Document:

DOCUMENT
      SECURITY SYSTEMS, INC.

     

    SUBSCRIPTION
      AGREEMENT

     

    NONE
      OF THE SECURITIES OFFERED PURSUANT TO THIS SUBSCRIPTION AGREEMENT HAVE BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR THE
      SECURITIES LAWS OF ANY U.S. STATE OR ANY FOREIGN JURISDICTION AND ARE BEING
      OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
      OF
      THE ACT AND SUCH LAWS. SUCH UNITS, THE SHARES OF COMMON STOCK THAT COMPRISE
      A
      PART OF THE UNITS, THE WARRANTS THAT COMPRISE A PART OF THE UNITS AND THE SHARES
      ISSUABLE UPON EXERCISE OF SUCH WARRANTS MAY NOT BE OFFERED FOR SALE, SOLD,
      TRANSFERRED, PLEDGED OR HYPOTHECATED TO ANY PERSON AT ANY TIME IN THE ABSENCE
      OF
      AN EFFECTIVE REGISTRATION STATEMENT COVERNG SUCH SECURITIES UNDER THE ACT OR
      AN
      OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
      REGISTRATION IS NOT NECESSSARY. 

     

    INVESTMENT
      IN THE COMPANY IS HIGHLY SPECULATIVE AND INVOLVES SUBSTANTIAL RISK, INCLUDING,
      BUT NOT LIMITED TO THE RISKS SET FORTH IN THE SECTION ENTITLED “RISK FACTORS” IN
      THE PRIVATE OFFERING MEMORANDUM ATTACHED HERETO. YOU SHOULD READ THE PRIVATE
      OFFERING MEMORANDUM CAREFULLY BEFORE INVESTING.

    

    This
      Subscription Agreement (this “Subscription
      Agreement”)
      is
      entered into on December ___, 2006, by and between DOCUMENT SECURITY SYSTEMS,
      INC., a New York corporation (the “Company”),
      and
      _______________, an individual or entity (“Subscriber”).
      As
      used herein, the Company and Subscriber are individually and respectively
      referred to as a “Party”
and
      collectively as the “Parties.”
Terms
      not otherwise defined herein shall have the meanings ascribed to them in the
      Private Offering Memorandum attached hereto as Exhibit
      A
      (the
“Private
      Offering Memorandum”).

     

    1.
      Subscription. 

     

    Subscriber
      subscribes for and offers to purchase, and the Company agrees to issue and
      sell,
      an equity interest in the Company (the “Units”),
      entitling Subscriber to the rights of Subscribers described in the Private
      Offering Memorandum for a purchase price equal to the amount set forth on the
      signature page below (the “Investment
      Amount”),
      subject to the terms and conditions set forth herein.

     

    2.
      Investment
      Amount; Escrow Funds. 

     

    (a)
      Deliveries
      Upon Signing. Simultaneous
      with the execution of this Subscription Agreement, Subscriber shall execute
      and
      deliver to Placement Agent an Investor Questionnaire substantially in the form
      of Exhibit
      B
      hereto
      (the “Investor
      Questionnaire”).
      

     

    (b)
      Payment
      of Investment Amount. Concurrent
      with the execution of this Subscription Agreement, Subscriber shall transmit
      a
      wire transfer or check to the escrow agent (the “Escrow
      Agent”)
      designated in the Escrow Agreement substantially in the form of Exhibit
      C
      hereto
      (the “Escrow
      Agreement”)
      in an
      amount equal to such Subscriber’s Investment Amount in accordance with the
      instructions for the Escrow Agent set forth in the Escrow Agreement. For
      purposes of this Agreement, “Payment”
shall
      mean Subscriber’s implementation of such wire transfer or receipt by Escrow
      Agent of the bank check. Subscriber funds deposited into the Escrow Account
      will
      be maintained separate and apart from funds of the Company. The Parties hereby
      agree that Subscriber shall not be deemed to have purchased the Units until
      the
      Company shall have provided a Closing Notice (as defined herein).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)
      Closing.
      At
      any
      time on or prior to March 12, 2007, the Company, at the Company’s sole
      discretion, may elect to accept the subscription of the Subscriber. The
      Company’s acceptance of the subscription shall be effective upon the Company’s
      transmitting a notice to the Subscriber according to the notice information
      for
      the Subscriber set forth herein informing the Subscriber of such acceptance
      (“Closing
      Notice”).
      The
      Company shall use commercially reasonable efforts to effect a closing within
      21
      days after the Company has obtained executed Subscription Agreements with an
      aggregate Investment Amount of at least $1,500,000.

     

    (d)
      Trigger
      for Return of Investment Amount. If
      by
      March 12, 2007, the Company has failed to obtain executed Subscription
      Agreements with an aggregate Investment Amount of at least $1,500,000, then
      the
      Company shall instruct the Escrow Agent to return to the Subscriber an amount
      equal to the Subscriber’s Investment Amount to the Subscriber pursuant to the
      terms set forth in the Escrow Agreement. In the event that the Company has
      provided Closing Notice to the Subscriber and is nonetheless obligated to return
      funds to Subscriber pursuant to this Section 2(d), the Subscriber shall be
      deemed to have authorized the Company to take all steps necessary to terminate
      Subscriber’s Units in the Company and Subscriber shall execute any documents
      provided by the Company to effect such termination. If the Company does not
      accept the subscription of the Subscriber within 45 days after Subscriber’s
      Payment, Subscriber may, at Subscriber’s sole discretion, provide written notice
      to the Company to return Subscriber’s payment (the “Return
      Notice”).
      The
      Company shall, within 3 business days of receipt of the Return Notice, instruct
      Escrow Agent to return the Subscriber’s Payment to Subscriber. 

