Document:

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                                                                  EXECUTION COPY

                          REGISTRATION RIGHTS AGREEMENT
                          -----------------------------

         THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
September 12, 2000 between Constellation 3D, Inc., a Florida corporation with
offices at 230 Park Avenue, New York, New York (the "Company") and each of the
entities listed under "Investors" on the signature page hereto (each an
"Investor" and collectively the "Investors"), each with offices at the address
listed under such Investor's name on Schedule I hereto.

                              W I T N E S S E T H:
                              --------------------

         WHEREAS, pursuant to that certain Common Stock Investment Agreement,
dated the date hereof, among the Company and the Investors (the "Purchase
Agreement"), the Company has agreed to sell and issue to the Investors, and the
Investors have agreed to purchase from the Company, inter alia, an aggregate of
14,774 shares (the "Initial Shares") of the Company's common stock, $.001 par
value ("Common Stock"), and certain warrants, all as more fully specified and
subject to the terms and conditions set forth in the Purchase Agreement;

         WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to issue the Initial Warrants, Optional Warrants and Adjustment Warrants
described therein (collectively, the "Warrants") exercisable for shares of
Common Stock ("Warrant Shares", "Optional Warrant Shares" and "Adjustment
Shares", respectively); and

         WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investors' agreement to enter into the Purchase Agreement, the Company has
agreed to provide the Investors with certain registration rights with respect to
the Initial Shares, Warrant Shares, Optional Warrant Shares, Adjustment Shares,
Anti-Dilution Shares, and MDP Shares (as defined herein), as well as certain
other rights and remedies as set forth in this Agreement.

         NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Investors agree as follows:

         1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement and/or
the Warrants. As used in this Agreement, the following terms shall have the
following respective meanings:

         "Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Purchase Agreement.

         "Commission" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.

         "Effectiveness Deadline" has the meaning specified in Section 2(a).

         "Fair Market Value" shall have the meaning ascribed to such term in the
Warrants.

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         "Holder" and "Holders" shall mean the Investor or the Investors,
respectively, and any transferee of Registrable Securities and/or Warrants which
have not been sold to the public to whom the registration rights conferred by
this Agreement have been transferred in compliance with this Agreement.

         "Interfering Events" shall have the meaning set forth in Section 2(b).

         "Monthly Delay Payment" shall have the meaning specified in Section
2(b)(i)(C).

         "Premium Redemption Price" shall mean the following:

            (a) as to the Initial Shares, Optional Warrant Shares and Warrant
Shares, the greater of (i) 120% of the Share Purchase Price (with respect to the
Initial Shares and the Optional Warrant Shares) or 120% of the exercise price of
the Initial Warrants (with respect to the Warrant Shares) and (ii) the highest
Common Stock closing price on the Principal Market between and including date of
the event triggering the right of redemption and the trading day immediately
prior to the actual redemption of the Purchased Shares;

            (b) as to the Adjustment Shares, Deficiency Shares and Anti-Dilution
Shares, 120% of the dollar amount which is the product of (i) the number of
shares to be redeemed, or the number of Deficiency Shares, as applicable, and
(ii) the Fair Market Value for shares of Common Stock in existence at the time
(x) of the closing of a redemption of shares, or a payment for Deficiency
Shares, as applicable, or (y) of the event triggering the right to redemption or
payment, whichever results in a greater Premium Redemption Price.

            (c) as to the Initial Warrants, Adjustment Warrants and Optional
Warrants, 120% of the dollar amount which is the product of (i) the number of
Warrant Shares, Adjustment Shares or Optional Warrant Shares to be issued to the
Holder upon exercise thereof multiplied by (ii) the Fair Market Value for Shares
of Common Stock in existence at the time (x) of the closing of the redemption or
(y) of the event triggering the right to redemption, whichever results in a
greater Premium Redemption Price.

         "Purchased Shares" shall mean the Initial Shares, Warrant Shares and
Optional Warrant Shares.

         "Purchased Shares Purchase Price" shall mean (i) with respect to the
Initial Shares and the Optional Warrant Shares, the Share Purchase Price, and
(ii) with respect to the Warrant Shares, the exercise price of the Initial
Warrants.

         "Put Notice" shall have the meaning set forth in Section 2(b)(i)(B).

         "Registrable Securities" shall mean: (i) the Initial Shares; (ii) the
Warrant Shares (without regard to Section 16 of the Initial Warrants); (iii) the
Adjustment Shares (without regard to Section 14 of the Adjustment Warrants);
(iv) the Optional Warrant Shares (without regard to Section 16 of the Optional
Warrants); (v) the Anti-Dilution Shares; (vi) the MDP Shares; (vii) securities
issued or issuable upon any stock split, stock dividend, recapitalization or
similar event with respect to the foregoing; and (v) any other security issued
as a dividend or other distribution with respect to, in exchange for or in
replacement of the securities referred to in the preceding clauses.

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         The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.

         "Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, "blue sky"
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company). "Registration Statement" shall have the meaning set forth in Section
2(a) herein.

         "Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.

         "Securities" means the Registrable Securities and the Warrants.

         "Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.

         "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all reasonable
fees and disbursements of counsel for Holders not included within "Registration
Expenses" and if the Holders engage a third party as an underwriter for the
purpose of distributing Registrable Securities on an underwritten basis, the
fees and expenses of such underwriting and any additional expenses of an
accountant incurred in order to obtain a "Comfort Letter."

         "Trading Day" shall mean (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.

