THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION
AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED
OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE
COMPANY RECEIVES AN OPINION, IN REASONABLY ACCEPTABLE FORM AND SCOPE, OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION, QUALIFICATION OR
OTHER SUCH ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS.

 

DOCUMENT SECURITY SYSTEMS, INC.

 

WARRANT TO PURCHASE COMMON STOCK
(Expires November 14, 2021)

 

Issue Date: November 14, 2016

Warrant Shares: 750,000

 

FOR VALUE RECEIVED, subject to the provisions set forth below, the undersigned,
DOCUMENT SECURITY SYSTEMS, INC., a New York corporation (the “Company”), hereby
certifies that BRICKELL KEY INVESTMENTS LP, a Delaware limited partnership, or
its registered assigns (the “Holder”) is entitled to subscribe for and purchase
from the Company up to 750,000 shares of Common Stock (the “Warrant Shares”) at
an exercise price of $1.00 per share (the “Exercise Price”) for an aggregate
cash purchase price of $750,000 (the “Aggregate Exercise Price”) at any time
from and after the date hereof and until 5:00 p.m. (Eastern time) on November
14, 2021 (the “Expiration Date”) upon surrender to the Company at its principal
office (or at such other location as the Company may advise the Holder in
writing) of this Warrant properly endorsed with the Notice of Exercise attached
hereto duly filled in and signed and, if applicable, upon payment in cash or by
check of the aggregate Exercise Price for the number of shares for which this
Warrant is then exercisable in accordance with the provisions hereof. The number
of Warrant Shares is subject to adjustment as provided in Section 3 of this
Warrant.

 

In the event that at any time there is more than one (1) holder of this Warrant
(A) the term “Holder” shall be deemed to refer to all such holders and each such
holder shall be referred to herein as a “Holder” and collectively as the
“Holders”, and (B) to any action, approval, or consent of the Holders required
or otherwise permitted pursuant to the provisions of this Warrant to be obtained
from the Holder, shall be deemed to have been taken, received or otherwise
obtained if such action, approval or consent is taken or received or otherwise
obtained by or from Holders of Warrants that are collectively exercisable into
more than fifty percent (50%) of the Warrant Shares into which this Warrant
(taken as a whole) is then exercisable (the “Requisite Holders”).

 

  

   

 

1. Exercise of Warrant.

 

1.1. Exercise. This Warrant shall be exercisable in whole or in part from time
to time at any time from the date hereof until the Expiration Date, and this
Warrant shall expire on the Expiration Date. Upon exercise of this Warrant, the
Exercise Price shall be payable in cash or by check.

 

1.2. Exercise Procedures; Delivery of Certificate. Upon surrender of this
Warrant with a duly executed Notice of Exercise in the form of Annex A attached
hereto, together with payment of the Exercise Price for the Warrant Shares
purchased, at the Company’s principal executive offices (the “Designated
Office”), the Holder shall be entitled to receive a certificate or certificates
for the Warrant Shares so purchased to the extent certificated, and if not
certificated, the Company’s records shall be updated to reflect the Warrant
Shares so purchased. The Company agrees that the Warrant Shares shall be deemed
to have been issued to the Holder as of the close of business on the date on
which this Warrant shall have been surrendered together with the Notice of
Exercise and payment for such Warrant Shares.

 

