NOCOPI TECHNOLOGIES INC/MD/ (Form: 10QSB, Received: 11/15/1999 17:30:32)

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 1999.

[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the transition period from _________________ to ______________

Commission file number 0-20333

NOCOPI TECHNOLOGIES, INC.
(Exact name of small business issuer as

                            specified in its charter)

              MARYLAND                                     87-0406496
---------------------------------              ---------------------------------
   (State or other jurisdiction                (IRS Employer Identification No.)
of incorporation or organization)

537 Apple Street, West Conshohocken, PA 19428
(Address of principal executive offices)

(610) 834-9600
(Issuer's telephone number)

Check whether the issuer has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _____

State the number of shares outstanding of each of the issuer's classes of common equity, as of November 1, 1999: Common stock, par value $.01 per share 33,797,332 shares.

Transitional Small Business Disclosure Format (check one): Yes ____ No __X__

NOCOPI TECHNOLOGIES, INC.

                                      INDEX


Part I.    FINANCIAL INFORMATION                                            PAGE

      Item 1.   Financial Statements

                Statements of Operations                                       1
                Three Months and Nine Months Ended
                September 30, 1999 and September 30, 1998

                Balance Sheet                                                  2
                September 30, 1999

                Statements of Cash Flows                                       3
                Nine Months Ended September 30, 1999
                and September 30, 1998.

                Notes to Financial Statements                                4-5

      Item 2.   Management's Discussion and Analysis                        6-10
                of Financial Condition and Results of Operations

Part II.   OTHER INFORMATION                                                  11

           Signatures                                                         12

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NOCOPI TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)

                                                              THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                                 SEPTEMBER 30,                         SEPTEMBER 30,
                                                         ---------------------------           -----------------------------
                                                           1999                1998               1999                1998
                                                           ----                ----               ----                ----
REVENUES
 LICENSES, ROYALTIES AND FEES                             $289,500          $497,300           $1,091,000         $1,402,200
 PRODUCT AND OTHER SALES                                    52,800           116,400              302,900            553,700
                                                          --------          --------           ----------         ----------
                                                           342,300           613,700            1,393,900          1,955,900

COST OF SALES
 LICENSES, ROYALTIES AND FEES                               89,700            83,300              293,800            284,000
 PRODUCT AND OTHER SALES                                    49,500           103,800              255,200            520,100
                                                          --------          --------           ----------         ----------
                                                           139,200           187,100              549,000            804,100
                                                          --------          --------           ----------         ----------
  GROSS PROFIT                                             203,100           426,600              844,900          1,151,800

OPERATING EXPENSES
 RESEARCH AND DEVELOPMENT                                   50,600            97,200              176,100            312,000
 SALES AND MARKETING                                       146,500           201,200              529,900            610,000
 GENERAL AND ADMINISTRATIVE                                127,500           221,900              663,000            685,900
                                                          --------          --------           ----------         ----------
                                                           324,600           520,300            1,369,000          1,607,900
                                                          --------          --------           ----------         ----------
  LOSS FROM OPERATIONS                                    (121,500)          (93,700)            (524,100)          (456,100)

OTHER INCOME (EXPENSES)
 AMORTIZATION                                                                                                         (6,300)
 INTEREST INCOME                                            11,500            16,800               35,400             78,000
 INTEREST AND BANK CHARGES                                  (3,900)           (4,100)             (11,300)           (26,300)
 EQUITY IN NET INCOME (LOSS) OF
  UNCONSOLIDATED AFFILIATE                                   4,200                                 (2,100)           (21,000)
                                                          --------          --------           ----------         ----------
                                                            11,800            12,700               22,000             24,400
                                                          --------          --------           ----------         ----------
  NET LOSS                                               ($109,700)         ($81,000)           ($502,100)         ($431,700)
                                                         =========          ========            =========          =========

LOSS PER COMMON SHARE                                      ($.00)            ($.00)              ($.01)              ($.01)

WEIGHTED AVERAGE COMMON
  SHARES OUTSTANDING                                    33,743,999        33,587,332           33,657,332         33,587,332

SEE NOTES TO FINANCIAL STATEMENTS.

NOCOPI TECHNOLOGIES, INC.
BALANCE SHEET
(UNAUDITED)

SEPTEMBER 30,

                                                                      1999
                                                                  ------------

                                     ASSETS

CURRENT ASSETS
 CASH AND CASH EQUIVALENTS                                        $    994,400
 ACCOUNTS RECEIVABLE LESS ALLOWANCE                                     87,000
 PREPAID AND OTHER                                                      31,300
                                                                  ------------
  TOTAL CURRENT ASSETS                                               1,112,700

FIXED ASSETS
 LEASEHOLD IMPROVEMENTS                                                 39,500
 FURNITURE, FIXTURES AND EQUIPMENT                                     456,500
                                                                  ------------
                                                                       496,000
 LESS: ACCUMULATED DEPRECIATION                                        420,600
                                                                  ------------
                                                                        75,400

OTHER ASSETS
 INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED AFFILIATE                208,000
 PATENTS, NET OF ACCUMULATED AMORTIZATION                              508,700
 OTHER                                                                   4,500
                                                                  ------------
                                                                       721,200
                                                                  ------------
   TOTAL ASSETS                                                   $  1,909,300
                                                                  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 CURRENT DEBT OBLIGATIONS                                         $    125,000
 ACCOUNTS PAYABLE                                                      141,300
 ACCRUED EXPENSES                                                      184,100
 ACCRUED COMMISSIONS                                                   143,600
 DEFERRED REVENUE                                                      150,400
                                                                  ------------
  TOTAL CURRENT LIABILITIES                                            744,400

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
 COMMON STOCK, $.01 PAR VALUE
  AUTHORIZED - 75,000,000 SHARES
  ISSUED AND OUTSTANDING - 33,757,332 SHARES                           337,600
 PAID-IN CAPITAL                                                    10,428,000
 ACCUMULATED OTHER COMPREHENSIVE LOSS                                  (26,100)
 ACCUMULATED DEFICIT                                                (9,574,600)
                                                                  ------------
                                                                     1,164,900
                                                                  ------------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $  1,909,300
                                                                  ============

SEE NOTES TO FINANCIAL STATEMENTS.

