Document:

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                                                                     Exhibit 4.4

                                                                  Execution Copy

                                OPTION AGREEMENT

          OPTION AGREEMENT (this "Agreement"), dated as of November 16, 2001, by
                                  ---------
and between Constellation 3D Technology Limited, a corporation organized under
the laws of the British Virgin Islands (the "Holder") and Constellation 3D,
                                             ------
Inc., a corporation organized under the laws of the State of Delaware (the
"Corporation").
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                                   BACKGROUND

          1.   The Holder and the Corporation are parties to that certain Loan
Agreement, of even date herewith (the "Loan Agreement"), pursuant to which the
                                       --------------
Holder has agreed to provide to the Corporation certain advances.

          2.   The Corporation has agreed to issue to the Holder a promissory
note evidencing $15,000,000 being advanced by the Holder to the Corporation as
of the date hereof pursuant to the Loan Agreement (the "Loan").
                                                        ----

          3.   To induce the Holder to advance the Loan to the Corporation, the
Corporation has, among other things, agreed to grant the Holder an option to
convert the Loan (plus accrued and unpaid interest thereon) evidenced by the
Note attached as Exhibit A hereto (the "Note") into shares of common stock, par
                 ---------              ----
value $.00001 per share, of the Corporation ("Common Stock").
                                              ------------

          4.   Defined terms used herein but not otherwise defined herein shall
have the meanings ascribed to such terms in the Loan Agreement.

                                      TERMS

          In consideration of the mutual promises and covenants contained
herein, and intending to be legally bound hereby, the Holder and the Corporation
agree as follows:

   Section 1.  Optional Conversion of Note.
               ---------------------------

          (a)  Subject to and upon compliance with the terms of this Section 1,
the Holder or its assignee shall have the right, at its option, at any time
after the 45/th/ Business Day after the Closing Date and on or prior to November
18, 2002 (the "Termination Date"), to convert the unpaid principal amount of,
               ----------------
and the accrued and unpaid interest on (subject to adjustment for withholding as
provided in Section 1(c) below), the Note into fully paid and non-assessable
shares of the Corporation's Common Stock; provided, however, that, for so long
                                          --------  -------
as the initial Holder shall be the Holder of the Note, the Note may only be
converted on the Termination Date. Such conversion shall be effected at the Note
Conversion Rate (as defined below). The "Note Conversion Rate" shall be equal to
                                         --------------------
(x) the sum of the outstanding principal amount of the Note plus accrued and
unpaid interest on the Note, including default interest, if

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any (the "Conversion Amount"), divided by (y) $0.646/1/ (the "Note Conversion
          -----------------                                   ---------------
Price"). The Holder may exercise its right to convert the Note in whole but not
-----
in part.

          (b)  In order to exercise the conversion right, the Holder shall
surrender the Note during regular business hours at the principal office of the
Corporation, accompanied by written notice to the Corporation at said office
that the Holder elects to convert the Note and shall specify the Conversion
Amount. Such notice shall also state the name or names (with address) in which
the certificate or certificates for shares of Common Stock deliverable upon such
conversion shall be issued. As promptly as practicable after the receipt of such
notice and the surrender of the Note, but subject to Section 3, the Corporation
shall deliver or cause to be delivered to the Holder or its designee or
designees a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock deliverable upon conversion of the Note
pursuant to the Holder's notice of conversion. Such conversion shall be deemed
to have been effected immediately prior to the close of business on the date on
which such notice shall have been received by the Corporation and the Note shall
have been surrendered (the "Date of Conversion"), and at such time the rights of
                            ------------------
the Holder shall cease with respect to the Conversion Amount converted and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby
unless the stock transfer books of the Corporation shall be closed on that date,
in which event such person or persons shall be deemed to have become such holder
or holders of record on the next succeeding day on which such stock transfer
books are open, but in any event such conversion shall be at the Note Conversion
Rate.

          (c)  The number of shares of Common Stock issuable upon conversion of
the Note in respect of accrued but unpaid interest thereon, including default
interest, if any, shall be calculated net of any amounts required by law to be
withheld at the time of such conversion (the "Withholding Amount"); provided,
                                              ------------------    --------
however, that the Withholding Amount shall not exceed 30% of such accrued but
-------
unpaid interest (or such higher amount required by law). The Corporation shall
satisfy the Withholding Amount, if any, by deducting the number of shares of
Common Stock (valued at the volume-weighted Market Price of such shares of
Common Stock for the ten (10) consecutive trading day period ending one (1)
trading day immediately prior to the Date of Conversion) issuable to the Holder
upon conversion of the Note which are equal to the Withholding Amount; provided,
                                                                       --------
however, that, at the option of the Holder, the Withholding Amount may be
-------
satisfied in whole or in part by a cash payment to be made by the Holder to the
Corporation on the Date of Conversion in lieu of deducting shares of Common
Stock (it being understood that if the Holder elects to satisfy the Withholding
Amount in part, but not in whole, in cash, then the number of shares of Common
Stock to be deducted shall be calculated as provided for in this Section 2(c),
after giving effect to such cash payment). As used herein, the term "Market
Price" means, on any given day, (i) the price of the last trade, as reported on
the Nasdaq National Market, not identified as having been reported late to such
system, or (ii) if the

__________________________
/1/    The Note Conversion Price shall be calculated based upon the average
       closing-bid price of the Corporation's Common Stock on the Nasdaq
       National Market System for the five (5) trading days immediately prior to
       the Closing Date.

                                       2

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Common Stock is so traded, but not so quoted, the average of the last bid and
ask prices, as those prices are reported on the Nasdaq National Market, or (iii)
if the Common Stock is not listed or authorized for trading on the Nasdaq
National Market or any comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Corporation for that
purpose. If the Common Stock is not listed and traded in a manner that the
quotations referred to above are available for the period required hereunder,
the market price per share of Common Stock shall be deemed to be the fair value
per share of such security as reasonably determined in good faith by the Board
of Directors of the Corporation.

   Section 2.  Mandatory Conversion of Note. If the Holder shall not exercise
               ----------------------------
its right to convert the Note on or before the Termination Date, the Conversion
Amount shall automatically be converted into Common Stock at the Note Conversion
Rate on the first Business Day immediately following the Termination Date,
without any further action by the Holder or the Corporation. As promptly as
practicable thereafter the Corporation shall deliver or cause to be delivered to
the Holder a certificate or certificates for the number of fully paid and
non-assessable shares of Common Stock deliverable upon conversion of the Note
registered in the name of the Holder. As soon as practicable after the
Termination Date, the Holder shall surrender the Note during regular business
hours at the principal office of the Corporation.

   Section 3.  No Fractional Shares. No fractional shares shall be issued upon
               --------------------
conversion of the Note, and the number of shares of Common Stock to be issued
shall be rounded upward to the nearest whole share.

   Section 4.  Adjustments to the Note Conversion Price.
               ----------------------------------------

          (a)  In the event the Corporation at any time or from time to time
after the date of issuance of the Note fixes a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock then, as of
such record date (or the date of such split or subdivision if no record date is
fixed), the Note Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of the Note shall be
increased in proportion to such increase in the aggregate number of shares
issuable of Common Stock.

