Document:

WARRANT

 

DOCUMENT SECURITY SYSTEMS, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

VOID AFTER 5:30 P.M., EASTERN 

TIME, ON THE EXPIRATION DATE

 

THIS WARRANT AND ANY SHARES ACQUIRED UPON
THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

 

As consideration for
consulting services performed pursuant to a Consulting Agreement, DOCUMENT SECURITY SYSTEMS, INC., a New York corporation (the
“Company”), on even date herewith (the “Issuance Date”) hereby agrees to sell upon the terms and
on the conditions hereinafter set forth, but no later than 5:30 p.m., Eastern Time, on the Expiration Date (as hereinafter defined)
to CENTURY MEDIA GROUP or registered assigns (the “Holder”), one-hundred thousand (250,000) fully paid
and non-assessable shares of the Company’s common stock, par value $0.02 per share (the “Common Stock”
or “Warrant Stock”), at the per share purchase prices set forth in Section 2 hereof (the “Warrant Prices”),
pursuant to this warrant (this “Warrant”). Holder’s right to purchase under this Warrant shall be subject
to and contingent upon the Company receiving prior NYSE Amex additional listing approval for the underlying Warrant Stock. The
number of shares of Warrant Stock to be so issued and the Warrant Price are subject to adjustment in certain events as hereinafter
set forth. The term “Common Stock” or “Warrant Stock” shall mean, when used herein, unless
the context otherwise requires, the stock receivable upon the exercise of this Warrant.

 

1.          Exercise
of Warrant.

 

a.           The
Holder may exercise this Warrant according to its terms by (i) surrendering this Warrant, properly endorsed, to the Company at
the address set forth in Section 10, (ii) executing the subscription form attached hereto (the “Form of Exercise”),
and (iii) making payment of the purchase price to the Company for the number of shares of the Warrant Stock specified in the Form
of Exercise, or as otherwise provided in this Warrant, prior to 5:30 p.m., Eastern Time, on April 20, 2013 (the
“Expiration Date”). Such exercise shall be deemed effected by the surrender of the Warrant, together
with a duly executed copy of the Form of Exercise, to Company at its principal office along with payment to the Company of an amount
equal to the aggregate Warrant Price for the number of shares of Warrant Stock being purchased in cash, check or bank draft.

 

    	 

    	 

    

 

b.           This
Warrant may be exercised in whole or in part. If exercised in part, the Company shall deliver to the Holder a new Warrant, identical
in form, in the name of the Holder, evidencing the right to purchase the number of shares of Warrant Stock as to which this Warrant
has not been exercised. The term Warrant as used herein shall include any subsequent Warrant issued as provided herein.

 

c.           No
fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. If any fraction of
a Warrant Stock would, except for the provisions of this Section 1(c), be issuable on the exercise of a Warrant, the number of
Warrant Stock to be issued by the Company shall be rounded to the nearest whole number, with one-half or greater being rounded
up.

 

d.           In
the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the Warrant Stock so purchased,
registered in the name of the Holder, shall be delivered to the Holder within a reasonable time after such rights shall have been
so exercised. The person or entity in whose name any certificate for the Warrant Stock is issued upon exercise of the rights represented
by this Warrant shall for all purposes be deemed to have become the holder of record of such shares immediately prior to the close
of business on the date on which the Warrant was surrendered and payment of the Warrant Price and any applicable taxes was made,
irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when
the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the
opening of business on the next succeeding date on which the stock transfer books are open.

 

2.          Vesting
and Warrant Prices. This Warrant shall vest on February 20, 2012 (the “Issuance Date”) and is exercisable pursuant
to the following schedule:

 

(i)          50,000
shares of Warrant Stock at $4.50 per share;

 

(ii)         50,000
shares of Warrant Stock at $4.75 per share;

 

(iii)        50,000
shares of Warrant Stock at $5.00 per share;

 

(iv)        50,000
shares of Warrant Stock at $5.25 per share;

 

(v)         50,000
shares of Warrant Stock at $6.00 per share.

