Document:

LIMITED
      EXCLUSIVE PATENT LICENSE AGREEMENT

    

    BETWEEN

    

    DOCUMENT
      SECURITY SYSTEMS, INC.

    

    AND

    

    ERGONOMIC
      GROUP, INC.

    

    

    This
      Agreement is effective as of December 29, 2006 between DOCUMENT SECURITY
      SYSTEMS, INC. (“Licensor” or “DSS”), a corporation organized and existing under
      the laws of the State of New York with its principal address at First Federal
      Plaza, Suite 1525, 28 East Main Street, Rochester, New York 14614 and ERGONOMIC
      GROUP, INC. (“Licensee” or “Ergonomic”), a corporation organized and existing
      under the laws of the
      State
      of New York with its principal address at
      191
      Herricks Road, Garden City Park, NY 11040.
      Licensor and Licensee may also be referred to herein individually as a “Party”
and together as the
      “Parties.”

    

    RECITALS

    

    WHEREAS,
      Licensor is engaged in the business of designing and developing systems and
      products relating to security printing and document anti-counterfeiting and
      has
      acquired and developed substantial patented and patent pending technology and
      know-how for creating encoded images useful in security printing and document
      anti-counterfeiting; and

    WHEREAS,
      Licensee wishes to acquire, and Licensor is willing to grant an
      exclusive, limited license to employ Licensor’s Technology (as
      defined below) in a Licensed Field (as defined below) upon the terms and
      conditions contained herein.

    

    NOW,
      THEREFORE, in consideration of the promises and the mutual covenants of this
      Agreement, the parties hereby agree as follows:

    

    AGREEMENT

    

    
      	
              1.

            	
              Definitions

            

    

    

    
      	
              1.1

            	
              “Agreement”
                shall have the meaning ascribed in the first paragraph of this
                Agreement.

            

    

    

    
      	
              1.2

            	
              “Affiliate”
                shall mean any corporation, partnership or limited liability company
                of
                which more than 50% of the voting control and economic ownership
                is owned,
                directly, or indirectly, by a
                Party
                or
                under common control of any
                Party.

            

    

    

    
      	
              1.3

            	
              “Approved
                Sub-Licensee”
                shall mean the companies which have been approved in writing by Licensor
                and have executed an AuthentiGuard Technology Sublicense
                Agreement.

            

      	 	 

    

    
      	
              1.4

            	
              “AuthentiGuard
                Pantograph 4000” shall
                mean the technology which creates pantograph backgrounds embedding
                hidden
                symbols, words and designs into the printed document background that
                appear when the document is copied using industry standard copiers
                and computer publishing systems and currently marketed by Licensor
                under
                the trade
                name“AuthentiGuard
                Pantograph 4000TM.”

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	 

    

    
      	
              1.5

            	
              “Calendar
                Quarter”
                shall mean a three (3) month period denoting the time span over which
                royalties are to be calculated and paid (pro
                rated
                for any partial period(s)).
                The first Calendar Quarter commences on the Effective Date of this
                Agreement. Subsequent Calendar Quarters shall begin on the first
                day
                following the end of the previous Calendar Quarter (i.e., if the
                Effective
                Date is February
                15, 2007,
                the first Calendar Quarter would end March 30, 2007 and the second
                Calendar Quarter would begin April 1,
                2007.)

            

      	 	 

    

    
      	
              1.6

            	
              “Calendar
                Year”
                shall mean each period of four (4) Calendar Quarters during the Term,
                commencing on the Effective Date. 

            

      	 	 

    

    
      	
              1.7

            	
               “Claims”
                shall have
                the meaning ascribed in Section 10.1
                below.

            

    

    

    
      	
              1.8

            	
              “Copies”
                shall have
                the meaning ascribed in Section 8.4
                below.

            

    

    

    
      	
              1.9

            	
              “Confidential
                Information”
                shall mean any information furnished or made available on a paper,
                electronic or mechanical medium by one Party to another Party
                that
                (a) is designated by a Party on the medium as confidential, proprietary,
                a
                trade secret or with a similar designation; (b)
                relates to past, present or future research, developments, improvements,
                inventions, processes, software, programs, Intellectual Property,
                techniques, designs or other technical data, contact lists or other
                compilations for marketing or development, or regarding administrative,
                management, financial or marketing activities of the Party disclosing
                such
                information or regarding the identities of customers of the Party
                disclosing such information;
                and (c) relates to the subject matter of this
                Agreement.

            

      	 	 

    

    
      	
              1.10

            	
              “Digital
                File”
                shall mean any executable code owned and delivered by Licensor
                for
                use by Licensee in connection with the Technology (as defined hereinbelow)
                to enable the placement of security features in Licensed
                Products.

            

      	 	 

    

    
      	
              1.11

            	
              “Disclosing
                Party”
                shall have the meaning ascribed
                in
                Section 8.1
                below.

            

      	 	 

    

    
      	
              1.12

            	
              “DSS”
                shall have the meaning ascribed in the first paragraph of this
                Agreement.

            

    

     

    
      	
              1.13

            	
              “Effective
                Date”
                shall mean the date set forth in the first paragraph of this
                Agreement.

            

    

     

    
      	
              1.14

            	
              “Gross
                Margin”
                shall mean the invoiced amount of a product or service, less the
                direct,
                unburdened cost of goods sold; allowances and discounts actually
                credited;
                taxes, tariffs and import/export duties (but not value-added taxes
                assessed on income derived from sales); and commissions paid to
                independent sales entities that are not in the employ or under the
                control
                of Licensee. Installation and set-up fees charged to a customer by
                Licensee shall not be included in Gross
                Margin.

            

    

     

    
      	
              1.15

            	
              “Improvements”
                shall have the meaning ascribed in Section 4.1
                below.

            

      	 	 

    

    
      	
              1.16

            	
              “Initial
                Term”
                shall have
                the meaning ascribed in Section 13.1
                below.

            

    

    

    
      	
              1.17

            	
              “Intellectual
                Property” shall
                mean, wherever existing in the world, (i) patents, whether in the
                form of
                utility patents, design patents or industrial designs, and all pending
                applications thereof; (ii) trademarks, trade names, service marks,
                domain
                names, designs, logos, trade dress and trade styles, whether or not
                registered, and all pending applications for registration thereof;
                (iii)
                copyrights, whether or not registered, and all pending applications
                for
                registration thereof; (iv) know-how, inventions, improvements, methods,
                processes, operations manuals and procedures, research records, trade
                secrets, confidential information, product designs, engineering
                specifications and drawings, technical information, formulas, customer
                lists, supplier lists and market analyses; (v) computer software
                and
                programs, and related flow charts, programmer notes, documentation,
                updates, and data, whether in object or source code form; and (vi)
                all
                other similar proprietary rights, whether or not
                registered.

