Document:

CONSULTING
AGREEMENT

    

    This
Consulting Agreement (the “Agreement”) is entered into
and effective this 1st day of February 2010 (the “Effective Date”) by and
between Foresight Capital Corporation, an Arizona corporation (“Consultant”), and
BioAuthorize Holdings, Inc., a Nevada corporation (“Client”).

    

    Recitals

    

    A.  The
Consultant is in the business of providing advisory and consulting services
including investor relations, Corporate promotion and on-line communications,
identifying and evaluating business alliances, strategic options, business
combinations and merger and acquisition candidates, providing advice on
financial structure and capitalization, provide introductions to professional
analysts, money managers and capital raising intermediaries, and providing other
value-added services for the benefit of Client.

    

    B. Client
is in the business of (i) the development and acquisition of applications for
mobile handheld devices and (ii) the implementation of its developed technology
solution for e-commerce transactions related to the delivery of voice-enabled
payment authorization services to merchants and their customers in processing
payments for purchases made over the Internet (the “Business”); and

    

    C.  Client
desires to engage Consultant, and Consultant desires to be engaged by Client
upon the following terms and conditions.

    

    Agreement

    

    NOW
THEREFORE, in consideration of the premises, the mutual promises contained
herein and other good and valuable consideration, the parties agree as
follows:

    

    
      	
              1.

            	
              Services.  The
      Consultant shall provide services as reasonably requested by the Client as
      follows:

            

    

    

    
      	
               
      

            	
              A.

            	
              Consultant
      shall assist and advise Client for the purpose of (i) developing an
      investor relations program for Client, (ii) securing sponsorship of at
      least two (2) market makers for Client’s shares of common stock which
      trade on the OTCBB, (iii) providing advice on financial structure and
      capitalization, (iv) provide introductions to professional analysts, money
      managers and capital raising intermediaries, and (v) such other services
      reasonably related to those set forth above as Client may
      request.  It is the intent of the parties that Consultant shall
      be the lead participant in directing the activities contemplated by this
      Section 1A.  Services shall not include any activities that may
      be deemed to be the offering, buying, selling or otherwise dealing or
      trading in securities issued by another person including Client or the
      giving of tax, legal, regulatory or other specialist
    advice.

            

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              B.

            	
              Consultant
      shall provide advice and assistance to Client in the preparation of
      executive summaries, business plans and models, financial pro formas and
      projections, and PowerPoint presentation materials reasonably necessary
      for performance of the activities set forth in Section 1A above
      (collectively Sections 1A and 1B are the “Services”).

            

    

    

    
      	
               
      

            	
              C.

            	
              Consultant
      shall not be required to undertake duties not reasonably within the scope
      of advisory and consulting services in which it is generally
      engaged.  In the performance of its duties, Consultant shall
      provide Client with the benefits of its best judgment and
      efforts.  It is understood and acknowledged by the parties that
      the value of the Services is not measurable in a quantitative manner
      except as otherwise provided for herein, and Consultant shall be obligated
      to render the Services in good faith as shall be determined by
      Consultant.

            

    

    

    
      	
              2.

            	
              Due
      Diligence.  Consultant shall conduct a review and
      evaluation of Client, including its business, operations, properties, and
      financial condition, as reasonably required for performance of the
      Services (the “Due
      Diligence”).

            

    

    

    
      
        	
                3.

              	
                Term. Client
      hereby retains Consultant for a period of approximately (12) months from
      the Effective Date until February 1, 2011 (the “Term”), and this
      Agreement is renewable thereafter upon the written election of the Client
      upon terms and conditions agreed to by the parties.  At the
      conclusion of this Agreement, or its termination, all materials, data,
      documentation and information provided by the Client to Consultant shall
      be returned to the Client and Consultant shall deliver to the Client all
      completed, uncompleted and partially completed deliverables that are
      prepared through performance of the Services. All compensation due and
      owing for Services satisfactorily provided and completed through the date
      of termination shall be paid to Consultant immediately upon
      termination.

              

      

    

    

    
      	
              4.

            	
              Consulting Fee and Expenses.
        Client agrees to pay to Consultant a Consulting Fee
      payable in shares of the Company’s Common Stock as
  follows:

            

    

    

    A.   Lump Sum Fee. A total
of 1,000,000 unregistered and restricted shares of common stock of Client (the
“Shares”) which shall
be issued to Consultant promptly upon the Execution Date and shall be earned at
the conclusion of each period as follows:

    

    (1)           250,000
of the Shares on March 1, 2010;

    

    (2)           68,182
of the Shares on the first day of each month beginning on April 1, 2010 and
ending on February 1, 2011.