 

3.          Disposition
of Warrant and Warrant Stock.

 

a.           The
Holder hereby acknowledges that this Warrant and any Warrant Stock purchased pursuant hereto are, as of the date hereof, not registered:
(i) under the Securities Act of 1933, as amended (the “Act”), on the ground that the issuance of this Warrant
is exempt from registration under Section 4(2) of the Act and/or Regulation D thereunder as not involving any public offering or
(ii) under any applicable state securities law because the issuance of this Warrant does not involve any public offering; and that
the Company’s reliance on the Section 4(2) exemption of the Act and/or Regulation D and the other rules and regulations promulgated
thereunder, and under applicable state securities laws is predicated in part on the representations hereby made to the Company
by the Holder that it is acquiring this Warrant and will acquire the Warrant Stock for investment for its own account, with no
present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless,
to any requirement of law that the disposition of its property shall at all times be within its control.

 

    	- 2 -

    	 

    

 

The Holder hereby
agrees that it will not sell or transfer all or any part of this Warrant and/or Warrant Stock unless and until it shall first have
given notice to the Company describing such sale or transfer and furnished to the Company either (i) an opinion, satisfactory to
counsel for the Company, to the effect that the proposed sale or transfer may be made without registration under the Act and without
registration or qualification under any state law, or (ii) an interpretative letter from the Securities and Exchange Commission
to the effect that no enforcement action will be recommended if the proposed sale or transfer is made without registration under
the Act.

 

b.           If,
at the time of issuance of the shares issuable upon exercise of this Warrant, no registration statement is in effect with respect
to such shares under applicable provisions of the Act, the Company may at its election require that the Holder provide the Company
with written reconfirmation of the Holder’s investment intent and that any stock certificate delivered to the Holder of a
surrendered Warrant shall bear legends reading substantially as follows:

 

“THE SHARES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

 

In addition, so long as the foregoing
legend may remain on any stock certificate delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it
may delegate registrar and transfer functions.

 

4.          Reservation
of Shares. The Company hereby agrees that at all times there shall be reserved for issuance upon the exercise of this Warrant
such number of shares of its Common Stock as shall be required for issuance upon exercise of this Warrant. The Company further
agrees that all shares which may be issued upon the exercise of the rights represented by this Warrant will be duly authorized
and will, upon issuance and against payment of the exercise price, be validly issued, fully paid and non-assessable, free from
all taxes, liens, charges and preemptive rights with respect to the issuance thereof, other than taxes, if any, in respect of any
transfer occurring contemporaneously with such issuance and other than transfer restrictions imposed by federal and state securities
laws.

 

    	- 3 -

    	 

    

 

5.          Exchange,
Transfer or Assignment of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations,
entitling the Holder or Holders thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder.
Upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, along with a duly executed
assignment form and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant
in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may
be divided or combined with other Warrants that carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which
new Warrants are to be issued and signed by the Holder hereof.

 

6.          Capital
Adjustments. This Warrant is subject to the following provisions:

 

A.      Adjustment
for Stock Splits, Stock Dividends, Recapitalizations. The number of Warrant Stock issuable upon exercise of each Warrant and
the Warrant Price shall each be proportionately adjusted to reflect any stock dividend, stock split, reverse stock split, recapitalization
or the like affecting the number of outstanding shares of Common Stock that occurs after the date hereof.

 

B.      Adjustments
for Reorganization, Consolidation, Merger. If after the date hereof, the Company (or any other entity, the stock or other securities
of which are at the time receivable on the exercise of the Warrants), consolidates with or merges into another entity or conveys
all or substantially all of its assets to another entity, then, in each such case, Holder, upon any permitted exercise of a Warrant,
at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in
lieu of the stock or other securities and property receivable upon the exercise of the Warrant prior to such consummation, the
stock or other securities or property to which such Holder would have been entitled upon the consummation of such reorganization,
consolidation, merger or conveyance if such Holder had exercised the Warrant immediately prior thereto. The successor or purchasing
entity in any such reorganization, consolidation, merger or conveyance (if other than the Company) shall duly execute and deliver
to Holder a written acknowledgment of such entity’s obligations under the Warrants and this Agreement.

