SEC Filing | Dynavax Technologies Corporation

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e10vq

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 000-24647

Dynavax Technologies Corporation

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		33-0728374 (IRS Employer Identification No.)

2929 Seventh Street, Suite 100
Berkeley, CA 94710-2753
(510) 848-5100

(Address, including Zip Code, and telephone number, including area code, of the registrant’s principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

As of July 31, 2006, the registrant had outstanding 30,587,769 shares of common stock.

INDEX

DYNAVAX TECHNOLOGIES CORPORATION


		Page No.
PART I FINANCIAL STATEMENTS

Item 1. Condensed Consolidated Financial Statements (Unaudited)		4

Condensed Consolidated Balance Sheets as of June 30, 2006 (Unaudited) and December 31, 2005		4

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2006 and 2005 (Unaudited)		5

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005 (Unaudited)		6

Notes to Condensed Consolidated Financial Statements (Unaudited)		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures about Market Risk		24

Item 4. Controls and Procedures		24

PART II OTHER INFORMATION

Item 1. Legal Proceedings		25

Item 1A. Risk Factors		25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		35

Item 3. Defaults upon Senior Securities		36

Item 4. Submission of Matters to a Vote of Security Holders		36

Item 5. Other Information		36

Item 6. Exhibits		36

SIGNATURES		38
EXHIBIT 10.20
EXHIBIT 10.21
EXHIBIT 10.22
EXHIBIT 10.23
EXHIBIT 10.24
EXHIBIT 10.25
EXHIBIT 10.26
EXHIBIT 10.27
EXHIBIT 10.28
EXHIBIT 10.29
EXHIBIT 21.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

FORWARD-LOOKING STATEMENTS

This Quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which are subject to a number of risks and uncertainties. Our forward-looking statements include discussions regarding our business and financing strategies, future research and development, preclinical and clinical product development efforts, intellectual property right and, ability to commercialize our product candidates as well as the timing of the introduction of our products, uncertainty regarding our future operating results and prospects for profitability. Our actual results may vary materially from those in such forward-looking statements as a result of various factors that are identified in “Item 1A – Risk Factors” and elsewhere in this document. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to update any forward-looking statements.

This Quarterly Report on Form 10-Q includes trademarks and registered trademarks of Dynavax Technologies Corporation. Products or service names of other companies mentioned in this Quarterly Report on Form 10-Q may be trademarks or registered trademarks of their respective owners.

PART I. FINANCIAL STATEMENTS

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dynavax Technologies Corporation

Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)


	June 30,			December 31,
	2006			2005
	(unaudited)			(Note 1)
Assets
Current assets:
Cash and cash equivalents	$	10,090		$	8,725
Marketable securities		31,613			66,385
Investments held by Symphony Dynamo, Inc.		19,044			—
Restricted cash		408			408
Accounts receivable		710			689
Prepaid expenses and other current assets		1,275			1,277

Total current assets		63,140			77,484
Property and equipment, net		4,986			2,197
Goodwill		2,312			—
Other intangible assets, net		4,884			—
Other assets		1,302			412

Total assets	$	76,624		$	80,093


Liabilities, noncontrolling interest and stockholders’ equity
Current liabilities:
Accounts payable	$	1,417		$	952
Accrued liabilities		6,195			3,841
Deferred revenues		829			750

Total current liabilities		8,441			5,543

Other long-term liabilities		152			187

Noncontrolling interest in Symphony Dynamo, Inc.		9,728			—

Commitments and contingencies

Stockholders’ equity:
Preferred stock: $0.001 par value; 5,000 shares authorized and no shares issued and outstanding at June 30, 2006 and December 31, 2005		—			—
Common stock: $0.001 par value; 100,000 shares authorized at June 30, 2006 and December 31, 2005; 30,588 and 30,482 shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively		31			30
Additional paid-in capital		197,620			192,840
Deferred stock compensation		—			(2,467	)
Accumulated other comprehensive loss:
Unrealized loss on marketable securities available-for-sale		(72	)		(144	)
Cumulative translation adjustment		60			(5	)

Accumulated other comprehensive loss		(12	)		(149	)

Accumulated deficit		(139,336	)		(115,891	)

Total stockholders’ equity		58,303			74,363

Total liabilities, noncontrolling interest and stockholders’ equity	$	76,624		$	80,093

See accompanying notes.

