Current Report Filing (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) July 1, 2014

Gaming Partners International Corporation

(Exact name of registrant as specified in its charter)

Nevada	0-23588	88-0310433
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

1700 Industrial Road, Las Vegas, Nevada		89102
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (702) 384-2425

(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.

The information provided in Item 2.01 is incorporated herein by reference.

Item 2.01

Completion of Acquisition or Disposition of Assets.

On July 1, 2014, Gaming Partners International Corporation (the "Company") completed its acquisition of substantially all of the net assets (the "Acquisition") of GemGroup Inc. and its subsidiaries ("GemGroup") for $19.75 million using a combination of cash and bank financing. As previously disclosed, the Company acquired only the gaming assets of GemGroup. The Company borrowed $10.0 million under a demand line of credit with HSBC Bank USA, National Association (the "Line of Credit"), the net proceeds of which were used toward the payment of the purchase price for the Acquisition. A portion of the purchase price was escrowed to secure GemGroup's indemnification obligations under the Asset Purchase Agreement, dated July 1, 2014 (the "Purchase Agreement"), among the Company and GemGroup and its subsidiaries and shareholders. GemGroup is a privately-held manufacturer of casino currency, cards and table layouts primarily sold under the Gemaco brand. No material relationship exists, other than in respect of the Purchase Agreement between GemGroup and the Company or any of the Company's affiliates, directors or officers.

The foregoing summaries of the Purchase Agreement and the Line of Credit do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Purchase Agreement and the Line of Credit, respectively.

The Company announced this transaction in a press release, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by this reference.

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in Item 2.01 above is incorporated hereby reference.

Item 9.01

Financial Statements and Exhibits.

(a)

Financial statements of business acquired

Any financial statements required by this Item 9.01(a) will be filed as an amendment to this Current Report on Form 8-K no later than September 16, 2014.

(b)

Pro forma financial information

Any pro forma financial information required by this Item 9.01(b) will be filed as an amendment to this Current Report on Form 8-K no later than September 16, 2014.

(d) Exhibits.

2.1

Binding letter of intent, dated March 13, 2014, between Gaming Partners International Corporation and GemGroup, Inc. (incorporated by reference to Exhibit 10.0 to the Company's Quarterly Report on Form 10-Q filed May 13, 2014; Asset Purchase Agreement, dated July 1, 2014, among Gaming Partners International Corporation and GemGroup Inc., Gemaco Inc, GemAsia LLC, GemTechc LLC, the shareholders of GemGroup Inc., and Danny R. Carpenter, as Agent. Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby undertakes to furnish copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission.

10.1

Demand line of credit agreement, dated June 26, 2014, between Gaming Partners International USA, Inc. and HSBC Bank USA, National Association; Demand Note, dated June 26, 2014, by Gaming Partners International USA, Inc. payable to the order of HSBC Bank USA, National Association; Security Agreement, dated June 26, 2014, between Gaming Partners International USA, Inc. and HSBC Bank USA, National Association; and Unlimited Guaranty, dated June 26, by Gaming Partners International Corporation for the benefit of HSBC Bank USA, National Association.]

99.1

Press release dated July 1, 2014.

SIGNATURES

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 thereunto duly authorized.

	Gaming Partners International Corporation

Date: July 7, 2014
	By:	/s/ Michael D. Mann
		Michael D. Mann
		Chief Financial Officer, Treasurer and Secretary

EXHIBIT INDEX

Exhibit No.		Description

Exhibit 2.1		Binding letter of intent, dated March 13, 2014, between Gaming Partners International Corporation and GemGroup, Inc. (incorporated by reference to Exhibit 10.0 to the Company's Quarterly Report on Form 10-Q filed May 13, 2014; Asset Purchase Agreement, dated July 1, 2014, among Gaming Partners International Corporation and GemGroup Inc., Gemaco Inc, GemAsia LLC, GemTechc LLC, the shareholders of GemGroup Inc., and Danny R. Carpenter, as Agent. Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby undertakes to furnish copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission.

Exhibit 10.1		Demand line of credit agreement, dated June 26, 2014, between Gaming Partners International USA, Inc. and HSBC Bank USA, National Association; Demand Note, dated June 26, 2014, by Gaming Partners International USA, Inc. payable to the order of HSBC Bank USA, National Association; Security Agreement, dated June 26, 2014, between Gaming Partners International USA, Inc. and HSBC Bank USA, National Association; and Unlimited Guaranty, dated June 26, by Gaming Partners International Corporation for the benefit of HSBC Bank USA, National Association.

Exhibit 99.1		Press release dated July 1, 2014.

Exhibit 2.1

March 13, 2014

CONFIDENTIAL

GemGroup Inc.

2925 N. 7 Highway

Blue Springs, Missouri 64014

Dear GemGroup Inc.:

Gaming Partners International Corporation, 1700 Industrial Road, Las Vegas, NV 89102 ("GPIC") is pleased to submit this Binding Letter of Intent (the "BLOI") to GemGroup, Inc., 2925 N. 7 Highway, Blue Springs, Missouri 64014 (together with its subsidiaries Gemaco Inc., GemAsia LLC, and GemTech LLC) (collectively, "GemGroup"), which sets forth the terms upon which GPIC or its designated affiliates ("Buyer"} will purchase substantially all of the tangible and intangible assets (the "Assets") of GemGroup, free and clear of all liens, claims and encumbrances (the "Transaction"). At the consummation of the Transaction (the "Closing''), Buyer will assume the ordinary course liabilities of GemGroup reflected in the Closing Date Balance Sheet (as defined below), and GemGroup's future obligations under contracts and permits transferred to Buyer as part of the Assets. Buyer will not assume any liabilities in respect of outstanding indebtedness of GemGroup, which indebtedness will be satisfied from the sales proceeds at the Closing, or any undisclosed, pre-Closing liabilities.

The Transaction is subject to the terms and conditions contained herein. This BLOI is based upon, among other things, the preliminary investigation undertaken by GPIC through the date hereof.

GPIC and GemGroup agree as follows:

A. Buyer will continue the existing Gemaco manufacturing operations in Blue Springs, Missouri for at least five (5) years after the date of Closing.

B. During due diligence, GPIC and Jason Fitzhugh will negotiate in good faith a three-year employment agreement with compensation at least commensurate with GPIC employees at a similar level. The employment agreement shall include three-year post-termination non-competition and non-solicitation provisions acceptable to GPIC.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

C. At the Closing, Danny Carpenter, Kaye Summers and Jason Fitzhugh will each enter into three-year agreements: (i) not to engage, directly or indirectly, for themselves or on behalf of another, in the business of designing, manufacturing or selling to gaming, promotional products and injection molding industries, playing cards, table game layouts and elements, gaming and promotional chips, table accessories and injection molded parts (collectively, the "Products") anywhere in the world, (ii) not to solicit any customers of GemGroup for the purposes of selling any Products on behalf of anyone other than Buyer, and (iii) not to solicit for employment or hire any employees of GPIC or Buyer (including any former GemGroup employees).

D. Promptly following GemGroup's acceptance of this BLOI, GPIC will, with the assistance of GemGroup, apply for all necessary approvals from gaming commissions and other regulatory agencies for consummation of the purchase and sale.

Section 1. PURCHASE PRICE AND PAYMENT TERMS. At the Closing, and subject to the other conditions set forth herein and in any definitive Asset Purchase Agreement (as discussed below), GPIC will pay GemGroup $22,500,000 for the Assets, plus or minus any working capital adjustment as described below (the "Purchase Price"). Within two business days after GemGroup's acceptance of this BLOI, GPIC will transfer a good faith deposit of $1,000,000 to BOKF, N.A. or another mutually agreeable escrow agent, which deposit shall be non-refundable except as hereafter provided (together with any escrow earnings, the "Non-Refundable Deposit"). The Purchase Price assumes that GemGroup will transfer working capital (calculated as provided below) at the Closing at least equal to the consolidated working capital of GemGroup as of December 31, 2013, as determined from the balance sheet included in the Audited 2013 Financial Statements (as defined in Section 10 below) (the "Target Working Capital"). For this purpose, working capital shall be determined by subtracting current liabilities to be assumed (consisting of accounts payable and accrued expenses) from current assets to be acquired (consisting of net accounts receivable, net inventory and pre-paid expenses the benefit of which will be received by Buyer). The Purchase Price will be increased or decreased based upon the amount by which the working capital transferred at the Closing exceeds or falls short of the Target Working Capital. For purposes of the Closing, the parties will estimate in good faith any working capital adjustment based on the most recently available information. The working capital adjustment will be subject to true-up within ninety (90) days following the Closing to reflect the actual working capital transferred, based on a closing date balance sheet to be prepared by Buyer and reviewed by GemGroup (the "Closing Date Balance Sheet"). Buyer will prepare the Closing Date Balance Sheet in accordance with GAAP, and as if the Closing date were the end of the fiscal year. Any disputes regarding the working capital adjustment that the parties cannot amicably resolve will be referred for final resolution to a mutually agreeable, independent CPA firm. Buyer and GemGroup will each pay one-half of any fees or expenses of such accounting firm.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

It is agreed that the Transaction will be structured as an asset purchase transaction. Buyer will pay the Purchase Price at the Closing (net of the Non-Refundable Deposit). The net Purchase Price payable at Closing will be applied as follows: first, to satisfy any indebtedness encumbering the Assets, and second, the balance will be payable to GemGroup by wire transfer of immediately available funds to an account designated in writing by GemGroup at least two business days prior to the scheduled Closing (subject to either escrow or holdback provisions in the following paragraph, if applicable).

At Closing, GemGroup will transfer the sum of $2,000,000 to HSBC or another mutually agreeable escrow agent for a period of two years to provide security for GemGroup's covenants and indemnities in this BLOI and in the Asset Purchase Agreement (defined below) under an Escrow Agreement to be entered into at Closing. If any unresolved Buyer claims against GemGroup are pending as of five business days prior to the expiration of the escrow, the Escrow Agreement will provide for a continuation of the escrow in an amount up to the maximum exposure of the Buyer on the unresolved claims, but not to exceed $2,000,000.

Section 2. The Assets of GemGroup to be transferred will be all of the assets of GemGroup (except as excluded below) and will include the following:

(i) All rights regarding any current and future manufacturing (including any licenses to use the patents or technology utilized by GemGroup to manufacture its Products), and all other intellectual property (including without limitation all trademarks, websites and URLs, know-how, trade secrets and other confidential information and the right to sue for past infringement or misappropriation of any intellectual property) and information technology rights, including all business records (the "Intellectual Property");

(ii) All rights to use all of GemGroup's requisite technology, and assignment of all vendor and supplier agreements;

(iii) All raw materials, WIP, and finished goods inventory;

(iv) All existing customer lists and contracts;

(v) All permits and governmental authorizations, to the extent transferable;

(vi) All accounts receivable;

(vii) All land, buildings and fixed and mobile equipment;

(viii) All pre-paid expenses or other current assets;

(ix) All rights under any confidentiality agreements, invention or copyright assignments, and any restrictive covenant agreements for the benefit of GemGroup;

(x) All goodwill of the GemGroup business or associated with the Assets; and

(xi) All claims or rights against third parties relating to the other Assets acquired.

GemGroup will retain any cash or cash equivalents, along with the shares or LLC interests in its subsidiaries and their related corporate and tax records, provided Buyer will be entitled to have access to such records post-Closing as reasonably necessary in connection with its operation of the Assets or conduct of its business.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

At the Closing, as additional consideration for the Assets, Buyer will assume all ordinary course trade accounts payable and accrued expenses of GemGroup (other than any amounts due to GemGroup's shareholders, subsidiaries or affiliates). Buyer will also assume GemGroup's post-Closing obligations under any permits transferred to Buyer in the Assets and under all of GemGroup's executory contracts (other than any liabilities in respect of pre-Closing breaches). Promptly following the execution of this BLOI, Buyer and GemGroup will cooperate in good faith to obtain any required consents of third parties for assignment of all such contracts. Buyer will indemnify and hold harmless GemGroup from all post-Closing obligations under such contracts (other than those arising from pre-Closing breaches), whether or not any required consent of the other party or parties to the contracts is obtained. GemGroup will remain responsible for (and will indemnify and hold harmless Buyer and its related parties against) all threatened or pending litigation matters based on or arising out of events or omissions occurring prior to Closing, taxes due prior to Closing and other undisclosed liabilities, whether fixed or contingent, of GemGroup.

Section 3. DUE DILIGENCE: Subject to being provided prompt access to requested materials and personnel, GPIC expects that it will complete its due diligence review of the Assets and the proposed Transaction from financial, accounting, operational, market, and competitive perspectives within sixty (60) days after GemGroup has provided substantially all materials requested in GPIC's original due diligence request list. In addition, during such period GPIC will perform confirmatory gaming, intellectual property, environmental, insurance, benefits, labor, legal and tax reviews. GemGroup agrees to provide to GPIC, its agents, advisors, representatives, and prospective lenders, full and complete access to such books, records, facilities, officers, employees and advisors as may be regarded as necessary or desirable by GPIC and its agents in connection with their review. GPIC must complete each of the above reviews to its reasonable satisfaction. GPIC is prepared to deliver an initial due diligence request list within ten days following the acceptance of this BLOI. No investigation made by GPIC will limit or affect the representations, warranties, covenants and indemnities of GemGroup under this BLOI or the Asset Purchase Agreement.

GemGroup has previously delivered to GPIC the audited consolidated balance sheet and statements of income, shareholders' equity (or deficit), and cash flows of GemGroup, as at and for the fiscal years ended December 31, 2009, 2010, 2011 and 2012 (the "Historical Financial Statements"), and the unaudited consolidated statement of income of GemGroup for the fiscal year ended December 31, 2013 (the "Unaudited 2013 Financial Statement''). In the Asset Purchase Agreement (defined below), GemGroup will represent and warrant that the Historical Financial Statements and Unaudited 2013 Financial Statement: (a) are true and correct in all material respects; (b) have been prepared in accordance with GAAP, consistently applied; (c) present fairly the financial condition and the results of operations of GemGroup and its subsidiaries as of the date(s) and for the period(s) therein indicated; and (d) are consistent with the books and records of GemGroup prepared in the ordinary course of business.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

Section 4. EXECUTION OF AGREEMENT; CLOSING: The parties intend to negotiate an asset purchase agreement relating to the Transaction (the "Asset Purchase Agreement'') consistent with the terms of this BLOI, which will be drafted by GPIC's attorneys and which will contain customary representations, warranties and covenants (including indemnities) by GemGroup and by GPI, as well as any provisions to address matters discovered in due diligence, certain of which would survive the Closing for the applicable timeframes outlined in the Asset Purchase Agreement. A representative list of customary topics to be addressed by such representations and warranties is attached as Exhibit A. GPIC will deliver an initial draft of the Asset Purchase Agreement to GemGroup within sixty (60) calendar days of acceptance of this proposal. GPIC anticipates signing the Asset Purchase Agreement and closing the Transaction within 120 calendar days after acceptance of this BLOI by GemGroup. The parties agree to negotiate in good faith, and use their reasonable commercial efforts to agree on the form of the definitive Asset Purchase Agreement.

Unless otherwise provided in the Asset Purchase Agreement, the Closing will take place on June 30, 2014, or such other date as the parties may agree in writing. Buyer's obligation to proceed with the Closing is subject to receipt of necessary regulatory (if any) and third party approvals for the transaction, and such other customary conditions precedent as may be set forth in the Asset Purchase Agreement except third party approvals for the assignment of GemGroup's contracts. GemGroup's obligation to proceed with the Closing is subject to receipt of necessary regulatory approvals for the transaction (if any) and such other customary conditions precedent as may be set forth in the Asset Purchase Agreement.

Section 5. EXCLUSIVITY: In consideration of GPIC's payment of the Non-Refundable Deposit and incurrence of costs in connection with the conduct of its due diligence, the preparation and negotiation of the Asset Purchase Agreement, and seeking regulatory consents, GemGroup agrees that, from their acceptance of this BLOI until the date that is four months after such acceptance, GemGroup will not, and will cause its affiliates and their respective officers, directors, stockholders, employees and agents not to, initiate, encourage (including by way of furnishing any non-public information concerning GemGroup, the Assets or business), solicit, conduct or continue any negotiations or discussions with or enter into any agreement with any third party (other than GPIC or its affiliates), relating to the acquisition of all or any portion of GemGroup of any of its subsidiaries, or any of their respective assets or business (whether by merger, share purchase, asset purchase, lease, exclusive license, or otherwise), other than, in each case, the sale of goods in accordance with past practices and other transactions in the ordinary course of business for the sale of products consistent with past practices.

Section 6. PUBLIC ANNOUNCEMENT. GPIC will provide a public announcement (the "Public Announcement") on behalf of both parties (which Public Announcement shall include an appropriate filing with the Securities and Exchange Commission by GPIC) of the Transaction contemplated by this BLOI. GemGroup will be given a reasonable opportunity to provide input on the Public Announcement as it relates to any information or statements regarding GemGroup. GemGroup acknowledges that GPIC will be required to file a form 8-K regarding this BLOI and the Transaction in accordance with applicable securities laws and SEC requirements.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

Section 7. CONFIDENTIALITY: Except as provided in Section 6 above, neither the parties to this BLOI nor any of their affiliates or their respective officers, directors, stockholders, employees, or agents shall make any public announcement or issue any press release or other publicity in respect of the Transaction without the prior written consent of the other party (except as such disclosures are required in applications or by applicable securities or gaming laws or stock market rules). The parties agree that, except as provided in Section 6 above, the Non-Disclosure Agreement dated February 5, 2014, the terms of which are hereby incorporated herein by this reference, shall continue in full force and effect, until the Closing.

Section 8. EXPENSES: Whether or not the Transaction is consummated, each party to this BLOI shall be responsible for its own fees and expenses incurred in connection with its preparation and negotiation and of this BLOI, the Asset Purchase Agreement and the Transaction, including the fees and disbursements of its respective counsel, advisors, finders, accountants or other experts. The parties shall equally share the fees and other expenses of the escrow agents for the escrows provided in Section 1. Each party shall be solely responsible for the fees of its respective broker or finder, if any.

Section 9. TERMINATION: This BLOI may be terminated by either party, at any time and for any reason, by written notice to the other party at any time prior to the execution of the Asset Purchase Agreement or the Closing, whichever occurs first. Upon any such termination, this BLOI shall terminate and become void and of no further force and effect, except for the provisions related to the payment of the Non-Refundable Deposit and Sections 7, 8 and 9 which shall survive in accordance with their respective terms.

In the event GPIC terminates this BLOI due to:

A. A lack of regulatory approval by any of the States of California, Pennsylvania, Nevada, Missouri, New Jersey, Washington, Michigan and Indiana in the United States or the Province of British Columbia in Canada or lack of regulatory approval by any Native American gaming agency in Florida, Connecticut or California for a Native American casino customer from which GemGroup received revenues of at least $50,000 in 2013; provided, however, that the Closing will be extended by up to one hundred twenty (120) days if necessary to obtain any such regulatory approvals.

B. Lack of good faith negotiations by GemGroup in connection with the Asset Purchase Agreement or intentional delays in the Closing by GemGroup;

C. Lack of good faith negotiations by Jason Fitzhugh in connection with his employment agreement;

D. Any material inaccuracy in the Historical Financial Statements, any failure to deliver the Audited 2013 Financial Statements, or any material discrepancy between the Unaudited 2013 Financial Statement and the Audited 2013 Financial Statements other than the matter disclosed in item 2 of Exhibit B below;

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

E. The occurrence since December 31, 2013, of any action, event, condition or circumstance, that, individually or in the aggregate, has had or could reasonably be expected to have a material adverse effect on, or a material adverse change in, the operations, condition (financial or otherwise), results of operations, prospects, assets, liabilities or reserves of GemGroup, provided, however, that when determining whether there has been a Material Adverse Change, any adverse change attributable to any of the following shall be disregarded: (i) general economic, business, industry or financial market conditions (whether in the United States or otherwise), but that do not disproportionately affect GemGroup; (ii) the taking of any action required by this BLOI or the Asset Purchase Agreement; (iii) the announcement of the transactions contemplated hereby; (iv) the breach of this BLOI or the Asset Purchase Agreement by GPIC, (v) any changes in applicable laws, regulations or accounting rules, including GAAP; (vi) any existing event, occurrence or circumstance set forth in the disclosure schedule to the Asset Purchase Agreement; and (vii) any adverse change in or effect on the business of GemGroup that is cured by or on behalf of GemGroup to the reasonable satisfaction of GPIC before the termination of this BLOI (a "Material Adverse Change");

F. Any material environmental condition at any owned real property in the Assets, or for which GPIC might otherwise be held liable as a result of its ownership of the Assets or operation of the business;

G. Any material misrepresentation or breach of any covenant herein by GemGroup or GemGroup's refusal to provide customary representations and warranties as reflected on Exhibit A to this BLOI in connection with any Asset Purchase Agreement (which representations and warranties will be subject to disclosed exceptions, including those matters disclosed on Exhibit B to this BLOI, provided that such disclosures do not include any material liabilities not reflected in the Historical Financial Statements or the Unaudited Financial Statements, other than the matter disclosed in item 2 of Exhibit B below and ordinary course trade accounts payable and accrued expenses);

then in any such case the escrow agent will return the entire Non-Refundable Deposit to GPIC. Otherwise, the escrow agent will pay the entire Non-Refundable Deposit to GemGroup as full liquidated damages, provided GemGroup executes and delivers to GPIC and its related parties a written release of all claims.

This BLOI will terminate automatically if the Asset Purchase Agreement has not been executed by the parties by June 30, 2014, and the escrow agent will pay the entire Non-Refundable Deposit to GemGroup as full liquidated damages, provided GemGroup executes and delivers to GPIC and its related parties a written release of all claims.

If this BLOI is terminated by GemGroup for any reason other than material breach of this BLOI by GPIC, the escrow agent will return the entire Non-Refundable Deposit to GPIC.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

Upon any termination, the parties agree promptly to execute written directions to the escrow agent to disburse the Non-Refundable Deposit in accordance herewith.

In the event this BLOI is terminated (other than by virtue of the Closing or the execution of the Asset Purchase Agreement), for a period of two years from such termination, GPIC agrees not to, and to cause its subsidiaries not to, directly or indirectly, employ, attempt to employ or solicit in any way any employee of GemGroup for other employment or to provide consulting or similar services (provided that general advertising to the public through newspapers or similar means not directed at GemGroup or its employees will not constitute a solicitation of employees of GemGroup).

Section 10. CONDUCT OF BUSINESS: From the date GemGroup accepts this BLOI through the Closing or the termination of this BLOI, GemGroup will: (i) (a) conduct its business in a reasonable and prudent manner in accordance with past practices, (b) use reasonable efforts to preserve its existing business organizations and relations with its employees, customers, suppliers, landlords, regulators and others with whom it has a business relationship, (c) use reasonable efforts to preserve and protect its properties, assets and rights (including permits and other governmental approvals) and conduct its business in compliance with all applicable laws and regulations, and (d) promptly notify GPIC of any Material Adverse Change, and (ii) not (a) enter into any contract or binding customer or vendor commitment having an aggregate dollar value in excess of $250,000 or a duration greater than one year without giving prior written notice to GPIC stating the customer or vendor name and the contract amount and duration, nor (b) intentionally take any action which is reasonably likely to have a material adverse effect on the Assets and rights, of GemGroup to be purchased, without the prior approval of GPIC. Without limiting the foregoing, GemGroup agrees that it will not make any material change in its accounting methods or practices, other than as required by changes in GAAP or applicable law, in the manner of keeping its books and records, or in its current practices with respect to customer contracts, sales, receivables, inventories, inventory valuation, payables or accrued expenses. GemGroup will cause to be finalized as soon as reasonably practicable, but not later than March 31, 2014 (and will deliver or cause to be delivered to GPIC promptly upon issuance by the third party accountants of GemGroup), the audited consolidated balance sheet and statements of income, shareholder's equity (or deficit), and cash flows of GemGroup, as at and for the fiscal year ended December 31, 2013 (the "Audited 2013 Financial Statements").

Following the Closing, GemGroup will provide reasonable assistance in transferring the business to Buyer. In furtherance of the foregoing, GemGroup grants to Buyer, effective as of the Closing, the power, right and authority, coupled with an interest, to receive, endorse, cash, deposit, and otherwise deal with in GemGroup’s name, any checks, drafts, documents and instruments evidencing payment of any accounts receivable or other payment rights included in the Assets and that are payable to or to the order of, or endorsed in favor of, GemGroup or any agent thereof. GemGroup agrees promptly to endorse and pay over or cause to be endorsed and paid over to Buyer, without deduction or offset, the full amount of any payment received by GemGroup or any of its agents after the Closing in respect of goods sold or services rendered as part of the business, and shall hold any such amounts in trust for Buyer pending such payment.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

Section 11. GOVERNING LAW: This BLOI shall be governed by and construed in accordance with the laws of the State of Missouri, without giving effect to the principles of conflict of laws thereof. The exclusive forum for the determination of any action relating to this BLOI or the Asset Purchase Agreement shall be an appropriate court in the County of Jackson, State of Missouri.

Section 12. ENTIRE AGREEMENT; COUNTERPARTS: This BLOI supersedes all prior understandings among the parties hereto except the Non-Disclosure Agreement dated February 5, 2014. This BLOI may be executed in one or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement.

Section 13. REPRESENTATIONS AND COVENANTS:

(i) GemGroup hereby represents to GPIC that, as of the date of this BLOI and up to the date of Closing: GemGroup has and will have good and marketable title to all Assets purported to be owned by it (including those reflected in the Financial Statements) and a valid leasehold interest in all leased Assets, in each case free and clear of all liens, claims and encumbrances of any kind (other than liens securing indebtedness to be satisfied at or prior to the Closing); the Assets constitute all of the assets and properties necessary or desirable to conduct business as presently conducted by GemGroup, including without limitation, the exclusive license, or non-exclusive licenses entered into in the ordinary course of business, to use the Intellectual Property, and neither the BLOI nor the Transaction violates or breaches or will violate or breach any agreement or understanding with any other person, except that GemGroup does not represent that the BLOI or the Transaction will not violate or breach any contractual clause precluding assignment without the consent of the other party (but GemGroup does represent and warrant that not more than five of Gemaco's contracts (not including customer issued purchase orders) with customers producing revenue for Gemaco over $50,000 in 2013 require a consent of the other party in connection with the Transaction). GemGroup covenants and agrees that, under no circumstances, shall it intentionally take any action that will harm or injure the rights or business relationship of any other person as a result of this BLOI or GPIC's purchase of the Assets or otherwise. GemGroup covenants to have in place at the Closing and maintain in place for three (3) years after Closing general and products liability insurance policy (or policies) with aggregate limits of $8,000,000 (except the limit on a separate product liability policy covering aircraft will be $5,000,000), and if requested by GPIC, GemGroup will use its best efforts to have GPIC named as an additional insured thereunder with any cost of doing so to be paid by GPIC. GemGroup covenants and agrees to defend, indemnify and hold harmless GPIC, its affiliates and their respective agents, employees, officers, directors, consultants, successors and assigns, from and against any and all liabilities and claims, including, without limitation, future liabilities and claims by third parties, for demands, suits, actions, liabilities, losses, damages, injuries, judgments, costs and expenses (including reasonable attorneys' fees and costs), directly or indirectly arising from any untruth, inaccuracy or breach of any representations, covenants or agreements made by GemGroup in this BLOI or in the Asset Purchase Agreement, any indebtedness or other obligations of GemGroup which GPIC has not agreed herein to assume, and any other excluded liabilities, claims or losses, whether or not known at Closing, except that the foregoing indemnity shall not apply in respect of any matter arising out of or related to (a) a breach of any representation, warranty or covenant of GPIC in this BLOI or the Asset Purchase Agreement or (b) any pre-Closing act or omission by GPIC or any of its representatives.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

(ii) GPIC represents and warrants that it has all necessary approvals and licenses to manufacture and sell playing cards, gaming table coverings and gaming chips in all States of the United States and all Provinces of Canada in which GemGroup's subsidiary, Gemaco Inc., is licensed by the relevant gaming authorities (as previously disclosed by GemGroup) and in the country of Panama. GPIC covenants and agrees to defend, indemnify and hold harmless GemGroup, its affiliates and their respective agents, employees, officers, directors, consultants, successors and assigns, from and against any and all liabilities and claims, including, without limitation, future liabilities and claims by third parties, for demands, suits, actions, liabilities, losses, damages, injuries, judgments, costs and expenses (including reasonable attorneys' fees and costs), directly or indirectly arising from any untruth, inaccuracy or breach of any representations, covenants or agreements made by GPIC in this BLOI or in the Asset Purchase Agreement and arising from post-Closing operations of the former businesses of GemGroup and from use of the Assets post-Closing, except that the foregoing indemnity shall not apply in respect of any matter arising out of or related to (a) a breach of any representation, warranty or covenant of GemGroup in this BLOI or the Asset Purchase Agreement, (b) any excluded liability retained by GemGroup, or (c) any pre-Closing act or omission by GemGroup or any of its representatives.

(iii) The foregoing will be incorporated into the Asset Purchase Agreement.

(iv) Except in the case of fraud, GemGroup's maximum aggregate liability for breach of representations and warranties (including indemnity obligations) will be $4,000,000. GemGroup will not have any liability for such breaches of representations or warranties until the aggregate loss to all Buyer indemnities combined exceeds $100,000, except that the foregoing basket will not apply to breaches of the representations and warranties relating to title to assets. The limitations of this subsection do not apply to GemGroup's indemnity obligations in respect of any excluded liabilities (pending or threatened litigation, regulatory actions, customer claims referenced on Exhibit B below or fraud). The representations, warranties and covenants referenced in this subsection include those contained in this BLOI and in the Asset Purchase Agreement.

(v) By their execution below, the shareholders of GemGroup agree to be jointly and severally liable with GemGroup in respect of its indemnification obligations under this BLOI and the Asset Purchase Agreement, provided that the shareholders maximum aggregate liability hereunder will not exceed $2 million, provided that such limitation shall not apply (and such obligation shall be unlimited) with respect to income taxes and existing or pending litigation.

[Remainder of Page Intentionally Blank]

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

If the foregoing correctly sets forth the understanding of the parties hereto, please so indicate by executing both originals of this BLOI in the spaces provided below and returning one fully executed original to us. GPI reserves the right to withdraw this BLOI at any time prior to GPI's receipt of such written acceptance by GemGroup and its shareholders.