 

C.      Stock
Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall issue or pay the holders of its
Common Stock, or take a record of the holders of its Common Stock for the purpose of entitling them to receive, a dividend payable
in, or other distribution of, Common Stock, then the Warrant Price shall be adjusted as provided in Section 5(C) and the number
of shares of Warrant Stock purchasable upon exercise of this Warrant shall be adjusted to the number of shares of Common Stock
that the Holder would have owned immediately following such action had this Warrant been exercised immediately prior thereto.

 

D.      Purchase
Adjustments. Except as otherwise provided herein, whenever the number of shares of Warrant Stock purchasable upon exercise
of this Warrant is adjusted, as herein provided, the Warrant Price payable upon the exercise of this Warrant shall be adjusted
to that price determined by multiplying such Warrant Price immediately prior to such adjustment by a fraction (i) the numerator
of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately prior to such adjustment,
and (ii) the denominator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately
thereafter. The number of shares of Common Stock outstanding at any given time for purposes of the adjustments set forth in this
Section 5 shall exclude any shares then directly or indirectly held in the treasury of the Company.

 

    	- 4 -

    	 

    

 

E.      Exception
to Purchase Adjustments. The Company shall not be required to make any adjustment pursuant to this Section 5 if the amount
of such adjustment would be less than one percent (1%) of the Warrant Price in effect immediately before the event that would otherwise
have given rise to such adjustment. In such case, however, any adjustment that would otherwise have been required to be made shall
be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried
forward, shall amount to not less than one percent (1%) of the Warrant Price in effect immediately before the event giving rise
to such next subsequent adjustment. Following each computation or readjustment as provided in this Section 5, the new adjusted
Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant shall remain in effect until a further
computation or readjustment thereof is required.

 

7.          Notice
to Holders.

 

a.           In
case:

 

(i)          the
Company shall take a record of the holders of its common stock (or other stock or securities at the time receivable upon the exercise
of this Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend payable out of earned surplus
of the Company) or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right;

 

(ii)         of
any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation with or
merger of the Company into another corporation, or any conveyance of all or substantially all of the assets of the Company to another
corporation; or

 

(iii)        of
any voluntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company
will mail or cause to be mailed to the Holder hereof at the time outstanding a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character
of such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any, is to be fixed, as of which the holders
of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution or winding-up. Such notice shall be
mailed at least ten (10) days prior to the record date therein specified, or if no record date shall have been specified therein,
at least ten (10) days prior to such specified date, provided, however, failure to provide any such notice shall not affect the
validity of such transaction.

 

    	- 5 -

    	 

    

 

8.          Loss,
Theft, Destruction or Mutilation. Upon receipt by the Company of evidence satisfactory to it, in the exercise of its reasonable
discretion, of the ownership and the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to the Company and, in the case of mutilation, upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof, without expense to the Holder, a new Warrant of like tenor dated
the date hereof.

 

9.          Warrant
Holder Not a Stockholder. The Holder of this Warrant, as such, shall not be entitled by reason of this Warrant to any rights
whatsoever as a stockholder of the Company.

 

10.         Notices.
Any notice required or contemplated by this Warrant shall be deemed to have been duly given if transmitted by registered or certified
mail, return receipt requested, or nationally recognized overnight delivery service, to the Company at its principal executive
offices located at 28 Main Street East, Suite 1525, Rochester, New York 14614, Attn: Chief Executive Officer, or to the Holder
at the name and address set forth in the Warrant Register maintained by the Company.

 

11.         Choice
of Law. THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

 

12.         Venue.
THE HOLDER BY RECEIPT OF THIS WARRANT HEREBY CONSENTS TO AND IRREVOCABLY SUBMITS TO PERSONAL JURISDICTION OVER SUCH HOLDER BY THE
APPLICABLE STATE OR FEDERAL COURTS OF THE STATE OF NEW YORK, COUNTY OF MONROE, IN ANY ACTION OR PROCEEDING, IRREVOCABLY WAIVES
TRIAL BY JURY AND PERSONAL SERVICE OF ANY AND ALL PROCESS AND OTHER DOCUMENTS AND SPECIFICALLY CONSENTS THAT IN ANY SUCH ACTION
OR PROCEEDING, ANY SERVICE OF PROCESS MAY BE EFFECTUATED UPON THE HOLDER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, IN ACCORDANCE
WITH SECTION 9 AND WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS WARRANT .