Dynavax Technologies Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Revenues:
Collaboration revenue	$	—		$	—		$	—		$	12,199
Services and license revenue		224			—			224			—
Grant revenue		305			953			593			1,452

Total revenues		529			953			817			13,651

Operating expenses:
Research and development		10,762			7,493			17,354			13,148
General and administrative		3,380			2,473			5,983			4,813
Acquired in-process research and development		4,180			—			4,180			—
Amortization of intangible assets		196			—			196			—

Total operating expenses		18,518			9,966			27,713			17,961


Loss from operations		(17,989	)		(9,013	)		(26,896	)		(4,310	)

Interest and other income, net		685			434			1,420			801


Loss including noncontrolling interest in Symphony Dynamo, Inc.		(17,304	)		(8,579	)		(25,476	)		(3,509	)

Loss attributed to noncontrolling interest in Symphony Dynamo, Inc.		2,031			—			2,031			—


Net loss	$	(15,273	)	$	(8,579	)	$	(23,445	)	$	(3,509	)


Basic and diluted net loss per share	$	(0.50	)	$	(0.35	)	$	(0.77	)	$	(0.14	)

Shares used to compute basic and diluted net loss per share		30,536			24,745			30,524			24,734

See accompanying notes.

Dynavax Technologies Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended
	June 30,
	2006			2005
Operating activities
Net loss	$	(23,445	)	$	(3,509	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		(827	)		387
Loss attributed to noncontrolling interest in Symphony Dynamo, Inc.		(2,031	)		—
Acquired in-process research and development		4,180			—
Amortization of intangible assets		196			—
Gain on disposal of property and equipment		(50	)		—
Accretion and amortization on marketable securities		169			640
Realized loss on sale of marketable securities		23			—
Interest accrued on notes receivable from stockholders		—			(12	)
Stock-based compensation expense		1,396			653
Changes in operating assets and liabilities:
Accounts receivable		468			2,387
Prepaid expenses and other current assets		2			(740	)
Other assets		(505	)		(10	)
Accounts payable		242			229
Accrued liabilities		2,354			178
Deferred revenues		(87	)		(6,952	)

Net cash used in operating activities		(17,915	)		(6,749	)

Investing activities
Purchases of investments held by Symphony Dynamo, Inc.		(19,044	)		—
Cash paid for acquisition, net of cash acquired		(14,045	)		—
Purchases of marketable securities		(7,653	)		(35,712	)
Maturities and sales of marketable securities		42,305			31,190
Disposal (purchases) of property and equipment		41			(363	)

Net cash provided by (used in) investing activities		1,604			(4,885	)

Financing activities
Proceeds from purchase of noncontrolling interest by preferred shareholders in Symphony Dynamo, Inc., net of fees		17,405			—
Proceeds from employee stock purchase plan		57			66
Exercise of stock options		149			6
Repayment of notes receivable from stockholders		—			92

Net cash provided by financing activities		17,611			164

Effect of exchange rate on cash and cash equivalents		65			(4	)

Net increase (decrease) increase in cash and cash equivalents		1,365			(11,474	)
Cash and cash equivalents at beginning of period		8,725			16,590

Cash and cash equivalents at end of period	$	10,090		$	5,116


Supplemental disclosure of non-cash investing and financing activities
Warrants issued in conjunction with the Symphony Dynamo, Inc. transaction	$	5,646		$	—

Change in unrealized loss on marketable securities	$	72		$	(18	)

Change in cumulative translation adjustment	$	65		$	(4	)

Exercise of stock options	$	—		$	200

Repurchase of common stock for exercise of stock options	$	—		$	(200	)

See accompanying notes.

