**Exhibit 10.14****Patent License Agreement**This Patent License Agreement is made and effective as of April 1, 2006 (the “**Effective Date**”)between Nocopi Technologies, Inc., 9-C Portland Road, West Conshohocken, Pennsylvania 19428 (the“**Licensor**”) and Giddy Up, LLC, 3630 Plaza Drive, #6, Ann Arbor, Michigan 48108 and Color Loco,LLC, 3630 Plaza Drive, #6, Ann Arbor, Michigan 48108 (jointly and severally, the “**Licensee**”).1. Background.Licensor is the owner of the patent rights set forth in **Exhibit A**hereto, including allcontinuations, divisionals, continuations-in-part, reissues, and any other related U.S. or foreignpatents (collectively “the **Licensed Patents**”), pertaining to Licensor’s Rub-It & Color inktechnology (the “**Patented Ink Technology**”).Licensee wishes to acquire a license from Licensor to enable Licensee to print, have printed,market, distribute, and sell children’s soft-cover books, activity/art kits, stationery, stickers,sticker books, and related items of merchandise set forth in **Exhibit B**hereto, each of which havinga suggested retail price in excess of $2.50 per item (the “**Products**”). Children’s soft-coverbooks, activity/art kits, stationery, sticker books and related items of merchandise having asuggested retail price below $2.50 per item (collectively, the “**Other Products**”) shall not beconsidered Products hereunder.Placemats sold on a stand-alone basis (i.e., without being part of a book or kit) (collectively,the “**Excluded Products**”) are also not Products (regardless of their suggested retail price), andare expressly excluded from, and outside the scope of, this Agreement. Licensee shall have norights with respect to any Other Products or Excluded Products except with Licensor’s prior writtenconsent which may be granted or withheld by Licensor in its sole discretion.Licensor and Licensee (collectively, the “**Parties**”, each sometimes a “**Party**”) wish to enterinto this Patent License Agreement (the “**Agreement**”) for the purpose of memorializing theirunderstandings and agreements related to the Patented Ink Technology. For avoidance of doubt, allreferences to Licensee in this Agreement incorporate by reference and include both Giddy Up, LLCand Color Loco, LLC, each of which shall enjoy the rights and be responsible for the obligations ofLicensee hereunder.2.License GrantLicensor grants to Licensee, on a personal and non-transferable basis, the right and license (the“**License**”) to use the Patented Ink Technology solely to print, have printed market, distribute, andsell the Products to retailers, wholesalers and distributors located throughout the world;provided, however, that Licensee shall not print or cause the Products to be printed at facilitieslocated within any portion of the territory described on **Exhibit C**hereto (the “**No-printTerritory**”).
 

 
Licensee’s license within North America and South America (the “**Exclusive Territory**”) shall be anexclusive license. Unless and until this Agreement is terminated, Licensor shall not, and shallnot license any third party to, print, have printed, market, distribute or sell Products containingthe Patented Ink Technology within the Exclusive Territory. Subject to Section 5, nothing in thisAgreement, however, shall limit Licensor’s rights to, and to license any third party to, use,manufacture and sell the Patented Ink Technology in connection with or with respect to any markets,product lines or territories in which Licensee does not then hold exclusive rights hereunder.Without prejudice to any other limitations set forth elsewhere in this Agreement, Licensee agreesthat (1) Licensee shall have no right to print or have printed Products containing the Patented InkTechnology atfacilities located within the No-print Territory, (2) Licensee shall not sublicense, assign orotherwise transfer the License to any third party, (3) Licensee will cause Products containing thePatented Ink Technology to be printed only by third party printers who have been previouslyapproved in writing by Licensor (collectively, “**Approved Printers**,” each an “**Approved Printer**”),and (4) Licensee will not cause or permit Products containing the Patented Ink Technology to beprinted by any third party other than an Approved Printer. The Licensor hereby approves thoseprinters identified in **Exhibit D**hereto as Approved Printers and agrees that it will notunreasonably delay or withhold its approval to other parties proposed by the Licensee as ApprovedPrinters. Licensor reserves the right to withdraw any previously-granted approval to an ApprovedPrinter, including, without limitation, any printer identified in Exhibit D, if (i) informationcomes to Licensor’s attention that, in Licensor’s reasonable opinion, places in jeopardy suchApproved Printer’s capability or intention to fulfill its obligations under this Agreement or anyrelated Confidentiality and Non-Disclosure Agreement, or (ii) such Approved Printer suffers amaterial adverse change in its financial position or trading reputation which, in Licensor’sreasonable opinion, affects its capability or intention to fulfill its obligations under thisAgreement, and (iii) in either such event, Licensee fails, within fifteen (15) business days afterwritten notice from Licensor, which notice shall include the information known or reasonablybelieved by Licensor, to provide written assurances related thereto that are satisfactory toLicensor.No rights or licenses are hereby granted or implied under this Agreement to any patents ofLicensor other than the Licensed Patents for the Products. The rights and licenses herein grantedconvey no rights to Licensee to use or register any trademarks or trade names of Licensor or to usethe name of Licensor or Licensor’s “Rub-It & Color” trademark in any manner whatsoever inconnection with the Products.Licensee agrees that all Products containing the Patented Ink Technology marketed,distributed, or sold by it shall be marked with the appropriate patent notices and numbers asreasonably specified by Licensor in writing.3. Annual Royalties Based on Shipments of ProductsIn consideration of the rights and license granted to it with respect to Products, Licensee shallpay to Licensor an annual royalty (the “**Annual Royalty**”). The Annual Royalty