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

    	- 6 -

    	 

    

 

IN WITNESS WHEREOF, the Company
has duly caused this Warrant to be signed on its behalf, in its corporate name and by its duly authorized officer, as of this 20th
day of February, 2012.

 

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

 

    	- 7 -

    	 

    

 

FORM OF EXERCISE

 

(to be executed by the registered holder hereof)

 

The undersigned hereby exercises the right
to purchase _________ shares of common stock, par value $0.02 per share (“Common Stock”), of Document Security Systems,
Inc. evidenced by the within Warrant for a Warrant Price of $______ per share and herewith makes payment of the purchase price
in full of $__________ in cash. Kindly issue certificates for shares of Common Stock (and for the unexercised balance of the Warrants
evidenced by the within Warrant Certificate, if any) in accordance with the instructions given below.

 

Dated:____________________
, 20___ .

 

______________________________

 

Instructions for registration
of stock

 

_____________________________

Name (Please Print)

 

Social Security or other
identifying Number:

 

Address:__________________________________

City/State and Zip Code

 

Instructions for registration
of certificate representing

the unexercised balance of
Warrants (if any)

 

_____________________________

Name (Please Print)

 

Social Security or other
identifying Number: ___________

 

Address:____________________________________

City, State and Zip Code

 

    	- 8 -February 20, 2012

 

Patrick White

CEO

Document Security Systems, Inc.

28 East Main Street, Suite 1525

Rochester, NY 14614

 

RE:
Strategic Alliance and Engagement for IP Strategy Execution in 2012

 

Dear Mr. White:

 

We understand that Document Security Systems,
Inc. (“DSS”), would like ipCapital Group, Inc. (“ipCG”) to assist in the execution of its IP strategy using
our expert tools for invention, IP strengthening, and process management. We are delighted to be entering a long-term trusted advisor
and strategic alliance relationship with DSS that we believe will result in the creation of substantial business value.

 

This letter sets forth the terms of our proposed
engagement and services ipCG will perform for DSS in the scope of work described below. In addition to this engagement letter,
ipCG and DSS will execute a stock options or warrant agreement to align interests toward the highest levels of value creation.

 

We will use DSS’s IP strategy and ipLandscape®
framework (to be delivered under previous ipCG/DSS engagement letter dated Jan. 10, 2012) as our guide for facilitated invention
activities that we expect will result in dozens of new patent applications filed over the course of 2012. We will also facilitate
installation of best practices for trade secret management and IP marketing communications, and serve as a general advisor on strategic
IP activities to ensure DSS develops a high-quality IP portfolio that serves the business strategy.

 

Our engagement will require close collaboration
with DSS’s executive management, engineers, designers, and patent counsel in an efficient team-based approach.

 

If you have any questions or require additional
information, please feel free to contact us at any time. We are looking forward to working with you on this important effort.

 

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	 

    	 

    

 

 

SCOPE
OF WORK: SUPPORT IP STRATEGY EXECUTION IN 2012

 

Part
1. Facilitate Eight (8) Full-Day Invention Sessions Using ipCG’s Proprietary Expert Tools 

 

ipCG will
facilitate a total of eight (8) full-day invention sessions with the DSS team using our expert tools for invention capture and
IP strengthening. This work is required to create a significant and strategic invention inventory on the front-end of new patent
application development. 

 

The focus
areas for the various invention sessions will be defined and prioritized based on DSS’s IP strategy and supporting business
and technical information. The invention focus areas are also subject to change should emerging business strategies, issues, or
events require revisions to the IP strategy over the course of the year. ipCG and DSS will discuss and agree upon any such modifications
to the focus areas of the contemplated invention sessions on a case-by-case basis as needed.

 

The cash
fee for each facilitated full-day invention session is $30,000, which will amount to $240,000 for all eight (8) sessions. See Detailed
Work Steps below for additional information on the ipScan®, Invention on Demand®, and ipNavigationSM invention
processes that will be deployed as appropriate based on the DSS’s IP strategy.

