Document:

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                                                                  EXECUTION COPY

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR OTHERWISE. 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.

                              AMENDED AND RESTATED
                         COMMON STOCK ADJUSTMENT WARRANT

No. AW2

              To Receive Shares of $.001 Par Value Common Stock of

                             CONSTELLATION 3D, INC.

         THIS CERTIFIES that, for value received, Halifax Fund, L.P. (the
"Investor") is entitled, upon the terms, at the times and subject to the
conditions hereinafter set forth, at any time after the termination of the
Adjustment Period (as defined herein) but prior to 5:00 p.m. New York City time
on August 23, 2005 (the "Termination Date"), to subscribe for and receive from
time to time from CONSTELLATION 3D, INC., a Florida 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" is $0. The number of shares for which the Adjustment Warrant is
exercisable shall be subject to adjustment as provided herein. This Adjustment
Warrant is being issued in connection with the Common Stock Investment Agreement
dated as of August 23, 2000 (the "Purchase Agreement") entered into by the
Company and the Investor, as amended on September 19, 2000. 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, upon exercise of the

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         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).

3.       Exercise of Adjustment Warrant for Adjustment Shares.

(a)      Definitions.

         Subject to Section 3(e), "Adjustment Period" means the period starting
         15 Trading Days after the day on which a registration statement
         covering the Initial Shares is first declared effective by the SEC and
         ending on and including the 100th consecutive Trading Day thereafter.
         For the avoidance of doubt, the Adjustment Period with respect to an
         Adjustment Warrant issued in connection with the exercise of an
         Optional Warrant shall be the same period in time as the Adjustment
         Period with respect to the Adjustment Warrants issued in connection
         with the sale of the Initial Shares, even if the Adjustment Period has
         ended prior to the exercise of such Optional Warrant.

         "Adjusted Share Purchase Price" means 115% of the Share Purchase Price.
         The Adjusted Share Purchase Price shall be appropriately adjusted to
         reflect stock splits, reverse stock splits, stock dividends,
         recapitalizations, etc.

         "Average Price" means, with respect to a particular day during the
         Adjustment Period, the average of the 30 lowest daily trades for a
         share of Common Stock from the commencement of the Adjustment Period up
         to and including the date on which such calculation is made.

         "Effective Registration" shall have the meaning specified in the
         Purchase Agreement.

         "Principal Market" shall have the meaning specified in the Purchase
         Agreement.

(b)      The number of Adjustment Shares deliverable will be calculated in
         accordance with Section 3(c). No shares will be due pursuant to Section
         3(c) unless the Average Price is less than the Adjusted Share Purchase
         Price.

(c)      Adjustment Share Calculations. Subject to Sections 3(e) and (f), the
         number of Adjustment Shares (if any) issuable in respect of the
         Adjustment Period shall be calculated immediately following the close
         of trading of the Principal Market on the final Trading Day of the
         Adjustment Period, using the following formula:

         # of Adjustment Shares = ($11,500,000 / Average Price) - # of
         Initial Shares

         The number of Initial Shares used in the above calculation shall be
         appropriately adjusted for any stock split, reverse stock split, stock
         dividend, recapitalization, etc. Promptly after performing the

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         calculations pursuant to Section 3(c), the Company shall deliver its
         written calculations to the Investor by facsimile.

         If this Adjustment Warrant was issued to the Investor pursuant to the
         exercise of an Optional Warrant, the term "Initial Shares" as used in
         this Adjustment Warrant shall be deemed to mean the Optional Warrant
         Shares received upon such exercise of such Optional Warrant.

(d)      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 30th Trading Day of the Adjustment 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 (such event being a "Fill-Up
         Closing"). An exercise of this Adjustment Warrant shall be deemed for
         all purposes a "cashless" exercise.

(e)      Effective Registration During Stock Adjustment Period.

                  (i) If at any time during the Adjustment Period there shall be
         a lack of Effective Registration, the Investor (as to itself only) may
         at its option either (x) waive the lack of Effective Registration, in
         which case the Adjustment Period will continue uninterrupted with
         respect to the Investor in accordance with the other provisions of this
         Section 3, or (y) by written notice to the Company (delivered no later
         than 24 hours after actually receiving written notification from the
         Company of such lack of Effective Registration) elect to suspend such
         Adjustment Period with respect to itself only (a "Suspension Notice").