    

    The
Shares shall be held in escrow by Client and a certificate representing the
corresponding number of the Shares for each period set forth above shall be
released and delivered to Client upon full performance of the Services during
each corresponding period.  Although issued at the Effective Date, the
number of Shares for each corresponding period are only earned upon full
performance at the conclusion of each period noted above and are not
substantially vested prior to that time.   Consultant shall
forfeit the number of Shares for each corresponding period upon failure to make
full performance of the Services for such corresponding period.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    B.    Monthly Retainer
Amount.  A monthly retainer amount equal to $10,000 due in
arrears at the conclusion of each monthly period beginning March 1, 2010 and
ending February 1, 2011 (each a “Monthly Retainer”). 
Notwithstanding the foregoing provision, Consultant acknowledges that as of the
Effective Date, Client does not have the financial means to pay the Monthly
Retainer in cash, and the parties agree that each unpaid Monthly Retainer shall
be deferred and accrued until such time that Client, in its sole discretion,
determines that it has the financial ability to make such
payments.  Such deferral in payment of the Monthly Retainer shall not
be an event of default under this Agreement.  Each Monthly Retainer
shall be earned only upon full performance of the Services during each
corresponding period. At Consultant’s election and in Consultant’s sole
discretion, each Monthly Retainer may be paid in unregistered and restricted
shares of Client’s Common Stock at the rate of one (1) share for each one (1)
dollar of the Monthly Retainer due and owing (e.g. 10,000 shares per
month).

    

    C.    Expenses. Client
shall reimburse the Consultant for all out of pocket expenses reasonably
incurred in connection with performance of the Services described in Paragraph 2
including, but not limited to, professional time, travel expenses, computer
services, research, and printing. Consultant shall seek pre-approval of all
travel and professional expenses that exceed $300 in the aggregate prior to
incurring such expenses.  Consultant shall provide the Client with a
statement of such expenses and shall be reimbursed at Consultant’s election in
unregistered and restricted shares of Client’s Common Stock at the rate of one
(1) share for each one (1) dollar of expense or in cash at the time that Client,
in its sole discretion, determines that it has the financial ability to make a
cash payment for the expenses.  It is estimated that expenses could be
as much as $300.  Expenses are paid in addition to the Consulting Fees
as set forth above. At Client’s election and in Client’s sole discretion, all
Expenses may be paid in shares of Client’s Common Stock.

    

    
      	
              5.

            	
              Investor Representation
      Letter.  With regard to the Shares to be issued to
      Consultant, Consultant agrees to execute the Investor Representation
      Letter in form attached hereto as Exhibit
      A.

            

    

    

    
      	
              6.

            	
              Confidentiality and
      Nondisclosure.  Consultant agrees to use all non-public
      information provided to it by or on behalf of the Client hereunder solely
      for the purpose of providing the services and deliverables which are the
      subject of this letter Agreement and to treat all such information
      confidentially, provided that
      nothing herein shall prevent Consultant from disclosing any such
      information with the Client’s prior written consent (i) pursuant to the
      order of any court or administrative agency or in any pending legal or
      administrative proceeding, (ii) upon the request or demand of any
      regulatory authority having jurisdiction over Consultant or any of its
      affiliates, (iii) to the extent that such information becomes publicly
      available other than by reason of disclosure by Consultant or was or
      becomes available to Consultant or its affiliates from a source which is
      not known by Consultant to be subject to a confidentiality obligation to
      the Client, or (iv) to Consultant's affiliates and its and their
      respective employees, legal counsel, independent auditors and other
      experts or agents who need to know such information in connection with the
      services and deliverables under this Agreement. Consultant accepts
      responsibility for compliance by the persons referred to in clause (iv)
      above with the provisions of this
paragraph.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    
      	
              7.

            	
              Binding Effect,
      Assignment.  The terms and provisions of this Agreement
      shall be binding upon and inure to the benefit of each of the parties
      hereto and their permitted successors and assigns.  Any
      attempted assignment of this Agreement shall be void and of no effect
      unless the written consent of the other party is obtained prior to such
      assignment.

            

    

    

    
      	
              8.

            	
              Governing Law and Dispute
      Resolution.  This Agreement
      shall be interpreted and construed in accordance with the laws of the
      State of Arizona.  The parties, their heirs, agents and
      any other persons having or claiming to have a legal or beneficial
      interest in this Agreement, including court-appointed trustees and
      receivers agree to settle by arbitration any controversy between or among
      them and/or any of their parents, subsidiaries, affiliates, officers,
      directors, employees or agents relating to this Agreement, including any
      controversy over the arbitrability of a
dispute.

