8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February, 12, 2010

DOCUMENT SECURITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

New York	1-32146	16-1229730
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

First Federal Plaza, Suite 1525 28 East Main Street Rochester, NY	14614
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (585) 325-3610

Not Applicable

(Former name or former address, if changed since last report.)

  Check the 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):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01  Completion of Acquisition or Disposition of Assets

On February 12, 2010, the Company acquired all of the outstanding common stock of Premier Packaging Corporation from Robert B. and Joan T. Bzdick for $2,000,000 in cash and 735,437 shares of the Company's common stock.  In connection with the transaction, the Company incurred secured bank debt in the principal amount of $1,500,000 which was used to partially satisfy the purchase price of the Premier common stock. 

On February 17, 2010, the Company issued a press release in connection with the transaction, a copy of which has been filed as an exhibit to this Current Report on Form 8 K.  For further information concerning the transaction, reference is made to the subject press release and to the Stock Purchase Agreement and Employment Agreement all of which are filed herewith as exhibits to this report.

The Company will file financial statements as required under Securities and Exchange Commission rules within the time periods prescribed by those rules.

Item 2.03  Creation of a Direct Financial Obligation or an Obligation Under and Off-Balance Sheet Arrangement of Registrant

OnFebruary 12, 2010, the Company’s newly acquired wholly owned subsidiary, Premier Packaging Corporation, entered into a Credit Facility Agreement with RBS Citizens, N.A. (“Citizens Bank”) pursuant to which Citizens Bank provided Premier Packaging Corporation  with a term loan of $1,500,000, and a revolving line of $1,000,000.  The Credit Facility Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default and is secured by all of the assets of Premier Packaging Corporation.  The credit facilities are also secured by cross guarantees by Document Security Systems, Inc., and its other wholly owned subsidiaries, Plastic Printing Professionals, Inc. and Secuprint, Inc.

The $1,500,000 term loan matures March 1, 2013 and is payable in 35 monthly payments of $25,000 plus interest commencing March 1, 2010 and a payment of $625,000 on the 36 month.  Interest accrues at 1 Month LIBOR plus 3.75%.   The proceeds of the term loan were used as partial payment of the purchase of all of the outstanding common stock of Premier Packaging Corporation.    The $1,000,000 revolving line of credit matures on February 12, 2011 and is payable in monthly installments of interest only beginning on March 1, 2010. Interest accrues at 1 Month LIBOR plus 3.75%.

The summary of the material provisions of the credit facility Citizens Bank set forth above is qualified in its entirety by reference to the Credit Facility Agreement and related agreements filed as exhibits hereto.

Item 3.02   Unregistered Sales of Equity Securities.

On February 17, 2010, the Company completed the sale of 20 investment units in a private placement pursuant to subscription agreements with six accredited investors.  Each investment unit was comprised of 5,000 shares of the Company’s common stock and five year warrants to purchase 1,000 shares of common stock at an exercise price of $3.50 per share. In the transaction, the Company sold 20 investment units for $15,000 per unit for gross cash proceeds of $300,000, consisting of 100,000 shares of common stock and warrants to purchase an aggregate of 20,000 shares of common stock.  In connection with these sales EKN Financial Services Inc., a registered broker-dealer, acted as non-exclusive placement agent.  EKN Financial Services, Inc. received a cash fee in the aggregate of $30,000 as commission for these sales. On February 17, 2010, the Company also sold 20 investment units for gross cash proceeds of $270,000, consisting of 100,000 shares of common stock and warrants to purchase an aggregate of 20,000 shares of common stock.   No placement agent fees were paid on these sales.

Item 9.01  Financial Statements and Exhibits

(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 April 28, 2010.

(d) Exhibits

Exhibit No.  Description

4.1 Form of Warrant to Purchase Common Stock of Document Security Systems, Inc. dated January 28, 2010.

10.2 Stock Purchase Agreement dated as of February 12, 2010 by and among Robert B. Bzdick and Joan T. Bzdick and Document Security Systems, Inc.

10.3 Employment Agreement

10.4 Acquisition Term Loan Note dated February 12, 2010 by and among Premier Packaging Corporation and RBS Citizens, N.A.

10.5 Revolving Line Note dated February 12, 2010 by and among Premier Packaging Corporation and RBS Citizens, N.A.

10.6 Credit Facility Agreement dated February 12, 2010 by and among Premier Packaging Corporation and RBS Citizens, N.A.

10.7 Security Agreement dated February 12, 2010 by and between RBS Citizens, N.A. and Document Security Systems, Inc,, Plastic Printing Professionals, Inc. and Secuprint, Inc.

10.8 Guaranty and Indemnity Agreement dated February 12, 2010 by and between RBS Citizens, N.A. and Document Security Systems, Inc,, Plastic Printing Professionals, Inc. and Secuprint, Inc.

10.9 Form of Subscription Agreement dated as of January 28, 2010 between Document Security Systems, Inc. and the Subscribers.

99.1 Press Release

SIGNATURE

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.

	DOCUMENT SECURITY SYSTEMS, INC.
Dated: February 17, 2010	By:	/s/ Patrick A. White
		Patrick A. White
		Chief Executive Officer

EX-4.1

NO SALE, OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT OR ANY INTEREST THEREIN SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH TRANSACTION IS THEN IN EFFECT, OR THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THAT ACT.

This Warrant will be void after 5:00 p.m. New York time on April __, 2014 (i.e. five years from the first closing date of the Offering).

COMMON STOCK PURCHASE WARRANT

WARRANT NO. C-____

To Subscribe for and Purchase Shares of

Document Security Systems, Inc.

(Transferability Restricted as Provided in Paragraph 2 Below)

THIS CERTIFIES THAT, for value received, ________, or registered assigns, is entitled to subscribe for and purchase from Document Security Systems, Inc., a corporation incorporated under the laws of the State of New York  (the “Company”)  ___________ (________) fully paid and non-assessable shares of Common Stock of the Company at the “Warrant Price” as hereinafter defined and during the period hereinafter set forth, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. This Warrant is one of an issue of the Company’s Common Stock purchase warrants (herein called the “Warrants”), issued in the Offering (as defined below) identical in all respects except as to the names of the holders thereof and the number of Common Shares purchasable thereunder.

1.            As used herein:

(a)           “Common Stock” or “Common Shares” shall initially refer to the Company’s Common Stock, $0.02 par value, per share as more fully set forth in Section 3 hereof.

(b)           “Warrant Price” shall be $3.50 per share, which is subject to adjustment pursuant to Section 4 hereof.

(c)           “Warrants” shall include any Warrants represented by any certificate issued from time to time in connection with the transfer, partial exercise, exchange of any Warrants or in connection with a lost, stolen, mutilated or destroyed Warrant certificate, if any, or to reflect an adjusted number of Common Shares.

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

(e)           “Holders” shall mean the registered holder of such Warrants or any issued Underlying Securities.

(f)           “Memorandum” shall mean the Company’s Confidential Private Offering Memorandum Supplement No. 1 dated January 28, 2010, as amended and supplemented, which is being used (or was used) in connection with the private offering of Common Stock and Series C Common Stock Purchase Warrants.

(g)           “Offering” means the private offering of Common Stock and Series C Common Stock Purchase Warrants in accordance with the Memorandum.

2.            The purchase rights represented by this Warrant may be exercised by the holder hereof, in whole or in part at any time, and from time to time, during the period commencing ______________, 2010 (the “Commencement Date”) until 5:00 New York Time on ______________, 2015  (the “Expiration Date”), by the presentation of this Warrant, with the purchase form attached duly executed, at the Company’s office (or such office or agency of the Company as it may designate in writing to the Holder hereof by notice pursuant to Section 11 hereof), and upon payment by the Holder to the Company in cash or by certified check of the Warrant Price for the Common Shares.  The purchase price of the Common Shares issuable pursuant to the Warrants, shall be payable in cash and/or by certified bank check.  The Company agrees that the Holder hereof shall be deemed the record owner of such Common Shares as of the close of business on the date on which this Warrant shall have been presented and payment made for such Common Shares as aforesaid. Certificates for the Common Shares so purchased shall be delivered to the Holder hereof within a reasonable time, not exceeding ten (10) business days, after the rights represented by this Warrant shall have been so exercised. If this Warrant shall be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, deliver a new Warrant evidencing the rights of the Holder hereof to purchase the balance of the Common Shares which such Holder is entitled to purchase hereunder.

3.            Subject and pursuant to the provisions of this Section 3, the Warrant Price and number of Common Shares subject to this Warrant shall be subject to adjustment from time to time as set forth hereinafter in this Section 3.

(a)           Dividends and Distributions.  In case the Company shall at any time after the date hereof pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock, then upon such dividend or distribution, the Exercise Price in effect immediately prior to such dividend or distribution shall be reduced to a price determined by dividing an amount equal to the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution multiplied by the Exercise Price in effect immediately prior to such dividend or distribution, by the total number of shares of Common Stock outstanding immediately after such dividend or distribution.  For purposes of any computation to be made in accordance with the provisions of this Section 3, the Common Stock issuable by way of dividend or distribution shall be deemed to have been issued immediately after the opening of business on the date following the date fixed for determination of shareholders entitled to receive such dividend or distribution.

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(b)           Subdivision and Combination.  In case the Company shall at any time subdivide or combine the outstanding Common Stock, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination.

(c)           Adjustment in Number of Warrant Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 3, the number of Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to the nearest full shares of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.

(d)           Reclassification, Consolidation, Merger, etc.  In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in nominal value, as aforesaid), or in the case of a sale or conveyance to another corporation of the property of the Company as an entirety, the Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Holder were the owner of the Warrant Shares issuable upon exercise of the Warrants immediately prior to any such events at a price equal to the product of (x) the number of Warrant Shares issuable upon exercise of the Warrants and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Holder had exercised the Warrants.

(e)           Determination of Outstanding Shares.  The number of shares of Common Stock at any one time outstanding shall include the aggregate number of shares issued or issuable upon the exercise of outstanding options, rights, warrants and upon the conversion or exchange of outstanding convertible or exchangeable securities.

(f)           Except as otherwise specifically provided herein the date of issuance or sale of Common Stock shall be deemed to be the date the Company is legally obligated to issue such Common Shares.  In case at any time the Company shall take a record date for the purpose of determining the holders of Common Stock entitled (i) to receive a dividend or other distribution payable in Common Stock or (ii) to subscribe for or purchase Common Stock, then such record date shall be deemed to be the date of issue or sale of the Common Shares, deemed to have been issued or sold upon the declaration of such dividend or the making of such distribution or the granting of such right of subscription or purchase, as the case may be.

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4.            For the purposes of this Warrant, the terms “Common Shares” or “Common Stock” or “Warrant Shares” shall mean (i) the class of stock designated as the common stock, $0.02 par value, of the Company on the date set forth on the first page hereof or (ii) any other class of stock resulting from successive changes or re-classifications of such Common Stock consisting solely of changes in par value, or from no par value to par value, or from par value to no par value. If at any time, as a result of an adjustment made pursuant to Section 3, the securities or other property obtainable upon exercise of this Warrant shall include shares or other securities of the Company other than Common Shares or securities of another corporation or other property, thereafter, the number of such other shares or other securities or property so obtainable shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Shares contained in Section 3 and all other provisions of this Warrant with respect to Common Shares shall apply on like terms to any such other shares or other securities or property. Subject to the foregoing, and unless the context requires otherwise, all references herein to Common Shares shall, in the event of an adjustment pursuant to Section 3, be deemed to refer also to any other securities or property then obtainable as a result of such adjustments.

5.            The Company covenants and agrees that:

(a)           During the period within which the rights represented by the Warrant may be exercised, the Company shall, at all times, reserve and keep available out of its authorized capital stock, solely for the purposes of issuance upon exercise of this Warrant, such number of its Common Shares as shall be issuable upon the exercise of this Warrant; and if at any time the number of authorized Common Shares shall not be sufficient to effect the exercise of this Warrant, the Company will take such corporate action as may be necessary to increase its authorized but unissued Common Shares to such number of shares as shall be sufficient for such purpose; the Company shall have analogous obligations with respect to any other securities or property issuable upon exercise of this Warrant;

(b)           All Common Shares which may be issued upon exercise of the rights represented by this Warrant will, upon issuance be validly issued, fully paid, nonassessable and free from all taxes, liens and charges with respect to the issuance thereof; and

(c)           All original issue taxes payable in respect of the issuance of Common Shares upon the exercise of the rights represented by this Warrant shall be borne by the Company but in no event shall the Company be responsible or liable for income taxes or transfer taxes upon the transfer of any Warrants.

6.            Until exercised, this Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company.

7.            In no event shall this Warrant be sold, transferred, assigned or hypothecated except in conformity with the applicable provisions of the Securities Act of 1933, as amended and as then in force (the “Act”), or any similar Federal statute then in force, and all applicable “Blue Sky” laws.

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8.            The Holder of this Warrant, by acceptance hereof, agrees that, prior to the disposition of this Warrant or of any Common Shares theretofore purchased upon the exercise hereof, under circumstances that might require registration of such securities under the Act, or any similar Federal statute then in force, such Holder will give written notice to the Company expressing such Holder’s intention of effecting such disposition, and describing briefly such Holder’s intention as to the disposition to be made of this Warrant and/or the securities theretofore issued upon exercise hereof.  Promptly upon receiving such notice, the Company shall present copies thereof to its counsel.  If, in the opinion of such counsel, the proposed disposition does not require registration under the Act or qualification pursuant to Regulation A promulgated under the Act, or any similar Federal statute then in force, of this Warrant and/or the securities issuable or issued upon the exercise of this Warrant, the Company shall, as promptly as practicable, notify the Holder hereof of such opinion, whereupon such Holder shall be entitled to dispose of this Warrant and/or such Common Shares theretofore issued upon the exercise hereof, all in accordance with the terms of the notice delivered by such Holder to the Company.  Certificates representing the Underlying Securities shall bear the following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT“) OR UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.”

9.            This Warrant is exchangeable, upon its surrender by the registered holder at such office or agency of the Company as may be designated by the Company, for new Warrants of like tenor, representing, in the aggregate, the right to subscribe for and purchase the number of Common Shares that may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of Common Shares as shall be designated by the registered holder at the time of such surrender.  Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of any such loss, theft or destruction, upon delivery of a bond of indemnity satisfactory to the Company, or in the case of such mutilation, upon surrender or cancellation of this Warrant, the Company will issue to the registered holder a new Warrant of like tenor, in lieu of this Warrant, representing the right to subscribe for and purchase the number of Common Shares that may be subscribed for and purchased hereunder. Nothing herein is intended to authorize the transfer of this Warrant except as permitted by applicable law.

10.          Every Holder hereof, by accepting the same, agrees with any subsequent Holder hereof and with the Company that this Warrant and all rights hereunder are issued and shall be held subject to all of the terms, conditions, limitations and provisions set forth in this Warrant, and further agrees that the Company and its transfer agent may deem and treat the registered Holder of this Warrant as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.

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11.          All notices required hereunder shall be given by first-class mail, postage prepaid; if given by the holder hereof, addressed to the Company at 28 Main Street East, Suite 1525, Rochester, NY 14614 or such other address as the Company may designate in writing to the holder hereof; and if given by the Company, addressed to the holder at the address of the holder shown on the books of the Company.

12.          The validity, construction and enforcement of this Warrant shall be governed by the laws of the State of New York and jurisdiction is hereby vested in the Courts of said State in the event of the institution of any legal action under this Warrant.

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IN WITNESS WHEREOF, Document Security Systems, Inc. has caused this Warrant to be signed by its duly authorized officers to be dated _______________, 2010.

DOCUMENT SECURITY SYSTEMS, INC.
By:
	Name:  Patrick White
	Title:  Chief Executive Officer

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PURCHASE FORM

To Be Executed

Upon Exercise of Warrant

The undersigned hereby exercises the right to purchase _______ Common Shares evidenced by the within Warrant, according to the terms and conditions thereof, and herewith makes payment of the purchase price in full.  The undersigned requests that certificates for such shares shall be issued in the name set forth below.

Dated: ____________, ______	Signature
	Print Name of Signatory
	Name to whom certificates are to
	be issued if different from above
	Address:
	Social Security No.
	or other identifying number

If said number of shares shall not be all the shares purchasable under the within Warrant, the undersigned requests that a new Warrant for the unexercised portion shall be registered in the name of :

(Please Print)

Address:

Social Security No.

or other identifying number

Signature

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EX-10.2

EXHIBIT 10.2

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of February 12, 2010 by and among ROBERT B. BZDICKandJOAN T. BZDICK, (each a “Seller”, and collectively, “Sellers”), residing at 935 Raccoon Run, Victor, New York 14564 and DOCUMENT SECURITY SYSTEMS, INC., a New York corporation with an office at 28 East Main Street, Suite 1525, Rochester, New York 14614 (“Buyer”).  Robert B. Bzdick is also joined as a party to this Agreement solely to accept the duties herein of “Sellers’ Agent” as set forth in Section 10.15, and in his individual capacity to the extent expressly provided herein.

WHEREAS, Sellers are the sole shareholders of PREMIER PACKAGING CORPORATION, a New York corporation (“PPC”); and

WHEREAS,  PPC is in the business of designing and manufacturing printed products (the “Business”); and

WHEREAS, Sellers desire to sell to Buyer all of the outstanding shares in PPC which consist of 265,000 shares of $1.00 par value common stock  (the “PPC Shares”), and Buyer desires to purchase the PPC Shares; and

WHEREAS, it is a material inducement to Buyer’s execution and delivery of this Agreement and the consummation of the transaction contemplated herein that each Seller shall have made the covenants and agreements as set forth in this Agreement including, without limitation, those contained in Articles IV and VI hereof.

NOW, THEREFORE, in consideration of the covenants, agreements, representations and warranties of the parties herein contained, and upon the terms and subject to the conditions hereinafter set forth, the parties hereto hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF SHARES

1.1         Shares to Be Sold.  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Sellers, and Sellers agree to sell for the Purchase Price (as defined below), the PPC Shares.

ARTICLE II

PURCHASE PRICE

2.1         Purchase Price.  On and subject to the terms and conditions of this Agreement, at Closing, Buyer agrees to pay to Sellers the aggregate Purchase Price as follows:

(a)           Buyer shall pay to Sellers a cash payment in an amount equal to $2,000,000, subject to adjustment as follows: (1) less the amount, if any, by which the Target Working Capital exceeds the Estimated Net Working Capital by more than $107,717 or (2) plus the amount, if any, by which the Estimated Net Working Capital exceeds the Target Working Capital by more than $107,717, by immediately available funds through a wire transfer to an account or accounts specified by Sellers; and

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(b)           Buyer shall deliver to Sellers (i) $1,500,000 by issuance of a stock certificate for the number of shares of Buyer common stock equal to $1,500,000, divided by the average closing price per share of Buyer common stock on the NYSE AMEX over the thirty (30) trading days for Buyer common stock ending on the second to last such trading day prior to Closing, and (ii) a stock certificate for 250,000 shares of Buyer common stock (collectively, the “Buyer Shares”).

2.2         Adjustments to the Purchase Price.  For purposes hereof the following terms shall have the meanings ascribed below:

“Estimated Net Working Capital” means the Net Working Capital, as set forth on the Estimated Working Capital Schedule.

“Estimated Working Capital Schedule” means the draft schedule of the Net Working Capital as of the Closing Date, prepared and delivered by Sellers at Closing.

“Final Working Capital Schedule” means the schedule of the Net Working Capital as of the Closing Date, which shall be in the same format as the Estimated Working Capital Schedule and will include a calculation of the Net Working Capital, as finally determined pursuant to Section 2.2(b), and the Working Capital Deficit or Working Capital Surplus, if any.

“Net Working Capital” means the current assets less the current liabilities of PPC as of the close of business on the Closing Date, prepared in accordance with PPC’s past custom and practice.

“Target Working Capital” means an amount equal to $1,077,168.

“Working Capital Deficit” means the amount, if any, by which the Net Working Capital reflected on the Final Working Capital Schedule is less than the Estimated Net Working Capital, taking into consideration any adjustment already made at Closing.

“Working Capital Surplus” means the amount, if any, by which the Net Working Capital reflected on the Final Working Capital Schedule is more than the Estimated Net Working Capital, taking into consideration any adjustment already made at Closing.

(a)             Buyer shall prepare and within thirty (30) days following Closing deliver to the Sellers’ Agent the Final Working Capital Schedule. Buyer shall provide Sellers’ Agent and his accounting and tax representatives, at Sellers’ sole cost and expense, with access to the books and records of PPC for purposes of validating the Final Working Capital Schedule.  In the absence of any objections from the Sellers’ Agent within thirty (30) days following delivery of such calculation, Buyer’s determination of the Final Working Capital Schedule shall be conclusive, final and binding on the parties for purposes of determining the Net Working Capital, Working Capital Surplus and Working Capital Deficit but shall not affect any of Sellers’ or Buyer’s rights under this Agreement, including without limitation under Article VIII.  If Sellers’ Agent objects to the Final Working Capital Schedule within thirty (30) days following receipt of such calculation from Buyer, Sellers’ Agent shall deliver a written dispute notice to Buyer which shall set forth the specific line items in dispute and provide the basis for such dispute in reasonable detail.  If, after ten (10) days from the date notice of a dispute is given hereunder, Sellers’ Agent and Buyer cannot agree on the resolution of all of the disputed items, the Final Working Capital Schedule shall be adjusted to the extent of any items that are not in dispute, and the items still in dispute shall be referred to a public accounting firm acceptable to both Sellers’ Agent and Buyer (the “Unrelated Accounting Firm”) to resolve the dispute, whose decision as to the issues in dispute shall be conclusive, final and binding upon Sellers and Buyer for purposes of this Agreement.  The Unrelated Accounting Firm shall address only those issues in dispute in accordance with the terms of this Section 2.2(a) and may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party.  Upon finalizing the Final Working Capital Schedule, either by agreement or by the Unrelated Accounting Firm, to the extent there is a Working Capital Surplus, Buyer will pay Sellers an amount equal to such Working Capital Surplus within fifteen (15) days of delivery of the Final Working Capital Schedule.  If such Working Capital Surplus is not paid within such fifteen (15) day period, then interest shall accrue and be due and payable from Buyer on the Working Capital Surplus from and including Closing through and including the date of payment at Prime Rate plus eight percent (8%) per annum.

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(b)           To the extent there is a Working Capital Deficit, within fifteen (15) days following the delivery of the Final Working Capital Schedule, Sellers will pay to Buyer in cash (by wire transfer of immediately available funds to an account designated by Buyer) the amount of the Working Capital Deficit. If such amounts are not paid within such fifteen (15) day period, then interest shall accrue and be due and payable from Sellers on such amounts from and including Closing through and including the date of payment at Prime Rate plus eight percent (8%) per annum.

(c)           Any payments, distributions, or bonuses made after December 31, 2009 made to Sellers or officers outside the Ordinary Course of Business (as defined below), will at the time of closing be subject to a deduction of such amount from the Purchase Price. For purposes of this Agreement, “Ordinary Course of Business” means, when used with respect to any Person, the ordinary course of business of such Person, consistent with past custom and practice of such Person (including with respect to quantity and frequency).

ARTICLE III

CLOSING

3.1         Closing.

(a)           Time and Place.  The closing of the transactions contemplated by this Agreement (“Closing”) shall take place at the offices of Sellers, at 10:00 a.m., local time, on February ____, 2010 or on such other date and place as mutually agreed upon by Sellers and Buyer.  The date on which Closing takes place is herein called the “Closing Date”.

(b)           Share Certificates.  Subject to the terms of this Agreement, Sellers will deliver to Buyer at Closing, the share certificates evidencing the PPC Shares, duly endorsed in blank or accompanied by stock power executed in blank, and otherwise in proper form for transfer, against payment of the Purchase Price.

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3.2         Sellers’ Deliveries.  At Closing, Sellers shall deliver or cause to be delivered to Buyer:

(a)           State and county UCC, Judgment and Lien Searches for PPC;

(b)           Certificate of Good Standing;

(c)           Copies of Certificate of Incorporation of PPC, duly certified by the New York State Department of State and its By-Laws, as amended to the Closing Date, and a Franchise Tax Search from New York State and each state in which PPC conducts business, indicating that no taxes or tax returns are past due; and

(d)           All other documents required by the terms of this Agreement to be delivered by Sellers to Buyer at Closing.

           3.3         Buyer’s Deliveries.  At Closing, Buyer will deliver to Sellers:

(a)           Two Million Dollars ($2,000,000) by wire transfer of immediately available funds to such account(s) as Sellers shall specify;

(b)           Stock certificates evidencing the Buyer Shares; and

(c)           All other documents required by the terms of this Agreement to be delivered by Buyer to Sellers at Closing.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers jointly and severally hereby represent and warrant to Buyer, as of the date of this Agreement and as of the Closing Date, except as set forth in the schedules referenced herein (collectively, the “Disclosure Schedules”).  Disclosure made in a specific section or subsection of the Disclosure Schedules shall be deemed to have been disclosed with respect to any other section or subsection herein.

4.1           Title to Shares.  Sellers are the owners, beneficially and of record, of all the PPC Shares, free of any liens, encumbrances, security agreements, equities, options, claims, charges and restrictions.  Sellers have the right and authority to enter into this Agreement on the terms and conditions set forth in it, and have full power to transfer the legal and beneficial ownership of the PPC Shares to Buyer without giving notice to, making any filing with, or obtaining the consent or approval of any other person or Governmental Entity (as defined below).

4.2           Organization.  PPC is a corporation duly organized, validly existing and in good standing under the laws of the State of New York and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business substantially as it is now being conducted.  PPC is duly qualified as a foreign corporation and is in good standing in each jurisdiction that requires such qualification.

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4.3           Authority.  Neither the execution, delivery, nor performance of this Agreement by Sellers will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate, or loss of rights under, or result in the creation of any lien, charge or encumbrance pursuant to, any provision of PPC’s Certificate of Incorporation, By-Laws, or any franchise, mortgage, deed of trust, lease, license, agreement, understanding, law, regulation, or any order, judgment or decree to which Sellers or PPC is a party or by which Sellers or PPC or its assets may be bound or affected, except, in the case of the foregoing, for violations, breaches or otherwise which could not reasonably be expected to have, individually or in the aggregate, any adverse effect on the validity or enforceability of this Agreement or a Material Adverse Effect.  This Agreement has been duly executed and delivered by Sellers, and constitutes the legal, valid and binding obligation of Sellers, enforceable against Sellers in accordance with its terms.  For purposes of this Agreement, the term “Material Adverse Effect” or “Material Adverse Change” means, with respect to any entity any occurrence, incident, action, failure to act, event, change or effect that is or could reasonably be expected to be, materially adverse to the condition (financial or otherwise), properties, assets, liabilities, business, results of operations, or prospects of such entity and its subsidiaries, taken as a whole, or to the enforcement of this Agreement and any agreement contemplated herein; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect or Material Adverse Change: (a) any adverse change, event, development, or effect (whether short-term or long-term) arising from or relating to (i) general business or economic conditions, including such conditions related to the business of PPC, (ii) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (iii) financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (iv) changes in United States generally accepted accounting principles, (v) changes in laws, rules, regulations, orders, or other binding directives issued by any Governmental Entity or (vi) the taking of any action contemplated by this Agreement and the other agreements contemplated hereby, (b) any failure to meet a forecast (whether internal or published) of revenue, earnings, cash flow, or other data for any period or any change in such a forecast, (c) any existing event, occurrence, or circumstance with respect to which Buyer has knowledge as of the date hereof and (d) any adverse change in or effect on the business of PPC that could be cured by Buyer after Closing.

4.4           Capital Stock.  PPC is authorized to issue 300,000 shares of common stock, $1.00 par value per share, of which only the PPC Shares are outstanding and issued.  All of the PPC Shares are validly issued, fully paid and non-assessable. There are no outstanding subscriptions, options, warrants, rights, convertible securities or other agreements or commitments of any character relating to the issued or unissued capital stock or other securities of PPC, or otherwise obligating PPC to issue any securities.  To Sellers’ knowledge, all of the issued and outstanding shares of PPC were issued in compliance with all requirements of all applicable federal and state securities laws, rules and regulations.

4.5           Approval.  To Sellers’ knowledge, except as set forth on Schedule 4.5 of the Disclosure Schedules, no material authorization, consent or approval of, or filing with, any public body, regulatory or governmental authority (a “Governmental Entity”) or any third party is necessary (i) for execution or delivery of this Agreement by Sellers or the consummation by Sellers of the transactions contemplated by this Agreement, or (ii) to prevent the termination of any material right, privilege, license or agreement of PPC, or to prevent any material loss to the business, operations, prospects or financial condition of PPC, by reason of the consummation of the transactions contemplated by this Agreement.

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4.6           Absence of Changes or Events.  Except as set forth in Schedule 4.6 of the Disclosure Schedules, since December 31, 2009, PPC has conducted its business in the Ordinary Course of Business.  Without limiting the generality of the foregoing, since December 31, 2009, PPC has not:

(a)           incurred any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due in excess of $50,000, outside the Ordinary Course of Business;

(b)           discharged or satisfied any lien, charge or encumbrance other than those then required to be discharged or satisfied, or paid any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, other than in the Ordinary Course of Business;

(c)           declared or made any payment of dividends or other distribution to any shareholder or upon or in respect of the PPC Shares other than in the Ordinary Course of Business and any payments that were accrued on the Financial Statements prior to December 31, 2009;

(d)           mortgaged, pledged or subjected to lien, charge, security interest or any other encumbrance or restriction any of its property, business or assets, tangible or intangible other than in the Ordinary Course of Business;

(e)           sold, transferred, leased to others or otherwise disposed of any of its assets, except for inventory sold in the Ordinary Course of Business, or canceled or compromised any material debt or claim of a substantial value, or waived or released any right of a substantial value;

(f)           received any notice of termination of any material contract, lease or other agreement or suffered any substantial damage, destruction or loss (whether of not covered by insurance) which, in any case or in the aggregate, has had a Material Adverse Effect;

(g)           except in the Ordinary Course of Business, made any material change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable, or paid or agreed or orally promised to pay, conditionally or otherwise, any bonus, extra compensation, pension or severance or vacation pay, to any employee, salesman, distributor or agent;

(h)           issued or sold any shares or other securities, or issued, granted or sold any options, rights or warrants with respect thereto, or acquired any capital stock or other securities of any corporation or any interest in any business enterprise, or otherwise made any loan or advance to or investment in any person, firm or corporation;

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(i)           made or committed to any capital expenditures or capital additions or betterments in excess of an aggregate of $5,000;

(j)           engaged in any transaction not in the Ordinary Course of Business with any stockholder, director, officer, employee, salesman, distributor or agent of PPC or made any loans or advances to any director, officer, employee, salesman, distributor or agent thereof;

(k)           changed its banking or safe deposit arrangements;

(l)           suffered any material adverse change in its business, condition (financial or otherwise), assets, results of operation or prospects; or

(m)            entered into any agreement or made any commitment to take any of the foregoing.

4.7           Taxes.  PPC has filed all tax returns for all Governmental Entities required to be filed by it and has paid, or made provision for payment of, all taxes required to be paid by it to the extent such taxes have become due.  All liabilities for unpaid federal, state and local taxes accrued on a tax basis in accordance with PPC’s past practice are reflected on the books of PPC and the Financial Statements.  Except as set forth on Schedule 4.7 of the Disclosure Schedules, (i) no deficiency for any taxes has been proposed, asserted or assessed, in writing, with respect to PPC, and to the Sellers’ knowledge there is no basis for any such deficiencies and no requests for waivers of the time to assess any such taxes are pending, and (ii) no examination of the tax returns of PPC is currently in progress. For the purposes of this Agreement, the term “tax” shall include all federal, state, local and foreign income, property, sales, use, franchise, value added, employees’ income withholding, social security, excise and all other taxes of any nature whatsoever. PPC is not a “consenting corporation” within the meaning of Section 341 (f)(1) of the Internal Revenue Code of 1986, as amended.  PPC has withheld or collected and paid to the proper governmental body  all taxes required to be withheld, collected or paid by it.  In the last three (3) years, no claim has been made in writing by any Governmental Entity in a jurisdiction where PPC does not file tax returns that it is or could be subject to taxation by that jurisdiction, nor to Sellers’ knowledge is there any reasonable basis for such a claim.

4.8           Title to Properties.  PPC has valid leases or good and marketable title to all material properties and assets it owns or uses in the Business or purports to own, free and clear of any Encumbrances except, with respect to all such assets, the following Encumbrances (collectively, “Permitted Encumbrances”):  (a) Encumbrances securing debt reflected as liabilities in the Financial Statements, which Encumbrances are listed in Schedule 4.8 of the Disclosure Schedules; (b) mechanics’, carriers’, workers’, repairmen’s, statutory or common law liens being contested in good faith and by appropriate proceedings, whether or not listed in Schedule 4.8 of the Disclosure Schedules; (c) obligations for current taxes not yet due and payable which have been fully reserved against, or which, if due, are being contested in good faith and by appropriate proceedings, which contested liens are listed in Schedule 4.8 of the Disclosure Schedules; (d) such imperfections of title, easements and Encumbrances, if any, against the Leased Real Property as are set forth in the Leases or which are not, individually or in the aggregate, substantial in character, amount or extent, and do not, individually or in the aggregate, materially interfere with the present use of the Leased Real Property or otherwise have an Material Adverse Effect; and (e) those additional Encumbrances listed in Schedule 4.8 of the Disclosure Schedules.

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4.9           Leased Real Property.  PPC does not own any real property and, instead, leases real property as a tenant.  Schedule 4.9 of the Disclosure Schedules is a true, correct and complete list of all real property leased, operated or used by PPC  (collectively, the “Leased Real Property”).  PPC has delivered to Buyer a true and complete copy of each of the leases for the Leased Real Property.

4.10           Schedules.  Attached as Schedule 4.10 of the Disclosure Schedules are separate schedules, each containing an accurate and complete list of each of the following:

(a)           Personal Property.  Schedule 4.10(a) of the Disclosure Schedule lists all machinery, tools, equipment, motor vehicles, and other tangible personal property (other than inventory and supplies), owned, leased or used by PPC except for (i) items having a value of less than $5,000.00 or (ii) items which (in the case of any item leased) payments to the owner thereof do not exceed $10,000.00 per annum.  Except as otherwise set forth on Schedule 4.10(a) of the Disclosure Schedules, all tangible personal property owned, leased or used by PPC is in a good state of repair and operating condition (ordinary wear and tear excepted).  The assets owned and leased by PPC constitute all the material assets used in connection with the business of PPC.