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	 	 

    

    
      	
              1.18

            	
              “Licensed
                Field”
                shall mean all implementations of the
                Technology (as subsequently defined herein) which involve the transmission
                of a file on the Internet or by any other electronic means of
                communication, which file is printed or viewed on a monitor after
                transmission.

            

    

     

    
      	
              1.19

            	
              “Licensed
                Patents”
                shall mean the
                patents and patent applications listed on Exhibit A, and all other
                present
                and future United States and foreign patents owned by Licensor or
                under
                which Licensor has rights that protect inventions that are useful
                in the
                Licensed Field.

            

    

     

    
      	
              1.20

            	
              “Licensed
                Products” shall
                mean products
                and services in
                the Licensed Field that incorporate the Technology and/or are covered
                by
                the Licensed Patents.

            

    

     

    
      	
              1.21

            	
              “Licensee”
                shall have the meaning ascribed in the first paragraph of this
                Agreement.

            

    

    

    
      	
              1.22

            	
              “Licensee
                Indemnified Parties”
                shall have
                the meaning ascribed in Section 9.1
                below.

            

    

    

    
      	
              1.23

            	
              “Licensor”
                shall have the meaning ascribed in the first paragraph of this
                Agreement.

            

    

    

    
      	
              1.24

            	
              “Licensor
                Indemnified Parties”
                shall have
                the meaning ascribed in Section 10.1
                below.

            

    

    

    
      	1.25	
              “Receiving
                Party”
                shall
                have
                the meaning ascribed in Section 8.1.

            

      	 	 

    

    
      	
              1.26

            	
              “Renewal
                Term”
                shall have
                the meaning ascribed in Section 13.1
                below.

            

    

    

    
      	1.27	
              “Royalty
                Fee”
                shall have
                the meaning ascribed in Section 6.1
                below.

            

      	 	 

    

    
      	
              1.28

            	
              “Sales
                Report”
                shall have
                the meaning ascribed in Section 7.1
                below.

            

    

    

    
      	
              1.29

            	
              “Technology”
                shall mean (i) AuthentiGuard Pantograph
                4000, AuthentiGuard Survivor
                21, and all other AuthentiGuardTM technologies
                including, without limitation, AuthentiGuard Prism, AuthentiGuard
                Block-Out, AuthentiGuard Laser Moiré, and all Improvements thereon
                developed and owned by Licensor, (ii) all Digital Files now and in
                the
                future owned by
                or under license to
                Licensor,
                and all Improvements thereon developed and owned by Licensor;
                and (iii) all
                specialized, novel or unique techniques, practices, inventions, digitized
                formats, improvements, drawings, computer imaging, computer generated
                step
                and repeat, discoveries, know-how, trade secrets, and all related
                knowledge, skill, experience, technical and other proprietary information
                and data and other Intellectual Property now or in the future owned
                by or
                under license to Licensor
                that are used to secure documents and files and to thwart counterfeiting,
                all of which Licensee acknowledges to be proprietary and valuable
                trade
                secrets of Licensor.

            

    

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      	
              1.30

            	
              “Target
                Markets”
                shall mean each of (a) the high technology industry, (b) the aerospace
                industry, (c) the financial industry and (d) the healthcare industry,
                and
                such other industries as the Parties shall mutually agree in
                writing.

            

    

    

    
      	
              1.31

            	
              “Technology
                Marks”
                shall mean Licensor’s
                trademarks
                and service marks which identify Licensor as the source of the
                Technology.

            

    

    

    
      	
              1.32

            	
              “Term” shall
                have
                the meaning ascribed in Section 13.1
                below.

            

    

    

    
      	
              1.33

            	
              “Territory”
                shall mean the
                entire world including but not limited to the
                United States of America.

            

    

    

    
      	
              2.

            	
              Grant
                of Licenses

            

    

    

    
      	
              2.1

            	
              Grant
                of Licenses. Licensor
                hereby grants to Licensee for the Term (as defined in Section 13.1)
                and in
                the Territory an exclusive,
                non-transferable license
                to use the Technology and the Licensed Patents in the Licensed Field
                to be
                sold by Licensee to its customers in the Target Markets. Licensee
                shall
                have no other rights to
                any software, technology, know-how or other Intellectual Property
                related
                to the production
                of Technology,
                implied or express,
                except as expressly provided in this Agreement.
                Under this Agreement, Licensee is not given the right to manufacture,
                market or sell, directly or indirectly, or the right or power to
                license
                to any other person the right to manufacture,
                market or sell, directly or indirectly, blank safety paper which
                utilizes
                the Technology. For purposes hereof, the term “blank safety paper” means
                paper which does not have customer specific information AND does
                not have
                visible
                color
                such as words, symbols, borders, artwork
                or similar features. Licensee understands and agrees that it shall
                not
                have the right to print “generic” or “blank safety paper” under
                this Agreement.

            

    

     

    
      	
              2.2

            	
              Proprietary
                Rights.
                Except as expressly set forth in this Agreement, all rights or licenses
                with respect to the Technology (including any Improvements or
                modifications to the Technology made by Licensor), Technology Marks,
                Licensor Confidential or Proprietary Information or other know-how
                and
                Intellectual Property of Licensor are reserved to Licensor.
                Licensee acknowledges that the Technology contains substantial trade
                secrets of Licensor, and Licensee agrees to employ reasonable security
                precautions to maintain the confidentiality of such trade
                secrets.
                Except as otherwise provided herein,
                Licensee shall
                not knowingly
                assist any third party
                to
                reverse engineer
                or
                assemble,
                produce, use, license, sell or otherwise distribute or exploit the
                Technology
                or
                Intellectual Property derived therefrom or
                bypass or defeat protection methods for
                preventing unauthorized access to the Technology. Notwithstanding
                the foregoing, for purposes of this Section 2.3, Licensee shall not
                be in
                violation of the restrictions provided herein in connection with
                the sale
                of Licensed Products to customers otherwise in compliance with this
                Agreement.

            

    

    

    
      	
              3.

            	
              Distribution
                of Technology

            

      	 	 

    

    
      	
              3.1

            	
              Distribution
                of Technology.
                Licensee may only distribute the Technology to its customers as the
                Technology is embedded in Licensed Products prepared by Licensee
                for a
                customer of Licensee in the Target Markets.

