Document:

exv10w19

EXHIBIT 10.19

SUBORDINATION AGREEMENT

     This Subordination Agreement (the “Agreement”) is made as of December __, 2010, by and
between ___________________ (“Creditor”), and MIDCAP FUNDING III, LLC, a Delaware limited
liability company (“MidCap”) in its capacity as Agent (as hereinafter defined) for the
Lenders (as hereinafter defined).

Recitals

     A. Pursuant to a Loan and Security Agreement (such agreement as it may be amended from time to
time, the “Loan Agreement”), dated as of
August 27, 2010, among MidCap in its capacity as
agent for the Lenders (as defined below) (together with its successors and assigns in such
capacity, “Agent”), SILICON VALLEY BANK, a California corporation (“SVB”; and
together with MidCap and the other financial institutions who are or hereafter become parties to
the Loan Agreement as lenders (collectively the “Lenders”, and each individually, a
“Lender”) and ENDOCYTE, INC., a Delaware corporation (“Borrower”), Borrower has
requested and/or obtained certain loans or other credit accommodations from the Lenders which are
or may be from time to time secured by assets and property of Borrower.

     B. Creditor has extended loans or other credit accommodations to Borrower, and/or may extend
loans or other credit accommodations to Borrower from time to time.

     C. In order to induce the Lenders to extend credit to Borrower and, at any time or from time
to time, at the Lenders’ option, to make such further loans, extensions of credit, or other
accommodations to or for the account of Borrower, or to purchase or extend credit upon any
instrument or writing in respect of which Borrower may be liable in any capacity, or maintain, or
to grant such renewals or extension of any such loan, extension of credit, purchase, or other
accommodation as the Lenders may deem advisable, Creditor is willing to subordinate: (i) all of
Borrower’s indebtedness to Creditor (including, without limitation, principal, premium (if any),
interest, fees, charges, expenses, costs, professional fees and expenses, and reimbursement
obligations), whether presently existing or arising in the future (the “Subordinated Debt”)
to all of Borrower’s indebtedness and obligations to Agent and/or the Lenders; and (ii) all of
Creditor’s security interests, if any, to all security interests in Borrower’s property in favor of
Agent and/or the Lenders.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

     1. Creditor hereby acknowledges and agrees that (i) Creditor does not have any lien on or
security interest in any property of Borrower, whether now owned or hereafter acquired, including,
without limitation, the “Collateral” as defined in the Loan Agreement, (ii) Borrower is prohibited
from granting to the Creditor any lien on or security interest in any property of Borrower, whether
now owned or hereafter acquired, including, without limitation, the Collateral and (iii) the
Creditor shall not take any lien on or security interest in any property of Borrower whether now
owned or hereafter acquired, including without limitation, the Collateral. If notwithstanding the
foregoing prohibition, Creditor now or in the future has any security interest or lien in any
property of Borrower, Creditor hereby subordinates to Agent and the Lenders any such security
interest or lien that Creditor may have in any property of Borrower, including without limitation,
the Collateral. Notwithstanding the respective dates of attachment or perfection of any security
interest of Creditor and the security interest of Agent and the Lenders, the lien and security
interest of Agent and the Lenders in any property of Borrower, whether now owned or hereafter
acquired, including, without limitation, the Collateral, shall at all times be senior to the lien
and security interest of Creditor.

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     2. All Subordinated Debt is subordinated in right of payment to all obligations of Borrower
to Agent and the Lenders now existing or hereafter arising, together with all costs of collecting
such obligations (including attorneys’ fees), including, without limitation, all interest accruing
after the commencement by or
against Borrower of any bankruptcy, reorganization or similar proceeding, and all obligations
under the Loan Agreement (the “Senior Debt”).

     3. Creditor will not demand or receive from Borrower (and Borrower will not pay to Creditor)
all or any part of the Subordinated Debt, by way of payment, prepayment, setoff, lawsuit or
otherwise, nor will Creditor exercise any remedy with respect to the Subordinated Debt or any
property of Borrower, whether now owned or hereafter acquired, including, without limitation, the
Collateral, nor will Creditor accelerate the Subordinated Debt, or commence, or cause to commence,
prosecute or participate in any administrative, legal or equitable action against Borrower, until
such time as (i) the Senior Debt is fully paid in cash, and (ii) the Lenders have no commitment or
obligation to lend any further funds to Borrower, and (iii) all financing agreements among Agent
and the Lenders and Borrower are terminated. Nothing in the foregoing paragraph shall prohibit
Creditor from converting all or any part of the Subordinated Debt into equity securities of
Borrower which do not have any call or put features that would obligate Borrower to pay any money
(including the payment of any dividends or other distributions for so long as the Senior Debt
remains outstanding) to the holder.