(b)           Trademarks, Names, Etc.  Schedule 4.10(b) of the Disclosure Schedule lists all material trademarks, trademark registrations, and applications therefore, service marks, service names, trade names, copyrights and copyright registrations, and applications therefore, patents, and applications therefore wholly or partially owned or held by PPC or used in the operation of the Business and all names under which PPC does business.

(c)           Insurance.  Schedule 4.10(c) of the Disclosure Schedule lists all fire, theft, casualty, liability and other insurance policies insuring PPC.

(d)           Sales Agreements, Etc.  Schedule 4.10(d) of the Disclosure Schedule lists all material sales representative agreements or franchises or agreements which are not cancelable by six months’ (or less) notice providing for the services of an independent contractor to which PPC is a party or by which it is bound.

(e)           Trademark Contracts, Etc.  Schedule 4.10(e) of the Disclosure Schedule lists all material contracts, agreements, commitments or licenses relating to patents, trademarks, trade names, copyrights, inventions, processes, know-how, formulae or trade secrets to which PPC is a party or by which it is bound.

(f)           Financing Documents.  Schedule 4.10(f) of the Disclosure Schedule lists all material loan agreements, indentures, mortgages, pledges, security agreements,  guaranties,  or leases to which PPC is a party or by which it is bound.

(g)           Securities Agreements.  Schedule 4.10(g) of the Disclosure Schedule lists all contracts, agreements and commitments, in respect of the issuance, sale or transfer of the capital stock, bonds or other securities of PPC or by which PPC would acquire the securities of any other corporations.

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(h)           Material Agreements.  Schedule 4.10(h) of the Disclosure Schedule lists the following contracts and agreements to which PPC is a party which are or contain provisions relating to any of the following (hereinafter referred to individually as a “Material Agreement” and collectively as the “Material Agreements”):

(1)           any contracts which are leases of personal property to or from any Person involving the expenditure of more than $50,000 per year or which are not cancelable without material penalty, cost or expense upon advance notice of ninety (90) days or less;

(2)           any contract (or group of related contracts) for the purchase or sale of products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year, reasonably expected to result in a loss to PPC, or involve consideration in excess of $50,000 per annum;

(3) any contract (or group of related contracts) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $50,000 or under which it has imposed Encumbrances on any of its assets, tangible or intangible;

(4)           collective bargaining agreements or other contracts to or with any labor unions or other employee representatives, groups of employees, works councils or the like;

(5)           employment contracts or other contracts to or with individual current or prospective employees, consultants or agents (other than contracts with PPC’s attorneys, accountants or advertising agencies that are cancelable without material penalty, cost or expense upon advance notice of ninety (90) days or less);

(6)           any contract concerning a bonus, profit sharing, incentive, deferred compensation, severance, or change in control (exclusive of generally applicable severance policy) or other material plan or arrangement for the benefit of any of PPC’s managers, directors, officers or employees; and

(7)           contracts to borrow funds, except for trade payables incurred in the Ordinary Course of Business.

(8)           PPC has delivered to Buyer a correct and complete copy of each contract or other agreement (as amended to date) listed in Schedule 4.10 of the Disclosure Schedule.

(i)           Directors and Officers; Bank Accounts; Powers of Attorney.  Schedule 4.10(i) of the Disclosure Schedule lists the names of all of the directors and officers of PPC and the name of each bank in which PPC has an account or safe deposit box and the names of all persons authorized to draw thereon or have access thereto.

(j)           Salaries.  Schedule 4.10(j) of the Disclosure Schedule lists the names and current annual salary rates of all current employees of PPC, showing separately for each such person the amounts paid or payable as salary, bonus payments and any indirect compensation for PPC’s most recent full fiscal year.

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4.11           Litigation.  Except as set forth on Schedule 4.11, there is no action, suit, claim, arbitration, governmental investigation or other legal or administrative proceeding nor any order, decree or judgment in progress, pending or in effect, or to the best of Sellers’ knowledge, threatened against or affecting the Sellers or PPC, its officers, directors, employees, its properties, assets or business.

4.12           Permits, Licenses, Etc.  PPC has all material permits, licenses and other governmental authorizations (“Permits”) which are necessary to the operation of its business.  To the Sellers’ knowledge, the business of PPC has not and is not being conducted in material violation of any applicable law, ordinance, rule, regulation, decree or order of any court or Government Entity.

4.13           Compliance with Laws.  To Sellers’ knowledge, the Business is being, and since January 1, 2006 has been, conducted in all material respects in compliance with all applicable laws, except for such violations that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  No investigation or review by any Governmental Entity with respect to PPC is pending or, to Sellers’ knowledge is threatened nor has any Governmental Entity indicated an intention to conduct the same.

4.14            Environmental Matters.

(a)           All of the Permits required under Environmental Laws for the operation of the Business have been obtained and maintained in effect in good standing.  No material change in the facts or circumstances reported or assumed in the applications for such Permits exists. Sellers and PPC are in material compliance, and at all times has materially complied, with all Environmental Laws applicable to the operations associated with the Business, and the Leased Real Property and with all of the Permits. Sellers and PPC are not aware of any material violation with respect to any of the Permits, which violations are outstanding or uncured as of the date hereof, and no proceeding is pending, or to Sellers’ and PPC’s knowledge, threatened, to revoke or limit any of the Permits.

(b)           To the Sellers’ Knowledge, Sellers and PPC have not performed or suffered any act which could give rise to, or has otherwise incurred, liability to any Person, including itself, under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”) or any of the Environmental Laws, nor does Sellers and PPC have notice of any such liability or any claim therefor or submitted notice pursuant to Section 103 of CERCLA to any Governmental Authority nor provided information in response to a request for information pursuant to Section 104(e) of CERCLA or any analogous state or local information gathering authority.

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(c)           To the Sellers’ Knowledge, no Hazardous Substances has been Released (as that term is defined under CERCLA), on, at, or beneath the Leased Real Property or any surface waters or ground-waters thereon or thereunder in excess of the levels prescribed or permitted under Environmental Laws.

(d)           To the Sellers’ Knowledge, there have been and are no aboveground or underground storage tanks, polychlorinated biphenyls or asbestos-containing materials located at or within the Leased Real Property.

(e)           None of the Leased Real Property is identified or, to the Sellers’ Knowledge,  proposed for listing on the National Priorities List under 40 C.F.R. § 300 Appendix B, the Comprehensive Environmental Response Compensation and Liability Inventory System (“CERCLIS”) or any analogous list of any Government Authority and Sellers are not aware of any conditions on such properties which, if known to a Governmental Authority, would qualify such properties for inclusion on any such list.

(f)           None of the Leased Real Property, or any current or previous business operations conducted by Sellers and PPC, is the subject of any pending or, to the Sellers’ Knowledge, threatened investigation or judicial or administrative proceeding, notice, decree or settlement respecting any actual, potential or alleged violation of any Environmental Law, or any Releases (as that term is defined under CERCLA) of Hazardous Substances into any surface water, ground water, drinking water supply, soil, land surface or subsurface strata, or ambient air (the “Environment”). Sellers and PPC have not received from any Governmental Authority, or other Person, any request for information indicating that Sellers and PPC are the subject of an investigation under Environmental Laws, notice of any potential or alleged violations of any Environmental Laws or of any proposed order under any Environmental Laws or any order or proposed order requiring any of such parties to prepare studies, action plans, or clean-up strategies concerning the Leased Real Property.  Sellers and PPC have not received notice of any inquiry or investigation by any Person concerning matters regulated by Environmental Laws.

(g)           Sellers and PPC have not reported any violation of any applicable Environmental Laws to any Governmental Authority.  To the Sellers’ Knowledge, no Releases have occurred on any of the Real Property which would require reporting to any Governmental Authority under any Environmental Laws.

(h)           Sellers and PPC have not sent, transported, or directly arranged for the transport of any Hazardous Substances, whether generated by Sellers and PPC or another Person, to any site listed on the National Priorities List or proposed for listing on the National Priorities List or to a site included on the CERCLIS list or any analogous state list of sites.

“Hazardous Substances” means and includes any flammable explosives, radioactive materials or hazardous, toxic or dangerous wastes, substances or related materials or any other chemicals, materials or substances, exposure to which is prohibited, limited or regulated by any federal, state, county, regional or local authority including, but not limited to, asbestos, PCBs, petroleum products and by-products (including, but not limited to, crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof), substances defined or listed as “hazardous substances”, “hazardous materials”, ‘‘hazardous wastes”, “toxic substances”, “hazardous air pollutants” or ‘‘waste’’ or similarly identified in, pursuant to, or for purposes of, any Environmental Laws applicable to the operations of the Business and the Leased Real Property.

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“Environmental Laws” means all federal, state and local environmental, health or safety laws, ordinances, regulations, rules of common law or published policies regulating Hazardous Substances, including, without limitation, those governing the generation, use, refinement, handling, treatment, removal, storage, production, manufacture, transportation or disposal of Hazardous Substances, to the extent such laws, ordinances, regulations, rules and policies may be in effect from time to time and be applicable to the operations of the Business and the Leased Real Property, and with all associated permits, including, without limitation; the Comprehensive Environmental Response, Compensation, and Liability Act, as now in effect (42 U.S.C. Section 9601, et seq.); the Hazardous Materials Transportation Act, as now in effect amended (49 U.S.C. Section 1801, et seq.); the Resource Conservation and Recovery Act, as now in effect (42 U.S.C. Section 6901, et seq.); (15 U.S.C. Section 2601 et seq.); the Clean Water Act, as now in effect (33 U.S.C. Section 1251 et seq.); the Clean Air Act, as now or hereafter amended (42 U.S.C. Section 7901 et seq.).

            4.15                      Labor Controversies.  There are not any controversies or, to the knowledge of Sellers, any basis or grounds therefore between PPC and any employees which might reasonably be expected to materially adversely affect the conduct of the business of PPC, and there are not any unresolved labor union grievances or unfair labor practice charges or labor arbitration proceedings pending or threatened related to the PPC or any known basis or grounds therefore. To the knowledge of the Sellers, there are not any organizational efforts presently being made or threatened involving any of the PPC’s employees.  Neither PPC nor Sellers have received notice of any claim, nor, to the knowledge of the Sellers, is there any basis or grounds for any claim, that PPC has not complied with any laws relating to the employment of labor, including, without limitation, any provisions thereof relating to wages, hours, collective bargaining, the payment of social security and similar taxes, equal employment opportunity, the proper classification of workers as employees or independent contractors, employment discrimination, sexual harassment, and employment safety, or that it is liable for any arrears of wages or any taxes or penalties for failure to comply with any of the foregoing.

           4.16           Employee Benefit Plans.

(a)           The following terms shall have the definitions set forth for purposes of this Section 4.16:

“Benefit Arrangement” means any plan, agreement, arrangement or practice providing for insurance coverage (including any self-insured plan, agreement, arrangement or practice), supplemental unemployment benefits, deferred compensation, bonuses, stock options, stock purchases, “parachute payments” (within the meaning of section 280G of the Code), or other form of incentive or post-employment compensation or benefits, which (1) is not a Pension Plan or Welfare Plan, and (2) covers or may provide benefits to any employee or prior employee of PPC or any ERISA Affiliate.

“Code” means the Internal Revenue Code of 1986, as amended.

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“ERISA Affiliate”means any entity with which PPC is a member of any group of entities within the meaning of sections 414(b), (c), (m) or (o) of the Code.

“Defined Benefit Pension Plan” means a Pension Plan that is not an “individual account plan” as defined in section 3(34) of ERISA, which covers or may provide benefits to any employee or prior employee of PPC or any ERISA Affiliate.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Pension Plan” means any “employee pension benefit plan,” as such term is defined in Section 3(2) of ERISA, including a profit sharing plan, 401(k) plan, stock bonus plan, employee stock ownership plan, and any other “individual account plan” as defined in section 3(34) of ERISA, which covers or may provide benefits to any employee or prior employee of PPC or any ERISA Affiliate.

“Welfare Plan” means any “employee welfare benefit plan,” as such term is defined in section 3(1) of ERISA, which covers or may provide benefits to any employee or prior employee of PPC or any ERISA Affiliate.

(b)           To the Sellers’ Knowledge, neither PPC nor any ERISA Affiliate has ever contributed to or been obligated to contribute to, and none of its employees have ever been covered under: a “voluntary employee benefits association” (within the meaning of section 501(c)(9) of the Code), providing for Welfare Plan benefits; a “multiemployer plan” as defined in section 3(37)(A) of ERISA; a Defined Benefit Pension Plan; or any other Pension Plan subject to the minimum funding requirements of section 412 of the Code.  To the Sellers’ Knowledge, except for the Pension Plan(s), Welfare Plan(s) and Benefit Arrangement(s) identified in Section 4.16, neither PPC nor any ERISA Affiliate has ever maintained, administered or contributed to any Pension Plan, Welfare Plan or Benefit Arrangement within the past six (6) years.

(c)           To the Sellers’ Knowledge, each Pension Plan, Welfare Plan and Benefit Arrangement (as defined in this Section 4.16) has been administered in full compliance with all applicable provisions of ERISA, the Code, other applicable laws, orders, rules and regulations, the terms and provisions of such Pension Plan, Welfare Plan or Benefit Arrangement, and all amendments thereto, except to the extent that failure to do so would not be expected to have a Material Adverse Effect.

(d)           To the Sellers’ Knowledge, except with respect to group health plan continuation coverage required under section 601 of ERISA and section 4980B of the Code, none of the terms of any Welfare Plan or Benefit Arrangement described in Section 4.16 require such Welfare Plan or Benefit Arrangement, or PPC or any ERISA Affiliate, to provide or pay the cost of any benefits to any individuals after retirement or other termination of his employment with PPC or such ERISA Affiliate.

(e)           To the Sellers’ Knowledge, each Welfare Plan described in Section 4.16 which is (or is in part) a “group health plan” within the meaning of section 607 of ERISA has fully complied in each and every instance with the provisions of section 601 of ERISA and section 4980B of the Code, relating to continuation coverage requirements, except to the extent that failure to do so would not be expected to have a Material Adverse Effect.  Each such Welfare Plan which is intended to meet the requirements for tax favored treatment under subchapter B of chapter 1 of the Code meets such requirements and there is no disqualified benefit (as defined in Section 4976(b) of the Code) which would give rise to any material tax liability under section 4976 of the Code.

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(f)           To the Sellers’ Knowledge, no provision of any Pension Plan, Welfare Plan or Benefit Arrangement identified in Section 4.16 or any amendment thereto, would result in any limitation on the sponsoring employer’s right to terminate such Pension Plan, Welfare Plan or Benefit Arrangement.

(g)           PPC has received a favorable Internal Revenue Service determination letter, or an opinion letter in which it is entitled to rely, with respect to the qualified status of each Pension Plan identified in Section 4.16 under section 401(a) of the Code, as amended to comply with all federal requirements now in effect, and, to the Sellers’ Knowledge, there has been no occurrence, whether by action or inaction, which could adversely affect the qualified status of any such Pension Plan.

(h)           No Pension Plan, Welfare Plan or Benefit Arrangement described in Section 4.16, nor any trust created thereunder, now holds or within the past six (6) years has held as assets any stock or other securities issued by PPC or any ERISA Affiliate.  To the Sellers’ Knowledge, no Pension Plan, Welfare Plan or Benefit Arrangement described in Section 4.16, nor any trust created thereunder, nor any trustee, administrator or fiduciary thereof, has engaged in a material fiduciary breach within the meaning of section 404 of ERISA, a material non-exempt “prohibited transaction” within the meaning of section 406 of ERISA or section 4975 of the Code, or any other transaction that could give rise to any liability or penalty under section 502 of ERISA.  To the Sellers’ Knowledge, no event has occurred and no condition exists with respect to any Pension Plan, Welfare Plan or Benefit Arrangement identified in Section 4.16 that could give rise to any material tax or liability under section 4972, 4977, 4979, 4980B or 6652 of the Code.

(i)           All insurance premiums, contributions and payments accrued under each Pension Plan, Welfare Plan and Benefit Arrangement identified in Section 4.16, determined in accordance with prior funding and accrual practices, as adjusted to include proportional insurance premiums, contribution and payment accruals for the period from the date of this agreement to the Closing Date, will be discharged and paid on or prior to the Closing Date, except to the extent that any such premiums, contributions or payment accrual is identified in Section 4.16.

(j)           To the Sellers’ Knowledge, all forms, reports and documents which have been required to be filed with the Internal Revenue Service, the United States Department of Labor, and/or distributed to participants, with respect to each Pension Plan, Welfare Plan and Benefit Arrangement identified in Section 4.16, including complete annual reports (Form 5500), summary annual reports and summary plan descriptions, have been timely filed and/or distributed, as the case may be, except to the extent that failure to do so would not be expected to have a Material Adverse Effect.  PPC has heretofore furnished to Buyer a complete copy of (i) the most recent determination letter or opinion letter issued by the Internal Revenue Service with respect to each Pension Plan identified in Section 4.16 and any outstanding application for a determination, (ii) the Plan, trust documents, amendments thereto and summary plan description relating to each Pension Plan and Welfare Plan identified in Section 4.16, (iii) the three most recent annual reports  (to the extent such reports are required by law) for each Pension Plan and Welfare Plan described in Section 4.16, and (iv) all material documents relating to each Benefit Arrangement described in Section 4.16.  To the Sellers’ Knowledge, all financial statements provided by PPC and containing footnotes reflect all Pension Plan, Welfare Plan and Benefit Arrangement liabilities in accordance with generally accepted accounting principles, methods and practices set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, and statements and pronouncements of the Financial Accounting Standards Board or of such other entity as may be approved by a significant segment of the accounting profession, which are consistently maintained and applied throughout the periods referenced.

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(k)           To the Sellers’ Knowledge, there is no material action, suit, investigation, arbitration or other proceeding pending, or threatened against, or affecting any Pension Plan, Welfare Plan or Benefit Arrangement described in Section 4.16, any fiduciary thereof or assets of any trust, insurance or annuity contract thereunder, at law or in equity, by or before any court, government department, commission, agency, instrumentality or arbitrator.  To the Sellers’ Knowledge, there is presently no material outstanding judgment, decree, injunction or order of any court, governmental department, commission, agency, instrumentality or arbitrator against or affecting any such Pension Plan, Welfare Plan or Benefit Arrangement, any fiduciary thereof or assets of any trust, insurance or annuity contract thereunder.

4.17           Patents, Trademarks, Etc. To the best of Sellers’ knowledge, PPC is not infringing upon or otherwise acting adversely to any copyrights, trademarks, trademark rights, service marks, service names, trade names, patents, patent rights, licenses or trade secrets owned by any other person or persons, and there is no claim or action by any such other person pending or, to the knowledge of the Sellers, threatened, with respect thereto.

4.18           Certificate of Incorporation and By-Laws.  PPC has delivered to Buyer, complete and correct copies of the Certificate of Incorporation and the By-Laws of PPC, as amended to the date hereof.

4.19           Transactions with Certain Persons.  Except as set forth on Schedule 4.19 of the Disclosure Schedules, during the past three (3) years PPC has not directly or indirectly, purchased, leased from others or otherwise acquired any property or obtained any services from, or sold, leased to others or otherwise disposed of any property or furnished any services to, or otherwise dealt with (except with respect to remuneration for services rendered as a director, officer or employee of PPC), in the Ordinary Course of Business or otherwise (i) any person, firm or corporation which has within the last three (3) years, directly or indirectly, alone or together with others, controlled, been controlled by or been under common control with PPC; (ii) officers and directors of PPC; (iii) any nominee for election as officer of PPC; or (iv) any member of the immediate family of any of the forgoing persons.

4.20           Absence of Undisclosed Liabilities.  Except as and to the extent reflected or reserved against in the Financial Statements (including the notes thereto) or as set forth on Schedule 4.20, (a) PPC has not had, as of the date hereof, any material liabilities or accrued expenses, whether accrued, absolute, contingent or otherwise, of a kind or character that would be required to be reflected in the consolidated balance sheet of PPC as of December 31, 2009; (b) since December 31, 2009, except for trade payables and accrued expenses incurred in the Ordinary Course of Business, PPC has not incurred any such liabilities.

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4.21           No Guarantees.  Except as set forth at Schedule 4.21, none of the obligations or liabilities of PPC are guaranteed by any other person, firm or corporation, nor has PPC guaranteed the obligations or liabilities of any other person, firm or corporation except for endorsements on instruments made in the Ordinary Course of Business.

4.22           Inventories.  Except as set forth in Schedule 4.22, the items of inventory and related supplies (including raw materials, work in process and finished products) reflected on the Financial Statements or thereafter acquired or generated by PPC (and not subsequently disposed of in the Ordinary Course of Business), PPC’s inventories consist of a quantity and quality historically useable or saleable in the Ordinary Course of Business.

4.23           Receivables.  All notes receivable and accounts receivable of PPC are reflected properly on their books and records, are valid receivables, and are collectible.

4.24           Minute Books. The minute books, stock certificate books and stock transfer ledgers of PPC are complete and correct in all material respects. The minute books contain accurate records of the proceedings of all actions formally taken by the shareholders and the board of directors of PPC.

4.25           Absence of Certain Business Practices.  To Sellers’ knowledge, neither PPC nor any of its officers, employees or agents, has directly or indirectly, within the past five (5) years, given or agreed to give any gift or similar benefit to any customer, supplier, governmental employee or other person who is or may be in a position to help or hinder the business of PPC (or assisted in connection with any actual or proposed transaction) which, in any material respect, (i) might subject PPC to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, might have had an adverse effect on the assets or business or operations of PPC as reflected in the Financial Statements, or (iii) if not continued in the future, might adversely affect the assets, business operations or prospects of PPC.

4.26           Financial Statements. Schedule 4.26 of the Disclosure Schedules provides copies of the unaudited statements of assets, liabilities and stockholders’ equity, statements of revenue, expenses and retained earnings and statements of cash flows for PPC for the years ended December 31, 2009 and 2008 (the “Financial Statements”).  The Financial Statements (including the notes thereto) are complete and accurate in all material respects and have been prepared on a consistent basis throughout the periods covered thereby, and present fairly the financial condition of PPC as of such dates and the results of operations and cash flows of PPC for such periods, are correct and complete in all material respects.

4.27            Securities Matters.

(a)           Sellers have acquired sufficient information about Buyer to reach an informed and knowledgeable decision to acquire the Buyer Stock.  Sellers have had the opportunity to ask questions of, and receive answers from, representatives of Buyer concerning Buyer and has obtained from Buyer any information requested.  All questions raised by Sellers concerning  Buyer have been answered to the satisfaction of  Sellers.  Sellers’ decision to acquire the Buyer Stock is based on Sellers’ own evaluation of the risks and merits of such purchase.

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(b)           Sellers are acquiring the Buyer Stock for their own account for investment purposes only and not as a nominee or agent and not with a view to, or in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(c)           Sellers understand that the Buyer Stock has not been registered under the Securities Act or any applicable state security law in reliance upon specific exemptions therefrom, which exemptions depend upon, among other things, upon the bona fide nature of Sellers’ investment intent as expressed herein.  Sellers further understands that the Buyer Stock must be held indefinitely unless subsequently registered or qualified under the Securities Act and such laws or unless exemptions from such registration and qualification are otherwise available.

(d)           Each Seller is an “accredited investor” as defined in Rule 501 of Regulation D under the Act.

4.28           Disclaimer of Other Representations and Warranties.Except as expressly set forth in this Article IV, Sellers make no representation or warranty, express or implied, at law or in equity, with respect to any of its assets, liabilities or operations, including, without limitation, with respect to merchantability or fitness for any particular purpose, and any such other representations or warranties are hereby expressly disclaimed. Without limiting the generality of the foregoing, Sellers make no representation or warranty regarding any matter unless specifically set forth herein and none shall be implied at law or in equity.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Sellers, as of the date of this Agreement and as of the Closing Date, as follows:

5.1           Organization.  Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of New York and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business substantially as it is now being conducted.

5.2           Authority.  Neither the execution, delivery, nor performance of this Agreement by Buyer will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate, or loss of rights under, or result in the creation of any lien, charge or encumbrance pursuant to, any provision of Buyer’s Certificate of Incorporation, By-Laws, or any franchise, mortgage, deed of trust, lease, license, agreement, understanding, law, regulation, or any order, judgment or decree to which Buyer is a party or by which Buyer or its assets may be bound or affected.  This Agreement has been duly executed and delivered by Buyer, and constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.

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5.3           SEC Filings; Financial Statements.  Buyer has furnished or made available to Sellers a correct and complete copy of Buyer’s Annual Report on Form 10-K filed with the SEC with respect to the fiscal year ended December 31, 2009, and each Quarterly Report on Form 10-Q, Current Report on Form 8-K, other report, schedule, registration statement, and definitive proxy statement filed by Buyer with the SEC on or after the date of filing of the Form 10-K which are all the documents (other than preliminary material) that Buyer was required to file (or otherwise did file) with the SEC in accordance with Sections 13, 14 and 15(d) of the Exchange Act on or after the date of filing with the SEC of the Form 10-K (collectively, the “Buyer SEC Documents”).  As of their respective filings dates, or in the case of registration statements, their respective effective times, none of the Buyer SEC Documents (including all exhibits and schedules thereto and documents incorporated by reference therein) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Buyer SEC Documents complied when filed, or in the case of registration statements, as of their respective effective times, in all material respects with the then applicable requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations promulgated by the SEC thereunder.  Each set of consolidated financial statements (including, in each case, any related notes thereto) contained in the Buyer SEC Documents was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, do not contain footnotes as permitted by Form 10-Q of the Exchange Act) and each fairly presents the consolidated financial position of Buyer and its subsidiaries at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse).

5.4           Investment.  The Buyer is not acquiring the PPC Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act.

5.5           Buyer Shares.The Buyer Shares and additional Buyer common stock provided hereunder, when issued and delivered in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and non-assessable, and free and clear of all rights of first refusal, preemptive rights and Encumbrances other than resale restrictions under applicable securities laws.

5.6           Disclaimer of Other Representations and Warranties.Except as expressly set forth in this Article V, Buyer makes no representation or warranty, express or implied, at law or in equity, with respect to any of its assets, liabilities or operations, including, without limitation, with respect to merchantability or fitness for any particular purpose, and any such other representations or warranties are hereby expressly disclaimed. Without limiting the generality of the foregoing, Buyer make no representation or warranty regarding any matter unless specifically set forth herein and none shall be implied at law or in equity.

ARTICLE VI

MUTUAL COVENANTS AND AGREEMENTS OF THE PARTIES

6.1           Expenses.Whether or not the transactions contemplated herein are consummated, Buyer will bear its own legal or other expenses (including disbursements) incurred in connection with this Agreement or any transactions contemplated by this Agreement, and Sellers will bear their and PPC’s own legal or other expenses (including disbursements), incurred by them or it in connection with this Agreement or any transaction contemplated by this Agreement.  Notwithstanding any provision herein to the contrary, PPC will bear its own accounting expenses incurred by it in connection with this Agreement, provided that the accounting expenses are not incurred for the benefit of Sellers.

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6.2           Public Announcements.  Prior to the Closing Date, the parties will advise and confer with each other prior to the issuance of any reports, statements or releases (including reports, statements or releases to its respective employees) pertaining to this Agreement and any transaction contemplated by this Agreement.  Nothing contained herein, however, shall prohibit any party from making any public statement required to be made by such party as a matter of law, provided that any such statement is provided to other party for review in advance of any disclosure or filing.

6.3           Further Assurances.  Each party hereby agrees to execute and deliver such instruments and take such other actions as any other party may reasonably require in order to carry out the intent of this Agreement.

6.4           Financial Statements.  Within sixty (60) days of the Closing, the Sellers shall make good faith efforts to cause PPC’s current accounting firm to prepare and deliver audited financial statements of PPC for the calendar years ending December 31, 2008 and 2009. Buyer shall reimburse Sellers for any and all costs incurred by Sellers in connection with the preparation of such financial statements.

6.5           Confidentiality; Restrictive Covenants.

(a)           The parties acknowledge that the value of confidential information developed by PPC is attributable substantially to the fact that such information is maintained by PPC in the strictest confidentiality and secrecy and is not available to others without the expenditure of substantial time, effort and money.  Sellers acknowledge that Buyer and PPC would be irreparably damaged if PPC’s confidential knowledge were disclosed to or utilized on behalf of Sellers or any other person, firm, corporation or other business organization which engages in the design, research, development, manufacture, promotion, marketing, distribution and/or sale of products or services of the type designed, developed, manufactured, promoted, marketed, provided, distributed and/or sold by PPC or products or services which compete with such products,  and Sellers jointly and severally covenant and agree that they shall not at any time, and shall ensure that their respective affiliates, associates (as the terms “affiliate” and “associate” are defined by the rules and regulations promulgated under the Securities Act ) or any other person whose behavior can be controlled by Seller (a “Controlled Person”) shall not at any time, without the prior written consent of Buyer, disclose or use any such confidential information.  For purposes of this Agreement, (i) a product or service “competes with” a product of PPC if such product can be substituted for any product or service, or any part thereof, designed, manufactured, promoted, marketed, provided, distributed and/or sold by PPC, and (ii) a business “engages in competition” with PPC if it designs, manufactures, promotes, markets, provides, distributes or sells any such product or service.

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(b)           To further secure the interests of Buyer hereunder, Sellers jointly and severally covenant and agree that for a period of five (5) years from the Closing Date, neither Sellers nor any of their respective, affiliates, associates and Controlled Persons shall, directly or indirectly, engage in competition with, or directly or indirectly perform services (as employee, manager, consultant, independent contractor, advisor or otherwise) for any business, or own any equity interest in any enterprise (other than an aggregate of not more than one percent (1%) of the stock issued by any publicly held corporation) that engages in competition with PPC or any of its affiliates anywhere in North America.   In addition, during such period, neither Seller shall (and shall assure that none of their respective employees, affiliates, associates or Controlled Persons shall) directly or indirectly solicit, raid or entice, or otherwise induce any customer of PPC or any of its affiliatesto cease doing business therewith or to do business with a competitor with respect to products or services that are competitive with the products or services of PPC or any of its affiliates.

(c)           To further secure the interests of Buyer, Sellers jointly and severally agree that for a period of five (5) years from the Closing Date, neither Seller shall (and shall assure that none of their respective, affiliates, associates or Controlled Persons shall), directly or indirectly, solicit for employment, offer employment to, or employ for its own account or the account of any other person, any person who is on the Closing Date or thereafter becomes an employee or consultant of PPC or any of its affiliates.

(d)           To further secure the interests of Buyer hereunder, Sellers jointly and severally agree that neither Seller shall (and shall assure that none of their respective, affiliates, associates or Controlled Persons shall) at any time disparage the business reputation, products or services of PPC or any of its affiliates.

(e)           Sellers agree that the provisions of this Section 6.5 are reasonable in scope and duration and necessary to protect the interests of Buyer in confidential information.  Sellers agree that, in addition to any other rights or remedies which Buyer may have, Buyer shall be entitled to injunctive and other equitable relief to prevent a breach of this Section 6.5 by Sellers, including a temporary restraining order or an injunction from any court of competent jurisdiction restraining any threatened or actual violation, and Sellers consent to the entry of such an order and injunctive relief and waive the making of a bond or undertaking as a condition for obtaining such relief.

6.6           Tax Matters.

(a)           Final Tax Returns. Within thirty (30) days of the Closing Date, the Buyers shall prepare, at Buyer’s sole cost and expense, all income tax returns to be filed for PPC’s tax year commencing on January 1, 2010 and ending on the Closing Date and provide the same to Sellers’ Agent for review and approval (collectively, the “Final Tax Returns”).  Notwithstanding anything herein to contrary, Buyer may not amend any of PPC’s tax returns filed or prepared prior to the Closing Date without the prior written consent of Sellers’ Agent.  Sellers covenant and agree that they shall remit immediately available funds equal to all taxes that are shown as due on such Final Tax Returns and Sellers and Buyer shall cause any distribution to be made to Sellers in an amount sufficient to satisfy any tax liability incurred by Sellers for the tax year commencing January 1, 2010 and ending as of the Closing Date.  The Final Tax Return for the period from January 1, 2010 through the Closing Date shall be prepared (i) using the "closing-of-the-books" method of allocation, wherein it would be presumed that the books of PPC would be closed as of the Closing Date and (ii) in accordance with Section 6.6(b) below.  If within forty-five (45) days after receiving a copy of the Final Tax Return for the tax year commencing January 1, 2010 and ending as of the Closing Date,  Sellers’ Agent does not object thereto or otherwise consents thereto, Buyer shall file such Final Tax Return with the appropriate Governmental Entity.  Buyer shall accept all reasonable comments of Sellers’ Agent made to such Final Tax Return.  Sellers shall have no responsibility to Buyer for any taxes imposed upon PPC for any time period prior to the Closing Date by reason of Buyer’s decision to cause PPC to file amended tax returns to increase or otherwise change the taxable income of PPC for any such periods.  

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(b)           Computation and Payment of Taxes.  Buyer will indemnify and hold Sellers harmless from and against, without duplication, any loss, claim, liability, expense or other damage attributable to all taxes (or the nonpayment thereof) of PPC for the period of time after the Closing Date and for all taxes included in the Final Working Capital Schedule.  Any other provision of this Agreement to the contrary notwithstanding, this Section 6.6 shall survive until the sixtieth (60th) day following expiration of the statute of limitations on collection of the applicable tax.

(c)             Tax Return Preparation.  Buyer, Sellers and Sellers’ Agent shall cooperate fully, as and to the extent reasonably requested by the other parties, in connection with the filing of any tax returns, and any audit, litigation or other proceeding with respect to taxes.  Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such tax return, or any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  Buyer, the Sellers and Sellers’ Agent agree (i) to retain or cause to be retained all books and records with respect to tax matters pertinent to PPC relating to any tax period beginning before the Closing Date until the expiration of the applicable statute of limitations (and, to the extent notified by Buyer or Sellers’ Agent, any extensions thereof) of the respective tax periods, and to abide by all record retention agreements entered into with any tax authority, (ii) to provide to the other party, upon request, all books and records with respect to tax matters pertinent to PPC relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer or Sellers’ Agent, any extensions thereof) of the respective periods, and (iii) to give the other parties reasonable written notice prior to transferring, destroying or discarding any such books and records and, if any of the other parties so requests, the other parties shall allow such requesting party to take possession of such books and records.