            

    

    

    
      	
              3.2

            	
              Sublicense
                Agreements with
                Approved Sub-Licensees.  Licensee
                shall have the right to enter
                into sub-license
                agreements only
                with Approved Sub-Licensees, granting
                to
                such Approved Sub-Licensees all
                rights, interest and licenses (except
                the right to further sub-license, which is explicitly not granted
                to
                Approved Sub-Licensees) granted
                by Licensor to Licensee under this Agreement.
                Licensee shall provide Licensor with true and correct complete copies
                of
                all Sublicense
                Agreements and shall, on an annual basis, provide Licensor with a
                list of
                all Sublicense
                Agreements entered into by Licensee, which list shall be certified
                by an
                officer of Licensee. Notwithstanding
                anything to the contrary herein, Licensee shall ensure that each
                Sublicense
                Agreement shall contain the terms set forth in this Agreement for
                the
                protection of Licensor. FURTHER, LICENSOR SHALL HAVE, AT ITS OPTION
                AND IN
                ITS SOLE DISCRETION, THE RIGHT TO PRE-APPROVE OR REJECT ANY SUB-LICENSEE
                AND THE TERMS OF ANY SUB-LICENSE AGREEMENT. LICENSEE SHALL PROVIDE
                COPIES
                OF ALL SUBLICENSE
                AGREEMENTS TO LICENSOR PRIOR TO LICENSEE’S EXECUTION OF SUCH SUB-LICENSE
                AGREEMENT. ANY SUB-LICENSE AGREEMENT NOT APPROVED BY LICENSOR SHALL
                BE
                NULL AND VOID.

            

    

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
      	
              3.3

            	
              Patent
                Marking.
                Licensee hereby agrees to use reasonable commercial efforts to mark,
                without charge to Licensor,
                all Licensed Products made under the terms and conditions of this
                Agreement with (a) a suitable legend in accordance with statutory
                requirements in a form approved in advance by the Licensor indicating
                that
                the Licensed
                Products
                contain Technology licensed under specified patents; and (b) any
                other
                warning labels or other markings as may be reasonably requested by
                the
                Licensor
                from time to time during the Term. Should
                the Licensor believe that any Licensed
                Product
                of the Licensee
                should be marked in accordance with this Agreement, the Licensor
                shall
                inform the Licensee in writing, particularly identifying such Licensed
                Products
                and the specific patents which are contained in such Licensed
                Products.
                However, Licensee shall not be required to mark Licensed Products
                with a
                degree of care beyond that exercised by Licensor to mark its own
                products.

            

    

    

    
      	
              4.

            	
              Improvements

            

    

    

    
      	
              4.1

            	
              Ownership
                of Improvements. During
                the Term, each Party shall advise the other of any technical improvements,
                modifications or enhancements relating to the Technology created
                from time to time and
                useful in the Party’s sole discretion to effectively operate the
                Technology (collectively
                referred to as “Improvements”). All
                such Improvements shall be the property of the Party that made the
                Improvement. All Improvements made by Licensor shall be included
                in the
                license grant of paragraph 2.1. All Improvements made by Licensee
                shall be
                licensed royalty-free to Licensor for its use, and for the use of
                any
                other licensees that Licensor has, in all fields other than the Licensed
                Field during the Term. Improvements that are made jointly by the
                parties
                shall be owned jointly and equally; however, Licensee shall have
                the
                exclusive right to use such Improvements in the Licensed Field during
                the
                Term. Each Party agrees to execute any and all documents requested
                by the
                other to perfect rights to jointly-made Improvements.
                

            

    

     

    
      	
              5.

            	
              Technical
                Support; Training and Technology
                Services

            

    

    

    
      	
              5.1

            	
              General
                Support Services.
                Licensor shall, at no additional charge, provide to Licensee reasonable
                assistance and technical support related to the Technology, Improvements
                (other than those Improvements owned by Licensee), Technology Marks
                and
                Confidential Information. 

            

    

    

    
      	
              5.2

            	
              Limitation
                on Liability for Support Services.
                Except in the event of willful misconduct, in no event shall the
                technicians, employees, officers or agents of Licensor or its affiliates
                be liable to Licensee for any damages or claims for damages which
                may
                occur during the provision of Support
                Services.

            

    

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
      	
              6.

            	
              Royalty
                and Other Fees

            

    

    

    
      	
              6.1

            	
              Royalty
                Fees.
                In consideration for the rights and licenses granted herein to
                be rendered by Licensor,
                Licensee agrees to pay royalties to Licensor as
                follows:

            

    

    

    (a)
      Prior
      to
      the execution of this Agreement, Licensee has paid to Licensor a non-refundable
      payment of $500,000. Upon execution of this Agreement, Licensee shall pay to
      Licensor an additional non-refundable payment of $500,000. These second $500,000
      payment shall be deemed as a royalty advance, to be credited against royalty
      fees due for sales during the first and any subsequent Terms of this Agreement.
      The royalty fees to be paid are

     

    20%
      of
      Gross Margin for the first $5.0 million in sales during any Term.

     

    30%
      of
      Gross margin for the second $5.0 million in sales during such Term.

     

    50%
      of
      Gross Margin for sales above $10.0 million during such Term. 

     

    (b) Licensee
      shall, concurrent with the delivery of the Sales Report (as defined in Section
      7.1 below) for a Calendar Quarter, deliver to Licensor the Royalty Fee payment
      in U.S. dollars in full for such Calendar Quarter.

    

    (c) If
      Licensor disputes any information contained in a certified report or the amount
      of any Royalty Fee payment provided by Licensee, Licensor shall, within
thirty
      (30)
      business
      days from the date of the disputed Sales Report or payment, as the case may
      be,
      notify Licensee, in writing, concerning the substance of the dispute and
      including any supporting documentation related thereto. The Parties agree to
      work together in good faith to resolve each dispute. The
      receipt or acceptance by Licensor of any Sales Report or Royalty Fee payment
      shall not prevent Licensor
      from
      subsequently challenging, within forty-five (45) days from the date of the
      disputed Sales Report or Royalty Fee payment, in accordance with Section 7.2,
      the validity or accuracy of such Sales
      Report
      or
      Royalty Fee payment. All
      fees
      due hereunder are non-refundable (except as expressly provided herein) and
      not
      contingent on any additional services or products to be provided
      hereunder.

