Document:

Unassociated Document

     

    EXHIBIT 10.8

     

    
      GUARANTY
AND INDEMNITY AGREEMENT

      

      This
Guaranty and Indemnity Agreement (this “Guaranty”) is made as of the 12th day of
February, 2010, by and between DOCUMENT SECURITY SYSTEMS, INC., a corporation
formed under the laws of the State of New York with offices at 28 East Main
Street, Rochester, New York 14614 (“DSS”), SECUPRINT, INC., a corporation formed
under the laws of the State of New York with offices at 1650 Emerson Street,
Rochester, New York 14606 (“Secuprint”), PLASTIC PRINTING PROFESSIONAL, INC., a
corporation formed under the laws of the State of New York with offices at 151
Park Lane Brisbane, California 94005  (“Plastic Printing,” and with
DSS and Secuprint bound hereby jointly and severally, and individually and
collectively called, “Guarantor”) and RBS CITIZENS, N.A., a national banking
association, with offices at 235 East Main Street, Rochester, New York 14604
(“Bank”), in consideration of the extension, modification, or renewal of credit
or forbearance by Bank to Borrower, as defined in that certain Credit Facility
Agreement, dated on even date herewith, by and between Borrower and Bank (as the
same may be amended, extended, replaced, or modified from time to time, the
“Credit Facility Agreement”).  Unless otherwise expressly provided
herein, all capitalized terms in this Guaranty shall have the meanings given to
them in the Credit Facility Agreement.

      

      Guarantor
acknowledges the receipt of valuable consideration for this Guaranty and
acknowledges that Bank is relying on this Guaranty in making financial
accommodations to Borrower.  Borrower requires financing of the kind
extended to it by the Credit Facility Agreement in order to enable Borrower from
time to time to enter into transactions which will benefit
Guarantor.  Guarantor has determined that (a) the execution, delivery
and performance of this Guaranty is necessary and convenient to the conduct,
promotion and attainment of Guarantor’s business and (b) Guarantor may
reasonably be expected to benefit, directly and indirectly, from the Credit
Facility Agreement.

      

      1.           GUARANTY.  Guarantor
hereby jointly and severally unconditionally guarantees to Bank the payment when
due, by acceleration or otherwise, of all Obligations of Borrower to Bank,
whether heretofore or hereafter created, arising or existing or at any time due
and owing from Borrower to Bank.  The obligations under this Guaranty
are cumulative, and are in addition to obligations under any other guaranty or
indemnity previously given by Guarantor to Bank and not terminated in writing by
Bank.

      

      Anything
contained in this Guaranty to the contrary notwithstanding, the obligations of
Guarantor hereunder shall be limited to a maximum aggregate amount equal to the
largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of the
Bankruptcy Code or under any applicable provisions of state insolvency or
fraudulent transfer laws, or other comparable state laws (collectively, the
“Fraudulent Transfer Laws”), in each case after giving effect to all other
liabilities of Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
Guarantor to Borrower in respect of inter-company advances or other
inter-company indebtedness to other affiliates of Borrower to the extent that
such indebtedness would be discharged in an amount equal to the amount paid by
Guarantor hereunder) and after giving effect as assets to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws) of
any rights to subrogation, reimbursement or contribution of Guarantor pursuant
to applicable laws, rules and regulations, and any applicable orders, writs,
injunctions or decrees of any court or governmental authority.

       

      
        
          
          

        

        
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      2.           UNCONDITIONAL ABSOLUTE
GUARANTY.  Guarantor’s liability hereunder shall be direct,
immediate and absolute and shall not be conditioned or contingent upon the
pursuit, exercise or prosecution by Bank of any remedies, and Bank shall have
and may exercise against Guarantor any and all of the rights and remedies that
it might exercise against a principal debtor upon a past due and liquidated
obligation.  This instrument shall constitute an unconditional,
continuing guarantee independent of and in addition to any other security,
collateral, endorsement or guarantee held by Bank for the Obligations or any
part thereof. The liability of Guarantor hereunder shall not be impaired,
altered or otherwise affected by (i) the taking of or release of any other or
additional security for or guarantee of the Obligations or any part thereof,
(ii) any neglect failure or omission to hold, perfect, protect or rely on or
realize upon any such other or additional security or guarantee, (iii) any
extension of credit in excess of the limit if any, of this guarantee, (iv) any
renewal, extension, modification, compounding, compromise, payment, replacement
or discharge of the Obligations or any part thereof or (v) any other act failure
to act or thing whatsoever, which but for this Section 2 would constitute a
release of any obligations of Guarantor, and all of which Guarantor hereby
consents to without notice to Guarantor.

      

      Any
payment of principal or interest, acknowledgment, promise or other act by or on
behalf of Borrower, the effect of which would take any right which Bank may have
against Borrower out of the operation of any statute of limitations shall have a
like effect with respect to the right which Bank may have hereunder against
Guarantor notwithstanding Guarantor’s lack of notice thereof or consent
thereto.

      

      Guarantor
waives notice of acceptance of this guarantee; notice that any Obligations have
been incurred; presentment demand, protest, notice of dishonor of any note or
Obligations; or notice to Guarantor, Borrower, or any other person, of
Borrower’s default. Guarantor authorizes Bank in its sole discretion to direct
the order or manner of the disposition of the collateral and the enforcement of
any and all endorsements and guaranties relating to the
Obligations.  Any payments or credits received from Borrower,
Guarantor, or any other source may be applied to the Obligations in whatever
order or manner Bank elects.