6.7           Certain Taxes and Fees.  All transfer, documentary, sales, use, stamp, registration and other such taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be paid by Buyer when due, and Buyer will file all necessary Tax returns and other documentation with respect to all such Taxes, fees and charges.  The expense of such filings shall be paid by Buyer.

6.8           S-3 Registration Statement; 10b5-1 Plan; Late Payments.

(a)           Buyer will use its best efforts to file with the Securities and Exchange Commission (the “SEC”) within thirty (30) days of Closing, a Form S-3 Registration Statement (the “Registration Statement”) to register the resale of the Buyer Shares issued to Sellers pursuant to this Agreement.  Buyer shall prepare and provide Sellers and their counsel an opportunity to review and provide comments to the Registration Statement before it is filed with the SEC.  Buyer will use its best efforts to ensure effectiveness of the Registration Statement within one hundred twenty (120) days from Closing.

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(b)           If the Registration Statement contemplated herein has not been declared effective by the SEC before the date that is one hundred twenty (120) days after the Closing Date (the “Effectiveness Deadline”), Buyer will pay to Sellers on the Effectiveness Deadline the sum of $5,000 (a “Late Payment”). If the Registration Statement has not been declared effective before the one month anniversary of the Effectiveness Deadline, Buyer will pay to Sellers an additional Late Payment.  Thereafter, Buyer will make an additional Late Payment to Sellers on each subsequent monthly anniversary of the Effectiveness Deadline, if the Registration Statement has not been declared effective before such monthly anniversary of the Effectiveness Deadline.

(c)           Within three (3) days of written request by Sellers’ Agent (subject to the Registration Statement being declared effective by the SEC) (“Implementation Deadline”), the Buyer shall implement the Rule 10b5-1 Plan in the form attached hereto as Exhibit A the “Sellers’ 10b5-1 Plan”) to allow the Buyer Shares issued to Sellers pursuant to the terms of this Agreement to be sold on the open market as part of a regular selling program.  If the Sellers’ 10b5-1 Plan is not filed by the Implementation Deadline, the Buyer shall pay Sellers a Late Payment, except to the extent the 10b5-1 Plan was not filed at Sellers’ election.  Thereafter, the Buyer will make additional Late Payments to Sellers on each subsequent weekly (seven day week) anniversary of the Implementation Deadline, if the 10b5-1 Plan has not been implemented before such weekly anniversary of the Implementation Deadline.

(d)           The Buyer acknowledges and agrees that each Late Payment shall be made in immediately available funds to Sellers in accordance with the written directions provided by Sellers’ Agent.  If any payments are not paid within the prescribed time period, then interest shall accrue and be due and payable from Buyer on such amount from and including the due date through and including the date of payment at eight percent (8%) per annum.

6.9           Issuance of Additional Shares of Buyer Common Stock for Sellers’ Increased Income Tax Liability.

(a)           If the Internal Revenue Service or other state or local income tax authority implements changes to the income (or other) tax rates that would have the effect of increasing the tax liability of Sellers (on a retroactive basis) as a result of the transactions contemplated in this Agreement, then Buyer shall pay Sellers (in additional shares of Buyer common stock or cash) the difference between the estimated income tax liability of Sellers as of the Closing Date prior to change in tax rates and the new tax liability of Sellers as result of any tax rate change (the “Sellers’ Increased Tax Liability Payment”).  As soon as practicable after any such change in tax rates, Sellers’ Agent shall prepare and deliver to Buyer a written statement calculating (with reasonable detail) Sellers’ tax liability prior to any such tax rate change, Sellers’ tax liability as a result of the tax rate change and a calculation of Sellers’ Increased Tax Liability Payment (the “Increased Tax Liability Statement”).  Within three (3) days of receipt of the Increased Tax Liability Statement, Buyer shall deliver to Sellers’ Agent a written statement with any good faith objections thereto.  Unless Buyer objects within such period, Buyer shall be deemed to have accepted and agreed to the Increased Tax Liability Statement and the same shall be final and binding on the parties.  If Buyer objects then the Unrelated Accounting Firm shall resolve any such dispute, whose decision as to the issues in dispute shall be conclusive, final and binding upon Sellers and Buyer for purposes hereof.  The Unrelated Accounting Firm shall address only those issues in dispute.  Any payment due by Buyer hereunder shall be paid within ten (10) days after final determination.  If not paid within such time period, then interest shall accrue and be due and payable from Buyer on such amount from and including the due date through and including the date of payment at four percent (4%) per annum.  If Buyer elects to make payment in the form of additional shares of Buyer common stock, then the number of shares to be issued by Buyer shall be determined by dividing the amount of Sellers’ Increased Tax Liability Payment by the lesser of (i) $2.00, or (ii) the average closing price of Buyer’s common stock over the thirty (30) trading day period immediately prior to the date of final determination of the payment amount multiplied by 0.80.  Buyer acknowledges and agrees that all such shares issued to Sellers under this Section shall be included, upon the request of Sellers’ Agent, in the Registration Statement discussed above (as part of the original filing and effectiveness or by amendment  thereto).  In addition, on the request of Sellers’ Agent, Buyer will make best efforts to implement a Rule 10b5-1 plan substantially similar to the 10b5-1 Plan described above to allow such additional shares issued to Sellers to be sold on the open market as part of a regular selling program.  Buyer acknowledges that the provision regarding Late Payments shall be applicable to the additional shares issued under this Section.

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(b)           Buyer will use its best efforts to file with the SEC within thirty (30) days after the issuance of the shares under Section 6.9(a), a Form S-3 Registration Statement to register the resale of all such shares issued to Sellers thereunder.  Buyer shall prepare and provide Sellers and their counsel an opportunity to review and provide comments to such registration statement before it is filed with the SEC.  Buyer will use its best efforts to ensure effectiveness of the Registration Statement within one hundred twenty (120) days from Closing.  If the registration statement contemplated herein has not been declared effective by the SEC before the date that is one hundred twenty (120) days after the issuance date, Buyer will pay to Sellers the a Late Payment. Thereafter, Buyer will make an additional Late Payment to Sellers on each subsequent monthly anniversary of the issuance date, if the registration statement has not been declared effective before such monthly anniversary of the issuance date.

6.10           Appointment as Director; PPC Employees Stock Options Pool.

(a)           Concurrently with the Closing, Buyer shall appoint Sellers’ Agent as the President and Chief Executive Officer of PPC.   Buyer and Buyer’s Board of Directors shall take the necessary corporate action to appoint Sellers’ Agent to Buyer’s Board of Directors and as Buyer’s President and the Chief Operating Officer as soon as practicable after the Closing, including, without limitation, to include in the notice of the 2010 annual meeting of Buyer’s shareholders a proposal (and as a appropriate proposal to be voted on by Buyer’s shareholders) recommending for approval an an amendment to Article II, Section 2.1 of the Buyer’s bylaws to increase the size of Buyer’s Board of Directors to create a vacancy that will be filled by the appointment of Sellers’ Agent.  Buyer shall provide Seller’s Agent with a copy of the proxy statement for the 2010 annual meeting of shareholders for review and shall accept reasonable comments from Seller’s Agent or his counsel prior to filing the same with the SEC or mailing to Buyer’s shareholders in advance of such meeting.

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(b)           Within ten (10) days of the Closing Date, Buyer shall have taken appropriate corporate measures to make available 50,000 shares under the Buyer’s 2004 Employee Stock Option Plan which shall be reserved for issuance to certain of the current employees of PPC at the discretion of Sellers’ Agent after the Closing Date pursuant to the attached Schedule 6.10(b) of the Disclosure Schedules.

ARTICLE VII

CONDITIONS PRECEDENT

7.1           Conditions Precedent to Buyer’s Obligations.  The obligations of the Buyer under this Agreement are subject to the satisfaction at or prior to Closing of the following conditions:

(a)           Financing.  Buyer shall have closed on a $1,000,000 revolving line of credit and a $1,500,000 Term Note with RBS Citizens, N.A. as set its in their loan commitment letter dated January 20, 2010 concurrently with the consummation of the transactions hereunder.

(b)           Representations and Warranties.  The representations and warranties of Sellers set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except as to representations and warranties which are expressly limited to a state of facts existing at a time prior to the Closing Date; provided that representations and warranties containing materiality qualifiers shall be true in all respects on each such date.

(c)           Performance of Obligations of Sellers.  Sellers shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.

(d)           Certificate.  Sellers shall have furnished Buyer with a certificate to the effect that (i) all of the Sellers’ representations and warranties contained in this Agreement are in all material respects true and accurate as of the date when made, except as to representations and warranties which are expressly limited to a state of facts existing at a time prior to the Closing Date, at and as of the Closing Date, as though such representations and warranties remain on the Closing Date, and that (ii) Sellers and PPC have performed and complied in all material respects with all terms, covenants and provisions of this Agreement required to be performed or complied with by them and/or it prior to or on the Closing Date.

(e)           No Material Adverse Changes. Since the date of this Agreement there shall have not occurred any material adverse change in the properties, assets, operations, business, condition (financial or otherwise), cash flow, working capital or prospects of PPC taken as a whole.

(f)           Other Certificates.  Sellers shall have furnished the Buyer with (i) a certificate of the New York Secretary of State dated as of a recent date as to the due incorporation and good standing of PPC; and (ii)  a franchise tax search from New York State and each state in which PPC conducts business, indicating that no taxes or tax returns are past due.

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(g)           Delivery of Documents.  All documents required by this Agreement, including but not limited to the Financial Statements, to be delivered by Sellers to Buyer, by, at or prior to the Closing Date shall have been so delivered.

(h)           Employment Agreement.  Sellers’ Agent and Buyer shall have entered into the Employment Agreement in the form, the “Employment Agreement”, as set forth as Exhibit B.

(i)           Lease.  Bzdick Properties, LLC and PPC shall have entered into the Lease for the premises at 6 Framark Drive in the form of the Lease set forth as Exhibit C.

7.2           Conditions Precedent to Sellers' Obligations.  The obligations of Sellers under this Agreement are subject to the satisfaction at or prior to the Closing of the following conditions:

(a)           Representations and Warranties.  The representations and warranties of Buyer set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except as to representations and warranties which are expressly limited to a state of facts existing at a time prior to the Closing Date; provided that representations and warranties containing materiality qualifiers shall be true in all respects on each such date.

(b)           Performance of Obligations of Buyer.  Buyer shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.

(c)           Certificate.  Buyer shall have furnished Sellers with a certificate to the effect that (i) all of Buyer’s representations and warranties contained in this Agreement are in all material respects true and accurate as of the date when made, except for changes expressly contemplated by this Agreement and except as to representations and warranties which are expressly limited to a state of facts existing at a time prior to the Closing Date, at and as of the Closing Date, as though such representations and warranties remain on the Closing Date, and that (ii) Buyer has performed and complied in all material respects with all terms, covenants and provisions of this Agreement required to be performed or complied with by it prior to or on the Closing Date.

(d)           No Material Adverse Changes. Since December 31, 2009 there shall have not occurred any Material Adverse Change in the properties, assets, operations, business, condition (financial or otherwise ), cash flow, working capital or prospects of PPC taken as a whole.

ARTICLE VIII

INDEMNIFICATION

8.1           Survival.  The representations and warranties in this Agreement  shall survive Closing until the two (2) year anniversary of Closing, at which time they shall terminate.   For purposes of the is Article VII, “Loss” or “Losses” means any and all judgments, losses, Liabilities, amounts paid in settlement, damages, fees, fines, penalties, deficiencies, costs and expenses (including interest, court costs, reasonable fees and expenses of attorneys, accountants and other experts or other reasonable expenses of litigation or other proceedings or of any claim, default or assessment).

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8.2           Indemnification by Sellers’ Agent.  From and after the Closing Date, for the applicable survival period set forth in Section 8.1, Sellers’ Agent shall indemnify, save and hold harmless Buyer, and their respective directors, officers and stockholders and Representatives, or any of them (collectively, “Buyer Indemnitees”) from and against any and all Losses asserted against, resulting to, imposed on, sustained, incurred or suffered by any of them based upon, arising out of, related to or otherwise in respect of any of the following (including any action, suit or proceeding based upon, arising out of, related to or otherwise in respect of any thereof):

(a)           the inaccuracy in or breach of any representation or warranty of Sellers contained in Article IV or any certificate delivered by Sellers to Buyer in connection with this Agreement;

(b)           any failure to perform or observe or any breach of any covenant or agreement made by Sellers in this Agreement or any other agreement delivered by Sellers; and

(c)           any pre-Closing taxes of PPC.

8.3           Indemnification by Buyer. From and after the Closing Date, for the applicable survival period set forth in Section 8.1, Buyer shall indemnify, save and hold harmless Sellers and their heirs (collectively, “Seller Indemnitees”) from and against any and all Losses asserted against, resulting to, imposed on, sustained, incurred or suffered by any them based upon, arising out of, related to or otherwise in respect of any of the following (including any action, suit or proceeding based upon, arising out of, related to or otherwise in respect of any thereof):

(a)           the inaccuracy in or breach of any representation or warranty by Buyer contained in Article V or any certificate delivered by Buyer in connection with this Agreement; and

(b)           any failure to perform or observe or any breach of any covenant or agreement made by Buyer or any of their respective affiliates in this Agreement; and

(c)           any Losses resulting from or arising out of the post-Closing ownership of the PPC Shares or operation of PPC’s Business.

8.4           Limitations. Sellers’ Agent shall be required to indemnify and hold harmless pursuant to Section 8.2 with respect to Losses incurred by Buyer Indemnitees only to the extent the aggregate Losses exceed One Hundred Fifty Thousand Dollars ($150,000) (the “Basket”), whereupon the Sellers’ Agent shall be liable for all Losses in excess of the Basket; provided, that the maximum aggregate liability of the Sellers’ Agent to all Buyer Indemnitees taken together for all Losses pursuant to Section 8.2 shall not exceed an amount equal to Two Million Dollars ($2,000,000) (the “Indemnification Cap”).

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8.5           Notice of Claims.

Except as provided in Section 8.6, if any Buyer Indemnitee or Sellers Indemnitee (an “Indemnified Party”) believes that it has suffered or incurred any Losses for which it is entitled to indemnification under this Article VIII, such Indemnified Party shall so notify the party from whom indemnification is being claimed (the “Indemnifying Party”) with reasonable promptness and reasonable particularity in light of the circumstances then existing. If any claim is instituted by or against a third party with respect to which any Indemnified Party intends to claim indemnification under this Article VIII, such Indemnified Party shall promptly notify the Indemnifying Party of such claim. The notice provided by the Indemnified Party to the Indemnifying Party shall describe the claim (the “Asserted Liability”) in reasonable detail and shall indicate the amount (or an estimate) of the Losses that have been or may be suffered by the Indemnified Party. The failure of an Indemnified Party to give any notice required by this Section 8.5 shall not affect any of the Indemnified Party’s rights under this Article VIII or otherwise except and to the extent that such failure is prejudicial to the rights or obligations of the Indemnifying Party. Notwithstanding the foregoing, if prior to the stated expiration of any representation and warranty there shall have been given notice of an Asserted Liability by an Indemnified Party, such Indemnified Party shall continue to have the right to such indemnification with respect to such noticed claim notwithstanding such expiration.

8.6           Opportunity to Defend Third Party Claims.

(a)           Any Indemnifying Party will have the right to defend the Indemnified Party against any third party claim for which it is entitled to indemnification from such Indemnifying Party under this Article VIII with counsel reasonably satisfactory to the Indemnified Party so long as (i) any of the Indemnifying Parties notifies the Indemnified Party in writing within twenty (20) days after the Indemnified Party has given notice of the third party claim that all of the Indemnifying Parties will indemnify the Indemnified Party from and against the entirety of Losses the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of or caused by the third party claim, (ii) the Indemnifying Parties provide the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Parties will have the financial resources to defend against the third party claim and fulfill their indemnification obligations hereunder, (iii) the third party claim involves only money damages and does not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the third party claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party, and (v) the Indemnifying Parties diligently conduct the defense of the third party claim.

Notwithstanding the foregoing, without the prior consent of the Indemnified Party, the Indemnifying Parties shall not settle or compromise any third party claim or consent to the entry of a judgment in connection therewith that: (i) does not provide for the claimant to give an unconditional release to the Indemnified Party in respect of the Asserted Liability; (ii) involves relief other than monetary damages; (iii) places restrictions or conditions on the operation of the business of the Indemnified Party or any of its Affiliates; or (iv) involves any finding or admission of criminal liability or of any Laws.

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(b)           So long as the Indemnifying Party has undertaken to conduct the defense of the third party claim in accordance with Section 8.6(a), (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the third party claim, (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the third party claim without the prior written consent of the Indemnifying Party, and (iii) the Indemnifying Party shall keep the Indemnified Party reasonably informed as to the status of the claim for which it is providing a defense. Notwithstanding the foregoing or Section 8.6(a), in the event that (w) any of the conditions in Section 8.6(a)(i) is or becomes unsatisfied or; (x) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to defend such action within thirty (30) days after the Indemnifying Party notifies the Indemnified Party of its intent to defend against the Asserted Liability; (y) the Indemnified Party shall have reasonably concluded, based upon written advice of counsel, that it has defenses available to it that are different from or additional to those available to the Indemnifying Party (in which case the Indemnifying Party shall not have the right to direct the defense of such action on behalf of the Indemnified Party with respect to such different defenses); or (z) representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding, then the Indemnified Party may defend against the third party claim in any manner it may deem appropriate and, the Indemnifying Parties will be responsible for the Indemnified Party’s costs of defending against the third party claim (including reasonable attorneys’ fees and expenses), and the Indemnifying Parties will remain responsible for the entirety of the Losses the Indemnified Party may suffer resulting from, arising out of or caused by the third party claim.

8.7         Exclusive Remedies. From and after Closing, the remedies contained in this Article VIII shall contain the sole and exclusive monetary remedies of Buyer with respect to any breach by Sellers of any representation, warranty, covenant or agreement contained herein; provided that nothing herein shall be construed to restrict or limit Buyer’s right to specific performance or injunctive relief to enforce the provisions of this Agreement.

ARTICLE IX

TERMINATION

9.1           Termination Events.Subject to Section 9.2, by notice given prior to or at the Closing, this Agreement may be terminated as follows:

(a)           by mutual consent of Buyer and Sellers;

(b)           by Buyer if a material breach of any provision of this Agreement has been committed by any Seller; or

(c)           by Sellers if a material breach of any provision of this Agreement has been committed by Buyer.

9.2           Effect of Termination.  Each party’s right of termination under Section 9.1 is in addition to any other right it may have under this Agreement  or otherwise, and the exercise of a party’s right of termination will not constitute an election of remedies.  If this Agreement is terminated pursuant to Section 9.1, this Agreement will be of no further force or effect; provided, however, that (i) this Section 9.2 and Article X will survive the termination of this Agreement and will remain in full force and effect, and (ii) the termination of this Agreement will not relieve any party from any liability for any breach of this Agreement.

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ARTICLE X

MISCELLANEOUS PROVISIONS

10.1           Amendment and Modification.  This Agreement may be amended, modified and supplemented with respect to any of the terms contained herein by mutual consent of Sellers’ Agent and Buyer, by an appropriate written instrument executed at any time prior to the Closing Date.

10.2           Waiver of Compliance.  Sellers and Buyer may, by an instrument in writing extend the time for or waive the performance of any of the obligations of the other or waive compliance by the other with any of the covenants, or waive any of the conditions to its obligations, contained herein. No such extension of time or waiver shall operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

10.3           Knowledge.  For purposes of this Agreement and any agreements, schedules, exhibits, certificates other contracts delivered in connection herewith, the terms “Sellers’ Knowledge”, “Sellers’ knowledge” or “knowledge of the Sellers” shall mean the actual knowledge of Robert B. Bzdick without independent investigation.

10.4           Assignment.  This Agreement and all of the provisions hereof shall be binding upon an inure to the benefit of the parties hereto and its respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties, except that the Buyer may assign its rights and obligations hereunder to an affiliate.

10.5           Specific Performance.  Each party hereto acknowledges and agrees that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that each party shall be entitled to an injunction or injunctions, without the need to post bond, to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any state or United States court of competent jurisdiction sitting in the State of New York, in addition to any other remedy to which they may be entitled at law or equity.

10.6           No Third-Party Beneficiaries.  Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give to any person, firm or corporation other than the parties hereto any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby, except as specifically contemplated by this Agreement.

10.7           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

10.8           Jurisdiction.  Each of the parties hereby irrevocably (i) submits, in any legal proceeding relating to this Agreement, to the exclusive jurisdiction of any state or United States court of competent jurisdiction sitting in the State of New York, Monroe County, and agrees to suit being brought in any such court, (ii)agrees to service of process in any such legal proceeding by mailing of copies thereof (by registered or certified mail, if practicable) postage prepaid at the addresses set forth below, and (iii) agrees that nothing contained herein shall affect the parties right to effect service of process in any other manner permitted by law.

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10.9           Notices.  Each notice and other communication given hereunder will be in writing and will be deemed given when delivered personally, sent by telecopier (receipt of which is confirmed), or mailed, freight prepaid, by internationally recognized overnight courier (with receipt confirmed) to the party for which it is intended at the following address (or at such other address for a party as is specified by like notice):

if to the Buyer, to:

Mr. Patrick White, CEO

Document Security Systems

28 East Main Street, Suite 1525

Rochester, New York 14614

Facsimile:

with a copy to:

Ronald J. Axelrod & Associates, P.C.

300 Linden Oaks, Suite 220

Rochester, New York 14625

Attn: Ronald J. Axelrod, Esq.

Facsimile:

if to Sellers or Sellers’ Agent, to:

Mr. Robert B. Bzdick

Premier Packaging Corporation

6 Framark Drive

Victor, New York 14564

Facsimile:

with a copy to:

Harter, Secrest & Emery

1600Bausch & Lomb Place

Rochester, New York  14604

Attn: William L. Kreienberg, Esq.

Facsimile: (585) 232-2152

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

10.11                      Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.  Facsimile signatures shall be deemed original purposes hereunder.

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10.12                      Entire Agreement.  This Agreement including the Exhibits and Disclsoure Schedules hereto and other documents and certificates delivered pursuant to the terms hereof, set forth the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein, and supersedes all prior agreements,  whether oral or written.

10.13                      Mutual Agreement.  This Agreement embodies the arm’s-length negotiation and mutual agreement among the parties hereto and shall not be construed against any party as having been drafted by it.

10.14                      Severability.  If in any jurisdiction, any provision of this Agreement or its application to any party or circumstance is restricted, prohibited or unenforceable, such provision shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invali­dating the remaining provisions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction or its application to other parties or circumstances provided the economic or legal substance of the transactions contemplated hereby is not effected in a manner adverse to any party hereto.  In addition, if any one or more of the provisions contained in this Agreement shall for any reason in any jurisdiction be held to be excessively broad as to time, duration, geographical scope, activ­ity or subject, it shall be construed, by limiting and reducing it, so as to be enforceable to the extent compatible with the application law of such jurisdiction as it shall then appear.

10.15                      Sellers’ Agent.  Sellers’ Agent is hereby appointed as agent, proxy, and attorney-in-fact for, and on behalf of, each Seller with regard to all purposes under this Agreement, including the Related Instruments, such that Sellers’ Agent shall have the full power and authority to consummate the Transaction on behalf of Sellers, perform all post-Closing matters related thereto, and do any and all things, and take any and all actions, that Sellers’ Agent, in Sellers’ Agent’s sole discretion, may consider necessary, proper, or convenient in connection with, or to carry out, the Transaction.  Without limiting the foregoing sentence, Sellers’ Agent is fully empowered and authorized to: (i) receive and disburse all payments, (ii) give and receive notices and other communications on behalf of all Sellers, and (iii) agree to, negotiate, enter into settlements, compromises, and any other resolutions of, demand arbitration of, and comply with court orders and arbitration awards with respect to indemnification and other claims by or against any Seller.  Sellers agree that the appointment of Sellers’ Agent is coupled with an interest and shall be irrevocable, except to the extent, if any, provided otherwise by any applicable Law.  Any decision, act, consent, waiver, or instruction of Sellers’ Agent relating to this Agreement, including the Related Instruments, or any matter arising thereunder or related thereto shall constitute a decision of all of the Sellers, jointly and severally, shall be final, binding, and conclusive upon each of them, and shall survive the death, incapacity, bankruptcy, dissolution, or liquidation of any Seller or the Sellers’ Agent.  Buyer and the other Indemnitees may rely upon any such decision, act, consent, waiver, or instruction of Sellers’ Agent as being the decision, consent, waiver, or instruction of each and every Seller.  Buyer and the other Indemnitees are hereby relieved from all liability to any Person for any acts done by them in accordance with any such decision, consent, waiver, or instruction of Sellers’ Agent.  Sellers shall, jointly and severally, indemnify, defend, and hold Sellers’ Agent harmless from any and all actions taken by Sellers’ Agent in good faith.

(signature page follows)

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by its respective officers thereunto duly authorized, all as of the date first written above.

BUYER:

DOCUMENT SECURITY SYSTEMS, INC.

By:  /s/ Patrick White

Patrick White, CEO

SELLERS:

/s/ Robert B. Bzdick

Robert B. Bzdick

/s/ Joan T. Bzdick

Joan T. Bzdick

SELLERS’ AGENT:

/s/ Robert B. Bzdick

Robert B. Bzdick

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EX-10.3

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of February 12, 2010 (the “Effective Date”), between Document Security Systems, Inc., a New York corporation with an office at 28 East Main Street, Suite 1525, Rochester, New York 14614 (“Company”) and Robert B. Bzdick, residing at 935 Raccoon Run, Victor, New York 14564 (“Executive”).

R E C I T A L S:

WHEREAS, Company is in the business of developing, licensing, manufacturing and selling anti-counterfeiting technology and products; and

WHEREAS, Company desires to engage the Executive, and the Executive wishes to serve the Company on the terms and conditions set forth below.

P R O V I S I O N S:

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties agree as follows:

1.      Employment; Duties.  Company hereby agrees to employ Executive as President and Chief Executive Officer (“CEO”) of Premier Packaging Corporation.  Executive hereby accepts such employment.  Executive will perform those duties and have such authority and powers as are customarily associated with the position of CEO,and such other duties and responsibilities as the CEO and/or the Board of Directors of Company may reasonably request.  The Executive shall report to the CEO of the Company or his designee.

2.      Term.  The term of this Agreement shall commence on the Effective Date and shall continue for a period of (5) five years from the Effective Date unless otherwise terminated or extended as provided herein (the “Term”).  Following the initial five (5) year Term of this Agreement, this Agreement shall be renewed automatically for a succeeding period of five (5) years (the “Renewal Period”) on the same terms and conditions as set forth herein unless either party shall, at least ninety (90) days prior to the expiration of the initial Term, provide written notice to the other party of its intention not to renew this Agreement.  The period during which Executive is employed by the Company, including the initial Term and any Renewal Period, is hereinafter referred to as the “Employment Period.”  If the Company elects not renew the Term for an additional five (5) years, then the Company will pay to the Executive, One Hundred Thousand Dollars ($100,000) per year for a period of five (5) years after the initial Term together with the additional payments and benefits described in Section 4(b), unless not renewed for Cause (as defined below).

3.      Termination of Agreement.

(a)                           Termination Date.  The employment of Executive and the Employment Period shall terminate as provided in Section 2 above or upon the date (the “Termination Date”) that is the earliest to occur of any of the following events:

(i)           the death of Executive;

(ii)           the termination of Executive’s employment by the Company due to Executive’s Disability (as defined below) pursuant to Section 3(b) hereof;

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(iii)           the termination of Executive’s employment by the Company for Cause (as defined below) pursuant to Section 3(c) hereof, or for any reason not constituting Cause; or

(iv)           by mutual agreement of the Company and Executive.

In the event of the termination of Executive’s employment hereunder, the rights and obligations of the parties shall be determined pursuant to this Agreement.

(b)         Disability.  If Executive incurs a Disability, the Company may terminate Executive's employment following such Disability period, upon thirty (30) days prior written notice to Executive.  Such termination shall not be effective if Executive returns to the full time performance of his material duties within such thirty (30) day period.

(c)         Termination for Cause.  Executive's employment and the Employment Period may be terminated by the Company for Cause (as defined below) upon thirty (30) days’ prior written notice to Executive indicating the specific Cause event relied upon and setting forth in reasonable detail the facts and circumstances which provide a basis for the termination for Cause.  Any purported termination for Cause which is held by a court not to have been based on the grounds set forth in this Agreement or not to have followed the procedures set forth in this Agreement shall be deemed a termination by the Company without Cause.

(d)         Definitions.

(i)           For purposes of this Agreement, “Cause” shall mean (A) the breach by Executive of any material term or condition of this Agreement for a period of thirty (30) days after written notice to Executive specifying the breach, (B) Executive’s willful misconduct or gross negligence in the performance of his duties hereunder, (C) Executive's theft, embezzlement or fraud involving, relating to or against Company, (D) Executive’s commission of, or conviction for, a felony or crime involving moral turpitude that has an adverse effect on the Company, (E) Executive’s breach of any material fiduciary duty owed by Executive to the Company as an officer thereof or (F) conviction of the Executive of any felony involving fraud or embezzlement.

(ii)           For purposes of this Agreement, “Disability” shall mean (A) a condition that will render Executive eligible for permanent disability insurance benefits under the Company’s disability insurance policy and, if none, then (B) that Executive has been unable for a period or periods constituting one hundred eighty (180) consecutive calendar days in any twelve (12) month period as a result of a mental illness, physical incapacity or loss of legal capacity, to perform Executive’s duties hereunder, under such circumstances as to render Executive eligible for permanent disability income payments under the standard terminology of the permanent disability income insurance policy for employees then in effect for the Company, or if none, then under the provisions of applicable New York disability laws and regulations.

4.      Consequences on Termination.

(a)                 Consequences of Termination for Death or Disability; Termination for Cause.  If Executive's employment and the Employment Period are terminated (i) by reason of Executive's death or Disability, (ii) by Executive or by the Company for Cause, then in any such case, the Employment Period shall terminate without further obligations to Executive or Executive's legal representatives under this Agreement except that Executive (or his legal representatives) shall be entitled to receipt of:  (i) a lump sum payment of any base salary earned but unpaid through the Termination Date, any accrued but unused vacation pay payable pursuant to the Company's policies through the Termination Date (“Accrued Vacation”), and any unreimbursed business expenses payable pursuant to Section 7 (collectively, the "Accrued Amounts"); (ii) payment of any earned but unpaid bonus for all fiscal quarters ending in the fiscal year in which the termination occurs (“Unpaid Bonus”), (iii) payment of any other amounts or benefits owing to Executive through the Termination Date under the then applicable employee benefit plans of the Company which shall be paid in accordance with such plans and programs (“Accrued Benefits”); and (iv) continued participation under the then applicable medical and dental plans of the Company with all such benefits as described in Section 6(d) below for the period specified therein.

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(b)         Consequences of Termination for any Reason Not Constituting Cause.  If Executive's employment and the Employment Period are terminated (i) by the Company for any reason not constituting Cause, or (ii) as a result of the Company giving notice of non-extension of the Employment Period pursuant to Section 2 hereof, then in any such case, Executive shall be entitled to receive:  (A) equal monthly payments of an amount equal to his then monthly rate of Base Salary from the Termination Date through the end of the initial Term; (B) the payments described in Section 2 above for the period specified therein; (C) continued participation under the then applicable medical and dental plans of the Company with all such benefits as described in Section 6(d) below for the period specified therein; (D) payment of all Accrued Amounts through the Termination Date; (E) payment of any Unpaid Bonus amount; (F) payment of all Accrued Benefits;  (G) payment of the bonus the Executive would have been entitled to receive during the remainder of the Term based upon the actual results of the Company for such year, payable each year in accordance with Section 6(a) below; and (H) continued benefits pursuant to Section 6(e) hereof.

5.      Salary.  In consideration for the services rendered by Executive on behalf of Company during the Term of this Agreement, Company shall pay Executive, commencing on the Effective Date, an annual salary, payable in accordance with the Company’s regular payroll practices, of Two Hundred Forty Thousand Dollars ($240,000).

6.       Benefits.

(a)  During the Employment Period, Executive shall be entitled to receive an additional  annual bonus each calendar year equal to ten percent (10%) of Net After-tax Income plus depreciation, amortization, and stock based compensation (“Adjusted Net Income”) of Premier Packaging Corporation (an operating subsidiary of the Company), as if it were a standalone entity, (in accordance with generally accepted accounting principles, or GAAP).  The calculation, administration and payment of the annual bonus will be determined on an annual basis, and shall be payable to Executive within a thirty (30) day period after the end of the calendar year in which the Adjusted Net Income is generated and the bonus calculated.  As an example, if Net After-tax Income (as defined by GAAP) for Premier Packaging Corporation for a calendar year is $1,000,000 and depreciation and amortization expense is $75,000 and stock based compensation expense is $50,000, then the Adjusted Net Income of such calendar year will be $1,125,000 and Executive’s annual bonus for such calendar year will be $112,500.

(b)  Executive will be immediately eligible for the Company’s 401(k) plan.

(c)  Executive will be eligible to participate in the Company’s 2004 Employee Stock Option Plan commensurate with other members of the Company’s senior management team, at the discretion of the Company’s Board of Directors or Compensation Committee.

(d)  Executive shall be entitled to participate in all employee benefit plans and programs sponsored by Company, including, without limitation, any group disability, life, major medical and accidental death and dismemberment insurance plans and/or benefits and profit sharing, retirement or pension plans in a manner not less than any other Company employees through the Term of this Agreement.  The Company agrees that the Company shall pay for 100% of Executive’s health insurance coverage  for Executive and his family for ten (10) years or his Employment Period, whichever is greater.  If Executive is not employed during any of the ten (10) years of coverage, then the value of such coverage will be reported to Executive as 1099 income during such period of non-employment. This provision shall not apply if Executive is terminated for Cause.