    

    
      	
              6.2

            	
              Failure
                to Pay.
                If
                Licensee fails to pay any amount owed to Licensor under this Agreement
                when such amount is due and payable, Licensee shall also pay Licensor
                interest
                on
                the amount of such under-payment or non-payment at
                the rate equal to three quarters of a percent (0.75%) per month,
                accruing
                from
                the due date until paid. Licensor
                shall also have the right, at its option, to terminate this Agreement
                should Licensee not cure any default within a reasonable time under
                the
                circumstances. Any
                payments received from Licensee, when there is any amount overdue,
                shall
                be applied first to discharge any such accrued late charges. In addition
                to the amounts payable by Licensee as
                specified herein or other fees arising
                from this Agreement, Licensee shall pay or reimburse Licensor for
                all
                federal, state, or local taxes, duties, or similar assessments arising
                from Licensee’s sales of Licensed Products pursuant to this Agreement,
                except taxes based on Licensor’s net income, which taxes shall be paid
                solely by Licensor. Each Party agrees to defend, indemnify and hold
                the
                other Party harmless for, from and against any claim, liability,
                loss,
                costs or other damages, including, without limitation, attorneys’ fees,
                expert witness
                fees,
                and costs of collection, arising from any federal, state or local
                income,
                sales, use, excise, import or export, value added or similar tax
                or duty,
                and
                any other tax incurred by the other Party arising from or in connection
                with this Agreement,
                except for taxes based on either Party’s
                income.

            

    

    

    
      	
              7.

            	
              Sales
                Reports; Record Inspection and
                Audit

            

    

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      	
              7.1

            	
              Sales
                Reports.
                Within
                forty-five (45) days after the end of each Calendar Quarter, Licensee
                shall deliver a report to Licensor
                certified by an authorized officer of Licensee
                showing in detail the dollar value of Licensed Products sold, and
                the
                amount of Royalty Fees due to Licensor for the
                prior
                Calendar Quarter (a “Sales Report”). Licensee shall also
                provide
                additional supporting information and documentation relating
                to Licensed
                Products
                sold as Licensor may reasonably request.
                The failure of Licensee to deliver a Sales Report on its due date
                shall be
                deemed to be a material breach of this
                Agreement.

            

    

    

    
      	
              7.2

            	
              Maintenance
                of Books and Records; Record Inspection and Audit. 
                During the Term and for a period of two
                (2)
                years thereafter, Licensee agrees to keep and maintain accurate and
                separate records related to this Agreement, including Customer agreements
                which resulted in the distribution of Licensed Products. Licensee
                further agrees that during such two (2) year period it
                shall
                make these records available for inspection, from
                time to time, by Licensor, or a
                third party retained by Licensor, at
                Licensee’s site and at Licensor’s cost.
                Any audit and/or inspection shall be conducted during regular
                business hours at Licensee’s facilities upon at least three
                (3)
                days prior written notice. Such examination shall be conducted in
                such a
                manner as to not unduly interfere with Licensee’s business. Subject
                to Section 7.3, if the audit reveals an underpayment of Royalty Fees
                by
                Licensee under this Agreement, Licensee shall pay to Licensor the
                full
                amount of any underpayment revealed by the audit, plus interest on
                the
                underpaid amounts accruing at the rate of three quarters of a percent
                (0.75%) per month until all underpaid amounts are paid in full.
                Notwithstanding
                the foregoing, if such audit reveals an underpayment by an amount
                in
                excess of twenty percent (20%) for the period covered by the audit
                report,
                Licensee shall pay
                to Licensor
                all of the fees and
                costs associated with such audit,
                the amount underpaid, interest due and an additional payment of fifteen
                percent (15%) of the total amount due for the audited period.
                

            

    

    

    
      	
              7.3

            	
              Audit
                Dispute Resolution Process.
                If
                Licensee disputes or otherwise desires to obtain third party verification
                of an audit report, the Parties agree that Licensee, within thirty
                (30)
                days from the date of the subject audit report, shall notify Licensor
                of
                its intent to verify the audit report. Licensee shall schedule, with
                an
                independent auditor, an audit of the subject records as soon as possible
                following the date of Licensee’s notice to Licensor hereunder. Licensor
                shall timely cooperate with and provide to the auditor all documentation
                and other information requested by the auditor. If the results of
                the
                independent audit are consistent with Licensor’s audit results, Licensee
                shall pay all amounts due as set forth in Section 7.2 and all costs
                and
                fees associated with the independent audit. If the results of the
                independent audit differ from Licensor’s audit, the Parties shall rely
                upon the results of the independent audit in determining what, if
                any,
                amounts are due pursuant to Section 7.2 and both Parties shall equally
                share the cost and fees of the independent audit. The Parties agree
                that a
                final determination of Licensee’s underpayment by an amount in excess of
                ten percent (10%) for the period covered by the audit report shall
                be
                deemed to be a material breach of this
                Agreement.

            

    

    

    
      	
              8.

            	
              Confidentiality

            

    

    

    
      	
              8.1

            	
              The
                Parties acknowledge that in the course of their performance under
                this
                Agreement, they may be furnished with, receive, or otherwise have
                access
                to Confidential Information of or concerning the other Party. For
                the purposes of this Agreement, the Party disclosing Confidential
                Information shall be referred to as the “Disclosing Party” and the Party
                receiving Confidential Information shall be referred to as the “Receiving
                Party.” Any Technology shall be treated as the
                Confidential Information of Licensor.

            

    

    

    
      	
              8.2

            	
              A
                Receiving Party shall not use the Disclosing Party’s Confidential
                Information for any purpose other than in accordance with this Agreement
                and shall not disclose, without the prior written consent of the
                Disclosing Party, Confidential Information to any person,
                other than Approved
                Sub-Licensees and their respective employees and independent
                contractors who
                (a) are subject to a nondisclosure obligation comparable in scope
                to this
                Section;
                and (b) have a need to know such Confidential Information. All information
                disclosed or otherwise provided shall be presumed Confidential
                Information, unless indicated otherwise by the Disclosing
                Party.

            

    

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
      	
              8.3

            	
              A
                Receiving Party shall not be liable for disclosure or use of any
                particular Confidential Information that: (a) is or becomes publicly
                known
                through no fault of the Receiving Party; (b) is developed independently
                by
                the Receiving Party without reference to any Confidential Information
                of
                the Disclosing Party; (c) is known by the Receiving Party at the
                time of
                disclosure by the Disclosing Party if the Receiving Party does not
                then
                have a duty to maintain its confidentiality,
                as
                evidenced by the Receiving Party’s records; or (d) is rightfully obtained
                by the Receiving Party from a third party not obligated to preserve
                its
                confidentiality. A Receiving Party also may disclose Confidential
                Information solely to the extent required by a court or other governmental
                authority, provided that (i) the Receiving Party gives the Disclosing
                Party prompt prior notice of the required disclosure;
                (ii) the Receiving Party uses reasonable efforts to resist disclosing
                the
                Confidential Information;
                (iii) the Receiving Party cooperates with the Disclosing Party to
                obtain
                a protective order or otherwise limit the disclosure;
                and (iv) as soon as reasonably possible, the Receiving Party provides
                a
                letter from its counsel confirming that the Confidential Information
                is in
                fact
                required to be disclosed. Licensee
                hereby acknowledges and agrees that Licensor may be required under
                applicable federal securities laws and regulations to disclose the
                terms
                of this Agreement, which shall not be deemed a violation of this
                Section
                8.