Dynavax Technologies Corporation

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Summary of Significant Accounting Policies

Dynavax Technologies Corporation (“Dynavax” or the “Company”) is a biopharmaceutical company that discovers, develops and intends to commercialize innovative products to treat and prevent allergies, infectious diseases, cancer and chronic inflammatory diseases using versatile, proprietary approaches that alter immune system responses in highly specific ways.

Basis of Presentation

Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. In our opinion, these unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary to fairly state our financial position and the results of our operations and cash flows. Interim-period results are not necessarily indicative of results of operations or cash flows for a full-year period. The condensed consolidated balance sheet at December 31, 2005 has been derived from audited financial statements at that date, but does not include all disclosures required by U.S. generally accepted accounting principles for complete financial statements.

These unaudited condensed consolidated financial statements and the notes accompanying them should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission (SEC) on March 16, 2006.

The unaudited condensed consolidated financial statements include the accounts of Dynavax and our wholly-owned subsidiaries as well as a variable interest entity, Symphony Dynamo, Inc., for which we are the primary beneficiary as defined by Financial Accounting Standards Board (FASB) Interpretation No. 46 (revised 2003), “Consolidation of Variable Interest Entities” (FIN 46R). All significant intercompany accounts and transactions have been eliminated. The Company operates in one business segment, which is the discovery and development of biopharmaceutical products.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results may differ from these estimates.

Critical Accounting Policies

The Company believes that there have been no significant changes in its critical accounting policies during the six months ended June 30, 2006 as compared with those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2005, except as discussed below.

Revenue Recognition

We recognize revenue from collaborative agreements, the performance of research and development and contract manufacturing services, royalty and license fees and grants. We recognize revenue when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectibility is reasonably assured.

Revenues from collaboration and research and development service agreements are recognized as work is performed. Any amounts received in advance of performance are recorded as deferred revenue and recognized as earned over the estimated term of the performance obligation. Revenue from milestones with substantive performance risk is recognized upon achievement of the milestone. All revenue recognized to date under these collaborations and milestones has been nonrefundable.

recognized when earned; up-front nonrefundable fees where the Company has no continuing performance obligations are recognized as revenues when collection is reasonably assured.

Grant revenue from government and private agency grants are recognized as the related research expenses are incurred and to the extent that funding is approved. Additionally, we recognize revenue based on the facilities and administrative cost rate reimbursable per the terms of the grant awards. Any amounts received in advance of performance are recorded as deferred revenue until earned.

Stock-Based Compensation

On January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards 123R, “Share-Based Payment” (FAS 123R) using the modified-prospective transition method. Under this transition method, compensation cost includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of FAS 123 and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of FAS 123R. Results for prior periods have not been restated.

Acquired In-process Research and Development

We allocate the purchase price of acquisitions based on the estimated fair value of the assets acquired and liabilities assumed. To assist in determining the value of the acquired in-process research and development (in-process R&D) and certain other intangibles associated with the Rhein Biotech GmbH transaction discussed in Note 2, we obtained a third party valuation as of the acquisition date. We used the income approach and the cost approach to value in-process research and development. The income approach is based on the premise that the value of an asset is the present value of the future earning capacity that is available for distribution to the investors in the asset. We perform a discounted cash flow analysis, utilizing anticipated revenues, expenses and net cash flow forecasts related to the technology. The cost approach is based on the theory that a prudent investor would pay no more than the cost of constructing a similar asset of like utility at prices applicable at the time of the appraisal. We estimate the costs involved in re-creating the technology using the historical cost and effort applied to the development of the technology prior to the valuation date. Given the high risk associated with the development of new drugs, we adjust the revenue and expense forecasts to reflect the probability and risk of advancement through the regulatory approval process based on the stage of development in the regulatory process. Such a valuation requires significant estimates and assumptions. We believe the estimated fair value assigned to the in-process R&D and other intangibles is based on reasonable assumptions. However, these assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur. Additionally, estimates for the purchase price allocation may change as subsequent information becomes available.