         2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including without
limitation the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable "blue sky" or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) reasonably
requested by the Holder and in all U.S. jurisdictions. Such best efforts by the
Company shall include the following:

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            (a) The Company shall, as expeditiously as reasonably possible after
the Closing Date:

                  (i) But in any event within 30 days thereafter, prepare and
            file a registration statement with the Commission on Form S-1 or
            Form S-3, as applicable, under the Securities Act (or in the event
            that the Company is ineligible to use either such form, such other
            form as the Company is eligible to use under the Securities Act)
            covering the Registrable Securities (such registration statement,
            including any amendments or supplements thereto and prospectuses
            contained therein, is referred to herein as the "Registration
            Statement"), which Registration Statement, to the extent allowable
            under the Securities Act and the rules promulgated thereunder
            (including Rule 416), shall state that such Registration Statement
            also covers such number of additional shares of Common Stock as may
            become issuable to prevent dilution resulting from stock splits,
            stock dividends or similar events. Thereafter, the Company shall use
            its best efforts to cause such Registration Statement to be declared
            effective as soon as reasonably practicable, and in any event prior
            to the earlier of (i) 120 calendar days following the Closing Date
            or (ii) 5 Trading Days after SEC clearance to request acceleration
            (the "Effectiveness Deadline"). The Company shall provide Holders
            and their legal counsel reasonable opportunity to review any such
            Registration Statement or amendment or supplement thereto prior to
            filing. Without limiting the foregoing, the Company will promptly
            respond to all SEC comments, inquiries and requests, and shall
            request acceleration of effectiveness at the earliest possible date.
            If the Company is not initially eligible to use Form S-3, it will,
            at the request of a majority-in-interest of the holders of
            Registrable Securities, amend its Form S-1 to a Form S-3 at such
            time that it becomes eligible to do so.

                  (ii) Prepare and file with the SEC such amendments and
            supplements to such Registration Statement and the prospectus used
            in connection with such Registration Statement, or prepare and file
            such additional registration statements, as may be necessary to
            comply with the provisions of the Act with respect to the
            disposition of all securities covered by such Registration Statement
            in accordance with the intended methods of disposition by the seller
            thereof as set forth in the Registration Statement and notify the
            Holders of the filing and effectiveness of such Registration
            Statement and any amendments or supplements.

                  (iii) After the registration, furnish to each Holder such
            numbers of copies of a current prospectus conforming with the
            requirements of the Act, copies of the Registration Statement, any
            amendment or supplement thereto and any documents incorporated by
            reference therein and such other documents as such Holder may
            reasonably require in order to facilitate the disposition of
            Registrable Securities owned by such Holder.

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                  (iv) Use its best efforts to register and qualify the
            securities covered by such Registration Statement under such other
            securities or "blue sky" laws of all U.S. jurisdictions (except in
            any such jurisdiction where the registration and qualification of
            the securities covered by such Registration Statement is exempt
            under the laws and regulations of such jurisdiction); provided that
            the Company shall not be required in connection therewith or as a
            condition thereto to qualify to do business or to file a general
            consent to service of process in any such states or jurisdictions.

                  (v) Notify each Holder immediately of the happening of any
            event (but not the substance or details of any such event unless
            specifically requested by a Holder) as a result of which the
            prospectus (including any supplements thereto or thereof and any
            information incorporated or deemed to be incorporated by reference
            therein) included in such Registration Statement, as then in effect,
            includes an untrue statement of material fact or omits to state a
            material fact required to be stated therein or necessary to make the
            statements therein not misleading in light of the circumstances then
            existing, and, pursuant to Section 2(f), use its best efforts to
            promptly update and/or correct such prospectus.

                  (vi) Notify each Holder immediately of the issuance by the
            Commission or any state securities commission or agency of any stop
            order suspending the effectiveness of the Registration Statement or
            the initiation of any proceedings for that purpose. The Company
            shall use its best efforts to prevent the issuance of any stop order
            and, if any stop order is issued, to obtain the lifting thereof at
            the earliest possible time.

                  (vii) Permit a single firm of counsel, designated as Holders'
            counsel by the Holders of a majority of the Registrable Securities
            included in the Registration Statement, to review the Registration
            Statement and all amendments and supplements thereto within a
            reasonable period of time prior to each filing, and shall not file
            any document in a form to which such counsel reasonably objects.

                  (viii) Use its best efforts to list the Registrable Securities
            covered by such Registration Statement with all securities
            exchange(s) and/or markets on which the Common Stock is then listed
            and/or quoted and prepare and file any required filings with the
            National Association of Securities Dealers, Inc. or any exchange or
            market where the Common Stock is then traded.

                  (ix) If applicable, take all steps necessary to enable Holders
            to avail themselves of the prospectus delivery mechanism set forth
            in Rule 153 (or successor thereto) under the Act.

            (b) Set forth below in this Section 2(b) are (I) events that may
arise that the Investors consider will interfere with the full enjoyment of
their rights under the Purchase Agreement and this Agreement (the "Interfering
Events"), and (II) certain remedies applicable in each of these events.

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         Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Investors if an Interfering Event
occurs and provide that the Investors may require that the Company redeem
outstanding Securities at a specified price if certain Interfering Events are
not timely cured.

         Paragraph (v) provides, inter alia, that if payments required as the
remedy in the case of certain of the Interfering Events are not paid when due,
the Company may be required by the Investors to redeem outstanding Securities at
a specified price.

         The preceding paragraphs in this Section 2(b) are meant to serve only
as an introduction to this Section 2(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2(b).

                (i) Delay in Effectiveness of Registration Statement.

                    (A) In the event that the Registration Statement has not
            been declared effective by the Effectiveness Deadline, then the
            Company shall pay to each Holder a Monthly Delay Payment (as defined
            below) for each 30 day period (or portion thereof) thereafter during
            which the Registration Statement has not been declared effective,
            which Monthly Delay Payments shall not in the aggregate exceed the
            maximum percentage permitted by law.

                    (B) If the Registration Statement has not been declared
            effective by 30 days following the Effectiveness Deadline, then each
            Holder shall have the right but not the obligation to require the
            Company to redeem the Warrants and/or Registrable Securities, in
            whole or in part at the Premium Redemption Price. Each Holder shall
            exercise such right by providing the Company with written notice
            thereof (the "Put Notice"), which such Put Notice shall include the
            type and amount of each security that the Holder seeks to redeem and
            a date at least 5 business days from the date thereof on which the
            Holder seeks the redemption to occur (the "Redemption Date").

