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<SEC-DOCUMENT>0001144204-08-070478.txt : 20081222
<SEC-HEADER>0001144204-08-070478.hdr.sgml : 20081222
<ACCEPTANCE-DATETIME>20081222092318
ACCESSION NUMBER:		0001144204-08-070478
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20081218
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20081222
DATE AS OF CHANGE:		20081222

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DOCUMENT SECURITY SYSTEMS INC
		CENTRAL INDEX KEY:			0000771999
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				161229730
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32146
		FILM NUMBER:		081262708

	BUSINESS ADDRESS:	
		STREET 1:		36 WEST MAIN ST
		STREET 2:		SUITE 710
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14614
		BUSINESS PHONE:		585 232 1500

	MAIL ADDRESS:	
		STREET 1:		36 W MAIN ST
		STREET 2:		SUITE 710
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14614

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NEW SKY COMMUNICATIONS INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	THOROUGHBREDS USA INC
		DATE OF NAME CHANGE:	19861118
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
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<FILENAME>v135421_8k.htm
<DESCRIPTION>CURRENT REPORT
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appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):</font></div>
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is incorporated herein by reference.</font></div>
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Assets</font></div>
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November 12, 2008, Document Security Systems, Inc. (the &#8220;Company) reported that
the Company&#8217;s wholly owned subsidiary, Secuprint Inc. (&#8220;Secuprint&#8221;), had entered
into an Asset Purchase Agreement (the &#8220;Agreement&#8221;) with DPI of Rochester, LLC
(&#8220;DPI&#8221;), James Stanley and Matthew Kellman to acquire substantially all of the
assets of DPI (the &#8220;Acquisition&#8221;), which agreement was subject to court approval
in DPI&#8217;s pending Chapter 11 bankruptcy case.&#160;&#160;In an Order dated
December 17, 2008, the United States Bankruptcy Court for the Western District
of New York approved the Acquisition, and the Acquisition closed on December 18,
2008.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DPI is a
full service digital and commercial offset printer located in Rochester, New
York with approximately $7.6 million in annual sales in 2007, and assets that
included working capital of approximately $865,000.&#160;&#160;The purchase
price was $940,000 plus the right to assume certain equipment
leases.&#160;&#160;The foregoing summary of the Agreement is qualified in its
entirety by reference to the Agreement, a copy of which is filed as Exhibit
10.01 to this report and is incorporated herein by reference.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
connection with the Acquisition, the Company and Secuprint entered into a new
credit facility (the &#8220;Secured Promissory Note&#8221;) with Baum Capital Investments
Inc. (&#8220;Baum&#8221;) in the principal amount of up to $1.0 million to pay for most of
the cash portion of the purchase price of the Acquisition.&#160;&#160;The
Secured Promissory Note has a one-year term, is secured by all of the assets of
Secuprint and has an annual interest rate of between 12% and 15%.&#160;&#160;The
foregoing summary of the Secured Promissory Note is qualified in its entirety by
reference to the Secured Promissory Note and the associated Security Agreement,
copies of which are filed as Exhibits 10.02 and 10.03, respectively, to this
report and are incorporated herein by reference.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 18, 2008, the Company issued Baum warrants (the &#8220;Warrants&#8221;) to purchase
up to a total of 250,000 shares of the Company&#8217;s common stock at an average
price of $2.00 per share.&#160;&#160;The Warrants are exercisable on February
16, 2009 and expire on December 17, 2013.&#160;&#160;The foregoing summary of
the Warrants is qualified in its entirety by reference to the Warrant, a copy of
which is filed as Exhibit 4.1 to this report and is incorporated herein by
reference.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 22, 2008, the Company issued a press release regarding the Acquisition,
a copy of which is furnished herewith as Exhibit 99.1 and is incorporated herein
by reference.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
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          </div>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
        </div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
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              <td align="right" style="WIDTH: 63pt">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
      9.01&#160;</font></div>
              </td>
              <td align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Financial
      Statements and Exhibits.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)(b)
The financial statements and pro forma financial information for DPI will be
reported on an amended Current Report on Form 8-K not later than March 5,
2009.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)
Exhibits</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">ExhibitNo.</font></font></div>
              </td>
              <td align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Document</font></font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 54pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;
      </font></div>
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              <td>
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrant,
      dated December 18, 2008, of Document Security Systems, Inc. issued to Baum
      Capital Investments Inc.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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                <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Asset
      Purchase Agreement, dated as of November 6, 2008, among Secuprint Inc.,
      DPI of&#160;&#160;&#160;&#160;&#160;Rochester, LLC, James Stanley and
      Matthew Kellman.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 54pt">
                <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;
      </font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Secured
      Promissory Note, dated December 18, 2008, between Document Security
      Systems, Inc., Secuprint Inc. and Baum Capital Investments
      Inc.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 54pt">
                <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Security
      Agreement, dated December 18, 2008, between Secuprint Inc. and Baum
      Capital Investments Inc.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 54pt">
                <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
      Release of Document Security Systems, Inc., dated December 22,
      2008.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURE</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div>
          <table border="0" cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td colspan="2" valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">      </font></font>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DOCUMENT
      SECURITY SYSTEMS, INC.</font></div>
                </td>
                <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
              <tr>
                <td align="left" valign="top" width="50%" style="BORDER-BOTTOM: #ffffff solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">      </font>
                    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:
      December 22, 2008</font></div>
                  </div>
                </td>
                <td valign="top" width="3%" style="BORDER-BOTTOM: #ffffff solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:
      </font></div>
                </td>
                <td align="left" nowrap valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
      Patrick White</font></div>
                </td>
                <td valign="top" width="12%" style="BORDER-BOTTOM: #ffffff solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td align="left" nowrap valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">      </font>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Patrick
      White</font>&#160;</div>
                </td>
                <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">      </font>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Chief
      Executive Officer</font>&#160;</div>
                </td>
                <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
              <tr>
                <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
                <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              </tr>
          </table>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXHIBIT
INDEX</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <div align="left">
          <div align="left">
            <div align="left">
              <div align="left">
                <table cellpadding="0" cellspacing="0" width="100%">
                    <tr>
                      <td valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td valign="middle" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="bottom" width="6%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exhibit</font></div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline">Number</font></div>
                      </td>
                      <td align="left" valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td align="left" valign="bottom" width="68%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline">Description</font></div>
                      </td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="6%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4.1</font></div>
                      </td>
                      <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td align="left" valign="bottom" width="68%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Warrant,
      dated December 18, 2008, of Document Security Systems, Inc. issued to Baum
      Capital Investments Inc.</font></div>
                      </td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="6%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.1</font></div>
                      </td>
                      <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      <td align="left" valign="bottom" width="68%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Asset
      Purchase Agreement, dated as of November 6, 2008, among Secuprint Inc.,
      DPI of&#160;&#160;&#160;&#160;&#160;Rochester, LLC, James Stanley and
      Matthew Kellman.</font></div>
                      </td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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      </font></td>
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      Promissory Note, dated December 18, 2008, between Document Security
      Systems, Inc., Secuprint Inc. and Baum Capital Investments
      Inc.</font></div>
                      </td>
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                    <tr>
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                      <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      </td>
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      </font></td>
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      Agreement, dated December 18, 2008, between Secuprint Inc. and Baum
      Capital Investments Inc.</font></div>
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                      <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      </td>
                      <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
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                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Press
      Release of Document Security Systems, Inc., dated December 22,
      2008.</font></div>
                      </td>
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<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>2
<FILENAME>v135421_ex4-1.htm
<DESCRIPTION>WARRANT
<TEXT>
<html>
  <head>
    <title></title>
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    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NEITHER
THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &#8220;SECURITIES
ACT&#8221;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DOCUMENT
SECURITY SYSTEMS, INC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">WARRANT</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrant
No. <font style="DISPLAY: inline; FONT-WEIGHT: bold">C-1</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dated:
December 18, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Document
Security Systems, a New York corporation (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Company</font>&#8221;), hereby certifies
that, for value received, Baum Capital Investments Inc., or its registered
assigns (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Holder</font>&#8221;),
is entitled to purchase from the Company up to a total of 250,000 shares of the
common stock, par value $0.02 per share (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Common Stock</font>&#8221;) of the Company
(each such share, a &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Warrant
Share</font>&#8221; and all such shares, the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Warrant Shares</font>&#8221;) at an
exercise price equal to:&#160;&#160;$1.60 per share for 50,000 of the Warrant
Shares; $2.00 per share for 150,000 of the Warrant Shares and $2.40 per share
for 50,000 of the Warrant Shares (as adjusted as provided in Section 8, the
&#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Exercise Price</font>&#8221;);
subject, however, to the provisions and upon the terms and conditions set forth
in this Warrant (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Warrant</font>&#8221;). This expires at
6.00 PM (Eastern Time) on December 17, 2013 (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Expiration
Date</font>&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Registration of
Warrant.</font>&#160;&#160;The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Warrant Register</font>&#8221;), in the
name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.
</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">Registration of
Transfers</font>. This Warrant may not be sold, transferred or assigned by the
Holder, without the prior written consent of the Company, which will not be
unreasonably withheld or delayed. The Company shall register any transfer of any
portion of this Warrant made in accordance with the terms hereof <font style="DISPLAY: inline; FONT-SIZE: 12pt">in </font>the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company (or to the warrant transfer agent for the
Company, if any) at its address specified herein. Upon any such permitted
registration of transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">New Warrant</font>&#8221;), evidencing the
portion of this Warrant so transferred shall be issued to the transferee and a
New Warrant evidencing the remaining portion of this Warrant not so transferred,
if any, shall be issued to the transferring Holder. The acceptance of the New
Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a
Warrant.</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3. <font style="TEXT-DECORATION: underline">Exercise and Duration of
Warrants</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a) This
Warrant shall become exercisable by the registered Holder with respect all of
the Warrant Shares sixty (60) days after the date on which the Company&#8217;s
acquisition, or a wholly owned subsidiary&#8217;s acquisition, of substantially all of
the assets of DPI of Rochester, LLC is consummated.&#160;&#160;At 6:30 PM, New
York City time, on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no
value.&#160;&#160;&#160;If the Company, or a wholly owned subsidiary, of the
Company does not acquire substantially all of the assets of DPI of Rochester,
LLC on or prior to November 1, 2009, this Warrant shall become void and of no
value.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Exercise Notice</font>&#8221;),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares as to which this Warrant is being exercised in
immediately available funds or bank check, and the date such items are sent to
the Company (as determined in accordance with the notice provisions hereof) is
an &#8220;Exercise Date.&#8221; The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder, provided, as a condition of
the Company effecting such exercise, Holder complies with any requests the
Company may make pursuant to Section 6 (relating to lost, stolen or destroyed
warrants) herein. Execution and giving of the Exercise Notice shall have the
same effect as cancellation of the original Warrant and issuance of a New
Warrant evidencing the right to purchase the remaining number of Warrant
Shares.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Delivery of Warrant
Shares.</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a) Upon
exercise of this Warrant, the Company shall promptly (but in no event later than
three Business Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
upon such exercise, free of restrictive legends unless a registration statement
covering the resale of the Warrant Shares and naming the Holder as a selling
stockholder thereunder is not then effective and the Warrant Shares are not
freely transferable without volume restrictions pursuant to Rule 144 under the
Securities Act and such issuance shall be promptly recorded in the Company's
share registry. The Holder, or any Person so designated by the Holder to receive
Warrant Shares, shall be deemed to have become holder of record of such Warrant
Shares as of the Exercise Date. For purposes of this Agreement, Business Days
shall mean any day on which Banks in New York State are open for
business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b) Upon
surrender of this Warrant following one or more partial exercises, the Company
shall issue or cause to be issued, at its expense, a New Warrant evidencing the
right to purchase the remaining number of Warrant Shares.</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c) The
Company's obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company,
excluding breach of this Warrant. Nothing herein shall limit a Holder's right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Charges, Taxes and
Expenses</font>. Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder
for any issue or transfer tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes and
expenses shall be paid by the Company; provided, however, that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrants
in a name other than that of the Holder. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Replacement of
Warrant.</font> If this Warrant is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation hereof, or in lieu of and substitution for this Warrant, a New
Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft, or destruction and customary and reasonable bond or
indemnity, if requested. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable third-party costs as the Company may
prescribe.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Reservation of Warrant
Shares</font>. The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other contingent purchase rights of
persons other than the Holder (after giving effect to the adjustments and
restrictions of Section 8, if any). The Company covenants that all Warrant
Shares so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable. The Company will
take all such action as may be necessary to assure that such shares of Common
Stock may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of any securities exchange or automated
quotation system upon which the Common Stock may be listed.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Certain Adjustments</font>.
The Exercise Price and number of Warrant Shares upon exercise of this Warrant
are subject to adjustment from time to time as set forth in this Section
8.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a) <font style="DISPLAY: inline; TEXT-DECORATION: underline">Stock Dividends and
Splits</font>. If the Company, at any time while this Warrant is outstanding,
(i) pays a stock dividend on its Common Stock or otherwise makes a distribution
on any class of capital stock that is payable in shares of Common Stock, (ii)
subdivides outstanding shares of Common Stock into a larger number of shares, or
(iii) combines outstanding shares of Common Stock into a smaller number of
shares, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.</font></div><br>
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Transactions</font>. If, at any time while this Warrant is outstanding the
Company effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (other than as a result of a
subdivision or combination of shares of Common Stock covered by Section 8(a)
above) (a &#8220;Fundamental Transaction&#8221;), then the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the same amount and kind
of securities, cash or property as it would have been entitled to receive upon
the occurrence of such Fundamental Transaction if it had been, immediately prior
to such Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the &#8220;Alternate Consideration&#8221;).