	Very truly yours,

	GAMING PARTNERS INTERNATIONAL CORPORATION

	By:	/s/ Gregory S. Gronau
		Name: Gregory S. Gronau
		Title: President and Chief Executive Officer

Agreed and accepted as of March 13, 2014

By:	/s/ D. Kaye Summers
	Name: D. Kaye Summers
	Title: President and Chief Executive Officer

D. Kaye Summers and Danny R. Carpenter agree to be bound by paragraph C and §13 (v) of this BLOI:

By:	/s/ D. Kaye Summers
	Name: D. Kaye Summers

By:	/s/ Danny R. Carpenter
	Name: Danny R. Carpenter

Jason A. Fitzhugh agrees to be bound by paragraphs B and C and §13 (v) of this BLOI:

By:	/s/ Jason A. Fitzhugh
	Name: Jason A. Fitzhugh

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

Exhibit A

Customary Representations and Warranties (subject to disclosed exceptions)

•

GemGroup has good title to the Assets purported to be owned by it (including those reflected in the Financial Statements) and a valid leasehold interest in all leased Assets, in each case, free and clear of all claims, liens and encumbrances

•

GemGroup DISC LLC has no assets used or held for use (tangible or intangible) in connection with the business

•

Audited financial statements are correct in all material respects, in accordance with GAAP, consistently applied, fairly present the financial situation and results of operations as of their respective dates, and are consistent with GemGroup's books and records maintained in the ordinary course

•

Inventory is good and saleable, subject to applicable reserves reflected in the Closing Date Balance Sheet

•

Tangible Assets material to the operation of GemGroup's business in the ordinary course are operational and in reasonable repair, ordinary wear and tear excepted

•

Equipment maintenance has not been deferred with respect to equipment that is material to the operation of GemGroup's business in the ordinary course.

•

GemGroup has all required permits and licenses, and is and has been in material compliance with all applicable laws, regulations and permits

•

Complete copies of all material contracts and governmental/judicial restrictions have been delivered; neither GemGroup nor, to GemGroup's knowledge, any counterparty is in default under any contract

•

No customer that has purchased more than $50,000 worth of products in the last twelve months has notified GemGroup that it intends to discontinue doing business with, or materially change the terms on which it does business with, GemGroup

•

All taxes have been correctly filed and paid when due

•

All known liabilities are recorded in the books

•

Disclosure of all pending and, to GemGroup's knowledge, threatened litigation, claims, government investigations, audits, arbitrations or similar proceedings

•

A reasonable insurance program is in effect; accurate disclosure of 3 years insurance loss

runs

•

To GemGroup's knowledge, there has been no Material Adverse Change since 12/31113

•

Employees are terminable at will (except as specifically disclosed) and employee benefit programs are at reasonable levels given the location of the facilities and nature of the business; there are no defined benefit or multi-employer pension plan obligations, none of the employees is represented by a union, and there are no collective bargaining agreements in effect

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

Exhibit B

Disclosures Relating to Assets and Business of GemGroup

1. New Jersey litigation-two lawsuits are pending related to use of a pre-shuffled pack of eight decks by the Golden Nugget Casino.

2. Items covered by 2013 reserve for one time items in the amount of approximately $170,000— customer issues involving claims of defective products.

3. Supplier issue involving claim made by Gemaco against supplier for defective products provided to Gemaco customers.

4. The roof of Gemaco's building in Blue Springs, Missouri has had relatively minor leaks from time to time for at least the last 11 years. We believe the issue relates to the original design of the building and gutters. We have found that it is considerably more economical for the Gemaco maintenance department to deal with the leaks than to make the major modifications that would be required to stop the leaks.

GAMING PARTNERS INTERNATIONAL CORPORATION | THE AMERICAS ∙ EUROPE ∙ ASIA

1700 INDUSTRIAL ROAD | LAS VEGAS, NEVADA 89102 | UNITED STATES OF AMERICA

tel: +1.702.384.2425 | f x: +1.702.384.1965 | gpigaming.com

ASSET PURCHASE AGREEMENT

by and among

GAMING PARTNERS INTERNATIONAL CORPORATION,

GEMGROUP INC.,

GEMACO INC.,

GEMASIA LLC,

GEMTECH LLC,

THE SHAREHOLDERS OF GEMGROUP INC.

and

DANNY R. CARPENTER, as AGENT

Dated as of July 1, 2014

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT, dated as of July 1, 2014, is entered into by and among GAMING PARTNERS INTERNATIONAL CORPORATION, a Nevada corporation (“Buyer”), GEMGROUP INC., a Missouri corporation (“GemGroup”), GEMACO INC., a Missouri corporation (“Gemaco”), GEMASIA LLC, a Missouri limited liability company (“GemAsia” and collectively with GemGroup and Gemaco, the “Sellers”, or each a “Seller”), D. KAYE SUMMERS, DANNY R. CARPENTER, and JASON A. FITZHUGH, being all of the shareholders of GemGroup Inc. (collectively the “Shareholders” and each, a “Shareholder”), DANNY R. CARPENTER, as “Agent” and, for the sole purpose of agreeing to the provisions of Section 4.02(d), Section 6.02 and Section 6.10, GEMTECH LLC, a Kansas limited liability company (“GemTech”).

RECITALS

WHEREAS, Sellers are engaged in the design, manufacture, distribution, and sale of playing cards, table game layouts and elements, gaming and promotional chips and table accessories for the gaming and promotional products industries, roulette wheels, display signs and card shredding machines for the gaming industry and dominoes and gift packaging for the promotional products industries (such products, collectively, the “Products”, and such activities, collectively, the “Business”);

WHEREAS, Buyer wishes to purchase and acquire, and Sellers desire to sell, substantially all of their assets used or useful in the Business, on and subject to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises, and the representations, warranties, covenants and agreements hereinafter set forth, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.01 Definitions. The following terms, as used herein, have the following meanings:

“Affiliate” (including the term “affiliated”), whether or not capitalized, means, with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by or under direct or indirect common Control with, such specified Person.

“Applicable Law” means any domestic or foreign, federal, state or local statute, law, ordinance, policy, guidance, rule, administrative interpretation, regulation or Order of any Governmental Authority applicable to the Business, the Assets or to any relevant Person or any of their respective properties, assets, operations, officers, directors, employees, consultants or agents.

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in Blue Springs, Missouri, or Las Vegas, Nevada, are authorized or required by law to close.

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

“Continuing Debt” means the Fitzhugh Auto Loan and the Simpleprint Agreement.

“Contracts” means all contracts, agreements, options, understandings, leases for real or personal property, accepted purchase orders, commitments, warranties and other instruments of any kind, whether written or oral, to which any Seller is a party or by which any of its assets are bound, including any option to renew or extend the term of any thereof.

“Control” (including the terms “controlling,” “controlled by” and “under common control with”), whether or not capitalized, means with respect to any specified Person the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of securities, by contract or otherwise.

“Covered Employees” means (i) directors or employees of any Seller or any other Persons performing services for a Seller or engaged in the Business; (ii) former directors or employees of, or any other Persons formerly performing services for, any Seller or engaged in the Business; or (iii) beneficiaries of anyone described in (i) or (ii).

“Damages” means all demands, claims, assessments, losses, damages, costs, defense costs, expenses, liabilities, judgments, decrees, awards, fines, interest, sanctions, penalties, diminution of Asset value, and charges, including any amounts paid in settlement, and reasonable costs, fees and expenses of attorneys, accountants and other representatives of a Person incurring or suffering such Damages or are reasonably incurred in investigating, mitigating or avoiding same, whether or not arising from a third party claim, but not including (v) allocations of overhead or other internal costs that do not constitute an out-of-pocket expense, (w) any “multiple of profits,” “multiple of cash flow”, “multiple of EBITDA”, general dimunition in value or similar valuation methodology in calculating the amount of any losses, (x) indirect, exemplary, special or speculative losses, (y) liabilities, damages or expenses incurred due to the interruption of the indemnitee’s business or lost profit in excess of the amount of such lost profits directly attributed to the actual interruption for a period of up to a maximum of three (3) years of such lost profits, or (z) punitive damages. For purposes of clarity, Buyer and Sellers agree that any indirect, exemplary, special, speculative or punitive damages paid by an Indemnified Party to a person who is not a party to this Agreement pursuant to a third party claim shall be deemed to be direct damages of such Indemnified Party, whether or not arising from a third party claim.

“Debt” means any indebtedness of a Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or other similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker’s acceptances or interest swap agreements, or representing capitalized or synthetic lease obligations or the unpaid balance of the purchase price of any property, as well as the amount of all such indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, to the extent not otherwise included, the amount of any indebtedness of any other Person guaranteed by such Person.

“Employee Benefit Plan” means any “employee benefit plan” (as defined by Section 3(3) of ERISA), and any other bonus, profit sharing, pension, compensation, deferred compensation, stock option, stock purchase, fringe benefit, severance, post-retirement, scholarship, disability, sick leave, vacation, commission, bonus, or retention plan, agreement or policy.

“Entitlements” means (i) any impact fee credits with, or impact fee payments to, any county or municipality in which any real estate is located arising from any construction of Improvements, or dedication or contribution of property, by any Person, or its predecessor in title or interest, related to such real estate; (ii) any development rights, allocations of development density or other similar rights allocated to or attributable to any real estate or Improvements; and (iii) any utility capacity allocated to or attributable to any real estate or Improvements, whether the matters described in the preceding clauses (i), (ii) or (iii) arise under or pursuant to Applicable Laws or agreement with Governmental Authorities or other third parties.

“Equipment” means all vehicles, machinery, office and computer equipment, furniture, fixtures, trade fixtures, rolling stock, molds, pallets and other equipment, together with all parts, tools, accessories and related supplies.

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

“ERISA Affiliate” means any trade or business, whether or not incorporated, other than a Seller, that has employees who are or have been at any date of determination occurring within the preceding six (6) years, treated pursuant to Section 4001(a)(14) of ERISA or Section 414 of the Code, as employees of a single employer that includes any Seller.

“Fitzhugh Auto Loan” means that certain agreement with Chrysler Capital for the purchase of that certain Jeep Cherokee used as a company car by Jason A. Fitzhugh.

“GAAP” means generally accepted accounting principles in the United States, consistently applied.

“Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, arbitral tribunal, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.

“Improvements” means all buildings, structures, fixtures and other fixed assets or improvements of any and every nature located on, or annexed, attached or affixed to, actually or constructively, any real estate or any other Improvement.

“Intellectual Property” means all patents, patent applications, docketed inventions, registered and unregistered trademarks, trademark applications, trade names, service marks, logos, copyrights, computer programs and other software and information technology rights, domain names, URLs, websites, trade secrets, confidential and proprietary business information, unpatented inventions, processes, know how, product formulae, engineering, drawings, plans and product specifications, all other intellectual property, including all trade dress, promotional displays and materials, price lists, bid and quote information, literature, catalogs, brochures, advertising material and the like, all telephone numbers, telephone and advertising listings, customer, supplier and distributor lists and all other information and data relating to the Business or its customers or suppliers, all product development, packaging development, and any licenses, license agreements and applications related to any of the foregoing.

“Inventory” means all inventories of raw materials, work-in-process and finished goods.

“IRS” means the Internal Revenue Service.

“Leased Real Property” means those parcels of real estate more particularly described on Schedule 2.01(a)(i) as Leased Real Property.

“Liability” means any liability or obligation of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, whether or not required to be accrued, reserved against or otherwise reflected on financial statements prepared in accordance with GAAP or is disclosed or required to be disclosed on any Schedule to this Agreement.

“Lien” means any mortgage, deed of trust, title defect, lien, pledge, security interest, hypothecation, transfer restriction, right of first refusal, adverse claim, conditional sales contract, easement, right-of-way, encumbrance, claim or charge of any kind or nature whatsoever.

“Material Adverse Change” means a material adverse effect on, or a material adverse change in, the operations, condition (financial or otherwise), results of operations, prospects, assets, Liabilities or reserves of the Business; provided, however, that when determining whether there has been a Material Adverse Change, any adverse change attributable to any of the following shall be disregarded: (i) general economic, business, industry or financial market conditions (whether in the United States or otherwise), but that do not disproportionately affect the Business; (ii) the taking of any action required by this Agreement; (iii) the announcement of the transactions contemplated hereby; (iv) the breach of this Agreement by Buyer, (v) any changes in applicable laws, regulations or accounting rules, including GAAP; (vi) any existing event, occurrence or circumstance set forth in the disclosure schedules to this Agreement; and (vii) any adverse change in or effect on the Business that is cured by or on behalf of the Sellers to the reasonable satisfaction of Buyer before the Closing Date.

“Owned Real Property” means that certain real estate described on Schedule 2.01(a)(i) as Owned Real Property, together with all Entitlements and Improvements, plants, shrubs and trees located thereon, and all rights, ways and easements apputenant thereto (it being understood and agreed that the Owned Real Property shall not include the Olathe Facility).

“Permitted Liens” means: (i) Liens for Taxes or governmental assessments, charges or claims, the payment of which is not yet due; (ii) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and other similar Persons and other Liens imposed by Applicable Law incurred in the ordinary course of business for sums not yet delinquent; (iii) Liens securing obligations of Sellers under secured Debt of Sellers being paid off at the Closing; and (iv) with respect to Owned Real Property only, Permitted Exceptions, provided, however, that none thereof interferes with or adversely affects, individually or in the aggregate, the value, marketability or current use of any Asset, and further provided, with respect to each of clauses (i) and (ii), that to the extent that any such Lien arises prior to the Closing Date and relates to, or secures the payment of, a Liability relating to the Business or Assets, such Lien shall not be a Permitted Lien unless all Liabilities related thereto or secured thereby are fully accrued as accounts payable or accrued expenses and are taken into account in the calculation of the Final Net Adjustment.

“Person” means an individual, corporation, partnership, limited liability company, association, trust, bank, estate or other entity or organization, including a Governmental Authority.

“Records” means all records, files, books and operating data, invoices, databases, vendor and customer lists and information, manuals and other materials, whether in print, electronic or other media, equipment maintenance records, books of account, correspondence, financial, sales, market and credit information and reports, drawings, market research and other research materials and contract documents, in each such case whether or not constituting Confidential Information.

“Related Party” means, with respect to any Person, (i) any Affiliate of such Person; (ii) any member, shareholder, interest holder, legal guardian, director or officer of such Person or any of its Affiliates; or (iii) any family member or any of the Shareholders.

"Seller's Knowledge” (and any derivation thereof, whether or not capitalized) means only the current, actual knowledge and awareness, after reasonable inquiry, of (i) each of the Shareholders, (ii) Paul D. Quinlan, (iii) Leesa Nichols, (iv) Michael Fluty and (v) Emily Io (and shall not include any deemed or constructive knowledge or awareness except what would have been known on a reasonable inquiry).

“SimplePrint Agreement” shall mean that certain SimplePrint agreement between Gemaco and KK Office Solutions, Inc.

“Tax” or “Taxes” means all taxes or tax assessments of any nature, including: (i) federal, state, local or foreign net income tax, alternative or add-on minimum tax, profits or excess profits tax, franchise tax, gross income, adjusted gross income or gross receipts tax, employment related tax (including employee withholding or employer payroll tax, FICA or FUTA), real or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any withholding or back up withholding tax, estimated taxes, value added tax, severance tax, prohibited transaction tax, premiums tax, occupation tax, together with any interest or any penalty, any addition to tax or additional amount imposed by any Governmental Authority responsible for the imposition of any such tax; and (ii) any liability with respect to the foregoing as a result of being or formerly having been a member of any affiliated, consolidated, combined, unitary, or similar group, as a result of any transferee liability in respect of the foregoing, whether arising as a result of any agreement or otherwise by operation of law.

“Tax Return” means all returns, reports, forms or other information required to be filed with respect to any Tax (including estimated Tax payments or returns, elections and changes in accounting method), and any claims for refunds of Taxes and any amendments or supplements of any of the foregoing.

“Transaction Agreements” means this Agreement and the other agreements, documents, instruments, and certificates executed or to be executed by the parties pursuant to this Agreement, including those to be delivered at or before the Closing.

1.02 Index of Other Defined Terms. In addition to the terms defined in Section 1.01 above, the following terms shall have the respective meanings given thereto in the Sections indicated below:

Defined Term	Section	Defined Term	Section

Agent	9.02	Hazardous Substance	4.14(h)(iv)
Allocation	7.02	Hired Employees	6.03(a)
Assets	2.01(a)	Indemnitee	8.03(a)
Assumed Obligations	2.03	Indemnitor	8.03(a)
Base Purchase Price	3.01(a)	Indemnified Party	8.05
Buyer	Preamble	Indemnifying Party	8.05
Buyer Indemnitees	8.01(a)	Insurance Policies	4.19
Cap	8.01(b)	International Acquisition
Chosen Firm	3.04(b)	Agreements	3.03(j)
Closing	3.03(a)	Lease Agreements	4.13(b)
Closing Date	3.03(i)	Listed IP	4.17(a)
Closing Working Capital	3.01(b)(i)	Local Laws	3.03(j)
COBRA	4.16(e)	Objection	3.04(b)
Collected Receivables	3.05(b)	Olathe Equipment	4.08(c)
Confidential Information	6.01(b)	Olathe Facility	6.10
Consumed Raw Materials	3.05(b)	Orders	4.11
Credited 12-Month Inventory		Organizational Documents	4.01
Amount	3.05(d)	Pay-off Letter	3.03(b)
Credited 18-Month Inventory		Permits	4.11
Amount	3.05(f)	Permitted Exceptions	4.13(j)
Credited Raw Materials Amount	3.05(e)	Proceeding	4.07(a)
Credited Receivables	3.05(c)	Products	Recitals
Debt Holder	3.03(b)	Purchase Price	3.01(a)
Deductible	8.01(b)	Real Property	2.01(a)(i)
Direct Claim	8.03(b)	Release	4.14(h)(v)
Emily Io Deferred Compensation		Required Contractual Consent	4.04
Plan	2.03(f)	Required Legal Approval	4.04
Environmental Condition	4.14(h)(i)	Sellers	Preamble

Defined Term	Section	Defined Term	Section

Environmental Law	4.14(h)(ii)	Seller Indemnitees	8.02(a)
Environmental Liabilities	4.14(h)(iii)	Seller Indemnitors	8.01(a)
Escrow Agent	3.03(d)	Shareholders	Preamble
Escrow Agreement	3.03(d)	Sold 12-Month Finished Goods	3.05(b)
Escrow Consideration	3.03(d)	Sold 18-Month Finished Goods	3.05(f)
Estimated Adjustment	3.03(c)(ii)	Survey	3.02
Excluded Assets	2.02	Title Commitment	3.02
Excluded Liabilities	2.04	Title Company	3.02
Final Net Adjustment	3.01(b)(ii)	Title Policy	3.02
Financial Reports	4.05	Unadjusted Book Value	3.05(d)
GemTech	Preamble	WARN Act	4.15(d)

ARTICLE II

ASSETS

2.01 Purchase of Assets.

(a) Subject to the terms and conditions of this Agreement, at the Closing, the Sellers shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from the Sellers, free and clear of all Liens, other than Permitted Liens, all right, title and interest in and to the following assets, properties and rights of the Sellers, excepting only the Excluded Assets (as defined in Section 2.02), wherever located, and whether or not reflected on the books of Sellers (collectively, the “Assets”), including all right, title and interest in and to the following:

(i) The Leased Real Property, as more particularly described on Schedule 2.01(a)(i), together with the Owned Real Property, as more particularly described on Schedule 2.01(a)(i) (collectively the “Real Property”);

(ii) all Equipment, including the Equipment listed on Schedule 4.08(a) and (b) and other tangible assets and leasehold improvements;

(iii) all Inventory and all rights to receive refunds, rebates or credits in connection with the purchase thereof;

(iv) all Contracts relating to the Business, including those Contracts listed on Schedule 4.09(c);

(v) all Permits, to the extent transferable;

(vi) all Records, except as provided in Sections 2.02(c), (d) and (e);

(vii) all prepaid expenses and deposits, deferred charges, advance payments, security deposits and prepaid items, but only to the extent Buyer would receive the post-Closing benefit thereof (excluding any such items relating to Excluded Assets);

(viii) all Intellectual Property (including the Listed IP) generated, used or held for use in the Business, including the right to sue in respect of any prior infringement or misappropriation of any thereof;

(ix) all goodwill and going concern rights associated with the Business and the Assets, including all rights to use the names “GemGroup”, “Gemaco”, and “GemAsia”, and any derivatives thereof;

(x) the right to receive any insurance proceeds relating to any Asset, other than any such right to receive any insurance proceeds to the extent relating to any Excluded Liabilities or other obligation of Sellers post-Closing;

(xi) all accounts and notes receivable and all rights to bill customers for products shipped or services rendered, whether before or after the Closing;

(xii) all claims, warranties, choses in action, causes of action, rights of recovery and rights of set-off of any kind against third parties relating to the Business, the Assets or the Assumed Obligations (other than to the extent relating to any Excluded Assets or Excluded Liabilities or obligations of Sellers under this Agreement), including any warranties from contractors, subcontractors, vendors (including Gill Studios to the extent related to defective products for which Buyer has responsibility) or suppliers regarding their performance, quality of workmanship or quality of materials supplied in connection with construction, manufacturing, development, installation, repair or maintenance at the Real Property, and the right to receive and retain mail and other communications relating to the Business, the Assets or the Assumed Obligations; and

(xiii) all other assets used or held for use in the Business.

2.02 Excluded Assets. Notwithstanding anything in Section 2.01 to the contrary, the Assets shall not include, and Buyer shall not be deemed to purchase or acquire, any of the following (the “Excluded Assets”):

(a) Gemaco’s facility located in Olathe, Kansas or any lease rights therein, or any assets of GemTech;

(b) any cash on hand, bank accounts, cash equivalents or marketable securities of any Seller;

(c) the corporate or company seal, minute books, stock books, blank share certificates, Tax Returns and other books and records relating to the corporate organization of any Seller;

(d) personal copies of records and personal correspondence maintained by D. Kaye Summers or Danny R. Carpenter that are not technical in nature or otherwise are not material to the Business;

(e) the original of any Records that Sellers are expressly required by Applicable Law to retain, so long as Sellers deliver at least one copy thereof to Buyer;

(f) shares or other securities issued by Sellers;

(g) all rights of Sellers under any Transaction Agreements;

(h) any Employee Benefit Plan or any assets or other rights under any Employee Benefit Plan;

(i) all claims, warranties, choses in action, causes of action, rights of recovery and rights of set-off of any kind against third parties to the extent relating to the Excluded Assets or Excluded Liabilities;

(j) all Tax assets, refunds and credits, rights to insurance refunds and credits, and refunds and credits not included in Closing Working Capital;

(k) all other assets set forth on Schedule 2.02(k); and

(l) all gaming licenses.

2.03 Assumed Obligations. As part of the consideration for the Assets, subject to Section 2.04, at the Closing, Buyer shall assume the following liabilities and obligations of the Sellers, to the extent arising from or related to the conduct of Business in the ordinary course (the “Assumed Obligations”):

(a) all executory obligations of the Sellers to be performed or arising from and after the Closing Date under those Contracts and Permits that are Assets (including, without limitation, purchase orders for materials, supplies, etc. that were placed prior to Closing in the ordinary course of the Business, consistent with past practices but not shipped or invoiced until post-Closing, provided that any such purchase orders in excess of $100,000 shall be set forth on Schedule 2.03(a)), but excluding (i) any obligations or liabilities arising from or related to any default, breach or violation of such Contract or Permit by Sellers at or prior to the Closing Date and (ii) any accounts payable or accrued expenses (which accounts payable and accrued expenses are addressed exclusively in Section 2.03(e) below);

(b) any obligations to replace gaming chips in respect of the listed chip problems set forth on Schedule 2.03(b);

(d) the Fitzhugh Auto Loan;

(e) any accounts payable and accrued expenses that are current liabilities of the Sellers arising prior to the Closing Date in the ordinary course of the Business, consistent with past practices, but solely to the extent taken into account in the determination of the Final Net Adjustment, and expressly excluding any amounts due to any Seller or Related Party of a Seller;

(f) obligations under the Deferred Compensation Plan for Emily Io (effective January 1, 2010), as revised on February 21, 2011 (the “Emily Io Deferred Compensation Plan”); and

(g) obligations of the lessee arising after the Closing under the Lease Agreements.

2.04 Excluded Liabilities. Other than as specifically listed in Section 2.03 above, Buyer shall assume no Liability whatsoever of any Seller, whether or not arising from or related to the ownership or operation of the Business or the Assets, and whenever accruing (the “Excluded Liabilities”), all of which will be retained by Sellers. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, and under no circumstances shall Buyer be deemed to assume any Liability arising out of or relating to:

(a) any accounts payable and accrued expenses that are not current liabilities of the Sellers or were not incurred in the ordinary course of the Business, consistent with past practices;

(b) any product liability or warranty claim arising out of any product sold or manufactured in the Business prior to the Closing Date, other than the obligations specifically listed in Section 2.03(b);

(c) any claim for breach of Contract or violation of Applicable Law arising at or prior to the Closing Date, other than the obligations specifically listed in Section 2.03(b);

(d) any claim predicated on tortious conduct, strict liability or any similar legal theories based on acts, omissions, events or circumstances at or prior to the Closing Date, other than the warranty obligations specifically listed in Section 2.03(b);

(e) Taxes of any kind or character (other than any prorated property Taxes for which Buyer is responsible under Section 7.04);

(f) the ownership, operation, use or disposal of any Excluded Asset or any business activity other than the Business, whether before or after Closing;

(g) any employee compensation or employee benefits, including liability for severance pay, overtime pay, unemployment compensation, bonuses, incentive compensation, vacation pay, sick leave, termination pay, retirement plans, pension plans, and any Liability otherwise relating to any Employee Benefit Plan of any Seller or of any ERISA Affiliate, including any such plans covering any employees of any Seller represented by a labor organization or covered by a collective bargaining agreement;

(h) any Environmental Liability proximately caused by any pre-Closing condition or obligation, including but not limited to any Liability proximately caused by any past or present events, conditions, obligations, circumstances, activities, practices, incidents, actions, omissions or plans, including any such events that: (x) could interfere with or prevent continued compliance with any Environmental Law with respect to the operation of the Real Property, or (y) may give rise to any Environmental Liability at any Real Property or that otherwise may form the reasonable basis of any Proceeding relating to the Real Property or the present or former operations at the Real Property: (i) under any Environmental Laws; (ii) based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, Release or Threatened Release, of any Hazardous Substance; or (iii) resulting from exposure to workplace hazards;

(i) any Debt of any Seller or any payables of Seller due to any other Seller or any Related Party;

(j) any Proceedings relating to any Seller or the Business in respect of acts or omissions prior to the Closing, whether or not listed on Schedule 4.07(a);

(k) the Transaction Agreements, including any related legal and accounting fees and expenses;

(l) any liability of GemTech of any kind or nature; and

(m) any claims, choses in action, causes of action, rights of recovery, rights of set-off of any kind by any third party (including any employee or former employee of any Seller) arising out of the conduct of the Business or the ownership of any Assets prior to the Closing Date, other than the obligations specifically listed in Section 2.03(b).

2.05 Purchase and Sale of GemAsia Foreign Assets. Buyer designates its subsidiary, Gaming Partners International Asia, Limited, to acquire all of the Assets and assume all of the Assumed Obligations located in or arising from the conduct of GemAsia’s Business in Macao, and will be responsible for paying the portion of the Purchase Price allocable thereto.

ARTICLE III

PURCHASE PRICE AND CLOSING

3.01 Purchase and Sale of Assets.

(a) The purchase price for the Assets shall equal: (i) Nineteen Million Seven Hundred Fifty Thousand Dollars ($19,750,000) (the “Base Purchase Price”), plus (ii) the Final Net Adjustment (such sum, the “Purchase Price”), payable as and when provided in this Article III.

(b) As used herein, the following terms have the respective meanings set forth below:

(i) “Closing Working Capital” means, as of the Closing Date, on a consolidated basis for Sellers, (x) the sum of (i) accounts receivable (less an agreed bad debt reserve of 2% of all accounts receivable), plus (ii) the book value of Inventory, plus (iii) prepaid expenses, minus (y) the sum of (i) accounts payable and (ii) accrued expenses (including, without limitation, the current portion under the Emily Io Deferred Compensation Plan), all determined in accordance with GAAP as in effect on the Closing Date, provided that for purposes of determining the book value of Inventory (A) there shall be applied an obsolescence reserve of (1) 50% with respect to any finished goods in a stock keeping unit for which no bona fide third party sales have occurred in the 6 months prior to the Closing Date, and (2) 100% with respect to any finished goods in a stock keeping unit for which no bona fide third party sales have occurred in the 12 months prior to the Closing Date, and (B) obsolete or slow moving raw materials shall be written off using the same methodology and principles as applied in the preparation of GemGroup’s audited 2013 financial statements, and in a manner consistent with the example set forth in Exhibit A attached hereto. For the avoidance of doubt, Closing Working Capital will not take into account any Excluded Assets or Excluded Liabilities.

(ii) “Final Net Adjustment” means (i) the Closing Working Capital, as finally determined pursuant to Section 3.03, minus (ii) $1,635,710, it being understood that the Final Net Adjustment can be a positive or negative number.

(c) For purposes of determining the quantity of the Sellers’ Inventory as of the Closing Date, Sellers and Buyer have conducted or will conduct on the Closing Date, a joint physical count of the Inventory included in the Assets, which count shall be adjusted to reflect transactions intervening between the time of such physical count and the Closing Date. In conducting the physical count of such Inventory, any chip components not related to any pending orders for Gemaco that are stored in the “cage” at the Olathe Facility will be disregarded.

3.02 Title Insurance.

(a) Buyer has previously obtained a title insurance commitment with respect to the Owned Real Property (the “Title Commitment”) issued by First American Title Insurance Company (the "Title Company"), a copy of which has been provided to Sellers. At Closing, the Title Company shall issue to Buyer, at Seller’s expense, an owner’s title insurance policy with respect to the Owned Real Property, in the then current ALTA standard Form B policy form consistent with the title Commitment but with the deletion of all “standard exceptions” as shown on the Title Commitment (the “Title Policy”), in the amount of $[TBD], insuring that at the time of the recording of the Deed there is vested in Buyer fee simple title to the Owned Real Property, subject only to the Permitted Exceptions. All endorsements to the Title Policy, if any, shall be paid for by Buyer. Sellers shall satisfy those matters shown on Schedule B, Part I requiring any action by Sellers.

3.03 Closing.

(a) The closing (the “Closing”) of the purchase and sale of the Assets shall take place at the offices of Dentons US LLP, 4520 Main Street, Suite 1100, Kansas City, Missouri 64111 or such other mutually agreed upon place, immediately following the execution and delivery of this Agreement.

(b) In anticipation of the Closing, Sellers have delivered or caused to be delivered to Buyer a letter (a “Pay-off Letter”) from each holder of any Debt (other than the Continuing Debt) encumbering or relating to any of the Assets (each a “Debt Holder”), if any, addressed to the relevant Sellers, Buyer and Buyer’s counsel, containing (A) the name of each Debt Holder to whom such Debt is owed, (B) the aggregate payments necessary to be made at the Closing in order to satisfy in full all amounts outstanding related to the Assets, including all principal, interest, fees, prepayment penalties or other amounts due or owing with respect thereto, (C) an agreement by such Debt Holder to release any Liens on any of the Assets securing such Debt upon payment of such statement amount (Seller will use reasonable efforts to get such Debt Holder to authorize Buyer and its representatives to release such Liens), and (D) wiring or other payment instructions for each such Debt Holder.

(i) to each Debt Holder the amount set forth in or determined in accordance with such Debt Holder’s Pay-off Letter;

(ii) to Sellers, an amount equal to the Base Purchase Price minus the aggregate amount paid or payable to the Debt Holders pursuant to Section 3.03(c)(i), minus $1,000,000, which represents Buyer’s non-refundable deposit being held by BOKF, NA, minus the Escrow Consideration.

