Document:

No 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 November 25,
2008 (i.e. five years from the first closing date of the Offering).

                          COMMON STOCK PURCHASE WARRANT

WARRANT NO. 2

                     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, FORDHAM FINANCIAL
MANAGEMENT, INC., 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"), identical in all respects except as to
the names of the holders thereof and the number of Common Shares purchasable
thereunder and issued pursuant to the Placement Agent Agreement.

         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 5 hereof.

                  (b) "Warrant Price" shall be $4.80 which is subject to
adjustment pursuant to Section 4 hereof.

                  (c) "Placement Agent" shall refer to FORDHAM FINANCIAL
MANAGEMENT, INC.

                  (d) "Placement Agent Agreement" shall refer to the Placement
Agent Agreement dated October 29, 2003 between the Company and the Placement
Agent.

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<PAGE>

                  (e) "Warrants" or "Placement Agent Warrants" shall refer to
Warrants to purchase Common Shares issued to the Placement Agent or its
designees by the Company pursuant to the Placement Agent Agreement, as such may
be adjusted from time to time pursuant to the terms of Section 4 and including
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.

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

                  (g) "Holders" shall mean the registered holder of such
Warrants or any issued Underlying Securities.

                  (h) "Memorandum" shall mean the Company's Confidential Private
Placement Memorandum dated October 29, 2003, as amended and supplemented, which
is being used (or was used) in connection with the private offering of Common
Stock and Series A Common Stock Purchase Warrants pursuant to the Placement
Agent Agreement.

                  (i) "Placement Agent Securities" shall refer and mean the
warrants and shares of Common Stock issued and/or issuable upon exercise of the
Warrants.

                  (j) "Offering" means the private offering of Common Stock and
Series ACommon 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 November 25, 2003 (the "Commencement Date") until
5:00 New York Time on November 25, 2008 (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 14
hereof), and upon payment by the Holder to the Company in cash, or by certified
check or bank draft of the Warrant Price for the Common Shares. At the option of
the Holder of this Warrant, the Warrant Price may be paid through a cashless
exercise of this Warrant. The purchase price of the Common Shares issuable
pursuant to the Warrants, shall be payable in cash, by certified bank check
and/or in lieu of cash, a warrant holder may exercise its Warrants through a
cashless exercise. In this respect, at any time prior to the Expiration Date,
the Holder may, at its option, exchange the Warrants, in whole or in part, into
the number of fully paid and non-assessable Common Shares determined in
accordance with this Section 2, by surrendering the Warrants which shall
represent the right to subscribe for and acquire the number of Common Shares
(rounded to the next highest integer) equal to (A) the number of Common Shares
specified by the Holder in its purchase form (the "Total Share Number") less (B)
the number of Warrant Shares equal to the quotient obtained by dividing (i) the
product of the Total Share Number and the current Warrant Price (initially $4.80
per share) per share by (ii) the Market Price of a share of Common Stock. The
Market Price of any shares of Common Stock to purchase shares so surrendered
shall be based upon the value of the Common Stock at the close of business on

                                       2
<PAGE>

the day before exercise based upon the following: (i) if the shares of Common
Stock are not listed and traded upon a recognized securities exchange and there
is no report of stock prices with respect to the shares of Common Stock
published by a recognized stock quotation service, on the basis of the most
recent purchases and sales of the shares of Common Stock by the Company in
arms-length transactions; or (ii) if the shares of Common Stock are not then
listed and traded upon a recognized securities exchange or quoted on the NASDAQ
Stock Market, and there are reports of stock prices by a recognized quotation
service, upon the basis of the last reported sale or transaction price of such
stock as reported by a recognized quotation service, or, if there is no last
reported sale or transaction price on the day before exercise, then upon the
basis of the mean of the last reported closing bid and closing asked prices for
such stock on the date nearest preceding that day; or (iii) if the shares of
Common Stock shall be then listed and traded upon a recognized securities
exchange or quoted on the NASDAQ Stock Market, upon the basis of the last
reported sale or transaction price at which shares of Common Stock were traded
on such recognized securities exchange or NASDAQ Stock Market or, if the shares
of Common Stock were not traded on the day before exercise, upon the basis of
the last reported sale or transaction price on the date nearest preceding that
date. In the event the Company is acquired for either stock, notes, securities,
cash or any combination thereof, the holders of the Warrants shall have the
option to use the value attached to the Company's Common Stock in the
transaction on a per share basis as the value of the Common stock. All
documentation and procedures to be followed in connection with such "cashless
exercise" shall be approved in advance by the Company, which approval shall be
expeditiously provided and not unreasonably withheld. 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 five (5) 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. Exercise in full of the rights represented by this Warrant shall not
extinguish the registration rights granted under Section 9 hereof and Section 2
of the Placement Agent Agreement.

         3. Subject to the provisions of Section 8 hereof, (i) this Warrant is
exchangeable at the option of the Holder at the aforesaid office of the Company
for other Warrants of different denominations entitling the Holder thereof to
purchase in the aggregate the same number of Common Shares as are purchasable
hereunder; and (ii) this Warrant may be divided or combined with other Warrants
which carry the same rights, in either case, upon presentation hereof at the
aforesaid office of the Company together with a written notice, signed by the
Holder hereof, specifying the names and denominations in which new Warrants are
to be issued, and the payment of any transfer tax due in connection therewith.

         4. Subject and pursuant to the provisions of this Section 4, 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
4.

                                       3
<PAGE>

                  (a) In case the Company shall sell or issue either any of its
Common Shares or any rights, options, warrants or obligations or securities
containing the right to subscribe for or purchase any Common Shares ("Options")
or exchangeable for or convertible into Common Shares ("Convertible
Securities"), at a price per share, as determined pursuant to Section 4(b), less
than the Warrant Price then in effect on the date of such sale or issuance, then
the number of Common Shares purchasable upon exercise of this Warrant shall be
determined by multiplying the number of Common Shares theretofore purchasable
upon exercise of this Warrant by a fraction, (a) the numerator of which shall be
the number of Common Shares outstanding on the date of issuance of such Common
Shares, Options or Convertible Securities and (b) the denominator of which shall
be the number of Common Shares outstanding on the date prior to the date of
issuance of such Common Shares or Convertible Securities plus the number of
Common Shares which the aggregate consideration received by the Company upon
such issuance would purchase on such date at the Warrant Price then in effect.

                  (b) The following provisions, in addition to other provisions
of this Section 4, shall be applicable in determining any adjustment under
Section 4(a):

                      (1) In case of the issuance or sale of Common Shares part
or all of which shall be for cash, the cash consideration received by the
Company therefor shall be deemed to be the amount of cash proceeds of such sale
of shares less any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or others performing
similar services or any expenses incurred in connection therewith, plus the
amounts, if any, determined as provided in Section 4(b)(2).