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will be payable inquarterly installments (each, a “**Quarterly Royalty**”), based upon the invoice price less returns,allowances, trade discounts, retail co-op fees, markdowns and commissions, which will, in theaggregate, not exceed ten percent (10%) of the invoice price, of all Products containing thePatented Ink Technology billed and shipped by Licensee during the preceding quarter (“**QuarterlyShipments**”). The quarters upon which the Quarterly Royalties and Shipments are based shall be:April 1 through June 30; July 1 through September 30; October 1 through December 31; and January 1through March 31 (each a “**Quarter**”).Where the Products incorporating the Patented Ink Technology also contain licensed marks of otherthird parties (e.g., Disney, Sesame Street, etc.) for which Licensee is paying such third party aseparate royalty (“**Licensed Products**”), the royalty rate payable to Nocopi under this Agreementwill be five percent (5%) of the Quarterly Shipments. Where the Products containing the PatentedInk Technology do not contain licensed marks of other third parties for which Licensee is payingsuch third party a separate royalty (“**Generic Products**”), the royalty rate payable to Nocopi underthis Agreement will be six percent (6%) of the Quarterly Shipments.Licensee’s list of Licensed Products as of the date of this Agreement is attached hereto as **ExhibitE**. Licensee will update **Exhibit E**from time to time upon Licensor’s request to provide Licensorwith information about Licensee’s then current list of Licensed Products. Except insofar asExhibit E is updated to add future Products as Licensed Products after the date of this Agreement,all such future Products shall be deemed Generic Products hereunder.Each Quarterly Royalty shall be due on or before the last day of the calendar month following theQuarter during which the applicable Products have been billed and shipped. The amounts payable foreach Quarterly Royalty will be subject to credits for prepayments as provided in Section 4. Timeis of theessence as to all royalty payments due hereunder. Royalties unpaid for more than ten (10) businessdays after due date shall bear interest at the prime rate (as reported by The Wall StreetJournal) plus 2%, or, if less, at the maximum allowable legal rate.The Quarterly Royalty for each Quarter shall be calculated at the net invoice price of allProducts containing the Patented Ink Technology billed and shipped during that Quarter, from whichnet invoice price there shall be no credits, allowances or deductions in excess of the amountexpressly authorized in this subparagraph on account of any Product returns, and regardless of (i)the basis of compensation, if any, to Licensee, (ii) whether sold to affiliated or independentthird parties, and (iii) whether the Products are sold on a stand-alone basis or as a component orconstituent of other products. In computing the Quarterly Royalty, the Licensee may deduct actualand good faith returns accepted from, and actual and good faith allowances granted to, Licensee’sretail customers or distributors for cooperative advertising, placement fees, pallet programs andthe like up to, but not exceeding ten percent (10%) in the aggregate of the total amount invoicedto the customer or distributor.
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With the Quarterly Royalty for each Quarter hereunder, Licensee shall provide Licensor with awritten report (each, a “**Report**”) stating the number of shipments, net invoice price per shipmentof all Products containing the Patented Ink Technology that were made during that Quarter,separately reported as to Licensed Products and Generic Products, and, if requested by Licensor,other supporting documentation in sufficient detail so as to enable Licensor to verify the amountof the Quarterly Royalty due for that Quarter, including documentation as to any deductions madefor returns or allowances for such invoices. Licensee further agrees to keep and preserve true andaccurate records and books showing all shipments and net invoice prices of Products containing thePatented Ink Technology for at least two (2) years, and to permit such books and records to beexamined, audited and photocopied from time to time (but not more frequently than once in anyconsecutive twelve month period) by an accountant chosen by Licensor, during Licensee’s normalbusiness hours and to the extent necessary to verify the validity of such Reports and QuarterlyRoyalties hereunder. If, upon any such inspection, a discrepancy of greater than five percent (5%)is found between the Quarterly Royalties paid by Licensee and the actual Quarterly Royalties duefor such Quarter, then Licensee shall, without prejudice to Licensor’s other rights hereunder,reimburse Licensor for all reasonable costs incurred in conducting such inspection includingtravel, hotel, subsistence and fees.Notwithstanding the foregoing, the Annual Royalties payable by Licensee to Licensor with respect toProducts hereunder may be subject to credits and adjustments, but only to the extent expressly setforth in the remaining subparagraphs of this section 3.o If Licensee’s actual Annual Royalty with respect to Products shipped during any Annual Periodexceeds Three Hundred Thousand Dollars ($300,000.00) in the aggregate, then Licensee shall beentitled to a credit equal to one percent (1%) of the actual Annual Royalty paid on shipments ofGeneric Products during that Annual Period (i.e., recalculating the Licensed Product royalty rateat 5% instead of 6%). The credit shall be applied against the Quarterly Royalties next payableunder this Agreement.o If Licensee’s actual Annual Royalty with respect to Products shipped during any two consecutiveAnnual Periods each exceeds Three Hundred Thousand Dollars ($300,000.00) in the aggregate, then, inaddition to the credits provided above for Quarterly Royalties previously paid, the royalty ratepayable by Licensee on subsequent shipments of Generic Products shall be reduced from 6% to 5% forthe remainder of the Term.o For the customers now or hereafter identified on **Exhibit F**hereto (the “**Special Rate Customers**”),Licensor shall, upon Licensee’s submission of satisfactory supporting documentation, allow Licenseeto pay royalties calculated at up to a 50% discount from the contractually-stated royalty ratesotherwise due. This special rate will be authorized by Licensor if made necessary because ofLicensee’s demonstrated reduced margins on Product sales to the Special Rate Customers initiallylisted in Exhibit F. The Licensee may from time to time propose to the Licensor additional customers to be added toExhibit F as Special Rate Customers and, in so doing, shall submit satisfactory
