EXHIBIT 10.5

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, restated or otherwise
modified, this “Agreement”) dated as of Aug. 3, 2017, is made among Advanced
Environmental Petroleum Producers, Inc., a Florida corporation (the “Company”),
those subsidiaries of the Company that are signatories hereto (such
subsidiaries, the “Guarantors” and, together with the Company, the “Debtors”)
and ___________, as Agent (the “Agent”) for the holders of the Company’s 10%
Senior Secured Convertible Notes (collectively, the “Notes”) due fifteen (15)
months following their issuance, in the original aggregate principal amount of
$________ (together with the Agent, and all of their endorsees, transferees and
assigns, collectively, the “Secured Parties”).

 

RECITALS

 

WHEREAS, pursuant to the Purchase Agreement (as defined in the Notes), the
Secured Parties have severally agreed to extend the loans to the Company
evidenced by the Notes;

 

WHEREAS, pursuant to a certain Subsidiary Guarantee (the “Guarantee”), the
Guarantor agreed to guarantee and act as surety for payment of the Notes;

 

WHEREAS, in order to induce the Secured Parties to extend the loans evidenced by
the Notes, each Debtor has agreed to execute and deliver to the Secured Parties
this Agreement and to grant the Secured Parties, pari passu with each other
Secured Party and through the Agent, a security interest in certain intellectual
property of such Debtor to secure the prompt payment, performance and discharge
in full of all of the Company’s obligations under the Notes and the Guarantor’s
obligations under the Guarantee (collectively, the “Obligations”);

 

NOW, THEREFORE, in consideration of the premises set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Debtors (intending to be legally bound) hereby agree as
follows:

 

1. Incorporation of Notes. The Notes and the terms and provisions thereof are
hereby incorporated herein in their entirety by this reference thereto. All
terms capitalized but not otherwise defined herein shall have the same meanings
herein as in the Notes.

 

2. Security Interest in Intellectual Property. To secure the complete
satisfaction and payment and performance when due (or declared due in accordance
with the terms of the Notes) of the Obligations, the Debtors hereby confirm
their grant to the Agent, on behalf of the Secured Parties, of a continuing
security interest in and to any and all of the Debtors’ right, title and
interest in and to all of the following now owned and existing and hereafter
arising, created or acquired property (collectively, the “Intellectual
Property”) owned by any of the Debtors:

 

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(i) patents and patent applications, including, without limitation, the
inventions and improvements described and claimed therein, and those patents
listed on Exhibit A attached hereto and hereby made a part hereof, and (a) all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (b) all income, royalties, damages, proceeds and
payments now and hereafter due or payable under or with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, (c) the right to sue for past, present and future
infringements thereof, and (d) all rights corresponding thereto throughout the
world (collectively, the “Patents”);

 

(ii) trademarks, trademark registrations, trademark applications, trade names
and tradestyles, brand names, service marks, service mark registrations and
service mark applications, including, without limitation, the trademarks, trade
names, brand names, service marks and applications and registrations thereof
listed on Exhibit B attached hereto and hereby made a part hereof, and (a) all
renewals or extensions thereof, (b) the goodwill of the Debtors’ business
connected with and symbolized thereby, (c) all income, royalties, proceeds,
damages and payments now and hereafter due or payable with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, (d) the right to sue for past, present and future
infringements thereof, and (e) all rights corresponding thereto throughout the
world, if any, excluding any “intent to use” trademark applications for which a
statement of use has not been filed (but only until such statement is filed and
has been accepted) (collectively, the “Trademarks”); and

 

(iii) Reserved.

 

3. Representations and Warranties. As of the date hereof, the Debtors own or
otherwise have the right to use the Intellectual Property, free and clear of any
claims (other than Permitted Liens and except in the case of such licenses for
the rights of the licensors thereunder) except for such Intellectual Property
the failure of which to own or license, would not reasonably be expected to have
a material adverse effect on any Debtor’s business, assets, liabilities,
properties, condition (financial or otherwise), operations or prospects, or on
the ability of any Debtor to perform the Obligations (“Material Adverse
Effect”). Debtors’ Intellectual Property does not to the best of our knowledge
infringe, violate or misappropriate the intellectual property rights of any
third parties where such infringement would reasonably be expected to have a
Material Adverse Effect. As of the date hereof, no third party has claimed or
asserted in writing the right to use, in connection with similar or closely
related goods and in the same geographic area, any mark which is identical or
confusingly similar to the Debtors’ Trademarks. No third party has asserted in
writing ownership rights in the Intellectual Property that would reasonably be
expected to result in a Material Adverse Effect, and Debtors have not licensed
or sublicensed any third party to use the Debtors’ material Intellectual
Property. The use of the Debtors’ material Intellectual Property in the Debtors’
business do not to the best of our knowledge infringe any right of any third
party where such infringement would reasonably be expected to have a Material
Adverse Effect. As of the date hereof, no third party is infringing any of the
Intellectual Property except where such infringement would not reasonably be
expected to have a Material Adverse Effect. Each of the Debtors has the legal
right to use the Intellectual Property currently used by such Debtor. The
Intellectual Property constitutes all of the intangible property necessary and
sufficient for the Debtors to conduct their businesses consistent with past
practices and as presently conducted.