                      (2) In case of the issuance or sale of Common Shares
wholly or partly for a consideration other than cash, the amount of the
consideration other than cash received by the Company for such shares shall be
deemed to be the fair value of such consideration as determined by a resolution
adopted by the Board of Directors of the Company acting in good faith, less any
compensation paid or incurred by the Company for any Underwriting of, or
otherwise in connection with such issuance, provided, however, the amount of
such consideration other than cash shall in no event exceed the cost thereof as
recorded on the books of the Company. In case of the issuance or sale of Common
Shares (otherwise than upon conversion or exchange) together with other stock or
securities or other assets of the Company for a consideration which is received
for both such Common Shares and other securities or assets, the Board of
Directors of the Company acting in good faith shall determine what part of the
consideration so received is to be deemed to be the consideration for the
issuance of such Common Shares, less any compensation paid or incurred by the
Company for any underwriting of, or otherwise in connection with such issuance,
provided, however, the amount of such consideration other than cash shall in no
event exceed the cost thereof as recorded on the books of the Company. In case
at any time the Company shall declare a dividend or make any other distribution
upon any stock of the Company payable in Common Stock, then such common stock
issuable in payment of such dividend or distribution shall be deemed to have
been issued or sold without consideration.

                                       4
<PAGE>

                      (3) The price per share of any Common Shares sold or
issued by the Company (other than pursuant to Options or Convertible Securities)
shall be equal to a price calculated by dividing (A) the amount of the
consideration received by the Company, as determined pursuant to Sections
4(b)(1) and 4(b)(2), upon such sale of issuance by (B) the number of Common
Shares sold or issued.

                      (4) In case the Company shall at any time after the date
hereof issue any Options or Convertible Securities the following provisions
shall apply in making any adjustment pursuant to this Section 4:

                          (i) The price per share for which Common Stock is
issuable upon the exercise of the Options or upon conversion or exchange of the
Convertible Securities shall be determined by dividing (A) the total amount, if
any, received or receivable by the Company as consideration for the issuance of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
such Options or the conversion or exchange of such Convertible Securities, by
(B) the aggregate maximum number of shares of Common Stock issuable upon the
exercise of such Option or upon the conversion or exchange of such Convertible
Securities.

                          (ii) In determining the price per share for which
Common Stock is issuable upon exercise of the Options or conversion or exchange
of the Convertible Securities as set forth in Section 4(b)(4)(i) and in
computing any adjustment pursuant to Section 4(a): (A) the aggregate maximum
number of shares of Common Stock issuable upon the exercise of such Convertible
Securities shall be considered to be outstanding at the time such Options or
Convertible Securities were issued and to have been issued for such price per
share as determined pursuant to Section 4(b)(4)(i) and (B) the consideration for
the issuance of such Options or Convertible Securities and the amount of
additional consideration payable to the Company upon exercise of such Options or
upon the conversion or exchange of such Convertible Securities shall be
determined in the same manner as the consideration received upon the issuance or
sale of Common Shares as provided in Sections 4(b)(1) and 4(b)(2).

                          (iii) On the expiration of such Options or the
termination of any right to convert or exchange any Convertible Securities, the
number of Common Shares subject to this Warrant shall forthwith be readjusted to
such number of Common Shares as would have obtained had the adjustments made
upon the issuance of such Options or Convertible Securities been made upon the
basis of the delivery of only the number of shares of Common Stock actually
delivered upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities.

                          (iv) If the minimum purchase price per share of Common
Stock provided for in any Option or the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock shall change or a
different purchase price or rate shall become effective at any time or from time
to time (other than pursuant to any anti-dilution provisions of such Options or
Convertible Securities) then, upon such change becoming effective, the number of
Common Shares subject to this Warrant shall forthwith be increased or decreased
to such number of shares as would have been obtained had the adjustments made
upon the granting or issuance of such Options or Convertible Securities been
made upon the basis of (l) the issuance of the number of shares of Common Stock

                                       5
<PAGE>

theretofore actually delivered upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities, and the total
consideration received therefor, and (2) the granting or issuance at the time of
such change of any such Options or Convertible Securities then still outstanding
for the consideration, if any, received by the Company therefor and to be
received on the basis of such changed price or rate of exchange or conversion.

                      (5) 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, or pursuant to
paragraph 4(b)(4), the date the Company is legally obligated to issue any Option
or Convertible Security. 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 in Options
or Convertible Securities or (ii) to subscribe for or purchase Common Stock,
Options or Convertible Securities then such record date shall be deemed to be
the date of issue or sale of the Common Shares, Options or Convertible
Securities 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.

                      (6) The number of shares of Common Stock outstanding at
any given time shall not include treasury shares and the disposition of any such
treasury shares shall be considered an issue or sale of Common Stock for the
purposes of this Section 4.

                      (7) Anything hereinabove to the contrary notwithstanding,
no adjustment shall be made pursuant to Section 4(a) to the Warrant Price, or to
the number of Underlying Securities upon:

                          (i) The issuance or sale by the Company of any Common
Shares, Warrants, Options or Convertible Securities pursuant to (A) the
Placement Agent Warrants, (B) the Offering, (C) the Placement Agent Agreement,
(D) the conversion or exchange of any security which is outstanding on any
closing date of the Offering which is convertible or exchangable into shares of
Common Stock, (E) the exercise of any right, warrant or option which is
outstanding on any closing date of the Offering or (F) the Stock Option Plans of
the Company and its Subsidiaries as described in the Memorandum.

                          (ii) The issuance or sale of Common Shares pursuant to
the exercise of Options or conversion or exchange of Convertible Securities
hereinafter issued for which an adjustment has been made (or was not required to
be made) pursuant to the provisions of Section 4 hereof.

                          (iii) The increase in the number of Common Shares
subject to any Option or Convertible Security referred to in subsections (i) and
(ii) hereof pursuant to the provisions of such Option or Convertible Securities
designed to protect against dilution.

                                       6
<PAGE>

                  (c) If the Company shall at any time subdivide its outstanding
Common Shares by recapitalization, reclassification or split-up thereof, the
number of Common Shares subject to this Warrant immediately prior to such
subdivision shall be proportionately increased, and if the Company shall at any
time combine the outstanding Common Shares by recapitalization, reclassification
or combination thereof, the number of Common Shares subject to this Warrant
immediately prior to such combination shall be proportionately decreased. Any
such adjustment to the Warrant Price pursuant to this Section shall become
effective at the close of business on the record date for such recapitalization,
reclassification, subdivision or combination.

                  (d) If the Company after the date hereof shall distribute to
all of the holders of its Common Shares any securities or other assets (other
than a distribution of Common Shares or a cash distribution made as a dividend
payable out of earnings or out of any earned surplus legally available for
dividends under the laws of the State of New York), the Board of Directors of
the Company shall be required to make such equitable adjustment in the Warrant
Price in effect immediately prior to the record date of such distribution as may
be necessary to preserve to the Holder of this Warrant rights substantially
proportionate to those enjoyed hereunder by such Holder immediately prior to the
happening of such distribution. Any such adjustment made in good faith by the
Board of Directors shall be final and binding upon the Holders and shall become
effective as of the record date for such distribution.