NOCOPI TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)

                                                                                   NINE
                                                                        MONTHS ENDED SEPTEMBER 30,
                                                                            1999           1998
                                                                        -----------    -----------
OPERATING ACTIVITIES
 NET LOSS                                                               ($  502,100)   ($  431,700)
 ADJUSTMENTS TO RECONCILE NET LOSS TO
  CASH FROM OPERATING ACTIVITIES
  DEPRECIATION                                                               46,800         65,700
  AMORTIZATION                                                               49,400         54,000
  ALLOWANCE FOR DOUBTFUL ACCOUNTS                                                            5,400
  EQUITY IN NET LOSS OF UNCONSOLIDATED AFFILIATE                              2,100         21,000
  STOCK AND STOCK OPTION COMPENSATION                                        23,500          7,500
                                                                        -----------    -----------
                                                                           (380,300)      (278,100)

(INCREASE) DECREASE IN ASSETS
 ACCOUNTS RECEIVABLE                                                         43,800        (98,300)
 PREPAID AND OTHER                                                           21,100         24,600
INCREASE (DECREASE) IN LIABILITIES
 ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                      (19,800)      (108,600)
 DEFERRED REVENUE                                                            28,100         62,900
                                                                        -----------    -----------
                                                                             73,200       (119,400)
                                                                        -----------    -----------
  CASH (USED IN) OPERATING ACTIVITIES                                      (307,100)      (397,500)

INVESTING ACTIVITIES
 ADDITIONS TO FIXED ASSETS                                                  (17,500)       (42,300)
 ADDITIONS TO PATENTS                                                       (36,600)       (18,100)
 ADVANCES (TO) FROM AFFILIATE, NET                                          (17,300)      (102,600)
                                                                        -----------    -----------
  CASH (USED IN) INVESTING ACTIVITIES                                       (71,400)      (163,000)

FINANCING ACTIVITIES
 REPAYMENT OF NOTES                                                                       (825,000)
                                                                        -----------    -----------
  CASH (USED) IN FINANCING ACTIVITIES                                                     (825,000)
                                                                        -----------    -----------
  DECREASE IN CASH AND CASH EQUIVALENTS                                    (378,500)    (1,385,500)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                           1,372,900      2,714,600
                                                                        -----------    -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD                               $   994,400    $ 1,329,100
                                                                        ===========    ===========

SEE NOTES TO FINANCIAL STATEMENTS.

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. FINANCIAL STATEMENTS

The accompanying interim financial statements have been prepared by the Company without audit. These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in the summary of Accounting Policies included in the Company's 1998 Annual Report. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Notes to Financial Statements included in the 1998 Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results are not necessarily indicative of the operating results expected for the full year.

NOTE 2. COMPREHENSIVE INCOME (LOSS)

In accordance with SFAS No. 130, Reporting Comprehensive Income, comprehensive loss is as follows:

                                                   Three Months Ended
                                                     September 30,
                                               -------------------------
                                                  1999           1998
                                                  ----           ----
Net loss                                       ($109,700)      ($81,000)
Currency translation adjustment                    4,900         11,100
                                               ---------      ---------
Comprehensive loss                             ($104,800)      ($69,900)
                                               =========      =========


                                                   Nine Months Ended
                                                     September 30,
                                               -------------------------
                                                  1999           1998
                                                  ----           ----
Net loss                                       ($502,100)     ($431,700)
Currency translation adjustment                  (13,200)        12,900
                                               ---------      ---------
Comprehensive loss                             ($515,300)     ($418,800)
                                               =========      =========

3. SEVERANCE EXPENSE

In the first quarter of 1999, the Company accrued $150,000 in severance obligations relative to the February 1999 resignation of its President and Chief Executive Officer. The severance was payable in installments of approximately $15,000 per month commencing March 1, 1999. During the third quarter of 1999, the severance agreement was modified by mutual consent of the parties resulting in the reduction of $30,900 in remaining severance obligations which has been recognized as a third quarter 1999 reduction in severance expense.

4. COMMITMENTS AND CONTINGENCIES

On November 4, 1999 a lawsuit was filed by Norman Gardner, a former director and officer of the Company, in the Court of Common Pleas for Montgomery County, Pennsylvania against the Company, its directors, and Michael McGovern, its chief operating officer. The suit alleges breach of an employment agreement and violation of Pennsylvania's wage and hour laws in failing to pay compensation. The amount sought in the action is $671,173 in actual damages plus any assessed punitive damages and costs. The suit was brought following the Company's termination of the agreement pursuant to its terms. The Company believes it has adequate defenses, intends to defend these claims vigorously and is in the process of preparing its answer, which may include the filing of counterclaims. Given the early stage of this action it is not possible to assess the likely outcome and, accordingly, no amounts are recorded on the books of the Company at September 30, 1999 in anticipation of a loss as a result of this contingency.

ITEM 2.

NOCOPI TECHNOLOGIES, INC.

Management's Discussion and Analysis

of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

The Company's revenues are derived from royalties paid by licensees of the Company's technologies, fees for the provision of technical services to licensees and from the direct sale of products which incorporate or deliver the Company's technologies, such as pressure sensitive labels and ink jet printing equipment. Royalties consist of guaranteed minimum royalties payable by the Company's licensees in certain cases and additional royalties which typically vary with the licensee's sales or production of products incorporating the licensed technology. Service fee and sales revenues vary directly with the number of units of service or product provided.

Because the Company's fixed costs are a relatively high percentage of total costs, its operating results are substantially dependent on revenue levels. Because revenues derived from licenses and royalties carry a much higher gross profit margin than other revenues, operating results are also substantially affected by changes in revenue mix.

Both the absolute amounts of the Company's revenues and the mix among the various sources of revenue are subject to substantial fluctuation. The Company has a relatively small number of substantial customers rather than a large number of small customers. Accordingly, changes in the revenue received from a significant customer can have a substantial effect on the Company's total revenue and on its revenue mix and overall financial performance. Such changes may result from a customer's product development delays, engineering changes, changes in product marketing strategies and the like. In addition, certain customers have, from time to time, sought to renegotiate certain provisions of their license agreements and, when the Company agrees to revise terms, revenues from the customer may be affected.

Revenues for the third quarter of 1999 were $342,300 compared to $613,700 in the third quarter of 1998, a decline of $271,400 or 44%. Licenses, royalties and fees declined by $207,800 or 42%, to $289,500 in the third quarter of 1999 from $497,300 in the third quarter of 1998. During the third quarter of 1999, the Company's largest customer, Paxar Corporation, terminated its arrangement with the Company whereby it incorporated the Company's technologies into labels it produced and sold to a major apparel manufacturer. The loss of this customer accounted for $168,400 or 81% of the decline in licenses, royalties and fees. Additionally, the termination of license agreements during the second half of 1998 and first half of 1999 with five other licensees negatively affected third quarter 1999 revenues from licenses, royalties and fees. Product and other sales declined by $63,600 to $52,800 in the third quarter of 1999 from $116,400 in the third quarter of 1998. The decline is due primarily to lower sales of pressure-sensitive labels and ink-jet printing equipment.