                    (C) As used in this Agreement, a "Monthly Delay Payment"
            shall be a payment in shares of Common Stock ("MDP Shares") computed
            as equal to "X"% of the Purchased Shares Purchase Price of the
            Purchased Shares held by a Holder for each 30 day period (or portion
            thereof) that the specified condition in this Section 2(b) has not
            been fulfilled or the specified deficiency has not been remedied,
            (prorated in each case as appropriate) divided by the lesser of (i)
            the Share Purchase Price, and (ii) the Fair Market Value of shares
            of Common Stock at the time delivery of MDP Shares is demanded. For
            purposes of this section, "X" shall mean "2" for the first 30 day
            period (or portion thereof) referred to above, and "1.5" for each
            subsequent 30 day period (or portion thereof) (the "Default Rate").
            Payment of the Monthly Delay Payments and Premium Redemption Price
            shall be due and payable from the Company to such Holder within 5
            business days of demand therefor. Without limiting the foregoing, if
            payment in immediately available funds of the Premium Redemption
            Price is not made within such 5 business day period, the Holder may

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            revoke and withdraw in whole or in part its election to cause the
            Company to make such mandatory purchase at any time prior to its
            receipt of such cash, without prejudice to its ability to elect to
            receive that particular or other Premium Redemption Price payments
            in the future.

                (ii) No Listing; Premium Price Redemption for Delisting of Class
            of Shares.

                    (A) In the event that the Company fails, refuses or is
            unable to cause the Registrable Securities covered by the
            Registration Statement to be listed and/or quoted, as the case may
            be, with the Approved Market and each other securities exchange and
            market on which the Common Stock is then traded at all times during
            the period ("Listing Period") commencing the earlier of the
            effective date of the Registration Statement or the Effectiveness
            Deadline and continuing thereafter for so long as any Warrants are
            outstanding, then the Company shall make to each Holder a Monthly
            Delay Payment for each 30 day period (or portion thereof) during the
            Listing Period from and after such failure, refusal or inability to
            so list the Registrable Securities until the Registrable Securities
            are so listed and/or quoted.

                    (B) In the event that shares of Common Stock of the Company
            are delisted or not quoted from the Approved Market at any time
            following the Closing Date and remain delisted for 5 consecutive
            business days, then at the option of each Holder and to the extent
            such Holder so elects, the Company shall on 2 business days notice
            either (1) make to such Holder a Monthly Delay Payment for each 30
            day period (or portion thereof) that the shares are delisted or not
            quoted or (2) redeem the Securities held by such Holder, in whole or
            in part, at a redemption price equal to the Premium Redemption Price
            (as defined above); provided, however, that such Holder may revoke
            such request at any time prior to receipt of such Monthly Delay
            Payments or Premium Redemption Price, as the case may be.

                (iii) Blackout Periods. In the event any Holder is unable to
            sell Registrable Securities under the Registration Statement for
            more than (A) 10 consecutive Trading Days or (B) an aggregate of 30
            Trading Days in any 12 month period ("Suspension Grace Period"),
            including without limitation by reason of a suspension of trading of
            the Common Stock on the Approved Market, any suspension or stop
            order with respect to the Registration Statement or the fact that an
            event has occurred as a result of which the prospectus (including
            any supplements thereto) included in such Registration Statement
            then in effect includes an untrue statement of material fact or
            omits to state a material fact required to be stated therein or
            necessary to make the statements therein not misleading in light of
            the circumstances then existing, or the number of shares of Common
            Stock covered by the Registration Statement is insufficient at such
            time to make such sales (a "Blackout"), then the Company shall make
            to each Holder a Monthly Delay Payment for each 30 day period (or

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            portion thereof) from and after the expiration of the Suspension
            Grace Period. In lieu of receiving the Monthly Delay Payment as
            provided above, a Holder shall have the right but not the obligation
            to elect to have the Company redeem its Securities at a price equal
            to the Premium Redemption Price.

                (iv) Redemption for Exercise Deficiency. In the event that the
            Company does not have a sufficient number of shares of Common Stock
            available to satisfy the Company's obligations to any Holder upon
            receipt of a notice of exercise of a Warrant from an Investor, or is
            otherwise unable or unwilling for any reason to issue Common Stock
            as required by, and in accordance with the provisions of, the
            Warrants, this Agreement or the Purchase Agreement (each, an
            "Exercise Deficiency"), then at any time 5 days after the
            commencement of the running of the first 30 day period following an
            Exercise Deficiency, at the request of any Holder, the Company
            promptly shall purchase from such Holder, on the terms set forth in
            Section 2(b)(i)(B) above, the Warrants that are unexercisable and/or
            the shares of Common Stock required to be issued that have not been
            issued, in each case as a result of the Exercise Deficiency, at
            their Premium Redemption Price.

                (v) Premium Redemption Price for Defaults.

                    (A) The Company acknowledges that any failure, refusal or
            inability by the Company to perform the obligations described in the
            foregoing paragraphs (i) through (iv) will cause the Holders to
            suffer damages in an amount that will be difficult to ascertain,
            including without limitation damages resulting from the loss of
            liquidity in the Registrable Securities and the additional
            investment risk in holding the Registrable Securities. Accordingly,
            the parties agree, after consulting with counsel, that it is
            appropriate to include in this Agreement the foregoing provisions
            for Monthly Delay Payments and mandatory redemptions in order to
            compensate the Holders for such damages. The parties acknowledge and
            agree that the Monthly Delay Payments and mandatory redemptions set
            forth above represent the parties' good faith effort to quantify
            such damages and, as such, agree that the form and amount of such
            payments and mandatory redemptions are reasonable and will not
            constitute a penalty.

                    (B) In the event that the Company fails to make any Monthly
            Delay Payment within 10 calendar days of demand therefor, each
            Holder shall have the right to sell to the Company any or all of its
            Securities at the Premium Redemption Price on the terms set forth in
            Section 2(b)(i)(B) above.