1.3. Cashless Exercise. Anything elsewhere contained herein to the contrary
notwithstanding, in lieu of payment of the Exercise Price, a Holder may exercise
this Warrant by presentation and surrender of this Warrant to the Company,
together with a Cashless Exercise Form in the form attached hereto as Annex B
(or a reasonable facsimile thereof) duly executed (a “Cashless Exercise”). Such
presentation and surrender shall be deemed a waiver of the Holder’s obligation
to pay all or any portion of the Exercise Price, as the case may be. In the
event of a Cashless Exercise, the Holder shall exchange this Warrant for that
number of Shares determined by multiplying the number of Shares for which this
Warrant is being exercised by a fraction, (a) the numerator of which shall be
the difference between (i) the then current market price per Share, and (ii) the
Exercise Price, and (b) the denominator of which shall be the then current
market price per Share. For purposes of any computation under this Section l.3,
the then current market price per Share for the Company’s common stock (the
“Shares”) at any date shall be deemed to be the average of the daily trading
price for the ten (10) consecutive trading days immediately prior to the
Cashless Exercise. If, during such measuring period, there shall occur any event
which gives rise to any adjustment of the number of Warrant Shares, then a
corresponding adjustment shall be made with respect to the closing prices of the
Shares for the days prior to the Effective Date of such adjustment event. As
used herein, the term “trading price” on any relevant date means (A) if the
Shares are listed for trading on the New York Stock Exchange, the NYSE MKT
Exchange, the NASDAQ Global Market, or the NASDAQ Global Select Market, the
closing sale price (or, if no closing sale price is reported, the last reported
sale price) of the Shares (regular way), (B) if the Shares were not so listed
but quotations for the Shares are reported on the OTC Bulletin Board, the most
recent closing price as reported on the OTC Bulletin Board, or (C) otherwise,
the fair market value of a Share as determined in good faith by the Board of
Directors of the Company, without discount for illiquidity or minority interest.

 

1.4. Dividends and Distributions. If the Company at any time or from time to
time after the date hereof declares, orders, pays or makes a dividend or other
distribution (including, without limitation, any distribution of cash, other
security or other property, by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement or otherwise) on or with
respect to its Shares (other than a dividend that is payable in securities and
that is subject to Section 3.3) then, and in each such case, the Holder shall be
entitled to receive its pro-rata share of cash, stock or other property as and
when the same is distributed to the beneficial owners of the Shares, for all
Warrant Shares the Holder owns on the record date of such distribution or
dividend as a result of a previous exercise of all or a portion of this Warrant.

 

 -2- 

   

 

1.5. Redemption of Warrants

 

(a) Subject to and in accordance with the provisions of this Section 1.5, the
Holders shall have the right and option (the “Redemption Option”) exercisable
commencing upon the earliest to occur of the following (each a “Triggering
Event”) (a) a Sale (as hereinafter defined), and (b) the occurrence of an Event
of Default under the Proceeds Investment Agreement, to require the Company to
redeem and purchase, all or any portion of the Warrant and Warrant Shares from
the Holders for a price equal to the then Fair Market Value of the Warrants and
Warrant Shares the Company is required to redeem (the “Redemption Price”),
payable in cash in full. Such Redemption Option shall be exercised by giving
written notice (the “Redemption Option Notice”) to the Company at least ten (10)
days prior to (A) the proposed closing date of a proposed Sale, or (B) the date
on which an Event of Default occurs, provided, that if the Triggering Event is
an acceleration of the Obligations (as defined in the Proceeds Investment
Agreement), then the Holder’s notice hereunder may be given simultaneously with
or as part of the notice accelerating the Obligations. Provided that the
Redemption Option is duly exercised, the Redemption Price shall be payable
simultaneously with the consummation of the Triggering Event. Upon the Company
becoming obligated hereunder to pay the Redemption Price, the Redemption Price
is an Obligation (as defined in the Proceeds Investment Agreement) which shall
be secured by the Collateral (as defined in the Proceeds Investment Agreement)
pursuant to the terms of the Proceeds Investment Agreement.

 

(b) In the event that and at such time as the Company or its equity holders (x)
enters into a binding agreement with respect to any Sale (and in any event, no
later than that date which is twenty (20) days prior to the closing of any such
proposed Sale), or (y) Company has received notice of the occurrence of an Event
of Default, the Company shall, in addition to any notice required under the
Proceeds Investment Agreement, give written notice to the Holder (or, if
applicable, the holders of the Warrant Shares) setting forth in reasonable
detail the circumstances and material terms of the subject Sale agreement or an
Event of Default, as the case may be. In conjunction with the giving of any such
notice, the Company shall provide or cause to be provided to the Holders any
past due consolidated financial statements (whether required pursuant to the
Proceeds Investment Agreement or pursuant to this Warrant).

