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**EMPLOYMENT AGREEMENT**

            This **EMPLOYMENT    AGREEMENT** (the "***Agreement***") is effective as of June 10 2004     (the "***Effective Date***"), between **DOCUMENT SECURITY SYSTEMS,    INC.**, a New York corporation with an office at 36 West Main Street, Rochester,    New York 14614 ("***Company***") and **PATRICK WHITE**, who resides    at 58 Bosworth Field, Mendon, New York   14506 ("***Executive***").

***R E C I T A L S :***

**            WHEREAS**,    Company is in the business of developing, licensing and selling anti- counterfeiting    technology and products;

**            WHEREAS**,    Executive has served as Company's Chief Executive Officer and President since    approximately August 5, 2002; and

            **WHEREAS**,    Company desires to continue the engagement of Executive as the Chief Executive    Officer and President of Company and Executive wishes to continue serving    in such capacity on the terms and conditions set forth below.

***P R O V I S I O N S :***

**            NOW,    THEREFORE**, in consideration of the mutual promises and covenants set forth    herein, the parties agree as follows:

            1.            ***Employment; Duties***.  Company hereby agrees to employ    Executive as its Chief Executive Officer, President, Chairman of the Board    and temporary Chief Financial Officer. The parties acknowledge and agree that    it is the intention of the Company to hire and employ a new Chief Financial    Officer within the next six months if possible.  The Executive hereby    accepts such employment.  Executive will report to Company's Board of    Directors and will perform those duties and have such authority and powers    as are customarily associated with the positions of Chief Executive Officer    and President of a company engaged in a business similar to the Business,    including, without limitation, leading Company's management, overseeing and    implementing Company's business development efforts, preparing business plans,    raising capital, and such other duties and responsibilities as the Board of    Directors may reasonably request.

            2.            ***Term***.  The term of this Agreement shall commence    on the Effective Date and shall continue for (5) five years from the Effective    Date unless otherwise terminated as provided herein (together with any Renewal    Term, as hereafter defined, shall be referred to as the "***Term***").    This Agreement shall automatically be extended for successive one (1) year    terms pursuant to the terms and conditions of this Agreement (each, a "***Renewal    Term***"), unless otherwise terminated by written notice from one party    to the other no less than sixty (60) days prior to the end of the Term or    any subsequent Renewal Term.

            3.            ***Compensation***. 

                           (a)        Annual Salary.     In consideration for the services rendered by Executive on behalf of Company    during the Term of this Agreement, Company shall pay Executive, commencing    on the Effective Date, an annual salary equal to One Hundred Fifty Thousand    Dollars ($150,000.00), payable in accordance with Company's regular payroll    practices.  Effective as of January 1 of each year during the Term, Executive's    annual salary shall be increased as determined by Company's Board of Directors,    but in no event less than ten percent (10%) annually from the prior year's    annual salary.  All forms of compensation referred to in this Agreement    are subject to reduction to reflect applicable withholding and payroll taxes.

                           (b)        Bonuses.  Executive    shall be eligible to receive a cash bonus, based upon the Company's financial    performance and as determined in the discretion of Company's Board of Directors.

                           (c)        Stock Options.     Company's Board of Directors has previously approved that certain Document    Security Systems, Inc. 2003 Executive Stock Incentive Plan (the "***Incentive    Plan***") pursuant to which 200,000 shares of Company's common stock    (the "***Company Option Shares***") are available for grant to Company's    employees.  Upon executing this Agreement, Executive shall receive incentive    stock options to purchase an aggregate of 30,000 options, vesting in increments    of 10,000 per year commencing on the date hereof with an exercise price based    upon the closing price of the Company's Common Stock as of June 10, 2004 ("***Executive's    Stock Options***") as reported on the American Stock Exchange.     These grants shall be subject to the terms and conditions of the Incentive    Plan and applicable rules and regulations of the Internal Revenue Service.

                           (i)         Immediately prior to the    consummation of any transaction constituting a "Change in Control" (as defined    in Section 10(a) below) any Executive Stock Options that remain unvested shall    immediately vest, and subject to any provisions in the Incentive Plan or applicable    Internal Revenue Service ("IRS") regulations, the  Executive shall have    a period equal to the greater of (i) one (1) year following the Change of    Control or the unexpired term of the Executive's Stock Options to exercise    his Executive Stock Options.