The aggregate Exercise Price for this Warrant will not be affected by any such
Fundamental Transaction, but the Company shall apportion such aggregate Exercise
Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction.</font></div>
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Shares</font>. Simultaneously with any adjustments to the Exercise Price
pursuant to paragraphs (a) or (b) of this Section, the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or
decreased proportionately, so that after such adjustment the aggregate Exercise
Price payable hereunder for the increased or decreased number of Warrant Shares
shall be the same as the aggregate Exercise Price in effect immediately prior to
such adjustment.</font></div>
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calculations under this Section 8 shall be made to the nearest cent or the
nearest 1/100th of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock. The number of shares of Common
Stock outstanding at any given time shall in addition to issued and outstanding
shares of Common Stock include all shares of Common Stock issuable upon
exercise, conversion or exchange of any Convertible Securities. In calculating
the offering price in connection with Convertible Securities, the price per
share of Common Stock issuable upon conversion or exchange shall be determined
by dividing (x) the total amount received by the Company as consideration for
the issue or sale of such Convertible Securities, plus the aggregate amount of
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (y) the total number of shares of Common Stock upon the conversion
or exchange of all such Convertible Securities.</font></div><br>
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Adjustments</font>. Upon the occurrence of each adjustment pursuant to this
Section 8, the Company at its expense will promptly compute such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment, including a statement of the adjusted Exercise Price and
adjusted number or type of Warrant Shares or other securities upon exercise of
this Warrant (as applicable), describing the transactions giving rise to such
adjustments and showing in detail the facts upon which such adjustment is
based.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(g) <font style="DISPLAY: inline; TEXT-DECORATION: underline">Fractional Shares</font>.
The Company shall not be required to issue or cause to be issued fractional
Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant
Share would, except for the provisions of this Section, be issuable upon
exercise of this Warrant, the number of Warrant Shares to be issued will be
rounded up to the nearest whole share.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Notices</font>. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder (including without limitation any Exercise Notice) shall be
in writing and shall be deemed given and effective on the earliest of (a) the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number specified in this Section prior to 6:30 p.m. (local time
of the recipient) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in tlns Section on a day that is not a Business Day
or later than 6:30 p.m. (local time of the recipient) on any Business Day, (c)
the Business Day (or second Business Day in the case of a recipient outside the
United States) following the date of deposit with a nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The addresses for such notices or communications
shall be:</font></div>
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      Security Systems, Inc.</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">28
      East Main. Street, Suite 1525</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Rochester,
      NY 14614</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Attn:&#160;&#160;Chief
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">C/o
      Stafford Higgins Industries</font></div>
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      Willard Road</font></div>
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Right</font>. Except as otherwise expressly provided herein, nothing contained
in this Warrant shall be construed as conferring upon Holder the right to vote
or consent or to receive notice as a shareholder of the Company or any other
matters or any rights whatsoever as a shareholder of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Break-Up
Fee</font>.&#160;&#160;The Company agrees and acknowledges that the Holder is
entitled to twenty-five percent (25%) of any break-up fee received by the
Company or any of its subsidiaries pursuant to Section 6.04 of that certain
Asset Purchase Agreement between the Secuprint Inc., a wholly owned subsidiary
of the Company, and DPI of Rochester, LLC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13. <font style="DISPLAY: inline; TEXT-DECORATION: underline">Miscellaneous</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
Nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.</font></div><br>
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Company will not, by amendment of its governing documents or&#160;&#160;through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any Warrant Shares above the amount payable therefor on such exercise, (ii) will
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of this Warrant, and (iii) will not close its shareholder
books or records in any manner which interferes with the timely exercise of this
Warrant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)
Governing Law: Venue; Waiver of Trial. All questions concerning the
construction, validity, enforcement and interpretation of this warrant shall be
governed by and construed and enforced in accordance with the laws of the state
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the city of Rochester, New York for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the transaction documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
The parties hereby waive all rights to a trial by jury.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK, SIGNATURE PAGE FOLLOWS]</font></font></div>
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WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.</font></div>
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      SECURITY SYSTEMS, INC.</font></div>
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NOTICE</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(To be
executed by the Holder to exercise the right to purchase shares of Common Stock
under the foregoing Warrant)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To:&#160;&#160;Document
Security Systems, Inc.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
undersigned is the Holder of Warrant No. _______ (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Warrant</font>&#8221;) issued by Document
Security Systems, Inc., a New York corporation (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Company</font>&#8221;).&#160;&#160;Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.</font></div>
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      _________________ Warrant Shares pursuant to the
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      Warrant Shares in accordance with the terms of the
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    <div>
      <div align="left">
        <div align="justify">
          <div align="justify">
            <div align="justify">
              <div align="justify">
                <div align="left">
                  <div align="justify">
                    <div align="justify">
                      <div align="justify">
                        <div align="justify">
                          <div align="justify">
                            <div align="justify">
                              <div align="justify">
                                <div align="left">
                                  <div align="justify">
                                    <div align="justify">
                                      <div align="justify">
                                        <div align="justify">
                                          <div align="justify">
                                            <div align="justify">
                                              <table cellpadding="0" cellspacing="0" width="100%">
                                                  <tr>
                                                    <td valign="top" width="40%">
                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dated:
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                                                    </td>
                                                    <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                                                    <td align="left" colspan="2" valign="top" width="40%">
                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name
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                                                    </td>
                                                    <td align="left" valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                  </tr>
                                                  <tr>
                                                    <td valign="top" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                  </tr>
                                                  <tr>
                                                    <td valign="top" width="40%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td align="left" valign="top" width="5%" style="PADDING-BOTTOM: 2px">
                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Print)</font></div>
                                                    </td>
                                                    <td valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                  </tr>
                                                  <tr>
                                                    <td valign="top" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                  </tr>
                                                  <tr>
                                                    <td valign="top" width="40%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td align="left" valign="top" width="5%" style="PADDING-BOTTOM: 2px">
                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:</font></div>
                                                    </td>
                                                    <td valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                  </tr>
                                                  <tr>
                                                    <td valign="top" width="40%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%" style="PADDING-BOTTOM: 2px">
                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;</font></div>
                                                    </td>
                                                    <td align="left" valign="top" width="5%" style="PADDING-BOTTOM: 2px">
                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name:&#160;&#160;</font></div>
                                                    </td>
                                                    <td valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                  </tr>
                                                  <tr>
                                                    <td valign="top" width="40%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td align="left" valign="top" width="5%" style="PADDING-BOTTOM: 2px">
                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title:</font></div>
                                                    </td>
                                                    <td valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                  </tr>
                                                  <tr>
                                                    <td valign="top" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                  </tr>
                                                  <tr>
                                                    <td valign="top" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                                    <td align="left" colspan="3" valign="top" width="40%">
                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Signature
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                                                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">as
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Warrant)</font></div>
                                                    </td>
                                                  </tr>
                                              </table>
                                            </div>
                                          </div>
                                        </div>
                                      </div>
                                    </div>
                                  </div>
                                </div>
                              </div>
                            </div>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
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</font></div>
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</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">FORM OF
ASSIGNMENT</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[To be
completed and signed only upon transfer of Warrant]</font></div>
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RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the within Warrant to
purchase&#160;&#160;____________ shares of Common Stock of Document Security
Systems, Inc. to which the within Warrant relates and appoints ________________
attorney to transfer said right on the books of&#160;&#160;Document Security
Systems, Inc. with full power of substitution in the premises.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <div align="left">
        <div align="left">
          <div align="left">
            <div align="left">
              <div align="left">
                <div align="left">
                  <div align="left">
                    <div align="left">
                      <div align="left">
                        <div align="left">
                          <div align="left">
                            <div align="left">
                              <div align="left">
                                <div align="left">
                                  <table cellpadding="0" cellspacing="0" width="100%">
                                      <tr>
                                        <td align="left" valign="top" width="38%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dated:
      ________________, __</font></div>
                                        </td>
                                        <td align="left" valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                                        <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                                        <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="2%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="40%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                                        <td valign="top" width="20%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                                        <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" colspan="2" valign="top" width="60%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Signature
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                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">as
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                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="2%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="40%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="20%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" colspan="2" valign="top" width="60%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Address
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                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="2%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="40%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                                        <td valign="top" width="20%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                                        <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>v135421_ex10-1.htm
<DESCRIPTION>ASSET PURCHASE AGREEMENT
<TEXT>
<html>
  <head>
    <title></title>
    </head>
    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ASSET
PURCHASE AGREEMENT</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">THIS AGREEMENT</font> is made by and
among <font style="DISPLAY: inline; FONT-WEIGHT: bold">DPI of Rochester,
LLC</font>, a&#160;&#160;New York limited liability company with an address at
1560 Emerson Street, Rochester, New York&#160;&#160;14606 ("Seller"); <font style="DISPLAY: inline; FONT-WEIGHT: bold">James Stanley</font>, an individual
residing in the State of New York (&#8220;Stanley&#8221;); <font style="DISPLAY: inline; FONT-WEIGHT: bold">Matthew Kellman</font>, an individual
residing in the State of New York (&#8220;Kellman&#8221;); and <font style="DISPLAY: inline; FONT-WEIGHT: bold">Secuprint Inc.</font>, a New York
corporation with an address at 28 East Main Street, Rochester, New
York&#160;&#160;14614 ("Buyer"), a subsidiary of <font style="DISPLAY: inline; FONT-WEIGHT: bold">Document Security Systems,
Inc</font>.&#160;&#160;The Seller, Stanley, Kellman and the Buyer and are
collectively referred to as the &#8220;Parties&#8221; and individually as a
&#8220;Party.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">R</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">E</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">C</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">I</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">T</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">A</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">L</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">S</font>:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>I.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
Seller is engaged in the business of commercial printing (the "Business");
and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>II.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
Seller desires to sell certain assets, properties and rights now owned and held
by it and used or usable in connection with the operation of the Business;
and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">III.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Buyer
desires to purchase certain Business assets, properties and rights of Seller
upon the terms and conditions hereinafter set forth, and to continue the
Business; and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IV.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
Parties acknowledge that Seller intends to file a voluntary petition for relief
(the &#8220;Bankruptcy Case&#8221;) under Chapter 11 of Title 11 of the United States Code,
11 U.S.C. &#167;&#167;101, et seq. (the &#8220;Bankruptcy Code&#8221;) in the United States Bankruptcy
Court for the Western District of New York (the &#8220;Bankruptcy
Court&#8221;).</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">V.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
&#160;Stanley and Kellman (&#8220;Members&#8221;) are the only members of the Seller, and
execute this agreement only to confirm the representations, warranties and
covenants in Articles II and III, and to specifically indicate their assent to
the provisions of Paragraph 3.09 of this Agreement.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-WEIGHT: bold">NOW, THEREFORE</font>, in
consideration of the foregoing premises and the mutual covenants hereinafter
contained, the Parties hereto agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- 1
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
I</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">PURCHASE AND
SALE</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Purchase of
Assets</font>.&#160;&#160;On the Closing Date set forth in Article V, Seller
agrees to sell and Buyer agrees to purchase, subject to the terms and conditions
of this Agreement, the assets, properties and rights of Seller relating to the
Business (the "Assets"), free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever except as provided herein, as
follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;All
of Seller's inventory relating to the Business as the same shall exist on the
Closing Date and which is usable and saleable in the ordinary course of
business, including but not limited to the items listed and described on
Schedule 1.01A hereto;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;All
of Seller's furniture, fixtures, machinery, equipment, tools, supplies and
leasehold improvements relating to the Business as the same shall exist on the
Closing Date, including but not limited to the items listed and described in