                (vi) Cumulative Remedies. Each Monthly Delay Payment triggered
            by an Interfering Event provided for in the foregoing paragraphs (i)
            through (v) shall be in addition to each other Monthly Delay Payment
            triggered by another Interfering Event; provided, however, that in
            no event shall the Company be obligated to make to any Holder
            Monthly Delay Payments in an aggregate amount greater than the
            Default Rate for any 30 day period (or portion thereof).
            Notwithstanding anything in this Section 2 to the contrary, the
            Company shall only be obligated to make Monthly Delay Payments to
            the Investor with respect to a particular Interfering Event for a
            total of 3 full 30 day periods; provided, that if the Company fails
            or has failed to make payment in full to the Investor of a

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            Premium Redemption Price on the applicable Redemption Date (with
            regard to any Interfering Event), then the limitations contained
            in this sentence shall cease to be of any force and effect with
            regard to any current or future Interfering Events. After the
            expiration of such 3 full 30 day periods, the Investor shall be
            immediately entitled to sell the applicable Securities to the
            Company at the Premium Redemption Price. The Monthly Delay Payments
            and mandatory redemptions provided for above are in addition to and
            not in lieu or limitation of any other rights the Holders may have
            at law, in equity or under the terms of the Transaction Documents
            including without limitation the right to specific performance. Each
            Holder shall be entitled to specific performance of any and all
            obligations of the Company in connection with the registration
            rights of the Holders hereunder.

            (c) If the Holder(s) intend to distribute the Registrable Securities
by means of an underwriting, the Holder(s) shall so advise the Company. Any such
underwriting may only be administered by investment bankers reasonably
satisfactory to the Company.

            (d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities. In the event that
the offering in which the Registrable Securities are to be sold is deemed to be
an underwritten offering or an Investor selling Registrable Securities is deemed
to be an underwriter, the Company shall:

                (i) make such representations and warranties to the Holders and
            the underwriter or underwriters, if any, in form, substance and
            scope as are customarily made by issuers to underwriters in
            secondary offerings;

                (ii) cause to be delivered, if requested, to the sellers of
            Registrable Securities and the underwriter or underwriters, if any,
            opinions of independent counsel to the Company, on and dated as of
            the effective day (or in the case of an underwritten offering, dated
            the date of delivery of any Registrable Securities sold pursuant
            thereto) of the Registration Statement, and within 90 days following
            the end of each fiscal year thereafter, which counsel and opinions
            (in form, scope and substance) shall be reasonably satisfactory to
            the Holders and the underwriter(s), if any, and their counsel and
            covering, without limitation, such matters as the due authorization
            and issuance of the securities being registered and compliance with
            securities laws by the Company in connection with the authorization,
            issuance and registration thereof and other matters that are
            customarily given to underwriters in underwritten offerings,
            addressed to the Holders and each underwriter, if any.

                (iii) cause to be delivered, immediately prior to the
            effectiveness of the Registration Statement (and, in the case of an
            underwritten offering, at the time of delivery of any Registrable

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            Securities sold pursuant thereto), and at the beginning of each
            fiscal year following a year during which the Company's independent
            certified public accountants shall have reviewed any of the
            Company's books or records, a "comfort" letter from the Company's
            independent certified public accountants addressed to the Holders
            and each underwriter, if any, stating that such accountants are
            independent public accountants within the meaning of the Securities
            Act and the applicable published rules and regulations thereunder,
            and otherwise in customary form and covering such financial and
            accounting matters as are customarily covered by letters of the
            independent certified public accountants delivered in connection
            with secondary offerings; such accountants shall have undertaken in
            each such letter to update the same during each such fiscal year in
            which such books or records are being reviewed so that each such
            letter shall remain current, correct and complete throughout such
            fiscal year; and each such letter and update thereof, if any, shall
            be reasonably satisfactory to the Holders.

                (iv) if an underwriting agreement is entered into, the same
            shall include customary indemnification and contribution provisions
            to and from the underwriters and procedures for secondary
            underwritten offerings;

                (v) deliver such documents and certificates as may be reasonably
            requested by the Holders of the Registrable Securities being sold or
            the managing underwriter or underwriters, if any, to evidence
            compliance with clause (i) above and with any customary conditions
            contained in the underwriting agreement, if any; and

                (vi) deliver to the Holders on the effective day (or in the case
            of an underwritten offering, dated the date of delivery of any
            Registrable Securities sold pursuant thereto) of the Registration
            Statement, and at the beginning of each fiscal quarter thereafter, a
            certificate in form and substance as shall be reasonably
            satisfactory to the Holders, executed by an executive officer of the
            Company and to the effect that all the representations and
            warranties of the Company contained in the Purchase Agreement are
            still true and correct except as disclosed in such certificate; the
            Company shall, as to each such certificate delivered at the
            beginning of each fiscal quarter, update or cause to be updated each
            such certificate during such quarter so that it shall remain
            current, complete and correct throughout such quarter; and such
            updates received by the Holders during such quarter, if any, shall
            have been reasonably satisfactory to the Holders.

            (e) The Company shall make available for inspection by the Holders,
representative(s) of all the Holders together, any underwriter participating in
any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders' due diligence examination of the
Company and review of any Registration Statement, all SEC Documents (as defined
in the Purchase Agreement) filed subsequent to the Closing, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any

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such representative, underwriter, attorney or accountant in connection with such
Registration Statement, provided that such parties agree to keep such
information confidential.

            (f) The Company shall file a Registration Statement with respect to
any newly authorized and/or reserved shares within ten (10) business days of any
shareholders meeting authorizing or reserving same and shall use its best
efforts to cause such Registration Statement to become effective within
seventy-five (75) days of such shareholders meeting. If the Holders become
entitled, pursuant to an event described in clause (iii) of the definition of
Registrable Securities, to receive any securities in respect of Registrable
Securities that were already included in a Registration Statement, subsequent to
the date such Registration Statement is declared effective, and the Company is
unable under the securities laws to add such securities to the then effective
Registration Statement, the Company shall promptly file, in accordance with the
procedures set forth herein, an additional Registration Statement with respect
to such newly Registrable Securities. The Company shall use its best efforts to
(i) cause any such additional Registration Statement, when filed, to become
effective under the Securities Act, and (ii) keep such additional Registration
Statement effective during the period described in Section 5 below. All of the
registration rights and remedies under this Agreement shall apply to the
registration of such newly reserved shares and such new Registrable Securities,
including without limitation the provisions providing for Monthly Delay Payments
contained herein.