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(e)         During the Employment Period, term life insurance coverage equal to one (1) year of Executive’s annual salary shall be maintained by the Company, with Executive’s spouse or other named beneficiary(ies) named as beneficiaries under any such policy.

(f)         Six (6) weeks of paid vacation per year.

(g)         Executive will be covered under the Company’s Directors & Officers Liability Insurance.

(h)         All forms of compensation referred to in this Agreement are subject to reduction to reflect applicable federal, state and local withholding and payroll taxes.

7.      Expenses.  Executive will be entitled to be paid or reimbursed for all reasonable, documented expenses incurred by Executive in connection with Executive’s responsibilities to Company, including, without limitation, administrative, travel, lodging, food, and entertainment, in accordance with the Company’s policies for senior executive employees in effect from time to time.

8.      Confidential Information. Executive shall not, during the Term and thereafter, disclose in any manner to any person or entity, except as required or necessary in the course of his employment by Company or as otherwise authorized by Company, any Confidential Information (as defined herein).  “Confidential Information” shall mean any information existing as of the date of this Agreement, or thereafter developed, in which Company has a proprietary interest, including, but not limited to, information relating to its patents, technology, research and development, technical data, trade secrets, know-how, products, services, finances, operations, sales and marketing, customers and customer information, licenses, orders for the purchase or sale of products, personnel matters and/or other information relating to Company, whether communicated orally, electronically or in writing, or obtained byExecutive as a result of his employment, or through observation or examination of the Company’s business.

9.       Non-Competition Covenant; Non Solicitation Covenant

(a)                 During the Employment Period and for a period of the longer of (i) one year thereafter, (ii) five years from the Effective Date, or (iii) the period of time that Executive is receiving any severance payments under Sections 4(b) above, Executive agrees that he will not directly or indirectly engage in any business or businesses that are engaged in businesses that are in direct competition with the Company or any of its subsidiaries or affiliates at such time.  For purposes hereof, businesses that are in direct competition to Company shall include, without limitation, those that sell design and manufacturer packaging materials or commercial printing or sell optical deterrent technologies.

(b)                 Notwithstanding anything herein to the contrary, Executive shall not be prevented or limited from (i) investing in the stock or other securities of any corporation whose stock or securities are publicly owned and regularly traded on any public exchange, (ii) serving as a director, officer or member of professional, trade, charitable and civic organizations, or (iii) passively investing (not to exceed being a beneficial owner of more than three percent (3%) of the outstanding Common Stock) his assets in such a form and manner as will not conflict with the terms of this Agreement and will not require services (whether as consultant, an officer, employee or director) on the part of Executive in the operation of the business of the entities in which such investments are made.

(c)         In furtherance of the foregoing, Executive shall not, during the aforesaid period of non-competition, directly or indirectly, in connection with any business involved in the manufacture, development and/or distribution of anti-counterfeiting technology and document security businesses, or any business similar to the business in which the Company or any of its subsidiaries or affiliates is then engaged, or in the process of developing during Executive’s tenure with the Company, solicit any customer or employee of the Company who was a customer or employee of the Company during the tenure of his employment.

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(d)         If any court shall hold that the duration of non-competition, the geographic scope or any other restriction contained in this Section 9 is unenforceable, it is our intention that same shall not thereby be terminated but shall be deemed amended to delete there from such provision or portion adjudicated to be invalid or unenforceable or, in the alternative, such judicially substituted term may be substituted therefor.

(e)         The parties acknowledge and agree that any violation of the confidentiality or non-competitive provisions of this Agreement would subject the Company to irreparable injury for which monetary damages will not be an adequate remedy.  Therefore, in addition to any remedies otherwise available, the Company will be entitled to injunctive relief and specific performance to enforce the terms of this Agreement, all without the necessity of posting a bond.

10.    Indemnification. Company shall, to the maximum extent permitted by law, indemnify Executive against all expenses, including, without limitation, reasonable attorneys’ fees, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of Executive’s employment by Company.  Company shall, to the maximum extent permitted by law, advance to Executive any expenses incurred in defending any such proceeding.  Company agrees to obtain Directors and Officers Liability insurance, and to include Executive in the coverage of this policy.

11.    Work-for Hire.  Except as otherwise may be agreed by the Company in writing, in consideration of the employment of Executive by the Company, and free of any additional obligations of the Company to make additional payment to Executive, Executive agrees to irrevocably assign to the Company any and all inventions, software, manuscripts, documentation, improvements or other intellectual property whether or not protectable by any state or federal laws relating to the protection of intellectual property, relating to the present or future business of the Company that are developed by Executive prior to the termination of his employment with the Company, either alone or jointly with others, and whether or not developed during normal business hours or arising within the scope of his/her duties of employment.  Executive agrees that all such inventions, software, manuscripts, documentation, improvement, trade secrets or other intellectual property shall be and remain the sole and exclusive property of the Company and shall be deemed the product of work for hire.  Executive hereby agrees to execute such assignments and other documents as the Company may consider appropriate to vest all right, title and interest therein to the Company and hereby appoints the Company Executive’s attorney-in-fact with full powers to execute such document itself in the event Executive fails or is unable to provide the Company with such signed documents.  This provision does not apply to an invention for which no equipment, supplies, facility, or intellectual property or trade secret information of the Company was used and which was developed entirely on Executive's own time, unless (a) the invention relates (i) to the business of the Company, or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by Executive for the Company.

12.    Miscellaneous.

(a)         This Agreement:

(i) shall constitute the entire agreement between the parties hereto concerning the subject matter herein and supersedes all prior agreements, written or oral, concerning the subject matter herein, and there are no oral understandings, statements or stipulations bearing upon the effect of this Agreement which have not been incorporated herein.

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(ii)  may be modified or amended only by a written instrument signed by each of the parties hereto.

(iii)  shall bind and inure to the benefit of the parties hereto and their respective heirs, successors and assigns.

(iv) may not be assigned by either party without a written agreement signed by all parties hereto.  Any assignment not signed by all parties is null and void.

(b)         If any provision of this Agreement shall be held invalid or unenforceable by competent authority, 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.  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.

(c)         This Agreement shall be construed in accordance with and governed by the laws of the State of New York without reference to conflict of laws principles.  Any litigation involving this Agreement shall be adjudicated in a court with jurisdiction located in Monroe County, New York and the parties irrevocably consent to the personal jurisdiction and venue of such court.

(d)         All notices and other communications under this Agreement must be in writing and must be given by personal delivery, via overnight delivery or first class mail, certified or registered with return receipt requested, and will be deemed to have been duly given upon receipt if personally delivered or delivered via overnight delivery, five (5) days after mailing, if mailed, to the respective persons named below:

If to Company:

Document Security Systems, Inc.

28 East Main Street, Suite 1525

Rochester, New York 14614

If to Executive:

Robert B. Bzdick

935 Raccoon Run

Victor, New York 14564

Any party may change such party’s address for notices by notice duly given pursuant to this Section.

(e)         In the event of litigation to enforce the terms and conditions of this Agreement, the losing party agrees to pay the substantially prevailing party's costs and expenses incurred including, without limitation, reasonable attorneys’ fees.

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

(g)         Failure of either party at any time to require performance of any provision of this Agreement shall not limit the party's right to enforce the provision, nor shall any waiver of any breach of any provision be a waiver of any succeeding breach of any provision or a waiver of the provision itself for any other provision.

(h)         If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

COMPANY:

Document Security Systems, Inc.

By:  /s/ Patrick White

Name: Patrick White

Title:   Chief Executive Officer

EXECUTIVE:

/s/ Robert Bzdick

Robert B. Bzdick

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EX-10.4

EXHIBIT 10.4

ACQUISITION TERM LOAN NOTE

$1,500,000.00 February 12, 2010

FOR VALUE RECEIVED, the undersigned, PREMIER PACKAGING CORPORATION, a New York corporation, having a mailing address of 6 Framark Drive, Victor, New York 14564 (“Borrower”), hereby promises to pay to the order of RBS  CITIZENS, N. A., a national banking association (“Bank”), at its principal office at 833 Broadway, Albany, New York 12207, or at such other place as the holder hereof may from time to time designate in writing, the principal sum of  ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS U.S. ($1,500,000.00).

1.           Certain Definitions.  Unless otherwise expressly provided herein, all capitalized terms in this Note shall have the meanings given to them in the 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 Agreement”).  The following terms shall have the following meanings in this Note:

(a)           “Account” means account #_____________ maintained by the Bank in the name of the Borrower.

(b)           “Applicable Margin” means three and three fourths percent (3.75%) per annum.

(c)           “Business Day” means:

(i)           any day which is neither a Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in New York State;

(ii)           when such term is used to describe a day on which a payment or prepayment is to be made in respect of a LIBOR Rate Loan, any day which is: (i) neither a Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in New York City; and (ii) a London Banking Day; and

(iii)           when such term is used to describe a day on which an interest rate determination is to be made in respect of a LIBOR Rate Loan, any day which is a London Banking Day.

(d)            “Event of Default” means an Event Default under the Credit Agreement.

(e)           “Funding Date” means the 12th day of February, 2010.

(f)           “Hedging Contracts” means, interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, or any other agreements or arrangements entered into between the Borrower and the Bank and designed to protect the Borrower against fluctuations in interest rates or currency exchange rates.

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(g)           “Hedging Obligations” means, with respect to the Borrower, all liabilities of the Borrower to the Bank under Hedging Contracts.

(h)           “Interest Period” means:

(i)           initially, the period beginning on (and including) the Funding Date and ending on (but excluding) March 1, 2010 (the “Stub Period”); and

(ii)           then, each period commencing on the last day of the next preceding Interest Period and ending on the day which numerically corresponds to last day of the Stub Period one month thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month); and

(iii)           thereafter, each period commencing on the last day of the next preceding Interest Period and ending one month thereafter;

provided, however, that

(iv)           if the Borrower has or may incur Hedging Obligations with the Bank in connection with the Loan, the Interest Period shall be of the same duration as the relevant period set under the applicable Hedging Contract;

(v)           if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day unless such day falls in the next calendar month, in which case such Interest Period shall end on the first preceding Business Day; and

(vi)           no Interest Period may end later than the Maturity Date.

(i)            “Interest Payment Date” means the last Business Day of each Interest Period.

(j)           “LIBOR Rate” means relative to any Interest Period for a LIBOR Rate Loan, the offered rate for deposits of U.S. Dollars in an amount approximately equal to the amount of the LIBOR Rate Loan for a term coextensive with the Interest Period which the British Bankers’ Association fixes as its LIBOR rate as of 11:00 a.m. London time on the day which is two London Banking Days prior to the beginning of such Interest Period.

(k)           “LIBOR Rate Loan” means the Loan for the period(s) when the rate of interest applicable to the Loan is calculated by reference to the LIBOR Rate

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(l)           “LIBOR Lending Rate” means, relative to a LIBOR Rate Loan for any Interest Period, a rate per annum determined pursuant to the following formula:

LIBOR Lending Rate	=	LIBOR Rate
		(1.00 - LIBOR Reserve Percentage)

(m)           “LIBOR-Reference Banks Loan” means the Loan for any period(s) when the rate of interest applicable to the Loan is calculated by reference to the LIBOR-Reference Banks Rate.

(n)           “LIBOR-Reference Banks Lending Rate” means, relative to a LIBOR-Reference Banks Rate Loan for any Interest Period, a rate per annum determined pursuant to the following formula:

LIBOR-Reference Banks Lending Rate	=	LIBOR-Reference Banks Rate
		(1.00 - LIBOR Reserve Percentage)

(o)           “LIBOR-Reference Banks Rate” means relative to any Interest Period for LIBOR-Reference Banks Loans, the rate for which deposits in U.S. Dollars are offered by the Reference Banks to prime banks in the London interbank market in an amount approximately equal to the amount requested LIBOR-Reference Banks Loan at approximately 11:00 a.m., London time on the day that is two London Banking Days prior to the beginning of such Interest Period.  The Bank will request the principal London office of each of the Reference Banks to provide a quotation of its rate.  If at least two such quotations are provided, the rate for such date will be the arithmetic mean of the quotations.  If fewer than two quotations are provided as requested, the rate for such date will be the arithmetic mean of the rates quoted by major banks in New York City selected by the Bank, at approximately 11:00 a.m. New York City time for loans in U.S. Dollars to leading European banks for such Interest Period and in an amount approximately equal to the amount requested LIBOR-Reference Banks Loan.

(p)           “LIBOR Reserve Percentage” means, relative to any day of any Interest Period for the LIBOR Rate Loan, the maximum aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) under any regulations of the Board of Governors of the Federal Reserve System (the “Board”) or other governmental authority having jurisdiction with respect thereto as issued from time to time and then applicable to assets or liabilities consisting of “Eurocurrency Liabilities”, as currently defined in Regulation D of the Board, having a term approximately equal or comparable to such Interest Period.

(q)            “Loan” means all amounts outstanding under the Note and/or advanced pursuant to this agreement.

(r)           “Loan Documents” means this Note and all related documents and agreements evidencing and/or securing the Loan including the Credit Agreement.

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(s)           “London Banking Day” means a day on which dealings in US dollar deposits are transacted in the London interbank market.

(t)           “Maturity Date” means the  1st  day of March, 2013.

(u)           “Note” means that certain promissory note dated as of the 12th day of February, 2010 in the principal amount of One Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00) made payable by the Borrower to the order, and for the benefit, of the Bank.

(v)           “Prime Rate” means the rate of interest announced by Bank in New York State from time to time as its “Prime Rate.”  The Borrower acknowledges that the Bank may make loans to its customers above, at or below the Prime Rate.  Interest accruing by reference to the Prime Rate shall be calculated on the basis of actual days elapsed and a 360-day year.

(w)           “Prime Rate Loan” means the Loan for the period(s) when the rate of interest applicable to the Loan is calculated by reference to the Prime Rate

(x)           “Principal Repayment Amount” means the regularly scheduled reductions in the outstanding principal of the Loan, to be made at the end of each Interest Period in an amount corresponding to such Interest Period and as set out in the attached Schedule A entitled “Principal Repayment Schedule”.

(y)           “Reference Banks” means four major banks in the London interbank market.

2.           Loan Funding. On the Funding Date and on terms and subject to the conditions of this agreement, the Loan shall be made available to the Borrower no later than 11:00 a.m. New York City time by a deposit to the Account (or as otherwise instructed by the Borrower in writing) in the full principal amount of the Loan.  Unless otherwise prohibited by this agreement, the Loan shall initially be classified as a LIBOR Rate Loan and interest shall accrue by reference to the LIBOR Rate.

3.           Repayments, Prepayments, and Interest.

(a)           Repayment of Loan; Automatic Rollover of LIBOR Rate Loan.  During the period(s) the Loan is classified as a LIBOR Rate Loan, it shall mature and become payable in full on the last day of each Interest Period.  Upon maturity the Loan shall automatically be continued as a LIBOR Rate Loan with an equal Interest Period in an amount equal to the expiring LIBOR Rate Loan LESS the applicable Principal Repayment Amount, provided, however, that no portion of the outstanding principal amount of a LIBOR Rate Loan may be continued as a LIBOR Rate Loan when any default or Event of Default has occurred and is continuing.  If any default or Event of Default has occurred and is continuing (if the Bank does not otherwise elect to exercise any right to accelerate the Loan it is granted hereunder), the maturing LIBOR Rate Loan shall automatically be continued as a Prime Rate Loan.  During the period(s) that the Loan is classified as a Prime Rate Loan, the Borrower shall make regular payments of principal in amounts equal to the applicable Principal Repayment Amount on the last day of each Interest Period.  Notwithstanding the foregoing, the Loan shall mature and become payable in full upon the Maturity Date.

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(b)           Voluntary Prepayment of the LIBOR Rate Loan.  When classified as a LIBOR Rate Loan, the Loan may be prepaid upon the terms and conditions set forth herein.  The Borrower acknowledges that additional obligations may be associated with prepayment, in accordance with the terms and conditions of any applicable Hedging Contracts.  The Borrower shall give the Bank, no later than 10:00 a.m., New York City time, at least four (4) Business Days notice of any proposed prepayment of the LIBOR Rate Loan, specifying the proposed date of payment and the principal amount to be paid.  Each partial prepayment shall be accompanied by the payment of all charges outstanding on the LIBOR Rate Loan and of all accrued interest on the principal repaid to the date of payment.  Borrower acknowledges that prepayment or acceleration of the LIBOR Rate Loan during an Interest Period shall result in the Bank incurring additional costs, expenses and/or liabilities and that it is extremely difficult and impractical to ascertain the extent of such costs, expenses and/or liabilities.  Therefore, all full or partial prepayments of the LIBOR Rate Loan shall be accompanied by, and the Borrower hereby promises to pay, on each date the LIBOR Rate Loan is prepaid or the date all sums payable hereunder become due and payable, by acceleration or otherwise, in addition to all other sums then owing, an amount (“LIBOR Rate Loan Prepayment Fee”) determined by the Bank pursuant to the following formula:

(i)           the then current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the end of the Interest Period as to which prepayment is made, subtracted from the LIBOR Lending Rate plus the Applicable Margin then applicable to the LIBOR Rate Loan.

(ii)           If the result of the calculation in subsection (i) is zero or a negative number, then there shall be no LIBOR Rate Loan Prepayment Fee.  If the result of this calculation is a positive number, then the resulting percentage shall be multiplied by the amount of the LIBOR Rate Loan being prepaid. The resulting amount shall be divided by 360 and multiplied by  the number of days remaining in the Interest Period as to which the prepayment is being made.  Said amount shall be reduced to present value calculated by using the referenced United States Treasury securities rate and the number of days remaining on the Interest Period for the LIBOR Rate Loan.  The resulting amount of these calculations shall be the LIBOR Rate Loan Prepayment Fee.

(c)           Interest Provisions.

(i)           Interest on the outstanding principal amount of the Loan when classified as a: (i) LIBOR Rate Loan shall accrue during each Interest Period at a rate equal to the sum of the LIBOR Lending Rate for such Interest Period plus the Applicable Margin thereto and be payable on each Interest Payment Date, (ii) LIBOR-Reference Banks Rate Loan shall accrue during each Interest Period at a rate equal to the sum of the LIBOR-Reference Banks Lending Rate for such Interest Period plus the Applicable Margin thereto and be payable on each Interest Payment Date, and (iii) Prime Rate Loan shall accrue during each Interest Period at a rate equal to the Prime Rate and be payable on each Interest Payment Date.  Interest shall continue to accrue after maturity, acceleration, and judgment at the rate required by Section 4.3 of the Credit Agreement until this Note is paid in full.

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(d)           LIBOR Rate Lending Unlawful.  If the Bank shall determine (which determination shall, upon notice thereof to the Borrower be conclusive and binding on the Borrower) that the introduction of or any change in or in the interpretation of any law, rule, regulation or guideline, (whether or not having the force of law) makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for the Bank to make, continue or maintain the Loan as, or to convert the Loan into, a LIBOR Rate Loan, and if the Loan is then presently a LIBOR Rate Loan, it shall automatically convert into a LIBOR-Reference Banks Loan at the end of the then current Interest Period or sooner, if required by such law or assertion.  For purposes of this agreement, in the event of such a conversion, all LIBOR-Reference Banks Rate Loans shall be treated (except as to interest rate) as equivalent to a LIBOR Rate Loan of similar amount and Interest Period.  For greater certainty, all provisions of this agreement relating to LIBOR Rate Loans shall apply equally to LIBOR-Reference Banks Loans, including, but not limited to the manner in which LIBOR-Reference Banks Loans are requested, continued, converted, the manner in which interest accrues, is payable, principal payments are made, whether voluntary or involuntary, as well as any penalties, increased costs or taxes associated with any of the foregoing.

(e)           Substitute Rate.  If the Bank shall have determined that  (i) US dollar deposits in the relevant amount and for the relevant Interest Period are not available to the Bank in the London interbank market; (ii) by reason of circumstances affecting the Bank in the London interbank market, adequate means do not exist for ascertaining the LIBOR Rate applicable hereunder to the LIBOR Rate Loan, or (iii) the LIBOR Rate no longer adequately reflects the Bank’s cost of funding the Loan, then, upon notice from the Bank to the Borrower, the LIBOR Rate Loan shall automatically convert to a LIBOR-Reference Banks Loan.  During any such suspension, the Loan shall be classified as a LIBOR-Reference Banks Loan.

(f)           Indemnities.

(i)           In addition to the LIBOR Rate Loan Prepayment Fee, the Borrower agrees to reimburse the Bank (without duplication) for any increase in the cost to the Bank, or reduction in the amount of any sum receivable by the Bank, in respect, or as a result of:

1)           any conversion or repayment or prepayment of the principal amount of the LIBOR Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3(b) above or otherwise;

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2)           any costs associated with marking to market any Hedging Obligations that (in the reasonable determination of the Bank) are required to be terminated as a result of any conversion, repayment or prepayment of the principal amount of the LIBOR Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3(b) above or otherwise;

(ii)           The Bank shall promptly notify the Borrower in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate the Bank for such increased cost or reduced amount.  Such additional amounts shall be payable by the Borrower to the Bank within five days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrower.  The Borrower understands, agrees and acknowledges the following: (i) the Bank does not have any obligation to purchase, sell and/or match funds in connection with the use of the LIBOR Rate as a basis for calculating the rate of interest on the LIBOR Rate Loan, (ii) the LIBOR Rate may be used merely as a reference in determining such rate, and (iii) the Borrower has accepted the LIBOR Rate as a reasonable and fair basis for calculating such rate, the LIBOR Rate Prepayment Fee, and other funding losses incurred by the Bank.  Borrower further agrees to pay the LIBOR Rate Prepayment Fee and other funding losses, if any, whether or not the Bank elects to purchase, sell and/or match funds.

(g)           Increased Costs.  If on or after the date hereof the adoption of any applicable law, rule or regulation or guideline (whether or not having the force of law), or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:  (i) shall subject the Bank to any tax, duty or other charge with respect to the LIBOR Rate Loan or its obligation to make the LIBOR Rate Loan, or shall change the basis of taxation of payments to the Bank of the principal of or interest on the LIBOR Rate Loan or any other amounts due under this agreement in respect of the LIBOR Rate Loan or its obligation to make the LIBOR Rate Loan (except for the introduction of, or change in the rate of, tax on the overall net income of the Bank or franchise taxes, imposed by the jurisdiction (or any political subdivision or taxing authority thereof) under the laws of which the Bank is organized or in which the Bank’s principal executive office is located); or (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System of the United States) against assets of, deposits with or for the account of, or credit extended by, the Bank or shall impose on the Bank or on the London interbank market any other condition affecting the LIBOR Rate Loan or its obligation to make the LIBOR Rate Loan;  and the result of any of the foregoing is to increase the cost to the Bank of making or maintaining the Loan as a LIBOR Rate Loan, or to reduce the amount of any sum received or receivable by the Bank under this agreement with respect thereto, by an amount deemed by the Bank to be material, then, within 15 days after demand by the Bank, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such increased cost or reduction.

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(h)           Increased Capital Costs.  If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority affects or would affect the amount of capital required or expected to be maintained by the Bank, or person controlling the Bank, and the Bank determines (in its sole and absolute discretion) that the rate of return on its or such controlling person’s capital as a consequence of its commitments or the Loan made by the Bank is reduced to a level below that which the Bank or such controlling person could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by the Bank to the Borrower, the Borrower shall immediately pay directly to the Bank additional amounts sufficient to compensate the Bank or such controlling person for such reduction in rate of return.  A statement of the Bank as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower.  In determining such amount, the Bank may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable.

(i)           Taxes.

(i)           All payments by the Borrower of principal of, and interest on, the LIBOR Rate Loan and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by the Bank’s net income or receipts (such non-excluded items being called “Taxes”).  In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will

1)           pay directly to the relevant authority the full amount required to be so withheld or deducted;

2)           promptly forward to the Bank an official receipt or other documentation satisfactory to the Bank evidencing such payment to such authority; and

3)           pay to the Bank such additional amount or amounts as is necessary to ensure that the net amount actually received by the Bank will equal the full amount the Bank would have received had no such withholding or deduction been required.

(ii)           Moreover, if any Taxes are directly asserted against the Bank with respect to any payment received by the Bank hereunder, the Bank may pay such Taxes and the Borrower will promptly pay such additional amount (including any penalties, interest or expenses) as is necessary in order that the net amount received by the Bank after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount the Bank would have received had not such Taxes been asserted.

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(iii)           If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence, the Borrower shall indemnify the Bank for any incremental Taxes, interest or penalties that may become payable by the Bank as a result of any such failure.

4.           Events of Default. This Note shall become immediately due and payable in full, without further presentment, protest, notice, or demand, upon the happening of any Event of Default.

5.           Late Charge.  This Note is subject to the late charges provided for in Section 4.4 of the Credit Agreement.

6.           Maximum Rate.  All agreements between Borrower and Bank are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration or maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to Bank for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under Applicable Law (the “Maximum Interest Rate”).  As used herein, the term “Applicable Law” shall mean the law in effect as of the date hereof, provided, however that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note and the Loan Documents shall be governed by such new law as of its effective date.  In this regard, it is expressly agreed that it is the intent of Borrower and Bank in the execution, delivery and acceptance of this Note to contract in strict compliance with the laws of the State of New York from time to time in effect.  If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents at the time performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from any circumstances whatsoever Bank 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.  This provision shall control every other provision of all agreements between Borrower and Bank.

7.           Business Days.  If this Note or any payment hereunder becomes due on a day which is not a Business Day, the due date of this Note or payment shall be extended to the next succeeding Business Day, and such extension of time shall be included in computing interest and fees in connection with such payment.

8.           Entire Agreement/Modification of Terms.  This Note and the Loan Documents are intended by the parties as the final, complete, and exclusive statement of the transactions evidenced by this Note and the Loan Documents.  All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Note and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Note and the Loan Documents.  This Note and the Loan Documents may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.  The terms of this Note cannot be changed, nor may this Note be discharged in whole or in part, except by a writing executed by Bank.  In the event that Bank demands or accepts partial payments of this Note, such demand or acceptance shall not be deemed to constitute a waiver of the right to demand the entire unpaid balance of this Note at any time in accordance with the terms hereof.  Any delay or omission by Bank in exercising any rights hereunder shall not operate as a waiver of such rights.

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9.           Additional Security/Set Off.  The Borrower hereby grants to Bank a continuing lien, security interest, and right of set off as security for all liabilities and obligations to the Bank, 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 Citizens Financial Group 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 Borrower), Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the obligation.  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 BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED.

10.           Assignment/Participation.

(a)           All the terms and provisions of this Note shall inure to the benefit of and be binding upon and be enforceable by the parties and their respective successors and assigns and shall inure to the benefit of and be enforceable by any holder hereof.

(b)           Bank may at any time pledge or assign all or any portion of its rights under this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or assignment or enforcement thereof shall release Bank from its obligations under any of the Loan Documents.

(c)           Bank shall have the unrestricted right at any time or from time to time, and without Borrower’s consent, to assign all or any portion of its rights and obligations hereunder to one or more banks or other financial institutions (each an “Assignee”), and Borrower agrees that it shall execute, or cause to be executed, such documents, including without limitation, amendments to this Note and to any other Loan Documents, as Bank shall deem necessary to effect the foregoing.  In addition, at the request of Bank and any such Assignee, Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if Bank has retained any of its rights and obligations hereunder following such assignment, to Bank, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by Bank prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and Bank after giving effect to such assignment.  Upon the execution and delivery of appropriate assignment documentation, amendments, and any other documentation required by Bank in connection with such assignment, and the payment by Assignee of the purchase price agreed to by Bank and such Assignee, such Assignee shall be a party to this agreement and shall have all of the rights and obligations of Bank hereunder (and under any and all other Loan Documents) to the extent that such rights and obligations have been assigned by Bank pursuant to the assignment documentation between Bank and such Assignee, and Bank shall be released from its obligations hereunder and thereunder to a corresponding extent.

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(d)           Bank shall have the unrestricted right at any time and from time to time, and without the consent of or notice to Borrower, to grant to one or more banks or other financial institutions (each a “Participant”) participating interests in Bank’s obligation to lend hereunder and/or any or all of the loans held by Bank hereunder.  In the event of any such grant by Bank of a participating interest to Participant, whether or not upon notice to Borrower, Bank shall remain responsible for the performance of its obligations hereunder and Borrower shall continue to deal solely and directly with Bank in connection with Bank’s rights and obligations hereunder.

(e)           Bank may furnish any information concerning Borrower in its possession from time to time to prospective Assignees and Participants, provided that Bank shall require any such prospective Assignee or Participant to agree in writing to maintain the confidentiality of such information.

11.           Loss or Mutilation.  Upon receipt of an affidavit of an officer of Bank as to the loss, theft, destruction, or mutilation of this Note or any other Loan Document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of this Note or other Loan Document, Borrower will issue, in lieu thereof, a replacement note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

12.           Enforcement/Waiver of Jury Trial.

(a)           BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE 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 CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER BY MAIL AT THE ADDRESS FIRST SET FORTH ABOVE IN THIS NOTE.  BORROWER 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.

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(b)           BORROWER AND BANK (BY ACCEPTANCE OF THIS NOTE) 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 NOTE OR ANY OTHER LOAN DOCUMENTS 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 LOAN 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, BORROWER 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.  BORROWER 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 LOANS CONTEMPLATED HEREUNDER.

13.           Miscellaneous.

(a)           To the fullest extent permissible by law, Borrower waives presentment, demand for payment, protest, notice of nonpayment, and all other demands or notices otherwise required by law in connection with the delivery, acceptance, performance, default, or enforcement of this Note.  Borrower consents to extensions, postponements, indulgences, amendments to notes and agreements, substitutions or releases of collateral, and substitutions or releases of other parties primarily or secondarily liable herefor, and agrees that none of the same shall affect Borrower’s obligations under this Note which shall be unconditional.

(b)           This Note and the Loan Documents are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Note and the Loan Documents.  All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Note and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Note and the Loan Documents.  This Note may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.

(c)           No portion of the proceeds of this Note shall be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System.

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(d)           This Note and the Loan Documents, and the rights and obligations of the parties hereunder, shall be construed, interpreted, governed and enforced in accordance with the internal laws of the State of New York (excluding the laws applicable to conflicts or choice of law).

PREMIER PACKAGING CORPORATION

By: 

Name:

Title:

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

On the 12th day of February , in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared 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/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Notary Public

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SCHEDULE A

[Principal Repayment Schedule]

Payment No.	Principal Payment Date	Principal Payment Amount
1	4/1/2010	$25,000.00
2	5/1/2010	$25,000.00
3	6/1/2010	$25,000.00
4	7/1/2010	$25,000.00
5	8/1/2010	$25,000.00
6	9/1/2010	$25,000.00
7	10/1/2010	$25,000.00
8	11/1/2010	$25,000.00
9	12/1/2010	$25,000.00
10	1/1/2010	$25,000.00
11	2/1/2011	$25,000.00
12	3/1/2011	$25,000.00
13	4/1/2011	$25,000.00
14	5/1/2011	$25,000.00
15	6/1/2011	$25,000.00
16	7/1/2011	$25,000.00
17	8/1/2011	$25,000.00
18	9/1/2011	$25,000.00
19	10/1/2011	$25,000.00
20	11/1/2011	$25,000.00
21	12/1/2011	$25,000.00
22	1/1/2011	$25,000.00
23	2/1/2012	$25,000.00
24	3/11/2012	$25,000.00
25	4/1/2012	$25,000.00
26	5/1/2012	$25,000.00
27	6/1/2012	$25,000.00
28	7/1/2012	$25,000.00
29	8/1/2012	$25,000.00
30	9/1/2012	$25,000.00
31	10/1/2012	$25,000.00
32	11/1/2012	$25,000.00
33	12/1/2012	$25,000.00
34	1/1/2012	$25,000.00
35	2/1/2013	$25,000.00
36	3/1/2013	$625,000.00

EX-10.5

EXHIBIT 10.5

REVOLVING LINE NOTE

(LIBOR Advantage)

$1,000,000.00 February 12, 2010

FOR VALUE RECEIVED, the undersigned, PREMIER PACKAGING CORPORATION, a New York corporation, having a mailing address of 6 Framark Drive, Victor, New York 14564 (“Borrower”), hereby promises to pay to the order of RBS  CITIZENS, N. A., a national banking association (“Bank”), at its principal office at 833 Broadway, Albany, New York 12207, or at such other place as the holder hereof may from time to time designate in writing, the principal sum of  ONE MILLION AND 00/100 DOLLARS U.S. ($1,000,000.00) or such lesser amount as may be outstanding hereunder.

1.           Certain Definitions.  Unless otherwise expressly provided herein, all capitalized terms in this Note shall have the meanings given to them in the Credit Facility Agreement, dated on even date herewith, by and among Borrower and Bank, as the same may be amended, extended, replaced, or modified from time to time (the “Credit Agreement”).  The following terms shall have the following meanings in this Note:

(a)           “Business Day” means any day which is neither a Saturday, Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in Rochester, New York.

(b)           “Event of Default” means an Event Default under the Credit Agreement.

(c)           “LA Interest Payment Date” means, initially, the 1st day of March, 2010, and thereafter the day of each succeeding month which numerically corresponds to such date or, if a month does not contain a day that numerically corresponds to such date, the LA Interest Payment Date shall be the last day of such month.

(d)           “LA Interest Period” means, with respect to any LIBOR Advantage Loan, the period commencing on (and including) the date hereof  (the “Start Date”) and ending on (but excluding) the date which numerically corresponds to such date one month later, and thereafter, each one month period ending on the day of such month that numerically corresponds to the Start Date.  If an Interest Period is to end in a month for which there is no day which numerically corresponds to the Start Date, the LA Interest Period will end on the last day of such month.  Notwithstanding the date of commencement of any LA Interest Period, interest shall only begin to accrue as of the date the initial LIBOR Advantage Loan is made hereunder.

(e)           “LA Margin” means three and three-fourths percent (3.75%) per annum.

(f)           “LIBOR Advantage Loan” means any loan or advance for which the applicable rate of interest is based upon the LIBOR Advantage Rate.