     

    3.
      The
      Offering.

     

    Subscriber
      understands that the details of the offering (the “Offering”)
      are
      set forth in the Private Offering Memorandum. The Offering will terminate on,
      or
      prior to, March 12, 2007, subject to extension and/or modification in the sole
      discretion of the Company, and may be extended or modified without notice as
      described in the Private Offering Memorandum. 

     

    Subscriber
      understands that this Subscription Agreement is not binding upon the Company
      unless and until such time as (i) payment of the Investment Amount is
      transferred from the Escrow Account, and clears and is credited to the Escrow
      Agent’s bank account, and (ii) the Company accepts Subscriber’s subscription in
      writing (the “Closing
      Date”).
      

     

    Subscriber
      acknowledges that the Company reserves the right, in its sole discretion, to
      accept or reject any Subscription Agreement. 

     

    Subscriber
      acknowledges that Subscriber has received, read, understands and is familiar
      with this Subscription Agreement, any attachments, including but not limited
      to
      the Private Offering Memorandum and all such information provided by the
      Placement Agent, if any, and together with any other filed regulatory documents
      (collectively “Offering
      Material”),
      and
      Subscriber further acknowledges that Subscriber has not relied upon any
      information concerning the Offering, written or oral, other than those contained
      in this Subscription Agreement and the Offering Material. Subscriber further
      understands that any other information or literature, regardless of whether
      distributed prior to, simultaneously with, or subsequent to, the date of this
      Subscription Agreement shall not be relied upon by Subscriber in determining
      whether to make an investment in the Units and Subscriber expressly
      acknowledges, agrees and affirms that Subscriber has not relied upon any such
      information or literature in making Subscriber’s determination to make an
      investment in the Units and that Subscriber understands that, except as
      otherwise provided herein, the Company is under no obligation to (and that
      Subscriber does not expect it to) update, revise, amend or add to any of the
      information heretofore furnished to Subscriber.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    4.
      Representations and Warranties of Subscriber.

     

    (a)
      In
      order to induce the Company to accept Subscriber’s subscription, Subscriber
      further represents and warrants to the Company, its Affiliates, as defined
      in
      the Securities Act of 1933 (the “Securities
      Act”),
      and
      counsel to the Company (the “Company’s
      Counsel”),
      and
      their respective agents and representatives as follows:

     

    
      	 	
              1.

            	
              SUBSCRIBER
                HAS READ THE PRIVATE OFFERING MEMORANDUM AND EXAMINED THE RISK FACTORS
                SET
                FORTH THEREIN, AND UNDERSTANDS THE SPECULATIVE NATURE OF AND SUBSTANTIAL
                RISK INVOLVED IN INVESTMENT IN THE COMPANY.
                

            

    

     

    
      	 	
              2.

            	
              If
                Subscriber has chosen to do so, Subscriber has been represented by
                such
                legal and tax counsel and other professionals, each of whom has been
                personally selected by Subscriber, as Subscriber has found necessary
                to
                consult concerning the purchase of the Units, and such representation
                has
                included an examination of all applicable documents and an analysis
                of all
                tax, financial, and securities law aspects thereof deemed to be necessary.
                Subscriber, together with Subscriber’s counsel, Subscriber’s advisors, and
                such other persons, if any, with whom Subscriber has found it necessary
                or
                advisable to consult, have sufficient knowledge and experience in
                business
                and financial matters to evaluate the information set forth in this
                Subscription Agreement and in the Offering Material and the risks
                of the
                investment and to make an informed investment decision with respect
                thereto. Further, Subscriber has been given the opportunity for a
                reasonable time period prior to the date hereof to ask questions
                of, and
                receive answers from, the Company or its representatives concerning
                the
                terms and conditions of the Offering and other matters pertaining
                to this
                investment and has been given the opportunity for a reasonable time
                period
                prior to the date hereof to verify the accuracy of the Company’s
                information. 

            

    

     

    
      	 	
              3.

            	
              With
                respect to the United States federal, state and foreign tax aspects
                of
                Subscriber’s investment, Subscriber is relying solely upon the advice of
                Subscriber’s own tax advisors, and/or upon Subscriber’s own knowledge with
                respect thereto.

            

    

     

    
      	 	
              4.

            	
              Subscriber
                has not relied, and will not rely upon, any information with respect
                to
                this offering other than the information contained herein and in
                the
                Offering Material. 

            

    

     

    
      	 	
              5.

            	
              Subscriber
                understands that no person has been authorized to make representations
                or
                to give any information or literature with respect to this offering
                that
                is inconsistent with the information that is set forth herein and
                in the
                Offering Material.

            

    

     

    
      	 	
              6.

            	
              Subscriber
                understands that, other than as provided herein and in the Offering
                Materials, no covenants, representations, or warranties have been
                authorized by or will be binding upon the Company, with regard to
                this
                Subscription Agreement, the performance of the Company or any expectation
                of investment returns, including any representations, warranties
                or
                agreements contained or made in any written document or oral communication
                received from or had with the Company, its Affiliates, Company Counsel
                or
                any of their respective representatives or agents. Subscriber has
                not
                relied upon any information or representation that may be or have
                been
                made or given except as permitted under this
                paragraph.

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	 	
              7.