For the first nine months of 1999, revenues were $1,393,900, $562,000 or 29% lower than revenues of $1,955,900 in the first nine months of 1998. Licenses, royalties and fees declined by $311,200, or 22%, to $1,091,000 in the first nine months of 1999 from $1,402,200 in the first nine months of 1998. The loss of revenues from Paxar Corporation, due to lower volumes in the first six

months of 1999 and the license termination in the third quarter, accounted for $214,200 or 69% of the decline in licenses, royalties and fees. The termination of certain other license agreements during 1998 and 1999 accounted for the balance of the decline.

The Company's gross profit declined 52% to $203,100, or 59% of revenues in the third quarter of 1999 from $426,600, or 70% of revenues in the third quarter of 1998. The decline in the gross margin, both as a percentage of revenues and in absolute dollars, is due primarily to the substantial reduction in revenues derived from licenses, royalties and fees. Certain components of cost of sales related to licenses, royalties and fees, such as production labor and rent, are substantially fixed. The variable component of these costs of sales, primarily ink and chemicals, is a small percentage of the related revenues. As these revenues decline, the gross margin is negatively impacted, both in absolute dollars and as a percentage of revenues. Product sales, which primarily consist of manufactured products, which incorporate the Company's technologies, equipment to support the application of its technologies or other products purchased for re-sale, are generally purchased from third-party vendors and sold to the end-user or licensee. These products carry a significantly lower gross margin than licenses, royalties and fees.

The gross profit for the first nine months of 1999 was $844,900, or 61% of revenues, compared to $1,151,800, or 59% of revenues, in the first nine months of 1998. The factors described above, relative to the third quarter gross margin, affected the first nine months as well.

Research and development expenses declined to $50,600 and $176,100 in the third quarter and first nine months of 1999, respectively, from $97,200 and $312,000 in the comparable periods of 1998. The reductions were due primarily to lower compensation expenses resulting from modifications to compensation arrangements with certain individuals including lower travel expenses.

Sales and marketing expenses declined to $146,500 and $529,900 in the third quarter and first nine months, respectively, of 1999 from $201,200 and $610,000 in the comparable 1998 periods. The decline relates primarily to lower commission expenses on the lower revenues and lower travel expenses in 1999 compared to 1998.

General and administrative expenses declined to $127,500 in the three months ended September 30, 1999 from $221,900 in the three months ended September 30, 1998. For the first nine months of 1999, general and administrative expenses were $663,000 compared to $685,900 in the first nine months of 1998. The substantial reduction in third quarter 1999 general and administrative expenses compared to the third quarter of 1998 is due primarily to lower salary expense as a result of the resignation of the Company's President and Chief Executive Officer in February 1999. In the first quarter of 1999, the Company charged to expense $150,000 in related severance obligations. During the third quarter of 1999, the severance arrangement was modified by mutual consent of the parties resulting in a reduction in severance expense of $30,900, which was recognized in the third quarter of 1999.

Other income (expense) includes interest on the $125,000 Series B 9% Subordinated Convertible Promissory Notes due March 31, 2000. The decline in interest income in the third quarter and first nine months of 1999 compared to the third quarter and first nine months of 1998 relates to lower levels of cash invested as cash was utilized during 1998 to fund operations and to repay $825,000 of the convertible notes.

Equity in net income (loss) of affiliate represents the proportionate share in the income of Euro-Nocopi attributable to the Company's approximate 18% ownership share of Euro-Nocopi.

The net loss increased in the third quarter of 1999 to $109,700 in the third quarter of 1999 from $81,000 in the third quarter of 1998 due primarily to the lower gross profit resulting from the sales decline, partially offset by a $195,700 reduction in overhead expenses. The increase in the loss of $502,100 for the first nine months of 1999 compared to the loss of $431,700 in the first nine months of 1998 relates primarily to the same factors as the third quarter.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents declined to $994,400 at September 30, 1999 from $1,372,900 at December 31, 1998. The cash was used primarily to fund operations over the nine-month period including reimbursable expenses on behalf of its European affiliate.

During the third quarter of 1999, the Company's largest customer, Paxar Corporation, terminated its license arrangement with the Company. As the loss of this customer will have a material adverse effect on the Company's results of operations and upon its liquidity and capital resources, the Company believes that the condition arising from this event raises substantial doubts about the Company's ability to continue as a going concern. The Board of Directors of the Company is in the process of reviewing strategic alternatives to provide increased liquidity, improve cash flow and enhance stockholder value. These potential alternatives include an investment in the Company by a strategic partner, the pursuit of strategic alliances, acquisitions or the sale of all or part of the business. There can be no assurances that the Company will be successful in accomplishing such a transaction or, if so achieved, that the transaction will have a material positive effect on the Company's business operations and cash flow. While the financial statements have been prepared assuming the Company will continue as a going concern, a further deterioration in its liquidity or its inability to effect a transaction described above may require the write-off, in a future period, of intangible assets, principally patents, whose current carrying value is $513,200.

The Company is aware of Year 2000 potential problems. These potential problems exist because many computer software applications use two digits to designate a year. Any computer hardware and programs that have date sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. The inability to properly process dates beyond 1999 may cause computer systems to process information incorrectly or not at all. As its internal information systems consist primarily of third party software systems, the Company intends to purchase and install available Year 2000 compliant upgrade versions during the fourth quarter of 1999. The Company has determined that the vendor's upgrade software is available and is Year 2000 complaint. The Company estimates the costs to purchase and install the upgrades at less than $10,000. The Company continues to communicate with vendors, financial institutions and others to assure their compliance to Year 2000 issues. However, there can be no

assurance that the systems of other companies on which the Company relies will be converted in a timely manner.

The foregoing contains forward-looking information within the meaning of the Private Securities Litigation Act of 1995. Such forward-looking statements involve certain risks and uncertainties including the particular factors described in this Management Discussion and Analysis. In each case, actual results may differ materially from such forward-looking statements. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results (expressed or implied) will not be realized.

FACTORS THAT MAY AFFECT FUTURE GROWTH AND STOCK PRICE

The Company's operating results and stock price are dependent upon a number of factors, some of which are beyond the Company's control. These include:

Uneven Pattern of Quarterly and Annual Operating Results. The Company's revenues, which are derived primarily from licensing and royalties, are difficult to forecast due to the long sales cycle for the Company's technologies, the potential for customer delay or deferral of implementation of the Company's technologies, the size and timing of inception of individual license agreements, the success of the Company's licensees and strategic partners in exploiting the market for the licensed products, modifications of customer budgets, and uneven patterns of royalty revenue and product orders. As the Company's revenue base is not substantial, delays in finalizing license contracts, implementing the technology to initiate the revenue stream and customer ordering decisions can have a material adverse effect on the Company's quarterly and annual revenue expectations and, as the Company's operating expenses are substantially fixed, income expectations will be subject to a similar adverse outcome.