            

    

    

    Such
arbitration will be conducted by, and according to the rules and regulations
then in effect of, the American Arbitration Association (AAA) in Phoenix,
Arizona.  If arbitration before the AAA is unavailable or impossible
for any reason, then the parties agree to have a court of competent jurisdiction
appoint a single arbitrator to resolve any and all disputes or controversies
between or among them.  Each party shall bear its own initial
arbitration costs, which are determined by the rules and regulations of the
arbitration forum.  In the event of financial hardship, the
arbitration forum may waive certain costs in accordance with such
rules.  At the conclusion of the hearing, the arbitrators will decide
to assess the costs of the arbitration among the parties.

    

    Any award
the arbitrator makes shall be final and binding, and judgment on it may be
entered in any court having jurisdiction.  This arbitration provision
shall be enforced and interpreted in accordance with applicable federal laws of
the United States, including the Federal Arbitration Act.  Any costs,
fees or taxes involved in enforcing the award shall be fully assessed against
and paid by the party resisting enforcement of said award.

    

    All
notices from one party to the other involving arbitration shall be considered to
have been fully given when so served, mailed by first-class, certified or
registered mail, or otherwise given by other commercially accepted medium of
written notification.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    
      	
              9.

            	
              Notice.  Any
      notice or other communication required or permitted to be given hereunder
      shall be deemed given if sent by first class mail, registered or certified
      postage prepaid, or delivered in person or by facsimile transmission (with
      the mailing of the original thereof within one (1) business day
      thereafter), addressed as follows:

            

    

    

    
      
        	
                Foresight
      Capital Corporation

              	 
      	
                BioAuthorize
      Holdings, Inc.

              
	
                10129
      N.119th
      Street

              	 
      	
                15849
      N. 71st
      Street, Suite 216

              
	
                Scottsdale,
      AZ 88289

              	 
      	
                Scottsdale,
      AZ 85254-2179

              
	
                Attn:  Michael
      Wilhelm

              	 
      	
                Attn:
      Yada Schneider

              
	
                Facsimile
      No. 480-922-4781

              	
                  

              	
                Facsimile
      No. ______

              

      

    

    

    
      	
              10.

            	
              Modification
      Waiver.  This Agreement constitutes the entire
      understanding of the parties with respect to the subject matter
      hereof.  This Agreement may only be modified by a writing signed
      by both parties.  No waiver of any provision of this Agreement
      shall be deemed to constitute a waiver of any other provision hereof and
      any such waiver shall not constitute a continuing
  waiver.

            

    

    

    
      	
              11.

            	
              Headings.  Paragraph
      heading are for convenience of reference only and shall not be considered
      part of this Agreement.

            

    

    

    
      	
              12.

            	
              Severability.  If
      any one or more provisions of this Agreement is declared to be void by a
      court of competent jurisdiction, the remaining provisions shall remain in
      full force and effect.

            

    

    

    
      	
              13.

            	
              Attorney’s
      Fees.  If either party institutes legal proceedings
      against the other arising out of this Agreement, the prevailing party
      shall be entitled to reasonable attorney’s fees and costs of litigation as
      fixed by the court or arbitrator in such
action.

            

    

    

    
      	
              14.

            	
              Third
      Parties.  This Agreement is for the exclusive benefit of
      the parties hereto and their permitted successors and
      assigns.  No benefit is intended to be conferred upon any other
      person whatsoever.

            

    

    

    
      	
              15.

            	
              Facsimile Execution and
      Counterparts.   For the convenience of the parties,
      this Agreement may be executed and delivered by facsimile transmission of
      the signature(s) of such party(ies) and shall be binding upon such party
      by such facsimile transmission of a manually signed copy of this Agreement
      to the other party. This
      Agreement and any amendments hereto may be executed in any number of
      counterparts, all of which together shall constitute a single, original
      instrument.

            

    

    

    
      	
              16.

            	
              Indemnification.  The
      Client agrees to indemnify and hold Consultant harmless from and against
      any losses, claims, damages, or liabilities (or actions, including
      security holder actions, in respect thereof) related to or arising out of
      Consultant’s engagement hereunder or Consultant’s role in connection
      herewith, and will reimburse Consultant for all reasonable expenses
      (including reasonable legal fees) as they are incurred by Consultant in
      connection with investigating, preparing for or defending any such action
      or claim, whether or not in connection with pending or threatened
      litigation in which Consultant is a
party.

            

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    
      	
              17.