(d) At the Closing, Buyer shall pay to HSBC, NA (the “Escrow Agent”), two million dollars ($2,000,000) (the “Escrow Consideration”), to be held in escrow and disbursed pursuant to that certain escrow agreement (the “Escrow Agreement”) entered into by Buyer, Agent and Escrow Agent simultaneously herewith.

(e) At or prior to the Closing, GemGroup and Buyer shall have sent instructions to BOKF, NA authorizing the release to GemGroup of the $1,000,000 non-refundable deposit pursuant to that certain escrow agreement entered into by Buyer, GemGroup and BOKF, NA, dated as of March 13, 2014.

(f) The payment to be made by Buyer to Sellers at the Closing pursuant to Section 3.03(c)(ii) will be paid by wire transfer to the bank account previously designated by Sellers to Buyer in writing.

(g) At the Closing, Sellers shall deliver or cause to be delivered to Buyer the following:

(i) possession or control at the Real Property (or with respect to the Olathe Equipment, at the Olathe Facility) of all tangible Assets;

(ii) bills of sale, general assignments and conveyance documents with respect to the Assets, in form and substance reasonably satisfactory to Buyer and its counsel, duly executed by the applicable Sellers, and such other instruments as may be reasonably requested by Buyer to transfer all right, title and interest in, under and to the Assets to Buyer, free and clear of Liens other than Permitted Liens;

(iii) good and marketable fee simple title to the Owned Real Property by warranty deed, executed in accordance with the requirements of the laws of Missouri, and in such form as permits the deeds to be recorded in the real property records of the county where such Owned Real Property is located;

(iv) an assignment of all of Sellers' leasehold rights and interests under the applicable Lease Agreements;

(v) certificates from the Secretaries or comparable officer of each of Sellers, dated as of the Closing Date, attesting to the resolutions of the Board of Directors and shareholders, or managers and members, as applicable, of each Seller authorizing the execution, delivery and performance of the Transaction Agreements to which such Seller is a party, and to the incumbency of each person executing any Transaction Agreement on behalf of such Seller;

(vi) certificate or certificates of insurance evidencing the coverage required by Section 6.07;

(vii) copies of the Organizational Documents of each Seller, as in effect on the Closing Date, certified by the Secretary of each applicable Seller;

(viii) evidence reasonably satisfactory to Buyer and its counsel that all mortgages, security interests, collateral assignments and other Liens (other than Permitted Liens) on any of the Assets have been released, discharged and terminated in full, and the relevant Assets or other assigned collateral have been returned to the relevant party;

(ix) such customary assignments, affidavits, deeds, certificates, consents, approvals or other documents and instruments as are reasonably required by the Title Company for issuance of any owner’s title insurance policy with respect to the Owned Real Property;

(x) a duly executed, mutually agreeable Transition Services Agreement between GemTech and Buyer;

(xi) a duly executed, mutually agreeable Employment Agreement between Jason A. Fitzhugh and Buyer; and

(xii) any other documents or instruments reasonably requested by Buyer, its counsel or the Title Company in order to implement or evidence the transactions contemplated hereby.

(h) At the Closing, Buyer shall deliver or cause to be delivered to Seller the following:

(i) Assumption agreements with respect to the Assumed Obligations (including the Lease Agreements), in form and substance reasonably satisfactory to Buyer and its counsel, duly executed by Buyer, and such other instruments as may be reasonably requested by Seller to document the transactions contemplated hereby;

(ii) certificates from the Secretary or comparable officer of Buyer, dated as of the Closing Date, attesting to the resolutions of the Board of Directors of Buyer authorizing the execution, delivery and performance of the Transaction Agreements to which Buyer is a party, and to the incumbency of each person executing any Transaction Agreement on behalf of Buyer;

(iii) a duly executed, mutually agreeable Transition Services Agreement between GemTech and Buyer;

(iv) a duly executed, mutually agreeable Employment Agreement between Jason A. Fitzhugh and Buyer; and

(v) any other documents or instruments reasonably requested by Seller, its counsel or the Title Company in order to implement or evidence the transactions contemplated hereby.

(i) Unless otherwise agreed by Buyer and Sellers, the purchase and sale of the Assets and the assumption of the Assumed Obligations shall be deemed effective (including for purposes of determining the Final Net Adjustment) as of 12:01 a.m. Central Time on the date of the Closing (the “Closing Date”).

(j) Subject to the terms and conditions hereof, Sellers and Buyer shall enter into and, if and to the extent required, file with the appropriate Governmental Authorities, such agreements or instruments (the “International Acquisition Agreements”) providing for the sale, transfer, assignment, delivery or other direct or indirect conveyance of any Assets located outside the United States that, in Buyer’s reasonable opinion, must be or reasonably should be documented separately from this Agreement pursuant to requirements of Applicable Laws in the jurisdiction where located (“Local Laws”). The forms of such International Acquisition Agreements shall be negotiated in good faith between the Agent and Buyer. Notwithstanding any provision of this Agreement to the contrary, the parties agree that each International Acquisition Agreement shall only contain the provisions required by applicable Local Laws or as are otherwise reasonably appropriate to permit enforcement of the parties’ respective rights and obligations hereunder or otherwise reasonable in giving effect to the transactions contemplated hereby in or with respect to any relevant jurisdiction. To the extent that the provisions of any International Acquisition Agreement are inconsistent with the provisions of this Agreement, (i) the provisions of this Agreement shall prevail and the inconsistent provisions of the International Acquisition Agreement shall be given effect only to the extent required to comply with applicable Local Laws, and (ii) the parties shall nonetheless to the maximum extent permitted by Applicable Law comply with the applicable provisions of this Agreement instead of the applicable provisions of the relevant International Acquisition Agreement, and if not permitted by Applicable Law to comply with this Agreement strictly in accordance with its terms, such parties shall implement such arrangements as may be necessary to afford to each such party as nearly as practicable the benefits and burdens such party would have enjoyed and been subject to had the parties been permitted to comply with this Agreement strictly in accordance with its terms.

(k) The following will be deposited with the Title Company on or before the Closing Date:

(i) Sellers will deposit or cause to be deposited:

(1) The Deed described in paragraph (g)(iii) of this Section 3.03, duly executed and acknowledged;

(2) A payoff statement or, if required by the Title Company, such release documents with respect to all mortgages, deeds of trust and financing instruments affecting the Owned Real Property;

(3) A certification of the Owned Real Property's Seller’s non-foreign status pursuant to Section 1445 of the Code;

(4) A closing statement prepared by the Title Company and executed by Seller;

(5) Such other documents and instruments as the Title Company reasonably requires to evidence the due organization and valid existence of Seller and its authority to enter into and perform its obligations under this Agreement;

(ii) Buyer will deposit or cause to be deposited:

(1) By federal wire transfer of funds, an amount equal to the portion of the Purchase Price allocated to purchase of the Seller owned Real Property, as adjusted for proration of taxes and assessments as herein provided;

(2) Such documents and instruments as the Title Company reasonably requires to evidence the due organization and valid existence of Buyer and its authority to enter into and perform its obligations under this Agreement; and

(3) A closing statement prepared by the Title Company and executed by Buyer.

Upon receipt of all of the documents and funds described in this subsection (j), the Title Company will (i) record the Deed; (ii) disburse funds as shown in Seller’s closing statement; (iii) deliver to Buyer the Title Policy, the original Deed, as recorded and a copy of Buyer’s closing statement executed Buyer; and (iv) deliver to Seller a photocopy of the Deed, as recorded, and a copy of Seller’s closing statement.

(k) The costs of Closing with respect to the Seller owned Real Property shall be paid as follows:

(i) Buyer will pay:

(1) One-half of the Title Company’s fee for acting as closing agent; and

(2) The cost of recording the Deed; and

(3) The cost of any endorsements to the Title Policy and the cost of any loan policy issued to Buyer's lender (if any).

(ii) Seller will pay:

(1) The cost of recording all releases of existing mortgages, deeds of trust and other financing instruments.

(2) The cost of issuance of the Title Commitment and the premium for the Title Policy in the amount of the portion of the Purchase Price allocated to purchase of the Owned Real Property; and

(3) One-half of the Title Company’s fee for acting as closing agent.

3.04 Purchase Price Adjustment.

(a) Within ninety (90) days after the Closing, Buyer shall prepare and deliver to Agent a statement setting forth Buyer’s good faith calculation of the Closing Working Capital.

(b) Buyer’s calculation of the Closing Working Capital shall be final and binding for all purposes hereof unless the Agent delivers to Buyer written notice of objection no later than thirty (30) days after Buyer delivers such calculation to Agent, which notice shall specify the nature, amount and basis of each disputed item (an “Objection”). Failure by the Agent to deliver an Objection within such thirty-day period will be deemed to be Sellers’ acceptance of the Closing Working Capital as proposed by Buyer. Buyer and the Agent shall attempt in good faith to reach an agreement resolving all disputes set forth in the Objection within thirty (30) days after its delivery. If Buyer and the Agent are unable to resolve any or all such disputes within such thirty-day period, the parties shall, promptly after the expiration of such period, submit for resolution all unresolved disputes to BDO USA, LLP, or another nationally-recognized, independent public accounting firm selected by agreement of Buyer and the Agent, or if they cannot agree, selected by agreement of the independent public accounting firms regularly used by GemGroup and Buyer to audit their respective financial statements (the “Chosen Firm”) for resolution.

(c) Promptly, but no later than thirty (30) days after its acceptance of its appointment as the Chosen Firm, the Chosen Firm shall determine, based solely on written presentations by Buyer and the Agent, those items remaining in dispute with respect to the calculation of the Closing Working Capital and shall render a written report to Buyer and the Agent as to the resolution of each disputed item and the resulting calculation of Closing Working Capital. In resolving any disputed item, the Chosen Firm (i) shall not assign a value to such item greater than the greatest value for such item claimed by the Agent or Buyer or less than the smallest value for such item claimed by the Agent or in the Objection; (ii) shall rule only on the unresolved items raised by the Agent or Buyer, accepting all other aspects of Buyer’s calculation of the Closing Working Capital; and (iii) shall have no right, authority or discretion to employ any accounting standard or principles except for those provided herein, as illustrated in the example calculation set forth on Exhibit A. The Chosen Firm will have exclusive jurisdiction over, and resort to the Chosen Firm as provided in this Section 3.04 will be the sole recourse and remedy of the parties with respect to, any disputes arising out of or relating to the calculation of the Closing Working Capital. The Chosen Firm’s determination will be conclusive and binding on the parties for all purposes hereof.

(d) The Parties shall cooperate with and make available to each other and their respective representatives, all relevant business records, and shall permit access to their relevant facilities and personnel, as reasonably required in connection with the preparation and analysis of the Closing Working Capital and the resolution of any disputes with respect thereto in accordance herewith.

(e) The fees and expenses of the Chosen Firm shall be paid one-half by Sellers and one-half by Buyer.

(f) If the Final Net Adjustment is a positive number, then the Purchase Price shall be increased by the amount of such Final Net Adjustment and Buyer shall pay such amount to the Agent, on behalf of Sellers, as their interests may appear. If the Final Net Adjustment is a negative number, then the Purchase Price shall be decreased by the amount of such shortfall and Sellers shall refund such amount to Buyer. Any payment or refund required under this Section 3.04(f) shall be made by wire transfer of immediately available funds no later than five (5) Business Days after the date on which the Closing Working Capital is finally determined as provided in this Section 3.04, whether by agreement of Buyer and the Agent, lapse of time to deliver an Objection or resolution of disputed matters by the Chosen Firm. In the event of any disputes with respect to the calculation of the Closing Working Capital, the parties shall nonetheless promptly pay to each other, as appropriate, any net amount as can not be affected by the outcome of the disputed items.

3.05 Subsequent Working Capital Adjustments.

(a) From the Closing Date through the first anniversary of the Closing Date, Buyer shall use its reasonable commercial efforts (consistent with its efforts to collect receivables arising in the conduct of its own business) to collect all accounts receivable included in the Assets transferred to Buyer, provided that such efforts need not include recourse to litigation or, except with respect to promotional accounts where consistent with the past practice of the Business and commercially reasonable under the circumstances, recourse to an outside collection agency. From the Closing Date through the first anniversary of the Closing Date (or for 18 months after the Closing Date for items listed on Schedule 3.05(f)), Buyer shall use its reasonable commercial efforts (in the ordinary course of business and in quantities consistent with its reasonable commercial needs) to (i) sell the finished goods and complete and sell the work in process included in the Assets transferred to Buyer and (ii) use the raw materials included in the Assets transferred to Buyer, excluding in the case of (i) and (ii) any defective, damaged or discontinued items. The parties agree that, with respect to any payment on account of the accounts receivable, payments by a customer shall be applied to the invoice(s) specified by the customer or to the receivable reasonably identifiable to such payment (as, for example, where the payment amount corresponds exactly to the amount of a given invoice), and otherwise to the oldest undisputed accounts receivable from such customer, provided, that Buyer shall not affirmatively request that customers pay post-Closing accounts receivable prior to any pre-Closing accounts receivable. Buyer shall use commercially reasonable efforts to use and/or sell the finished goods, work in process and raw materials included in the Assets transferred to Buyer (other than defective or damaged items) before using any of the same items of substantially similar quality purchased or produced by Buyer after the Closing Date.

(b) Within sixty (60) days after the first anniversary of the Closing Date, Buyer shall prepare and deliver to Agent a report setting forth, with respect to the one year period ending on such anniversary: (i) the aggregate amount collected by Buyer on account of all accounts receivable included in the Assets transferred to Buyer at the Closing (the “Collected Receivables”); (ii) the quantity by stock keeping unit of all finished goods and work in process Inventories transferred to Buyer at the Closing sold by Buyer in the ordinary course of the Business (but excluding those stock keeping units listed on Schedule 3.05(f)) (the “Sold 12-Month Finished Goods”); and (iii) the quantity by category of raw materials included in the Inventories transferred to Buyer at the Closing used by Buyer in the production of finished goods (the “Consumed Raw Materials”). Buyer will maintain a record of all purchases of Inventory by individual item during the twelve (12) month period following the Closing, shall conduct a complete physical inventory on the first anniversary of the Closing Date and shall use such purchase records to compare and compute the amounts of the Sold 12-Month Finished Goods on the first anniversary of the Closing Date.

(c) If the Collected Receivables exceed the net amount taken into account in the final calculation of the Closing Working Capital on account of accounts receivable (such amount, the “Credited Receivables”), then Buyer will pay to Agent, on behalf of Sellers, as an addition to the Purchase Price, the amount of such excess. If the Collected Receivables are less than the Credited Receivables, then Sellers shall refund to Buyer the amount of such shortfall, and Buyer shall, upon request, transfer and assign to Sellers on a quitclaim basis any accounts receivable in respect of which Sellers shall have reimbursed Buyer.

(d) If the book value (determined as of the Closing Date and without regard to the obsolescence reserves pursuant to subclause (A) of the definition of Closing Working Capital) (“Unadjusted Book Value”) of the Sold 12-Month Finished Goods exceeds the net amount taken into account (after giving effect to such obsolescence reserves) in the final calculation of the Closing Working Capital on account of such stock keeping units (the “Credited 12-Month Inventory Amount”), then Buyer will pay to Agent, on behalf of Sellers, as an addition to the Purchase Price, the amount of such excess. If such book value is less than the Credited 12-Month Inventory Amount, then Sellers shall refund to Buyer the amount of such shortfall.

(i) By way of example only, assume that, as of the Closing, there are 100 units of a particular SKU in the Inventory transferred to Buyer, having a book value of $1.00 each. A 50% obsolescence reserve is applied to such SKU pursuant to subclause (A) of the definition of Closing Working Capital. Accordingly, the Credited 12-Month Inventory Amount for such SKU is $50.00. Assume further that during the one year period ending on the first anniversary of the Closing, Buyer sells all 100 units of such SKU in the ordinary course of the Business (i.e., the Sold 12-Month Finished Goods for such SKU is 100 units). The Unadjusted Book Value of the Sold 12-Month Finished Goods is therefore $100 (100 units * $1.00 per unit), and Buyer would pay to Sellers an additional $50 on account of such SKU (i.e., $100 - $50 = $50).

(ii) By way of further example, assume that, as of the Closing, there are 100 units of a particular SKU in the Inventory transferred to Buyer, having a book value of $1.00 each. A 50% obsolescence reserve is applied to such SKU pursuant to subclause (A) of the definition of Closing Working Capital. Accordingly, the Credited 12-Month Inventory Amount for such SKU is $50.00. Assume further that during the one year period ending on the first anniversary of the Closing, Buyer sells only 30 units of such SKU in the ordinary course of the Business (i.e., the Sold 12-Month Finished Goods for such SKU is 30 units). The Unadjusted Book Value of the Sold 12-Month Finished Goods is therefore $30 (30 units * $1.00 per unit), and Sellers would refund to Buyer $20 on account of such SKU (i.e., $30 - $50 = ($20)).

(e) If the book value (determined as of the Closing Date and without regard to any write-offs pursuant to subclause (B) of the definition of Closing Working Capital) (also referred to as the “Unadjusted Book Value” of the Consumed Raw Materials for purposes of Section 3.05(g) below) of the Consumed Raw Materials exceeds the amount taken into account (after giving effect to such write-offs) in the final calculation of the Closing Working Capital on account of such raw materials (the “Credited Raw Materials Amount”), then Buyer will pay to Agent, on behalf of Sellers, as an addition to the Purchase Price, the amount of such excess. If such book value is less than the Credited Raw Materials Amount, then Sellers shall refund to Buyer the amount of such shortfall.

(f) Within sixty (60) days after the eighteen-month anniversary of the Closing Date, Buyer shall prepare and deliver to Agent a report setting forth, with respect to the eighteen-month period ending on such anniversary the quantity by stock keeping unit of all Inventories in the stock keeping units listed on Schedule 3.05(f) that were transferred to Buyer at the Closing and sold by Buyer in the ordinary course of the Business (the "Sold 18-Month Goods"). If the Unadjusted Book Value of such Inventories exceeds the net amount taken into account (after giving effect to such obsolescence reserves) in the final calculation of the Closing Working Capital on account of such stock keeping units (the “Credited 18-Month Inventory Amount”), then Buyer will pay to Agent, on behalf of Sellers, as an addition to the Purchase Price, the amount of such excess. If such book value is less than the Credited 18-Month Inventory Amount, then Sellers shall refund to Buyer the amount of such shortfall. Buyer will maintain a record of all purchases of Inventory by individual item during the eighteen (18) month period following the Closing and shall conduct a complete physical inventory 18 months following the Closing Date and shall use such purchase records and inventory to compare and compute the amounts of the Credited 18-Month Inventory Amount on the eighteen-month anniversary of the Closing Date.

(g) Notwithstanding any other provision of this Section 3.05, with respect to any finished goods or raw materials included in the Assets transferred to Buyer which are defective or damaged and which are sold during the relevant 12- or 18-month time period under this Section 3.05 for less than their Unadjusted Book Value, then, in calculating the Credited 12-Month Inventory Amount, Credited Raw Materials Amount or Credited 18-Month Inventory Amount, as applicable, the parties shall, in lieu of Unadjusted Book Value, use the lower of (i) the Unadjusted Book Value and (ii) the amount equal to 70% of the actual sales price of the finished goods or raw materials. Sellers acknowledge that it is not Buyer’s culture or intent to sell products at less than book value, but this paragraph 3.05(g) will apply to the extent such sales do occur during the relevant time periods.

(h) Any report delivered by Buyer pursuant to Section 3.05(b) or (f) will be final and binding for all purposes hereof unless the Agent delivers to Buyer written notice of objection within thirty (30) days after delivery of Buyer’s report, which notice shall specify in reasonable detail the scope, amount and basis of any disputed items. The procedures of Section 3.05(b)-(e) shall apply to resolution of any such disputed items, mutatis mutandis. Any net amount payable by Buyer or Sellers hereunder shall be paid within five (5) Business Days after all related disputes have been resolved in accordance herewith. Any payment pursuant to this Section 3.05 shall be treated as an adjustment to the Purchase Price for all purposes.

(i) If, during the twelve (12) months after the Closing Date, Buyer no longer actively offers for sale or sells a Seller product or product line in a manner comparable to how the product or product line was sold prior to Closing, all work in process and finished goods Inventories related to that product or product line and included in the Assets transferred to Buyer will be deemed sold by Buyer during the first year after the Closing at Closing Date book value; provided, however, that this Section 3.05(i) shall not apply to (x) any work in process that is not tied to a particular customer order as of the Closing Date, (y) any defective or damaged items, or (z) any items stored in the “cage” at the Olathe Facility as of the Closing Date.

(j) If, during the relevant twelve (12) or eighteen (18) months after the Closing Date, Buyer or its representatives negligently damages Inventory or takes any action or fails to take any commercially reasonable action to protect the Inventory from damage or loss, and as a direct result of such damage, action or failure to take action the value of such Inventory is materially decreased, then such Inventories will be deemed sold by Buyer during the first year after the Closing at Closing Date book value.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers, jointly and severally, and, GemTech (but only with respect Section 4.02(d)), severally and not jointly, represent and warrant to Buyer as follows:

4.01 Organization. Each of GemGroup and Gemaco is a corporation, duly organized, validly existing and in good standing under the laws of the State of Missouri, and has all requisite corporate power and authority to carry on its business as now conducted by it and to own and operate its assets as now owned and operated by it. GemAsia is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Missouri, and has all requisite limited liability company power and authority to carry on its business as now conducted by it and to own and operate its assets as now owned and operated by it. No Seller is required to be qualified to conduct business in any state or other jurisdiction other than as set forth in Schedule 4.01, in which states they are duly qualified to do business and in good standing, except where the failure to be so qualified and in good standing could not reasonably be expected to have a Material Adverse Effect. Each Seller has delivered to Buyer true and correct copies of its Articles of Incorporation, Bylaws, Operating Agreements and any similar governing or constitutive documents or agreements, as applicable (collectively, the “Organizational Documents”), each as currently in effect.

4.02 Authority; Enforceability.

(a) Each Seller has the right, corporate or limited liability company power, and authority, and each of the Shareholders has the right, power and legal capacity, in each case, to execute and deliver the Transaction Agreements executed or to be executed by each of them pursuant to this Agreement, and to perform their respective obligations thereunder. The Transaction Agreements to which each Seller or Shareholder is a party constitute (or will, when executed and delivered as contemplated herein, constitute) the legally binding obligations of such Seller or Shareholder, enforceable in accordance with their respective terms.

(b) Except as set forth on Schedule 4.02(b), the execution, delivery and performance of the Transaction Agreements by Sellers and Shareholders, and the consummation of the transactions contemplated thereby, do not and will not: (i) require the consent, waiver, approval, license or other authorization of any Person (including any spousal consent); (ii) violate any provision of Applicable Law; (iii) violate or breach any Contract included in the Assets; or (iv) contravene, conflict with, or result in a violation of: (1) any provision of any Seller’s Organizational Documents; or (2) any resolution adopted by the Board of Directors, shareholders, managers or members, as applicable, of any Seller.

(c) All requisite corporate or limited liability company action has been taken by Sellers and Shareholders to authorize and approve the execution and delivery of the Transaction Agreements, the performance by Sellers of their respective obligations thereunder and of all other acts necessary or appropriate for the consummation of the transactions contemplated by the Transaction Agreements.

(d) GemTech has the right, limited liability company power, and authority, to execute and deliver the Transaction Agreements executed or to be executed by each of them pursuant to this Agreement, and to perform their respective obligations thereunder. All requisite corporate or limited liability company action has been taken by GemTech to authorize and approve the execution and delivery of the Transaction Agreements, the performance by GemTech of its obligations thereunder and of all other acts necessary or appropriate for the consummation of the transactions contemplated by the Transaction Agreements.

4.03 Capitalization. The Shareholders are the legal and beneficial owners of all of the issued and outstanding shares of GemGroup. GemGroup is the legal and beneficial owner of all of the issued and outstanding shares of Gemaco and all of the limited liability company interests of GemAsia.

4.04 Consents. Schedule 4.04 sets forth (i) each governmental or other registration, filing, application, notice, transfer, consent, approval, order, qualification and waiver required under Applicable Law to be obtained by any Seller in connection with the execution and delivery of any Transaction Agreement, or the consummation of the transactions contemplated thereby (each, a “Required Legal Approval”), and (ii) each Contract with respect to which a consent of or waiver by any other party thereto must be obtained by virtue of the execution and delivery of the Transaction Agreements or the consummation of the transactions contemplated thereby to avoid the invalidity of such Contract, the termination thereof (or the giving rise to any right to terminate by another party), a breach or default thereunder (whether with notice, passage of time or both) or any other change or modification to the terms thereof (including acceleration of any Liabilities) (each, a “Required Contractual Consent”).

4.05 Financial Reports; Liabilities. Sellers have previously delivered to Buyer the audited, consolidated balance sheet and statements of income, shareholders’ equity (or deficit), and cash flows of GemGroup and its subsidiaries, as at and for the fiscal years ended December 31, 2009, 2010, 2011, 2012 and 2013 (the “Financial Reports”). The Financial Reports: (i) are true and correct in all material respects; (ii) have been prepared in accordance with GAAP, consistently applied; (iii) present fairly the financial condition and the results of operations of Sellers as of the date(s) and for the period(s) therein indicated; and (d) are consistent with the books and records of Sellers prepared in the ordinary course of business. The Sellers have no known Liabilities other than: (i) as reflected in the most recent balance sheet included in the Financial Reports (including the notes thereto); (ii) executory obligations under Contracts; and (iii) Liabilities set forth on Schedule 4.05.

4.06 Books and Records.

(a) The books of account and other records of Sellers, all of which have been made available to Buyer, have been maintained in accordance with commercially reasonable business practices, consistently applied, and fairly and accurately provide the basis for the financial position and results of operation of Sellers set forth in the Financial Reports. All of those books and records are in possession of Sellers and, to the extent they are not Excluded Assets under Section 2.02(c) or (d), will be put into Buyer’s possession or control at the Closing.

(b) Sellers maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and to maintain accountability for assets, (iii) access to financial assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded assets are compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

4.07 Legal Actions.

(a) Except as set forth in Schedule 4.07(a), there is no demand, action, suit, claim, proceeding, complaint, grievance, charge, inquiry, hearing, arbitration or governmental investigation of any nature, public or private (each, a “Proceeding”), pending or, to Sellers’ Knowledge, threatened by or against Sellers or otherwise involving the Business or any of the Assets, nor to the Sellers' Knowledge is there any basis for any such Proceeding.

(b) Schedule 4.07(b) specifically sets forth all pending claims for which Sellers have received notice for product liability, warranty, material back charge, material additional work, material repair or replacement or other claims by any third party (whether based on contract or tort and whether relating to personal injury, including death, property damage or economic loss) arising from products sold or services rendered by Sellers in the Business. Except as set forth on Schedule 4.07(b), all services rendered and products sold in the Business have been in conformity with all Applicable Laws, all applicable contractual commitments and all express and implied warranties. No services or products provided by Sellers relating to the Business are subject to any guaranty, warranty, or other indemnity beyond those contained in the customer Contracts identified on Schedule 4.09(c), copies of which have been previously delivered to Buyer, other than any guaranty, warranty, or other indemnity occuring by operation of law. Schedule 4.07(b) separately lists any such claims relating to the Business resolved within the last two (2) years that resulted in payment by Seller (or its insurers) in excess of $10,000.

4.08 Personal Property, Inventory, Title and Sufficiency of Assets and Receivables.

(a) Schedule 4.08(a) sets forth all owned Equipment and other owned tangible assets reflected on Seller's books (other than Inventory).

(b) Schedule 4.08(b) sets forth all leased Equipment or other tangible assets included in the Assets.

(c) Schedule 4.08(c) identifies all equipment and other tangible assets included in the Assets which are located at the Olathe Facility (the “Olathe Equipment”). Except as disclosed on Schedule 4.08(c), all Equipment and other tangible assets (owned or leased) included in the Assets are located at the Real Property or with respect to the Olathe Equipment, at the Olathe Facility.

(d) All Inventory included in the Assets was manufactured or acquired by the Principal Sellers in bona fide, arms-length transactions entered into in the ordinary course of business. No Inventory is held by the Principal Sellers on consignment, or is otherwise subject to any ownership interest of any third party. The Inventories reflected in the Financial Reports: (i) were reasonable in relation to the then existing circumstances of the Business; (ii) were classified as current assets in accordance with GAAP; and (iii) were reflected consistently with past practices. Except as set forth on Schedule 4.08(d), no items of Inventory have been held by the Principal Sellers for one year or more or are held by the Principal Sellers in quantities materially exceeding the amount of such item sold or consumed, as applicable, by the Principal Sellers during the twelve (12) calendar months ended prior to the date of this Agreement. Except as listed on Schedule 4.08(d), the Business does not depend on any single vendor for any material portion of its total Inventories, nor has any Principal Seller had difficulty in obtaining any Inventories. All items of Inventory included in the Assets are of a quality and quantity which are merchantable and, in the case of finished goods, saleable as first quality goods, or in the case of raw materials or work-in-progress, fully useable in the production of first-quality finished goods, in each case in the ordinary course of business. The values at which such items of Inventory are accrued on the most recent balance sheet of Sellers contained in the Financial Reports or, in the case of Inventory manufactured or acquired following the date thereof, on the books and records of Sellers, reflect the normal Inventory valuation policies of Sellers (which policies are consistently applied and include the writing down of or reserving against the value of slow moving or obsolete Inventory and stating Inventories at the lower of cost or market in accordance with GAAP).

(e) Except as set forth in Schedule 4.08(e), Sellers own all right, title and interest in and to all of the Assets, free and clear of any and all Liens, other than Permitted Liens. None of the Assets are owned or possessed by GemTech. GemTech has no assets or properties used in the design, manufacture, distribution or sale of Products.

(f) Except as set forth on Schedule 4.08(f), the Equipment listed (or required to be listed) on Schedule 4.08(a) is in good operating condition and repair, ordinary wear and tear excepted, and are adequate for the uses to which they are put. No replacement, maintenance or repair has been deferred with respect to any Equipment material to the Business within the past twelve (12) months.

(g) Except as listed on Schedule 4.08(g), during the ten (10) year period immediately prior to the Closing no Seller has engaged in any other business other than the Business.

(h) The Assets are all of the properties, assets and rights (tangible and intangible) necessary to conduct the Business as heretofore conducted by Sellers and are sufficient for the uninterrupted continuation of the Business by Buyer after the Closing.

(i) All receivables (including trade accounts and other accounts receivable, loans receivable and advances) included in the Assets have arisen only from bona fide transactions entered into in the ordinary course of business consistent with past practices.

4.09 Contracts.

(a) Except as described on Schedule 4.09(a), no Seller has breached, violated or defaulted under (or taken or failed to take any action that, with the giving of notice, the passage of time or both would constitute a violation or default under) any Contract included in the Assets. Except as set forth on Schedule 4.09(a), to Sellers’ Knowledge, no other party obligated to Sellers pursuant to a Contract has breached, violated or defaulted under (or taken or failed to take any action that, with the giving of notice, the passage of time or both would constitute a default under) such Contract. Except as set forth on Schedule 4.09(a), all such Contracts can be fulfilled or performed by Sellers in accordance with their respective terms in the ordinary course of the Business.

(b) Except as set forth on Schedule 4.09(b), all of the Contracts included in the Assets (i) were entered into in the ordinary course of business with bona fide third parties in arms-length transactions; (ii) are valid and enforceable against the relevant Seller and to Sellers’ Knowledge, any counterparty, in each case in accordance with their terms; and (iii) are in full force and effect.