          (b)  For so long as the Note remains unconverted, in the event that
the Corporation shall issue any Additional Stock (as defined below), at a price
per share that is lower at the record date for such issuance than the Market
Price, then the Note Conversion Price in effect immediately prior to each such
issuance (or deemed issuance pursuant to Section 4(f) hereof) shall be adjusted
to a price determined by the following formula: (A + B) / (C + D), where "A"
equals the number of shares of Common Stock outstanding immediately prior to
such issuance or sale multiplied by the then applicable Note Conversion Price,
where "B" equals the consideration, if any, received by the Corporation upon
such issuance or sale, where "C" equals the total number of shares of Common
Stock outstanding prior to issuance of the additional shares and where "D"
equals any additional stock or conversion shares, or any other shares

                                       3

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reserved for issuance which are associated with such financing, immediately
after such issuance or sale. Such adjustment shall become effective at the close
of business on the record date for the determination of stockholders entitled to
receive such rights, options or warrants. For purposes of the calculation set
forth in this Section 4(b), all shares of Common Stock outstanding and issuable
upon conversion of outstanding Options and Convertible Securities immediately
prior to giving effect to such calculation shall be deemed to be outstanding.

               As used herein, "Additional Stock" shall mean any shares of
                                ----------------
Common Stock or shares of Common Stock issuable pursuant to Convertible
Securities issued or Options (or deemed to have been issued pursuant to Section
4(f) hereof) by the Corporation after the date of issuance of the Note, except:

               (i)   Common Stock issued pursuant to a transaction described in
Section 4(f) hereof;

               (ii)  Common Stock or options to purchase such Common Stock
issued to officers, employees or directors of, or consultants to, the
Corporation, pursuant to any agreement, plan or arrangement approved by the
Board of Directors of the Corporation; provided, however, that the maximum
                                       --------  -------
number of shares of Common Stock heretofore or hereafter issued or issuable
pursuant to all such agreements, plans and arrangements shall not exceed an
aggregate (as constituted on the date hereof) of 6,484,948 shares of Common
Stock;

               (iii) Common Stock issued or issuable upon conversion of the
Debentures and any warrants of the Corporation outstanding as of the Closing
Date described in the Corporation's Form 10-Q for the period ended September 30,
2001;

               (iv)  Common Stock issued to the Holder upon conversion of the
Note or otherwise; and

               (v)   Common Stock issued in connection with an acquisition of
another entity by the Corporation pursuant to an agreement approved by the Board
of Directors.

          (c)  No adjustment of the Note Conversion Price shall be made in an
amount less than one-half of one cent ($0.005) per share, provided that any
adjustments which are not required to be made by reason of this sentence shall
be carried forward and shall be taken into account in any subsequent adjustment
to the Note Conversion Price. No adjustment of the Note Conversion Price
pursuant to this Section 4(c) shall have the effect of increasing the Note
Conversion Price in effect immediately prior to such adjustment.

          (d)  In the case of the issuance of securities of the Corporation for
cash, the amount of consideration received by the Corporation for such
securities shall be deemed to be the amount of cash paid therefor before
deducting any discounts, commissions or other expenses allowed, paid or incurred
by the Corporation for any underwriting or otherwise in connection with the
issuance and sale thereof.

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          (e)  In the case of the issuance of securities of the Corporation for
a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to have a dollar value equal to the fair market value
of such non-cash consideration, irrespective of any accounting treatment
thereof, as reasonably determined in good faith by a vote of the majority of the
Board of Directors.

          (f)  In the case of the issuance (whether before, on or after the date
of issuance of the Note) of Options or Convertible Securities, the following
provisions shall apply for all purposes of this Section 4:

               (i)   With respect to Options to purchase Common Stock, the
aggregate maximum number of shares of Common Stock deliverable upon exercise of
such Options shall be deemed to have been issued at the time such Options were
issued and for a consideration equal to the consideration (determined in the
manner provided in Sections 4(d) and (e) hereof), if any, received by the
Corporation for such Options plus the minimum exercise price provided in such
Options for Common Stock issuable thereunder.

               (ii)  With respect to Convertible Securities and Options to
purchase Convertible Securities, the aggregate maximum number of shares of
Common Stock deliverable upon the conversion or exchange of any such Convertible
Securities and the aggregate maximum number of shares of Common Stock issuable
upon the exercise of such Options to purchase Convertible Securities and the
subsequent conversion or exchange of such Convertible Securities shall be deemed
to have been issued at the time such Convertible Securities or such Options were
issued and for a consideration equal to the consideration, if any, received by
the Corporation for any such Convertible Securities and Options, plus the
minimum additional consideration, if any, to be received by the Corporation upon
the conversion or exchange of such Convertible Securities or the exercise of
such Options and the conversion or exchange of the Convertible Securities
issuable upon exercise of such Options (the consideration in each case to be
determined in the manner provided in Sections 4(d) and(e) hereof).

               (iii) In the event of any change in the number of shares of
Common Stock deliverable, or in the consideration payable to the Corporation,
upon exercise of such Options or upon conversion or exchange of such Convertible
Securities, including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Note Conversion Price, to the extent in
any way affected by or computed using such Options or Convertible Securities,
shall be recomputed to reflect such change, but no further adjustment shall be
made for the actual issuance of Common Stock or any payment of such
consideration upon the exercise of any such Options or the conversion or
exchange of such Convertible Securities.

               (iv)  Upon the expiration or termination of any such Options or
any such rights to convert or exchange Convertible Securities, the Note
Conversion Price, to the extent in any way affected by or computed using such
Options or Convertible Securities, shall be recomputed to reflect the issuance
of only the number of shares of Common Stock (and Options and Convertible
Securities which remain in effect) that were actually issued upon the exercise
of such Options or upon the conversion or exchange of such Convertible
Securities.

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               (v)   The number of shares of Common Stock deemed issued and the
consideration deemed paid therefor pursuant to Sections 4(f)(i) and (ii) hereof
shall be appropriately adjusted to reflect any change, termination or expiration
of the type described in either Sections 4(f)(iii) or (iv) hereof.

               (vi)  "Convertible Securities" means any indebtedness or shares
                      ----------------------
of stock convertible into or exchangeable for Common Stock.

               (vii) "Option" means rights, options or warrants to subscribe
                      ------
for, purchase or otherwise acquire Common Stock or Convertible Securities.

          (g)  If at any time or from time to time there shall be a
recapitalization or reclassification of Common Stock, provision shall be made so
that the Holder shall thereafter be entitled to receive, upon conversion of the
Note, the number of shares of stock or other securities or property of the
Corporation or otherwise, receivable upon such recapitalization or
reclassification by a holder of the number of shares of Common Stock into which
the Note could have been converted immediately prior to such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the Holder after the
recapitalization or reclassification to the end that the provisions of this
Section 4 (including adjustments of the Note Conversion Price then in effect and
the number of shares purchasable upon conversion of the Note) shall be
applicable after that event as nearly equivalent as may be practicable.