Goodwill and Other Intangible Assets

Goodwill amounts are recorded as the excess purchase price over tangible assets, liabilities and intangible assets acquired based on their estimated fair value, by applying the purchase method of accounting. The valuation in connection with the initial purchase price allocation and the ongoing evaluation for impairment of goodwill and intangible assets requires significant management estimates and judgment. The purchase price allocation process requires management estimates and judgment as to expectations for various products and business strategies. If any of the significant assumptions differ from the estimates and judgments used in the purchase price allocation, this could result in different valuations for goodwill and intangible assets. The Company evaluates goodwill for impairment on an annual basis and on an interim basis if events or changes in circumstances between annual impairment tests indicate that the asset might be impaired as required by SFAS No. 142, “Goodwill and Other Intangible Assets.”

Valuation of Long-lived Assets

Long-lived assets to be held and used, including property and equipment and identified intangible assets, are reviewed for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors we consider important that could indicate the need for an impairment review include the following:

	•		significant changes in the strategy for our overall business;

	•		significant underperformance relative to expected historical or projected future operating results;

	•		significant changes in the manner of our use of acquired assets;

	•		significant negative industry or economic trends;

	•		significant decline in our stock price for a sustained period; and

	•		our market capitalization relative to net book value.

Determination of recoverability is based on an estimate of undiscounted cash flows resulting from the use of the asset and its eventual disposition. Measurement of impairment charges for long-lived assets that management expects to hold and use are based on the fair value of such assets.

Consolidation of Variable Interest Entities

Under FIN 46R, “Consolidation of Variable Interest Entities,” arrangements that are not controlled through voting or similar rights are accounted for as variable interest entities (VIEs). An enterprise is required to consolidate a VIE if it is the primary beneficiary of the VIE. The enterprise that is deemed to absorb a majority of the expected losses or receive a majority of expected residual returns of the VIE is considered the primary beneficiary.

Based on the provisions of FIN 46R, we have concluded that under certain circumstances when we enter into agreements that contain an option to purchase assets or equity securities from an entity, or enter into an arrangement with a financial partner for the formation of joint ventures which engage in research and development projects, a VIE may be created. For each VIE created, we compute expected losses and residual returns based on the probability of future cash flows. If we are determined to be the primary beneficiary of the VIE, the assets, liabilities and operations of the VIE will be consolidated with our financial statements. Our consolidated financial statements include the accounts of Symphony Dynamo, Inc. discussed in Note 4.

2. Acquisition of Rhein Biotech GmbH

On April 21, 2006, the Company completed the acquisition of Rhein Biotech GmbH (Rhein) from Rhein Biotech NV, a subsidiary of Berna Biotech AG (Berna). As a result, the financial position and results of operations of Rhein have been included in our condensed consolidated financial statements as of June 30, 2006 and for the period from April 22, 2006 through June 30, 2006. Rhein, located in Düsseldorf, Germany, became a wholly-owned subsidiary which the Company refers to as Dynavax Europe. Through this acquisition, Dynavax gained ownership of a current Good Manufacturing Practice (GMP)-certified vaccine manufacturing facility in the European Union, control over the production and supply of its hepatitis B surface antigen and potentially other antigens to support clinical and commercial programs, management and personnel with expertise in biopharmaceutical product development and production and a complementary pipeline of vaccine and antiviral products. Upon closing of the transaction, Dynavax’s license and supply agreement with Berna for the supply of hepatitis B surface antigen used in the Company’s HEPLISAV™ vaccine was terminated, eliminating Berna’s option to commercialize HEPLISAV.