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supportingdocumentation of the reduced margins on Product sales to such customers. No additional customerswill be added to Exhibit F as Special Rate Customers unless be agreed to by Licensor in writing,which agreement will not be unreasonably withheld or delayed.Any reductions to or discounts from contractually-stated royalty rates that are granted by Licensorunder the preceding subparagraphs of this section 3 will not diminish or decrease Licensee’sMinimum Annual Royalties with respect to Products set forth in section 4 below. Licensor’sgranting of a royalty discount to a customer listed on Exhibit F in one instance shall notconstitute a waiver or estoppel precluding Licensor from refusing to grant a similar or any otherdiscount in any other instance that does not warrant a discount in Licensor’s reasonable judgmentbased upon the circumstances presented by Licensee’s supporting documentation.The names of Licensee’s customers set forth on Exhibit F may be modified or supplemented from timeto time with the Parties’ mutual written consent; provided, however, that at no time may more thanten percent (10%) of Licensee’s then active customers (i.e., customers to whom Licensee has madebona fide shipments of Products within the previous 6 months) be listed on Exhibit F.4. Minimum Annual Royalties Based on Product ShipmentsEach twelve (12) month period from January 1 through December 31 shall be referred to as an “**AnnualPeriod**.” The period from April 1, 2006, through December 31, 2006, is referred to as the“**Development Period**.” Licensee shall actively promote the Products during the Development Periodand each Annual Period while this Agreement remains in effect, and shall consult with Licensor fromtime to time and keep Licensor apprised regarding to extent and focus of such promotional efforts.Notwithstanding anything to the contrary elsewhere in this Agreement and without regard to actualQuarterly Shipments of the Products, Licensee guarantees to pay Licensor Eighty Thousand Dollars($80,000.00) during the Development Period (the “Minimum **Development Period Royalty**”), and,commencing with the Annual Period from January 1, 2008, through December 31, 2008 (the “**2008 AnnualPeriod**”), Licensee guarantees to pay Licensor a minimum royalty of at least One Hundred TenThousand Dollars ($110,000.00) during each Annual Period (the “**Minimum Annual Royalty**”). Providedthat Licensee timely pays the Minimum Development Period Royalty to Licensor, there will be noMinimum Annual Royalty for the 2007 Annual Period; otherwise, Licensor, at its sole option uponwritten notice to Licensee may either (i) license the Patented Ink Technology to other thirdparties within the Exclusive Territory for their use with children’s merchandise comparable to theProducts during the remainder of the Term, in which event Licensee’s rights and license within theformerly Exclusive Territory shall become non-exclusive, without affecting any of the Parties’other rights and obligations hereunder, or (ii) terminate this Agreement in its entirety.
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Of the Minimum Development Period Royalty, Fifty Thousand Dollars ($50,000.00) shall be due andpayable from Licensee to Licensor on the Effective Date, and the remaining Thirty Thousand Dollars($30,000.00) shall be due and payable from Licensee to Licensor on the sooner to occur of either(i) the 270th day after the Effective Date, or (ii) the date upon which first finishedProduct containing the Patented Ink Technology has been shipped by Licensee.The Minimum Development Period Royalty will be applied as a credit against any Quarterly Royaltiespayable with respect to Products shipped during the Development Period such that QuarterlyRoyalties will only be payable to the extent royalties otherwise payable from shipments of Productsduring the Development Period exceed the Minimum Development Period Royalty. In addition, Licenseeshall be entitled to a credit against the Minimum Annual Royalty due for subsequent Annual Periodsto the extent Licensee’s actual Quarterly Royalties during the Development Period exceed the creditfor the Minimum Development Period Warranty.Any Quarterly Royalties paid by Licensee to Licensor on account of actual shipments of Productsduring an Annual Period shall be credited against the Minimum Annual Royalty due hereunder for thatAnnual Period. In addition, Licensee shall be entitled to a credit against the Minimum Annual Royalty duefor subsequent Annual Periods to the extent Licensee’s actual Annual Royalties during the precedingAnnual Period(s) exceeded its Minimum Annual Royalty for such Annual Period(s).Without prejudice to Licensor’s other rights and remedies under this Agreement, if Licensee failsto generate an Annual Royalty at least equal to the Minimum Annual Royalty in any Annual Period,Licensee shall at the time of submission of the Report and the Quarterly Royalty for the lastQuarter of that Annual Period pay Licensor an aggregate amount sufficient to satisfy the unpaidportion of the Minimum Annual Royalty (the “**Royalty Shortfall Payment**”).The Minimum Development Period Royalty and any Royalty Shortfall Payments that the Licensee isrequired to pay for any Annual Period, since not based on actual sales of the Products, will berecorded as prepayments (the “**Prepaid Royalties**”) that will thereafter be applied as a creditagainst the Quarterly Royalties next payable with respect to actual sales of Products. But indetermining whether the Annual Royalty for an Annual Period meets the Minimum Annual Royalty, anyQuarterly Royalties payable for actual sales of Products during the current Annual Period that weresatisfied by means of a credit of Prepaid Royalties from a prior Annual Period will not be includedin the count of the Annual Royalty for the current Annual Period.If the Annual Royalty payable on the basis of Licensee’s actual sales of Products for the 2008Annual Period is less than $110,000 and cumulative Annual Royalties payable based on Licensee’sactual sales of the Products for the 2006, 2007 and 2008 Annual Periods are less than $190,000, orif the Annual Royalty payable on the basis of Licensee’s actual sales of Products for the 2009Annual Period or any later Annual Period is less than the Minimum Annual Royalty applicable to thatAnnual Period, then, without