(c) Schedule 4.09(c) lists each Contract included in the Assets other than purchase orders in amounts under $200,000. Sellers have previously delivered to Buyer true and correct copies of all Contracts (or accurate written summaries of any oral Contract) other than purchase orders in amounts under $200,000, each as currently in effect.

4.10 Tax Matters.

(a) Each Seller has duly and timely filed all Tax Returns required to be filed by it under Applicable Law. All such Tax Returns were correct and complete in all material respects. All Taxes due and payable by each Seller (whether or not shown on any Tax Return) have been paid to the extent the failure to pay same could result in a Liability to Buyer or a Lien on any of the Assets. No Seller is currently a beneficiary of any extension of time within which to file any Tax Return, and no claim has ever been made by an authority in a jurisdiction where any Seller does not file Tax Returns that such Seller is or may be subject to taxation by that jurisdiction in connection with the conduct of the Business or ownership or operation of the Assets.

(b) All Taxes that any Seller is or was required by Applicable Law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Authority or other Person or, if not paid, have been appropriately reserved.

(c) Except as set forth on Schedule 4.10(c), there is no dispute or claim concerning any material Tax Liability of any Seller claimed or raised by any Governmental Authority in writing at any time in the past six (6) years and, to Sellers' Knowledge there exists no proposed tax assessment against any Seller for which such Seller has received notice.

(d) No Seller has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(e) Except as set forth on Schedule 4.10(e), no Seller has entered into any agreements with federal, state or local taxing authorities, relating to any tax abatement or tax credit agreements.

4.11 Applicable Laws and Permits. Schedule 4.11 sets forth (i) a list of all licenses, permits, qualifications, certificates, franchises, approvals, authorizations, exemptions and other registrations necessary to conduct the Business, or to own or operate the Assets, as applicable (collectively, “Permits”), and (ii) all orders, writs, injunctions, directives, judgments, decrees, or awards applicable to any Seller, the Business or the Assets (collectively, “Orders”). Except as listed on Schedule 4.11:

(a) Each Seller holds all such Permits, each of which is in full force and effect;

(b) the Business is now being, and has at all times been, conducted, and the Assets are, and have at all times been, owned and operated, in compliance with all Applicable Laws, Orders and Permits;

(c) no Seller has received notice of, or has any Knowledge of, any alleged violation, breach or default of any Applicable Laws, Orders or Permits; and

(d) no loss, non-renewal or expiration of, nor any noncompliance with, any Permit is pending or threatened (except as a result of the transactions contemplated hereby), other than the expiration of such Permits in accordance with their terms or non-renewal at the election of Sellers.

4.12 Certain Changes. Since December 31, 2013, Sellers have conducted the Business and operated the Assets solely in the ordinary course of business consistent with past practices, and have used commercially reasonable efforts to preserve the Assets. Without limiting the foregoing, except as set forth on Schedule 4.12, since December 31, 2013, there has not been any:

(a) event or circumstance that, to Sellers’ Knowledge, has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Change;

(b) damage, destruction or loss (whether or not covered by insurance) that resulted in or could reasonably be expected to result in losses with respect to the Business or Assets, in the aggregate, of more than Twenty Thousand Dollars ($20,000);

(d) amendment or termination of any Contract included in the Assets other than in the ordinary course of business;

(e) change in the accounting principles, methods or practices of any Seller, or in the manner any Seller keeps its books and records, or any change by any Seller of its current practices with regard to sales, receivables, Inventory, Inventory valuation, payables or accrued expenses;

(f) with respect to Covered Employees, (i) grant of any severance, continuation or termination pay; (ii) entering into (or amendment of) any employment, deferred compensation or other similar agreement; (iii) increase in benefits payable or potentially payable under any severance, retention or termination pay policies or employment agreements; (iv) increase in compensation, bonus or other benefits payable or potentially payable, except for increases in compensation, bonus or other benefits payable or potentially payable in the ordinary course of business; (v) change in the terms of any bonus, pension, insurance, health or other benefit plan; or (vi) representation to any employee or former employee that any Seller or Buyer would continue to maintain or implement any benefit plan or would continue to employ such employee after the Closing Date (excluding any representations made by Buyer);

(g) acquisition or disposal of assets used or held for use in the Business (except in bona fide, arm’s length transactions entered into in the ordinary course of business consistent with past practice);

(h) except as listed on Schedule 4.12(h), capital expenditures exceeding, individually or in the aggregate, Twenty Thousand Dollars ($20,000);

(i) any change in any pricing practices (other than in the ordinary course of business consistent with past practices or approved by Buyer);

(j) any settlement or compromise in any claim, suit or cause of action involving more than Twenty Thousand Dollars ($20,000); or

(k) any agreement to do, directly or indirectly, any of the things described in the preceding clauses (a) through (j).

4.13 Real Property.

(a) Except as described on Schedule 4.13(a), the Real Property constitutes all of the lots, tracts and parcels of real property owned, used or held for use in the Business. Except for Leased Real Property identified on Schedule 4.13(b), Sellers have good and marketable fee simple title to all of the Owned Real Property, free and clear of any Liens, other than Permitted Liens.

(b) Except for the leases described on Schedule 4.13(b) (the “Lease Agreements”), there are no leases, subleases or other agreements for use, occupancy or possession of any of the Real Property. Sellers have a valid leasehold interest in all Leased Real Property identified as leased on Schedule 4.13(b). All such Leased Real Property is in the condition required for surrender to the relevant lessor at the end of the applicable lease.

(c) Except as set forth on Schedule 4.13(c), no Seller has received notice of any material non-recurring Taxes, assessments or proposed assessment with respect to any Real Property.

(d) Except as set forth on Schedule 4.13(d) hereto: (i) no buildings, structures or other Improvements have been erected on the Real Property or structurally modified since December 31, 2013; and (ii) there has been no fire, flood or other casualty to any of the buildings, structural additions or other Improvements on the Real Property requiring any repair or restoration that changed the footprint or the height of such buildings, structural additions or other improvements.

(e) Except as set forth on Schedule 4.13(e): (A) no Owned Real Property encroaches on, or is encroached on by any other Person; (B) there is no basis for any dispute regarding the location of any boundary line of any Owned Real Property; and (C) as to the Owned Real Property there is no encroachment or alleged encroachment by an Improvement onto any real property of, or any area subject to any easement held by, any other Person.

(f) None of the Owned Real Property is subject to any pending or to Sellers’ Knowledge threatened condemnation, eminent domain, expropriation or rezoning proceeding. The Owned Real Property, Sellers’ current use of the Owned Real Property and Sellers' current use of the Leased Real Property complies with all restrictive covenants and Applicable Laws, including subdivision, municipal, zoning or building ordinances or codes, use and occupancy restrictions and no Seller has received notice of any allegation to the contrary.

(g) Except as set forth on Schedule 4.13(g), no Seller is indebted to any contractor, laborer, mechanic, materialman, architect, engineer or any other Person for work, labor or services performed or rendered, or for materials supplied or furnished, in connection with the Real Property for which any such Person could claim a Lien against the Real Property or any other Assets.

(h) None of the Owned Real Property is subject to any exemption from ad valorem or property taxes.

(i) Except as set forth on Schedule 4.13(i): (A) the Improvements located on or annexed to the Real Property are in good order and repair, ordinary wear and tear excepted and are in good and safe condition, free from material defects; and (B) all electrical, plumbing, heating and air-conditioning and exterior drainage systems and Equipment, in or on the Real Property are in good condition and working order, ordinary wear and tear excepted; (C) there is no termite or other pest infestation, dry rot or similar damage affecting any of the Owned Real Property that will require repairs to any of the Real Property; and (D) there is no subsidence or other soil condition that does or is reasonably likely in the future to adversely affect (i) any of the Owned Real Property or (ii) to Sellers' Knowledge, any of the Leased Real Property.

(j) Except as set forth on Schedule 4.13(j), none of the Owned Real Property and, to Sellers' Knowledge, none of the Leased Real Property is subject to any use, development or occupancy restrictions (except those imposed by applicable zoning and subdivision laws and regulations), Taxes or utility “tap-in” fees (except those generally applicable throughout the tax district in which such Real Property is located), or charges or restrictions, whether existing of record or arising by operation of law, unrecorded or unregistered agreement or the passage of time or otherwise (other than the Permitted Exceptions). The term “Permitted Exceptions” means: (A) current city, state, municipal and county ad valorem taxes not yet due and payable; (B) easements for the installation or maintenance of public utilities; (C) building and use restrictions of record; and (D) all applicable zoning, entitlement, conservation restrictions and other land use and environmental regulations.

(k) Sellers have delivered or made available to Buyer true and correct copies of all surveys, plans, specifications, environmental, engineering and mechanical data relating to the Owned Real Property that are in the possession or control of any Seller.

4.14 Environmental Matters.

(a) Except as set forth on Schedule 4.14(a), no Seller has: (i) entered into or been subject to any consent decree, compliance order, or administrative order pursuant to applicable Environmental Laws (as hereafter defined) or relating to any Environmental Condition (as hereafter defined); (ii) received any written request for information, notice, demand letter, administrative inquiry, or formal or informal complaint or claim with respect to any Environmental Condition (including under the citizen suit provision of any Environmental Law); or (iii) been the subject of, or threatened with, any governmental enforcement action or third party claim under any Environmental Law, and no Seller has any reason to believe that any of the above is reasonably likely to be forthcoming.

(b) Except as set forth on Schedule 4.14(b), each Seller has complied and is in compliance with all applicable Environmental Laws at the Real Property and any other location where the Business has been conducted.

(c) Except as set forth on Schedule 4.14(c), no Seller has generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced, recycled, or processed any Hazardous Substances or wastes at or from the Real Property or any other location where the Business has been conducted except, in each case, in compliance with all applicable Environmental Laws, and there has been no Release of any Hazardous Substances (as hereinafter defined) at or in the vicinity of the Real Property or any other location where the Business has been conducted.

(d) Except as set forth on Schedule 4.14(d), no Seller has received notice of or otherwise has any Knowledge concerning, any Environmental Condition at any off-site location(s) to which any Seller transported or arranged for the transportation of Hazardous Substances.

(e) Except as set forth on Schedule 4.14(e), there are no, and there have never been, any underground storage tanks present on the Real Property or any other location where the Business has been conducted.

(f) Except as set forth on Schedule 4.14(f), no Seller is required or obligated to make any capital or other expenditure in excess of Ten Thousand Dollars ($10,000) to comply with any Environmental Law at the Real Property nor is there any reasonable basis on which any Governmental Authority would take any action that would require any such capital or other expenditure.

(g) Except as set forth on Schedule 4.14(g), Sellers have delivered to Buyer true and correct copies of all reports or tests that were prepared at any time since January 1, 2003, with respect to compliance of the Real Property with the Environmental Laws or the presence of Hazardous Substances to the extent such reports were prepared for any of them or are in their possession or control.

(h) For purposes of this Section 4.14, the following terms shall have the respective meanings set forth below:

(i) “Environmental Condition” means any condition with respect to the environment (including the air, water, groundwater, surface water and land), whether or not yet discovered, which could or does result in any damage, loss, cost, expense, claim, demand, order or liability to or against any Person by any third party or Governmental Authority, including any condition resulting from the ownership or operation of any Assets, the conduct of the Business or any activity or operation formerly conducted by any Person on or off the Real Property or any other location where the Business has been conducted.

(ii) “Environmental Law” means any Applicable Law relating to the protection of human health, safety or the environment including: (A) all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of Hazardous Substances, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, whether solid, liquid or gaseous in nature; and (B) all requirements pertaining to the protection of the health and safety of employees or the public.

(iii) “Environmental Liabilities” means all Liabilities of a Person, whether such Liabilities are owed by such Person to Governmental Authorities, private third parties or otherwise, arising under or relating to any Environmental Law or Environmental Condition.

(iv) “Hazardous Substance” means any substance: (A) the presence of which requires investigation or remediation under any Environmental Laws; (B) which is defined as a “pollutant,” “hazardous waste” or “hazardous substance” under any Environmental Laws; (C) that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic or otherwise hazardous and is regulated under Environmental Laws; or (D) that is gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenols (PCBs) or asbestos.

(v) “Release” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping into the environment, or any substantial likelihood of any of the foregoing that requires action to prevent or mitigate damage to the environment that may result therefrom.

4.15 Employment Matters. (a) Schedule 4.15(a) sets forth: (i) all present employees (including any leased or temporary employees) and independent contractors of each Seller, together with their respective dates of hire and, to Seller's Knowledge, any prior periods of employment with Sellers; (ii) each employee’s or independent contractor’s current rate of compensation; (iii) each such employee’s accrued vacation, sick leave or personal leave if applicable; and (iv) each such employee who works, on average, fewer than 20 hours per week. Schedule 4.15(a) also names any employee who is absent from work due to a work-related injury, is receiving workers’ compensation or is receiving disability compensation. Except as set forth on Schedule 4.15(a), there are no unpaid wages, bonuses or commissions (other than those not yet due and which have been accrued in the financial books and records of Sellers, and which, to the extent unpaid as of the Closing Date, will be reflected as accrued expenses and taken into account in the determination of the Final Net Adjustment) owed to any employees or independent contractors.

(b) Except as set forth on Schedule 4.15(b), Sellers: (i) have not experienced any organized slowdown, organized work interruption, strike or work stoppage by their employees; (ii) are not a party to, nor obligated by, any Contract or otherwise, regarding the rates of pay, working conditions or other terms of employment of any employees of Sellers; and (iii) are not obligated under any Contract or otherwise to recognize or bargain with any labor organization or union on behalf of any employees of Sellers.

(c) Except as listed in Schedule 4.15(c): (i) no Seller nor any of their respective officers, directors, or employees has been charged, or threatened with the charge of, any unfair labor practice; and (ii) the Sellers are in compliance with all Applicable Laws concerning the employer-employee relationship and with all agreements relating to the employment of their employees, including applicable wage and hour laws, workers’ compensation laws, occupational safety laws, immigration laws, unemployment laws and social security laws.

(d) Except as set forth on Schedule 4.15(d): (i) all officers, employees and agents of each Seller are employees at-will; and (ii) there are no outstanding agreements or arrangements with respect to severance payments to current or former employees of any Seller. Schedule 4.15(d) identifies all former employees of each Seller that have suffered an employment loss within the preceding ninety (90) days. No notice required under the Federal Workers Adjustment and Retraining Notification Act (“WARN Act”), or any similar state law has been or will be required of any Seller to its employees or former employees by reason of any acts prior to the Closing or by reason of the consummation of the Closing.

4.16 Employee Benefit Plans.

(a) Schedule 4.16(a) sets forth each Employee Benefit Plan that is currently in effect or was maintained, sponsored or contributed to at any time within the last six (6) calendar years or that has been approved before the date hereof but is not yet effective, (x) for the benefit of Covered Employees or (y) with respect to any Seller or any ERISA Affiliate thereof has or has had any obligation on behalf of any Covered Employee.

(b) Sellers have delivered to Buyer, with respect to each current Employee Benefit Plan applicable to any Covered Employee, true and correct copies of: (i) the documents embodying the plan, including the current plan documents and documents creating any trust maintained pursuant thereto, all amendments, group annuity contracts, insurance contracts, the most recent summary plan description with each summary of material modification, if any, and employee handbooks; (ii) as applicable, annual reports, including Forms 5500, 990 and 1041 for the last three (3) years for the plan and any related trust; and (iii) the most recent determination letter received from the IRS pertaining to any such Employee Benefit Plan intended to qualify under Sections 401(a) or 501(c)(9) of the Code.

(c) Except as set forth on Schedule 4.16(c), no Seller nor any ERISA Affiliate currently maintains, contributes to or participates in, nor has at any time, maintained, contributed to, participated in, or had an obligation to maintain, contribute to, or otherwise participate in, any employee pension benefit plan that is a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) or that is subject to the provisions of Title IV of ERISA.

(d) Each Seller, ERISA Affiliate, Employee Benefit Plan and, to Sellers’ Knowledge, each Employee Benefit Plan “sponsor” or “administrator” (within the meaning of Section 3(16) of ERISA) has complied in all material respects with the terms of the Employee Benefit Plan and with all Applicable Laws.

(e) Schedule 4.16(e) lists the name of each Covered Employee who has experienced a “Qualifying Event” (as defined in Section 4980B of the Code and Section 601 et seq. of ERISA or any comparable state laws (such statutory provisions and predecessors thereof, collectively, “COBRA”) with respect to an Employee Benefit Plan who is eligible for “Continuation Coverage” (as defined in COBRA) and whose maximum period for Continuation Coverage required by COBRA has not expired.

(f) With respect to each Employee Benefit Plan:

(i) each Employee Benefit Plan that is described in Section 3(2) of ERISA and that is intended to be tax qualified qualifies under Section 401(a) of the Code, and nothing has occurred or is expected to occur that caused or would reasonably be expected to cause the loss of such qualification or exemption or the imposition of any penalty or Tax Liability; and

(ii) no Proceeding has been asserted, instituted or threatened in writing against the Employee Benefit Plan, any trustee or fiduciaries thereof, any Seller or any ERISA Affiliate, any director, officer or employee thereof, or any of the assets of the Employee Benefit Plan or any related trust.

(g) All payments by Sellers or any ERISA Affiliate required by any Employee Benefit Plan (including all contributions, insurance premiums or intercompany charges) with respect to all periods through the date hereof have been made.

(h) Except as set forth in Schedule 4.16(h), the consummation of the transactions contemplated by this Agreement will not give rise to any Liability on the part of Buyer for any employee benefits of Sellers absent any post-Closing action taken on the part of Buyer, including Liability for severance pay, unemployment compensation, termination pay or withdrawal liability, or accelerate the time of payment or vesting or increase the amount of compensation or benefits due to any Covered Employee.

4.17 Intellectual Property.

(a) Schedule 4.17(a) sets forth a complete and correct list of each (i) patent, (ii) patent application, (iii) trademark, service name or trade name registration or application for registration, (iv) material unregistered trademark, service name or trade name, (v) copyright registration or application for copyright registration, or (vi) website, URL or domain name owned by Sellers and used in the conduct of the Business (the “Listed IP”), setting forth accurate information with respect to any registration or application to register any thereof. Except as set forth on Schedule 4.17(a), all of the Listed IP is owned by a Seller free and clear of any Liens, other than Permitted Liens, and none of the Listed IP is licensed to third parties except as ancillary to the normal course of the operation of the Business.

(b) Except as set forth on Schedule 4.17(b), no Seller is currently, or has been during the five (5) years preceding the date hereof, either: (i) a party to any Proceeding or threatened Proceeding involving a claim of infringement by any third party of any Intellectual Property of any Seller; or (ii) a party to any Proceeding brought or threatened by a third party involving a claim of infringement by any Seller of the rights of any third party as a result of any Seller’s use of any Intellectual Property in the Business. No Seller’s current use of any Listed IP in the Business conflicts with, infringes upon or violates any intellectual property rights of any third party, and, to Seller's Knowledge, no Seller has liability for past infringement.

(c) Each Seller owns the entire right, title and interest in, to and under, or has acquired an express license to use (or in connection with the acquisition of Equipment or Inventory, an implied license to use) the Listed IP used by it in the conduct of the Business, without, except as described on Schedule 4.17(c), payment of any further royalty or similar amount to any third party. The Intellectual Property owned and used by Sellers is sufficient for the unimpaired continued operation of the Business following the Closing as heretofore conducted.

(d) Sellers have taken commercially reasonable measures to protect the confidentiality of the trade secrets and other proprietary information used or held for use in the Business, and of any third party confidential information provided to Sellers with respect to the Business under an obligation of confidentiality. No current or former employee owns any Intellectual Property used in and material to the Business. In all cases where any Seller has engaged any third party to develop Intellectual Property that is material to the Business, such third party has assigned in writing all right, title and interest in, under and to the resulting Intellectual Property to such Seller.

4.18 Brokers. None of Sellers nor any Person acting on behalf of any of them has incurred any obligation or liability to any Person for any brokerage fees, agent’s commissions or finder’s fees in connection with the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby.

4.19 Insurance. Schedule 4.19 sets forth a complete and correct list of all insurance policies of any kind currently in force with respect to each Seller or the Assets (the “Insurance Policies”). Sellers have made available true and correct copies of such Insurance Policies to Buyer. None of the insurers under any of the Insurance Policies has rejected the defense or coverage of any claim purported to be covered by such insurer or has reserved the right to reject the defense or coverage of any claim purported to be covered by such insurer.

4.20 Significant Customers and Suppliers. Except as set forth on Schedule 4.20, none of the ten largest customers or suppliers of the Business (measured by value of net sales or purchases, respectively) during the twelve (12) month period ended December 31, 2013, has terminated, canceled or limited or made any material modification or change in, its business relationship with any Seller or threatened to take any of the foregoing actions. Except as set forth in Schedule 4.20 hereto, there exists no condition or state of facts involving customers or suppliers of or to the Business which could reasonably be expected to have a Material Adverse Change. Except as set forth in Schedule 4.20 hereto, no customer, with which any Seller has a Contract with and has provided more than $50,000 worth of Products in the last twelve (12) months to such customer, has notified any Seller, prior to the date of this Agreement, that it intends to discontinue business with any Seller, or materially change the terms of the Contract.

4.21 Certain Payments. No Seller, nor any director, or officer, or to Seller's Knowledge, no agent or employee of any Seller, nor any Related Party or other Person acting for or on behalf thereof, has directly or indirectly: (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, or (iv) in violation of any Applicable Law; or (b) established or maintained any fund or asset that has not been recorded in the books and records of each Seller maintained in the ordinary course.

4.22 Disclaimer of Other Representations and Warranties.

(a) Neither Sellers nor the Shareholders make, and they have not made, any representations or warranties relating to the Business or the Assets in connection with the transactions contemplated hereby other than those expressly set forth in this Agreement or any Transaction Agreement. It is also understood that any cost estimates, projections or other productions, any data, any financial information or any memoranda or presentations are not and shall not be deemed to be or to include representations or warranties of Sellers and the Shareholders, except to the extent otherwise expressly covered by the representations and warranties of Sellers hereunder. No person has been authorized by Sellers to make any representation or warranty relating to Sellers, the Business or otherwise in connection with the transactions contemplated hereby except as set forth in this Agreement or any Transaction Agreement and, if made, such representation or warranty must not be relied upon as having been authorized by Sellers.

(b) Notwithstanding anything to the contrary contained in this Agreement or in any of the Exhibits or the Disclosure Schedule, any information disclosed in one Exhibit or Disclosure Schedule shall be deemed to be disclosed for all purposes of this Agreement where the relevance of such matter is or should be readily apparent. Certain information set forth in the Disclosure Schedule is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made by Sellers in this Agreement or that it is material, nor shall such information be deemed to establish a standard of materiality (and the actual standard of materiality may be higher or lower than the matters disclosed by such information).

ARTICLE V

REPRESENTATIONS AND WARRANTIES

OF BUYER

Buyer represents and warrants to Sellers as follows:

5.01 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite corporate power and authority to carry on its business as now conducted by it and to own and operate its assets as now owned and operated by it. Gaming Partners International Asia, Limited is a company duly organized, validly existing and in good standing under the laws of Macau, and has all requisite corporate power and authority to carry on its business as now conducted by it and to own and operate its assets as now owned and operated by it. Buyer is qualified to conduct business in any state or other jurisdiction, where the nature of Buyer’s business or activities makes such qualification required, except where the failure to be so qualified and in good standing could not reasonably be expected to have a material adverse effect on Buyer’s ability to consummate the transactions contemplated herein or to perform its obligations under the Transaction Agreements to which Buyer is a party.

5.02 Authority; Enforceability.

(a) Buyer has the right, corporate power and authority to execute and deliver the Transaction Agreements to which Buyer is, or will be, a party, and to perform its obligations thereunder. The Transaction Agreements to which Buyer is a party constitute (or will, when executed and delivered at the Closing, constitute) the legally binding obligations of Buyer, enforceable in accordance with their respective terms.

(b) Except as set forth on Schedule 5.02(b), the execution, delivery and performance of the Transaction Agreements by Buyer, and the consummation of the transactions contemplated thereby do not and will not: (i) require the consent, waiver, approval, license or other authorization of any Person; (ii) violate any provision of Applicable Law applicable to Buyer; (iii) contravene, conflict with, or result in a violation of: (A) any provision of Organizational Documents of Buyer; or (B) any resolution adopted by the Board of Directors or shareholders of Buyer; or (iv) conflict with, result in the termination of any provisions of, constitute a default under, accelerate any obligations arising under, trigger any payment under, or otherwise adversely affect, any material contract to which Buyer is a party, which, as to each of (i) through (iv), would materially and adversely affect Buyer’s ability to consummate the transactions contemplated herein or to perform its obligations under the Transaction Agreements to which Buyer is a party.

(c) All requisite corporate action has been taken by Buyer authorizing and approving the execution and delivery by Buyer of the Transaction Agreements to which Buyer is or will be a party, the performance by Buyer of its obligations thereunder, and of all other acts necessary and appropriate for the consummation of the transactions contemplated by the Transaction Agreements.

5.03 Gaming Authority Approvals. Buyer has all necessary approvals and licenses to manufacture and sell playing cards, gaming table coverings and gaming chips in all states of the United States and all Provinces of Canada in which Gemaco is licensed by the relevant gaming authorities (as set forth on Schedule 4.11), and in the country of Panama.

5.04 Brokers. Neither Buyer nor any person acting on behalf of Buyer has incurred any obligation or liability to any Person for any brokerage fees, agent’s commissions or finder’s fees in connection with the execution or delivery of this Agreement or the transactions consummation of the contemplated thereby.

5.05 Limitation on Warranties.

(a) Buyer acknowledges and agrees that neither Sellers nor any of the Shareholders, nor any other Person acting on behalf of Sellers or any of the Shareholders or any of their respective Affiliates or representatives has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Business or the Assets, except as expressly set forth in this Agreement, in any Transaction Agreement or as and to the extent required by this Agreement to be set forth in the Disclosure Schedule.

(b) Buyer acknowledges and agrees that except for the representations and warranties of Sellers expressly set forth in this Agreement or any Transaction Agreement, the Assets are being acquired AS IS WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OR OTHER EXPRESSED OR IMPLIED WARRANTY. Buyer acknowledges and agrees that it is consummating the transactions contemplated by this Agreement without any representation or warranty, express or implied, by any Person, except for the representations and warranties of Sellers expressly set forth in this Agreement or any Transaction Agreement.

(c) Buyer has no knowledge that any representation or warranty of Sellers set forth in this Agreement or any Transaction Agreement is untrue or inaccurate in any material respect. For purposes of this Section, Buyer’s “knowledge” shall mean the actual knowledge, without any due inquiry requirement or any constructive or deemed knowledge, of Alain Thieffry, Alex Thieffry, Robert J. Kelly, Michael Mann and Greg Gronau. Nothing herein shall be construed to limit any claim of Buyer for breach of any representation or warranty of Sellers of which Buyer had knowledge as of the execution hereof except to the extent of any Damages that a reasonable Person would have reasonably anticipated to be incurred based on the facts relating to such breach as actually known to Buyer at the time of the execution of this Agreement. The representations contained in this Section 5.05 shall be used by Sellers only as an affirmative defense to any claims by Buyer hereunder, and the burden of proving Buyer’s actual knowledge of any such breach in any Proceeding related to this Agreement shall be on Sellers.

(d) In connection with Buyer's investigation of Sellers and the Business, Buyer has received from or on behalf of Sellers certain projections, including projected statements of operating revenues and income from operations of the Business. Buyer acknowledges that there are uncertainties inherent in attempting to make such estimates, projections and other forecasts and plans, and that Sellers and the Shareholders make no representations or warranties whatsoever with respect to such estimates, projections and other forecasts and plans (including the reasonableness of the assumptions underlying such estimates, projections and forecasts).

5.06 Plant Closings and Mass Lay-Offs. Buyer does not currently plan to implement any plant closings, reductions in force or terminations that, in the aggregate, would constitute a mass lay-off of the employees of the Business under the WARN Act or any similar federal, state or local statute or ordinance.

ARTICLE VI

ADDITIONAL COVENANTS

6.01 Confidentiality.

(a) From and after the Closing, no Seller nor Shareholder will, and each will cause its Related Parties and representatives not to, directly or indirectly, use or disclose (other than to Buyer) for any purpose any Confidential Information. This Section 6.01(a) shall survive the Closing and shall continue indefinitely; provided, however, that the restrictions in this Section 6.01(a) shall terminate on the fifth (5^th) anniversary of the Closing with respect to any Confidential Information that does not then constitute a trade secret under Applicable Law (so long as such Confidential Information remains a trade secret under Applicable Law). Nothing in this Section 6.01 shall be construed to limit or supersede the common law of torts or statutory or other protection of trade secrets where such law provides Buyer with greater or longer protection than provided in this Section 6.01.

(b) For purposes of this Agreement, “Confidential Information” means any and all technical, business and other information of or relating to the Business or the Assets, regardless of medium, that derives value, actual, potential, economic or otherwise, from not being generally known to other Persons, including technical or non-technical data, know-how, formulae, compositions, devices, methods, techniques, drawings, inventions, processes, financial data, financial plans, product plans, lists of, or information relating to, actual or potential customers or suppliers, acquisition and investment plans and strategies, business plans or operations of the Business. Confidential Information includes: (i) information contained in any books and records, the originals of which are retained by any Seller pursuant to Sections 2.02(c), (d) and (e), to the extent otherwise satisfying the definition of Confidential Information and (ii) information of third parties that Sellers are obligated to keep as confidential.

(c) The obligations set forth in Section 6.01(a) shall not apply to any information that any Seller demonstrates: (i) has become generally available to the public through no act or omission of any Seller and without violation of any Transaction Agreement, or any other confidentiality obligation of such Seller; (ii) is lawfully received after the Closing by Seller from a third party or parties subject to no restriction of confidentiality; or (iii) is required to be disclosed by subpoena or other mandatory legal process, provided that the affected Seller promptly gives Buyer notice of any request or demand for disclosure of such Confidential Information upon receipt of such request or demand along with a copy of any written correspondence, pleading or other communications concerning the request or demand, and the affected Seller shall, upon request of Buyer, provide reasonable cooperation should Buyer seek to obtain, an appropriate protective order, at Buyers sole cost and expense.

(d) On the Closing Date, the confidentiality agreement contained in Section 7 of the Binding Letter of Intent, by and among Buyer, GemGroup and the Shareholders, dated as of March 13, 2014, is hereby terminated.