Under the terms of the transaction, the Company purchased all of the outstanding capital stock of Rhein, which included the satisfaction of outstanding debt and certain employee and acquisition costs for an aggregate purchase price of approximately $14.6 million. The components of the purchase price are summarized in the following table (in thousands):


Consideration and acquisition costs:
Cash paid for common stock	$	7,925
Cash paid to satisfy outstanding debt		4,550
Employee costs		745
Acquisition costs		1,338

Total purchase price	$	14,558

Under the purchase method of accounting, the total purchase price is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the date of the acquisition. Certain purchase accounting adjustments were made in order to state the tangible assets acquired and liabilities assumed at their estimated fair values and in accordance with the Company’s accounting policies and U.S. generally accepted accounting principles. These adjustments primarily impacted deferred revenue and acquired property and equipment. The Company utilized a third party valuation expert to assess the fair value of the identifiable intangible assets acquired, as well as in-process research and development. The purchase price was allocated using information available at the time of acquisition. The Company may adjust the preliminary purchase price relating to good will, intangible assets and in-process R&D after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions of preliminary estimates. The excess of purchase price over the aggregate fair values was recorded as goodwill.

The preliminary allocation of the total purchase price is as follows (in thousands):


Allocation of purchase price:
Cash and cash equivalents	$	513
Accounts receivable		489
Other current assets		385
Property, plant and equipment		3,092
Goodwill		2,312
Intangible assets		5,080
In-process research and development		4,180
Accounts payable		(273	)
Deferred revenue		(166	)
Other current liabilities		(1,054	)

Total purchase price	$	14,558

Intangible assets consist primarily of manufacturing process, customer relationships, and developed technology. The manufacturing process derives from the methods for making proteins in Hansenula yeast, which is a key component in the production of hepatitis B vaccine. The customer relationships derive from Rhein’s ability to sell existing, in-process and future products to its existing customers. The developed technology derives from a licensed hepatitis B vaccine product. Purchased intangible assets other than goodwill are amortized on a straight-line basis over their respective useful lives. The following table presents details of the purchased intangible assets acquired as part of the acquisition (in thousands, except years):


	Estimated Useful Life
Intangible Assets	(in Years)	Amount
Manufacturing process	5	$	3,670
Customer relationships	5		1,230
Developed technology	7		180

Total		$	5,080

The following tables present details of the Company’s total purchased intangible assets (in thousands):


			Accumulated
June 30, 2006	Gross		Amortization		Net
Manufacturing process	$	3,670	$	143	$	3,527
Customer relationships		1,230		48		1,182
Developed technology		180		5		175

Total	$	5,080	$	196	$	4,884

The estimated future amortization expense of purchased intangible assets is as follows (in thousands):


Year ending December 31,
2006 (remaining six months)	$	503
2007		1,006
2008		1,006
2009		1,005
2010		1,005
Thereafter		359

Total	$	4,884

The Company’s methodology for allocating the purchase price to in-process R&D is determined through established valuation techniques in the biotechnology industry. In-process R&D is expensed upon acquisition because technological feasibility has not been established at that date and no future alternative uses exist. Total in-process R&D expense was $4.2 million for both the three and six months ended June 30, 2006.

The unaudited financial information in the table below summarizes the combined results of operations of Dynavax and Rhein, on a pro forma basis, as though the companies had been combined as of January 1, 2006 and 2005. The pro forma financial information is

presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each of the periods presented. The pro forma financial information for the three and six months ended June 30, 2006 includes a charge for the write off of in-process R&D. The pro forma financial information for all periods presented also includes the purchase accounting adjustments on Rhein’s revenue, adjustments to depreciation on acquired property and equipment, and amortization charges from acquired intangible assets.

The following table summarizes the unaudited pro forma financial information (in thousands, except per share amounts):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Revenues	$	571		$	1,702		$	1,503		$	15,182
Net loss	$	(15,794	)	$	(9,764	)	$	(25,733	)	$	(5,907	)
Basic and diluted earnings per share	$	(0.52	)	$	(0.39	)	$	(0.84	)	$	(0.24	)

3. Collaborative Research and Development Agreements

In March 2005, the Company agreed to end its collaboration with UCB Farchim, S.A. (UCB) and regained full rights to its allergy program. During the second quarter of 2005, the Company received cash payments in satisfaction of outstanding receivables due from UCB and obligations owed by UCB under the collaboration. Collaboration revenue for the six months ended June 30, 2005 included accelerated recognition of $7.0 million in deferred revenue as the Company had no ongoing obligations under the collaboration. Collaboration revenue from UCB amounted to $12.2 million during the six months ended June 30, 2005.