         3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, and all Selling
Expenses of a Holder shall be borne by such Holder.

         4. Registration on Form S-3; Other Forms. The Company shall use its
best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible to use
such form, such form as the Company is eligible to use under the Securities Act.

         5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective until the later to occur of (i) sales are
permitted of all Registrable Securities without registration under Rule 144(k)
or (ii) such time as there are no longer any Warrants outstanding or issuable.

         6. Indemnification.

            (a) The Company Indemnity. The Company will indemnify each Holder,
each of its officers, directors and partners, and each person controlling each
Holder, within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, any underwriter,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the

                                       11
<PAGE>

statements therein not misleading, or any violation by the Company of the
Securities Act or any state securities law or in either case, any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each Holder, each of its
officers, directors and partners, and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to a Holder to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by such Holder or the underwriter (if any) therefor and
stated to be specifically for use therein. The indemnity agreement contained in
this Section 6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent will not be unreasonably withheld).

            (b) Holder Indemnity. Each Holder will, severally and not jointly,
if Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and partners, and
each person controlling such other Holder(s), against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, and will reimburse the Company and such other Holder(s)
and their directors, officers and partners, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities. The indemnity agreement contained in
this Section 6(b) shall not apply to amounts paid in settlement of any such
claims, losses, damages or liabilities if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).

            (c) Procedure. Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense

                                       12
<PAGE>

at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article except to the extent
that the Indemnifying Party is materially and adversely affected by such failure
to provide notice. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.

         7. Contribution. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying each of such Indemnified Parties, shall contribute to the amount
paid or payable by each such Indemnified Party as a result of such losses,
claims, damages or liabilities as between the Company on the one hand and any
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of such Holder in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of any Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by such
Holder.

         In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.

         The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

                                       13
<PAGE>

         8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.

         9. Information by Holders. Each Holder shall reasonably promptly
furnish to the Company such information regarding such Holder and the
distribution and/or sale proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement. The
intended method or methods of disposition and/or sale (Plan of Distribution) of
such securities as so provided by such Investor shall be included without
alteration in the Registration Statement covering the Registrable Securities and
shall not be changed without written consent of such Holder, except that such
Holder may not require an intended method of disposition which violates
applicable securities law.

         10. NASDAQ Limit on Stock Issuances. Section 3.14 of the Purchase
Agreement shall govern limits imposed by NASDAQ rules on the issuance of Common
Stock.

         11. Replacement Certificates. The certificate(s) representing the
Registrable Securities held by the Investor (or then Holder) may be exchanged by
the Investor (or such Holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate number of
Registrable Securities, as reasonably requested by the Investor (or such Holder)
upon surrendering the same. No service charge will be made for such registration
or transfer or exchange.

         12. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Registrable Securities or Warrants, and all other rights granted
to the Investors by the Company hereunder may be transferred or assigned to any
transferee or assignee of any Registrable Securities or Warrants; provided in
each case that the Company must be given written notice by the such Investor at
the time of or within a reasonable time after said transfer or assignment,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned; provided that the transferee or assignee of such rights agrees in
writing to be bound by the provisions of this Agreement.

         13. Miscellaneous.

            (a) Remedies. The Company and the Investors acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or

                                       14
<PAGE>

were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.

            (b) Jurisdiction. THE COMPANY AND EACH OF THE INVESTORS (I) HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE UNITED STATES SITTING
IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II) HEREBY WAIVES, AND AGREES
NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER. THE COMPANY AND EACH OF THE INVESTORS CONSENTS
TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY
THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS
AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR
LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

            (c) Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing by facsimile, mail or personal
delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:

            to the Company:

                     Constellation 3D, Inc.
                     230 Park Avenue
                     Suite 453
                     New York, New York 10169
                     Telephone: (212) 983-1107
                     Facsimile: (212) 983-1108
                     Attention: Eugene Levich, President

                     with copies to:

                     Blank Rome Comisky & McCauley, LLP
                     One Logan Square
                     Philadelphia, Pennsylvania 19103
                     Telephone: (215) 569-5754
                     Facsimile: (215) 569-5628
                     Attention: Alan L. Zeiger, Esq.

                                       15
<PAGE>

            to the Investors:

                To each Investor at the address and/or fax number set forth on
                Schedule I of the Purchase Agreement

            with copies to:

            Hershkovitz Jacqueline

            Haifa
            Telephone:  +972-
            Facsimile:  +972-
            Attention:  Hershkovitz Jacqueline

         Any party hereto may from time to time change its address for notices
by giving at least 10 days' written notice of such changed address to the other
parties hereto.

            (d) Indemnity. Each party shall indemnify each other party against
any loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement.

            (e) Waivers. No waiver by any party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Investor contained herein shall survive the
Closing.

            (f) Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.

            (g) Publicity. The Company agrees that it will not disclose, and
will not include in any public announcement, the name of any Investor without
its express written approval, unless and until such disclosure is required by
law or applicable regulation, and then only to the extent of such requirement.
The Company agrees to deliver a copy of any public announcement regarding the
matters covered by this Agreement or any agreement or document executed herewith
to each Investor and any public announcement including the name of an Investor
to such Investor, prior to the publication of such announcements.

            (h) Entire Agreement. This Agreement, together with the Purchase
Agreement, the Warrants and the agreements and documents contemplated hereby and
thereby, contains the entire understanding and agreement of the parties, and may
not be modified or terminated except by a written agreement signed by both
parties.

                                       16
<PAGE>

            (i) Governing Law. THIS AGREEMENT AND THE VALIDITY AND PERFORMANCE
OF THE TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.

            (j) Severability. The parties acknowledge and agree that the
Investors are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint, that no Investor shall have any responsibility or
liability for the representations, warrants, agreements, acts or omissions of
any other Investor, and that any rights granted to "Investors" hereunder shall
be enforceable by each Investor hereunder.

            (k) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY.

            (l) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

                             Signature page follows

                                       17

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                         CONSTELLATION 3D, INC.