 

Detailed
Work Steps for Services Provided in Part 1 of the Scope of Work

 

This section
outlines the work steps associated with each of the services ipCG will provide to DSS in Part 1 of the Scope of Work. Note that
the ipScan®, Invention on Demand®, and ipNavigationSM processes may each be deployed multiple times based on
the invention focus areas defined by DSS’s IP strategy.

 

A. Facilitated Invention Extraction Sessions
(ipScan® Process)

 

ipCG will use its proprietary ipScan®
process to systematically extract existing invention concepts from DSS’s team and then help to broaden them across multiple
thinking axes to capture potential IP across DSS’s ipLandscape® frameworks.
This potential IP will be documented and categorized to build a thorough inventory that can be reviewed for further IP documentation,
such as invention disclosures, patent applications, enabled publications, or documented trade secrets. Typically, a full-day ipScan®
workshop captures 50-100 concepts.

 

Specifically, ipCG will:

 

		1.	Schedule a conference call with DSS to confirm the objectives and focus areas for the session

 

		2.	Facilitate an ipScan® invention extraction session(s)
with DSS’s key inventive team onsite in Rochester, NY or at ipCG’s office in Williston, VT

 

		3.	Develop brief titles and abstracts for the invention ideas captured in the session, along with
the relevant ipLandscape® categories

 

		4.	Schedule a conference call with DSS and Patent Counsel as required to review the results along
with first-pass prioritization of invention ideas for further IP documentation

  

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	2

    	 

    

 

 

B. Facilitated Invent-Around Sessions (ipNavigationSM
Process)

 

ipCG will use its proprietary ipNavigationSM
invent-around process and associated “checklist” to identify additional potential inventions that may be added to or
around DSS’s existing patents and patent applications to enhance the overall strength of the core IP. This process results
in a thorough inventory of invention concepts that can be reviewed for further IP documentation, such as new patent claims, invention
disclosures, patent applications, provisionals, enabled publications, or documented trade secrets. Typically, a full-day ipNavigationSM
session workshop captures 50-100 concepts.

 

Specifically, ipCG will:

 

		1.	Schedule a conference call with DSS to confirm the objectives and focus areas for the session

 

		2.	Review the subject IP documents to be targeted in the session (i.e., specific patents or patent
applications)

 

		3.	Facilitate an ipNavigationSM invent-around session(s) with DSS’s key inventive
team onsite in Rochester, NY or at ipCG’s office in Williston, VT. Note that ipNavigationSM sessions may be conducted
by web meeting to facilitate scheduling and minimize costs.

 

		4.	Develop brief titles and abstracts for the invention ideas captured in the session, along with
the relevant ipLandscape® categories

 

		5.	Schedule a conference call with DSS and Patent Counsel as required to review the results along
with first-pass prioritization of invention ideas for further IP documentation

  

C. Facilitated Directed Invention Sessions
(Invention on Demand® Process)

 

ipCG’s Invention on Demand® (IOD®)
process identifies problems and elements that accelerate and direct new invention using creativity tools. ipCG will use its proprietary
process to assist DSS in the discovery of new potential inventions that have possible technical operability in strategic areas
defined by the IP strategy and other inputs. This process will further expand the inventory of DSS’s existing invention ideas
extracted through the ipScan® process.

 

Specifically, ipCG will:

 

		1.	Schedule a conference call with DSS to confirm the objectives and focus areas for the session

 

		2.	Facilitate an Invention on Demand® session(s) with DSS’s key inventive team onsite in
Rochester, NY or at ipCG’s office in Williston, VT

 

		3.	Develop brief titles and abstracts for the invention ideas captured in the session, along with
the relevant ipLandscape® categories

 

		4.	Schedule a conference call with DSS and Patent Counsel as required to review the results along
with first-pass prioritization of invention ideas for further IP documentation

  

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	3

    	 

    

 

 