 

(c) For purposes hereof, “Sale” shall mean either (i) the sale, lease, license,
transfer, conveyance or other disposition, in one transaction or a series of
related transactions, of all or substantially all of the assets of the Company
and its Subsidiaries, taken as a whole, or (ii) a transaction or series of
transactions (including by way of merger, consolidation, recapitalization,
reorganization or sale of securities by the holders of securities of the
Company) the result of which is that the stockholders of the Company immediately
prior to such transaction are (after giving effect to such transaction) no
longer, in the aggregate, the “beneficial owners” (as such term is defined in
Rule 13d-3 and Rule 13d-5 promulgated under the Securities Exchange Act),
directly or indirectly through one or more intermediaries, of more than 50% of
the voting power of the outstanding voting securities of the Company and its
Subsidiaries.

 

(d) For purposes hereof, “Fair Market Value” shall mean the fair market value of
the entire Company and its Subsidiaries on a consolidated basis (after giving
effect to the repayment of any funded debt) as determined by an independent
nationally recognized investment banking firm or other third party experienced
in valuing similar companies, chosen by the Holder, subject to the Company’s
consent, which will not be unreasonably withheld (and paid for by the Company),
without discount for illiquidity minority Shares or restrictions on transfer. In
no event shall the Fair Market Value of a Warrant or the Warrant Shares be less
than the per share consideration received or receivable with respect to the
shares of such class in connection with any pending Sale.

 

 -3- 

   

 

(e) The Redemption Option shall be exercisable at any time and from time to time
after the occurrence of a Triggering Event by the Holder providing a Redemption
Option Notice duly executed, to the Company’s principal executive office, in the
form attached hereto as Annex C (or a reasonable facsimile thereof). Upon
payment of the Redemption Price by the Company to the Holders, the Holders shall
surrender the applicable Warrant (or the certificate(s) if certificated,
representing the applicable Warrant Shares, as applicable) to the Company,
against delivery to the Holders of a replacement Warrant (or certificate(s)
representing Warrant Shares, as applicable) representing the portion of this
Warrant or the Warrant Shares (as applicable) not purchased by the Company
hereunder.

 

2. Transfer; Issuance of Stock Certificates; Restrictive Legends.

 

2.1. Transfer. This Warrant may be transferred in whole, or in part, by the
Holder at any time. Each transfer of this Warrant and all rights hereunder shall
be registered on the books of the Company to be maintained for such purpose,
upon surrender of this Warrant at the Designated Office, together with a written
assignment of this Warrant in the form of Annex D attached hereto duly executed
by the Holder or its agent or attorney. Upon such surrender and delivery, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment. A Warrant may be exercised by the new Holder for the purchase of
Warrant Shares without having a new Warrant issued. Prior to due presentment for
registration of transfer thereof, the Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof (notwithstanding any
notations of ownership or writing thereon made by anyone other than a duly
authorized officer of the Company) for all purposes and shall not be affected by
any notice to the contrary. All Warrants issued upon any assignment of Warrants
shall be the valid obligations of the Company, evidencing the same rights, and
entitled to the same benefits as the Warrants surrendered upon such registration
of transfer or exchange.

 

2.2. Certificates. To the extent Shares are or hereinafter become certificated,
certificates for the Warrant Shares shall be delivered to the Holder within five
(5) business days after the rights represented by this Warrant shall have been
exercised pursuant to Section 1. The issuance of certificates for Warrant Shares
upon the exercise of this Warrant shall be made without charge to the Holder
hereof including, without limitation, any documentary, stamp or similar tax that
may be payable in respect thereof; provided, however, that the Company shall not
be required to pay any income tax to which the Holder hereof may be subject in
connection with the issuance of this Warrant or the Warrant Shares.

 

 -4- 

   

 

2.3. Restrictive Legend. Except as otherwise provided in this Section 2, each
certificate for Warrant Shares, if any, initially issued upon the exercise of
this Warrant and each certificate for Warrant Shares, if any, issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with legends in substantially the following form:

 

“These securities have not been registered under the Securities Act of 1933, as
amended (THE “ACT”) OR UNDER the SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. They may not be sold, offered for sale, pledged or hypothecated
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.”