                  (e) No adjustment in the number of Common Shares subject to
this Warrant shall be required under this Section 4 hereof unless such
adjustment would require an increase or decrease in such number of shares of at
least 1% of the then adjusted number of Common Shares issuable upon exercise of
this Warrant, provided, however, that any adjustments which by reason of the
foregoing are not required at the time to be made shall be carried forward and
taken into account and included in determining the amount of any subsequent
adjustment; and provided further, however, that in case the Company shall at any
time subdivide or combine the outstanding Common Shares or issue any additional
Common Shares as a dividend, said percentage shall forthwith be proportionately
increased in the case of a combination or decreased in the case of a subdivision
or dividend of Common Shares so as to appropriately reflect the same. If the
Company shall make a record of the Holders of its Common Shares for the purpose
of entitling them to receive any dividend or distribution and legally abandon
its plan to pay or deliver such dividend or distribution then no adjustment in
the number of Common Shares subject to the Warrant shall be required by reason
of the making of such record.

                  (f) Whenever the number of Common Shares purchasable upon the
exercise of this Warrant is adjusted, as provided in Section 4, the Warrant
Price shall be adjusted (to the nearest one tenth of a cent by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, the numerator
of which shall be the number of Common Shares purchasable upon the exercise of
this Warrant immediately prior to such adjustment, and the denominator of which
shall be the number of Common Shares so purchasable immediately thereafter.

                                       7
<PAGE>

                  (g) In case of any reclassification of the outstanding Common
Shares (other than a change covered by Section 4(c) hereof or which solely
affects the par value of such Common Shares) or in the case of any merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or capital reorganization of the
outstanding Common Shares), or in the case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety in connection with which the Company is dissolved, the Holder of this
Warrant shall have the right thereafter (until the expiration of the right of
exercise of this Warrant) to receive upon the exercise hereof, for the same
aggregate Warrant Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property receivable
upon such reclassification, capital reorganization, merger or consolidation, or
upon the dissolution following any sale or other transfer, by a Holder of the
number of Common Shares of the Company obtainable upon the exercise of this
Warrant immediately prior to such event; and if any reclassification also
results in a change in Common Shares covered by Section 4(c), the such
adjustment shall be made pursuant to both this Section 4(g) and Section 4(c).
The provisions of this Section 4(g) shall similarly apply to successive
re-classifications, or capital reorganizations, mergers or consolidations, sales
or other transfers.

         If the Company after the date hereof shall issue or agree to issue the
Common Shares, Options or Convertible Securities, other than as described in
this Section 4, and such issuance or agreement would materially affect the
rights of the Holder of this Warrant, the Warrant Price and the number of Common
Shares obtainable upon exercise of this Warrant shall be adjusted in such
manner, if any, and at such time, as the Board of Directors of the Company, in
good faith, may determine to be equitable in the circumstances. The minutes or
unanimous consent approving such action shall set forth the Board's
determination as to whether an adjustment is warranted and the manner of such
adjustment. In the absence of such determination, any Holder may request in
writing that the Board make such determination. Any such determination made in
good faith by the directors shall be final and binding upon the Holders. If the
Board fails, however, to make such determination within sixty (60) days after
such request, such failure shall be deemed a determination that an adjustment is
required.

                  (h) (1) Upon occurrence of each event requiring an adjustment
of the Warrant Price and of the number of Common Shares obtainable upon exercise
of this Warrant in accordance with, and as required by, the terms of this
Section 4, the Company shall forthwith employ a firm of certified public
accountants (who may be the regular accountants for the Company) who shall
compute the adjusted Warrant Price and the adjusted number of Common Shares
purchasable at such adjusted Warrant Price by reason of such event in accordance
with the provisions of this Section 4. The Company shall mail forthwith to the
Holder of this Warrant a copy of such computation which shall be conclusive and
shall be binding upon such Holder unless contested by such Holder by written
notice to the Company within thirty (30) days after receipt thereof by such
Holder.

                          (2) In case the Company after the date hereof shall
propose (i) to pay any dividend payable in stock to the Holders of its Common
Shares or to make any other distribution (other than cash dividends) to the
Holders of its Common Shares rights to subscribe to or purchase any additional

                                       8
<PAGE>

shares of any class or any other rights or options, or (iii) to effect any
reclassification of Common Shares (other than a reclassification involving
merely the subdivision or combination of outstanding Common Shares) or (iv) any
capital reorganization or any consolidation or merger, or any sale, transfer or
other disposition of its property, assets and business substantially as an
entirety, or the liquidation, dissolution or winding up of the Company, then in
each such case, the Company shall obtain the computation described in Section
4(h)(1) hereof and if an adjustment to the Warrant Price is required under this
Section 4, the Company shall notify the registered Holder of this Warrant of
such proposed action, which shall specify the record date for any such action or
if no record date is established with respect thereto, the date on which such
action shall occur or commence, or the date of participation therein by the
Holders of Common Shares if any such date is to be fixed, and shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the Warrant Price and the number, or kind,
or class of shares or other securities or property obtainable upon exercise of
this Warrant after giving affect to any adjustment which will be required as a
result of such action. Such notice shall be given at least twenty (20) days
prior to the record date for determining Holders of the Common Shares for
purposes of any such action, and in the case of any action for which a record
date is not established then such notice shall be mailed at least twenty (20)
days prior to the taking of such proposed action.

                          (3) Failure to file any certificate or notice or to
mail any notice, or any defect in any certificate or notice, or any defect in
any certificate or notice, pursuant to this Section 4(h), shall not effect the
legality or validity of the adjustment in the Warrant Price or in the number, or
kind, or class or shares or other securities or property obtainable upon
exercise of this Warrant or of any transaction giving rise thereto.

                  (i) The Company shall not be required to issue fractional
Common Shares upon any exercise of this Warrant. As to any final fraction of a
Common Share which the Holder of this Warrant would otherwise be entitled to
purchase upon such exercise, the Company shall pay the Holder the cash
equivalent of such fraction of a Common Share.

                  (j) Irrespective of any adjustments pursuant to this Section 4
in the Warrant Price or in the number, or kind, or class of shares or other
securities or other property obtainable upon exercise of this Warrant, this
Warrant may continue to express the Warrant Price and the number of Common
Shares obtainable upon exercise at the same price and number of Common Shares as
are stated herein.

         5. 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 4,
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

                                       9
<PAGE>

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 4 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 4, be deemed to refer also to any other securities or
property then obtainable as a result of such adjustments.

         6. 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.

         7. Until exercised, this Warrant shall not entitle the Holder hereof to
any voting rights or other rights as a stockholder of the Company, except that
the Holder of this Warrant shall be deemed to be a stockholder of this Company
for the purpose of bringing suit on the ground that the issuance of shares of
stock of the Company is improper under the New York Business Corporation Law.

         8. 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.

         9. 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

                                       10
<PAGE>

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 and the provisions of
the following subdivisions shall apply:

                  (a) 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.

