THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), 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.

     

    PROMISSORY
NOTE

     

    
      	
              $575,000.00

            	
              November
      24, 2009

            
	 
      	
              Rochester,
      New York

            


    

     

    FOR VALUE
RECEIVED, SECUPRINT INC. (“Secuprint,”, the “Borrower”),.promises to pay to Mr.
Mayer Laufer (the “Lender”), or to its order, the principal sum of $575,000 (the
“Principal Amount”), 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.

     

    1.           Maturity. The
aggregate Outstanding Principal Amount, together with all accrued interest
thereon and expenses incurred by the Lender in connection herewith
(cumulatively, the “Outstanding Amount”), shall be due and payable in full on
the earliest to occur of (the earliest of such events, the “Maturity Date”): (i)
November 24, 2012 (the “Scheduled Maturity Date”) and (ii) the acceleration of
this Note upon the occurrence of an Event of Default.

     

    2.           Interest. Interest
shall accrue on the then outstanding principal balance of this Note at a fixed
interest rate per annum equal to 10%. Accrued interest shall be payable in cash
in arrears on the last day of each calendar quarter commencing on December 31,
2009, until the outstanding principal balance is paid in full. If at any time
the principal balance of this Note shall be paid in full, then all accrued
interest shall be payable at the time of such principal payment.

     

    5. Optional Borrower
Redemption. At any time on or before November 24, 2012, the Borrower
shall have the right to redeem all of the then outstanding principal of this
Note for a price equal to the outstanding principal amount plus all accrued and
unpaid interest.

    


    6.           Usury.  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.

     

    7.           Late
Charge.  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.  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.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    8.           Collateral. Upon the
use of proceeds from this Note and the proceeds from the Convertible Promissory
Note between Secuprint, Inc and Congregation Noam Elimelech, dated November 24,
2009, for the payment in full of the Secured Promissory Note between Baum
Capital  Investments and Secuprint dated December 18, 2008, this Note
along with the Convertible Promissory Note each with equal rights pari
passu, is secured by all of the assets of Secuprint, subject to certain
default provisions of equipment leases held by Secuprint with Baum Capital
Investments, which provide Baum Capital Investments with the right of recovery
for rents due under the equipment leases in excess of equipment value in the
event of default.

     

    9      
     Replacement of Note.
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.

    


    10.         Events of
Default.  The following constitute an event of default (“Event
of Default”):

    


    a.           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;

    


    d.           Borrower
fails or neglects to perform, keep or observe any of the covenants, conditions
or agreements contained in this Note;

    


    e.           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;

    


    f.           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;

    


    g.           Borrower
voluntarily or involuntarily dissolves or is dissolved, terminates or is
terminated;

    


    h.           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;

    


    11.         Purpose.  The
Loan proceeds shall be used for the business purpose of payment in full of
Secuprint’s Secured Promissory Note with Baum Capital Investments dated December
18, 2008

     

    12.         Miscellaneous.

    


    a.           Authority and
Enforceability; Etc. The Borrower hereby represents and warrants to the
Lender that:


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    i.           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;

    


    ii.           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’ rights and remedies
generally, and by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law);

    


    iii.           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

     

    b.           Notices. 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:

    


    i.            If
to the Lender:

    


    Mr. Mayer
Laufer

    1402
59th
Street

    Brooklyn,
NY 11219

     

    ii.           If
to Document Security Systems, Inc.:

    


    Document
Security Systems, Inc.

    28 East
Main Street, Suite 1525

    Rochester,
NY 14614

    Attention: Chief Financial
Officer 

     

    ii          If
to Secuprint:

    


    Secuprint
Inc.

    c/o
Document Security Systems, Inc.

    28 East
Main Street, Suite 1525

    Rochester,
NY 14614

    Attention: Vice President of
Finance 

    


    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.

     

    c.           Waiver. 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.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    d.           Amendments. Any term,
covenant, or condition of this Note may be amended or waived only by written
consent of the Borrower and the Lender.

     

    e.           Expenses. Any
reasonable expense incurred by the Lender (including, without limitation,
reasonable attorneys’ 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’ 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.

     

    f.           Governing Law. 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.

     

    g.           Transfer; Successors and
Assigns. 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.

     

    h.           Entire Agreement.
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.

     

    i.           Confidentiality. 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’s securities are listed,
or with the prior written consent of the Borrower.

    


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    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.

    


    
      
        
          	
                  SECUPRINT
      INC.

                
	
                   
       

                	
                   
       

                
	
                  By:  

                	 
      
	 
      	
                  Name:
      Patrick White

                  Title:
      Chief Executive Officer

                


        

      

    

    


    
      
        
          	
                  DOCUMENT
      SECURITY SYSTEMS, INC.

                
	
                   
       

                	
                   
       

                
	
                  By:  

                	 
      
	 
      	
                  Name:
      Patrick White

                  Title:
      Chief Executive Officer

                


        

      

    

    


    
      
        
          
            	
                    Mr.
      Mayer Laufer

                  
	
                     
       

                  	
                     
       

                  
	
                    By:  

                  	 
      
	 
      	
                    Name:
      Mayer Laufer