 

Notwithstanding the foregoing, the legend requirements of this Section 2.3 shall
terminate as to any particular Warrant Shares when (i) in the case of the first
paragraph of such legends, the Warrant Shares are transferred pursuant to an
effective resale registration statement, or the Company shall have received from
the Holder thereof an opinion of counsel in form and substance reasonably
acceptable to the Company that such legend is not required in order to ensure
compliance with the Securities Act. Whenever the restrictions imposed by this
Section 2.3 shall terminate, the Holder or subsequent transferee, as the case
may be, shall be entitled to receive from the Company without cost to such
Holder or transferee a certificate for the Warrant Shares without the subject
restrictive legends.

 

3. Adjustment of Number of Shares; Nature of Securities Issuable Upon Exercise
of this Warrant.

 

3.1. Adjustment Upon Non-Shares Distributions. If the Company, at any time or
from time to time after the issuance of this Warrant, makes a distribution to
the holders of the Shares payable in securities of the Company other than shares
of Shares, then, in each such event, provision shall be made so that the Holder
shall receive upon exercise of this Warrant, in addition to the number of
Warrant Shares, the amount of such securities of the Company which would have
been received if this Warrant had been exercised for Warrant Shares on the date
of such event, subject to adjustments subsequent to the date of such event with
respect to such distributed securities (i) on an appropriate and equitable
arithmetic basis in the event of any stock split, stock dividend, combination of
shares, recapitalization or other such event with respect to such securities
from time to time, and (ii) which shall otherwise be on terms as nearly
equivalent as practicable to the adjustments provided in this Section 3.

 

3.2. Adjustment Upon Merger, Consolidation or Exchange.

 

(a) If at any time or from time to time after the issuance and before the
exercise of this Warrant there is any merger, consolidation, arrangement or
statutory share exchange of the Company with or into any other person or entity,
then, in each such event, provision shall be made so that the Holder shall
receive upon exercise of the Warrant the kind and amount of Shares, shares and
other securities and property (including cash) which would have been received
upon such merger, consolidation, arrangement or statutory share exchange by the
Holder if this Warrant had been exercised for Warrant Shares immediately prior
to such merger, consolidation, arrangement or statutory share exchange, subject
to adjustments for events subsequent to the effective date of such merger,
consolidation, arrangement or statutory share exchange with respect to such
shares and other securities which shall be on terms as nearly equivalent as
practicable to the adjustments provided in this Section 3 and all other
adjustments under this Section 3.

 

 -5- 

   

 

(b) If the holders of a majority of the outstanding Shares with the power to
vote thereon, wishes to form a holding company which will own all of the
outstanding Shares, the Holder will exchange this Warrant and any Warrant Shares
for identical warrants and common stock of the holding company, and the holding
company will become a party to this Warrant and in substitution for the Company;
provided, however, that as a condition to such exchange, i) the Holder shall
have the same percentage holdings (in common stock and/or this Warrant, as
applicable) in the holding company as the Holder had in the Company immediately
prior to such exchange, ii) all holders of Shares and options, warrants,
convertible securities and other rights to acquire Shares shall make similar
exchanges, such that the Holder and the holders of such other securities shall
be treated on an equivalent proportionate basis, and iii) the holding company
shall be a corporation which, to the greatest extent possible, shall have a
similar capital structure and other corporate and tax attributes as the Company.

 

3.3. Adjustments for Recapitalization or Reclassification. If, at any time or
from time to time after the issuance of this Warrant, the Warrant Shares
issuable upon exercise of this Warrant are changed into the same or a different
number of securities of any class of the Company, whether by recapitalization,
reclassification or otherwise (other than a merger, consolidation, arrangement
or statutory share exchange provided for elsewhere in this Section 3), then, in
each such event, provision shall be made so that the Holder shall receive upon
exercise of this Warrant the kind and amount of securities or other property
which would have been received in connection with such recapitalization,
reclassification or other change by the Holder if this Warrant had been
exercised immediately prior to such recapitalization, reclassification or
change, subject to adjustments for events subsequent to the effective date of
such recapitalization, reclassification or other change with respect to such
securities (i) on an appropriate and equitable arithmetic basis in the event of
any equity split, equity dividend, combination of Shares, recapitalization or
other such event with respect to such securities from time to time, and (ii)
which shall otherwise be on terms as nearly equivalent as practicable to the
adjustments provided in this Section 3.