                  (b) If, in the opinion of either such counsel, such proposed
disposition requires such registration or qualification under the Act, or
similar Federal statute then in effect, of this Warrant and/or the Common Shares
issuable or issued upon the exercise of this Warrant, the Company shall promptly
give written notice to all then Holders of the Warrants, at the respective
addresses thereof shown on the books of the Company.

         The Placement Agent Agreement provides for the following registration
rights:

         "The Placement Agent Warrants shall also contain a demand registration
right after the expiration of one year from the completion of the minimum
offering and "piggy-back" registration rights until the expiration date(s) of
the Placement Agent Warrants. These registration rights if exercised by the
Placement Agent or the holders of the Placement Agent Warrants and/or underlying
securities shall be at the sole expense of the Company except that the Company
shall not be responsible for the sales commissions relating to the sale of the
shares underlying the Placement Agent Warrants. The foregoing registration
rights shall not apply in the event counsel to the Company indicates in writing
to the Placement Agent that the resale of the shares of Common Stock issuable
upon exercise of the Placement Agent Warrants will tack its holding period
pursuant to Rule 144(d) back to the original date(s) of issuance of the
Placement Agent Warrants in the event the holders exercise the Placement Agent
Warrants exclusively through the cashless exercise provisions contained
therein."

         10. The Company agrees to indemnify and hold harmless the holder of
this Warrant, or of Underlying Securities issuable or issued upon the exercise
hereof, from and against any claims and liabilities caused by any untrue
statement of a material fact, or omission to state a material fact required to
be stated, in any such registration statement, prospectus, notification or
offering circular under Regulation A, except insofar as such claims or
liabilities are caused by any such untrue statement or omission based on
information furnished in writing to the Company by such holder, or by any other
such holder affiliated with the holder who seeks indemnification, as to which
the holder hereof, by acceptance hereof, agrees to indemnify and hold harmless
the Company.

         11. If this Warrant, or any of the Underlying Securities issuable
pursuant hereto, require qualification or registration with, or approval of, any

                                       11
<PAGE>

governmental official or authority (other than registration under the Act, or
any similar Federal statute at the time in force), before such shares may be
issued on the exercise hereof, the Company, at its expense, will take all
requisite action in connection with such qualification, and will use its best
efforts to cause such securities to be duly registered or approved, as may be
required.

         12. 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.

         13. 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.

         14. All notices required hereunder shall be given by first-class mail,
postage prepaid; if given by the holder hereof, addressed to the Company at 36
W. Main Street, Suite 710, 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.

         15. The Company will not merge or consolidate with or into any other
corporation, or sell or otherwise transfer its property assets and business
substantially as an entirety to another corporation, unless the corporation
resulting from such merger or consolidation (if not the Company), or such
transferee corporation, as the case may be, shall expressly assume, by
supplemental agreement satisfactory in form to the Placement Agent, the due and
punctual performance and observance of each and even covenant and condition of
this Warrant to be performed and observed by the Company.

         16. 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.

                                       12
<PAGE>

         IN WITNESS WHEREOF, DOCUMENT SECURITY SYSTEMS, INC. has caused this
Warrant to be signed by its duly authorized officers under its corporate seal,
to be dated December 29, 2003.

                                   DOCUMENT SECURITY SYSTEMS, INC.

                                   By:
                                      -------------------------
                                       Patrick White, President

Witness:

-----------------------
 Brian Daughney, Esq.

(Corporate Seal)

                                       13
<PAGE>

                                  PURCHASE FORM
                                 To Be Executed
             Upon Exercise of Warrant, except for Cashless Exercise

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:                      , 200
      ----------------------     ---
                                           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

                                       14
<PAGE>

                                  PURCHASE FORM
                               To Be Executed Upon
                        Cashless Exercise of this Warrant

         The undersigned hereby exercises the right to purchase _______ Common
Shares evidenced by the within Warrant No. __ according to the terms and
conditions thereof and the undersigned hereby submits warrants to purchase
________ Common Shares as evidenced by the within Warrant No. ___ to be in full
payment of the _______ Common Shares exercised and purchased herein. The
undersigned represents that certificates for such purchased shares shall be
issued in the name set forth below:

Dated:                    , 200
       -------------------     ----
                                             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

                                       15
<PAGE>

                               FORM OF ASSIGNMENT

         FOR VALUE RECEIVED                                   , hereby
sells assigns and transfers to                      , Soc. Sec. No.

[ ] the within Warrant, together with all rights, title and interest therein,
and does hereby irrevocably constitute and appoint attorney to transfer such
Warrant on the register of the within named Company, with full power of
substitution.

                                             --------------------------
                                                      Signature

Dated:                             , 200
      -----------------------------     ----

Signature Guaranteed:

-----------------------

                                       16
<PAGE>THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
CAN BE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND APPLICABLE STATE SECURITIES LAWS. THE SHARES
OF COMMON STOCK UNDERLYING THIS WARRANT MAY NOT BE SOLD, TRANSFERRED, OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, UNLESS, IN THE
OPINION OF COUNSEL FOR DOCUMENT SECURITY SYSTEMS, INC., REGISTRATION IS NOT THEN
REQUIRED.

                               DATED JULY 8, 2003

                                     WARRANT

             TO SUBSCRIBE FOR AND PURCHASE SHARES OF COMMON STOCK OF

                         DOCUMENT SECURITY SYSTEMS, INC.

                       THIS WARRANT EXPIRES July 7, 2008.

         THIS CERTIFIES THAT, for value received, W.A.B. Capital LLC, or its
registered assigns as permitted under Section 2 below (the "Holder"), is
entitled to subscribe for and purchase from DOCUMENT SECURITY SYSTEMS, INC.
("DCSS"), a New York corporation, whose corporate offices are located at 36 W.
Main Street; Suite 710; Rochester, NY; 14614, at any time from and after July 8,
2003, and prior to July 7, 2008 (the "Exercise Period"), an aggregate of 100,000
fully paid and nonassessable shares of DCSS's common stock, $0.02 par value, at
a per share price of $2.00 (the "Share Purchase Price"); subject, however, to
the provisions and upon the terms and conditions set forth in this Warrant (the
"Warrant"). The shares of common stock (or other securities pursuant to Section
6 below) deliverable upon exercise of this Warrant shall be referred to in this
Warrant as the "Shares."