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

                                         HERSHKOVITZ JACQUELINE

                                         By: /s/ Hershkovitz Jacqueline
                                             --------------------------------
                                             Name:
                                             Title:

                 Signature page to Registration Rights Agreement

                                       18<PAGE>

                                                                  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 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 PURCHASE WARRANT

No. W1

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

                             CONSTELLATION 3D, INC.

         THIS CERTIFIES that, for value received, Hershkovitz Jacqueline (the
"Investor") is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after the date hereof and on or prior
to 5:00 p.m. New York City Time on September 12, 2005 (the "Termination Date"),
but not thereafter, to subscribe for and purchase from CONSTELLATION 3D, INC., a
Florida corporation (the "Company"), 5,910 shares of Common Stock of the Company
(the "Warrant Shares"). The "Exercise Price" is $14.6656. The Exercise Price and
the number of shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. This Warrant is being issued in connection with
the Common Stock Investment Agreement dated September 12, 2000 (the "Agreement")
entered into by the Company and the Investor.

1.       Title of Warrant. Prior to the expiration hereof and subject to
         compliance with applicable laws, this Warrant and all rights hereunder
         are transferable, in whole or in respect of the right to purchase any
         part of the 5,910 Warrant Shares, at the office or agency of the
         Company by the holder hereof in person or by duly authorized attorney,
         upon surrender of this 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 of rights
         represented by this Warrant will, upon exercise of the rights
         represented by this Warrant and payment of the Exercise Price as set
         forth herein 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 Warrant.

(a)      Exercise of the purchase rights represented by this Warrant may be made
         at any time or times, in whole or in part before 5:00 p.m. New York
         City time on the Termination Date, by the surrender on any business day
         of this Warrant and the Notice of Exercise 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), and upon payment of the full
         Exercise Price of the shares thereby purchased; whereupon the holder of
         this Warrant shall be entitled to receive a certificate for the number
         of shares of Common Stock so purchased. Certificates for shares
         purchased hereunder shall be delivered to the holder hereof within
         three (3) Trading Days after the date on which this Warrant shall have
         been exercised as aforesaid. Payment of the Exercise Price of the
         shares shall be by certified check or cashier's check or by wire
         transfer (of same day funds) to an account designated by the Company in
         an amount equal to the Exercise Price multiplied by the number of
         shares being purchased.

(b)      Alternatively, and only in the event the Warrant Shares are not subject
         to Effective Registration, the Warrant holder may exercise this
         Warrant, in whole or in part in a "cashless" or "net-issue" exercise by
         delivering to the offices of the Company or any transfer agent for the
         Common Stock this Warrant, together with a Notice of Exercise
         specifying the number of Warrant Shares to be delivered to such Warrant
         holder ("Deliverable Shares") and the number of Warrant Shares with
         respect to which this Warrant is being surrendered in payment of the
         aggregate Exercise Price for the Deliverable Shares ("Surrendered
         Shares").

         The number of Deliverable Shares shall be calculated as follows:
<TABLE>
<CAPTION>
<S>                                                          <C>

         # of Deliverable Shares = # of Surrendered Shares x Fair Market Value of Common Stock less Exercise Price
                                                             -----------------------------------------------------
                                                                  Fair Market Value of Common Stock
</TABLE>

         "Fair Market Value" shall have the meaning specified in Section 12(c).

         In the event that the Warrant is not exercised in full, the number of
         Warrant Shares shall be reduced by the number of such Warrant Shares
         for which this Warrant is exercised and/or surrendered, and the
         Company, at its expense, shall within three (3) Trading Days issue and
         deliver to or upon the order of the Warrant holder a new Warrant of
         like tenor in the name of the Warrant holder or as the Warrant holder
         (upon payment by the Warrant holder of any applicable transfer taxes)
         may request, reflecting such adjusted Warrant Shares.

         All exercises will be deemed to occur as of the date of the Notice of
         Exercise, and certificates for shares of Common Stock purchased
         hereunder shall be delivered to the holder hereof within five (5)
         Trading Days after the date on which this Warrant shall have been
         exercised as aforesaid. The Warrant holder may withdraw its Notice of
         Exercise under Section 3(a) or 3(b) at any time thereafter if the
         Company fails to timely deliver the applicable certificates to the
         Warrant holder as provided in this Agreement.

                                       2
<PAGE>

(c)      In lieu of delivering physical certificates representing the Common
         Stock issuable upon exercise, provided the Company's transfer agent is
         participating in the Depository Trust Company ("DTC") Fast Automated
         Securities Transfer ("FAST") program, upon request of the Warrant
         Holder, the Company shall use its best efforts to cause its transfer
         agent to electronically transmit the Common Stock issuable upon
         exercise to the Warrant holder by crediting the account of 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.

4.       No Fractional Shares or Scrip. No fractional shares or scrip
         representing fractional shares shall be issued upon the exercise of
         this Warrant.

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

                                       3
<PAGE>

6.       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 Warrant.

7.       No Rights as Shareholder until Exercise. Subject to Section 12 of this
         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 Warrant 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 Warrant shall have been exercised as provided herein.
         However, at the time of the exercise of this Warrant pursuant to
         Section 3 hereof, the Warrant Shares so purchased 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 Warrant shall
         have been exercised.

8.       Assignment and Transfer of Warrant. This Warrant may be assigned in
         whole or in part by the surrender of this 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
         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 Warrant to the effect that
         the transaction is so exempt.

9.       Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
         Company of evidence reasonably satisfactory to it of the loss, theft,
         destruction or mutilation of any Warrant or stock certificate
         representing the Warrant 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 Warrant or stock
         certificate, if mutilated, the Company will make and deliver a new
         Warrant or stock certificate of like tenor and dated as of such
         cancellation, in lieu of this Warrant or stock certificate.

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

                                       4
<PAGE>

11.      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 Warrant shall have the right thereafter to purchase, by
         exercise of this Warrant and payment of the aggregate Exercise Price in
         effect immediately prior to such action, the kind and amount of 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 Warrant been exercised immediately prior thereto, subject to
         further adjustment as provided in Section 12. 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.

