____________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 23, 2015
DOCUMENT SECURITY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
| New York | 001-32146 | 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
______________________________________________________________
(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 1.01 Entry into a Material Definitive Agreement.
As previously reported, on May 24, 2013, Document Security Systems, Inc. (the “Company”) entered into a Promissory Note (the “CNE Note”) with Congregation Noam Elimelech (the “Lender”), in the principal sum of $850,000. The CNE Note was amended on May 2, 2014 to extend its maturity date to May 24, 2015 (the “Maturity Date”).
On February 23, 2015, the Company entered into Promissory Note Amendment No. 2 (the “CNE Note Amendment”) with Lender amending the CNE Note (i) to extend the Maturity Date to May 31, 2016 (the “Extended Maturity Date”), and (ii) to institute principal payments in the amount of $15,000 per month plus interest through the Extended Maturity Date, and a balloon payment of $610,000 due on the Extended Maturity Date. All the other terms and conditions of the CNE Note will remain effective and in force through the Extended Maturity Date. The Lender is neither an affiliate of, nor a related party to, the Company.
In consideration of Lender’s agreement to enter into the CNE Note Amendment, the Company has agreed to issue Lender 60,000 shares of its common stock.
The forgoing description is a summary only, does not purport to set forth the complete terms of the CNE Note Amendment, and is qualified in its entirety by reference to the CNE Note Amendment filed as Exhibit 10.1 to this Current Report on Form 8-K.
Also as previously reported, on December 30, 2011, the Company entered into a Convertible Promissory Note (the “Laufer Note”) with Mayer Laufer (“Laufer”), in the principal sum of $575,000. The Laufer Note was amended on May 24, 2013 to extend its maturity date to December 30, 2015 (the “Laufer Note Maturity Date”).
On February 23, 2015, the Company entered into Convertible Promissory Note Amendment No. 2 (the “Laufer Note Amendment”) with Laufer amending the Laufer Note (i) to extend the Laufer Note Maturity Date to December 30, 2016 (the “Extended Laufer Note Maturity Date”), (ii) to institute principal payments in the amount of $15,000 per month plus interest through the Extended Laufer Note Maturity Date, and a balloon payment of $230,000 due on the Extended Laufer Note Maturity Date, and (iii) to delete Laufer’s conversion rights, in their entirety, under the Laufer Note. All other terms and conditions of the Laufer Note will remain effective and in force through the Extended Laufer Note Maturity Date. Laufer is neither an affiliate of, nor a related party to, the Company.
In consideration of Laufer’s agreement to enter into the Laufer Note Amendment, the Company has agreed to issue Laufer 40,000 shares of its common stock.
The foregoing description is a summary only, does not purport to set forth the complete terms of the Laufer Note Amendment, and is qualified in its entirety by reference to the Laufer Note Amendment filed as Exhibit 10.2 to this Current Report on Form 8-K.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant.
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The 100,000 shares of common stock issued in connection with and as partial consideration for the CNE Note Amendment and the Laufer Note Amendment discussed in Item 1.01 above were issued in private transactions pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| 10.1 | Promissory Note Amendment No. 2 between Document Security Systems, Inc. and Congregation Noam Elimelech dated February 23, 2015. |
| 10.2 | Convertible Promissory Note Amendment No. 2 between Document Security Systems, Inc. and Mayer Laufer dated February 23, 2015. |
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 26, 2015. | By: |
/s/ Jeffrey Ronaldi
| ||
| Jeffrey Ronaldi | ||||
| Chief Executive Officer | ||||
Exhibit Index
| Exhibit No. | Description |
| 10.1 | Promissory Note Amendment No. 2 between Document Security Systems, Inc. and Congregation Noam Elimelech dated February 23, 2015. |
| 10.2 | Convertible Promissory Note Amendment No. 2 between Document Security Systems, Inc. and Mayer Laufer dated February 23, 2015. |
Exhibit 10.1
PROMISSORY NOTE AMENDMENT No. 2
This PROMISSORY NOTE AMENDMENT NO. 2 (the “Amendment”) is made as of February 23, 2015 (the “Amendment Date”) by and between DOCUMENT SECURITY SYSTEMS, INC. (the “Borrower”), a corporation formed under the laws of the State of New York, with offices at 28 East Main Street, Suite 1525, Rochester, New York 14614 and CONGREGATION NOAM ELIMELECH (the “Lender”).
This Amendment amends the Promissory Note (“Note”), dated May 24, 2013, made among Borrower and Lender, as follows. All capitalized terms used herein without definition shall have the meanings ascribed to them in the Note.
