**LICENSE
      AND DISTRIBUTION AGREEMENT**





This
      License and Distribution Agreement (this “ Agreement ”)
      is
      entered into as of this 27th day of June, 2007 (the “ Effective
      Date ”)
      by and
      between Document Security Systems, Inc., a corporation organized and existing
      under the laws of the State of New York (“ DSS ”),
      and
      Cultura Interactiva S.A. de C.V., a company organized and existing under the
      laws of Mexico (“ Licensee ”).





**RECITALS:**





WHEREAS,
      DSS is engaged in the business of, among other things, developing and licensing
      anti-counterfeiting technology, processes and products providing protection
      against a wide range of document security threats, including forgery,
      counterfeiting and unauthorized copying, scanning and photo imaging;





WHEREAS,
      Licensee is engaged in the business of, among other things, manufacturing,
      marketing, selling and distributing safety paper, security identification cards,
      labels, certificates, packaging and other secure printed documents;
      and




WHEREAS,
      Licensee wishes to acquire, and DSS is willing to grant, an exclusive, limited
      license and right to represent DSS’ products (including, without limitation,
      safety/security paper, plastic cards, certificates and documents incorporating
      anti-counterfeiting features) and anti-counterfeiting and anti-forgery
      technology and solutions in the country of Mexico.




NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which is hereby acknowledged, the parties agree as follows:




1.  Definitions .
      For
      purposes of this Agreement, the following capitalized terms shall have the
      meanings set forth below.




“ Decertified
      Technologies ”
shall
      mean all Technologies
      (as hereinafter defined) identified by DSS to Licensee in writing as being
      no
      longer effective when used for security printing and document
      anti-counterfeiting.




“ DSS
      Products ”
shall
      mean those products specified on Schedule
      1 hereto.




“ DSS
      Safety Paper ”
shall
      mean all Safety Paper (as hereinafter defined) manufactured by DSS.




“ Force
      Majeure ”
means
      circumstances or events which: (i) could not be normally reasonably anticipated
      by the parties, (ii) are external to the parties, and (iii) could not be
      mitigated through commercially reasonable efforts. Such circumstances or events
      shall include, without limitation, strikes, lockouts, riots, insurrections,
      acts
      of terrorism, civil disturbances, sabotage, embargoes, blockades, acts of war,
      acts or failures to act of any governmental or regulatory body (whether civil
      or
      military, domestic or foreign), governmental regulations superimposed after
      the
      fact, power failures, fires, explosions, floods, accidents, epidemics,
      earthquakes or other natural or man-made disasters, and all occurrences similar
      to the foregoing.







“ Intellectual
      Property ” shall
      mean, but shall not be limited to, (i) all patents, trademarks, trade names,
      service marks, designs, logos, and copyrights, and all pending applications
      for
      registration thereof; (ii) know-how, inventions, improvements, methods,
      operation manuals and procedures, trade secrets, technical information,
      formulas; (iii) computer software and programs, and related documentation,
      updates, and data, whether in object or source code form, and (vi) all other
      similar proprietary and intellectual rights, whether or not
      registered.




“ Licensee
      Products ”
shall
      mean those products specified on Schedule
      1 hereto.




“ Person ”
shall
      mean any
      individual, corporation, partnership, limited liability company, association,
      trust or any other entity or organization of any kind or character, including
      a
      governmental authority or agency.




“ Safety
      Paper ”
shall
      mean paper
      that is larger than 8 inches by 10 inches printed in a flat or graduated tint
      with or without patterns and containing hidden alert words or symbols such
      as
      "VOID," "COPY" or "UNAUTHORIZED COPY," or bar codes, logos or other images
      embedded in the background tint that appear when a handheld verifier is placed
      on the paper or when the document is copied, scanned, faxed or reproduced in
      any
      form utilizing industry standard copiers, desktop scanners or facsimile
      machines. The appearance of the hidden words after reproduction of the document
      is intended to alert document recipients that they are looking at a non-original
      document.




“ Technologies ”
shall
      mean those certain DSS patent and/or patent-pending technologies specified
      on Schedule
      1 hereto.




“ Technology
      Marks ”
shall
      mean DSS’ trademark and service marks (including, without limitation, the
      AuthentiGuardTM logo) that identify DSS as the source of the Technologies.




“ Term ”
shall
      mean have the meaning set forth in Section 4.1 hereof.




“ Territory ”
shall
      mean the geographical area specified on Schedule
      1 hereto.




2.  License .




2.1.  License
      Grant .
      Subject
      to the terms and conditions set forth herein, DSS hereby grants to Licensee,
      and
      Licensee accepts from DSS, for the Term, (i) an exclusive, limited, and
      non-transferable (except as otherwise expressly set forth herein), license
      to
      use, install and otherwise incorporate the Technologies into the Licensee
      Products to be manufactured, processed, prepared, displayed, offered for sale
      and sold by Licensee in the Territory; and (ii) a limited and non-transferable
      (except as otherwise expressly set forth herein) license to use the Technology
      Marks in accordance with the terms and conditions set forth herein or as
      otherwise approved in writing by DSS.