     4. Creditor shall hold in trust for Agent and the Lenders and promptly deliver to Agent in the
form received (except for endorsement or assignment by Creditor where required by Agent), for
application to the Senior Debt, any payment, distribution, security or proceeds received by
Creditor with respect to the Subordinated Debt other than in accordance with this Agreement.

     5. In the event of Borrower’s insolvency, reorganization or any case or proceeding under any
bankruptcy or insolvency law or laws relating to the relief of debtors, these provisions shall
remain in full force and effect, and Agent’s and the Lenders’ claims against Borrower and the
estate of Borrower shall be paid in full before any payment is made to Creditor.

     6. Until the Senior Debt is fully paid in cash and Lenders’ arrangements to lend any funds to
Borrower have been terminated, Creditor irrevocably appoints Agent as Creditor’s attorney-in-fact,
and grants to Agent a power of attorney with full power of substitution, in the name of Creditor or
in the name of Agent and/or the Lenders, for the use and benefit of Agent and the Lenders, without
notice to Creditor, to perform at Agent’s option the following acts in any bankruptcy, insolvency
or similar proceeding involving Borrower:

     (i) To file the appropriate claim or claims in respect of the Subordinated Debt on behalf
of Creditor if Creditor does not do so prior to 30 days before the expiration of the time to
file claims in such proceeding and if Agent elects, in its sole discretion, to file such
claim or claims;

     (ii) To accept or reject any plan of reorganization or arrangement on behalf of Creditor and
to otherwise vote Creditor’s claims in respect of any Subordinated Debt in any manner that
Agent deems appropriate for the enforcement of its rights hereunder.

     7. Creditor shall immediately affix a legend to the instruments evidencing the Subordinated Debt
stating that the instruments are subject to the terms of this Agreement. By the execution of this
Agreement, Creditor hereby authorizes Agent and the Lenders to amend any financing statements filed
by Creditor against Borrower as follows: “In accordance with a certain Subordination Agreement by
and among the Secured Party, the Debtor and Midcap Funding III, LLC, in its capacity as Agent for
the benefit of certain lenders (“Agent”), the Secured Party has subordinated any security interest
or lien that

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Secured Party may have in any property of the Debtor to the security interest of
Agent, in all assets of the Debtor, notwithstanding the respective dates of attachment or
perfection of any security interest in favor of the Secured Party and/or Agent.”

     8. Neither Borrower nor the Creditor may amend the terms of any Subordinated Debt without the
prior written consent of Agent and the Lenders. Without limiting the foregoing, no amendment of
the documents evidencing or relating to the Subordinated Debt shall directly or indirectly modify
the provisions of this Agreement in any manner which might terminate or impair the subordination of
the Subordinated Debt or the subordination of any security interest or lien that
Creditor may have in any property of Borrower. By way of example, such instruments shall not be amended to (i)
increase the rate of interest with respect to the Subordinated Debt, or (ii) accelerate the payment
of the principal or interest or any other portion of the Subordinated Debt. Agent and the Lenders
shall have the sole and exclusive right to restrict or permit, or approve or disapprove, the sale,
transfer or other disposition of any of the property or assets of Borrower, including, without
limitation, the Collateral, except in accordance with the terms of the Senior Debt. Upon written
notice from Agent of Agent’s and the Lenders’ agreement to release its lien on all or any portion
of the Collateral in connection with the sale, transfer or other disposition thereof by Agent and
the Lenders (or by Borrower with consent of Agent and the Lenders), Creditor shall be deemed to
have also, automatically and simultaneously, released any lien or security interest on such
Collateral, and Creditor shall upon written request by Agent, immediately take such action as shall
be necessary or appropriate to evidence and confirm such release. All proceeds resulting from any
such sale, transfer or other disposition shall be applied first to the Senior Debt until payment in
full thereof, with the balance, if any, to the Subordinated Debt, or to any other entitled party.
If Creditor fails to release any lien or security interest as required hereunder, Creditor hereby
appoints Agent as attorney in fact for Creditor with full power of substitution to release
Creditor’s liens and security interests as provided hereunder. Such power of attorney being
coupled with an interest shall be irrevocable.