            

    

    

    
      	
              8.4

            	
              All
                Confidential Information shall remain the property of and be deemed
                proprietary to the Disclosing Party. At any time upon the Disclosing
                Party’s request, the Receiving Party shall promptly return to the
                Disclosing Party all Confidential Information, including all copies
                thereof, and all documents, materials, or products generated or produced
                by,
                or at the request of,
                the Receiving Party that contain, summarize, outline or otherwise
                reference the Disclosing Party’s Confidential Information (individually
                and collectively, “Copies”). At the Disclosing Party’s option,
                Receiving Party shall destroy all of
                the Disclosing Party’s
                Confidential Information and Copies and
                certify such destruction to the Disclosing Party. This paragraph
                shall not
                apply to Confidential Information that is furnished to Licensee under
                its
                license rights and that is used in exercising those
                rights.

            

    

    

    
      	8.5	
              A
                Receiving Party further agrees to receive Confidential Information
                in
                strict confidence and to accord such Confidential Information at
                least the
                same level of protection against unauthorized use or disclosure that
                the
                Receiving Party customarily accords to its own confidential, proprietary
                or trade secret information of a like nature, but in no event less
                than a
                reasonable level of protection. The Receiving Party shall have sole
                responsibility for the physical security and maintenance of the
                confidentiality of all Confidential Information delivered to it by
                the
                Disclosing Party. The Disclosing Party shall have the right, upon
                at least
                three (3) business days prior written notice to the Receiving Party
                and
                during the Receiving Party’s normal business hours, to visit and inspect
                the Disclosing Party’s places of business for the purpose of verifying, to
                the satisfaction of the Disclosing Party, that the Receiving Party
                is
                performing its obligations under this Section
                8.

            

    

    

    
      	
              9.

            	
              Infringement
                Indemnity; Infringement Lawsuits and Patent
                Prosecution

            

    

    

    
      	
              9.1

            	
              Licensor
                shall indemnify, defend and hold the Licensee and its affiliates,
                shareholders, directors, officers, members, managers, employees,
                agents,
                independent contractors, licensees and representatives (“Licensee
                Indemnified Parties”) harmless for, from and against, any and all suits,
                actions and proceedings, claims, threats, demands, liabilities, losses,
                damages, judgments, obligations, fines, expenses (including, without
                limitation, attorneys’ fees and expert witness fees) and costs
                (individually and collectively, “Infringement Claims”), made against a
                Licensee Indemnified Party by a third party arising from or in connection
                with any actual or alleged claims that the Technology, Improvements
                (other
                than improvements owned by Licensee or jointly owned by Licensee),
                Technology Marks, Confidential Information and/or other proprietary
                information provided by Licensor under this Agreement infringes any
                patent, trademark, copyright, trade secret or other property right
                of a
                third party. The indemnification in this Section 9 is contingent
                upon (a)
                the Licensee Indemnified Parties promptly notifying the Licensor
                in
                writing of any known claim which may give rise to an Infringement
                Claim;
                (b) Licensor’s control of the defense and settlement of such Infringement
                Claims at Licensor’s sole expense; provided, however, that any settlement
                be made with the consent or an unconditional full release of the
                Licensee
                Indemnified Parties; and (c) the Licensee Indemnified Parties cooperate
                with all reasonable requests of the Licensor (at the Licensor’s expense)
                in defending or settling an Infringement Claim. Licensee Indemnified
                Parties reserve the right to retain their own counsel, in addition
                to
                Licensor’s counsel, at Licensee’s sole
                expense
                to participate in the defense of any Infringement
                Claims;
                provided, however, Licensee Indemnified Parties may not take deliberate
                and willful action that impairs Licensor’s defense of the Infringement
                Claims.

            

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
      	
              9.2

            	
              In
                addition to the rights and obligations of the Parties set forth in
                Section
                9.1, if an Infringement Claim is made or threatened, Licensor, at
                its own
                expense and in its sole discretion, may exercise any of the following
                remedies: (i) obtain for Licensee the right to continue to use the
                Technology, Improvements, Technology Marks, and/or Confidential
                Information, as the case may be, consistent with this Agreement;
                (ii)
                modify the Technology, Improvements, Technology Marks, and/or Confidential
                Information, as the case may be, so it is non-infringing and complies
                in
                all material respects with this Agreement; (iii) replace the Technology,
                Improvements, Technology Marks, and/or Confidential Information,
                as the
                case may be, with non-infringing technology, trademarks or information
                and/or materials, as the case may be, that complies in all material
                respects with this Agreement; or (iv) refund all License Fees paid
                hereunder by Licensee and Approved Sub-Licensees for the prior twelve
                (12)
                month period. Licensor will have no obligation to indemnify Licensee
                or
                Licensee personnel for claims that Licensor’s Technology, Improvements,
                Technology Marks, and/or Confidential Information, infringe the
                intellectual property rights of a third party to the extent such
                claims
                arise solely as a result of Licensee's avoidable implementation of
                Licensor’s Technology with other software and/or hardware not furnished or
                authorized in writing by Licensor, and provided such infringement
                or claim
                would have been avoided in the absence of such implementation, or
                Licensee's modification of the Technology by anyone not authorized
                in
                writing by Licensor other than Licensor’s agents or subcontractors, and
                provided such infringement or claim would have been avoided in the
                absence
                of such modification. The foregoing represents
                Licensor’s entire obligation, and Licensee’s entire remedy, with respect
                to Infringement Claims. 

            

    

     

    
      	
              9.3

            	
              Infringement
                Lawsuits.
                In the event that Licensee learns of the infringement of one or more
                Licensed Patents in the Licensed Field that are actually in substantial
                use by customers of Licensee, Licensee may request that Licensor
                take
                legal action against the infringement of the Licensed Patents. Such
                request shall be made in writing and shall include reasonable evidence
                of
                such infringement and damages to Licensee. If the infringing activity
                has
                not been abated within one hundred and twenty (120) days following
                the
                effective date of such request and Licensor shall not have filed
                suit
                against the infringing party, , then Licensee shall have the right
                to
                commence suit on its own account. In such case, (1) Licensee shall
                prosecute the suit at its own expense and shall be the sole beneficiary
                of
                any recovery, and (2) Licensor will reasonably cooperate and advance
                such
                suit, but at Licensee’s expense.