      

      3.           INDEMNITY.  Guarantor
hereby agrees to indemnify Bank and hold it harmless from and against any and
all losses, expenses and damages incurred by Bank in connection with or as a
result of the assertion of any and all claims for the return of moneys
(including the proceeds of any collateral) received or applied by Bank in
partial or full payment of the Obligations, including without limitation all
claims based upon allegations that moneys so received by Bank constituted trust
funds under the Lien Law of the State of New York or other applicable laws, or
that the payment of such moneys or the giving of such collateral to Bank
constituted a preference or fraudulent transfer under the Bankruptcy Code or any
other applicable statute.  This indemnity shall extend to and include
all moneys recovered from or paid over by Bank as a result of such claims,
regardless of the basis thereof, and all costs and expenses including reasonable
attorneys’ fees incurred by Bank in investigation, evaluating and contesting
such claims, regardless of the outcome.  Guarantor’s liability
pursuant to this Section 3 shall survive any termination of this Guaranty to the
extent of all moneys (including proceeds of any collateral) received by Bank on
account of that portion of the Obligations (and any renewals, modifications or
extensions thereof, or replacements therefor, whether made before or after such
termination) for which Guarantor under the terms of this Guaranty remains liable
notwithstanding such termination, whether such moneys are recovered from, or
paid over by, Bank before or after such termination.  The indemnity
provided by this paragraph is in addition to the guarantee set forth elsewhere
in this Guaranty.

       

      
        
          
          

        

        
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      4.           TERMINATION.  The
liability of Guarantor under this Guaranty may be terminated to the extent
hereinafter permitted only (i) if Borrower has no outstanding obligations to
Bank, Bank has no continuing commitments to lend to Borrower, and Bank receives
written notice of Guarantor’s intent to terminate this Guaranty signed by
Guarantor, or (ii) upon the written agreement of Bank.  Any
termination of Guarantor’s liability under this Guaranty shall be effective only
as to the portion of the Obligations not committed by Bank prior to or created
or arising subsequent to such termination and provided further that this
Guaranty and Guarantor’s liability hereunder shall remain in full force and
effect with respect to the portion of the Obligations committed, created,
arising or existing prior to such termination and to all renewals, extensions
and modifications thereof, whether made before or after such
termination.

      

      If there
is more than one Guarantor, including guarantors of the Obligations under
separate agreements, the liability hereunder of any of them may be terminated in
the manner and to the extent provided above, but the liability of those of
Guarantor whose liability hereunder is not terminated shall continue in full
force and effect as though executed only by those of Guarantor
remaining.

      

      The
payment in full of all Obligations outstanding at any time shall not discharge
or otherwise affect Guarantor’s liability hereunder with respect to Obligations
thereafter created or arising prior to the termination of such liability as
herein provided, unless this Guaranty is otherwise terminated as provided
herein.

      

      5.           SETOFF.  Guarantor
hereby grants to Bank a continuing lien, security interest, and right of set off
as security for the Obligations, whether now existing or hereafter arising, upon
and against all deposits, credits, collateral and property, now or hereafter in
the possession, custody, safekeeping or control of Bank or any entity under the
control of Bank and its successors and assigns or in transit to any of
them.  At any time without demand or notice (any such notice being
expressly waived by Guarantor), Bank may set off the same or any part thereof
and apply the same to any Obligations even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations.  ANY
AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS PRIOR TO EXERCISING ITS
RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS, OR OTHER PROPERTY OF
GUARANTOR ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY
WAIVED.

       

      
        
          
          

        

        
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      6.           GUARANTY OBLIGATIONS
DUE.  In case of (i) the death, legal incapacity, insolvency,
liquidation, dissolution, merger, consolidation, or other change of
organizational structure of Guarantor, (ii) suspension of the usual business of
Guarantor, (iii) institution of bankruptcy proceedings or other proceedings of
any kind for the relief or collection of debt by or against Guarantor
(including, without limitation, assignments for the benefit of creditors,
appointment of trustees, receivers, or custodians for a material part of
Guarantor’s assets, levies upon or attachments of assets, the filing of
judgments not fully insured or bonded or removed within thirty days, or the
filing of tax liens), (iv) transfer of a material portion of the assets of
Guarantor, (v) any financial statement or information furnished by Guarantor to
Bank having been false or misleading in any material respect as of the date
furnished, (vi) default (after applicable grace and cure periods) by Guarantor
under any other agreement between Guarantor and Bank, (vii) any default or other
reason by which the Obligations shall have become due and payable, the
Obligations at the option of Bank shall become immediately due and payable by
Guarantor irrespective of any other contract or agreement fixing the date of
maturity.

      

      7.           FINANCIAL
INFORMATION.  Guarantor shall provide Bank with such financial
statements, copies of tax returns, and other information as, and in the
form,  Bank may request, in each case as provided in the Credit
Facility Agreement.

