Exhibit 10.16

 

OPTION AGREEMENT

 

This Option Agreement (the “Agreement”) dated as of March 23, 2012 (“Effective
Date”) is by and between LaserLock Technologies, Inc. a Nevada corporation,
having a principal place of business at 837 Lindy Lane, Bala Cynwyd,
Pennsylvania 19004 (hereinafter referred to as “Vendor”) and Gaming Partners
International Corporation, a Nevada corporation, having a principal place of
business located at 1700 Industrial Road, Las Vegas, Nevada 89102 (“Company”).

 

Recitals

 

A. Vendor has the right to develop, license and commercialize the Technology (as
defined below);

 

B. Company wishes to evaluate the commercial potential of the Technology (the
“Purpose”); and

 

C. Vendor wishes to grant Company a right to evaluate the Technology and an
option to obtain the exclusive right to distribute, market and sell certain
gaming products incorporating the Technology, on the terms and conditions set
out in this Agreement.

 

NOW THERFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties have agreed as follows:

 

1.0DEFINTIONS

 

The following capitalized words and expressions have the following meanings set
forth in this Section, whether used in the singular or plural. Other terms may
be defined in the Agreement and shall have the meanings set forth where defined.

 

(a)“Confidential Information” has the meaning given to that term in the NDA.

 

(b)“Distribution Agreement” has the meaning given to that term in Section 2.5.

 

(c)“Field of Use” means the casino gaming industry.

 

(d)“Intellectual Property” or “IP” means any and all ideas, developments,
discoveries, improvements, drawings, inventions; know-how, trade secrets;
parents, and copyrights (and any pending application for protection therefore
globally); works of authorship, and products, and any modifications to any of
the above, and whether or not patentable, copyrightable, or susceptible to any
other form of legal protection.

 

(e)“Vendor Background IP” means the IP related to U.S. Patent No. 7,939,239
namely “technology relating to illumination sources and subjects having
distinctly matched and mismatched narrow spectral bank” that is owned by or
licensed to Vendor.

 

(f)“Materials” means pigments incorporating the Technology.

 

(g)“NDA” means the Non-Disclosure Agreement dated March 13, 2012, by and between
Vendor and Company.

 

(h)“Notice to Exercise Option” has the meaning given to that term in section
2.5.

 

 

 

 

 

 

 

(i)“Option” has the meaning given to that term in section 2.3.

 

(j)“Option Fee” has the meaning given to that term in section 2.3.

 

(k)“Option Period” means the period commencing on the Effective Date and ending
hundred eighty (180) days after the Effective Date, unless (i) extended by
mutual written agreement of the parties or (ii) terminated earlier in accordance
with section 2.7 or Section 9.

 

(l)“Purpose” has the meaning given to that term in Recital B.

 

(m)“Technology” means (i) any and all Vendor Background IP; and (ii) any and all
modifications, variations, updates, enhancements and improvements thereto that
are made during the Option Period or Negotiation Period.

 

(n)“Territory” means the entire world.

 

2.0GRANT OF OPTION

 

2.1 Company’s Evaluation of Technology. Subject to the terms and conditions of
this Agreement, Vendor hereby grants Company during the Option Period a right to
evaluate the Technology in the Field of Use for the Purpose and to assist
Company in making a decision as to whether or not it wishes to obtain the
exclusive right to sell products in the Field of Use that incorporate the
Technology pursuant to the option granted to it under section 2.3. During the
Option Period, Company shall use commercially reasonable efforts to carry out
the Purpose and shall provide Vendor with quarterly written reports of its
progress and findings.

 

2.2 Materials. Vendor shall provide Materials to Company at a price of $2,000.00
per kilogram to enable Company to use the Technology to carry out the Purpose.

 

2.3 Grant of Option. Subject to the terms and conditions of this Agreement,
Vendor hereby grants Company a personal, exclusive option to obtain an
exclusive, royalty-bearing right to distribute, market and sell products
incorporating the Technology in the Field of Use and Territory for a specific
period of time in accordance with the terms of the Distribution Agreement (the
“Option”).