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prejudice to its other rights, and upon written notice delivered toLicensee within sixty (60) days after the end of that Annual Period, Licensor shall be authorizedand permitted at its sole option either (i) to terminate this Agreement pursuant to Section 13effective ninety (90) days after the date of delivery of that notice, or (ii) to license thePatented Ink Technology to other third parties within the Exclusive Territory for their use withchildren’s merchandise comparable to the Products during the remainder of the Term, in which eventLicensee’s rights and license within the formerly Exclusive Territory shall become non-exclusive,without affecting any of the Parties’ other rights and obligations hereunder, except that Licenseeshall not be required to pay any Minimum Annual Royalties with respect to any billings andshipments that take place after its former Exclusive Territory has become non-exclusive.5. Licensee’s Right of First OfferIf Licensor at any time develops and wishes to introduce into the marketplace newinks, patents or inventions for children’s books and activity games/kits having a suggestedretail price in excess of $2.50 per item (“**New Developments**”), Licensor shall first offer,in writing, to license the New Developments to Licensee, at Licensee’s option, upon termsand conditions that are set forth in writing from Licensor to Licensee. Licensee shallhave the right and option, exercisable within thirty (30) days after receipt of such offer,to send written notice to Licensor that Licensee intends to accept such offer. If Licenseeaccepts the offer, the Parties shall promptly negotiate the terms and conditions of thewritten license agreement and the signing of such license agreement must occur within sixty(60) days from the date of notice of Licensee’s approval, otherwise the first offer rightsof Licensee hereunder shall expire.If Licensee does not elect to accept such offer within the 30-day timeframe, or if the parties areunable, despite good faith efforts, to execute a written license agreement within thirty (30) daysafter the Licensee has delivered to the Licensor its written acceptance of the offer, then Licensormay license the New Developments to a bona fide third party; provided that (1) an agreement isreached within one hundred twenty (120)days after the expiration of, or rejection by, Licensee of the offer, and (2) the third party’slicense is at a royalty and upon other terms and conditions are the same as or more favorable tothe Licensor than those offered in writing to Licensee.Failure by Licensee on any occasion to exercise the right of first offer afforded herein shall notconstitute a waiver of Licensee’s right to exercise such right of first offer on any lateroccasion. If any sale to the third party does not take place within the timeframe set forth above,then Licensee’s right of first offer will apply to each and every subsequent proposed license ofNew Developments.If Licensee elects to accept Licensor’s offer to license the New Developments, the licenseagreement offered by Licensor to Licensee shall include similar assurances, undertakings,representations, warranties and commitments by the Licensee to those set forth in thisAgreement, including without limitation annual royalties, minimum annual royalties and
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shortfall payments that are established based upon the reasonable expectations of theLicensor and the Licensee as to the commercial prospects for the New Development..6.Licensor’s Sales of Ink to Licensee’s ApprovedPrintersThe parties contemplate that Licensee will cause the Products to be printed by one or moreApproved Printers. Nocopi shall have no legal obligation to authorize a third party to serve as anApproved Printer hereunder unless such third party agrees (1) to purchase all required Rub-It &Color ink (the “**Ink**”) from Licensor under and pursuant to the General Terms and Conditions of Saleattached hereto as **Exhibit G**, (2) to meet and satisfy all written and reasonable specificationsissued by Nocopi with respect to the handling, storage and use of the Ink, (3) to provide access toits printing facilities from time to time sufficient to enable Nocopi to assess compliance withNocopi’s written specifications and quality control procedures, (4) to execute, together withLicensee, and abide by the Confidentiality and Non-Disclosure Agreement (the “**NDA**”) attached heretoas **Exhibit H**, and (5) not to print any Products containing the Ink at a facility located within theNo-print Territory.Notwithstanding anything to the contrary set forth in the General Terms and Conditions of Sale, allInk sold by Licensor hereunder shall be paid for by the Approved Printer (or by Licensee, if theApproved Printer fails to remit any amount in a timely manner) as follows: One half (50%) upon thedate of delivery to the port of entry or airport then servicing the facilities of the ApprovedPrinter, and one half (50%) within thirty (30) days after the date of such delivery. Licensorshall use commercially reasonable efforts, and in any event efforts that are at least comparable tothose it uses to protect its own confidential information, not to disclose, or permit thedisclosure of, the identities of Licensee’s Approved Printer(s) to any of Licensee’s knowncompetitors.To the extent that there are any inconsistencies between the provisions in the General Terms andConditions of Sale and the provisions of this Agreement, the provisions of this Agreement willprevail.Within a reasonable time period after the Effective Date, Licensor agrees to have independentlaboratories perform a reasonable number of testings and to provide written certifications toLicensee and any Approved Printer that then-current samples of the Ink and the then-current Ink’schemical formulations satisfy the requirements of not being toxic or a skin/eye irritant as definedin 16 CFR §1500.3(b)(5) and (8), and (ii) the requirements of ASTM Standard F-963 for heavy metalscontent and lead content pursuant to 16 CFR §1303, (iii) ASTM Standard D-4236, (iv) ToxologicalRisk Assessment (Acute Eye/Skin/Oral Toxicity Evaluation), (v) USP 51 Preservative Effectiveness,(vi) USP 61 Microbial Cleanliness and (iv) any other children’s safety standards to which Licensorsubmits the Ink for testing. If Licensee desires Licensor to obtain additional testings and/orcertifications beyond those that are customarily provided by Licensor or that, in Licensor’sreasonable opinion, are excessive in comparison to the royalties being generated underthis Agreement, Licensor reserves the right to require Licensee to share equally in the costs ofsuch additional testings and certifications.