     9. All necessary action on the part of the Creditor, its officers, directors, partners, members
and shareholders, as applicable, necessary for the authorization of this Agreement and the
performance of all obligations of Creditor hereunder has been taken. This Agreement constitutes
the legal, valid and binding obligation of Creditor, enforceable against Creditor in accordance
with its terms. The execution, delivery and performance of and compliance with this Agreement by
Creditor will not (i) result in any material violation or default of any term of any of the
Creditor’s charter, formation or other organizational documents (such as Articles or Certificate of
Incorporation, bylaws, partnership agreement, operating agreement, etc.) or (ii) violate any
material applicable law, rule or regulation.

     10. If, at any time after payment in full of the Senior Debt any payments of the Senior Debt must
be disgorged by Agent or the Lenders for any reason (including, without limitation, the bankruptcy
of Borrower), this Agreement and the relative rights and priorities set forth herein shall be
reinstated as to all such disgorged payments as though such payments had not been made and Creditor
shall immediately pay over to Agent all payments received with respect to the Subordinated Debt to
the extent that such payments would have been prohibited hereunder. At any time and from time to
time, without notice to Creditor, Agent and the Lenders may take such actions with respect to the
Senior Debt as Agent and the Lenders, in their sole discretion, may deem appropriate, including,
without limitation, terminating advances to Borrower, increasing the principal amount, extending
the time of payment, increasing applicable interest rates, renewing, compromising or otherwise
amending the terms of any documents affecting the Senior Debt and any collateral securing the
Senior Debt, and enforcing or failing to enforce any rights against Borrower or any other person.
No such action or inaction shall impair or otherwise affect Agent’s and the Lenders’ rights
hereunder.

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     11. This Agreement shall bind any successors or assignees of Creditor and shall benefit any
successors or assigns of Agent and the Lenders. This Agreement shall remain effective until
terminated in writing by Agent. This Agreement is solely for the benefit of Creditor and Agent and
the Lenders and not for the benefit of Borrower or any other party. Creditor further agree that if
Borrower is in the process of refinancing any portion of the Senior Debt with a new lender, and if
Agent and/or the Lenders makes a request of Creditor,
Creditor shall agree to enter into a new subordination agreement with the new lender on
substantially the terms and conditions of this Agreement.

     12. Creditor hereby agrees to execute such documents and/or take such further action as Agent and
the Lenders may at any time or times reasonably request in order to carry out the provisions and
intent of this Agreement, including, without limitation, ratifications and confirmations of this
Agreement from time to time hereafter, as and when requested by Agent.

     13. This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument.

     14. This Agreement shall be governed by and construed in accordance with the laws of the State of
Maryland, without giving effect to conflicts of laws principles. Creditor and Agent submit to the
exclusive jurisdiction of the state and federal courts located in Maryland in any action, suit, or
proceeding of any kind, against it which arises out of or by reason of this Agreement. CREDITOR
AND AGENT WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

     15. This Agreement represents the entire agreement with respect to the subject matter hereof, and
supersedes all prior negotiations, agreements and commitments. Creditor is not relying on any
representations by Agent, the Lenders or Borrower in entering into this Agreement, and Creditor has
kept and will continue to keep itself fully apprised of the financial and other condition of
Borrower. This Agreement may be amended only by written instrument signed by Creditor and Agent.

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

	 	 	 	 	 
	 	MIDCAP FUNDING III, LLC, as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CREDITOR:

[               ]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	The undersigned approves of the terms of this Agreement.

 	 
	 	BORROWER:

 	 
	 	ENDOCYTE, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

5exv10w1

Exhibit 10.1

FORM OF RELATED PARTY PROMISSORY NOTE

			
	 	 	 
	Atlanta, Georgia
	 	October 14, 2010

     1. BORROWER’S PROMISE TO PAY

          In return for a loan that the Undersigned has received, the Undersigned promises to pay
[amount] ($[•]) (this amount is called “principal”), plus interest, to the order of [lender name]
of [lender’s city and state] (the “Lender”). The Undersigned understands that the Lender may
transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to
receive payments under this Note is referred to as the “Holder”.