2.2.  License
      Fees and Payment Terms **.** In
      consideration of the license granted herein and services to be rendered by
      DSS,
      Licensee shall pay to DSS those fees (the “ License
      Fees ”)
      as set
      forth on Schedule
      1 hereto.
      All such License Fees shall be payable by Licensee to DSS as determined by
      DSS
      on a project-by-project basis. The specifics of any particular project shall
      be
      agreed upon by the parties provided, however, that any such project will be
      governed by the terms and conditions agreed upon by the parties herein. ****




2.3.  Exclusivity .
      During
      the Term, DSS shall not grant to any third party, directly or indirectly, any
      license to use, install, market and/or distribute the Technologies in the
      Territory, other than Technologies using, used by or incorporated into
      AuthentiGuardTM On-Demand. DSS shall pay to Licensee an amount equal to 5% of the
      total revenue generated from any third party licensee who is prohibited from
      licensing the Technology pursuant to this Section 2.3 and which Licensee grants
      a waiver to such prohibition.




2.4.  Exclusions
      and Restrictions .




2.4.1.  Licensee
      shall have no right to any software, technology, know-how or other Intellectual
      Property related to the Technologies or production of the Technologies, implied
      or express, and, except as otherwise expressly provided herein, Licensee shall
      have no right to sub-license, assign or otherwise transfer the right to use
      the
      Technologies.




2.4.2.  The
      license right granted pursuant hereto shall be subject to any restrictions
      with
      respect to Licensee Products or volume that are set forth on Schedule
      1 .
      Without
      limiting the foregoing, Licensee shall have no right to manufacture, print,
      market or sell, directly or indirectly, and no right or power to license or
      sub-license to any other Person the right to manufacture, market or sell,
      directly or indirectly, Safety Paper other than DSS Safety Paper marketed using
      the “AuthentiGuard TM ”
      trademark. DSS hereby acknowledges and agrees that the foregoing restriction
      shall not in any way prohibit Licensee from manufacturing, printing, marketing
      or selling paper with a pantograph background in which words, symbols, borders,
      artwork or similar features are printed in a secondary visible color, which
      color is different and distinct from the color of the pantograph background.




2.4.3.  The
      license right granted pursuant hereto does not include, and Licensee shall
      have
      no right hereunder, under any circumstances, to receive, use or make copies
      of
      the source/object code for the Technologies. Further, the license right granted
      pursuant hereto does not include the right to, and Licensee shall
      not (directly
      or indirectly) ,
      and
      shall not knowingly assist any third party to (i)
      copy, adapt, alter, modify, translate or create derivative works of the
      Technologies or other Intellectual Property owned by or under license to DSS;
      (ii) reverse engineer, decompile, disassemble, or otherwise attempt to
      reconstruct the source code for the Technologies or other Intellectual Property
      owned by or under license to DSS; (iii) reverse engineer, reconstruct or
      otherwise attempt to ascertain, or adapt, alter or modify, the proprietary
      protocols, programming interfaces, algorithms, internal instructions, and
      command sets used in the operation of the Technologies or other Intellectual
      Property owned by or under license to DSS; or (iv) produce,
      use, license, sell or otherwise distribute or exploit the Technologies or
      Intellectual Property derived therefrom or bypass or defeat protection methods
      for preventing unauthorized access to the Technologies.







2.4.4.  Without
      limiting anything herein, Licensee may only sell Licensee Products incorporating
      the Technologies in the Territory. Licensee shall have no right or license,
      express or implied, to sell Licensee Products incorporating the Technologies
      outside of the Territory. **** The
      Licensee Products listed on Schedule
      1 hereto
      represent the scope of products in which the Technologies may be incorporated
      by
      Licensee under this Agreement. Production or manufacture by Licensee of any
      products incorporating the Technologies not specifically identified on Schedule
      1 is
      prohibited, except with the express written consent of DSS, to be given or
      withheld in DSS’ sole and absolute discretion. All requests to incorporate the
      Technologies into products other than those specified on Schedule
      1 must be
      in writing.




2.5.  The
      Licensee Products represent the scope of products on which the Technology may
      be
      incorporated under this Agreement. The marketing, sale, production or
      manufacture of any products not specifically included as a Licensee Product
      is
      prohibited (“Other Products”), except with the express written consent of DSS,
      to be given or withheld in DSS’ sole and absolute discretion. All requests by
      Licensee to incorporate the Technology in Other Products must be in writing.
      Without limiting the foregoing, all inquires received by Licensee regarding
      incorporation of the Technology in connection with plastic cards, whether such
      inquiries are received verbally or in writing, shall be referred in writing
      by
      Licensee to DSS’ subsidiary Plastic Printing Professionals (“P3”) at the
      following address: Plastic Printing Professionals, 5955 Mission Street, Daly
      City, CA 94104, Attention: President). DSS or P3 and Licensee shall then
      negotiate a price at which DSS or P3 would incorporate the Technology on the
      Other Products for Licensee. If DSS or P3 and Licensee are unable to agree
      upon
      a price at which DSS or P3 would incorporate the Technology on the Other
      Products for Licensee, Licensee may withdraw from such negotiations without
      obligation or liability but, in such event, Licensee shall not be permitted
      to
      incorporate the Technology on the Other Products either directly or with the
      assistance of a third party. Without limiting the foregoing, all plastic cards
      sold, directly or indirectly, by Licensee shall be manufactured by P3 at a
      mutually agreed upon price.