      

      8.           COSTS OF
COLLECTION.  Guarantor shall pay on demand of Bank in
connection with the preparation, administration, default, collection, waiver or
amendment of  terms of the Obligations, or in connection with Bank’s
exercise, preservation, or enforcement of any of its rights, remedies, or
options hereunder, including without limitation, fees of outside legal counsel
or the allocated costs of in-house legal counsel, accounting, consulting,
brokerage or similar professional fees or expenses, and any fees or expenses
associated with travel or other costs relating to any appraisals or examinations
conducted in connection with any Obligation or any collateral therefor, and the
amount of all such expenses shall, until paid, bear interest at the highest rate
applicable to any Obligations (including any default rate) and be Obligations
secured by any collateral.

      

      9.           SUBROGATION.  Guarantor
hereby irrevocably waives any claims or rights, including, without limitation,
any right of subrogation, which Guarantor may now possess or subsequently
acquire against the Borrower or its bankruptcy estate, arising from Guarantor’s
execution of, or payment under, this Guaranty and Guarantor agrees that in such
instances it shall have no recourse, at law or in equity against Borrower or its
bankruptcy estate arising from any liability imposed upon, or incurred by,
Guarantor as a result of Guarantor’s execution of this Guaranty.

       

      
        
          
          

        

        
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      10.           AUTHORIZATION.  If
Guarantor is a corporation, partnership or other organization or association,
this Guaranty is made and entered into by it in furtherance of its
purposes.  The execution of this Guaranty is not contrary to, or in
violation of, its certificate of incorporation, charter or by-laws or any other
agreement or indenture to which it or any of its members is a party or by which
it or its property or its members are bound.  Guarantor and the party
executing this Guaranty on its behalf represent to Bank that Guarantor is duly
authorized to guarantee the Obligations and undertake the within
indemnity.

      

      11.           CREDIT FACILITY AGREEMENT
TERMS.  The obligations, representations, covenants, terms and
conditions contained in the Credit Facility Agreement applicable to Guarantor as
a Guarantor thereunder are hereby incorporated into this Guaranty by reference,
and Guarantor shall be bound by them in the same manner as if Guarantor was a
signatory to the Credit Facility Agreement.

      

      12.           NEGATIVE
PLEDGE.                                                      Without
the express written consent of the Bank, such consent to be in the sole
discretion of the Bank, no Guarantor shall (a) distribute, transfer or convey
any asset or property of such Guarantor to any Affiliate except the Borrower or
another Guarantor or (b) make any loan or extend any other credit accommodation
to any Affiliate except the Borrower or another Guarantor.

      

      13.           JURISDICTION/WAIVER OF
JURY.  This Guaranty, and the rights and obligations of the
parties hereunder, shall be construed, interpreted, governed and enforced in
accordance with the laws of the State of New York (excluding the laws applicable
to conflicts or choice of law).

      

      GUARANTOR
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS GUARANTY OR ANY OF THE OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENT TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON GUARANTOR BY
MAIL AT THE ADDRESSES FIRST SET FORTH ABOVE IN THIS
GUARANTY.  GUARANTOR HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT FORUM.

      

      GUARANTOR
AND BANK (BY ACCEPTANCE OF THIS AGREEMENT) MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
GUARANTY OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION
HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING WITHOUT LIMITATION, ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF BANK RELATING TO
THE ADMINISTRATION OF THE OBLIGATIONS OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND
AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  EXCEPT
AS PROHIBITED BY LAW, GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.  GUARANTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR
ATTORNEY OF BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER.  THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO
ACCEPT THIS AGREEMENT AND MAKE THE LOAN.

       

      
        
          
          

        

        
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      14.           MISCELLANEOUS.  If
there is more than one Guarantor, the representations, agreements, obligations
and liabilities hereunder of Guarantor shall be joint and
several.  This Guaranty shall be binding upon Guarantor, each of them
and their respective heirs, executors, administrators, legal representatives,
successors and assigns, and shall inure to the benefit of Bank, and its
successors and assigns, including specifically any assignee of all or any
portion of the Obligations.

      

      There are
no oral representations, understandings or warranties with respect to this
Guaranty.  It may not be changed except by written agreement signed by
Guarantor and Bank. Bank’s rights and remedies shall not be modified, limited or
waived by any representation, promise or agreement made, or any course of
conduct by Bank after the date of this Guaranty unless evidenced by a written
document signed by Bank.  If any provision of this Guaranty is
declared unenforceable or invalid in whole or in part for any reason, the
remaining provisions shall continue to be effective.

      

      [SIGNATURE
PAGE IMMEDIATELY FOLLOWS.]

       

      
        
          
          

        

        
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      IN
WITNESS WHEREOF, the parties have caused this Unlimited Guaranty and Indemnity
Agreement to be executed by their duly authorized officers as of the date first
set forth above.

       

      
        	
                RBS
      CITIZENS, N.A.

                 

                 

                By:

                
                  
      

                Jeffrey
      R. Morse

                Assistant
      Vice President

                 

                SECUPRINT,
      INC.

                 

                 

                By:

                
                  
      

                Name:  Patrick
      White

                Title:  President

              	
                DOCUMENT
      SECURITY SYSTEMS, INC.

                 

                By:

                
                  
      

                Name: 
      Patrick White

                Title: 
      President

                 

                 

                PLASTIC
      PRINTING PROFESSIONALS, INC.