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After (i) execution of the NDA and this Agreement, and (ii) Licensor’s approval of any ApprovedPrinter, Licensor shall provide samples of the Ink to Licensee’s Approved Printer, and shall alsomake a technical representative available at a mutually convenient time to provide reasonableintroductory technological assistance to Licensee’s Approved Printer with regard to use of the Ink.Licensee shall reimburse Licensor for one half (50%) of such representative’s actual travel,lodging and subsistence expenses, plus his other reasonable out-of-pocket expenses therebyincurred.Licensor agrees to sell its Ink to Licensee’s Approved Printers at the initial rate of between$12.50 to $16.50 (USD) per pound, depending on Ink color and quantity and packaging requirements.Licensor shall not increase the price for the Ink during the initial twelve (12) months in whichthis Agreement remains in effect and, thereafter, by written notice delivered to the ApprovedPrinter and the Licensee at least sixty (60) days prior to the date that the price increase iseffective, may increase the price for the Ink on an annual basis subject to the limitation that theincrease may not by more than the greater of (i) ten percent (10%) of the price applicable for theprior per year or (ii) the actual increases in the costs of raw materials to produce the Ink on adollar-for-dollar basis in accordance with appropriate supporting documentation. Licensor agreesto use commercially reasonable efforts to limit the increases in the costs of raw materialsrequired to produce the Ink.7. Insurance and IndemnificationLicensee shall maintain throughout the Term of this Agreement and for two (2) years thereafterinsurance policies with reputable insurers with an AM Best rating of ‘A’ who are satisfactory toLicensor, including Comprehensive General Liability, and Product Liability, with a minimum limit of$5,000,000.00. To the extent not paid by the Approved Printer or its insurance carriers, Licensee,to the best of its financial capabilities, will indemnify, defend and hold Licensor harmless fromand against any liabilities, claims and damages of any kind, and all costs, including reasonableattorney’s fees, arising from or relating to an Approved Printer’s improper disclosure,dissemination or use of the Ink or the Patented Ink Technology in violation of this Agreement, anyNDA entered into by Licensee or the Approved Printer, or applicable patent and other intellectualproperty laws.Licensee’s liability to Licensor under this Agreement shall not be limited to Licensee’sinsurance coverage. Licensee shall provide Licensor with a certificate of insurance evidencing therequired coverage, and showing Licensor as a named additional insured, and will provide at leastthirty (30) days prior written notice of policy cancellation or modification. Licensee shall alsoprovide Licensor with updated certificates of insurance on the renewal anniversary of any policiesrequired under this Agreement.8. Representations, Limited Warranty and Damage Limitations
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Licensor warrants that it is the owner and/or patent holder of the Licensed Patents, and thatLicensee’s use of the Patented Ink Technology as authorized by this Agreement will not violate orinfringe upon the patent issued by any country in North America, or, to the knowledge of theLicensor, any proprietary rights of any third parties. Licensor warrants that each of the LicensedPatents is as of the date of this Agreement in full force and effect and that the Licensor willduring the continuance of the term of this Agreement take all actions that are necessary orappropriate to maintain those Licensed Patents in full force and effect. Licensor shall defend atits own expense, with counsel of its choosing, any third-party action, suit, claim or proceeding(“Claim”) brought against Licensee alleging that the Licensee’s use of the Patented Ink Technologyas authorized by this Agreement infringes upon or misappropriates any such third-party’srights under any patent issued by any country in North America or other proprietary rights.Licensee may elect at its sole expense to participate in such defense through its legal counsel.Licensor shall pay, to the best of its financial capabilities, any damages finally awarded againstLicensee in connection with such Claim or constituting a settlement of such Claim. Licensor shallnot be required to pay any settlement that it has not approved. If infringement is held to exist,Licensor shall, at its own expense and its sole option, either supply to Licensee suitablereplacements for the infringing material, or Licensor may terminate this Agreement. In eitherinstance, to the best of its financial capabilities, Licensor shall be liable to the Licensee forthe damages and expenses incurred by the Licensee solely as a result of such infringement,including, without limitation, any damages that result from the option elected by the Licensorpursuant to the preceding sentence. Without limiting the generality of the foregoing, theobligations of Licensor under this subparagraph shall be inapplicable to any Claim that alleges, inwhole or in part, that Licensee printed or caused any Products to be printed at facilities locatedwithin the No-print Territory, and shall be contingent upon Licensee promptly notifying Licensor inwriting of such Claim, providing all necessary information and fully cooperating as reasonablyrequired by the Licensor, at Licensee’s expense, in the defense of such Claim.Licensee shall notify Licensor of any activities by third parties that may constitute apotential infringement or be in violation of Licensor’s Patented Ink Technology and which may fromtime to time come to the attention of Licensee. If such third party is a customer of Licensee,Licensee shall notify the third party customer of the existence of Licensor’s Patented InkTechnology and Licensee’s role as exclusive licensee for the manufacture of Products containing thePatented Ink Technology in the Exclusive Territory. If the third party customer promptly agrees inwriting to refrain from using the Patented Ink Technology except in Products purchased fromLicensee, Licensor will take no further action against the third party customer.If other third parties’ activities may constitute a potential infringement of the Patented InkTechnology, Licensor shall be responsible for taking the steps it deems appropriate to address suchinfringement, including at Licensor’s sole discretion the institution of legal proceedings againstsuch third party. Such litigation shall be under the sole control of the Licensor. Licensor mayconsult with the Licensee on the conduct of such litigation and the Licensee agrees to reasonablycooperate with the Licensor in connection with such litigation, for example, by providing at itsown expense any information within its possession reasonably required for use in such