3.  Sales
      and Distribution of DSS Products **.**




3.1.  Sales
      and Distribution **.** In
      addition to the right to license and sublicense the Technologies pursuant to
      Section 2 above, subject to the terms and conditions set forth herein, DSS
      hereby grants to Licensee, and Licensee accepts from DSS, for the Term, an
      exclusive, non-transferable right to market, sell and distribute the DSS
      Products in the Territory through direct sales efforts, retail store outlets,
      office products wholesalers, on Licensee’s websites, and through such other
      venues or distribution outlets as Licensee deems necessary or desirable from
      time to time; provided, however, that any reference to the DSS Products on
      Licensee’s websites shall be pre-approved by DSS and in no event shall such
      website list or otherwise refer to pricing of the DSS Products.







3.2.  Pricing
      and Payment .
      The
      prices to be paid by Licensee to DSS for the DSS Products and the payment terms
      with respect thereto shall be as set forth on Schedule
      1 .




3.3.  Packaging
      Terms .
      The
      parties shall, on a case by case basic, mutually agree upon packaging standards
      for the DSS Products. No changes in the packaging terms shall be made by
      Licensee without the prior written consent of DSS.




4.  Term
      and Termination .




**4.1.**  Term .
      The
      Initial Term of this Agreement (the “ Initial
      Term ”)
      shall
      commence on the Effective Date, and shall continue for the period of time set
      forth on Schedule
      1 hereto,
      unless earlier terminated pursuant to Section 4.2. For purposes hereof, the
      Initial Term, together with any extension or renewal terms, shall hereinafter
      be
      collectively referred to as the “ Term ”.




4.2.  Termination **.**




4.2.1.  Either
      party may terminate this Agreement: (i) upon thirty (30) days prior written
      notice of a material breach of the other party, if the breach has not been
      cured
      within such thirty (30) day period; or (ii) immediately upon written notice
      to
      the other party if: (a) the other party declares or a petition is filed in
      any
      court for insolvency or bankruptcy and such petition is not dismissed in sixty
      (60) days; (b) the other party reorganizes under the relevant bankruptcy act
      or
      any similar statute in such party’s jurisdiction of incorporation; (c) the other
      party consents to the appointment of a trustee in bankruptcy or a receiver
      or
      similar entity; or (d) if either party breaches the Intellectual Property rights
      contained herein of the other party. A material breach by Licensee shall
      include, but not be limited to, the failure by Licensee to pay when due any
      amount owed to DSS under this Agreement. In addition, and notwithstanding
      anything herein to the contrary, in the event that, as of the day preceding
      the
      six-month anniversary of the Effective Date and each six-month period
      thereafter, the total revenue generated by DSS from Licensee (with respect
      to
      both License Fees and payment for DSS Products) is less than Six Hundred and
      Twenty-Five Thousand and No/100 U.S. Dollars (U.S. $625,000) during each such
      six-month period, DSS may terminate this Agreement upon written notice to
      Licensee, and this Agreement will terminate immediately upon the date such
      notice is deemed effectively given pursuant to Section 13.9; provided, however,
      that Licensee shall be given 30 days to cure such material default.




4.2.2.  Upon
      the
      expiration or termination of this Agreement (i) all licenses granted hereunder
      shall cease; (ii) Licensee shall cease all use of Technology Marks and
      promotional materials and return all sales, promotional and display or
      advertising materials that were furnished by DSS; and (iii) all amounts due
      to
      DSS by Licensee under the terms of this Agreement shall become immediately
      due
      and payable. Notwithstanding the foregoing, upon termination of this Agreement
      for the reasons specified in Sections 4.2.1(ii)(a) through (c) and for the
      reason specified in the last sentence in Section 4.2.1, Licensee shall be
      permitted a reasonable opportunity, not to exceed ninety (90) days, to sell
      its
      remaining inventory of finished Licensee Products, subject to the terms of
      this
      Agreement.







4.2.3.  The
      provisions of Sections 4.2, 6, 9, 11, 12 and 13 shall survive the termination
      or
      expiration of this Agreement.




5.  Payment .




5.1.  Payment .
      All
      License Fees and other amounts payable hereunder shall be in U.S. Dollars,
      shall
      be non-refundable, and shall be made in full, without set-off or deduction
      of
      any kind, into an account or accounts of DSS, for which DSS shall provide wire
      transfer instructions to Licensee.




5.2.  Late
      Fees .
      In the
      event Licensee shall fail to pay any amount owed to DSS under this Agreement
      when such amount is due and payable, Licensee shall pay to DSS interest on
      the
      amount of such under-payment or non-payment at the rate equal to three quarters
      of one percent (0.75%) per month, from the date due until paid. Any payments
      received from Licensee, when there is any amount overdue, shall be applied
      first
      to discharge any such accrued late charges.




5.3.  Foreign
      Exchange **.** If
      applicable, all License Fees and other amounts payable hereunder shall be based
      on the exchange rate described on Schedule
      1 on the
      date on which payment is due, and Licensee shall provide detailed conversion
      calculations with every payment submitted hereunder. If, by reason of any
      governmental or fiscal restrictions affecting convertibility, payment cannot
      be
      made in U.S. funds, then Licensee shall take such reasonable actions with
      respect to such payments as DSS directs.