Schedule 1.01B hereto;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;All
Seller&#8217;s personal property leases for equipment listed on Schedule&#160;1.01C
attached hereto (the &#8220;Personal Property Leases&#8221;);</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>D.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;All
accounts receivable owned by Seller and existing as of the Closing Date;
and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">E.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;All
of Seller's trademarks, tradenames (including "DPI"), goodwill, intangible
assets and records relating to the Business, including, but not limited to,
Seller's telephone numbers, internet addresses, websites, customer lists,
mailing lists, sales and purchasing correspondence and records, computer
software, data processing records and all of the operational books, records and
data used by Seller in connection with the Business, except as hereafter set
forth.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>It is the intention of the parties
hereto that the Assets shall include all of Seller's assets, used or usable in
the conduct of the Business, whether or not specifically listed in the Schedules
attached hereto and made a part hereof; PROVIDED, however, that there is
specifically excluded from the Assets the items listed on Schedule
1.01C.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Liabilities</font>.&#160;&#160;Except
as set forth in Schedule 1.02, it is expressly understood and agreed that Buyer
does not, nor will it assume or become liable for, any of Seller's liabilities
of any kind or nature at any time existing or asserted, whether fixed,
contingent or otherwise, including without limitation, accounts, notes and taxes
payable, workers compensation claims, liability claims, lease obligations
accrued prior to the Closing Date, salaries, wages, commissions, severance or
separation pay, or vacation, profit sharing, retirement, pension, bonus,
hospitalization, medical, health or other employee benefits or any unemployment
or other benefit taxes relating to any of Seller's employees.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- 2
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Purchase
Price</font>.&#160;&#160;The aggregate purchase price to be paid by Buyer to
Seller for the Assets and the Covenant Not to Compete (the "Purchase Price")
shall be calculated as the lesser of:&#160;&#160;(A) the sum of:&#160;&#160;(i)
ninety percent (90%) of the value of Seller&#8217;s net (non-contra) accounts
receivable less than 90 days old (as adjusted pursuant to Paragraph 1.04); <font style="DISPLAY: inline; TEXT-DECORATION: underline">plus</font> (ii) fifty
percent (50%) of the value of Seller&#8217;s inventory (as adjusted pursuant to
Paragraph 1.04); <font style="DISPLAY: inline; TEXT-DECORATION: underline">plus</font> (iii) Fifty
Thousand Dollars ($50,000.00); or (B) One Million Dollars
($1,000,00.00).&#160;&#160;The Purchase Price shall be allocated to the various
portions of the Assets, and to the Covenants Not-To-Compete established by
Paragraph 3.09 hereof, as set forth in Schedule 1.03.&#160;&#160;Such allocation
shall be used by the parties for all tax purposes and filings, including without
limitation, IRS Form 8594.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Adjustment of Account
Receivables/Inventory</font>.&#160;&#160;For the purposes of calculating the
Purchase Price pursuant to Paragraph 1.03, the actual value of the inventory on
the Closing Date shall be determined by a physical inventory conducted jointly
by Seller and Buyer following the close of business on the day preceding the
Closing Date, with each item of inventory to be valued at the lower of cost or
market.&#160;&#160;Similarly, net (non-contra) accounts receivable shall be
valued as reflected on the Seller&#8217;s books and records after properly crediting
all payments made against accounts receivable on the Closing Date.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1.05&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Payment of Purchase
Price</font>.&#160;&#160;The Purchase Price, net of offset under Section 1.06,
shall be paid at the Closing to Seller in the form of a wire transfer to an
account specified by Seller</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>1.06&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Credit for DIP
Financing</font>.&#160;&#160;Subject to the approval of the Bankruptcy Court, it
is anticipated that Buyer or an affiliate might provide financing to Seller, as
a debtor in possession (&#8220;DIP&#8221;), in connection with the Bankruptcy
Case.&#160;&#160;Buyer may, at its option, use part or all of any amounts due
from Seller pursuant to the terms of the DIP credit facilities extended to
Seller by Buyer or its affiliate to apply against or satisfy any of Buyer&#8217;s
obligations to pay the Purchase Price.</font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
II</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">REPRESENTATIONS AND
WARRANTIES OF SELLER AND MEMBERS</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Seller and the Members, to the best of
their knowledge, jointly and severally represent and warrant to Buyer as
follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Authority</font>.&#160;&#160;Seller
is a limited liability company, duly organized, validly existing and in good
standing under the laws of the State of New York.&#160;&#160;Subject to the
authority of the Bankruptcy Court and any orders of such court in the Bankruptcy
Case (specifically including, without limitation, the Sale Order described in
Article 6), Seller has full power and authority to own the Assets, to carry on
the Business as currently conducted, to enter into this Agreement and to sell,
transfer and deliver the Assets.&#160;&#160;Subject to the authority of the
Bankruptcy Court and any orders in the Bankruptcy Case (specifically including,
without limitation, the Sale Order described in Article 6), Seller has taken all
such actions as may be necessary or advisable and proper to authorize this
Agreement, the execution and delivery thereof, the consummation of the
transactions contemplated hereby and the execution and delivery of each of the
documents required to be delivered hereunder.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Absence of
Restrictions</font>.&#160;&#160;Except as specifically set forth in Schedule
2.03, and the Bankruptcy Case, Seller has made no other agreement with any other
party with respect to the sale or encumbrance of the Assets.&#160;&#160;Except
for the Bankruptcy Case and the consent of Seller's landlord with respect to the
negotiation of a new lease of the Business premises located at 1560&#160;Emerson
Street, Rochester, New York (the &#8220;Business Premises&#8221;), the execution and
delivery of this Agreement, and the consummation of the transactions provided
hereunder, do not require any third party consent and do not violate, conflict
with, result in the breach of, or cause the acceleration of or default under any
provision of any obligation, mortgage, lien, lease, agreement, instrument, law,
order, arbitration award, judgment, decree or any other restriction to which
Seller is a party or by which Seller is subject or bound.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Title to
Assets</font>.&#160;&#160;Except as set forth in Schedule 2.03, Seller is in
possession of the Assets and has good, marketable and indefeasible title to all
of the Assets, free and clear of all liabilities, mortgages, conditional sales
agreements, security interests, leases, liens, pledges, encumbrances,
restrictions, charges, claims or imperfections of title whatsoever.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Condition of
Property</font>.&#160;&#160;All of Seller's tangible personal property and
equipment included in the Assets in good working order so as to be fit for use
in the ordinary course of the Business.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.05&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Inventory</font>.&#160;&#160;All
of Seller's inventory included in the Assets is located on the Business
Premises, is usable and saleable in the ordinary course of the Business and is
of a quality suitable for sale in the ordinary course of such
Business.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.06&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Contracts</font>.&#160;&#160;Other
than the Bankruptcy Case, Seller has no contracts or commitments of any kind or
nature which would materially and adversely affect the Business, the Assets or
the continuation of the Business by Buyer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.07&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Litigation and
Claims</font>.&#160;&#160;Other than the Bankruptcy Case, there is no
litigation, proceeding, suit, action, controversy or claim in law or in equity
(including proceedings by or before any governmental board or agency) existing,
pending or, to the best of Seller's and Members' knowledge, threatened against
Seller which might materially adversely affect the Business or the Assets, and
there is no fact known to Seller and Members which could form the basis for any
such litigation, proceeding, suit, action, controversy or
claim.&#160;&#160;Seller has complied with all laws, regulations and orders
applicable to the Business, specifically including all orders of the Bankruptcy
Court, all applicable zoning and environmental regulations and
orders.&#160;&#160;Other than the Bankruptcy Case, there are no judgments,
orders, or notices, whether or not filed, against Seller which might materially
adversely affect the Assets and the continuation of the Business as now
conducted by Seller.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.08&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Taxes</font>.&#160;&#160;Except
as set forth in Schedule 2.08, Seller has filed returns for and paid in full all
of its federal, state and local taxes, including New York State sales and
franchise taxes, to the extent such filings and payments are required or due
prior to the date of this Agreement.&#160;&#160;All such returns were true and
correct when filed.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.09&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Environmental
Compliance</font>.&#160;&#160;At all times in the conduct of the Business,
Seller has complied in all material respects with all environmental laws and
regulations, including, but not limited to, those laws and regulations relating
to the use, storage, transport, and disposal of any hazardous substances, wastes
or other materials and any related documentation, labeling or
records.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.10&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Financial
Statements</font>.&#160;&#160;The reviewed financial statements of the Seller
as, at and for the periods ended December 31, 2006, December 31, 2007, and
September 30, 2008, annexed hereto as Schedule 3.05, (a) are in accordance with
the books and records of the Seller (b) present fully, fairly and accurately the
consolidated financial position of the Seller as of said dates and the
operational results of the Seller for the periods represented thereby and (c)
have been prepared in accordance with GAAP.&#160;&#160;Such financial statements
set forth all of the liabilities and obligations of the Seller, direct and
indirect, contingent and accrued, of any nature whatsoever, whether arising out
of contract, tort, statute or otherwise, except: (a) where not required to be
included in such financial statements pursuant to GAAP, (b) liabilities and
obligations set forth in the contracts, leases and commitments listed and
described in the attached Schedules, and (c) liabilities and obligations
incurred in the ordinary course of the Business subsequent to the respective
dates thereof.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.11&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Labor
Relations</font>.&#160;&#160;Except as set forth in Schedule 2.11(a) hereto, the
Seller has complied in all material respects with all applicable agreements,
laws, rules and regulations relating to the employment of labor, including those
related to wages, hours and payroll taxes.&#160;&#160;The Seller has withheld
and remitted to the proper Governmental Authorities all amounts required by law
or agreement to be withheld from wages or salaries of its employees and is not
liable for any arrearage of wages or any taxes or penalties for failure to
comply with any of the foregoing.&#160;&#160;&#160;&#160;The Seller has no labor
troubles in the sense that within the last 12 months there have been no strikes,
work stoppages, slowdowns, threatened unfair labor practice charges or other
material controversies pending or threatened by any of its employees; and the
Seller has not entered into any collective bargaining agreement and no union
represents, or in the past twelve (12) months has demanded or requested to
represent or is currently attempting to represent, any of the employees of the
Seller.&#160;&#160;Except as set forth in Schedule 2.11(b)
hereto,&#160;&#160;the Seller has not promulgated any policy or entered into any
agreement relating to the payment of any medical insurance premium, retirement
pay, severance pay, vacation pay or sick leave to any present or former
employees of the Seller.&#160;&#160;&#160;Schedule 2.11(b) will reflect all
vacation accrued as of the Closing and set forth the names of any employees of
the Seller who are currently on a leave of absence for any reason including
military duty, sickness, injury or disability and the reasons for and other
details of such leave(s).&#160;&#160;All of the employees of the Seller and
their current wage rates, none of which has been increased in the past thirty
(30) days, are listed in Schedule 2.11(b).&#160;&#160;True, correct and complete
copies of all written employment policies and all employee manuals which are
still in effect for any present or former employee of the Seller have heretofore
been delivered to Buyer.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.12&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">ERISA
Matters</font>.&#160;&#160;Seller does not maintain or contribute to any
"employee benefit plans" as defined in Paragraph 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (including any "multiemployer
plans" as defined in Paragraph 3(37) of ERISA), or any other material bonus,
deferred compensation or other fringe benefits plan or arrangement for the
benefit of employees of Seller which are subject to the minimum funding
standards contained in Section 302 of ERISA.&#160;&#160;Set forth on Schedule
2.12 is a list and description of each bonus, deferred compensation or other
fringe benefit plan or arrangement for the benefit of employees of
Seller.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.13&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Accounts
Receivable</font>.&#160;&#160;All of the Accounts Receivable owned by Seller and
existing as of Closing: (a)&#160;&#160;arose in the ordinary course of Seller's
business; and (b) to the best of Seller&#8217;s and Members&#8217; information as of the
date of this Agreement, will be free and clear of all defenses and claims,
including claims of offset, of any nature whatever,</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>2.14&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">General
Warranty</font>.&#160;&#160;No representation or warranty contained in this
Agreement, nor any Schedule, statement or certificate furnished to or to be
furnished by Seller to Buyer pursuant to the terms hereof, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or fails or will fail to state a material fact
necessary to make the statements contained or incorporated therein or herein not
misleading.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
III</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">COVENANTS OF SELLER AND
MEMBERS</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Seller and the Members jointly and
severally covenant and agree as follows:</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Conduct of the
Business</font>.&#160;&#160;Except as required in connection with the Bankruptcy
Case, to conduct the Business pending the Closing in the normal and usual manner
consistent with the successful operation thereof and, without the prior approval
of Buyer, not to make any change in the policies affecting the operation and
conduct of the Business nor to commence negotiations for, or enter into, any
material or unusual contracts or agreements affecting the Business or the
Assets, or extending beyond the Closing.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Retention of
Business</font>.&#160;&#160;To use and exert best efforts between the date
hereof and Closing to keep and retain the Business as a going business for the
benefit of Buyer and to provide such assistance and cooperation as may be
reasonably requested by Buyer as necessary to assure the orderly transfer of the
Business to Buyer and the continuation thereof by Buyer subsequent to the
Closing.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Changes.</font>&#160;&#160;Between
the date hereof and the Closing, to notify Buyer of any unusual changes,
problems or developments with respect to the Business and the status of Seller's
liabilities, obligations and relationship with its creditors, customers and
suppliers, to endeavor to obtain an uninterrupted and efficient transfer of the
ownership of the Business.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Liabilities</font>.&#160;&#160;To
the extent authorized by the Bankruptcy Court, to pay and discharge, or to make
adequate provision satisfactory to Buyer for the payment and discharge of, all
of Seller's liabilities, indebtedness, obligations, claims and losses arising
out of, or by reason of, the operation of the Business prior to the Closing
Date.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.05&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Access</font>.&#160;&#160;To
allow the authorized personnel and agents of Buyer, upon reasonable notice,
access to any and all of the records and premises of Seller concerning the
Business at reasonable times as agreed to by the Parties between the date hereof
and the Closing; and to furnish Buyer with all information concerning Seller's
affairs as the same pertain to the Business as Buyer may reasonably request; and
to permit Buyer to make extracts from, and copies of, all of Seller's tax
returns and related canceled checks, books, records, appraisals, files, purchase
orders, sales orders and other records as the same pertain to the
Business.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.06&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Indemnification</font>.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
Members shall jointly and severally fully indemnify and hold harmless Buyer, its
officers, directors, agents, employees, advisors, successors and assigns, as
applicable, from and against and in respect of any and all liabilities,
obligations, damages, losses and expenses, including claims of every kind and
nature, whether accrued, absolute, contingent or otherwise, and reasonable
attorneys' fees and the costs of defense, incurred by any of them as a result
(the &#8220;Buyer&#8217;s Losses&#8221;), or by reason, of the breach, falsity or failure of any
of Seller's representations, warranties, covenants or undertakings contained in
this Agreement; it being agreed by the Parties hereto that the provisions of
this indemnification shall survive the Closing Date for a period of five (5)
years.&#160;&#160;In particular, this indemnity shall include any claim against
or losses or damages Buyer may suffer as a result of any violation by Seller of
any environmental laws or regulations, failure to pay any taxes or related
interest or penalties, or Seller's failure to satisfy any claims of
creditors.</font></div>
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      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 108pt"></font>Notwithstanding any provision of this
Section&#160;3.06A, the Seller or any Member will have no liability
(indemnification or otherwise) with respect to an inaccuracy or breach of any
representation, warranty or covenant set forth in this Agreement or any exhibit,
schedule or certificate until the Buyer&#8217;s Losses shall exceed $10,000 in the
aggregate (the &#8220;Seller&#8217;s Basket&#8221;) and then the Seller and the Members shall have
liability only for such amount in excess of the Seller&#8217;s Basket.&#160;&#160;In
no event shall the aggregate liability of the Seller or Members with respect to
any Buyer&#8217;s Losses exceed $100,000.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
Buyer shall&#160;&#160;fully indemnify and hold harmless the Seller and its
Members or employees, as applicable, from and against and in respect of any
liabilities, obligations, damages, losses and expenses, including claims of
every kind and nature, whether accrued, absolute, contingent or otherwise, and
reasonable attorneys&#8217; fees and the costs of defense, incurred by any of them as
