NO
      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
      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 December 25, 2011 (i.e.
      five years from the first closing date of the Offering).

    


    


    COMMON
      STOCK PURCHASE WARRANT

    


    WARRANT
      NO. B-

    


    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”) 2,940 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”), identical in all respects except as to
      the names of the holders thereof and the number of Common Shares purchasable
      thereunder and issued pursuant to the Placement Agent Agreement.

    


    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 4
      hereof.

    


    (b)    “Warrant
      Price” shall be $11.75, which is subject to adjustment pursuant to Section 4
      hereof.

    


    (c)    “Placement
      Agent” shall refer to Perrin, Holden & Davenport Capital Corp.

    


    (d)    “Placement
      Agent Agreement” shall refer to the Placement Agent Agreement dated December 12,
      2006 between the Company and the Placement Agent.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    (e)    “Warrants”
      or “Placement Agent Warrants” shall refer to Warrants to purchase Common Shares
      issued to the Placement Agent or its designees by the Company pursuant to the
      Placement Agent Agreement, as such may be adjusted from time to time pursuant
      to
      the terms of Section 4 and including 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.

    


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

    


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

    


    (h)    “Memorandum”
      shall mean the Company’s Confidential Private Placement Memorandum dated
      December 12, 2006, as amended and supplemented, which is being used (or was
      used) in connection with the private offering of Common Stock and Series A
      Common Stock Purchase Warrants pursuant to the Placement Agent Agreement.


    


    (i)    “Placement
      Agent Securities” shall refer and mean the warrants and shares of Common Stock
      issued and/or issuable upon exercise of the Warrants. 

    


    (j)    “Offering”
      means the private offering of Common Stock and Series A 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 December 26, 2006 (the “Commencement Date”) until 5:00 New
      York Time on December 25, 2011 (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 14 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. Exercise in full of the rights represented
      by
      this Warrant shall not extinguish the registration rights granted under
      Section 8 hereof and Section 2 of the Placement Agent
      Agreement.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    3.    Subject
      and pursuant to the provisions of this Section 4, 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.

    


    (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 Article
      7, 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.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
 

    (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 in Options or
      Convertible Securities or (ii) to subscribe for or purchase Common Stock,
      Options or Convertible Securities then such record date shall be deemed to
      be
      the date of issue or sale of the Common Shares, Options or Convertible
      Securities 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.

    


    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;

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (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, except that the Holder of
      this
      Warrant shall be deemed to be a stockholder of this Company for the purpose
      of
      bringing suit on the ground that the issuance of shares of stock of the Company
      is improper under the New York Business Corporation Law.

    


    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.

    


    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 and the provisions
      of
      the following subdivisions shall apply:

    


    (a)    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.

    


    (b)    If,
      in
      the opinion of either such counsel, such proposed disposition requires such
      registration or qualification under the Act, or similar Federal statute then
      in
      effect, of this Warrant and/or the Common Shares issuable or issued upon the
      exercise of this Warrant, the Company shall promptly give written notice to
      all
      then Holders of the Warrants, at the respective addresses thereof shown on
      the
      books of the Company. 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    The
      holder of this Warrant shall also be entitled to the registration rights as
      stated in the Placement Agent Agreement.

    


    9.    The
      Company agrees to indemnify and hold harmless the holder of this Warrant, or
      of
      Underlying Securities issuable or issued upon the exercise hereof, from and
      against any claims and liabilities caused by any untrue statement of a material
      fact, or omission to state a material fact required to be stated, in any such
      registration statement, prospectus, notification or offering circular under
      Regulation A, except insofar as such claims or liabilities are caused by any
      such untrue statement or omission based on information furnished in writing
      to
      the Company by such holder, or by any other such holder affiliated with the
      holder who seeks indemnification, as to which the holder hereof, by acceptance
      hereof, agrees to indemnify and hold harmless the Company.

    


    10.   If
      this
      Warrant, or any of the Underlying Securities issuable pursuant hereto, require
      qualification or registration with, or approval of, any governmental official
      or
      authority (other than registration under the Act, or any similar Federal statute
      at the time in force), before such shares may be issued on the exercise hereof,
      the Company, at its expense, will take all requisite action in connection with
      such qualification, and will use its best efforts to cause such securities
      to be
      duly registered or approved, as may be required.

    


    11.   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.

    


    12.   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.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    13.    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.

    


    15.    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.

    


    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    


    IN
      WITNESS WHEREOF, Document Security Systems, Inc.
      has
      caused this Warrant to be signed by its duly authorized officers under its
      corporate seal, to be dated December 26, 2006.

     

     

    
      	 	 	 
	 	DOCUMENT
              SECURITY SYSTEMS, INC.
	 
 	 
 	 
 
	 
              	By:  	 
	 	
              

              Name:
                Patrick White

              Title:
                Chief Executive Officer

            
	 	
               

            


    

     

    


    (Corporate
      Seal)

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

     

    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
                    

                

              


      

       

    

     

    
      
         

      

      
        2