6.02 Covenant Not to Compete.

(a) GemTech and each Seller and Shareholder hereby agrees that it will not, and will not permit any of its respective Affiliates to, except on behalf of Buyer, during the period beginning on the date hereof and ending on the third (3^rd) anniversary of the Closing Date, directly or indirectly, for any reason, for its own account, or on behalf of, or together with or through, any other Person or entity, whether as principal, agent, shareholder, participant, partner, promoter, director, officer, manager, member, equity owner, employee, consultant, sales representative or otherwise:

(i) own, control, manage, or participate in the ownership, control or management of, or render services or advice to, or have a material financial interest in, or lend its name to, any Person or business engaged in, or that is undertaking to become engaged, in whole or in part, in the development, manufacture, sale or distribution of any Product or of any product that is identical to or a reasonable substitute for any Product sold or offered for sale by any Seller in the Business as of the date hereof;

(ii) solicit, or assist in the solicitation of, any Person to whom any Seller either sold, provided or solicited to sell or provide any Product in the Business during the three (3) years ending on the date hereof, including distributors, contractors and end users, in each case for the purpose of selling, providing or soliciting to sell or provide any Product or any product that is identical to or a reasonable substitute for any Product sold or offered for sale by any Seller in the Business as of the date hereof;

(iii) solicit, or assist in the solicitation of, any Hired Employee or other Person employed or engaged by Buyer in the Business in any capacity to terminate such employment or other engagement, whether or not such employment or engagement is pursuant to a contract or on an at-will basis; provided, however, Sellers and the Shareholders may solicit and employ James Gilbert; or

(iv) knowingly or intentionally damage or destroy the goodwill and esteem of Buyer or the Business with its suppliers, employees, patrons, customers, and any others who may at any time have or have had business relations with Buyer or the Business.

(b) Notwithstanding anything herein to the contrary, it shall not be a breach of the covenant contained in Section 6.02(a)(i) for Sellers and the Shareholders to own, directly or indirectly, up to five percent (5%), in the aggregate, of any class of publicly traded securities of any Person engaged in any of the activities described in Section 6.02(a)(i), so long as such securities are held as a passive investment.

(c) Although the parties have, in good faith, used their best efforts to make the provisions of Sections 6.01(a) and 6.02(a) reasonable in terms of geographic area, duration and scope of restricted activities in light of the scope of the Business and the consideration to be provided by Buyer hereunder, and it is not anticipated, nor is it intended, by any party hereto that an arbitral panel or court of competent jurisdiction would find it necessary to reform the provisions hereof to make them reasonable in terms of geographic area, duration or otherwise, the parties understand and agree that if an arbitral panel or court of competent jurisdiction determines it necessary to reform the scope of Sections 6.01(a) or 6.02(a) or any part thereof in order to make it binding and enforceable, such provision shall be considered divisible in all respects and such lesser scope as any such court shall determine to be reasonable shall be effective, binding and enforceable.

(d) The parties recognize and agree that in the event of a breach or threatened breach by any Seller or Shareholder of Sections 6.01(a) or 6.02(a), money damages would not be an adequate remedy to Buyer for such breach and, even if money damages were adequate, it would be difficult to ascertain or measure with any degree of accuracy the damages sustained by Buyer therefrom. Accordingly, if there should be a breach or threatened breach by any Seller or Shareholder of the provisions of Section 6.01(a) or 6.02(a), Buyer shall be entitled to an injunction restraining any such Seller or Shareholder from any such breach. Nothing in the preceding sentence shall limit or otherwise affect any remedies that Buyer or its Affiliates may otherwise have under Applicable Law.

(e) Buyer, Sellers, GemTech and Stockholders believe Sections 6.01 and 6.02 are reasonable and fair in all respects, and are necessary to protect the interests of the Buyer. All of the covenants in Sections 6.01(a) and 6.02(a) are intended by each party hereto to be, and shall be construed as, agreements independent of any other provision in this Agreement, and the existence of any claim or cause of action of GemTech or any Seller or Shareholder against Buyer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Buyer of any covenant in Section 6.01(a) or 6.02(a).

6.03 Employees of the Business.

(a) At or following the Closing, Buyer shall offer employment to all employees of Sellers (other than D. Kaye Summers and Danny R. Carpenter), including the employees of Sellers identified on Schedule 6.03(a) who are currently on short term disability or on FLMA leave at closing, subject to compliance with Buyer’s standard job application and screening procedures (such employees who accept the terms and conditions of any such offer of employment and who are employed by Buyer are hereinafter referred to as “Hired Employees”). Sellers agree to terminate the employment of any Hired Employees effective as of the Closing Date. Sellers shall remain solely responsible for D. Kaye Summers and Danny R. Carpenter or any other employees not accepting Buyer's offer of employment and all claims related thereto. Buyer shall at its discretion establish the initial terms and conditions of employment for all Hired Employees. Notwithstanding the foregoing, in the event that Buyer terminates any of the Hired Employees in the twelve (12) month period after the Closing, Buyer agrees to pay such Hired Employees severance in accordance with Buyer's normal severance policy.

(b) Except to the extent included in accrued expenses which are part of Closing Working Capital, Sellers shall pay or shall cause to be paid (or arrange for their insurance carriers to pay) all employees of Sellers or their dependents for all amounts due such employees or their dependents through their separation from employment with Sellers, including amounts due as wages or salary, on account of severance, health claims, bonus, accrued vacation or personal leave, and other benefits through the Closing Date, when and as the same become due. Buyer shall pay incentive payments to Hired Employees included in accrued expenses which are part of Closing Working Capital by not later than March 15, 2015, and shall pay management bonuses to Hired Employees at least equal to the amount included in accrued expenses which are part of Closing Working Capital by not later than March 15, 2015.

(c) The active participation by all Hired Employees in the Employee Benefit Plans of each Seller or any ERISA Affiliate will cease as of their separation from employment with such Seller. Except as set forth on Schedule 6.03(c) or the obligations to pay certain amounts included in accrued expenses which are part of Closing Working Capital, Buyer will not assume or continue, and will have no responsibility or liability to the Hired Employees or any other Person under or with respect to, any of the Employee Benefit Plans of any Seller or any ERISA Affiliate.

(d) Except as included in accrued expenses which are part of Closing Working Capital, each Seller shall continue to make or shall cause to be made all required contributions to any Employee Benefit Plan on behalf of the employees of the Business in respect of all periods through their separation from employment with each Seller, and will fully vest the Hired Employees under the Sellers' Profit Sharing 401(k) Plan as of such separation. Each Seller shall take or shall cause to be taken all actions as may be legally required to so vest such employees. At or following the Closing, together with its offer of employment to the Hired Employees Buyer will offer and make available to each of the Hired Employees the ability to roll its current balances in the Sellers' 401(k) plan into the applicable Buyer plan, or, if available, to effect a trustee-to-trustee transfer.

(e) The provisions of this Agreement are for the benefit of Buyer and Sellers only, and no employee of any Seller or any other Person shall have any rights hereunder. Nothing herein expressed or implied shall be deemed an amendment of any Employee Benefit Plan or otherwise confer upon any employee of any Seller, any other employee or legal representatives or beneficiaries thereof, unless otherwise provided in this Section 6.03, any rights or remedies, including any right to employment or continued employment for any specified period or to be covered under or by any employee benefit plan or arrangement, or shall cause the employment status of any employee to be other than terminable at-will.

(f) Buyer shall be solely responsible for offering and providing any required COBRA “Continuation Coverage” with respect to any “qualified beneficiary” who is covered by an Employee Benefit Plan that is a “group health plan” and who experiences a “Qualifying Event” prior to or on the Closing Date, a list of which is set forth on Schedule 6.03(f). Buyer shall be solely responsible for offering and providing any COBRA Coverage required with respect to any Hired Employees (or other “qualified beneficiaries”) who become covered by a group health plan sponsored or contributed to by Buyer and who experience a Qualifying Event after the Closing Date. “Qualified beneficiary” and “group health plan” are as defined in Section 4980B of the Code and the regulations thereunder.

6.04 Consents. Buyer acknowledges that certain consents and approvals to the transactions contemplated by this Agreement may be required from parties to contracts, leases, licenses or other agreements to which the Sellers are a party (including the Contracts included in the Assets) and such consents have not been obtained and might not be obtained. Buyer and Sellers shall reasonably cooperate to obtain such approvals and consents, provided, that Sellers shall not be required in such efforts to expend money, commence any litigation or offer or grant any accommodation (financial or otherwise) to any third party. Whether or not any consent or consents are obtained, Buyer shall have sole responsibility for the post-Closing performance of such Contracts and Permits to the extent described in Section 2.03. Notwithstanding anything to the contrary set forth herein, this Agreement shall not constitute an assignment or attempt to assign or transfer any interest in any instrument, Contract or Permit otherwise includable in the Assets, or any claim, right or benefit arising thereunder or resulting therefrom, if such assignment or transfer is without the consent of a third party and would constitute a breach or violation thereof or adversely affect the rights of Buyer, the Assets or the Business. Until all such consents are obtained, Sellers shall reasonably cooperate at Buyer’s expense in any commercially reasonable lawful arrangement designed to the extent practicable to fulfill Sellers’ respective obligations thereunder and to afford Buyer the continued full benefits thereof. Buyer agrees that the Sellers shall not have any liability whatsoever to Buyer (and Buyer shall not be entitled to assert any claims) arising out of or relating to the failure to obtain any consents or approvals that may have been or may be required in connection with the transactions contemplated by this Agreement because of the default, acceleration or termination of or loss of right under any such contract, lease, license or other agreement as a result thereof. Buyer further agrees that no representation, warranty or covenant of Sellers contained herein shall be breached or deemed breached solely as a result of the failure to obtain any such consent or as a result of any such default, acceleration or termination or loss of right or any lawsuit, action, claim, proceeding or investigation commenced or threatened by or on behalf of any Person arising out of or relating to the failure to obtain any such consent or any such default, acceleration or termination or loss of right.

6.05 Transition Cooperation; Mail Received After Closing.

(a) Sellers agree to cooperate with Buyer to facilitate the transfer of all utilities servicing the Business into Buyer’s name, including the transfer of any telephone numbers, electrical service, water and sewage.

(b) Buyer may receive and open all mail addressed to any Seller at the Real Property and, to the extent that such mail and the contents thereof relate to the Business or the Assets, deal with the contents thereof at its discretion. Any other mail address to any Seller and all mail addressed to a shareholder shall be forwarded to Danny R. Carpenter, or to Jason A. Fitzhugh if addressed solely to him. From and after the Closing, Sellers shall promptly forward or cause to be forwarded to Buyer any mail received by any of them that relates to the Business, the Assets, or the Assumed Obligations.

(c) Each Seller hereby grants to Buyer the power, right and authority, coupled with an interest, to receive, endorse, cash, deposit, and otherwise deal with, in the name of any Seller, any checks, drafts, documents and instruments evidencing payment of any notes, accounts receivable or other payment rights included in the Assets and that are payable to or to the order of, or endorsed in favor of, any Seller or any agent thereof. Sellers agree promptly to endorse and pay over or cause to be endorsed and paid over to Buyer, without deduction or offset, the full amount of any payment received by any of them after the Closing in respect of goods sold or services rendered as part of the Business, and shall hold any such amount in trust for Buyer pending such payment.

(d) Within five (5) Business Days, Sellers will take all action and execute all documents reasonably necessary to: (i) change the corporate name of each Seller to delete the names “GemGroup”, “Gemaco”, or “GemAsia” or any derivative thereof, (ii) change each Seller’s registered office address and principal place of business on file with the Missouri Secretary of State to a location other than the Real Property and (iii) assign and transfer to Buyer any domain name registrations of each Seller, and cause Buyer or its designee to be registered as the registrant and administrative contact for such domain names.

(e) Notwithstanding Sections 2.02(c), (d) and (e) of this Agreement, Buyer may have access to any Records or other documents retained by Sellers pursuant to Sections 2.02(c), (d) and (e) at any time after Closing as reasonably necessary in connection with Buyer’s operation of the Assets or in conducting the Business. Sellers shall retain all such Records for not less than six (6) years after the Closing.

(f) Notwithstanding Section 2.01(a) or any other provision of this Agreement, Sellers may have access to any financial Records delivered to Buyer pursuant to this Agreement at any time after Closing as reasonably required by any Seller to file tax returns, to complete its accounting functions, for any tax review or audit, to deal with any Excluded Liabilities, or to deal with any other claims or litigation with third parties; except in each case to the extent Buyer is advised by counsel that reasonable restrictions on such access are necessary to preserve privilege. Buyer shall retain all such Records for not less than six (6) years after the Closing.

6.06 Waiver of Bulk Sales Compliance. Except as hereafter provided, the parties hereby waive compliance with the bulk sales laws of any applicable jurisdiction, and Sellers, jointly and severally, hereby agree to indemnify and hold harmless Buyer from and against any claims arising out of or due to the failure to comply with such bulk sales laws.

6.07 Insurance. At or before the Closing, Sellers shall, at their cost and expense, obtain and maintain after the Closing, with reputable and financially responsible insurers with an A.M. Best’s minimum rating of “A-” (or any future equivalent) and A.M. Best’s minimum financial performance rating of “VIII” (or any future equivalent), a three (3) year products liability insurance policy (or policies) with aggregate limits of at least eight million dollars ($8,000,000). Sellers shall provide Buyer notice if such policies are to be cancelled by the insurer. In addition, such policies shall provide that the insurer will provide prior notice to Buyer prior to cancellation of such policies in accordance with the endorsement set forth on Schedule 6.07. Sellers shall provide customary certificates evidencing such coverage to Buyer at least annually. If requested by Buyer, Sellers shall use their best efforts to have Buyer named as an additional insured, and Buyer shall pay any incremental costs attributable to any such additional insured endorsement.

6.08 Further Assurances. From time to time, the parties will execute and deliver such other documents, certificates, agreements and other writings and take such other actions as may reasonably be necessary or requested by another party in order to consummate, evidence or implement expeditiously the transactions contemplated by this Agreement.

6.09 Public Announcements. The parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except as may be required by Applicable Law or securities exchange rules, will not issue any such public statement without the prior written consent of Buyer; provided that, for the avoidance of doubt, following the Closing, notifications by Buyer to customers, suppliers and other third parties having dealings with the Business made in connection with the conduct of the Business or relating to the Assets will not constitute public statements for purposes of this Section 6.09.

6.10 Removal of Olathe Equipment. Within ninety (90) days following the Closing, Buyer shall remove the Olathe Equipment now located at Gemaco's Olathe, Kansas facility (“Olathe Facility”) described in Section 2.02(a) from the Olathe Facility. GemTech and Gemaco will allow Buyer reasonable access to the Olathe Facility during normal business hours to allow Buyer to disassemble, pack and remove the Olathe Equipment. Buyer shall give GemTech and Gemaco at least five Business Days’ advance notice of intent to remove the Olathe Equipment. Buyer shall bear the cost of removing such Olathe Equipment from the Olathe Facility, but shall not be charged any rent or storage fees during such 90-day period. Promptly following the Closing, Sellers shall label all such Olathe Equipment as the property of Buyer, and will not suffer any Lien arising through any Seller to attach thereto. No Seller will use any such Olathe Equipment after the Closing Date. Sellers shall use reasonable commercial efforts to store such Olathe Equipment in a safe and protected manner, appropriately sheltered from the elements, pending its removal by Buyer.

6.11 Blue Springs Plant. For a period of not less than five (5) years following the Closing, Buyer will continue to operate the existing Gemaco manufacturing operations at the Blue Springs, Missouri facility located on the Owned Real Property, subject to casualty loss and acts of god.

6.12 Payment to Beyond Technologies. Sellers have paid prior to Closing all amounts outstanding to Beyond Technologies, and to the extent that any amounts are outstanding as of Closing, the Base Purchase Price shall be reduced by such amount.

ARTICLE VII

TAXES AND RELATED MATTERS

7.01 Tax Reporting; Liability for Taxes. Each Seller shall timely pay any Taxes and file any Tax Returns attributable to the Assets, the Business or its income for periods ending on or before the Closing Date.

7.02 Allocation of Purchase Price. Buyer and the Agent shall use good faith efforts to attempt to reach agreement on the allocation of the applicable portion of the Purchase Price and other relevant items (including, for example, adjustments to the Purchase Price) among the Assets, including goodwill and other assets, within ninety (90) days of the Closing Date, in accordance with Section 1060 of the Code and the Treasury regulations promulgated thereunder and any comparable provision of state, local or foreign law, as appropriate, subject to periodic adjustment to reflect any post-Closing adjustments to the Purchase Price (the “Allocation”). If Buyer and the Agent reach a timely agreement regarding the Allocation, (a) such Allocation shall be binding on Buyer and Sellers, (b) Buyer and Sellers shall prepare and timely file all applicable federal and state income Tax forms (including Internal Revenue Service Form 8594) in a manner consistent with the Allocation, cooperate with each other in the preparation of such forms, and furnish each other with a copy of the final version of Form 8594 within a reasonable period before the filing date thereof, and (c) except as otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any comparable provision of any state, local or foreign law), neither Buyer nor Sellers shall take a position inconsistent with the Allocation on any Tax Return (including any forms required to be filed pursuant to Section 1060 of the Code), or otherwise. Buyer and Sellers recognize that the Allocation will not include Buyer’s acquisition expenses or Sellers’ selling expenses, and Buyer and Sellers will unilaterally allocate such expenses appropriately. If Buyer and the Agent are unable to reach a timely agreement regarding the Allocation, Buyer and Sellers are entitled to adopt their own position regarding the Allocation.

7.03 Additional Tax Matters.

(a) The parties hereto agree to furnish or cause to be furnished to each other, upon reasonable request, as promptly as practicable, such information (including access to books and records) and assistance relating to the Assets or the Business as is reasonably necessary for the filing of any Tax Return, the preparation for any Tax audit, the prosecution or defense of any claim, suit or proceeding relating to any proposed Tax adjustment relating to the Assets or the Business. The parties shall keep all such information and documents received by them confidential unless otherwise required by law.

(b) The parties agree to retain or cause to be retained all books and records pertinent to the Assets or the Business until the applicable period for assessment of Taxes under Applicable Law has expired. Sellers agree to give Buyer, and Buyer agrees to give Sellers, reasonable notice prior to transferring, discarding or destroying any such books and records relating to Tax matters and, if so requested, shall allow the other party to take possession of such books and records.

(c) Buyer shall deliver to Sellers valid resale exemption certificates for Inventory purchased hereunder. Except as otherwise provided in Section 3.03(k), Buyer will pay 50% of all transfer, documentary, sales, use, stamp, registration, recording and other such Taxes and governmental fees (including any penalties and interest), as applicable, incurred in connection with the transactions contemplated by this Agreement, including the sale and transfer of the Assets, and Sellers shall pay 50% o such Taxes and fees. The parties will cooperate to the extent reasonably necessary to make such filings or returns as may be required. The parties will cooperate with each other and use their reasonable commercial efforts to minimize the Taxes attributable to the transfer of the Assets, subject to Applicable Law.

7.04 Proration. Notwithstanding anything herein to the contrary, any property Taxes imposed on or with respect to the Assets and other periodic expense items such as rent, utilities and similar expenses with respect to the Business that relate to a period beginning before the Closing Date and ending after the Closing Date shall be apportioned based upon the number of days in any such period falling through the Closing Date, on the one hand, and after the Closing Date on the other hand, such that Sellers shall be liable for (and shall reimburse Buyer to the extent that Buyer shall have paid) that portion of such Taxes and other expense items relating to, or arising in respect of, periods through the Closing Date and Buyer shall be liable for (and shall reimburse Sellers to the extent it shall have paid) that portion of such Taxes and other expense items relating to, or arising in respect to, periods after the Closing Date. All amounts to be prorated will, to the extent reasonably feasible, be estimated or reflected on the settlement sheet adopted by the parties in connection with the Closing or if not settled at the Closing, will be settled at the same time as the Final Net Adjustment. To the extent the amount of any such proratable item is not finally known at the time of the Closing or the determination of the Final Net Adjustment, as the case may be, appropriate settlement will made within thirty (30) days after the amount of any such item is finally known.

ARTICLE VIII

INDEMNIFICATION

8.01 Sellers’ Indemnification.

(a) Sellers and Shareholders (collectively, “Seller Indemnitors”) shall, jointly and severally, indemnify, defend and hold harmless Buyer and its Affiliates, and their respective officers, directors, employees, representatives and agents (collectively, “Buyer Indemnitees”) from, against and in respect of any and all Damages arising out of or resulting from: (i) any inaccuracy or misrepresentation in or breach of any representation or warranty made by any Seller Indemnitor in any Transaction Agreement or any Exhibit or Schedule thereto; (ii) any breach of any covenant or agreement made by any Seller Indemnitor in any Transaction Agreement; (iii) any Excluded Liability, including the claims involved in that certain lawsuit styled Marina District Devel. Co., LLC d/b/a Borgata Hotel Casino & Spa v. Ivey, Gemaco Inc. et al., Civ. Action No. 1:14-cv-02283-NLH-AMD, pending in the U.S. District Court for the District of New Jersey, any appeal therefrom or any Proceeding involving the claims and parties to such lawsuit and based substantially on the same facts or allegations; or (iv) any and all costs associated with the repair or replacement of any chips manufactured by Sellers prior to the Closing Date, other than the warranty obligations specifically listed on Schedule 2.03(b).

(b) Seller Indemnitors shall have no indemnification obligation under Section 8.01(a)(i) unless and until the aggregate amount of Damages incurred by the Buyer Indemnitees for all such inaccuracies, misrepresentations and breaches exceeds one hundred thousand dollars ($100,000) (the “Deductible”), whereupon the Buyer Indemnitees shall be entitled to be indemnified pursuant to Section 8.01(a)(i) only for all such Damages in excess of the Deductible. The aggregate liability of Seller Indemnitors to indemnify the Buyer Indemnitees in respect of inaccuracies or misrepresentations in or breaches of representations or warranties under Sections 8.01(a)(i) shall not exceed four million dollars ($4,000,000) (the “Cap”). Notwithstanding anything to the contrary herein, neither the Deductible nor the Cap shall apply to claims arising out of fraud, or out of any inaccuracy, misrepresentation in or breach of the representations and warranties in Sections 4.08(e) or 4.13(a).

(c) Notwithstanding anything to the contrary in this Section 8.01, the Shareholders’ aggregate liability to indemnify the Buyer Indemnitees under this Agreement shall not exceed two million dollars ($2,000,000), provided that such limitation shall not apply to claims relating to income Taxes or to any existing or pending Proceeding (including any appeals or other Proceedings based on the same facts or allegations).

8.02 Buyer Indemnification.

(a) Buyer shall indemnify, defend and hold harmless Sellers, their Affiliates, and their respective officers, directors, employees, representatives and agents (collectively, “Seller Indemnitees”) from, against and in respect of any and all Damages arising out of or resulting from: (i) any inaccuracy or misrepresentation in or breach of any representation or warranty made by Buyer in any Transaction Agreement or any Exhibit or Schedule thereto; (ii) any breach of any covenant or agreement made by Buyer in any Transaction Agreement; or (iii) the Assumed Obligations or Buyer’s post-Closing operation of the Business or use of the Assets after the Closing Date (except to the extent any such Damages arise out of or relate to any matter in respect of which the Seller Indemnitees are obligated to indemnify the Buyer Indemnitees hereunder, or would be so required but for the temporal, monetary or other limitations contained herein).

(b) Buyer shall have no indemnification obligation under Section 8.02(a)(i) for any inaccuracy or misrepresentation in or breach of any representation or warranty made by Buyer, unless and until the aggregate amount of Damages incurred by the Seller Indemnitees for all such inaccuracies, misrepresentations and breaches exceeds the Deductible, whereupon the Seller Indemnitees shall be entitled to be indemnified pursuant to Section 8.02(a)(i) only for all such Damages in excess of the Deductible. The aggregate liability of Buyer to indemnify the Seller Indemnitees in respect of inaccuracies or misrepresentations in or breaches of representations or warranties under Section 8.02(a)(i) shall not exceed the Cap. Notwithstanding anything to the contrary herein, neither the Deductible nor the Cap shall apply to claims arising out of fraud or breaches of Sections 5.03 or 5.04.

8.03 Defense of Claims.

(a) If any third party notifies any Seller Indemnitees or any Buyer Indemnitee (each, an “Indemnitee”) with respect to any matter with respect to which an Indemnitee intends to seek indemnification under this Article IX, then the Indemnitee will notify the Agent, on behalf of Sellers, or Buyer, as applicable (each, an “Indemnitor”), thereof within thirty (30) days, stating the nature and basis of any claim made by the third party; provided that, no failure or delay on the part of the Indemnitee in notifying an Indemnitor will relieve any party from any indemnification obligation hereunder unless, and then solely to the extent that, the Indemnitor is materially and demonstrably prejudiced thereby in the defense of such claim. If an Indemnitor notifies the Indemnitee within thirty (30) days after the date the Indemnitee has given notice of the matter that the Indemnitor will indemnify the Indemnitee in respect of such matter, then the Indemnitor may, by notice to the Indemnitee within such 30-day period, assume the defense of such matter. If the Indemnitor assumes the defense of such matter, (i) the Indemnitor will defend the Indemnitee against the matter with counsel of the Indemnitor’s choice reasonably satisfactory to the Indemnitee, (ii) the Indemnitee may retain separate counsel at its sole cost and expense to participate in such defense, (iii) the Indemnitee will not consent to the entry of a judgment or enter into any settlement with respect to the matter without the written consent of the Indemnitor, not to be unreasonably withheld or delayed, and (iv) the Indemnitor will not consent to the entry of a judgment or consent order with respect to the matter, or enter into any settlement, in each case that either (A) grants the plaintiff or claimant any form of relief other than monetary damages that will be satisfied by the indemnifying party or parties or (B) fails to include a provision whereby the plaintiff or claimant in the matter releases the Indemnitee from all liability with respect thereto, in either such case without the written consent of the Indemnitee. If the Indemnitor does not timely assume the defense of such matter, the Indemnitee may defend against or settle the matter in any manner it may deem appropriate and without prejudice to the Indemnitee’s indemnification rights hereunder. Notwithstanding anything to the contrary in the foregoing, if defendants in any action include the Indemnitee and an Indemnitor, and the Indemnitee shall have been advised by its counsel that there are material legal defenses available to such Indemnitee inconsistent with those available to the Indemnitor, if the Indemnitee shall have been advised by its counsel that a conflict of interest exists between any Indemnitee and any such Indemnitor with respect to such claim or the defense thereof, or if the Indemnitor cannot demonstrate financial means to properly conduct the defense thereof, then in any such case, the Indemnitee shall have the right to re-assume the defense through counsel of its choosing, and in such event (or if the Indemnitor does not timely assume the defense of such matter as provided above) the reasonable fees and expenses of the Indemnitee’s counsel shall be borne by the indemnifying party or parties and shall be paid by them from time to time within twenty (20) days of receipt of appropriate invoices therefore.

(b) Any claim for potential indemnification hereunder that does not involve a third party claim (“Direct Claim”) shall be asserted by the Indemnitee by giving Buyer or the Agent, as applicable, reasonably prompt written notice thereof, provided that no failure or delay in giving such notice shall relieve any party of any indemnification obligation, unless and only to the extent that the Indemnitor is materially and demonstrably prejudiced thereby. Except for a Direct Claim involving a breach of Sections 6.01 or 6.02, if the Direct Claim involves a claim for a breach of a covenant, then the party asserting the breach of such covenant shall first allow the alleged breaching party thirty (30) days to cure such breach, if curable, and shall only assert an indemnification claim hereunder if such breach is not cured within such thirty (30) day period. If the Indemnitor fails to cure the breach or dispute the Indemnitor’s liability for such Direct Claim within thirty (30) days, the Indemnitor shall be deemed to have accepted liability for such Direct Claim.

8.04 Survival of Representations, Warranties and Covenants.

(a) Except as otherwise provided in this Section 8.04, all representations and warranties contained herein and the right to assert claims in respect of any breach thereof, shall survive the Closing and any investigation heretofore or hereafter conducted by or on behalf of, or knowledge obtained or obtainable by, the party entitled to benefit thereof, and shall expire on the second (2^nd) anniversary of the Closing Date.

(b) Notwithstanding Section 8.04(a) above, the representations and warranties made in Section 4.10 (Tax Matters) or otherwise relating to Tax matters, Section 4.16 (Employee Benefit Plans), Section 4.14 (Environmental), Section 4.08(e) (Title), Section 4.13(a) (Title to Real Property), and the right to assert claims in respect of any breach thereof, shall survive the Closing until the expiration of any applicable statute of limitations, including extensions thereof.

(c) Notwithstanding Section 8.04(a) above, any claims for fraud, and the right to assert claims in respect thereof, shall survive the Closing until the expiration of any applicable statute of limitations, including extensions thereof.

(d) Notwithstanding anything to the contrary herein, the survival period in respect of any representation or warranty in this Agreement, or any related claim, shall be extended automatically to include any time period necessary to resolve a claim which was asserted by the giving of notice (including a notice pursuant to Section 8.03(b)) in accordance with Section 9.01 prior to the expiration of the timeframe to bring such claim under this Section 8.04 but which was not liquidated or resolved before expiration of such survival period. Liability for any such item shall continue until such claim shall have been finally liquidated, settled, decided or adjudicated (only as to any Damages directly arising from the specific claim and facts alleged in the claim notice and incurred or accruing after the expiration of such survival period), and the parties waive any defense based on any statute of limitations or repose with respect to such matter. Under no circumstances shall the fact that Damages are still being or may in the future be incurred be a basis for postponing or delaying satisfaction of any indemnifiable Damages that have already been incurred.

(e) Notwithstanding anything herein to the contrary, all covenants, agreements and obligations contained herein shall not expire unless otherwise specifically provided in this Agreement.

8.05 Net of Recovery; No Double Recovery. Payments by Seller Indemnitors or Buyer pursuant to Section 8.01(a) or Section 8.02(a) in respect of any Damages shall be net of (i) any amounts actually recovered by the Person entitled to indemnification hereunder (the “Indemnified Party”) under insurance policies (provided that, for purposes of this Section 8.05, “Damages” shall include any cost associated with pursuing insurance providers and any increase in premium payable by such Indemnified Party or any retroactive adjustment under any such insurance) and (ii) any proceeds actually received from third parties under any agreements, understandings, indemnities or theories of recovery thereunder; provided that no Indemnified Party shall be subject to any obligation to pursue recovery in respect of any Loss from any insurer or under any insurance policy or any such other Person unless the Indemnifying Party advances and reimburses the full cost of obtaining such recovery. Subject to the foregoing sentence, to the extent that such insurance proceeds or third party indemnification payments are received after payment has been made by the Person obligated to indemnify the Indemnified Party (the “Indemnifying Party”) to the Indemnified Party, the Indemnified Party shall promptly pay an amount equal to such insurance proceeds (net of any cost associated with pursuing such proceeds and any increase in premium or any retroactive adjustment under any such insurance) or third party indemnification payments to the Indemnifying Party. For the avoidance of doubt, no indemnification payment hereunder shall be conditioned, withheld or delayed as a result of any Indemnified Party not having sought, realized or received any insurance proceeds. Notwithstanding anything herein to the contrary, no Indemnified Party shall be entitled to indemnification or reimbursement under any provision of this Agreement for any amount to the extent such Indemnified Party has been indemnified or reimbursed for such amount under any other provision of this Agreement.

ARTICLE IX

MISCELLANEOUS

9.01 Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be deemed duly given: (i) if personally delivered, when so delivered; (ii) if mailed, five (5) Business Days after having been sent by first class, registered or certified U.S. mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below;; or (iii) if sent through a nationally-recognized overnight delivery service that guarantees next day delivery, the Business Day following its delivery to such service in time for next day delivery:

If to Sellers or Shareholders in care of the Agent:

Danny R. Carpenter and D. Kaye Summers

5639 High Drive

Shawnee Mission, Kansas 66208

with a copy to:

Dentons US LLP

2398 East Camelback Road

Suite 850

Phoenix, AZ 85016-9016

Attn: Shaun M. Klein

If to Buyer:

Gaming Partners International Corporation

1700 Industrial Road

Las Vegas, NV 89102

Attn: Greg Gronau, President

with a copy to:

Kilpatrick Townsend & Stockton LLP

Suite 2800

1100 Peachtree Street, N.E.

Atlanta, GA 30309-4530

Attn: Richard Cicchillo, Jr., Esq.

