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Document Security Systems, Inc. And Lexington Technology Group, Inc. Sign Definitive Merger Agreement

Exceptional Experience on Post-Merger Management Team and Board

Following the completion of the merger, the combined company will be led by a premier management team with a proven track record of technological innovation and maximizing the value of intellectual property assets, including:

CEO Will Rosellini — Before joining Lexington Technology Group, Rosellini was CEO of MicroTransponder, Inc. a development stage medical device company, and scientific advisor for the patent monetization firm IP Navigation Group (IPNav). He was named a 2010 Entrepreneur of the Year, a 2011 Tech Titan and is a 2012 finalist for the O'Donnell Award given by the Academy of Medicine, Engineering and Science. Previously, he played professional baseball for the Arizona Diamondbacks.

CIO Peter Hardigan — Currently Chief Operating Officer at Lexington Technology Group, Hardigan will become DSS's chief investment officer. Previously, he served as CFO and head of investment management at IPNav, where he was responsible for financial assessment of all IPNav portfolio acquisitions, and aided activist investors in the bid for control of AOL and in other high-value IP transactions. Prior to IPNav, he was a principal in charge of IP transactions at Charles River Associates in New York and Frankfurt, where he represented a range of Fortune 500 Companies and institutional investors involved in IP monetization, including the management of a €100 million EU patent investment fund.

CTO Tom Bascom — The inventor of the pivotal LinkSpace technology, Bascom will serve as chief technology officer of Bascom Research.

Following the merger, the DSS board of directors will possess expertise in finance, technology and value extraction, and a particular focus on startups and fast-growth companies. Members of the board will include CEO Will Rosellini, CIO Peter Hardigan and:

Warren Hurwitz In 2005, Hurwitz co-founded Altitude Capital Partners, a private investment fund focused on investing in, enforcing and protecting the rights of intellectual property assets. He managed Altitude's key investment portfolio companies, including: Visto, Saxon, DeepNines, MercExchange, Digitude and Software Rights Archive. Prior to co-founding Altitude Capital Partners, Hurwitz was a Sr. Vice President at HSBC Capital ( USA), the U.S. Private Equity arm of HSBC Group.  

Jeff Ronaldi — Ronaldi has 25 years of experience driving revenues, market growth, and profitability for start-up and high-growth companies such as Turtle Bay Technologies, SPX Corporation, XO Communications and Verizon. As CEO of Turtle Bay, Jeff was responsible for defining overall strategy for the company and managing the company's approximate $50 million investment in various patent portfolios.

Robert Fagenson — Fagenson, current Chairman of DSS, is also Chairman of National Holdings, parent of broker-dealer national securities, with more than 700 registered representatives around the United States and overseas. Fagenson's career at the New York Stock Exchange began in 1973. He served as a Governor on the trading floor and served for eight years on the NYSE Board of Directors, and as Vice Chairman in 1998 and 1999.

Robert BzdickPresident and chief operating officer of DSS, Bzdick joined the company in 2010 following the company's acquisition of Premier Packaging Corp., where he served as CEO. As COO, Bob uses his 29 years of experience in manufacturing operations management to integrate and strengthen DSS's three production divisions to service DSS's growing worldwide, Fortune 1000 customer-base.

Ira Greenstein An independent director of DSS since 2004, Greenstein is president of IDT Corp., a provider of wholesale and retail telecommunication services. He was previously a partner at the law firm Morrison & Foerster and general counsel of Net2Phone Inc.

David Klein – Since 2009, Klein has served as senior vice president and treasurer of Constellation Brands, Inc. From 2004 to 2009, he served in the capacities of vice president, business development and chief financial officer of Constellation Europe, for Constellation Brands. In his current role, Klein is responsible for the quantitative management of risk, improving company-wide cash flow generation and the management of capital structure. Before joining Constellation Brands, he was chief financial officer at Montana Mills Bread Co.

Details on the Merger Agreement

Pursuant to the terms of the Merger Agreement, a wholly-owned subsidiary of DSS will merge with and into Lexington Technology Group, with Lexington Technology Group being the surviving corporation as a wholly-owned subsidiary of DSS through an exchange of capital stock of Lexington Technology Group for capital stock and warrants of DSS. Upon completion of the merger and subject to the Beneficial Ownership Condition (as defined below), each share of then-issued and outstanding Lexington Technology Group Common Stock and Series A Convertible Preferred Stock will be automatically converted into (i) the right to receive shares of DSS Common Stock, (ii) five-year warrants to purchase DSS Common Stock at an exercise price of $4.80 per share, (iii) shares of DSS Common Stock to be held in escrow and to be released upon the achievement of certain milestones and, as applicable, shares of DSS's Series A Convertible Preferred Stock, determined by multiplying each of (x) 17,250,000 plus (i) the number of additional shares of DSS Common Stock calculated by dividing any cash held by Lexington Technology Group at closing in excess of $7,500,000 (up to $1,500,000) by $3.00 and (ii) the number of shares of DSS held by Lexington Technology Group prior to closing, (y) 4,859,894, and (z) 7,100,000 by a fraction, the numerator of which shall be one and the denominator of which shall be the sum of (A) the number of shares of Lexington Technology Group Common Stock plus (B) the number of Lexington Technology Group Preferred Stock, in each case issued and outstanding immediately prior to the effective time. 

Upon the consummation of the merger, only the holders of Lexington Technology Group Preferred Stock who would, after giving effect to the merger and receipt of the merger consideration, beneficially own more than 9.99% of DSS Common Stock (the "Beneficial Ownership Condition") shall receive for each share of Lexington Technology Group Preferred Stock they hold the same merger consideration as outlined above except that such holders shall receive a combination of DSS Common Stock and DSS Preferred Stock that is convertible into (or if the proposal to authorize DSS Preferred Stock is not approved, $.02 Warrants exercisable for) that number of shares of DSS Common Stock they would have received if they had been a holder of Lexington Technology Group Common Stock immediately prior to the Effective Time in such amounts that would enable such holders, after giving effect to the merger, to beneficially own no more than 9.99% of DSS Common Stock upon consummation of the Merger. Each $.02 Warrant shall have an exercise price of $.02 per share and will be exercisable at any time after the date of issuance for a period of ten years.  The DSS Preferred Stock will have the powers, preferences and privileges and other rights as will be set forth in a Certificate of Amendment to the Certificate of Incorporation of DSS to be filed immediately following the closing of the merger. 

Immediately following the completion of the merger, the former stockholders of Lexington Technology Group are expected to own approximately 55% of the outstanding common stock of the combined company (on a fully-diluted basis) and the current stockholders of DSS are expected to own approximately 45% of the outstanding common stock of the combined company (on a fully-diluted basis) (without taking into account any shares of DSS Common Stock held by Lexington Technology Group's stockholders prior to the completion of the merger).

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