a result, or by reason of the breach, falsity or failure of any of Buyer&#8217;s
representations, warranties, covenants or undertakings contained in this
Agreement (&#8220;the Seller&#8217;s Losses&#8221;); it being agreed by the Parties hereto that
the provisions of this indemnification shall survive the Closing Date for a
period of five (5) years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 108pt"></font>Notwithstanding any provision of this
Section&#160;3.06B, the Buyer will have no liability (indemnification or
otherwise) with respect to an inaccuracy or breach of any representation,
warranty or covenant set forth in this Agreement or any exhibit, schedule or
certificate until the Seller&#8217;s Losses shall exceed $10,000 in the aggregate (the
&#8220;Buyer&#8217;s Basket&#8221;) and then the Buyer shall have liability only for such amount
in excess of the Buyer&#8217;s Basket.&#160;&#160;In no event shall the aggregate
liability of the Buyer with respect to any Seller&#8217;s Losses exceed
$100,000.&#160;&#160;Further, in no event shall this indemnification extend to
any members&#8217; liability under any equipment lease guaranty, mortgage guaranty, or
other monetary obligation of the Members.</font></div>
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    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.07&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Cooperation</font>.&#160;&#160;To
execute, acknowledge and deliver to Buyer on demand, both prior and subsequent
to the Closing, all such instruments, consents, authorizations, certifications,
books, records and data, and to take all other action, as previously agreed or
as may be reasonably necessary or advisable in the opinion of
Buyer:&#160;&#160;(i) to satisfy the Conditions to Closing contained in Article
V hereof, (ii) to effect the provisions and intent of this Agreement, or (iii)
to facilitate the transfer and conveyance of title to and possession of the
Assets to Buyer; and further to assist and cooperate with Buyer in connection
with any litigation or other claims of third parties involving the Business or
the Assets.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.08&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Sales Tax
Notification</font>.&#160;&#160;To cooperate with Buyer in its preparation and
filing of form AU-196.10 with the Sales Tax Bureau of the New York State
Department of Taxation and Finance.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.09&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Non-competition</font>.&#160;&#160;For
a period of five (5) years from and after the Closing Date, Seller and Members
each hereby severally agrees not to engage or compete, directly or indirectly,
as a principal, on his/her/its own account, or as a shareholder, member,
officer, director, employee, consultant, advisor, partner or joint venturer in
any corporation or other business entity, as the case may be, in any business
engaged in the sale, distribution or provision of products or services
previously sold, distributed or provided by Seller with respect to the Business,
or which is otherwise in competition with the Business, in the geographical area
in Seller&#8217;s products were distributed.&#160;&#160;If any of these restrictions
on post-closing competitive activities contained in this Paragraph shall for any
reason be held by a court of competent jurisdiction to be excessively broad as
to duration, geographical scope, activity or subject, such restrictions shall be
construed so as to be limited or reduced to be enforceable to the extent
compatible with the applicable law as it shall then appear; it being understood
that by the execution of this Agreement the parties hereto regard the
restrictions herein as reasonable and compatible with their respective
rights.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
IV</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">REPRESENTATIONS AND
WARRANTIES OF BUYER</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Buyer represents and warrants to the
Seller and Members as follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Corporate
Standing</font>.&#160;&#160;Buyer is a business entity duly organized, validly
existing and in good standing under the laws of the State of New
York.&#160;&#160;Buyer has full corporate power and authority to own its
properties and to carry on its business as currently conducted.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Corporate
Authority</font>.&#160;&#160;Buyer has full corporate power and authority to
enter into this Agreement and to purchase the Assets.&#160;&#160;Buyer has taken
all such corporate action as may be necessary or advisable and proper to
authorize this Agreement, the execution and delivery thereof, the consummation
of the transactions contemplated hereby and the execution and delivery of each
of the documents required to be delivered hereunder, so that Buyer will have
full right, power and authority to purchase the Assets from the Seller and to
perform all of its obligations under this Agreement at the Closing.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Consents</font>.&#160;&#160;Neither
the execution of this Agreement nor the consummation of the transactions
contemplated hereby on the part of Buyer requires the consent of any third
party.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
V</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">CLOSING</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Closing (the &#8220;Closing&#8221;) shall take
place at the offices of Underberg &amp; Kessler LLP, 300 Bausch &amp; Lomb
Place, Rochester, New York within 10 days of the last date upon which the Sale
Order and/or Assignment Order required pursuant to Article 6 of this Agreement
shall become Final Orders, as defined in Paragraph 6.03 of this Agreement (&#8220;the
Closing Date&#8221;).</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
VI</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">BANKRUPTCY CONDITIONS TO
CLOSING</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Seller has advised Buyer, and Buyer
acknowledges that Seller has advised it, that Seller is contemplating and is
expected to seek protection from its creditors under the Bankruptcy
Code.&#160;&#160;This Agreement, and the obligations of each party performed
hereunder, shall be subject to the fulfillment or wavier of each of the
following conditions (any one or more of which may be waived in writing in whole
or in part by the written consent of Seller and Buyer, as the case may
be):</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Seller
obtaining an order from the Bankruptcy Court in a form reasonably satisfactory
to Seller and Buyer which shall have been entered upon appropriate notice to
appropriate parties in interest entitled thereto, in the Bankruptcy Case (&#8220;the
Sale Order&#8221;): (i) approving this Agreement and the transaction contemplated
hereby; (ii) authorizing Seller to transfer and assign to Buyer all of its
rights, title and interest in and to the Assets under&#160;&#160;Section 363 of
the Bankruptcy Code, free and clear of any mortgage, pledge, claim, lien,
charge, encumbrances or security interests with such mortgage, pledge, claims,
liens, charges, encumbrances and security interests, if any, to attach to the
proceeds of the sale with the same validity, priority, enforceability and to the
same extent as such liens previously attached to the Assets; (iii) all of the
requirements of Section 363 of the Bankruptcy Code have been satisfied; (iv)
notice of the hearing on the transactions completed by this Agreement (1) was
given in accordance with the applicable provisions of the Bankruptcy Code ad the
Federal Rules of Bankruptcy Procedure (the &#8220;Bankruptcy Rules&#8221;) and (2)
constitutes such notice as is appropriate under the particular circumstances and
in accordance with the Bankruptcy Code and applicable law; (v) finding that the
Buyer is a &#8220;good faith&#8221; purchaser as that term is used in Section 363(m) of the
Bankruptcy Code; and (vi) provisions for the Bankruptcy Court&#8217;s retention of
jurisdiction over matters arising out of or related to this Agreement and the
transactions contemplated hereby.&#160;&#160;Buyer shall have a reasonable
opportunity to review and approve any proposed Sale Order prior to its
submission to the Bankruptcy Court.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;As
to the assigned Executory Contract(s) (as defined in Schedule 6.02 attached
hereto), Seller obtaining entry of an order (the &#8220;Assignment Order&#8221;) of the
Bankruptcy Court (which order may also be the Sale Order), in form reasonably
acceptable to Seller and Buyer, on notice other parties to such agreement(s) and
subject to the consent of such other parties if necessary, authorizing and
providing for (a) the assumption of the assigned Executory Contract(s) by the
Seller; and (b) the valid assignment of the assigned Executory Contract(s) to
Buyer.&#160;&#160;Buyer shall be responsible for satisfying the conditions of
Section 365(b)(1)(A) &#8211; (C) of the Bankruptcy Code to the extent necessary to
permit the assumption by Seller and the assignment to Buyer of the assigned
Executory Contract(s) (all such obligations, including without limitation any
payments required to be made, the &#8220;Cure Obligations&#8221;).&#160;&#160;Buyer shall
have a reasonable opportunity to review and approve any proposed Assignment
Order prior to its submission to the Bankruptcy Court.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
Sale Order and the Assignment Order shall have become a Final Order (as defined
in this paragraph); <font style="DISPLAY: inline; TEXT-DECORATION: underline">provided</font>, <font style="DISPLAY: inline; TEXT-DECORATION: underline">however</font>, that this
condition may be waived in writing by the parties.&#160;&#160;&#8220;Final Order&#8221;
shall mean an order or judgment of the Bankruptcy Court (a) which is not the
subject of a pending appeal, petition for certiorari, or other proceeding for
review, rehearing or reargument accompanied by a stay of the transactions
contemplated hereby, (b) which has not been reversed, stayed, modified, or
amended and (c) respecting which the time to appeal from or petition for
certiorari or to seek review, rehearing or reargument of such order shall have
expired, as a result of which such order shall have become final in accordance
with Rule 8002 of the Bankruptcy Rules and other applicable law, and there shall
not be in effect any preliminary or permanent injunction, stay or order, or
decree or ruling, by a court of competent jurisdiction or by a governmental
regulatory or administrative agency preventing performance of the transactions
contemplated by this Agreement.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;In
the absence of such Sale Order and the Assignment Order, this Agreement shall be
deemed null and void and neither Party shall have any claim against the other by
virtue of this Agreement; <font style="DISPLAY: inline; TEXT-DECORATION: underline">provided</font>, <font style="DISPLAY: inline; TEXT-DECORATION: underline">however</font> that the
Buyer shall be entitled to a break-up fee in the amount of One Hundred
Twenty-five Thousand Dollars ($125,000.00) if, prior to the termination of the
Agreement in accordance with its terms, the Bankruptcy Court approves an
Alternative Transaction (as defined in this paragraph) and such Alternative
Transaction is consummated; <font style="DISPLAY: inline; TEXT-DECORATION: underline">provided</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">further</font>, <font style="DISPLAY: inline; TEXT-DECORATION: underline">however</font>, that the
Seller&#8217;s obligation to pay such break-up fee, and the amount of such break-up
fee, are subject to the Bankruptcy Court&#8217;s approval.&#160;&#160;For the purposes
of this Agreement, an &#8220;Alternative Transaction&#8221; shall mean any one of the
following transactions with or by any person or group other than the
Buyer:&#160;&#160;(a) a merger, consolidation or similar transaction involving
the Seller, or (b) a sale, lease or other disposition directly or indirectly by
merger, consolidation tender offer, share exchange or otherwise of some or all
of the Assets.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
VII</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">OTHER CONDITIONS OF CLOSING
BY BUYER</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The obligation of Buyer to consummate
the transactions contemplated by this Agreement shall be subject, at Buyer's
sole discretion, to the satisfaction of the following conditions
precedent:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>7.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Representations</font>.&#160;&#160;All
of the representations and warranties of Seller herein contained shall be true
and correct as of the date of this Agreement, and as of the Closing Date as if
expressly made on and as of the Closing Date.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>7.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Performance of
Covenants</font>.&#160;&#160;All of the covenants to be performed and all of the
conditions to be satisfied by Seller prior to the Closing Date shall have been
performed or satisfied on or before the Closing.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>7.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Books and
Records</font>.&#160;&#160;Seller shall have delivered to Buyer on or before the
Closing Date all of Seller's operational books, records, data and materials used
by Seller in the conduct of the Business which are or would be necessary or
useful to Buyer in the continuation thereof.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>7.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Condition of
Property</font>.&#160;&#160;All of the Assets shall be in the same condition on
the Closing Date as the same are as of the date hereof, ordinary wear and tear
alone excepted.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>7.05&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Employment of
Members</font>.&#160;&#160;Buyer shall have entered into employment agreements
with both Stanley and Kellman, on terms acceptable to Buyer which shall include
those set forth in Schedule 7.05.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>7.06&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Lease for Business
Premises</font>.&#160;&#160;Buyer and Seller&#8217;s landlord shall have entered into
a lease for the Business Premises.&#160;&#160;Said lease shall be upon such
terms as are acceptable to Buyer, but shall include: (i) an initial term of five
(5) years; (ii) a five (5) year option to renew, exercisable by Buyer; (iii) an
option to purchase the real property during the term or any renewal of the lease
for fair market value, so long as the landlord has not sold the property to a
bona fide arm&#8217;s length purchaser; (iv) a right of first refusal to purchase the
property during the term of the lease, or any renewal thereof, on the same terms
as contained in any bona fide arm&#8217;s length offer to purchase received by the
landlord, <font style="DISPLAY: inline; TEXT-DECORATION: underline">provided</font>, <font style="DISPLAY: inline; TEXT-DECORATION: underline">however</font>, that Buyer&#8217;s
exercise of that right of first refusal shall require Buyer to pay landlord
Twenty-five Thousand Dollars ($25,000) more than said bona fide arm&#8217;s length
offer (Buyer&#8217;s failure to exercise the right of first refusal within thirty (3)
days of notice of a bona fide offer shall terminate Buyer&#8217;s option to purchase
upon the closing of landlord&#8217;s sale of the property to another party); and (v)
the rent payable under such lease shall be &#8220;triple net,&#8221; with an annual base
rent of $80,000 (payable in monthly installments) for the first year, and shall
increase by five percent (5%) per year during the term or any renewal
thereof.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.07&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Additional
Contingencies</font>.&#160;&#160;This Agreement is contingent upon (i) Buyer&#8217;s
obtaining a commitment for financing in an amount and upon terms satisfactory to
Buyer in its sole discretion; and (ii) Buyer's obtaining any required
governmental permits, approvals or consents relating to the operation of the
Business.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>7.08&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Delivery of
Documents</font>.&#160;&#160;Buyer shall have received all such documents,
certificates, opinions and papers required of Seller pursuant to the terms of
this Agreement, or which shall have been reasonably requested by Buyer in
connection therewith, in form and substance as approved prior to the Closing by
Underberg &amp; Kessler LLP, attorneys for Buyer, including but not limited to
the following:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A duly executed
warranty Bill of Sale to the Assets.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A new lease
for the Business Premises has been executed and received by Buyer.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A certified
copy of the Sale Order and Assignment Order, accompanied by a certification by
Seller&#8217;s counsel that they constitute Final Orders as herein
defined.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
D.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A
certificate jointly from Seller and Members dated as of the Closing Date, to the
effect that, as of the Closing Date, all of the representations and warranties
of Seller contained in this Agreement and the Schedules hereto are true and
correct and that all of the covenants and conditions contained in this Agreement
to be performed or satisfied by Seller prior to the Closing have been performed
or satisfied.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
VIII</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">OTHER CONDITIONS OF CLOSING
BY SELLER</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The obligation of Seller to consummate
the transactions contemplated by this Agreement shall be subject, at Seller&#8217;s
sole option, to the satisfaction of the following conditions
precedent:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>8.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Representations</font>.&#160;&#160;All
of the representations and warranties of Buyer herein contained shall be true
and correct as of the date of this Agreement, and as of the Closing Date as if
made on and as of the Closing Date.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>8.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Covenants and
Conditions</font>.&#160;&#160;All of the covenants to be performed and all of
the conditions to be satisfied by Buyer prior to the Closing Date shall have
been performed or satisfied on or before the Closing.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>8.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Members&#8217; Equipment Lease
Guarantees</font>.&#160;&#160;The lessors on any and all Personal Property
Leases assigned to Buyer shall have released any guarantees by which the Members
secured payment of such leases by the Seller.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Deliveries</font>.&#160;&#160;Seller
shall have received all such documents, payments, certificates, notes,
instruments, opinions and papers required of Buyer pursuant to the terms of this
Agreement,&#160;&#160;in form and substance as approved prior to the Closing by
Seller's Attorney, including expressly, but not limited to, the
following:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Payment of
the Purchase Price to the extent and in the manner set forth in Paragraph 1.05
hereof.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A
certificate of resolutions adopted by Buyer's Board of Directors or Executive
Committee thereof authorizing the execution of this Agreement, the consummation
of the transactions contemplated hereby and the execution and delivery of the
documents required to be delivered hereunder, appropriately certified by Buyer's
corporate Secretary.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A
certificate of Buyer, dated as of the Closing Date, to the effect that, as of
the Closing Date, all of the representations and warranties of Buyer contained
in this Agreement are true and correct and that all of the covenants and
conditions contained in this Agreement to be performed or met by Buyer prior to
Closing have been performed or met, such certificate to be executed by Buyer's
President.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
D.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Bankruptcy
Court approval of this Agreement.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
IX</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">CONTINGENT FINANCIAL
MATTERS</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>9.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Tax Status and
Effect</font>.&#160;&#160;It is understood and agreed that neither Seller nor
Buyer has made any representations to the other as to the tax status or tax
effect of the transactions contemplated by this Agreement, and each of the