Any Person entitled to notice may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth. Any notice given to or by the Agent shall be deemed given to or by each Seller and each Shareholder.

9.02 Agent. Danny R. Carpenter (the “Agent”) is hereby appointed as agent and attorney-in-fact for each Seller and Shareholder, for and on behalf of Sellers and Shareholders, to act as the Agent for Sellers and Shareholders under each Transaction Agreement, and to give and receive notices and communications, to waive or amend any provision of any Transaction Agreement, to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to claims for indemnification, to authorize delivery to any Buyer Indemnitee of any payment hereunder, and to take all actions necessary or appropriate in the judgment of the Agent for the accomplishment of the foregoing in accordance with the terms and provisions of any Transaction Agreement. Notices or communications to or from the Agent hereunder shall constitute notice to or from each of Sellers and Shareholders. Sellers and Shareholders hereby agree that the appointment of the Agent pursuant to this Section 9.02 shall be irrevocable except as otherwise provided herein or by non-waivable provisions of Applicable Law. Any decision, act, consent or instruction of the Agent relating to any Transaction Agreement shall constitute a decision of all of Sellers and Shareholders, and Buyer may rely upon any such written decision, consent or instruction of the Agent as being the decision, consent or instruction of each and every Seller and Shareholder. Buyer and the other Buyer Indemnitees are hereby relieved from any liability to any Person for any acts done by them in accordance with such decision, consent or instruction of the Agent. The Agent may resign or its agency may be changed from time to time, upon written notice to Buyer; provided that the Agent may not be removed without the consent of Sellers and Shareholders and Sellers and Shareholders shall promptly designate a successor Agent, with all of the rights and powers herein set forth, which successor Agent shall be reasonably acceptable to Buyer. In the event of the death or permanent disability of the Agent, Sellers and Shareholders shall elect a successor Agent. Any successor appointed by Sellers and Shareholders shall succeed the Agent as Agent hereunder and shall be entitled to all the rights, powers, immunities and privileges as was his or her predecessor, without the need of any further act or writing.

9.03 Amendments; No Waivers.

(a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Buyer and the Agent, or in the case of a waiver, by the party against whom the waiver is to be effective.

(b) No waiver by a party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent occurrence. No failure or delay by a party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

9.04 Expenses. Subject to Article VIII, all costs and expenses incurred in connection with the negotiation and execution of this Agreement and in closing and carrying out the transactions contemplated hereby shall be paid by the party incurring such cost or expense.

9.05 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No Seller or Shareholder may assign or delegate this Agreement or any of its respective rights, interests or obligations hereunder without the prior written approval of Buyer. Buyer may assign or delegate its rights under this Agreement (including the right to acquire all or any portion of the Assets or the obligation to assume all or any portion of the Assumed Obligations) to one or more Affiliates of Buyer or to any purchaser of all or substantially all or any substantial part of Buyer’s business (by merger, sale or assets or otherwise), provided, however, Buyer shall remain liable for the performance of its obligations under this Agreement. Any assignment or delegation in breach of this Section shall be null and void.

9.06 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts and the signatures delivered by telecopy, each of which shall be an original and all of which, when taken together, will be deemed to constitute one and the same agreement, with the same effect as if the signatures thereto and hereto were upon the same instrument and delivered in person. Signatures transmitted electronically by portable document file (pdf) or facsimile shall be deemed originals, shall be binding for all purposes hereof and may be used in lieu of the original Agreement for all purposes.

9.07 Entire Agreement. This Agreement (including the Schedules and Exhibits referred to herein that are hereby incorporated by reference and the other Transaction Agreements) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations (including but not limited to that certain Binding Letter of Intent among the parties dated March 13, 2014, as amended), both written and oral, between the parties with respect to the subject matter of this Agreement.

9.08 Severability. If any provision of this Agreement, or the application thereof to any Person, place or circumstance, shall be held by an arbitral tribunal or court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied to other Persons, places and circumstances shall remain in full force and effect if, but only if, after excluding the portion deemed to be unenforceable, the remaining terms shall provide for the consummation of the transactions contemplated hereby in substantially the same manner as originally set forth at the later of the date this Agreement was executed or last amended.

9.09 Construction. The parties hereto intend that each representation, warranty, and covenant contained herein shall have independent significance. If any party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the party has not breached shall not detract from or mitigate the fact that the party is in breach of the first representation, warranty or covenant. A disclosure on one Schedule relates only to the Sections of the Agreement that reference such Schedule, and not to any other Schedule or Section of the Agreement, unless (i) expressly so stated, (ii) a cross-reference is made from one Schedule to another Schedule or (iii) the relevance of such disclosure to another Schedule is readily apparent on the face of such disclosure. Each party having participated in the negotiation and preparation of this Agreement and having been represented by counsel of its choosing, there shall be no presumption that any ambiguities herein be construed against any particular party. Where any warranty or representation is made in this Agreement “to the Knowledge” of any group of Persons, the Knowledge of any one such Person shall be imputed to all of them. In this Agreement references to Sections, Exhibits or Schedules, refer to Sections of, or Exhibits or Schedules to, this Agreement unless otherwise indicated. 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. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” Any reference in this Agreement to gender shall include all genders including the neuter, and words imparting the singular number only shall include the plural and vice versa. Any reference to a Governmental Authority or statutory law of any particular jurisdiction shall be construed to refer to the nearest analogous Governmental Authority or statutory law, if any, of any other applicable jurisdiction.

9.10 Third Party Beneficiaries. Except with respect to indemnification under Article VIII, no provision of this Agreement shall be deemed to create any third party beneficiary rights in any Person, including any employee or former employee of any Seller or any beneficiary or dependent thereof. Nothing contained in this Agreement shall be construed to affect or limit any right Buyer or its Affiliates may have after the Closing with respect to the terms and conditions of employment of any Hired Employees (including, but not limited to, provision of employee benefits different from those provided through the Employee Benefit Plans) or to terminate the employment of any Hired Employee at any time or to modify the benefits provided to employees through any Employee Benefit Plan.

9.11 Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Missouri (without reference to its principles of choice or conflict of laws).

9.12 Mandatory Choice of Forum. For the purposes of any controversy or claim arising out of or relating to this Agreement, or any other Transaction Agreement or any Schedule, Exhibit or other agreement executed and delivered in connection with this Agreement or the transactions contemplated hereby or thereby, any breach hereof or thereof, or relating to the intent, interpretation, performance, or enforcement of any provision hereof or thereof, the parties agree that the exclusive forum shall be an appropriate federal or state court in the County of Jackson, State of Missouri. Each party irrevocably and unconditionally submits to the exclusive jurisdiction of such courts. Each party agrees that a final judgment in any such action, litigation or proceeding is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed under seal by their respective authorized officers as of the day and year first above written.

[Corporate Seal]	BUYER:

	GAMING PARTNERS INTERNATIONAL CORPORATION

	By:
		Name:
		Title:

[Corporate Seal]	SELLERS:

	GEMGROUP INC.

	By:
		Name:
		Title:

[Corporate Seal]	GEMACO INC.

	By:
		Name:
		Title:

[Company Seal]	GEMASIA LLC

	By:
		Name:
		Title:

[Signature Page to Asset Purchase Agreement]

[Company Seal]	GEMTECH LLC

	By:
		Name:
		Title:

[Seal]	AGENT:

	By:
		Name: Danny R. Carpenter

[Signature Page to Asset Purchase Agreement]

	SHAREHOLDERS:

[Seal]	D. KAYE SUMMERS

	By:

[Seal]	DANNY R. CARPENTER

	By:

[Seal]	JASON A. FITZHUGH

	By:

[Signature Page to Asset Purchase Agreement]

Exhibit 10.1

HSBC BANK USA, NATIONAL ASSOCIATION

452 Fifth Avenue

New York, New York 10018

June 26, 2014

Gaming Partners International USA, Inc.

1700 Industrial Road

Las Vegas, NV 89102

Ladies and Gentlemen:

HSBC Bank USA, National Association (the “Bank”) is pleased to advise you that subject to the terms and conditions set forth herein, we are prepared to extend to Gaming Partners International USA, Inc., a Nevada corporation (the “Company”) an uncommitted discretionary demand line of credit of up to $10,000,000.00 to be used solely to finance the acquisition of GemGroup, Inc. (this “Facility”). Capitalized terms used in this agreement and not otherwise defined herein shall have the meanings specified on Schedule A attached hereto.

This Facility is subject to the provisions set forth herein and in the other documents entered into in connection with this Facility. Company shall pay an upfront fee of $25,000.00.

Borrowing under this Facility shall be evidenced by a Demand Note (the “Note”). Interest on this Facility shall be at LIBOR + 2.25% as more fully set forth in the Note. This Facility shall be payable on demand.

Borrowing under this Facility shall be secured by a first priority perfected security interest in and lien on all of the personal property of Company, including, without limitation, accounts receivable, inventory and general intangibles, all as more fully set forth in any security agreement referred to below. Company’s obligations under this Facility shall be guaranteed by Gaming Partners International Corporation, a Nevada corporation (“Guarantor”).

This Facility is subject to annual renewal by Bank in its sole and absolute discretion on June 30 of each year (or if such day is not a business day, then on the next business day thereafter); provided, however, THE CONTINUING AVAILABILITY OF THIS FACILITY IS AT ALL TIMES SUBJECT TO BANK’S CONTINUING SATISFACTION, AS DETERMINED BY BANK IN ITS SOLE AND ABSOLUTE DISCRETION, WITH (a) THE BUSINESS, AFFAIRS AND FINANCIAL CONDITION OF COMPANY AND (b) COMPLIANCE BY COMPANY, EACH GUARANTOR, IF ANY, AND EACH OTHER PARTY PROVIDING COLLATERAL AND EXECUTING AND DELIVERING DOCUMENTS TO BANK HEREUNDER OR OTHERWISE IN CONNECTION WITH THIS FACILITY, WITH THE TERMS AND PROVISIONS OF THIS AGREEMENT AND EACH OF THE DOCUMENTS REFERRED TO HEREIN. In addition, the continuing availability of this Facility is subject to (a) Company’s furnishing to Bank each of the following:

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i. Annual audited financial statements of Company and Guarantor to be received within 120 days from fiscal year end;

ii. Quarterly reviewed financial statements of Company and Guarantor to be received within 45 days from each fiscal quarter end;

iii. Evidence satisfactory to Bank that HSBC Bank USA, National Association is named lender’s loss payee on Company’s property insurance policy and additional insured on Company’s liability insurance policy;

iv. Prompt written notice of any default by Company or Guarantor that shall have occurred beyond any applicable grace period under any other agreement between Company or Guarantor, on the one hand, and Bank or any of Bank’s affiliates on the other hand; and

v. Such other information, including interim financial statements, concerning Company’s business, affairs, or financial condition as Bank may request from time to time.

(b) Company’s acknowledgment and agreement with the following:

Proceeds of this Facility shall be used to fund the acquisition of company GemGroup, Inc.;

ii.

100% of net proceeds of any asset sales greater than $500,000.00 shall be used by Company to pay down any outstanding amount under this Facility;

ii.

Company shall not, without prior written consent of the Bank, incur any additional debt for borrowed money;

iii.

Company shall not, without prior written consent of the Bank, pay any dividends on or make any distribution on account of any class of Company's capital stock in cash or in property (other than additional shares of such stock), or redeem, purchase or otherwise acquire, directly or indirectly, any of such stock; and

iv.

No default by Company or Guarantor shall have occurred and be continuing beyond the applicable grace period under any other agreement with Bank or Bank’s affiliates to which Company or Guarantor is a party.

All payments of principal, interest and fees payable by Company under this Facility shall be made in U.S. dollars, in immediately available funds at Bank’s office at 452 Fifth Avenue, New York, New York 10018 and may be charged to any account Company maintains with Bank.

This Facility is further subject to Bank’s receipt in form and substance satisfactory to Bank of the following, in each case duly executed and delivered on behalf of Company or Guarantor by an authorized officer thereof:

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certified copy of resolutions of Company’s board of directors (or equivalent governing body) authorizing Company’s execution, delivery and performance of this agreement, the Note, the security agreement and each of the other documents herein referred to;

ii.

signature cards for Company’s authorized signatories;

iii.

an executed copy of the Note;

iv.

an executed copy of Bank’s standard form of Security Agreement covering the collateral referred to above, along with recorded UCC financing statements as required by Bank;

an executed copy of Bank’s standard form of Guaranty, together with certified copy of resolutions of Guarantor’s board of directors (or equivalent governing body) authorizing Guarantor’s execution, delivery and performance of such Guaranty;

vi.

acknowledgment by Company’s insurance carrier that Bank has been named lender’s loss payee on Company’s property insurance policy and additional insured on Company’s liability insurance policy; and

vii.

all other documents, instruments and other agreements requested by Bank, in each case, in form and substance satisfactory to Bank.

NO AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION OF THIS AGREEMENT NOR CONSENT TO ANY DEPARTURE BY BANK THEREFROM SHALL BE EFFECTIVE, IRRESPECTIVE OF ANY COURSE OF DEALING, UNLESS THE SAME SHALL BE IN WRITING AND SIGNED BY BANK AND THEN SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.

This agreement shall be governed by and construed in accordance with the laws of the State of New York. Please note that to the extent any of the terms or provisions of this agreement conflict with those contained in the Note or any of the above- mentioned documents, the terms and provisions of such Note and of such other documents shall govern.

COMPANY AND BANK AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS RELATING TO THIS FACILITY MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW YORK.

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COMPANY FURTHER AGREES THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR CONTROVERSY BETWEEN OR AMONG COMPANY AND BANK WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT BANK’S ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY COMPANY AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY COMPANY, BE RESOLVED BY ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS PARAGRAPH AND SHALL, AT THE ELECTION OF BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH (I) THIS AGREEMENT, THE NOTE OR ANY OTHER RELATED AGREEMENTS OR INSTRUMENTS, (II) ALL PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES, (III) ANY TRANSACTION CONTEMPLATED HEREBY AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING THE PARTIES AND (IV) ANY ASPECT OF THE PAST, PRESENT OR FUTURE RELATIONSHIP OF THE PARTIES. Bank may elect to require arbitration of any Dispute with Bank without thereby being required to arbitrate all Disputes between Company and Bank. Any such Dispute shall be resolved by binding arbitration in accordance with Article 75 of the New York Civil Practice Law and Rules and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). In the event of any inconsistency between such Rules and these arbitration provisions, these provisions shall supersede such Rules. All statutes of limitations, which would otherwise be applicable, shall apply to any arbitration proceeding under this paragraph. In any arbitration proceeding subject to these provisions, the arbitration panel (the "arbitrator") is specifically empowered to decide (by documents only, or with a hearing, at the arbitrator's sole discretion) pre-hearing motions which are substantially similar to pre-hearing motions to dismiss and motions for summary adjudication. In any such arbitration proceeding, the arbitrator shall not have the power or authority to award punitive damages to any party. Judgment upon the award rendered may be entered in any court having jurisdiction. Whenever arbitration is required, the parties shall select an arbitrator in the manner provided in this paragraph. No provision of, nor the exercise of any rights under, this paragraph shall limit the right of any party (i) to foreclose against any real or personal property collateral through judicial foreclosure, by the exercise of a power of sale under a deed of trust, mortgage or other security agreement or instrument, pursuant to applicable provisions of the Uniform Commercial Code, or otherwise pursuant to applicable law, (ii) to exercise self help remedies including but not limited to setoff and repossession, or (iii) to request and obtain from a court having jurisdiction before, during or after the pendency of any arbitration, provisional or ancillary remedies and relief including but not limited to injunctive or mandatory relief or the appointment of a receiver. The institution and maintenance of an action or judicial proceeding for, or pursuit of, provisional or ancillary remedies or exercise of self help remedies shall not constitute a waiver of Bank’s right, even if Bank is the plaintiff, to submit the Dispute to arbitration if Bank would otherwise have such right. Bank may require arbitration of any Dispute(s) concerning the lawfulness, unconscionableness, propriety, or reasonableness of any exercise by Bank of Bank’s right to take or dispose of any collateral or Bank’s exercise of any other right in connection with collateral including, without limitation, judicial foreclosure, exercising a power of sale under a deed of trust or mortgage, obtaining or executing a writ of attachment, taking or disposing of property with or without judicial process pursuant to Article 9 of the Uniform Commercial Code or otherwise as permitted by applicable law, notwithstanding any such exercise by Bank. Whenever arbitration is required under this paragraph, the arbitrator shall be selected, except as otherwise herein provided, in accordance with the Commercial Arbitration Rules of the AAA. A single arbitrator shall decide any claim of $100,000 or less and he or she shall be an attorney with at least five years' experience. Where the claim of any party exceeds $100,000, the Dispute shall be decided by a majority vote of three arbitrators, at least two of whom shall be attorneys (at least one of whom shall have not less than five years' experience representing commercial banks). In the event of any Dispute governed by this paragraph, each of the parties shall, subject to the award of the arbitrator, pay an equal share of the arbitrator's fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrator's fees, and court costs) to the prevailing party.

INTERNAL - 4

ANYTHING IN THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS RELATING TO THIS FACILITY TO THE CONTRARY NOTWITHSTANDING, THE ENUMERATION IN THIS AGREEMENT, THE NOTE OR IN SUCH OTHER DOCUMENTS OF SPECIFIC OBLIGATIONS TO BANK AND/OR CONDITIONS TO THE AVAILABILITY OF THIS FACILITY AND THE NOTE SHALL NOT BE CONSTRUED TO QUALIFY, DEFINE OR OTHERWISE LIMIT BANK’S RIGHT, POWER OR ABILITY, AT ANY TIME, UNDER APPLICABLE LAW, TO MAKE DEMAND FOR PAYMENT OF THE ENTIRE OUTSTANDING PRINCIPAL OF AND INTEREST DUE UNDER THIS FACILITY AND THE NOTE OR BANK’S RIGHT NOT TO MAKE ANY EXTENSION OF CREDIT UNDER THIS FACILITY AND COMPANY AGREES THAT COMPANY’S BREACH OF OR DEFAULT UNDER ANY SUCH ENUMERATED OBLIGATIONS OR CONDITIONS IS NOT THE ONLY BASIS FOR DEMAND TO BE MADE OR FOR A REQUEST FOR AN EXTENSION OF CREDIT TO BE DENIED, AS COMPANY’S OBLIGATION TO MAKE PAYMENT SHALL AT ALL TIMES REMAIN A DEMAND OBLIGATION. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THIS AGREEMENT DOES NOT CREATE A COMMITMENT OR OBLIGATION TO LEND BY BANK AND COMPANY ACKNOWLEDGES THAT BANK HAS NO OBLIGATION TO LEND.

EACH OF COMPANY AND BANK HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT IN ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS RELATING TO THIS FACILITY. COMPANY ALSO HEREBY WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE BASED UPON ANY CLAIM OF LACHES OR SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE, INCIDENTAL, EXEMPLARY OR SPECIAL DAMAGES.

Company confirms that no regulated, hazardous or toxic substances are being stored on any of Company’s lands, facilities or premises (the “Premises”) or any adjacent property, nor have any such substances been stored or used on the Premises or in Company’s business or any adjacent property prior to Company’s ownership, possession or control of the Premises. Company will provide written notice to Bank immediately upon Company becoming aware that the Premises or any adjacent property are being or have been contaminated with regulated, hazardous or toxic substances. The term “regulated, hazardous or toxic substances” means any substance, defined or designated as hazardous or toxic wastes, hazardous or toxic material, a hazardous, toxic or radioactive substance or other similar term, by any applicable federal, state or local statute, law, regulation or ordinance now or in the future in effect, or any substance or materials, the use or disposition of which is regulated by any such statute, law, regulation or ordinance.

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Bank hereby notifies Company that pursuant to the requirements of the USA Patriot Act of 2001 (the “USA Patriot Act”), Bank is required to obtain, verify and record information that identifies Company, which information includes the name and address of Company and other information that will allow Bank to identify Company in accordance with the USA Patriot Act, and Company agrees to provide such information from time to time to Bank.

Company represents that each of the Company and its subsidiaries is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto and (ii) the USA Patriot Act. Company hereby agrees that no part of the proceeds of this Facility will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

Neither Company nor any director, officer, agent, employee or affiliate or subsidiary of Company, (i) is a person on the list of “Specially Designated Nationals and Blocked Persons” or (ii) is currently the subject of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and Company will not directly or indirectly use the proceeds of this Facility or otherwise knowingly make available such proceeds to any person, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

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If this agreement is acceptable to you, please sign and return this agreement and the other documents referred to above within two weeks from the date of this agreement.

Very truly yours,

HSBC Bank USA, National Association

By:
Name:
Title:

AGREED TO AND ACCEPTED:

Gaming Partners International USA, Inc.			SIGNATURE VERIFICATION: (Bank use Only)

By:
Name:			Name:
Title:			Title:

INTERNAL - 7

DEMAND NOTE

June 26, 2014

$10,000,000.00

For value received, the undersigned Gaming Partners International USA, Inc., a Nevada corporation, with an address of 1700 Industrial Road, Las Vegas, Nevada 89102 (the "Borrower"), promises to pay to the order of HSBC Bank USA, National Association, a bank organized under the laws of the United States with an address of 452 Fifth Avenue, New York, NY 10018 (together with its successors and assigns, the "Bank"), ON DEMAND, the principal amount of Ten Million Dollars and Zero Cents ($10,000,000.00) or, if less, such amount as may be the aggregate unpaid principal amount of all loans or advances made by the Bank to the Borrower pursuant hereto, together with interest from the date hereof on the unpaid principal balance from time to time outstanding until paid in full.

The aggregate principal balance outstanding shall bear interest, and interest shall be payable, in accordance with that certain Interest Rider, attached hereto and made a part hereof (the "Interest Election Rider").

Principal and interest shall be payable at the Bank's main office or at such other place as the Bank may designate in writing in immediately available funds in lawful money of the United States of America without set-off, deduction or counterclaim. Interest shall be calculated on the basis of actual number of days elapsed and a 360-day year.

This Note shall continue in full force and effect until all obligations and liabilities evidenced by this Note are paid in full, even if, from time to time, there are no amounts outstanding respecting this Note. Nothing contained in this Note or otherwise is intended, nor shall constitute, an obligation of the Bank to make any loan or advance.

Any payments received by the Bank on account of this Note shall, at the Bank's option, be applied first, to accrued and unpaid interest; second, to the unpaid principal balance hereof; third to any costs, expenses or charges then owed to the Bank by the Borrower; and the balance to escrows, if any. Notwithstanding the foregoing, any payments received after demand for payment shall be applied in such manner as the Bank may determine. The Borrower hereby authorizes the Bank to charge any deposit account which the Borrower may maintain with the Bank for any payment required hereunder without prior notice to the Borrower.

If pursuant to the terms of this Note, the Borrower is at any time obligated to pay interest on the principal balance at a rate in excess of the maximum interest rate permitted by applicable law for the loan evidenced by this Note, the applicable interest rate shall be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder.

The Borrower represents to the Bank that the proceeds of this Note will not be used for personal, family or household purposes or for the purpose of purchasing or carrying margin stock or margin securities within the meaning of Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

The Borrower and each endorser and guarantor hereof grant to the Bank a continuing lien on and security interest in any and all deposits or other sums at any time credited by or due from the Bank or any Bank Affiliate (as hereinafter defined) to the Borrower and/or each endorser or guarantor hereof and any cash, securities, instruments or other property of the Borrower and each endorser and guarantor hereof in the possession of the Bank or any Bank Affiliate, whether for safekeeping or otherwise, or in transit to or from the Bank or any Bank Affiliate (regardless of the reason the Bank or Bank Affiliate had received the same or whether the Bank or Bank Affiliate has conditionally released the same) as security for the full and punctual payment and performance of all of the liabilities and obligations of the Borrower and/or any endorser or guarantor hereof to the Bank or any Bank Affiliate and such deposits and other sums may be applied or set off against such liabilities and obligations of the Borrower or any endorser or guarantor hereof to the Bank or any Bank Affiliate at any time, whether or not such are then due, whether or not demand has been made and whether or not other collateral is then available to the Bank or any Bank Affiliate.

RESTRICTED - 1

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 of the Bank, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. The Borrower and every endorser or guarantor of this Note, regardless of the time, order or place of signing, waive presentment, demand, protest, notice of intent to accelerate, notice of acceleration and all other notices of every kind in connection with the delivery, acceptance, performance or enforcement of this Note and assent to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or secondarily liable and waives all recourse to suretyship and guarantor defenses generally, including any defense based on impairment of collateral. To the maximum extent permitted by law, the Borrower and each endorser and guarantor of this Note waive and terminate any homestead rights and/or exemptions respecting any premises under the provisions of any applicable homestead laws, including without limitation, Section 5206 of the Civil Practice Law and Rules of New York.

The Borrower and each endorser and guarantor of this Note shall indemnify, defend and hold the Bank and the Bank Affiliates and their directors, officers, employees, agents and attorneys (each an "Indemnitee") harmless against any claim brought or threatened against any Indemnitee by the Borrower, by any endorser or guarantor, or by any other person (as well as from attorneys' reasonable fees and expenses in connection therewith) on account of the Bank's relationship with the Borrower or any endorser or guarantor hereof (each of which may be defended, compromised, settled or pursued by the Bank with counsel of the Bank's selection, but at the expense of the Borrower and any endorser and/or guarantor), except for any claim arising out of the gross negligence or willful misconduct of the Bank.

The Borrower and each endorser and guarantor of this Note agree to pay, upon demand, costs of collection of all amounts under this Note including, without limitation, principal and interest, or in connection with the enforcement of, or realization on, any security for this Note, including, without limitation, to the extent permitted by applicable law, reasonable attorneys' fees and expenses. Upon demand for payment of any amounts hereunder, interest shall accrue at a rate per annum equal to the aggregate of 3.0% plus the rate provided for herein. If any payment due under this Note is unpaid for 10 days or more, the Borrower shall pay, in addition to any other sums due under this Note (and without limiting the Bank's other remedies on account thereof), a late charge equal to 5.0% of such unpaid amount (which amount shall be subject to and limited so as to not be in violation of the provisions of Section 254-b of New York Real Property Law, if applicable).

This Note shall be binding upon the Borrower and each endorser and guarantor hereof and upon their respective heirs, successors, assigns and legal representatives, and shall inure to the benefit of the Bank and its successors, endorsees and assigns.

The liabilities of the Borrower and each Borrower, if more than one, and any endorser or guarantor of this Note are joint and several; provided, however, the release by the Bank of the Borrower or any one or more endorsers or guarantors shall not release any other person obligated on account of this Note. Any and all present and future debts of the Borrower to any endorser or guarantor of this Note are subordinated to the full payment and performance of all present and future debts and obligations of the Borrower to the Bank. Each reference in this Note to the Borrower and each Borrower, if more than one, and endorser or guarantor of this Note, is to such person individually and also to all such persons jointly. No person obligated on account of this Note may seek contribution from any other person also obligated, unless and until all liabilities, obligations and indebtedness to the Bank of the person from whom contribution is sought have been irrevocably satisfied in full. The release or compromise by the Bank of any collateral shall not release any person obligated on account of this Note.

RESTRICTED - 2

The Borrower and each endorser and guarantor hereof each authorizes the Bank to complete this Note if delivered incomplete in any respect. A photographic or other reproduction of this Note may be made by the Bank, and any such reproduction shall be admissible in evidence with the same effect as the original itself in any judicial or administrative proceeding, whether or not the original is in existence.

The Borrower will from time to time execute and deliver to the Bank such documents, and take or cause to be taken, all such other further action, as the Bank may request in order to effect and confirm or vest more securely in the Bank all rights contemplated by this Note or any other loan documents related thereto (including, without limitation, to correct clerical errors) or to vest more fully in or assure to the Bank the security interest in any collateral securing this Note or to comply with applicable statute or law.

This Note shall be governed by the laws of the State of New York without giving effect to the conflicts of laws principles thereof.

Any notices under or pursuant to this Note shall be deemed duly received and effective if delivered in hand to any officer or agent of the Borrower or Bank, or if mailed by registered or certified mail, return receipt requested, addressed to the Borrower or Bank at the address set forth in this Note or as any party may from time to time designate by written notice to the other party.

The term "Bank Affiliate" as used in this Note shall mean any "Affiliate" of the Bank or any lender acting as a participant under any loan arrangement between the Bank and the Borrower(s). The term "Affiliate" shall mean with respect to any person, (a) any person which, directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such person, or (b) any person who is a director or officer (i) of such person, (ii) of any subsidiary of such person, or (iii) any person described in clause (a) above. For purposes of this definition, control of a person shall mean the power, direct or indirect, (x) to vote 5% or more of the Capital Stock having ordinary voting power for the election of directors (or comparable equivalent) of such person, or (y) to direct or cause the direction of the management and policies of such person whether by contract or otherwise. Control may be by ownership, contract, or otherwise.

No change in any provision of this Note may be made except by a writing signed by authorized signers of both parties to this Note, except that the Bank is authorized to fill in any blank spaces and to otherwise complete this Note and correct any patent errors herein.

All of the Bank's rights and remedies not only under the provisions of this Note but also under any other agreement or transaction shall be cumulative and not alternative or exclusive, and may be exercised by the Bank at such time or times and in such order of preference as the Bank in its sole discretion may determine.

IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE, BORROWER AND EACH INDORSER WAIVE (i) THE RIGHT TO INTERPOSE ANY SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, (ii) ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE AND (iii) ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.

RESTRICTED - 3

The Borrower and each endorser and guarantor of this Note each irrevocably submits to the nonexclusive jurisdiction of any Federal or state court sitting in New York, over any suit, action or proceeding arising out of or relating to this Note. Each of the Borrower and each endorser and guarantor irrevocably waives, to the fullest extent it may effectively do so under applicable law, any objection it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum. Each of the Borrower and each endorser and guarantor hereby consents to any and all process which may be served in any such suit, action or proceeding, (i) by mailing a copy thereof by registered and certified mail, postage prepaid, return receipt requested, to the Borrower's, endorser's or guarantor's address shown below or as notified to the Bank and (ii) by serving the same upon the Borrower(s), endorser(s) or guarantor(s) in any other manner otherwise permitted by law, and agrees that such service shall in every respect be deemed effective service upon the Borrower or such endorser or guarantor.

THE BORROWER AND EACH ENDORSER AND GUARANTOR ACKNOWLEDGE THAT THIS NOTE IS A DEMAND NOTE AND THE RIGHT OF THE BANK TO DEMAND PAYMENT OF THIS NOTE IN WHOLE OR IN PART AT ANY TIME SHALL BE ABSOLUTE, UNCONDITIONAL AND IN THE SOLE DISCRETION OF THE BANK. THE INCLUSION OF EVENTS OF DEFAULT AND COVENANTS IN ANY LOAN DOCUMENTS BETWEEN THE BANK AND THE BORROWER OR ANY ENDORSER OR GUARANTOR OR ANY OTHER PARTY DELIVERED IN CONNECTION WITH THIS NOTE OR OTHERWISE SHALL NOT IN ANY WAY LIMIT THE DEMAND NATURE OF THIS NOTE AND THE BANK MAY MAKE DEMAND FOR PAYMENT AT ANY TIME FOR ANY OR NO REASON, WHETHER OR NOT AN EVENT OF DEFAULT HAS OCCURRED UNDER ANY SUCH LOAN DOCUMENTS.