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
              9.4

            	
              Patent
                Prosecution.
                Licensor will diligently prosecute and maintain the Licensed Patents
                at
                its expense using counsel of its choice. Licensor’s obligation hereunder
                shall continue for so long as this Agreement remains in
                effect.

            

    

     

    
      	
              10.

            	
              Indemnification
                by Licensee

            

    

    

    
      	
              10.1

            	
              Licensee shall
                indemnify, defend and hold the Licensor and its directors, officers,
                employees, agents and independent contractors (“Licensor Indemnified
                Parties”) harmless from and against, any and all suits, actions and
                proceedings, claims, liabilities, losses, damages, expenses (including
                attorneys’ fees) and costs (individually
                and collectively, “Claims”),
                made against a Licensor Indemnified Party by a third party to the
                extent
                arising from
                Licensee’s
                (or its officers’, directors’, employees’, agents’ and independent
                contractors’)
                improper or unauthorized use of the Technology. The indemnities
                in
                this Section 10 are
                contingent upon: (a) the Licensor Indemnified Parties promptly notifying
                the Licensee in writing of any claim which may give rise to a
                Claim
                for indemnification hereunder;
                (b) the Licensee being allowed to control the defense and settlement
                of
                such Claims; provided, however, that any settlement be made with
                the
                consent of
                the Licensor Indemnified Parties or includes, as
                an
                unconditional part
                thereof, a full
                release of the Licensor Indemnified Parties; and (c) the Licensor
                Indemnified Parties cooperating
                with all reasonable requests of the Licensee (at the Licensee’s expense)
                in defending or settling a Claim. Licensor Indemnified Parties reserve
                the
                right to retain their
                own counsel, in addition to Licensee’s counsel, at Licensor’s sole expense
                to participate in the defense of any Claim
                provided
                that Licensor Indemnified Parties may not take deliberate and willful
                action that impairs Licensee’s defense of the
                Claim.

            

    

    

    
      	
              11.

            	
              Limited
                Warranties; Limitation of
                Liability

            

    

     

    
      	
              11.1

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

            

    

     

    
      	
              11.2

            	
              Licensor
                represents and warrants to Licensee that it has no knowledge of patents
                or
                other proprietary rights of another party, or a claim by another
                party
                that it has patents or other proprietary rights, that are infringed
                by the
                Technology licensed hereunder.

            

    

     

    
      	
              11.3

            	
              Licensor
                represents and warrants to Licensee that as of the Effective Date
                and
                throughout the Term that: (a) Improvements (except as otherwise provided
                herein), Technology Marks, and Licensor’s Confidential Information are the
                sole and exclusive property of Licensor; (b) that Licensor has all
                right,
                title and interest in the Technology, Improvements (except as otherwise
                provided herein), Technology Marks, and Licensor Confidential Information
                to grant to Licensee the rights provided in this Agreement; (c) that
                nothing contained in this Agreement conflicts with any other obligation
                or
                agreement of Licensor; and (d) that no liens, claims or other obligations
                exist that will affect Licensee’s and/or Approved
                Sub-Licensees’
                use or rights to any Technology, Improvements, Technology Marks,
                and/or
                Confidential Information granted under this Agreement.
                Licensor does not warrant that the Technology will meet Licensee’s
                requirements or that the use of the Technology will be uninterrupted
                or
                error-free.

            

    

     

    
      	
              11.4

            	
              LIMITATION
                OF LIABILITY.
                NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,
                CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES WHATSOEVER,
                INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
                BUSINESS INTERRUPTION, LOSS OF BUSINESS INFORMATION, AND THE LIKE,
                ARISING
                OUT OF THE USE OF OR INABILITY TO USE THE TECHNOLOGY OR ANY PRODUCTS
                OR
                SERVICES PROVIDED HEREUNDER, REGARDLESS OF THE FORM OF ACTION, WHETHER
                IN
                CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF THE OTHER
                PARTY HAS
                BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. BECAUSE SOME STATES
                DO
                NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR CONSEQUENTIAL
                OR
                INCIDENTAL DAMAGES, THE ABOVE LIMITATION MAY NOT
                APPLY.

            

    

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    
      	
              12.

            	
              Marketing
                and Advertising Obligations; Technology
                Marks.

            

      	 	 

    

    
      	
              12.1

            	
              Marketing
                and Advertising Requirements.
                Licensee shall actively advertise and promote the Technology during
                the
                Term, which promotional efforts shall include, without limitation,
                attending and presenting at industry trade shows, preparing customer
                mailings and presentations, brochures or other promotional material
                and
                references to the Technology on Licensee’s websites. During the Term,
                Licensee shall confer with Licensor on a semi-annual basis to review
                and
                plan the Licensor’s promotional activities. Licensor shall have the right
                to pre-approve all promotional materials, but pre-approval shall
                not be
                withheld unreasonably.
                Licensor shall cooperate and assist Licensee on all reasonable requests
                with respect to the aforementioned marketing and advertising
                efforts.

            

    

     

    
      	
              12.2

            	
              License
                for Technology Marks.
                Licensor hereby grants to Licensee a non-exclusive, royalty-free
                license,
                including the right to sublicense to Approved
                Sub-Licensees(s),
                to use the Technology Marks on Licensed Products, advertising and
                promotional material, and elsewhere, as contemplated herein. Licensee
                (and/or
                Approved Sub-Licensees) shall,
                upon reasonable notice from Licensor, fully and promptly correct
                and
                remedy any deficiencies in its use of the Technology
                Marks.

            

    

     

    
      	
              12.3

            	
              Ownership
                of Technology Marks.
                Licensee acknowledges Licensor’s claim of sole ownership of the Technology
                Marks and all associated goodwill. Nothing in this Agreement or in
                the
                performance thereof, or that might otherwise be implied by law, shall
                operate to grant Licensee any right, title, or interest in or to
                the
                Technology Marks, other than as specified in the limited license
                grant
                herein. Licensee’s use of the Technology Marks shall inure solely to the
                benefit of Licensor. Licensor shall have the sole right to, and in
                its
                sole discretion may, commence, prosecute or defend, and control any
                action
                concerning the Technology Marks. Licensee shall not contest the validity
                of, by act or omission jeopardize, or take any action inconsistent
                with,
                Licensor’s rights or goodwill in the Technology Marks, including attempted
                registration of the Technology Marks, or use or attempt registration
                of
                any mark confusingly similar thereto. Licensee shall maintain and
                not
                alter or remove, without Licensor’s consent, any copyright, trademark,
                patent and other proprietary or protective notices contained in any
                Technology.

            

    

    

    
      	
              13.