          (h)  In the event the Corporation shall declare a distribution payable
in securities of other persons, evidences of indebtedness issued by the
Corporation or other persons, assets (excluding cash dividends) or options or
rights not referred to in Section 4(f) hereof, then, in each such case for the
purpose of this Section 4(h), the Holder shall be entitled to a proportionate
share of any such distribution as though such the Holder was the holder of the
number of shares of Common Stock into which the Note is convertible as of the
record date fixed for the determination of the holders of shares of Common Stock
entitled to receive such distribution.

          (i)  Before taking any action which would cause an adjustment reducing
the Note Conversion Price below the then par value, if any, of the shares of
Common Stock issuable upon the conversion of the Note, the Corporation will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue registered, fully paid
and non-assessable shares of the Common Stock at such adjusted Note Conversion
Price.

          (j)  Upon the occurrence of each adjustment or readjustment of the
Note Conversion Price pursuant to this Section 4, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based, certified by the
Corporation's President or Chief Financial Officer. The Corporation shall, upon
the written

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request at any time of the Holder, furnish or cause to be furnished to such
Holder a like certificate setting forth (i) such adjustment and readjustment,
(ii) the Note Conversion Price at the time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of the Note.

          (k)  The Corporation covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
delivery upon conversion of the Note as herein provided such number of shares of
Common Stock as shall then be deliverable upon the conversion of the Conversion
Amount, plus the maximum amount of accrued but unpaid interest, including
default interest, if any, convertible pursuant to the Note. The Corporation
covenants that all the shares of Common Stock which shall be so deliverable upon
conversion of the Note shall be duly and validly issued, fully paid and
non-assessable.

          (l)  The delivery of certificates for shares of Common Stock upon the
conversion of the Note shall be made without charge to the Holder for any
documentary, stamp or similar issue or transfer tax in respect of the issuance
of such certificates, and such certificates shall be delivered in the name of,
or in such names as may be directed by, the Holder. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue or transfer and delivery of shares of Common
Stock in a name other than that of the Holder and no such issue or transfer and
delivery shall be made unless and until the person requesting such transfer has
paid to the Corporation the amount of any such tax or has established to the
satisfaction of the Corporation that such tax has been paid.

          (m)  If the Common Stock of the Corporation ceases to be listed or
authorized to be quoted on any national securities exchange or the public market
for the Common Stock of the Corporation otherwise ceases to exist, the
Corporation shall engage an investment bank, reasonably acceptable to the
Corporation and the Holder, to determine the fair market value price of the
Common Stock, from time to time in connection with the Note.

          (n)  In the event of any taking by the Corporation of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation shall mail to the
Holder, at least twenty (20) calendar days prior to the date specified therein,
a notice specifying the date on which any such record is to be taken for the
purpose of such right, and the amount and character of such right.

          (o)  The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holder of the Note
against impairment.

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   Section 5.  Effectiveness of Agreement. This Agreement shall terminate if the
               --------------------------
Loan shall not have been advanced on or prior to the Funding Date.

   Section 6.  Representations and Warranties of the Corporation. The
               -------------------------------------------------
Corporation hereby makes the following representations and warranties to the
Holder as of the date hereof and on the Date of Conversion:

          (a)  Authorization; Enforcement; Compliance with Other Instruments.
               -------------------------------------------------------------
The Corporation has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement, (ii) the execution and
delivery of this Agreement by the Corporation and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by the
Corporation's Board of Directors and no further consent or authorization is
required by the Corporation, its Board of Directors or its shareholders, (iii)
this Agreement and the have been duly executed and delivered by the Corporation
and (iv) this Agreement and the constitute the valid and binding obligations of
the Corporation enforceable against the Corporation in accordance with their
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.

          (b)  Capitalization. As of October 31, 2001, the authorized capital
               --------------
stock of the Corporation consisted of 100,000,000 shares of Common Stock, of
which as of the date thereof, 50,189,824 shares are issued and outstanding,
6,484,948 shares are issuable upon exercise of outstanding stock options,
whether or not currently exercisable, 3,500,943 shares are issuable upon
exercise of outstanding warrants, whether or not currently exercisable, and
2,285,942 shares are issuable upon conversion of convertible loans. Schedule
                                                                    --------
6(b) sets forth the aggregate amount of shares of Common Stock issuable after
----
giving effect to all anti-dilution and similar provisions contained in any such
warrants, options or convertible loans which are or will be applicable as a
result of the issuance of the Note or the Conversion Shares (as defined below).
Except as set forth in Section 4 of this Agreement or as disclosed on Schedule
                                                                      --------
6(b), no warrants, options, convertible loans or other securities of the
----
Corporation contain any anti-dilution or similar provisions. All of such
outstanding shares have been, or upon issuance will be, validly issued, fully
paid and nonassessable. As of the date hereof, except as set forth on Schedule
                                                                      --------
6(b), (i) no shares of the Corporation's capital stock are subject to preemptive
----
rights or any other similar rights or are secured by any liens or encumbrances
against the Corporation or its assets, (ii) there are no outstanding debt
securities, (iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible, exercisable or exchangeable into, any shares
of capital stock of the Corporation or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Corporation or any of
its Subsidiaries is or may become bound to issue additional shares of capital
stock of the Corporation or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible, exercisable or exchangeable
into, any shares of capital stock of the Corporation or any of its Subsidiaries,
(iv) there are no agreements or arrangements

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under which the Corporation or any of its Subsidiaries is obligated to register
the sale of any of their securities under the Securities Act, (v) there are no
outstanding securities of the Corporation or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Corporation or any of
its Subsidiaries is or may become bound to redeem a security of the Corporation
or any of its Subsidiaries, (vi) there are no securities or instruments
containing anti-dilution, most-favored-nation or similar provisions that will be
triggered by the issuance of the Note pursuant to the Loan Agreement or the
issuance of Common Stock upon conversion of the Note (the "Conversion Shares")
                                                           -----------------
and, (vii) the Corporation does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement. The
Corporation has furnished to the Holder true and correct copies of the
Corporation's Articles of Incorporation, as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), and the Corporation's By-laws, as
             ----------------------------
in effect on the date hereof (the "By-laws"), and the terms of all securities
                                   -------
convertible or exchangeable into or exercisable for Common Stock and the
material rights of the Holder thereof in respect thereto.