THE BORROWER, EACH ENDORSER AND GUARANTOR AND THE BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, (A) WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS NOTE, ANY OF THE OBLIGATIONS OF THE BORROWER, EACH ENDORSER AND GUARANTOR TO THE BANK, AND ALL MATTERS CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREES NOT TO SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT BE, OR HAS NOT BEEN, WAIVED. THE BORROWER, EACH ENDORSER AND GUARANTOR AND THE BANK EACH CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

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PARTIES AGREE THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR CONTROVERSY BETWEEN OR AMONG THE PARTIES WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT BANK'S ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY A PARTY OTHER THAN THE BANK, AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY PARTY OTHER THAN THE BANK, BE RESOLVED BY ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION AND SHALL, AT THE ELECTION OF BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH (I) THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, (II) ALL PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES, (III) ANY TRANSACTION CONTEMPLATED HEREBY AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING THE PARTIES AND (IV) ANY ASPECT OF THE PAST, PRESENT OR FUTURE RELATIONSHIP OF THE PARTIES. Bank may elect to require arbitration of any Dispute with the other party without thereby being required to arbitrate all Disputes between Bank and the other party. Any such Dispute shall be resolved by binding arbitration in accordance with Article 75 of the New York Civil Practice Law and Rules and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). In the event of any inconsistency between such Rules and this arbitration provision, this provision shall supersede such Rules. All statutes of limitations which would otherwise be applicable shall apply to any arbitration proceeding under this provision. In any arbitration proceeding subject to this provision, the arbitration panel (the "arbitrator") is specifically empowered to decide (by documents only, or with a hearing, at the arbitrator's sole discretion) pre-hearing motions which are substantially similar to pre-hearing motions to dismiss and motions for summary adjudication. In any such arbitration proceeding, the arbitrator shall not have the power or authority to award punitive damages to any party. Judgment upon the award rendered may be entered in any court having jurisdiction. Whenever an arbitration is required, the parties shall select an arbitrator in the manner provided in this section. No provision of, nor the exercise of any rights under this provision shall limit the right of any party (i) to foreclose against any real or personal property collateral through judicial foreclosure, by the exercise of a power of sale under a deed of trust, mortgage or other security agreement or instrument, pursuant to applicable provisions of the UCC, or otherwise pursuant to applicable law, (ii) to exercise self help remedies including but not limited to setoff and repossession, or (iii) to request and obtain from a court having jurisdiction before, during or after the pendency of any arbitration, provisional or ancillary remedies and relief including but not limited to injunctive or mandatory relief or the appointment of a receiver. The institution and maintenance of an action or judicial proceeding for, or pursuit of, provisional or ancillary remedies or exercise of self help remedies shall not constitute a waiver of the right of Bank, even if Bank is the plaintiff, to submit the Dispute to arbitration if Bank would otherwise have such right. Bank may require arbitration of any Dispute(s) concerning the lawfulness, unconscionableness, propriety, or reasonableness of any exercise by Bank of its right to take or dispose of any Collateral or its exercise of any other right in connection with Collateral including, without limitation, judicial foreclosure, exercising a power of sale under a deed of trust or mortgage, obtaining or executing a writ of attachment, taking or disposing of property with or without judicial process pursuant to Article 9 of the UCC or otherwise as permitted by applicable law, notwithstanding any such exercise by Bank. Whenever an arbitration is required under this section, the arbitrator shall be selected, except as otherwise herein provided, in accordance with the Commercial Arbitration Rules of the AAA. A single arbitrator shall decide any claim of $100,000 or less and he or she shall be an attorney with at least five years' experience. Where the claim of any party exceeds $100,000, the Dispute shall be decided by a majority vote of three arbitrators, at least two of whom shall be attorneys (at least one of whom shall have not less than five years' experience representing commercial banks). In the event of any Dispute governed by this section, each of the parties shall, subject to the award of the arbitrator, pay an equal share of the arbitrator's fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrator's fees, and court costs) to the prevailing party.

Executed as of June 26, 2014.

Signature Verified:	Borrower:
(Bank use Only)	Gaming Partners International USA, Inc.

	By:
		Name:
		Title:

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INTEREST RIDER

1. INTEREST RATE(S); PAYMENTS AND PREPAYMENTS.

1.1 Interest Rates. So long as the Bank has not demanded payment of any amounts hereunder, and subject to the other terms of this Note, the outstanding principal balance shall bear interest at a rate per annum for the Interest Periods (as hereinafter defined) equal to Two and One-Quarter Percent (2.25%) above the LIBOR Rate (as hereinafter defined) for Interest Periods of 30, 60, 90 or 180 days, but not longer than the remainder of the term of this Note (a "LIBOR Advance").

1.2 Advances. Each LIBOR Advance may only be requested in increments greater than One Hundred Thousand Dollars and Zero Cents ($100,000.00). The Bank shall record on the books and records of the Bank an appropriate notation evidencing each repayment on account of the principal thereof and the amount of interest paid, and the Borrower authorizes the Bank to maintain such records and make such notations and agrees that the amount shown on the books and records as outstanding from time to time shall constitute the amount owing to the Bank pursuant to this Note, absent manifest error.

1.3 Payment of Interest. Interest on all amounts outstanding shall be payable, in arrears, on the first Banking Day following the expiration of the applicable Interest Period or, at the Bank’s option, on the 1st day of each month commencing the month following the date of this Note and on the day LIBOR advances are paid in full.

1.4 Interest Periods. Each Interest Period shall commence on the date selected and shall end on the date the Borrower shall elect, in each case as set forth in Paragraph 1.1 hereof; provided, however, that (a) any Interest Period that would otherwise end on a day which is not a Banking Day shall be extended to the next Banking Day and (b) any Interest Period that would otherwise extend beyond demand for payment of any amount shall end on the date of such demand.

1.5 End of Interest Period. Subject to all of the terms and conditions applicable to a request for a new LIBOR advance, the Borrower may elect to continue a LIBOR Advance as of the last day of the applicable Interest Period to a new LIBOR Advance.

1.6 Basis for Determining LIBOR Inadequate or Unfair. In the event that the Bank shall determine that by reason of circumstances affecting the interbank Eurodollar market, adequate and reasonable means do not exist for determining the LIBOR Rate, or Eurodollar deposits in the relevant amount and for the relevant maturity are not available to the Bank in the interbank Eurodollar market, with respect to a proposed LIBOR Advance, the Bank shall give the Borrower prompt notice of such determination. If such notice is given, then: (a) any requested LIBOR Advance shall instead be made at a rate per annum rate equal to a variable rate (“Variable Rate”) equal to One Percent (1.0%) above the Prime Rate (as hereinafter defined) (a “Variable Rate Advance”) unless the Borrower gives the Bank one Banking Day’s prior written notice that its request for such borrowing is canceled; (b) any outstanding LIBOR Advance shall be converted to a Variable Rate Advance on the last Banking Day of the then current Interest Period for such LIBOR Advance. Until such notice has been withdrawn, the Bank shall have no obligation to make LIBOR Advances or maintain outstanding LIBOR Advances and the Borrower shall not have the right to request LIBOR Advances.

1.7 Illegality of LIBOR Rate. Notwithstanding any other provision of this Note, if, after the date of this Note, any applicable law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful for the Bank to make or maintain any LIBOR Advance, the obligation of the Bank hereunder to make or maintain such LIBOR Advance shall forthwith be suspended for the duration of such illegality and the Borrower shall, if any such LIBOR Advance is outstanding, promptly upon request from the Bank, prepay such LIBOR Advance or convert such LIBOR Advance to another type of advance. If any such payment is made on a day that is not the last Banking Day of the then current Interest Period applicable to such advance, the Borrower shall pay the Bank, upon the Bank's request, any amount required under Paragraph 1.99 of this Note.

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1.8 Termination of Pricing Option. After the Bank has demanded payment of any amounts hereunder, interest shall accrue at a rate per annum equal to 3.0% plus the Variable Rate.

1.9 Optional Prepayment.

(a)

The Borrower has the right to pay before due the unpaid balance of any Variable Rate Advance or any part thereof without penalty or premium, but with accrued interest on the principal being prepaid to the date of such repayment.

(b)

At its option and upon prior written notice to the Bank, the Borrower may prepay any LIBOR Advance in whole or in part from time to time without premium or penalty but with accrued interest on the principal being prepaid to the date of such repayment; provided, however, that such LIBOR Advance may only be prepaid on the last Banking Day of the then current Interest Period applicable thereto.

(c)

In the event that any prepayment of a LIBOR Advance is required or permitted on a date other than the last Banking Day of the then current Interest Period applicable thereto, then so long as this Note has not become due and payable in accordance with its terms, the Borrower shall have the right to prepay such LIBOR Advance in whole (but not in part), provided that the Borrower shall pay to the Bank concurrently with such prepayment a Yield Maintenance Fee in an amount computed as follows: The 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 maturity date of the term chosen pursuant to the Interest Period as to which the prepayment is made, shall be subtracted from the "cost of funds" component of the LIBOR Advance in effect at the time of prepayment. If the result is zero or a negative number, there shall be no Yield Maintenance Fee payable. If the result is a positive number, then the resulting percentage shall be multiplied by the amount of the principal balance being prepaid. The resulting amount shall be divided by 360 and multiplied by the number of days remaining in the term chosen pursuant to the Interest Period as to which the prepayment is made. Said amount shall be reduced to present value calculated by using the number of days remaining in the designated term and using the above-referenced United States Treasury security rate and the number of days remaining in the designated term chosen pursuant to the Interest Period as to which the prepayment is made. The resulting amount shall be the Yield Maintenance Fee due to the Bank upon prepayment of the LIBOR Advance. If this Note shall become due and payable for any reason, then any Yield Maintenance Fee with respect to the Note shall become due and payable in the same manner as though the Borrower had exercised its right of prepayment. The Borrower recognizes that the Bank will incur substantial additional costs and expenses including loss of yield and anticipated profitability in the event of prepayment of all or part of this Note and that the Yield Maintenance Fee compensates the Bank for such costs and expenses. The Borrower acknowledges that the Yield Maintenance Fee is bargained-for consideration and not a penalty.

(d)

All prepayments of any LIBOR Advance shall be applied first to fees and expenses then due hereunder, then to interest on the unpaid principal balance accrued to the date of prepayment and last to the principal balance then due hereunder.

2. DEFINITIONS.

2.1 Definitions. The following definitions are applicable to this Interest Rate Election Rider:

(a)

"Banking Day" shall mean with respect to LIBOR Advances, a London Banking Day and with respect to all other advances, any day other than a day on which commercial banks in New York are required or permitted by law to close.

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(b)

"Interest Period" shall mean with respect to any LIBOR Advance, the 30, 60, 90 or 180 day period pursuant to Paragraph 1.1.

(c)

"LIBOR Advance" shall have the meaning set forth in Paragraph 1.1 above.

(d)

"LIBOR Rate" shall mean the rate of interest (rounded upwards if necessary to the next 100th of one percent) determined by the Bank to be the prevailing rate per annum at which deposits in United States dollars for an applicable period, determined by the Bank in its sole discretion, are offered to the Bank by first class banks in the London Interbank Market in which the Bank regularly participates at any such time, or, in the discretion of the Bank, the base, reference or other rate then designated by the Bank for general commercial loan reference purposes, it being understood that such rate is a reference rate, not necessarily the lowest, established from time to time, which serves as the basis upon which effective interest rates are calculated for loans making reference thereto.

(e)

"London Banking Day" shall mean with respect to LIBOR Advances, any day on which commercial banks are open for international business (including dealings in U.S. Dollar ($) deposits) in London, England and New York.

(f)

"Prime Rate" shall mean the rate per annum from time to time established by the Bank as the Prime Rate and made available by the Bank at its main office or, in the discretion of the Bank, the base, reference or other rate then designated by the Bank for general commercial loan reference purposes, it being understood that such rate is a reference rate, not necessarily the lowest, established from time to time, which serves as the basis upon which effective interest rates are calculated for loans making reference thereto.

(g)

"Variable Rate Advance" shall have the meaning set forth in Paragraph 1.1 above.

2.2 Other Terms. Terms set forth in this Note which are defined in the Note shall have the meanings set forth in the Note.

Promissory Notes

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SECURITY AGREEMENT

This SECURITY AGREEMENT (this "Agreement") is entered into at LAS VEGAS, NEVADA, as of June 26, 2014, between Gaming Partners International USA, Inc., a Nevada corporation, with its chief executive office located at 1700 Industrial Road, Las Vegas, Nevada 89102 (the "Borrower") and HSBC Bank USA, National Association, a bank organized under the laws of the United States, with an address of 452 Fifth Avenue, New York, NY 10018 (the "Bank").

FOR VALUE RECEIVED, and in consideration of the granting by the Bank of financial accommodations to or for the benefit of the Borrower, including without limitation respecting the Obligations (as hereinafter defined), the Borrower represents to and agrees with the Bank, as of the date hereof and as of the date of each loan, credit and/or other financial accommodation, as follows:

1. GRANT OF SECURITY INTEREST

1.1 Grant of Security Interest. In consideration of the Bank’s extending credit and other financial accommodations to or for the benefit of the Borrower, the Borrower hereby grants to the Bank a security interest in, a lien on and pledge and assignment of the Collateral (as hereinafter defined). The security interest granted by this Agreement is given to and shall be held by the Bank as security for the payment and performance of all Obligations (as hereinafter defined).

1.2 Definitions. The following definitions shall apply:

(a) "Bank Affiliate" shall mean any "Affiliate" of the Bank or any lender acting as a participant under any loan arrangement between the Bank and the Borrower(s). The term "Affiliate" shall mean with respect to any person, (a) any person which, directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such person, or (b) any person who is a director or officer (i) of such person, (ii) of any subsidiary of such person, or (iii) any person described in clause (a) above. For purposes of this definition, control of a person shall mean the power, direct or indirect, (x) to vote 5% or more of the Capital Stock having ordinary voting power for the election of directors (or comparable equivalent) of such person, or (y) to direct or cause the direction of the management and policies of such person whether by contract or otherwise. Control may be by ownership, contract, or otherwise.

(b) "Code" shall mean the New York Uniform Commercial Code as amended from time to time.

(c) "Collateral" shall mean all of the Borrower's present and future right, title and interest in and to any and all of the personal property of the Borrower whether such property is now existing or hereafter created, acquired or arising and wherever located from time to time, including without limitation:

(i) accounts;

(ii) chattel paper;

(iii) goods;

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(iv) inventory;

(v) equipment;

(vi) fixtures

(vii) farm products;

(viii) instruments;

(ix) investment property;

(x) documents;

(xi) commercial tort claims;

(xii) deposit accounts;

(xiii) letter-of-credit rights;

(xiv) general intangibles;

(xv) supporting obligations; and

(xvi) records of, accession to and proceeds and products of the foregoing.

(d) "Debtors" shall mean the Borrower's customers who are indebted to the Borrower.

(e) "Loan Documents" shall mean this Agreement and all other agreements between the Bank and the Borrower.

(f) "Obligation(s)" shall mean, without limitation, all loans, advances, indebtedness, notes, liabilities, rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, equity or equity index swaps, equity or equity index options, bond options, interest rate options, foreign exchange transactions, cap transactions, floor transactions, collar transactions, forward transactions, currency swap transactions, cross-currency rate swap transactions, currency options and amounts, liquidated or unliquidated, owing by the Borrower to the Bank or any Bank Affiliate at any time, of each and every kind, nature and description, whether arising under this Agreement or otherwise, and whether secured or unsecured, direct or indirect (that is, whether the same are due directly by the Borrower to the Bank or any Bank Affiliate; or are due indirectly by the Borrower to the Bank or any Bank Affiliate as endorser, guarantor or other surety, or as borrower of obligations due third persons which have been endorsed or assigned to the Bank or any Bank Affiliate, or otherwise), absolute or contingent, due or to become due, now existing or hereafter arising or contracted, including, without limitation, payment when due of all amounts outstanding respecting any of the Loan Documents. Said term shall also include all interest and other charges chargeable to the Borrower or due from the Borrower to the Bank or any Bank Affiliate from time to time and all costs and expenses referred to in this Agreement.

(g) "Person" or "party" shall mean individuals, partnerships, corporations, limited liability companies and all other entities.

All words and terms used in this Agreement other than those specifically defined herein shall have the meanings accorded to them in the Code.

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1.3 Ordinary Course of Business. The Bank hereby authorizes and permits the Borrower to hold, process, sell, use or consume in the manufacture or processing of finished goods, or otherwise dispose of inventory for fair consideration, all in the ordinary course of the Borrower's business, excluding, without limitation, sales to creditors or in bulk or sales or other dispositions occurring under circumstances which would or could create any lien or interest adverse to the Bank’s security interest or other right hereunder in the proceeds resulting therefrom. The Bank also hereby authorizes and permits the Borrower to receive from the Debtors all amounts due as proceeds of the Collateral at the Borrower's own cost and expense, and also liability, if any, subject to the direction and control of the Bank at all times; and the Bank may at any time, without cause or notice, and whether or not an Event of Default has occurred or demand has been made, terminate all or any part of the authority and permission herein or elsewhere in this Agreement granted to the Borrower with reference to the Collateral, and notify Debtors to make all payments due as proceeds of the Collateral to the Bank. Until Bank shall otherwise notify Borrower, all proceeds of and collections of Collateral shall be retained by Borrower and used solely for the ordinary and usual operation of Borrower's business. From and after notice by Bank to Borrower, all proceeds of and collections of the Collateral shall be held in trust by Borrower for Bank and shall not be commingled with Borrower's other funds or deposited in any Bank account of Borrower; and Borrower agrees to deliver to Bank on the dates of receipt thereof by Borrower, duly endorsed to Bank or to bearer, or assigned to Bank, as may be appropriate, all proceeds of the Collateral in the identical form received by Borrower.

1.4 Allowances. Absent an Event of Default the Borrower may grant such allowances or other adjustments to Debtors (exclusive of extending the time for payment of any item which shall not be done without first obtaining the Bank’s written consent in each instance) as the Borrower may reasonably deem to accord with sound business practice, including, without limiting the generality of the foregoing, accepting the return of all or any part of the inventory (subject to the provisions set forth in this Agreement with reference to returned inventory).

1.5 Records. The Borrower shall hold its books and records relating to the Collateral segregated from all the Borrower's other books and records in a manner satisfactory to the Bank; and shall deliver to the Bank from time to time promptly at its request all invoices, original documents of title, contracts, chattel paper, instruments and any other writings relating thereto, and other evidence of performance of contracts, or evidence of shipment or delivery of the merchandise or of the rendering of services; and the Borrower will deliver to the Bank promptly at the Bank’s request from time to time additional copies of any or all of such papers or writings, and such other information with respect to any of the Collateral and such schedules of inventory, schedules of accounts and such other writings as the Bank may in its sole discretion deem to be necessary or effectual to evidence any loan hereunder or the Bank’s security interest in the Collateral.

1.6 Legends. The Borrower shall promptly make, stamp or record such entries or legends on the Borrower's books and records or on any of the Collateral (including, without limitation, chattel paper) as Bank shall request from time to time, to indicate and disclose that Bank has a security interest in such Collateral.

1.7 Inspection. The Bank, or its representatives, at any time and from time to time, shall have the right at the sole cost and expense of Borrower, and the Borrower will permit the Bank and/or its representatives: (a) to examine, check, make copies of or extracts from any of the Borrower's books, records and files (including, without limitation, orders and original correspondence); (b) to perform field exams or otherwise inspect and examine the Collateral and to check, test or appraise the same as to quality, quantity, value and condition; and (c) to verify the Collateral or any portion or portions thereof or the Borrower's compliance with the provisions of this Agreement.

1.8 Purchase Money Security Interests. To the extent the Borrower uses proceeds of any loans to purchase Collateral, the repayment of such loans shall be on a “first-in-first-out” basis so that the portion of the loan used to purchase a particular item of Collateral shall be repaid in the order in which Borrower purchased such item of Collateral.

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1.9 Search Reports. Bank shall receive prior to the date of this Agreement UCC search results under all names used by the Borrower during the prior five (5) years, from each jurisdiction where any Collateral is located, from the State, if any, where the Borrower is organized and registered (as such terms are used in the Code), and the State where the Borrower’s chief executive office is located. The search results shall confirm that the security interest in the Collateral granted Bank hereunder is prior to all other security interests in favor of any other person.

2. REPRESENTATIONS AND WARRANTIES

2.1 Accounts and Contract Rights. All accounts arise out of legally enforceable and existing contracts, and represent unconditional and undisputed bona fide indebtedness by a Debtor, and are not and will not be subject to any discount (except such cash or trade discount as may be shown on any invoice, contract or other writing delivered to the Bank). No contract right, account, general intangible or chattel paper is or will be represented by any note or other instrument, and no contract right, account or general intangible is, or will be represented by any conditional or installment sales obligation or other chattel paper, except such instruments or chattel paper as have been or immediately upon receipt by the Borrower will be delivered to the Bank (duly endorsed or assigned), such delivery, in the case of chattel paper, to include all executed copies except those in the possession of the installment buyer and any security for or guaranty of any of the Collateral shall be delivered to the Bank immediately upon receipt thereof by the Borrower, with such assignments and endorsements thereof as the Bank may request.

2.2 Location of Collateral. Except for sale, processing, use, consumption or other disposition in the ordinary course of business, the Borrower will keep all inventory and equipment only at locations specified in this Agreement or specified to the Bank in writing. The Borrower shall, during the term of this Agreement, keep the Bank currently and accurately informed in writing of each location where the Borrower's records relating to its accounts and contract rights, respectively, are kept, and shall not remove such records or any of them to another location without giving the Bank at least thirty (30) days prior written notice thereof.

2.3 Third Parties. The Bank shall not be deemed to have assumed any liability or responsibility to the Borrower or any third person for the correctness, validity or genuineness of any instruments or documents that may be released or endorsed to the Borrower by the Bank (which shall automatically be deemed to be without recourse to the Bank in any event) or for the existence, character, quantity, quality, condition, value or delivery of any goods purporting to be represented by any such documents; and the Bank, by accepting such security interest in the Collateral, or by releasing any Collateral to the Borrower, shall not be deemed to have assumed any obligation or liability to any supplier or Debtor or to any other third party, and the Borrower agrees to indemnify and defend the Bank and hold it harmless in respect to any claim or proceeding arising out of any matter referred to in this paragraph.

2.4 Payment of Accounts. Each account or other item of Collateral, other than inventory and equipment, will be paid in full on or before the date shown as its due date in the schedule of Collateral, in the copy of the invoice(s) relating to the account or other Collateral or in contracts relating thereto. Upon any suspension of business, assignment or trust mortgage for the benefit of creditors, dissolution, petition in receivership or under any chapter of the Bankruptcy Code as amended from time to time by or against any Debtor, any Debtor becoming insolvent or unable to pay its debts as they mature or any other act of the same or different nature amounting to a business failure, the Borrower will immediately notify the Bank thereof.

3. AFFIRMATIVE COVENANTS

3.1 Inspection. Borrower will at all reasonable times make its books and records available in its offices for inspection, examination and duplication by the Bank and the Bank’s representatives and will permit inspection of the Collateral and all of its properties by the Bank and the Bank’s representatives. Borrower will from time to time furnish the Bank with such information and statements as the Bank may request in its sole discretion with respect to the Obligations or the Bank’s security interest in the Collateral. Borrower shall, during the term of this Agreement, keep the Bank currently and accurately informed in writing of each location where Borrower's records relating to its accounts and contract rights are kept, and shall not remove such records to another location without giving the Bank at least thirty (30) days prior written notice thereof.

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3.2 Notice to Account Debtors. The Borrower agrees, at the request of the Bank, to notify all or any of the Debtors in writing of the Bank’s security interest in the Collateral in whatever manner the Bank requests and, hereby authorizes the Bank to notify all or any of the Debtors of the Bank’s security interest in the Borrower's accounts at the Borrower's expense.

3.3 Lien Law. If any account or general intangible included in the Collateral represents money owing pursuant to any contract for the improvement of real property or for a public improvement for purposes of the Lien Law of the State of New York (the "Lien Law"), Borrower shall (i) give Bank notice of such fact; (ii) receive and hold any money advanced by Bank with respect to such account or general intangible as a trust fund to be first applied to the payment of trust claims as such term is defined in the Lien Law (Section 71 or otherwise); and (iii) until such trust claim is paid, not use or permit the use of any such money for any purpose other than the payment of such trust claims.

4. DEFAULT

4.1 Default. "Event of Default" shall mean the occurrence of one or more of any of the following events:

(a) default of any liability, obligation, covenant or undertaking of the Borrower or any guarantor of the Obligations to the Bank, hereunder or otherwise, including, without limitation, failure to pay in full and when due any installment of principal or interest or default of the Borrower or any guarantor of the Obligations under any other Loan Document or any other agreement with the Bank;

(b) failure of the Borrower or any guarantor of the Obligations to maintain aggregate collateral security value satisfactory to the Bank;

(c) default of any material liability, obligation or undertaking of the Borrower or any guarantor of the Obligations to any other party;

(d) if any statement, representation or warranty heretofore, now or hereafter made by the Borrower or any guarantor of the Obligations in connection with this Agreement or in any supporting financial statement of the Borrower or any guarantor of the Obligations shall be determined by the Bank to have been false or misleading in any material respect when made;

(e) if the Borrower or any guarantor of the Obligations is a corporation, trust, partnership or limited liability company, the liquidation, termination or dissolution of any such organization, or the merger or consolidation of such organization into another entity, or its ceasing to carry on actively its present business or the appointment of a receiver for its property;

(f) the death or judicial declaration of incompetence of the Borrower or any guarantor of the Obligations and, if the Borrower or any guarantor of the Obligations is a partnership or limited liability company, the death or judicial declaration of incompetence of any partner or member;

(g) the institution by or against the Borrower or any guarantor of the Obligations of any proceedings under the Bankruptcy Code 11 USC §101 et seq. or any other law in which the Borrower or any guarantor of the Obligations is alleged to be insolvent or unable to pay its debts as they mature, or the making by the Borrower or any guarantor of the Obligations of an assignment for the benefit of creditors or the granting by the Borrower or any guarantor of the Obligations of a trust mortgage for the benefit of creditors (each of the foregoing in this subclause, an "Insolvency Default");

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(h) the service upon the Bank of a writ in which the Bank is named as trustee of the Borrower or any guarantor of the Obligations;

(i) a judgment or judgments for the payment of money shall be rendered against the Borrower or any guarantor of the Obligations, and any such judgment shall remain unsatisfied and in effect for any period of thirty (30) consecutive days without a stay of execution;

(j) any levy, lien (including mechanics lien), seizure, attachment, execution or similar process shall be issued or levied on any of the property of the Borrower or any guarantor of the Obligations;

(k) the termination or revocation of any guaranty of the Obligations; or

(l) the occurrence of such a change in the condition or affairs (financial or otherwise) of the Borrower or any guarantor of the Obligations, or the occurrence of any other event or circumstance, such that the Bank, in its sole discretion, deems that it is insecure or that the prospects for timely or full payment or performance of any obligation of the Borrower or any guarantor of the Obligations to the Bank has been or may be impaired.

4.2 Acceleration. If an Event of Default shall occur, at the election of the Bank (but automatically in the case of an Insolvency Default), all Obligations shall become immediately due and payable without notice or demand, except with respect to Obligations payable on DEMAND, which shall be due and payable on DEMAND, whether or not an Event of Default has occurred.

The Bank is hereby authorized, at its election, after an Event of Default or after Demand, without any further demand or notice except to such extent as notice may be required by applicable law, to take possession and/or sell or otherwise dispose of all or any of the Collateral at public or private sale; and the Bank may also exercise any and all other rights and remedies of a secured party under the Code or which are otherwise accorded to it in equity or at law, all as Bank may determine, and such exercise of rights in compliance with the requirements of law will not be considered adversely to affect the commercial reasonableness of any sale or other disposition of the Collateral. If notice of a sale or other action by the Bank is required by applicable law, unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Borrower agrees that ten (10) days written notice to the Borrower, or the shortest period of written notice permitted by such law, whichever is smaller, shall be sufficient notice; and that to the extent permitted by law, the Bank, its officers, attorneys and agents may bid and become purchasers at any such sale, if public, and may purchase at any private sale any of the Collateral that is of a type customarily sold on a recognized market or which is the subject of widely distributed standard price quotations. Any sale (public or private) shall be without warranty and free from any right of redemption, which the Borrower shall waive and release after default upon the Bank’s request therefor, and may be free of any warranties as to the Collateral if Bank shall so decide. No purchaser at any sale (public or private) shall be responsible for the application of the purchase money. Any balance of the net proceeds of sale remaining after paying all Obligations of the Borrower to the Bank shall be returned to such other party as may be legally entitled thereto; and if there is a deficiency, the Borrower shall be responsible for repayment of the same, with interest. Upon demand by the Bank, the Borrower shall assemble the Collateral and make it available to the Bank at a place designated by the Bank which is reasonably convenient to the Bank and the Borrower. The Borrower hereby acknowledges that the Bank has extended credit and other financial accommodations to the Borrower upon reliance of the Borrower's granting the Bank the rights and remedies contained in this Agreement including without limitation the right to take immediate possession of the Collateral upon the occurrence of an Event of Default or after DEMAND with respect to Obligations payable on DEMAND and the Borrower hereby acknowledges that the Bank is entitled to equitable and injunctive relief to enforce any of its rights and remedies hereunder or under the Code and the Borrower hereby waives any defense to such equitable or injunctive relief based upon any allegation of the absence of irreparable harm to the Bank.

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The Bank shall have the unrestricted right from time to time to apply (or to change any application already made of) the proceeds of any of the Collateral to any of the Obligations, as the Bank in its sole discretion may determine.

The Bank shall not be required to marshal any present or future security for (including but not limited to this Agreement and the Collateral subject to the security interest created hereby), or guarantees of, the Obligations or any of them, or to resort to such security or guarantees in any particular order; and all of its rights hereunder and in respect of such securities and guaranties shall be cumulative and in addition to all other rights, however existing or arising. To the extent that it lawfully may do so, the Borrower hereby agrees that it will not invoke and irrevocably waives the benefits of any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Bank’s rights under this Agreement or under any other instrument evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or guaranteed. Except as required by applicable law, the Bank shall have no duty as to the collection or protection of the Collateral or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining thereto beyond the safe custody thereof.