         1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENTS FOR SHARES; VESTING.
This Warrant may be exercised by the Holder, in whole or in part (subject to the
vesting schedule below), at any time or from time to time during the Exercise
Period, upon presentation and surrender of this Warrant to DCSS at its principal
office as set forth on Page 1 of this Warrant, or at any other place DCSS may
designate by notice in writing to the Holder, with a duly-executed subscription
in the form of the Subscription Agreement attached to this Warrant (the
"Subscription Agreement") and accompanied by payment of the applicable Share
Purchase Price for each Share purchased. The payment shall be made in cash or by
certified, bank, or cashier's check, payable to the order of Document Security
Systems, Inc. Upon receipt thereof DCSS shall, as promptly as practicable, and
in any event within 10 business days thereafter, execute or cause to be executed
and deliver to the Holder a certificate or certificates representing the
aggregate number of Shares specified in said Subscription Agreement. The Shares
purchased shall be deemed to have been issued to the Holder as of the close of

                                       1
<PAGE>

business on the date next following the date on which this Warrant is
surrendered to DCSS, along with the Subscription Agreement and full payment for
the Shares purchased. DCSS shall pay all expenses, taxes and other charges
payable in connection with the preparation, execution and delivery of stock
certificates pursuant to this Section, except that in case such stock
certificates shall be registered in a name or names other than the name of the
registered holder of this Warrant, funds sufficient to pay all stock transfer
taxes which shall be payable upon the execution and delivery of such stock
certificate or certificates shall be paid by the registered holder hereof to
DCSS at the time of delivering this Warrant to DCSS as mentioned above. In the
event that this Warrant is exercised in part, DCSS will execute and deliver a
new warrant of like tenor exercisable for the number of Shares for which this
Warrant may then be exercised.

         Notwithstanding the foregoing, this Warrant may not be exercised for
more than the number of Shares which have vested. The shares will vest according
to the following schedule: 100,000 shares will vest upon the completion of the
initial equity research report, as defined in Section 1(a) of the attached
Research Agreement.

         2. RESTRICTIONS ON TRANSFER OF WARRANT. The Holder may sell, assign,
transfer, or hypothecate this Warrant without prior written permission from
DCSS.

         3. EXCHANGE, ASSIGNMENT, OR LOSS OF WARRANT.

         (a) This Warrant is exchangeable, at the option of the Holder and
without expense other than as provided in this Section, for other Warrants of
different denominations entitling the Holder to purchase in the aggregate the
same number of Shares purchasable under this Warrant, upon presentation and
surrender of this Warrant to DCSS.

         (b) This Warrant may be sold, transferred, assigned, or hypothecated as
permitted under Section 2 above. Any sale, transfer, or assignment shall be made
by surrender of this Warrant to DCSS, together with a duly executed assignment
(in the form of the assignment attached to this Warrant) and funds sufficient to
pay any transfer costs. Upon receipt of the assignment and the appropriate
payment, DCSS shall execute and deliver a new Warrant in the name of the
assignee named in the assignment, and this Warrant shall promptly be canceled.

         (c) This Warrant may be divided or combined with other Warrants that
carry the same rights upon presentation and surrender of this Warrant at the
office of DCSS together with a written notice, signed by the Holder, specifying
the names and denominations in which new Warrants are to be issued.

         (d) DCSS will execute and deliver a duplicate of this Warrant upon
receipt by DCSS of evidence satisfactory to it of the loss, theft, destruction,
or mutilation of this Warrant, and (i) in the case of loss, theft, or
destruction, upon receipt by DCSS of indemnity satisfactory to DCSS, or (ii) in
the case of mutilation, upon presentation, surrender, and cancellation of this
Warrant.

                                       2
<PAGE>

         (e) The term "Warrant" as used in this Section includes any Warrants
issued in substitution for or replacement of this Warrant, or into which this
Warrant may be divided or exchanged.

         (f) DCSS shall pay all federal and state taxes and any other
governmental charge applicable to any issuance of new Warrants under this
Section.

         4. NO RIGHTS AS SHAREHOLDER. The Holder shall not, by virtue of this
Warrant, be entitled to any rights of a shareholder in DCSS, either at law or
equity. The rights of the Holder are limited to those expressed in the Warrant
and are not enforceable against DCSS except to the extent set forth in this
Warrant.

         5. ANTI-DILUTION PROVISIONS: ADJUSTMENTS. The Share Purchase Price and
the number of Shares purchasable hereunder are subject to adjustment from time
to time as follows:

         (a) MERGER, SALE OF ASSETS, ETC. If at any time while this Warrant, or
any portion hereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of DCSS with or into another corporation in which DCSS is not the
surviving entity, or a reverse triangular merger in which DCSS is the surviving
entity but the shares of DCSS's capital stock outstanding immediately prior to
the merger are converted by virtue of the merger into other property, whether in
the form of securities, cash, or otherwise, or (iii) a sale or transfer of
DCSS's properties and assets as, or substantially as, an entirety to any other
person, then, as a part of such reorganization, merger, consolidation, sale or
transfer, lawful provision shall be made so that the holder of this Warrant
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the Share Purchase Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such reorganization, merger, consolidation,
sale or transfer that a holder of the shares deliverable upon exercise of this
Warrant would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this Section 5. The foregoing
provisions of this Section 5(a) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per share consideration payable to the Holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by DCSS's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by DCSS's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.

                                       3
<PAGE>

        (b) RECLASSIFICATION, ETC. If DCSS, at any time while this Warrant, or
any portion hereof, remains outstanding and unexpired shall, by
reclassification, combination, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant exist into the same or a different number of securities of any other
class or classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the result of
such change with respect to the securities that were subject to the purchase
rights under this Warrant immediately prior to such reclassification or other
change and the Share Purchase Price therefor shall be appropriately adjusted,
all subject to further adjustment as provided in this Section 5.

        (c) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If DCSS at any time
while this Warrant, or any portion hereof, remains outstanding and unexpired
shall split, subdivide or combine the securities as to which purchase rights
under this Warrant exist, into a different number of securities of the same
class, the Share Purchase Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination.

        (d) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY.
If while this Warrant, or any portion hereof, remains outstanding and unexpired
the holders of the securities as to which purchase rights under this Warrant
exist at the time shall have received, or, on or after the record date fixed for
the determination of eligible stockholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities
or property (other than cash) of DCSS by way of dividend, then and in each case,
this Warrant shall represent the right to acquire, in addition to the number of
shares of the security receivable upon exercise of this Warrant, and without
payment of any additional consideration therefor, the amount of such other or
additional stock or other securities or property (other than cash) of DCSS that
such holder would hold on the date of such exercise had it been the holder of
record of the securities receivable upon exercise of this Warrant on the date
hereof and had thereafter, during the period from the date hereof to and
including the date of such exercise, retained such shares and/or all other
additional stock available to, it as aforesaid during such period, giving effect
to all adjustments called for during such period by the provisions of this
Section 5.

        (e) FRACTIONAL SHARES. No fractional Shares or scrip representing
fractional Shares shall be issued upon the exercise of this Warrant, and DCSS
shall have no obligation for any cash payment with respect to any such Shares.

        (f) NO CHANGE IN WARRANT. Regardless of any adjustment or change in the
Share Purchase Price or the number of Shares or other securities actually
purchasable under the Warrant, any Warrant may continue to express the Share
Purchase Price and the number of Shares purchasable under the Warrant as the
price and number of shares were expressed in the Warrant when initially issued,
subject to the Holder's rights under Section 3 to exchange the Warrant for a new
Warrant that reflects the terms of any such adjustment or change.