 

3.4. Post-Issuance Adjustments. In addition to any adjustments which may
thereafter be required pursuant to Sections 3.1, 3.2, and 3.3 above, if the
Company, at any time or from time to time after the date hereof, shall (a) make
a dividend or distribution on its Shares or Common Stock payable in Shares or
Common Stock, (b) subdivide or reclassify the outstanding Shares or Common Stock
into a greater number of shares, or (c) combine or reclassify the outstanding
Shares or Common Stock into a smaller number of Shares or shares, the number of
Warrant Shares into which this Warrant is exercisable, and the Exercise Price at
that time shall be proportionately adjusted effective as of the record date for
the dividend or distribution or the effective date of the subdivision,
combination or reclassification, but without any adjustment of the Aggregate
Exercise Price.

 

3.5. Notice of Adjustment. Whenever the number or type of securities issuable
hereunder is adjusted, the Company shall promptly deliver to the Holder a
certificate of adjustment, setting forth the number and type of securities after
adjustment, a brief statement of the facts requiring the adjustment and the
computation by which the adjustment was made. The certificate of adjustment
shall be conclusive evidence of the correctness of the adjustment.

 

 -6- 

   

 

3.6. Successive Adjustments. The provisions of this Section 3 shall be
applicable successively to each event described herein which may occur
subsequent to the issuance of this Warrant and prior to the exercise of this
Warrant.

 

3.7. No Impairment. The Company will not, by amendment of its incorporation
documents or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder.

 

3.8. Authorization and Reservation of Shares. As a condition granting this
Warrant, the Company shall take all required actions to amend its charter
documents to authorize a sufficient number of additional Shares for issuance
upon exercise of this Warrant and shall reserve for issuance upon exercise of
this Warrant a sufficient number of Shares.

 

4. Register; Exchange and Replacement of Warrant; Reservation of Shares. The
Company shall keep at the Designated Office a register in which the Company
documents and accounts for this Warrant. The Company shall not at any time,
except upon the dissolution, liquidation or winding-up of the Company, close
such register so as to result in preventing or delaying the exercise or transfer
of this Warrant.

 

The Company may deem and treat the person in whose name this Warrant is
registered as the Holder and owner hereof for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration or transfer as provided in this Section 4.

 

Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant and (in case of loss,
theft or destruction) of the Holder’s agreement of indemnity reasonably
satisfactory to the Company, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will (in the absence of notice to the
Company that the Warrant has been acquired by a bona fide purchaser) make and
deliver a new Warrant of like tenor, in lieu of this Warrant without requiring
the posting of any bond or the giving of any security.

 

The Company shall at all times reserve and keep available out of its authorized
Shares, solely for the purpose of issuance upon the exercise of this Warrant,
such number of Shares and/or other securities as shall be issuable upon the
exercise hereof. The Company covenants and agrees that, upon exercise of this
Warrant and payment of the Exercise Price therefor, if applicable, all Warrant
Shares issuable upon such exercise shall be duly and validly authorized and
issued, fully paid and non-assessable.

 

 -7- 

   

 

5. No Registration Rights.

 

General. The Shares issuable upon exercise hereunder shall be issued to Holder
pursuant to Rule 144 holding period limitations, and Holder agrees to accept the
Shares pursuant to Rule 144 limitations. The Company shall have no obligation to
file a registration statement with respect to the Shares underlying this Warrant
for its next public or private offering of common stock, regardless of when such
offering may occur; provided, however, that if at any time thereafter during the
term of this Warrant, the Company proposes to register any of its Shares under
the Securities Act in connection with an underwritten public offering, then
Company will promptly give notice to the Holder of its intention to do so. Upon
the written request of Holder received by Company within ten (10) days after
receipt by Holder of any such notice , Company will cause the Holder’s Warrant
Shares to be registered under the Securities Act at Company’s expense (the
“Piggyback Registration Rights”); provided, however that the obligation to give
such notice and to cause such registration shall not apply to any registration
(a) on Form S-8 (or any successor form), (b) of solely a dividend reinvestment
plan or (c) for the sole purpose of offering registered securities to another
Person in connection with the acquisition of assets or capital stock of such
Person or in connection with a merger, consolidation, combination or similar
transaction with such Person.