          (c)  No Conflicts. The execution, delivery and performance of this
               ------------
Agreement by the Corporation and the consummation by the Corporation of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the
Corporation or the By-laws; (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Corporation or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
without limitation United States federal and state securities laws and
regulations and the rules and regulations of the Nasdaq National Market System)
applicable to the Corporation or any of its Subsidiaries or by which any
property or asset of the Corporation or any of its Subsidiaries is bound or
affected. Except as set forth in Schedule 6(c) hereto, neither the Corporation
                                 -------------
nor its Subsidiaries is in violation of any term of, or in default under, (x)
its Certificate of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock or By-laws or their
organizational charter or by-laws, respectively, (y) any material contract,
agreement, mortgage, indebtedness, indenture, instrument, or (z) any judgment,
decree or order or any statute, rule or regulation applicable to the Corporation
or its Subsidiaries, the non-compliance with which (in the case of clause (z)
only) would reasonably be likely to result in a Material Adverse Effect. The
business of the Corporation and its Subsidiaries is not being conducted in
violation of any material law, ordinance or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required
under the Securities Act (or applicable "Blue Sky" laws), the Corporation is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under, or contemplated by, this Agreement in accordance with the
terms hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Corporation is

                                       9

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required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.

          (d)  Valid Issuance. When validly converted in accordance with the
               --------------
terms of this Agreement, the Conversion Shares will be duly and validly issued,
fully paid, and non-assessable. Neither the sale of the Note nor the issuance of
the Conversion Shares will entitle the holder or holders of outstanding
securities of the Corporation to preemptive or other rights to acquire shares of
Common Stock of the Corporation.

          (e)  No Integrated Offering. Neither the Corporation, nor any of its
               ----------------------
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause the transactions
contemplated by the Loan Agreement of this Agreement to be integrated with prior
offerings by the Corporation for purposes of the Securities Act or any
applicable shareholder approval provisions, including, without limitation, under
the rules and regulations of the Nasdaq National Market System, nor will the
Corporation or any of its Subsidiaries take any action or steps that would cause
the transactions contemplated by this Agreement to be integrated with other
offerings.

          (f)  Application of Takeover Protections. The Corporation and its
               -----------------------------------
board of directors have taken all necessary action, if any, in order to render
inapplicable any anti-takeover provisions under applicable Delaware law or
contained in the Corporation's Certificate of Incorporation or otherwise which
is or could become applicable to the Holder as a result of the transactions
contemplated by this Agreement.

          (g)  Rights Plan. Neither the Corporation nor any of its Subsidiaries
               -----------
has adopted a shareholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Corporation. The Corporation confirms that no provision of such a plan will,
under any present or future circumstances, delay, prevent or interfere with the
performance of any of the Corporation's obligations under this Agreement and
such plan will not be "triggered" by such performance.

          (h)  Registration Rights and Voting. Except as set forth in Schedule
               ------------------------------                         --------
6(h), the Corporation and its Subsidiaries are not under any obligation and have
----
not granted any rights to register under the Securities Act any of its presently
outstanding securities or any of its securities that may subsequently be issued.
To the knowledge of the Corporation and its Subsidiaries, except as set forth in
Schedule 6(h), no stockholder of the Corporation or any of its Subsidiaries has
-------------
entered into any agreement with respect to the voting of the Corporation's
securities.

          (i)  Representations and Warranties made in Loan Agreement. The
               -----------------------------------------------------
representations and warranties made by the Corporation in the Loan Agreement are
hereby incorporated by reference herein.

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   Section 7.  Delivery of Legal Opinion. In connection with the execution of
               -------------------------
this Agreement, the Corporation shall deliver to the Holder and Target Invest
Consulting, LLC ("TIC") an opinion of outside counsel substantially in the form
                  ---
of Exhibit B attached hereto.
   ---------

   Section 8.  Miscellaneous Provisions.
               ------------------------

          (a)  Notices. All notices, requests and demands to or upon the
               -------
respective parties hereto to be effective shall be in writing (including by
facsimile). Unless otherwise expressly provided herein, any such notice, request
or demand shall be deemed to have been duly given or made when delivered by
hand, or three (3) Business Days after being deposited in the mail, postage
prepaid, or, in the case of facsimile notice, when sent, receipt electronically
confirmed, addressed as follows or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Note:

   The Corporation:

               Constellation 3D, Inc.
               805 Third Avenue, 14/th/ Floor
               New York, New York  10022
               Attention: Craig Weiner, Esq.
               Telephone: (212) 308-3572
               Facsimile: (212) 308-3573

   The Holder:

               Constellation 3D Technology Limited
                c/o Zysman, Aharoni, Gayer and Co.
               52A Hayarkon St.
               Tel Aviv 63432  Israel
               Attention: Jonathan Sherman, Adv.
               Telephone: 972-3-79 55 5552
               Facsimile: 972-3-79-55 5550

          (b)  No Waiver; Cumulative Remedies. No failure to exercise and no
               ------------------------------
delay in exercising, on the part of any party, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

          (c)  Survival of Representations and Warranties. All representations
               ------------------------------------------
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the issuance of Common Stock upon the
conversion of the Note.

                                       11

<PAGE>

          (d)  Modifications. No modification or waiver of any provision of this
               -------------
Agreement, nor consent to any departure by any party therefrom, shall in any
event be effective unless the same shall be in writing, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.

          (e)  Assignment; Successors and Assigns. The Holder may without
               ----------------------------------
notice, transfer or assign this Agreement or any interest herein to any Person,
including, without limitation, to TIC. The Corporation may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Holder. Subject to the preceding sentence, this Agreement
shall be binding upon and inure to the benefit of the Corporation and the
Holder, all future holders of the Note and their respective successors and
assigns.

          (f)  Entire Agreement. This Agreement, together with the Loan
               ----------------
Agreement and the Loan Documents, constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matters
contained therein.

          (g)  Severabilitv. In case any one or more of the provisions contained
               ------------
in this Agreement is for any reason held to be invalid, illegal or unenforceable
in any respect by a court or other authority of competent jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
hereof. This Agreement will be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. In lieu of each such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

          (h)  Further Assurances. The Corporation shall take all actions as the
               ------------------
Holder shall reasonably request to more fully carry out the intentions of this.

          (i)  Counterparts. This Agreement may be executed by one or both of
               ------------
the parties to this Agreement on separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

          (j)  Governing Law. This Agreement and the rights and obligations of
               -------------
the parties under this Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York, without regard
to principles of conflicts of laws.

          (k)  Specific Performance. The Corporation acknowledges and agrees
               --------------------
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
were otherwise breached. It is accordingly agreed that the Holder 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 the
Holder may be entitled by law or equity.

                                       12

<PAGE>

         (l) SUBMISSION TO JURISDICTION; WAIVERS. THE CORPORATION HEREBY
             -----------------------------------
IRREVOCABLY AND UNCONDITIONALLY: (A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK; (B) CONSENTS THAT
ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (C) AGREES THAT
SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A
COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM
OF MAIL), POSTAGE PREPAID, TO THE CORPORATION AT ITS ADDRESS SET FORTH IN
SECTION 8(a) OR AT SUCH OTHER ADDRESS OF WHICH THE HOLDER SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO; (D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT
TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND (E) WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.

         (m) WAIVER OF JURY TRIAL. EACH OF THE CORPORATION AND THE HOLDER HEREBY
             --------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

         (n) Acknowledgments. The Corporation hereby acknowledges that: (a) it
             ---------------
has been advised by counsel in the negotiation, execution and delivery of this
Agreement; (b) the Holder has no fiduciary relationship to the Corporation, and
the relationship between the Corporation on one hand, and the Holder, on the
other hand, is solely that of debtor and creditor under the Loan Agreement; and
(c) no joint venture exists among the Corporation and the Holder.

