/8NO SALE, OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
WARRANT OR ANY INTEREST THEREIN SHALL BE MADE UNLESS A REGISTRATION STATEMENT
UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH
TRANSACTION IS THEN IN EFFECT, OR THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THAT
ACT.

This Warrant will be void after 5:00 p.m. New York time on June 18, 2015.

COMMON STOCK PURCHASE WARRANT

SERIES D WARRANT NO. -

To Subscribe for and Purchase Shares of

Document Security Systems, Inc.

(Transferability Restricted as Provided in Paragraph 2 Below)

THIS CERTIFIES THAT, for value received, ________, or registered assigns, is
entitled to subscribe for and purchase from Document Security Systems, Inc., a
corporation incorporated under the laws of the State of New York  (the
“Company”)  ___________ (________) fully paid and non-assessable shares of
Common Stock of the Company at the “Warrant Price” as hereinafter defined and
during the period hereinafter set forth, subject, however, to the provisions and
upon the terms and conditions hereinafter set forth. This Warrant is one of an
issue of the Company’s Common Stock purchase warrants (herein called the
“Warrants”), issued in the Offering (as defined below) identical in all respects
except as to the names of the holders thereof and the number of Common Shares
purchasable thereunder.

1.           As used herein:

(a)           “Common Stock” or “Common Shares” shall initially refer to the
Company’s Common Stock, $0.02 par value, per share as more fully set forth in
Section 3 hereof.

(b)           “Warrant Price” shall be $3.75 per share, which is subject to
adjustment pursuant to Section 4 hereof.

(c)           “Warrants” shall include any Warrants represented by any
certificate issued from time to time in connection with the transfer, partial
exercise, exchange of any Warrants or in connection with a lost, stolen,
mutilated or destroyed Warrant certificate, if any, or to reflect an adjusted
number of Common Shares.

(d)           “Underlying Securities” shall refer to and include the Common
Stock issuable or issued upon exercise of the Warrants.

 
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(e)           “Holders” shall mean the registered holder of such Warrants or any
issued Underlying Securities.

(f)           “Memorandum” shall mean the Company’s Confidential Private
Offering Memorandum dated June 18, 2010, as amended and supplemented, which is
being used (or was used) in connection with the private offering of Common Stock
and Series D Common Stock Purchase Warrants.

(g)           “Offering” means the private offering of Common Stock and Series D
Common Stock Purchase Warrants in accordance with the Memorandum.

2.           The purchase rights represented by this Warrant may be exercised by
the holder hereof, in whole or in part at any time, and from time to time,
during the period commencing June 18, 2010 (the “Commencement Date”) until 5:00
New York Time on June 18, 2015  (the “Expiration Date”), by the presentation of
this Warrant, with the purchase form attached duly executed, at the Company’s
office (or such office or agency of the Company as it may designate in writing
to the Holder hereof by notice pursuant to Section 11 hereof), and upon payment
by the Holder to the Company in cash or by certified check of the Warrant Price
for the Common Shares.  The purchase price of the Common Shares issuable
pursuant to the Warrants, shall be payable in cash and/or by certified bank
check.  The Company agrees that the Holder hereof shall be deemed the record
owner of such Common Shares as of the close of business on the date on which
this Warrant shall have been presented and payment made for such Common Shares
as aforesaid. Certificates for the Common Shares so purchased shall be delivered
to the Holder hereof within a reasonable time, not exceeding ten (10) business
days, after the rights represented by this Warrant shall have been so exercised.
If this Warrant shall be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, deliver a new Warrant evidencing the
rights of the Holder hereof to purchase the balance of the Common Shares which
such Holder is entitled to purchase hereunder.

3.           Subject and pursuant to the provisions of this Section 3, the
Warrant Price and number of Common Shares subject to this Warrant shall be
subject to adjustment from time to time as set forth hereinafter in this Section
3.

(a)           Dividends and Distributions.  In case the Company shall at any
time after the date hereof pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock, then upon such dividend or distribution,
the Exercise Price in effect immediately prior to such dividend or distribution
shall be reduced to a price determined by dividing an amount equal to the total
number of shares of Common Stock outstanding immediately prior to such dividend
or distribution multiplied by the Exercise Price in effect immediately prior to
such dividend or distribution, by the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.  For purposes of
any computation to be made in accordance with the provisions of this Section 3,
the Common Stock issuable by way of dividend or distribution shall be deemed to
have been issued immediately after the opening of business on the date following
the date fixed for determination of shareholders entitled to receive such
dividend or distribution.