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litigation.Any award or settlement of damages as a result of such litigation shall belong to the Licensor.This provision shall not preclude the Licensee from separately seeking recovery from the thirdparty of damages incurred by the Licensee as a result of such infringement; provided, however, thatLicensee shall not institute any action seeking such a separate recovery from a third party withoutreasonable prior written notice to Licensor.If any material portion of the Patented Ink Technology is found to be invalid or unenforceableby an appellate court of competent jurisdiction, or by a lower court of competent jurisdictionwhose decision Licensor elects not to appeal in a timely manner, or if a settlement of suchlitigation occurs which in effect eliminates the patent protection on the Patented Ink Technology,then either Party may elect to terminate this Agreement by written notice to the other Party. Anyaward or settlement of damages as a result of third party litigation challenging the patentprotection of the Patented Ink Technology which results in payment to such third party shall be theresponsibility of Licensor unless it can be shown that the infringement was caused by Licenseeusing the Patented Ink Technology in a manner inconsistent with the intended uses set forth in thisAgreement.Licensor makes the following limited warranty (“**Limited Warranty**”) to Licensee with respect to thePatented Ink Technology and the Ink: (1) for press-ready one-part Ink (i.e., Ink that requires nocombining of parts or additives prior to printing) for a period ending upon the first to occur ofeither (a) ninety (90) days after the date of manufacture, or (b) thirty (30) days after beingopened, and (2) for non press-ready two-part Ink (i.e., Ink which is supplied in parts and requirescombining or additional additives prior to printing) for a period ending upon the first to occur ofeither (a) one hundred eighty (180) days after the date of manufacture, or (b) thirty (30) daysafter being opened (either, the “**Warranty Period**”), the Inks will print on standard flexographicpresses in substantialconformance with (a) any written specifications for such Inks previously agreed to in writing bythe parties, and (b) any Ink samples previously furnished by Licensor to Licensee, if applied tosimilar substrates and handled, stored and used in compliance with Licensor’s writtenspecifications. Insignificant printing non-conformances that do not materially adversely affectthe marketability of the Products are expressly excluded from this Limited Warranty, as arenon-conformances that cannot be verified and reproduced by Licensor.Licensor shall not be responsible for any failure of the Inks to perform as warranted if suchfailure is caused by Licensee’s or its Approved Printer’s misuse or improper use of the Ink, byproblems with third party products not provided by Licensor, by the Inks being applied tosubstrates not authorized by Licensor, or by the Inks not being handled or stored in compliancewith Licensor’s directions and specifications. Subject to the provisions below for indemnity fromthird-party claims, Licensor’s sole obligation and Licensee’s sole and exclusive remedy for anybreach of the foregoing Limited Warranty will be, upon Licensee’s return of the non-conforming Inkto Licensor during the Warranty Period and Licensor’s verifying the non-conformance, for Licensorto furnish
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replacement Ink at no additional cost to Licensee. Any replacement Ink will bewarranted for the Warranty Period set forth above.Notwithstanding Licensor’s right to undertake quality control inspections, Licenseeunderstands that Licensor shall be under no obligation to conduct any such inspections or to adviseLicensor if its Approved Printer is not performing in accordance with Licensor’s writtenspecifications. Licensee acknowledges that Licensee is solely responsible for determining thecompliance by its Approved Printer with such written specifications. Licensee acknowledges thatits investments in implementing this Agreement are made at Licensee’s own risk and are the resultof Licensee’s independent evaluation of the Ink, this Agreement, and the business opportunitiespresented hereby.Subject to the provisions below for indemnity from third-party claims, neither Licensor norany of its affiliates, agents or representatives will have any responsibility or liability for anyclaims, demands, losses, injuries or damages of any kind, including but not limited to punitive orconsequential damages (such as, without limitation, the cost to reprint books or replacemerchandise, lost profits, lost revenues, lost savings or other economic losses), caused to orsuffered in any manner by Licensee resulting from (i) breach of the foregoing Limited Warranty,(ii) Licensee’s marketing, distribution and sale of Products containing the Patented InkTechnology, or (iii) Licensee’s or any third party’s use of the Products containing the PatentedInk Technology, whether or not Licensor has been advised of the possibility of such damages, andwhether based on breach of contract, warranty or statutory duty, negligence, strict liability orother tort, principles of indemnity, contribution or otherwise. As an exception, but only to theextent actually paid by any insurance coverage under policies then held by Licensor, the Licensorwill indemnify, defend (through counsel selected by Licensor or its insurer) and will hold theLicensee harmless from and against loss, liability, damage or expense (including, withoutlimitation, attorney fees [if no defense is provided] and related expenses) suffered or incurred bythe Licensee as a result of claims made by third parties against the Licensee that are solely theresult of a breach by the Licensor of its Limited Warranty. Without limiting the generality of theforegoing, the Licensor’s obligations in the preceding sentence shall be inapplicable to any claimsthat allege, in whole or in part, that Licensee printed or caused any Products to be printed atfacilities located within the No-print Territory.Except for the Limited Warranty set forth above and except for Licensor’s warranty regardingpatents of third parties set forth above, neither Licensor nor any of its affiliates, agents orrepresentatives makes or gives any warranty, express or implied with respect to the Patented InkTechnology or the Ink, **including but not limited to implied warranties of merchantability andfitness for a particular purpose**, and Licensee hereby indemnifies Licensor and its affiliates,agents and representatives and shall save them and hold them harmless against any claims, demands,losses or damages of whatsoever kind caused to or suffered by them as a result of Licensee’smarketing, distribution and sale of Products containing the Patented Ink Technology.
