Item
1.01 Entry into a Material Definitive Agreement.
As
previously reported, on May 24, 2013, Document Security Systems, Inc. (the “Company”) entered into a Promissory Note
(the “CNE Note”) with Congregation Noam Elimelech (the “Lender”), in the principal sum of $850,000. The
CNE Note was amended on May 2, 2014 and February 23, 2015 to extend its maturity date and restructure its payment schedule.
On
April 12, 2016, the Company entered into Promissory Note Amendment No. 3 (“CNE Note Amendment No. 3”) with Lender
amending the CNE Note (i) to extend the Maturity Date to May 31, 2017 (the “Extended Maturity Date”) and (ii) to provide
for principal payments in the amount of $15,000 per month plus interest through the Extended Maturity Date, and a balloon payment
of $430,000 due on the Extended Maturity Date. Except as expressly amended by CNE Note Amendment No. 3, all the other terms and
conditions of the CNE Note and previously executed amendments thereto will remain effective and in force through the Extended
Maturity Date. The Lender is neither an affiliate of, nor a related party to the Company.
The
forgoing description is a summary only, does not purport to set forth the complete terms of CNE Note Amendment No. 3, and is qualified
in its entirety by reference to Promissory Note Amendment No. 3 filed as Exhibit 10.1 to this Current Report on Form 8-K.
Also
as previously reported, on December 30, 2011, the Company entered into a Convertible Promissory Note (the “Laufer Note”)
with Mayer Laufer (“Laufer”), in the principal sum of $575,000. The Laufer Note was amended on May 24, 2013 and February
23, 2015 to extend its maturity date, to restructure its payment schedule, and to eliminate its conversion feature.
On
April 12, 2016, the Company entered into Convertible Promissory Note Amendment No. 3 (“Laufer Note Amendment No. 3”)
amending the Laufer Note (i) to extend the Maturity Date to May 31, 2017 (the “Extended Note Maturity Date”) and (ii)
to provide for principal payments in the amount of $15,000 per month plus interest through the Extended Note Maturity Date, and
a balloon payment of $155,000 due on the Extended Note Maturity Date. Except as expressly amended by Laufer Note Amendment No.
3, all other terms and conditions of the Laufer Note and previously executed amendments thereto will remain effective and in force
through the Extended Note Maturity Date. Laufer is neither an affiliate of, nor a related party to the Company.
The
foregoing description is a summary only, does not purport to set forth the complete terms of Laufer Note Amendment No. 3, and
is qualified in its entirety by reference to Convertible Promissory Note Amendment No. 3 filed as Exhibit 10.2 to this Current
Report on Form 8-K.