In 2003, the Company was awarded government grants totaling $8.3 million to be received over as long as three and one-half years, assuming annual review criteria are met, to fund research and development of certain biodefense programs. Revenue associated with these grants is recognized as the related expenses are incurred. For the six months ended June 30, 2006 and 2005, the Company recognized revenue of approximately $0.5 million and $1.4 million, respectively, associated with government grants for biodefense programs.

In the fourth quarter of 2004, the Company was awarded $0.5 million from the Alliance for Lupus Research to be received during 2005 and 2006 to fund research and development of new treatment approaches for lupus. For each of the six months ended June 30, 2006 and 2005, the Company recognized revenue of approximately $0.1 million associated with the lupus grant.

4. Symphony Dynamo, Inc.

On April 18, 2006, the Company entered into a series of related agreements with Symphony Capital Partners, LP to advance specific Dynavax ISS-based programs for cancer, hepatitis B therapy and hepatitis C therapy through certain stages of clinical development. Pursuant to the agreements, Symphony Dynamo, Inc. (SDI) has agreed to invest $50.0 million to fund the clinical development of these programs and we have licensed to SDI our intellectual property rights related to these programs. SDI is a wholly-owned subsidiary of Symphony Dynamo Holdings LLC (Holdings), which provided $20.0 million in funding to SDI at closing, and which is obligated to fund an additional $30.0 million in one year following closing. We continue to be primarily responsible for the development of these programs.

In accordance with FIN 46R, we have determined that SDI is a variable interest entity for which we are the primary beneficiary. As a result, the financial position and results of operations of SDI have been included in our condensed consolidated financial statements as of June 30, 2006 and for the period from April 18, 2006 through June 30, 2006. Accordingly, the investments held by SDI and noncontrolling interest in SDI in the condensed consolidated balance sheet include the initial $20.0 million of funding, less funds spent to date on the development of the programs. The noncontrolling interest in SDI, which will continue to be reduced by SDI’s losses, was also reduced initially by (i) the structuring fee and other closing costs of $2.6 million, and (ii) the value assigned to the warrants issued to Holdings upon closing of $5.6 million.

Reimbursable expenses related to the SDI programs were $2.0 million for the period from April 18, 2006 through June 30, 2006, as reflected in the loss attributed to the noncontrolling interest in SDI.

Pursuant to the agreements, we issued to Holdings a five-year warrant to purchase 2,000,000 shares of Dynavax common stock at

$7.32 per share, representing a 25% premium over the applicable 60-day trading range average of $5.86 per share. The warrant exercise price is subject to reduction to $5.86 per share under certain circumstances. The warrant may be exercised or surrendered for a cash payment upon consummation of an all cash merger or acquisition of Dynavax, the obligation for which would be settled by the surviving entity. The warrant issued upon closing was assigned a value of $5.6 million using the Black-Scholes valuation model, which has been recorded as a reduction in the noncontrolling interest in SDI and an increase in additional paid in capital.

In consideration for the warrant, Dynavax received an exclusive purchase option (Purchase Option) to acquire all of the programs through the purchase of all of the equity in SDI during the five-year term at specified prices. The Purchase Option exercise price is payable in cash or a combination of cash and shares of Dynavax common stock, at Dynavax’s sole discretion. Dynavax also has an option to purchase either the hepatitis B or hepatitis C program (Program Option) during the first year of the agreement. The Program Option is exercisable at our sole discretion at a price which is payable in cash only and will be fully creditable against the exercise price for any subsequent exercise of the Purchase Option. If the Company does not exercise its exclusive right to purchase some or all of the programs licensed under the agreement, the intellectual property rights to the programs at the end of the development period will remain with SDI.