 

2.4 Option Fee. In consideration of the Option granted herein, Company shall pay
Vendor a non-refundable fee of $10,000 (the “Option Fee”). The Option Fee shall
be (a) paid by wire transfer as directed by Vendor no later than March 30, 2012
and (b) payable against future royalty payments (if any) made by Company to
Vendor.

 

2.5 Exercise of Option: License Agreement. Company may exercise its Option by
executing and delivering to Vendor during the Option Period a written notice
indicating its interest in negotiating the Distribution Agreement (the “Notice
to Exercise Option”), together with a business plan prepared in accordance with
generally accepted business standards, and describing, at a minimum, the
relevant market information and revenue projections, and steps Company proposes
to take to commercially exploit the Technology in the Field of Use and the
Territory. After receipt of the Notice to Exercise Option, the parties shall
promptly begin to negotiate the terms and conditions of the distribution
agreement pursuant to which Company shall have an exclusive, royalty-bearing
right to distribute, market and sell products incorporating the Technology in
the Field of Use and Territory for a specific period of time (the “Distribution
Agreement”). The period of time after company’s exercise of the option during
which negotiations are in progress, but a Distribution Agreement is not yet
executed shall be the “Negotiation Period”.

 

 

 

 

 

The parties shall negotiate the Distribution Agreement in good faith; provided
that the terms and conditions must be acceptable to each party in its reasonable
judgment. Notwithstanding any other terms and conditions, the Distribution
Agreement will provide for the payment of royalties by the Company to Vendor.

 

2.6 Exclusivity. During the Option Period and Negotiation Period, Vendor shall
not enter into negotiations with any other party for the rights (a) to evaluate
the Technology for use in the Field of Use or (b) to otherwise distribute,
market and sell products incorporating the Technology in the Field of Use.

 

2.7 Non-Exercise or Expiry of Option. Company shall inform Vendor in writing no
later than 45 days before the expiration of the Option if Company does not wish
to exercise the Option or wishes to terminate the negotiation of the
Distribution Agreement. The Option Period shall end on the date (if any)
specified in the notice or be deemed to end on the date of receipt by Vendor or
such notice, whichever is earlier. Upon expiry of the Option Period, Company
shall cease use of the Technology and the Materials and shall have no further
right in or to the Technology or the Materials. Vendor may thereafter act
without any restrictions or further obligations to Company with respect to the
Technology in the Field of Use or otherwise.

 

2.8 Rights Retained By Vendor. Nothing in this Agreement shall restrict the
right of Vendor to use and practice the Technology outside the Field of Use in
any way and for any purpose, including commercial purposes, and to grant options
and license to others to do the same.

 

3.0REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of Vendor. Vendor represents and warrants
that as of the Effective Date, Vendor is not aware of, nor has Vendor received
notice of any allegations or claims that the Technology infringes the patent or
other proprietary rights of any third party. If, during the Option Period and if
applicable the Negotiation Period, the Vendor becomes aware of, or has received
notice of, any allegations or claims that the Technology infringe the patent or
other proprietary rights of any third party, the Vendor shall so promptly notify
Company in writing.

 

3.2 Representations and Warranties of Both Parties. Each party hereby represents
and warrants to the other Party that: (a) it is a company or corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction in which it is incorporated; (b) it has the corporate power and
authority and the legal right to enter into this Agreement and perform its
obligations hereunder. It has taken all necessary corporate action on its part
required to authorize the execution and delivery of the Agreement and the
performance of its obligation hereunder. This Agreement has been duly executed
and delivered on behalf of such Party, and constitutes a legal, valid, and
binding obligation of such Party that is enforceable against it in accordance
with its terms; (c) it is not under and will not assume any obligation that
conflicts with its obligations or the rights granted in this agreement.