Parties hereto is therefore separately taking counsel as to such matters and
each is assuming, subject only to the express and specific provisions of this
Agreement, the tax, if any, which may be incurred by reason of the carrying out
of the terms and provisions hereof.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>9.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Sales or Use
Tax</font>.&#160;&#160;In the event that any sales or use tax shall be due to
any state or local governmental authority by reason of the sale of the Assets,
such tax shall be borne by Buyer; <font style="DISPLAY: inline; TEXT-DECORATION: underline">provided, however</font>,
that Seller shall be solely responsible for any sales taxes arising out of the
operation of the Business prior to Closing.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>9.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Brokerage
Commissions</font>.&#160;&#160;Seller and Buyer represent and warrant, each to
the other, that this Agreement and the transactions contemplated hereunder were
brought about without the assistance of any broker, person or firm, and that no
one is entitled to a commission, fee or payment of any kind relative to this
Agreement or the transactions contemplated hereby.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>9.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Risk of
Loss</font>.&#160;&#160;All risk of loss to the Assets shall remain on Seller
until completion of the Closing.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>9.05&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses of
Parties</font>.&#160;&#160;All expenses involved in the preparation,
authorization and consummation of this Agreement, including, without limitation,
all fees and expenses of agents, representatives, counsel and accountants, shall
be borne solely by the Party which shall have incurred the same, and the other
Parties shall have no liability with respect thereto.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
X</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">TERMINATION</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
Agreement may be terminated, and the transactions contemplated hereby may be
abandoned, by written notice promptly given to the other parties hereto, at any
time prior to the Closing Date:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;By
mutual written consent of the Seller and Buyer;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;By
either Seller or Buyer if any permanent injunction or other order of a court or
competent authority or governmental agency which prevents the consummation of
the transaction shall have become final and not appealable;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;By
either Seller or Buyer upon ten (10) days written notice of such termination to
the other parties, if the Closing shall not have occurred on or prior to
__________;<font style="DISPLAY: inline; TEXT-DECORATION: underline">
provided</font> that the failure of the Closing to occur by such date is not due
in whole or in part to a material breach of the terminating party of such
party&#8217;s representations, warranties or covenants under this
Agreement;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;By
either Seller or Buyer if either (A) the Sale Order or the Assignment Order is
not entered by _______; or (B) the Sale Order or the Assignment Order is not a
Final Order by ________ (or if the Sale Order or the Assignment Order was
entered in the ten (10) days prior to such date and no appeal has been
perfected, eleven (11) days after the date of the Sale Order or Assignment Order
was entered; or (C) the Bankruptcy Court shall have denied the Sale order or the
Assignment Order;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.05&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;By
either Seller or Buyer if the Closing has not occurred by the date which is
thirty days after the last to occur of the date of the Sale Order and the date
of the Assignment Order;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.06&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Automatically,
without further action by either Party, if the Bankruptcy Court approves an
Alternative Transaction, as defined in Paragraph 6.04;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.07&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;By
Buyer if there has been a breach by Seller of any of its representations,
warranties or covenants that would result in the condition set forth in Article
VII not being met, which breach is not curable, or if curable, is not cured
within thirty (30) days after notice of such breach is given by Buyer to Seller;
or by Seller if there has been a breach by Buyer of any of its representations,
warranties or covenants that would result in the condition set forth in Article
VIII not being met, which breach is not curable, or if curable, is not cured
within thirty (30) days after notice of such breach is given by Seller to
Buyer.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- 18
- -</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ARTICLE
XI</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">MISCELLANEOUS
PROVISIONS</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.01&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Survival of Representations
and Warranties</font>.&#160;&#160;All representations and warranties of the
Seller and the Members contained in this Agreement shall survive the execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the trans&#173;fer and conveyance of the
Assets.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Buyer's
Liability</font>.&#160;&#160;It is understood and agreed that all of Buyer's
obligations and responsibilities hereunder are solely those of Secuprint Inc.,
and that Document Security Systems, Inc., has, and shall have, no personal
liability with respect thereto.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.03&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Binding Effect;
Assignment</font>.&#160;&#160;This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective personal representatives,
successors and assigns.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.04&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Entire
Agreement</font>.&#160;&#160;This Agreement contains the entire understanding
and agreement among the Parties hereto and supersedes any prior understandings,
memoranda or other written or oral agreements between or among any of them
respecting the within subject matter.&#160;&#160;There are no representations,
agreements, arrangements or understandings, oral or written, between or among
any of the Parties relating to the subject matter of this Agreement which are
not fully expressed herein.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.05&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Modifications;
Waiver</font>.&#160;&#160;No modification or waiver of this Agreement or any
part hereof shall be valid or effective unless in writing and signed by the
Party or Parties sought to be charged therewith, no waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other
subsequent breach or condition, whether of like or different nature, and no
waiver of any breach of this Agreement by any Members shall be deemed to be a
waiver of any other Members for the same breach or any subsequent breach,
whether of like or different nature.&#160;&#160;No course of dealing between or
among any of the Parties hereto will be deemed effective to modify, amend or
discharge any part of this Agreement or the rights or obligations of any Party
hereunder.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- 19
- -</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.06&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Partial
Invalidity</font>.&#160;&#160;If any provision of this Agreement shall be held
by a court of competent jurisdiction to be invalid or unenforceable, such
provision shall be construed so as to be limited or reduced to be enforceable to
the maximum extent compatible with the law as it shall then
appear.&#160;&#160;&#160;The total invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.07&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">No Third Party
Beneficiary</font>.&#160;&#160;None of the provisions of this Agreement shall be
for the benefit of, or enforceable by, any person or entity which is not a Party
hereto.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.08&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Notices</font>.&#160;&#160;Any
notice or other communication required or permitted under this Agreement shall
be in writing and shall be deemed to have been duly given (i) upon hand
delivery, or (ii) on the third day following delivery to the U.S. Postal Service
as certified or registered mail, return receipt requested and postage prepaid,
or (iii) on the first day following delivery to a nationally recognized United
States overnight courier service, fee prepaid, return receipt or other
confirmation of delivery requested or (iv) when telecopied or sent by facsimile
transmission if an additional notice is also given under (i), (ii) or (iii)
above within three days thereafter.&#160;&#160;Any such notice or communication
shall be directed to a Party at its address set forth below or at such other
address as may be designated by a party in a notice given to all other Parties
hereto in accordance with the provisions of this Paragraph.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <div style="MARGIN-LEFT: 36pt" align="left">
        <table cellpadding="0" cellspacing="0" width="70%">
            <tr>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Notice
      to Buyer shall</font></div>
              </td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Secuprint,
      Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">be
      shall be sent to:</font></div>
              </td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">28
      East Main Street</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Rochester,
      New York&#160;&#160;14614</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Attn.:&#160;&#160;Patrick
      White</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <div style="MARGIN-LEFT: 36pt" align="left">
        <table cellpadding="0" cellspacing="0" width="70%">
            <tr>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">with
      a copy to:</font></div>
              </td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Underberg
      &amp; Kessler LLP</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">300
      Bausch &amp; Lomb Place</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Rochester,
      New York&#160;&#160;14604</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Attn:&#160;&#160;Michael
      J. Beyma</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <div style="MARGIN-LEFT: 36pt" align="left">
        <table cellpadding="0" cellspacing="0" width="70%">
            <tr>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Notice
      to Seller</font></div>
              </td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DPI
      of Rochester, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">shall
      be sent to:</font></div>
              </td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1560
      Emerson Street</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Rochester,
      New York&#160;&#160;14606</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Attn.:&#160;&#160;James
      Stanley</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- 20
- -</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <div style="MARGIN-LEFT: 36pt" align="left">
        <table cellpadding="0" cellspacing="0" width="70%">
            <tr>
              <td align="left" valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="tabdatabeginip">with a copy to:</a></font></div>
              </td>
              <td align="left" valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Lacy
      Katzen, LLP</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">140
      East Main Street</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Rochester,
      New York&#160;&#160;14614</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="35%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Attn.:&#160;&#160;David
      D. MacKnight</font></div>
              </td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.09&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing
Law</font>.&#160;&#160;This Agreement shall be governed by and construed in
accordance with the laws of the State of New York pertaining to contracts made
and to be wholly performed within such state, without taking into account
conflicts of laws principles.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.10&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Jurisdiction and
Venue</font>.&#160;&#160;DURING THE PENDENCY OF THE BANKRUPTCY CASE, THE
BANKRUPTCY COURT WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN OR
AMONG THE PARTIES, WHETHER IN LAW OR IN EQUITY, ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY AGREEMENT CONPTEMPLATED HEREBY; PROVIDED, HOWEVER, THAT IF
THE BANKRUPTCY COURT IS UNWILLING OR UNABLE TO HEAR SUCH DISPUTE:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
(i)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;the courts
of the State of New York and/or the United States Federal Courts located in the
State of New York shall have exclusive jurisdiction over each of the Parties and
such proceedings; and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>&#160;&#160;
(ii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;the venue
of any such action shall be in Monroe County, New York and/or the United States
District Court for the Western District of New York.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.11&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Headings</font>.&#160;&#160;The
headings contained in this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.12&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Gender</font>.&#160;&#160;Whenever
the context may require, any pronoun used herein shall include the corresponding
masculine, feminine or neuter forms and the singular of nouns, pronouns and
verbs shall include the plural and vice versa.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.13&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Fair
Meaning</font>.&#160;&#160;This Agreement shall be construed according to its
fair meaning, the language used shall be deemed the language chosen by the
Parties hereto to express their mutual intent, and no presumption or rule of
strict construction should be applied against any Party hereto.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>11.14&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Counterparts</font>.&#160;&#160;This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of said counterparts shall together constitute but one and
the same instrument which may be sufficiently evidenced by one
counterpart.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- 21
- -</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>IN WITNESS WHEREOF, the Parties
hereunto have duly executed this Agreement on November 6, 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <div align="left">
        <div align="justify">
          <div align="justify">
            <div align="justify">
              <div align="justify">
                <div align="left">
                  <table cellpadding="0" cellspacing="0" width="100%">
                      <tr>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td colspan="2" valign="top" width="50%">
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      INC</font>.</font></div>
                        </td>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                      <tr>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                      <tr>
                        <td valign="top" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="5%" style="PADDING-BOTTOM: 2px">
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;By:</font></div>
                        </td>
                        <td valign="top" width="45%" style="BORDER-BOTTOM: black 2px solid">
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      Patrick White</font></div>
                        </td>
                        <td valign="top" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                      <tr>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="45%">
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Patrick
      White, President</font></div>
                        </td>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                      <tr>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                      <tr>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td colspan="2" valign="top" width="50%">
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SELLER:
      <font style="DISPLAY: inline; FONT-WEIGHT: bold">DPI OF ROCHESTER,
      INC</font>.</font></div>
                        </td>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                      <tr>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                      <tr>
                        <td valign="top" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="5%" style="PADDING-BOTTOM: 2px">
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;By:</font></div>
                        </td>
                        <td valign="top" width="45%" style="BORDER-BOTTOM: black 2px solid">
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      James Stanley</font></div>
                        </td>
                        <td valign="top" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                      <tr>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                        <td valign="top" width="45%">
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">James
      Stanley, President</font></div>
                        </td>
                        <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                      </tr>
                  </table>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <div align="justify">
        <div align="left">
          <div align="justify">
            <div align="justify">
              <table cellpadding="0" cellspacing="0" width="100%">
                  <tr>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="50%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">JAMES
      W. STANLEY:</font></div>
                    </td>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td align="left" valign="top" width="50%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      James W. Stanley</font></div>
                    </td>
                    <td valign="top" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="50%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(a
      Member, per Recital V)</font></div>
                    </td>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="50%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MATTHEW
      KELLMAN:</font></div>
                    </td>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td align="left" valign="top" width="50%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      Matthew Kellman</font></div>
                    </td>
                    <td valign="top" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                    <td valign="top" width="50%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(a
      Member, per Recital V)</font></div>
                    </td>
                    <td valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  </tr>
              </table>
            </div>
          </div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">- 22
- -</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>v135421_ex10-2.htm
<DESCRIPTION>SECURED PROMISSORY NOTE
<TEXT>
<html>
  <head>
    <title></title>
    </head>
    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THIS NOTE
HAS NOT BEEN REGISTERED UNDER&#160;THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE &#8220;<font style="DISPLAY: inline; TEXT-DECORATION: underline">SECURITIES ACT</font>&#8221;), OR
ANY APPLICABLE STATE LAW, AND MAY NOT BE SOLD, OFFERED FOR SALE, DISTRIBUTED,
ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE, OR FOREIGN
SECURITIES LAWS COVERING ANY SUCH TRANSACTION OR (B) SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURED
PROMISSORY NOTE</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="43%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Up
      to $1,000,000.00</font></div>
            </td>
            <td align="right" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">December
      18, 2008</font></div>
            </td>
          </tr>
          <tr>
            <td align="right" valign="top" width="43%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></td>
            <td align="right" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rochester,
      New York</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FOR VALUE
RECEIVED, DOCUMENT SECURITY SYSTEMS, INC. (&#8220;DSSI&#8221;) and SECUPRINT INC.