            	
              Matters Relating to
      Engagement.  The Client acknowledges that Consultant has
      been retained solely to provide the Services set forth in this
      Agreement.  In rendering such Services, Consultant shall act as
      an independent contractor, and any duties of Consultant arising out of its
      engagement hereunder shall be owed solely to the Client.  The
      Client further acknowledges that Consultant may perform certain of the
      Services described herein through one or more of its affiliates with the
      Client’s prior written consent which shall not be unreasonably withheld,
      and such affiliates shall be entitled to the benefits of this Agreement.
      Client acknowledges that Consultant is in the business of providing
      advisory and consulting services to others.  Nothing in this
      Agreement shall be construed to limit or restrict Consultant in conducting
      such advisory and consulting services to others.  The Client
      further acknowledges that Consultant may exercise powers and otherwise
      perform its functions in connection with fiduciary or other relationships
      it may have with entities that may have affiliations with Client, subject
      to its relationships with the Client
hereunder.

            

    

    

    
      	
              18.

            	
              Authority to Perform and
      Authorization.  The Client hereby represents and warrants
      (i) that it is duly organized and validly existing under the laws of the
      jurisdiction of its creation with full power and authority to conduct
      business as it is presently being conducted, and to own or lease, as
      applicable, its assets and properties, (ii) that it is duly qualified to
      do business as a foreign entity and is in good standing in each
      jurisdiction where the character of its properties owned or leased or the
      nature of its activities make such qualification necessary, except where
      the failure to be so qualified or in good standing would not have a
      material adverse effect on the Client, and (iii) that it has full power
      and authority to enter into this Agreement including the performance of
      the obligations hereunder and has taken all action necessary to carry out
      the transactions contemplated under this
  Agreement.

            

    

    

    
      	
              19.

            	
              Survival.  The
      provisions of Sections 4B, 6, 7 and 8 shall survive any termination of
      this Agreement.

            

    

    
      	
               
      

            	 

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.

    

    
      
        	
                Consultant:

              	 
      	
                Client:

              
	 
      	 
      	 
      
	
                Foresight
      Capital Corporation,

              	 
      	
                BioAuthorize
      Holdings, Inc.,

              
	
                an
      Arizona corporation

              	 
      	
                a
      Nevada corporation

              
	 
      	 
      	 
      	 
      	 
      
	
                By:

              	
                /s/ Michael Wilhelm

              	 
      	
                By:

              	
                /s/ Yada Schneider

              
	 
      	
                Michael
      Wilhelm

              	 
      	 
      	
                Yada
      Schneider

              
	 
      	
                President

              	 
      	 
      	
                President
      & CEO

              
	 
      	 
      	 
      
	 
      	 
      	 
      	
                [Executed
      on February 11, 2010]

              

      

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Exhibit
A

    

    Investor
Representation Letter

    

    This Investor Representation Letter is
dated effective this 1st day of February 2010.  BioAuthorize Holdings,
Inc., a Nevada corporation, (the “Company”) has entered into a
Consulting Services Agreement with Foresight Capital, Inc., an Arizona
corporation, dated February 1, 2010 (the “Agreement”) with regard to
the performance of certain consulting services as set forth in the
Agreement.  Under provisions of the Agreement, the Company agrees to
compensate Consultant for performance of the consulting services by issuing
shares of the Company’s Common Stock on the terms and conditions set forth in
the Agreement (the “Shares”).

     

    As a condition to the Company issuing
the Shares to Consultant, Consultant represents and warrants as
follows:

    

    (a)
Respecting the Company, its business, plans and financial condition, and any
other matters relating to issuance of the Shares: the Consultant has received
all materials which have been requested by the Consultant including copies of
the most recent report filed by the Company with the Securities and Exchange
Commission on Form 10-K for the year ending December 31, 2009 and on Form 10-Q
for the interim period ending September 30, 2009; has had a reasonable
opportunity to ask questions of the Company and its representatives; and the
Company has answered all inquiries that the Consultant or the Consultant's
representatives have put to it.  The Company undertakes no obligation
to update, review or revise any forward-looking statements to reflect any change in the Company's expectations or
any change in events, conditions, circumstances or assumptions on which any such
statements are based. The Consultant has had access to all additional
information necessary to verify the accuracy of the information set forth in
this Agreement and any other materials furnished herewith, and has taken all the
steps necessary to evaluate the merits and risks of an investment as proposed
hereunder.

    (b) The
Consultant is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933 (the “Act”), and Consultant is
experienced in evaluating and investing in newly organized technology companies
such as the Company. The Consultant has such knowledge and experience in
financial and business matters to enable the Consultant to evaluate the merits
and risks of an investment in the Shares, to make
an informed investment decision with respect thereto, and can afford to bear
such risks, including, without limitation, the risks of losing its entire
investment in the Shares.