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(g)           “LIBOR Advantage Rate” means, relative to any LA Interest Period, the offered rate for delivery in two London Banking Days of deposits of U.S. Dollars for a term coextensive with the designated LA Interest Period which the British Bankers’ Association fixes as its LIBOR rate as of 11:00 a.m. London time on the day on which such LA Interest Period commences.  If the first day of any Interest Period is not a day which is both a (i) Business Day, and (ii) a London Banking Day, the LIBOR Advantage Rate shall be determined by reference to the next preceding day which is both a Business Day and a London Banking Day.  If for any reason the LIBOR Advantage Rate is unavailable and/or Bank is unable to determine the LIBOR Advantage Rate for any LA Interest Period, Bank may, at its discretion, either: (a) select a replacement index based on the arithmetic mean of the quotations, if any, of the interbank offered rate by first class banks in London or New York for deposits with comparable maturities or (b)  accrue interest at a rate per annum equal to Bank’s Prime Rate as of the first day of any Interest Period for which the LIBOR Advantage Rate is unavailable or cannot be determined.

(h)           Loan Documents” means this Note and all related documents and agreements evidencing and/or securing the Loan including the Credit Agreement.

(i)           “London Banking Day” means any day on which dealings in US dollar deposits are transacted in the London interbank market.

(j)           “Maturity Date” means the Revolving Line Termination Date, as defined in Article 2.2 of the Credit Agreement.

2.           Advances.

(a)           Borrower may request advances hereunder from time to time from Bank, and provided that no Event of Default has occurred and further provided that advance requests are received on or before the Maturity Date, Bank shall advance such funds to Borrower so long as the aggregate principal amount outstanding at any time does not exceed the lesser of (i) $1,000,000.00 and (ii) the Borrowing Base as defined in Section 2.8 of the Credit Agreement.

(b)           Bank shall maintain a record of amounts of principal and interest payable by Borrower from time to time, and the records of Bank maintained in the ordinary course of business shall be prima facie evidence (absent manifest error by Bank) of the existence and amounts of Borrower’s obligations recorded therein.  In addition, Bank may mail or deliver periodic statements to Borrower indicating the date and amount of each advance hereunder (but any failure to do so shall not relieve Borrower of the obligation to repay any advance).  Unless Borrower questions the accuracy of an entry on any periodic statement within 30 calendar days after such mailing or delivery by Bank, Borrower shall be deemed to have accepted and be obligated by the terms of each such periodic statement as accurately representing the advances hereunder.  In the event of transfer of this Note, or if Bank shall otherwise deem it appropriate, Borrower hereby authorizes Bank to endorse on this Note the amount of advances and payments to reflect the principal balance outstanding from time to time.  Bank is hereby authorized to honor borrowing and other requests received from Philip Jones by telecopy or otherwise in writing.

3.           Interest.

(a)           Interest on the outstanding principal amounts outstanding hereunder shall accrue during the LA Interest Period at a rate per annum equal to the sum of the LIBOR Advantage Rate for such LA Interest Period plus the LA Margin.  Interest shall be due and payable on each LA Interest Payment Date and on the Maturity Date.  Interest shall be calculated for the actual number of days elapsed on the basis of a 360-day year, including the first date of the applicable period to, but not including, the date of repayment.

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(b)           Interest shall continue to accrue after maturity, acceleration, and judgment at the rate required by Section 4.3 of the Credit Agreement until this Note is paid in full.

(c)           The rate of interest on this Note may be increased under the circumstances provided in the Credit Agreement.  The right of Bank to receive such increased rate of interest shall not constitute a waiver of any other right or remedy of Bank.

4.           Payments.

(a)           All accrued interest hereunder shall be due and payable on each LA Interest Payment Date.  All remaining accrued interest and all outstanding principal shall be due and payable in full on the Maturity Date.

(b)           In the event Borrower becomes aware, or receives notice (oral or written) from Bank, that principal amounts outstanding under the Revolving Line exceed the maximum available amount hereunder, Borrower promptly shall make a principal payment to Bank sufficient to reduce outstanding principal amounts to the maximum amount available hereunder.

5.           Prepayments.  Borrower may prepay principal outstanding under this Note at any time without premium or charge.  Borrower acknowledges that additional obligations may be associated with prepayment in accordance with the terms and conditions of any applicable Hedging Contracts.

6.           Events of Default.  This Note shall become immediately due and payable in full, without further presentment, protest, notice, or demand, upon the happening of any Event of Default.

7.           Late Charge.  This Note is subject to the late charges provided for in Section 4.4 of the Credit Agreement.

8.           Maximum Rate.  All agreements between Borrower and Bank are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration or maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to Bank for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under Applicable Law (the “Maximum Interest Rate”).  As used herein, the term “Applicable Law” shall mean the law in effect as of the date hereof, provided, however that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note and the Loan Documents shall be governed by such new law as of its effective date.  In this regard, it is expressly agreed that it is the intent of Borrower and Bank in the execution, delivery and acceptance of this Note to contract in strict compliance with the laws of the State of New York from time to time in effect.  If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents at the time performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from any circumstances whatsoever Bank 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.  This provision shall control every other provision of all agreements between Borrower and Bank.

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9.           Business Days.  If this Note or any payment hereunder becomes due on a day which is not a Business Day, the due date of this Note or payment shall be extended to the next succeeding Business Day, and such extension of time shall be included in computing interest and fees in connection with such payment.

10.           Entire Agreement/Modification of Terms.  This Note and the Loan Documents are intended by the parties as the final, complete, and exclusive statement of the transactions evidenced by this Note and the Loan Documents.  All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Note and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Note and the Loan Documents.  This Note and the Loan Documents may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.  The terms of this Note cannot be changed, nor may this Note be discharged in whole or in part, except by a writing executed by Bank.  In the event that Bank demands or accepts partial payments of this Note, such demand or acceptance shall not be deemed to constitute a waiver of the right to demand the entire unpaid balance of this Note at any time in accordance with the terms hereof.  Any delay or omission by Bank in exercising any rights hereunder shall not operate as a waiver of such rights.

11.           Additional Security/Set Off.  The Borrower hereby grants to Bank a continuing lien, security interest, and right of set off as security for all liabilities and obligations to the Bank, 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 Citizens Financial Group 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 Borrower), Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the obligation.  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 BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED.

12.           Assignment/Participation.

(a)           All the terms and provisions of this Note shall inure to the benefit of and be binding upon and be enforceable by the parties and their respective successors and assigns and shall inure to the benefit of and be enforceable by any holder hereof.

(b)           Bank may at any time pledge or assign all or any portion of its rights under this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or assignment or enforcement thereof shall release Bank from its obligations under any of the Loan Documents.

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(c)           Bank shall have the unrestricted right at any time or from time to time, and without Borrower’s consent, to assign all or any portion of its rights and obligations hereunder to one or more banks or other financial institutions (each an “Assignee”), and Borrower agrees that it shall execute, or cause to be executed, such documents, including without limitation, amendments to this Note and to any other Loan Documents, as Bank shall deem necessary to effect the foregoing.  In addition, at the request of Bank and any such Assignee, Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if Bank has retained any of its rights and obligations hereunder following such assignment, to Bank, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by Bank prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and Bank after giving effect to such assignment.  Upon the execution and delivery of appropriate assignment documentation, amendments, and any other documentation required by Bank in connection with such assignment, and the payment by Assignee of the purchase price agreed to by Bank and such Assignee, such Assignee shall be a party to this agreement and shall have all of the rights and obligations of Bank hereunder (and under any and all other Loan Documents) to the extent that such rights and obligations have been assigned by Bank pursuant to the assignment documentation between Bank and such Assignee, and Bank shall be released from its obligations hereunder and thereunder to a corresponding extent.

(d)           Bank shall have the unrestricted right at any time and from time to time, and without the consent of or notice to Borrower, to grant to one or more banks or other financial institutions (each a “Participant”) participating interests in Bank’s obligation to lend hereunder and/or any or all of the loans held by Bank hereunder.  In the event of any such grant by Bank of a participating interest to Participant, whether or not upon notice to Borrower, Bank shall remain responsible for the performance of its obligations hereunder and Borrower shall continue to deal solely and directly with Bank in connection with Bank’s rights and obligations hereunder.

(e)           Bank may furnish any information concerning Borrower in its possession from time to time to prospective Assignees and Participants, provided that Bank shall require any such prospective Assignee or Participant to agree in writing to maintain the confidentiality of such information.

13.           Loss or Mutilation.  Upon receipt of an affidavit of an officer of Bank as to the loss, theft, destruction, or mutilation of this Note or any other Loan Document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of this Note or other Loan Document, Borrower will issue, in lieu thereof, a replacement note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

14.           Enforcement/Waiver of Jury Trial.

(a)           BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE 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 CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER BY MAIL AT THE ADDRESS FIRST SET FORTH ABOVE IN THIS NOTE.  BORROWER 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.

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(b)           BORROWER AND BANK (BY ACCEPTANCE OF THIS NOTE) 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 NOTE OR ANY OTHER LOAN DOCUMENTS 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 LOAN 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, BORROWER 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.  BORROWER 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 LOANS CONTEMPLATED HEREUNDER.

15.           Miscellaneous.

(a)           To the fullest extent permissible by law, Borrower waives presentment, demand for payment, protest, notice of nonpayment, and all other demands or notices otherwise required by law in connection with the delivery, acceptance, performance, default, or enforcement of this Note.  Borrower consents to extensions, postponements, indulgences, amendments to notes and agreements, substitutions or releases of collateral, and substitutions or releases of other parties primarily or secondarily liable herefor, and agrees that none of the same shall affect Borrower’s obligations under this Note which shall be unconditional.

(b)           This Note and the Loan Documents are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Note and the Loan Documents.  All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Note and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Note and the Loan Documents.  This Note may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.

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(c)           No portion of the proceeds of this Note shall be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System.

(d)           This Note and the Loan Documents, and the rights and obligations of the parties hereunder, shall be construed, interpreted, governed and enforced in accordance with the internal laws of the State of New York (excluding the laws applicable to conflicts or choice of law).

PREMIER PACKAGING CORPORATION

By:

Name:

Title:

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

On the ____ day of February , in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared 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/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Notary Public

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EX-10.6

EXHIBIT 10.6

CREDIT FACILITY AGREEMENT

THIS CREDIT FACILITY AGREEMENT is made as of the 12th day of February, 2010, by and between PREMIER PACKAGING CORPORATION, a corporation formed under the laws of the State of New York with offices at 6 Framark Drive, Victor, New York 14564 and RBS CITIZENS, N.A., a national banking association, with offices at 833 Broadway Albany NY 12207

The parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

The following terms shall have the following meanings unless otherwise expressly stated herein:

“Acquisition Term Loan” shall have the meaning set forth in Section 3.1 hereof.

“Acquisition Term Loan Maturity Date” shall be the earlier of (i) March 1, 2013, or (ii) the date of an Event of Default.

“Acquisition Term Loan Note” shall have the meaning set forth in Section 3.1(a) hereof.

“Affiliate” shall mean any entity which directly or indirectly, or through one or more intermediaries, Controls or is Controlled By or is Under Common Control with the Borrower.  For purposes of this Agreement, the term “Affiliate” shall include, but is not limited to, Document Security Systems, Inc., Secuprint, Inc., and Plastic Printing Professionals, Inc.

 “Bank” shall mean RBS Citizens, N.A., and its successors, legal representatives, and assigns.

“Borrower” shall mean Premier Packaging Corporation and its successors, legal representatives, and assigns.

“Borrowing Base” shall have the meaning ascribed to such term in Section 2.8 hereof.

“Business Day” means: (a) any day which is neither a Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in New York; (b) when such term is used to describe a day on which a payment or prepayment is to be made in respect of a LIBOR Rate Loan, any day which is: (i) neither a Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in New York City; and (ii) a London Banking Day; and (c) when such term is used to describe a day on which an interest rate determination is to be made in respect of a LIBOR Rate Loan, any day which is a London Banking Day.

“Capital Expenditure” shall mean, for the applicable period, expenditures made to acquire or construct fixed assets, plant, and equipment (including improvements, renovations, and replacements required to be classified in accordance with GAAP as capital expenditures but excluding maintenance and repairs not required to be so classified). Capital expenditures shall include the capitalized amount of obligations under leases or similar agreements covering such fixed assets, plant, and equipment, to the extent that such obligations are required to be treated as a capital lease for balance sheet purposes under GAAP.

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“Change of Control” means the acquisition of ownership, directly or indirectly, beneficially or of record, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of shares representing more than twenty-five percent (25%) of the aggregate ordinary voting power in the election of such entity’s directors represented by the issued and outstanding capital stock of such entity.

“Controlled Group” means a controlled group of corporations and all members of a controlled group or trades or businesses (whether or not incorporated) under common control, which, together with Borrower, are treated as a single employer under Section 414 or Section 4001 of ERISA.

“Controls” (including the terms “Controlled By” or “Under Common Control”) shall mean but not be limited to the ownership of ten percent (10%) or more of the outstanding equity interests of any entity having voting power for the election of directors or managers, whether or not at the same time equity interest of any other class or classes has or might have voting power by reason of the happening of any contingency, or ownership of ten percent (10%) or more of any interest in any partnership, or any other interest by reason of which a controlling influence over the affairs of the entity may be exercised.

“Current Assets” shall mean all assets treated as current assets in accordance with GAAP.

“Current Liabilities” shall mean all liabilities treated as current liabilities in accordance with GAAP, including without limitation all obligations payable on demand or within one year after the applicable measurement date as well as installment, reimbursement, or sinking fund payments payable within one year after the applicable measurement date, but excluding any such liabilities which are renewable or extendable at the option of the obligor to a date more than one year after the applicable measurement date.

“Current Ratio” shall mean, for the applicable period and calculated according to GAAP on a consolidated basis without duplication, the ratio of Current Assets to Current Liabilities.

“Debt” for any person or entity shall mean (i) indebtedness of such person or entity for borrowed money, (ii) obligations of such person or entity for the deferred purchase price of property or services (except trade payables incurred in the ordinary course of business), (iii) capitalized or capitalizable obligations of such person or entity with respect to leases, (iv) the amount available for drawing under outstanding standby letters of credit issued for the account of  such person or entity and the amount of other off-balance sheet obligations or liabilities, each to the extent not otherwise treated separately as Debt, (v) all obligations endorsed (other than for collection in the ordinary course of business) or guaranteed by such person or entity directly or indirectly in any manner including without limitation contingent obligations to purchase, pay or supply funds to any person or entity to assure a creditor against loss, (vi) obligations of such person or entity arising under acceptance facilities, and (vii) obligations secured by a lien, security interest, or other arrangement for the purpose of security on property owned by such person or entity whether or not the underlying obligations have been assumed by such person or entity.

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“Default” shall mean any event, action, inaction, or occurrence that with the giving of notice or passage of time or both would constitute an Event of Default.

“Distributions” shall mean (i) dividends, payments, or distributions of any kind (including without limitation cash or property) in respect of the capital stock, securities or other equity interests or rights to acquire such equity interests of the applicable entity excluding distributions in the form of such stock, equity securities, equity interests, or rights to acquire equity interests, and (ii) repurchases, redemptions, or acquisitions of capital stock, securities, or other equity interests or rights to acquire such equity interests.

“EBITDA” shall mean for any period, the sum of Net Income plus interest, taxes, depreciation and amortization.

“Eligible Receivables” shall mean: (i) for trade accounts receivable from payors whose accounts are less than 90 days beyond date of invoice, all accounts receivable, plus (ii) for trade accounts receivable from payors whose accounts are in whole or in part more than 90 days beyond date of invoice, the portion of the accounts receivable less than 90 days beyond date of invoice provided that at least 50% of the outstanding amount from the payor is less than 90 days beyond date of invoice, minus all (iii) contra accounts receivable, affiliate company accounts receivable, foreign accounts receivable (unless backed by irrevocable letters of credit, confirmed by a U.S. bank, and acceptable to Bank in its sole discretion, and duly assigned to Bank), employee accounts receivable, bill and hold accounts receivable (i.e. accounts relating to goods not yet shipped but invoiced), uncollectible accounts receivable, accounts receivable arising from progressive billings (i.e., accounts receivable from billings for work performed on a partially completed contract), accounts receivable arising from guaranteed sales with buy back provisions (i.e., sales in which the Borrower is obligated to repurchase inventory or merchandise sold to customers), accounts receivable from the United States of America or agency or department thereof (unless assignment and notice thereof is effected in accordance with the Assignment of Claims Act), and accounts receivable from businesses reasonably believed by the Bank to be at risk of defaulting on accounts including without limitation accounts receivable from insolvent payors. In the event that total accounts receivable from any payor represent more than 20% of the Borrower’s total accounts receivable, the Bank reserves the right in its sole discretion to delete those accounts receivable from eligible accounts receivable. Eligible Accounts must be trade accounts receivable that arise from goods sold or delivered or services rendered in the Borrower’s ordinary course of business as it exists on the date of this Agreement and must be subject to the first priority security interest of the Bank and to no other security interest or lien.

“Environment” means any water including but not limited to surface water and ground water or water vapor; any land including land surface or subsurface; stream sediments; air; fish; wildlife; plants; and all other natural resources or environmental media.

“Environmental Laws” means all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances, regulations, codes and rules relating to the protection of the Environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the regulations, rules, ordinances, bylaws, policies, guidelines, procedures, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

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“Environmental Permits” means all licenses, permits, approvals, authorizations, consents or registrations required by any applicable Environmental Laws and all applicable judicial and administrative orders in connection with ownership, lease, purchase, transfer, closure, use and/or operation of the Improvements and/or as may be required for the storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances.

“Environmental Report” means written reports, if any, prepared for the Bank by an environmental consulting or environmental engineering firm.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“Escrow Account” means account #4009651228 maintained by the Bank in the name of the Borrower.

“Escrow Deposit Amount” shall have the meaning ascribed to such term in Section 2.6 hereof.

“Escrow Deposit Date” shall mean the 15th of each month.

“Event of Default” shall mean the occurrence of any event described in Section 11.1 hereof.

“Fixed Charge Coverage Ratio” shall mean, for the applicable period and calculated according to GAAP on a consolidated basis without duplication, the ratio of: (a) the sum of EBITDA, plus Interest Expense and rent expense minus Distributions to (b) current maturities long term debt plus cash Interest Expense plus current maturities of capital leases plus rent expense plus cash Capital Expenditures paid or required to be paid during the applicable period.

“Forfeiture Action” shall mean any action, including investigations, hearings, and other legal proceedings, before any court, tribunal, commission, or governmental authority, agency, or instrumentality, whether domestic or foreign, that may result in seizure of any property or asset.

“GAAP” shall mean generally accepted accounting principles.

“Guarantors” shall mean all of the Affiliates of the Borrower, jointly and severally, including without limitation: Document Security Systems, Inc., Plastic Printing Professionals, Inc., and Secuprint Inc.  The “Guarantors” are sometimes referred to individually, each as a “Guarantor.”

“Hazardous Substances” means, without limitation, any explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances and any other material defined as a hazardous substance in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et. seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801, et. seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901, et. seq.; Articles 15 and 27 of the New York State Environmental Conservation Law or any other federal, state, or local law, regulation, rule, ordinance, bylaw, policy, guideline, procedure, interpretation, decision, order, or directive, whether existing as of the date hereof, previously enforced or subsequently enacted.

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“Hedging Contracts” means interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, or any other agreements or arrangements entered into between the Borrower and the Bank and designed to protect the Borrower against fluctuations in interest rates or currency exchange rates.

“Hedging Obligations” means, with respect to the Borrower, all liabilities of the Borrower to the Bank under Hedging Contracts.

“Improvements” shall mean any real property owned or used by the Borrower or the Guarantors.

“Interest Expense” shall mean for the applicable period, all interest paid, capitalized, or accrued, and amortization of debt discount with respect to all Debt less all related interest income during such period and determined after giving effect to the net cost associated with Hedging Contracts.

“Letters of Credit” shall have the meaning set forth in Section 2.6 hereof.

“LIBOR Rate Loan” means the loan for the period(s) when the rate of interest applicable to the loan is calculated by reference to the LIBOR Rate (as defined in the applicable note).

“Loan Documents” shall mean this Agreement and all notes, instruments, security agreements, assignments, pledges, mortgages, guarantees, and other documents and agreements of any kind or nature related to this Agreement or the Obligations (including without limitation guarantees, security agreements, and the like previously given in favor of the Bank which by their terms apply to or secure both present and future obligations).

“London Banking Day” shall mean any date on which United States Dollar deposits are transacted on in the London interbank market.

“Material Adverse Effect” shall mean a material adverse effect on (i) the property, business, operations, financial condition, prospects, liabilities, or capitalization of the Borrower and its Subsidiaries taken as a whole, (ii) the legality, validity or enforceability of, or the legal ability of the Borrower or any Guarantor to perform its obligations under, this Agreement or any of the Loan Documents, (iii) the financial capacity of the Borrower or any Guarantor to perform any of its obligations under this Agreement or any of the Loan Documents, (iv) the rights and remedies of the Bank under this Agreement or any of the Loan Documents, or (v) the perfection or priority of any security interest or lien held by the Bank.

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“Net Income” shall mean the gross revenues for such period less all expenses and other proper charges but without deduction for Interest Expense and provision for taxes, determined in accordance with GAAP consistently applied, but excluding in any event:

(a)           any gains or losses on the sale or other disposition of investments or fixed or capital assets, and any taxes on such excluded gains and any tax deductions or credits on account of any such excluded losses;

(b)           the proceeds of any life insurance policy;

(c)           net earnings and losses of any corporation substantially all the assets of which have been acquired in any manner, realized by such other corporation prior to the date of such acquisition;

(d)           net earnings and losses of any corporation with which the Borrower shall have consolidated or which shall have merged into or with the Borrower prior to the date of such consolidation or merger;

(e)           net earnings of any business entity in which the Borrower has an ownership interest unless such net earnings shall have actually been received by the Borrower in the form of cash distributions;

(f)           earnings resulting from any reappraisal, revaluation or write-up of assets;

(g)           any gain arising from the acquisition of any securities of the Borrower;

(h)           any reversal of any contingency reserve, except to the extent that provision for such contingency reserve shall have been made from income arising during such period;

(i)           amortization of negative good will net of good will,

(j)           income or loss attributable to equity in Affiliates, and

(k)           other extraordinary or unusual items.

“Obligations” shall include all of the Borrower’s obligations to the Bank of any kind or  nature, arising now or in the future, including without limitation obligations under or related to this Agreement, the Revolving Line Note, the Acquisition Term Loan Note, the Loan Documents, any Letters of Credit or Hedging Contracts, overdrafts, swap transactions, automated transfer transactions, electronic funds transfers, and other transactions related to Borrower’s dealings with Bank.

“PATRIOT Act” shall have the meaning provided in Section 6.17.

“Purchased Stock” means any and all of the issued and outstanding shares of stock of Premier Packaging Corporation, all of which were purchased pursuant to that certain Stock Purchase Agreement, dated February 12, 2010, by and between Borrower and Document Security Systems, Inc.

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“Release” has the same meaning as given to that term in Section 101(22) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601(22), and the regulations promulgated thereunder.

“Revolving Line” shall mean the revolving line of credit established pursuant to Section 2.1 of this Agreement.

“Revolving Line Note” shall mean the note evidencing Obligations related to the Revolving Line as described in Section 2.2 of this Agreement.

“Revolving Line Termination Date” shall mean the date on which the Revolving Line terminates as described in Section 2.5 of this Agreement.

“Senior Funded Debt” means the sum of total Debt of the Borrower owed to the Bank, plus capital leases.

“Subsidiary” shall mean any entity with respect to which the Borrower owns a majority of the equity and voting interests including without limitation the Guarantors.

“Total Liabilities” shall mean the sum of all liabilities shown on the Borrower’s balance sheet as of the applicable date of determination, determined in accordance with GAAP including without limitation subordinated debt.

ARTICLE II.

REVOLVING LINE

2.1.           Revolving Line. Subject to the terms and conditions of this Agreement, the Bank hereby establishes for the benefit of the Borrower a revolving line of credit in the maximum principal amount equal to the lesser of One Million and 00/100 Dollars ($1,000,000.00)  and the Borrowing Base outstanding at any one time (the “Revolving Line”). The proceeds of the Revolving Line shall be used for the Borrower’s working capital purposes.  Subject to the terms of this Agreement, the Borrower may borrow, repay, and reborrow under the Revolving Line so long as the aggregate principal amount outstanding at any time does not exceed the lesser of $1,000,000.00 and the Borrowing Base.

2.2.           Revolving Line Note. The Borrower shall execute, together with this Agreement, a note evidencing Obligations related to the Revolving Line in the form of Exhibit A attached hereto and made a part hereof.

2.3.           Interest Rate.  Outstanding amounts under the Revolving Line Note shall accrue interest in accordance with the terms, covenants, and conditions of the Revolving Line Note.

2.4.           Payments. Payments and prepayments of accrued interest and all outstanding principal shall be made in accordance with the covenants, terms and conditions of the Revolving Line Note.

2.5.           Revolving Line Termination. Unless extended in writing by the Bank on terms and conditions then acceptable to the Bank, the Revolving Line will terminate on the earlier of (i) February 12, 2011 or (ii) the date of an Event of Default.

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2.6.           Escrow Account.  Subject to the terms and conditions of this agreement, on each Escrow Deposit Date until the Revolving Line is indefeasibly paid in full, the Borrower shall deposit into the Escrow Account an amount equal to the excess, if any, of all revenues received by the Borrower from and including the immediately preceding Escrow Deposit Date to but excluding such Escrow Deposit Date less all expenses paid by the Borrower from and including the immediately preceding Escrow Deposit Date to but excluding such Escrow Deposit Date (the “Escrow Deposit Amount”).    The Borrower shall not use any revenues for any purpose other than to pay expenses of the Borrower currently due and owing and to fund the Escrow Account.

Upon three (3) Business Days prior notice to the Bank, the Borrower shall have the option to forego depositing the Escrow Deposit Amount into the Escrow Account for such Escrow Deposit Date and instead apply such Escrow Deposit Amount to reduce the outstanding balance of the Revolving Line; provided, however, that the Borrower may not draw on the Revolving Line for a period of ten (10) Business Days following the application of any Escrow Deposit Amounts to reduce the outstanding balance of the Revolving Line.

The Borrower shall not withdraw any amounts in the Escrow Account without the express prior written consent of the Bank, which consent may be given or withheld in the Bank’s sole discretion.  All amounts in the Escrow Account on the Revolving Line Termination Date shall be applied to the repayment of all amounts outstanding under the Revolving Line.  Any amounts remaining in the Escrow Account following the indefeasible payment in full of all amounts outstanding under the Revolving Line shall be remitted to the Borrower within 60 days.  The Escrow Account shall be an interest-bearing account.

2.7.           Letter of Credit Subfacility.  Subject to the terms and conditions of this Agreement, the Bank agrees to issue and extend standby and commercial letters of credit (“Letters of Credit”) for the account of Borrower; provided, however, that (a) no Letter of Credit shall have an expiration date that is later than the Revolving Line Termination Date; (b) the aggregate Letter of Credit Obligations at any one time shall not exceed $250,000, and (c) the sum of the aggregate Letter of Credit Obligations plus the aggregate outstanding principal amount of all outstanding amounts under the Revolving Line shall not exceed the lesser of $1,000,000 and the Borrowing base.  All letters of credit will be issued on terms and conditions acceptable to the Bank and the Borrower will execute and deliver to the Bank any and all additional documents as are usual and customary in connection with the issuance of any Letter of Credit.  The Borrower will pay to the Bank non-refundable Letter of Credit fees based upon the aggregate outstanding face amount of Letters of Credit quarterly in arrears, calculated at a per annum rate equal to the interest rate specified in the Revolving Line Note.

On the Revolving Line Termination Date, or upon any demand by the Bank during the continuance of any Event of Default, the Borrower shall provide to the Bank cash collateral in an amount equal to the then-existing exposure under Letters of Credit.

If the Bank is required to pay any amount with respect to any Letter of Credit issued for the account of the Borrower, then such amount shall automatically be deemed to be a draw on the Revolving Line and shall be subject to all of the terms and conditions hereof.

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The Borrower hereby agrees to indemnify and hold harmless the Bank from and against any and all losses, liabilities, claims, damages, costs, or expenses of any kind or nature (including consequential damages) that the Bank may incur or that may be claimed against the Bank by reason of or related in any manner to the Letters of Credit; provided, however, that the Borrower shall not be required to indemnify the Bank from and against any such losses, liabilities, claims, damages, costs, or expenses to the extent, but only to the extent, that they are caused by a failure to honor a draw under a Letter of Credit that conforms strictly to the requirements of the Letter of Credit, by a failure to perform contractual obligations, or by the willful misconduct or gross negligence of the Bank.

2.8.           Borrowing Base.  Aggregate outstanding borrowings under the Revolving Line at any one time may not exceed the lesser of $1,000,000 and the amounts available under the following Borrowing Base:

(a)           65 percent (65%) of all Eligible Receivables, minus

(b)           the outstanding stated amount of the Letter of Credit and other letters of credit issued by the Bank (after approval by the Bank) from time to time for the account of the Borrower.

The Bank reserves the right in its sole discretion to modify the Borrowing Base or make changes in the definitions of Eligible Receivables, or to delete certain receivables from the Borrowing Base in the event of a material adverse change in the collateral for the Revolving Line or its collectibility, or in the event the Bank reasonably concludes that there are circumstances or conditions which materially affect the value of the collateral.

2.9.           Audits and Reconciliations.  Borrower agrees to allow the Bank complete access to all books and records of the Borrower upon reasonable request. Borrower agrees to submit information which the Bank may reasonably request from time to time in connection with the Revolving Line.

The Bank reserves the right to perform full field audits of Borrower’s accounts receivable and inventories at Borrower’s expense.

Borrower agrees to allow the Bank to request accounts receivable verifications from the Borrowers’ customers, but prior to an Event of Default, no more than four per calendar year. These requests will be done under an assumed name and P. O. Box address or its equivalent.

ARTICLE III.

TERM LOANS

3.1.           Acquisition Term Loan.  Subject to the terms and conditions of this Agreement, the Bank shall make a term loan (the “Acquisition Term Loan”) to the Borrower in a principal amount equal to One Million and Five Hundred Thousand and 00/100 Dollars ($1,500,000), the proceeds of which shall be used to fund the acquisition of the Purchased Stock.

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(a)           Acquisition Term Loan Note. The Acquisition Term Loan shall be evidenced by a note, dated the date hereof, in the form of Exhibit B attached hereto and made a part hereof (the “Acquisition Term Loan Note”).

(b)           Acquisition Term Loan Interest Rate. Outstanding amounts under the Acquisition Term Loan Note shall accrue interest in accordance with the terms, covenants, and conditions of the Acquisition Term Loan Note.

(c)           Acquisition Term Loan Payments.  Payments and prepayments of accrued interest and all outstanding principal under the Acquisition Term Loan shall be made in accordance with the covenants, terms and conditions of the Acquisition Term Loan Note.

ARTICLE IV.

EXPENSES/FEES/DEFAULT RATE/PAYMENT APPLICATION

4.1.           Costs and Expenses. The Borrower shall pay on demand all expenses of the Bank in connection with the preparation, administration, default, collection, waiver or amendment of any Obligation terms, or in connection with the 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 Obligation (including any default rate) and be an Obligation secured by any collateral.

4.2.           Application of Payments. All payments shall be applied first to the payment of all fees, expenses and other amounts due to the Bank (excluding principal and interest), then to accrued interest, and the balance on account of outstanding principal; provided, however, that after an Event of Default, payments will be applied to the Obligations as the Bank determines in its sole discretion.

4.3.           Default Interest Rate. Upon a Default (whether or not the Bank has accelerated payment of the Obligations), or after maturity or after judgment has been rendered with respect to any of the Obligations, the unpaid principal of all Obligations shall, at the option of the Bank, bear interest at a rate up to five (5) percentage points per annum greater than that which would otherwise be applicable.

4.4.           Late Payment Fees. If the entire amount of any required principal and/or interest is not paid in full under any of the Loan Documents within ten (10) days after the same is due, the Borrower shall pay to the Bank a late fee up to five percent (5%) of the required payment.

4.5.           Prepayments Upon Default. If by reason of an Event of Default the Bank elects to declare the Obligations to be immediately due and payable, then any charge owing upon prepayment with respect to the Obligations shall become due and payable in the same manner as though the Borrower had exercised a right of prepayment.

4.6.           Obligations Related to Hedging Contracts.  In the event that the Borrower enters into any Hedging Contracts with the Bank or any of its affiliates, any costs incurred by the Bank or its affiliates in connection therewith, including without limitation any interest, expenses, fees, premiums, penalties, or other charges associated with any obligations undertaken by the Bank or its affiliates to hedge or offset the Bank’s or its affiliates’ obligations pursuant to such agreement, or the termination of any such obligations, shall be (i) deemed additional interest and/or a related expense (to be determined in the sole discretion of the Bank) and due as part of the Obligations and secured by all collateral and otherwise therefor to the full extent thereof, and included in any judgment in any proceeding instituted by the Bank.

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ARTICLE V.

COLLATERAL AND GUARANTEES

5.1.           Security Interests. As collateral for all Obligations, the Borrower shall grant to the Bank a security interest and lien in all assets of the Borrower, including without limitation goods, machinery, equipment, furniture, fixtures, vehicles, accounts, inventory, chattel paper, interests in leases and property under lease, intellectual property and proprietary interests, documents, instruments, and general intangibles. Such security interests shall be first liens on such assets, which shall not be otherwise encumbered except as specified on Schedule 5.1(a) attached hereto and made a part hereof.  Without limiting the generality of the foregoing, the Bank shall have a first priority security interest on all business assets of the Borrower and a first priority security interest on the equipment listed on Schedule 5.1(b) attached hereto.

5.2.           Guarantees. The Borrower shall cause each Guarantor to provide an unconditional, unlimited guarantee of the Obligations.  As security for the aforementioned guarantees, the Guarantors shall each grant to the Bank a security interest and lien in all of their respective assets, including without limitation goods, machinery, equipment, furniture, fixtures, vehicles, accounts, inventory, chattel paper, interests in leases and property under lease, intellectual property and proprietary interests, documents, instruments, and general intangibles. Such security interests shall be first liens on such assets (to the extent not otherwise encumbered as specified on Schedule 5.2 attached hereto), which shall not be otherwise encumbered except as specified on Schedule 5.2 attached hereto and made a part hereof.