(&#8220;Secuprint,&#8221; and, with DSSI, collectively, the &#8220;Borrower&#8221;), promises to pay to
BAUM CAPITAL INVESTMENTS INC. (the &#8220;Lender&#8221;), or to its order, the principal sum
of up to ONE MILLION and 00/100 U.S. DOLLARS ($1,000,000.00) (the &#8220;Principal
Amount&#8221;), together with interest in arrears on the unpaid principal balance from
time to time outstanding from the date hereof until the entire principal amount
due hereunder is paid in full at the rate(s) provided below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Maturity</font>. The
aggregate Principal Amount, together with all accrued interest thereon and
expenses incurred by the Lender in connection herewith (cumulatively, the
&#8220;Outstanding Amount&#8221;), shall be due and payable in full on the earliest to occur
of (the earliest of such events, the &#8220;Maturity Date&#8221;): (i) December 17, 2009
(the &#8220;Scheduled Maturity Date&#8221;) and (ii) the acceleration of this Note upon the
occurrence of an Event of Default. Unless payment is made following a demand
therefor by the Lender, the Borrower shall provide the Lender with not less than
five (5) business days&#8217; prior written notice of its intent to repay the amounts
outstanding hereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Interest</font>. This
Secured Promissory Note (this &#8220;Note&#8221;) shall bear interest at a rate of fifteen
percent (15%). Interest shall be calculated on the basis of a year of 360 days
for the actual number of days elapsed. If, for the period from the first day of
the month following the date of this Note to the date three months thereafter
(&#8220;Test Period&#8221;), Secuprint is &#8220;Profitable&#8221; (as defined herein), then the
interest rate shall be reduced to twelve percent (12%) beginning on that
date.&#160;&#160;Profitable shall mean Secuprint&#8217;s aggregate cash receipts shall
exceed its aggregate cash expenditures (Secuprint handling its receipts and
expenditures in the normal course of business).&#160;&#160;From and after the
occurrence of an Event of Default, the unpaid principal balance of this Note
and, to the extent permitted by law, overdue interest shall bear interest at a
rate per annum equal to four (4%) percent over the then applicable interest rate
due under this Note (the &#8220;Default Rate&#8221;).</font></div><br>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Payment</font>. The Borrower
shall pay eleven (11) consecutive monthly installments of interest commencing on
January 1, 2009 and continuing on the same day of each month thereafter; and one
(1) last payment consisting of the entire outstanding principal amount together
with interest, accrued thereon, which payment is due and payable on the Maturity
Date.&#160;&#160;All payments by the Borrower under this Note shall be made in
United States Dollars without deduction, set-off or counterclaim and shall be
free and clear and without any deduction or withholding for any taxes or fees of
any nature whatever, unless the obligation to make such deduction or withholding
is required by law.&#160;&#160;Unless otherwise expressly provided in this Note,
the Borrower, to the extent permitted by applicable law, waives presentment for
payment, protest, and demand, and notice of protest, demand, and/or dishonor and
nonpayment of this Note, notice of any Event of Default under this Note, and all
other notices or demands otherwise required by law that the Borrower may
lawfully waive.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Immediately
upon full repayment of the Outstanding Amount in accordance with the terms
hereof, the Borrower shall be released from the repayment obligation set forth
in this Note, the pledge and security interest shall be terminated, and the
Lender shall execute releases of financing statements.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Usury</font>.&#160;&#160;All
agreements between the Borrower and the Lender are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of acceleration of
maturity of the indebtedness evidenced hereby or otherwise, shall the amount
paid or agreed to be paid to the Lender for the use, forbearance, or detention
of the indebtedness evidenced hereby exceed the maximum permissible amount under
applicable law. If, from any circumstance whatsoever, fulfillment of any
provision hereof at the time performance of such provision shall be due shall
involve transcending the limit of validity prescribed by law, the obligation to
be fulfilled shall automatically be reduced to the limit of such validity, and
if from any circumstances the Lender should ever receive as interest an amount
which would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced
hereby and not to the payment of interest, and, if the principal amount of this
Note has been paid in full, shall be refunded to the Borrower.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Late
Charge</font>.&#160;&#160;If an interest payment is not received within ten days
of its due date, Borrower shall pay a late charge equal to twenty-five percent
(25%) of the delinquent amount; any excess collected by mistake shall be
refunded on request, and each such late charge shall be separately charged and
collected by the Lender.&#160;&#160;Payments may be applied in any order in the
sole discretion of the Lender but prior to demand, shall be applied first to
past due interest, expenses and late charges, then to scheduled principal
payments, if any, which are past due, then to current interest, expenses and
late charges, and last to remaining principal.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Security Interest and
Collateral</font>. This Note is secured by a first priority security interest in
all the assets of Secuprint as more fully described in and pursuant to the terms
of the Security Agreement, of even date hereof, made by Secuprint in favor of
the Lender (the &#8220;Security Agreement,&#8221; together with this Note, the &#8220;Transaction
Documents&#8221;).</font></div><br>
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    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Replacement of Note</font>.
If this Note is mutilated, lost, stolen or destroyed, the Borrower shall issue
or cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Note, a new Note, but only upon
receipt of evidence reasonably satisfactory to the Borrower of such loss, theft
or destruction and customary and reasonable bond or indemnity, if
requested.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Events of
Default</font>.&#160;&#160;The following constitute an event of default (&#8220;Event
of Default&#8221;):</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Borrower
fails to pay any of its material liabilities, obligations, and indebtedness to
Lender of any and every kind and nature, whether heretofore, now or hereafter
owing, arising, due or payable and howsoever evidenced, created, incurred,
acquired, or owing, whether primary, secondary, direct, contingent, fixed or
otherwise whether arising under or in accordance with the Transaction Documents
or otherwise. when due and said failure continues for a period of ten (10)
days;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Secuprint&#8217;s
fails to be Profitable as of the end of the Test Period and on a cumulative
basis as of the end of each month thereafter.&#160;&#160;Profitable shall mean
for the applicable period Secuprint&#8217;s aggregate cash receipts shall exceed its
aggregate cash expenditures (Secuprint handling its receipts and expenditures in
the normal course of business);</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Secuprint&#8217;s
fails to be Profitable for any two consecutive months after the Test
Period.&#160;&#160;Profitable shall mean for each of two consecutive months
Secuprint&#8217;s monthly cash receipts shall exceed its monthly cash expenditures
(Secuprint handling its receipts and expenditures in the normal course of
business);</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">d.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Borrower
fails or neglects to perform, keep or observe any of the covenants, conditions
or agreements contained in this Note;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">e.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Any
warranty or representation now or hereafter made by the Borrower in connection
with this Note is untrue or incorrect in any material respect, or any schedule,
certificate, statement, report, financial data, notice, or writing furnished at
any time by the Borrower to the Lender is untrue or incorrect in any material
respect, on the date as of which the facts set forth therein are stated or
certified;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">f.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A
proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute is filed against
Borrower which is not dismissed within sixty (60) days of its filing, or a
proceeding under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt or receivership law or statute is filed by
Borrower or the Borrower makes an assignment for the benefit of creditors or
Borrower takes any corporate action to authorize any of the
foregoing;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">g.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Borrower
voluntarily or involuntarily dissolves or is dissolved, terminates or is
terminated;</font></div><br>
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    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">h.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Borrower
becomes insolvent or fails generally to pay its debts as they become due, and
said failure continues for a period of thirty (30) days after written notice of
same from the Lender to the Borrower;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">i.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;A
default under any of the other Transaction Documents;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">j.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;One
or more judgments, decrees, or judicial orders for the payment of money which in
the aggregate, in any fiscal year of Borrower, exceeds $250,000.00 shall be
rendered against the Borrower or any of its subsidiaries, and such judgments,
decrees, or judicial orders shall continue unsatisfied and in effect for a
period of thirty (30) consecutive days without being vacated, discharged,
satisfied, or stayed or appealed;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Financials</font>. Secuprint
agrees to provide to Lender within fifteen (15) days after the end of each month
the following:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;an
unaudited internally prepared financial statement of Secuprint as of the end of
such month, which financial statement shall consist of income and cash flows for
the month, for the corresponding month in the previous fiscal year and for the
period from the end of the previous fiscal year, with a balance sheet as of the
month end;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;a
statement signed by Secuprint&#8217;s chief financial officer certifying that no event
of default has occurred or is continuing to occur under the Transaction
Documents, together with calculations demonstrating compliance with Profitable
requirements contained in Paragraphs 2, 8.b. and 8.c above.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Liability of Each
Borrower</font>: Each Borrower of this Note agrees to be jointly and severally
liable for all amounts and obligations which become due under this Note and for
compliance with all of the terms and conditions of this Note.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Purpose</font>.&#160;&#160;The
Loan proceeds shall be used for the business purpose of purchasing the assets of
DPI of Rochester, LLC</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Miscellaneous</font>.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Authority and
Enforceability; Etc</font>. The Borrower hereby represents and warrants to the
Lender that:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">i.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;it
has full power and authority and has taken or shall take all required corporate
and other action necessary to permit it to execute, deliver, and perform all of
its obligations contained in this Note, the Security Agreement, and any other
documents or instruments delivered in connection herewith, and to borrow
hereunder, and such actions to the best of its knowledge will not violate any
provision of law applicable to, or the organizational documents of, the
Borrower, or result in the breach of or constitute a default under any material
agreement or instrument to which the Borrower is a party or by which it is
bound, which default has not been waived in writing on or prior to the date
hereof;</font></div><br>
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      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ii.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;this
Note has been duly authorized and validly executed by and is the valid and
binding obligation of the Borrower enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other laws affecting creditors&#8217; rights and remedies
generally, and by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law);</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">iii.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;neither
the execution and delivery by the Borrower of this Note, nor the performance by
the Borrower of its obligations hereunder, requires the consent, approval or
authorization of any person or governmental authority, which consent, approval,
or authorization has not been obtained; and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">b.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Notices</font>. All notices
to any party required or permitted hereunder shall be in writing and shall be
sent to the address or facsimile number set forth for such party as
follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">i.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If
to the Lender:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Baum
Capital Investments Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c/o
Stafford Higgins Industries</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11
Willard Road</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Norwalk,
Connecticut 06851</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Attn:
Walter Baum</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ii.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If
to DSSI:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Document
Security Systems, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">28 East
Main Street, Suite 1525</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rochester,
NY 14614</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Attention:<font style="DISPLAY: inline; FONT-STYLE: italic">&#160;</font>Vice President of
Finance<font style="DISPLAY: inline; FONT-STYLE: italic">&#160;</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">iii.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If
to Secuprint:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Secuprint
Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c/o
Document Security Systems, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">28 East
Main Street, Suite 1525</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rochester,
NY 14614</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Attention:<font style="DISPLAY: inline; FONT-STYLE: italic">&#160;</font>Vice President of
Finance<font style="DISPLAY: inline; FONT-STYLE: italic">&#160;</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any such
notice shall be deemed effectively given (i) upon personal delivery to the party
to be notified; (ii) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (iii)
three days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) one day after deposit with a
recognized national overnight courier, specifying next day delivery, or two days
after deposit with a recognized international overnight courier, specifying two
day delivery, in each case with written verification of
receipt.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Waiver</font>. No failure to
exercise, and no delay in exercising, on the part of the Lender, any right,
power, or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power, or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">d.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Amendments</font>. Any term,
covenant, or condition of this Note may be amended or waived only by written
consent of the Borrower and the Lender.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">e.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses</font>. Any
reasonable expense incurred by the Lender (including, without limitation,
reasonable attorneys&#8217; fees and disbursements) in connection with the
administration, or enforcement of this Note and any other document executed by
the Borrower in connection with the obligations of Borrower hereunder or any
amendment hereto or thereto, or the exercise of any right or remedy upon the
occurrence of an Event of Default, including, without limitation, the recording
and filing fees to perfect the liens granted under the Security Agreement and
the costs of collection and reasonable attorneys&#8217; fees and expenses, shall be
paid by the Borrower within 15 days of receiving written notice thereof from the
Lender. Any such expense incurred by the Lender and not timely paid by the
Borrower shall be added to the other obligations hereunder and shall earn
interest at the same rate per annum as the principal hereunder.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">f.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing Law</font>. This
Note shall be governed by and construed in accordance with the laws of the State
of New York without giving effect to any conflict or choice of laws
principles.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">g.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Transfer; Successors and
Assigns</font>. The terms and conditions of this Note shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties.