            	
              Subscriber
                understands that the Offering has not been, and it is not anticipated
                that
                the same will be, registered under the Securities Act, or pursuant
                to the
                provisions of the securities or other laws of any other applicable
                jurisdictions, but is being made in reliance upon the provisions
                of
                Section 4(2) and/or 4(6) of the Securities Act and/or Regulation
                D and the
                other rules and regulations promulgated thereunder, and/or upon such
                other
                exemption from the registration requirements of the Securities Act
                as may
                be available with respect to any or all of the investments in securities
                to be made hereunder. Subscriber is fully aware that the Units subscribed
                for by Subscriber are to be sold to Subscriber in reliance upon such
                safe
                harbor based upon Subscriber’s representations, warranties, and agreements
                as set forth herein. Subscriber is fully aware of the restrictions
                on
                sale, transferability and assignment of the Units (including the
                shares of
                Common Stock and the Warrants that comprise the Units, and the shares
                of
                Common Stock issuable upon exercise of such Warrants), and that Subscriber
                must bear the economic risk of Subscriber’s investment herein for an
                indefinite period of time because the offering has not been registered
                under the Securities Act and, therefore, the Securities cannot be
                offered
                or sold unless such offer is subsequently registered under the Securities
                Act or an exemption from such registration is available to
                Subscriber.
                 

            

    

     

    
      	 	
              8.

            	
              Subscriber
                is an “accredited investor” (as defined in Rule 501 of Regulation D
                promulgated under the Securities
                Act).

            

    

     

    
      	 	
              9.

            	
              Subscriber’s
                execution and delivery of this Subscription Agreement has been duly
                authorized by all necessary action and all necessary consents have
                been
                obtained. Subscriber has no present intention to sell, distribute,
                pledge,
                assign, or otherwise transfer the Units (including the shares of
                Common
                Stock and the Warrants that comprise the Units, and the shares of
                Common
                Stock issuable upon exercise of such Warrants), which Subscriber
                acquires
                pursuant to this offering. Subscriber is making the investment hereunder
                solely for Subscriber’s own account and not for the account of others and
                for investment purposes only and not with a view to or for the transfer,
                assignment, resale or distribution thereof, in whole or in part.
                Subscriber has no present plans to enter into any such contract,
                undertaking, agreement, or
                arrangement.

            

    

     

    
      	 	
              10.

            	
              Except
                as provided in Section 2(c), Subscriber agrees that Subscriber will
                not
                cancel, terminate or revoke this Subscription Agreement, which has
                been
                executed by Subscriber, and that this Subscription Agreement shall
                survive
                any sale, assignment or other transfer of control over, or of all
                or
                substantially all of Subscriber’s assets or business and Subscriber’s
                bankruptcy, except as otherwise provided pursuant to the laws of
                any
                applicable jurisdiction.

            

    

     

    
      	 	
              11.

            	
              Subscriber
                has substantial investment experience and is familiar with investments
                of
                the type contemplated by this Subscription Agreement. Subscriber
                confirms
                that although one of Subscriber’s motivations for investing in the Company
                is to derive economic benefits therefrom, Subscriber is aware that
                purchase of the Units is a speculative investment involving a high
                degree
                of risk and there is no guarantee that Subscriber will realize any
                gain
                from Subscriber’s investment or realize any tax benefits therefrom and
                Subscriber is further aware that Subscriber may lose all or a substantial
                part of Subscriber’s investment. Subscriber understands that there are
                substantial restrictions on the transferability of, and there is
                no
                existing public market for, the Units (including the Warrants that
                are
                included in the Units) and it may not be possible to liquidate an
                investment in the Units (including the shares of Common Stock and
                the
                Warrants that comprise the Units, and the shares of Common Stock
                issuable
                upon exercise of such Warrants). Subscriber affirms that Subscriber
                acknowledges that this investment is highly speculative, involves
                a high
                degree of risk and, accordingly, Subscriber can afford to lose the
                entire
                investment.

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	 	
              12.

            	
              The
                address set forth herein is Subscriber’s true and correct address and
                Subscriber has no present intention of becoming a resident of any
                other
                country, state, or jurisdiction prior to, or after, Subscriber’s purchase
                of the Units.

            

    

     

    
      	 	
              13.

            	
              Subscriber
                understands the meaning and legal consequences of the foregoing
                representations and warranties, which are true and correct as of
                the date
                hereof and will be true and correct as of the date of Subscriber’s
                purchase of the Units subscribed for herein. Each such representation
                and
                warranty shall survive such
                purchase.

            

    

     

    
      	 	
              14.

            	
              Subscriber
                acknowledges and agrees that it shall not be a defense to a suit
                for
                damages for any misrepresentation or breach of covenant or warranty
                made
                by Subscriber that the Company, its Affiliates, the Company’s Counsel and
                their respective agents or representatives knew or had reason to
                know that
                any such covenant, representation or warranty in this Subscription
                Agreement or furnished or to be furnished to the Company by Subscriber
                contained untrue statements. The foregoing shall survive any investigation
                of Subscriber’s representations and warranties in this Subscription
                Agreement made by the Company, its Affiliates, the Company’s Counsel and
                their respective agents or representatives.

            

    

     

    
      	 	
              15.

            	
              No
                representation or warranty that Subscriber has made in this Subscription
                Agreement, or in a writing furnished or to be furnished pursuant
                to this
                Subscription Agreement, contains or shall contain any untrue statement
                of
                fact, or omits or shall omit to state any fact which is required
                to make
                the statements contained herein or therein, in light of the circumstances
                under which they were made, not
                misleading.

            

    

     

    
      	 	
              16.

            	
              Subscriber
                has full right, power, and authority to execute and deliver this
                Subscription Agreement and to perform Subscriber’s obligations hereunder.
                This Subscription Agreement has been duly authorized, executed and
                delivered by or on behalf of Subscriber and is a valid, binding and
                enforceable obligation of Subscriber, enforceable against Subscriber
                in
                accordance with its terms subject to bankruptcy, insolvency,
                reorganization, moratorium or similar laws from time to time in effect
                and
                affecting creditors’ rights generally and to general equity
                principles.

