT IN ALL RESPECTS AS
         IF IT HAD BEEN ISSUED AND DELIVERED BY THE COMPANY ON THE DATE HEREOF.
         THIS ADJUSTMENT WARRANT SHALL BE BINDING UPON ANY SUCCESSORS OR ASSIGNS
         OF THE COMPANY. THIS ADJUSTMENT WARRANT WILL BE CONSTRUED AND ENFORCED
         IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
         EXCEPT FOR MATTERS ARISING UNDER THE ACT, WITHOUT REFERENCE TO
         PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES CONSENTS TO THE
         EXCLUSIVE JURISDICTION OF THE U.S. DISTRICT COURT SITTING IN THE STATE
         OF CITY OF NEW YORK IN THE STATE OF NEW YORK IN CONNECTION WITH ANY
         DISPUTE ARISING UNDER THIS ADJUSTMENT WARRANT AND HEREBY WAIVES, TO THE
         MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION
         BASED ON FORUM NON CONVENIENS, TO THE BRINGING OF ANY SUCH PROCEEDING
                  --------------------
         IN SUCH JURISDICTION. EACH PARTY HEREBY AGREES THAT IF THE OTHER PARTY
         TO THIS ADJUSTMENT WARRANT OBTAINS A JUDGMENT AGAINST IT IN SUCH A
         PROCEEDING, THE PARTY WHICH OBTAINED SUCH JUDGMENT MAY ENFORCE SAME BY
         SUMMARY JUDGMENT IN THE COURTS OF ANY COUNTRY HAVING JURISDICTION OVER
         THE PARTY AGAINST WHOM SUCH JUDGMENT WAS OBTAINED, AND EACH PARTY
         HEREBY WAIVES ANY DEFENSES AVAILABLE TO IT UNDER LOCAL LAW AND AGREES
         TO THE ENFORCEMENT OF SUCH A JUDGMENT. EACH PARTY TO THIS ADJUSTMENT
         WARRANT IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH
         PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
         MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS IN ACCORDANCE WITH
         SECTION 15(C). NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO
         SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH PARTY WAIVES
         ITS RIGHT TO A TRIAL BY JURY.

(b)      Modification and Waiver. This Adjustment Warrant and any provisions
         -----------------------
         hereof may be changed, waived, discharged or terminated only by an
         instrument in writing signed by the


                                       10

<PAGE>


         party against which enforcement of the same is sought. Any amendment
         effected in accordance with this paragraph shall be binding upon the
         Purchaser, each future holder of this Adjustment Warrant and the
         Company. No waivers of, or exceptions to, any term, condition or
         provision of this Adjustment Warrant, in any one or more instances,
         shall be deemed to be, or construed as, a further or continuing waiver
         of any such term, condition or provision.

(c)      Notices. Any notice, request or other document required or permitted to
         -------
         be given or delivered to the Purchaser or future holders hereof or the
         Company shall be personally delivered or shall be sent by certified or
         registered mail, postage prepaid, to the Purchaser or each such holder
         at its address as shown on the books of the Company or to the Company
         at the address set forth in the Purchase Agreement. All notices under
         this Adjustment Warrant shall be deemed to have been given when
         received.

         A party may from time to time change the address to which notices to it
         are to be delivered or mailed hereunder by notice in accordance with
         the provisions of this Section 15(c).

(d)      Severability. Whenever possible, each provision of this Adjustment
         ------------
         Warrant shall be interpreted in such manner as to be effective and
         valid under applicable law, but if any provision of this Adjustment
         Warrant is held to be invalid, illegal or unenforceable in any respect
         under any applicable law or rule in any jurisdiction, such invalidity,
         illegality or unenforceability shall not affect the validity, legality
         or enforceability of any other provision of this Adjustment Warrant in
         such jurisdiction or affect the validity, legality or enforceability of
         any provision in any other jurisdiction, but this Adjustment Warrant
         shall be reformed, construed and enforced in such jurisdiction as if
         such invalid, illegal or unenforceable provision had never been
         contained herein.

(e)      No Impairment. The Company will not, by amendment of its Certificate of
         -------------
         Incorporation or through any reorganization, transfer of assets,
         consolidation, merger, dissolution, issue or sale of securities or any
         other voluntary action, avoid or seek to avoid the observance or
         performance of any of the terms of this Adjustment Warrant, but will at
         all times in good faith assist in the carrying out of all such terms
         and in the taking of all such action as may be necessary or appropriate
         in order to protect the rights of the Adjustment Warrant holder against
         impairment. Without limiting the generality of the foregoing, the
         Company (a) will not increase the par value of any Adjustment Shares
         above the amount payable therefor on such exercise, and (b) will take
         all such action as may be reasonably necessary or appropriate in order
         that the Company may validly and legally issue fully paid and
         nonassessable Adjustment Shares on the exercise of this Adjustment
         Warrant.


                                       11

<PAGE>


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

Dated: August 16, 2001

                                               CONSTELLATION 3D, INC.


                                               By: /s/Leonardo Berezowsky
                                                  ------------------------------
                                                  Name:  Leonardo Berezowsky
                                                  Title: Chief Financial Officer




                                       12

<PAGE>

                               NOTICE OF EXERCISE
                               ------------------

To:  CONSTELLATION 3D, INC.

(1)  The undersigned  hereby elects to receive          shares of Common Stock
                                               --------
of CONSTELLATION  3D, INC.  pursuant to the terms of the attached Adjustment
Warrant in a "cashless" exercise.

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

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

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

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

(3)  Please issue a new Adjustment Warrant for the unexercised portion of the
attached Adjustment Warrant in the name of the undersigned or in such other name
as is specified below:

                           Other Name:
                                       -----------------------



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

--------------------                    -----------------------------------
      (Date)                                       (Signature)

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

<PAGE>


                                 ASSIGNMENT FORM

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

         FOR VALUE RECEIVED, the foregoing Adjustment Warrant of Constellation
3D, Inc. and all rights evidenced thereby are hereby assigned to

                                                whose address is
-----------------------------------------------

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



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

                                                     Dated:                ,
                                                             --------------


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

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



Signature Guaranteed:
                       -------------------------------------------



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