 

4.0DISCLAIMER OF WARRANTY

 

4.1 Technology Disclaimer. The warranty in section 3.1 is exclusive and in lieu
of all other warranties, and VENDOR IS MAKING NO OTHER WARRANTIES EXPRESS OR
IMPLIED, WITH RESPECT TO THE TECHNOLOGY OR MATERIALS, INCLUDING BUT NOT LIMITED
TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT OR ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE.

 

 

 

 

4.2 Company Due Diligence. Company acknowledges that it has been advised by
Vendor to undertake its own due diligence regarding the Technology and Materials
and has done and will continue to do such due diligence as it considers
necessary and appropriate.

 

4.3 Third Party Claims or Infringement. Except as expressly set out herein,
nothing in this Agreement shall;

 

(a)constitutes a warranty or representation by Vendor as to title to the
Technology or that anything made, used, sold or otherwise disposed of under any
agreement or other right resulting from the Option granted under this Agreement
is or shall be free from claims or allegations of infringement of patents,
copyrights, trade-markets, industrial design or other intellectual property
rights; or

 

(b)imposes an obligation on Vendor to bring or prosecute or defend actions or
suits against third parties for infringement of patents, copyrights,
trade-marks, industrial designs or other intellectual property or contractual
rights.

 

 

5.0INDEMNITY AND LIMITATION OF LIABILITY

 

5.1 Indemnification by Company. Company agrees to indemnify, hold harmless and
defend Vendor, its directors, officers, agents, contractors, subcontractors,
licensees and employees (collectively, the “Indemnified Parties”) against any
and all third party demands, claims, suits, proceedings, actions of any nature
or kind whatsoever (“Claims”) liabilities, damages, judgments, costs, expenses
and fees (including reasonable legal expenses) (“Losses”) arising out of or in
any way associated with this Agreement, including, without limitation, the use
by Company of the Technology or Materials, and any damage, loss, cost or expense
incurred by the Indemnified Parties relating to Claims that the Technology
infringes the patent or other proprietary rights of a third party, to the extent
that such Claims or Losses do not result from the gross negligence or willful
misconduct of any of the Indemnified Parties.

 

5.2 Limitation of Liability. Except for damages or losses arising out of a
breach by Vendor, the total liability of Vendor (or any of the Indemnified
Parties) to Company, whether under the express or implied terms of this
Agreement, in tort (including negligence), contract or otherwise, for Losses
suffered by Company that may arise out of or in any way be associated with this
Agreement shall be limited to the aggregate amount of the Option Fees paid to
Vendor.

 

5.3 Damages. EXCEPT FOR DAMAGES OR LOSSES ARISING OUT OF A BREACH OF SECTION 6,
NEITHER PARTY (INCLUDING THE INDEMNIFIED PARTIES) SHALL BE LIABLE TO THE OTHER
PARTY OR ANY OTHER ENTITY FOR LOST PROFITS, LOST BUSINESS OPPORTUNITIES OR COSTS
OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE OR FOR ANY INDIRECT, SPECIAL
INCIDENTAL OR CONSEQUENTIAL DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, WHETHER FOR BREACH OF WARRANTY, BREACH OF CONTRACT, REPUDIATION OF
CONTRACT, NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

6.0CONFIDENTIALITY

 

6.1 Use of Confidential Information. During the Option Period and Negotiation
Period all Confidential Information disclosed by the Discloser (as defined in
the NDA) in connection with this Agreement shall be subject to, and treated in
accordance with, the NDA.

 

7.0ASSIGNMENT AND ENCUMBRANCE

 

7.1 No Assignment or Encumbrance by Company. Company shall not assign, transfer,
mortgage, pledge, financially encumber, grant a security interest, permit a lien
to be created, charge or otherwise dispose of any or all of the rights granted
to it under this Agreement without the prior written consent of Vendor.