            

    

     

    
      	 	
              17.

            	
              The
                execution and delivery of this Subscription Agreement by Subscriber
                will
                not result in any violation of, or be in conflict with, or result
                in the
                default of, any term of any material agreement or instrument to which
                Subscriber is a party or by which Subscriber is bound, or of any
                law or
                governmental order, rule or regulation which is applicable to
                Subscriber.

            

    

     

    
      	 	
              18.

            	
              Subscriber
                is duly and validly organized, validly existing and in good tax and
                corporate standing as a corporation under the laws of the jurisdiction
                of
                its incorporation with full power and authority to purchase the Units
                to
                be purchased by it and to execute and deliver this Subscription
                Agreement.

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	 	
              19.

            	
              To
                Subscriber’s knowledge, except for the Placement Agent, all negotiations
                relative to this Agreement and the transactions contemplated hereby
                have
                been carried out by Subscriber directly with the Company without
                the
                intervention of any person or entity in such manner as to give rise
                to any
                valid claim by any person or entity against Subscriber or the Company
                for
                a finder’s fee, brokerage commission or similar payment. To the extent
                Subscriber becomes aware of an additional claim to such fees, commission
                or payments, other than to Placement Agent, Subscriber shall promptly
                provide the Company with notice of such claim. To the extent any
                person or
                entity claims to be entitled to a finder’s fee, brokerage commission, or
                similar payment in connection with the transactions contemplated
                hereby,
                Subscriber shall be liable for all such fees and expenses related
                thereto
                to the extent any such claims relate to acts or omissions of Subscriber
                or
                to this transaction. In the event a payment is payable by the Company
                to
                any broker, finder, agent or other person, other than to Placement
                Agent,
                in connection with Subscriber’s investment in the Company, such payment
                shall be deducted from the amount paid by Subscriber in connection
                with
                this Agreement. 

            

    

     

    5.
      Legend.

     

    Any
      certificate representing Subscriber’s interest in the Company shall bear the
      following legend:

     

    THESE
      SECURITIES HAVE NOT 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, SOLD, PLEDGED, HYPOTHECATED OR
      OTHERWISE TRANSFERRED 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 ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS IN
      WHICH THE TRANSFEROR PROVIDES THE COMPANY WITH AN OPINION OF COUNSEL
      SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION IS NOT NECESSSARY.
      

     

    6.
      Indemnification
      by Subscriber.

     

    Subscriber
      hereby agrees to indemnify and hold harmless the Company, its Affiliates, the
      Company’s Counsel, Placement Agent and their respective officers, directors,
      employees, agents and representatives, from any and all damages, losses, costs,
      and expenses (including reasonable attorneys’ fees to collect such amount of
      damages, losses, costs, expenses) which they, or any of them, may incur by
      reason of Subscriber’s failure to fulfill any of the terms and conditions of
      this Subscription Agreement or by reason of Subscriber’s breach of any of
      Subscriber’s representations and warranties contained in this Subscription
      Agreement.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    7.
      Confidential
      Information.

    

    For
      purposes of this Agreement, the term “Confidential Information” will mean and
      refer to any information, technical data or know-how, patentable and
      un-patentable, including, but not limited to, software, machinery, research,
      product plans, product services, customer lists, marketing materials,
      developments, inventions, process designs, finances, or other trade secrets
      of
      the Company or similar items relating to the Company’s business and litigation
      activities, or that of any supplier, customer or prospective customer, which
      Confidential Information is designated in writing to be confidential or
      proprietary, or if given orally, to Subscriber under circumstances reasonably
      demonstrating or suggesting the confidential or proprietary nature of such
      information. The restrictions in this Section shall not apply to information,
      which (i) prior to or after the time of disclosure becomes part of the public
      knowledge or literature, not as a result of any inaction or action of
      Subscriber; (ii) must be delivered in response to a valid order by a court
      or
      governmental body, (iii) became or becomes generally available to the recipient
      on a non-confidential basis from a source other than the Company; or (iv) is
      approved by the Company, in writing, for release. Subscriber covenants and
      agrees not to use any Confidential Information for Subscriber’s own use or
      benefit (directly or indirectly), or for the benefit of any party other than
      Company. Subscriber may not disclose Confidential Information to third parties
      except employees, consultants, or professional advisers of the Company in
      connection with Company business who are required to have the information in
      order to carry out their duties for the Company. Subscriber agrees that it
      will
      take all reasonable measures to protect the secrecy of and avoid disclosure
      or
      use of Confidential Information of the Company in order to prevent the
      Confidential Information from falling into the public domain or the possession
      of persons other than those persons authorized hereunder to have such
      information, which measures shall include the highest degree of care that
      Subscriber uses to protect Subscriber’s own Confidential Information of a
      similar nature. Subscriber agrees to immediately notify the Company in writing
      of any misuse or misappropriation of the Confidential Information, which may
      come to Subscriber’s attention. All proceeds from a misuse or disclosure of the
      Company’s Confidential Information will be recoverable from Subscriber
      responsible for such misuse or disclosure, which Subscriber shall be liable
      to
      the Company to the fullest extent of the law. 

     

    8.
       General
      Provisions.

     

    (a)
      Headings.
      The
      headings contained in this Subscription Agreement are for reference purposes
      only and shall not affect in any way the meaning or interpretation of this
      Subscription Agreement.