                            [signature page follows]

                                       13

<PAGE>

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

                                            CONSTELLATION 3D, INC.

                                            By: /s/ Leonardo Berezowsky
                                                --------------------------------
                                                Name:  Leonardo Berezowsky
                                                Title: Director

                                            CONSTELLATION 3D TECHNOLOGY LIMITED

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

                                       14

<PAGE>

                                                                       Exhibit A
                                                                       ---------

                                      NOTE
                                      ----

                                      A-1

<PAGE>

                                                                       Exhibit B
                                                                       ---------

                              FORM OF LEGAL OPINION
                              ---------------------

                                      B-1<PAGE>

                                                                     Exhibit 4.5

                                                                  Execution Copy

                           SECURITY HOLDERS AGREEMENT
                           --------------------------

     This Security Holders Agreement (this "Agreement") is made and entered into
                                            ---------
effective as of November 16, 2001, by and among Constellation 3D, Inc., a
corporation organized under the laws of the State of Delaware (the "Company"),
                                                                    -------
TIC Target Invest Consulting, LLC, a financing corporation organized under the
laws of St. Kitts & Nevis with its principal office located at Churer Strasse
35, CH-9470, Buchs, SG, Switzerland ("TIC"), and Constellation 3D Technology
                                      ---
Limited, a corporation organized under the laws of the British Virgin Islands
(the "Principal Stockholder", and together with TIC, each a "Holder" and
      ---------------------                                  ------
collectively, the "Holders").
                   -------

                                   BACKGROUND

     A.  TIC is party to the Loan Agreement (the "Loan Agreement"), of even date
                                                  --------------
herewith, by and among the Principal Shareholder and TIC, pursuant to which TIC
is providing a term loan facility (the "Loan") of up to $20 million to the
                                        ----
Principal Stockholder

     B.  The Principal Stockholder is party to the Loan Agreement, of even date
herewith, by and among the Principal Stockholder and the Company, pursuant to
which the Principal Stockholder is providing a term loan facility of up to $20
million to the Company

     C.  The obligation of TIC to provide the Loan to the Principal Shareholder
is conditioned upon the execution and delivery of this Agreement.

     D.  The parties desire to have this Agreement govern certain relationships
among them relating to the capital stock and governance of the Company.

                                    AGREEMENT

     In consideration of the mutual covenants set forth herein and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

                             ARTICLE 1. DEFINITIONS

     1.1 Certain Defined Terms. As used in this Agreement, the following terms
         ---------------------
shall have the following respective meanings:

         "Affiliate" means any Person which directly or indirectly controls, or
          ---------
is under common control with, or is controlled by, another Person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise); provided, however, that in any
                                                --------  -------
event, any Person

<PAGE>

which owns directly or indirectly 10% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.

             "Company Loan Agreement" means that certain Loan Agreement, of even
              ----------------------
date herewith, by and between the Company and the Principal Stockholder.

             "GAAP" means generally accepted accounting principals in the United
              ----
States of America as in effect from time to time.

             "Governmental Authority" means, any nation or government, any state
              ----------------------
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

             "Governing Documents" means, as to any Person, the articles or
              -------------------
certificate of incorporation and by-laws or other organizational or governing
documents of such Person.

             "Note" means the promissory note made in favor of the Principal
              ----
Stockholder by the Company pursuant to the Company Loan Agreement.

             "Option" means the Option Agreement, of even date herewith, by and
              ------
between the Principal Stockholder and the Company.

             "Person" means an individual, partnership, corporation, limited
              ------
liability company, business trust, joint stock company, trust, voluntary
association, joint venture, Governmental Authority or other entity of whatever
nature.

             "Public Sale" means (i) any transfer pursuant to an effective
              -----------
registration statement filed under the Securities Act or (ii) any transfer
pursuant to Rule 144 promulgated by the SEC pursuant to the Securities Act.

             "Requirement of Law" means, with respect to any Person, the
              ------------------
Governing Documents of such Person, if applicable, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

             "SEC" means the Securities and Exchange Commission.
              ---

             "Securities Act" means the Securities Act of 1933, as amended.
              --------------

             "Securities Exchange Act" means the Securities Exchange Act of
              -----------------------
1934, as amended.

             "Stock" means shares of the Company's Stock, par value $.00001 per
              -----
share, whether or not now authorized, issued or outstanding.

                                       2

<PAGE>

                            ARTICLE 2. CO-SALE RIGHTS

        2.1 Notice of Sales. If any Holder proposes to sell or transfer any
            ---------------
shares of the Stock held by it (the "Transferring Holder"), then the such
                                     -------------------
Transferring Holder shall promptly give written notice (the "Notice") to the
                                                             ------
other Holder (the "Tag-along Holder") at least thirty (30) days prior to the
                   ----------------
proposed closing of such sale or transfer. The Notice shall describe in
reasonable detail the proposed sale or transfer including, without limitation,
the number of shares of Stock to be sold or transferred, the nature of such sale
or transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee.

        2.2 Co-Sale Right. The Tag-along Holder shall have the right,
            -------------
exercisable upon written notice to the Transferring Holder within fifteen (15)
days after receipt of the Notice, to participate in such sale of Stock on the
same terms and conditions. The co-sale right of TIC set forth in this Article 2
shall be subject to the following terms and conditions:

            (a) The Tag-along Holder may sell all or any part of that number of
shares of Stock held by it that is equal to the product obtained by multiplying
(x) the aggregate number of shares of Stock covered by the Notice by (y) a
fraction, the numerator of which is the number of shares of Stock owned by the
Tag-along Holder at the time of the sale or transfer and the denominator of
which is the combined number of shares of Stock of the Company at the time owned
by the each of the Transferring Holder and the Tag-along Holder, on a fully
diluted basis.

            (b) The Tag-along Holder shall effect its participation in the sale
by promptly delivering to the Transferring Holder for transfer to the
prospective purchaser one or more certificates, properly endorsed for transfer,
which represent:

                (i) the number of shares of Stock which the Tag-along Holder
elects to sell; or

                (ii) options, warrants and/or convertible securities which are
at such time convertible into the number of shares of Stock that the Tag-along
Holder elects to sell; provided, however, that if the prospective purchaser
                       --------  -------
objects to the delivery of options, warrants and/or convertible securities in
lieu of Stock, the Tag-along Holder shall convert such options, warrants and/or
convertible securities into Stock and deliver Stock as provided in Section
2.2(b)(i) above. The Company agrees to make any such conversion concurrent with
the actual transfer of such shares to the prospective purchaser or transferee.