    (c) The
Consultant acknowledges, agrees and recognizes that neither the Company nor any
of its affiliates or agents or consultants have made any representation or
warranty concerning the Company's financial results, upon which the Consultant
is relying in accepting the issuance of the Shares.  The Consultant is
subscribing for the Shares based solely upon the Consultant's own independent
analysis of the Company's business and the historical financial information
provided.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (d) The
Consultant is aware that the Shares have not been registered under the Act, that the Shares will be issued on the basis of the
statutory exemption provided by Section 4(2) of the Act or Regulation D
promulgated thereunder, or both, relating to transactions by an issuer not
involving any public offering and under similar exemptions under certain state
securities laws, that this transaction has not been reviewed by, passed on or
submitted to any Federal or state agency or self-regulatory organization where
an exemption is being relied upon, and that the Company's reliance thereon is
based in part upon the representations made by the Consultant in this Investor
Representation Letter. The Consultant acknowledges that the Consultant has been
informed by the Company, or is otherwise familiar with, the nature of the
limitations imposed by the Act (and applicable state securities laws) and the
rules and regulations thereunder on the transfer of securities. In particular,
the Consultant agrees that no sale, assignment or transfer of any of the Shares
shall be valid or effective, and the Company shall not be required to give any
effect to such sale, assignment or transfer, unless (i) such sale, assignment or
transfer is registered under the Act (and applicable state securities laws), it
being understood that the Shares are not currently registered for sale and that
the Company has no obligation or intention to so register the Shares, except as
contemplated hereunder or (ii) the Shares is sold, assigned or transferred in
accordance with all the requirements and
limitations of Rule 144 under the Act, it being understood that Rule 144 is not
available at the present time for the sale of the Shares, or (iii) such sale,
assignment or transfer is otherwise exempt from the registration under the Act
(and applicable state securities laws). The Consultant further understands that
an opinion of counsel and other documents may be required to transfer the
Shares. The Consultant acknowledges that the certificates evidencing the Shares
shall bear the following, or a substantially similar legend, and such other
legends as may be required by state blue-sky laws:

        "The
securities represented by this certificate have not been registered under the
Securities Act of 1933, or any state securities laws and neither such securities
nor any interest therein may be offered, sold, pledged, assigned or otherwise
transferred unless (1) a registration statement with respect thereto is
effective under the Act and any applicable state securities laws, or (2) the
Company receives an opinion of counsel to the holder of such securities, which
counsel and opinion are reasonably satisfactory to the Company, that such
securities may be offered, sold, pledged, assigned or transferred in the manner
contemplated without an effective registration statement under the Act or
applicable state securities laws."

    (e) The
Consultant is acquiring the Shares for investment for its own account and not
with the view to, or for resale in connection with, any distribution thereof or
the granting of any participation therein, and has no present intention of
distributing or selling to others any of such interest or granting
participations therein.

    (f) The
Consultant acknowledges that a limited trading market for the Company's Common
Stock and the Shares presently exists and it is uncertain that a more active
market for the Common Stock or the Shares will develop in the future, and that
the Consultant may find it impossible to liquidate the investment at a time when
it may be desirable to do so, or at any other time.

    (g) The Consultant is not subscribing for the Shares
because of or following any advertisement, article, notice or other
communication published in any newspaper, magazine or internet site or similar
media or broadcast over television or radio, or presented at any seminar or
meeting, or any solicitation or a subscription by a person other than a
representative of the Company.

    (h) The
Consultant is not relying on the Company with respect to the tax and other
economic considerations of an investment in the Shares.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (i) The
Consultant acknowledges that the representations, warranties and agreements made
by the Consultant herein shall survive the execution and delivery of this
Investor Representation Letter.

    (j) All
action (if any) on the part of the Consultant necessary for the authorization,
execution, delivery and performance by the Consultant of this Investor
Representation Letter has been taken, and this Agreement constitutes a valid and
binding obligation of the Consultant, enforceable in accordance with its
terms.

    (k) There
are no registration rights for the Shares.

    

    Consultant:

    

    Foresight
Capital, Inc.,

    an
Arizona corporation

    

    
      
        	
                By:

              	
                /s/ Michael K. Wilhelm

              	 
      
	 
      	
                Michael
      K. Wilhelm

              	 
      

      

    

    

    Its:        President
& CEO

    
      
         

      

      
        9NO SALE,
OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT OR ANY
INTEREST THEREIN SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH TRANSACTION IS THEN IN
EFFECT, OR THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT
SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THAT ACT.

    

    This Warrant will be void after 5:00
p.m. New York time on April __, 2014 (i.e. five years from the first closing
date of the Offering).

    

    COMMON
STOCK PURCHASE WARRANT

    

    WARRANT
NO. C-____

    

    To
Subscribe for and Purchase Shares of

    

    Document
Security Systems, Inc.

