**NEITHER
      THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
      HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE
      SECURITIES OR BLUE SKY LAWS.**




DOCUMENT
      SECURITY SYSTEMS, INC.




**WARRANT**




Warrant
      No. **B-1**




Dated:
      June 16, 2006




Document
      Security Systems, a New York corporation (the " **Company** "),
      hereby certifies that, for value received, International Barcode Corporation,
      a
      Delaware corporation, dba Barcode Technology, or its registered assigns (the
      " **Holder** "),
      is
      entitled to purchase from the Company up to a total of 500,000 shares of the
      common stock, par value $0.02 per share (the " **Common
      Stock** ”)
      of the
      Company (each such share, a “ **Warrant
      Share** "
      and all
      such shares, the " **Warrant
      Shares** ")
      at an
      exercise price equal to $10.00 per share (as adjusted as provided in Section
      8,
      the “ **Exercise
      Price** ");
      subject, however, to the provisions and upon the terms and conditions set forth
      in this Warrant (the " **Warrant** ").
      This
      expires at 6.00 PM (Eastern Time) on June 16, 2007 (the “ **Expiration
      Date** ").




1.  Registration
      of Warrant. The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the " **Warrant
      Register** "),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.





2.  Registration
      of Transfers .
      This
      Warrant may not be sold, transferred or assigned by the Holder, without the
      prior written consent of the Company, which will not be unreasonably withheld
      or
      delayed. The Company shall register any transfer of any portion of this Warrant
      made in accordance with the terms hereof in the
      Warrant Register, upon surrender of this Warrant, with the Form of Assignment
      attached hereto duly completed and signed, to the Company (or to the warrant
      transfer agent for the Company, if any) at its address specified herein. Upon
      any such permitted registration of transfer, a new warrant to purchase Common
      Stock, in substantially the form of this Warrant (any such new warrant, a
      " **New
      Warrant** "),
      evidencing the portion of this Warrant so transferred shall be issued to the
      transferee and a New Warrant evidencing the remaining portion of this Warrant
      not so transferred, if any, shall be issued to the transferring Holder. The
      acceptance of the New Warrant by the transferee thereof shall be deemed the
      acceptance by such transferee of all of the rights and obligations of a holder
      of a Warrant.








3.   Exercise
      and Duration of Warrants .




(a)
      This
      Warrant shall become exercisable by the registered Holder as follows:








Date
            Warrants
                to become exercisableJune
                30, 2006
            125,000September
                16, 2006
            125,000December
                16, 2006
            125,000March
                16, 2007
            125,000Total
                Warrants
            500,000





At
      6:30PM, New York City time on the Expiration Date, the portion of this Warrant
      not exercised prior thereto shall be and become void and of no value.
      Notwithstanding anything to the contrary herein, if a registration statement
      has
      been filed relating to the Warrant Shares prior to the Expiration Date, the
      Expiration Date shall be extended for each day following the proposed effective
      date that the registration statement is not effective.





(b)
      Holder may exercise this
      Warrant by delivering to the Company (i) an exercise notice, in the form
      attached hereto (the " **Exercise
      Notice** "),
      appropriately completed and duly signed, and (ii) payment of the Exercise Price
      for the number of Warrant Shares as to which this Warrant is being exercised
      in
      immediately available funds or bank check, and the date such items are sent
      to
      the Company (as determined in accordance with the notice provisions hereof)
      is
      an "Exercise Date." The Holder shall not be required to deliver the original
      Warrant in order to effect an exercise hereunder, provided, as a condition
      of
      the Company effecting such exercise, Holder complies with any requests the
      Company may make pursuant to Section 6 (relating to lost, stolen or destroyed
      warrants) herein. Execution and giving of the Exercise Notice shall have the
      same effect as cancellation of the original Warrant and issuance of a New
      Warrant evidencing the right to purchase the remaining number of Warrant Shares.








4.  Delivery
      of Warrant Shares.





(a)
      Upon
      exercise of this Warrant, the Company shall promptly (but in no event later
      than
      three Business Days after the Exercise Date) issue or cause to be issued and
      cause to be delivered to or upon the written order of the Holder and in such
      name or names as the Holder may designate, a certificate for the Warrant Shares
      upon such exercise, free of restrictive legends unless a registration statement
      covering the resale of the Warrant Shares and naming the Holder as a selling
      stockholder thereunder is not then effective and the Warrant Shares are not
      freely transferable without volume restrictions pursuant to Rule 144(k) under
      the Securities Act and such issuance shall be promptly recorded in the Company's
      share registry. The Holder, or any Person so designated by the Holder to receive
      Warrant Shares, shall be deemed to have become holder of record of such Warrant
      Shares as of the Exercise Date. For purposes of this Agreement, Business Days
      shall mean any day on which Banks in New York State are open for business.