        2.3 The stock certificate or certificates that the Tag-along Holder
delivers to the Transferring Holder pursuant to Section 2.2 shall be transferred
to the prospective purchaser or transferee in consummation of the sale of the
Stock pursuant to the terms and conditions specified in the Notice, and the
Transferring Holder shall concurrently therewith remit to the Tag-along Holder
that portion of the sale proceeds to which such Tag-along Holder is entitled by
reason of its participation in such sale. To the extent that any prospective
purchaser or transferee prohibit such assignment or otherwise refuse to purchase
shares or other securities from the Tag-along Holder in exercising its rights of
co-sale hereunder, the Transferring Holder shall not sell

                                       3

<PAGE>

to such prospective purchaser or transferee any Stock unless and until,
simultaneously with such sale, the Transferring Holder shall purchase such
shares or other securities from the Tag-along Holder.

     2.4  To the extent the Tag-along Holder does not elect to participate in
the sale of Stock subject to the Notice, the Transferring Holder may, not later
than ninety (90) days following delivery to the Tag-along Holder of the Notice,
effect a transfer of the Transferring Holder's Stock covered by the Notice (and
the Stock the Tag-along Holder has elected to transfer), on terms and conditions
not more favorable to the Transferring Holder than those described in the
Notice. Any proposed transfer on terms and conditions more favorable than those
described in the Notice, as well as any subsequent proposed transfer of any
Stock by the Transferring Holder, shall again be subject to the co-sale rights
of the Tag-along Holder and shall require compliance by the Transferring Holder
with the procedures described in this Article 2.

     2.5  Exempt Transfers. Notwithstanding the foregoing, the co-sale rights of
          ----------------
a Holder shall not apply to (a) any pledge of Stock made pursuant to a bona fide
loan transaction that creates a mere security interest in such Stock, (b) any
transfer to an Affiliate of such Holder, (c) any transfer of less than five (5%)
percent of the Stock held by such Holder and (d) any Public Sale; provided,
                                                                  --------
however, that, in the case of (a) and (b) above, the Holder and such pledgee or
-------
Affiliate shall comply with provisions of Section 7 with respect to such
transfer.

                           ARTICLE 3. VOTING AGREEMENT

     3.1  Board Size. The Principal Stockholder shall vote all Stock held by it
          ----------
(or to which it has voting power), and the Company shall take all action as
shall be necessary to ensure that the authorized number of Directors on the
Board of Directors shall be set and remain at seven (7) directors, provided,
                                                                   --------
however, that such authorized number may be subsequently increased or decreased
-------
with the consent of TIC.

     3.2  Board of Directors. During the term of this Agreement, the Principal
          ------------------
Stockholder agrees to vote all of the Stock now or hereafter directly or
indirectly owned (of record or beneficially) by it, and the Principal
Stockholder and the Company agrees to take such other action as shall be
necessary to elect and appoint to the Board of Directors of the Company two (2)
representatives designated by TIC, which representatives shall initially be Hans
Rutkowski. and Gerhard Kalchgruber. One (1) of such representatives shall, at
the election of TIC, serve on the Company's audit and compensation committees.
The Company shall vote all of the capital stock of any of the Company's
Subsidiaries now or hereafter directly or indirectly owned (or record or
beneficially) by it and take such action to ensure that the authorized number of
directors of the Board of Directors of such Subsidiaries shall be the same as
the Company's. Throughout the term of this Agreement, the Company further agrees
to vote all of the capital stock of any of such Subsidiaries and to take such
other action as shall be necessary to elect and appoint to the Board of
Directors of such Subsidiaries the same individuals elected and appointed to the
Board of Directors of the Company, except as otherwise required by applicable
law; provided, however, that if TIC waives the requirement that the directors of
     --------  -------
the Board of Directors of the Company and its Subsidiaries be the same
individuals, then TIC shall

                                       4

<PAGE>

nevertheless have the right to appoint at least one (1) director to the Board of
Directors of the Subsidiaries. During the term of this Agreement, TIC agrees to
vote all of the Stock now or hereafter directly or indirectly owned (of record
or beneficially) by it, and TIC and the Company agrees to take such other action
as shall be necessary to elect and appoint to the Board of Directors of the
Company two (2) representatives designated by the Principal Stockholder, which
representatives shall be identified in writing by the Principal Stockholder as
promptly practicable.

     3.3  Removal of Directors. Any director of the Company may be removed from
          --------------------
the Board of Directors in the manner allowed by law and the Company's
Certificate of Incorporation and By-laws, but with respect to a director
designated pursuant to Section 3.2 above, only upon the vote or written consent
of such Holder having the right to designate such director (such consent not to
be unreasonably withheld or delayed in the event of a removal of such director
for cause).

     3.4  Observer. If, at any time TIC or the Principal Stockholder, as the
          --------
case may be, shall elect not to have both of its representatives serve on the
Board of Directors pursuant to Section 3.2 above, then such Holder shall have
the right to appoint one (1) observer to attend meetings of the Board of
Directors and all committees thereof (whether in person, telephonic or
otherwise); provided, however, that such observer shall not have rights to vote
            --------  -------
on any matters presented at any meeting. The Company will provide such Holder
with notice as is reasonably necessary to enable the observer to attend each
meeting of the Board of Directors, and will provide the observer with all
information and documentation given to the directors of the Company, including,
without limitation, such information and documentation furnished to directors
without reference to a specific meeting.

     3.5  Board of Directors Meetings. The Company will ensure that meetings of
          ---------------------------
its Board of Directors are held at least four (4) times each year at intervals
of not more than four (4) months, with adequate advance notice given to all
members. The Company shall pay or provide to any director of the Company who is
nominated by TIC, fees and other compensation in amounts at least equal to the
fees or other compensation paid to any other non-management director of the
Company, and shall pay or reimburse each such director for his reasonable travel
expenses incurred in connection with attending meetings or other functions of
the Board of Directors and committees thereof and for the reasonable costs
incurred by him in connection with any other work on behalf of the Company.

     3.6  Director Indemnification. As promptly as practicable following their
          ------------------------
election, the Company shall enter into a Director Indemnification Agreement with
each director designated by TIC in form and substance satisfactory to TIC. The
Certificate of Incorporation and By-laws will in respect of all times during
which any TIC nominee serves as a director of the Company provide for
exculpation and indemnification of the directors and limitations on the
liability of the directors to the fullest extent permitted under applicable
state law, and the Company shall obtain and maintain directors and officers'
liability insurance coverage on terms satisfactory to the nominees of TIC of at
least $5,000,000 per occurrence, covering, among other things, violations

                                       5

<PAGE>

of federal or state securities laws, including coverage of claims under the
Securities Act and the Exchange Act.

     3.7  Covenants of the Company. The Company shall use its best efforts to
          ------------------------
ensure that the rights granted to TIC pursuant to this Section 3 are effective
and that TIC enjoys the benefits thereof. Such actions include, without
limitation, the use of the Company's best efforts to cause the nomination and
election of the directors as provided above. The Company shall not, by any
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all of the provisions of this Agreement
and in the taking of all such actions as may be necessary, appropriate or
reasonably requested by TIC in order to protect TIC's rights against impairment.