New Business Opportunities. The Company, with limited research and development resources, is compelled to develop new technologies that it believes will enhance and expand its position in the anti-counterfeiting and anti-diversion marketplace it serves. There can be no assurance that the resources expended in this effort will generate significant revenues for the Company.

Intellectual Property. The Company relies on a combination of protections provided under applicable international patent, trademark and trade secret laws. It also relies on confidentiality, non-analysis and licensing agreements to establish and protect its rights in its proprietary technologies. While the Company actively attempts to protect these rights, the Company's technologies could possibly be compromised through reverse engineering or other means. There can be no assurance that the Company will be able to protect the basis of its technologies from discovery by unauthorized third parties, thus adversely affecting its customer and licensee relationships.

Volatility of Stock Prices. The market price for the Company's common stock has historically experienced significant fluctuations and may continue to do so. The Company has, since its inception, operated at a loss and has not produced revenue levels traditionally associated with publicly traded companies. The Company's common stock is not listed on a national or regional securities exchange and, consequently, the Company receives limited publicity regarding its business achievements and prospects, nor do securities analysts and traders extensively follow it. The market price may be affected by announcements of new relationships or modifications to existing relationships. The stock prices of many developing public companies, particularly those with small capitalizations, have experienced wide fluctuations not necessarily related to operating performance. Such fluctuations may adversely affect the market price of the Company's common stock.

Adverse Liquidity. As a result of the loss of a number of customers during the past eighteen months including, in the third quarter of 1999, the Company's largest customer, the Company is experiencing a period of adverse liquidity during which it will be required to reduce expenses while the Company's Board of Directors explore options to restructure the Company's operations, including seeking a potential business combination. The requirements to conserve cash may cause the Company to limit its discretionary research and development and sales and marketing expenditures, thus impeding the Company's ability to develop new technologies and markets. These factors may negatively impact the Company's efforts to increase its customer base and revenues.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On November 4, 1999 a suit was filed by Norman Gardner, a former director and officer of the Company, in the Court of Common Pleas for Montgomery County, Pennsylvania against the Company, its directors, and Michael McGovern, its chief operating officer. The suit alleges breach of an employment agreement and violation of Pennsylvania's wage and hour laws in failing to pay compensation. The amount sought in the action is $671,173 in actual damages plus any assessed punitive damages and costs. The suit was brought following the Company's termination of the agreement pursuant to its terms. The Company intends to defend these claims vigorously and is in the process of preparing its answer. Given the early stage of this action it is not possible to assess the likely outcome.

Item 2. Changes in Securities

Not Applicable

Item 3. Defaults Upon Senior Securities

Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibit 3.5 - Amendments to Bylaws

(b). Exhibit 10.19 - Director Indemnification Agreement

(c). Exhibit 10.20 - Officer Indemnification Agreement

(d). Exhibit 27 - Financial Data Schedule

(e). No Current Reports on Form 8-K have been filed by the Registrant during the quarter ended September 30, 1999.

SIGNATURES

Pursuant to the requirement 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.

NOCOPI TECHNOLOGIES, INC.

DATE:  November 15, 1999            /s/ Jack H. Halperin
                                    --------------------
                                   Jack H. Halperin
                                   Chairman of the Board


DATE: November 15, 1999             /s/ Rudolph A. Lutterschmidt
                                    ----------------------------
                                    Rudolph A. Lutterschmidt
                                    Vice President & Chief Financial Officer

EXHIBIT 3.5

AMENDMENTS TO THE BYLAWS
OF NOCOPI TECHNOLOGIES, INC. AS
APPROVED BY THE BOARD OF DIRECTORS ON JUNE 24, 1999

1. Article II, Section 1 is amended to delete the first sentence thereof and replace it with the following:

The Annual Meeting of the Stockholders of the Corporation for the election of directors etc. shall be held at such time on such date as the Board of Directors shall determine from time to time.

2. Article III, Section 5 is amended to delete the second sentence thereof and replace it with the following:

Special Meetings of the Board of Directors may be called by the Chairman of the Board or the Secretary upon written request of two directors.

3. Article IV, Section 1 is amended by adding "Chairman of the Board" before the word President in the first sentence thereof.

4. Article IV, Section III is amended by adding after the word Follows in the first sentence:

Chairman of the Board

The Chairman of the Board shall, when present, preside at all meetings of the directors and stockholders. He shall perform such Other duties as the Board of Directors shall determine.

5. Article IV, Section III is amended to delete the first sentence thereof.

EXHIBIT 10.19

NOCOPI TECHNOLOGIES, INC.

DIRECTOR
INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is made as of _____, by and between Nocopi Technologies, Inc., a Maryland corporation (the "Company"), and _______ ("Indemnitee").

WHEREAS, Indemnitee is a director of the Company and performs a valuable service in such capacity for the Company;

WHEREAS, the Company and Indemnitee recognize the difficulty in obtaining liability insurance for its directors, officers, employees, agents and fiduciaries, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance;

WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited;

WHEREAS, Indemnitee does not regard the current protection available as adequate under the present circumstances, and the Indemnitee and other directors, officers, employees, agents and fiduciaries of the Company may not be willing to continue to serve in such capacities without additional protection; and

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company and, in part, in order to induce Indemnitee to continue to provide services to the Company as a director, the Company wishes to provide for the indemnification and advancing of expenses to Indemnitee to the maximum extent permitted by law.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

INDEMNIFICATION.

Indemnification of Expenses. The Company shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or

other (hereinafter a "Claim") by reason of (or arising in part out of) any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity (hereinafter an "Indemnifiable Event") against any and all expenses (including attorneys' fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any such action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) of such Claim and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement (collectively, hereinafter "Expenses"), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses. Such payment of Expenses shall be made by the Company as soon as practicable but in any event no later than thirty (30) days after written demand by Indemnitee therefor is presented to the Company.

