Document:

Exhibit 10.22

 

EXCLUSIVE LICENSE AGREEMENT

 

THIS EXCLUSIVE LICENSE AGREEMENT (the “Agreement”) is made
and entered into by and between LANKENAU INSTITUTE FOR
MEDICAL RESEARCH (“LIMR”) and NEWLINK GENETICS
CORPORATION (“NewLink”) for the licensing of certain intellectual
property rights to NewLink, effective on this
           day of October,
2007 (the “Effective Date”).

 

WHEREAS, LIMR owns certain technology and intellectual
property rights developed by its employee(s) relating to  inhibitors of Indoleamine 2, 3 Dioxygenase -2 (“IDO-2”),
and

 

WHEREAS, LIMR has filed certain non-provisional patent
applications covering such IDO-2 inhibitors and related inventions; and

 

WHEREAS, NewLink and LIMR intend to enter into a
Collaborative Research and Development Agreement (“CRADA”) covering further
research to be conducted in cooperation with, and funded by, NewLink regarding
inhibitors of IDO-2 (the “Sponsored Research”), to be conducted by Dr. George
Prendergast at LIMR in collaboration with Dr. Michael William Malachowski
in the Department of Chemistry at Bryn Mawr College (the
“Investigators”), and LIMR shall provide NewLink with a copy of the term sheet
on which LIMR’s agreement with the Investigators will be based and a copy of
the final agreement with the Investigators, subject to NewLink keeping such
term sheet and final agreement confidential. ; and

 

WHEREAS, NewLink would like to obtain the  exclusive, worldwide
license rights from LIMR, and LIMR desires to grant such rights to NewLink,
under such technology and intellectual property of LIMR, and under any
improvements or derivatives thereof developed by LIMR, including resulting from
the Sponsored Research, for the purpose of developing the technology into
marketable  therapeutic or diagnostic products;

 

NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

 

1.                                       Definitions.

 

a.                                       Affiliate(s).  “Affiliate” means, with respect to NewLink,
any individual, company or other business entity, in whatever country
organized, that directly or indirectly controls, is controlled by, or is under
common control with NewLink.  For purposes
of this Agreement, the term “control” (with correlative meanings for the terms “controlled
by” and “under common with”) shall mean that the applicable individual, company
or entity owns, directly or indirectly, more than thirty-three percent (33%) of
the voting stock or equity of NewLink, or otherwise has the ability to direct
and manage the business affairs of NewLink (whether through contract or
otherwise).

 

b.                                      Consideration.  Subject to the other provisions of this
Agreement, “Consideration” shall mean any and all revenues or  payments in-kind  received by
NewLink or its Affiliates from a Sublicensee (as defined in Article 3) as
consideration for the grant by NewLink of a sublicense under the rights granted
to 

 

 

NewLink by LIMR pursuant to Article 2(a) hereof,
but excluding sums or amounts received: (i) for
the purchase of an equity interest in NewLink (which for purposes of this
Agreement shall be valued at fair market value at the time of receipt by
NewLink); (ii) as payments or reimbursements for research and development
work performed by or on behalf of NewLink (which reimbursement may be in the
form of reasonable and typical FTE rates); (iii) for purchase or supply of  Licensed Product; and (iv) as a loan, or as
reimbursement of patent prosecution costs, or as payment of a share of amounts
recovered in enforcing a patent or other intellectual property rights.  Furthermore, if NewLink or an Affiliate
receives from a Sublicensee  payments or
revenue, and such payments or revenue is in consideration both for the grant of
a sublicense under the licenses granted to NewLink hereunder as well as for the
grant of a license or sublicense to other technology controlled by NewLink but
not acquired  from LIMR under this Agreement,
then the “Consideration”, for purposes of this Agreement, shall be deemed to be
such payments or revenue multiplied by a percentage that fairly represents, as
reasonably determined and mutually agreed upon by the parties, the percentage
contribution of the LIMR Technology and the Patent Rights to the total value of
the rights licenses or sublicensed by NewLink or its Affiliate to such
Sublicensee.

 

c.                                       Improvements.  “Improvement” shall mean any improvement,
modification, derivative, and/or enhancement of the LIMR Technology or the
Patent Rights developed, acquired or otherwise controlled by LIMR at any time
after the Effective Date.

 

d.                                      Licensed
Product.  “Licensed Product” shall mean
any article, composition, apparatus, substance, chemical material, method,
process or service whose manufacture, use, or sale is covered or claimed by a
Valid Claim within the Patent Rights. 
For clarity, a “Licensed Product” shall not include other product or
material that (a) is used in combination with Licensed Product, and (b) does
not constitute an article, composition, apparatus, substance, chemical
material, method, process or service whose manufacture, use, or sale is covered
or claimed by a Valid Claim within the Patent Rights.

 

e.                                       LIMR Technology.  “LIMR Technology” shall mean the technology
and/or know-how owned or controlled by LIMR that specifically relates to the
subject matter of the Patent Rights or is otherwise necessary or useful for the
practice of the Patent Rights.

 

f.                                         Net Sales.  “Net Sales” shall mean the gross
consideration actually received or collected by NewLink and/or any Affiliate
from the transfer, sale or other commercial distribution of any Licensed
Product to a third party customer, less:

 

(1)                                  revenue
credited or rebated on returns and allowances, and bad debts;

 

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(2)                                  discounts, in
amounts  customary in the trade and to the
extent actually granted, for quantity purchases, for prompt payments and for
wholesalers and distributors;

 

(3)                                  transportation,
shipping, insurance and delivery charges or allowances;

 

(4)                                  customs,
duties;

 

(5)                                  sales, use,
excise, value-added and other taxes (other than the taxes on the income of the
selling party or NewLink) or other governmental charges measured by sales;

 

(6)                                  governmental
and managed care rebates or chargebacks to the extent actually incurred or
allowed  with respect to Licensed Product sold
during the relevant time period to group purchasing organizations, hospitals,
or other buying groups; and

 

(7)                                  retroactive
price reductions that are actually allowed or granted.

 

Sales
between or among NewLink and its Affiliates will be excluded from the
computation of Net Sales, but the subsequent final sales of such Licensed
Product to third parties by NewLink or its Affiliates will be included in the
computation of Net Sales.  In addition,
transfers or dispositions of Licensed Products in commercially reasonably
quantities for nominal consideration the use of which is restricted to either  charitable, sampling or promotional purposes or for
preclinical, clinical, manufacturing (without sale), scale-up, regulatory or
governmental purposes  shall not be
considered a “sale” or “other commercial disposition” and shall not be included
for purposes of calculating Net Sales under this Agreement.  Sales of Licensed Products to Sublicensees
shall be included in “Net Sales”, as are the royalty payments to NewLink (or
its Affiliate) by Sublicensees on resale of such Licensed Product, the intent
being that LIMR shall receive a royalty or other share or payment on any and
all consideration received by NewLink or its Affiliates hereunder, unless
expressly excluded in this Agreement.

 

If
NewLink (or its Affiliate) sells a Licensed Product in combination with another
active component or ingredient, which is not itself a Licensed Product (a “Combination Product”), for one selling price, then the “Net
Sales of such Combination Product, for the purpose of determining the royalty
owed, shall be the Net Sales resulting from such sale, as set forth above,
multiplied by a factor that reflects the fair market value, in such Combination
Product, of the Licensed Product therein, compared to the total market value of
the Combination Product including its other active components or ingredients,
such factor to be determined reasonably and in good faith by NewLink and LIMR.

 

g.                                      Patent Rights.  “Patent Rights” shall mean (a) the
patent applications identified on Exhibit A
of this Agreement; (b) all patents and patent applications of LIMR

 

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covering or claiming any improvement, modification,
derivative, and or enhancement of the LIMR Technology or of any of the patent
applications or rights or foreign counterparts described in subclauses (a),
(c), (d) or (e) of this definition; (c) all continuing patent
applications (including divisional, substitution, continuations and
continuations-in-part) based on any of the foregoing applications; (d) all
rights and interest held, acquired or otherwise controlled by LIMR in and to
any patents issuing on any of the foregoing applications (including any
reexaminations, reissues, renewals, inventors certifications, and extensions
thereof); and (e) all foreign counterparts worldwide of any such patent
applications and patents.

 

h.                                      Research Aims.  “Research Aims” shall have the meaning
ascribed to such term in the CRADA, as summarized in Exhibit B of this
Agreement.

 

i.                                          Successful
Completion.  “Successful
Completion” of a particular clinical trial means that such trial has been
completed on sufficient numbers of subjects to meet the regulatory requirements
for proceeding to the next phase of clinical trials, the final report analyzing
the data from such subjects in such trial has been completed, and the results
of such data support initiating the next phase of clinical trials on the drug
studied in such trial.

 

j.                                          Valid Claim.  A “Valid Claim” means (i) a claim of an
issued patent in the Patent Rights that (a) has not expired or been
abandoned; (b) has not been disclaimed; (c) has not been canceled or
superseded, or if cancelled or superseded, has not been reasserted; (d) has
not been revoked, held invalid or otherwise declared unenforceable or not
allowable by a tribunal or patent authority of competent jurisdiction over such
claim in any country in which such patent may have issued (from which no
further appeal has or may be taken); and/or (e) abandoned in accordance
with or as permitted by the terms of this Agreement or by mutual written
consent; or (ii) a claim included in a pending patent application under
the Patent Rights, which claim is being actively prosecuted in accordance with
this Agreement, has been subject to prosecution for protection for no more than
five years and has not been canceled, withdrawn from consideration, finally
determined to be unallowable by the applicable governmental authority in such
country (and from which no appeal is or can be taken), and/or abandoned in
accordance with or as permitted by the terms of this Agreement by mutual
written consent.

 

k.                                       Future IDO
Discoveries.  “Future IDO
Discoveries” means any new developments, inventions or discoveries created or
developed by LIMR or its employees, agents, or subcontractors (such as by the
Investigators) in connection with the Sponsored Research or otherwise that (a) relate
directly to IDO-2 and/or inhibitors of IDO-2 and (b) are not covered or
claimed by the Patent Rights and do not incorporate the LIMR Technology
licensed under this Agreement.  The
discovery of [*] be considered Future IDO  Discoveries.

 

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l.                                          Milestones.

 

(1)                                  Scientific
Milestones.  “Scientific
Milestone” means the successful completion of a Research Aim.

 

(2)                                  Development
Milestones.  “Development
Milestones” shall have the meaning ascribed to such term in Section 10(b) of
this Agreement.

 

2.                                       Exclusive
License.

 

a.                                       License Grant.  Subject to the retained rights of LIMR and
the government set forth in subsection 2(c) below, LIMR hereby grants to
NewLink the  exclusive, world-wide,
royalty-bearing license, with the right to grant sublicenses, to use and
practice the LIMR Technology and the Patent Rights in all fields and to make,
have made, use, sell, offer for sale, and/or import Licensed Product in all
fields  (the “License”).

 

With respect to any Licensed Products covered by
Patent Rights that have been discovered using Federal funding, NewLink and its
sublicensees shall comply (to the extent applicable) with the requirements of
the Bayh-Dole Act which require that “any products embodying the invention or
produced through the use of the subject invention will be manufactured
substantially in the United States.” (United States Code, Title 35, Part II,
Chapter 18, Section 204), except if there
is an exception to such requirement, and provided that LIMR shall use
reasonable efforts, if reasonably requested by NewLink, to request and obtain
an exception to such requirement.

 

b.                                      RAND Compounds.  Pursuant to and subject to the terms of the [*] Agreement between LIMR and [*],
the [*] that are identified by an ongoing
screen of the [*] will be licensed to NewLink as
Improvements.