            4.            ***Benefits***.  In addition to the compensation set forth    above, Company shall provide Executive with the following benefits:

                           (a)        Executive and Executive's family,    as applicable, shall be entitled to participate in all employee benefit plans    and programs from time to time whenever sponsored by Company, including, without    limitation, any group disability, life, major medical and accidental death    and dismemberment insurance plans and/or benefits and profit sharing, retirement    or pension plans to the full extent available to any of the Company's other    employees through the Term of this Agreement.

                           (b)        Company will obtain, and maintain    during the term of this Agreement, on Executive's life an additional term    life insurance policy for his benefit, at Company's sole cost, in the amount    of $800,000.  Executive shall designate a beneficiary or beneficiaries    from time to time.  If Executive fails to designate a beneficiary, the    beneficiary shall be Executive's estate.

                           (c)        Executive shall be entitled    to four (4) weeks of vacation each year that he is employed hereunder during    which vacation his annual salary shall be paid in full.  Any vacation    not taken by Executive shall carryover into the succeeding year or in accordance    with the Company's executive employee policies in effect from time to time.     All unused and accrued vacation shall be paid to Executive (or Executive's    estate) upon Executive's termination of employment.

                           (d)        Company shall provide Executive    with up to 5 days of paid sick leave each year; unused sick days shall not    carryover into the succeeding year.  Company also shall provide Executive    with holiday pay, as provided by Company to its other executives.

            5.            ***Expenses***.  Executive will be entitled to be paid    or reimbursed for all expenses incurred by Executive in connection with Executive's    responsibilities to Company, including, without limitation, administrative,    travel, lodging, food, and entertainment. 

            6.            ***Confidential Information***. Executive shall not, during    the Term, disclose, except as required or necessary in the course of his employment    by Company or as otherwise authorized by Company, any Confidential Information    (as defined herein).  "***Confidential Information***" shall    mean any information existing as of the date of this Agreement, or thereafter    developed, in which Company has a proprietary interest, including, but not    limited to, information relating to its patents, technology, research and    development, technical data, trade secrets, know-how, products, services,    finances, operations, sales and marketing, customers and customer information,    licenses, orders for the purchase or sale of products, personnel matters and/or    other information relating to Company, whether communicated orally, electronically    or in writing, or obtained by ****Executive as a result of his employment,    or through observation or examination of the Business.  Company and Executive    agree that the foregoing confidentiality obligations shall not apply to information    that (i) was known to Executive prior to the receipt of such information,    (ii) was publicly available at the time of disclosure or subsequently becomes    available through no fault of Executive, or (iii) was disclosed to Executive    by a third party who is under no obligation of confidentiality with Company.

            7.            **Non-Competition Covenant; Non Solicitation Covenant**    

                           (a)        During the term of his employment    and for a period of the longer of (i) one year thereafter or (ii) the period    of time that Executive is receiving any severance payments under Section 9(ii)    hereof, Executive agrees that he will not directly or indirectly engage in    any business, that sells develops software, manufactures or distributes products    or provides services in the anti- counterfeiting and document security businesses    or that are engaged in businesses that the same as those sold or provided    by Company at such time.

                           (b)        Notwithstanding anything herein    to the contrary, Executive shall not be prevented or limited from (i) investing    in the stock or other securities of any corporation whose stock or securities    are publicly owned and regularly traded on any public exchange, (ii) serving    as a director, officer or member of professional, trade, charitable and civic    organizations, or (iii) passively investing (not to exceed being a beneficial    owner of more than 3% of the outstanding Common Stock)  his assets in    such a form and manner as will not conflict with the terms of this Agreement    and will not require services on the part of Executive in the operation of    the business of the entities in which such investments are made.

                           (c)  In furtherance of the foregoing, Executive shall not, during the    aforesaid period of non-competition, directly or indirectly, in connection    with any business involved in the manufacture, development and/or distribution    of anti-counterfeiting technology and document security businesses, or any    business similar to the business in which the Company was engaged, or in the    process of developing during Executive's tenure with the Company, solicit    any customer or employee of the Company who was a customer or employee of    the Company during the tenure of his employment.

                           (d) If any court shall hold that the duration of non-competition or any other    restriction contained in this Section 7 is unenforceable, it is our intention    that same shall not thereby be terminated but shall be deemed amended to delete    therefrom such provision or portion adjudicated to be invalid or unenforceable    or, in the alternative, such judicially substituted term may be substituted    therefor.

            8.            ***Termination of Agreement***

                           (a)        This Agreement shall terminate    upon Executive's death.