                  (ii) If the Investor elects pursuant to subsection (i) above
         to suspend a particular Adjustment Period and Effective Registration is
         subsequently re-established either before or after the scheduled end of
         the Adjustment Period, then the Investor may, at its option, elect (x)
         to treat the Adjustment Period as tolled for the duration (however
         long) of the lack of Effective Registration, such that the first full
         day of Effective Registration following delivery of the Suspension
         Notice shall be treated as and deemed to be the next day of the tolled
         Adjustment Period, (y) to treat the Adjustment Period as having never
         commenced, such that the first full day of Effective Registration
         following delivery of the Suspension Notice shall be treated as and
         deemed to be the first day of the Adjustment Period, or (z) to treat
         the Adjustment Period as having been extended by such number of days
         that is equal to the duration of the lack of Effective Registration.

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         The Investor shall have two (2) Trading Days after receiving written
         notice from the Company of the re-establishment of Effective
         Registration to make such election.

(f)      Effective Registration as of Fill-Up Closing. If there is not Effective
         Registration on the date of a Fill-Up Closing, then the Investor shall
         have the option (as to itself only) but not the obligation to receive
         from the Company, in lieu of the Adjustment Shares otherwise
         deliverable, an amount in immediately available funds equal to the
         product of (i) the highest closing bid price of the Common Stock on the
         Principal Market from the final Trading Day of the Adjustment Period
         through and including the Trading Day immediately prior to such Fill-Up
         Closing and (ii) the number of Adjustment Shares the Company otherwise
         would be obligated to deliver to such Investor at such Fill-Up Closing.

(g)      Remedies. If the Company fails to deliver the specified number of
         Adjustment Shares to the Investor within 10 Trading Days of the time
         and at the place specified herein, then the Investor may, without
         reducing its other rights at law or in equity, compel the Company to
         repurchase all or a part of its Securities (including the number of
         Adjustment Shares which, without regard to Effective Registration,
         should have been delivered by the Company) at the applicable Premium
         Redemption Price (as defined and specified in the Registration Rights
         Agreement).

(h)      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 Investor
         receives the same economically equivalent value of Adjustment Shares as
         it would in the absence of such event.

(i)      Short Sales. The Investor agrees that prior to expiration of the
         Adjustment Period, it will not engage in short sales of Common Shares
         with the intent of lowering the market price of such shares. The fact
         that the market price of the Common Shares declines contemporaneously
         with short sales effected by the Investor shall not be deemed a
         presumption that the Investor had the intent of so lowering the market
         price.

(j)      Miscellaneous. The Adjustment Shares shall upon delivery to the
         Investor be fully-paid, nonassessable, shares of Common Stock, free and
         clear of all liens and encumbrances and duly eligible for trading on
         each exchange and market on which shares of Common Stock are then
         traded.

(k)      If the number of Adjustment Shares would be but for this Section 3(k)
         greater than 348,415 (as appropriately adjusted for stock splits,
         reverse stock splits, stock dividends, recapitalizations and the like)
         and the Company has delivered a written notice to the Investor on any
         date after the date hereof until 5:00 p.m. New York City time on the
         Option Day (as defined below) that it has elected the terms of this
         Section 3(k) to be effective upon such an event (such notice to be
         irrevocable once delivered) (an "Option Notice"), the number of
         Adjustment Shares shall be reduced to 348,415 (as appropriately
         adjusted for stock splits, reverse stock splits, stock dividends,
         recapitalizations and the like) and the Company shall pay to the
         Investor, in cash, within 15 Trading Days after the termination of the

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         Adjustment Period, an amount equal to the Excess Adjustment Amount (as
         defined below). In the event an Option Notice has not been so delivered
         to the Investor in a timely manner, the terms of this Section 3(k)
         shall not be of any force or effect and the number of Adjustment Shares
         shall be as calculated in accordance with Section 3(c) above.

         For purposes hereof, the "Option Day" shall be the earlier of (i) the
         Trading Day immediately following the first Trading Day during the
         Adjustment Period on which the Common Stock trades below $6.50 on the
         Principal Market at any time during such day, and (ii) the Trading Day
         immediately following the first Trading Day during the Adjustment
         Period on which the Average Price, as calculated as of the close of
         business on such day, is below $8.625 (each as appropriately adjusted
         for stock splits, reverse stock splits, stock dividends,
         recapitalizations, and the like).

         For purposes hereof, "Excess Adjustment Amount" shall mean:

                  $11,500,000 - (1,333,333 x Average Price)

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.