Reviewing Party. Notwithstanding the foregoing, (i) the obligations of the Company under Section l(a) shall be subject to the condition that the Reviewing Party (as described in Section 10(e) hereof) shall not have determined (in a written opinion, in any case in which the Independent Legal Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an advance payment of Expenses to Indemnitee pursuant to Section 2(a) (an "Expense Advance") shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any Expense Advance shall be unsecured and no interest shall be charged thereon. If there has not been a Change in Control (as defined in Section 10(c) hereof), the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), the Reviewing Party shall be the Independent Legal Counsel referred to in Section l(c) hereof. If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party

otherwise shall be conclusive and binding on the Company and Indemnitee. Change in Control. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control) then with respect to all matters thereafter arising concerning the rights of Indemnitee to payments of Expenses and Expense Advances under this Agreement or any other agreement or under the Company's Amended and Restated Articles of Incorporation or Amended and Restated Bylaws as now or hereafter in effect, the Company shall seek legal advice only from Independent Legal Counsel (as defined in Section 10(d) hereof) selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. Mandatory Payment of Expenses. Notwithstanding any other provision of this Agreement other than Section 9 hereof, to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit, proceeding, inquiry or investigation referred to in Section
(1)(a) hereof or in the defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred by Indemnitee in connection therewith.

Norman Gardner Settlement. The Company agrees that it shall not enter into any settlement agreement with Norman Gardner in connection with that certain lawsuit pending in the Common Pleas Court in Montgomery County, Pennsylvania captioned Norman Gardner v. Nocopi Technologies, Inc., et al, unless such settlement agreement provides that Norman Gardner unconditionally releases Indemnitee from any Claim by reason of (or arising in part out of) any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity.

EXPENSES; INDEMNIFICATION PROCEDURE.

Advancement of Expenses. The Company shall advance all Expenses incurred by Indemnitee. The advances to be made hereunder shall be paid by the Company to Indemnitee as soon as practicable but in any event no later than five (5) days after written demand by Indemnitee therefor to the Company.

Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to Indemnitee's right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any Claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power.

No Presumptions; Burden of Proof. For purposes of this Agreement, the termination of any claim, action,

suit or proceeding, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under applicable law, shall be a defense to Indemnitee's claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In connection with any determination by the Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Indemnitee is not so entitled.

Notice to Insurers. If, at the time of the receipt by the Company of a notice of a Claim pursuant to Section 2(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such action, suit, proceeding, inquiry or investigation in accordance with the terms of such policies.

Selection of Counsel. In the event the Company shall be obligated hereunder to pay the Expenses of any action, suit, proceeding, inquiry or investigation, the Company, if appropriate, shall be entitled to assume the defense of such action, suit, proceeding, inquiry or investigation with counsel approved by Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same action, suit, proceeding, inquiry or investigation; provided that, (i) Indemnitee shall have the right to employ Indemnitee's counsel in any such action, suit, proceeding, inquiry or investigation at Indemnitee's expense and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain such counsel to defend such action, suit, proceeding, inquiry or investigation, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company.

ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

Scope. The Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's Amended and Restated Articles of Incorporation, the Company's Amended and Restated Bylaws or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Maryland corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Maryland corporation to indemnify a member of its board of

directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder.

Nonexclusivity. The indemnification provided by this Agreement shall be in addition to any rights to which Indemnitee may be entitled under the Company's Amended and Restated Articles of Incorporation, its Amended and Restated Bylaws, any agreement, any vote of stockholders or disinterested directors, the Maryland General Corporation Law, or otherwise.

The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity.

NO DUPLICATION OF PAYMENTS. THE COMPANY SHALL NOT BE LIABLE UNDER THIS AGREEMENT TO MAKE ANY PAYMENT IN CONNECTION WITH ANY ACTION, SUIT, PROCEEDING, INQUIRY OR INVESTIGATION MADE AGAINST INDEMNITEE TO THE EXTENT INDEMNITEE HAS OTHERWISE ACTUALLY RECEIVED PAYMENT (UNDER ANY INSURANCE POLICY, AMENDED AND RESTATED ARTICLES OF INCORPORATION, BYLAW OR OTHERWISE) OF THE AMOUNTS OTHERWISE INDEMNIFIABLE HEREUNDER.

PARTIAL INDEMNIFICATION. IF INDEMNITEE IS ENTITLED UNDER ANY PROVISION OF THIS AGREEMENT TO INDEMNIFICATION BY THE COMPANY FOR SOME OR A PORTION OF EXPENSES IN THE INVESTIGATION, DEFENSE, APPEAL OR SETTLEMENT OF ANY CIVIL OR CRIMINAL ACTION, SUIT, PROCEEDING, INQUIRY OR INVESTIGATION, BUT NOT, HOWEVER, FOR ALL OF THE TOTAL AMOUNT THEREOF, THE COMPANY SHALL NEVERTHELESS INDEMNIFY INDEMNITEE FOR THE PORTION OF SUCH EXPENSES TO WHICH INDEMNITEE IS ENTITLED.

MUTUAL ACKNOWLEDGMENT. BOTH THE COMPANY AND INDEMNITEE ACKNOWLEDGE THAT IN CERTAIN INSTANCES, FEDERAL LAW OR APPLICABLE PUBLIC POLICY MAY PROHIBIT THE COMPANY FROM INDEMNIFYING ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR FIDUCIARIES UNDER THIS AGREEMENT OR OTHERWISE. INDEMNITEE UNDERSTANDS AND ACKNOWLEDGES THAT THE COMPANY HAS UNDERTAKEN OR MAY BE REQUIRED IN THE FUTURE TO UNDERTAKE WITH THE SECURITIES AND EXCHANGE COMMISSION TO SUBMIT THE QUESTION OF INDEMNIFICATION TO A COURT IN CERTAIN CIRCUMSTANCES FOR A DETERMINATION OF THE COMPANY'S RIGHT UNDER PUBLIC POLICY TO INDEMNIFY INDEMNITEE.

LIABILITY INSURANCE. TO THE EXTENT THE COMPANY MAINTAINS LIABILITY INSURANCE APPLICABLE TO DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR FIDUCIARIES, INDEMNITEE SHALL BE COVERED BY SUCH POLICIES IN SUCH A MANNER AS TO PROVIDE INDEMNITEE THE SAME RIGHTS AND BENEFITS AS ARE ACCORDED TO THE MOST FAVORABLY INSURED OF THE COMPANY'S DIRECTORS, IF INDEMNITEE IS A DIRECTOR; OR OF THE COMPANY'S OFFICERS, IF INDEMNITEE IS NOT A DIRECTOR OF THE COMPANY BUT IS AN OFFICER; OR OF THE COMPANY'S KEY EMPLOYEES, AGENTS OR FIDUCIARIES, IF INDEMNITEE IS NOT AN OFFICER OR DIRECTOR BUT IS A KEY EMPLOYEE, AGENT OR FIDUCIARY.