                           (b)        Company may terminate this Agreement    upon Executive's "total disability" ("Disability"), which shall mean his incapacity    due to physical or mental illness or disability, which renders him absent,    or unable to perform, his duties hereunder on a full time basis for a period    of six (6) months, whether consecutive or cumulative, within any twelve (12)    month period.

                           (c)        Company may terminate this Agreement    for "Good Cause" as defined below upon thirty (30) days prior written notice    to Executive, which notice shall specify the reason(s) for termination.     For purposes of this Agreement, "***Good Cause***" means (i) willful    disobedience by the Executive of a material and lawful instruction of the    Board of Directors of the Company; (ii) conviction of the Executive of any    misdemeanor involving fraud or embezzlement or similar crime or any felony;    (iii) an order is entered by the Securities and Exchange Commission, a state    regulatory agency  or an exchange on which the Company's securities are    traded finding that Executive has violated the securities laws; (iv)     breach by the Employee of any material term, condition or covenant of this    Agreement; (v)  fraud or  gross negligence in the performance of    his duties to the Company; or (vi)  excessive absences from work, other    than for illness or Disability, in the case of breach which is capable of    being cured, is not cured within thirty (30) days after Company has provided    Executive with written notice thereof.

                           (d)        Executive may terminate this    Agreement upon sixty (60) days prior written notice to the Company.

                           (e)        Executive may terminate this    Agreement at any time, on 30 days advance written notice to Company, for "***Good    Reason***" which shall mean the occurrence of one or more of the following    events without Executive's prior written consent:

                                       (i)         a Change in Control occurs    with respect to Company;

                                       (ii)        excluding the role or title    of Chief Financial Officer which the Parties expect to occur,  any change    in Executive's status, title, authorities or responsibilities (including reporting    responsibilities) which represents a demotion from Executive's status, title,    position or responsibilities (including reporting responsibilities) as of    the date of this Agreement ); or any removal of Executive from, any of such    positions, except in the event of Executive's death or Disability;

                                       (iii)       the failure by Company to continue    in effect any incentive, bonus or other compensation plan in which Executive    participates, unless an equitable arrangement (embodied in an ongoing substitute    or alternative plan) has been made with respect to the failure to continue    such plan, or the failure by Company to continue Executive's participation    therein, or any action by Company which would directly or indirectly materially    reduce his participation therein or reward opportunities thereunder;

                                       (iv)       the failure of Company to obtain    a satisfactory agreement from any successor or assignee of the Company to    fully assume and agree to perform this Agreement; or

                                       (v)        any breach by Company of any    material term, condition or covenant of this Agreement, which is not cured    within thirty (30) days after Executive has provided Company with notice thereof.

            (f)            This Agreement may be terminated upon the mutual agreement of Company and    Executive.

            9.            ***Obligations Following Termination of Agreement***.

                           (a)        If this Agreement is terminated    pursuant to Section 8(a), (b), (c), (d) or (f), Company shall have no obligation    to pay any Severance Pay (as defined below) or benefits to Executive; provided,    however, Company shall be obligated to pay Executive (or in the case of his    death, his spouse, estate or representative) all unpaid salary, earned bonuses,    vacation and other benefits accrued through the date of termination of this    Agreement and shall provide such other benefits, such as health insurance    continuation coverage under COBRA, as may be required by law.

                           (b)        If this Agreement is terminated    pursuant to Section 8(e) or otherwise by Company without "Good Cause":

                                       (i)         Executive shall be paid    all unpaid salary, earned bonuses, vacation and other benefits accrued through    the date of termination and shall receive such other benefits, such as health    insurance continuation coverage under COBRA, as may be required by law;

                                       (ii)        Executive shall receive as    severance payment an amount equal to eighteen (18) months of Executive's annual    salary at the rate in effect as of the date of Executive's termination, payable    at Executive's sole discretion in either a lump sum at the time of termination    or on normal pay dates in accordance with the Company's pay policies in effect    prior to the termination date.  In addition, for the eighteen (18) month    period immediately after the termination of this Agreement, Company shall    continue to provide and pay the premium for the health insurance provided    to Executive (and his family, if applicable) immediately prior to the termination    of this Agreement;

                                       (iii)       Executive shall not be required    to mitigate damages of the amount of any salary continuation payments provided    for under this Section by seeking other employment or otherwise, nor shall    the amount of any payments provided for under this Section be reduced by any    compensation earned by Executive as the result of employment by another employer    or by any self employment after the date of termination;

                                       (iv)       All options for Company capital stock    granted to Executive pursuant to the Incentive Plan including, without limitation,    Executive's Stock Options, or otherwise, that remain unvested shall immediately    vest, and Executive shall have a period of one (1) year following termination    to exercise his vested options, subject to the provisions of the Incentive    Plan and applicable IRS regulations.