Part
2. Retainer for IP Process Engineering and Management Support in 2012

 

ipCG will
provide as-needed IP process engineering and management support to DSS above and beyond the facilitated invention sessions described
in Part 1. This will ensure that all of the strategic action items described in DSS’s IP strategy report (to be delivered
under previous ipCG/DSS engagement letter dated Jan. 10, 2012) are executed in a cost-effective manner leveraging ipCG’s
expertise and best-practices. ipCG consultants will support DSS in a range of IP management activities under a retainer that includes
a maximum total fee of $125,000 during 2012 at daily consulting rates. For reference, full utilization of the retainer would result
in approximately three to four man-days of time per month for ipCG Senior Advisors / Managers over the course of 2012. Possible
support activities include, but are not limited to, the following:

 

		·	Facilitate meetings to prioritize the output of ipCG invention
sessions for IP development 

		·	Help manage DSS’s Patent Counsel and disclosure writers
to ensure high-quality work

		·	Define and install a trade secret policy and management process

		·	Regularly extract trade secrets from DSS’s staff and
document them in a repository

		·	Define a strategy and process for IP marketing communications
in press releases, web, etc.

		·	Support IP due diligence on external business opportunities
for DSS, such as M&A

		·	Define and implement IP process integrated in DSS’s
new product development process

 

These
activities will be managed and executed primarily by ipCG Senior Advisors and Managers. ipCG Associates and Analysts will support
Senior Advisors and Managers as needed on documentation, data analyses, and other detailed tasks at lower daily rates to maximize
cost-effectiveness for DSS.

 

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	4

    	 

    

 

 

DELIVERABLES

 

	Professional Services:	 	Deliverables:
	 
	Part 1: Facilitate Eight (8) Full-Day Invention Sessions Using ipCG’s Proprietary Expert Tools
	 	 	 	 
	A. Facilitated Invention Extraction Sessions (ipScan® Process)	 	 	ipCG will develop a single unified Excel worksheet to document titles, brief abstracts, ipLandscape® categorization, and tracking data for the invention ideas captured in the ipScan®, Invention on Demand®, and ipNavigationSM sessions. ipCG will add new “invention records” to build the Excel worksheet as the sessions are completed.
	 	 	 
	B. Facilitated Invent-Around Sessions (ipNavigationSM Process)	 	 
	 	 	 
	C. Facilitated Directed Invention Sessions (Invention on Demand® Process)	 	 
	 
	Part 2: Retainer for IP Process Engineering and Management Support in 2012
	 
	Documentation and training of IP processes, IP management support, and other strategic advice as needed

 

COLLABORATION
WITH DSS AND PATENT COUNSEL

 

ipCG will
work closely with DSS to execute the proposed Scope of Work. DSS’s involvement will include participation in invention sessions,
follow-up calls, and other meetings as required to review ipCG’s work products and make final decisions regarding IP development.

 

Please
note that ipCG’s Scope of Work does not include drafting detailed invention disclosures or prosecuting patent applications.
ipCG does not practice law. We will collaborate closely with DSS’s Patent Counsel to review our work products and transfer
the information (e.g., invention abstracts generated by the ipScan®, Invention on Demand®, and ipNavigationSM
invention processes) to Counsel and/or other designated technical writers for inclusion in detailed invention disclosures and patent
applications as required. 

 

Should
DSS and its Patent Counsel require assistance in developing detailed invention disclosures to support new patent applications,
ipCG and DSS may explore a separate arrangement at that time in which ipCG directly manages this activity.

 

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	5

    	 

    

 

 

Under the scope of this engagement, ipCG will
perform the services described in the table below entitled “Professional Services and Fees” (hereinafter referred to
as “Services”) in accordance with the following terms and conditions:

 

1.          Professional
Services and Fees

 

	Professional Services	 	Cash Fees
	Part 1: Facilitate Eight (8) Full-Day Invention Sessions Using ipCG’s Proprietary Expert Tools	 	
        $30,000 per full-day session

        ($240,000 total for 8 days)

	Part 2: Retainer for IP Process Engineering and Management Support in 2012	 	Maximum of $125,000 total based on daily rates for 2012 (see table below)
	Total	 	Maximum of $365,000

 

ipCG’s daily rates for this engagement
as follows. These rates will be applied to ipCG staff time spent executing Part 2 of the Scope of Work.