                       ARTICLE 4. COVENANTS OF THE COMPANY

     4.1  Affirmative Covenants of the Company.
          ------------------------------------

          (a) The Company shall at all times (i) require each person employed by
the Company (as an employee or consultant) to execute a proprietary information
confidentiality and nondisclosure agreement substantially in the form attached
hereto as Exhibit A; (ii) use its best efforts to preserve its business
          ---------
organization, (iii) comply with all Requirements of Law and with the directions
of any Governmental Authority having jurisdiction over the Company or its
business or property; (iv) keep proper books of record and account, in which
full and correct entries shall be made of all financial transactions and the
assets and business of the Company in accordance with GAAP consistently applied
and (v) allow TIC (or its designee) to visit and inspect any of the properties
of the Company and its Subsidiaries, including its and their books of account
(and to make copies and take abstracts therefrom), and to discuss its and their
affairs, finances and accounts with its and their officers and current and prior
independent public accountants, all at such reasonable times and as often as TIC
may reasonably request; provided, however, that, if the person or persons
conducting an inspection of the Company or its Subsidiaries are not directors of
the Company, then each such person shall execute the Company's standard
confidentiality agreement in the form previously provided to TIC and its counsel
(or in such other form as shall be reasonably acceptable to TIC).

          (b) The Company shall deliver to TIC copies (i) of all reports filed
with the SEC pursuant to the Securities Act or the Exchange Act and (ii) all
notices and other communications provided to the stockholders of the Company.

          (c) As soon as practicable after the Closing Date, the Company shall
engage an international reputable executive search firm to commence the search
for a chief executive officer for the Company. The job description and candidate
profile for such search shall be as approved by a majority of the Board of
Directors (including at least one (1) director designated by TIC). Unless
otherwise agreed to by TIC, the candidate shall be a full-time U.S. resident
with experience in operating a publicly traded, internationally active
technology company, preferably from an industry related to the Company's
business, and, as condition to such officer's

                                       6

<PAGE>

employment, the Company shall require that such officer maintain a primary
residence in the New York Metropolitan Area.

          (d) As soon as practicable after the Closing Date, the Company shall
perform (or cause to be performed) a detailed analysis of stockholder, taxation,
governmental and management issues in order to develop a proposal to revise its
organizational structure. Management of the Company shall submit such proposal
to the Board of Directors for approval, which shall require the affirmative vote
of a majority of the Board of Directors (including at least one (1) director
designated by TIC).

     4.2  Negative Covenants of the Company. Until the first anniversary of the
          ---------------------------------
conversion of the Note pursuant to the Option Agreement, the Company shall not,
without the prior consent of a majority of the independent directors of the
Company (i.e., directors who are not employees or officers of the Company,
         ---
affiliates or directors of the Principal Stockholder or TIC, or in any way
affiliated with or related to the Principal Stockholder or TIC or any
stockholder of the Principal Stockholder or TIC) (a) issue any series of
preferred stock; (b) sell, transfer, assign, lease, convey, liquidate, or
otherwise dispose of or encumber, directly or indirectly, all or substantially
all of its assets, or consolidate or merge with or into any other Person; (c)
redeem or repurchase any shares of its capital stock; (d) make any investment in
any Person that is not engaged in a business related to the business of the
Company as currently conducted; (e) issue any shares of Stock (or any capital
stock of the Company which ordinarily has voting power for the election of
directors of the Company) at a price per share less than eighty percent (80%) of
its market price (as defined below) on the date of issuance thereof; or (f)
enter into any transaction with an affiliate of the Company or any of its
Subsidiaries, other than on terms and conditions as favorable to the Company or
its Subsidiaries, as the case may be, as would be obtainable by any of them in a
comparable arm's-length transaction with a Person other than an affiliate. As
used, herein, the term "market price" means, on any given day, (i) the price of
the last trade, as reported on the Nasdaq National Market, not identified as
having been reported late to such system, or (ii) if the Stock is so traded, but
not so quoted, the average of the last bid and ask prices, as those prices are
reported on the Nasdaq National Market, or (iii) if the Stock is not listed or
authorized for trading on the Nasdaq National Market or any comparable system,
the average of the closing bid and asked prices as furnished by two members of
the National Association of Securities Dealers, Inc. selected from time to time
by the Company for that purpose. If the Stock is not listed and traded in a
manner that the quotations referred to above are available for the period
required hereunder, the market price per share of Stock shall be deemed to be
the fair value per share of such security as reasonably determined in good faith
by a majority of the Board of Directors of the Company (including at least one
(1) director designated by TIC).

                       ARTICLE 5. APPOINTMENT OF OFFICERS

     5.1  Officers. For so long as TIC shall have the right to designate
          --------
representatives to the Board of Directors of the Company pursuant to Section 3.2
hereof, the Company and each of its Subsidiaries shall not appoint any executive
officer of the Company or any chief executive

                                       7

<PAGE>

officer of any Subsidiary without the prior written consent of at least one
director designated by TIC, which consent shall not be unreasonably withheld
or delayed.

                                ARTICLE 6. LEGEND

     6.1  Legend. Each Holder understands and agrees that the legend in
          ------
substantially the form set forth below shall appear on all stock certificates
representing the Stock owned by such Holder.

          THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
          REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
          OF A CERTAIN STOCKHOLDERS AGREEMENT AMONG THE COMPANY AND CERTAIN
          HOLDERS OF THE COMPANY'S CAPITAL STOCK, AS IT MAY BE AMENDED FROM TIME
          TO TIME. A COPY OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST
          TO THE SECRETARY OF THE COMPANY.

     6.2  Instructions. Each Holder agrees that the Company may instruct its
          ------------
transfer agent to impose transfer restrictions on the shares represented by
certificates bearing the legend referred to in Section 6.1 above to enforce the
provisions of this Agreement and the Company agrees to promptly do so. The
legend shall be removed (i) upon termination of this Agreement and (ii) a Public
Sale of any Stock (it being understood that if a Holder transfers less than all
of its Stock in connection with such Public Sale, then the Company shall issue a
new stock certificate or certificates bearing the legend referred to in Section
6.1 above).

                          ARTICLE 7. GENERAL PROVISIONS

     7.1  Notices. Except as may be otherwise provided herein, all notices,
          -------
requests, waivers and other communications made pursuant to this Agreement shall
be in writing and shall be conclusively deemed to have been duly given (a) when
hand delivered to the other party; (b) when received when sent by facsimile at
the address and number set forth in Exhibit B; (c) three business days after
                                    ---------
deposit in the U.S. mail with first class or certified mail receipt requested,
postage prepaid, and addressed to the other party as set forth in Exhibit B; or
                                                                  ---------
(d) the next business day after deposit with a national overnight delivery
service, postage prepaid, addressed to the other party as set forth in Exhibit B
                                                                       ---------
with next-business-day delivery guaranteed. Each person making a communication
hereunder by facsimile shall promptly confirm by telephone to the person to whom
such communication was addressed each communication made by it by facsimile
pursuant hereto but the absence of such confirmation shall not affect the
validity of any such communication. A party may change or supplement the
addresses set forth in Exhibit B, or designate additional addresses, for
                       ---------
purposes of this Section 7.1 by giving the other parties written notice of the
new address in the manner set forth above.