                           (c)        Upon the termination of this    Agreement for any reason, any and all restrictions (other than restrictions    which are the result of applicable federal securities laws and regulations    and those restrictions which Executive has entered into with a third party    on a contractual basis) on the transfer of shares of Company's capital stock    then owned by Executive (which shall include any and all option shares unvested    at the time of the termination) shall be terminated as of the date of termination    of this Agreement.

                           (d)        Company represents and warrants    to Executive that this Agreement (including the Severance Compensation) have    been duly approved and authorized by Company's Board of Directors and, therefore,    the payments to be made hereunder shall not under any circumstances be subject    to Section 4999 of the Code. Should, however, any of the payments, singly,    in any combination or in the aggregate, that are provided for hereunder to    be paid to or for the benefit of Executive be determined or alleged to be    subject to an excise or similar purpose tax pursuant to Section 4999 of the    Code, or any successor or other comparable federal, state or local tax law    by reason of being a "parachute payment" (within the meaning of Section 280G    of the Code), Company shall pay to Executive such additional compensation    as is necessary (after taking into account all federal, state and local taxes    payable by Executive as a result of the receipt of such additional compensation)    to place Executive in the same after-tax position (including federal, state    and local taxes) he would have been in had no such excise or similar purpose    tax (or interest or penalties thereon) been paid or incurred.  Without    limiting the obligation of Company hereunder, Executive agrees to negotiate    with Company in good faith (at Company's sole cost and expense including attorney's    fees) with respect to procedures reasonably requested by Company which would    afford Company the ability to contest the imposition of such excise or similar    purpose tax.

            10.          ***Change in Control***. 

                           (a)        For purposes of this Agreement,    a "***Change in Control***" will be deemed to have occurred with respect    to Company if:

                                       (i)         the Board of Directors    of the Company approves of (A) any merger, consolidation, reorganization or    other business combination of Company where the pre transaction shareholders    of the Company do not continue to own 50.1% of the post transaction outstanding    shares of Common Stock  having the right to vote in an election of Company's    Board of Directors, (B) the sale, exchange, transfer or other disposition    of all or substantially all of the assets of Company (in one transaction or    a series of transactions contemplated by any party as a single plan), or (C)    any plan or proposal for the liquidation or dissolution of Company; or

                                       (ii)        any person or entity, together    with all "affiliates" and "associates" (as defined in Rule 12b-2 of the Securities    Exchange Act of 1934 (the "***Exchange Act***")) of such person or    entity, shall become the "beneficial owner" (as defined in Rule 13d-3 of the    Exchange Act), directly or indirectly, of securities of Company representing    50.1% or more of either (A) the combined voting power of Company's then outstanding    securities having the right to vote in an election of Company's Board of Directors    ("***Voting Securities***") or (B) the then outstanding shares of    all classes of stock of Company.               

            11.          ***Personal Guaranty of Indebtedness***.  Company and    Executive acknowledge that Executive has personally guaranteed the following    Company indebtedness: (a) Line of Credit with Fleet Bank in the amount of    approximately $80,000; (b) a business loan from CIT, in the principal amount    of $215,000; and (c) equipment leases with outstanding amounts of approximately    $78,000 (collectively, the "***Personally Guaranteed Debts***").     Company covenants and agrees to use its best efforts to obtain the release    of Executive from all of the Personally Guaranteed Debts as soon as practicable.     If prior to or after the release of the Personally Guaranteed Debts, Executive    incurs any liability as a result of the Personally Guaranteed Debts, Company    shall defend, hold harmless and indemnify Executive (or Executive's estate)    from any and all liability, cost or expense incurred or which will likely    be incurred by Executive, including, without limitation, principal, interest,    late fees and attorneys' fees.