This Note shall not be assignable by any Lender without the prior written
consent of the Borrower, provided that the Lender may assign or transfer any of
its rights, privileges, or obligations set forth in, arising under, or created
by this Agreement to any entity controlled by, controlling or under common
control with the Lender. The Borrower may not assign this Note without prior
written consent of the Lender, provided that the Borrower may assign this Note
to any successor of all or substantially all of its assets or business, or any
entity surviving the merger, combination or consolidation with the
Borrower.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">h.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Entire Agreement</font>.
This Note and any other agreement or instrument entered into in connection
herewith contains the entire agreement of the Borrower and the Lender with
respect to the subject matter hereof.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">i.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidentiality</font>. In
addition to separate confidentiality agreement, if any, the Lender will at all
times keep confidential and not divulge, use or make accessible to anyone the
terms and conditions of this Agreement and the transactions described herein,
and any non-public material information concerning or relating to the business
or financial affairs of the Borrower to which such party has been or will become
privy relating to this Agreement, except to its employees and advisors in such
capacity, as required to perform its obligations hereunder, if required by law
or rules of a stock exchange on which its or its parent&#8217;s securities are listed,
or with the prior written consent of the Borrower.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[The
remainder of this page intentionally left blank.]</font></div><br>
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      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IN
WITNESS WHEREOF, the Borrower has caused this Note to be executed by its duly
authorized representative as of the day and year first above
written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font></div>
    <div>
      <div align="right">
        <table cellpadding="0" cellspacing="0" width="50%">
            <tr>
              <td align="left" colspan="2" valign="top" width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DOCUMENT
      SECURITY SYSTEMS, INC.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      &#160;</font></div>
              </td>
              <td align="left" valign="top" width="46%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      &#160;</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:&#160;&#160;</font></div>
              </td>
              <td align="left" valign="top" width="46%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">/s/ Philip Jones</font></font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="46%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name:
      Philip Jones</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title:
      Vice President of Finance</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:&#160;&#160;</font></div>
              </td>
              <td align="left" valign="top" width="46%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">&#160;/s/ Patrick White</font></font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="46%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name:
      Patrick White</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title:
      Chief Executive Officer</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" colspan="2" valign="top" width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SECUPRINT
      INC.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      &#160;</font></div>
              </td>
              <td align="left" valign="top" width="46%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      &#160;</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:&#160;&#160;</font></div>
              </td>
              <td align="left" valign="top" width="46%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">/s/ Patrick White</font></font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="46%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name:
      Patrick White</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title:
      Chief Executive Officer</font></div>
              </td>
            </tr>
        </table>
      </div>
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</font></div>
      </div>
      <div id="PN">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8</font></div>
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          <hr style="COLOR: black" noshade size="2">
        </div>
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<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>v135421_ex10-3.htm
<DESCRIPTION>SECURITY AGREEMENT
<TEXT>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">SECURITY
AGREEMENT</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITY
AGREEMENT, dated December 18, 2008, made by SECUPRINT INC. (the &#8220;Borrower&#8221;), in
favor of BAUM CAPITAL INVESTMENTS INC. (&#8220;Lender&#8221;).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">WITNESSETH</font>:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
pursuant to a Secured Promissory Note, dated as of the date hereof (the &#8220;Note&#8221;),
from the Borrower and Document Security Systems, Inc. (&#8220;DSSI&#8221;) in favor of the
Lender, the Lender has agreed to make certain a loan (the &#8220;Loan&#8221;) to the
Borrower in an aggregate principal amount of up to $1,000,000;
&#160;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Borrower is a subsidiary of DSSI, and DSSI is executing the Note as an
additional borrower thereunder, with the Borrower using the proceeds of the
Loan;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
it is a condition precedent to the Lender making the Loan to the Borrower
pursuant to the Note, that the Borrower shall have executed and delivered to the
Lender a security agreement providing for the grant to Lender of a security
interest in all of the assets of the Company;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOW,
THEREFORE, in consideration of the premises and the agreements herein and in
order to induce the Lender to make and maintain the Loan pursuant to the Note,
the Company hereby jointly and severally agrees with the Lender as
follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
1.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Definitions</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;Reference
is hereby made to the Note for a statement of the terms thereof. All terms used
in this Agreement and the recitals hereto which are defined in the Note or in
Article 9 of the Uniform Commercial Code (the &#8220;Code&#8221;) as in effect from time to
time in the State of New York and which are not otherwise defined herein shall
have the same meanings herein as set forth therein; <font style="DISPLAY: inline; TEXT-DECORATION: underline">provided</font> that terms
used herein which are defined in the Code as in effect in the State of New York
on the date hereof shall continue to have the same meaning notwithstanding any
replacement or amendment of such statute except as Lender may otherwise
determine.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;As
used in this Agreement, the following terms shall have the respective meanings
indicated below, such meanings to be applicable equally to both the singular and
plural forms of such terms:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
2.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Grant of
Security Interest</font>. As collateral security for all of the Obligations (as
defined in Section 3 hereof), the Borrower hereby pledges and assigns to the
Lender, and grants to the Lender, a continuing security interest in all assets
of the Borrower now owned or existing or hereafter acquired or arising, wherever
located, including but not limited to: Accounts, Deposit Accounts, Investment
Property, Inventory, General Intangibles (including payment intangibles,
trademarks, service marks, tradenames, patents, copyrights, licenses and
franchises), Chattel Paper (including electronic chattel paper), Documents
(including documents of title), Money, Supporting Obligations, Instruments
(including promissory notes), Equipment (including machinery, vehicles and
furniture), and Fixtures, together with all proceeds of the foregoing and all
substitutions, additions, replacements and accessions therefor or thereto and
the proceeds thereof (collectively, the "Collateral").</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
3.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Security for
Obligations</font>. The security interest created hereby in the Collateral
constitutes continuing collateral security for all of the following obligations,
whether now existing or hereafter incurred (the &#8220;Obligations&#8221;):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;the
prompt payment by the Company, as and when due and payable (by scheduled
maturity, required prepayment, acceleration, demand or otherwise), of all
amounts from time to time owing by it in respect of the Note and the other
Transaction Documents, including, without limitation, (i)&#160;principal of and
interest on the Loan (including, without limitation, all interest that accrues
after the commencement of any insolvency proceeding of the Company, whether or
not the payment of such interest is unenforceable or is not allowable due to the
existence of such insolvency proceeding), and (ii)&#160;all fees, commissions,
expense reimbursements, indemnifications and all other amounts due or to become
due under any Transaction Document;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;the
due performance and observance by the Company of all of its other obligations
from time to time existing in respect of the Transaction Documents;
and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)&#160;any
and all indebtedness or other obligations of Company to Lender in any capacity,
now existing or hereafter incurred, however created or evidenced, regardless of
kind, class or form, whether direct, indirect, absolute or contingent (including
obligations pursuant to any guaranty, endorsement, other assurance of payment or
otherwise), whether joint or several, whether from time to time reduced and
thereafter increased, or entirely extinguished and thereafter reincurred,
together with all extensions, renewals and replacements thereof, and all
interest, fees, charges, costs or expenses which accrue on or in connection with
the foregoing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
4.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Representations and
Warranties</font>. The Company represents and warrants as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;The
Company (i) is a corporation duly organized, validly existing and in good
standing under the laws of the state or jurisdiction of its organization,
(ii)&#160;has all requisite power and authority to execute, deliver and perform
this Agreement and each other Transaction Document to be executed and delivered
by it pursuant hereto and to consummate the transactions contemplated hereby and
thereby, and (iii)&#160;is duly qualified to do business and is in good standing
in each jurisdiction in which the character of the properties owned or leased by
it or in which the transaction of its business makes such qualification
necessary.</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;The
execution, delivery and performance by the Company of this Agreement and each
other Transaction Document to which the Company is a party or will be a party
(i) have been duly authorized by all necessary action, (ii) do not and will not
contravene its charter or by-laws, or any applicable law or any contractual
restriction binding on or otherwise materially affecting the Company, (iii) do
not and will not result in or require the creation of any Lien upon or with
respect to any of its properties and (iv)&#160;do not and will not result in any
default, noncompliance, suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to it or
its operations or any of its properties.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)&#160;This
Agreement is, and each other Transaction Document to which the Company is or
will be a party, when executed and delivered pursuant hereto, will be, a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)&#160;The
Company is and will be at all times the sole and exclusive owners of, or
otherwise have and will have adequate rights in, the Collateral free and clear
of any Lien except for (i)&#160;the Lien created by this Agreement and
(ii)&#160;the Permitted Liens. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording or filing office except (A)&#160;such as may have been
filed in favor of Lender relating to this Agreement and (B)&#160;such as may
have been filed to perfect or protect any security interests or Liens permitted
by the Note.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)&#160;This
Agreement creates in favor of Lender a legal, valid and enforceable security
interest in the Collateral, as security for the Obligations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
5.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Covenants as
to the Collateral</font>. So long as any of the Obligations shall remain
outstanding and the Note and the other Transaction Documents shall not have
expired or terminated, unless Lender shall otherwise consent in
writing:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Further Assurances</font>.