 

6. Investment Representations. The Holder, by accepting this Warrant, covenants
and agrees that, at the time of exercise of this Warrant, the securities
acquired by the Holder upon exercise hereof are for the account of the Holder or
are being acquired for its own account for investment and are not acquired with
a view to, or for sale in connection with, any distribution thereof (or any
portion thereof) and with no present intention (at any such time) of offering
and distributing such securities (or any portion thereof), except in compliance
with applicable federal and state securities laws.

 

7. Warrant Holders Not Deemed Shareholders. No Holder of this Warrant shall, as
such, be entitled to vote or be deemed the holder of Warrant Shares that may at
any time be issuable upon exercise of this Warrant, nor shall anything contained
herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any company action (whether upon any
recapitalization, issue or reclassification of equity, consolidation, merger or
conveyance or otherwise), or to receive notice of meetings, or subscription
rights, until such Holder shall have exercised this Warrant and been issued
Warrant Shares or deemed to have been issued Warrant Shares in accordance with
the provisions hereof. No provision hereof, in the absence of affirmative action
by the Holder to purchase Shares or other securities hereunder, and no mere
enumeration herein of the rights of the rights or privileges of the Holder
hereunder shall give rise to any liability of such Holder for the Exercise Price
or as a shareholder of the Company, whether such liability is asserted by the
Company or by any creditors of the Company.

 

 -8- 

   

 

Notices. Any notice which is required to be given by this Warrant must be in
writing, and shall be given or served, unless otherwise expressly provided
herein, by depositing the same in the United States mail, postpaid and certified
and addressed to the party to be notified, with return receipt requested, or by
delivering the same by courier or in person to such party (or, if the party or
parties to be notified be incorporated, to an officer of such party). Notice
deposited in the mail, postpaid and certified with return receipt requested,
shall be deemed received and effective upon the deposit in a proper United
States depository. Notice given in any other manner shall be effective only if
and when received by the party to be notified. For the purposes of notice, the
addresses of the parties for the receipt of notice hereunder are:

 

If to Company: Document Security Systems, Inc.

200 Canal View Blvd.

Suite 300

Rochester, New York 14623

Attention: Jeff Ronaldi, CEO

Email: ronaldi@dsssecure.com

 

If to Holder: Brickell Key Investments LP

11 New Street

St. Peter Port

Guernsey GY1 2PF

Attention:

Fax:

Email:

 

With a copy to: Juridica Asset Management Limited

11 New Street

St. Peter Port

Guernsey GY1 2PF

Attention:

Fax:

Email:

 

and

 

Juridica Asset Management (US) Inc.

18 Broad Street

Suite 201D

Charleston, SC 29401

U.S.A.

Attention:

Fax:

Email:

 

and

 

Akerman LLP

750 9th Street, N.W.

Suite 750

Washington, D.C. 20001

U.S.A.

Attention:

Fax:

Email:

 

 -9- 

   

 

Any party shall have the right from time to time, and at any time, to change its
address for the receipt of notice by giving at least five (5) days’ prior
written notice of the change of its address to the other parties in the manner
specified herein.

 

8. Successors. All the covenants, agreements, representations and warranties
contained in this Warrant shall bind the parties hereto and their respective
heirs, executors, administrators, distributees, successors, assigns and
transferees.

 

9. Law Governing. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

 

10. Entire Agreement; Amendments and Waivers. This Warrant sets forth the entire
understanding of the parties with respect to the transactions contemplated
hereby. The failure of any party to seek redress for the violation or to insist
upon the strict performance of any term of this Warrant shall not constitute a
waiver of such term and such party shall be entitled to enforce such term
without regard to such forbearance. This Warrant may be amended, and any breach
of or compliance with any covenant, agreement, warranty or representation may be
waived, only if the Company has obtained the written consent or written waiver
of the Holder, and then such consent or waiver shall be effective only in the
specific instance and for the specific purpose for which given.

