CAPITAL PLEDGE AGREEMENT
CAPITAL PLEDGE AGREEMENT (this "Agreement") dated as of the 24th day of
February, 2005 by and among Biophan Technologies, Inc., a Nevada corporation
("Obligor"), TomoVation GmbH, a company organized under the laws of Germany
("TomoVation"), Prof. Xx. Xxxxxxx Xxxxxx ("Xxxxxx" and collectively with
TomoVation, the "Sellers").
Statement of the Premises
Pursuant to the Agreement among Obligor, Sellers, aMRIs GmbH, a company
organized under the laws of Germany (the "Company"), TomoVation, Prof. Xx.
Xxxxxxx Xxxxxx, Xx. Xxxxxxx Xxxxxx, Dipl.-Ing. Gregor Scharfers and
Dipl.Beriebswirt Xxxxxxx Xxxxxx, dated as of February 24, 2005 (the "Purchase
Agreement" according to I.1 above), Obligor acquired from the Sellers a 51%
interest in the Company which amounts to (euro) 12,750 (the "Company Interest").
Pursuant to the Purchase Agreement, Obligor has agreed to make capital
contributions to the Company in the aggregate amount of US $2,000,000. This
Agreement is entered into pursuant to the Purchase Agreement to secure the
making by Obligor of the Capital Contributions required by the Purchase
Agreement (the "Capital Contributions").
Statement of Consideration
Accordingly, in consideration of the premises, all the parties hereto
agree as follows.
Agreement
Definitions. The term "Liabilities" means Obligor's commitment to make
Capital Contributions to the Company pursuant to the Purchase Agreement.
The term "Collateral" means shares of the Company in the nominal amount of
(euro) 11,400 .whereby the Collateral is granted by shares in the nominal amount
of (euro) 3,800 to TomoVation and in the nominal amount of (euro) 7,600 to
Xxxxxx and in all increases, profits or rights received therefrom, in all
substitutions and additions, together with any proceeds except for rights to the
shares which relate to the ownership of the shares exclusive and cannot be
transferred without title to the shares.
The term "Event of Default" shall mean the suspension of Obligor's
obligation to make future Capital Contributions pursuant to Section 1.4(e) of
the Purchase Agreement signed by the Parties of this Agreement. The Parties
herewith refer to this Section 1.4 (e) and waive the right to attach this to
this Agreement.
Grant of Security Interest. As security for the payment of the
Liabilities, Obligor hereby grant(s) to Sellers a security interest in, a
general lien upon and/or right of set-off against (as applicable) the
Collateral. This security interest is granted to TomoVation with respect to
shares of the Company in the nominal amount of (euro) 3,800 and to Xxxxxx with
respect to shares of the Company in the nominal amount of (euro) 7,600.
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Release of Security Interest. The security interest in the Collateral
shall be released as Obligor makes Capital Contributions to the Company. Three
(3) shares of the Company in the nominal amount of (euro) 50 each shall be
released for each US $26,315.00 contributed by Obligor to the Company pursuant
to the Purchase Agreement. As shares of the Company are released from the
security interest, they shall be released in a proportion of 1/3 for TomoVation
and 2/3 for Xxxxxx from the shares in which TomoVation and Xxxxxx were granted a
security interest so that at any given time the number of shares in which each
of TomoVation and Xxxxxx has a security interest is in proportion. This means
for example that a Capital Contribution of US $26,315.00 would result in two (2)
shares of Xxxxxx and one (1) share of TomoVation, each in the nominal amount of
(euro) 50, to be released. Any Capital Contribution, or remaining portion
thereof, that has not resulted in the release of shares because it is less than
US $26,315.00 shall be added to a subsequent Capital Contribution for purposes
of this paragraph until such Capital Contribution has effectively resulted in
the release of shares. The Sellers hereby agree to take any and all actions
necessary to document the release of any shares of the Company released pursuant
to this paragraph even if all shares have not then been released.
Covenants. As long as any part of the Liabilities remain unpaid Obligor
agrees to:
(a) defend the Collateral against all claims, keep the collateral free
from other security interests, liens, pledges or other encumbrances and
not dispose of any portion of the Collateral without Sellers' written
consent;
(b) notify Sellers promptly of any changes in Obligor's name or address;
(c) notify Sellers of any change in legal entity structure, if applicable;
(d) execute and deliver any financing statements or other documents, pay
any costs of title searches and filing fees, and take any other action
Sellers request in relation to the security interest;
(e) pay all taxes and other charges which may be levied against the
Collateral.