 

7.2 Assignment by Vendor. Vendor shall have the right to assign this Agreement
or any its rights, duties and obligations under this Agreement in connection
with an acquisition of all or substantially all of its assets or operations
without the prior written consent of Company.

 

7.3 Successors and Assigns. Subject to the foregoing, this Agreement shall inure
to the benefit of and be binding upon the parties hereto, and their respective
administrators, successors, and permitted assigns.

 

8.0NOTICES

 

8.1 Any notice, request, demand or other communication (other than payments)
required or permitted hereunder may be sent by United States mail, postage
prepaid, or by facsimile or electronic mail, by overnight courier or messenger,
in each case addressed to the parties at the following addresses, facsimile or
email address or number below, or to such other address or person as the parties
may from time to time designate in writing to the other in accordance with this
Section:

 

If to Vendor: LaserLock Tecnologies, Inc.

837 Lindy Lane

Bala Cynwyd, PA 19004

[Att: Norman A. Gardner, Chairman & CEO]

If to Company: Gaming Partners International Corporation

1700 Industrial Road

Las Vegas, Nevada 89102

[Att: Gregory S. Gronau, President & CEO]

 

 

Any such notice, request, demand or other communication shall be deemed to be
properly made to either party under this Agreement only when received by such
party at the applicable address.

 

9.0TERMINATION

 

9.1 Automatic Termination. This Agreement shall automatically and immediately
terminate (i) upon the expiry of the Option Period or (ii) without notice to
Company upon or after (A) the filing by Company of a petition in bankruptcy or
insolvency, or (B) any adjudication that Company is bankrupt or insolvent.

 

9.2 Termination by Vendor. Vendor may, at its option, terminate this Agreement
with immediate effect by giving written notice to Company if one or more of the
following occurs:

 

(a)the filing by Company of any petition or any application seeking
reorganization, readjustment or rearrangement of the business of Company under
any federal or provincial law relating to bankruptcy or insolvency;

 

(b)the making by Company of any assignment or attempted assignment for the
benefit of creditors;

 

(c)Company becoming insolvent, as evidenced, for example (without limitation) by
(i) the appointment of a receiver or a receiver manager for all or substantially
all of the property of

 

 

 

 

 

 

Company, (ii) the inability of Company to pay its liabilities generally as they
become due, (iii) the termination of a majority of Company’s employees, or (iv)
Company ceasing, or imminently ceasing by way of a third party petition
remaining in place for 30 days, to carry on business;

 

(d) any resolution passed, order made, or other steps taken by Company for the
winding up, liquidation or other termination of the existence of Company;

 

(e) if Company is in breach of this Agreement and such breach is not cured
within thirty (30) days after written notice of such breach by Vendor to
Company; or

 

(f) if Company is in breach of any other agreement relating to the Technology
entered into between Company and Vendor, and the breach has not been cured
within the time provided for the curing of the breach under the terms of the
related agreement, or if such related agreement has been subsequently terminated
in accordance with the terms of that agreement.

 

9.3 Return of Technology. If this Agreement is terminated according to Section
9.1 or 9.2, Company shall, at Vendor’s request, either destroy or deliver up to
Vendor all Technology and Materials in Company’s possession or control and
Company shall have no further right to any nature whatsoever in the Technology
or the Materials.

 

10.0 GOVERNING LAW AND DISPUTE RESOLUTION

 

10.1 Governing Law. This Agreement shall be construed in accordance with the
laws of the state of Nevada, without regard to any choice or conflict of law
principles.

 

10.2 Dispute Resolution. The parties agree that any and all disputes and
controversies arising from, connected with, or relating to this Agreement,
including relating to the construction, meanings, performance or effect of this
Agreement or any breach thereof (collectively “Disputes”) shall be resolved in
accordance with the terms of this Section 10.2 as follows:

 

(a) Informal Dispute Resolution. Prior to initiating formal dispute resolution
procedures, the parties shall first attempt to resolve any Dispute directly
through good faith negotiations. Either party may deliver to the other a written
notice requiring negotiation of the Dispute (“Notice to Negotiate”). The parties
shall seek to resolve Disputes through negotiations, but may escalate the
resolution of any Dispute internally as necessary or appropriate at the
executive level.