                                       4
<PAGE>

        (g) DEFINITION OF "STOCK." As used in this Warrant, "Stock" shall mean
shares of DCSS's capital stock of any class, whether now or subsequently
authorized, that has the right to participate in the distribution of earnings
and assets of DCSS without limit as to amount or percentage. On the date of this
Warrant, Stock consists of 200,000,000 authorized shares of DCSS's common stock
at $0.02 par value per share. The number of shares of Stock of any class at any
time outstanding shall include all shares of Stock of that class then owned or
held by or for the account of DCSS.

        6. NOTIFICATION BY DCSS. (a) In case at any time:

            (i) DCSS shall pay any dividend payable in stock upon its Stock or
            make any distribution (other than cash dividends which are not in a
            greater amount per share than the then most recent cash dividend) to
            the holders of its Stock;

            (ii) DCSS shall make an offer for subscription pro rata to the
            holders of its Stock of any additional shares of stock of any class
            or make any offer to receive any other rights;

            (iii) there shall be any capital reorganization, reclassification of
            the capital stock of DCSS, consolidation or merger of DCSS with, or
            sale of all or substantially all of its assets to, another
            corporation; or

            (iv) there shall be a voluntary or involuntary dissolution,
            liquidation or winding-up of DCSS;

then, in any one or more of such cases, DCSS shall give written notice to the
registered holder of this Warrant of the date on which (a) the books of DCSS
shall close, or a record shall be taken for such dividend, distribution or
subscription rights, or (b) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up shall take
place, as the case may be. Such notice shall also specify the date as of which
the holders of Stock of record shall participate in such dividend, distribution
or subscription rights, or shall be entitled to exchange their Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such written notice shall be given not less than
30 and not more than 90 days prior to the record date or the date on which
DCSS's transfer books are closed in respect thereto and such notice may state
that the record date is subject to the effectiveness of a registration statement
under the Securities Act, or to a favorable vote of stockholders, if either is
required.

                                       5
<PAGE>

         (b) Whenever the Share Purchase Price or number of shares purchasable
hereunder shall be adjusted pursuant to Section 5 hereof, DCSS shall issue a
certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Share Purchase Price and number of shares purchasable
hereunder after giving effect to such adjustment, and shall cause a copy of such
certificate to be delivered or given in the manner provided in Section 13 hereof
to the holder or holders of this Warrant.

         7. REGISTRATION. The Holder shall, with respect to the Shares issuable
upon exercise of this Warrant, have the "demand" and "piggy-back" registration
rights in the Rider attached hereto. Such registration rights are incorporated
by reference herein as if such provisions had been set forth herein in full. .

         8. TRANSFER TO COMPLY WITH THE SECURITIES ACT. This Warrant and the
Shares or any other security issued or issuable upon exercise of this Warrant
may not be offered or sold except in conformity with the Securities Act and then
only against receipt of an agreement of the person to whom the offer or sale is
made to comply with the provisions of this Section 8 with respect to any resale
or other disposition of the securities and subject to the restrictions contained
in Section 2 above; except that no such agreement shall be required from any
person purchasing Shares or other security issued or issuable upon exercise of
this Warrant pursuant to a registration statement effective under the Securities
Act.

         9. FURTHER ASSURANCES. DCSS will take all action that may be necessary
or appropriate so that DCSS may validly and legally issue fully paid and
nonassessable Shares or other securities upon the exercise of this Warrant.

         10. RESERVATION OF STOCK, AVOIDANCE OF CERTAIN ACTIONS. DCSS will at
all times reserve and keep available, solely for issuance and delivery upon the
exercise of the Warrants, all Shares (or other securities) from time to time
issuable upon the exercise of this Warrant, and it will have at all times any
other rights or privileges provided for therein sufficient to enable it at any
time to fulfill all of its obligations hereunder. DCSS will not, by amendment of
its certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, issue or sale of securities or otherwise, avoid
or take any action which would have the effect of avoiding the observance or
performance of any of the terms to be observed or performed hereunder by DCSS,
but will at all times in good faith assist in carrying out all of the provisions
of this Warrant and in taking all such action as may be necessary or appropriate
in order to protect the rights of the holders of this Warrant against dilution
or other impairment.

                                       6
<PAGE>

         11. APPLICABLE LAW. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of New York (without regard to the choice
of law principles thereof).

         12. NOTICE. Any notices or certificates by DCSS to the Holder shall be
deemed delivered if in writing and delivered personally or sent by certified
mail to the Holder at 1559 Michael Lane; Pacific Palisades, CA 90272 or to any
other address if the Holder shall have designated another address by notice in
writing to DCSS; and if to DCSS, addressed to it at the address appearing for it
on page 1 of this Warrant. DCSS may change its address for purposes of service
of notice by written notice to the Holder at the address provided above.

         13. SURVIVAL. The various rights and obligations of DCSS as set forth
in Section 7 of this Warrant shall survive the exercise and surrender of this
Warrant. This Warrant shall be binding upon any corporation or entity succeeding
to DCSS by merger, consolidation or acquisition of all or substantially all of
DCSS's assets.

         14. MISCELLANEOUS. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought. The descriptive headings of the several
Sections of this Warrant are inserted for convenience only and do not constitute
a part of this Warrant.

         IN WITNESS WHEREOF, DCSS has caused this Warrant to be signed by its
duly authorized officer, and to be dated and effective as of the ____ day of
_________, 2003.

                                          DOCUMENT SECURITY SYSTEMS, INC.

                                          By:
                                            --------------------------------
                                              Patrick White, President / CEO

                                       7
<PAGE>

                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers to ___________________________, of ___________________________, the
right to purchase ___________________________ (__________) of the shares
evidenced by the Warrant issued to them by Document Security Systems, Inc.
("DCSS"), dated July 8, 2003, that expires on July 7, 2008, and they do
irrevocably constitute and appoint ______________________ to transfer the right
on the books of DCSS, with full power of substitution.

Dated:
      ---------------------------.

---------------------------------
NAME

---------------------------------
NAME

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Warrant, in every particular, without
alteration or enlargement, or any change whatsoever, and must be guaranteed by a
trust company or a bank, other than a savings bank, that has an office in NEW
YORK, NEW YORK, or by a firm having membership on a registered national
securities exchange and an office in NEW YORK, NEW YORK.

                                       8
<PAGE>

                             SUBSCRIPTION AGREEMENT

DOCUMENT SECURITY SYSTEMS, INC.

         The undersigned hereby elects to purchase, pursuant to the provisions
of the Warrant dated July 8, 2003, held by the undersigned, the following number
of shares of common stock, par value $.02 per share, of DOCUMENT SECURITY
SYSTEMS, INC., a New York corporation, as provided in the Warrant:

                             shares
         --------------------

         Payment of the purchase price per share and applicable taxes required
under the Warrant accompanies this Subscription Agreement.