6.  Proprietary
      Rights .




6.1.  Subject
      to Licensee’s expressly granted rights under this Agreement, Licensee
      acknowledges and agrees that DSS shall own all right, title, and interest in
      and
      to the Technologies (including any Improvements), Technology Marks, or other
      Intellectual Property of DSS. Licensee agrees that it will not at any time
      (i)
      do or cause to be done any act or thing contesting or in any way impairing
      any
      part of such right, title and interest or (ii) represent, expressly or by
      implication that it has any right, title or interest in or to any of the
      foregoing other than as expressly set forth herein.




6.2.  Licensee
      acknowledges DSS’ claim of sole ownership of the Technology Marks and all
      associated goodwill. Nothing in this Agreement or in the performance thereof,
      or
      that might otherwise be implied by law, shall operate to grant Licensee any
      right, title, or interest in or to the Technology Marks, other than as specified
      in the limited license grant set forth herein. Licensee’s use of the Technology
      Marks shall inure solely to the benefit of DSS. Licensee hereby assigns and
      shall assign in the future to DSS all rights it may acquire by operation of
      law
      or otherwise in the Technology Marks, along with the goodwill associated
      therewith. DSS shall have the sole right to, and in its sole discretion may,
      commence, prosecute or defend, and control any action concerning the Technology
      Marks. Licensee shall not contest the validity of, by act or omission
      jeopardize, or take any action inconsistent with, DSS’ rights or goodwill in the
      Technology Marks, including attempted registration of the Technology Marks,
      or
      use or attempted registration of any mark similar thereto.







7.  Licensee
      Obligations .




7.1.  Exclusivity .
      During
      the Term, Licensee shall not (i) manufacture, distribute, sell, promote, license
      or sub-license any products manufactured using a technology that competes in
      any
      way, directly or indirectly, with the Intellectual Property of DSS, and/or
      (ii)
      enter into any marketing or distribution agreement or relationship with any
      other provider of products or services whereby Licensee will market, sell or
      distribute any products which are either directly or indirectly competitive
      to
      the DSS Products.




7.2.  Decertified
      Technologies **.** During
      the Term, Licensee shall not use, install or otherwise incorporate any
      Decertified Technologies in connection with Licensee Products to be
      manufactured, processed, prepared, displayed, offered for sale and sold by
      Licensee.




7.3.  Technology
      Marks .
      During
      the Term, Licensee agrees to use DSS’ Technology Marks in accordance with the
      usage guidelines attached hereto as Exhibit
      A .
      Licensee shall promptly, upon notice from DSS, correct and remedy any
      deficiencies in its use of the Technology Marks.




7.4.  Advertising .
      During
      the Term, Licensee shall use its best efforts to promote and market the sale
      of
      both Licensee Products containing the Technologies and DSS Products, which
      promotional efforts shall include, without limitation, attending and presenting
      at industry trade shows, preparing customer mailings and presentations,
      brochures or other promotional material, and including references to the
      Technologies on Licensee’s websites. During the Term, Licensee shall confer with
      DSS on a regular basis to review and plan joint promotional activities. Licensee
      may appoint sub-distributors, agents, or other representatives to market the
      DSS
      Products without the prior written consent of DSS provided Licensee shall ensure
      that such persons do not sell or market the DSS Products outside of the
      Territory or otherwise violate the terms of this Agreement.




7.5.  Quality
      Control .
      Throughout the Term, Licensee shall use commercially reasonable efforts, and
      cooperate with DSS, to ensure that the Technologies embedded in the Licensee
      Products are reliable, effective and in compliance with all minimum quality
      and
      output standards as determined in DSS’ reasonable discretion and that Licensee’s
      application thereof conforms with all applicable guidelines with respect
      thereto. To this end, Licensee shall, upon DSS’ reasonable request, make
      available to DSS samples of Licensee Products incorporating the Technologies.
      In
      the event DSS determines, in its reasonable discretion, that Licensee’s
      application of the Technologies fails to meet minimum quality and output
      standards, DSS may initiate troubleshooting procedures and request that Licensee
      make specific adjustments. Licensee’s failure to comply with DSS’ request shall
      be deemed a material breach under this Agreement.




8.  Technical
      Support; Training and Technology Services .




8.1.  General
      Support Services .
      DSS
      shall make available to Licensee, during DSS’ regular business hours, via
      telephone and electronic mail, trained personnel to assist Licensee with
      technical support related to the Technologies. **** If
      Licensee desires to obtain on-site support from DSS’ authorized, trained
      personnel, Licensee shall send a written request to DSS and the parties shall
      mutually agree on the date and scope of the services to be provided. Licensee
      shall pay to DSS an additional fee in the amount set forth on Schedule
      1 for each
      authorized person provided on-site to perform the agreed upon services. Licensee
      shall also reimburse DSS for all such assigned service personnel’s reasonable
      out-of-pocket expenses incurred in providing support to Licensee, including
      expenses incurred for travel, lodging and meals. All amounts due by Licensee
      hereunder shall be paid by Licensee within thirty (30) days of the date of
      the
      invoice thereof. If Licensee disputes the amount of an invoice submitted by
      DSS
      hereunder, Licensee shall notify DSS in writing within fifteen (15) days after
      Licensee’s receipt of the invoice.







8.2.  Limitation
      on Liability for Support Services **.** Except
      in the event of gross negligence or willful misconduct, in no event shall DSS,
      or the technicians, employees or agents of DSS, be liable to Licensee for any
      damages or claims for damages that may occur as a result of the action or
      inaction of the technicians, employees or agents of DSS during the provision
      of
      support services.