(b)
      Upon
      surrender of this Warrant following one or more partial exercises, the Company
      shall issue or cause to be issued, at its expense, a New Warrant evidencing
      the
      right to purchase the remaining number of Warrant Shares.





(c)
      The
      Company's obligations to issue and deliver Warrant Shares in accordance with
      the
      terms hereof are absolute and unconditional, irrespective of recovery of any
      judgment against any Person or any action to enforce the same, or any setoff,
      counterclaim, recoupment, limitation or termination, or any breach or alleged
      breach by the Holder or any other Person of any obligation to the Company,
      excluding breach of this Warrant. Nothing herein shall limit a Holder's right
      to
      pursue any other remedies available to it hereunder, at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company's failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the Warrant
      as
      required pursuant to the terms hereof.





5.   Charges,
      Taxes and Expenses .
      Issuance and delivery of certificates for shares of Common Stock upon exercise
      of this Warrant shall be made without charge to the Holder for any issue or
      transfer tax, transfer agent fee or other incidental tax or expense in respect
      of the issuance of such certificates, all of which taxes and expenses shall
      be
      paid by the Company; provided, however, that the Company shall not be required
      to pay any tax which may be payable in respect of any transfer involved in
      the
      registration of any certificates for Warrant Shares or Warrants in a name other
      than that of the Holder. The Holder shall be responsible for all other tax
      liability that may arise as a result of holding or transferring this Warrant
      or
      receiving Warrant Shares upon exercise hereof.





6.  Replacement
      of Warrant. If this
      Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
      cause to be issued in exchange and substitution for and upon cancellation
      hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
      only
      upon receipt of evidence reasonably satisfactory to the Company of such loss,
      theft, or destruction and customary and reasonable bond or indemnity, if
      requested. Applicants for a New Warrant under such circumstances shall also
      comply with such other reasonable regulations and procedures and pay such other
      reasonable third-party costs as the Company may prescribe.








7.  Reservation
      of Warrant Shares .
      The
      Company covenants that it will at all times reserve and keep available out
      of
      the aggregate of its authorized but unissued and otherwise unreserved Common
      Stock, solely for the purpose of enabling it to issue Warrant Shares upon
      exercise of this Warrant as herein provided, the number of Warrant Shares which
      are then issuable and deliverable upon the exercise of this entire Warrant,
      free
      from preemptive rights or any other contingent purchase rights of persons other
      than the Holder (after giving effect to the adjustments and restrictions of
      Section 8, if any). The Company covenants that all Warrant Shares so issuable
      and deliverable shall, upon issuance and the payment of the applicable Exercise
      Price in accordance with the terms hereof, be duly and validly authorized,
      issued and fully paid and nonassessable. The Company will take all such action
      as may be necessary to assure that such shares of Common Stock may be issued
      as
      provided herein without violation of any applicable law or regulation, or of
      any
      requirements of any securities exchange or automated quotation system upon
      which
      the Common Stock may be listed.





8.  Certain
      Adjustments .
      The
      Exercise Price and number of Warrant Shares upon exercise of this Warrant are
      subject to adjustment from time to time as set forth in this Section 8.




(a)  Stock
      Dividends and Splits .
      If the
      Company, at any time while this Warrant is outstanding, (i) pays a stock
      dividend on its Common Stock or otherwise makes a distribution on any class
      of
      capital stock that is payable in shares of Common Stock, (ii) subdivides
      outstanding shares of Common Stock into a larger number of shares, or (iii)
      combines outstanding shares of Common Stock into a smaller number of shares,
      then in each such case the Exercise Price shall be multiplied by a fraction
      of
      which the numerator shall be the number of shares of Common Stock outstanding
      immediately before such event and of which the denominator shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to clause (i) of this paragraph shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution, and any adjustment pursuant to clause
      (ii) or (iii) of this paragraph shall become effective immediately after the
      effective date of such subdivision or combination.





(b)  Fundamental
      Transactions .
      If, at
      any time while this Warrant is outstanding the Company effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property (other than as a result of a subdivision or
      combination of shares of Common Stock covered by Section 8(a) above) (a
      "Fundamental Transaction"), then the Holder shall have the right thereafter
      to
      receive, upon exercise of this Warrant, the same amount and kind of securities,
      cash or property as it would have been entitled to receive upon the occurrence
      of such Fundamental Transaction if it had been, immediately prior to such
      Fundamental Transaction, the holder of the number of Warrant Shares then
      issuable upon exercise in full of this Warrant (the "Alternate Consideration").
      The aggregate Exercise Price for this Warrant will not be affected by any such
      Fundamental Transaction, but the Company shall apportion such aggregate Exercise
      Price among the Alternate Consideration in a reasonable manner reflecting the
      relative value of any different components of the Alternate Consideration.
      If
      holders of Common Stock are given any choice as to the securities, cash or
      property to be received in a Fundamental Transaction, then the Holder shall
      be
      given the same choice as to the Alternate Consideration it receives upon any
      exercise of this Warrant following such Fundamental Transaction.