         The term "Trading Day" means (x) if the Common Stock is listed on the
         New York Stock Exchange or the American Stock Exchange, a day on which
         there is trading on such stock exchange, or (y) if the Common Stock is
         not listed on either of such stock exchanges but sale prices of the
         Common Stock are reported on an automated quotation system, a day on
         which trading is reported on the principal automated quotation system
         on which sales of the Common Stock are reported, or (z) if the
         foregoing provisions are inapplicable, a day on which quotations are
         reported by National Quotation Bureau Incorporated.

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,

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         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 Investor in
         connection with the Investor's 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 Investor, the Investor 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 Investor, 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 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.

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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.
         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

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         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 Investor (as to itself only) may
         elect, in its sole discretion, to participate in such distribution and
         receive the shares of 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,

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         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
         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

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         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.

                  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

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         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 party against which enforcement of
         the same is sought. Any amendment effected in accordance with this
         paragraph shall be binding upon the Investor, 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 Investor or future holders hereof or the
         Company shall be personally delivered or shall be sent by certified or
         registered mail, postage prepaid, to the Investor 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 Agreement. All notices under this
         Adjustment Warrant shall be deemed to have been given when received.

                                       11
<PAGE>

         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.

                                       12
<PAGE>

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

Dated: September 19, 2000

                                            CONSTELLATION 3D, INC.

                                            By: /s/ Eugene Levich
                                                -------------------------------
                                                 Name:    Eugene Levich
                                                 Title:   President
Agreed and Accepted
this 19th day of September, 2000

HALIFAX FUND, L.P.

By: /s/ Robert L. Chender
    -----------------------
     Name:
     Title:

                                       13
<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.<PAGE>

                                                                  EXECUTION COPY

                               HALIFAX FUND, L.P.
                          c/o The Palladin Group, L.P.
                              195 Maplewood Avenue
                           Maplewood, New Jersey 07040

                                                              September 19, 2000

Constellation 3D, Inc.
230 Park Avenue, Suite 453
New York, New York  10169

              Re:  Additional Investment
                   ---------------------

Ladies and Gentlemen:

                  On August 23, 2000, Halifax Fund, L.P. (the "Investor")
invested $5,000,000 in Constellation 3D, Inc. (the "Company") pursuant to the
terms of a Common Stock Investment Agreement (the "Purchase Agreement"). This
investment is referred to herein as the "Initial Investment." In consideration
for the Initial Investment, the Investor received from the Company (i) 492,459
shares of the Company's common stock, $.001 par value ("Initial Shares"), (ii)
five (5) year warrants to purchase 196,984 shares of common stock at an initial
exercise price of $14.6656 per share (the "Initial Warrants"), (iii) adjustment
warrants to purchase a number of shares of common stock calculated pursuant to a
formula set forth therein (the "Adjustment Warrants") and (iv) one year warrants
to purchase 246,229 shares of Common Stock at an initial exercise price of
$10.15313 and additional Adjustment Warrants pertaining to such shares of Common
Stock (the "Optional Warrants" and together with the Initial Warrants and the
Adjustment Warrants, the "Warrants"), all on the terms and conditions described
in the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Purchase Agreement.

                  The Investor and the Company now wish to amend and supplement
the Transaction Documents to provide for an additional $5,000,000 investment in
the Company by the Investor on the same terms and conditions as set forth in the
Transaction Documents for the Initial Investment, except as such terms and
conditions are amended as provided herein, and therefore agree as follows:

                  1. Additional Investment. Concurrently with the execution and
delivery of this Agreement, the Investor shall make an additional investment in
the Company of $5,000,000 (the "Additional Investment") on the same terms and
conditions as the Initial Investment. In consideration of such additional
investment, the Company shall issue to the Investor 492,459 shares ("New
Shares") of the Company's common stock, $.001 par value ("Common Stock"). The
New Shares shall be deemed "Initial Shares" under the Purchase Agreement, and
except as specifically set forth herein, the terms of the Purchase Agreement
shall apply mutatis mutandis to the Additional Investment with the "Closing
Date" being the date of this Agreement. Upon the Company's receipt of the
Additional Investment, the amendments to the Transaction Documents set forth
herein shall automatically become effective.

<PAGE>

                  2. Amendments to the Transaction Documents.

                     (a) Amendment to Initial Warrant. The Initial Warrant is
hereby amended to be exercisable for a total of 393,968 Warrant Shares.

                     (b) Amendment to Optional Warrant. The Optional Warrant is
hereby amended to be exercisable for a total of 492,458 units consisting of (i)
one Optional Warrant Share and (ii) an Adjustment Warrant per unit.