 

c.                                       Retained  Rights.  Notwithstanding the foregoing, LIMR expressly
reserves a non-exclusive, non-transferable, royalty-free right to use the
Patent Rights and the LIMR Technology, including use by its staff and
researchers, and affiliates for its internal non-commercial, educational and
research purposes only, including without limitation the right of LIMR to
publish its research, subject to the prior review by NewLink to the extent such
publication would disclose confidential LIMR Technology licensed
hereunder.  LIMR shall temporarily
refrain from publication for a reasonable period of time to accommodate any
patent filings or other regulatory actions intended to protect any confidential
LIMR Technology licensed hereunder, such period of time not to exceed

 

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the later of [*] from (x) the
date on which such confidential LIMR Technology was [*]
or (y) the date on which such confidential LIMR Technology was [*].  Further, the
licenses granted to NewLink in Section 2(a) are subject to certain
rights reserved by the United States government pursuant to applicable law or
regulation in any inventions in the Patent Rights made with federal funding
pursuant to [*].

 

3.                                       Sublicenses.  NewLink and its Affiliates shall have the
right to grant sublicenses to third parties (each, a “Sublicensee”) under the
LIMR Technology and Patent Rights (with the further rights to sublicense) for
all purposes including to research, develop, make, have made, use and sell the
Licensed Products.  Such sublicenses
shall be in writing and expressly subject to the terms of this Agreement, and
shall not grant rights under the Patent Rights that exceed the scope of the
rights expressly granted under this Agreement. 
Any such sublicense agreement that is materially inconsistent with this
Agreement shall constitute a material breach of this  Agreement
by Company.  NewLink agrees to require
that its Sublicensees must not violate the terms of this Agreement, and that
such Sublicensees shall do the same with respect to any further subsublicenses,
and NewLink shall use commercially reasonable efforts to enforce such
obligations for the benefit of LIMR.  At
LIMR’s request, NewLink will provide LIMR with a copy of each sublicense and subsublicense
in order to allow LIMR to review such sublicenses and subsublicenses to assure
consistency with this Agreement (which copy may be redacted to delete any
confidential information that does not relate to the Patent Rights or LIMR
Technology or the sublicense of rights thereunder).  If LIMR performs such a review on any
sublicense or subsublicense agreement, those agreements reviewed by LIMR, not
including any subsequent amendments or changes to the agreements, shall be
deemed to conform to this Agreement unless LIMR has raised an objection to one
or more of such sublicense or subsublicense agreements.  Upon termination of this Agreement in
compliance with the notice and other provisions of this Agreement, and subject
to Section 4(e) below, any such sublicenses between NewLink and its
sublicensees will remain in effectand be assigned directly to LIMR, which shall
have the right to cancel any such sublicense if such sublicensee is not then in
compliance with the terms of its sublicense and he applicable terms of this
Agreement.  Notwithstanding the
foregoing, LIMR shall not be responsible for any obligation of NewLink under
any such agreement which obligation accrued prior to the date of such
assignment and if there is any such unperformed obligation which is ongoing or
which affects the obligations of the subsublicensee or its ability to perform,
LIMR may elect to cancel such sublicense agreement, without liability, upon
written notice to such subsublicensee.  Upon
such a cancellation], the subsublicensee may sell all Licensed Products in its
inventory and [complete Licensed Products in the process of manufacture at the
time of such termination and sell the same, provided it is not in default under
its subsublicense agreement and further provided it pays to LIMR all payments
required to be paid to the sublicensor thereunder and provides one or more
accountings of all such sales to LIMR (i) within thirty (30) days of LIMR’s

 

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request therefore and (ii) within thirty days
after the last such sale, such accountings to be certified as true, complete
and correct by such sublicensee’s chief financial officer.

 

4.                                       Term and
Termination.  The term of
this Agreement shall commence as of the Effective Date and shall stay in effect
until the last to expire issued Valid Claim covering Licensed Products included
in the Patent Rights, unless otherwise terminated earlier as provided below in
this Article 4 (collectively, the “Term”).

 

a.                                       If LIMR
believes in good faith that NewLink has materially breached its obligations
under Section 10(a), then LIMR shall, in accordance with the terms of this
paragraph 4, have the right and option to reduce NewLink’s exclusive License to
a nonexclusive license or revoke the License in its entirety (by terminating
the Agreement), provided that prior to taking this action:

 

(1)                                  LIMR shall
provide NewLink written notice of the perceived breach, describing in detail
the basis for LEVIR’s belief that such perceived breach has occurred, describing
the preferred method of cure and the proposed action to be taken by LIMR in the
event of non-cure; and

 

(2)                                  NewLink shal+l
have ninety (90) days to establish that it has met or will, within such ninety
(90) day period, meet the applicable obligations; if the parties are still in
dispute as to whether NewLink has met such obligations or cured such breach
within ninety (90) days after receipt of notice from LIMR, the dispute will be
submitted to binding arbitration in accordance with Section 26(b) of
this Agreement, and if such arbitration determines that NewLink materially
breached its obligations under Section 10(a) and did not cure such
breach, then LIMR shall have the option to terminate this Agreement or to
convert the License granted to NewLink in Section 2(a) to a
non-exclusive license, in each case, upon prior written notice to NewLink.

 

b.                                      LIMR may
terminate this Agreement immediately by providing NewLink written notice of
termination, if:

 

(1)                                  NewLink ceases
to function as a going concern;

 

(2)                                  a bankruptcy
petition or action is filed or taken by or against NewLink under any United
States bankruptcy law;

 

(3)                                  a receiver,
assignee or other liquidating officer is appointed with control for all or
substantially all of the assets of NewLink; or

 

(4)                                  NewLink makes
an assignment for the benefit of creditors of all or substantially all its
assets;

 

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provided, that, in the case of subclauses
(b)(2), (3) or (4) above, such aforementioned circumstance is not remedied,
dismissed or stayed within sixty (60) days of LIMR’s notice of its intent to
terminate this Agreement;

 

Notwithstanding anything in Sections 4(a) or (b) or
26 to the contrary, at any time that LIMR or NewLink believes that the other
party has defaulted under this Agreement and that such default will irreparably
harm such party, in addition to its rights under this Agreement and at law,
such party shall have the right to seek all applicable equitable remedies.

 

c.                                       If NewLink
fails to make any payment whatsoever due and payable to LIMR hereunder, LIMR
shall have the right to terminate this Agreement effective on thirty (30) days
written notice, unless NewLink shall make all such payments to LIMR within said
thirty (30) day period, and provided that the payments demanded by LIMR are not
disputed by NewLink.  In the event of a
dispute of such payments by NewLink, the parties shall use good faith efforts
to resolve the dispute, which if not resolved by the end of 90 days either
party may submit the dispute to binding arbitration pursuant to Section 26(b).  Any disputed payments submitted to
arbitration hereunder shall not be deemed due and payable unless and until
determined due by the arbitrator under Section 26(b).

 

d.                                      NewLink shall
have the right to terminate this Agreement at any time on 90 days’ prior
written notice to LIMR, provided that NewLink shall remain obligated to
complete payment of all amounts that have accrued and are owed to LIMR through
the effective date of the termination. 
In the event NewLink terminates the Agreement, the license granted
hereunder shall be deemed terminated, and all rights with respect to the
subject matter thereof revert to LIMR and all further obligations of NewLink to
LIMR (except for obligations accrued prior to such termination) shall
automatically be terminated.

 

e.                                       Upon expiration
or termination of this Agreement for any reason, nothing herein shall be
construed to release either party from any obligation that has accrued prior to
the effective date of such termination. 
NewLink and any Sublicensee thereof may, however, after the effective
date of such termination, sell all Licensed Products, and complete Licensed
Products in the process of manufacture at the time of such termination and sell
the same, provided that NewLink shall make the
payments to LIMR as required by Articles 8 & 9 of this Agreement and
shall submit the reports as required by Article 12 hereof.

 

f.                                         Sections 4(e),
4(f), 8(b) (but solely with respect to sales made pursuant to
Section 4(e)), 16 (solely for the period specified therein), 14, 15, 21,
22, 23, 24 and 26 shall survive termination or expiration of this Agreement.

 

5.                                       Ownership.  LIMR represents and warrants to NewLink that
LIMR owns the rights to the LIMR Technology and the Patent Rights and has the
right to license the LIMR

 

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Technology and the Patent Rights to NewLink, subject
to the rights retained by the United States government and LIMR as described in
Section 2(c).

 

6.                                       Patent
Prosecution.  Commencing
on the Effective Date, NewLink shall have the right and responsibility, at its
expense and in its reasonable discretion, for the preparation, filing,
prosecution and maintenance of any patent applications and patents included in
the Patent Rights, in consultation with LIMR. 
NewLink shall provide LIMR the right to review and comment upon such
patent applications prior to filing, and on all communications with patent
offices in all applicable countries and jurisdictions, the selection of countries
for filing of patent applications, responses to office actions, and other
substantive patent documents prior to filing and the right to have such
documents revised prior to filing to reflect such comments.  Promptly after the Effective Date, LIMR will
transfer to NewLink (or its selected counsel) all patent prosecution files for
the Patent Rights, shall provide to NewLink such executed documents or
instruments as needed for NewLink to undertake such prosecution efforts, and
shall provide NewLink all reasonable assistance in such prosecution.  NewLink shall reimburse LIMR for the
reasonable out-of-pocket costs, based on detailed invoices of such costs,
actually incurred in conducting such prosecution and maintenance of the Patent
Rights prior to the Effective Date, not to exceed $17,000; provided that LIMR
has provided NewLink with an invoice for such costs together with appropriate
documentation outlining the costs incurred. 
LIMR shall provide NewLink with all information necessary or useful its
filings and prosecution of such Patent Rights and shall cooperate fully with
NewLink so as to maximize NewLink’s rights. 
NewLink shall not abandon or opt not to file any patent or patent
application included in the Patent Rights without the prior notice to LIMR.  NewLink may elect in writing to cease the
continued prosecution or maintenance of particular Patent Right in a country,
and on such notice NewLink shall no longer have any further rights or
responsibility for the such prosecution or maintenance, or obligation to pay
any amounts therefore, or any further rights under such specific Patent Right
in such country, and LIMR may in its discretion continue such prosecution Any
such notice shall be given by NewLink to LIMR in sufficient time to enable LIMR
an adequate time period to protect its rights, but in no case less than three (3) months
prior the filing deadline imposed or promulgated by any governing or regulatory
authority for filing any such protective document.

 

7.                                       License Fee.

 

a.                                       Initial
Fee.  Upon the Effective Date, NewLink
shall pay LIMR an initial one-time fee of [*].

 

b.                                      Annual
Fee.  NewLink shall pay LIMR an annual
license maintenance fee of [*] due on or
before each anniversary of the Effective Date during the Term.

 

9

 

8.                                       Royalty;
Sublicense Payments.

 

a.                                       NewLink shall
pay LIMR a royalty in an amount equal to [*] of the Net
Sales of the Licensed Products in [*] where the [*], unless additional royalties must be paid by NewLink for
another technology to allow use of Licensed Products as provided in subsection (b) below.  Royalties payable under this Section 7(a) shall
be payable during the Term on a country-by-country basis.

 

b.                                      In the event
one or more additional technologies (including any patents related thereto)
must be licensed (e.g. formulation, cross linking) by NewLink, its Affiliates,
and/or Sublicensees from any third party to develop, make, use, import, sell,
offer for sale, or import a Licensed Product in any country, NewLink shall be
entitled to [*] royalties otherwise due to
LIMR hereunder an amount [*]; provided,
however, that in no event shall NewLink pay LIMR a royalty of less than [*] of Net Sales.

 

c.                                       If NewLink
grants a sublicense, under the License rights granted under this Agreement to
NewLink, to a Sublicensee pursuant to Article 3 hereof, NewLink shall pay
LIMR [*] of any Consideration received by
NewLink from such Sublicensee, for each such sublicense during the Term.

 

d.                                      No more than
one royalty payment shall be due with respect to a sale of a particular
Licensed Product.  No multiple royalties
shall be payable because any Licensed Product, or its manufacture, sale or use
is covered by more than one Valid Claim in a given country.

 

9.                                       Payment of
Royalties.  Royalties
and sublicense payments shall be payable by NewLink quarterly in U.S. dollars
within forty-five (45) days of the end of the calendar quarter.  NewLink shall render quarterly reports to
LIMR on or before the last day of April, July, October, and January, as
applicable, showing the amount of Net Sales received by NewLink during the most
recently concluded fiscal quarter and the appropriate royalties and sublicense
payments due to LIMR certified by NewLink’s chief financial officer (or
comparable financial officer) as true, correct and complete.  Each such report shall be accompanied by
payment of the royalties and/or sublicense payments due for such fiscal
quarter.  After the first commercial sale
of any Licensed Product pursuant to this Agreement, and upon LIMR’ s request
and at its expense, NewLink shall provide LIMR with copies of NewLink’s
then-existing standard audited financial statements covering the royalties and
sublicense payments due under this Agreement within thirty (30) days of LIMR’s
request.  NewLink shall pay estimated
royalties payments quarterly with an annual reconciliation and of all payments
performed within 30 days of receipt of audited numbers.  For the purpose of determining royalties
payable under this Agreement, any Consideration NewLink receives from
Sublicensees in currencies other than U.S. dollars and any Net Sales
denominated in currencies other than U.S. dollars shall be converted into U.S.
dollars at the same conversion rate that NewLink actually receives on such
conversion at the time of the transaction in question which gave rise the
Consideration.

 

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10.                                 Diligence;
Milestones and Associated Payments.

 

a.                                       Diligence.  NewLink has represented to LIMR, to induce
LIMR to issue this exclusive license, that it will commit itself to a diligent
program of developing and exploiting Licensed Product(s) so that public
utilization will result there from.  As
part of the consideration for the exclusive  license
granted to NewLink hereunder, NewLink has agreed to use commercially reasonable
efforts to develop and exploit Licensed Product.

 

It is understood and agreed by the parties that the
actions by any Affiliate or Sublicensee may satisfy the above obligations.

 

b.                                      Milestone
Payments to LIMR.

 

(1)                                  Upon achievement
of each [*], NewLink will pay to LIMR a
one-time payment of [*], for a
maximum total payment of [*] for
achievement of all [*].

 

(2)                                  NewLink will
pay to LIMR [*] for the [*]
a Licensed Product; [*] for the [*] a Licensed Product; [*] for the [*] a Licensed Product; and [*]
for the [*] a Licensed Product (the “Development
Milestones”).  For clarity, each
Development Milestone shall be payable only once under this Agreement.

 

c.                                       Limitation on
Payments for Dual Activity Products. 
NewLink and LIMR acknowledge that, due to the nature of  IDO inhibitors, a particular Licensed Product may have
activity in inhibiting both the IDO-2 target and also IDO-1  (such
product, a “Dual Activity Product”).  For
any Dual Activity Product that is covered by the payment obligations under this
Agreement, and also is subject to payment
obligations (milestone payments and/or royalty payments) under the Exclusive
License Agreement dated July 7, 2005 between the Parties, covering IDO-1
inhibitors  (the “Prior License”), NewLink shall not owe payments under both
agreements due to the achievement of the milestone event by, or sale of, such
Dual Activity Product, but  rather shall owe to LIMR the higher
of the applicable milestone payment, or royalty payment, owed for such Dual Activity
Product under the terms of either the Agreement and the Prior License (based on
the particular event or sale).  The
foregoing shall apply to all obligations under the Prior Agreement with respect
to any product covered by such agreement that is a Dual Activity Product.

 

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For
the purposes of determining which licensing agreement — either this Agreement
or the Prior License (as defined above) — will govern and regulate a particular  inhibitor compound, each such compound will be classified
either as an IDO1-specific inhibitor, an IDO2-specific inhibitor or a Dual
Activity Product (an IDO1/IDO2 dual inhibitor)  based
[*]. 
A compound will be considered a Dual Activity Product when the [*] and the [*] are [*].  If the [*], then the [*] will
determine whether the compound is an IDO1-specific inhibitor or an IDO-2
specific inhibitor.

 

11.                                 CRADA.  Concurrently with entry into this Agreement,
the parties agree to the obligations set forth in Exhibit B, which is
hereby made a part hereof of this Agreement, pursuant to which NewLink will
provide certain funding to LIMR in support of the Sponsored Research to be
conducted by the Investigators.  Under
such CRADA, NewLink may renew the Sponsored Research (Newlink shall base its
election upon the research results and other potential corporate limitations)
for additional years at an annual budget to be based on scientific needs and
approved by NewLink; [*] described
in Exhibit B, in consideration for such funding LIMR agrees to [*] for Future IDO Discoveries as provided in Section 13
(b).  The decision to renew the CRADA for
additional years shall be made at least three months prior to the expiration
date of the CRADA and shall based on a progress report submitted by LIMR to
NewLink.

 

12.                                 Reports and
Accounting.  NewLink
shall provide to LIMR no less than once a year during the Term a written report
regarding NewLink’s product development, royalty and sublicense payment (i.e.,
receipt of Consideration) information with respect to Licensed Products and
milestone status.  The report shall be
certified by an officer of NewLink as true, correct and complete.  This report is in addition to the reports
required under Section 9 hereof.

 

13.                                 Exclusive
Option to Future IDO Discoveries.

 

a.                                       LIMR hereby
grants NewLink the  exclusive  option to obtain an exclusive, worldwide, sublicensable
license under LIMR’s interests in and to any or all Future IDO Discoveries
(including any patent rights or other intellectual property covering or
appurtenant to such Future IDO Discoveries) for any and all purposes, including
to develop, make, have made, use, sell, offer for sale, and import
products.  LIMR shall promptly disclose
in writing to NewLink (or its designees) any Future IDO Discovery made or
identified, including all relevant information relating to the Future IDO
Discovery as reasonably needed for NewLink to evaluate whether to exercise the
option.  NewLink shall indicate its
intention to exercise such option by notifying LIMR in writing within six (6) months
after the disclosure of such Future IDO Discovery to NewLink hereunder (such
period, the “Option Period” as to such Future IDO Discovery).

 

12

 

b.                                      If NewLink
exercises such option for a particular Future IDO Discovery disclosed by LIMR
pursuant to Section 13(a) above, the parties will negotiate
exclusively and in good faith the specific terms and conditions on which an
exclusive (or if elected by NewLink, non-exclusive) license will be
granted.  Such license shall be on commercially
reasonable terms typical for similar license agreements; provided, however,
that should NewLink elect to renew the CRADA for additional years of funding [*], LIMR [*] of any
Future IDO Discovery.  The [*] reduce the requirement of the payment of [*] as consideration for such license(s) (provided
that, to the extent appropriate in a determination of [*],
NewLink’s funding under the CRADA shall be taken into account in determining
what is such [*]).  The annual fees, royalties, and sublicensing
fees associated with such license shall be based upon and be equivalent to the [*] of the underlying Future IDO Discovery, and any other
reasonable terms and conditions, in each case, shall be negotiated by the
parties in good faith.  If the parties
are unable, despite each party using good faith efforts, to agree upon the
terms of such license within six (6) months  following
the date the option is exercised by NewLink with respect to a particular Future
IDO Discovery, then the option as to Future IDO Discovery shall expire;
provided, however, that in no event may LIMR enter into a license or other
similar agreement with any third party with respect to such Future IDO
Discovery on terms more favorable to such third party than those last offered
to NewLink during the twenty-four (24) months immediately following such option
expiration, unless LIMR has first offered to NewLink the right to obtain such
license on such terms, and NewLink fails to accept such terms within thirty
(30) days after receiving LIMR’s offer.

 

14.                                 Indemnity.  NewLink shall defend and indemnify and hold
LIMR, its parent corporations, affiliates, trustees, officers, agents and
employees (the “Indemnitees”) harmless from any judgments and other liabilities
based upon claims or causes of action brought by a third party against any Indemnitee
which arise out of alleged negligence in the development, manufacture or sale
of Licensed Products by NewLink, its Affiliates or any Sublicensees, or from
the use by the end users of Licensed Products, except to the extent that such
judgments or liabilities arise in whole or in part from the gross negligence or
willful misconduct of LIMR or its employees, provided that LIMR promptly
notifies NewLink of any such claim coming to its attention and that it
cooperates with NewLink in the defense of such claim.  If any such claims or causes of action are
made, NewLink counsel, the identity of whom LIMR does not have a reasonable
objection, shall defend LIMR. If LIMR has a reasonable objection to the counsel
selected by NewLink, LIMR and NewLink shall cooperate with each other
reasonably and in good faith so that NewLink can engage legal counsel to whom
LIMR does not have reasonable objection. 
LIMR reserves the right to be represented by its own counsel at its own
expense.

 

15.                                 Limitations of
Liability.  EXCEPT FOR
THE INDEMNIFICATION OBLIGATIONS ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR 

 

13

 

ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING LOST REVENUES OR LOST
PROFITS, WHETHER BASED ON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE,
STRICT LIABILITY OR OTHER TORT OR OTHERWISE ARISING OUT OF THIS AGREEMENT, AND
REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREIN, NEWLINK’S
TOTAL LIABILITY UNDER THIS AGREEMENT SHALL BE LIMITED TO THE [*].

 

16.                                 Insurance.  At such time as NewLink, its Affiliates, or
Sublicensees, initiates or otherwise enters into clinical trials of any
Licensed Product or commercially distributes or sells Licensed Products (other
than for the purpose of obtaining regulatory approvals), NewLink shall at its
sole cost and expense, procure and maintain comprehensive general liability
insurance in amounts not less than $3,000,000  per
incident and naming the Indemnitees (defined in Section 13(a) above)
as additional insureds.  LIMR may require
such minimum requirements to be increased from time to time if the minimum
amounts of such insurance carried by prudent companies in the general size of
NewLink and in similar industries as NewLink is higher, so that NewLink will at
all times carry commercially reasonable amounts of insurance.  Such comprehensive general liability
insurance shall provide (i) product liability coverage and (ii) broad
form contractual liability coverage for NewLink’s indemnification under this
Agreement.  If NewLink elects to
self-insure all or part of the limits described above (including deductibles or
retentions, which are in excess of $250,000 annual aggregate) such
self-insurance program must be acceptable to LIMR and Main Line Health Vice
President Insurance in their sole and absolute discretion.  Such insurance will be considered primary as
to any other valid and collectible insurance, but only as to acts of the named
insured.  The minimum amounts of
insurance coverage required shall not be construed to create a limit of NewLink’s
liability with respect to its indemnification and other obligations under this
Agreement.  NewLink shall provide LIMR
with written evidence of such insurance promptly upon written request of LIMR.
NewLink shall use commercially reasonable efforts to provide LIMR with written
notice at least fifteen (15) days prior to the cancellation, non-renewal or
material change in such insurance.  If
NewLink does not obtain replacement insurance providing comparable coverage
within sixty (60) days following the date of such cancellation, non-renewal or
material change, LIMR shall have the right to terminate this Agreement
effective at the end of such sixty (60) day period without notice or any
additional waiting periods.  NewLink
shall maintain such comprehensive general liability insurance beyond the
expiration or termination of this Agreement during (i) the period that any
Licensed Product is being clinically tested, commercially distributed or sold
by NewLink (or an agent on its behalf) or by a sublicensee, Affiliate and (ii) a
reasonable period after the period referred to in (i) above which in no
event shall be less than five (5) years.

 

17.                                 Mutual
Confidentiality.  NewLink and
LIMR realize that certain confidential or proprietary information disclosed by
one party (the “disclosing party”) to the other party (the “receiving party”)
pursuant to this Agreement (“Confidential Information” of the 

 

14

 

disclosing party) shall be treated as
confidential.  For purposes of this
Agreement, the term “Confidential Information” of a party means any of the
following:

 

a.                                       all information
concerning the business or affairs of either party or its affiliates, including
without limitation, all information relating to the LIMR Technology or to
NewLink technology, the Patent Rights, the Licensed Product, the Future IDO
Discoveries, and/or any and all existing and potential research parameters,
program requirements, strategies, products, technology, know-how, information,
data, processes, systems, inventions, developments, formulations, applications,
and methods of rendition of services relating to any of the foregoing;

 

b.                                      all information
received from third parties and held in confidence by either party or its
affiliates, or

 

c.                                       all information
pertaining to the proposed business relationship(s) and/or transactions(s) between
the parties, including without limitation, the terms thereof (except that LIMR
may disclose the terms of this Agreement to Bryn Mawr College or Professor Bill
Malachowski or to their legal counsel to the extent LIMR deems such disclosure
necessary or appropriate in connection with negotiating with them agreements
related to this Agreement or to the Sponsored Research.

 

The
Confidential Information of the disclosing party shall not be disclosed by the
receiving party to any third party and shall not be used by the receiving party
for purposes other than those contemplated by this Agreement without the prior
written consent of the disclosing party. 
Any Confidential Information exchanged by the parties under this
Agreement shall remain subject to such confidentiality and non-use obligations
for a period of five (5) years from the termination or expiration of the
Agreement.  The confidentiality and
non-use obligations under this Article 17 shall not apply to any
information that:

 

a.                                       Is or which
later becomes publicly known through no fault of the receiving party, or

 

b.                                      Is already in
the receiving party’s possession prior to the disclosure by the disclosing
party to the receiving party as indicated in the receiving party’s competent
written records, or

 

c.                                       Is subsequently
disclosed to the receiving party, by a third party not under any obligation of
confidentiality to the disclosing party, or

 

d.                                      Is
independently developed by the receiving party without use of the Confidential
Information of disclosing party or any other information from the disclosing
party that is protected by any other confidentiality obligations.

 

In
addition, the receiving party may disclose specific Confidential Information of
the other party to the extent such disclosure is required to be disclosed by
court order or governmental law, rule or regulation, provided that the
receiving party first gives the disclosing party prompt written 

 

15

 

notice
of any such requirement and cooperates with the disclosing party in attempting
to limit or seek confidential treatment with respect to such disclosure of such
Confidential Information.

 

The
provisions of this Section 17 are subject to the publication rights of
LIMR as described in Section 2(c) hereof.

 

18.                                 Disclaimer.  Except as expressly set forth in Section 5
hereof, nothing contained in this Agreement shall be construed as:

 

a.                                       a warranty or
representation by LIMR as to the validity or scope of any Patent Rights;

 

b.                                      a warranty or
representation that any Licensed Products manufactured, used or sold will be
free from infringement of patents, copyrights, or third parties, except that
LIMR represents that it has no knowledge of any existing issued patents or
copyrights which might be infringed;

 

LIMR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF LICENSED PRODUCTS.

 

19.                                 Third party
Infringement.

 

a.                                       Each party
shall promptly notify the other party in writing of any alleged or actual
infringement of the Patent Rights of which it becomes aware and which may
adversely impact the rights of either party hereunder.

 

b.                                      NewLink shall
have the first right but not the obligation, at its expense, to bring an
appropriate action against any person or entity directly or contributorily
infringing the Patent Rights.  LIMR shall
cooperate reasonably with NewLink in such action, including by consenting to be
named as a party to such action and furnishing a power of attorney upon request.  Except as otherwise set forth in this
Agreement, NewLink shall have sole control of the action brought by it;
provided, however, that LIMR shall have the right to participate in such action
against a third party infringer through counsel of its own choice and at its
own expense.

 

c.                                       In the event
NewLink institutes legal action against an infringer hereunder, LIMR shall
fully cooperate with and supply all assistance reasonably requested by NewLink,

 

16

 

including,
without limitation, by using commercially reasonable efforts to have its
employees testify and grant interviews when requested and to make available
relevant records, papers, information, samples, specimens, and similar items
upon request of NewLink LIMR shall render such cooperation at its own cost and
expense (“LIMR’s Costs”).  NewLink shall
keep LIMR reasonably informed of the progress of such action, and LIMR shall be
entitled to be represented by counsel in connection with such action at its own
expense.

 

d.                                      NewLink shall
bear the costs of all reasonable and customary expenses for such action
(including attorneys’ fees and expert fees). 
Any amounts paid to NewLink by third parties as a result of such action
(in satisfaction of a judgment or pursuant to a settlement recovery) shall
first be applied to the payment of NewLink’s out-of-pocket expenses (including
attorneys’ fees and expert fees), second to LIMR’s Costs, third to LIMR’s other
out-of-pocket expenses in connection with the matter (including attorneys’ fees
and experts fees), and then the balance of any such amounts [*].  NewLink shall
have the right to settle any claims, but provided that if such settlement
materially negatively affects LIMR’s interests such settlement shall be only
upon terms and conditions that are reasonably acceptable to LIMR, such
reasonable acceptance to be confirmed by LIMR in writing prior to NewLink’s
agreement to such settlement.

 

e.                                       If NewLink
elects to abandon such an action other than pursuant to a settlement with the
alleged infringer that is reasonably acceptable to LIMR, NewLink shall give
timely notice to LIMR who, if it so desires, may continue the action; provided,
however, that the sharing of expenses and any recovery in such suit shall be [*].  Any such notice
shall be given by NewLink to LIMR in sufficient advance of the expiration of
the applicable statute of limitations to enable LIMR an adequate time period to
protect its rights, but in no case less than twelve (12) months  prior to the expiration of such statute of limitations.

 

20.                                 Technical
Assistance.  Throughout
the term of the Agreement, LIMR agrees to permit NewLink and its designees to
consult with its employees and agents regarding any Improvements or Future IDO
Inventions made after the Effective Date relating to the Licensed Products, at
such times and places as may be mutually agreed upon; provided that NewLink
agrees to limit such consultation to five (5) employee-investigator hours
per week and make suitable arrangements directly with LIMR employees and agents
and to compensate for such consultation at LIMR’s then-current rates as
communicated to NewLink.

 

21.                                 Name.  NewLink shall not use and shall not permit to
be used by any other person or entity the name or logo of LIMR nor any
adaptation thereof, or the name of LIMR’s employees, in any advertising,
promotional or sales literature, or for any other purpose without prior written
permission of LIMR, except as required by governmental authority or applicable
law, and provided that the foregoing shall not prevent NewLink from disclosing
to third parties the existence of this Agreement including the CRADA
obligations.

 

17

 

22.                                 Governing Law.  This Agreement shall be construed, governed,
interpreted and enforced according to the laws of the Commonwealth of
Pennsylvania without reference to principles of conflicts of laws.

 

23.                                 Notices.  Any notice or communication required or
permitted to be given by either party hereunder, shall be deemed sufficiently
given, if mailed by certified mail, return receipt requested, and addressed to
the party to whom notice is given as follows:

 

If
to LIMR:

 

J.
Todd Abrams, Ph.D. Director of Philanthropy and Business Development

Lankenau Institute for Medical Research

100 E. Lancaster Avenue

Wynnewood, PA 19096

 

With
a Copy to:

 

Office
of the General Counsel

Main Line Health

Bryn Mawr Hospital Legal Department, 1st floor, D Wing

130 So.  Bryn Mawr Avenue

Bryn Mawr, PA 19010

Attention: Senior Vice President and General Counsel

 

If
to NewLink:

 

Dr. Nick
Vahanian

Chief Medical and Operations Officer

2901 South Loop Drive

Suite 3900

Ames, Iowa 50010

 

24.                                 Assignment.  This Agreement shall inure to the benefit of
and be binding on the parties’ permitted assigns and successors in
interest.  Except as provided in this Section 24,
neither party shall assign or transfer this Agreement without the express prior
written consent of the other, such consent not to be unreasonably
withheld.  Notwithstanding the foregoing,
an assignment of this Agreement by NewLink in connection with the transfer of
all or substantially all of its assets or equity, or by reason of acquisition,
merger, consolidation or operation of law shall not require LIMR’s consent.

 

25.                                 Entire
Agreement.  This
Agreement, together with any exhibits attached hereto, represents the entire
agreement between the parties with respect to the subject matter hereof, and
may only be subsequently altered or modified by an instrument in writing.  This Agreement cancels and supersedes any and
all prior oral or written agreements between the parties that relate to the
subject matter of this Agreement.

 

18

 

26.                                 Mediation and
Arbitration.

 

a.                                       Except as
otherwise expressly provided herein, both parties agree that they shall use
good faith, reasonable efforts to attempt to resolve any dispute arising from
this Agreement, or the breach thereof, through mediation before proceeding to
arbitration proceedings as set forth below. 
Both parties agree that at least one employee (with respect to NewLink
an authorized executive officer of NewLink) who is authorized and capable of
negotiating an agreement on behalf of such party, shall, within three (3) weeks
of receipt of written notification of a dispute, meet with at least one
employee (an executive officer in the case of NewLink) of the other party who
is also authorized and capable of negotiating an agreement on behalf of such
party.  If no agreement can be reached,
both parties agree to meet again within a four (4) week period after the
initial meeting to negotiate in good faith to resolve the dispute.

 

b.                                      If no agreement
can be reached after this second meeting or if otherwise expressly provided
herein, both parties agree to submit the dispute to binding arbitration under
the Commercial Arbitration Rules of the American Arbitration Association (“AAA”)
before a panel of three (3) independent arbitrators each having at least
ten (10) years experience in the biomedical licensing area.  The identity of the arbitrators shall be
mutually agreed upon by the parties, provided, however, that if they are unable
to agree on such arbitrators within ten (10) business days after the
earlier of (i) the AAA providing them with a list of potential qualified
arbitrators or (ii) the delivery of a list of at least ten potential
qualified arbitrators by one party to the other party, then AAA shall select
the arbitrators from the relevant list. 
Discovery shall be permitted as set forth in the Federal Rules of
Civil Procedure with respect to the performance by the parties of their
obligations under this Agreement and such other matters as the arbitrators may
determine Judgment upon an award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.

 

27.                                 Waiver.  A failure by one of the parties to this
Agreement to assert its rights for or upon any breach or default of this
Agreement shall not be deemed a waiver of such rights nor shall any such waiver
be implied from acceptance of any payment. 
No such failure or waiver in writing by any one of the parties hereto
with respect to any rights, shall extend to or affect any subsequent breach or
impair any right consequent thereon.

 

28.                                 Severability.  The parties agree that it is the intention of
neither party to violate any public policy, statutory or common laws, and
governmental or supranational regulations; that if any sentence, paragraph,
clause or combination of the same is in violation of any applicable law or
regulation, or is unenforceable or void for any reason whatsoever, such sentence,
paragraph, clause or combinations of the same shall be inoperative and the
remainder of the Agreement shall remain binding upon the parties.

 

29.                                 Force Majeure.  Neither party shall lose any rights under
this Agreement or be liable to the other party for damages or losses on account
of failure of performance by the defaulting party if the failure is occasioned
by war, strike, fire, act of God, earthquake, flood, explosions, sabotage,
strikes or labor disputes, lockout, riots, invasions, acts of war, embargo,
governmental acts or orders or restrictions, disruptions of supplies of
adequate raw materials, terrorist attacks, or any other reason where failure to
perform is 

 

19

 

beyond the reasonable control and not caused by the
negligence or intentional conduct or misconduct of the nonperforming party, and
such party has exerted all reasonable efforts to avoid or remedy such force
majeure; provided, however, that in no event shall a party be required to settle
any labor dispute or disturbance.

 

30.                                 Marking.  NewLink agrees to mark the Licensed Products
covered by the Patent Rights in the United States with all applicable U.S.
Patent numbers.  NewLink agrees to mark
the Licensed Products covered by the Patent Rights in other countries with all
applicable patent numbers issued by such other countries to the extent required
by applicable laws in order to preserve patent rights.

 

31.                                 Headings.  The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not constitute a part
hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

20

 

IN
WITNESS WHEREOF, the parties have signed this Agreement on and as of the
Effective Date.

 

 

	
  LANKENAU
  INSTITUTE FOR MEDICAL RESEARCH

  	
   

  	
  NEWLINK
  GENETICS CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Edward
  Jones., Jr.

  	
   

  	
  Name:

  	
  /s/
  Nicholas N. Vahanian

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman

  	
   

  	
  Title:

  	
  Chief
  Operations Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  12/11/07

  	
   

  	
  Date:

  	
  12/21/07

  

 

21

 

Exhibit A

 

Patent Rights

 

[*]

 

22

 

Exhibit B

 

CRADA

 

NewLink
Genetics Corporation will provide financial support to fund research at
Lankenau Institute for Medical Research (LIMR) for one year (“Initial Year”)
with an option for future one-year renewals based on need and progress.  The Initial Year shall begin on October 1,
2007 and end on May 31, 2008.  All
subsequent years for purposes of these financial support obligations shall
begin on June 1 of the applicable year and end on May 31 of the
following calendar year.  The support
funds will be committed towards personnel and consumable expenses that are
directly related to this research project.

 

Project
Scope: The first part of the project will involve study/ analysis of [*] and [*].  The second part of this project involves [*] and [*] through an
established collaboration of LIMR with William Malachowski and his colleagues
in the Department of Chemistry at Bryn Mawr College.  Further aim of this project is to evaluate [*] from [*], from [*], or from other [*], during the
term of this proposal.

 

Research
Aims: Are as summarized below

 

Scientific Milestones proven by:

 

[*]

 

Year 1
Budget: Support for [*] personnel, [*] is included
in this project.  Supply costs will be
estimated at [*] annually.

 

	
  Scientific
  Personnel Costs

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Supply
  costs

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  Total
  Potential Project Reward

  	
   

  	
  [*]

  

 

The
amounts set forth above for Year 1 shall be paid within sixty (60) days after
the execution and delivery of this Agreement.

 

Any
amounts due with respect to CRADA funding for Year 2 and years subsequent to
that shall be paid quarterly in advance.

 

23Exhibit 10.23

 

EXCLUSIVE LICENSE AGREEMENT

 

THIS EXCLUSIVE LICENSE AGREEMENT (the “Agreement”) is made
and entered into by and between LANKENAU INSTITUTE FOR
MEDICAL RESEARCH (“LIMR”) and NEWLINK GENETICS
CORPORATION (“NewLink”) for the licensing of certain intellectual
property rights to NewLink, effective on this 23 day of April, 2009 (the “Effective
Date”).

 

WHEREAS, LIMR owns certain technology and intellectual
property rights developed by Dr. George Prendergast at LIMR relating to [*] inhibitors of Indoleamine 2, 3 Dioxygenase (“IDO”), and

 

WHEREAS, LIMR filed U.S. provisional patent application no. [*] covering such IDO inhibitors and related inventions as
of [*]; and

 

WHEREAS, NewLink and LIMR have conducted further
collaborative research on such IDO inhibitors and intend to [*]; and

 

WHEREAS, NewLink would like to obtain the exclusive,
worldwide license rights from LIMR, , [*] and LIMR
desires to grant such rights to NewLink, under LIMR’s interest in such
technology and intellectual property, and in any improvements or derivatives
thereof developed by LIMR or jointly by LIMR and NewLink, for the purpose of
developing the technology into marketable therapeutic or diagnostic products.

 

NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

 

1.                                       Definitions.

 

a.                                       Affiliate(s).  “Affiliate” means, with respect to NewLink,
any individual, company or other business entity, in whatever country
organized, that directly or indirectly controls, is controlled by, or is under
common control with NewLink.  For
purposes of this Agreement, the term “control” (with correlative meanings for
the terms “controlled by” and “under common with”) shall mean that the
applicable individual, company or entity owns, directly or indirectly, more
than thirty-three percent (33%) of the voting stock or equity of NewLink, or
otherwise has the ability to direct and manage the business affairs of NewLink
(whether through contract or otherwise).

 

b.                                      Consideration.  Subject to the other provisions of this
Agreement, “Consideration” shall mean any and all revenues or payments in-kind
received by NewLink or its Affiliates from a Sublicensee (as defined in Article 3)
as consideration for the grant by NewLink of a sublicense under the rights
granted to NewLink by LIMR pursuant to Article 2(a) hereof, but excluding sums or amounts received:  (i) for the purchase of an equity
interest in NewLink (which for purposes of this Agreement shall be valued at
fair market value at the time of receipt by NewLink); (ii) as fair market
value payments or reimbursements for 

 

 

research and development work performed by or on behalf of NewLink
(which reimbursement may be in the form of reasonable and typical FTE rates); (iii) for
purchase or supply of Licensed Product; and (iv) as a loan, or as
reimbursement of patent prosecution costs, or as payment of a share of amounts
recovered in enforcing a patent or other intellectual property rights.  Furthermore, if NewLink or an Affiliate
receives from a Sublicensee payments or revenue or other consideration, and
such payments or revenue or other consideration is in consideration both for
the grant of a sublicense under the Licenses granted to NewLink hereunder as
well as for the grant of a license or sublicense to other technology controlled
by NewLink but not acquired from LIMR under this Agreement, then the “Consideration,”
for purposes of this Agreement, shall be deemed to be such payments or revenue
or other consideration multiplied by a percentage that fairly represents, as
reasonably determined and mutually agreed upon by the parties, the percentage
contribution of the LIMR Technology and the Patent Rights to the total value of
the rights licenses or sublicensed by NewLink or its Affiliate to such
Sublicensee.  Either party may request an
independent third party fair market value determination of such reasonable
percentage and in such a case the parties shall equally share the cost of
obtaining such determination.

 

c.                                       [*] Claim.  “[*] Claim”
shall mean a claim in [*] as filed
with the United States Patent and Trademark Office on [*].

 

d.                                      Improvements.  “Improvement” shall mean any improvement, modification,
derivative, and/or enhancement of the LIMR Technology or the Patent Rights
developed, acquired or otherwise controlled by LIMR at any time after the
Effective Date.

 

e.                                       Licensed
Product.  “Licensed Product” shall mean
any article, composition, apparatus, substance, chemical material, method,
process or service whose manufacture, use, or sale is covered or claimed by a
Valid Claim within the Patent Rights. 
For clarity, a “Licensed Product” shall not include other product or
material that (a) is used in combination with Licensed Product, and (b) does
not constitute an article, composition, apparatus, substance, chemical
material, method, process or service whose manufacture, use, or sale is covered
or claimed by a Valid Claim within the Patent Rights.

 

f.                                         LIMR Technology.  “LIMR Technology” shall mean the technology
and/or know-how owned or controlled by LIMR that specifically relates to the
subject matter of the Patent Rights or is otherwise necessary or useful for the
practice of the Patent Rights.

 

g.                                      Net Sales.  “Net Sales” shall mean the gross
consideration actually received or collected by NewLink and/or any Affiliate
from the transfer, sale or other commercial distribution of any Licensed
Product to a third party customer, less:

 

(1)                                  revenue
credited or rebated on returns and allowances, and bad debts;

 

2

 

(2)                                  discounts, in
amounts customary in the trade and to the extent actually granted, for quantity
purchases, for prompt payments and for wholesalers and distributors;

 

(3)                                  transportation,
shipping, insurance and delivery charges or allowances;

 

(4)                                  customs,
duties;

 

(5)                                  sales, use,
excise, value-added and other taxes (other than the taxes on the income of the
selling party or NewLink) or other governmental charges measured by sales;

 

(6)                                  governmental
and managed care rebates or chargebacks to the extent actually incurred or
allowed with respect to Licensed Product sold during the relevant time period
to group purchasing organizations, hospitals, or other buying groups; and

 

(7)                                  retroactive
price reductions that are actually allowed or granted.

 

Sales between or among NewLink and its Affiliates
will be excluded from the computation of Net Sales, but the subsequent final
sales of such Licensed Product to third parties by NewLink or its Affiliates
will be included in the computation of Net Sales.  In addition, transfers or dispositions of
Licensed Products in commercially reasonable quantities for nominal consideration
the use of which is restricted to either charitable, sampling or promotional
purposes or for preclinical, clinical, manufacturing (without sale), scale-up,
regulatory or governmental purposes shall not be considered a “sale” or “other
commercial disposition” and shall not be included for purposes of calculating
Net Sales under this Agreement.

 

If NewLink (or its Affiliate) sells a Licensed
Product in combination with another active component or ingredient, which is
not itself a Licensed Product (a “Combination Product”),
for one selling price, then the “Net Sales of such Combination Product, for the
purpose of determining the royalty owed, shall be the Net Sales resulting from
such sale, as set forth above, multiplied by a factor that reflects the fair
market value, in such Combination Product, of the Licensed Product therein,
compared to the total market value of the Combination Product including its
other active components or ingredients, such factor to be determined reasonably
and in good faith by NewLink and LIMR.

 

h.                                      Patent Rights.  “Patent Rights” shall mean (a) the
patent applications identified on Exhibit A
of this Agreement; (b) all patents and patent applications of LIMR
covering or claiming any improvement, modification, derivative, and or
enhancement of the LIMR Technology or of any of the patent applications or
rights or foreign counterparts described in subclauses (a), (c), (d) or (e) of
this definition; (c) all continuing patent applications (including
divisional, substitution, continuations and continuations-in-part) based on any
of the foregoing applications; (d) all rights and interest held, acquired
or otherwise 

 

3

 

controlled by LIMR in and to any patents issuing on any of the
foregoing applications (including any reexaminations, reissues, renewals,
inventors certifications, and extensions thereof); and (e) all foreign
counterparts worldwide of any such patent applications and patents.

 

i.                                          [*] of a [*] means that [*] on [*] of [*] to [*] the [*] for [*] to the [*] of [*], the [*] the [*] from such [*] in such [*], and the [*] of such [*] the [*] of [*] on the [*] in such [*].

 

j.                                          Valid Claim.  A “Valid Claim” means (i) a claim of an
issued patent in the Patent Rights that (a) has not expired or been
abandoned; (b) has not been disclaimed; (c) has not been canceled or
superseded, or if cancelled or superseded, has not been reasserted; (d) has
not been revoked, held invalid or otherwise declared unenforceable or not
allowable by a tribunal or patent authority of competent jurisdiction over such
claim in any country in which such patent may have issued (from which no
further appeal has or may be taken); and/or (e) abandoned in accordance
with or as permitted by the terms of this Agreement or by mutual written
consent; or (ii) a claim included in a pending patent application under
the Patent Rights, which claim is being actively prosecuted in accordance with
this Agreement, has been subject to prosecution for protection for no more than
five (5) years and has not been canceled, withdrawn from consideration,
finally determined to be unallowable by the applicable governmental authority
in such country (and from which no appeal is or can be taken), and/or abandoned
in accordance in accordance with or as permitted by the terms of this Agreement
by mutual written consent.

 

2.                                       Exclusive
License.

 

a.                                       License Grant.  Subject to the retained rights of LIMR and
the government set forth in subsection 2(b) below, LIMR hereby grants to
NewLink the exclusive, world-wide, royalty-bearing license, with the right to
grant sublicenses, under LIMR’s interest in the LIMR Technology and the Patent
Rights, to use and practice the LIMR Technology and the Patent Rights in all
fields and to make, have made, use, sell, offer for sale, and/or import
Licensed Product in all fields (the “License”).

 

With
respect to any Licensed Products covered by Patent Rights that have been
discovered using Federal funding, NewLink and its sublicensees shall comply (to
the extent applicable) with the requirements of the Bayh-Dole Act which require
that “any products embodying the invention or produced through the use of the
subject invention will be manufactured substantially in the United States,”
(United States Code, Title 35, Part II, Chapter 18, Section 204), except if there is an exception to such requirement, and
provided that LIMR shall use reasonable efforts, if reasonably requested by
NewLink, to request and obtain an exception to such requirement.

 

4

 

b.                                      Retained Rights.  Notwithstanding the foregoing, LIMR expressly
reserves a non-exclusive, non-transferable, royalty-free right to use the
Patent Rights and the LIMR Technology, including use by its staff and
researchers and affiliates for its internal non-commercial, educational and
research purposes only, including without limitation the right of LIMR to
publish its research, subject to the reasonable prior review by NewLink to the
extent such publication would disclose confidential LIMR Technology licensed
hereunder.  LIMR shall temporarily
refrain from publication for a reasonable period of time to accommodate any
patent filings or other regulatory actions intended to protect any confidential
LIMR Technology licensed hereunder, such period of time not to exceed the later
of one year from (x) the date on which such confidential LIMR Technology
was created, developed, discovered, conceived and/or reduced to practice or (y) the
date on which such confidential LIMR Technology was licensed to NewLink
hereunder.  Further, the licenses granted
to NewLink in Section 2(a) are subject to certain rights reserved by
the United States government pursuant to applicable law or regulation in any
inventions in the Patent Rights made with federal funding pursuant to
RO1CA109542.

 

3.                                       Sublicenses.  NewLink and its Affiliates shall have the
right to grant sublicenses to third parties (each, a “Sublicensee”) under the
LIMR Technology and Patent Rights (with the right to further sublicense) for
all purposes including to research, develop, make, have made, use, sell, offer
for sale, and import the Licensed Products. 
Such sublicenses shall be in writing and expressly subject to the terms
of this Agreement, and shall not grant rights under the Patent Rights that
exceed the scope of the rights expressly granted under this Agreement.  Any such sublicense agreement that is
materially inconsistent with this Agreement shall constitute a material breach
of this Agreement by Company.  NewLink
agrees to require that its Sublicensees must not violate the terms of this
Agreement, and that such Sublicensees shall do the same with respect to any
further subsublicenses, and NewLink shall use commercially reasonable efforts
to enforce such obligations for the benefit of LIMR.  At LIMR’s request, NewLink will provide LIMR
with a copy of each sublicense and subsublicense in order to allow LIMR to
review such sublicenses and subsublicenses to assure consistency with this
Agreement (which copy may be redacted to delete any confidential information
that does not relate to the Patent Rights or LIMR Technology or the royalties,
revenue or consideration thereunder or the sublicense of rights
thereunder).  If LIMR performs such a
review on any sublicense or subsublicense agreement, those agreements reviewed
by LIMR, not including any subsequent amendments or changes to the agreements,
shall be deemed to conform to this Agreement unless LIMR has raised an
objection to one or more of such sublicense or subsublicense agreements.  If LIMR has requested copies of the
Agreement, New Link shall automatically provide copies of any amendments in
existence at the time of the request and subsequently at the time such
amendments are entered into.  Upon
termination of this Agreement in compliance with the notice and other
provisions of this Agreement, and subject to Section 4(e) below, any
such sublicenses between NewLink and its sublicensees will remain in effect and
be assigned directly to LIMR, which shall have the right to cancel any such
sublicense if such sublicensee is not then in compliance with the terms of its
sublicense and the applicable terms of this Agreement.  Notwithstanding the 

 

5

 

foregoing, LIMR shall not be responsible for any obligation of NewLink
under any such agreement which obligation accrued prior to the date of such
assignment and if there is any such unperformed obligation which is ongoing or
which affects the obligations of the subsublicensee or its ability to perform,
LIMR may elect to cancel such sublicense agreement, without liability, upon
written notice to such subsublicensee. 
Upon such a cancellation, the subsublicensee may sell all Licensed
Products in its inventory and complete Licensed Products in the process of
manufacture at the time of such termination and sell the same, provided it is
not in default under its subsublicense agreement and further provided it pays
to LIMR all payments required to be paid to the sublicensor thereunder and
provides one or more accountings of all such sales to LIMR (1) within thirty
(30) days of LIMR’s request therefore and (ii) within thirty (30) days
after the last such sale, such accountings to be certified as true, complete
and correct by such sublicensee’s chief financial officer.

 

4.                                       Term and
Termination.  The term of
this Agreement shall commence as of the Effective Date and shall stay in effect
until the last to expire issued Valid Claim covering Licensed Products included
in the Patent Rights, unless otherwise terminated earlier as provided below in
this Article 4 (collectively, the “Term”).

 

a.                                       If LIMR
believes in good faith that NewLink has materially breached its obligations
under Section 9(a), then LIMR shall, in accordance with the terms of this
paragraph 4, have the right and option to reduce NewLink’s exclusive License to
a nonexclusive license or revoke the License in its entirety (by terminating
the Agreement), provided that prior to taking this action:

 

(1)                                  LIMR shall
provide NewLink written notice of the perceived breach, describing in detail
the basis for LIMR’s belief that such perceived breach has occurred, describing
the preferred method of cure and the proposed action to be taken by LIMR in the
event of non-cure; and

 

(2)                                  NewLink shall
have ninety (90) days to establish that it has met or will, within such ninety
(90) day period, meet the applicable obligations; if the parties are still in
dispute as to whether NewLink has met such obligations or cured such breach
within ninety (90) days after receipt of notice from LIMR, the dispute will be
submitted to binding arbitration in accordance with Section 23(b) of
this Agreement, and if such arbitration determines that NewLink materially
breached its obligations under Section 9(a) and did not cure such
breach, then LIMR shall have the option to terminate this Agreement or to
convert the License granted to NewLink in Section 2(a) to a
non-exclusive license, in each case, upon prior written notice to NewLink.

 

b.                                      LIMR may
terminate this Agreement immediately by providing NewLink written notice of
termination, if:

 

(1)                                  NewLink ceases
to function as a going concern;

 

6

 

(2)                                  a bankruptcy
petition or action is filed or taken by or against NewLink under any United
States bankruptcy law;

 

(3)                                  a receiver,
assignee or other liquidating officer is appointed with control for all or
substantially all of the assets of NewLink; or

 

(4)                                  NewLink makes
an assignment for the benefit of creditors of all or substantially all its
assets;

 

provided,
that, in the case of subclauses (b)(2), (3) or (4) above, such
aforementioned circumstance is not remedied, dismissed or stayed within the
earlier of sixty (60) days of (x) occurrence of (b)(2), (3) or (4) or
(y) LIMR’s notice of its intent to terminate this Agreement;

 

Notwithstanding
anything in Sections 4(a) or (b) or 23 to the contrary, at any time
that LIMR or NewLink believes that the other party has defaulted under this
Agreement and that such default will irreparably harm such party, in addition
to its rights under this Agreement and at law, such party shall have the right
to seek all applicable equitable remedies.

 

c.                                       If NewLink
fails to make any payment whatsoever due and payable to LIMR hereunder, LIMR
shall have the right to terminate this Agreement effective on ninety (90) days
written notice, unless NewLink shall make all such payments to LIMR within said
ninety (90) day period, and provided that the payments demanded by LIMR are not
disputed by NewLink.  In the event of a
dispute of such payments by NewLink, the parties shall use good faith efforts
to resolve the dispute, which if not resolved by the end of four (4) months
either party may submit the dispute to binding arbitration pursuant to Section 23(b).  Any disputed payments submitted to
arbitration hereunder be paid into escrow the arbitrator or other independent
escrow agent acceptable to both parties in their reasonable discretion unless
and until determined due by the arbitrator under Section 23(b), provided,
however that if the arbitrator determines that amounts are payable by NewLink
to LIMR, then such outstanding amounts will bear interest back to the date that
they originally accrued at the default rate of Prime plus 4%.  Prime shall be the prime rate published by
the Wall Street Journal or if the Wall Street Journal publishes more than one
prime rate, then the average of the prime rates published by the Wall Street
Journal, and if the Wall Street Journal does not publish a prime rate, then the
prime rate of the largest bank in Philadelphia, Pennsylvania.

 

d.                                      NewLink shall
have the right to terminate this Agreement at any time on ninety (90) days
prior written notice to LIMR, provided that NewLink shall remain obligated to
complete payment of all amounts that have accrued and are owed to LIMR through
the effective date of the termination. 
In the event NewLink terminates the Agreement, the license granted
hereunder shall be deemed terminated, and all rights with respect to the
subject matter thereof revert to LIMR and all further obligations of NewLink to
LIMR (except for obligations accrued prior to such termination) shall
automatically be terminated.

 

7

 

e.                                       Upon expiration
or termination of this Agreement for any reason, nothing herein shall be
construed to release either party from any obligation that has accrued prior to
the effective date of such termination. 
NewLink and any Sublicensee thereof may, however, after the effective
date of such termination, sell all then existing Licensed Products, and
complete Licensed Products in the process of manufacture at the time of such
termination and sell the same, provided that NewLink shall make the payments to
LIMR as required by Articles 8 & 9 of this Agreement and shall submit
the reports as required by Article 11 hereof.

 

f.                                         Sections 4(e),
4(f), 7(b) (but solely with respect to sales made pursuant to Section 4(e)),
11, 12, 13 (solely for the period specified therein), 14, 18, 19, 20, 21 and 23
shall survive termination or expiration of this Agreement.

 

5.                                       Ownership.  LIMR represents and warrants to NewLink that
LIMR owns the rights to the LIMR Technology and the Patent Rights (except to
the extent any such LIMR Technology and Patent Rights are co-owned by NewLink)
and has the right to license its interest in the LIMR Technology and the Patent
Rights to NewLink, subject to the rights retained by the United States
government and LIMR as described in Section 2(b).

 

6.                                       Patent
Prosecution.  Commencing
on the Effective Date, NewLink shall have the right and responsibility, at its
expense and in its reasonable discretion, for the preparation, filing,
prosecution and maintenance of any patent applications and patents included in
the Patent Rights, in consultation with LIMR. 
NewLink shall provide LIMR the opportunity to review and comment upon
such patent applications prior to filing, and on all communications with patent
offices in all applicable countries and jurisdictions, the selection of
countries for filing of patent applications, responses to office actions, and
other substantive patent documents prior to filing and the right to have such
documents revised prior to filing to reflect such comments.  Promptly after the Effective Date, LIMR will
transfer to NewLink (or its selected counsel) all patent prosecution files for
the Patent Rights, shall provide to NewLink such executed documents or
instruments as needed for NewLink to undertake such prosecution efforts, and
shall provide NewLink all reasonable assistance in such prosecution.  NewLink shall reimburse LIMR for the
reasonable out-of-pocket costs, based on detailed invoices of such costs,
actually incurred in conducting such prosecution and maintenance of the Patent
Rights prior to the Effective Date; provided that LIMR has provided NewLink
with an invoice for such costs together with appropriate documentation
outlining the costs incurred.  LIMR shall
provide NewLink with all information necessary or useful for NewLink’s filing
and prosecution of such Patent Rights and shall cooperate fully with NewLink so
as to maximize NewLink’s rights.  NewLink
shall not abandon or opt not to file any patent or patent application included
in the Patent Rights without the prior notice to LIMR.  NewLink may elect in writing to cease the
continued prosecution or maintenance of particular Patent Right in a country,
and on such notice NewLink shall no longer have any further rights or
responsibility for such prosecution or maintenance, or obligation to pay any
amounts therefore, or any further rights under such specific Patent Right in
such country, and LIMR may in its discretion continue such prosecution.  Any such notice shall be given by NewLink to
LIMR in sufficient time to enable LIMR an adequate time 

 

8

 

period to protect its rights, but in no case less than three (3) months
prior the filing deadline imposed or promulgated by any governing or regulatory
authority for filing any such protective document.

 

7.                                       Royalties;
Sublicense Payments.

 

a.                                       NewLink shall
pay the following royalties to LIMR during the Term on a country-by-country and
Licensed Product-by-Licensed Product basis, subject to Section 7(b) below:

 

(1)                                  For Licensed
Product covered or claimed by a [*] Claim:  [*] of the Net
Sales of such Licensed Product in countries where the Licensed Product is covered
by a Valid Claim at the time of sale.

 

(2)                                  For Licensed
Product not covered by a [*] Claim: [*] of the Net Sales of such Licensed Product in countries
where the Licensed Product is covered by a Valid Claim at the time of sale.

 

b.                                      In the
event:  (i) one or more additional
technologies (including any patents related thereto) must be licensed (e.g.
formulation, cross linking) by NewLink, its Affiliates, and/or Sublicensees
from any third party to develop, make, use, import, sell, offer for sale, or
import a Licensed Product in any country, or (ii) royalties are payable on
the sale of a Licensed Product (as defined hereunder) pursuant to the Exclusive
License Agreement between LIMR and NewLink, dated December 21, 2007, or
pursuant to the License Agreement between LIMR and NewLink, dated July 7,
2005, (the “Prior Agreements”), NewLink shall be entitled to fully offset
against royalties otherwise due to LIMR hereunder an amount equal to the
aggregate royalties owed to such third party and owed to LIMR under the Prior
Agreements; provided, however, that in no event shall NewLink pay LIMR a
royalty hereunder of less than [*] of Net
Sales.

 

c.                                       If NewLink
grants a sublicense, under the License rights granted under this Agreement to
NewLink, to a Sublicensee pursuant to Article 3 hereof, NewLink shall pay
LIMR [*] of any Consideration received by
NewLink from such Sublicensee, for each such sublicense during the Term.  For clarity, sales of Licensed Product by a
Sublicensee shall not be included in Net Sales.

 

d.                                      No more than
one royalty payment shall be due with respect to a sale of a particular
Licensed Product.  No multiple royalties
shall be payable because any Licensed Product, or its manufacture, sale or use
is covered by more than one Valid Claim in a given country.

 

8.                                       Payment of
Royalties.  Royalties
and sublicense payments shall be payable by NewLink quarterly in U.S. dollars
within forty-five (45) days of the end of the calendar quarter.  NewLink shall render quarterly reports to
LIMR on or before the last day of April, July, October, and January, as
applicable, showing the amount of Net Sales received by NewLink during the most
recently concluded fiscal quarter and the appropriate royalties 

 

9

 

and sublicense payments due to LIMR certified by NewLink’s chief
financial officer (or comparable financial officer) as true, correct and
complete.  Each such report shall be
accompanied by payment of the royalties and/or sublicense payments due for such
fiscal quarter.  After the first
commercial sale of any Licensed Product pursuant to this Agreement, and upon
LIMR’s request and at its expense, NewLink shall provide LIMR with copies of
NewLink’s then-existing standard audited financial statements covering the
royalties and sublicense payments due under this Agreement within thirty (30)
days of LIMR’s request.  NewLink shall
pay estimated royalties payments quarterly with an annual reconciliation and of
all payments performed within thirty (30) days of receipt of audited numbers.  For the purpose of determining royalties
payable under this Agreement, any Consideration NewLink receives from
Sublicensees in currencies other than U.S. dollars and any Net Sales
denominated in currencies other than U.S. dollars shall be converted into U.S.
dollars at the same conversion rate that NewLink actually receives on such
conversion at the time of the transaction in question which gave rise the
Consideration.

 

9.                                       Diligence;
Milestones and Associated Payments.

 

a.                                       Diligence.  NewLink has represented to LIMR, to induce
LIMR to issue this exclusive license, that it will commit itself to a diligent
program of developing and exploiting [*] so that
public utilization will result there from. 
As part of the consideration for the exclusive license granted to
NewLink hereunder, NewLink has agreed to use commercially reasonable efforts to
develop and exploit [*].  Notwithstanding the foregoing, NewLink will
not be deemed in breach of this Section 9(a) as long as it is using
commercially reasonable efforts to develop and exploit [*]
as defined under one or both of the Prior Agreements.

 

It
is understood and agreed by the parties that the actions by any Affiliate or
Sublicensee may satisfy the above obligations.

 

b.                                      Milestone
Payments to LIMR.  Subject to Section 9(c) below,
NewLink will pay to LIMR:

 

(1)                                  [*] for the [*] for a Licensed Product in [*];

 

(2)                                  [*] for the [*] on a Licensed Product;

 

(3)                                  [*] for the [*] on a Licensed Product;

 

(4)                                  [*] for the [*] on a Licensed Product;

 

(5)                                  [*] for the [*] for a Licensed Product in [*];

 

(6)                                  [*] for [*] for a Licensed Product [*]
in [*].

 

For
clarity, each such milestone payment above shall be payable only once under
this Agreement.

 

10

 

c.                                       In the
event:  (i) one or more additional
technologies (including any patents related thereto) must be licensed
(e.g.  formulation, cross linking) by
NewLink, its Affiliates, and/or Sublicensees from any third party to develop,
make, use, import, sell, offer for sale, or import a Licensed Product in any
country, or (ii) milestone payments are payable pursuant to the Prior
Agreements in connection with [*], NewLink
shall be entitled to fully offset against a milestone payment payable upon the
occurrence of a milestone event under Section 9(b)(5) or 9(b)(6) above
with respect to a Licensed Product, an amount equal to the aggregate amount of
any milestone payments owed to such third party or owed to LIMR under the Prior
Agreements upon the occurrence of such milestone event with respect to such
Licensed Product; provided, however, that in no event shall the amount payable
under Section 9(b)(5) or 9(b)(6), as applicable, be less than [*].

 

10.                                 Reports and
Accounting.  NewLink
shall provide to LIMR no less than once a year during the Term a written report
regarding NewLink’s product development, royalty and sublicense payment (i.e.,
receipt of Consideration) information with respect to Licensed Products and
milestone status.  The report shall be
certified by an officer of NewLink as true, correct and complete.  This report is in addition to the reports
required under Section 8 hereof.

 

11.                                 Indemnity.  NewLink shall defend and indemnify and hold
LIMR, its parent corporations, affiliates, trustees, officers, agents and
employees (the “Indemnitees”) harmless from any judgments and other liabilities
based upon claims or causes of action brought by a third party against any
Indemnitee which arise out of [*] by NewLink,
its Affiliates or any Sublicensees, or from [*]
by the end users of Licensed Products or from [*]
by NewLink, its Affiliates or any Sublicensees of [*],
except to the extent that [*], provided
that LIMR promptly notifies NewLink of any such claim coming to its attention
and that it cooperates with NewLink in the defense of such claim.  If any such claims or causes of action are
made, NewLink counsel, the identity of whom LIMR does not have a reasonable
objection, shall defend LIMR.  If LIMR
has a reasonable objection to the counsel selected by NewLink, LIMR and NewLink
shall cooperate with each other reasonably and in good faith so that NewLink
can engage legal counsel to whom LIMR does not have reasonable objection.  LIMR reserves the right to be represented by
its own counsel at its own expense. 
NewLink shall not settle any claim that requires the payment of money or
the cessation of research and development in each case by LIMR without the
prior written consent of LIMR in its sole discretion.

 

12.                                 Limitations of
Liability.  EXCEPT FOR
THE INDEMNIFICATION OBLIGATIONS ABOVE, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING LOST REVENUES OR LOST
PROFITS, WHETHER BASED ON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE,
STRICT LIABILITY OR OTHER TORT OR OTHERWISE ARISING OUT OF THIS AGREEMENT, AND
REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY SET FORTH HEREIN, 

 

11

 

NEWLINK’S TOTAL LIABILITY UNDER THIS AGREEMENT SHALL
BE LIMITED TO [*]

 

13.                                 Insurance.  At such time as NewLink, its Affiliates, or
Sublicensees, initiates or otherwise enters into clinical trials of any
Licensed Product or commercially distributes or sells Licensed Products (other
than for the purpose of obtaining regulatory approvals), NewLink shall at its
sole cost and expense, procure and maintain comprehensive general liability
insurance in amounts not less than $3,000,000 per incident and naming the
Indemnitees (defined in Section 11 above) as additional insureds.  LIMR may require such minimum requirements to
be increased from time to time if the minimum amounts of such insurance carried
by prudent companies in the general size of NewLink and in similar industries
as NewLink is higher, so that NewLink will at all times carry commercially
reasonable amounts of insurance.  Such
comprehensive general liability insurance shall provide (i) product
liability coverage and (ii) broad form contractual liability coverage for
NewLink’s indemnification under this Agreement. 
If NewLink elects to self-insure all or part of the limits described
above (including deductibles or retentions, which are in excess of $250,000
annual aggregate) such self-insurance program must be acceptable to LIMR and
Main Line Health Vice President Insurance and Main Line Health, Inc’s
chief financial officer in each of their sole and absolute discretions.  Such insurance will be considered primary as to
any other valid and collectible insurance, but only as to acts of the named
insured.  The minimum amounts of
insurance coverage required shall not be construed to create a limit of NewLink’s
liability with respect to its indemnification and other obligations under this
Agreement.  NewLink shall provide LIMR
with written evidence of such insurance promptly upon written request of
LIMR.  NewLink shall use provide LIMR
with written notice at least thirty (30) days prior to the cancellation,
non-renewal or material change in such insurance.  If NewLink does not obtain replacement
insurance providing comparable coverage immediately, LIMR shall have the right
to terminate this Agreement effective immediately without notice or any
additional waiting periods.  NewLink
shall maintain such comprehensive general liability insurance beyond the
expiration or termination of this Agreement during (i) the period that any
Licensed Product is being clinically tested, commercially distributed or sold
by NewLink (or an agent on its behalf) or by a Sublicensee, Affiliate and (ii) a
reasonable period after the period referred to in (i) above which in no
event shall be less than five (5) years.

 

14.                                 Mutual
Confidentiality.  NewLink and
LIMR realize that certain confidential or proprietary information disclosed by
one party (the “disclosing party”) to the other party (the “receiving party”)
pursuant to this Agreement (“Confidential Information” of the disclosing party)
shall be treated as confidential.  For
purposes of this Agreement, the term “Confidential Information” of a party
means any of the following:

 

a.                                       All information
concerning the business or affairs of either party or its affiliates, including
without limitation, all information relating to the LIMR Technology or to NewLink
technology, the Patent Rights, the Licensed Product, and/or any and all
existing and potential research parameters, program requirements, strategies,
products, technology, know-how, information, data, processes, systems, 

 

12

 

inventions, developments, formulations,
applications, and methods of rendition of services relating to any of the
foregoing;

 

b.                                      All information
received from third parties and held in confidence by either party or its
affiliates, or

 

c.                                       All information
pertaining to the proposed business relationship(s) and/or transactions(s) between
the parties, including without limitation, the terms thereof.

 

The
Confidential Information of the disclosing party shall not be disclosed by the
receiving party to any third party and shall not be used by the receiving party
for purposes other than those contemplated by this Agreement without the prior
written consent of the disclosing party. 
Any Confidential Information exchanged by the parties under this
Agreement shall remain subject to such confidentiality and non-use obligations
for a period of five (5) years from the termination or expiration of the
Agreement.  The confidentiality and
non-use obligations under this Article 14 shall not apply to any
information that:

 

a.                                       Is or which
later becomes publicly known through no fault of the receiving party, or

 

b.                                      Is already in
the receiving party’s possession prior to the disclosure by the disclosing
party to the receiving party as indicated in the receiving party’s competent
written records, or

 

c.                                       Is subsequently
disclosed to the receiving party, by a third party not under any obligation of
confidentiality to the disclosing party, or

 

d.                                      Is
independently developed by the receiving party without use of the Confidential
Information of disclosing party or any other information from the disclosing
party that is protected by any other confidentiality obligations.

 

In addition, the receiving party may disclose
specific Confidential Information of the other party to the extent such
disclosure is required to be disclosed by court order or governmental law, rule or
regulation, provided that the receiving party first gives the disclosing party
prompt written notice of any such requirement and cooperates with the disclosing
party in attempting to limit or seek confidential treatment with respect to
such disclosure of such Confidential Information.

 

The provisions of this Section 14 are subject
to the publication rights of LIMR as described in Section 2(b) hereof.

 

15.                                 Disclaimer.  Except as expressly set forth in Section 5
hereof, nothing contained in this Agreement shall be construed as:

 

a.                                       a warranty or
representation by LIMR as to the validity or scope of any Patent Rights; or

 

13

 

b.                                      a warranty or
representation that any Licensed Products manufactured, used or sold will be
free from infringement of patents, copyrights, or third parties; except that
LIMR represents that it has no knowledge of any existing issued patents or
copyrights which might be infringed.

 

LIMR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF LICENSED PRODUCTS.

 

16.                                 Third Party
Infringement.

 

a.                                       Each party
shall promptly notify the other party in writing of any alleged or actual
infringement of the Patent Rights of which it becomes aware and which may
adversely impact the rights of either party hereunder.

 

b.                                      NewLink shall
have the first right but not the obligation, at its expense, to bring an
appropriate action against any person or entity directly or contributorily
infringing the Patent Rights.  LIMR shall
cooperate reasonably with NewLink in such action, including by consenting to be
named as a party to such action and furnishing a power of attorney upon
request.  Except as otherwise set forth
in this Agreement, NewLink shall have sole control of the action brought by it;
provided, however, that LIMR shall have the right to participate in such action
against a third party infringer through counsel of its own choice and at its
own expense.

 

c.                                       In the event
NewLink institutes legal action against an infringer hereunder, LIMR shall
fully cooperate with and supply all assistance reasonably requested by NewLink,
including, without limitation, by using commercially reasonable efforts to have
its employees testify and grant interviews when requested and to make available
relevant records, papers, information, samples, specimens, and similar items
upon request of NewLink.  LIMR shall
render such cooperation at its own cost and expense (“LIMR’s Costs”).  NewLink shall keep LIMR reasonably informed
of the progress of such action, and LIMR shall be entitled to be represented by
counsel in connection with such action at its own expense.

 

d.                                      NewLink shall bear
the costs of all reasonable and customary expenses for such action (including
attorneys’ fees and expert fees).  Any
amounts paid to NewLink by third parties as a result of such action (in
satisfaction of a judgment or pursuant to a settlement recovery) shall first be
applied to the payment of NewLink’s out-of-pocket expenses (including attorneys’
fees and expert fees), second to LIMR’s Costs, third to LIMR’s other
out-of-pocket expenses in connection with the matter (including attorneys’ fees
and experts fees), and then the balance of any such amounts shall be included
in NewLink’s calculation of Net Sales, applied to the quarter in which such
recovery is obtained.  NewLink shall have
the right to settle any claims, but provided that if such settlement materially
negatively affects LIMR’s interests such settlement shall be only upon terms
and conditions that are reasonably acceptable to LIMR, such reasonable
acceptance to be confirmed by LIMR in writing prior to NewLink’s agreement to
such settlement.

 

14

 

e.                                       If NewLink
elects to abandon such an action other than pursuant to a settlement with the
alleged infringer that is reasonably acceptable to LIMR, NewLink shall give
timely notice to LIMR who, if it so desires, may continue the action; provided,
however, that the sharing of expenses and any recovery in such suit shall be as
agreed upon between the parties.  Any
such notice shall be given by NewLink to LIMR in sufficient advance of the
expiration of the applicable statute of limitations to enable LIMR an adequate
time period to protect its rights, but in no case less than twelve (12) months
prior to the expiration of such statute of limitations.

 

17.                                 Technical
Assistance.  Throughout
the term of the Agreement, LIMR agrees to permit NewLink and its designees to
consult with its employees and agents regarding the LIMR Technology or any
Improvements made after the Effective Date relating to the Licensed Products,
at such times and places as may be mutually agreed upon; provided that NewLink
agrees to limit such consultation to five (5) employee-investigator hours
per week and make suitable arrangements directly with LIMR employees and agents
and to compensate for such consultation at LIMR’s then-current rates as
communicated to NewLink.

 

18.                                 Name.  NewLink shall not use and shall not permit to
be used by any other person or entity the name or logo of LIMR nor any
adaptation thereof, or the name of LIMR’s employees, in any advertising,
promotional or sales literature, or for any other purpose without prior written
permission of LIMR, except as required by governmental authority or applicable
law, and provided that the foregoing shall not prevent NewLink from disclosing
to third parties the existence of this Agreement.

 

19.                                 Governing Law.  This Agreement shall be construed, governed,
interpreted and enforced according to the laws of the Commonwealth of
Pennsylvania without reference to principles of conflicts of laws.

 

20.                                 Notices.  Any notice or communication required or
permitted to be given by either party hereunder, shall be deemed sufficiently
given, (i) when mailed by certified mail, return receipt requested, and
addressed as below to the party to whom notice is given or (ii) when
transmitted by facsimile, email or other electronic means, provided that the
sender receives confirmation of transmission, and sends a confirmation copy as
provided in clause (1), addressed as below:

 

If
to LIMR:

 

J.
Todd Abrams, Ph.D.

Director of Philanthropy and Business Development 

Lankenau Institute for Medical Research

100 E. Lancaster Avenue

Wynnewood, PA 19096

 

15

 

With
a Copy to:

 

Office
of the General Counsel

Main Line Health

Bryn Mawr Hospital Legal Department, 1st floor, D Wing

130 So. Bryn Mawr Avenue

Bryn Mawr, PA 19010

Attention: Senior Vice President and General Counsel

 

If
to NewLink:

 

Dr. Nick
Vahanian

Chief Medical and Operations Officer

2901 South Loop Drive

Suite 3900

Ames, Iowa 50010

 

21.                                 Assignment.  This Agreement shall inure to the benefit of
and be binding on the parties’ permitted assigns and successors in
interest.  Except as provided in this Section 21,
neither party shall assign or transfer this Agreement without the express prior
written consent of the other, such consent not to be unreasonably
withheld.  Notwithstanding the foregoing,
an assignment of this Agreement by NewLink to an Affiliate or in connection
with the transfer of all or substantially all of the business to which this
Agreement relates, whether by acquisition, merger, consolidation, operation of
law or other transaction, shall not require LIMR’s consent.

 

22.                                 Entire
Agreement.  This
Agreement, together with any exhibits attached hereto, represents the entire
agreement between the parties with respect to the subject matter hereof, and
may only be subsequently altered or modified by an instrument in writing.  This Agreement cancels and supersedes any and
all prior oral or written agreements between the parties that relate to the
subject matter of this Agreement.

 

23.                                 Mediation and
Arbitration.

 

a.                                       Except as
otherwise expressly provided herein, both parties agree that they shall use
good faith, reasonable efforts to attempt to resolve any dispute arising from
this Agreement, or the breach thereof, through mediation before proceeding to
arbitration proceedings as set forth below. 
Both parties agree that at least one employee (with respect to NewLink,
an authorized executive officer of NewLink) who is authorized and capable of
negotiating an agreement on behalf of such party, shall, within three (3) weeks
of receipt of written notification of a dispute, meet with at least one
employee (an executive officer in the case of NewLink) of the other party who
is also authorized and capable of negotiating an agreement on behalf of such
party.  If no agreement can be reached,
both parties agree to meet again within a four (4) week period after the
initial meeting to negotiate in good faith to resolve the dispute.

 

b.                                      If no agreement
can be reached after this second meeting or if otherwise expressly provided
herein, both parties agree to submit the dispute to binding arbitration 

 

16

 

under the Commercial Arbitration Rules of the
American Arbitration Association (“AAA”) before a panel of three (3) independent
arbitrators each having at least ten (10) years experience in the
biomedical licensing area.  The identity
of the arbitrators shall be mutually agreed upon by the parties, provided,
however, that if they are unable to agree on such arbitrators within ten (10) business
days after the earlier of (i) the AAA providing them with a list of
potential qualified arbitrators or (ii) the delivery of a list of at least
ten potential qualified arbitrators by one party to the other party, then AAA
shall select the arbitrators from the relevant list.  Discovery shall be permitted as set forth in
the Federal Rules of Civil Procedure with respect to the performance by
the parties of their obligations under this Agreement and such other matters as
the arbitrators may determine.  Judgment
upon an award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.

 

24.                                 Waiver.  A failure by one of the parties to this
Agreement to assert its rights for or upon any breach or default of this
Agreement shall not be deemed a waiver of such rights nor shall any such waiver
be implied from acceptance of any payment. 
No such failure or waiver in writing by any one of the parties hereto
with respect to any rights, shall extend to or affect any subsequent breach or
impair any right consequent thereon.

 

25.                                 Severability.  The parties agree that it is the intention of
neither party to violate any public policy, statutory or common laws, and
governmental or supranational regulations; that if any sentence, paragraph,
clause or combination of the same is in violation of any applicable law or
regulation, or is unenforceable or void for any reason whatsoever, such
sentence, paragraph, clause or combinations of the same shall be inoperative
and the remainder of the Agreement shall remain binding upon the parties.

 

26.                                 Force Majeure.  Neither party shall lose any rights under
this Agreement or be liable to the other party for damages or losses on account
of failure of performance by the defaulting party if the failure is occasioned
by war, strike, fire, act of God, earthquake, flood, explosions, sabotage,
strikes or labor disputes, lockout, riots, invasions, acts of war, embargo,
governmental acts or orders or restrictions, disruptions of supplies of
adequate raw materials, terrorist attacks, or any other reason where failure to
perform is beyond the reasonable control and not caused by the negligence or
intentional conduct or misconduct of the nonperforming party, and such party
has exerted all reasonable efforts to avoid or remedy such force majeure;
provided, however, that in no event shall a party be required to settle any
labor dispute or disturbance.

 

27.                                 Marking.  NewLink agrees to mark the Licensed Products
covered by the Patent Rights in the United States with all applicable U.S.
Patent numbers.  NewLink agrees to mark
the Licensed Products covered by the Patent Rights in other countries with all
applicable patent numbers issued by such other countries to the extent required
by applicable laws in order to preserve Patent Rights.

 

28.                                 Headings.  The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not constitute a part
hereof.

 

17

 

*********************************

 

[rest of page blank]

 

18

 

 

IN
WITNESS WHEREOF, the parties have signed this Agreement on and as of the
Effective Date.

 

	
  LANKENAU INSTITUTE FOR MEDICAL

  	
   

  	
  NEWLINK GENETICS CORPORATION

  
	
  RESEARCH

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ George C. Prendergast, PhD

  	
   

  	
  By:

  	
  /s/ Mario Mautino

  
	
   

  	
  George C. Prendergast, PhD

  	
   

  	
   

  	
   

  
	
   

  	
  Professor & President/CEO

  	
   

  	
  Title:

  	
  VP of Drug Discovery & Intellectual Property

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  5/18/09

  	
   

  	
  Date:

  	
  5/19/09

  

 

19

 

License Agreement between
LIMR and NewLink

 

Exhibit A

 

Patent Rights

 

1.                                       [*]

 

2.                                       [*]

 

20

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