9.  Confidentiality;
      Non-Disclosure .
      The
      parties acknowledge that they have entered into that certain Mutual
      Non-Disclosure dated as of November 6, 2006 (the “ NDA ”),
      a
      copy of which is attached hereto as Exhibit
      B .
      During
      the term of this Agreement and at all times thereafter, the parties shall be
      bound by all of the terms and conditions set forth in the NDA.




10.  Maintenance
      of Books and Records; Sales Reports; Audit .




10.1.  Maintenance
      of Books and Records; Sales Reports .
      During
      the Term, and for a period of three (3) years thereafter, Licensee agrees to
      keep and maintain proper records and books of account in accordance with
      generally accepted accounting practices, showing the sales upon which the
      License Fees are based, and all other information necessary to determine
      accurate payment thereof. Together with any License Fee payment, Licensee will
      deliver to DSS a detailed report showing the information on which the License
      Fee calculation was based.




10.2.  Audit .




10.2.1.  During
      the Term, and for one (1) year thereafter, DSS, together with its agents,
      consultants, accountants, attorneys and representatives, shall have access
      to
      Licensee’s and Licensee’s agents’ records, databases, and premises for the
      purposes of conducting an audit concerning Licensee’s compliance with Licensee’s
      obligations hereunder. All such audits shall be conducted during Licensee’s
      normal business hours, and on reasonable advance notice to Licensee, and
      at
      DSS’ expense, subject to Section 10.2.2.




10.2.2.  If
      an
      audit reveals an underpayment by Licensee, Licensee shall promptly pay the
      amounts owing, plus interest thereon at the rate of three quarters of a percent
      (0.75%) per month until all underpaid amounts are paid in full. If such audit
      reveals an underpayment by an amount in excess of ten percent (10%) for the
      period covered by the audit report then, without prejudice to any other rights
      or remedies of DSS, Licensee shall pay to DSS the out-of pocket costs of such
      audit, including, without limitation, attorneys fees, the amount underpaid,
      interest due thereon, and an additional payment of fifteen percent (15%) of
      the
      total amount due for the audited period.







11.  Indemnification .




11.1.  By
      DSS .




11.1.1.  DSS
      shall
      indemnify, defend and hold Licensee and each of its shareholders, directors,
      officers, employees, agents, independent contractors, and representatives
      (“ Licensee
      Indemnified Parties ”)
      harmless for, from and against, any and all suits, actions and proceedings,
      claims, demands, liabilities, losses, damages, judgments, fines, expenses
      (including, without limitation, attorneys’ fees and expert witness fees) and
      costs (individually and collectively, “ Infringement
      Claims ”),
      made
      against a Licensee Indemnified Party by a third party arising from or in
      connection with any actual or alleged claims that marketing, manufacture or
      sale
      of DSS Products and/or Licensee Products incorporating the Technologies infringe
      any patent, trademark, copyright, trade secret or other property right of a
      third party. The indemnification provided by this Section 11.1 is contingent
      upon: (i) the Licensee Indemnified Parties promptly notifying DSS in writing
      of
      any known claim which may give rise to an Infringement Claim; (ii) DSS’ sole
      control of the defense and settlement of such Infringement Claims at DSS’
expense ( provided , however ,
      that
      any settlement shall be made only with the consent of Licensee or include,
      as an
      unconditional part thereof, a full release of the Licensee Indemnified Parties);
      and (iii) the Licensee Indemnified Parties’ cooperation with all reasonable
      requests of DSS (at DSS' sole expense) in defending or settling an Infringement
      Claim.




11.1.2.  In
      addition to the rights and obligations of the parties set forth in Section
      11.1.1, if an Infringement Claim is made or threatened, DSS, at its own expense
      and in its sole discretion, may exercise any of the following remedies: (i)
      obtain for Licensee the right to continue to use market, manufacture or sell
      the
      DSS Products and/or Licensee Products consistent with this Agreement; (ii)
      modify the Technologies incorporated into the Licensee Products and/or the
      DSS
      Products so they are non-infringing and comply in all material respects with
      this Agreement; (iii) replace the Technologies with non-infringing technology
      or
      information and/or materials, as the case may be, that comply in all material
      respects with this Agreement; or (iv) terminate this Agreement, in its sole
      discretion, immediately without further liability to Licensee or DSS provided
      that in such event DSS shall be required to promptly refund to Licensee, on
      a
      pro-rata basis, any prepaid License Fees or payments on behalf of DSS Products.
      DSS will have no obligation to indemnify Licensee Indemnified Parties for claims
      that the Technologies infringe the intellectual property rights of a third
      party
      to the extent such claims arise as a result of Licensee's modification of the
      Technologies by anyone other than DSS’ agents or subcontractors or any Person
      authorized in writing by DSS.




11.1.3.  The
      foregoing represents DSS’ entire obligation, and Licensee’s entire remedy, with
      respect to Infringement Claims.