          The Undersigned acknowledges that a $[•] fee has been paid to the Lender for making this
loan, which amount has been credited against the amount of the loan to the Undersigned funded by
the Lender.

          The proceeds of the loan evidenced by this Note shall be used by the Undersigned to fund
working capital or for other operating purposes. This Note is one of four notes aggregating
$500,000 in principal amount that were issued by the Undersigned on this date to Samuel E. Allen,
Alan R. Abrams, J. Andrew Abrams and Herschel Kahn, which Notes are collectively secured by the
Security Deed described in Paragraph 10 below. All payments under any of these Notes by the
Undersigned shall be made proportionately among all such Notes.

     2. INTEREST

          Interest will be charged on unpaid principal at an annual rate of twelve percent
(12.00%) until the full amount of principal has been paid. If the Undersigned does not pay the
full amount of any unpaid principal and accrued but unpaid interest no later than the Maturity
Date (as defined in Paragraph 3 below), or if the Undersigned is in default under the Security
Deed described in Section 10, then the Undersigned will pay interest on the unpaid principal at a
yearly rate of fifteen percent (15.00%). Interest shall be payable in arrears on the fourteenth
(14th) day of each month until maturity.

     3. TIME AND PLACE OF PAYMENTS

          The Undersigned will pay any unpaid principal and all accrued but unpaid interest on May
14, 2012, or, if sooner, upon the earliest of the following events:

	 	(i)	 	the sale of the property subject to the Security Deed described in
Paragraph 10 below, which property the Undersigned agrees to cause to be sold at
auction or by other means at the earliest practicable time and in a

 

 

	 	 	 	manner that is consistent with maximizing the proceeds realized from
such sale (provided that if less than all such property is sold and the
proceeds of such sale are less than the outstanding principal and accrued but
unpaid interest under this Note and the other Notes described in Paragraph 1
above, then such proceeds shall be applied as a mandatory prepayment by the
Undersigned but the Note shall not otherwise mature);
	 
	 	(ii)	 	the sale by the Undersigned of a substantial portion or all
of the equity or the assets of an operating business segment of the Undersigned;
or
	 
	 	(iii)	 	the sale by the Undersigned of shares of its equity or the
receipt by the Undersigned of any proceeds of an offering of senior or
subordinated debt.

The first to occur of such events shall be referred to as the “Maturity Date”.

          The Undersigned’s payments will be applied to interest before principal. The Undersigned will
make all payments at the Undersigned’s offices at 1945 The Exchange, Atlanta, Georgia 30339, or at
a different place if required by the Holder.

     4. BORROWER’S RIGHT TO PREPAY

          The Undersigned has the right to make payments of principal at any time before they
are due. A payment of principal only is known as a “prepayment.” When a prepayment is made, the
Undersigned will inform the Holder in writing that the Undersigned is doing so. The Undersigned
may make a full prepayment or partial prepayments without paying any prepayment charge. The Holder
will use all of the prepayments to pay any accrued but unpaid interest and then to reduce the
amount of principal that the Undersigned owes under this Note. If the Undersigned makes a partial
prepayment, there will be no changes in the maturity date unless the Lender agrees in writing to
those changes.

     5. LOAN CHARGES

          If a law, which applies to this loan and which sets maximum loan charges, is finally
interpreted so that the interest or other loan charges collected or to be collected in connection
with this loan exceed the legally permitted limits, then: (i) any such loan charge collected shall
be reduced by the amount necessary to reduce the charge to the legally permitted limit; and (ii)
any sums already collected which exceeded legally permitted limits will be refunded to the
Undersigned. The Holder may choose to make this refund by reducing the principal owed under this
Note or by making a direct payment to the Undersigned. If a refund reduces principal, the reduction
will be treated as a partial prepayment.

 

 

     6. BORROWER’S DEFAULT

          (A) Payment Default; Security Deed Default

               If the Undersigned does not pay the full amount of any principal payment on the date
it is due, or the full amount of any accrued interest within ten (10) days after it is due, or if
the Undersigned is in default of the Security Deed described in Section 10, the Undersigned will
be in default hereunder.