     

    (b)
      Enforceability.
      If any
      provision, which is contained in this Subscription Agreement, for any reason,
      should be held to be invalid or unenforceable in any respect under the laws
      of
      any State of the United States or any other jurisdiction, such invalidity or
      unenforceability shall not affect any other provision of this Subscription
      Agreement. Instead, this Subscription Agreement shall be construed as if such
      invalid or unenforceable provisions had not been contained herein.

     

    (c)
      Notices.
      Any
      notice or other communication required or permitted hereunder (“Notice”)
      must
      be in writing and sent by either (i) registered or certified mail, postage
      prepaid, return receipt requested, (ii) overnight delivery with confirmation
      of
      delivery, or (iii) confirmed facsimile transmission, in each case addressed
      as
      follows:

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
 

    
      	
            	To
              the Company:	
              Document
                Security Systems, Inc.

              
                Attn:
                  Chief Executive Officer

                28
                  East Main Street

                Suite
                  1525 

                Rochester,
                  NY 14614

                Facsimile
                  No: (585)
                  325-2977

              

            

      	 	 	 

      	 	To Subscriber:	
              _________________________

              _________________________

              _________________________

              Attention:
                _________________

              Facsimile
                No: _______________

            

        

      or
        in
        each case to such other address and facsimile number as shall have last been
        furnished by like Notice. If mailing by registered or certified mail is
        impossible due to an absence of postal service, and if the other methods
        of
        sending Notice set forth in this Section 8 are not otherwise available, Notice
        shall be in writing and personally delivered to the aforesaid addresses.
        Each
        Notice or communication shall be deemed to have been given as of the date
        so
        mailed or delivered, as the case may be; provided, however,
        that any
        Notice sent by facsimile shall be deemed to have been given as of the date
        sent
        by facsimile.

    

     

    (d)
      Governing
      Law; Disputes.
      This
      Subscription Agreement shall in all respects be construed, governed, applied
      and
      enforced with the laws of the State of New York without giving effect to the
      principles of conflicts of laws. The Parties hereby consent to and irrevocably
      submit to personal jurisdiction over each of them by the applicable State or
      Federal Courts of the State of New York, County of Monroe, in any action or
      proceeding, irrevocably waive trial by jury and personal service of any and
      all
      process and other documents and specifically consent that in any such action
      or
      proceeding, any service of process may be effectuated upon any of them by
      certified mail, return receipt requested, in accordance with this Section 8.
      

     

    (e)
      Further
      Assurances.
      The
      Parties agree to execute any and all such other and further instruments and
      documents, and to take any and all such further actions, which are reasonably
      required to effectuate this Subscription Agreement and the intents and purposes
      hereof.

     

    (f)
      Binding
      Agreement.
      This
      Subscription Agreement shall be binding upon and inure to the benefit of the
      Parties hereto and their heirs, executors, administrators, personal
      representatives, successors and assigns.

     

    (g)
      Waiver.
      Except
      as otherwise expressly provided herein, no waiver of any covenant, condition,
      or
      provision of this Subscription Agreement shall be deemed to have been made
      unless expressly set forth in writing and signed by the Party against whom
      such
      waiver is charged; and, (i) the failure of any Party to insist in any one or
      more cases upon the performance of any of the provisions, covenants, or
      conditions of this Subscription Agreement or to exercise any option herein
      contained, shall not be construed as a waiver or relinquishment for the future
      of any such provisions, covenants, or conditions; (ii) the acceptance of
      performance of anything required by this Subscription Agreement to be performed
      with knowledge of the breach or failure of a covenant, condition, or provision
      hereof shall not be deemed a waiver of such breach or failure; and, (iii) no
      waiver by any Party of one breach by another Party shall be construed as a
      waiver with respect to any other or subsequent breach.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

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

     

    (i)
      Entire
      Agreement.
      The
      Parties have not made any representations, warranties, or covenants with respect
      to the subject matter hereof, orally or in writing, which are not expressly
      set
      forth herein, and this Subscription Agreement, together with any instruments
      or
      other agreements executed simultaneously herewith, constitutes the entire
      agreement between them with respect to the subject matter hereof. All
      understandings and agreements heretofore had between the Parties with respect
      to
      the subject matter hereof are merged in this Subscription Agreement, which
      alone
      fully and completely expresses their agreement. This Subscription Agreement
      may
      not be changed, modified, extended, terminated, or discharged orally, but only
      by an agreement in writing, which is signed by all of the Parties to this
      Subscription Agreement.

     

    (j)
      Subscription
      Irrevocable.
      Except
      as set forth herein, this Subscription is irrevocable, is subject to all of
      the
      terms and provisions contained in the Subscription Agreement, and will survive
      the death, dissolution, or disability of the Subscriber. 

     

    (k)
      Limited
      Liability.
      The
      Company, its Affiliates, the Company’s Counsel and the Company’s applicable
      agents and representatives shall not be liable for taking any action pursuant
      to
      this Subscription Agreement in the absence of their respective willful
      misconduct or fraud.

     

    (l).
      Assignability.
      This
      Agreement is not transferable or assignable by the Subscriber.

     

    9.
      Certification.

     

    Under
      penalties of perjury Subscriber certifies as follows:

     

    If
      it has
      been provided, the number shown below, as Subscriber’s taxpayer’s identification
      number is Subscriber’s correct taxpayer identification number. Subscriber is not
      subject to backup withholding either because Subscriber has not been notified
      by
      the Internal Revenue Service that Subscriber is subject to backup withholding
      as
      a result of a failure to report all interest or dividends, or the Internal
      Revenue Service has notified Subscriber that it is no longer subject to backup
      withholding. 

     

    [REMAINDER
      OF PAGE INTENTIONALLY BLANK]

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement as
      of
      the date first written above. 