    

    (Transferability
Restricted as Provided in Paragraph 2 Below)

    

    THIS CERTIFIES THAT, for value
received, ________, or registered assigns, is entitled to subscribe for and
purchase from Document Security Systems, Inc., a corporation incorporated under
the laws of the State of New York  (the
“Company”)  ___________ (________) fully paid and non-assessable
shares of Common Stock of the Company at the “Warrant Price” as hereinafter
defined and during the period hereinafter set forth, subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. This Warrant
is one of an issue of the Company’s Common Stock purchase warrants (herein
called the “Warrants”), issued in the Offering (as defined below) identical in
all respects except as to the names of the holders thereof and the number of
Common Shares purchasable thereunder.

    

    1.            As
used herein:

    

    (a)           “Common
Stock” or “Common Shares” shall initially refer to the Company’s Common Stock,
$0.02 par value, per share as more fully set forth in Section 3
hereof.

    

    (b)           “Warrant
Price” shall be $3.50 per share, which is subject to adjustment pursuant to
Section 4 hereof.

    

    (c)           “Warrants”
shall include any Warrants represented by any certificate issued from time to
time in connection with the transfer, partial exercise, exchange of any Warrants
or in connection with a lost, stolen, mutilated or destroyed Warrant
certificate, if any, or to reflect an adjusted number of Common
Shares.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    (d)           “Underlying
Securities” shall refer to and include the Common Stock issuable or issued upon
exercise of the Warrants.

    

    (e)           “Holders”
shall mean the registered holder of such Warrants or any issued Underlying
Securities.

    

    (f)           “Memorandum”
shall mean the Company’s Confidential Private Offering Memorandum Supplement No.
1 dated January 28, 2010, as amended and supplemented, which is being used (or
was used) in connection with the private offering of Common Stock and Series C
Common Stock Purchase Warrants.

    

    (g)           “Offering”
means the private offering of Common Stock and Series C Common Stock
Purchase Warrants in accordance with the Memorandum.

    

    2.            The
purchase rights represented by this Warrant may be exercised by the holder
hereof, in whole or in part at any time, and from time to time, during the
period commencing ______________, 2010 (the “Commencement Date”) until 5:00 New
York Time on ______________, 2015  (the “Expiration Date”), by the
presentation of this Warrant, with the purchase form attached duly executed, at
the Company’s office (or such office or agency of the Company as it may
designate in writing to the Holder hereof by notice pursuant to Section 11
hereof), and upon payment by the Holder to the Company in cash or by certified
check of the Warrant Price for the Common Shares.  The purchase price
of the Common Shares issuable pursuant to the Warrants, shall be payable in cash
and/or by certified bank check.  The Company agrees that the Holder
hereof shall be deemed the record owner of such Common Shares as of the close of
business on the date on which this Warrant shall have been presented and payment
made for such Common Shares as aforesaid. Certificates for the Common Shares so
purchased shall be delivered to the Holder hereof within a reasonable time, not
exceeding ten (10) business days, after the rights represented by this Warrant
shall have been so exercised. If this Warrant shall be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation, deliver a
new Warrant evidencing the rights of the Holder hereof to purchase the balance
of the Common Shares which such Holder is entitled to purchase
hereunder.

    

    3.           
Subject and pursuant to the provisions of this Section 3, the Warrant Price and
number of Common Shares subject to this Warrant shall be subject to adjustment
from time to time as set forth hereinafter in this Section 3.

    

    (a)           Dividends and
Distributions.  In case the Company shall at any time after the
date hereof pay a dividend in shares of Common Stock or make a distribution in
shares of Common Stock, then upon such dividend or distribution, the Exercise
Price in effect immediately prior to such dividend or distribution shall be
reduced to a price determined by dividing an amount equal to the total number of
shares of Common Stock outstanding immediately prior to such dividend or
distribution multiplied by the Exercise Price in effect immediately prior to
such dividend or distribution, by the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.  For
purposes of any computation to be made in accordance with the provisions of this
Section 3, the Common Stock issuable by way of dividend or distribution shall be
deemed to have been issued immediately after the opening of business on the date
following the date fixed for determination of shareholders entitled to receive
such dividend or distribution.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    (b)           Subdivision and
Combination.  In case the Company shall at any time subdivide
or combine the outstanding Common Stock, the Exercise Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination.

    

    (c)           Adjustment in Number of
Warrant Shares. Upon each adjustment of the Exercise Price pursuant to
the provisions of this Section 3, the number of Warrant Shares issuable upon the
exercise of each Warrant shall be adjusted to the nearest full shares of Common
Stock by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Shares issuable upon exercise
of the Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.