The parties agree as follows:
1. Section 1 of the Note shall be, and hereby is, amended to read in its entirety as follows:
| “1. | Maturity. The aggregate outstanding Principal Amount, together with all accrued interest thereon and expenses incurred by the Lender in connection herewith (cumulatively, the “Outstanding Amount”), shall be due and payable in full on the earliest to occur of (the earliest of such events being the “Maturity Date”): (i) May 31, 2016 (the “Scheduled Maturity Date”) and (ii) the acceleration of this Note upon the occurrence of an Event of Default.” |
2. Section 2 of the Note shall be, and hereby is, amended to read in its entirety as follows:
| “2. | Principal and Interest. Borrower shall make principal payments in the amount of $15,000 per month until the Maturity Date, at which time a balloon payment of $610,000 of principal will become due and payable. In addition to the monthly principal payments, Borrower shall make monthly interest payments which shall accrue on the then outstanding balance of the Principal Amount at a fixed interest rate equal to 9% per annum. Accrued interest shall be payable in cash in arrears on the last day of each calendar month commencing on February 28, 2015, until the Principal Amount is paid in full. If at any time the outstanding Principal Amount shall be paid in full, then all accrued interest shall be payable at the time of such principal payment.” |
3. Note Ratified. Except as expressly amended hereby, the Note is in all respects ratified and confirmed, and all of the terms, provisions and conditions thereof shall be and remain in full force and effect, and this Amendment and all of its terms, provisions and conditions shall be deemed to be a part of the Note.
4. No Events of Default. The Borrower confirms that, as of the date hereof, there exists no condition or event that constitutes (or that would after expiration of applicable grace or cure periods constitute) an Event of Default.
5. Costs and Expenses. Borrower agrees to pay any and all reasonable costs incurred in connection with preparation for closing, the closing, and post-closing items relating to this Amendment.
6. Governing Law. This Amendment, together with all of the rights and obligations of the parties hereto, shall be construed and interpreted in accordance with the laws of the State of New York, excluding the laws applicable to conflicts or choice of law.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives by their signatures below.
CONGREGATION NOAM ELIMELECH (Lender)
/s/ Mayer Laufer
_______________________________
By: Mayer Laufer
Title: President
DOCUMENT SECURITY SYSTEMS, INC. (Borrower)
/s/ Philip Jones
_______________________________
By: Philip Jones
Title: Chief Financial Officer
Exhibit 10.2
CONVERTIBLE PROMISSORY NOTE AMENDMENT No. 2
This CONVERTIBLE PROMISSORY NOTE AMENDMENT NO. 2 (the “Amendment”) is made as of February 23, 2015 (the “Amendment Date”) by and between DOCUMENT SECURITY SYSTEMS, INC. (“Borrower”), a corporation formed under the laws of the State of New York, with offices at 28 East Main Street, Suite 1525, Rochester, New York 14614 and MAYER LAUFER (“Lender”).
This Amendment amends the Convertible Promissory Note (“Note”), dated December 30, 2011, made among Borrower and Lender, as follows. All capitalized terms used herein without definition shall have the meanings ascribed to them in the Note.
The parties agree as follows:
1. Section 1 of the Note shall be, and hereby is, amended to read in its entirety as follows:
| “1. | Maturity. The aggregate outstanding Principal Amount, together with all accrued interest thereon and expenses incurred by the Lender in connection herewith (cumulatively, the “Outstanding Amount”), shall be due and payable in full on the earliest to occur of (the earliest of such events being the “Maturity Date”): (i) December 30, 2016 (the “Scheduled Maturity Date”) and (ii) the acceleration of this Note upon the occurrence of an Event of Default.” |
2. Section 2 of the Note shall be, and hereby is, amended to read in its entirety as follows:
| “2. | Principal and Interest. Borrower shall make principal payments in the amount of $15,000 per month until the Maturity Date, at which time a balloon payment of $230,000 of principal will become due and payable. In addition to the monthly principal payments, Borrower shall make monthly interest payments which shall accrue on the then outstanding balance of the Principal Amount at a fixed interest rate equal to 10% per annum. Accrued interest shall be payable in cash in arrears on the last day of each calendar month commencing on February 28, 2015, until the Principal Amount is paid in full. If at any time the outstanding Principal Amount shall be paid in full, then all accrued interest shall be payable at the time of such principal payment.” |
3. Section 3 of the Note, entitled “Conversion”, shall be deleted in its entirety from the Note.
4. Note Ratified. Except as expressly amended hereby, the Note is in all respects ratified and confirmed, and all of the terms, provisions and conditions thereof shall be and remain in full force and effect, and this Amendment and all of its terms, provisions and conditions shall be deemed to be a part of the Note.
5. No Events of Default. The Borrower confirms that, as of the date hereof, there exists no condition or event that constitutes (or that would after expiration of applicable grace or cure periods constitute) an Event of Default.
6. Costs and Expenses. Borrower agrees to pay any and all reasonable costs incurred in connection with preparation for closing, the closing, and post-closing items relating to this Amendment.
7. Governing Law. This Amendment, together with all of the rights and obligations of the parties hereto, shall be construed and interpreted in accordance with the laws of the State of New York, excluding the laws applicable to conflicts or choice of law.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives by their signatures below.
LENDER
/s/ Mayer Laufer
_______________________________
Mayer Laufer
DOCUMENT SECURITY SYSTEMS, INC. (Borrower)
/s/ Philip Jones
By: _______________________________
Name: Philip Jones
Title: Chief Financial Officer