    

     

    Investment
      Amount: $_________ 

    

    

    Print
      Name of Subscriber:
      ________________________

    

    

    Signature
      of Subscriber:

    

    Individual:

    

    ____________________________

    

    

    Business
      Entity:

    

    

    By:
       ___________________________

    Name:
      ___________________________  

    Title:
       ___________________________

    

    

    

    Taxpayer
      ID Number: ________________ 

    Date:
         
      ________________

     

    
      	Address	
              ____________________

              ____________________

              ____________________ 

            

    

    
      

     

    Accepted
      and Agreed to:

     

    DOCUMENT
      SECURITY SYSTEMS, INC.

    

    

    

    By:
      _____________________________________

    Name:
      Patrick White

    Title:
      Chief Executive Officer

    

    

    

    Date:
      _______________________

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
      A

    

    PRIVATE
      OFFERING MEMORANDUM

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      B

    

    INVESTOR
      QUESTIONNIARE

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    EXHIBIT
      C

    

    ESCROW
      AGREEMENTREGISTRATION
      RIGHTS AGREEMENT

    

    REGISTRATION
      RIGHTS AGREEMENT (the “Agreement”), dated as of the 12th day of December, 2006,
      executed and delivered by DOCUMENT SECURITY SYSTEMS, INC., a New York
      corporation (the “Company”), and PERRIN, HOLDEN & DAVENPORT CAPITAL CORP.,
      as agent for and on behalf of, the Holders (as defined below).

    

    RECITALS

    

    WHEREAS,
      simultaneously with the execution and delivery of this Agreement, the Company,
      pursuant to terms and conditions set forth in the Confidential Private Offering
      Memorandum of the Company, dated December 12, 2006, including the exhibits
      thereto and any and all supplements thereof and amendments thereto, and all
      documents incorporated by reference therein (collectively, the (Memorandum”) is
      offering for sale (the “Offering”) up to 130 units (the “Units”), each Unit
      consisting of (i) 5,880 shares (“Shares”) of its Common Stock, par value $.02
      per share (“Common Stock”) and (ii) Series B Common Stock Warrants (the
“Warrants”) to purchase up to an aggregate of 2,940 shares (the
      “Warrant Shares”) of Common Stock;

    

    WHEREAS,
      Perrin, Holden & Davenport Capital Corp. (“Perrin”) is acting as placement
      agent in connection with the Offering, and in connection therewith the investors
      in the Offering whose names appear on Exhibit A annexed hereto as may be amended
      during the Offering (“Holders”); and

    

    WHEREAS,
      the terms and conditions of the Offering provide for the execution and delivery
      of this Agreement.

    

    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged by the Company, the Company hereby agrees as
      follows:

    

    1.     Automatic
      Registration.
      The
      Company shall use its best efforts to file a registration statement
      (“Registration Statement”) with the Securities and Exchange Commission under the
      Securities Act of 1933 (the “Act”), on appropriate form, and such other
      documents, including a prospectus, as may be necessary (in the opinion of
      counsel for the Company), in order to comply with the provisions of the Act,
      within 60 business days after the final closing of the Offering, so as to allow
      for the resale under the Act by any Holder or combination of Holders of all
      Registerable Shares (as defined in Section 2) held by all of the Holders, at
      the
      sole expense of the Company, so as to permit the public resale by the Holder
      of
      the Registerable Shares pursuant thereto.

    

    2.     Registerable
      Shares.
      For
      purposes of this Agreement, the term “Registerable Shares” shall include” (a)
      the Shares purchased as a component of the Units in the Offering; (b) any
      securities issued or issuable with respect to the Warrants; or (c) Warrant
      Shares; or (d) any other shares of Common Stock issued to the Holders by way
      of
      stock dividend or stock split or in connection with a combination of shares,
      recapitalization, merger, consolidation or other reorganization or otherwise.
      Anything herein contained to the contrary notwithstanding, the provisions of
      this Agreement shall not apply to, and the term “Registerable Shares” as used in
      this Agreement shall not include, Shares of Common Stock or Warrant Shares
      after
      they have been sold by a Holder pursuant to an effective Registration Statement
      under the Act or sold pursuant to Rule 144.

    

    3.     Additional
      Covenants of the Company With Respect to Registration.

    

    The
      Company covenants and agrees as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a)    In
      connection with any registration under Section 1 above, the Company shall file
      the Registration Statement no event later than 60 business days following the
      final closing of the Offering, and use reasonable efforts to have such
      Registration Statement declared effective at the earliest possible
      time.

    

    (b)    In
      connection with any registration of Registerable Shares pursuant to Section
      1
      above, the Company shall furnish each Holder of Registerable Shares included
      in
      a Registration Statement with such reasonable number of copies of such
      Registration Statement, related preliminary prospectus and prospectus meeting
      the requirements of the Act, and other documents necessary or incidental to
      the
      registration and public offering of such Registerable Shares, as shall be
      reasonably requested by the Holder to permit the Holder to make a public
      distribution of such Registerable Shares.

    

    (c)    Once
      effective, the Company covenants and agrees to use its best efforts to maintain
      the effectiveness of any Registration Statement until the earlier of (i) a
      date
      which is two years from the final closing date of the Offering, or (ii) the
      date
      that the Holders of the Registerable Shares receive an opinion of counsel to
      the
      Company that all of the Registerable Shares may be freely traded (without
      limitation or restriction as to quantity or timing and without registration
      under the Act) pursuant to Rule 144 or otherwise; provided, however, the Company
      may suspend the use of any Registration Statement for a period not to exceed
      45
      days in any 12-month period for valid business reasons (not including avoidance
      of the Company’s obligations hereunder), including the acquisition or
      divestiture of assets, public filings with the SEC, pending corporate
      developments and similar events.