 

11. Severability; Headings. If any term of this Warrant as applied to any person
or to any circumstance is prohibited, void, invalid or unenforceable in any
jurisdiction, such term shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or invalidity without in any way affecting any other
term of this Warrant or affecting the validity or enforceability of this Warrant
or of such provision in any other jurisdiction. The Section headings in this
Warrant have been inserted for purposes of convenience only and shall have no
substantive effect.

 

[The remainder of this page is intentionally blank]

 

 -10- 

   

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
of the 14th day of November, 2016.

 

  DOCUMENT SECURITY SYSTEMS, INC.         By: /s/ Jeffrey Ronaldi   Name:
Jeffrey Ronaldi   Title: Chief Executive Officer

 

{38961835;1}Signature Page to Warrant to Purchase Shares

 

   

 

ANNEX A

 

NOTICE OF EXERCISE

 

(To be executed upon exercise of the within Warrant)

 

The undersigned hereby irrevocably elects to exercise the right to purchase
Shares of DOCUMENT SECURITY SYSTEMS, INC. (the “Company”) covered by the within
Warrant according to the conditions hereof. Based on the most recent financial
statements provided by the Company to the undersigned (provided that such
information shall be updated and/or supplemented by the Company by written
notice given to the undersigned by the Company promptly after the date hereof
and the following calculations appropriately adjusted as needed), the aggregate
Shares purchasable upon this exercise is _______ and the aggregate purchase
price for such Shares is $________.

 

  By:       (Signature of Registered Holder)

 

Dated: ____________________________

 

  

   

 

ANNEX B

 

CASHLESS EXERCISE FORM

 

(To be executed upon exercise of Warrants pursuant to Section 1.3 of the
Warrant)

 

The undersigned hereby irrevocably elects to surrender ____________ Shares in
DOCUMENT SECURITY SYSTEMS, INC. purchasable under the Warrant for _________
Shares issuable in exchange therefor pursuant to the Cashless Exercise
provisions of the within Warrant, as provided for in Section 1.3 of such
Warrant.

 

Please issue a certificate or certificates for such Shares, if any, in the name
of, and pay cash for fractional shares in the name of:

 

(Please print name, address, and social security number/tax identification
number:)

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

and, if said number of Shares shall not be all the Shares purchasable
thereunder, that a new Warrant for the balance remaining of the Shares
purchasable under the within Warrant be registered in the name of the
undersigned Holder or its transferee as below indicated and delivered to the
address stated below.

 

Dated:____________________________

 

Name of Warrant Holder

or transferee:     (Please print)     Address:       Signature:  

 

NOTICE: The signature on this form must correspond with the name as written upon
the face of this Warrant in every particular, without alteration or enlargement
or any change whatsoever.

 

  

   

 

ANNEX C

 

REDEMPTION EXERCISE FORM

 

(To be executed upon exercise of a Redemption Option
pursuant to Section 1.5 of the Warrant)

 

The undersigned hereby irrevocably elects to require DOCUMENT SECURITY SYSTEMS,
INC. to purchase _____% of Warrant No. ______ pursuant to the Redemption Option
provisions of the within Warrant, as provided for in Section 1.5 of such
Warrant.

 

Please send cash in the amount of the $__________________ (the “Redemption
Price”) by wire transfer of immediately available funds to:

 

(Please print name, address, and social security number/tax identification
number:)

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

Wire transfer instructions:

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

Dated:____________________________

 

Name of Warrant Holder

or transferee:     (Please print)     Address:       Signature:  

 

NOTICE: The signature on this form must correspond with the name as written upon
the face of this Warrant in every particular, without alteration or enlargement
or any change whatsoever.

 

  

   

 

ANNEX D

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant:

 

Name and Address of Assignee:

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

___________________________________________

 

and does hereby irrevocably constitute and appoint _______________________
attorney-in-fact to register such transfer onto the books of DOCUMENT SECURITY
SYSTEMS, INC. maintained for the purpose, with full power of substitution in the
premises.

 

Dated: _________________ Print Name:     Signature:     Witness:  

 

NOTICE: The signature on this assignment must correspond with the name as
written upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.