 
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(b)           Subdivision and Combination.  In case the Company shall at any
time subdivide or combine the outstanding Common Stock, the Exercise Price shall
forthwith be proportionately decreased in the case of subdivision or increased
in the case of combination.

(c)           Adjustment in Number of Warrant Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 3, the number of
Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to
the nearest full shares of Common Stock by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.

(d)           Reclassification, Consolidation, Merger, etc.  In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination), or in the case of
any consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in nominal value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holder shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holder were the owner of the Warrant Shares
issuable upon exercise of the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of Warrant Shares issuable upon
exercise of the Warrants and (y) the Exercise Price in effect immediately prior
to the record date for such reclassification, change, consolidation, merger,
sale or conveyance as if such Holder had exercised the Warrants.

(e)           Determination of Outstanding Shares.  The number of shares of
Common Stock at any one time outstanding shall include the aggregate number of
shares issued or issuable upon the exercise of outstanding options, rights,
warrants and upon the conversion or exchange of outstanding convertible or
exchangeable securities.

(f)           Except as otherwise specifically provided herein the date of
issuance or sale of Common Stock shall be deemed to be the date the Company is
legally obligated to issue such Common Shares.  In case at any time the Company
shall take a record date for the purpose of determining the holders of Common
Stock entitled (i) to receive a dividend or other distribution payable in Common
Stock or (ii) to subscribe for or purchase Common Stock, then such record date
shall be deemed to be the date of issue or sale of the Common Shares, deemed to
have been issued or sold upon the declaration of such dividend or the making of
such distribution or the granting of such right of subscription or purchase, as
the case may be.

 
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4.           For the purposes of this Warrant, the terms “Common Shares” or
“Common Stock” or “Warrant Shares” shall mean (i) the class of stock designated
as the common stock, $0.02 par value, of the Company on the date set forth on
the first page hereof or (ii) any other class of stock resulting from successive
changes or re-classifications of such Common Stock consisting solely of changes
in par value, or from no par value to par value, or from par value to no par
value. If at any time, as a result of an adjustment made pursuant to Section 3,
the securities or other property obtainable upon exercise of this Warrant shall
include shares or other securities of the Company other than Common Shares or
securities of another corporation or other property, thereafter, the number of
such other shares or other securities or property so obtainable shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
Section 3 and all other provisions of this Warrant with respect to Common Shares
shall apply on like terms to any such other shares or other securities or
property. Subject to the foregoing, and unless the context requires otherwise,
all references herein to Common Shares shall, in the event of an adjustment
pursuant to Section 3, be deemed to refer also to any other securities or
property then obtainable as a result of such adjustments.

5.           The Company covenants and agrees that:

(a)           During the period within which the rights represented by the
Warrant may be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes of
issuance upon exercise of this Warrant, such number of its Common Shares as
shall be issuable upon the exercise of this Warrant; and if at any time the
number of authorized Common Shares shall not be sufficient to effect the
exercise of this Warrant, the Company will take such corporate action as may be
necessary to increase its authorized but unissued Common Shares to such number
of shares as shall be sufficient for such purpose; the Company shall have
analogous obligations with respect to any other securities or property issuable
upon exercise of this Warrant;

(b)           All Common Shares which may be issued upon exercise of the rights
represented by this Warrant will, upon issuance be validly issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof; and

(c)           All original issue taxes payable in respect of the issuance of
Common Shares upon the exercise of the rights represented by this Warrant shall
be borne by the Company but in no event shall the Company be responsible or
liable for income taxes or transfer taxes upon the transfer of any Warrants.

6.           Until exercised, this Warrant shall not entitle the Holder hereof
to any voting rights or other rights as a stockholder of the Company.

7.           In no event shall this Warrant be sold, transferred, assigned or
hypothecated except in conformity with the applicable provisions of the
Securities Act of 1933, as amended and as then in force (the “Act”), or any
similar Federal statute then in force, and all applicable “Blue Sky” laws.