          (B) Insolvency; Bankruptcy Matters

               The Undersigned will be in default hereunder if:

               (i) the Undersigned becomes insolvent as defined in the Georgia Uniform Commercial Code or
makes an assignment for the benefit of creditors, or an action is brought by the Undersigned
seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its
property, or the Undersigned commences a voluntary case under the Federal Bankruptcy Code, or a
reorganization or arrangement proceeding is instituted by the Undersigned for the settlement,
readjustment, composition or extension of any of its debts upon any terms, or an action or petition
is otherwise brought by the Undersigned seeking similar relief or alleging that it is insolvent or
unable to pay its debts as they mature; or

               (ii) an action is brought against the Undersigned seeking the appointment of a trustee,
interim trustee, receiver or other custodian for any of its property, and such action is consented
to or acquiesced in by the Undersigned or is not dismissed within sixty (60) days of the date upon
which it was instituted, or a proceeding under the Federal Bankruptcy Code is instituted against
the Undersigned and an order for relief is entered in such proceeding or such proceeding is
consented to or acquiesced in by the Undersigned or is not dismissed within sixty (60) days of the
date upon which it was instituted, or a reorganization or arrangement proceeding is instituted
against the Undersigned for the settlement, readjustment, composition or extension of any of its
debts upon any terms and such proceeding is consented to or acquiesced in by the Undersigned or is
not dismissed within sixty (60) days of the date upon which it was instituted, or an action or
petition is otherwise brought against the Undersigned seeking similar relief or alleging that it
is insolvent, unable to pay its debts as they mature or generally not paying its debts as they
become due and such action or petition is consented to or acquiesced in by the Undersigned or is
not dismissed within sixty (60) days of the date upon which it was brought.

          (C) Notice of Default

               If the Undersigned is in default, the Holder may send a written notice to the
Undersigned stating that if the overdue amount is not paid by a certain date, the Holder may
require the Undersigned to pay immediately the full amount of principal which has not been paid and
all the interest that the Undersigned owes on the amount. That date must be at least ten (10) days
after the date on which the notice is delivered or mailed to the
Undersigned.

 

 

          (D) No Waiver By Holder

               Even if, at a time when the Undersigned is in default, the Holder does not require the
Undersigned to pay immediately in full as described above, the Holder will still have the right to
do so if the Undersigned is in default at a later time.

          (E) Payment of Holder’s Costs and Expenses

               If Holder has required the Undersigned to pay immediately in full as described above,
the Holder will have the right to be paid for all of its costs and expenses in enforcing this
Note. The Undersigned agrees to pay Holder’s reasonable attorney’s fees if enforcement of this
Note is referred to an attorney.

     7. GIVING OF NOTICE

          Unless applicable law requires a different method, any notice that must be given to the
Undersigned under this Note will be given by delivering it or by mailing it by first class mail or
by sending by recognized overnight carrier for next business day delivery to the address below the
undersigned’s signature.

          Any notice that must be given to the Holder under this Note will be given by mailing it by
first class mail or by sending by recognized overnight carrier for next business day delivery to
the Holder at the address stated on the signature page or at a different address if the
Undersigned is given a notice of that different address.

     8. GOVERNING LAW

          This Note shall be governed by and construed and enforced in accordance with the laws of the
State of Georgia without regard to its conflicts of laws rules. Wherever possible, each provision
of this Note shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Note.

     9. WAIVERS

          The Undersigned and any other person who has obligations under this Note waive the
rights of presentment and notice of dishonor. “Presentment” means the right to require the Holder
to demand payment of the amounts due. “Notice of dishonor” means the right to require the Holder
to give notice to other persons that amounts due have not been paid.

     10. SECURITY DEED

          In addition to the protections given to the Holder under this Note, a Security Deed dated the
same date of this Note, has been granted by a subsidiary of the Undersigned, Abrams

 

 

Properties, Inc., to Samuel E. Allen, Alan R. Abrams, J. Andrew Abrams and Herschel Kahn,
which protects the Holder from possible losses which might result if the Undersigned does not keep
the promises made in this Note.

[SIGNATURES ON THE FOLLOWING PAGE]

 

 

Witness the hand and seal of the undersigned. This Note is executed and delivered on
October 14, 2010.

	 	 	 	 	 	 	 

	 	 	SERVIDYNE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	(SEAL)
	 	 	 	 	 
	 

	 	Title: 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notices:	 	 
	 
	 	 	 	 	 	 
	 	 	1945 The Exchange, Suite 325	 	 
	 	 	Atlanta, GA 30339	 	 
	 	 	Attn: Chief Financial Officer

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