                 

                 

                By:

                
                  
      

                Name: 
      Patrick White

                Title: 
      President

              

      

       

       

      
        	STATE
      OF NEW YORK	)	 
	 	)
      SS.:	 
	COUNTY
      OF MONROE	)	 

      

       

       

      On the
12th day of February in the year 2010 before me, the undersigned, a notary
public in and for said state, personally appeared Jeffrey R. Morse, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacities, and that by his signature on the
instrument, the individual, or the persons upon behalf of which the individual
acted, executed the instrument.

       

       

      
        
          

        

      

      Notary
Public

       

      
        
          	STATE
      OF NEW YORK	)	 
	 	)
      SS.:	 
	COUNTY
      OF MONROE	)	 

        

         

      

      On the
12th day of February in the year 2010 before me, the undersigned, a notary
public in and for said state, personally appeared Patrick White, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacities, and that by his signatures on
the instrument, the individual, or the persons upon behalf of which the
individual acted, executed the instrument.

       

       

      
        
          
            

          

        

        Notary
Public

         

         

         

        -
7 -Unassociated Document

    

    DOCUMENT
SECURITY SYSTEMS, INC.

     

    SUBSCRIPTION
AGREEMENT

     

    NONE
OF THE SECURITIES OFFERED PURSUANT TO THIS SUBSCRIPTION AGREEMENT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR THE
SECURITIES LAWS OF ANY U.S. STATE OR ANY FOREIGN JURISDICTION AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND SUCH LAWS.  SUCH UNITS, THE SHARES OF COMMON STOCK THAT
COMPRISE A PART OF THE UNITS, THE WARRANTS THAT COMPRISE A PART OF THE UNITS AND
THE SHARES ISSUABLE UPON EXERCISE OF SUCH WARRANTS MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED TO ANY PERSON AT ANY TIME IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER
THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT NECESSSARY.

     

    INVESTMENT
IN THE COMPANY IS HIGHLY SPECULATIVE AND INVOLVES SUBSTANTIAL RISK, INCLUDING,
BUT NOT LIMITED TO THE RISKS SET FORTH IN THE SECTION ENTITLED “RISK FACTORS” IN
THE PRIVATE OFFERING MEMORANDUM ATTACHED HERETO. YOU SHOULD READ THE PRIVATE
OFFERING MEMORANDUM CAREFULLY BEFORE INVESTING.

    

    This
Subscription Agreement (this “Subscription Agreement”) is
entered into on January ___, 2010, by and between DOCUMENT SECURITY SYSTEMS,
INC., a New York corporation (the “Company”), and
________________________, an individual or entity (“Subscriber”). As used herein,
the Company and Subscriber are individually and respectively referred to as a
“Party” and collectively
as the “Parties.” Terms
not otherwise defined herein shall have the meanings ascribed to them in the
Private Offering Memorandum attached hereto as Exhibit A (the “Private Offering
Memorandum”).

     

    1.  Subscription.

     

    Subscriber
subscribes for and offers to purchase, and the Company agrees to issue and sell,
an equity interest in the Company (the “Units”), entitling Subscriber
to the rights of Subscribers described in the Private Offering Memorandum for a
purchase price equal to the amount set forth on the signature page below
(the “Investment Amount”), subject
to the terms and conditions set forth herein.

     

    2.  Investment
Amount.

     

    (a) Deliveries Upon
Signing.  Simultaneous with the execution of this Subscription
Agreement, Subscriber shall execute and deliver to the Company:

     

    (i)  an
Investor Questionnaire substantially in the form of Exhibit B hereto (the
“Investor
Questionnaire”); and

     

    (b) Payment of Investment
Amount.  Concurrent with the execution of this Subscription
Agreement, Subscriber shall transmit a wire transfer or check to the Company in
an amount equal to such Subscriber’s Investment Amount.   For
purposes of this Agreement, “Payment” shall mean
Subscriber’s implementation of such wire transfer or receipt by the Company of
the bank check. Subscriber funds will be maintained separate and apart from
funds of the Company.   The Parties hereby agree that Subscriber
shall not be deemed to have purchased the Units until the Company shall have
provided a Closing Notice (as defined herein).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (c) Closing. The Company, at the
Company’s sole discretion, may elect to accept the subscription of the
Subscriber. The Company’s acceptance of the subscription shall be effective upon
the Company’s transmitting a notice to the Subscriber according to the notice
information for the Subscriber set forth herein informing the Subscriber of such
acceptance (“Closing
Notice”).  The Company shall use commercially reasonable
efforts to effect a closing within 21 days after receiving executed Subscription
Documents and payment of the Investment Amount.

     

    3.  The
Offering.

     

    Subscriber
understands that the details of the offering (the “Offering”) are set forth in
the Private Offering Memorandum, as may be amended or supplemented from time to
time. The Offering will terminate on, or prior to, March 1, 2010, subject to
extension and/or modification in the sole discretion of the Company, and may be
extended or modified without notice as described in the Private Offering
Memorandum.

     

    Subscriber
understands that this Subscription Agreement is not binding upon the Company
unless and until such time as (i) payment of the Investment Amount is received
by the Company, and (ii) the Company accepts Subscriber’s subscription in
writing (the “Closing
Date”).

     

    Subscriber
acknowledges that the Company reserves the right, in its sole discretion, to
accept or reject any Subscription Agreement.