Warranties. As long as any part of the Liabilities remain unpaid Obligor
warrants to Sellers that:
(a) each document representing the Collateral is genuine;
(b) Obligor owns the Collateral (except to the extent that Obligor did not
get good title to the Collateral from the Sellers), free and clear of all
liens, encumbrances, charges or security interests, other than those in
favor of Sellers under this Agreement;
(c) Obligor is fully authorized to enter into this Agreement.
Default
Obligor agrees to pay on demand or, if such payment on demand is not
permitted under applicable law, as otherwise provided under applicable law, all
costs and expenses incurred by Sellers in enforcing this Agreement and in
realizing upon any Collateral, including, without limitation reasonable
attorneys' fees and legal expenses. Obligor shall not be responsible for any
such costs and expenses if it tenders delivery of the shares then constituting
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Collateral to the Sellers. Nothing in this Agreement shall require Obligor to
make any Capital Contribution after the occurrence of an Event of Default, and
the sole remedy of the Sellers with respect thereto shall be to recover the
shares of the Company in which they then have a security interest that has not
been released.
Upon the occurrence of an Event of Default and giving notice thereof then
Sellers may collect the Collateral that is still subject to this Capital Pledge
Agreement after taking into account any release of shares as set forth in the
Clause "Release of Security Interest" and sell it in a public auction which
shall be announced to Obligor and publicly in accordance with applicable law.
The public auction may take place anywhere in Germany. Sellers may be the
purchaser at such auction, and Sellers shall not be liable for any reduction in
the value of the Collateral by reason of Sellers' exercising any discretion the
may have under applicable laws as to whether or when to proceed with any such
action or to postpone an auction once scheduled.
Dividends/income. So long as no Event of Default has occurred and is
continuing, Obligor shall have the right to receive all cash income from the
Collateral. If Sellers receive any cash income before the occurrence of an Event
of Default, Sellers agree to turn it over to Obligor. Once an Event of Default
occurs, Obligor will no longer be entitled to receive any cash income and if
Obligor receives any, Obligor agrees to turn it over to Sellers.
Custody of Collateral. Sellers agree to use reasonable care to protect any
Collateral in their possession. However, Sellers shall not be required to:
(a) vote any shares of the Company representing the Collateral;
(b) collect any debt;
(c) exercise any conversion rights;
(d) take any steps necessary to preserve rights against prior parties;
(e) notify Obligor of any maturities, calls, conversions, or other
similar matters concerning the Collateral, except for forwarding to
Obligor those communications which are addressed to Obligor;
(f) act upon any request Obligor may send Sellers.
Except as otherwise required under applicable law, the existence of the
Collateral does not confer on Sellers any rights or obligations as shareholders
of the Company.
Changes in Collateral. Whether or not an Event of Default has occurred,
Obligor authorizes Sellers to:
(a) receive and hold as additional collateral any non-cash increases in or
profits on the Collateral;
(b) surrender the Collateral and receive any payment or distribution upon
redemption, dissolution or liquidation of the issuer of the Collateral.
If Obligor receives any of the payments or distributions described above,
Obligor agrees to turn them over to Sellers.
Modification. This Agreement cannot be modified, waived, discharged or
terminated except upon satisfactions in full of Obligor's obligations with
respect to the Liabilities in accordance with their terms or by a written
agreement signed by the party to be charged therewith.
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Miscellaneous. No delay or omission on the part of Sellers in exercising
any right under this Agreement shall operate as a waiver of any other rights of
Sellers, nor shall any delay, omission, or waiver on any one occasion be deemed
a bar to or waiver of any other right on any future occasion. This Agreement
shall be binding upon the Obligor and the Obligor's successors and assigns and
shall inure to the benefit of Sellers and Seller's successors. In the event of
any conflict between the terms of this Agreement and the Purchase Agreement, the
terms of this Agreement, as to the specific term or provision which may be in
conflict, shall be superceding and controlling. Any term or provision of this
Agreement that is invalid or unenforceable under applicable law shall be
ineffective to the extent of such invalidity or enforceability and shall not
affect the validity or enforceability of the remaining terms and provisions of
this Agreement. Any such term or provision shall be construed so as to be valid
and enforceable in any situation or jurisdiction where such validity or
enforceability is permitted. Any such invalid term or provision shall be
enforceable to the fullest extent permitted by applicable law.
Notices. Obligor waives any right to notice of any action Sellers may take
with respect to the Collateral, except as otherwise required by applicable law.
Notices given under this Agreement shall be given as provided in the Purchase
Agreement. Obligor agrees that notice of foreclosure sale sent at least five
days before the sale, except as otherwise provided by applicable law, provides
Obligor with a reasonable opportunity to exercise its right of redemption of the
Collateral and any other legal rights.
Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of Germany.
III.