            	
              Termination

            

    

    

    
      	
              13.1

            	
              Term.
                This
                Agreement will begin as of the Effective Date and will continue for
                a
                period of two
                (2)
                years (the “Initial Term”), unless earlier terminated in accordance
                with Section 13.2 below.
                Upon expiration of the Initial Term, this Agreement shall automatically
                renew for additional two-year terms (each a “Renewal Term”), unless
                Licensee provides Licensor with thirty (30) days written notice prior
                to
                the expiration of the Initial Term or any Renewal Term, of its intent
                NOT
                to renew the Agreement.
                The Initial Term and any Renewal Term(s) shall each be referred to
                as the
                “Term.”

            

    

    

    
      	
              13.2

            	
              Termination.
                Either Party may terminate this Agreement for cause: (a) upon thirty
                (30)
                days prior written notice of a material breach of the other Party,
                if the
                breach has not been cured within such thirty (30) day period; or
                (b)
                immediately upon written notice to the other Party (i)
                if the other Party declares or a petition is filed in any court for
                insolvency or bankruptcy and such petition is not dismissed in
                sixty (60) days;
                or
                (ii) for the other Party’s reorganization under the United States
                bankruptcy act of
                any similar statute; (iii) if the other Party consents to the appointment
                of a trustee in bankruptcy or a receiver or similar entity.

            

    

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    
      	
              13.3

            	
              Effect
                of Termination. Upon
                the expiration or
                termination of this Agreement for
                any reason
                (a)
                all licenses granted hereunder shall cease; (b)
                each Party shall return to the other and make no further use of
                the
                any
                of the other Party’s Confidential Information
                in
                its possession
                and all Copies
                thereof;
                (c)
                the Parties shall immediately discontinue any and all promotional
                activities hereunder and Licensee shall cease all use of Technology
                Marks
                and promotional materials and return, at no charge, all sales, promotional
                and display or advertising materials, which were furnished by Licensor;
                and (d)
                all amounts due to
                Licensor by Licensee
                through the termination date under the terms of this Agreement shall
                become immediately due and payable. Upon
                termination of this Agreement, Licensee and Approved Sub-Licensees
                shall
                be permitted a reasonable opportunity, not to exceed ninety (90)
                days, to
                sell their remaining inventory of finished Licensed Products. The
                provisions of Sections 2.2,
                4.1 and 8, 9, 10, 11,
                12.3, 13, 14 and 15
                shall survive the termination or expiration of this
                Agreement.

            

      	 	 

    

    
      	
              14.

            	
              Notices

            

    

    

    
      	
              14.1

            	
              All
                notices sent under this Agreement shall be in writing and (i) hand
                delivered; (ii) transmitted by legible facsimile with a copy sent
                concurrently by certified mail, return receipt requested; or (iii)
                delivered by prepaid overnight courier. Notice shall be effective
                (i) upon
                receipt if delivered by hand; (ii) one (1) business day after deposit
                with
                an overnight courier service; or (iii) three (3) business days after
                deposit with the United States Postal Service if sent via certified
                mail.
                Notices shall be sent to the Parties
                at
                the following addresses or such other addresses as the Parties
                subsequently may provide in accordance with this Section 14.1:

            

    

    

    

    
      	
              If
                to Licensor:

              Document
                Security Systems, Inc.

              25
                East Main Street

              Suite
                1525

              Rochester,
                NY 14614

              Fax:
                585-325-2977 

              Attention:
                Chief Executive Officer 

            	
              With
                a copy to:

              Law
                Offices of Michael T. Hughes, Esq.

              60
                E. 42nd Street, Suite 1812

              New
                York, NY 10165

              Fax:
                (212) 697-3969

              Attention:
                Michael T. Hughes,
                Esq.

               

            
	 	 
	
              If
                to Licensee:

              The
                Ergonomic Group

              191
                Herricks Road

              Garden
                City Park, NY 11040 

              Fax:
                (516) 746-7809

              Attn:
                Mr. Robert Girards

                  Executive
                Vice
                President

                  Chief
                Operating Officer

            	
              With
                a copy to:

              Gottlieb
                Rackman & Reisman

              New
                York City, NY 10016

              Fax:
                (212) 684-3999

              Attn:
                Michael
                I. Rackman, Esq.

            

    

     

    
      	
              15.

            	
              Miscellaneous

            

    

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    
      	
              15.1

            	
              Assignment. 
                Licensee may not assign this Agreement or the rights and obligations
                hereunder to any third party
                except as contemplated herein
                without the prior express written approval of the Licensor.
                Any
                purported assignment without the consent of the Licensor shall be
                void.
                The provisions of this Agreement shall be binding upon, and shall
                inure
                to, the benefit of the Parties hereto, their legal representatives,
                permitted
                successors
                and permitted assigns.
                In
                the event of a “change of control” of Licensee, Licensor shall have the
                right to terminate this Agreement, unless such change of control
                is
                acceptable to Licensor, such acceptance not to be unreasonably withheld.
                For purposes hereof, the term “change of control” shall mean the sale or
                other transfer of more than 50% of the outstanding ownership of Licensee.
                

            

    

     

    
      	
              15.2

            	
              Governing
                Law; Jurisdiction.
                This Agreement shall be governed in accordance with the laws of the
                State
                of New York, without regard to conflict of laws principles. All disputes
                under this Agreement shall be resolved in the appropriate state or
                federal
                courts located in Rochester, New York.
                Each
                Party consents to the jurisdiction of and venue in such courts, agrees
                to
                accept service of process by mail and hereby waives any jurisdictional,
                lack of venue, or forum defenses otherwise available to it.
                

            

    

    

    
      	
              15.3

            	
              Force
                Majeure.
                No
                Party shall be in default or otherwise liable for any delay in or
                failure
                of its performance under this Agreement, other than of obligations
                regarding payments or confidentiality, if such delay or failure is
                caused
                by something beyond its reasonable control and without its fault
                or
                negligence, including,
                but not limited to,
                any act of God, strikes, lockouts, riots, any acts of the common
                enemy,
                the elements, earthquakes, floods, fires, epidemics, governmental
                laws and
                regulations ,
                inability to secure products or services from other persons, entities
                or
                transportation facilities, failures or delay in transportation or
                communications or power failures. Such delay or failure shall not
                constitute a breach of this Agreement and shall automatically extend
                any
                completion dates for a period equal to the duration of such events.
                Lack
                of funds shall not constitute a reason beyond the Party’s reasonable
                control.