 

	ipCG Staff	 	Daily Rates
	Principals, Senior Advisors, and Managers	 	$3,500 / day
	Associates and Analysts	 	$2,200 / day

 

In addition to the cash fees described above,
DSS will issue to ipCG options or warrants to purchase 100,000 shares of DSS common stock according to the terms and conditions
defined in a separate options or warrants agreement to be executed by ipCG and DSS simultaneously herewith.

 

Should DSS request additional meetings, reports,
analyses, or services outside the scope of the Services, the scope of such services and fees will be mutually agreed upon in writing
between ipCG and DSS.

 

2.          Timing
& Delivery.   Work can begin upon acceptance of the terms in this engagement letter. ipCG and DSS shall
mutually agree upon a project schedule.

 

3.          Resources.
Jed Cahill, Senior Manager, will oversee the Services with DSS and provide guidance and support within the scope of the project.
Additional company resources will be utilized as required. ipCG will work in a close, collaborative manner with DSS to execute
the Services. Because of the highly interactive nature of this work, the availability of DSS’s management and key technical
personnel will be critical to the completion of the project. DSS agrees to provide ipCG with its full assistance and cooperation
including, but not limited to, providing all information as may be necessary or reasonable for ipCG to discharge its duties under
this engagement letter and making the appropriate DSS personnel available to enable ipCG to obtain such DSS information.

 

4.          Compensation.
The maximum aggregate fee for Services is $365,000.00 (“Contract Total”). DSS agrees to pay ipCG $30,000 upon execution
of this engagement letter to initiate the first Service in Part 1 of the Scope of Work. DSS agrees to pay the fee associated with
each subsequent Service in Part 1 at initiation. For Services in Part 2 of the Scope of Work (i.e., retainer), ipCG will provide
monthly invoices for fees calculated based upon the specified daily rates and payable within ten (10) days from date of the invoice
for Services. DSS also agrees to reimburse ipCG for all reasonable, preapproved, out of pocket expenses estimated at 15% - 20%
of fees. Reimbursable expenses will be included in invoices as they are incurred together with appropriate documentation of such
expenses. DSS shall pay all charges and fees in U.S. Dollars. Additionally, DSS agrees to pay any legal and/or travel expenses
incurred by ipCG in relation to DSS (e.g., depositions, other legal proceedings, etc.).

 

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	6

    	 

    

 

 

5.          Late
Payment/Interest. If payment in full is not received within 10 days from the invoice due date, as defined in mutually signed
agreement(s), DSS is subject to interest fees, along with costs of collection incurred by ipCG, including but not limited to, collection
agency fees and reasonable attorney’s fees (whether or not suit is brought to affect such collection). The interest fees
will be calculated per day of actual delay, from the due date of invoice, and based on the maximum rate of interest or fee allowed
by law.

 

6.          Confidential
Nature. ipCG and DSS agree that the terms and conditions of the Mutual Non-Disclosure Agreement (“NDA”) executed
or intended to be executed by ipCG and DSS simultaneously herewith, shall govern and control the manner in which Confidential Information
(defined below) is protected. The term Confidential Information shall have the meaning set forth in the NDA.

 

7.          Independent
Contractor. The parties are and shall be independent contractors to one another, and nothing herein shall be deemed to
cause these services to create an agency, partnership, or joint venture between the parties. Further, nothing in this engagement
letter shall be interpreted or construed as creating or establishing the relationship of employer and employee between DSS and
either ipCG or any employee of ipCG.

 

8.           Warranty.
The services are warranted to conform substantially to the services described in Section 1 entitled “Professional Services
and Fees.” As the exclusive remedy for any breach of this warranty, ipCG shall reperform Services at no cost to DSS necessary
to remedy or avoid any condition that results in the services not performing as warranted above. This warranty is conditioned upon
receipt by ipCG of DSS’s written notice of all claimed breaches within sixty (60) days of the date of delivery of the services.
DSS ACKNOWLEDGES THAT NO EXPRESS WARRANTIES HAVE BEEN MADE BY IPCG EXCEPT FOR THE LIMITED WARRANTY MADE IN THIS PARAGRAPH. THIS
LIMITED WARRANTY AND THE ASSOCIATED LIMITED REMEDY IS PROVIDED BY IPCG IN LIEU OF ALL OTHER WARRANTIES AND REMEDIES RELATED TO
PERFORMANCE OF THE SERVICES. IPCG DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.