EXCEPTIONS. ANY OTHER PROVISION HEREIN TO THE CONTRARY NOTWITHSTANDING, THE

COMPANY SHALL NOT BE OBLIGATED PURSUANT TO THE TERMS OF THIS AGREEMENT:

Excluded Action or Omissions. To indemnify Indemnitee for acts, omissions or transactions from which Indemnitee may not be relieved of liability under applicable law. Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except (1) with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other agreement or insurance policy or under the Company's Amended and Restated Articles of Incorporation or Amended and Restated Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such suit, or (iii) as otherwise required under Maryland General Corporation Law, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be.

Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or

Claims Under Section 16(b). To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

PERIOD OF LIMITATIONS. NO LEGAL ACTION SHALL BE BROUGHT AND NO CAUSE OF ACTION SHALL BE ASSERTED BY OR IN THE RIGHT OF THE COMPANY AGAINST INDEMNITEE, INDEMNITEE'S ESTATE, SPOUSE, HEIRS, EXECUTORS OR PERSONAL OR LEGAL REPRESENTATIVES AFTER THE EXPIRATION OF TWO YEARS FROM THE DATE OF ACCRUAL OF SUCH CAUSE OF ACTION, AND ANY CLAIM OR CAUSE OF ACTION OF THE COMPANY SHALL BE EXTINGUISHED AND DEEMED RELEASED UNLESS ASSERTED BY THE TIMELY FILING OF A LEGAL ACTION WITHIN SUCH TWO-YEAR PERIOD; PROVIDED, HOWEVER, THAT IF ANY SHORTER PERIOD OF LIMITATIONS IS OTHERWISE APPLICABLE TO ANY SUCH CAUSE OF ACTION, SUCH SHORTER PERIOD SHALL GOVERN.

CONSTRUCTION OF CERTAIN PHRASES.

For purposes of this Agreement, references to the "Company" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent or fiduciary of such constituent corporation, or is or was serving at the

request of such constituent corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement.

For purposes of this Agreement a "Change in Control" shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13(d)(3) under said Act), directly or indirectly, of securities of the Company representing more than 20% of the total voting power represented by the Company's then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all of the Company's assets.

For purposes of this Agreement, "Independent Legal Counsel" shall mean an attorney or firm of attorneys, selected in accordance with the provisions of
Section 1(c) hereof, who shall not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements). For purposes of this Agreement, a "Reviewing Party" shall mean any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board of Directors who is not a party to the particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel.

For purposes of this Agreement, "Voting Securities" shall mean any securities of the Company that vote generally in the election of directors.

COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS,

EACH OF WHICH SHALL CONSTITUTE AN ORIGINAL.

BINDING EFFECT; SUCCESSORS AND ASSIGNS. THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, INCLUDING ANY DIRECT OR INDIRECT SUCCESSOR BY PURCHASE, MERGER, CONSOLIDATION OR OTHERWISE TO ALL OR SUBSTANTIALLY ALL OF THE BUSINESS AND/OR ASSETS OF THE COMPANY, SPOUSES, HEIRS, AND PERSONAL AND LEGAL REPRESENTATIVES. THE COMPANY SHALL REQUIRE AND CAUSE ANY SUCCESSOR (WHETHER DIRECT OR INDIRECT BY PURCHASE, MERGER, CONSOLIDATION OR OTHERWISE) TO ALL, SUBSTANTIALLY ALL, OR A SUBSTANTIAL PART, OF THE BUSINESS AND/OR ASSETS OF THE COMPANY, BY WRITTEN AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY TO INDEMNITEE, EXPRESSLY TO ASSUME AND AGREE TO PERFORM THIS AGREEMENT IN THE SAME MANNER AND TO THE SAME EXTENT THAT THE COMPANY WOULD BE REQUIRED TO PERFORM IF NO SUCH SUCCESSION HAD TAKEN PLACE. THIS AGREEMENT SHALL CONTINUE IN EFFECT REGARDLESS OF WHETHER INDEMNITEE CONTINUES TO SERVE AS A DIRECTOR OF THE COMPANY OR OF ANY OTHER ENTERPRISE AT THE COMPANY'S REQUEST.

ATTORNEYS' FEES. IN THE EVENT THAT ANY ACTION IS INSTITUTED BY INDEMNITEE UNDER THIS AGREEMENT OR UNDER ANY LIABILITY INSURANCE POLICIES MAINTAINED BY THE COMPANY TO ENFORCE OR INTERPRET ANY OF THE TERMS HEREOF OR THEREOF, INDEMNITEE SHALL BE ENTITLED TO BE PAID ALL EXPENSES INCURRED BY INDEMNITEE WITH RESPECT TO SUCH ACTION, REGARDLESS OF WHETHER INDEMNITEE IS ULTIMATELY SUCCESSFUL IN SUCH ACTION, AND SHALL BE ENTITLED TO THE ADVANCEMENT OF EXPENSES WITH RESPECT TO SUCH ACTION, UNLESS AS A PART OF SUCH ACTION THE COURT OF COMPETENT JURISDICTION OVER SUCH ACTION DETERMINES THAT EACH OF THE MATERIAL ASSERTIONS MADE BY INDEMNITEE AS A BASIS FOR SUCH ACTION WERE NOT MADE IN GOOD FAITH OR WERE FRIVOLOUS. IN THE EVENT OF AN ACTION INSTITUTED BY OR IN THE NAME OF THE COMPANY UNDER THIS AGREEMENT TO ENFORCE OR INTERPRET ANY OF THE TERMS OF THIS AGREEMENT, INDEMNITEE SHALL BE ENTITLED TO BE PAID ALL EXPENSES INCURRED BY INDEMNITEE IN DEFENSE OF SUCH ACTION (INCLUDING COSTS AND EXPENSES INCURRED WITH RESPECT TO INDEMNITEE'S COUNTERCLAIMS AND CROSS-CLAIMS MADE IN SUCH ACTION), AND SHALL BE ENTITLED TO THE ADVANCEMENT EXPENSES WITH RESPECT TO SUCH ACTION, UNLESS AS A

PART OF SUCH ACTION THE COURT HAVING JURISDICTION OVER SUCH ACTION DETERMINES

THAT EACH OF INDEMNITEE'S MATERIAL DEFENSES TO SUCH ACTION WERE MADE IN BAD FAITH OR WERE FRIVOLOUS.