     

    (d)    If
      any
      stop order shall be issued by the SEC in connection with any Registration
      Statement filed pursuant to Sections 1 above, the Company will use its best
      efforts to obtain the removal of such order.

    

    (e)    The
      Company shall pay all costs, fees, and expenses in connection with all
      Registration Statements filed pursuant to Section 1 above, including, without
      limitation, the Company’s legal and accounting fees, printing expenses, and blue
      sky fees and expenses; provided, however, that the Holders shall be solely
      responsible for the fees of any counsel retained by the Holders in connection
      with such registration and any transfer taxes or underwriting discounts,
      commissions or fees applicable to the Registerable Shares sold by the Holders
      pursuant thereto.

    

    4.    Indemnification.

    

    (a)    In
      the
      event of any registration of any the Registerable Shares under the Act, the
      Company shall indemnify and hold harmless each Holder, the affiliates of each
      such Holder, the directors, partners, officers, employees and agents of each
      such Holder and any person who controls any such Holder within the meaning
      of
      the Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
      against any and all losses, claims, damages or liabilities, joint or several,
      to
      which they or any of them may become subject under the Act, the Exchange Act
      or
      other Federal or State statutory law or regulation, at common law or otherwise,
      insofar as such losses, claims, damages or liabilities (or actions in respect
      thereof) caused by, arising out of or based on any untrue statement or alleged
      untrue statement of a material fact contained in any registration statement
      under which such securities were registered under the Act, any preliminary
      prospectus, final prospectus or summary prospectus contained therein, or any
      amendment or supplement thereto, or arise out of or are based upon any omission
      or alleged omission to state therein a material fact required to be stated
      therein or necessary to make the statements therein not misleading, and agrees
      to reimburse each such indemnified party, as incurred, for any legal or other
      expenses reasonably incurred by them in connection with investigating or
      defending any such loss, claim, damage, liability or action; provided, however,
      that (i) the Company will not be liable in any case to the extent that any
      such
      loss, claim, damage or liability arises out of or is based upon any such untrue
      statement or alleged untrue statement or omission or alleged omission made
      therein in reliance upon and in conformity with written information furnished
      to
      the Company by or on behalf of any such Holder specifically for inclusion
      therein, (ii) the Company will not be liable to any indemnified party under
      this
      indemnity agreement with respect to any Registration Statement or Prospectus
      to
      the extent that any such loss, claim, damage or liability of such indemnified
      party results from the use of the Prospectus during a period when the use of
      the
      Prospectus has been suspended in accordance with Section 3(c) hereof, provided
      that the Holders received prior notice of such suspension; and (iii) the Company
      shall not be liable to any indemnified party with respect to any preliminary
      Prospectus to the extent that any such loss, claim, damage or liability of
      such
      indemnified party results from the fact that such indemnified party sold
      Registerable Securities to a person as to whom there was not sent or given,
      at
      or prior to the written confirmation of such sale, a copy of the Prospectus
      or
      of the Prospectus as then amended or supplemented in any case where such
      delivery is required by the Act, if the loss, claim, damage or liability of
      such
      indemnified party results from an untrue statement or omission of a material
      fact contained in the preliminary Prospectus which was corrected in the
      Prospectus or in the Prospectus as then amended or supplemented. 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)   Promptly
      after receipt by an indemnified party of notice of the commencement of any
      action or proceeding involving a claim referred to in the preceding subdivisions
      of this Section 4, such indemnified party will, if a claim in respect thereof
      is
      to be made against an indemnifying party, give written notice to the latter
      of
      the commencement of such action, provided that the failure of any indemnified
      party to give notice as provided herein shall not relieve the indemnifying
      party
      of its obligations under the preceding subdivisions of this Section 4, except
      to
      the extent that the indemnifying party is materially prejudiced by such failure
      to give notice. In case any such action is brought against an indemnified party,
      unless in such indemnified party’s reasonable judgment a conflict of interest
      between such indemnified and indemnifying parties may exist in respect of such
      claim, the indemnifying party shall be entitled to participate in and to assume
      the defense thereof, jointly with any other indemnifying party similarly
      notified, to the extent that the indemnifying party may wish, with counsel
      reasonably satisfactory to such indemnified party, and after notice from the
      indemnifying party to such indemnified party of its election so to assume the
      defense thereof, the indemnifying party shall not be liable to such indemnified
      party for any legal or other expenses subsequently incurred by the latter in
      connection with the defense thereof other than reasonable costs of
      investigation. Notwithstanding the indemnifying party’s election to appoint
      counsel to represent the indemnified party in an action, the indemnified party
      shall have the right to employ separate counsel (including local counsel),
      and
      the indemnifying party shall bear the reasonable fees, costs and expenses of
      such separate counsel (and local counsel) if (i) the use of counsel chosen
      by
      the indemnifying party to represent the indemnified party would present such
      counsel with a conflict of interest, (ii) the actual or potential defendants
      in,
      or targets of, any such action include both the indemnified party and the
      indemnifying party and the indemnified party shall have reasonably concluded
      that there may be legal defenses available to it and/or other indemnified
      parties which are different from or additional to those available to the
      indemnifying party, (iii) the indemnifying party shall not have employed counsel
      satisfactory to the indemnified party to represent the indemnified party within
      a reasonable time after notice of the institution of such action or (iv) the
      indemnifying party shall authorize the indemnified party to employ separate
      counsel at the expense of the indemnifying party. An indemnified party shall
      not
      settle or compromise any action for which it seeks indemnification or
      contribution hereunder without the prior written consent of the indemnifying
      party, which consent shall not be unreasonably withheld. An indemnifying party
      will not, without the prior written consent of the indemnified parties, settle
      or compromise or consent to the entry of any judgment with respect to any
      pending or threatened claim, action, suit or proceeding in respect of which
      indemnification or contribution may be sought hereunder (whether or not the
      indemnified parties are actual or potential parties to such claim or action)
      unless such settlement, compromise or consent includes an unconditional release
      of each indemnified party from all liability arising out of such claim, action,
      suit or proceeding.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
 

    (c)    The
      provisions of this Section 4 shall remain in full force and effect regardless
      of
      any investigation made by or on behalf of any Holder or the Company or any
      other
      persons who are entitled to indemnification pursuant to the provisions of this
      Section 4, and shall survive the sale by a Holder of Registerable Shares
      pursuant to the Registration Statement.

