Item
8.01 Other Events.
Effective December 18, 2020,
Document Security Systems, Inc.’s wholly-owned subsidiary Impact BioMedical Inc. (the “Company”) entered into
an exclusive distribution agreement (the “Distribution Agreement”) with BioMed Technologies Asia Pacific Holdings
Limited (“BioMed”), a limited liability company incorporated in the British Virgin Islands focused on manufacturing
natural probiotics, pursuant to which the Company will directly market, advertise, promote, distribute and sell certain BioMed
products to resellers. The products to be distributed by the Company include BioMed’s PGut Premium ProbioticsTM,
PGut Allergy ProbioticsTM, PGut SupremeSlim ProbioticsTM, PGut Kids ProbioticsTM, and PGut Baby
ProbioticsTM.
Under
the terms of the Distribution Agreement, the Company will have exclusive rights to distribute the products within the United States,
Canada, Singapore, Malaysia, and South Korea and non-exclusive distribution rights in all other countries. In exchange, the Company
agreed to certain obligations, including mutual marketing obligations to promote sales of the products.
The
Distribution Agreement has an initial term of ten years and may be terminated by the Company at its option, at any time, and for
any reason, or by BioMed for an uncured material breach or if the other party becomes bankrupt or insolvent.
In
connection with the Distribution Agreement, the Company also entered into a subscription agreement with BioMed (the “Subscription
Agreement”), pursuant to which the Company agreed to purchase 525 ordinary shares of BioMed (the “Shares”) at
a purchase price of HK$9,333.33 per share for total consideration of HK$4,900,000 (approximately US$630,000).
The
Subscription Agreement provides, among other things, the Company the right to appoint a new director to the board of BioMed. With
respect to an issuance of shares to a third party by BioMed, the Company will have the right of first refusal to purchase such
shares, as well as customary tag-along rights.
The
Distribution Agreement and the Subscription Agreement each contain customary representations, warranties and covenants of the
parties as well as certain indemnification provisions.
The
foregoing description of the Distribution Agreement does not purport to be complete and is qualified in its entirety by reference
to the complete text of the Distribution Agreement, a copy of which is filed as an exhibit to this
report.
A copy of the press release announcing
the terms of the Distribution Agreement and Subscription Agreement is filed as an exhibit to this report.