5. Commitments

The Company leases its facilities in Berkeley, California and Düsseldorf, Germany under operating leases that expire in September 2014 (Berkeley Lease) and August 2009 (Düsseldorf Lease), respectively. The Berkeley Lease can be terminated at no cost to the Company in September 2009 but otherwise extends automatically until September 2014. The Berkeley Lease provides for periods of escalating rent. The total cash payments over the life of the lease were divided by the total number of months in the lease period and the average rent is charged to expense each month during the lease period. In addition, our Berkeley Lease provided a tenant improvement allowance of $0.4 million, which is considered a lease incentive and accordingly, has been included in accrued liabilities and other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2006 and December 31, 2005. The Berkeley Lease incentive is amortized as an offset to rent expense over the estimated initial lease term, through September 2009. Total net rent expense related to our operating leases for the six months ended June 30, 2006 and 2005, was $0.8 million and $0.7 million, respectively. Deferred rent was $0.2 million as of June 30, 2006.

We have entered into a sublease agreement under the Berkeley Lease for a certain portion of the leased space with scheduled payments to the Company totaling $0.4 million annually through 2007. This sublease agreement includes an option for early termination by the Company in August 2006 but otherwise extends automatically until August 2007.

Future minimum payments under the non-cancelable portion of our operating leases at June 30, 2006, excluding payments from the sublease agreement, are as follows (in thousands):


Year ending December 31,
2006	$	1,051
2007		2,139
2008		2,192
2009		1,487

	$	6,869

During the fourth quarter of 2004, we established a letter of credit with Silicon Valley Bank as security for our Berkeley Lease in the amount of $0.4 million. The letter of credit remained outstanding as of June 30, 2006 and is collateralized by a certificate of deposit which has been included in restricted cash in the condensed consolidated balance sheets as of June 30, 2006 and December 31, 2005. Under the terms of the Berkeley Lease, if the total amount of our cash, cash equivalents and marketable securities falls below $20.0 million for a period of more than 30 consecutive days during the lease term, the amount of the required security deposit will increase to $1.1 million, until such time as our projected cash and cash equivalents will exceed $20.0 million for the remainder of the lease term, or until our actual cash and cash equivalents remains above $20.0 million for a period of 12 consecutive months.

In addition to the non-cancelable commitments included above, we have entered into contractual arrangements that obligate us to make payments to the contractual counterparties upon the occurrence of future events. In the normal course of operations, we have entered into license and other agreements and intend to continue to seek additional rights relating to compounds or technologies in connection with our discovery, manufacturing and development programs. Under the terms of the agreements, the Company may be required to pay future up-front fees, milestones and royalties on net sales of products originating from the licensed technologies. We consider these potential obligations to be contingent and have summarized all significant arrangements below.

We rely on research institutions, contract research organizations (CRO), clinical investigators and clinical manufacturers. As of June 30, 2006, under the terms of our agreements, we are obligated to make future payments as services are provided of approximately $33 million through 2008. These agreements are terminable by us upon written notice. We are generally only liable for actual effort expended by the organizations at any point in time during the contract, subject to certain termination fees and penalties.

The Company entered into a series of exclusive license agreements with the Regents of the University of California in March 1997 and October 1998. These agreements provide the Company with certain technology and related patent rights and materials related to ISS, TNF-alpha inhibitors, vaccines using DNA and immunoregulatory sequences. Under the terms of the agreements, the Company pays annual license or maintenance fees and will be required to pay milestones and royalties on net sales of products originating from the licensed technologies.

On April 21, 2006, Rhein and Green Cross Vaccine Corp. entered into an exclusive license agreement whereby Green Cross granted Rhein an exclusive license relating to a hepatitis B vaccine. In exchange, Rhein will be required to pay Green Cross a certain profit share until Green Cross’s development costs for the product are recouped and a certain profit share for a specified period of time after the hepatitis B product is launched in Europe and Asia.

In December 2004, Rhein entered into a joint venture agreement under which it is obligated to perform research and development services up to a maximum of 1.5 million Euro, or approximately $2.0 million, related to the development of a vaccine for cytomegalovirus. As of June 30, 2006, the remaining obligation was approximately $1.0 million.

6. Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period and potentially dilutive common shares using the treasury-stock method. For purposes of this calculation, common stock subject to repurchase and incremental common shares issuable upon the exercise of stock options and warrants are considered to be potentially dilutive common shares and are not included in the calculation of diluted net loss per share attributable to common stockholders because their effect is dilutive.