12.      Adjustments of Exercise Price and Number of Warrant Shares.

         The number of and kind of securities purchasable upon exercise of this
         Warrant and the Exercise Price 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
         Warrant subdivide its outstanding securities as to which purchase
         rights under this Warrant exist, by split-up, spin-off, or otherwise,
         or combine its outstanding securities as to which purchase rights under
         this Warrant exist, the number of Warrant Shares as to which this
         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. Appropriate proportional adjustments (decrease in the
         case of subdivision, increase in the case of combination) shall also be
         made to the Exercise Price payable per share, so that the aggregate
         Exercise Price payable for the total number of Warrant Shares
         purchasable under this Warrant as of such date shall remain the same as
         it would have been before such subdivision or 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 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, and the Exercise Price shall be proportionately reduced so
         that the aggregate Exercise Price for all the Warrant Shares issuable
         hereunder immediately after the record date (or on the date of such
         distribution, if applicable), for such dividend shall equal the
         aggregate Exercise Price so payable immediately before such record date
         (or on the date of such distribution, if applicable).

                                       5
<PAGE>

(c)      Other Distributions. If at any time after the date hereof the Company
         distributes to holders of its 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 Warrant Shares for which
         this Warrant is exercisable shall be increased to equal: (i) the number
         of Warrant Shares for which this 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 Warrant holder) of any and all such
         evidences of indebtedness, shares of capital stock, other securities or
         property, so distributed. Additionally, the Exercise Price shall be
         reduced to equal: (i) the Exercise Price in effect immediately before
         the occurrence of any event (ii) multiplied by a fraction, (A) the
         numerator of which is the number of Warrant Shares for which this
         Warrant is exercisable immediately before the adjustment, and (B) the
         denominator of which is the number of Warrant Shares for which this
         Warrant is exercisable immediately after the adjustment. In lieu of
         such changes to the number of Warrant Shares for which this Warrant is
         exercisable and the Exercise Price, 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 Warrant had been
         exercised in full for Warrant Shares as of the record date for such
         distribution, without regard to the restrictions contained in Section
         16.

         This clause will not hold for shares distributed under stock option
         plans, rewards for services or property, investment or other type of
         financing, mergers or other type of commercial agreements that involve
         issuance of shares.

         For purposes of this Warrant, "Fair Market Value" shall equal the
         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 Warrant 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 Warrant holder.

(d)      Merger, etc. In case the Company will 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), the Company will try to achieve
         that such transferee or 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 Optional
         Warrant to be performed and observed by the Company. In case the
         Company cannot achieve such a commitment then the holder will be
         entitled to immediately exercise this Optional Warrant.

                                       6
<PAGE>

(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 Warrant exist into the same or a different
         number of securities of any other class or classes, then the Warrant
         holder shall thereafter be entitled to receive upon exercise of this
         Warrant, during the period specified herein and upon payment of the
         Exercise Price then in effect, the number of shares or other securities
         or property resulting from such reorganization or reclassification,
         which would have been received by the Warrant holder for the shares of
         stock subject to this Warrant had this Warrant at such time been
         exercised.

(f)      Exercise Price Adjustment. In the event that the Company issues or
         sells any Common Stock or securities which are convertible into or
         exchangeable for its Common Stock or any convertible securities, or any
         warrants or other rights to subscribe for or to purchase or any options
         for the purchase of its Common Stock or any such convertible securities
         (other than (A) shares or options issued or which may be issued
         pursuant to (i) the Company's current or future employee or director or
         subcontractor or consultant option plans or shares issued upon exercise
         of options, warrants or rights outstanding on the date of the Agreement
         and listed in the Company's most recent periodic report filed under the
         Exchange Act, (ii) arrangements with the Investor, or (iii)
         acquisitions of other entities by the Company or merge with such other
         entity, or (B) sales of Common Stock (in one more tranches to the same
         or different purchasers) that, in the aggregate, have a fair market
         value of less than $500,000 at the time they are sold or (C) issued to
         strategic partners or investment banks, or shares issued in the context
         of a financing package from bank entities) at an effective exercise
         price per share ("Effective Price") which is (1) less than the Exercise
         Price then in effect, or (2) at a discount greater than 10% from the
         Fair Market Value (as described in Section 12(c) above) of the Common
         Stock on the Trading Day next preceding such issue or sale, then the
         Exercise Price in effect immediately prior to such issue or sale shall
         be reduced effective concurrently with such issue or sale to an amount
         equal to the lesser of (x) such Effective Price, and (y) the product of
         (A) the Exercise Price divided by .9 and (B) 1.00 minus the discount
         from Fair Market Value (expressed as a fraction).

         For the purposes of the foregoing adjustment, in the case of the
         issuance of any convertible securities, warrants, options or other
         rights to subscribe for or to purchase or exchange for, shares of
         Common Stock ("Convertible Securities"), the maximum number of shares
         of Common Stock issuable upon exercise, exchange or conversion of such
         Convertible Securities shall be deemed to be outstanding, provided that
         no further adjustment shall be made upon the actual issuance of Common
         Stock upon exercise, exchange or conversion of such Convertible
         Securities.

         The number of shares which may be purchased hereunder shall be
         increased proportionately to any reduction in Exercise Price pursuant
         to this paragraph 12(f), so that after such adjustments the aggregate
         Exercise Price payable hereunder for the increased number of shares
         shall be the same as the aggregate Exercise Price in effect just prior
         to such adjustments.

                                       7
<PAGE>

         In the event of any such issuance for a consideration which is less
         than such fair market value and also less than the Exercise Price then
         in effect, than there shall be only one such adjustment by reason of
         such issuance, such adjustment to be that which results in the greatest
         reduction of the Exercise Price computed as aforesaid.

(g)      For the purposes of the foregoing adjustment, in the case of the
         issuance of any convertible securities, warrants, options or other
         rights to subscribe for or to purchase or exchange for, shares of
         Common Stock ("Convertible Securities"), the maximum number of shares
         of Common Stock issuable upon exercise, exchange or conversion of such
         Convertible Securities shall be deemed to be outstanding, provided that
         no further adjustment shall be made upon the actual issuance of Common
         Stock upon exercise, exchange or conversion of such Convertible
         Securities.