5.3.           Landlord Waivers. The Borrower shall deliver to the Bank a waiver from each landlord of premises on which the Bank’s collateral is located and that is not owned by the Borrower.

ARTICLE VI.

REPRESENTATIONS OF BORROWER

The Borrower and the Guarantors represent and warrant to the Bank as follows:

6.1.           Organization and Power. The Borrower and the Guarantors are duly organized, validly existing and in good standing under the laws of their respective jurisdictions of formation, and each is duly qualified to transact business and in good standing in all states in which it is required to qualify or in which failure to qualify could have a Material Adverse Effect. The Borrower and each Guarantor has full power and authority to own its properties, to carry on their business as now being conducted, to execute, deliver and perform the Loan Documents, and to consummate the transactions contemplated thereby. The Borrower and each Guarantor has no Subsidiaries or Affiliates except those listed on Schedule 6.1 attached hereto.

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6.2.           Proceedings of Borrower and the Guarantors. All necessary action on the part of the Borrower and each Guarantor, including shareholder and membership approval to the extent required, relating to authorization of the execution and delivery of the Loan Documents, and the performance of the Obligations of the Borrower and the Guarantors thereunder has been taken. The Loan Documents constitute legal, valid and binding obligations of the Borrower and the Guarantors, enforceable in accordance with their respective terms. The Borrower and the Guarantors have no defenses, offsets, claims, or counterclaims with respect to their respective obligations arising under the Loan Documents. The execution and delivery by the Borrower and the Guarantors of the Loan Documents, and the performance by the Borrower and the Guarantors of the Loan Documents, will not violate any provision of law or the Borrower’s or any Guarantor’s Certificate of Incorporation or By-laws, or organizational or other documents or agreements. The execution, delivery and performance of the Loan Documents, and the consummation of the transactions contemplated thereby will not violate, be in conflict with, result in a breach of, or constitute a default under any agreement to which either the Borrower or any Guarantor is a party or by which any of its or his properties is bound, or any order, writ, injunction, or decree of any court or governmental instrumentality, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of its or his properties, other than those created by the Loan Documents in favor of the Bank.

6.3.           Capitalization. All of the outstanding shares or membership interests, as applicable, and other equity interests of the Borrower and the Guarantors are duly authorized, validly issued, and fully paid. There is no existing contract, debenture, security, right, option, warrant, call or similar commitment of any character calling for or relating to the issuance of, purchase or receipt of, or redemption or retirement of any other equity interests of the Borrower.

6.4.           Litigation.  There is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency pending or, to the knowledge of the Borrower or the Guarantors, threatened against or affecting the Borrower or any Guarantor that brings into question the legality, validity or enforceability of the Loan Documents or the transactions contemplated thereby or that, if adversely determined, would have a Material Adverse Effect, other than those described in Schedule 6.4 attached hereto.

6.5.           Financial Statements. All financial statements furnished by the Borrower and each Guarantor to the Bank are complete and correct, have been prepared in accordance with GAAP consistently applied throughout the periods indicated, and fairly present the financial condition of the Borrower and each Guarantor, as of the respective dates thereof and the results of its or his operations for the respective periods covered thereby.

6.6.           Adverse Changes. Since the most recent financial statements described in Section 6.5 hereof there has been no Material Adverse Effect.

6.7.           Taxes. The Borrower and each Guarantor has filed or caused to be filed when due all federal tax returns and all state and local tax returns that are required to be filed, and have paid or caused to be paid all taxes as shown on said returns or any assessment received. The tax returns of the Borrower and each Guarantor are not being audited on the date of this Agreement and neither the Borrower nor any Guarantor has been notified of any intention by any taxing authority to conduct such an audit.

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6.8.           Properties. The Borrower and each Guarantor has undisturbed peaceable possession under all leases under which it is operating, none of which contain unusual or burdensome provisions that have or may have a Material Adverse Effect, and all such leases are in full force and effect.

6.9.           Indebtedness. Except as disclosed in the most recent financial statements referred to in Section 6.5 hereof, the Borrower and each Guarantor has no Debt, other than trade payables not yet due incurred in the ordinary course of business, and those listed on Schedules 5.1 and 5.2 attached hereto, respectively.

6.10.         Franchise; Permits. The Borrower and each Guarantor has all franchises, permits, licenses and other authority as are necessary to enable the Borrower and/or such Guarantor to conduct its, his or their businesses as now being conducted, and is not in default under any such franchise, permit, license or authority.

6.11.         ERISA. No action, event, or transaction has occurred that could give rise to a lien or encumbrance on the assets of the Borrower or any Guarantor as a result of the application of relevant provisions of ERISA, and the Borrower and each Guarantor is in material compliance with all requirements of ERISA.  Neither Borrower, any Guarantor, nor any member of its or their Controlled Group maintains, contributes, or has any liability under (or with respect to) any pension plan, whether or not terminated.  No pension plan maintained by the Borrower or any Guarantor or any member of its or their Controlled Group or to which such person has an obligation to contribute, or with respect to which such employer has any liability, has any material “unfunded liability” (i.e. accrued liabilities in excess of the fair market value of its assets).

6.12.         Margin Securities. No proceeds of the Obligations have been or will be used for the purpose of purchasing or carrying Margin Securities as defined in Regulation U of the Federal Reserve Board.

6.13.         Compliance With Law. Neither the Borrower nor any Guarantor is in violation of any laws, ordinances, governmental rules, requirements, or regulations to which it or he is subject which violation might have a Material Adverse Effect. The Borrower and each Guarantor have obtained and is in compliance with all licenses, permits, franchises, and governmental authorizations necessary for the ownership of his or its properties and the conduct of his or its businesses, for which failure to comply could have a Material Adverse Effect.

6.14.         Environmental Matters. To the best of Borrower’s and each Guarantor’s knowledge:

(a)           neither the Improvements nor any property adjacent to the Improvements is being used for, and neither the Borrower nor any Guarantor is engaged in, the storage, treatment, generation, transportation, processing, handling, production or disposal of any Hazardous Substance except in compliance with all Environmental Laws;

(b)           underground storage tanks are not located on the Improvements except in compliance with all Environmental Laws;

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(c)           the soil, subsoil, bedrock, surface water and groundwater of the Improvements are free of any Hazardous Substances;

(d)           since the occupancy of the Improvements by the Borrower or any Guarantor, there has been no Release, nor is there the threat of a Release of any Hazardous Substance on, at or from the Improvements or any property adjacent to or within the immediate vicinity of the Improvements which through soil, subsoil, bedrock, surface water or groundwater migration could come to be located on the Improvements, and neither the Borrower nor any of the Guarantors has received any form of notice or inquiry from any federal, state or local governmental agency or authority, any operator, tenant, subtenant, licensee or occupant of the Improvements or any property adjacent to or within the immediate vicinity of the Improvements or any other person with regard to a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements or any property adjacent to the Improvements;

(e)           all Environmental Permits relating to the Borrower and the Guarantors in connection with their respective operations on or within the Improvements have been obtained and are in full force and effect, and no event has occurred with respect to the Borrower, any Guarantor or the Improvements which, with the passage of time or the giving of notice, or both, would constitute a violation of any applicable Environmental Law or non-compliance with any Environmental Permit; there are no agreements, consent orders, decrees, judgments, license or permit conditions or other orders or directives of any federal, state or local court, governmental agency or authority relating to the past, present or future ownership, use, operation, sale, transfer or conveyance of the Improvements which require any change in the present condition of the Improvements or any work, repairs, construction, containment, clean up, investigations, studies, removal or other remedial action or capital expenditures with respect to the Improvements; and

(f)           there are no actions, suits, claims or proceedings, pending or threatened, which could cause the incurrence of expenses or costs of any name or description or which seek money damages, injunctive relief, remedial action or any other remedy that arise out of, relate to or result from (i) a violation or alleged violation by Borrower or any Guarantor of any applicable Environmental Law or non-compliance or alleged non-compliance with any Environmental Permit, (ii) the presence of any Hazardous Substance or a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements or any property adjacent to or within the immediate vicinity of the Improvements as a result of the operations of the Borrower and/or any Guarantor therein or (iii) exposure to any Hazardous Substance to the extent the same arises from the Improvements or business or operations of Borrower or the Guarantors.

6.15.         Patents, Trademarks and Authorizations. The Borrower and each Guarantor owns or possesses all patents, trade marks, service marks, trade names, copyrights, licenses, authorizations, and all rights with respect to the foregoing, necessary to the conduct of its businesses as now conducted without any material conflict with the rights of others. All of the Borrower’s and Guarantors’ patents, trademarks, and service marks are listed on Schedule 6.15 attached hereto.

6.16.         Contracts and Agreements. Neither the Borrower nor any Guarantor is a party to any contract or agreement that has or can reasonably be expected to have a Material Adverse Effect, and the Borrower and each Guarantor is in compliance in all material respects with all contracts and agreements to which each is a party.

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6.17.        USA PATRIOT Act.  The Borrower and the Guarantors have provided, sufficiently in advance of the date of this Agreement, all documentation and other information reasonably requested by the Bank under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the United States PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “PATRIOT Act”) including, without limitation, information such as the name, address and tax identification number, if any, of the Borrowers that allows the Bank to identify the Borrower and the Guarantors in accordance with the PATRIOT Act.

ARTICLE VII.

CONDITIONS OF LENDING

The following conditions must be satisfied before the Bank shall have any obligation to make any advance under this Agreement:

7.1.           Representations and Warranties. The representations and warranties of the Borrower and the Guarantors contained herein shall be true and correct as of the date of making of each such advance, with the same effect as if made on and as of such date.

7.2.           No Defaults. There shall exist no Default at the time each advance is made.

7.3.           Performance. The Borrower and each Guarantor shall have performed and complied with all agreements and conditions required to be performed or complied with by it prior to or at the time the advance is made.

7.4.           Opinion of Counsel. Upon the request of the Bank, the Borrower shall have delivered an opinion of its counsel, dated the date of the advance, in form and substance reasonably satisfactory to the Bank.

7.5.           Documents to be Delivered. The Borrower and each Guarantor shall have delivered to the Bank all security agreements, guarantees, and any other documents necessary or desirable in connection with this Agreement, including the requirements of ARTICLE VIII hereof. All notes evidencing the Obligations shall have been delivered to the Bank at the time of the making of the respective loans.

7.6.           Certified Resolutions. Each of the Borrower and the Guarantors shall have delivered a certificate of its corporate secretary or other duly appointed officer certifying, as of the date of the first advance, resolutions duly adopted by the Board of Directors, or Shareholders of the Borrower and the Guarantors, as applicable, authorizing the execution, delivery and performance of the Loan Documents, and the consummation of the transactions contemplated thereby, which resolutions shall remain in full force and effect so long as any of the Obligations are outstanding or any commitment to lend exists under this Agreement or the Loan Documents.

7.7.           Fees and Taxes. The Borrower shall have paid all filing fees, taxes, and assessments related to the borrowings and the perfection of any interests in collateral security required hereunder.

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7.8.           Insurance. The Borrower and each Guarantor shall have delivered evidence satisfactory to the Bank of the existence of insurance required hereby.

7.9.           Organizational Documents. The Borrower and each Guarantor shall have delivered to the Bank a copy of its then-effective Certificate of Incorporation and By-laws, d/b/a certificates, and other organizational documents and instruments, or a written certificate that such documents and instruments have not been changed or amended since the last advance to Borrower pursuant to the terms of this Agreement.

7.10.       Other Documents and Agreements. On or before the date of this Agreement, the Borrower shall have delivered such other documents, instruments, and agreements as the Bank and its legal counsel may require in connection with the transactions contemplated hereby.

7.11.       Financial Statements. On or before the date of this Agreement, the Borrower and each Guarantor shall have delivered to the Bank a copy of his or its federal income tax return  and the Borrower’s most recent consolidated monthly financial statement.

7.12.       Certificates of Good Standing. On or before the date of this Agreement the Borrower and each Guarantor shall have delivered to the Bank certificates of good standing from appropriate state or provincial officials to the effect that the Borrower or such Guarantor is in good standing in the state of its formation as well as in all other states or provinces in which qualification is necessary for the Borrower or such Guarantor to carry on its business in such states or provinces.

7.13.       Environmental Reports.  The Bank may require at any time, at the Borrower’s expense, a written report of a site assessment and environmental audit in scope, form and substance satisfactory to the Bank, prepared by an independent, competent and qualified engineer selected by the Bank, in the Bank’s sole and unfettered discretion, showing that the engineer made all appropriate inquiry consistent with good commercial and customary practice, that no evidence or indication came to light which would suggest there was a Release involving the Improvements which would necessitate an environmental response action and that the Improvements comply with and do not deviate from, all applicable Environmental Laws and Environmental Permits.

7.14.       Stock Purchase Agreement. The Borrower shall have consummated the transactions contemplated by that certain Stock Purchase Agreement, dated February 12, 2010, by and between Borrower and Document Security Systems, Inc.  The Stock Purchase Agreement shall be in a form and substance satisfactory to the Bank.

7.15.       Landlord Waivers.   Except as set forth on Schedule 7.15 attached hereto, on or before the date of this Agreement, the Borrower and each Guarantor shall deliver to the Bank a waiver from each landlord of premises on which any collateral for the Obligations or the Guarantees is located and which is not owned by the Borrower or a Guarantor, as applicable, as required by Section 5.3 hereof, which waiver is in form and substance satisfactory to the Bank.

7.16.       Anti-Terrorism Laws.  On or before the date of this Agreement, there shall have been delivered to the Bank, to the extent requested by the Bank, all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act (unless previously delivered).

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ARTICLE VIII.

AFFIRMATIVE COVENANTS OF BORROWER

Any affirmative covenant of the Borrower contained herein shall also be deemed to include an affirmative covenant of any Affiliate of Borrower.  So long as any Obligations to the Bank shall be outstanding or this Agreement remains in effect, unless the Bank otherwise consents in writing:

8.1.           Financial Statements.

(a)           The Borrower shall furnish to the Bank as soon as available, but in no event later than 120 days following the fiscal year end of any year in which this Agreement remains in effect, annual financial statements of the Borrower in reasonable detail satisfactory to the Bank prepared in accordance with GAAP reviewed by, and with an unqualified opinion from, an independent certified public accountant satisfactory to the Bank. Said financial statements shall include at least a balance sheet and a statement of profit and loss, and shall be accompanied by (i) a schedule showing computation of financial covenants, (ii) a copy of any management letter prepared by the Borrower’s accountants, and (iii) a certificate of the Chief Financial Officer of the Borrower to the effect that no Default has occurred.

(b)           The Borrower shall furnish to the Bank unaudited financial statements not more than 45 days after the close of each quarter of its fiscal year. Said statements shall be in reasonable detail satisfactory to the Bank, shall be prepared in accordance with GAAP, and shall include at least a balance sheet, a statement of profit and loss, and a schedule showing computation of financial covenants. Said financial statements shall be certified to be true and correct to the best knowledge of the Chief Financial Officer of the Borrower. Such financial statements shall be accompanied by a certificate of the Chief Financial Officer of the Borrower to the effect that no Default has occurred.

(c)           Not more than 45 days after the close of each quarter, the Borrower shall deliver to the Bank an aging of accounts receivable and an aging of accounts payable for the Borrower.  Said information shall be certified to be true and correct to the best knowledge of a duly authorized officer of the Borrower, with such knowledge necessary to make such certification.

(d)           Not more than 45 days after the close of each quarter, the Borrower shall deliver to the Bank a borrowing base certificate for the Borrower in the form of Exhibit C attached hereto.

(e)           Within 30 days following its fiscal year end, the Borrower shall provide to the Bank projections for the succeeding year, including quarterly profit and loss statements, balance sheets, and cash flow statements, for each of the Borrower and its Parents, Subsidiaries and Affiliates.

(f)           Within 45 days of the end of each quarter, the Borrower shall provide to the Bank a compliance certificate on the Bank’s standard form, as provided to the Borrower.

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8.2.           Other Reports and Inspections. Furnish to the Bank such additional information, reports, or financial statements as the Bank may, from time to time, reasonably request. The Borrower shall permit or cause to be permitted any person designated by the Bank to inspect the property, assets, and books of the Borrower and each Guarantor at reasonable times and, prior to an Event of Default, upon reasonable notice, and shall discuss its affairs, finances, and accounts at reasonable times with the Bank from time to time as often as may be reasonably requested.

8.3.           Taxes. Pay and discharge all taxes, assessments, levies, and governmental charges upon the Borrower and the Guarantors, and their income and property, prior to the date on which penalties are attached thereto; provided, however, that the Borrower and each Guarantor may in good faith contest any such taxes, assessments, levies, or charges so long as such contest is diligently pursued, appropriate reserves are reflected on the Borrower’s financial statements, and no lien or execution exists or is levied against any of Borrower’s or such Guarantor’s assets related to the contested items.

8.4.           Insurance. Maintain or cause to be maintained insurance, of kinds and in amounts satisfactory to the Bank, with responsible insurance companies on all of its real and personal properties in such amounts and against such risks as are prudent, including but not limited to, full-risk extended coverage hazard insurance to the full insurable value of real property (co-insurance not being permitted without the prior written consent of the Bank), all-risk coverage for personal property, business interruption or loss of rents coverage, worker’s compensation insurance, and comprehensive general liability and products liability insurance. The Borrower also shall maintain flood insurance covering any of its real properties located in flood zones. The Borrower and each Guarantor shall provide to the Bank, no less often than annually and upon its request, a detailed list and evidence satisfactory to the Bank of its insurance carriers and coverage and shall obtain such additional insurance as the Bank may reasonably request. Hazard insurance policies for real property shall name the Bank as mortgagee, and for personalty, additional insured, as its interests may appear. All policies shall provide for at least thirty (30) days’ prior notice of cancellation to the Bank.

8.5.           Existence. Cause to be done all things necessary to preserve and to keep in full force and effect its existence, rights, and franchises and to comply in all material respects with all valid laws and regulations now in effect or hereafter promulgated by any properly constituted governmental authority having jurisdiction.

8.6.           Maintenance of Properties. At all times maintain, preserve, protect, and keep its property used or useful in conducting its business, in good repair, working order, and condition and, from time to time, make all needful and proper repairs, renewals, replacements, betterments, and improvements thereto, so that the business carried on may be properly and advantageously conducted at all times.

8.7.           Material Changes; Judgments. Notify the Bank immediately of any Material Adverse Effect and of the filing of any suits, judgments, or liens which, if adversely determined, could have a Material Adverse Effect. The Borrower also shall notify the Bank immediately of any change in the name, identity, or organizational structure of the Borrower or any Guarantor, or any change in any equity or ownership interest in the Borrower or any Guarantor other than Document Security Systems, Inc.  The Borrower shall notify the Bank immediately of any Change of Control in Document Security Systems, Inc.

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8.8.           Environmental Compliance.

(a)           Comply with all applicable Environmental Laws and shall obtain and comply with all Environmental Permits;

(b)           promptly provide the Bank with a copy of all notifications which it gives or receives with respect to any past or present Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements or any property adjacent to the Improvements or by the Borrower or any Guarantor;

(c)           at all times allow the Bank and its officers, employees, agents, representatives, contractors and subcontractors reasonable access after reasonable prior notice to the Improvements for the purposes of ascertaining compliance with Environmental Laws and site conditions, including, but not limited to, subsurface conditions;

(d)           deliver promptly to the Bank: (i) copies of any documents received from the United States Environmental Protection Agency, or any state, county or municipal environmental or health agency concerning the Borrower’s or any Guarantor’s operations or the Improvements; and (ii) copies of any documents submitted by the Borrower or any Guarantor to the United States Environmental Protection Agency or any state, county or municipal environmental or health agency concerning its operations or the Improvements; and

(e)           if at any time the Bank obtains any reasonable evidence or information which suggests that a material potential environmental problem may exist with respect to the Borrower, any Guarantor, or the Improvements, at the Bank’s request provide to the Bank a full or supplemental environmental inspection and audit report of a scope and level of detail satisfactory to Bank be prepared by an environmental engineer or other qualified person acceptable to the Bank at Borrower’s expense. If such audit report indicates the presence of any Hazardous Substance or a Release or the threat of a Release of any Hazardous Substance by the Borrower or on, at or from the Improvements, the Borrower shall promptly undertake and diligently pursue to completion all necessary, appropriate and/or legally required investigative, containment, removal, clean up and other remedial actions, using methods recommended by the engineer or other person who prepared said audit report and acceptable to the appropriate federal, state and local agencies or authorities.

8.9.           ERISA Compliance. Comply in all material respects ERISA and regulations and interpretations related thereto.

8.10.         Franchises/Permits/Laws. Preserve and keep in full force and effect all franchises, permits, licenses, and other authority as are necessary to enable it to conduct its business as being conducted on the date of this Agreement and comply in all material respects with all laws, the provisions of regulations, and requirements now in effect or hereafter promulgated by any properly constituted governmental authority having jurisdiction over it.

8.11.         Payments. Make all payments as and when required by the Loan Documents.

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8.12.         Deposits/Bank Services. The Borrower and each Guarantor shall maintain all of its main depository accounts at the Bank.

8.13.         Shareholder and Officer Loans. The Borrower shall provide to the Bank subordination agreements in form satisfactory to the Bank covering any loans to the Borrower from, or other obligations of the Borrower to, its Subsidiaries, Affiliates and shareholders, officers, or members in existence from time to time.

8.14.         Affiliate Guarantors.  The Borrower shall cause each and every Guarantor to continue to provide and unconditional, unlimited Guaranty of the Obligations.

8.15.         Landlord Waivers.  To the extent not delivered on or before the date hereof, the Borrower shall, and shall cause each Guarantor to, deliver to the Bank a waiver from each landlord of premises on which any collateral for the Obligations or the Guarantees is located and which is not owned by the Borrower or a Guarantor, as applicable, as required by Section 5.3 hereof, which waiver is in form and substance satisfactory to the Bank on or before the later of March 1, 2010 and the date on which any collateral for the Obligations is located on such premises.

8.16.         Franchise Tax Searches.  On or before March 1, 2010, the Borrower shall furnish to the Bank a franchise tax search in each jurisdiction in which the Borrower or any Guarantor is organized or is qualified to do business as a foreign entity, which franchise tax search shall indicate that the Borrower or such Guarantor, as applicable, has filed and paid all franchise tax due and owing in such jurisdiction.

8.17.         Foreign Qualification.  On or before March 1, 2010, the Borrower shall furnish to the Bank proof, in form and substance satisfactory to the Bank, that Plastic Printing Professionals, Inc. is duly qualified to conduct business as a foreign corporation in the State of California.

ARTICLE IX.

NEGATIVE COVENANTS OF BORROWER

So long as any Obligations shall be outstanding, or this Agreement shall remain in effect, unless the Bank otherwise consents in writing, the Borrower shall not, directly or indirectly:

9.1.           Indebtedness. Create, incur, assume, or allow to exist, voluntarily or involuntarily, any Debt, excluding only (i) Obligations to the Bank, (ii) Debt described in Schedule 9.1 attached hereto and made a part hereof, and (iii) Debt to which the Bank consents in writing.

9.2.           Mortgages, Liens, and Encumbrances. Create, incur, assume, or allow to exist, voluntarily or involuntarily, any capitalizable lease, mortgage, security interest, pledge, lien or other encumbrance of any kind (including the charge upon property purchased under conditional sales or other title retention agreements) covering any of its property or assets, whether now owned or hereafter acquired, excluding only (i) interests held by the Bank, (ii) encumbrances described in Schedule 9.2 attached hereto, and (iii) obligations and interests to which the Bank consents in writing.

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9.3.           Contingent Liabilities. (i) Assume, guarantee, endorse, contingently agree to purchase, or otherwise become liable in any manner upon any obligation, contingent or otherwise, whether funded or current except for endorsement of negotiable instruments for deposit, collection, or similar transactions in the ordinary course of business, (ii) guarantee the dividends, of any person, firm, corporation, or other entity, or (iii) become the general partner in any partnership.

9.4.           Loans and Investments. Make any loan or advance to, or any investment in, any person, firm, joint venture, corporation or other entity whatsoever, except short-term investments in certificates of deposit of financial institutions and similar investments made in the ordinary course of business.

9.5.           Mergers Sales and Acquisitions/Change in Ownership Interests. (i) Enter into any merger or consolidation, (ii) acquire all or substantially all the stock or other ownership interests or assets of any person, firm, joint venture, corporation, or other entity, (iii) sell, lease, transfer, or otherwise dispose of any material portion of its assets except in the ordinary course of business, or (iv) allow any change in the ownership, legal or equitable, of its shareholder, membership or other equity interests or allow a Change in Control of Document Security Systems, Inc.

9.6.           Amendments. Allow the amendment or modification of its governing documents and agreements in any material respect without the prior written consent of the Bank.

9.7.           Distributions. Make any Distributions or apply any of its property or assets to Distributions or set apart any sum or asset for the purpose of Distributions without the explicit written consent of the Bank, such consent to be exercised in the Bank’s sole discretion.

9.8.           Material Changes. Allow to occur, voluntarily or involuntarily: (a) any change in the character of its business, or in the nature of its operations as carried out on at the date of this Agreement that in each case or in the aggregate has or could reasonably be expected to have a Material Adverse Effect, (b) any change in its respective key management personnel unless reasonably qualified replacements in such management personnel are made within ninety (90) days, (c) except as a result of force majeure, material damage to, or loss, theft, or destruction of Borrower’s property, whether or not insured, if any such event or circumstance could reasonably be expected to have a Material Adverse Effect, or (d) any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive Business Days, the cessation or substantial curtailment of revenue producing activities at any facility of Borrower if any such event or circumstance could reasonably be expected to have a Material Adverse Effect.

9.9.           Compensation. Compensate any person or entity, including without limitation salaries, bonuses, consulting fees, or otherwise, in excess of amounts reasonably related to services rendered to it.

9.10.         Judgments. Allow to exist any judgments against it in excess of $25,000 which are not fully covered by insurance or for which an appeal or other proceeding for the review thereof shall not have been taken and for which a stay of execution pending such appeal shall not have been obtained.

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9.11.         Margin Securities. Allow any portion of the proceeds of the Obligations to be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulation U of the Board of Governors of the Federal Reserve.

9.12.         Asset Transfer and Affiliate Loans.  The Borrower shall not (a) distribute, transfer or convey any asset or property of the Borrower to any Affiliate or Subsidiary or (b) make any loan or extend any other credit accommodation to any Affiliate or Subsidiary.  The Borrower shall not permit any Guarantor, without the express written consent of the Bank, such consent to be in the sole discretion of the Bank, to (y) distribute, transfer or convey any asset or property of such Guarantor to any Affiliate except the Borrower or another Guarantor or (z) make any loan or extend any other credit accommodation to any Affiliate except the Borrower or another Guarantor.

It is hereby expressly greed that, except to the extent expressly provided herein, the provisions of this Article IX shall not be applicable to any Guarantor.

ARTICLE X.

FINANCIAL COVENANTS

So long as any Obligations to the Bank shall be outstanding or this Agreement remains in effect, unless the Bank otherwise consents in writing, the Borrower shall:

10.1.         Minimum Fixed Charge Coverage Ratio. On a consolidated basis, maintain a minimum Fixed Charge Coverage Ratio of 1.00 to 1.0, reported on a year to date basis commencing with the quarter ending March 31, 2010; a minimum Fixed Charge Coverage Ratio of 1.10 to 1.0, reported on a year to date basis commencing with the quarter ending June 30, 2010; and at all times thereafter a minimum Fixed Charge Coverage Ratio of 1.15 to 1.0, reported on a year to date basis commencing with the quarter ending September 30, 2010 and on a rolling four quarter basis thereafter commencing with the quarter ending December 31, 2010.  

10.2.         Maximum Senior Funded Debt to EBITDA Ratio. Maintain at all times a maximum Senior Funded Debt to EBITDA Ratio of 3.0 to 1.0, reported on a revised rolling four quarter basis commencing with the quarter ending March 31, 2010. The compliance of such covenant will be tested on March 31, 2010, June 30, 2010 and September 30, 2010 on a revised EBITDA basis, with an officer salary cap of $260,000 and all distributions limited to 40% of Net Income for all quarters calculated in 2009. Commencing December 31, 2010, such covenant will be tested on a rolling four quarter basis according to GAAP.

10.3.         Current Ratio.  Maintain at all times a Current Ratio of 1.25 to 1.0, reported on a rolling four quarter basis commencing with the quarter ending March 31, 2010.

ARTICLE XI.

DEFAULTS

11.1.         Defaults.  The following events shall constitute “Events of Default” under this Agreement.

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(a)           Nonpayment. Failure of the Borrower or any Guarantor to make any payment of any type under the terms of the Loan Documents within five (5) days after the same becomes due and payable.

(b)           Performance. Failure of the Borrower or any Guarantor to observe or perform any condition, covenant or term of the Loan Documents; provided, however, that if such failure occurs under ARTICLE VIII and is susceptible to cure an Event of Default shall not occur unless such failure is not cured within fifteen (15) days after the Bank gives the Borrower notice of same.

(c)           Other Obligations and Cross Default. Failure of the Borrower or any Guarantor to observe or perform any other condition, covenant, or term of any other agreement with the Bank, including without limitation, any Hedging Contracts or other documents or agreements giving rise to Hedging Obligations after any applicable cure or grace period related thereto, or default by the Borrower or any Guarantor under any agreement involving borrowed money or the like, or any other material agreement with any third person or entity.  Without limiting the foregoing, if the Borrower or any Guarantor shall default in the payment of principal or interest due and owing upon any obligation for borrowed money, beyond any grace period provided with respect thereto, or in the performance or observance of any other agreement, term or condition contained in any agreement under which such obligation is created, and the effect of such default is to allow the acceleration of the maturity of such indebtedness or to permit the holder thereof to cause such indebtedness to become due prior to its stated maturity, then, in such event, the Borrower and each Guarantor covenants and agrees that any such default shall cause a Default under every obligation owed by the Borrower and each Guarantor to the Bank.

(d)           Representations. Failure of any representation or warranty made by the Borrower or any Guarantor in connection with the execution and performance of this Agreement, or any certificate of officers pursuant hereto, to be truthful, accurate or correct in all material respects.

(e)           Financial Difficulties. Financial difficulties of the Borrower or any Guarantor as evidenced by:

(i)           any admission in writing of inability to pay debts as they become due; or

(ii)           the filing of a voluntary or involuntary petition in bankruptcy, or under any chapters of the Bankruptcy Code, or under any federal or state statute providing for the relief of debtors; or

(iii)           making an assignment for the benefit of creditors; or

(iv)           consenting to the appointment of a trustee or receiver for all or a major part of any of its property; or

(v)           the entry of a court order appointing a receiver or a trustee for all or a major part of its property;

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(vi)           the occurrence of any event, action, or transaction that could give rise to a lien or encumbrance on the assets of the Borrower or any Guarantor as a result of application of relevant provisions of ERISA; or

(vii)           the occurrence of any Forfeiture Action.

(f)           Material Change. Change in the Borrower’s or any Guarantor’s business or operations, including but not limited to a Change in Control of Document Security Systems, Inc., or in any factor affecting the Borrower’s or any Guarantor’s business or operations, or regarding any obligation or agreement of the Borrower or any Guarantor, or in the financial condition of the Borrower or any Guarantor or in the collateral for the Borrower’s Obligations or the Guarantees, or any other condition affecting the Borrower or any Guarantor, in each case by reason of which the Bank reasonably believes the Borrower’s ability to timely repay any Obligations to the Bank is materially impaired.

11.2.         Remedies. If any one or more Events of Default listed in Sections 11.1(e)(ii) through 11.1(e)(v) occur, (i) any further commitments or obligations of the Bank shall be deemed to be automatically and without need for further action terminated, and (ii) all Obligations of the Borrower to the Bank, automatically and without need for further action, shall become forthwith due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived. If any one or more Events of Default other than those listed in Sections 11.1(e)(ii) through 11.1(e)(v) occur, the Bank may, at its option, take either or both of the following actions at the same or different times: (i) terminate any further commitments or obligations of the Bank, and (ii) declare all Obligations of the Borrower to the Bank, automatically and without need for further action, to be forthwith due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived.

In case any such Events of Default shall occur, the Bank shall be entitled to recover judgment against the Borrower for all Obligations of the Borrower to the Bank either before, or after, or during the pendency of any proceedings for the enforcement, of any security interests, mortgages, pledges, or guarantees and, in the event of realization of any funds from any security or guarantee and application thereof to the payment of the Obligations due, the Bank shall be entitled to enforce payment of and recover judgment for all amounts remaining due and unpaid on such Obligations. The Bank shall be entitled to exercise any other legal or equitable right which it may have, and may proceed to protect and enforce its rights by any other appropriate proceedings, including action for the specific performance of any covenant or agreement contained in this Agreement and other agreements held by the Bank.

If any Default occurs, the Bank or its designee shall have the right, upon reasonable notice to the Borrower, to enter upon the Borrower’s property and conduct such tests, investigation and sampling, including but not limited to installation of monitoring wells, as shall be reasonably necessary for the Bank to determine whether any disposal of Hazardous Substances has occurred on, at or near such property. The costs of all such tests, investigations and samplings shall be considered as additional indebtedness secured by all collateral for the Obligations and shall become immediately due and payable without notice and with interest thereon at highest rate then borne by any of the Obligations. The Borrower agrees that the Bank

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shall not be liable in any way for the completeness or accuracy of any Environmental Report or the information contained therein. The Borrower further agrees that the Bank has no duty to warn the Borrower or any other person or entity about any actual or potential environmental contamination or other problem that may have become apparent or will become apparent to the Bank.

ARTICLE XII.

MISCELLANEOUS

12.1.         Entire Agreement/Waiver. This Agreement and the Loan Documents are intended by the parties as the final, complete, and exclusive statement of the transactions evidenced by this Agreement and the Loan Documents. All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Agreement and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Agreement and the Loan Documents. This Agreement and the Loan Documents may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.