                     (c) Amendment to Registration Rights Agreement. The
Registration Rights Agreement is hereby amended as follows:

                         (1) The defined term "Initial Shares" is amended to
include the New Shares, in addition to (and not in substitution of) the 492,459
shares of the Company's Common Stock purchased by the Investor in connection
with the Initial Investment.

                         (2) The Company hereby agrees that for purposes of the
Registration Rights Agreement, the New Shares and the shares of Common Stock
issuable upon exercise of the Warrants, as the Warrants have been amended
pursuant to this Agreement, shall be deemed "Registrable Securities" under the
Registration Rights Agreement.

                     (d) Amendment to Adjustment Warrant. The Adjustment Warrant
is hereby amended as follows:

                         (1) The definition of "Adjustment Period" contained in
Section 3(a) shall be replaced in its entirety by the following:

                  "Subject to Section 3(e), "Adjustment Period" means the period
                  starting 15 Trading Days after the day on which a registration
                  statement covering the Initial Shares is first declared
                  effective by the SEC and ending on and including the 100th
                  consecutive Trading Day thereafter. For the avoidance of
                  doubt, the Adjustment Period with respect to an Adjustment
                  Warrant issued in connection with the exercise of an Optional
                  Warrant shall be the same period in time as the Adjustment
                  Period with respect to the Adjustment Warrants issued in
                  connection with the sale of the Initial Shares, even if the
                  Adjustment Period has ended prior to the exercise of such
                  Optional Warrant."

                         (2) The definition of "Average Price" contained in
Section 3(a) shall be replaced in its entirety by the following:

                  "Average Price" means, with respect to a particular day during
                  the Adjustment Period, the average of the 30 lowest daily
                  trades for a share of Common Stock from the commencement of
                  the Adjustment Period up to and including the date on which
                  such calculation is made.

                                        2
<PAGE>

                         (3) Section 3(c) shall be replaced in its entirety by
the following:

                  "Adjustment Share Calculations. Subject to Sections 3(e) and
                  (f), the number of Adjustment Shares (if any) issuable in
                  respect of the Adjustment Period shall be calculated
                  immediately following the close of trading of the Principal
                  Market on the final Trading Day of the Adjustment Period,
                  using the following formula:

                  # of Adjustment Shares = ($11,500,000 / Average Price) - # of
                  Initial Shares

                  The number of Initial Shares used in the above calculation
                  shall be appropriately adjusted for any stock split, reverse
                  stock split, stock dividend, recapitalization, etc. Promptly
                  after performing the calculations pursuant to Section 3(c),
                  the Company shall deliver its written calculations to the
                  Investor by facsimile.

                  If this Adjustment Warrant was issued to the Investor pursuant
                  to the exercise of an Optional Warrant, the term "Initial
                  Shares" as used in this Adjustment Warrant shall be deemed to
                  mean the Optional Warrant Shares received upon such exercise
                  of such Optional Warrant."

                         (4) Section 3(d) shall be replaced in its entirety by
the following:

                  "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 30th Trading Day of
                  the Adjustment 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
                  (such event being a "Fill-Up Closing"). An exercise of this
                  Adjustment Warrant shall be deemed for all purposes a
                  "cashless" exercise."

                         (5) The following section shall be added as Section
3(k):

                  "(k) If the number of Adjustment Shares would be but for this
                  Section 3(k) greater than 348,415 (as appropriately adjusted
                  for stock splits, reverse stock splits, stock dividends,
                  recapitalizations and the like) and the Company has delivered
                  a written notice to the Investor on any date after the date
                  hereof until 5:00 p.m. New York City time on the Option Day
                  (as defined below) that it has elected the terms of this
                  Section 3(k) to be effective upon such an event (such notice

                                        3

<PAGE>

                  to be irrevocable once delivered) (an "Option Notice"), the
                  number of Adjustment Shares shall be reduced to 348,415 (as
                  appropriately adjusted for stock splits, reverse stock splits,
                  stock dividends, recapitalizations and the like) and the
                  Company shall pay to the Investor, in cash, within 15 Trading
                  Days after the termination of the Adjustment Period, an amount
                  equal to the Excess Adjustment Amount (as defined below). In
                  the event an Option Notice has not been so delivered to the
                  Investor in a timely manner, the terms of this Section 3(k)
                  shall not be of any force or effect and the number of
                  Adjustment Shares shall be as calculated in accordance with
                  Section 3(c) above.