 

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4. Covenants.

 

(i) The Debtors shall have the duty, in the Debtors’ good faith business
judgment: (a) to file and prosecute diligently any Patent or Trademark
applications pending as of the date hereof or hereafter until the termination of
this Agreement in accordance with Section 6; (b) to make application on
unpatented but patentable inventions and on trademarks and service marks where
any such application is deemed by the Debtors to be commercially reasonable, (c)
to preserve and maintain all rights in the material Trademarks and Patents owned
by any Debtor (including, but not limited to, with respect to Trademarks, the
filing of affidavits of use and, incontestability, where applicable, under §§8
and 15 of the Lanham Act (15 U.S.C. § 1058, 1065) and renewals and initiating
opposition or cancellation proceedings or litigation against users of the same
or confusingly similar marks who seriously threaten the validity or rights of
any Debtor in its Trademarks), and (d) to ensure that the material Trademarks
and Patents owned by any Debtor are and remain enforceable. Any and all costs
and expenses incurred in connection with the Debtors’ obligations under this
Section shall be borne by the Debtors.

 

(ii) The Debtors will promptly notify the Agent in writing if any third party
(a) claims or asserts (i) the right to use, in connection with similar or
closely related goods and in the same geographic area, any mark which is
identical or confusingly similar to any of the Debtors’ Trademarks, or (ii)
ownership rights in any of the Intellectual Property that would reasonably be
expected to result in a Material Adverse Effect, or (b) infringes any of the
Intellectual Property except where such infringement would not reasonably be
expected to have a Material Adverse Effect.

 

5. Effect on Notes. Each Debtor acknowledges and agrees that this Agreement is
not intended to limit or restrict in any way the rights and remedies of the
Agent or the Secured Parties under the Notes but rather is intended to be filed
by the Agent with the United States Patent and Trademark Office and, if
applicable, the United States Copyright Office or Library of Congress in order
to provide notice of the Secured Parties’ security interest. The Secured Parties
shall have, in addition to all other rights and remedies given them by the terms
of this Agreement and the Notes, all rights and remedies allowed by law, in
equity, and the rights and remedies of a secured party under the UCC. In the
event of a conflict between the Notes and this Agreement, the terms of the Notes
shall control.

 

6. Release of Security Agreement. Upon the indefeasible repayment in full in
cash of the Obligations (other than contingent indemnification obligations) and
the termination of the Notes in accordance with their terms, this Agreement
shall terminate, and the Agent shall execute and deliver any document reasonably
requested by the Debtors, at the Debtors’ joint and several cost and expense, as
shall be necessary to evidence termination of the security interest granted by
the Debtors to the Secured Parties hereunder.

 

7. Severability. The provisions of this Agreement are severable, and if any
clause or provision shall be held invalid and unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.

 

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8. Modification. This Agreement cannot be altered, amended or modified in any
way, except by a writing signed by the Debtors and the Agent.

 

9. Binding Effect; Benefits. This Agreement shall be binding upon each of the
Debtors and its successors and permitted assigns, and shall inure to the benefit
of the Agent and each of the Secured Parties, and their successors and assigns;
provided, however, the Debtors shall not assign this Agreement or any of the
Debtors’ obligations hereunder without the prior written consent of the Agent.

 

10. Headings; Counterparts. Paragraph headings used herein are for convenience
only and shall not modify the provisions which they precede. This Agreement may
be signed in one or more counterparts, but all of such counterparts taken
together shall constitute and be deemed to be one and the same instrument. A
signature hereto sent or delivered by facsimile or other electronic transmission
(including .PDF document) shall be as legally binding and enforceable as a
signed original for all purposes.

 

11. Further Assurances. Each of the Debtors agrees to promptly and duly execute
and deliver such further agreements, instruments and documents, and to perform
such further acts, as the Agent shall reasonably request from time to time in
order to carry out the purpose of this Agreement and agreements set forth
herein. Each of the Debtors acknowledges that a copy of this Agreement will be
filed by the Agent with the United States Patent and Trademark Office and, if
applicable, the United States Copyright Office or Library of Congress, at the
sole cost and expense of the Debtors.

 

12. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE
OF NEW YORK AND THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION
AND ENFORCEMENT, AND THE RIGHTS AND OBLIGATIONS OF PARTIES HEREUNDER, SHALL BE
DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW OR CHOICE OF LAW
PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANY OTHER LAWS.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the undersigned has duly executed this Intellectual
Property Security Agreement in favor of the Agent, on behalf of the Secured
Parties, as of the date first written above.

 

DEBTORS

 

ADVANCED ENVIRONMENTAL PETROLEUM PRODUCERS, INC.

 

By:

/s/ Michael T. Redman

 

Name:

Michael T. Redman

 

Title:

CEO

 

ONCOLIX, INC.

By:

/s/ Michael T. Redman

Name:

Michael T. Redman

Title:

CEO

 

AGENTV

_________________, AS AGENT

 

By:

/s/ AGENT

  

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EXHIBIT A

 

Patent Schedule

 

 

 

 

 

 

 

 

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EXHIBIT B

 

TRADEMARK SCHEDULE

 

APP / REG. NO.

MARK

CLASS

IDENTIFICATION OF SERVICES

 

 

 

 

 

 

 

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