    

    (d)           Reclassification,
Consolidation, Merger, etc.  In case of any reclassification or
change of the outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in nominal value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holder shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holder were the owner of the Warrant Shares
issuable upon exercise of the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of Warrant Shares issuable upon
exercise of the Warrants and (y) the Exercise Price in effect immediately prior
to the record date for such reclassification, change, consolidation, merger,
sale or conveyance as if such Holder had exercised the Warrants.

    

    (e)           Determination of Outstanding
Shares.  The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable upon
the exercise of outstanding options, rights, warrants and upon the conversion or
exchange of outstanding convertible or exchangeable securities.

    

    (f)           Except
as otherwise specifically provided herein the date of issuance or sale of Common
Stock shall be deemed to be the date the Company is legally obligated to issue
such Common Shares.  In case at any time the Company shall take a
record date for the purpose of determining the holders of Common Stock entitled
(i) to receive a dividend or other distribution payable in Common Stock or (ii)
to subscribe for or purchase Common Stock, then such record date shall be deemed
to be the date of issue or sale of the Common Shares, deemed to have been issued
or sold upon the declaration of such dividend or the making of such distribution
or the granting of such right of subscription or purchase, as the case may
be.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    4.            For
the purposes of this Warrant, the terms “Common Shares” or “Common Stock” or
“Warrant Shares” shall mean (i) the class of stock designated as the common
stock, $0.02 par value, of the Company on the date set forth on the first page
hereof or (ii) any other class of stock resulting from successive changes or
re-classifications of such Common Stock consisting solely of changes in par
value, or from no par value to par value, or from par value to no par value. If
at any time, as a result of an adjustment made pursuant to Section 3, the
securities or other property obtainable upon exercise of this Warrant shall
include shares or other securities of the Company other than Common Shares or
securities of another corporation or other property, thereafter, the number of
such other shares or other securities or property so obtainable shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
Section 3 and all other provisions of this Warrant with respect to Common Shares
shall apply on like terms to any such other shares or other securities or
property. Subject to the foregoing, and unless the context requires otherwise,
all references herein to Common Shares shall, in the event of an adjustment
pursuant to Section 3, be deemed to refer also to any other securities or
property then obtainable as a result of such adjustments.

    

    5.            The
Company covenants and agrees that:

    

    (a)           During
the period within which the rights represented by the Warrant may be exercised,
the Company shall, at all times, reserve and keep available out of its
authorized capital stock, solely for the purposes of issuance upon exercise of
this Warrant, such number of its Common Shares as shall be issuable upon the
exercise of this Warrant; and if at any time the number of authorized Common
Shares shall not be sufficient to effect the exercise of this Warrant, the
Company will take such corporate action as may be necessary to increase its
authorized but unissued Common Shares to such number of shares as shall be
sufficient for such purpose; the Company shall have analogous obligations with
respect to any other securities or property issuable upon exercise of this
Warrant;

    

    (b)           All
Common Shares which may be issued upon exercise of the rights represented by
this Warrant will, upon issuance be validly issued, fully paid, nonassessable
and free from all taxes, liens and charges with respect to the issuance thereof;
and

    

    (c)           All
original issue taxes payable in respect of the issuance of Common Shares upon
the exercise of the rights represented by this Warrant shall be borne by the
Company but in no event shall the Company be responsible or liable for income
taxes or transfer taxes upon the transfer of any Warrants.

    

    6.            Until
exercised, this Warrant shall not entitle the Holder hereof to any voting rights
or other rights as a stockholder of the Company.

    

    7.            In
no event shall this Warrant be sold, transferred, assigned or hypothecated
except in conformity with the applicable provisions of the Securities Act of
1933, as amended and as then in force (the “Act”), or any similar Federal
statute then in force, and all applicable “Blue Sky” laws.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    8.           
The Holder of this Warrant, by acceptance hereof, agrees that, prior to the
disposition of this Warrant or of any Common Shares theretofore purchased upon
the exercise hereof, under circumstances that might require registration of such
securities under the Act, or any similar Federal statute then in force, such
Holder will give written notice to the Company expressing such Holder’s
intention of effecting such disposition, and describing briefly such Holder’s
intention as to the disposition to be made of this Warrant and/or the securities
theretofore issued upon exercise hereof.  Promptly upon receiving such
notice, the Company shall present copies thereof to its counsel.  If,
in the opinion of such counsel, the proposed disposition does not require
registration under the Act or qualification pursuant to Regulation A promulgated
under the Act, or any similar Federal statute then in force, of this Warrant
and/or the securities issuable or issued upon the exercise of this Warrant, the
Company shall, as promptly as practicable, notify the Holder hereof of such
opinion, whereupon such Holder shall be entitled to dispose of this Warrant
and/or such Common Shares theretofore issued upon the exercise hereof, all in
accordance with the terms of the notice delivered by such Holder to the
Company.  Certificates representing the Underlying Securities shall
bear the following legend:

    

    “THESE
SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES
ACT OF 1933 (THE “SECURITIES
ACT“) OR UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE. NEITHER THESE
SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR
ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
THEREFROM.”