            12.          ***Indemnification.*** Company shall, to the maximum extent    permitted by law, indemnify Executive against all expenses, including, without    limitation, reasonable attorneys' fees, judgments, fines, settlements, and    other amounts actually and reasonably incurred in connection with any proceeding    arising by reason of Executive's employment by Company.  Company shall,    to the maximum extent permitted by law, advance to Executive any expenses    incurred in defending any such proceeding.  Company agrees to obtain    Directors and Officers Liability insurance, and to include Executive in the    coverage of this policy.  In addition, Company agrees to amend its Certificate    of Incorporation, as necessary, to authorize Company to indemnify Executive    as set forth in this Section 12.******

            13.          ***Work-for Hire***.  Except as otherwise may be agreed    by the Company in writing, in consideration of the employment of Employee    by the Company, and free of any additional obligations of the Company to make    additional payment to Employee, Employee agrees to irrevocably assign to the    Company any and all inventions, software, manuscripts, documentation, improvements    or other intellectual property whether or not protectible by any state or    federal laws relating to the protection of intellectual property, relating    to the present or future business of the Company that are developed by Employee    prior to the termination of his/her employment with the Company, either alone    or jointly with others, and whether or not developed during normal business    hours or arising within the scope of his/her duties of employment.  Employee    agrees that all such inventions, software, manuscripts, documentation, improvement    or other intellectual property shall be and remain the sole and exclusive    property of the Company and shall be deemed the product of work for hire.     Employee hereby agrees to execute such assignments and other documents as    the Company may consider appropriate to vest all right, title and interest    therein to the Company and hereby appoints the Company Employee's attorney-in-fact    with full powers to execute such document itself in the event employee fails    or is unable to provide the Company with such signed documents.  This    provision does not apply to an invention for which no equipment, supplies,    facility, or trade secret information of the Company was used and which was    developed entirely on Employee's own time, unless (a) the invention relates    (i) to the business of the Company, or (ii) to the Company's actual or demonstrably    anticipated research or development, or (b) the invention results from any    work performed by Employee for the Company.

            14.          ***Miscellaneous***.

                           (a)        This Agreement:

                                       (i)         shall constitute the entire    agreement between the parties hereto and supersedes all prior agreements,    written or oral, concerning the subject matter herein and there are no oral    understandings, statements or stipulations bearing upon the effect of this    Agreement which have not been incorporated herein.

                                       (ii)        may be modified or amended    only by a written instrument signed by each of the parties hereto.

                                       (iii)       shall bind and inure to the benefit    of the parties hereto and their respective heirs, successors and assigns.

                                       (iv)       may not be assigned by either party    without a written agreement signed by all parties hereto.  Any assignment    not signed by all parties is null and void.

                           (b)        If any provision of this Agreement    shall be held invalid or unenforceable by competent authority, such provision    shall be construed so as to be limited or reduced to be enforceable to the    maximum extent compatible with the law as it shall then appear.  The    total invalidity or unenforceability of any particular provision of this Agreement    shall not affect the other provisions hereof and this Agreement shall be construed    in all respects as if such invalid or unenforceable provision were omitted.

                           (c)        This Agreement shall be construed    in accordance with and governed by the laws of the State of New York without    reference to conflict of laws principles.  Any litigation involving this    Agreement shall be adjudicated in a court with jurisdiction located in Monroe    County, New York and the parties irrevocably consent to the personal jurisdiction    and venue of such court.

(d)        All notices and other communications    under this Agreement must be in writing and must be given by personal delivery    or first class mail, certified or registered with return receipt requested,    and will be deemed to have been duly given upon receipt if personally delivered,    five (5) days after mailing, if mailed, to the respective persons named below:

                                       If to Executive:

Mr. Patrick White    58 Bosworth Field    Mendon, New York 14506     

Any party may change such party's address for notices by notice duly given    pursuant to this Section.

                           (e)        In the event of litigation to    enforce the terms and conditions of this Agreement, the losing party agrees    to pay the substantially prevailing party's costs and expenses incurred including,    without limitation, reasonable attorneys' fees.

                           (f)         Company agrees that it    will indemnify and hold Executive harmless to the fullest extent permitted    by applicable law from and against any loss, cost, expense or liability resulting    from or by reason of Executive's employment hereunder, whether as an officer,    executive, agent, fiduciary, director or other official of Company, except    to the extent of any expenses, costs, judgments, fines or settlement amounts    which result from conduct which is determined by a court of competent jurisdiction    to be knowingly fraudulent or to constitute some other type of willful misconduct.

                           (g)        This Agreement may be executed    simultaneously in one or more counterparts, each one of which shall be deemed    an original, but all of which together shall constitute one and the same instrument.

**[SIGNATURE PAGE FOLLOWS]**

[Signature Page to Employment Agreement]

            **IN    WITNESS WHEREOF**, the parties have executed this Agreement on the day and    year first above written.

**COMPANY**:   **Document Security Systems, Inc.**

By:                                                               

Name: Alan Harrison    Title: Chairman of Compensation Committee

**Executive**:

Patrick White