4.3 Power of Attorney. The Borrower hereby irrevocably constitutes and appoints the Bank as the Borrower's true and lawful attorney, with full power of substitution, at the sole cost and expense of the Borrower but for the sole benefit of the Bank, upon the occurrence of an Event of Default or after DEMAND with respect to Obligations payable on DEMAND, to convert the Collateral into cash, including, without limitation, completing the manufacture or processing of work in process, and the sale (either public or private) of all or any portion or portions of the inventory and other Collateral; to enforce collection of the Collateral, either in its own name or in the name of the Borrower, including, without limitation, executing releases or waivers, compromising or settling with any Debtors and prosecuting, defending, compromising or releasing any action relating to the Collateral; to receive, open and dispose of all mail addressed to the Borrower and to take therefrom any remittances or proceeds of Collateral in which the Bank has a security interest; to notify Post Office authorities to change the address for delivery of mail addressed to the Borrower to such address as the Bank shall designate; to endorse the name of the Borrower in favor of the Bank upon any and all checks, drafts, money orders, notes, acceptances or other instruments of the same or different nature; to sign and endorse the name of the Borrower on and to receive as secured party any of the Collateral, any invoices, freight or express receipts, or bills of lading, storage receipts, warehouse receipts, or other documents of title of the same or different nature relating to the Collateral; to sign the name of the Borrower on any notice of the Debtors or on verification of the Collateral; and to sign, if necessary, and file or record on behalf of the Borrower any financing or other statement in order to perfect or protect the Bank’s security interest. The Bank shall not be obliged to do any of the acts or exercise any of the powers hereinabove authorized, but if the Bank elects to do any such act or exercise any such power, it shall not be accountable for more than it actually receives as a result of such exercise of power, and it shall not be responsible to the Borrower except for its own gross negligence or willful misconduct. All powers conferred upon the Bank by this Agreement, being coupled with an interest, shall be irrevocable so long as any Obligation of the Borrower or any guarantor or surety to the Bank shall remain unpaid or the Bank is obligated under this Agreement to extend any credit to the Borrower.

4.4 Nonexclusive Remedies. All of the Bank’s rights and remedies not only under the provisions of this Agreement but also under any other agreement or transaction shall be cumulative and not alternative or exclusive, and may be exercised by the Bank at such time or times and in such order of preference as the Bank in its sole discretion may determine.

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5. MISCELLANEOUS

5.1 Costs and Expenses. the Borrower shall pay to the Bank on demand any and all costs and expenses (including, without limitation, reasonable attorneys' fees and disbursements, court costs, litigation and other expenses) incurred or paid by the Bank in establishing, maintaining, protecting or enforcing any of the Bank’s rights or the Obligations, including, without limitation, any and all such costs and expenses incurred or paid by the Bank in defending the Bank’s security interest in, title or right to the Collateral or in collecting or attempting to collect or enforcing or attempting to enforce payment of the Obligations.

5.2 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which shall constitute but one agreement.

5.3 Severability. If any provision of this Agreement or portion of such provision or the application thereof to any person or circumstance shall to any extent be held invalid or unenforceable, the remainder of this Agreement (or the remainder of such provision) and the application thereof to other persons or circumstances shall not be affected thereby.

5.4 Complete Agreement. This Agreement and the other Loan Documents constitute the entire agreement and understanding between and among the parties hereto relating to the subject matter hereof, and supersedes all prior proposals, negotiations, agreements and understandings among the parties hereto with respect to such subject matter.

5.5 Binding Effect of Agreement. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, and shall remain in full force and effect (and the Bank shall be entitled to rely thereon) until released in writing by the Bank. Notwithstanding any such termination, the Bank shall have a security interest in all Collateral to secure the payment and performance of Obligations arising after such termination as a result of commitments or undertakings made or entered into by the Bank prior to such termination. The Bank may transfer and assign this Agreement and deliver the Collateral to the assignee, who shall thereupon have all of the rights of the Bank; and the Bank shall then be relieved and discharged of any responsibility or liability with respect to this Agreement and the Collateral. The Borrower may not assign or transfer any of its rights or obligations under this Agreement. Except as expressly provided herein or in the other Loan Documents, nothing, expressed or implied, is intended to confer upon any party, other than the parties hereto, any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

5.6 Further Assurances. Borrower will from time to time execute and deliver to Bank such documents, and take or cause to be taken, all such other or further action, as Bank may request in order to effect and confirm or vest more securely in Bank all rights contemplated by this Agreement and the other Loan Documents (including, without limitation, to correct clerical errors) or to vest more fully in or assure to the Bank the security interest in the Collateral granted to the Bank by this Agreement or to comply with applicable statute or law and to facilitate the collection of the Collateral (including, without limitation, the execution of stock transfer orders and stock powers, endorsement of promissory notes and instruments and notifications to obligors on the Collateral). To the extent permitted by applicable law, Borrower authorizes the Bank to file financing statements, continuation statements or amendments, and any such financing statements, continuation statements or amendments may be filed at any time in any jurisdiction. Bank may at any time and from time to time file financing statements, continuation statements and amendments thereto which contain any information required by the Code for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including whether Borrower is an organization, the type of organization and any organization identification number issued to Borrower. Borrower agrees to furnish any such information to Bank promptly upon request. In addition, Borrower shall at any time and from time to time take such steps as Bank may reasonably request for Bank (i) to obtain an acknowledgment, in form and substance satisfactory to Bank, of any bailee having possession of any of the Collateral that the bailee holds such Collateral for Bank, (ii) to obtain "control" (as defined in the Code) of any Collateral comprised of deposit accounts, electronic chattel paper, letter of credit rights or investment property, with any agreements establishing control to be in form and substance satisfactory to Bank, and (iii) otherwise to insure the continued perfection and priority of Bank’s security interest in any of the Collateral and the preservation of its rights therein. Borrower hereby constitutes Bank its attorney-in-fact to execute, if necessary, and file all filings required or so requested for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; and such power, being coupled with an interest, shall be irrevocable until this Agreement terminates in accordance with its terms, all Obligations are irrevocably paid in full and the Collateral is released.

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5.7 Amendments and W aivers. This Agreement may be amended and Borrower may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if Borrower shall obtain the Bank’s prior written consent to each such amendment, action or omission to act. No course of dealing and no delay or omission on the part of Bank in exercising any right hereunder shall operate as a waiver of such right or any other right and waiver on any one or more occasions shall not be construed as a bar to or waiver of any right or remedy of Bank on any future occasion.

5.8 Terms of Agreement. This Agreement shall continue in full force and effect so long as any Obligations or obligation of Borrower to Bank shall be outstanding, or the Bank shall have any obligation to extend any financial accommodation hereunder, and is supplementary to each and every other agreement between Borrower and Bank and shall not be so construed as to limit or otherwise derogate from any of the rights or remedies of Bank or any of the liabilities, obligations or undertakings of Borrower under any such agreement, nor shall any contemporaneous or subsequent agreement between Borrower and the Bank be construed to limit or otherwise derogate from any of the rights or remedies of Bank or any of the liabilities, obligations or undertakings of Borrower hereunder, unless such other agreement specifically refers to this Agreement and expressly so provides.

5.9 Notices. Any notice under or pursuant to this Agreement shall be a signed writing or other authenticated record (within the meaning of Article 9 of the Code). Any notices under or pursuant to this Agreement shall be deemed duly received and effective if delivered in hand to any officer or agent of the Borrower or Bank, or if mailed by registered or certified mail, return receipt requested, addressed to the Borrower or Bank at the address set forth in this Agreement or as any party may from time to time designate by written notice to the other party.

5.10 Governing Law. This Agreement shall be governed by the laws of the State of New York without giving effect to the conflicts of laws principles thereof.

5.11 Reproductions. This Agreement and all documents which have been or may be hereinafter furnished by Borrower to the Bank may be reproduced by the Bank by any photographic, photostatic, microfilm, xerographic or similar process, and any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business).

5.12 Joint and Several. If more than one Borrower signs this Agreement, then the responsibilities hereunder are joint and several.

5.13 Completing and Correcting this Agreement. The Borrower authorizes the Bank to fill in any blank spaces and to otherwise complete this Agreement and to correct any patent errors herein.

5.14 ADDITIONAL WAIVERS. IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT, BORROWER WAIVES (i) THE RIGHT TO INTERPOSE ANY SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, (ii) ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE AND (iii) ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.

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5.15 Increased Costs. If any law, regulation or guideline or any change therein or interpretation or application thereof by any regulatory body, court, administrative or governmental authority charged with the interpretation or administration thereof, or compliance with any request, directive, ruling, decree, judgment or recommendation of any regulatory body, court administrative or governmental authority now existing or hereafter adopted (whether or not having the force of law) imposes, modifies or deems applicable, any capital adequacy, increased capital adequacy or similar requirement and the result is to increase the cost of, or reduce the rate of return on, the Bank's (or Bank affiliate's or participant's) capital as a consequence of its obligations hereunder, the Bank shall notify the Borrower of such fact. The Borrower and the Bank shall thereafter in good faith negotiate an adjustment to the fees payable hereunder which, in the reasonable judgment of the Borrower and the Bank, will adequately compensate the Bank (or Bank affiliate or participant) in light of these circumstances. In the event that the Borrower and the Bank are unable to agree on such adjustment within 30 days after the date on which the Bank sends such notice to the Borrower, the Borrower shall on the later of such 30th day after notice or the date such increased cost or reduced return takes effect, unless otherwise agreed to by the Bank (or Bank affiliate or participant), prepay all loans on the 30th day.

5.16 USA Patriot Act. The Bank is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot Act") and hereby notifies Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Bank to identify the Borrower in accordance with the Patriot Act.

5.17 Jurisdiction and Venue. Borrower irrevocably submits to the nonexclusive jurisdiction of any Federal or state court sitting in New York, over any suit, action or proceeding arising out of or relating to this Agreement. Borrower irrevocably waives, to the fullest extent it may effectively do so under applicable law, any objection it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum. Borrower hereby consents to any and all process which may be served in any such suit, action or proceeding, (i) by mailing a copy thereof by registered and certified mail, postage prepaid, return receipt requested, to the Borrower's address shown in this Agreement or as notified to the Bank and (ii) by serving the same upon the Borrower in any other manner otherwise permitted by law, and agrees that such service shall in every respect be deemed effective service upon Borrower.

5.18 JURY WAIVER. THE BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, (A) WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS AGREEMENT, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREE NOT TO SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE, OR HAS NOT BEEN, WAIVED. THE BORROWER CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

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5.19 Arbitration. PARTIES AGREE THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR CONTROVERSY BETWEEN OR AMONG THE PARTIES WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT BANK'S ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY A PARTY OTHER THAN THE BANK, AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY PARTY OTHER THAN THE BANK, BE RESOLVED BY ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION AND SHALL, AT THE ELECTION OF BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH (I) THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, (II) ALL PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES, (III) ANY TRANSACTION CONTEMPLATED HEREBY AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING THE PARTIES AND (IV) ANY ASPECT OF THE PAST, PRESENT OR FUTURE RELATIONSHIP OF THE PARTIES. Bank may elect to require arbitration of any Dispute with the other party without thereby being required to arbitrate all Disputes between Bank and the other party. Any such Dispute shall be resolved by binding arbitration in accordance with Article 75 of the New York Civil Practice Law and Rules and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). In the event of any inconsistency between such Rules and this arbitration provision, this provision shall supersede such Rules. All statutes of limitations which would otherwise be applicable shall apply to any arbitration proceeding under this provision. In any arbitration proceeding subject to this provision, the arbitration panel (the "arbitrator") is specifically empowered to decide (by documents only, or with a hearing, at the arbitrator's sole discretion) pre- hearing motions which are substantially similar to pre-hearing motions to dismiss and motions for summary adjudication. In any such arbitration proceeding, the arbitrator shall not have the power or authority to award punitive damages to any party. Judgment upon the award rendered may be entered in any court having jurisdiction. Whenever an arbitration is required, the parties shall select an arbitrator in the manner provided in this section. No provision of, nor the exercise of any rights under this provision shall limit the right of any party (i) to foreclose against any real or personal property collateral through judicial foreclosure, by the exercise of a power of sale under a deed of trust, mortgage or other security agreement or instrument, pursuant to applicable provisions of the UCC, or otherwise pursuant to applicable law, (ii) to exercise self help remedies including but not limited to setoff and repossession, or (iii) to request and obtain from a court having jurisdiction before, during or after the pendency of any arbitration, provisional or ancillary remedies and relief including but not limited to injunctive or mandatory relief or the appointment of a receiver. The institution and maintenance of an action or judicial proceeding for, or pursuit of, provisional or ancillary remedies or exercise of self help remedies shall not constitute a waiver of the right of Bank, even if Bank is the plaintiff, to submit the Dispute to arbitration if Bank would otherwise have such right. Bank may require arbitration of any Dispute(s) concerning the lawfulness, unconscionableness, propriety, or reasonableness of any exercise by Bank of its right to take or dispose of any Collateral or its exercise of any other right in connection with Collateral including, without limitation, judicial foreclosure, exercising a power of sale under a deed of trust or mortgage, obtaining or executing a writ of attachment, taking or disposing of property with or without judicial process pursuant to Article 9 of the UCC or otherwise as permitted by applicable law, notwithstanding any such exercise by Bank. Whenever an arbitration is required under this section, the arbitrator shall be selected, except as otherwise herein provided, in accordance with the Commercial Arbitration Rules of the AAA. A single arbitrator shall decide any claim of $100,000 or less and he or she shall be an attorney with at least five years' experience. Where the claim of any party exceeds $100,000, the Dispute shall be decided by a majority vote of three arbitrators, at least two of whom shall be attorneys (at least one of whom shall have not less than five years' experience representing commercial banks). In the event of any Dispute governed by this section, each of the parties shall, subject to the award of the arbitrator, pay an equal share of the arbitrator's fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrator's fees, and court costs) to the prevailing party.

Executed as of June _26_, 2014.

Signature Verified:		Borrower:
(Bank use Only)		Gaming Partners International USA, Inc.

		By:
		Name:
		Title:

Security Agreement - Obligor 1

Ó 2014 Medici, a division of Wolters Kluwer Financial Services

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Z:VineyardLive jobs201407 July03 JulyShift IIIGaming Partners International CorporationDraft03-Production

UNLIMITED GUARANTY

TO: HSBC Bank USA, National Association, a bank organized under the laws of the United States (the "Bank")

452 Fifth Avenue, New York, NY 10018

RE: Gaming Partners International USA, Inc., a Nevada corporation (the "Borrower")

To induce the Bank to make or continue to make loans, advances, or grant other financial accommodations to the Borrower, in consideration thereof and for loans, advances or financial accommodations heretofore or hereafter granted by the Bank to or for the account of the Borrower, the undersigned Gaming Partners International Corporation (the "Guarantor") absolutely and unconditionally guarantees the full and punctual payment to the Bank of all sums which may be presently due and owing and of all sums which shall in the future become due and owing to the Bank from the Borrower, whether direct or indirect, whether as a borrower, guarantor, surety or otherwise, including, without limitation, interest, attorneys' fees and other amounts accruing after the filing of a petition in bankruptcy by or against Borrower, notwithstanding the discharge of Borrower from such obligations, together with all costs and expenses incurred by the Bank in connection with such obligations, this Unlimited Guaranty (this "Guaranty") and the enforcement thereof, and also guarantees the due performance by the Borrower of all its obligations under all other present and future contracts and agreements with the Bank, including, without limitation, all rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, equity or equity index swaps, equity or equity index options, bond options, interest rate options, foreign exchange transactions, cap transactions, floor transactions, collar transactions, forward transactions, currency swap transactions, cross-currency rate swap transactions and currency options. Notwithstanding the foregoing, any obligation to pay or perform under any agreement, contract or transaction that constitutes a swap ("Swap") within the meaning of the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, or any successor statute, shall not be guarantied hereunder if, and to the extent that, and for the period of time that, all or a portion of the guaranty of such Swap is or becomes void or voidable under, or violates, the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of the Guarantor’s failure for any reason to constitute an "eligible contract participant" ("ECP") as defined in the Commodity Exchange Act and the regulations thereunder. If a Swap arises under a master agreement governing more than one Swap, this provision shall exclude only the portion that is attributable to Swaps for which such guaranty is or becomes void or voidable, or violates, such Act, rules, regulations or orders. If Guarantor is an ECP and any Swap is also guaranteed by one or more other guarantors (each, a "Swap Guarantor"), then Guarantor, jointly and severally with any other Swap Guarantors who are also ECP’s, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by any non-ECP Swap Guarantor to honor such non-ECP Swap Guarantor’s Swap guaranty obligations (provided, however, that Guarantor shall only be liable under this provision for the maximum amount of such liability that can be hereby incurred without rendering Guarantor’s obligation under this provision, or otherwise under this Guaranty, as it relates to such non-ECP Swap Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations, if any, of Guarantor under this provision shall remain in full force and effect until all Swap Guarantors’ guaranties of Swaps have terminated. If Guarantor is an ECP, Guarantor intends that this provision constitute, and this provision shall be deemed to constitute, a "keepwell, support, or other agreement" for the benefit of each non-ECP Swap Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act. This is a guaranty of payment and not collection.

Guarantor also agrees:

(1)

to indemnify and hold the Bank and any Bank Affiliate (as hereinafter defined) and their directors, officers, employees, agents and attorneys harmless from and against all claims, obligations, demands and liabilities, by whomsoever asserted, and against all losses in any way suffered, incurred or paid as a result of or in any way arising out of or following or consequential to transactions with the Borrower, except for any claim arising out of the gross negligence or willful misconduct of the Bank;

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(2)

that this Guaranty shall not be impaired by any modification, supplement, extension, renewal or amendment of any contract or agreement to which the parties thereto may hereafter agree, nor by any modification, increase, decrease, release or other alteration of any of the obligations hereby guaranteed or of any security therefor, nor by any agreements or arrangements whatsoever with the Borrower or anyone else, all of which may be done without notice to or consent by the Guarantor;

(3)

that the liability of the Guarantor hereunder is direct and unconditional and due immediately upon default of the Borrower without demand or notice and without requiring the Bank first to resort to any other right, remedy or security;

(4)

that Guarantor shall have no right of subrogation, reimbursement or indemnity whatsoever until the Bank is indefeasibly paid in full, nor any right of recourse to security for the debts and obligations of the Borrower to the Bank;

(5)

that the liability of the Guarantor is unlimited and shall be joint and several with the liabilities of any other guarantors;

(6)

that if the Borrower or the Guarantor or any other guarantor should at any time become insolvent or make a general assignment, or if a petition in bankruptcy or any insolvency or reorganization proceedings shall be filed or commenced by, against or in respect of the Borrower or the Guarantor, or any other guarantor of the obligations guaranteed hereby, any and all obligations of the Guarantor shall be immediately due and payable without notice;

(7)

that the Bank’s books and records showing the account between the Bank and the Borrower shall be admissible in any action or proceeding, shall be binding upon the Guarantor for the purpose of establishing the items therein set forth and shall constitute conclusive proof thereof;

(8)

that this Guaranty is, as to the Guarantor, a continuing Guaranty that shall remain effective under successive transactions until expressly terminated as hereinafter provided;

(9)

that this Guaranty may be terminated as to the Guarantor only by giving the Bank prior written notice by registered or certified mail to the address of the Bank listed above, and thereupon this Guaranty shall terminate with respect to Guarantor only after the date of receipt of such notice by the Bank, which shall then be the effective date of termination, and that such termination shall be applicable only to transactions having their inception after the effective date of termination and shall not affect rights and obligations arising out of transactions or indebtedness or extensions or renewals thereof having their inception prior to such date, including renewals, extensions, modifications and refinancings of such prior transactions, or arising out of extensions of credit made pursuant to a commitment previously made by the Bank;

(10)

that the termination or dissolution of Guarantor shall not effect the termination of this Guaranty as to Guarantor;

(11)

that termination, release or limitation of any guaranty of the obligations guaranteed hereby by any other guarantor shall not affect the continuing liability hereunder of the Guarantor;

(12)

that nothing shall discharge or satisfy the liability of the Guarantor hereunder except the full indefeasible payment and performance of all of the Borrower's debts and obligations to the Bank with interest and costs of collection, and the Bank may apply any amounts received in payment from the Borrower or the Guarantor as the Bank so elects;

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(13)

that this Guaranty shall not be affected by the illegality, invalidity or unenforceability of the obligations guaranteed, by any fraudulent, illegal or improper act by the Borrower, the legal incapacity or any other defense of the Borrower, the Guarantor or any other person obligated to the Bank consequential to transactions with the Borrower nor by the invalidation, by operation of law or otherwise, of all or any part of the obligations guaranteed hereby, including but not limited to any interest accruable on the obligations guaranteed hereby during the pendency of any bankruptcy or receivership proceeding of the Borrower;

(14)

that any and all present and future debts and obligations of the Borrower to Guarantor are hereby waived and postponed in favor of and subordinated to the full indefeasible payment and performance of all present and future debts and obligations of the Borrower to the Bank;

(15)

that the Guarantor hereby grants to the Bank a continuing lien and security interest in all deposits or other sums at any time credited by or due from the Bank or any Bank Affiliate to the Guarantor and any property of the Guarantor at any time in the possession of the Bank or any Bank Affiliate whether for safekeeping or otherwise, or in transit to or from the Bank or any Bank Affiliate (regardless of the reason the Bank or Bank Affiliate had received the same or whether the Bank or Bank Affiliate has conditionally released the same) as security for the full and punctual payment and performance of all of the obligations guaranteed hereby, and such deposits and other sums may be applied or set off against such obligations at any time, whether or not such are then due, whether or not demand has been made and whether or not other collateral is then available to the Bank or any Bank Affiliate;

(16)

that if at any time payment of all or any part of the obligations guaranteed hereunder is rescinded or otherwise must be restored by the Bank to the Borrower or to the creditors of the Borrower or any representative of the Borrower or representative of the Borrower's creditors as a voidable preference or fraudulent transfer or conveyance upon the insolvency, bankruptcy or reorganization of the Borrower or the Guarantor, or to the creditors of the Guarantor or any representative of the Guarantor or representative of the creditors of Guarantor upon the insolvency, bankruptcy or reorganization of the Guarantor or otherwise, this Guaranty shall continue to be effective or be reinstated, as the case may be, as though such payments had not been made, and shall survive as an obligation of the Guarantor, and shall not be discharged or satisfied by said payment or payments, notwithstanding the return of the original of this Guaranty to the Guarantor or to the Borrower, or any other apparent termination of Guarantor's obligations hereunder;

(17)

that any rights and remedies available to the Bank under this Guaranty or any other guaranty, instrument or agreement are cumulative, and not exclusive of any rights and remedies otherwise available to the Bank at law or in equity;

(18)

that the Bank’s delay or omission in exercising any of the Bank’s rights and remedies shall not constitute a waiver of these rights and remedies, nor shall the Bank’s waiver of any right or remedy operate as a waiver of any other right or remedy available to the Bank. The Bank’s waiver of any right or remedy on any one occasion shall not be considered a waiver of same on any subsequent occasion, nor shall this be considered to be a continuing waiver;

(19)

Guarantor agrees that any debt can be fully paid and after that new debt can be incurred;

(20)

Guarantor agrees to pay any and all expenses incurred by the Bank in enforcing any rights under this Guaranty or in defending any of its rights or any amounts received hereunder. Without limiting the foregoing, Guarantor agrees that whenever any attorney is used by the Bank to obtain payment hereunder, to advise it as to its rights, to adjudicate the rights of the parties hereunder or for the defense of any of its rights or amounts received hereunder, the Bank shall be entitled to recover all attorneys' fees, court costs, and expenses attributable thereto;

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(21)

Guarantor acknowledges and agrees that any acknowledgement, new promise, payment of principal or interest or other act by the Borrower or others with respect to any claim, obligation, demand or liability of the Borrower shall be deemed to be made as agent for the Guarantor;

(22)

that this Guaranty incorporates all discussions and negotiations between the Bank and the Guarantor concerning the guaranty and indemnification provided by the undersigned hereby, and that no such discussions or negotiations shall limit, modify, or otherwise affect the provisions hereof, there are no preconditions to the effectiveness of this Guaranty and that no provision hereof may be altered, amended, waived, canceled or modified, except by a written instrument executed and acknowledged by the Bank’s duly authorized officer; and

(23)

that this Guaranty and all documents which have been or may be hereinafter furnished by the Guarantor to the Bank may be reproduced by the Bank by any photographic, photostatic, microfilm, xerographic or similar process, and that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business).

Guarantor waives: notice of acceptance hereof, presentment and protest of any instrument and notice thereof, notice of default and all other notices to which the Guarantor might otherwise be entitled; and any and all defenses, including without limitation, any and all defenses which the Borrower or any other party may have to the fullest extent permitted by law, any defense to this Guaranty based on impairment of collateral or on suretyship defenses of every type; any right to exoneration or marshaling. To the maximum extent permitted by law, Guarantor waives and terminates any homestead rights and/or exemptions respecting any premises under the provisions of any applicable homestead law, including without limitation, Section 5206 of the Civil Practice Law and Rules of New York. To the extent that it lawfully may, Guarantor hereby further agrees not to invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Bank’s rights under this Guaranty or otherwise respecting the guaranteed obligations, and to the extent that it lawfully may do so, the Guarantor hereby irrevocably waives the benefits of all such laws. Except as otherwise provided by applicable law, the Bank shall have no duty as to the collection or protection of any collateral, if any, securing the guaranteed obligations beyond the safe custody thereof.

Guarantor will from time to time execute and deliver to the Bank, and take or cause to be taken, all such other further action as the Bank may request in order to effect and confirm or vest more securely in the Bank all the rights contemplated in this Guaranty (including, without limitation, to correct clerical errors) or respecting any of the obligations guaranteed hereby or to comply with applicable statute or law.

The execution and delivery of this Guaranty is in furtherance of the Guarantor's corporate purposes, is not contrary to or in violation of its charter or by-laws and the person executing this Guaranty on Guarantor's behalf has been duly authorized to do so.

The term "Bank Affiliate" as used in this Guaranty shall mean any "Affiliate" of the Bank or any lender acting as a participant under any loan arrangement between the Bank and the Borrower(s). The term "Affiliate" shall mean with respect to any person, (a) any person which, directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such person, or (b) any person who is a director or officer (i) of such person, (ii) of any subsidiary of such person, or (iii) any person described in clause (a) above. For purposes of this definition, control of a person shall mean the power, direct or indirect, (x) to vote 5% or more of the Capital Stock having ordinary voting power for the election of directors (or comparable equivalent) of such person, or (y) to direct or cause the direction of the management and policies of such person whether by contract or otherwise. Control may be by ownership, contract, or otherwise.

RESTRICTED - 4

This Guaranty shall be governed by the laws of the State of New York without giving effect to the conflicts of laws principles thereof, shall be binding upon the heirs, executors, administrators, successors and assigns of the Guarantor and shall inure to the benefit of the Bank’s successors and assigns.

If any provision of this Guaranty is found to be invalid, illegal or unenforceable, the validity of the remainder of the Guaranty shall not be affected.

GUARANTOR HEREBY WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE, SET-OFF, COUNTERCLAIM OR CROSS-CLAIM OF ANY NATURE OR DESCRIPTION, AND OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.

The Bank is authorized to fill in any blank spaces and to otherwise complete this Guaranty and correct any patent errors herein.

Guarantor irrevocably submits to the nonexclusive jurisdiction of any Federal or state court sitting in New York, over any suit, action or proceeding arising out of or relating to this Guaranty. Guarantor irrevocably waives, to the fullest extent it may effectively do so under applicable law, any objection it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that the same has been brought in an inconvenient forum. Guarantor hereby consents to any and all process which may be served in any such suit, action or proceeding, (i) by mailing a copy thereof by registered and certified mail, postage prepaid, return receipt requested, to the Guarantor's address shown below or as notified to the Bank and (ii) by serving the same upon the Guarantor in any other manner otherwise permitted by law, and agrees that such service shall in every respect be deemed effective service upon the Guarantor.

GUARANTOR AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, (A) WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS GUARANTY, THE OBLIGATIONS GUARANTEED HEREBY, ALL MATTERS CONTEMPLATED HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREE NOT TO SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT BE, OR HAS NOT BEEN WAIVED. GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

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Executed and dated June 26 , 2014.


Signature Verified:	Guarantor:
(Bank use Only)	Gaming Partners International Corporation


	By:
		Name:
		Title:

	Address: 1700 Industrial Road
	Las Vegas, Nevada 89102

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STATE OF	NEVADA	:
		SS.

COUNTY OF

CLARK

On the 26th day of JUNE in the year 2014, before me, the undersigned, a Notary Public in and for said State, personally appeared, MICHAEL D. MANN , 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


		TYPE OR PRINT NAME

Guaranty - Guarantor 1

Ó 2014 Medici, a division of Wolters Kluwer Financial Services

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Exhibit 99.1

FOR IMMEDIATE RELEASE

For Further Information Contact:

Michael D. Mann, Chief Financial Officer, Treasurer and Secretary

PH: 702.384.2425

FX: 702.384.1965

Gaming Partners International Corporation Announces the Acquisition of GemGroup Inc.

Las Vegas, NV (PR Newswire) (July 1, 2014)— Gaming Partners International Corporation (NASDAQ: GPIC), a leading provider of casino currency and table game products worldwide, announced today that it has completed its acquisition of substantially all of the assets of GemGroup Inc. and Subsidiaries. The transaction was consummated with a combination of cash and bank financing for a total of $19.75 million.

“We are pleased to announce the successful completion of our acquisition of GemGroup and its well-known Gemaco-branded gaming products,” commented Gregory Gronau, GPIC’s President and Chief Executive Officer. “In addition to adding their playing card and table layout products to our domestic product portfolio and increasing our US market share for both segments of recurring revenue, this acquisition expands our manufacturing capabilities in North America while adding recurring layout sales and related services to our Asia Pacific offerings. This combination of products, talent and expertise gives GPIC a greater ability to support our global customers’ ongoing table game product needs while expanding our customer support network with Gemaco’s experienced staff. During the forthcoming integration, we will continue to provide the highest quality products and services to all GPI and Gemaco customers.”

About Gaming Partners International Corporation (GPIC)

GPIC manufactures and supplies casino table game equipment to licensed casinos worldwide. Under the brand names of Paulson®,Bourgogne et Grasset®, Bud Jones® and Gemaco®, GPIC provides casino currency such as chips, plaques and jetons; gaming furniture and table accessories; table layouts; playing cards; dice; and roulette wheels. GPIC pioneered the use of security features such as radio frequency identification device (RFID) technology in casino currency and provides RFID solutions including RFID readers, software and displays. Headquartered in Las Vegas, Nevada, GPIC also has manufacturing facilities, warehouses and/or sales offices in Beaune, France; San Luis Rio Colorado, Mexico; Blue Springs, Missouri, Atlantic City, New Jersey, Gulfport, Mississippi and Macau S.A.R., China. For additional information, please visit http://www.gpigaming.com.

Safe Harbor Statement

This release contains “forward-looking statements” based on current expectations that are inherently subject to known and unknown risks and uncertainties, including (i) the plan, objectives and expectations regarding GPIC's acquisition of the gaming assets of the acquired company, (i) the integration of the acquired company's business, and (iii) the expected financial performance of GPIC following completion of such acquisition. Actual results or achievements may be materially different from those expressed or implied. Our plans and objectives are based on assumptions involving judgments with respect to future economic, competitive and market conditions, the timing of and ability to consummate acquisitions, and future business decisions and other risks and uncertainties identified in Part I-Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the period ended December 31, 2013, all of which are difficult or impossible to predict accurately and many of which are beyond our control and are subject to change. Therefore, there can be no assurance that any forward-looking statement will prove to be accurate.

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