     

    Subscriber
acknowledges that Subscriber has received, read, understands and is familiar
with this Subscription Agreement, any attachments, including but not limited to
the Private Offering Memorandum, as may be amended or supplemented from time to
time, and together with any other filed regulatory documents (collectively
“Offering Material”),
and Subscriber further acknowledges that Subscriber has not relied upon any
information concerning the Offering, written or oral, other than those contained
in this Subscription Agreement and the Offering Material.  Subscriber
further understands that any other information or literature, regardless of
whether distributed prior to, simultaneously with, or subsequent to, the date of
this Subscription Agreement shall not be relied upon by Subscriber in
determining whether to make an investment in the Units and Subscriber expressly
acknowledges, agrees and affirms that Subscriber has not relied upon any such
information or literature in making Subscriber’s determination to make an
investment in the Units and that Subscriber understands that, except as
otherwise provided herein, the Company is under no obligation to (and that
Subscriber does not expect it to) update, revise, amend or add to any of the
information heretofore furnished to Subscriber.

     

    4.  Representations and
Warranties of Subscriber.

     

    (a) In
order to induce the Company to accept Subscriber’s subscription, Subscriber
further represents and warrants to the Company, its Affiliates, as defined in
the Securities Act of 1933 (the “Securities Act”), and counsel
to the Company (the “Company’s
Counsel”), and their respective agents and representatives as
follows:

     

    
      	
               
      

            	
              1.

            	
              SUBSCRIBER HAS READ THE PRIVATE
      OFFERING MEMORANDUM AND EXAMINED THE RISK FACTORS SET FORTH THEREIN, AND
      UNDERSTANDS THE SPECULATIVE NATURE OF AND SUBSTANTIAL RISK INVOLVED IN
      INVESTMENT IN THE
COMPANY.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.

            	
              If
      Subscriber has chosen to do so, Subscriber has been represented by such
      legal and tax counsel and other professionals, each of whom has been
      personally selected by Subscriber, as Subscriber has found necessary to
      consult concerning the purchase of the Units, and such representation has
      included an examination of all applicable documents and an analysis of all
      tax, financial, and securities law aspects thereof deemed to be necessary.
      Subscriber, together with Subscriber’s counsel, Subscriber’s advisors, and
      such other persons, if any, with whom Subscriber has found it necessary or
      advisable to consult, have sufficient knowledge and experience in business
      and financial matters to evaluate the information set forth in this
      Subscription Agreement and in the Offering Material and the risks of the
      investment and to make an informed investment decision with respect
      thereto. Further, Subscriber has been given the opportunity for a
      reasonable time period prior to the date hereof to ask questions of, and
      receive answers from, the Company or its representatives concerning the
      terms and conditions of the Offering and other matters pertaining to this
      investment and has been given the opportunity for a reasonable time period
      prior to the date hereof to verify the accuracy of the Company’s
      information.

            

    

     

    
      	
               
      

            	
              3.

            	
              With
      respect to the United States federal, state and foreign tax aspects of
      Subscriber’s investment, Subscriber is relying solely upon the advice of
      Subscriber’s own tax advisors, and/or upon Subscriber’s own knowledge with
      respect thereto.

            

    

     

    
      	
               
      

            	
              4.

            	
              Subscriber
      has not relied, and will not rely upon, any information with respect to
      this offering other than the information contained herein and in the
      Offering Material.

            

    

     

    
      	
               
      

            	
              5.

            	
              Subscriber
      understands that no person has been authorized to make representations or
      to give any information or literature with respect to this offering that
      is inconsistent with the information that is set forth herein and in the
      Offering Material.

            

    

     

    
      	
               
      

            	
              6.

            	
              Subscriber
      understands that, other than as provided herein and in the Offering
      Materials, no covenants, representations, or warranties have been
      authorized by or will be binding upon the Company, with regard to this
      Subscription Agreement, the performance of the Company or any expectation
      of investment returns, including any representations, warranties or
      agreements contained or made in any written document or oral communication
      received from or had with the Company, its Affiliates, Company Counsel or
      any of their respective representatives or agents. Subscriber has not
      relied upon any information or representation that may be or have been
      made or given except as permitted under this
  paragraph.

            

    

     

    
      	
               
      

            	
              7.

            	
              Subscriber
      understands that the Offering has not been, and it is not anticipated that
      the same will be, registered under the Securities Act, or pursuant to the
      provisions of the securities or other laws of any other applicable
      jurisdictions, but is being made in reliance upon the provisions of
      Section 4(2) and/or 4(6) of the Securities Act and/or Regulation D and the
      other rules and regulations promulgated thereunder, and/or upon such other
      exemption from the registration requirements of the Securities Act as may
      be available with respect to any or all of the investments in securities
      to be made hereunder. Subscriber is fully aware that the Units subscribed
      for by Subscriber are to be sold to Subscriber in reliance upon such safe
      harbor based upon Subscriber’s representations, warranties, and agreements
      as set forth herein. Subscriber is fully aware of the restrictions on
      sale, transferability and assignment of the Units (including the shares of
      Common Stock and the Warrants that comprise the Units, and the shares of
      Common Stock issuable upon exercise of such Warrants), and that Subscriber
      must bear the economic risk of Subscriber’s investment herein for an
      indefinite period of time because the offering has not been registered
      under the Securities Act and, therefore, the Securities cannot be offered
      or sold unless such offer is subsequently registered under the Securities
      Act or an exemption from such registration is available to Subscriber.
  

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              8.