(c)  Number
      of Warrant Shares .
      Simultaneously with any adjustments to the Exercise Price pursuant to paragraphs
      (a) or (b) of this Section, the number of Warrant Shares that may be purchased
      upon exercise of this Warrant shall be increased or decreased proportionately,
      so that after such adjustment the aggregate Exercise Price payable hereunder
      for
      the increased or decreased number of Warrant Shares shall be the same as the
      aggregate Exercise Price in effect immediately prior to such adjustment.





(d)  Calculations .
      All
      calculations under this Section 8 shall be made to the nearest cent or the
      nearest 11100th of a share, as applicable. The number of shares of Common Stock
      outstanding at any given time shall not include shares owned or held by or
      for
      the account of the Company, and the disposition of any such shares shall be
      considered an issue or sale of Common Stock. The number of shares of Common
      Stock outstanding at any given time shall in addition to issued and outstanding
      shares of Common Stock include all shares of Common Stock issuable upon
      exercise, conversion or exchange of any Convertible Securities. In calculating
      the offering price in connection with Convertible Securities, the price per
      share of Common Stock issuable upon conversion or exchange shall be determined
      by dividing (x) the total amount received by the Company as consideration for
      the issue or sale of such Convertible Securities, plus the aggregate amount
      of
      consideration, if any, payable to the Company upon the conversion or exchange
      thereof, by (y) the total number of shares of Common Stock upon the conversion
      or exchange of all such Convertible Securities.




(e)  Notice
      of Adjustments .
      Upon
      the occurrence of each adjustment pursuant to this Section 8, the Company at
      its
      expense will promptly compute such adjustment in accordance with the terms
      of
      this Warrant and prepare a certificate setting forth such adjustment, including
      a statement of the adjusted Exercise Price and adjusted number or type of
      Warrant Shares or other securities upon exercise of this Warrant (as
      applicable), describing the transactions giving rise to such adjustments and
      showing in detail the facts upon which such adjustment is based.




(f)  Notice
      of Corporate Events .
      If the
      Company authorizes or approves, enters into any agreement comtemplating or
      solicits stockholder approval for (i) any merger or consolidation of the Company
      with or into another Person, (ii) sale of all or substantially all of the
      Company's assets in one or a series or related transaction, (iii) a tender
      offer
      or exchange offer pursuant to which holders of Common Stock are permitted to
      tender or exchange their share for other securities, cash or property (iv)
      the
      voluntary dissolution, liquidation or winding up of the affairs of the Company,
      then the Company shall deliver to the Holder a notice describing the material
      terms and conditions of such transaction, at least thirty (30) calendar days
      prior to the applicable record or effective date on which a Person would need
      to
      hold Common Stock in order to participate in or vote with respect to such
      transaction, and the Company will take all steps reasonably necessary in order
      to insure that the Holder is given the practical opportunity to exercise this
      Warrant prior to such time so as to participate in or vote with respect to
      such
      transaction; *provided,
      however* ,
      that
      the failure to deliver such notice or any defect therein shall not affect the
      validity of the corporate action required to be described in such notice.







(g)   Fractional
      Shares .
      The
      Company shall not be required to issue or cause to be issued fractional Warrant
      Shares on the exercise of this Warrant. If any fraction of a Warrant Share
      would, except for the provisions of this Section, be issuable upon exercise
      of
      this Warrant, the number of Warrant Shares to be issued will be rounded up
      to
      the nearest whole share.




10.   Notices .
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder (including without limitation any Exercise Notice) shall
      be
      in writing and shall be deemed given and effective on the earliest of (a) the
      date of transmission, if such notice or communication is delivered via facsimile
      at the facsimile number specified in this Section prior to 6:30 p.m. (local
      time
      of the recipient) on a Business Day, (b) the next Business Day after the date
      of
      transmission, if such notice or communication is delivered via facsimile at
      the
      facsimile number specified in tlns Section on a day that is not a Business
      Day
      or later than 6:30 p.m.
      (local time of the recipient) on any Business Day, (c) the Business Day (or
      second Business Day in the case of a recipient outside the United States)
      following the date of deposit with a nationally recognized overnight courier
      service, or (d) upon actual receipt by the party to whom such notice is required
      to be given. The addresses for such notices or communications shall
      be:




Document
                Security Systems, Inc.
              28
                E Main. St, Ste. 1525
              Rochester,
                NY 14614
            International
                Barcode Corporation
              257
                Park Ave South
              7thFloor
              New
                York, NY 10010







11.  No
      Voting or Dividend Right .
      Except
      as otherwise expressly provided herein, nothing contained in this Warrant shall
      be construed as conferring upon Holder the right to vote or consent or to
      receive notice as a shareholder of the Company or any other matters or any
      rights whatsoever as a shareholder of the Company.