                                       8

<PAGE>

     7.2  Entire Agreement. This Agreement, together with all the Exhibits
          ----------------
hereto, constitutes and contains the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter hereof.

     7.3  Governing Law; Jurisdiction of Disputes. This Agreement shall be
          ---------------------------------------
governed by and construed exclusively in accordance with the internal laws of
the State of New York as applied to agreements among New York residents entered
into and to be performed entirely within the State of New York, excluding that
body of law relating to conflict of laws and choice of law. Any disputes arising
hereunder shall be adjudicated solely in the Federal or State Courts of the
State of New York. The parties hereby consent to service of process and hereby
waive any claim of inconvenient forum in connection with such jurisdiction.

     7.4  Severability. If one or more provisions of this Agreement are held to
          ------------
be unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms.

     7.5  Third Parties. Nothing in this Agreement, express or implied, is
          -------------
intended to confer upon any person, other than the parties hereto and their
permitted successors and assigns, any rights or remedies under or by reason of
this Agreement.

     7.6  Amendment. Any provision of this Agreement may be amended and the
          ---------
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only by a written instrument signed
by the party against whom enforcement of any such amendment or waiver is sought.

     7.7  Assignment. Notwithstanding anything contained in this Agreement to
          ----------
the contrary (i) no Holder shall assign or otherwise transfer any of its Stock
and its rights and obligations contained in this Agreement unless the Company is
given written notice by the such Holder at the time of such assignment stating
the name and address of the assignee and identifying the Stock of the Company as
to which the rights and obligations in question are being assigned, (ii) no such
assignment shall be effective unless and until such assignee (including, without
limitation, any pledgee) shall execute a written instrument with the Company and
the non-assigning party agreeing to be bound by the terms hereof to the same
extent as such assigning party and (iii) any Stock shall remain "Stock"
hereunder. This Section 7.7 shall not apply to a Public Sale of Stock by any
Holder.

     7.8  Successors and Assigns. The provisions of this Agreement shall inure
          ----------------------
to the benefit of, and shall be binding upon, the successors and permitted
assigns of the parties hereto.

     7.9  After-Acquired Securities. All of the provisions of this Agreement
          -------------------------
shall apply to all of the Stock now owned or which may be issued or transferred
hereunder to a party hereto in consequence of any additional issuance, purchase,
conversion, exercise, exchange or reclassification of any of such Stock,
corporate reorganization, or any other form of

                                       9

<PAGE>

recapitalization, consolidation, merger, share split or share dividend, or which
are acquired by a party hereto in any other manner.

     7.10 Termination. The co-sale rights set forth in Article 2 hereof and the
          -----------
voting rights set forth in Article 3 hereof shall terminate when either Holder
(together with its Affiliates) beneficially owns less than ten (10%) percent of
the outstanding Stock of the Company on a fully-diluted basis. All other
provisions of this Agreement shall terminate on the later to occur of (x)
November 18, 2002 and (y) the date on which TIC (together with its Affiliates)
beneficially owns less than ten (10%) percent of the outstanding Stock of the
Company on a fully-diluted basis.

     7.11 Captions. The captions to sections of this Agreement have been
          --------
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.

     7.12 Counterparts. This Agreement may be executed in counterparts, each of
          ------------
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

     7.13 Remedies. The Principal Stockholder and the Company agree that it
          --------
would be impossible or inadequate to measure and calculate the damages to TIC
resulting from any breach of the provisions set forth herein. Accordingly, the
Principal Stockholder and the Company agree that if such party breaches such
arrangement, TIC will have, in addition to any other right or remedy available,
the right to obtain an injunction from a court of competent jurisdiction
restraining such breach or threatened breach and to specific performance of such
arrangement.

     7.14 Securities Compliance. Without limiting the generality at Section
          ---------------------
4.1(a)(iii), the Company shall notify the SEC and the Nasdaq National Market
System, in accordance with their respective requirements, of the transactions
contemplated by the TIC Loan Agreement and the Company Loan Agreement and shall
take all other necessary action and proceedings as may be required and permitted
by applicable law, rule and regulation, for the legal and valid issuance of the
Notes and the shares of Stock issuable upon conversion thereof.

     7.15 Additional Financing. TIC may be interested in investing up to an
          --------------------
additional $15 million in the Company (upon substantially the same terms and
subject to the same conditions as its existing investment in the Company) and,
in connection with any future financing by the Company, the Company and TIC will
explore and discuss in good faith the possibility and terms of such additional
investment by TIC.

     7.16 Certain Covenants of the Principal Stockholder and TIC. Each of the
          ------------------------------------------------------
Principal Stockholder and TIC hereby agrees that their respective trading
activities with respect to shares of the Common Stock will be in compliance with
all applicable state and federal securities laws, rules and regulations and
rules and regulations of the Nasdaq National Market System relating to market
manipulation. In addition, each of the Principal Stockholder and TIC hereby
agrees that it will make no short sales (as defined in any applicable SEC or
National Association of

                                       10

<PAGE>

Securities Dealers, Inc. rules) of the Common Stock while the Note remains
issued and outstanding.

     7.17  Effectiveness of Agreement. Notwithstanding anything to the contrary
           --------------------------
contained herein, this Agreement shall become effective only upon the advance of
the Loan by TIC on the Funding Date.

                            [signature page follows]

                                       11

<PAGE>

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

                                    CONSTELLATION 3D, INC.

                                    By: /s/ Leonardo Berezowsky
                                       -----------------------------------------
                                       Name:  Leonardo Berezowsky
                                       Title: Director

                                    TIC TARGET INVEST CONSULTING, LLC

                                    By: /s/ Andre Khayyam
                                       -----------------------------------------
                                       Name:  Andre Khayyam
                                       Title: Managing Director

                                    CONSTELLATION 3D TECHNOLOGY LIMITED

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

                                       12

<PAGE>

                                                                       Exhibit A
                                                                       ---------

                        PROPRIETARY INVENTION ASSIGNMENT
                        --------------------------------

                                      A-1

<PAGE>

                                                                       Exhibit B
                                                                       ---------

                              ADDRESSES FOR NOTICES
                              ---------------------

                           To the Company:

                           Constellation 3D, Inc.
                           805 Third Avenue, 14/th/ Floor
                           New York, New York 10022
                           Attn: General Counsel
                           Fax Number: 212-308-3573

                           To TIC:

                           TIC Target Invest Consulting, LLC
                           c/o Auditra AG
                           Churer Strasse 35
                           CH-9470 Buchs, SG, Switzerland
                           Attn: Andre Khayyam
                           Fax Number: 0041 81 750 5359

                           To the Principal Stockholder:

                           Constellation 3D Technology Limited
                           c/o Zysman, Aharoni, Gayer and Co.
                           52A Hayarkon St.
                           Tel Aviv 63432 Israel
                           Attn: Jonathan Sherman, Adv.
                           Fax Number: 972-3-7955550

                                       B-1

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