            	
              Subscriber
      is an “accredited investor” (as defined in Rule 501 of Regulation D
      promulgated under the Securities
Act).

            

    

     

    
      	
               
      

            	
              9.

            	
              Subscriber’s
      execution and delivery of this Subscription Agreement has been duly
      authorized by all necessary action and all necessary consents have been
      obtained. Subscriber has no present intention to sell, distribute, pledge,
      assign, or otherwise transfer the Units (including the shares of Common
      Stock and the Warrants that comprise the Units, and the shares of Common
      Stock issuable upon exercise of such Warrants), which Subscriber acquires
      pursuant to this offering. Subscriber is making the investment hereunder
      solely for Subscriber’s own account and not for the account of others and
      for investment purposes only and not with a view to or for the transfer,
      assignment, resale or distribution thereof, in whole or in
      part.  Subscriber has no present plans to enter into any such
      contract, undertaking, agreement, or
  arrangement.

            

    

     

    
      	
               
      

            	
              10.

            	
              Subscriber
      agrees that Subscriber will not cancel, terminate or revoke this
      Subscription Agreement, which has been executed by Subscriber, and that
      this Subscription Agreement shall survive any sale, assignment or other
      transfer of control over, or of all or substantially all of Subscriber’s
      assets or business and Subscriber’s bankruptcy, except as otherwise
      provided pursuant to the laws of any applicable
    jurisdiction.

            

    

     

    
      	
               
      

            	
              11.

            	
              Subscriber
      has substantial investment experience and is familiar with investments of
      the type contemplated by this Subscription Agreement. Subscriber confirms
      that although one of Subscriber’s motivations for investing in the Company
      is to derive economic benefits therefrom, Subscriber is aware that
      purchase of the Units is a speculative investment involving a high degree
      of risk and there is no guarantee that Subscriber will realize any gain
      from Subscriber’s investment or realize any tax benefits therefrom and
      Subscriber is further aware that Subscriber may lose all or a substantial
      part of Subscriber’s investment. Subscriber understands that there are
      substantial restrictions on the transferability of, and there is no
      existing public market for, the Units (including the Warrants that are
      included in the Units) and it may not be possible to liquidate an
      investment in the Units (including the shares of Common Stock and the
      Warrants that comprise the Units, and the shares of Common Stock issuable
      upon exercise of such Warrants). Subscriber affirms that Subscriber
      acknowledges that this investment is highly speculative, involves a high
      degree of risk and, accordingly, Subscriber can afford to lose the entire
      investment.

            

    

     

    
      	
               
      

            	
              12.

            	
              The
      address set forth herein is Subscriber’s true and correct address and
      Subscriber has no present intention of becoming a resident of any other
      country, state, or jurisdiction prior to, or after, Subscriber’s purchase
      of the Units.

            

    

     

    
      	
               
      

            	
              13.

            	
              Subscriber
      understands the meaning and legal consequences of the foregoing
      representations and warranties, which are true and correct as of the date
      hereof and will be true and correct as of the date of Subscriber’s
      purchase of the Units subscribed for herein. Each such representation and
      warranty shall survive such
purchase.

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              14.

            	
              Subscriber
      acknowledges and agrees that it shall not be a defense to a suit for
      damages for any misrepresentation or breach of covenant or warranty made
      by Subscriber that the Company, its Affiliates, the Company’s Counsel and
      their respective agents or representatives knew or had reason to know that
      any such covenant, representation or warranty in this Subscription
      Agreement or furnished or to be furnished to the Company by Subscriber
      contained untrue statements. The foregoing shall survive any investigation
      of Subscriber’s representations and warranties in this Subscription
      Agreement made by the Company, its Affiliates, the Company’s Counsel and
      their respective agents or
representatives.

            

    

     

    
      	
               
      

            	
              15.

            	
              No
      representation or warranty that Subscriber has made in this Subscription
      Agreement, or in a writing furnished or to be furnished pursuant to this
      Subscription Agreement, contains or shall contain any untrue statement of
      fact, or omits or shall omit to state any fact which is required to make
      the statements contained herein or therein, in light of the circumstances
      under which they were made, not
misleading.

            

    

     

    
      	
               
      

            	
              16.

            	
              Subscriber
      has full right, power, and authority to execute and deliver this
      Subscription Agreement and to perform Subscriber’s obligations hereunder.
      This Subscription Agreement has been duly authorized, executed and
      delivered by or on behalf of Subscriber and is a valid, binding and
      enforceable obligation of Subscriber, enforceable against Subscriber in
      accordance with its terms subject to bankruptcy, insolvency,
      reorganization, moratorium or similar laws from time to time in effect and
      affecting creditors’ rights generally and to general equity
      principles.

            

    

     

    
      	
               
      

            	
              17.

            	
              The
      execution and delivery of this Subscription Agreement by Subscriber will
      not result in any violation of, or be in conflict with, or result in the
      default of, any term of any material agreement or instrument to which
      Subscriber is a party or by which Subscriber is bound, or of any law or
      governmental order, rule or regulation which is applicable to
      Subscriber.

            

    

     

    
      	
               
      

            	
              18.

            	
              Subscriber
      is duly and validly organized, validly existing and in good tax and
      corporate standing as a corporation under the laws of the jurisdiction of
      its incorporation with full power and authority to purchase the Units to
      be purchased by it and to execute and deliver this Subscription
      Agreement.