Dated:
      ----------------------------

                                 ------------------------------------
                                 Name

                                 ------------------------------------
                                 Name

                                 ------------------------------------
                                 Address

<PAGE>

                                      RIDER

                               REGISTRATION RIGHTS

         1. DEMAND REGISTRATION. W.A.B. Capital LLC or its permitted assigns, as
holder of the Warrant dated July 8, 2003 to which this Rider is attached (the
"Holder"), shall have certain "demand" registration rights with respect to all
of the Shares issuable upon exercise of this Warrant (the "Registrable
Securities") as hereinafter provided. All capitalized terms used but not defined
herein shall have the meanings set forth in the Warrant.

          (a) At any time after six (6) months after the date of this Warrant,
if DCSS (hereinafter, the "Company") shall receive, a written request that the
Company file a registration statement under the Securities Act covering the
registration of all or a portion of the Registrable Securities, then the Company
shall, subject to the limitations of subsections 1(d) and 1(e), use its best
efforts to effect as soon as practicable, and in any event within ninety (90)
days of the receipt of such request, the registration under the Securities Act
of all Registrable Securities which the Holder requests to be registered.

           (b) If the Holder intends to distribute the Registrable Securities
covered by its request by means of an underwriting, it shall so advise the
Company as a part of its request made pursuant to this Section 1. The Holder
shall enter into such agreements as may be reasonably required by the
underwriters and the Holder shall pay all Registration Expenses (as defined in
Section 3(k)) incurred in connection with a registration of Registrable
Securities pursuant to this Section 1, subject to a maximum of $25,000, whether
or not such registration statement shall become effective. If the Registration
Expenses exceed $25,000, the Company shall pay the excess.

            (c)   The Company is obligated to effect only two (2) such
registrations pursuant to this Section 1.

         (d) Notwithstanding the foregoing, if the Company shall furnish to
Holder a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than ninety (90) days after receipt of the request of
the Holder; provided, however, that the Company may not utilize this right more
than once in any twelve (12) month period.

         (e) Notwithstanding the foregoing, the Company shall not be obligated
to effect, or to take any action to effect, any such registration pursuant to
this Section 1 during the period starting with the date sixty (60) days prior to
the Company's good faith estimate of the date of filing of, and ending on a date
one hundred twenty (120) days after the effective date of, a Company-initiated
registration; provided the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective.

         2. COMPANY REGISTRATION. The Holder shall have certain "Piggy-back"
registration rights with respect the Registrable Securities as hereinafter
provided:

<PAGE>

                  (a) At any time or times the Company determines to file with
the Securities and Exchange Commission ("SEC"') a registration statement under
the Securities Act registering any shares of its common stock $.02 par value
("Common Stock"), the Company shall give written notice to the Holder prior to
such filing.

                  (b) Within fifteen (15) days after such notice from the
Company, the Holder shall give written notice to the Company whether or not the
Holder desires to have all of the Holder's Registrable Securities included in
the registration statement. If the Holder fails to give such notice within such
period, the Holder shall not have the right to have its Registrable Securities
registered pursuant to such registration statement. If the Holder gives such
notice, then the Company shall include the Holder's Registrable Securities in
the registration statement, at the Company's sole cost and expense, subject to
the remaining terms of this Section 2.

                  (c) If the registration statement relates to an underwritten
offering, and the underwriter shall determine in writing that the total number
of Shares to be included in the offering, including the Registrable Securities,
shall exceed the amount which the underwriter deems to be appropriate for the
offering, the number of shares of the Registrable Securities shall be reduced in
the same proportion as the remainder of the shares in the offering and the
Holder's Registrable Securities included in such registration statement will be
reduced proportionately. For this purpose, if other securities in the
registration statement are derivative securities, their underlying shares shall
be included in the computation. The Holder shall enter into such agreements as
may be reasonably required by the underwriters and the Holder shall pay to the
underwriters commissions relating to the sale of the Holder's Registrable
Securities.

                  (d) The Holder of this Warrant shall have two (2)
opportunities to have the Registrable Securities registered under this Section
2.

                  (e) The Holder shall furnish in writing to the Company such
information as the Company shall reasonably require in connection with a
registration statement.

         3. If and whenever the Company is required by the provisions of
Sections 1 or 2 to register any Registrable Securities under the Securities Act,
the Company shall, as expeditiously as possible under the circumstances:

                  (a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective as soon as possible after filing
and remain effective.

                  (b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement current and
effective and to comply with the provisions of the Securities Act, and any
regulations promulgated thereunder, with respect to the sale or disposition of
all Registrable Securities covered by the registration statement required to
effect the distribution of the securities, but in no event shall the Company be
required to do so for a period of more than five (5) years following the
effective date of the registration statement.

<PAGE>

                  (c) Furnish to the Holder copies (in reasonable quantities) of
summary, preliminary, final, amended or supplemented prospectuses, in conformity
with the requirements of the Securities Act and any regulations promulgated
thereunder, and other documents as reasonably may be required in order to
facilitate the disposition of the securities, but only while the Company is
required under the provisions hereof to keep the registration statement current.

                  (d) Use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions of the United States as the
Holder shall reasonably request, and do any and all other acts and things which
may be reasonably necessary to enable the Holder to consummate the disposition
of the Registrable Securities in such jurisdictions.

                  (e) Notify the Holder at any time when a prospectus relating
to any Registrable Securities covered by such registration statement is required
to be delivered under the Securities Act, of the Company's becoming aware that
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and promptly
prepare and furnish to the Holder a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.

                  (f) As soon as practicable after the effective date of the
registration statement, and in any event within eighteen (18) months thereafter,
make generally available to the Holder an earnings statement (which need not be
audited) covering a period of at. least twelve (12) consecutive months beginning
after the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act, including,
at the Company's option, Rule 158 thereunder. To the extent that the Company
files such information with the SEC in satisfaction of the foregoing, the
Company need not deliver the above referenced earnings statement to the Holder.

                  (g) Upon request, deliver promptly to counsel of the Holder
copies of all correspondence between the SEC and the Company, its counsel or
auditors and all memoranda, relating to discussions with the SEC or its staff
with respect to the registration statement and permit the Holder to conduct such
investigation at the Holder's sole cost and expense, upon reasonable advance
notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary. Holder agrees that it
will use its best efforts not to interfere unreasonably with the Company's
business when conducting any such investigation and Holder shall keep any such
information received pursuant to this Section 3(g) confidential.

<PAGE>

                  (h) Provide a transfer agent and registrar located in the
United States for all such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement.

                  (i) List the Registrable Securities covered by such
registration statement on such exchanges and/or on the NASDAQ as the shares of
Common Stock are then currently listed upon.

                  (j) Pay all Registration Expenses incurred in connection with
a registration of Registrable Securities pursuant to Section 2 of this Rider,
whether or not such registration statement shall become effective; provided that
Holder shall pay all underwriting discounts, commissions and transfer taxes, and
its own counsel fees, if any, relating to the sale or disposition of such
Holder's Registrable Securities pursuant to a registration statement. As used
herein, "Registration Expenses" means any and all reasonable and customary
expenses incident to performance of or compliance with the registration rights
set forth herein, including, without limitation, (i) all SEC and stock exchange
or National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all fees and expenses of complying with state securities or blue sky
laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities but no other expenses of the underwriters or their counsel), (iii)
all printing, messenger and delivery expenses, and (iv) the reasonable fees and
disbursements of counsel for the Company and the Company's independent public
accountants.