    

    5.     Amendments.
      This
      Agreement may not be amended, modified or supplemented, and waivers of or
      consents to departures from the provisions of this Agreement may not be given,
      unless it would not have an adverse effect upon the rights of any of the Holders
      and the Company has obtained the written consent of Holders then holding a
      majority of the Registerable Shares.

    

    6.     Notices.
      Except
      as otherwise provided in this Agreement, all notices, requests and other
      communications (which shall include publication) to any person provided for
      hereunder shall be in writing and shall be given by hand delivery, registered
      or
      certified mail or by any courier providing overnight delivery (i) if to the
      Company, Perrin or the initial Holder, at the address set forth in the
      Subscription Agreement and (ii) if to a subsequent Holder, to the address set
      forth on the books and records of the Company. All such notices, requests or
      communications shall not be effective until received.

    

    7.    Assignment.
      This
      Agreement shall be binding upon and inure to the benefit of and be enforceable
      by the parties hereto. In addition, and whether or not any express assignment
      shall have been made, the provisions of this Agreement which are for the benefit
      of Holder shall also be for the benefit of and enforceable by any subsequent
      holder of the Registerable Shares. Holder agrees, by accepting any portion
      of
      the Registerable Shares after the date hereof, to the provisions of this
      Agreement.

    

    8.     Governing
      Law.

    

    (a)     THIS
      AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS
      OF
      THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WITHOUT
      REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.

    

    (b)    Each
      of
      the Company and Holder hereby irrevocably and unconditionally consents to submit
      to the exclusive jurisdiction of any State Court in New York County, New York
      and the United States District Court for the Southern District of New York
      (the
“NY Courts”) for any litigation arising out of or relating to this Agreement and
      the transactions contemplated hereby (and agrees not to commence any litigation
      relating thereto except in such courts), waives any objection to the laying
      of
      venue of any such litigation in the NY Courts and agrees not to plead or claim
      that such litigation brought in any NY Courts has been brought in an
      inconvenient forum.

    

    9.    Counterparts.
      This
      Agreement may be executed by facsimile and may be signed simultaneously in
      any
      number of counterparts, each of which shall be deemed an original, but all
      such
      counterparts shall together constitute one and the same instrument.

    

    10.   Entire
      Agreement.
      This
      Agreement embodies the entire agreement of between the Company relating to
      the
      subject matter hereof and supersedes all prior agreements and understandings
      relating to such subject matter.

     

    11.   Severability.
      If any
      provision of this Agreement, or the application of such provisions to any person
      or circumstance, shall be held invalid, the remainder of this Agreement, or
      the
      application of such provision to persons or circumstances other than those
      to
      which it is held invalid, shall not be affected thereby.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    12.    Third
      Party Beneficiaries.
      The
      Holders from time to time shall each be a third party beneficiary of the
      agreements of the Company contained herein.

    

    13.    Headings.
      The
      headings which are contained in this Agreement are for the sole purpose of
      convenience of reference, and shall not limit or otherwise affect the
      interpretation of any of the provisions hereof.

    

    14.    Further
      Assurances.
      The
      Company will from time to time after the date hereof take any and all actions,
      and execute, acknowledge and deliver any and all documents and instruments,
      at
      its cost and expense, as any Holder may from time to time reasonably request
      in
      order to more fully perfect or protect the rights intended to be granted to
      it
      hereunder.

    

    15.    Interpretation.
      As used
      in this Agreement, unless the context otherwise requires: words describing
      the
      singular number shall include the plural and vice versa; words denoting any
      gender shall include all genders; words denoting natural persons shall include
      corporations, partnerships and other entities, and vice versa; and the words
      “hereof”, “herein” and “hereunder”, and words of similar import, shall refer to
      this Agreement as a whole, and not to any particular provision of this
      Agreement.

    

    16.    Waiver.
      The
      failure of the Company or any Holder to at any time enforce any of the
      provisions of this Agreement shall not be deemed or construed to be a waiver
      of
      any such provision, nor to in any way affect the validity of this Agreement
      or
      any provision hereof or the right of the Company or any Holder to thereafter
      enforce each and every provision of this Agreement.

    

    

    [signature
      page appears next]

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the undersigned has duly executed and delivered this Agreement
      as of the date first above written.

     

    
      	 	 	 
	 	DOCUMENT
              SECURITY SYSTEMS, INC.
	 
 	 
 	 
 
	 	By:  	 
              
	 	
              
Name:
              Patrick White
              Title:
                Chief Executive Officer

            
	 	 

    

    

    Accepted
      and Agreed

    As
      Agent
      on Behalf of the Holders:

    

    

    PERRIN,
      HOLDEN & DAVENPORT CAPITAL CORP.

    

    

    By:                                                                                   

    Name:
      

    Title:
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

    LIST
      OF HOLDERS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]