NOTICE. ALL NOTICES, REQUESTS, DEMANDS AND OTHER COMMUNICATIONS UNDER THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE DEEMED DULY GIVEN (i) IF DELIVERED BY HAND AND RECEIPTED FOR BY THE PARTY ADDRESSEE, ON THE DATE OF SUCH RECEIPT, OR
(II) IF MAILED BY DOMESTIC CERTIFIED OR REGISTERED MAIL WITH POSTAGE PREPAID, ON THE THIRD BUSINESS DAY AFTER THE DATE POSTMARKED. ADDRESSES FOR NOTICE TO EITHER PARTY ARE AS SHOWN ON THE SIGNATURE PAGE OF THIS AGREEMENT, OR AS SUBSEQUENTLY MODIFIED BY WRITTEN NOTICE.

CONSENT TO JURISDICTION. THE COMPANY AND INDEMNITEE EACH HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF MARYLAND FOR ALL PURPOSES IN CONNECTION WITH ANY ACTION OR PROCEEDING WHICH ARISES OUT OF OR RELATES TO THIS AGREEMENT AND AGREE THAT ANY ACTION INSTITUTED UNDER THIS AGREEMENT SHALL BE COMMENCED, PROSECUTED AND CONTINUED ONLY IN THE STATE OF MARYLAND, WHICH SHALL BE THE EXCLUSIVE AND ONLY PROPER FORUM FOR ADJUDICATING SUCH A CLAIM.

SEVERABILITY. THE PROVISIONS OF THIS AGREEMENT SHALL BE SEVERABLE IN THE EVENT THAT ANY OF THE PROVISIONS HEREOF (INCLUDING ANY PROVISION WITHIN A SINGLE SECTION, PARAGRAPH OR SENTENCE) ARE HELD BY A COURT OF COMPETENT JURISDICTION TO BE INVALID, VOID OR OTHERWISE UNENFORCEABLE, AND THE REMAINING PROVISIONS SHALL REMAIN ENFORCEABLE TO THE FULLEST EXTENT PERMITTED BY LAW. FURTHERMORE, TO THE FULLEST EXTENT POSSIBLE, THE PROVISIONS OF THIS AGREEMENT (INCLUDING, WITHOUT LIMITATIONS, EACH PORTION OF THIS AGREEMENT CONTAINING ANY PROVISION HELD TO BE INVALID, VOID OR OTHERWISE UNENFORCEABLE, THAT IS NOT ITSELF INVALID, VOID OR UNENFORCEABLE) SHALL BE CONSTRUED SO AS TO GIVE EFFECT TO THE INTENT MANIFESTED BY THE PROVISION HELD INVALID, ILLEGAL OR UNENFORCEABLE.

CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND ITS PROVISIONS CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, AS APPLIED TO CONTRACTS BETWEEN MARYLAND RESIDENTS, ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF MARYLAND, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

SUBROGATION. IN THE EVENT OF PAYMENT UNDER THIS AGREEMENT, THE COMPANY SHALL BE SUBROGATED TO THE EXTENT OF SUCH PAYMENT TO ALL OF THE RIGHTS OF RECOVERY OF INDEMNITEE, WHO SHALL EXECUTE ALL DOCUMENTS REQUIRED AND SHALL DO ALL ACTS THAT MAY BE NECESSARY TO SECURE SUCH RIGHTS AND TO ENABLE THE COMPANY EFFECTIVELY TO BRING SUIT TO ENFORCE SUCH RIGHTS.

AMENDMENT AND TERMINATION. NO AMENDMENT, MODIFICATION, TERMINATION OR CANCELLATION OF THIS AGREEMENT SHALL BE EFFECTIVE UNLESS IT IS IN WRITING SIGNED BY BOTH THE PARTIES HERETO. NO WAIVER OF ANY OF THE PROVISIONS OF THIS AGREEMENT SHALL BE DEEMED OR SHALL CONSTITUTE A WAIVER OF ANY OTHER PROVISIONS HEREOF (WHETHER OR NOT SIMILAR) NOR SHALL SUCH WAIVER CONSTITUTE A CONTINUING WAIVER.

INTEGRATION AND ENTIRE AGREEMENT. THIS AGREEMENT SETS FORTH THE ENTIRE UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDES AND MERGES ALL PREVIOUS WRITTEN AND ORAL NEGOTIATIONS, COMMITMENTS, UNDERSTANDINGS AND AGREEMENTS RELATING TO THE SUBJECT MATTER HEREOF BETWEEN THE PARTIES HERETO.

NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS GIVING INDEMNITEE ANY RIGHT TO BE RETAINED IN THE EMPLOY OF THE COMPANY OR ANY OF ITS SUBSIDIARIES.

**********

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

NOCOPI TECHNOLOGIES, INC.

By:

AGREED TO AND ACCEPTED:

INDEMNITEE:

(signature)

(name of Indemnitee)

(address)

EXHIBIT 10.20
NOCOPI TECHNOLOGIES, INC.

OFFICER
INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is made as of ______, by and between Nocopi Technologies, Inc., a Maryland corporation (the "Company"), and ___________ ("Indemnitee").

WHEREAS, Indemnitee is an officer and director of the Company and performs a valuable service in such capacity for the Company;

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company and, in part, in order to induce Indemnitee to continue to provide services to the Company as an officer and director, wishes to provide for the indemnification and advancing of expenses to Indemnitee to the maximum extent permitted by law.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

1. Indemnification.

(a) Indemnification of Expenses. The Company shall indemnify Indemnitee to the fullest extent permitted by law if Indemnitee was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or

alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other (collectively hereinafter a "Claim") by reason of (or arising in part out of) any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity (hereinafter an "Indemnifiable Event") against any and all expenses (including attorneys' fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any such Claim), judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) of such Claim and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement (collectively, hereinafter "Expenses"), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses. Such payment of Expenses shall be made by the Company as soon as practicable but in any event no later than thirty (30) days after written demand by Indemnitee therefor is presented to the Company.

(b) Reviewing Party. Notwithstanding the foregoing, (i) the obligations of the Company under Section l(a) shall be subject to the condition that the Reviewing Party (as described in Section 10(e) hereof) shall not have determined (in a written opinion, in any case in which the Independent Legal Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "Expense Advance") shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any Expense Advance shall be unsecured and no interest shall be charged thereon. If there has not been a Change in Control (as defined in Section 10(c) hereof), the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), the Reviewing Party shall be the Independent Legal Counsel referred to in Section l(c) hereof. If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee

substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee.

(c) Change in Control. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control) then with respect to all matters thereafter arising concerning the rights of Indemnitee to payments of Expenses and Expense Advances under this Agreement or any other agreement or under the Company's Articles of Incorporation or Bylaws as now or hereafter in effect, the Company shall seek legal advice only from Independent Legal Counsel (as defined in Section 10(d) hereof) selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(d) Mandatory Payment of Expenses. Notwithstanding any other provision of this Agreement other than Section 9 hereof, to the extent that Indemnitee has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any Claim referred to in Section (1)(a) hereof or in the defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred by Indemnitee in connection therewith.