No delay or failure of the Bank to exercise any right, remedy, power or privilege hereunder shall impair the same or be construed to be a waiver of the same or of any Default or an acquiescence therein. No single or partial exercise of any right, remedy, power or privilege shall preclude other or further exercise thereof by the Bank. All rights, remedies, powers, and privileges herein conferred upon the Bank shall be deemed cumulative and not exclusive of any others available.

12.2.         Survival of Representations. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the execution and delivery of other agreements hereunder.

12.3.         Setoff. The Borrower and the Guarantors hereby grant to the 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 the Bank or any entity under the control of the 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 the Borrower and each Guarantor), the Bank may set off the same or any part thereof and apply the same to any Obligation of the Borrower and any Guarantor even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE 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 THE BORROWER OR ANY GUARANTOR ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED.

12.4.         Notices. Any notice or demand upon any party hereto shall be deemed to have been sufficiently given or served for all purposes hereof when delivered in person, one day after delivery to a nationally recognized overnight courier with receipt requested, or two business days after it is mailed certified mail postage prepaid, return receipt requested, addressed as follows:

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If to the Bank:

RBS Citizens, N.A.

Commercial Lending

126 East Avenue

Rochester, New York 14604

Attention: Mr. Jeffrey R. Morse

With a copy to: Harris Beach PLLC

99 Garnsey Road

Pittsford, New York 14534

Attention: Mr. Justin P. Runke, Esq.

If to the Borrower Premier Packaging Corporation

or the Guarantors: Document Security Systems, Inc.

Plastic Printing Professionals, Inc.

Secuprint, Inc.

Suite 1525

28 East Main Street

Rochester, New York 14614

With a copy to:	Attention: Mr. Philip Jones
	Ronald J. Axelrod & Associates, P.C.

Basin Meadows Office Park

141 Sully’s Trail, Suite 5A

Pittsford, NY 14534

Attention: Ronald J. Axelrod, Esq.

Any party may change, by notice in writing to the other parties, the address to which notices to it shall be sent.

12.5.         Assignment/Participation. All of the terms and provisions of this Agreement shall inure to the benefit of and be binding upon and be enforceable by the parties and their respective successors and assigns and shall inure to the benefit of and be enforceable by any holder of notes executed hereunder.

The Bank may at any time pledge or assign all or any portion of its rights under the Loan Documents, including any portion of any note evidencing the Obligations, to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or assignment or enforcement thereof shall release the Bank from its obligations under any of the Loan Documents.

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The Bank shall have the unrestricted right at any time or from time to time, and without the Borrower’s or any Guarantor’s consent, to assign all or any portion of its rights and obligations hereunder to one or more banks or other financial institutions (each an “Assignee”), and the Borrower and each Guarantor agree that it shall execute such documents, including without limitation, amendments to this Agreement and to any other Loan Documents, as the Bank shall deem necessary to effect the foregoing. In addition, at the request of the Bank and any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if the Bank has retained any of its rights and obligations hereunder following such assignment, to the Bank, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by the Bank prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and the Bank after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments, and any other documentation required by the Bank in connection with such assignment, and the payment by such Assignee of the purchase price agreed to by the Bank and such Assignee, such Assignee shall be a party to this Agreement and shall have all of the rights and obligations of the Bank hereunder (and under any and all of the other Loan Documents) to the extent that such rights and obligations have been assigned by the Bank pursuant to the assignment documentation between the Bank and such Assignee, and the Bank shall be released from its obligations hereunder and thereunder to a corresponding extent.

The Bank shall have the unrestricted right at any time and from time to time, and without the consent of or notice to the Borrower or any Guarantor, to grant to one or more banks or other financial institutions (each a “Participant”) participating interests in the Bank’s obligation to lend hereunder and/or any or all of the Obligations. In the event of any such grant by the Bank of a participating interest to Participant, whether or not upon notice to the Borrower, the Bank shall remain responsible for the performance of its obligations hereunder and the Borrower shall continue to deal solely and directly with the Bank in connection with the Bank’s rights and obligations hereunder.

The Bank may furnish any information concerning the Borrower in its possession from time to time to prospective Assignees and Participants, provided that the Bank shall require any such prospective Assignee or Participant to agree in writing to maintain the confidentiality of such information.

12.6.         Business Days. If any Obligation or any payment hereunder becomes due on a day which is not a Business Day, the due date of the Obligation or payment shall be extended to the next succeeding Business Day, and such extension of time shall be included in computing interest and fees in connection with such payment.

12.7.         Telecopy Requests. As a convenience to the Borrower, the Borrower hereby authorizes the Bank to rely upon requests made by the Borrower or its employees by telecopy, and to treat such requests as if they were made in a writing delivered to the Bank. Any advance of funds made by the Bank pursuant to any such request shall be deemed to be authorized by the Borrower unless immediately repaid in full.

12.8.         Severability. In the event that any one or more of the provisions contained in this Agreement or any other agreement, document, or guarantee related hereto shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or such other agreement, document, or guarantee. This Agreement has been prepared in cooperation of counsel for each of the parties, and shall not be construed as against any particular party as drafter.

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12.9.         Governing Law. This Agreement and the Loan Documents, 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).

12.10.       Loss or Mutilation. Upon receipt of an affidavit of an officer of the Bank as to the loss, theft, destruction, or mutilation of any note evidencing any Obligation or any other Loan Document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of such note or other Loan Document, the Borrower will issue, in lieu thereof, a replacement note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

12.11.       Indemnity. The Borrower and each Guarantor, jointly and severally, shall indemnify and hold harmless the Bank and its affiliates, directors, officers, employees, agents, and representatives from and against any and all claims, damages, liabilities, and expenses that may be incurred by or asserted against such indemnified party in connection with the Loan Documents and the transactions contemplated thereby including without limitation in connection with the investigation of, preparation for, or defense of any pending or threatened claim, action, or proceeding; provided, however, that neither the Borrower nor any Guarantor shall be liable to any indemnified party for such claims, damages, liabilities, and expenses resulting from such indemnified party’s own gross negligence or willful misconduct.

The Borrower and each Guarantor, jointly and severally, agrees to indemnify, defend, and hold harmless the Bank from and against any and all liabilities, claims, damages, penalties, expenditures, losses, or charges, including, but not limited to, all costs of investigation, monitoring, legal representation, remedial response, removal, restoration or permit acquisition of any kind whatsoever, which may now or in the future be undertaken, suffered, paid, awarded, assessed, or otherwise incurred by the Bank (or any other person or entity affiliated with the Bank or representing or acting for the Bank or at the Bank’s behest, or with a claim on the Bank or to whom the Bank has liability or responsibility of any sort related to this Section 12.11 relating to, resulting from or arising out of (a) actions by the Borrower related to, or the use of the Improvements for, the storage, treatment, generation, transportation, processing, handling, production or disposal of any Hazardous Substance, (b) the presence of any Hazardous Substance or a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements, (c) the failure to promptly undertake and diligently pursue to completion all necessary, appropriate and legally authorized investigative, containment, removal, clean up and other remedial actions with respect to a Release or the threat of a Release of any Hazardous Substance on, at or from the Improvements, (d) exposure to any Hazardous Substance to the extent the same arise from activities of the Borrower or the condition of the Improvements or the ownership, use, operation, sale, transfer or conveyance thereof, (e) a violation of any applicable Environmental Law, or (f) non-compliance with any Environmental Permit. Such costs or other liabilities incurred by the Bank or other entity described in this Section 12.11 shall be deemed to include, without limitation, any sums which the Bank deems it necessary or desirable to expend to protect its security interests and liens. Notwithstanding anything to the contrary contained herein, the Borrower’s liability and obligations under this Section 12.11 shall survive the discharge, satisfaction or assignment of this Agreement by the Bank and the payment in full of all of the Obligations.

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12.12.       Usury. All agreements between and among the Borrower, the Guarantors and the Bank are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration or maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Bank for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. As used herein, the term “applicable law” shall mean the law in effect as of the date hereof, provided, however that in the event there is a change in the law which results in a higher permissible rate of interest, then the Loan Documents shall be governed by such new law as of its effective date. In this regard, it is expressly agreed that it is the intent of the Borrower and the Bank in the execution, delivery and acceptance of this Agreement to contract in strict compliance with the laws of the State of New York from time to time in effect. If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents at the time performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from any circumstances whatsoever the Bank 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. This provision shall control every other provision of all agreements between and among the Borrower, the Guarantors, and the Bank.

12.13.       JURISDICTION/VENUE. THE BORROWER AND EACH GUARANTOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT 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 CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SET FORTH FOR NOTICES GIVEN UNDER THIS AGREEMENT. THE BORROWER 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.

12.14.       WAIVER OF TRIAL BY JURY. THE BORROWER, EACH GUARANTOR, AND THE BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY 1N RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS 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 THE BANK RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NO 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, THE BORROWER 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. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS AGREEMENT AND MAKE THE LOANS CONTEMPLATED HEREUNDER.

[SIGNATURE PAGE IMMEDIATELY FOLLOWS.]

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IN WITNESS WHEREOF, the parties have caused this Credit Facility Agreement to be executed by their duly authorized representatives as of the date first above written.

RBS CITIZENS, N.A.

By: 

Jeffrey R. Morse, Assistant Vice President

PREMIER PACKAGING CORPORATION

By: 

Name:

Title:

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INDEX TO SCHEDULES

SCHEDULE 5.1(a)   Liens and Encumbrances of the Borrower

SCHEDULE 5.1(b)  Certain Equipment of the Borrower

SCHEDULE 5.2       Liens and Encumbrances of the Guarantors

SCHEDULE 6.1      Affiliates and Subsidiaries

SCHEDULE 6.4      Litigation

SCHEDULE 6.15    Patents, Trademarks and Authorizations

SCHEDULE 7.15    Landlord Waivers

SCHEDULE 9.1      Existing Indebtedness

SCHEDULE 9.2      Mortgages, Liens and Encumbrances

INDEX TO EXHIBITS

EXHIBIT A Revolving Line Note

EXHIBIT B  Acquisition Term Loan Note

EXHIBIT C  Borrowing Base Certificate

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EXHIBIT A

(FORM OF REVOLVING LINE NOTE)

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REVOLVING LINE NOTE

(LIBOR Advantage)

$1,000,000.00 February 12, 2010

FOR VALUE RECEIVED, the undersigned, PREMIER PACKAGING CORPORATION, a New York corporation, having a mailing address of 6 Framark Drive, Victor, New York 14564 (“Borrower”), hereby promises to pay to the order of RBS  CITIZENS, N. A., a national banking association (“Bank”), at its principal office at 833 Broadway, Albany, New York 12207, or at such other place as the holder hereof may from time to time designate in writing, the principal sum of  ONE MILLION AND 00/100 DOLLARS U.S. ($1,000,000.00) or such lesser amount as may be outstanding hereunder.

Certain Definitions.  Unless otherwise expressly provided herein, all capitalized terms in this Note shall have the meanings given to them in the Credit Facility Agreement, dated on even date herewith, by and among Borrower and Bank, as the same may be amended, extended, replaced, or modified from time to time (the “Credit Agreement”).  The following terms shall have the following meanings in this Note:

“Business Day” means any day which is neither a Saturday, Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in Rochester, New York.

“Event of Default” means an Event Default under the Credit Agreement.

“LA Interest Payment Date” means, initially, the 1st day of March, 2010, and thereafter the day of each succeeding month which numerically corresponds to such date or, if a month does not contain a day that numerically corresponds to such date, the LA Interest Payment Date shall be the last day of such month.

“LA Interest Period” means, with respect to any LIBOR Advantage Loan, the period commencing on (and including) the date hereof  (the “Start Date”) and ending on (but excluding) the date which numerically corresponds to such date one month later, and thereafter, each one month period ending on the day of such month that numerically corresponds to the Start Date.  If an Interest Period is to end in a month for which there is no day which numerically corresponds to the Start Date, the LA Interest Period will end on the last day of such month.  Notwithstanding the date of commencement of any LA Interest Period, interest shall only begin to accrue as of the date the initial LIBOR Advantage Loan is made hereunder.

“LA Margin” means three and three-fourths percent (3.75%) per annum.

“LIBOR Advantage Loan” means any loan or advance for which the applicable rate of interest is based upon the LIBOR Advantage Rate.

“LIBOR Advantage Rate” means, relative to any LA Interest Period, the offered rate for delivery in two London Banking Days of deposits of U.S. Dollars for a term coextensive with the designated LA Interest Period which the British Bankers’ Association fixes as its LIBOR rate as of 11:00 a.m. London time on the day on which such LA Interest Period commences.  If the first day of any Interest Period is not a day which is both a (i) Business Day, and (ii) a London Banking Day, the LIBOR Advantage Rate shall be determined by reference to the next preceding day which is both a Business Day and a London Banking Day.  If for any reason the LIBOR Advantage Rate is unavailable and/or Bank is unable to determine the LIBOR Advantage Rate for any LA Interest Period, Bank may, at its discretion, either: (a) select a replacement index based on the arithmetic mean of the quotations, if any, of the interbank offered rate by first class banks in London or New York for deposits with comparable maturities or (b)  accrue interest at a rate per annum equal to Bank’s Prime Rate as of the first day of any Interest Period for which the LIBOR Advantage Rate is unavailable or cannot be determined.

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Loan Documents” means this Note and all related documents and agreements evidencing and/or securing the Loan including the Credit Agreement.

“London Banking Day” means any day on which dealings in US dollar deposits are transacted in the London interbank market.

“Maturity Date” means the Revolving Line Termination Date, as defined in Article 2.2 of the Credit Agreement.

Advances.

Borrower may request advances hereunder from time to time from Bank, and provided that no Event of Default has occurred and further provided that advance requests are received on or before the Maturity Date, Bank shall advance such funds to Borrower so long as the aggregate principal amount outstanding at any time does not exceed the lesser of (i) $1,000,000.00 and (ii) the Borrowing Base as defined in Section 2.8 of the Credit Agreement.

Bank shall maintain a record of amounts of principal and interest payable by Borrower from time to time, and the records of Bank maintained in the ordinary course of business shall be prima facie evidence (absent manifest error by Bank) of the existence and amounts of Borrower’s obligations recorded therein.  In addition, Bank may mail or deliver periodic statements to Borrower indicating the date and amount of each advance hereunder (but any failure to do so shall not relieve Borrower of the obligation to repay any advance).  Unless Borrower questions the accuracy of an entry on any periodic statement within 30 calendar days after such mailing or delivery by Bank, Borrower shall be deemed to have accepted and be obligated by the terms of each such periodic statement as accurately representing the advances hereunder.  In the event of transfer of this Note, or if Bank shall otherwise deem it appropriate, Borrower hereby authorizes Bank to endorse on this Note the amount of advances and payments to reflect the principal balance outstanding from time to time.  Bank is hereby authorized to honor borrowing and other requests received from Philip Jones by telecopy or otherwise in writing.

Interest.

Interest on the outstanding principal amounts outstanding hereunder shall accrue during the LA Interest Period at a rate per annum equal to the sum of the LIBOR Advantage Rate for such LA Interest Period plus the LA Margin.  Interest shall be due and payable on each LA Interest Payment Date and on the Maturity Date.  Interest shall be calculated for the actual number of days elapsed on the basis of a 360-day year, including the first date of the applicable period to, but not including, the date of repayment.

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Interest shall continue to accrue after maturity, acceleration, and judgment at the rate required by Section 4.3 of the Credit Agreement until this Note is paid in full.

The rate of interest on this Note may be increased under the circumstances provided in the Credit Agreement.  The right of Bank to receive such increased rate of interest shall not constitute a waiver of any other right or remedy of Bank.

Payments.

All accrued interest hereunder shall be due and payable on each LA Interest Payment Date.  All remaining accrued interest and all outstanding principal shall be due and payable in full on the Maturity Date.

In the event Borrower becomes aware, or receives notice (oral or written) from Bank, that principal amounts outstanding under the Revolving Line exceed the maximum available amount hereunder, Borrower promptly shall make a principal payment to Bank sufficient to reduce outstanding principal amounts to the maximum amount available hereunder.

Prepayments.  Borrower may prepay principal outstanding under this Note at any time without premium or charge.  Borrower acknowledges that additional obligations may be associated with prepayment in accordance with the terms and conditions of any applicable Hedging Contracts.

Events of Default.  This Note shall become immediately due and payable in full, without further presentment, protest, notice, or demand, upon the happening of any Event of Default.

Late Charge.  This Note is subject to the late charges provided for in Section 4.4 of the Credit Agreement.

Maximum Rate.  All agreements between Borrower and Bank are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration or maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to Bank for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under Applicable Law (the “Maximum Interest Rate”).  As used herein, the term “Applicable Law” shall mean the law in effect as of the date hereof, provided, however that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note and the Loan Documents shall be governed by such new law as of its effective date.  In this regard, it is expressly agreed that it is the intent of Borrower and Bank in the execution, delivery and acceptance of this Note to contract in strict compliance with the laws of the State of New York from time to time in effect.  If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents at the time performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from any circumstances whatsoever Bank 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.  This provision shall control every other provision of all agreements between Borrower and Bank.

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Business Days.  If this Note or any payment hereunder becomes due on a day which is not a Business Day, the due date of this Note or payment shall be extended to the next succeeding Business Day, and such extension of time shall be included in computing interest and fees in connection with such payment.

Entire Agreement/Modification of Terms.  This Note and the Loan Documents are intended by the parties as the final, complete, and exclusive statement of the transactions evidenced by this Note and the Loan Documents.  All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Note and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Note and the Loan Documents.  This Note and the Loan Documents may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.  The terms of this Note cannot be changed, nor may this Note be discharged in whole or in part, except by a writing executed by Bank.  In the event that Bank demands or accepts partial payments of this Note, such demand or acceptance shall not be deemed to constitute a waiver of the right to demand the entire unpaid balance of this Note at any time in accordance with the terms hereof.  Any delay or omission by Bank in exercising any rights hereunder shall not operate as a waiver of such rights.

Additional Security/Set Off.  The Borrower hereby grants to Bank a continuing lien, security interest, and right of set off as security for all liabilities and obligations to the Bank, 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 Citizens Financial Group 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 Borrower), Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the obligation.  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 BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED.

Assignment/Participation.

All the terms and provisions of this Note shall inure to the benefit of and be binding upon and be enforceable by the parties and their respective successors and assigns and shall inure to the benefit of and be enforceable by any holder hereof.

Bank may at any time pledge or assign all or any portion of its rights under this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or assignment or enforcement thereof shall release Bank from its obligations under any of the Loan Documents.

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Bank shall have the unrestricted right at any time or from time to time, and without Borrower’s consent, to assign all or any portion of its rights and obligations hereunder to one or more banks or other financial institutions (each an “Assignee”), and Borrower agrees that it shall execute, or cause to be executed, such documents, including without limitation, amendments to this Note and to any other Loan Documents, as Bank shall deem necessary to effect the foregoing.  In addition, at the request of Bank and any such Assignee, Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if Bank has retained any of its rights and obligations hereunder following such assignment, to Bank, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by Bank prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and Bank after giving effect to such assignment.  Upon the execution and delivery of appropriate assignment documentation, amendments, and any other documentation required by Bank in connection with such assignment, and the payment by Assignee of the purchase price agreed to by Bank and such Assignee, such Assignee shall be a party to this agreement and shall have all of the rights and obligations of Bank hereunder (and under any and all other Loan Documents) to the extent that such rights and obligations have been assigned by Bank pursuant to the assignment documentation between Bank and such Assignee, and Bank shall be released from its obligations hereunder and thereunder to a corresponding extent.

Bank shall have the unrestricted right at any time and from time to time, and without the consent of or notice to Borrower, to grant to one or more banks or other financial institutions (each a “Participant”) participating interests in Bank’s obligation to lend hereunder and/or any or all of the loans held by Bank hereunder.  In the event of any such grant by Bank of a participating interest to Participant, whether or not upon notice to Borrower, Bank shall remain responsible for the performance of its obligations hereunder and Borrower shall continue to deal solely and directly with Bank in connection with Bank’s rights and obligations hereunder.

Bank may furnish any information concerning Borrower in its possession from time to time to prospective Assignees and Participants, provided that Bank shall require any such prospective Assignee or Participant to agree in writing to maintain the confidentiality of such information.

Loss or Mutilation.  Upon receipt of an affidavit of an officer of Bank as to the loss, theft, destruction, or mutilation of this Note or any other Loan Document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of this Note or other Loan Document, Borrower will issue, in lieu thereof, a replacement note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

Enforcement/Waiver of Jury Trial.

BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE 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 CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER BY MAIL AT THE ADDRESS FIRST SET FORTH ABOVE IN THIS NOTE.  BORROWER 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.

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BORROWER AND BANK (BY ACCEPTANCE OF THIS NOTE) 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 NOTE OR ANY OTHER LOAN DOCUMENTS 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 LOAN 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, BORROWER 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.  BORROWER 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 LOANS CONTEMPLATED HEREUNDER.

Miscellaneous.

To the fullest extent permissible by law, Borrower waives presentment, demand for payment, protest, notice of nonpayment, and all other demands or notices otherwise required by law in connection with the delivery, acceptance, performance, default, or enforcement of this Note.  Borrower consents to extensions, postponements, indulgences, amendments to notes and agreements, substitutions or releases of collateral, and substitutions or releases of other parties primarily or secondarily liable herefor, and agrees that none of the same shall affect Borrower’s obligations under this Note which shall be unconditional.

This Note and the Loan Documents are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Note and the Loan Documents.  All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Note and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Note and the Loan Documents.  This Note may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.

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No portion of the proceeds of this Note shall be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System.

This Note and the Loan Documents, and the rights and obligations of the parties hereunder, shall be construed, interpreted, governed and enforced in accordance with the internal laws of the State of New York (excluding the laws applicable to conflicts or choice of law).

PREMIER PACKAGING CORPORATION

By: 

Name:

Title:

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

On the ____ day of February , in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared 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/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Notary Public

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EXHIBIT B

(FORM OF ACQUISITION TERM LOAN NOTE)

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ACQUISITION TERM LOAN NOTE

$1,500,000.00 February 12, 2010

FOR VALUE RECEIVED, the undersigned, PREMIER PACKAGING CORPORATION, a New York corporation, having a mailing address of 6 Framark Drive, Victor, New York 14564 (“Borrower”), hereby promises to pay to the order of RBS  CITIZENS, N. A., a national banking association (“Bank”), at its principal office at 833 Broadway, Albany, New York 12207, or at such other place as the holder hereof may from time to time designate in writing, the principal sum of  ONE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS U.S. ($1,500,000.00).

Certain Definitions.  Unless otherwise expressly provided herein, all capitalized terms in this Note shall have the meanings given to them in the 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 Agreement”).  The following terms shall have the following meanings in this Note:

“Account” means account #_____________ maintained by the Bank in the name of the Borrower.

“Applicable Margin” means three and three fourths percent (3.75%) per annum.

“Business Day” means:

any day which is neither a Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in New York State;

when such term is used to describe a day on which a payment or prepayment is to be made in respect of a LIBOR Rate Loan, any day which is: (i) neither a Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required to be closed in New York City; and (ii) a London Banking Day; and

when such term is used to describe a day on which an interest rate determination is to be made in respect of a LIBOR Rate Loan, any day which is a London Banking Day.

 “Event of Default” means an Event Default under the Credit Agreement.

“Funding Date” means the 12th day of February, 2010.

“Hedging Contracts” means, interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, or any other agreements or arrangements entered into between the Borrower and the Bank and designed to protect the Borrower against fluctuations in interest rates or currency exchange rates.

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“Hedging Obligations” means, with respect to the Borrower, all liabilities of the Borrower to the Bank under Hedging Contracts.

“Interest Period” means:

initially, the period beginning on (and including) the Funding Date and ending on (but excluding) March 1, 2010 (the “Stub Period”); and

then, each period commencing on the last day of the next preceding Interest Period and ending on the day which numerically corresponds to last day of the Stub Period one month thereafter (or, if such month has no numerically corresponding day, on the last Business Day of such month); and

thereafter, each period commencing on the last day of the next preceding Interest Period and ending one month thereafter;

provided, however, that

if the Borrower has or may incur Hedging Obligations with the Bank in connection with the Loan, the Interest Period shall be of the same duration as the relevant period set under the applicable Hedging Contract;

if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next following Business Day unless such day falls in the next calendar month, in which case such Interest Period shall end on the first preceding Business Day; and

no Interest Period may end later than the Maturity Date.

 “Interest Payment Date” means the last Business Day of each Interest Period.

“LIBOR Rate” means relative to any Interest Period for a LIBOR Rate Loan, the offered rate for deposits of U.S. Dollars in an amount approximately equal to the amount of the LIBOR Rate Loan for a term coextensive with the Interest Period which the British Bankers’ Association fixes as its LIBOR rate as of 11:00 a.m. London time on the day which is two London Banking Days prior to the beginning of such Interest Period.

“LIBOR Rate Loan” means the Loan for the period(s) when the rate of interest applicable to the Loan is calculated by reference to the LIBOR Rate

“LIBOR Lending Rate” means, relative to a LIBOR Rate Loan for any Interest Period, a rate per annum determined pursuant to the following formula:

LIBOR Lending Rate	=	LIBOR Rate
		(1.00 - LIBOR Reserve Percentage)

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“LIBOR-Reference Banks Loan” means the Loan for any period(s) when the rate of interest applicable to the Loan is calculated by reference to the LIBOR-Reference Banks Rate.

“LIBOR-Reference Banks Lending Rate” means, relative to a LIBOR-Reference Banks Rate Loan for any Interest Period, a rate per annum determined pursuant to the following formula:

LIBOR-Reference Banks Lending Rate	=	LIBOR-Reference Banks Rate
		(1.00 - LIBOR Reserve Percentage)

“LIBOR-Reference Banks Rate” means relative to any Interest Period for LIBOR-Reference Banks Loans, the rate for which deposits in U.S. Dollars are offered by the Reference Banks to prime banks in the London interbank market in an amount approximately equal to the amount requested LIBOR-Reference Banks Loan at approximately 11:00 a.m., London time on the day that is two London Banking Days prior to the beginning of such Interest Period.  The Bank will request the principal London office of each of the Reference Banks to provide a quotation of its rate.  If at least two such quotations are provided, the rate for such date will be the arithmetic mean of the quotations.  If fewer than two quotations are provided as requested, the rate for such date will be the arithmetic mean of the rates quoted by major banks in New York City selected by the Bank, at approximately 11:00 a.m. New York City time for loans in U.S. Dollars to leading European banks for such Interest Period and in an amount approximately equal to the amount requested LIBOR-Reference Banks Loan.

“LIBOR Reserve Percentage” means, relative to any day of any Interest Period for the LIBOR Rate Loan, the maximum aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements (including all basic, emergency, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) under any regulations of the Board of Governors of the Federal Reserve System (the “Board”) or other governmental authority having jurisdiction with respect thereto as issued from time to time and then applicable to assets or liabilities consisting of “Eurocurrency Liabilities”, as currently defined in Regulation D of the Board, having a term approximately equal or comparable to such Interest Period.

 “Loan” means all amounts outstanding under the Note and/or advanced pursuant to this agreement.

“Loan Documents” means this Note and all related documents and agreements evidencing and/or securing the Loan including the Credit Agreement.

“London Banking Day” means a day on which dealings in US dollar deposits are transacted in the London interbank market.

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“Maturity Date” means the  1st  day of March, 2013.

“Note” means that certain promissory note dated as of the 12th day of February, 2010 in the principal amount of One Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00) made payable by the Borrower to the order, and for the benefit, of the Bank.

“Prime Rate” means the rate of interest announced by Bank in New York State from time to time as its “Prime Rate.”  The Borrower acknowledges that the Bank may make loans to its customers above, at or below the Prime Rate.  Interest accruing by reference to the Prime Rate shall be calculated on the basis of actual days elapsed and a 360-day year.

“Prime Rate Loan” means the Loan for the period(s) when the rate of interest applicable to the Loan is calculated by reference to the Prime Rate

“Principal Repayment Amount” means the regularly scheduled reductions in the outstanding principal of the Loan, to be made at the end of each Interest Period in an amount corresponding to such Interest Period and as set out in the attached Schedule A entitled “Principal Repayment Schedule”.

“Reference Banks” means four major banks in the London interbank market.

Loan Funding. On the Funding Date and on terms and subject to the conditions of this agreement, the Loan shall be made available to the Borrower no later than 11:00 a.m. New York City time by a deposit to the Account (or as otherwise instructed by the Borrower in writing) in the full principal amount of the Loan.  Unless otherwise prohibited by this agreement, the Loan shall initially be classified as a LIBOR Rate Loan and interest shall accrue by reference to the LIBOR Rate.

Repayments, Prepayments, and Interest.

Repayment of Loan; Automatic Rollover of LIBOR Rate Loan.  During the period(s) the Loan is classified as a LIBOR Rate Loan, it shall mature and become payable in full on the last day of each Interest Period.  Upon maturity the Loan shall automatically be continued as a LIBOR Rate Loan with an equal Interest Period in an amount equal to the expiring LIBOR Rate Loan LESS the applicable Principal Repayment Amount, provided, however, that no portion of the outstanding principal amount of a LIBOR Rate Loan may be continued as a LIBOR Rate Loan when any default or Event of Default has occurred and is continuing.  If any default or Event of Default has occurred and is continuing (if the Bank does not otherwise elect to exercise any right to accelerate the Loan it is granted hereunder), the maturing LIBOR Rate Loan shall automatically be continued as a Prime Rate Loan.  During the period(s) that the Loan is classified as a Prime Rate Loan, the Borrower shall make regular payments of principal in amounts equal to the applicable Principal Repayment Amount on the last day of each Interest Period.  Notwithstanding the foregoing, the Loan shall mature and become payable in full upon the Maturity Date.

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Voluntary Prepayment of the LIBOR Rate Loan.  When classified as a LIBOR Rate Loan, the Loan may be prepaid upon the terms and conditions set forth herein.  The Borrower acknowledges that additional obligations may be associated with prepayment, in accordance with the terms and conditions of any applicable Hedging Contracts.  The Borrower shall give the Bank, no later than 10:00 a.m., New York City time, at least four (4) Business Days notice of any proposed prepayment of the LIBOR Rate Loan, specifying the proposed date of payment and the principal amount to be paid.  Each partial prepayment shall be accompanied by the payment of all charges outstanding on the LIBOR Rate Loan and of all accrued interest on the principal repaid to the date of payment.  Borrower acknowledges that prepayment or acceleration of the LIBOR Rate Loan during an Interest Period shall result in the Bank incurring additional costs, expenses and/or liabilities and that it is extremely difficult and impractical to ascertain the extent of such costs, expenses and/or liabilities.  Therefore, all full or partial prepayments of the LIBOR Rate Loan shall be accompanied by, and the Borrower hereby promises to pay, on each date the LIBOR Rate Loan is prepaid or the date all sums payable hereunder become due and payable, by acceleration or otherwise, in addition to all other sums then owing, an amount (“LIBOR Rate Loan Prepayment Fee”) determined by the Bank pursuant to the following formula:

the then current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date closest to the end of the Interest Period as to which prepayment is made, subtracted from the LIBOR Lending Rate plus the Applicable Margin then applicable to the LIBOR Rate Loan.

If the result of the calculation in subsection 0 is zero or a negative number, then there shall be no LIBOR Rate Loan Prepayment Fee.  If the result of this calculation is a positive number, then the resulting percentage shall be multiplied by the amount of the LIBOR Rate Loan being prepaid. The resulting amount shall be divided by 360 and multiplied by  the number of days remaining in the Interest Period as to which the prepayment is being made.  Said amount shall be reduced to present value calculated by using the referenced United States Treasury securities rate and the number of days remaining on the Interest Period for the LIBOR Rate Loan.  The resulting amount of these calculations shall be the LIBOR Rate Loan Prepayment Fee.

Interest Provisions.

Interest on the outstanding principal amount of the Loan when classified as a: (i) LIBOR Rate Loan shall accrue during each Interest Period at a rate equal to the sum of the LIBOR Lending Rate for such Interest Period plus the Applicable Margin thereto and be payable on each Interest Payment Date, (ii) LIBOR-Reference Banks Rate Loan shall accrue during each Interest Period at a rate equal to the sum of the LIBOR-Reference Banks Lending Rate for such Interest Period plus the Applicable Margin thereto and be payable on each Interest Payment Date, and (iii) Prime Rate Loan shall accrue during each Interest Period at a rate equal to the Prime Rate and be payable on each Interest Payment Date.  Interest shall continue to accrue after maturity, acceleration, and judgment at the rate required by Section 4.3 of the Credit Agreement until this Note is paid in full.

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LIBOR Rate Lending Unlawful.  If the Bank shall determine (which determination shall, upon notice thereof to the Borrower be conclusive and binding on the Borrower) that the introduction of or any change in or in the interpretation of any law, rule, regulation or guideline, (whether or not having the force of law) makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for the Bank to make, continue or maintain the Loan as, or to convert the Loan into, a LIBOR Rate Loan, and if the Loan is then presently a LIBOR Rate Loan, it shall automatically convert into a LIBOR-Reference Banks Loan at the end of the then current Interest Period or sooner, if required by such law or assertion.  For purposes of this agreement, in the event of such a conversion, all LIBOR-Reference Banks Rate Loans shall be treated (except as to interest rate) as equivalent to a LIBOR Rate Loan of similar amount and Interest Period.  For greater certainty, all provisions of this agreement relating to LIBOR Rate Loans shall apply equally to LIBOR-Reference Banks Loans, including, but not limited to the manner in which LIBOR-Reference Banks Loans are requested, continued, converted, the manner in which interest accrues, is payable, principal payments are made, whether voluntary or involuntary, as well as any penalties, increased costs or taxes associated with any of the foregoing.

Substitute Rate.  If the Bank shall have determined that  (i) US dollar deposits in the relevant amount and for the relevant Interest Period are not available to the Bank in the London interbank market; (ii) by reason of circumstances affecting the Bank in the London interbank market, adequate means do not exist for ascertaining the LIBOR Rate applicable hereunder to the LIBOR Rate Loan, or (iii) the LIBOR Rate no longer adequately reflects the Bank’s cost of funding the Loan, then, upon notice from the Bank to the Borrower, the LIBOR Rate Loan shall automatically convert to a LIBOR-Reference Banks Loan.  During any such suspension, the Loan shall be classified as a LIBOR-Reference Banks Loan.