            

    

    

    
      	
              15.4

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

            

    

     

    
      	
              15.5

            	
              Construction;
                Severability.  The
                Parties acknowledge that they have reviewed this Agreement and bargained
                over its terms. Accordingly, this Agreement shall be construed without
                regard to the Party or Parties responsible for its preparation, and
                shall
                be deemed to have been prepared jointly by the Parties.
                Headings contained in this Agreement are not intended to be full
                and
                accurate descriptions of the contents of this Agreement and shall
                not
                affect the meaning or interpretation of this Agreement. If any term,
                clause, or provision hereof is held invalid or unenforceable by a
                court of
                competent jurisdiction, such invalidity shall not affect the validity
                or
                operation of any other term, clause, or provision and such invalid
                term,
                clause, or provision shall be deemed to be severed from the Agreement.
                This Agreement may be executed in counterparts, each of which shall
                be
                deemed to be original but all of which together shall constitute
                a single
                instrument. The
                signatures required for execution may be transmitted to the other
                Party
                via facsimile and such signatures shall be deemed a duplicate
                original.

            

    

    

    
      	
              15.6

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

            

    

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    
      	
              15.7

            	
              Entire
                Agreement; Termination of Prior Agreements.
                This Agreement and the
                Exhibits and
                Schedules hereto
                constitute
                the entire agreement between the Parties
                and supersedes
                any and
                all prior agreements between the Parties
                concerning the subject matter of this Agreement. The
                pre-printed terms and conditions on any forms, purchase orders, invoices,
                or confirmations of the Parties shall not be construed as superseding
                this
                Agreement and in the event of any conflict between such documents
                and this
                Agreement, the terms of this Agreement shall prevail. No modifications
                or
                amendments may be made to this Agreement except as expressed in writing
                and signed by each Party.

            

    

    

    
      
        
          	15.8	
                  Publicity.
                    Either Party may refer to the other by name in advertising, promotional
                    materials and publications in connection with this Agreement
                    only upon
                    receiving the prior written consent of the other Party, which
                    consent
                    shall not be unreasonably withheld. Notwithstanding anything
                    to the
                    contrary herein, Licensee acknowledges and agrees that (a) it
                    is the
                    Licensor’s intention to issue a press release within ten (10) days of
                    the
                    date hereof regarding the signing of this Agreement;
                    and (b) either Party may be required, under applicable securities
                    laws, to
                    disclose the existence and contents of this Agreement.
                    

                

        

      

    

    

    
      	
              15.9

            	
              Export
                Control; Government Customers. Anything
                contained in this Agreement notwithstanding, the obligations of the
                Parties hereto shall be subject to all laws, present and future,
                including
                export control laws and regulations, of any government having jurisdiction
                over the Parties
                hereto and to orders, regulations, directions or requests of any
                such
                government. Each Party
                shall undertake to comply with and will be solely responsible for
                complying with such laws applicable to such party.
                Both Parties agree and acknowledge that an appropriate restrictive
                rights
                legend pertaining to government Customers shall be contained in any
                license agreement concerning the
                Technology.

            

    

    

    
      	
              15.10

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

            

    

    

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

    

    
      	
              LICENSOR

               

              DOCUMENT
                SECURITY SYSTEMS, INC.

               

               

              By:
                /s/
                Patrick
                White             
                  

              Name:
                Patrick White

              Title:
                 Chief
                Executive Officer

            	
              LICENSEE
                

               

              ERGONOMIC
                GROUP, INC.

               

               

               

              By:
                /s/
                Robert
                Girards             

              Name: Robert
                Girards

              Title:
                 Executive
                Vice President 

              and
                Chief Operating Officer

            
	 	 

    
      
         

      

      
        14Unassociated Document

    LICENSE
      AND DISTRIBUTION AGREEMENT

    

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

    

    RECITALS:

    

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

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    2.  License.
      

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

    2.4.  Exclusions
      and Restrictions.
      

     

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

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

    3.  Sales
      and Distribution of DSS Products.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

    4.  Term
      and Termination.
      

     

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

     

    4.2.  Termination.
      

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    5.  Payment.
      

     

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

     

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

     

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

     

    6.  Proprietary
      Rights.

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.  Licensee
      Obligations.
      

     

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

     

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

     

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

     

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

     

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

     

    8.  Technical
      Support; Training and Technology Services.
      

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

    10.2.  Audit.
      

     

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11.  Indemnification.
      

     

    11.1.  By
      DSS.
      

     

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

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    12.  Limited
      Warranties; Limitation of Liability. 

     

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

     

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

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    13.  Miscellaneous.

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

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

     

    
      	
              If
                to DSS:

               

              Document
                Security Systems, Inc.

              28
                Main Street East, Suite 1525

              Rochester,
                New York 14614

              USA

              Fax:
                585-325-2977 

              Attention:
                Chief Executive Officer 

            	
              With
                a copy to:

               

              Document
                Security Systems, Inc.

              28
                Main Street East, Suite 1525

              Rochester,
                New York 14614

              USA 

              Fax:
                585-325-2977

              Attn:
                General Counsel 

            
	 	 
	
              If
                to Licensee:

               

              Cultura
                Interactiva, S.A. de C.V.

              Bosques
                de Ciruelos 190, A-107

              Col.
                Bosques de las Lomas

              Mexico,
                D.F. 11700

              Phone
                & Fax (52-55) 5251-0150

              Attention:
                President

            	
              With
                a copy to:

               

              Bosques
                de Ciruelos 190, A-107

              Col.
                Bosques de las Lomas

              Mexico,
                D.F. 11700

              Phone
                & Fax (52-55) 5251-0150

              Attention:
                Juan Carlos Collado, Abogado

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

    

     

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      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
      	
              DOCUMENT
                SECURITY SYSTEMS, INC.

               

              By:
                 /s/
                Patrick White  

              Name:
                Patrick White

              Title:
                Chief Executive Officer 

            	
              CULTURA
                INTERACTIVA S.A. DE C.V.

               

              By:
                 /s/
                Fernando Fuentes  

              Name:
                Fernando Fuentes

              Title:
                President

            

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      1

    SCHEDULE
      OF TERMS AND CONDITIONS

    

    

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

            

    

    

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

            

    

    

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

            

    

    

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

            

    

    

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

            

    

    

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

            

    

    

    
      	7.  	
              Territory:
                Country of Mexico

            

    

    

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

            

    

    

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

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	10.  	
              Term.
                

            

    

    

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

            

    

    

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

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
      A

    USAGE
      GUIDELINES FOR TECHNOLOGY MARKS

    

     

    
      	
              1.

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

            

    

    

    
      	
              2.

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

            

    

    

    
      	
              3.

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

            

    

    

    
      	
              4.

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

            

    

    

    
      	
              5.

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

            

    

    

    
      	
              6.

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

            

    

    

    
      	
              7.

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

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      B

    CONFIDENTIALITY/NON-DISCLOSURE
      AGREEMENT

    

    Attached

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