11.2.  By
      Licensee .
      Licensee shall, at its own expense, indemnify, defend and hold harmless DSS,
      its
      shareholders, directors, officers, employees, agents, independent contractors
      and representatives (each a “ DSS
      Indemnified Party ”)
      from
      and against
      all suits, actions and proceedings, claims, demands, liabilities, losses,
      damages, judgments, fines, expenses (including, without limitation, attorneys’
fees and expert witness fees) and costs, made against a DSS Indemnified Party
      by
      a third party to the extent arising from Licensee’s (or its officers, directors,
      employees, agents, independent contractors and representatives’) improper or
      unauthorized use of the Technologies, the Technology Marks and/or the DSS
      Products. Licensee
      shall have the right to control the defense of all such claims, lawsuits and
      other proceedings. In no event shall DSS settle any such claim, lawsuit or
      proceeding without Licensee's prior written approval.




12.  Limited
      Warranties; Limitation of Liability .




12.1.  Power
      and Authority .
      Each
      party represents and warrants that it has the right, power and authority to
      enter into this Agreement and that the signatory on behalf of such party to
      this
      Agreement has full authority to enter into and bind the party to the obligations
      set forth in this Agreement.




12.2.  Right
      to Technology .
      DSS
      represents and warrants to Licensee that (i) the Technologies and the Technology
      Marks are the sole and exclusive property of DSS; (ii) DSS has all right, title
      and interest in the Technologies and the Technology Marks to grant to Licensee
      the rights provided in this Agreement; (iii) nothing contained in this Agreement
      conflicts with any other obligation or agreement of DSS; and (iv), to DSS’
knowledge, no liens, claims or other obligations exist that will affect
      Licensee’s use or rights to any Technologies and/or Technology Marks granted
      under this Agreement.




12.3.  DISCLAIMER
      OF WARRANTIES .
      EXCEPT
      AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THE TECHNOLOGIES IS PROVIDED STRICTLY
      “AS IS” AND DSS MAKES NO WARRANTIES HEREUNDER, EXPRESS OR IMPLIED, AND ALL OTHER
      WARRANTIES, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND
      FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED.




12.4.  LIMITATION
      OF LIABILITY .
      EXCEPT
      FOR CLAIMS ARISING OUT OF A BREACH BY ONE PARTY OF THE OTHER PARTY’S
      INTELLECTUAL PROPERTY RIGHTS OR CLAIMS ARISING UNDER A PARTY’S INDEMNIFICATION
      OBLIGATIONS HEREUNDER, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER
      PARTY FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES
      WHATSOEVER, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
      BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION AND THE LIKE, ARISING OUT
      OF
      THE USE OF OR INABILITY TO USE THE TECHNOLOGIES OR ANY PRODUCTS OR SERVICES
      PROVIDED HEREUNDER, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT,
      TORT,
      STRICT LIABILITY OR OTHERWISE, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF
      THE
      POSSIBILITY OF SUCH DAMAGES. BECAUSE SOME JURISDICTIONS DO NOT ALLOW THE
      EXCLUSION OR LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES,
      THE ABOVE LIMITATION MAY NOT APPLY. IN NO EVENT SHALL DSS’ LIABILITY UNDER THIS
      AGREEMENT EXCEED THE TOTAL AMOUNT PAID BY LICENSEE TO DSS UNDER THIS AGREEMENT.







12.5.  Nothing
      contained herein shall be deemed to require that DSS shall be under any
      obligation to maintain any of its patents. The parties hereby agree that the
      grant of rights under this Agreement does not imply any warranty concerning the
      validity or scope of the patents or any rights held by a third party or any
      warranty against unauthorized use of the patents and/or know-how. Further,
      this
      Agreement imposes no obligation for DSS to enforce any of its patents against
      third party infringers and imposes no obligation on the Licensee should a patent
      be so enforced by DSS.




13.  Miscellaneous .




13.1.  Applicable
      Taxes :
      Licensee shall be responsible for all local, state, sales, use, service, excise,
      or other similar taxes or duties, and any other taxes payable on any amounts
      payable pursuant to this Agreement.




13.2.  Assignment .
      Neither
      party may assign this Agreement, nor its rights and obligations hereunder,
      to
      any third party without the prior express written approval of the other party.
      Any purported assignment without the consent of such other party shall be void.
      The provisions of this Agreement shall be binding upon, and shall inure to,
      the
      benefit of the parties, their legal representatives, permitted successors and
      permitted assigns.




13.3.  Remedies
      Cumulative; Waiver .
      The
      rights and remedies provided in this Agreement, and all other rights and
      remedies available to either party at law or in equity, are, to the extent
      permitted by law, cumulative and not exclusive of any other right or remedy
      now
      or hereafter available at law or in equity. A party’s failure to assert any
      right or remedy shall not constitute a waiver of that right or remedy. No waiver
      by either party of any default shall be deemed as a waiver of prior or
      subsequent default of the same or other provisions of this
      Agreement.




13.4.  Severability .
      In the
      event that a court of competent jurisdiction finds any provision of this
      Agreement to be illegal, invalid or unenforceable, it is the intention of the
      parties that such court shall modify such provision as necessary so that it
      shall be legal, valid and enforceable. The illegality, invalidity or
      unenforceability of any provision of this Agreement shall not affect the
      legality, validity or enforceability of any other provision of this
      Agreement.




13.5.  Relationship
      of the Parties .
      Nothing
      in this Agreement shall be construed as creating a partnership, joint venture
      or
      agency relationship between the parties, or as authorizing either party to
      act
      as agent for the other.




13.6.  Amendments .
      No
      modifications or amendments may be made to this Agreement except as expressed
      in
      writing and signed by both parties.