 

(b) Exclusive Jurisdiction. Any Dispute that is not resolved within 15 days
after the delivery of a Notice to Negotiate, shall be determined by, and subject
to the exclusive jurisdiction of, the federal and state courts in San Francisco
County, California, and the parties agree to the personal and exclusive
jurisdiction of these courts. The parties hereby agree that any such court shall
be a proper forum for the determination of any dispute arising hereunder and
waive any defense based upon inconvenient forum or jurisdiction.

 

(c) Prevailing Party. If any Dispute arises between Vendor and Company with
respect to the matters covered by this Agreement that leads to a proceeding to
resolve such Dispute, the prevailing party in such proceeding shall be entitled
to receive its attorney’s fees and costs incurred in connection with such
proceeding in addition to any other relief it may be awarded.

 

11.0 GENERAL

 

11.1 Headings. The headings and subheadings in this Agreement are inserted for
convenience of reference only and shall not be used in interpreting or
construing the provisions of this Agreement.

 

 

 

 

11.2 Independent Contractor. The relationship between the Vendor and Company is
that of independent contractors and nothing in this Agreement shall be construed
as establishing an agency, partnership, joint venture, or employment
relationship between the parties. No party has the authority to act on behalf of
the other party, or to commit the other party in any manner at all or cause any
other party’s name to be used in any way not specifically authorized by this
Agreement.

 

11.3 Entire Agreement. The parties hereto acknowledge that this Agreement,
together with the NDA and the MTA, set forth the entire agreement and
understanding of the parties hereto as to the subject matter hereof, and
replaces and supersedes all prior discussions, agreements and writings in
respect hereto.

 

11.4 Amendment. No amendment or variation to this Agreement shall operate to
change or vary the terms, obligation or conditions hereof except upon mutual
agreement by both parties signed by an authorized representation of each party.

 

11.5 Severability. In the event that any provision of this Agreement is
determined to be invalid or unenforceable by a court of competent jurisdiction
in any jurisdiction, the remainder of the Agreement shall remain in full force
and effect without said provision in said jurisdiction and such determination
shall not affect the validity or enforceability of such provision or the
Agreement in any other jurisdiction. The parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which
shall most nearly approximate the intent of the parties in entering this
Agreement.

 

11.6 Waiver. No condoning, excusing or overlooking by any party of any default,
breach or non-observance by any other party at any time(s) regarding any terms
of this Agreement operates as a waiver of that party’s rights under this
Agreement. A waiver of any term, or right under, this Agreement shall be in
writing signed by the party entitled to the benefit of that term or right, and
is effective only to the extent set out in the written waiver.

 

11.7 Survival. Sections 2.5 and 9.3 and Sections 4, 5, 6,8,10, and 11 shall
survive the expiry or earlier termination of the term of this Agreement.

 

11.8 Interpretation. Each party and its attorneys have participated fully in the
review and negotiation of this Agreement. Any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not apply
with respect to this Agreement.

 

11.9 Further Assurances. The parties shall promptly do such acts and execute and
deliver to each other such further instruments as may be required to give effect
to the intent expressed in this Agreement.

 

IN WITNESS WHEREOF, the duly authorized officers of the parties have executed
this Agreement to be effective as of the Effective Date.

 

LaserLock Technologies, Inc.

 

 

By: /s/Norman A. Gardner

Name: Norman A. Gardner

Title: ___Chairman and CEO__

Date: 3/31/12______________

 

 

 

 

 

 

 

 

 

Gaming Partners International Corp

 

By: /s/ Gregory S. Gronau__

Name: __Gregory S. Gronau___

Title: ___President and CEO___

Date: _____________________