            

    

     

    
      	
               
      

            	
              19.

            	
              To
      Subscriber’s knowledge, all negotiations relative to this Agreement and
      the transactions contemplated hereby have been carried out by Subscriber
      directly with the Company without the intervention of any person or entity
      in such manner as to give rise to any valid claim by any person or entity
      against Subscriber or the Company for a finder’s fee, brokerage commission
      or similar payment. To the extent Subscriber becomes aware of an
      additional claim to such fees, commission or payments, other than to a
      placement agent retained by the Company, Subscriber shall promptly provide
      the Company with notice of such claim. To the extent any person or entity
      claims to be entitled to a finder’s fee, brokerage commission, or similar
      payment in connection with the transactions contemplated hereby,
      Subscriber shall be liable for all such fees and expenses related thereto
      to the extent any such claims relate to acts or omissions of Subscriber or
      to this transaction.  In the event a payment is payable by the
      Company to any broker, finder, agent or other person, other than to a
      placement agent, in connection with Subscriber’s investment in the
      Company, such payment shall be deducted from the amount paid by Subscriber
      in connection with this
Agreement.

            

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    5.  Legend.

     

    Any
certificate representing Subscriber’s interest in the Company shall bear the
following legend:

     

    THESE
SECURITIES HAVE NOT 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 “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED 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 ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS  IN WHICH THE TRANSFEROR PROVIDES THE COMPANY WITH AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION IS NOT
NECESSSARY.

     

    6.  Indemnification by
Subscriber.

     

    Subscriber
hereby agrees to indemnify and hold harmless the Company, its Affiliates, the
Company’s Counsel, and their respective officers, directors, employees, agents
and representatives, from any and all damages, losses, costs, and expenses
(including reasonable attorneys’ fees to collect such amount of damages, losses,
costs, expenses) which they, or any of them, may incur by reason of Subscriber’s
failure to fulfill any of the terms and conditions of this Subscription
Agreement or by reason of Subscriber’s breach of any of Subscriber’s
representations and warranties contained in this Subscription
Agreement.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    7.  Confidential
Information.

    

    For purposes of this Agreement, the
term “Confidential Information” will mean and refer to any information,
technical data or know-how, patentable and un-patentable, including, but not
limited to, software, machinery, research, product plans, product services,
customer lists, marketing materials, developments, inventions, process designs,
finances, or other trade secrets of the Company or similar items relating to the
Company’s business and litigation activities, or that of any supplier, customer
or prospective customer, which Confidential Information is designated in writing
to be confidential or proprietary, or if given orally, to Subscriber under
circumstances reasonably demonstrating or suggesting the confidential or
proprietary nature of such information. The restrictions in this Section shall
not apply to information, which (i) prior to or after the time of disclosure
becomes part of the public knowledge or literature, not as a result of any
inaction or action of Subscriber; (ii) must be delivered in response to a valid
order by a court or governmental body, (iii) became or becomes generally
available to the recipient on a non-confidential basis from a source other than
the Company; or (iv) is approved by the Company, in writing, for release.
Subscriber covenants and agrees not to use any Confidential Information for
Subscriber’s own use or benefit (directly or indirectly), or for the benefit of
any party other than Company. Subscriber may not disclose Confidential
Information to third parties except employees, consultants, or professional
advisers of the Company in connection with Company business who are required to
have the information in order to carry out their duties for the Company.
Subscriber agrees that it will take all reasonable measures to protect the
secrecy of and avoid disclosure or use of Confidential Information of the
Company in order to prevent the Confidential Information from falling into the
public domain or the possession of persons other than those persons authorized
hereunder to have such information, which measures shall include the highest
degree of care that Subscriber uses to protect Subscriber’s own Confidential
Information of a similar nature. Subscriber agrees to immediately notify the
Company in writing of any misuse or misappropriation of the Confidential
Information, which may come to Subscriber’s attention. All proceeds from a
misuse or disclosure of the Company’s Confidential Information will be
recoverable from Subscriber responsible for such misuse or disclosure, which
Subscriber shall be liable to the Company to the fullest extent of the
law.

     

    8.  General
Provisions.

     

    (a) Headings. The
headings contained in this Subscription Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Subscription Agreement.

     

    (b) Enforceability. If
any provision, which is contained in this Subscription Agreement, for any
reason, should be held to be invalid or unenforceable in any respect under the
laws of any State of the United States or any other jurisdiction, such
invalidity or unenforceability shall not affect any other provision of this
Subscription Agreement. Instead, this Subscription Agreement shall be construed
as if such invalid or unenforceable provisions had not been contained
herein.

     

    (c) Notices. Any notice
or other communication required or permitted hereunder (“Notice”) must be in writing
and sent by either (i) registered or certified mail, postage prepaid, return
receipt requested, (ii) overnight delivery with confirmation of delivery, or
(iii) confirmed facsimile transmission, in each case addressed as
follows:

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    
      
        	
                To
      the Company:

              	
                Document
      Security Systems, Inc.