13.7.  Irreparable
      Damage .
      The
      parties acknowledge and agree that any violation of this Agreement would subject
      the other to irreparable injury for which monetary damages will not be an
      adequate remedy. Therefore, in addition to any remedies otherwise available,
      the
      non-breaching party will be entitled to any injunctive relief and specific
      performance to enforce the terms of this Agreement. The breaching party shall
      pay all reasonable attorney's fees and court costs, arbitration cost, and/or
      appeal costs incurred by the non-breaching party should it be necessary for
      the
      non-breaching party to enforce the terms of this Agreement.




13.8.  No
      Construction against the Drafter; Headings .
      The
      parties acknowledge that they have reviewed this Agreement, have either been
      represented by counsel or had the opportunity to be represented by counsel,
      and
      have negotiated its terms. Accordingly, this Agreement shall be construed
      without regard to the party or parties responsible for its preparation, and
      shall be deemed to have been prepared jointly by the parties. Headings contained
      in this Agreement are not intended to be full and accurate descriptions of
      the
      contents of this Agreement and shall not affect the meaning or interpretation
      of
      this Agreement.




13.9.  Notice .
      All
      notices sent under this Agreement shall be in writing and shall be deemed
      effectively given (i)
      upon
      personal delivery to the party to be notified; (ii) when sent by confirmed
      facsimile if sent during normal business hours of the recipient, if not, then
      on
      the next business day; (iii) three (3) days after having been sent by registered
      or certified mail, return receipt requested, postage prepaid; or (iv) two (2)
      days after deposit with an internationally recognized overnight courier,
      specifying two (2) day delivery, with written verification of
      receipt. Notices
      shall be sent to the Parties at the following addresses or fax numbers or such
      other addresses or fax numbers as the parties subsequently may provide in
      accordance with this Section 13.9:




If
                to DSS:
              
              Document
                Security Systems, Inc.
              28
                Main Street East, Suite 1525
              Rochester,
                New York 14614
              USA
              Fax:
                585-325-2977
              Attention:
                Chief Executive Officer
            With
                a copy to:
              
              Document
                Security Systems, Inc.
              28
                Main Street East, Suite 1525
              Rochester,
                New York 14614
              USA
              Fax:
                585-325-2977
              Attn:
                General CounselIf
                to Licensee:
              
              Cultura
                Interactiva, S.A. de C.V.
              Bosques
                de Ciruelos 190, A-107
              Col.
                Bosques de las Lomas
              Mexico,
                D.F. 11700
              Phone
                & Fax (52-55) 5251-0150
              Attention:
                President
            With
                a copy to:
              
              Bosques
                de Ciruelos 190, A-107
              Col.
                Bosques de las Lomas
              Mexico,
                D.F. 11700
              Phone
                & Fax (52-55) 5251-0150
              Attention:
                Juan Carlos Collado, Abogado







13.10.  Force
      Majeure .
      Notwithstanding any provision herein, the parties may be discharged from all
      liabilities if the failure to perform or improper performance of this Agreement
      is the result of Force Majeure, provided that the party subject to the Force
      Majeure provides notice of such Force Majeure, as soon as possible after such
      party became subject to such Force Majeure.




13.11.  Governing
      Law; Jurisdiction .
      This
      Agreement shall be governed in accordance with the laws of the State of New
      York
      without regard to conflict of laws principles. Each of the parties hereby (i)
      consents to the exclusive jurisdiction of and venue in the appropriate state
      or
      federal courts located in the City of Rochester, State of New York, (ii) agrees
      to accept service of process by mail, and (iii) waives any jurisdictional,
      lack
      of venue, or forum defenses otherwise available to it with respect to actions
      brought in such courts.




13.12.  Foreign
      Taxes and Governmental Approvals *.* Licensee
      agrees, at its sole cost and expense, to obtain all governmental approvals
      and
      registrations required under the laws of the Territory in connection with this
      Agreement, and to pay any taxes or fees required (including withholding taxes)
      that may be levied on the fees payable by Licensee under this Agreement.
      Licensee agrees to provide DSS with certificates and receipts indicating that
      such taxes have been duly paid.




13.13.  Entire
      Agreement . This
      Agreement and the Schedules and Exhibits hereto contain the entire agreement
      between the parties with respect to the transactions described herein, and
      supersede all prior agreements, written or oral, with respect thereto, provided , however ,
      that
      notwithstanding any provision herein, the NDA ** shall
      remain in full force and effect.




13.14.  Counterparts;
      Facsimile Signatures .
      This
      Agreement may be executed in counterparts, each of which shall be deemed to
      be
      original but all of which together shall constitute a single instrument. The
      signatures required for execution may be transmitted to the other Party via
      facsimile and such signatures shall be deemed a duplicate original.









[REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]







IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      their respective duly authorized officers as of the date first set forth
      above.