                  (k) Pay all Registration Expenses in excess of $25,000
incurred in connection with a registration of Registrable Securities pursuant to
Section 1 of this Rider, whether or not such registration statement shall become
effective; provided that Holder shall pay the first $25,000 of Registration
Expenses. In addition, the Holder will pay the cost of all underwriting
discounts, commissions and transfer taxes, and its own counsel fees, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to a registration statement. As used herein, "Registration Expenses"
means any and all reasonable and customary expenses incident to performance of
or compliance with the registration rights set forth herein, including, without
limitation, (i) all SEC and stock exchange or National Association of Securities
Dealers, Inc. registration and filing fees, (ii) all fees and expenses of
complying with state securities or blue sky laws (including reasonable fees and
disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities but no other expenses of the
underwriters or their counsel), (iii) all printing, messenger and delivery
expenses, and (iv) the reasonable fees and disbursements of counsel for the
Company and the Company's independent public accountants.

                  (l) Include as selling security holders under such
registration statement the Holder and its successors, assigns, and transferees
(the "Selling Security Holders") such that any Registrable Securities sold by
such persons would be registered thereunder.

         4. REMEDIES. The Company acknowledges that there is no adequate remedy
at law for failure by it to comply with the provisions of this Rider and that
such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Rider may be specifically enforced.

<PAGE>

In the event that the Company shall fail to file such registration statement
when required pursuant to Section 1 or 2 above or to keep any registration
statement effective as provided in Section 3 or otherwise fails to comply with
its obligations and agreements in this Rider, then, in addition to any other
rights or remedies Holder may have at law or in equity, including without
limitation, the right of rescission, the Company shall indemnify and hold
harmless the Holder from and against any and all manner of loss which it may
incur as a result of such failure. In addition, the Company shall also reimburse
Holder for any and all reasonable legal fees and expenses incurred by it in
enforcing its rights pursuant to this Rider, regardless of whether any
litigation was commenced.

         5. INDEMNIFICATION BY COMPANY. In the event the Company effects any
registration under the Securities Act of any Registrable Securities pursuant to
Section 1 or 2 above, the Company shall indemnify, to the extent permitted by
law, and hold harmless the Holder, any underwriter, any officer, director,
employee or agent of the Holder or underwriter, and each other person, if any,
who controls the Holder or underwriter within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, judgment,
fines, penalties, costs and expenses, joint or several, or actions in respect
thereof (collectively, the "Claims"), to which each such indemnified party
becomes subject, under the Securities Act or otherwise, insofar as such Claims
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the registration statement or prospectus or
any amendment or supplement thereto or any document filed under a state
securities or blue sky law (collectively, the "Registration Documents") or
insofar as such Claims arise out of or are based upon the omission or alleged
omission to state in any Registration Document a material fact required to be
stated therein or necessary to make the statements made therein not misleading,
and will reimburse any such indemnified party for any legal or other expenses
reasonably incurred by such indemnified party in investigating or defending any
such Claim; provided that the Company shall not be liable in any such case to a
particular indemnified party to the extent such Claim is based upon an untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission of a material fact made in any Registration Document in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such indemnified party specifically for use in the preparation of such
Registration Document.

         6. INDEMNIFICATION BY HOLDER. In connection with any registration
statement in which the Holder is participating, the Holder shall indemnify, to
the extent permitted by law, and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
other person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each underwriter, any officer, director, employee or
agent of any such underwriter and each other person, if any, who controls such
underwriter within the meaning of Section 15 of the Securities Act against any
Claims to which each such indemnified party may become subject under the
Securities Act or otherwise, insofar as such Claims (or actions in respect
thereof) are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Document, or insofar as any Claims
are based upon the omission or alleged omission to state in any Registration
Document a material fact required to be stated therein or necessary to make the
statements made therein not misleading, and will reimburse any such indemnified

<PAGE>

party for any legal or other expenses reasonably incurred by such indemnified
party in investigating or defending any such claim; provided, however, that such
indemnification or reimbursement shall be payable only if, and to the extent
that, any such Claim arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Registration Document in reliance upon and in conformity with written
information furnished to the Company by the Holder specifically for use in the
preparation thereof.

         7. NOTICE OF CLAIM; RIGHT TO PARTICIPATE. Any person entitled to
indemnification under Sections 5 or 6 above shall notify promptly the
indemnifying party in writing of the commencement of any Claim if a claim for
indemnification in respect thereof is to be made against an indemnifying party
under this Section 7, but the omission of such notice shall not relieve the
indemnifying party from any liability which it may have to any indemnified
party, except to the extent that such failure shall materially adversely affect
any indemnifying party or its rights hereunder. In case any action is brought
against the indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it chooses, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party; and, after written
notice from the indemnifying party to the indemnified party that it so chooses,
the indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
(i) if the indemnifying party fails to take reasonable steps necessary to defend
diligently the Claim within twenty (20) days after receiving notice from the
indemnified party that the indemnified party believes it has failed to do so;
(ii) if the indemnified party who is a defendant in any action or proceeding
which is also brought against the indemnifying party reasonably shall have
concluded that there are legal defenses available to the indemnified party which
are not available to the indemnifying party; or (iii) if representation of both
parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct, the indemnified party shall have the right to
assume or continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified parties in each jurisdiction, except to the
extent any indemnified party or parties reasonably shall have concluded that
there are legal defenses available to such party or parties which are not
available to the other indemnified parties or to the extent representation of
all indemnified parties by the same counsel is otherwise inappropriate under
applicable standards of professional conduct) and the indemnifying party shall
be liable for any reasonable expenses therefor; provided, that no indemnifying
party shall be subject to any liability for any settlement of a Claim made
without its consent (which may not be unreasonably withheld, delayed or
conditioned). If the indemnifying party assumes the defense of any Claim
hereunder, such indemnifying party shall not enter into any settlement without
the consent of the indemnified party if such settlement attributes liability to
the indemnified party.

           8. CONTRIBUTION. If for any reason the indemnity provided in Sections
5 or 6 above is unavailable or is insufficient to hold harmless an indemnified
party, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of any Claim in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other from the
transactions contemplated by this Rider. If, however, the allocation provided in
the immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the indemnifying party and the

<PAGE>

indemnified party as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable in respect of any Claim shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim.
Notwithstanding the foregoing, no underwriter or controlling person thereof if
any, shall be required to contribute, in respect of such underwriter's
participation as an underwriter in the offering, any amount in excess of the
amount by which the total price at which the Registrable Securities underwritten
by it and distributed to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligation of any underwriters
to contribute pursuant to this Section 8 shall be several in proportion to their
respective underwriting commitments and not joint.

           9. The provisions of Sections 5 through 8 of this Rider shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the transfer
of the Registrable Securities by any such party.

<PAGE>

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