12.   Miscellaneous .




(a)  Nothing
      in this Warrant shall be construed to give to any Person other than the Company
      and the Holder any legal or equitable right, remedy or cause of action under
      this Warrant. This Warrant may be amended only in writing signed by the Company
      and the Holder and their successors and assigns.










(b)  The
      Company will not, by amendment of its governing documents or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, but will at
      all
      times in good faith assist in the carrying out of all such terms and in the
      taking of all such action as may be necessary or appropriate in order to protect
      the rights of the Holder against impairment. Without limiting the generality
      of
      the foregoing, the Company (i) will not increase the par value of any Warrant
      Shares above the amount payable therefor on such exercise, (ii) will take all
      such action as may be reasonably necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares on the exercise of this Warrant, and (iii) will not close its shareholder
      books or records in any manner which interferes with the timely exercise of
      this
      Warrant.




(c)  Governing Law: Venue; Waiver of Trial. All questions concerning the
      construction, validity, enforcement and interpretation of this warrant shall
      be
      governed by and construed and enforced in accordance with the laws of the state
      of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of the state and federal courts sitting in the city of Rochester, New York
      for
      the adjudication of any dispute hereunder or in connection herewith or with
      any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of any of the transaction documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court. Each
      party hereby irrevocably waives personal service of process and consents to
      process being served in any such suit, action or proceeding by mailing a copy
      thereof via registered or certified mail or overnight delivery (with evidence
      of
      delivery) to such party at the address in effect for notices to it under this
      agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      The parties hereby waive all rights to a trial by jury.




(d)   The
      headings herein are for convenience only, do not constitute a part
      of this
      Warrant and shall not be deemed to limit or affect any of the provisions hereof.




(e)  In
      case
      any one or more of the provisions of this Warrant shall be invalid or
      unenforceable in any respect, the validity and enforceability of the remaining
      terms and provisions of this Warrant shall not in any way be affected or
      impaired thereby and the parties will attempt in good faith to agree upon a
      valid and enforceable provision which shall be a commercially reasonable
      substitute therefor, and upon so agreeing, shall incorporate such substitute
      provision in this Warrant.








[REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK, SIGNATURE PAGE FOLLOWS]




IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
      its
      authorized officer as of the date first indicated above.


**DOCUMENT
                SECURITY SYSTEMS, INC.**Date:
            By:
            /s/ Patrick
              WhiteName:
                Patrick White
              Title:
                Chief Executive OfficerTitle









FORM
      OF EXERCISE NOTICE




(To
      be
      executed by the Holder to exercise the right to purchase shares of Common Stock
      under the foregoing Warrant)




To:
      Document Security Systems, Inc.




The
      undersigned is the Holder of Warrant No. _______ (the “ **Warrant** ”)
      issued
      by Document Security Systems, Inc., a New York corporation (the “ **Company** ”).
      Capitalized terms used herein and not otherwise defined have the respective
      meanings set forth in the Warrant.




|1. | The
              Warrant is currently exercisable to purchase a total of ______________
              Warrant Shares.
|-- | ----------------------------------------------------------------------------------------------------------------------



|2. | The
              undersigned Holder hereby exercises its right to purchase
              _________________ Warrant Shares pursuant to the
              Warrant.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. | The
              Holder shall pay the sum of $___________ to the Company in accordance
              with
              the terms of this Warrant.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------



|4. | Pursuant
              to this exercise, the Company shall deliver to the holder _______________
              Warrant Shares in accordance with the terms of the
              Warrant.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. | Following
              this exercise, the Warrant shall be exercisable to purchase a total
              of
              ______________ Warrant Shares.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



Date: ___
            Name
              of
              Holder:(Print)By:Name:Title:(Signature
                must conform in all respects to name of holder as specified on the
                face of
                the Warrant)









FORM
      OF ASSIGNMENT




[To
      be
      completed and signed only upon transfer of Warrant]




FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto
      ________________________________ the right represented by the within Warrant
      to
      purchase ____________ shares of Common Stock of Document Security Systems,
      Inc.
      to which the within Warrant relates and appoints ________________ attorney
      to
      transfer said right on the books of Document Security Systems, Inc. with full
      power of substitution in the premises.




Dated:
                ______________________,
                _____(Signature
                must conform in all respects to name of holder as specified on the
                face of
                the Warrant)Address
                of TransfereeIn
                the presence of: