Document:

Exhibit
10.2

 

NEWLINK GENETICS CORPORATION

 

2000 EQUITY INCENTIVE PLAN

 

Adopted by
the Board: March 2, 2000; Amended August 30, 2001

Approved By Stockholders April 10, 2000 and December 12, 2001

Termination Date: March 2, 2010

 

1.                                      PURPOSES.

 

(a)                                  Eligible
Stock Award Recipients.  The persons
eligible to receive Stock Awards are the Employees, Directors and Consultants
of the Company and its Affiliates.

 

(b)                                  Available
Stock Awards.  The purpose of
the Plan is to provide a means by which eligible recipients of Stock Awards may
be given an opportunity to benefit from increases in value of the Common Stock
through the granting of the following Stock Awards: (i) Incentive Stock
Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights
to acquire restricted stock.

 

(c)                                  General
Purpose.  The Company, by means of the
Plan, seeks to retain the services of the group of persons eligible to receive
Stock Awards, to secure and retain the services of new members of this group
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates.

 

2.                                      DEFINITIONS.

 

(a)                                  “Affiliate” means any
parent corporation or subsidiary corporation of the Company, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.

 

(b)                                  “Board” means the
Board of Directors of the Company.

 

(c)                                  “Code” means the
Internal Revenue Code of 1986, as amended.

 

(d)                                  “Committee” means a
committee of one or more members of the Board appointed by the Board in
accordance with subsection 3(c).

 

(e)                                  “Common
Stock” means the common stock of the Company.

 

(f)                                    “Company” means NewLink
Genetics Corporation, a Delaware corporation.

 

(g)                                                                                 “Consultant” means any
person, including an advisor, (i) engaged by the Company or an Affiliate to
render consulting or advisory services and who is compensated for such services
or (ii) who is a member of the Board of Directors of an Affiliate.  However, the term “Consultant” shall not
include either Directors who are not compensated by the Company 

 

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for their services as Directors or Directors who are
merely paid a director’s fee by the Company for their services as Directors.

 

(h)                                 “Continuous
Service” means that the Participant’s service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated.  The
Participant’s Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant renders service to
the Company or an Affiliate as an Employee, Consultant or Director or a change
in the entity for which the Participant renders such service, provided that
there is no interruption or termination of the Participant’s Continuous
Service.  For example, a change in status
from an Employee of the Company to a Consultant of an Affiliate or a Director
will not constitute an interruption of Continuous Service.  The Board or the chief executive officer of
the Company, in that party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave of absence
approved by that party, including sick leave, military leave or any other
personal leave.

 

(i)                                    “Covered
Employee” means the chief executive officer and the four (4) other
highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.

 

(j)                                    “Director” means a member
of the Board of Directors of the Company.

 

(k)                                “Disability” means the
permanent and total disability of a person within the meaning of Section 22(e)(3)
of the Code.

 

(l)                                    “Employee” means any
person employed by the Company or an Affiliate. 
Mere service as a Director or payment of a director’s fee by the Company
or an Affiliate shall not be sufficient to constitute “employment” by the
Company or an Affiliate.

 

(m)                              “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.

 

(n)                                 “Fair
Market Value” means, as of any date, the value of the Common
Stock determined as follows:

 

(i)                                    If the Common
Stock is listed on any established stock exchange or traded on the Nasdaq
National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share
of Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or market (or the
exchange or market with the greatest volume of trading in the Common Stock) on
the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Board
deems reliable.

 

(ii)                                In the absence
of such markets for the Common Stock, the Fair Market Value shall be determined
in good faith by the Board.

 

(o)                                  “Incentive
Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

 

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(p)                                  “Listing
Date” means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.

 

(q)                                  “Non-Employee
Director” means a Director who either (i) is not a current
Employee or Officer of the Company or its parent or a subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities
Act (“Regulation S-K”)), does not possess an interest in any other transaction
as to which disclosure would be required under Item 404(a) of Regulation S-K
and is not engaged in a business relationship as to which disclosure would be
required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.

 

(r)                                  “Nonstatutory
Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

 

(s)                                  “Officer” means a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

 

(t)                                    “Option” means an
Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the
Plan.

 

(u)                                 “Option
Agreement” means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant.  Each Option Agreement shall be
subject to the terms and conditions of the Plan.

 

(v)                                   “Optionholder” means a person
to whom an Option is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Option.

 

(w)                                “Outside
Director” means a Director who either (i) is not a current
employee of the Company or an “affiliated corporation” (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an “affiliated corporation” receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an “affiliated corporation”
at any time and is not currently receiving direct or indirect remuneration from
the Company or an “affiliated corporation” for services in any capacity other
than as a Director or (ii) is otherwise considered an “outside director” for
purposes of Section 162(m) of the Code.

 

(x)                                  “Participant” means a person
to whom a Stock Award is granted pursuant to the Plan or, if applicable, such
other person who holds an outstanding Stock Award.

 

(y)                                  “Plan” means this
NewLink Genetics Corporation 2000 Equity Incentive Plan.

 

(z)                                  “Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.

 

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(aa)                            “Securities
Act” means the Securities Act of 1933, as amended.

 

(bb)                            “Stock
Award” means any right granted under the Plan, including
an Option, a stock bonus and a right to acquire restricted stock.

 

(cc)                            “Stock
Award Agreement” means a written agreement between the Company and a
holder of a Stock Award evidencing the terms and conditions of an individual
Stock Award grant.  Each Stock Award
Agreement shall be subject to the terms and conditions of the Plan.

 

(dd)                            “Ten
Percent Stockholder” means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates.

 

3.                                      ADMINISTRATION.

 

(a)                                  Administration
by Board.  The Board shall
administer the Plan unless and until the Board delegates administration to a
Committee, as provided in subsection 3(c).

 

(b)                                  Powers
of Board.  The Board shall
have the power, subject to, and within the limitations of, the express
provisions of the Plan:

 

(i)                                    To determine
from time to time which of the persons eligible under the Plan shall be granted
Stock Awards; when and how each Stock Award shall be granted; what type or
combination of types of Stock Award shall be granted; the provisions of each
Stock Award granted (which need not be identical), including the time or times
when a person shall be permitted to receive Common Stock pursuant to a Stock
Award; and the number of shares of Common Stock with respect to which a Stock
Award shall be granted to each such person.

 

(ii)                                To construe and
interpret the Plan and Stock Awards granted under it, and to establish, amend
and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.

 

(iii)                            To amend the
Plan or a Stock Award as provided in Section 12.

 

(iv)                               Generally, to
exercise such powers and to perform such acts as the Board deems necessary or
expedient to promote the best interests of the Company which are not in
conflict with the provisions of the Plan.

 

(c)                                  Delegation
to Committee.

 

(i)                                    General.  The Board may delegate
administration of the Plan to a Committee or Committees of one (1) or more
members of the Board, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated.  If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee any of the administrative powers the Committee is
authorized to 

 

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exercise (and references in this Plan to the Board
shall thereafter be to the Committee or subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. 
The Board may abolish the Committee at any time and revert in the Board
the administration of the Plan.

 

(ii)                                Committee
Composition when Common Stock is Publicly Traded.  At such time as the Common
Stock is publicly traded, in the discretion of the Board, a Committee may
consist solely of two or more Outside Directors, in accordance with Section 162(m)
of the Code, and/or solely of two or more Non-Employee Directors, in accordance
with Rule 16b-3.  Within the scope of
such authority, the Board or the Committee may (1) delegate to a committee of
one or more members of the Board who are not Outside Directors the authority to
grant Stock Awards to eligible persons who are either (a) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code
and/or) (2) delegate to a committee of one or more members of the Board who are
not Non-Employee Directors the authority to grant Stock Awards to eligible
persons who are not then subject to Section 16 of the Exchange Act.

 

(d)                                  Effect
of Board’s Decision.  All
determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.

 

4.                                      SHARES
SUBJECT TO THE PLAN.

 

(a)                                  Share
Reserve.  Subject to the provisions of
Section 11 relating to adjustments upon changes in Common Stock, the Common
Stock that may be issued pursuant to Stock Awards shall not exceed in the
aggregate one million seven hundred thousand (1,700,000) shares of Common
Stock.

 

(b)                                  Reversion
of Shares to the Share Reserve.  If any Stock
Award shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the shares of Common Stock not acquired
under such Stock Award shall revert to and again become available for issuance
under the Plan.

 

(c)                                  Source
of Shares.  The shares of
Common Stock subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise.

 

5.                                      ELIGIBILITY.

 

(a)                                  Eligibility
for Specific Stock Awards.  Incentive Stock
Options may be granted only to Employees. 
Stock Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants.

 

(b)                                  Ten
Percent Stockholders.  A Ten Percent
Stockholder shall not be granted an Incentive Stock Option unless the exercise
price of such Option is at least one hundred ten percent (110%) of the Fair
Market Value of the Common Stock at the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant.

 

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(c)                                  Section
162(m) Limitation.  Subject to the
provisions of Section 11 relating to adjustments upon changes in the shares of
Common Stock, no Employee shall be eligible to be granted Options covering more
than 375,000 shares of Common Stock during any calendar year.  This subsection 5(c) shall not apply prior to
the Listing Date and, following the Listing Date, this subsection 5(c) shall
not apply until (i) the earliest of: (1) the first material modification of the
Plan (including any increase in the number of shares of Common Stock reserved
for issuance under the Plan in accordance with Section 4); (2) the issuance of
all of the shares of Common Stock reserved for issuance under the Plan; (3) the
expiration of the Plan; or (4) the first meeting of stockholders at which
Directors are to be elected that occurs after the close of the third calendar
year following the calendar year in which occurred the first registration of an
equity security under Section 12 of the Exchange Act; or (ii) such other date
required by Section 162(m) of the Code and the rules and regulations
promulgated thereunder.

 

(d)                                  Consultants.

 

(i)                                    Prior to the
Listing Date, a Consultant shall not be eligible for the grant of a Stock Award
if, at the time of grant, either the offer or the sale of the Company’s
securities to such Consultant is not exempt under Rule 701 of the Securities
Act (“Rule 701”) because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person, or
as otherwise provided by Rule 701, unless the Company determines that such
grant need not comply with the requirements of Rule 701 and will satisfy
another exemption under the Securities Act as well as comply with the
securities laws of all other relevant jurisdictions.

 

(ii)                                From and after
the Listing Date, a Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act (“Form S-8”) is not available to register either the offer or
the sale of the Company’s securities to such Consultant because of the nature
of the services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules governing
the use of Form S-8, unless the Company determines both (i) that such grant (A)
shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not
require registration under the Securities Act in order to comply with the
requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions.

 

(iii)                            Rule 701 and Form
S-8 generally are available to consultants and advisors only if (i) they are
natural persons; (ii) they provide bona fide services to the issuer, its
parents, its majority-owned subsidiaries or majority-owned subsidiaries of the
issuer’s parent; and (iii) the services are not in connection with the offer or
sale of securities in a capital-raising transaction, and do not directly or
indirectly promote or maintain a market for the issuer’s securities.

 

6.                                      OPTION
PROVISIONS.

 

Each
Option shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate.  All
Options shall be separately designated Incentive Stock Options or Nonstatutory
Stock Options at the time of grant, and, if certificates are issued, a 

 

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separate
certificate or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option.  The
provisions of separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in the Option
or otherwise) the substance of each of the following provisions:

 

(a)                                  Term.  Subject to the provisions of
subsection 5(b) regarding Ten Percent Stockholders, no Incentive Stock Option
shall be exercisable after the expiration of ten (10) years from the date it
was granted.

 

(b)                                  Exercise
Price of an Incentive Stock Option.  Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on
the date the Option is granted. 
Notwithstanding the foregoing, an Incentive Stock Option may be granted
with an exercise price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.

 

(c)                                  Exercise
Price of a Nonstatutory Stock Option.  The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. 
Notwithstanding the foregoing, a Nonstatutory Stock Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) of
the Code.

 

(d)                                  Consideration.  The purchase price of Common
Stock acquired pursuant to an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (i) in cash at the time the Option
is exercised or (ii) at the discretion of the Board at the time of the grant of
the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by
delivery to the Company of other Common Stock, (2) according to a deferred
payment or other similar arrangement with the Optionholder or (3) in any other
form of legal consideration that may be acceptable to the Board.  Unless otherwise specifically provided in the
Option, the purchase price of Common Stock acquired pursuant to an Option that
is paid by delivery to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock
of the Company that have been held for more than six (6) months (or such longer
or shorter period of time required to avoid a charge to earnings for financial
accounting purposes).  At any time that
the Company is incorporated in Delaware, payment of the Common Stock’s “par
value,” as defined in the Delaware General Corporation Law, shall not be made
by deferred payment.

 

In
the case of any deferred payment arrangement, interest shall be compounded at
least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the
Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.

 

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(e)                                  Transferability
of an Incentive Stock Option.  An Incentive
Stock Option shall not be transferable except by will or by the laws of descent
and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. 
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

 

(f)                                    Transferability
of a Nonstatutory Stock Option.  A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement.  If the Nonstatutory Stock
Option does not provide for transferability, then the Nonstatutory Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. 
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

 

(g)                                 Vesting
Generally.  The total
number of shares of Common Stock subject to an Option may, but need not, vest
and therefore become exercisable in periodic installments that may, but need
not, be equal.  The Option may be subject
to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board
may deem appropriate.  The vesting
provisions of individual Options may vary. 
The provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option
may be exercised.

 

(h)                                 Termination
of Continuous Service.  In the event an
Optionholder’s Continuous Service terminates (other than upon the Optionholder’s
death or Disability), the Optionholder may exercise his or her Option (to the
extent that the Optionholder was entitled to exercise such Option as of the
date of termination) but only within such period of time ending on the earlier
of (i) the date three (3) months following the termination of the Optionholder’s
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in
the Option Agreement.  If, after
termination, the Optionholder does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate.

 

(i)                                    Extension
of Termination Date.  An Optionholder’s
Option Agreement may also provide that if the exercise of the Option following
the termination of the Optionholder’s Continuous Service (other than upon the
Optionholder’s death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in subsection
6(a) or (ii) the expiration of a period of three (3) months after the
termination of the Optionholder’s Continuous Service during which the exercise
of the Option would not be in violation of such registration requirements.

 

(j)                                    Disability
of Optionholder.  In the event
that an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s Disability, the Optionholder may exercise his or her Option (to
the extent that the Optionholder was entitled to exercise such Option as of the

 

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date of termination), but only within such period of
time ending on the earlier of (i) the date twelve (12) months following such
termination (or such longer or shorter period specified in the Option
Agreement) or (ii) the expiration of the term of the Option as set forth in the
Option Agreement.  If, after termination,
the Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate.

 

(k)                                Death
of Optionholder.  In the event (i)
an Optionholder’s Continuous Service terminates as a result of the Optionholder’s
death or (ii) the Optionholder dies within the period (if any) specified in the
Option Agreement after the termination of the Optionholder’s Continuous Service
for a reason other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise such Option as of the date of death)
by the Optionholder’s estate, by a person who acquired the right to exercise
the Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement) or (2) the expiration of the term of such Option as
set forth in the Option Agreement.  If,
after death, the Option is not exercised within the time specified herein, the
Option shall terminate.

 

(l)                                    Early
Exercise.  The Option may,
but need not, include a provision whereby the Optionholder may elect at any
time before the Optionholder’s Continuous Service terminates to exercise the
Option as to any part or all of the shares of Common Stock subject to the
Option prior to the full vesting of the Option. 
Any unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate.

 

(m)                              Right
of Repurchase.  The Option may,
but need not, include a provision whereby the Company may elect, prior to the
Listing Date, to repurchase all or any part of the vested shares of Common
Stock acquired by the Optionholder pursuant to the exercise of the Option.

 

(n)                                 Right
of First Refusal.  The Option may,
but need not, include a provision whereby the Company may elect, prior to the
Listing Date, to exercise a right of first refusal following receipt of notice
from the Optionholder of the intent to transfer all or any part of the shares
of Common Stock received upon the exercise of the Option.  Except as expressly provided in this
subsection 6(n), such right of first refusal shall otherwise comply with any
applicable provisions of the Bylaws of the Company.

 

7.                                      PROVISIONS
OF STOCK AWARDS OTHER THAN OPTIONS.

 

(a)                                  Stock
Bonus Awards.  Each stock
bonus agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
The terms and conditions of stock bonus agreements may change from time
to time, and the terms and conditions of separate stock bonus agreements need
not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

 

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(i)                                    Consideration.  A stock bonus may be awarded
in consideration for past services actually rendered to the Company or an
Affiliate for its benefit.

 

(ii)                                Vesting.  Shares of Common Stock
awarded under the stock bonus agreement may, but need not, be subject to a
share repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.

 

(iii)                            Termination
of Participant’s Continuous Service.  In the event a
Participant’s Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the stock bonus agreement.

 

(iv)                               Transferability.  Rights to acquire shares of
Common Stock under the stock bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the stock
bonus agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the stock bonus agreement remains subject to the
terms of the stock bonus agreement.

 

(b)                                  Restricted
Stock Awards.  Each restricted
stock purchase agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
The terms and conditions of the restricted stock purchase agreements may
change from time to time, and the terms and conditions of separate restricted
stock purchase agreements need not be identical, but each restricted stock
purchase agreement shall include (through incorporation of provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions:

 

(i)                                    Purchase
Price.  The purchase price of
restricted stock awards shall not be less than eighty-five percent (85%) of the
Common Stock’s Fair Market Value on the date such award is made or at the time
the purchase is consummated.

 

(ii)                                Consideration.  The purchase price of Common
Stock acquired pursuant to the restricted stock purchase agreement shall be
paid either: (i) in cash at the time of purchase; (ii) at the discretion of the
Board, according to a deferred payment or other similar arrangement with the
Participant; or (iii) in any other form of legal consideration that may be
acceptable to the Board in its discretion; provided, however, that at any time
that the Company is incorporated in Delaware, then payment of the Common Stock’s
“par value,” as defined in the Delaware General Corporation Law, shall not be
made by deferred payment.

 

(iii)                            Vesting.  Shares of Common Stock
acquired under the restricted stock purchase agreement may, but need not, be
subject to a share repurchase option in favor of the Company in accordance with
a vesting schedule to be determined by the Board.

 

(iv)                               Termination
of Participant’s Continuous Service.  In the event a
Participant’s Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.

 

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(v)                                   Transferability.  Rights to acquire shares of
Common Stock under the restricted stock purchase agreement shall be
transferable by the Participant only upon such terms and conditions as are set
forth in the restricted stock purchase agreement, as the Board shall determine
in its discretion, so long as Common Stock awarded under the restricted stock
purchase agreement remains subject to the terms of the restricted stock purchase
agreement.

 

8.                                      COVENANTS
OF THE COMPANY.

 

(a)                                  Availability
of Shares.  During the
terms of the Stock Awards, the Company shall keep available at all times the
number of shares of Common Stock required to satisfy such Stock Awards.

 

(b)                                  Securities
Law Compliance.  The Company
shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to grant Stock
Awards and to issue and sell shares of Common Stock upon exercise of the Stock
Awards; provided, however, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Stock Award or any Common
Stock issued or issuable pursuant to any such Stock Award.  If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such
Stock Awards unless and until such authority is obtained.

 

9.                                      USE OF
PROCEEDS FROM STOCK.

 

Proceeds
from the sale of Common Stock pursuant to Stock Awards shall constitute general
funds of the Company.

 

10.                               MISCELLANEOUS.

 

(a)                                  Acceleration
of Exercisability and Vesting.  The Board shall
have the power to accelerate the time at which a Stock Award may first be
exercised or the time during which a Stock Award or any part thereof will vest
in accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

 

(b)                                  Stockholder
Rights.  No Participant shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Stock Award unless and
until such Participant has satisfied all requirements for exercise of the Stock
Award pursuant to its terms.

 

(c)                                  No
Employment or other Service Rights.  Nothing in the
Plan or any instrument executed or Stock Award granted pursuant thereto shall
confer upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Stock Award was granted or
shall affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause, (ii)
the service of a Consultant pursuant to the terms of such Consultant’s
agreement with the Company or an Affiliate or (iii) the service of a Director
pursuant to the Bylaws of the Company or an Affiliate, 

 

11

 

and any applicable provisions of the corporate law
of the state in which the Company or the Affiliate is incorporated, as the case
may be.

 

(d)                                  Incentive
Stock Option $100,000 Limitation.  To the extent
that the aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by any Optionholder during any calendar year (under all plans of
the Company and its Affiliates) exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

 

(e)                                  Investment
Assurances.  The Company may
require a Participant, as a condition of exercising or acquiring Common Stock
under any Stock Award, (i) to give written assurances satisfactory to the
Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
and business matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
the Stock Award; and (ii) to give written assurances satisfactory to the
Company stating that the Participant is acquiring Common Stock subject to the
Stock Award for the Participant’s own account and not with any present
intention of selling or otherwise distributing the Common Stock.  The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (1) the
issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (2) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws.  The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

 

(f)                                    Withholding
Obligations.  To the extent
provided by the terms of a Stock Award Agreement, the Participant may satisfy
any federal, state or local tax withholding obligation relating to the exercise
or acquisition of Common Stock under a Stock Award by any of the following
means (in addition to the Company’s right to withhold from any compensation
paid to the Participant by the Company) or by a combination of such means: (i) tendering
a cash payment; (ii) authorizing the Company to withhold shares of Common Stock
from the shares of Common Stock otherwise issuable to the Participant as a
result of the exercise or acquisition of Common Stock under the Stock Award,
provided, however, that no shares of Common Stock are withheld with a value
exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering
to the Company owned and unencumbered shares of Common Stock.

 

11.                               ADJUSTMENTS
UPON CHANGES IN STOCK.

 

(a)                                  Capitalization
Adjustments.  If any change
is made in the Common Stock subject to the Plan, or subject to any Stock Award,
without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of 

 

12

 

shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company), the Plan will be appropriately adjusted in the class(es) and
maximum number of securities subject to the Plan pursuant to subsection 4(a) and
the maximum number of securities subject to award to any person pursuant to
subsection 5(c), and the outstanding Stock Awards will be appropriately
adjusted in the class(es) and number of securities and price per share of
Common Stock subject to such outstanding Stock Awards.  The Board shall make such adjustments, and
its determination shall be final, binding and conclusive.  (The conversion of any convertible securities
of the Company shall not be treated as a transaction “without receipt of
consideration” by the Company.)

 

(b)                                  Dissolution
or Liquidation.  In the event of
a dissolution or liquidation of the Company, then all outstanding Stock Awards
shall terminate immediately prior to such event.

 

(c)                                  Corporate
Transaction.

 

(i)                                    At least ten (10)
days prior to the consummation of a Corporate Transaction, the Company shall
give Participants written notice of a proposed Corporate Transaction.  All Options, to the extent not previously
exercised, shall terminate upon the consummation of such Corporate Transaction
and cease to be exercisable unless expressly assumed by the surviving or
acquiring corporation.

 

As
used herein, “Corporate Transaction” shall mean
(i) a dissolution, liquidation, or sale of all or substantially all of the
assets of the Company; (ii) a merger or consolidation in which the Company is
not the surviving corporation; (iii) a reverse merger in which the Company is
the surviving corporation but the shares of the Company’s common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (iv) after the Listing Date (as defined below), an acquisition by
any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Exchange Act, as hereafter amended or succeeded, excluding any employee benefit
plan, or related trust, sponsored or maintained by the Company or an affiliate
of the Company, of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of securities of the Company or its
successor representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors; provided that,
notwithstanding the foregoing, in the case of (ii) and (iii) above, such
transactions shall only be deemed a “Corporate Transaction” if the stockholders
of the Company or its successor immediately prior to such merger, consolidation
or reverse merger: (A) hold less then 50% of the outstanding securities of the
surviving company following the merger or consolidation, or (B) in the event
that the securities of an affiliated entity are issued to the stockholders of
the Company in the transaction, hold less then 50% of the outstanding
securities of such entity corporation. 
For purposes hereof, “Listing Date”
shall mean the first date upon which any security of the Company or its
successor is listed on the American or New York Stock Exchange or designated
upon notice of issuance as a national market security on the Nasdaq National
Market inter-dealer quotation system.

 

13

 

(ii)                                If the Company
or its stockholders enter into an agreement providing for a Corporate
Transaction, the vesting schedule of all Options shall be accelerated so that
all Options outstanding under the Plan as of the day before the consummation of
such Corporate Transaction, to the extent not exercised, shall for all purposes
under this Plan become exercisable as of such date.

 

(iii)                            In the event
that the surviving or acquiring corporation in a Corporate Transaction assumes
Options, the vesting schedule of all assumed Options that were held by
Participants who were Employees of the Company immediately prior to such Corporate
Transaction (a “Continuing Employee”) shall be fully vested and exercisable if
such Continuing Employee’s employment is involuntarily terminated other than
for Cause or is voluntarily terminated with Good Reason within 13 months
following the consummation of the Corporate Transaction.

 

As
used herein, “Cause” shall mean (i) conviction
of any felony or any crime, or entry of a plea of nolo
contendere, involving moral turpitude or dishonesty; (ii) participation
in a fraud or act of dishonesty against the Company or the surviving
corporation; (iii) willful misfeasance or nonfeasance of duty that materially
injures the reputation, business or business relationships of the Company, the
surviving corporation or any of their respective officers, directors or affiliates,
(iv) material breach of this Agreement, the Assignment and Agreement Concerning
Non-Disclosure of Proprietary Information and Non-Competition of the Company’s
or the surviving corporation’s policies and procedures, or (v) conduct by you
which in the good faith and reasonable determination of the surviving
corporation’s Board of Directors demonstrates gross unfitness to serve.  As used herein, “Good Reason”
shall mean (i) a reduction in compensation, (ii) a relocation of the Continuing
Employee’s principal worksite to a location more than thirty (30) miles from
the Continuing Employees’ pre-Corporate Transaction principal worksite, or
(iii) for an executive officer, a material reduction in responsibilities, title
or authority as in effect immediately prior to the Corporate Transaction.

 

12.                               AMENDMENT
OF THE PLAN AND STOCK AWARDS.

 

(a)                                  Amendment
of Plan.  The Board at any time, and
from time to time, may amend the Plan. 
However, except as provided in Section 11 relating to adjustments upon
changes in Common Stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq
or securities exchange listing requirements.

 

(b)                                  Stockholder
Approval.  The Board may,
in its sole discretion, submit any other amendment to the Plan for stockholder
approval, including, but not limited to, amendments to the Plan intended to
satisfy the requirements of Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based compensation from the
limit on corporate deductibility of compensation paid to certain executive
officers.

 

(c)                                                                                  Contemplated
Amendments.  It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible 

 

14

 

Employees with the maximum benefits provided or to
be provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

 

(d)                                  No
Impairment of Rights.  Rights under
any Stock Award granted before amendment of the Plan shall not be impaired by
any amendment of the Plan unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing.

 

(e)                                  Amendment
of Stock Awards.  The Board at
any time, and from time to time, may amend the terms of any one or more Stock
Awards; provided, however, that the rights under any Stock Award shall not be
impaired by any such amendment unless (i) the Company requests the consent of
the Participant and (ii) the Participant consents in writing.

 

13.                               TERMINATION
OR SUSPENSION OF THE PLAN.

 

(a)                                  Plan
Term.  The Board may suspend or
terminate the Plan at any time.  Unless
sooner terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier.  No Stock Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.

 

(b)                                  No
Impairment of Rights.  Suspension or
termination of the Plan shall not impair rights and obligations under any Stock
Award granted while the Plan is in effect except with the written consent of
the Participant.

 

14.                               EFFECTIVE
DATE OF PLAN.

 

The
Plan shall become effective as determined by the Board, but no Stock Award
shall be exercised (or, in the case of a stock bonus, shall be granted) unless
and until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan
is adopted by the Board.

 

15.                               CHOICE
OF LAW.

 

The
law of the State of Iowa shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.

 

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  Exhibit 10.3    
    

 
  NEWLINK GENETICS CORPORATION
2000 EQUITY INCENTIVE PLAN

 
    Stock Option Agreement
  (Incentive Stock Option or Nonstatutory Stock Option)    

        Pursuant
to your Stock Option Grant Notice ("Grant Notice") and this Stock Option Agreement, NewLink Genetics Corporation (the "Company") has granted you an
option under its 2000 Equity Incentive Plan (the "Plan") to purchase the number of shares of the Company's Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant
Notice. Defined terms not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the Plan. 

        The
details of your option are as follows: 

        1.    VESTING.    Subject to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that vesting will cease upon the termination of your Continuous Service. 

        2.    NUMBER OF SHARES AND EXERCISE PRICE.    The number of shares of
Common Stock subject to your option and your exercise price per share referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments, as provided in the Plan. 

        3.    METHOD OF PAYMENT.    Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect to make payment of the exercise price in cash or by check or in any other manner permitted by your Grant
Notice, which may include one or more of the following: 

        (a)   In the Company's sole discretion at the time your option is exercised and provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds. 

        (b)   Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in  The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period required to avoid a charge to the
Company's reported earnings (generally six months) or that you did not acquire, directly or indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise. "Delivery" for these purposes, in the sole discretion of the Company at the time you exercise your option, shall include
delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you may not exercise your option by tender to
the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or agreement restricting the redemption of the Company's stock. 

        4.    WHOLE SHARES.    You may exercise your option only for whole shares of Common Stock. 

        5.    SECURITIES LAW COMPLIANCE.    Notwithstanding anything to the contrary contained herein,
you may not exercise your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common Stock are not then so
registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option must also comply with other
applicable
laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations. 

1

 

        6.    TERM.    You may not exercise your option before the commencement of its term or after
its term expires. The term of your option commences on the Date of Grant and expires upon the earliest of the following: 

        (a)   Ninety (90) days after the termination of your Continuous Service for any reason other than your Disability or
death, provided that if during any part of such ninety (90) day period your option is not exercisable solely because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of ninety (90) days after the
termination of your Continuous Service; 

        (b)   twelve (12) months after the termination of your Continuous Service due to your Disability; 

        (c)   eighteen (18) months after your death if you die either during your Continuous Service or within ninety
(90) days after your Continuous Service terminates; 

        (d)   the Expiration Date indicated in your Grant Notice; or 

        (e)   the day before the tenth (10th) anniversary of the Date of Grant. 

        If
your option is an incentive stock option, note that, to obtain the federal income tax advantages associated with an "incentive stock option," the Code requires that at all times
beginning on the date of grant of your option and ending on the day ninety (90) days before the date of your option's exercise, you must be an employee of the Company or an Affiliate, except in
the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will
necessarily be treated as an "incentive stock option" if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you
otherwise exercise your option more than ninety (90) days after the date your employment terminates. 

        7.    EXERCISE.    

        (a)   You may exercise the vested portion of your option [(and the
unvested portion of your option if your Grant Notice so permits)] during its term by delivering a Notice of Exercise (in a form designated
by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional
documents as the Company may then require. 

        (b)   By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to
enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option, (2) the
lapse of any substantial risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock acquired upon such
exercise. 

        (c)   If your option is an incentive stock option, by exercising your option you agree that you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option. 

        (d)   By exercising your option you agree that the Company (or a representative of the underwriter(s)) may, in connection with
the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that you not sell, dispose of, transfer, make any short sale of, grant any option
for the purchase of, or enter into any hedging or similar 

2

 

transaction
with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by you, for a period of time specified by the underwriter(s) (not to exceed one
hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. You further agree to execute and deliver such other
agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock until the end of such period. 

        8.    TRANSFERABILITY.    Your option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter be entitled to exercise your option. 

        9.    RIGHT OF FIRST REFUSAL.    Shares of Common Stock that you acquire upon exercise of your
option are subject to any right of first refusal that may be described in the Company's bylaws in effect at such time the Company elects to exercise its right. The Company's right of first refusal
shall expire on the Listing Date. 

        10.    RIGHT OF REPURCHASE.    To the extent provided in the Company's bylaws as amended from
time to time, the Company shall have the right to repurchase all or any part of the shares of Common Stock you acquire pursuant to the exercise of your option. 

        11.    OPTION NOT A SERVICE CONTRACT.    Your option is not an employment or service contract,
and nothing in your option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective shareholders, Boards of Directors, Officers or Employees to continue any
relationship that you might have as a Director or Consultant for the Company or an Affiliate. 

        12.    MARKET STAND-OFF.    At the time you exercise your option, in whole or in
part, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the Company under the Securities
Act, you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale,
any shares of Common Stock you acquire pursuant to the exercise of your option for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of the Company filed under the Securities Act. You hereby agree to execute and deliver such other agreements as may be reasonably requested by the Company
and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to any shares of Common Stock you acquire pursuant to the exercise of your option until the end of such period. 

        13.    WITHHOLDING OBLIGATIONS.    

        (a)   At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise in connection with your option. 

        (b)   Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, the Company may withhold from 

3

 

fully
vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the
date of exercise, not in excess of the minimum amount of tax required to be withheld by law. If the date of determination of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence shall not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the
aggregate number of shares of Common Stock acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of such election, shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined as
of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure shall be your
sole responsibility. 

        (c)   You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided for herein. 

        14.    NOTICES.    Any notices provided for in your option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage
prepaid, addressed to you at the last address you provided to the Company. 

        15.    GOVERNING PLAN DOCUMENT.    Your option is subject to all the provisions of the Plan,
the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 

4

QuickLinks

Exhibit 10.3

NEWLINK GENETICS CORPORATION 2000 EQUITY INCENTIVE PLAN

Stock Option Agreement (Incentive Stock Option or Nonstatutory Stock Option)

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