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9. No Sublicensing by LicenseeThis Agreement is personal to Licensee and may not be assigned or otherwise transferred byLicensee, except (i) to an entity wholly owned and controlled by Licensee, or (ii) to an entity inwhich the Licensee is merged or an entity to which the Licensee sells or otherwise transferssubstantially all of its assets and its good will; provided, however, no such transfer orassignment may be made to a proposed assignee or transferee who is a competitor to the Licensor inthe development and licensing of ink products.10. Assignment of PatentsSubject to Licensor’s right in its sole and unfettered discretion to sell or otherwise transfer itsLicensed Patents to an entity into which Licensor is merged or an entity that acquires all orsubstantially all of Licensor’s common stock or assets, the Licensor reserves the right in othercircumstances to sell or otherwise assign one or more of the Licensed Patents and all or any rightsunder one or more of the Licensed Patents (an “**Assignment**”) subject to the following:o If during the term of this Agreement the Licensor receives an offer for an Assignment containingterms acceptable to the Licensor (an “**Offer**”), then before acceptance, the Licensor shall deliver acopy of that Offer to the Licensee and identify to the Licensee the proposed assignee (the“**Assignee**”) and, in such event, the Licensee shall have the right (the “**Refusal Right**”),exercisable by written notice delivered to the Licensor within thirty (30) days following the dateof the Licensee’s receipt of the Offer (and “**Acceptance**”), to acquire the Patent(s) or the rightsunder the Patent(s) that are described in the Offer at the price and on the terms and conditionsstated in that Offer. If the Licensee delivers the Acceptance within the period specified above,then the Licensor and Licensee shall proceed with the closing of the Assignment on the later of thedate specified in the Offer or sixtieth (60th) business day after the date that theLicensee received the Offer. If the Licensee does not deliver the Acceptance within the periodspecified above, then the Licensor may proceed with the closing of the Assignment to the Assigneeon the date specified in the Offer.o If Licensee does not exercise the Refusal Right to an Assignment as provided above and theLicensor proceeds with the Assignment to the Assignee, the rights of the Assignee with respect tothe Patent(s) and rights under Patent(s) that are the subject of that Assignment shall be subjectto the rights of the Licensee under this Agreement. Without limiting the generality of thepreceding sentence, if the Assignment includes any rights with respect to the Ink, the Assignee, asa condition to the Assignment, shall assume in writing and shall thereafter be obligated to supplythe Ink to the Licensee and its Approved Printers as provided in this Agreement. No Assignmentshall relieve the Licensor of its obligations to the Licensee under this Agreement unless otherwiseagreed n writing by the Licensor.11.  Notices
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Any notice or other communication required or permitted under this Agreement must be in writing,including via facsimile, and must be sent to the Party at the address first noted above for thatParty, or at such other address as that Party may have designated in the manner prescribed herein.Unless a time period is expressly defined by business days, any other reference to “day” or “days”in this Agreement means calendar days.12. Confidentiality and Non-DisclosureLicensee hereby acknowledges and affirms all terms and conditions set forth in theNon-Disclosure Agreement previously executed on behalf of Licensor. In addition, as a condition tothis Agreement, Licensee shall execute, together with any Approved Printer, an additionalConfidentiality & Non-Disclosure Agreement with Licensor containing terms and conditionssatisfactory to Licensor.13. Term of AgreementThis Agreement shall commence on April 1, 2006, and shall remain in effect until December 31,2009 (the “**Initial Term**”) unless the Agreement is extended (i) by the Parties’ mutual writtenagreement or (ii) by Licensee under the circumstances set forth in this Section 13, or unless theAgreement is terminated before the end of the Initial Term for a reason expressly set forth in thisSection 13 or elsewhere contained in the Agreement.Upon written notice to Licensor received not later than five (5) business days after the endof the Initial Term or any Renewal Term, Licensee shall have the automatic right to renew thisAgreement for additional period of three (3) years (each, a “**Renewal Term**”) if during the AnnualPeriod ending December 31, 2009 (the “**2009 Annual Period**”) or during the last Annual Period of eachRenewal Term, Licensee generates Annual Royalties through actual shipments of the Products at leastequal to Two Hundred Thousand Dollars ($200,000.00). During each Annual Period of any RenewalTerm, Licensee shall be required to generate Minimum Annual Royalties with respect to Productshipments at least equal to One Hundred Fifty Thousand Dollars ($150,000.00) per year. The InitialTerm and any Renewal Terms are sometimes referred to as the “**Term**.”The Licensor may terminate this Agreement in the time and manner stated in Section 4 if the AnnualRoyalty payable on the basis of Licensee’s actual sales of Products for the 2009 Annual Period orany later Annual Period does not equal the Minimum Annual Royalty applicable to that Annual Period.This Agreement shall automatically terminate in the event of Licensee’s liquidation, dissolution,bankruptcy, winding up, assignment for the benefit of creditors, or any similar procedure.The Licensee shall have the option to terminate this Agreement in the event of Licensor’sliquidation, dissolution, bankruptcy, winding up, assignment for the benefit of creditors,
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or anysimilar procedure, but if the Licensee does not elect to terminate, then this Agreement, and therights and obligations of the Licensee hereunder, shall remain in full force and effect, bindingupon and inuring to the benefit of the Licensee and the party succeeding to the Licensor’s rightsand obligations hereunder.This Agreement shall also terminate if, subsequent to its effective date, Licensee asserts theinvalidity of any aspect of the Patented Ink Technology, coupled with or followed by eitherLicensee’s withholding or notice of its intention to withhold, or denial of any obligation to payany sums due hereunder, or by Licensee’s initiation or participation in any suit, action orproceeding challenging or denying the validity of any aspect of Licensor’s Patented Ink Technology.Finally, in the event of any breach by either Party of its obligations under this Agreement or thebreach by the Licensor of its obligations to supply Ink to the Licensee’s Approved Printers and, inany such event, the breach is not cured to the reasonable satisfaction of the non-breaching Partywithin ten (10) calendar days after written notice from the non-breaching Party if the breachrelates to the non-payment of money, or within thirty (30) calendar days after such written noticefor any other type of breach, the non-breaching Party, at its election may affirm this Agreementand seek and secure specific performance by the breaching Party of its obligations under thisAgreement or may terminate this Agreement and, in either instance, may seek and securereimbursement for damages incurred as a result of such breach..Termination of this Agreement for any reason shall not affect obligations accruing before theeffective date of such termination, or any obligation which is stated in the Agreement to survivetermination. In the event of termination of this Agreement on account of Licensee’s uncureddefault, then, in addition to any other remedies at law or equity, Licensee shall forthwith pay toLicensor the remainder of the Annual Minimum Royalties due for the balance of the Term. In theevent of termination of this Agreement on account of Licensor’s uncured default, the Licensee shallhave such rights and remedies at law or equity as are permitted under applicable law.14. Force MajeureEach Party shall be excused from delays in performing or from its failure to perform hereunder tothe extent that such delays or failures result from causes beyond the reasonable control of suchParty. Performance times shall be considered extended for a period of time equivalent to the timelost because of such delay. This Section shall be inapplicable to any failure to make a payment ofmoney due under the Agreement.15. Dispute ResolutionIn the event of any dispute between the Parties relating to money damages under this Agreement, theParties shall submit such dispute to non-binding mediation conducted by a mediator appointed by theAmerican Arbitration Association’s Philadelphia, Pennsylvania office, and the mediation shall takeplace in Philadelphia, Pennsylvania.
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The expenses of the mediator shall be equally shared unlessthe mediator determines otherwise. If non-binding mediation is unsuccessful in resolving thedispute within ninety (90) calendar days after the mediator’s appointment, the Parties shall submitsuch dispute to binding arbitration conducted by a single arbitrator appointed by the AAA’sPhiladelphia, Pennsylvania office, and the arbitration shall take place in Philadelphia,Pennsylvania. The expenses of the arbitrator shall be shared equally unless the arbitratordetermines otherwise. The arbitrator shall award the prevailing Party recovery of its reasonableattorney’s fees, but each Party shall otherwise bear its own expenses incurred in connection withthe mediation or arbitration. The arbitrator’s award may be enforced by any court havingjurisdiction over the Parties.16. Other ProvisionsIf, in the event of Licensor’s liquidation, dissolution, bankruptcy, winding up, assignment for thebenefit of creditors, or any similar procedure or the breach by the Licensor of any obligationunder this Agreement or the breach by the Licensor of its obligations to supply Ink to theLicensee’s Approved Printers and the failure of the Licensor to remedy that breach within theperiod permitted under Section 13, the Licensee does not elect to terminate this Agreement andinstead affirms and continues this Agreement, and if the Licensor thereafter does not or cannotsupply to the Licensee or its Approved Printers the Ink required in order to produce the Products,then the Licensor shall provide to the Licensee all technical and other information required by theLicensee in order to continue manufacturing the Product, including but not limited to, allformulations for the Ink (including percentage of each ingredient, CAS numbers for each ingredientand MSDS sheets for each ingredient) and for manufacturing the Ink (including sources of inkingredients, sources for ink manufacturing, ingredient storage requirements, mixing methods, oceanand air shipping specifications and any other specialized processing that may be required).The sections of this Agreement relating to Representations, Limited Warranty and Damage Limitationsand to Confidentiality and Non-Disclosure shall continue in full force and effect and shall survivethe termination of this Agreement for any reason. Notwithstanding termination of the Agreement,Licensee may use any Ink then on hand which has been fully paid for; otherwise, such Ink shall bepromptly returned to Licensor or destroyed.The Parties are contractors independent of each other, and this Agreement does not create a jointventure or partnership. Neither Party has the authority to bind the other Party to any thirdparty.This Agreement shall be governed and construed in accordance with the laws of the Commonwealth ofPennsylvania without regard to the conflicts of laws or principles thereof. Any action or suitseeking equitable or injunctive relief related to this Agreement shall be brought only in the state orfederal courts covering Montgomery County, Pennsylvania.
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If either Party prevails in any action hereunder, it shall, in addition, be entitled to recover itsreasonable attorney’s fees.This Agreement sets forth the entire agreement and understanding between the Parties as to itssubject matter and supersedes all prior discussions between the Parties. Neither Party shall bebound by any terms or conditions with respect to such subject matters other than as expresslyprovided herein, or in a further written instrument executed by both Parties on or after the dateof this Agreement. No modification of this Agreement shall be effective unless in writing andsigned by both Parties. A waiver of a breach under this Agreement shall not be a waiver of anysubsequent breach hereunder. Failure of either Party to enforce compliance with any term orcondition of this Agreement shall not constitute a waiver of such term or condition. If anyprovision of this Agreement is found to be invalid or unenforceable, such provision is to thatextent to be deemed omitted, and the remaining provisions shall not be affected in any way.Section headings are for reference purposes only and shall not affect the meaning or constructionof the paragraphs to which they relate.In witness whereof, the Parties have executed this Agreement as of the date first set forth above,intending to be legally bound.     **Nocopi Technologies, Inc.** **Giddy Up, LLC**        Signature  Signature        Printed Name  Printed Name        Title  Title        Date  Date       **Color Loco, L.L.C.**          Signature          Printed Name          Title          Date    
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