         The number of shares which may be purchased hereunder shall be
         increased proportionately to any reduction in Exercise Price pursuant
         to this paragraph 12(f), so that after such adjustments the aggregate
         Exercise Price payable hereunder for the increased number of shares
         shall be the same as the aggregate Exercise Price in effect just prior
         to such adjustments.

13.      Voluntary Adjustment by the Company. The Company may at its option, at
         any time during the term of this Warrant, reduce but not increase the
         then current Exercise Price to any amount and for any period of time
         deemed appropriate by the Board of Directors of the Company.

14.      Notice of Adjustment. Whenever the number of Warrant Shares or number
         or kind of securities or other property purchasable upon the exercise
         of this Warrant or the Exercise Price is adjusted, the Company shall
         promptly mail to the holder of this Warrant a notice setting forth the
         number of Warrant Shares (and other securities or property) purchasable
         upon the exercise of this Warrant and the Exercise Price of such
         Warrant Shares after such adjustment and setting forth a brief
         statement of the facts requiring such adjustment.

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

                                       8
<PAGE>

16.      9.99% Limitation. Void.

17.      Compliance with Securities Laws.

(a)      The holder hereof acknowledges that the Warrant Shares acquired upon
         the exercise of this Warrant, if not registered (or if no exemption
         from registration exists), will have restrictions upon resale imposed
         by state and federal securities laws. Each certificate representing the
         Warrant Shares issued to the holder upon exercise (if not registered or
         if no exemption from registration exists) will bear the following
         legend:

         THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
         COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
         AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE
         DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
         UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
         IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
         SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
         BASED ON AN OPINION LETTER OF COUNSEL SATISFACTORY TO THE COMPANY OR A
         NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

(b)      Without limiting the Investor's right to transfer, assign or otherwise
         convey the Warrant or Warrant Shares in compliance with all applicable
         securities laws, the Investor, by acceptance hereof, acknowledges that
         this Warrant and the Warrant Shares to be issued upon exercise hereof
         are being acquired solely for the Investor's own account and not as a
         nominee for any other party, and that the Investor will not offer, sell
         or otherwise dispose of this Warrant or any Warrant Shares to be issued
         upon exercise hereof except under circumstances that will not result in
         a violation of applicable federal and state securities laws.

(c)      Neither this Warrant nor any share of Common Stock issued upon exercise
         of this Warrant may be offered for sale or sold, or otherwise
         transferred or sold in any transaction which would constitute a sale
         thereof within the meaning of the Act, unless (i) such security has
         been registered for sale under the Act and registered or qualified
         under applicable state securities laws relating to the offer an sale of
         securities, or (ii) exemptions from the registration requirements of
         the Act and the registration or qualification requirements of all such
         state securities laws are available and the Company shall have received
         an opinion of counsel that the proposed sale or other disposition of
         such securities may be effected without registration under the Act,
         such counsel and such opinion to be satisfactory to the Company.

                                       9
<PAGE>

(d)      The Investor recognizes that investing in the Warrant and the Warrant
         Shares involves a high degree of risk, and the Investor is in a
         financial position to hold the Warrant and the Warrant Shares
         indefinitely and is able to bear the economic risk and withstand a
         complete loss of its investment in the Warrant and the Warrant Shares.
         The Investor is a sophisticated investor and is capable of evaluating
         the merits and risks of investing in the Company. The Investor has had
         an opportunity to discuss the Company's business, management and
         financial affairs with the Company's management, has been given full
         and complete access to information concerning the Company, and has
         utilized such access to its satisfaction for the purpose of obtaining
         information or verifying information and have had the opportunity to
         inspect the Company's operation. The Investor has had the opportunity
         to ask questions of, and receive answers from, the management of the
         Company (and any person acting on its behalf) concerning the Warrant
         and the Warrant Shares and the agreements and transactions contemplated
         hereby, and to obtain any additional information as the Investor may
         have requested in making its investment decision. The initial Investor
         in this Warrant is an "accredited investor", as defined by Regulation D
         promulgated under the Act.

18.      Miscellaneous.

(a)      Issue Date; Choice Of Law; Venue; Jurisdiction. THE PROVISIONS OF THIS
         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 WARRANT SHALL BE BINDING UPON ANY SUCCESSORS OR ASSIGNS OF THE
         COMPANY. THIS 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
         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 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 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 18(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.

                                       10
<PAGE>

(b)      Modification and Waiver. This 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 Warrant and
         the Company. No waivers of, or exceptions to, any term, condition or
         provision of this 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
         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 18(c).

(d)      Severability. Whenever possible, each provision of this Warrant shall
         be interpreted in such manner as to be effective and valid under
         applicable law, but if any provision of this Warrant 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 Warrant in such
         jurisdiction or affect the validity, legality or enforceability of any
         provision in any other jurisdiction, but this 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 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 Warrant holder against impairment. Without
         limiting the generality of the foregoing, the Company (a) will not
         increase the par value of any Warrant 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 Warrant Shares
         on the exercise of this Warrant.

                      Rest of page intentionally left blank

                                       11
<PAGE>

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

Dated: September 12, 2000

                                           CONSTELLATION 3D, INC.

                                           By: /s/ Eugene Levich
                                               ---------------------------------
                                                Name:    Eugene Levich
                                                Title:   President
Agreed and Accepted
this September 12, 2000

HERSHKOVITZ JACQUELINE

By: /s/ Hershkovitz Jacqueline
    --------------------------------
    Name:
    Title:

                                       12
<PAGE>

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

To:      CONSTELLATION 3D, INC.

(1)      The undersigned hereby elects:

         (A) to purchase ________ shares of Common Stock of Constellation 3D,
Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment
of the Exercise Price in full, together with all applicable transfer taxes, if
any.

         (B) in a "cashless" or "net-issue exercise" for, and to purchase
thereunder, ______ shares of Common Stock, and herewith makes payment therefor
with _______ Surrendered Shares.

(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 Warrant for the unexercised portion of the attached
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 warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

                  FOR VALUE RECEIVED, the foregoing 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 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
Warrant.

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