 

9.           DSS
agrees that ipCG’s AGGREGATE MONETARY liability FOR ALL CAUSES (REGARDLESS OF THE FORM OF ACTION) UNDER OR RELATING TO THIS
AGREEMENT, WHETHER PRIOR OR SUBSEQUENT TO ITS EXECUTION OR TERMINATION, SHALL IN NO EVENT EXCEED THE TOTAL OF ALL AMOUNTS PAID
TO IPCG BY DSS FOR THE SERVICES GIVING RISE TO SUCH LIABILITY. DSS will indemnify and hold harmless ipCG and its personnel from
any claims, liabilities, costs, and expenses that arise, for any reason, related to the delivery of the Services pursuant to this
agreement, including, without limitation, costs and reasonable attorneys’ fees incurred in connection with responding to
subpoenas related to DSS and/or the services.

 

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	7

    	 

    

 

 

10.         Taxes.
All charges for the sale or delivery of services purchased or licensed pursuant to this engagement letter, unless otherwise
noted, are exclusive of applicable taxes. Excluding taxes on ipCG’s income, DSS agrees to pay any current or future applicable
tax which ipCG may be required to pay or collect and which is imposed on the sale or delivery or services purchased or licensed
in this engagement letter. Such taxes may include, but are not limited to, state and local privilege, excise, sales, services,
withholding, and use. DSS’s obligation to pay taxes includes any interest. To the extent ipCG has not collected and remitted
any applicable tax for DSS in reliance upon an erroneous representation of DSS as to its tax status, DSS’s obligation to
pay taxes shall include any penalties imposed by any taxing authorities.

 

11. Governing Law. This engagement
letter shall be construed in accordance with and governed for all purposes by the Uniform Trade Secrets Act and otherwise by the
law of the State of New York, without regard to its principles regarding conflicts of law.

 

12. Document Retention Policy.
DSS acknowledges and agrees that, upon the conclusion of ipCG’s provision of Services hereunder, ipCG shall destroy all documents
and electronic media related to the Services, except for the final deliverable(s).

 

13.         Entire
Agreement. This engagement letter and the NDA reflect the entire agreement between ipCG and DSS related to the Services
described in this letter. It replaces and supersedes any previous proposals, correspondence, and understandings, whether written
or oral. The agreements of ipCG and DSS contained in this letter shall survive the completion of the Services or termination of
this letter. In the event of any inconsistency between the NDA and this letter, the terms of the NDA will govern unless this letter
specifically references a paragraph of the NDA and expressly states that such paragraph is intended to be amended by this engagement
letter. Subject to the preceding sentence, any terms or conditions in this engagement letter which conflict with NDA shall have
no force or effect.

 

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	8

    	 

    

 

 

Please confirm your agreement with the foregoing
by signing a copy of this letter and returning it to ipCG. We are pleased to have this opportunity to be of service to you.

 

Very truly yours,

ipCapital Group, Inc.

 

	By:  /s/ Robert McDonald	 
	 	 
	Name:  Robert McDonald	 
	 	 
	Title:  Managing Director and President	 
	 	 
	Date: 02/20/12	 

 

DSS agrees to, accepts, and acknowledges the
foregoing terms and conditions pursuant to which ipCapital Group, Inc. will provide services to DSS.

 

	By:  /s/ Patrick White	 
	 	 
	Name: Patrick White	 
	 	 
	Title:  CEO	 
	 	 
	Date:  02/20/12	 

 

400
Cornerstone Drive, Suite 325 - Williston, VT 05495-4046

(802)
872.3200 - Toll Free (888) 853.2212

fax:
(802) 288.9468 - www.ipcg.com

 

    	9

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