(e) Norman Gardner Settlement. The Company agrees that it shall not enter into any settlement agreement with Norman Gardner in connection with that certain lawsuit pending in the Common Pleas Court in Montgomery County, Pennsylvania captioned Norman Gardner v. Nocopi Technologies, Inc., et al, unless such settlement agreement provides that Norman Gardner unconditionally releases Indemnitee from any Claim by reason of (or arising in part out of) any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity.

2. Expenses; Indemnification Procedure.

(a) Advancement of Expenses. The Company shall advance all Expenses incurred by Indemnitee. The advances to be made hereunder shall be paid by the Company to Indemnitee as soon as practicable but in any event no later than five (5) days after written demand by Indemnitee therefor to the Company.

(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to Indemnitee's right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any Claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power.

(c) No Presumptions; Burden of Proof. For purposes of this Agreement, the termination of any Claim, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination that Indemnitee should be indemnified under applicable law, shall be a defense to Indemnitee's claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief. In connection with any determination by the Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Indemnitee is not so entitled.

(d) Notice to Insurers. If, at the time of the receipt by the Company of a notice of a Claim pursuant to Section 2(b) hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Claim in accordance with the terms of such policies.

(e) Selection of Counsel. In the event the Company shall be obligated hereunder to pay the Expenses of any Claim, the Company, if appropriate, shall be entitled to assume the defense of such Claim with counsel approved by Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees

of counsel subsequently incurred by Indemnitee with respect to the same Claim; provided that, (i) Indemnitee shall have the right to employ Indemnitee's counsel in any such Claim at Indemnitee's expense and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain such counsel to defend such Claim, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company.

3. Additional Indemnification Rights; Nonexclusivity.

(a) Scope. The Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's Articles of Incorporation, the Company's Bylaws or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Maryland corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Maryland corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder.

(b) Nonexclusivity. The indemnification provided by this Agreement shall be in addition to any rights to which Indemnitee may be entitled under the Company's Articles of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested directors, the Maryland General Corporation Law, or otherwise. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity.

4. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, Articles of Incorporation, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder.

5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses in the investigation, defense, appeal or settlement of any civil or criminal Claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, agents or fiduciaries under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee.

7. Liability Insurance. To the extent the Company maintains liability insurance applicable to directors, officers, employees, agents or fiduciaries, Indemnitee shall be covered by such policies in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company's directors, if Indemnitee is a director; or of the Company's officers, if Indemnitee is not a director of the Company but is an officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee is not an officer or director but is a key employee, agent or fiduciary.

8. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Excluded Action or Omissions. To indemnify Indemnitee for acts, omissions or transactions from which Indemnitee may not be relieved of liability under applicable law.

(b) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except (1) with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other agreement or insurance policy or under the Company's Articles of Incorporation or Bylaws now or hereafter in effect relating to Claims for Indemnifiable Events, (ii) in specific cases if the Board of Directors has approved the initiation or bringing of such suit, or
(iii) as otherwise required under the Maryland General Corporation Law, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be.

(c) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or

(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale or, sale and purchase, by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

9. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.

10. Construction of Certain Phrases.

(a) For purposes of this Agreement, references to the "Company" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement.

(c) For purposes of this Agreement a "Change in Control" shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than 20% of the total voting power represented by the Company's then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total

voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all of the Company's assets.

(d) For purposes of this Agreement, "Independent Legal Counsel" shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 1(c) hereof, who shall not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).

(e) For purposes of this Agreement, a "Reviewing Party" shall mean any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board of Directors who is not a party to the particular Claim for which Indemnitee is seeking indemnification, or Independent Legal Counsel.

(f) For purposes of this Agreement, "Voting Securities" shall mean any securities of the Company that vote generally in the election of directors.

11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

12. Binding Effect; Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director of the Company or of any other enterprise at the Company's request.

13. Attorneys' Fees. In the event that any action is instituted by Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee with respect to such action, regardless of whether Indemnitee is ultimately successful in such action, and shall be entitled to the advancement of Expenses with respect to such action, unless as a part of such action the court of

competent jurisdiction over such action determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by Indemnitee in defense of such action (including costs and expenses incurred with respect to Indemnitee's counterclaims and cross-claims made in such action), and shall be entitled to the advancement Expenses with respect to such action, unless as a part of such action the court having jurisdiction over such action determines that each of Indemnitee's material defenses to such action were made in bad faith or were frivolous.

14. Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee, on the date of such receipt, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

15. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Maryland for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in the State of Maryland, which shall be the exclusive and only proper forum for adjudicating such a claim.

16. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitations, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

17. Choice of Law. This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of the State of Maryland, as applied to contracts between Maryland residents, entered into and to be performed entirely within the State of Maryland, without regard to the conflict of laws principles thereof.

18. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

19. Amendment and Termination. No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

20. Integration and Entire Agreement. This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto.

21. No Construction as Employment Agreement. Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in the employ of the Company or any of its subsidiaries.

*******

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

NOCOPI TECHNOLOGIES, INC.

By:

AGREED TO AND ACCEPTED

INDEMNITEE:

(signature)

(name of Indemnitee

(address)

ARTICLE 5


PERIOD TYPE	3 MOS
FISCAL YEAR END	DEC 31 1999
PERIOD END	SEP 30 1999
CASH	994,400
SECURITIES	0
RECEIVABLES	142,500
ALLOWANCES	55,500
INVENTORY	10,700
CURRENT ASSETS	1,112,700
PP&E	496,000
DEPRECIATION	420,600
TOTAL ASSETS	1,909,300
CURRENT LIABILITIES	744,400
BONDS	0
PREFERRED MANDATORY	0
PREFERRED	0
COMMON	337,600
OTHER SE	827,300
TOTAL LIABILITY AND EQUITY	1,909,300
SALES	1,393,900
TOTAL REVENUES	1,393,900
CGS	549,000
TOTAL COSTS	549,000
OTHER EXPENSES	0
LOSS PROVISION	0
INTEREST EXPENSE	11,300
INCOME PRETAX	(502,100)
INCOME TAX	0
INCOME CONTINUING	(502,100)
DISCONTINUED	0
EXTRAORDINARY	0
CHANGES	0
NET INCOME	(502,100)
EPS BASIC	(0.01)
EPS DILUTED	(0.01)