**DOCUMENT
                SECURITY SYSTEMS, INC.**
              
              By:/s/
                Patrick White
              Name:
                Patrick White
              Title:
                Chief Executive Officer
            **CULTURA
                INTERACTIVA S.A. DE C.V.**
              
              By:/s/
                Fernando Fuentes
              Name:
                Fernando Fuentes
              Title:
                President










**SCHEDULE
      1**


**SCHEDULE
      OF TERMS AND CONDITIONS**








1.
            Technologies:
                AuthentiGuardTM Pantograph 4000, AuthentiGuardTM Prism, AuthentiGuardTM Block
                Out, AuthentiGuardTM Phantom, and AuthentiGuardTM On-Demand as may be agreed
                upon by the parties from time to time in writing. Notwithstanding
                anything
                in the Agreement to the contrary,DSS
                reserves the right to restrict and limit use of one or more of the
                Technologies with respect to specific applications by Licensee.





2.
            Licensee
                Products:
                Checks, labels, documents, brand packaging, government issued
                identification cards, licenses, certificates, and such other products
                as
                may be agreed upon by the parties from time to time in writing.





3.
            License
                Fees:
                Such royalty fees and other fees as shall be agreed upon by the parties
                in
                writing on a project-by-project basis.





4.
            DSS
                Products:
                Safety/security paper (stock and custom), plastic cards, certificates
                and
                documents, labels, and other printed items incorporating the
                Technology.





5.
            Prices
                for DSS Products:
                Such prices as shall be determined by DSS on a case by case basis
                upon
                Licensee’s written request, based on the requested product specifications
                and quantity, the geographic area in which the DSS Products will
                be sold,
                and the customers to whom the DSS Products will be sold, discounted
                so as
                to allow for mark-ups by Licensee. All such prices shall be set forth
                on a
                price list and provided to Licensee within ten (10) days of written
                request therefor.





6.
            Payment
                Terms With Respect to DSS Products:
                Payments to be made thirty (30) days after receipt of a written invoice
                by
                Licensee, subject to available credit by Licensee. For purposes hereof,
                Licensee is granted an initial credit limit in the amount of Twenty
                Five
                Thousandand
                No/100 U.S. Dollars (U.S. $25,000) subject to credit review.Additional credit is subject to approval by DSS, in its sole and
                absolute
                discretion, using standard business credit verification terms.





7.
            Territory:
                Country of Mexico





8.
            Applicable
                Exchange Rate.
                The exchange rate for conversion of the currency into U.S. Dollars
                shall
                be calculated on the day payment is made, or the preceding business
                day if
                payment is not made on a business day, according to the dollar exchange
                rate for such currency published in the Wall Street Journal or such
                other
                exchange rate to which the parties
                agree.





9.****
            Rate
                for Additional Support.
                Such amounts as shall be agreed upon by the parties in writing on
                a
                project-by-project basis.








10.
            Term.





a.
            Initial
                Term:
                Two (2) years (the “Initial
                Term”).





b.
            Renewal
                Term:Provided
                (i) the Agreement shall be in full force and effect as of the expiration
                date of the Initial Term, (ii) Licensee shall not then be in default
                under
                the terms of the Agreement, and (iii) the total revenue generated
                by DSS
                from Licensee under this Agreement during the Initial Term (with
                respect
                to both License Fees and payment for DSS Products) is equal to or
                greater
                than Two Million, Five Hundred Thousand and No/100 U.S. Dollars (U.S.
                $2,500,000), the Agreement shall automatically renew for an additional
                period of one (1) year (the “Renewal Term”). Such Renewal Term shall be
                upon the same terms and conditions as the Initial Term, except that
                Licensee shall have no option to renew at the end of the Renewal
                Term. The
                parties agree to mutually enter into good faith negotiations with
                respect
                to the terms and conditions of any extension of the Agreement beyond
                the
                Renewal Term.










**EXHIBIT
      A**


**USAGE
      GUIDELINES FOR TECHNOLOGY MARKS**







1.
            Licensee
                agrees to use the appropriate trademark, product descriptor and trademark
                symbol (either “(TM)” or “(R)” in a superscript), and clearly indicate
                DSS’ ownership of its trademark(s) whenever the Technology name is
                mentioned in any advertisement, brochure or in any other manner in
                connection with Licensee Products or DSS Products. Licensee further
                agrees
                to reproduce and include all copyright, patent and other confidential
                or
                proprietary rights notices on any copies of any DSS property it
                makes.





2.
            Licensee
                shall, upon request, provide DSS with samples of all of Licensee’s
                promotional, packaging and other written materials which use the
                Technology name and the Technology Marks.





3.
            Licensee
                shall not adopt or use a product name, trademark or service mark
                in
                conjunction with the advertising, packaging, promotion or sale of
                Licensed
                Products or DSS Products which includes all or part of any Technology
                Marks or any term that is similar to the Technology Marks.





4.
            Licensee
                agrees not to remove, obliterate or alter any Technology Marks or
                any
                copyright, patent, trademark or other confidential or proprietary
                rights
                notice of DSS which appear on any Intellectual Property provided
                by DSS or
                the DSS Products, nor shall it affix to the same any other notice
                or mark.





5.
            Licensee
                may use Technology Marks on web pages, and in related advertising,
                marketing, and collateral materials, solely as approved by DSS in
                writing,
                and insofar as the use is consistent with this
                Agreement.





6.
            Technology
                Marks may not be altered in any manner and may never be used in a
                sentence
                or phrase, nor may it be joined or used as a design element with
                any other
                logo.





7.
            Technology
                Marks may only be presented in the form attached hereto, as previously
                provided to Licensee.








**EXHIBIT
      B**


**CONFIDENTIALITY/NON-DISCLOSURE
      AGREEMENT**





Attached