              
	 
      	
                Attn:  Chief
      Executive Officer

              
	 
      	
                28
      East Main Street

              
	 
      	
                Suite
      1525

              
	 
      	
                Rochester,
      NY  14614

              
	 
      	
                Facsimile
      No:  (585) 325-2977

              
	 
      	 
      
	
                To
      Subscriber:

              	
                at
      the address set forth on the signature
page

              

      

    

     

    or in
each case to such other address and facsimile number as shall have last been
furnished by like Notice.  If mailing by registered or certified mail
is impossible due to an absence of postal service, and if the other methods of
sending Notice set forth in this Section 8 are not otherwise available, Notice
shall be in writing and personally delivered to the aforesaid addresses. Each
Notice or communication shall be deemed to have been given as of the date so
mailed or delivered, as the case may be; provided, however, that any Notice
sent by facsimile shall be deemed to have been given as of the date sent by
facsimile.

     

    (d) Governing Law;
Disputes. This Subscription Agreement shall in all respects be construed,
governed, applied and enforced with the laws of the State of New York without
giving effect to the principles of conflicts of laws. The Parties hereby consent
to and irrevocably submit to personal jurisdiction over each of them by the
applicable State or Federal Courts of the State of New York, County of Monroe,
in any action or proceeding, irrevocably waive trial by jury and personal
service of any and all process and other documents and specifically consent that
in any such action or proceeding, any service of process may be effectuated upon
any of them by certified mail, return receipt requested, in accordance with this
Section 8.

     

    (e) Further Assurances.
The Parties agree to execute any and all such other and further instruments and
documents, and to take any and all such further actions, which are reasonably
required to effectuate this Subscription Agreement and the intents and purposes
hereof.

     

    (f) Binding Agreement.
This Subscription Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their heirs, executors, administrators, personal
representatives, successors and assigns.

     

    (g) Waiver. Except as
otherwise expressly provided herein, no waiver of any covenant, condition, or
provision of this Subscription Agreement shall be deemed to have been made
unless expressly set forth in writing and signed by the Party against whom such
waiver is charged; and, (i) the failure of any Party to insist in any one or
more cases upon the performance of any of the provisions, covenants, or
conditions of this Subscription Agreement or to exercise any option herein
contained, shall not be construed as a waiver or relinquishment for the future
of any such provisions, covenants, or conditions; (ii) the acceptance of
performance of anything required by this Subscription Agreement to be performed
with knowledge of the breach or failure of a covenant, condition, or provision
hereof shall not be deemed a waiver of such breach or failure; and, (iii) no
waiver by any Party of one breach by another Party shall be construed as a
waiver with respect to any other or subsequent breach.

     

    (h) Counterparts. This
Subscription Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (i) Entire Agreement. The
Parties have not made any representations, warranties, or covenants with respect
to the subject matter hereof, orally or in writing, which are not expressly set
forth herein, and this Subscription Agreement, together with any instruments or
other agreements executed simultaneously herewith, constitutes the entire
agreement between them with respect to the subject matter hereof. All
understandings and agreements heretofore had between the Parties with respect to
the subject matter hereof are merged in this Subscription Agreement, which alone
fully and completely expresses their agreement. This Subscription Agreement may
not be changed, modified, extended, terminated, or discharged orally, but only
by an agreement in writing, which is signed by all of the Parties to this
Subscription Agreement.

     

    (j) Subscription
Irrevocable. Except as set forth herein, this Subscription is
irrevocable, is subject to all of the terms and provisions contained in the
Subscription Agreement, and will survive the death, dissolution, or disability
of the Subscriber.

     

    (k) Limited Liability.
The Company, its Affiliates, the Company’s Counsel and the Company’s applicable
agents and representatives shall not be liable for taking any action pursuant to
this Subscription Agreement in the absence of their respective willful
misconduct or fraud.

     

    (l) Assignability. This
Agreement is not transferable or assignable by the Subscriber.

     

    9.  Certification.

     

    Under
penalties of perjury Subscriber certifies as follows:

     

    If it has
been provided, the number shown below, as Subscriber’s taxpayer’s identification
number is Subscriber’s correct taxpayer identification number. Subscriber is not
subject to backup withholding either because Subscriber has not been notified by
the Internal Revenue Service that Subscriber is subject to backup withholding as
a result of a failure to report all interest or dividends, or the Internal
Revenue Service has notified Subscriber that it is no longer subject to backup
withholding.

     

    [REMAINDER
OF PAGE INTENTIONALLY BLANK]

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement as of
the date first written above.

     

    Investment
Amount: $_________

    

    Print Name of
Subscriber:    ________________________

    

    Signature
of Subscriber:

    

    Individual:

    

    ____________________________

    

    Business
Entity:

    

    
      
        
          
            
              
                	
                        By:

                      	
                         
      

                      
	
                        Name:

                      	 
        
	
                        Title:

                      	
                           
      

                      

              

            

          

        

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Taxpayer
      ID Number:

                                	
                                   
    

                                
	
                                  Date:

                                	
                                   
    

                                
	 
      	  
      
	
                                  Address:

                                	
                                    
      

                                
	 
      	
                                    
      

                                
	 
      	
                                    
      

                                
	
                                  Facsimile
      No:

                                	
                                    
      

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Accepted and Agreed
to:

     

    DOCUMENT
SECURITY SYSTEMS, INC.

    

    
      
        
          
            
              	
                      By:

                    	 
        
	 
      	
                      Name:
      Patrick White

                    
	 
      	
                      Title:   Chief
      Executive
Officer

                    

            

          

        

      

    

    

    Date:
_______________________

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