Indemnities.

In addition to the LIBOR Rate Loan Prepayment Fee, the Borrower agrees to reimburse the Bank (without duplication) for any increase in the cost to the Bank, or reduction in the amount of any sum receivable by the Bank, in respect, or as a result of:

any conversion or repayment or prepayment of the principal amount of the LIBOR Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 0 above or otherwise;

any costs associated with marking to market any Hedging Obligations that (in the reasonable determination of the Bank) are required to be terminated as a result of any conversion, repayment or prepayment of the principal amount of the LIBOR Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 0 above or otherwise;

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The Bank shall promptly notify the Borrower in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate the Bank for such increased cost or reduced amount.  Such additional amounts shall be payable by the Borrower to the Bank within five days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrower.  The Borrower understands, agrees and acknowledges the following: (i) the Bank does not have any obligation to purchase, sell and/or match funds in connection with the use of the LIBOR Rate as a basis for calculating the rate of interest on the LIBOR Rate Loan, (ii) the LIBOR Rate may be used merely as a reference in determining such rate, and (iii) the Borrower has accepted the LIBOR Rate as a reasonable and fair basis for calculating such rate, the LIBOR Rate Prepayment Fee, and other funding losses incurred by the Bank.  Borrower further agrees to pay the LIBOR Rate Prepayment Fee and other funding losses, if any, whether or not the Bank elects to purchase, sell and/or match funds.

Increased Costs.  If on or after the date hereof the adoption of any applicable law, rule or regulation or guideline (whether or not having the force of law), or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:  (i) shall subject the Bank to any tax, duty or other charge with respect to the LIBOR Rate Loan or its obligation to make the LIBOR Rate Loan, or shall change the basis of taxation of payments to the Bank of the principal of or interest on the LIBOR Rate Loan or any other amounts due under this agreement in respect of the LIBOR Rate Loan or its obligation to make the LIBOR Rate Loan (except for the introduction of, or change in the rate of, tax on the overall net income of the Bank or franchise taxes, imposed by the jurisdiction (or any political subdivision or taxing authority thereof) under the laws of which the Bank is organized or in which the Bank’s principal executive office is located); or (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System of the United States) against assets of, deposits with or for the account of, or credit extended by, the Bank or shall impose on the Bank or on the London interbank market any other condition affecting the LIBOR Rate Loan or its obligation to make the LIBOR Rate Loan;  and the result of any of the foregoing is to increase the cost to the Bank of making or maintaining the Loan as a LIBOR Rate Loan, or to reduce the amount of any sum received or receivable by the Bank under this agreement with respect thereto, by an amount deemed by the Bank to be material, then, within 15 days after demand by the Bank, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such increased cost or reduction.

Increased Capital Costs.  If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority affects or would affect the amount of capital required or expected to be maintained by the Bank, or person controlling the Bank, and the Bank determines (in its sole and absolute discretion) that the rate of return on its or such controlling person’s capital as a consequence of its commitments or the Loan made by the Bank is reduced to a level below that which the Bank or such controlling person could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by the Bank to the Borrower, the Borrower shall immediately pay directly to the Bank additional amounts sufficient to compensate the Bank or such controlling person for such reduction in rate of return.  A statement of the Bank as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower.  In determining such amount, the Bank may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable.

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Taxes.

All payments by the Borrower of principal of, and interest on, the LIBOR Rate Loan and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by the Bank’s net income or receipts (such non-excluded items being called “Taxes”).  In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will

pay directly to the relevant authority the full amount required to be so withheld or deducted;

promptly forward to the Bank an official receipt or other documentation satisfactory to the Bank evidencing such payment to such authority; and

pay to the Bank such additional amount or amounts as is necessary to ensure that the net amount actually received by the Bank will equal the full amount the Bank would have received had no such withholding or deduction been required.

Moreover, if any Taxes are directly asserted against the Bank with respect to any payment received by the Bank hereunder, the Bank may pay such Taxes and the Borrower will promptly pay such additional amount (including any penalties, interest or expenses) as is necessary in order that the net amount received by the Bank after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount the Bank would have received had not such Taxes been asserted.

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If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence, the Borrower shall indemnify the Bank for any incremental Taxes, interest or penalties that may become payable by the Bank as a result of any such failure.

Events of Default. This Note shall become immediately due and payable in full, without further presentment, protest, notice, or demand, upon the happening of any Event of Default.

Late Charge.  This Note is subject to the late charges provided for in Section 4.4 of the Credit Agreement.

Maximum Rate.  All agreements between Borrower and Bank are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration or maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to Bank for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under Applicable Law (the “Maximum Interest Rate”).  As used herein, the term “Applicable Law” shall mean the law in effect as of the date hereof, provided, however that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note and the Loan Documents shall be governed by such new law as of its effective date.  In this regard, it is expressly agreed that it is the intent of Borrower and Bank in the execution, delivery and acceptance of this Note to contract in strict compliance with the laws of the State of New York from time to time in effect.  If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents at the time performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from any circumstances whatsoever Bank 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.  This provision shall control every other provision of all agreements between Borrower and Bank.

Business Days.  If this Note or any payment hereunder becomes due on a day which is not a Business Day, the due date of this Note or payment shall be extended to the next succeeding Business Day, and such extension of time shall be included in computing interest and fees in connection with such payment.

Entire Agreement/Modification of Terms.  This Note and the Loan Documents are intended by the parties as the final, complete, and exclusive statement of the transactions evidenced by this Note and the Loan Documents.  All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Note and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Note and the Loan Documents.  This Note and the Loan Documents may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.  The terms of this Note cannot be changed, nor may this Note be discharged in whole or in part, except by a writing executed by Bank.  In the event that Bank demands or accepts partial payments of this Note, such demand or acceptance shall not be deemed to constitute a waiver of the right to demand the entire unpaid balance of this Note at any time in accordance with the terms hereof.  Any delay or omission by Bank in exercising any rights hereunder shall not operate as a waiver of such rights.

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Additional Security/Set Off.  The Borrower hereby grants to Bank a continuing lien, security interest, and right of set off as security for all liabilities and obligations to the Bank, 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 Citizens Financial Group 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 Borrower), Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the obligation.  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 BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED.

Assignment/Participation.

All the terms and provisions of this Note shall inure to the benefit of and be binding upon and be enforceable by the parties and their respective successors and assigns and shall inure to the benefit of and be enforceable by any holder hereof.

Bank may at any time pledge or assign all or any portion of its rights under this Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or assignment or enforcement thereof shall release Bank from its obligations under any of the Loan Documents.

Bank shall have the unrestricted right at any time or from time to time, and without Borrower’s consent, to assign all or any portion of its rights and obligations hereunder to one or more banks or other financial institutions (each an “Assignee”), and Borrower agrees that it shall execute, or cause to be executed, such documents, including without limitation, amendments to this Note and to any other Loan Documents, as Bank shall deem necessary to effect the foregoing.  In addition, at the request of Bank and any such Assignee, Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and, if Bank has retained any of its rights and obligations hereunder following such assignment, to Bank, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by Bank prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and Bank after giving effect to such assignment.  Upon the execution and delivery of appropriate assignment documentation, amendments, and any other documentation required by Bank in connection with such assignment, and the payment by Assignee of the purchase price agreed to by Bank and such Assignee, such Assignee shall be a party to this agreement and shall have all of the rights and obligations of Bank hereunder (and under any and all other Loan Documents) to the extent that such rights and obligations have been assigned by Bank pursuant to the assignment documentation between Bank and such Assignee, and Bank shall be released from its obligations hereunder and thereunder to a corresponding extent.

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Bank shall have the unrestricted right at any time and from time to time, and without the consent of or notice to Borrower, to grant to one or more banks or other financial institutions (each a “Participant”) participating interests in Bank’s obligation to lend hereunder and/or any or all of the loans held by Bank hereunder.  In the event of any such grant by Bank of a participating interest to Participant, whether or not upon notice to Borrower, Bank shall remain responsible for the performance of its obligations hereunder and Borrower shall continue to deal solely and directly with Bank in connection with Bank’s rights and obligations hereunder.

Bank may furnish any information concerning Borrower in its possession from time to time to prospective Assignees and Participants, provided that Bank shall require any such prospective Assignee or Participant to agree in writing to maintain the confidentiality of such information.

Loss or Mutilation.  Upon receipt of an affidavit of an officer of Bank as to the loss, theft, destruction, or mutilation of this Note or any other Loan Document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of this Note or other Loan Document, Borrower will issue, in lieu thereof, a replacement note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

Enforcement/Waiver of Jury Trial.

BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE 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 CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON BORROWER BY MAIL AT THE ADDRESS FIRST SET FORTH ABOVE IN THIS NOTE.  BORROWER 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.

BORROWER AND BANK (BY ACCEPTANCE OF THIS NOTE) 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 NOTE OR ANY OTHER LOAN DOCUMENTS 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 LOAN 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, BORROWER 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.  BORROWER 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 LOANS CONTEMPLATED HEREUNDER.

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Miscellaneous.

To the fullest extent permissible by law, Borrower waives presentment, demand for payment, protest, notice of nonpayment, and all other demands or notices otherwise required by law in connection with the delivery, acceptance, performance, default, or enforcement of this Note.  Borrower consents to extensions, postponements, indulgences, amendments to notes and agreements, substitutions or releases of collateral, and substitutions or releases of other parties primarily or secondarily liable herefor, and agrees that none of the same shall affect Borrower’s obligations under this Note which shall be unconditional.

This Note and the Loan Documents are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Note and the Loan Documents.  All prior or contemporaneous promises, agreements, and understandings, whether oral or written, are deemed to be superseded by this Note and the Loan Documents, and no party is relying on any promise, agreement, or understanding not set forth in this Note and the Loan Documents.  This Note may not be amended or modified except by a written instrument describing such amendment or modification executed by the Borrower and the Bank.

No portion of the proceeds of this Note shall be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System.

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This Note and the Loan Documents, and the rights and obligations of the parties hereunder, shall be construed, interpreted, governed and enforced in accordance with the internal laws of the State of New York (excluding the laws applicable to conflicts or choice of law).

PREMIER PACKAGING CORPORATION

By:

Name:

Title:

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

On the 12th day of February , in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared 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/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Notary Public

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SCHEDULE A

[Principal Repayment Schedule]

Payment No.	Principal Payment Date	Principal Payment Amount
1	4/1/2010	$25,000.00
2	5/1/2010	$25,000.00
3	6/1/2010	$25,000.00
4	7/1/2010	$25,000.00
5	8/1/2010	$25,000.00
6	9/1/2010	$25,000.00
7	10/1/2010	$25,000.00
8	11/1/2010	$25,000.00
9	12/1/2010	$25,000.00
10	1/1/2010	$25,000.00
11	2/1/2011	$25,000.00
12	3/1/2011	$25,000.00
13	4/1/2011	$25,000.00
14	5/1/2011	$25,000.00
15	6/1/2011	$25,000.00
16	7/1/2011	$25,000.00
17	8/1/2011	$25,000.00
18	9/1/2011	$25,000.00
19	10/1/2011	$25,000.00
20	11/1/2011	$25,000.00
21	12/1/2011	$25,000.00
22	1/1/2011	$25,000.00
23	2/1/2012	$25,000.00
24	3/11/2012	$25,000.00
25	4/1/2012	$25,000.00
26	5/1/2012	$25,000.00
27	6/1/2012	$25,000.00
28	7/1/2012	$25,000.00
29	8/1/2012	$25,000.00
30	9/1/2012	$25,000.00
31	10/1/2012	$25,000.00
32	11/1/2012	$25,000.00
33	12/1/2012	$25,000.00
34	1/1/2012	$25,000.00
35	2/1/2013	$25,000.00
36	3/1/2013	$625,000.00

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EXHIBIT C

(FORM OF BORROWING BASE CERTIFICATE)

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BORROWING BASE CERTIFICATE

RBS Citizens, N.A.

Commercial Lending

126 East Avenue

Rochester, New York 14604

Attn.: Jeffrey R. Morse

Re:           Premier Packaging Corporation

This certificate is submitted by the undersigned (hereinafter the “Company”).

The Company hereby certifies to the RBS Citizens, N.A. (the “Bank”) that the following information is true, accurate and complete as of February 12, 2010 (the “Reporting Date”).  The Company further certifies that as of the Reporting Date, no default has occurred, exists or to the knowledge of the Company, will exist in the future, with the passage of time or otherwise, under the Credit Agreement, as amended, by and between the Company and the Bank.

I. Company’s Eligible Accounts Receivable

(as defined in the Credit Agreement):                                                  $______________________

65% of Eligible Accounts Receivable =                                                           $_____________________

II.           Outstanding Letters of Credit:                                                                                            $_____________________

II.             Borrowing Base =                                                                                                                $______________________

    (I – II)

Premier Packaging Corporation

By:

Name:

Title:

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EX-10.7

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”) is made this 12th day of February, 2010 in favor of RBS CITIZENS, N.A., a national banking association, with offices at 833 Broadway, Albany, New York 12207 (“Bank”) by PREMIER PACKAGING CORPORATION, a corporation formed under the laws of the State of New York with offices at 6 Framark Drive, Victor, New York 14564 (“Premier”), 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 1560 Emerson Street, Rochester, New York 14606 (“Secuprint”), PLASTIC PRINTING PROFESSIONALS, 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 together with Premier, DSS and Secuprint bound hereby jointly and severally, and individually and collectively called, “Grantor”).

1.           DEFINITIONS.

Unless otherwise indicated in this Agreement, all terms shall have the same meanings as given to them in the Credit Facility Agreement, dated on even date herewith, and to the extent not inconsistent therewith in the Uniform Commercial Code of the State of New York as amended from time to time.

(a)           “Collateral” means all assets and property including, without limitation, all goods, tangible property, machinery, equipment, furniture, vehicles, parts, leasehold improvements, accounts (including, but not limited to, the Escrow Account), inventory, chattel paper, documents, choses in action, general intangibles, goodwill, insurance policies and proceeds, and intellectual property (including among others operating systems, patents, copyrights, trademarks, tradenames, licenses, trade secrets, know-how, franchises, and proprietary and other rights in data, engineering, technical plans, drawings, information, methods, systems, processes, inventions, formulas, applications, software, programs, manuals, and technology, and all other technology and proprietary rights of Grantor and all applications to acquire such rights, and in all rights and interests in any of them unless the same are licensed or leased pursuant to an agreement that prohibits the granting of a security interest in or similar assignment of the same), of any kind or nature in which the Grantor has an interest now or in the future, and which are now existing or hereafter created or acquired, together with all additions, replacements, accessions, products, and proceeds in any form thereof.

(b)           “Debtor” means Premier Packaging Corporation and its successors, legal representatives, and assigns.

(c)           “Liabilities” mean all indebtedness, liabilities, and obligations of every kind or nature, whether absolute or contingent, primary or secondary, direct or indirect, joint or several, and whether heretofore or hereafter created, arising, or existing or at any time due and owing from Grantor and/or Debtor to Bank (including without limitation all obligations and liabilities of the Grantor and/or Debtor under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangement with the Bank designed to protect the Grantor and/or Debtor against fluctuations in interest rates or currency exchange rates, (ii) guarantees, and all sums expended by the Bank for protection of its interests such as payments made for taxes, insurance, and expenses of collection).

(d)           “Credit Facility Agreement” means the Credit Facility Agreement between the Bank and Borrower, dated on even date herewith, as the same may be modified, extended, or replaced from time to time.

2.           SECURITY INTEREST.  The Grantor hereby grants to the Bank a security interest in the Collateral to secure the payment and performance of the Liabilities.  This security interest is specifically intended to be a continuing interest and shall cover Collateral in which the Grantor acquires an interest after the date of this Agreement as well as Collateral in which the Grantor now has an interest.  This security interest shall continue until terminated as described in this Agreement even if all Liabilities are paid in full from time to time.  The Bank shall have the right to apply the Collateral and any proceeds therefrom to all or any part of the Liabilities as and in the order the Bank may elect, whether such Liabilities are otherwise secured.  Without limiting the generality of the foregoing, the Bank shall have a first priority security interest on all business assets of the Debtor and a first priority security interest on the equipment listed on Schedule B hereto.

3.           LOCATIONS OF GRANTOR AND COLLATERAL.  The principal office of the Grantor is at the address shown in the preamble to this Agreement.  All locations at which the Collateral will be kept or at which the Grantor does business are indicated on Schedule A attached to and made a part of this Agreement.  Grantor will notify the Bank immediately of any new or changed locations at which any of the Collateral is kept or where the Grantor does business, and of any change in the name of the Grantor.  At the request of Bank, the Grantor will provide disclaimers of interest and removal agreements, in form satisfactory to the Bank, signed by all parties other than Grantor having an interest in premises at which any Collateral is located.

4.           GRANTOR’S REPRESENTATION.  Except for the security interest granted hereby and as otherwise allowed by the Credit Facility Agreement, (i) Grantor is the owner of the Collateral free from all liens, encumbrances, and security interests, (ii) Grantor will not sell or transfer the Collateral or any interest (including, without limitation, a security interest) therein without the prior written consent of the Bank except for sales in the ordinary course of business for fair value, sales of obsolete equipment, and transfers of assets that do not constitute a material portion of its assets for a fair consideration, and (iii) Grantor will defend the Collateral against the claims and demands of all persons (except for those persons who have a claim or lien permitted under the Credit Facility Agreement), and will cause the immediate removal and termination of any levy, execution, judgment or other lien, or similar claim of third persons to the Collateral (except for those persons who have a claim or lien permitted under the Credit Facility Agreement).

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5.           PERFECTION OF SECURITY INTEREST.  Grantor will execute and deliver to the Bank such financing statements, security agreements, assignments, and other documents as Bank may at any time reasonably request that are required to perfect or protect the security interest granted hereby.  Grantor hereby authorizes the Bank to execute and file financing statements with or without the signature of the Grantor from time to time as the Bank may deem necessary or desirable.  If the Collateral is a motor vehicle required to be titled under applicable law, Grantor warrants that the Bank’s security interest will be recorded on the title certificates covering the Collateral and will deliver such certificates or other evidence of ownership to the Bank, as the Bank requests.  Grantor hereby appoints Bank as its attorney in fact to execute and deliver notices of lien, financing statements, assignments, and any other documents, notices, and agreements necessary for the perfection of Bank’s security interests in the Collateral.  Grantor agrees to pay the costs of filing or perfection of the Bank’s security interests and searches of the public records necessary to confirm perfection and relative priority of Bank’s security interests.

6.           USE OF COLLATERAL/MAINTENANCE. The Grantor will keep the Collateral in good order and repair except for normal wear and tear in the ordinary course of business.  The Grantor will not use the Collateral in violation of law or any policy of insurance thereon.  The Bank or its nominees may inspect the Collateral and the Grantor’s records regarding the same at any reasonable time, wherever located, and may make extracts therefrom and copies thereof.

7.           TAXES.  The Grantor will pay promptly, when due, all taxes and assessments upon the Collateral or its use or operation, or upon this Agreement.

8.           INSURANCE.  The Grantor at all times will keep the Collateral insured in such amounts, with such insurance companies chosen by the Grantor, and against such risks, all as are reasonably satisfactory to the Bank.  All insurance policies shall name the Bank as additional insured/loss payee and shall provide for losses covered thereby to be payable to the Bank and the Grantor as their respective interests may appear.  All policies of insurance shall provide for not less than thirty (30) days’ prior notice of cancellation to the Bank.  The Grantor will deliver evidence required insurance to the Bank upon its request and in any event at least annually.

After any Event of Default hereunder, the Bank may, but need not, (i) cancel, in accordance with applicable law, any insurance contract covering the Collateral or its ownership or operation, (ii) demand and receive any return premiums, unearned premium refunds and dividends payable in respect thereof (the Grantor hereby irrevocably designating, constituting and appointing the Bank as its true and lawful attorney in fact so to do) and (iii) apply any and all sums received by the Bank as a result of such cancellation, after deducting therefrom any and all expenses incident thereto, toward payment of the Liabilities.

The Grantor will notify insurer and the Bank in the event of any loss, damage, or other casualty affecting a material portion of the Collateral.  The Grantor hereby assigns to the Bank any and all monies which may become due and payable under any policy insuring the Collateral, directs any such insurance company to make payments directly to the Bank, and authorizes the Bank to apply such monies in payment on account of the Liabilities, whether or not due, and to remit any surplus to the Grantor; provided, however, that the Bank will make available to the Grantor such insurance proceeds to repair or replace the Collateral provided that no Event of Default has occurred and that the Grantor has provided evidence satisfactory to the Bank that such proceeds together with any necessary additional funds from sources acceptable to the Bank are available for such repair or replacement and that such repair or replacement can be accomplished within a reasonable period of time and without unreasonable disruption of the Grantor’s business or operations beyond any period covered by business interruption insurance.  After an Event of Default, the Grantor hereby irrevocably appoints the Bank as its attorney in fact, with full power of substitution, to (i) make and adjust claims, (ii) receive all proceeds and payments including the return of unearned premiums, (iii) execute proofs of claim, (iv) endorse drafts and other instruments for the payment of money, (v) execute releases, (vi) negotiate settlements, (vii) cancel any insurance referred to in this Agreement, and (viii) do all other things necessary and required to effect a settlement under or to realize the benefits of any insurance policy.

3

9.           PROTECTION OF BANK’S INTEREST.  Seven or more days after the day the Bank mails the Grantor notice, upon failure of the Grantor to (i) remove liens or interests prohibited by Section 4 of this Agreement, (ii) comply with obligations to maintain Collateral pursuant to Section 6 of this Agreement, (iii) pay taxes or assessments as required by Section 7 of this Agreement, or (iv) provide evidence satisfactory to the Bank of insurance as required by Section 8 of this Agreement, the Bank in its discretion may discharge any such liens or interests, pay taxes or assessments, and obtain insurance coverage on the Collateral.  The Bank also may pay any costs of perfection and searches pursuant to Section 5 of this Agreement.  The Grantor agrees to reimburse the Bank on demand for any and all expenditures so made, and until paid the amount thereof also shall be part of the Liabilities secured by the Collateral.  The Bank shall have no obligation to the Grantor to make any such expenditures nor shall the making thereof relieve any default hereunder.

10.         GRANTOR’S COVENANTS.  So long as this Agreement remains in effect the Grantor will: (i) furnish the Bank at such intervals as the Bank may reasonably prescribe with a certificate (in such form as the Bank may from time to time specify) containing such information with respect to the Collateral as the Bank may reasonably require, including, without limitation, inventory listings and account agings; and  (ii) keep accurate and complete records of the Collateral in accordance with generally accepted accounting principles consistently applied.

If requested by the Bank, the Grantor will also: (a) mark its records evidencing the Collateral in a manner satisfactory to the Bank so as to indicate the security interest of the Bank hereunder; (b) following an Event of Default deliver to the Bank to hold pursuant hereto any chattel paper, instruments, or other documents representing or relating to any of the Collateral; (c) promptly reflect in its books, records, and reports to the Bank any claims made in regard to any Collateral; (d) immediately notify the Bank if any of the Collateral arises out of contracts for the improvement of real property, deals with a public improvement or is with the United States, any state, or any department, agency or instrumentality thereof, and execute any instruments and take an steps required by the Bank in order that all moneys due or to become due under any such contract shall be assigned to the Bank and notice thereof be given as required by law; and (e) fully cooperate with the Bank in the exercising of its rights and methods for verification of the Collateral.

11.         DEFAULT.  The following events or conditions shall be an “Event of Default” under this Agreement: (a) any Event of Default under the Credit Facility Agreement or (b) loss, theft, material damage or destruction of a material portion of the Collateral which is not covered by insurance.

4

12.         REMEDIES.  Upon the occurrence of an Event of Default, the Bank may declare all of the Liabilities to be immediately due and payable and the Bank shall have the rights and remedies of a secured party under the Uniform Commercial Code of the State of New York as amended from time to time in any jurisdiction where enforcement of this Agreement is sought, in addition to all other rights and remedies at law or in equity.  Among other remedies, the Bank may take immediate possession of the Collateral and for that purpose the Bank may, so far as the Grantor can give authority therefor, enter upon any premises on which the Collateral or any part thereof may be situated and secure or remove the same therefrom. Upon request of the Bank, the Grantor will assemble and make the Collateral available to the Bank, at a reasonable place and time designated by the Bank.  The Grantor’s failure to take possession of any Collateral in possession or under control of the Bank at any time and place reasonably specified by the Bank in writing to the Grantor shall constitute an abandonment of such property.  The Grantor agrees that notice of the time and place of public sale of any of the Collateral or of the time after which any private sale thereof is to be made or of other disposition of the Collateral shall be deemed reasonable notice seven days after such notice is deposited in the mail or otherwise delivered to the Grantor at the address shown in the preamble of this Agreement.

In addition to its other rights, following an Event of Default the Bank may but shall not be obligated to notify any parties which are obligated to pay the Grantor any Collateral or proceeds thereof, to make all payments directly to the Bank.  The Grantor authorizes such parties to make such payments directly to the Bank and to rely on notice from the Bank without further inquiry.  The Bank may demand and take all necessary or desirable steps to collect such Collateral in either its or the Grantor’s, name, with the right to enforce, compromise, settle, or discharge any of the foregoing.  The Bank may endorse the Grantor’s name on any checks, commercial paper, instruments, and the like pertaining to the foregoing.

The Bank shall not be responsible to the Grantor for loss or damage resulting from the Bank’s failure to enforce or collect any Collateral or any monies due or to become due under any Liability of the Grantor to the Bank.  The Bank shall have no obligation to take, and the Grantor shall have the sole responsibility for taking, any and all steps to preserve rights against any and all prior parties to any Collateral, whether or not in the Bank’s possession.

After an Event of Default, the Grantor (i) will make no change in any account (or the contract underlying such account), chattel paper, or general intangible, and (ii) shall receive as the sole property of the Bank and hold in trust for the Bank all monies, checks, notes, drafts, and other property (collectively called “items of payment”) representing the proceeds of any Collateral.  After an Event of Default, the Bank may but shall be under no obligation to: (a) notify all appropriate parties that the Collateral, or any part thereof, has been assigned to the Bank; (b) collect any or all accounts, chattel paper or general intangibles in its or the Grantor’s name, and apply any such collections against such Liabilities as the Bank may select; (c) take control of any cash or non-cash proceeds of any item of the Collateral; (d) compromise, extend or renew any account, chattel paper, general intangible, or document, or deal with the same as it may deem advisable; and (e) make exchanges, substitutions or surrender of items comprising the Collateral.

The rights of the Bank are cumulative, and the Bank may enforce its rights under this Agreement irrespective of any other collateral, guaranty, right, or remedy it may have.  The exercise of all or a part of its rights or remedies hereunder shall not prevent the Bank from exercising at the same or any other time any other right or remedy with respect to the Liabilities.  The Grantor authorizes the Bank in its sole discretion to direct the order or manner of the disposition of the Collateral.

5

From the proceeds realized from the Collateral the Bank shall be entitled to retain all sums secured hereby as well as their reasonable expenses of collection including without limitation those of retaking, holding, safeguarding, accounting for, preparing for sale, selling, and reasonable attorneys’ fees and legal expenses.  If the proceeds realized from the Collateral are not sufficient to defray said expenses and to satisfy the balance due on the Liabilities, the Grantor shall remain liable for such expenses.  Any payments or proceeds from realization on the Collateral may be applied to the Liabilities in whatever order or manner the Bank elect.

13.         CONTINUING AGREEMENT, TERMINATION.  This is a continuing Agreement, and no notice of the creation or existence of the Liabilities, renewal, extension or modification thereof need be given to the Grantor.  This Agreement may be terminated only (i) by a written agreement of the Bank, or (ii) upon written request of the Grantor at such time as the Liabilities have been satisfied in full and the Bank has no remaining commitments to Debtor of any kind.

14.         NO WAIVER.  The Grantor agrees that no representation, promise, or agreement made by the Bank or by any officer or employee of the Bank, at, prior, or subsequent to the execution and delivery of this Agreement shall modify, alter, limit, or otherwise abridge the rights and remedies of the Bank hereunder unless agreed by the Bank in writing.  None of the rights and remedies of the Bank hereunder shall be modified, altered, limited, or otherwise abridged or waived by any representation, promise, or agreement hereafter made or by any course of conduct hereafter pursued by the Bank.  No delay or omission on the part of the Bank in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Agreement, and waiver of any right shall not be deemed waiver of any other right unless expressly agreed by the Bank in writing.

15.         CONFLICT WITH CREDIT FACILITY AGREEMENT.  If any provision hereof expressly conflicts with any specific provision of the Credit Facility Agreement, the terms of the Credit Facility Agreement shall be controlling.

16.         LAWS.  The validity, construction, and performance of this Agreement shall be governed by the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

17.         PARTIES IN INTEREST.  All of the terms and provisions of this Agreement shall inure to the benefit of, be binding upon and be enforceable by the respective legal representatives, successors, and assigns of the parties hereto.

18.         SEVERABILITY.  Any partial invalidity of the provisions of this Agreement shall not invalidate the remaining portions hereof or thereof.

19.         WAIVER.  The Grantor hereby expressly waives demand, presentment, protest, or notice of dishonor on any and all of the Liabilities and with respect to the Collateral.

6

IN WITNESS WHEREOF, the Grantor has caused this Agreement to be executed by its duly authorized officer as of the date first set forth above

PREMIER PACKAGING CORPORATION	DOCUMENT SECURITY SYSTEMS, INC.
By:______________________________	By:________________________
Name: Title:	Name:  Patrick White Title:    President
SECUPRINT, INC.	PLASTIC PRINTING PROFESSIONALS, INC.
By:________________________
Name:   Patrick White	By:________________________
Title:     President	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 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

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  ______________________________, 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

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ACKNOWLEDGED BY:

RBS CITIZENS, N.A.

By:
	Jeffrey R. Morse, Assistant Vice 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

8

EX-10.8

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

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EX-10.9

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.

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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.

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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.

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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.

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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:

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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.

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(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]

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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: _______________________

EX-99.1

Document Security Systems, Inc. Makes Strategic Acquisition

of Premier Packaging Corporation

Acquisition increases DSS annual sales revenue to $17 million and allows Company to offer complete line of secure packaging containing DSS anti-counterfeiting technologies to multi-billion dollar marketplace

ROCHESTER, N.Y., Feb. 17  — Document Security Systems, Inc. (NYSE/AMEX: DMC) ("DSS") a world leader in the development, design and manufacturing of secure identification and authentication technologies for documents, packaging, labels, ID cards and electronic data and assists in the prevention of counterfeiting and brand fraud, announced today that it had acquired Premier Packaging Corporation ("Premier"), a privately held Victor, N.Y.-based provider of high quality packaging solutions.

Premier Packaging Corporation is an ISO 9001:2008 registered manufacturer of custom paperboard packaging serving clients in the pharmaceutical, beverage, photo packaging, toy, specialty foods and direct marketing industries, among others. An early innovator of upscale photo packaging, Premier has expanded their product offerings to include everything from basic mailers and sleeves to folding cartons and complex 3-dimensional solutions. Since 1989, Premier has been providing their customers with a complete range of products and services that include package design, prototyping, manufacturing, inventory management programs and more.  

Robert Fagenson, DSS Chairman, commented: "The addition of Premier Packaging to the DSS family of companies is a major event for DSS for a variety of reasons.  On a non-audited pro-forma basis, the combined companies showed 2009 sales of over $17 million, which significantly increases the size of DSS.  We have worked together previously on a number of sales where our ability to offer customers the combination of printing, packaging and our proprietary anti-counterfeiting/security technology has proven very effective.  The DSS Board has elected Premier's owner and CEO, Robert 'Bob' Bzdick to the offices of President and COO of DSS while he will also retain the position of CEO of Premier.  Bob is a seasoned, successful and respected member of the Rochester business community and will provide valuable additional depth and experience to our management team."

Pat White, DSS CEO added: "In the traditional packaging world, the word 'Security' has mainly meant 'tamper proof' packaging.  Based on our market research this acquisition gives DSS the ability to give a whole new meaning to 'Packaging Security' as we have created the world's first and largest packaging manufacturing company which utilizes Document Security Systems anti-counterfeiting optical deterrent technologies.  In addition, I have known Bob Bzdick for quite some time and I have been excited about the prospect of combining our companies.  I was also pleased that our Board agreed that the strategic and financial benefits of this transaction were too exciting to pass up.  Having Bob as our President and COO is an added bonus that goes beyond the quantifiable financial benefits.  I look forward to working with Bob as we continue to grow our new unique combined company."

Premier Packaging Corporation, has 32 employees and operates from a 40,000 square foot plant located in Victor, New York, is approximately 17 miles from the DSS headquarters and has been serving a diverse customer base for over 20 years.  In 2009, Premier reported $6.9 million in sales and approximately $530,000 in profit.  The Company expects that savings from redundant printing and binding costs, along with additional cost savings, will result in at least an additional $400,000 per year of net profit from the acquisition, and that the acquisition of Premier will be accretive to combined earnings of the Company in 2010.  

Bob Bzdick, new President and COO of DSS stated: "The opportunities presented with this merger are substantial.  The ability to bring to the consumer packaging market the technologies that DSS has developed is extremely exciting.  I look forward to working with the talented team at DSS and its affiliated companies as well as the great team that I have had the privilege to work with at Premier Packaging over the last 20 years."

For more information on Premier Packaging, visit www.premiercustompkg.com.  

For a video tour of Premier's plant and demonstrations of their automated inserting capabilities visit: http://www.premiercustompkg.com/tour.html

About Document Security Systems, Inc.

Document Security Systems is a world leader in the development and manufacturing 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's patented and patent-pending technologies protect valuable documents and printed products from counterfeiters and identity thieves. Document Security Systems' 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. Document Security Systems' strategy is to become the world's leading producer of cutting-edge security technologies for paper, plastic and electronically generated printed assets.

More information about Document Security Systems, Inc. and its products and services can be found by visiting the following: www.documentsecurity.com, www.protectedpaper.com, www.plasticprintingprofessionals.com and www.dpirochester.com.  

Safe Harbor Statement

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.

For information contact:

Contact: Jody Janson

Company: Document Security Systems, Inc.

Title: Shareholder Relations

Voice: 585-232-5440

Email: ir@documentsecurity.com