The Company will at its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or desirable or that Lender may request in order to
(i)&#160;perfect and protect the security interest purported to be created
hereby; (ii)&#160;enable Lender to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii)&#160;otherwise effect the
purposes of this Agreement.</font></div><br>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Transfers and Other
Liens</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)&#160;Except
to the extent expressly permitted by the Note, the Company will not sell or
otherwise transfer (by operation of law or otherwise) any of the
Collateral.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 108pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)&#160;Except
to the extent expressly permitted by the Note, the Company will not create,
suffer to exist or grant any Lien upon or with respect to any
Collateral.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
6.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Additional
Provisions Concerning the Collateral</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;The
Company hereby (i)&#160;authorizes Lender to file, one or more financing or
continuation statements, and amendments thereto, relating to the Collateral and
(ii)&#160;ratifies such authorization to the extent that Lender has filed any
such financing or continuation statements, or amendments thereto, prior to the
date hereof. A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;The
Company hereby irrevocably appoints Lender as its attorney-in-fact and proxy,
with full authority in the place and stead of the Company and in the name of the
Company or otherwise, from time to time in Lender&#8217;s discretion, to take any
action and to execute any instrument which Lender may deem necessary or
advisable to accomplish the purposes of this Agreement (subject to the rights of
the Company under Section 5 hereof), including, without limitation, to execute
assignments, licenses and other documents to enforce the rights of Lender and
the Lender with respect to any Collateral. This power is coupled with an
interest and is irrevocable until all of the Obligations are indefeasibly paid
in full after the termination of the Note and the other Transaction
Documents.&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)&#160;The
powers conferred on Lender hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Lender shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any
Collateral.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
7.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Remedies Upon
Default</font>. If any Event of Default shall have occurred and be
continuing:</font></div>
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may exercise in respect of the Collateral, in addition to any other rights and
remedies provided for herein or otherwise available to it, all of the rights and
remedies of a secured party upon default under the Code (whether or not the Code
applies to the affected Collateral), and also may (i)&#160;take absolute control
of the Collateral, including, without limitation, transfer into Lender&#8217;s name or
into the name of its nominee or nominees (to the extent Lender has not
theretofore done so) and thereafter receive, for the benefit of Lender, all
payments made thereon, give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though it were the outright
owner thereof, (ii)&#160;without notice except as specified below and without
any obligation to prepare or process the Collateral for sale, sell the
Collateral<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>or any
part thereof in one or more parcels at public or private sale, at any of
Lender&#8217;s offices or elsewhere, for cash, on credit or for future delivery, and
at such price or prices and upon such other terms as Lender may deem
commercially reasonable. all Cash Proceeds received by Lender in respect of any
sale of or collection from, or other realization upon, all or any part of the
Collateral may, in the discretion of Lender, be held by Lender as collateral
for, and/or then or at any time thereafter applied (after payment of any amounts
payable to Lender pursuant to Section 8 hereof) in whole or in part by Lender
against, all or any part of the Obligations in such order as Lender shall elect,
consistent with the provisions of the Note and the Transaction Documents. Any
surplus of such cash or Cash Proceeds held by Lender and remaining after the
indefeasible payment in full of all of the Obligations after the termination of
the Note and the other Transaction Documents shall be paid over to whomsoever
shall be lawfully entitled to receive the same or as a court of competent
jurisdiction shall direct.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;In
the event that the proceeds of any such sale, collection or realization are
insufficient to pay all amounts to which Lender is legally entitled, the Company
shall be liable for the deficiency, together with interest thereon at the
highest rate specified in any applicable Transaction Document for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees, costs,
expenses and other client charges of any attorneys employed by Lender to collect
such deficiency.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)&#160;The
Company hereby acknowledges that if Lender complies with any applicable state or
federal law requirements in connection with a disposition of the Collateral,
such compliance will not adversely effect the commercial reasonableness of any
sale or other disposition of the Collateral.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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8.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Indemnity and
Expenses</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;The
Company agrees to defend, protect, indemnify and hold Lender harmless from and
against any and all claims, damages, losses, liabilities, obligations,
penalties, fees, costs and expenses (including, without limitation, reasonable
legal fees, costs, expenses, and disbursements of Lender&#8217;s counsel) to the
extent that they arise out of or otherwise result from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting solely and directly from Lender&#8217;s gross
negligence or willful misconduct, as determined by a final judgment of a court
of competent jurisdiction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;The
Company will upon demand pay to Lender the amount of any and all costs and
expenses, including the reasonable fees, costs, expenses and disbursements of
counsel for Lender and of any experts of Lender (including, without limitation,
any collateral trustee which may act as agent of Lender), which Lender may incur
in connection with (i)&#160;the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination of this Agreement, (ii)&#160;the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral, (iii)&#160;the exercise or enforcement of any of the rights of
Lender hereunder, or (iv)&#160;the failure by the Company to perform or observe
any of the provisions hereof.</font></div><br>
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</font></div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
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</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
9.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Notices,
Etc.</font> All notices and other communications provided for hereunder shall be
in writing and shall be mailed (by certified mail, postage prepaid and return
receipt requested), telecopied or delivered, if to the Company or to Lender, to
it at its address specified in the Note; or as to any such Person, at such other
address as shall be designated by such Person in a written notice to such other
Person complying as to delivery with the terms of this Section 9. All such
notices and other communications shall be effective (i)&#160;if mailed (by
certified mail, postage prepaid and return receipt requested), when received or
three (3) Business Days after deposited in the mails, whichever occurs first,
(ii)&#160;if telecopied, when transmitted and confirmation is received, provided
same is on a Business Day and, if not, on the next Business Day; or
(iii)&#160;if delivered, upon delivery, provided same is on a Business Day and,
if not, on the next Business Day.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
10.&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Miscellaneous</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;No
amendment of any provision of this Agreement shall be effective unless it is in
writing and signed by the Company and Lender, and no waiver of any provision of
this Agreement, and no consent to any departure by the Company therefrom, shall
be effective unless it is in writing and signed by Lender, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;No
failure on the part of Lender to exercise, and no delay in exercising, any right
hereunder or under any other Transaction Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The rights
and remedies of Lender in the other Transaction Documents are cumulative and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of Lender against any party thereto are not conditional or contingent
on any attempt by such Person to exercise any of its rights under any other
Transaction Document against such party or against any other Person, including
but not limited to, the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)&#160;Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.</font></div><br>
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</font></div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)&#160;This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the later of (A) the
indefeasible payment in full of the Obligations and (B) the termination of the
Note and the other Transaction Documents and (ii) be binding on the Company and
all other Persons who become bound as debtor to this Agreement in accordance
with Section 9-203(d) of the Code and shall inure, together with all rights and
remedies of Lender and the Lender hereunder, to the benefit of Lender and the
Lender and their respective permitted successors, transferees and assigns.
Without limiting the generality of clause (ii) of the immediately preceding
sentence, without notice to the Company, Lender may assign or otherwise transfer
their rights and obligations under this Agreement and any other Transaction
Document, to any other Person and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to Lender and the
Lender herein or otherwise. Upon any such assignment or transfer, all references
in this Agreement to Lender shall mean the assignee of Lender. None of the
rights or obligations of the Company hereunder may be assigned or otherwise
transferred without the prior written consent of Lender, and any such assignment
or transfer shall be null and void.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)&#160;Upon
the satisfaction in full of the Obligations and the termination of the Note and
the other Transaction Documents, (i) this Agreement and the security interests
created hereby shall terminate and all rights to the Collateral shall revert to
the Company and (ii) Lender will, upon the Company&#8217;s request and at the
Company&#8217;s expense, (A) return to the Company such of the Collateral as shall not
have been sold or otherwise disposed of or applied pursuant to the terms hereof
and (B) execute and deliver to the Company such documents as the Company shall
reasonably request to evidence such termination, all without any representation,
warranty or recourse whatsoever.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">(f)</font>&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT
THE VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">(g)</font>&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF MONROE, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF </font><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">FORUM</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">NON</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">CONVENIENS</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">, WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS
IS DEEMED APPROPRIATE BY THE COURT.</font></font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">(h)</font>&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">THE COMPANY AND (BY ITS ACCEPTANCE OF
THE BENEFITS OF THIS AGREEMENT) LENDER WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE
PARTIES HERETO.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)&#160;The
Company irrevocably consents to the service of process of any of the aforesaid
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Company at its address provided herein, such service to
become effective 10 days after such mailing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(j)&#160;Nothing
contained herein shall affect the right of Lender to serve process in any other
manner permitted by law or commence legal proceedings or otherwise proceed
against the Company or any property of the Company in any other
jurisdiction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(k)&#160;The
Company irrevocably and unconditionally waives any right it may have to claim or
recover in any legal action, suit or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(l)&#160;Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(m)&#160;This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together constitute one in the same
Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(n)&#160;All
of the obligations of the Company hereunder are joint and several. Lender may,
in its sole and absolute discretion, enforce the provisions hereof against any
of the Company and shall not be required to proceed against the Company or seek
payment from the Company. In addition, Lender may, in its sole and absolute
discretion, select the Collateral of any one or more of the Company for sale or
application to the Obligations, without regard to the ownership of such
Collateral, and shall not be required to make such selection ratably from the
Collateral owned by all of the Company.&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <div align="left">
        <div align="justify">
          <div align="justify">
            <table cellpadding="0" cellspacing="0" width="100%">
                <tr>
                  <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td colspan="2" valign="top" width="50%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SECUPRINT
      INC.</font></div>
                  </td>
                </tr>
                <tr>
                  <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                  <td valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
                </tr>
                <tr>
                  <td valign="top" width="50%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
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                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:&#160;&#160;</font></div>
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      Patrick White</font></div>
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      Patrick White</font></div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title:
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Officer</font></div>
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<TYPE>EX-99.1
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<FILENAME>v135421_ex99-1.htm
<DESCRIPTION>PRESS RELEASE
<TEXT>
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    <div>
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                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><img src="logo.jpg" alt=""></font></div>
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                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">News
      Release</font></div>
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                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Document
      Security Systems, Inc.</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">585.325.3610</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Document
Security Systems Acquires Substantially</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
of the Assets of DPI of Rochester, LLC</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Acquisition
to Transform Company to Full-Service Security Print Manufacturer</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Rochester, NY, December 22,
2008</font> &#8211; Document Security Systems, Inc., (NYSE/Alternext US LLC: DMC)
(&#8220;DSS&#8221;) a leader in patented protection against counterfeiting and unauthorized
copying, scanning and photo imaging, today announced that Secuprint Inc., a
wholly owned subsidiary of DSS, acquired substantially all of the assets of DPI
of Rochester, LLC (&#8220;DPI&#8221;), including working capital of approximately $865,000,
for approximately $940,000 in cash, plus the right to assume up to $2.6 million
in certain secured equipment leases and loans.&#160;&#160;Secuprint plans to
operate DPI&#8217;s business after the acquisition under the name DPI
Secuprint.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DPI is a
full service digital and commercial offset printer located in Rochester, New
York. During the first nine months of 2008, the combined DSS and DPI would have
generated revenue of approximately $11.2 million on a pro forma basis, which
includes $5.3 million revenue from DSS and $5.9 million revenue from
DPI.&#160;&#160;In 2007, DPI generated approximately $7.6 million in revenue and
DSS generated approximately $6.0 million, or combined revenue of $13.6 million
on a pro forma basis.&#160;&#160;DPI&#8217;s financial statements for 2007 and 2008
have not yet been audited.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
Fagenson, Chairman of the Board of DSS, commented, &#8220;The acquisition of DPI is a
transformational event for DSS. It not only accomplishes the fifth of our five
2008 strategic goals &#8211; a synergistic acquisition in the commercial printing
industry - it also advances our goal of becoming a leading provider of security
solutions. With DPI&#8217;s cutting-edge digital print equipment and much-needed
capacity we are well positioned to meet the growing global demand for our
security print products. We are delighted to welcome DPI&#8217;s talented workforce to
the DSS family.&#8221;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Patrick
White, CEO of DSS, added, &#8220;The acquisition of DPI&#8217;s assets continues DSS&#8217;s
transformation from an IP licensing company to a customer-driven, full-service
manufacturer and strengthens our position in the rapidly expanding
anti-counterfeiting and authentication market.&#160;&#160;By purchasing the
assets of DPI, we gain a very capable team, a state-of-the-art commercial print
facility and a notable list of clients, all which will enable us to continue
growing our security print production capabilities. Our collective team will
carry on DPI&#8217;s reputation for high-quality printing and excellent service to our
combined customer group.&#8221;</font></div><br>
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      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
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          <hr style="COLOR: black" noshade size="2">
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      <div id="HDR">
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</font></div>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">White
continued, &#8220;We expect to derive significant operational synergies from the
transaction as we consolidate print operations into DPI&#8217;s facility and integrate
the sales forces to pursue cross-sell opportunities. We also expect to realize
margin improvement by bringing in-house certain DSS print products that we had
previously been outsourcing. As a result, we expect this transaction to be
accretive in the second half of 2009. In addition to acquiring the physical
assets of DPI and its highly skilled printing staff, we are excited that both of
DPI&#8217;s principals have signed five-year employment agreements, with mutually
agreeable automatic extensions, with Secuprint, enabling a smooth transition for
DPI&#8217;s customers.&#8221;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
will provide more detail on its integration plans with DPI in early 2009 when it
outlines its strategic goals and outlook for the year.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DSS and
Secuprint entered into a new credit facility with Baum Capital Investments Inc.
in the principal amount of up to $1.0 million to pay for most of the cash
portion of the purchase price of the DPI acquisition.&#160;&#160;The credit
facility has a one-year term and is secured by all of the assets of
Secuprint.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
November 6, 2008, DPI of Rochester filed for bankruptcy protection in Rochester,
New York.&#160;&#160;As announced on November 7, 2008, DSS&#8217; Secuprint subsidiary
entered into an agreement to acquire substantially all of the assets of DPI
subject to court approval. The acquisition closed on December 18, 2008 following
a December 17, 2008 Order of the United States Bankruptcy Court for the Western
District of New York that approved the acquisition.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">About
Document Security Systems, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Document
Security Systems is a world leader in the development of optical deterrent
technologies that help prevent counterfeiting and brand fraud from the use of
the most advanced scanners, copiers and imaging systems in the market. The
company&#8217;s patented and patent-pending technologies protect valuable documents
and printed products from counterfeiters and identity thieves. Document Security
Systems&#8217; customers, which include international governments, major corporations
and world financial institutions, use its covert and overt technologies to
protect a number of applications including, but not limited to, currency, vital
records, brand protection, ID cards, internet commerce, passports and gift
certificates. DSS&#8217; strategy is to become the world&#8217;s leading producer of
cutting-edge security technologies for paper, plastic and electronically
generated printed assets. More information about Document Security Systems can
be found at its websites: www.documentsecurity.com and
www.plasticprintingprofessionals.com.</font></div><br>
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    <div>&#160;</div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold">Safe Harbor
Statement</font></div>
    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
release contains forward-looking statements regarding expectations for future
financial performance, which involve uncertainty and risk. It is possible the
company's future financial performance may differ from expectations due to a
variety of factors including, but not limited to, changes in economic and
business conditions in the world, increased competitive activity, achieving
sales levels to fulfill revenue expectations, consolidation among its
competitors and customers, technology advancements, unexpected costs and
charges, adequate funding for plans, changes in interest and foreign exchange
rates, regulatory and other approvals and failure to implement all plans, for
whatever reason. It is not possible to foresee or identify all such factors. Any
forward-looking statements in this report are based on current conditions;
expected future developments and other factors it believes are appropriate in
the circumstances. Prospective investors are cautioned that such statements are
not a guarantee of future performance and actual results or developments may
differ materially from those projected. The company makes no commitment to
update any forward-looking statement included herein, or disclose any facts,
events or circumstances that may affect the accuracy of any forward-looking
statement.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contact:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lippert/Heilshorn
&amp; Associates, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amy
Gibbons</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">212-838-3777</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">agibbons@lhai.com</font></div><br>
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