    

    9.            This
Warrant is exchangeable, upon its surrender by the registered holder at such
office or agency of the Company as may be designated by the Company, for new
Warrants of like tenor, representing, in the aggregate, the right to subscribe
for and purchase the number of Common Shares that may be subscribed for and
purchased hereunder, each of such new Warrants to represent the right to
subscribe for and purchase such number of Common Shares as shall be designated
by the registered holder at the time of such surrender.  Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of any such loss, theft or
destruction, upon delivery of a bond of indemnity satisfactory to the Company,
or in the case of such mutilation, upon surrender or cancellation of this
Warrant, the Company will issue to the registered holder a new Warrant of like
tenor, in lieu of this Warrant, representing the right to subscribe for and
purchase the number of Common Shares that may be subscribed for and purchased
hereunder. Nothing herein is intended to authorize the transfer of this Warrant
except as permitted by applicable law.

    

    10.          Every
Holder hereof, by accepting the same, agrees with any subsequent Holder hereof
and with the Company that this Warrant and all rights hereunder are issued and
shall be held subject to all of the terms, conditions, limitations and
provisions set forth in this Warrant, and further agrees that the Company and
its transfer agent may deem and treat the registered Holder of this Warrant as
the absolute owner hereof for all purposes and shall not be affected by any
notice to the contrary.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    11.          All
notices required hereunder shall be given by first-class mail, postage prepaid;
if given by the holder hereof, addressed to the Company at 28 Main Street East,
Suite 1525, Rochester, NY 14614 or such other address as the Company may
designate in writing to the holder hereof; and if given by the Company,
addressed to the holder at the address of the holder shown on the books of the
Company.

    

    12.          The
validity, construction and enforcement of this Warrant shall be governed by the
laws of the State of New York and jurisdiction is hereby vested in the Courts of
said State in the event of the institution of any legal action under this
Warrant.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, Document Security
Systems, Inc. has caused this Warrant to be signed by its duly authorized
officers to be dated _______________, 2010.

    

    
      
        
          
            
              	
                      DOCUMENT
      SECURITY SYSTEMS, INC.

                    	 
	 
      	 
      	 
	
                      By:

                    	
                       

                    	 
	 
      	
                      Name:  Patrick
      White

                    	 
	 
      	
                      Title:  Chief
      Executive Officer

                    	 

            

          

        

      

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    PURCHASE
FORM

    To Be
Executed

    Upon
Exercise of Warrant

    

    The
undersigned hereby exercises the right to purchase _______ Common Shares
evidenced by the within Warrant, according to the terms and conditions thereof,
and herewith makes payment of the purchase price in full.  The
undersigned requests that certificates for such shares shall be issued in the
name set forth below.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Dated:
      ____________, ______

                                	 
      	
                                  Signature

                                	 
	 
      	 
      	 
      	 
	 
      	 
      	
                                   

                                	 
	 
      	 
      	
                                  Print
      Name of Signatory

                                	 
	 
      	 
      	 
      	 
	 
      	 
      	
                                  Name
      to whom certificates are to

                                	 
	 
      	 
      	
                                  be
      issued if different from above

                                	 
	 
      	 
      	 
      	 
	 
      	 
      	
                                  Address:

                                	 
	 
      	 
      	
                                   

                                	 
	 
      	 
      	 
      	 
	 
      	 
      	
                                   

                                	 
	 
      	 
      	 
      	 
	 
      	 
      	
                                   

                                	 
	 
      	 
      	
                                  Social
      Security No.

                                	 
	 
      	 
      	
                                  or
      other identifying number

                                	 

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    If said number of shares shall not be
all the shares purchasable under the within Warrant, the undersigned requests
that a new Warrant for the unexercised portion shall be registered in the name
of :

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 
      	 
      	
                                         

                                      	 
	 
      	 
      	
                                        (Please
      Print)

                                      	 
	 
      	 
      	
                                        Address:

                                      	 
	 
      	 
      	
                                         

                                      	 
	 
      	 
      	 
      	 
	 
      	 
      	
                                         

                                      	 
	 
      	 
      	 
      	 
	 
      	 
      	
                                         

                                      	 
	 
      	 
      	
                                        Social
      Security No.

                                      	 
	 
      	 
      	
                                        or
      other identifying number

                                      	 
	 	 	 	 
	 
      	 
      	
                                         

                                      	 
	 
      	 
      	
                                        Signature

                                      	 

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        8

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