                  For purposes hereof, the "Option Day" shall be the earlier of
                  (i) the Trading Day immediately following the first Trading
                  Day during the Adjustment Period on which the Common Stock
                  trades below $6.50 on the Principal Market at any time during
                  such day, and (ii) the Trading Day immediately following the
                  first Trading Day during the Adjustment Period on which the
                  Average Price, as calculated as of the close of business on
                  such day, is below $8.625 (each as appropriately adjusted for
                  stock splits, reverse stock splits, stock dividends,
                  recapitalizations, and the like).

                  For purposes hereof, "Excess Adjustment Amount" shall mean:

                           $11,500,000 - (1,333,333 x Average Price)"

                     (e) All other terms and conditions of the Purchase
Agreement, Initial Warrant, Optional Warrant, Adjustment Warrant and
Registration Rights Agreement shall remain in full force and effect.

                  3. Payment of Legal Fees. Concurrently with the execution of
this Agreement, the Company shall pay to Kleinberg, Kaplan, Wolff & Cohen, P.C.
("KKWC") in immediately available funds, all reasonable legal fees and expenses
incurred by the Investor in connection with the transactions contemplated by
this Agreement. In lieu thereof, the Investor may pay such amounts due to KKWC,
with the amount of such payment being credited towards the payment of the
Additional Investment.

                  4. Legal Opinion and Officer's Certificate. Concurrently with
the execution of this Agreement, the Company shall deliver to the Investor (i)
an opinion of counsel to the Company in the form attached to the Purchase
Agreement as Exhibit 4.2(e), and (ii) a certificate in form and substance
satisfactory to the Investor and the Investor's counsel, executed by an officer
of the Company, certifying as to satisfaction of applicable closing conditions,
incumbency of signing officers, and the true, correct and complete nature of the
Certificate of Incorporation, By-laws, good standing and authorizing resolutions
of the Company.

                  5. Representation and Warranties of the Company. Except as
described on Schedule A hereto, the Company hereby restates and reaffirms to the
Investor, as of the date hereof, each of the Company's representations and
warranties set forth in the Purchase Agreement with, for the purposes of making
these representations and warranties, the New Shares being deemed Initial Shares
thereunder and the Warrants being amended as set forth in this Agreement.

                                        4

<PAGE>

                  6. Representation and Warranties of the Undersigned. The
Investor hereby restates and reaffirms to the Company, as of the date hereof,
each of the Investor's representations and warranties set forth in the Purchase
Agreement with, for the purposes of making these representations and warranties,
the New Shares being deemed Initial Shares thereunder and the Warrants being
amended as set forth in this Agreement.

                  7. Miscellaneous.

                     (a) In case of any conflict between the terms of this
Agreement and the terms of the Warrants or any other document governing the
Initial Investment, the terms of this Agreement shall govern.

                     (b) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS TO BE
EXECUTED AND PERFORMED EXCLUSIVELY IN NEW YORK. EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN
THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY
OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN
ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO
THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH
NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY
MANNER PERMITTED BY LAW. IF ANY PROVISION OF THIS AGREEMENT SHALL BE INVALID OR
UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT
AFFECT THE VALIDITY OR ENFORCEABILITY OF THE REMAINDER OF THIS AGREEMENT IN THAT
JURISDICTION OR THE VALIDITY OR ENFORCEABILITY OF ANY PROVISION OF THIS
AGREEMENT IN ANY OTHER JURISDICTION. EACH PARTY HEREBY WAIVES ALL RIGHTS TO
TRIAL BY JURY.

                     (c) This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.

                                        5

<PAGE>

                     (d) Each party covenants and agrees to promptly execute and
deliver all such agreements, instruments and documents and to promptly take all
such further actions as the other party may reasonably request from time to time
to carry out the intent and purposes of this Agreement and to consummate the
transactions contemplated hereby, including, but not limited to, issuing amended
and restated Warrants to the Investor incorporating the amendments set forth in
this Agreement.

                     (e) This Agreement may only be amended or modified pursuant
to a written agreement executed by both the Investor and the Company.

                  Please indicate your acceptance and agreement of the terms
contained herein by countersigning this Agreement and returning a signed copy to
the Investor.

                                   Sincerely,

                                                  HALIFAX FUND, L.P.

                                                  By: /s/ Steven W. Weiner
                                                      -----------------------
                                                        Name:  Steven W. Weiner
                                                        Title: Managing Director

AGREED TO AND ACCEPTED:

CONSTELLATION 3D, INC.

By: /s/ Eugene Levich
   ------------------
      Name:
      Title:

                                        6

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