 
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8.           The Holder of this Warrant, by acceptance hereof, agrees that,
prior to the disposition of this Warrant or of any Common Shares theretofore
purchased upon the exercise hereof, under circumstances that might require
registration of such securities under the Act, or any similar Federal statute
then in force, such Holder will give written notice to the Company expressing
such Holder’s intention of effecting such disposition, and describing briefly
such Holder’s intention as to the disposition to be made of this Warrant and/or
the securities theretofore issued upon exercise hereof.  Promptly upon receiving
such notice, the Company shall present copies thereof to its counsel.  If, in
the opinion of such counsel, the proposed disposition does not require
registration under the Act or qualification pursuant to Regulation A promulgated
under the Act, or any similar Federal statute then in force, of this Warrant
and/or the securities issuable or issued upon the exercise of this Warrant, the
Company shall, as promptly as practicable, notify the Holder hereof of such
opinion, whereupon such Holder shall be entitled to dispose of this Warrant
and/or such Common Shares theretofore issued upon the exercise hereof, all in
accordance with the terms of the notice delivered by such Holder to the
Company.  Certificates representing the Underlying Securities shall bear the
following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT“) OR UNDER THE APPLICABLE SECURITIES
LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY
STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.”

9.           This Warrant is exchangeable, upon its surrender by the registered
holder at such office or agency of the Company as may be designated by the
Company, for new Warrants of like tenor, representing, in the aggregate, the
right to subscribe for and purchase the number of Common Shares that may be
subscribed for and purchased hereunder, each of such new Warrants to represent
the right to subscribe for and purchase such number of Common Shares as shall be
designated by the registered holder at the time of such surrender.  Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of any such loss, theft or
destruction, upon delivery of a bond of indemnity satisfactory to the Company,
or in the case of such mutilation, upon surrender or cancellation of this
Warrant, the Company will issue to the registered holder a new Warrant of like
tenor, in lieu of this Warrant, representing the right to subscribe for and
purchase the number of Common Shares that may be subscribed for and purchased
hereunder. Nothing herein is intended to authorize the transfer of this Warrant
except as permitted by applicable law.

10.           Every Holder hereof, by accepting the same, agrees with any
subsequent Holder hereof and with the Company that this Warrant and all rights
hereunder are issued and shall be held subject to all of the terms, conditions,
limitations and provisions set forth in this Warrant, and further agrees that
the Company and its transfer agent may deem and treat the registered Holder of
this Warrant as the absolute owner hereof for all purposes and shall not be
affected by any notice to the contrary.

 
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11.           All notices required hereunder shall be given by first-class mail,
postage prepaid; if given by the holder hereof, addressed to the Company at 28
Main Street East, Suite 1525, Rochester, NY 14614 or such other address as the
Company may designate in writing to the holder hereof; and if given by the
Company, addressed to the holder at the address of the holder shown on the books
of the Company.

12.           The validity, construction and enforcement of this Warrant shall
be governed by the laws of the State of New York and jurisdiction is hereby
vested in the Courts of said State in the event of the institution of any legal
action under this Warrant.

 
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IN WITNESS WHEREOF, Document Security Systems, Inc. has caused this Warrant to
be signed by its duly authorized officers to be dated _______________, 2010.

DOCUMENT SECURITY SYSTEMS, INC.
 
By:  
   
 
Name:  Patrick White
 
Title:  Chief Executive Officer

 
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PURCHASE FORM
To Be Executed
Upon Exercise of Warrant

The undersigned hereby exercises the right to purchase _______ Common Shares
evidenced by the within Warrant, according to the terms and conditions thereof,
and herewith makes payment of the purchase price in full.  The undersigned
requests that certificates for such shares shall be issued in the name set forth
below.

Dated:                    , ______
Signature
 
   
Print Name of Signatory
 
Name to whom certificates are to
be issued if different from above
 
Address:
    
 
    
 
    
Social Security No.
or other identifying number

If said number of shares shall not be all the shares purchasable under the
within Warrant, the undersigned requests that a new Warrant for the unexercised
portion shall be registered in the name of :

    
(Please Print)
Address:
    
 
  
 
    
Social Security No.
or other identifying number
 
  
Signature

 
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