The following is a reconciliation of the numerator and denominator used in the basic and diluted net loss per share computations (in thousands):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Numerator:
Net loss		(15,273	)		(8,579	)		(23,445	)		(3,509	)

Denominator:
Weighted-average common shares outstanding used for basic and diluted net loss per share		30,536			24,745			30,524			24,734

7. Stockholders’ Equity

As of June 30, 2006, the Company had three share-based compensation plans: the 1997 Equity Incentive Plan; the 2004 Stock Incentive Plan, which includes the 2004 Non-Employee Director Option Program; and the 2004 Employee Stock Purchase Plan.

Prior to January 1, 2006, the Company accounted for its share-based compensation plans under the recognition and measurement provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related interpretations, as permitted by FASB Statement No. 123, “Accounting for Stock-Based Compensation” (FAS 123). On January 1, 2006, the Company adopted the fair value recognition provisions of FAS 123R using the modified-prospective transition method. Under this transition method, compensation cost includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of FAS 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of FAS 123R. Results for prior periods have not been restated.

As a result of the adoption of FAS 123R, the Company reduced its deferred stock compensation balance and additional paid in capital previously associated with APB 25 accounting by $2.5 million as of January 1, 2006. Also as a result of adopting FAS123R, the Company’s loss before income taxes and net loss for the three and six months ended June 30, 2006 are higher by $0.5 million and $0.8 million, respectively, than if the Company had continued to account for share-based compensation under APB 25. Basic and diluted net loss per share for the three and six months ended June 30, 2006 are higher by $0.02 and $0.03, respectively, than if the Company had continued to account for share-based compensation under APB 25.

The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of FAS 123 to options granted under the Company’s share-based compensation plans during the three and six months ended June 30, 2005 (in thousands, except per share amounts). For purposes of this pro forma disclosure, the fair value of the options is estimated using the Black-Scholes option valuation model and amortized to expense on a straight-line basis over the vesting periods of the options.


	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2005			2005
Net loss, as reported	$	(8,579	)	$	(3,509	)
Add: Stock-based employee compensation expense included in net loss		336			668
Less: Stock-based employee compensation expense determined under the fair value based method		(716	)		(1,410	)

Net loss, pro forma	$	(8,959	)	$	(4,251	)


Net loss per share:
Basic and diluted net loss, as reported	$	(0.35	)	$	(0.14	)

Basic and diluted net loss, pro forma	$	(0.36	)	$	(0.17	)

Under the Company’s stock-based compensation plans, option awards generally vest over a 4-year period contingent upon continuous service and expire 10 years from the date of grant (or earlier upon termination of continuous service). The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model and the following weighted-average assumptions:


													Employee Stock
	Employee Stock Options												Purchase Plan
	Three Months Ended						Six Months Ended						Six Months Ended
	June 30,						June 30,						June 30,
	2006			2005			2006			2005			2006			2005
Weighted-average fair value	$	3.79		$	2.28		$	3.99		$	3.85		$	2.65		$	3.68
Risk-free interest rate		5.1	%		3.9	%		4.8	%		3.5	%		4.7	%		3.2	%
Expected life (in years)		5.8			4			5.7			4			1.2			1.7
Volatility		0.8			0.7			0.8			0.7			0.7			0.7
Expected dividends		—			—			—			—			—			—

Expected volatility is based on historical volatility of the Company’s stock and comparable peer data. The expected life of options granted is estimated based on historical option exercise and employee termination data. Executive level employees, who hold a majority of the options outstanding, and non-executive level employees were each found to have similar historical option exercise and termination behavior and thus were grouped and considered separately for valuation purposes. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The Company recognized the following amounts of stock-based compensation expense (in thousands):


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2006			2005		2006		2005
Employee and director stock-based compensation expense	$	731		$	336	$	1,388	$	668
Non-employee stock-based compensation expense		(1	)		—		8		(15	)

Total	$	730		$	336	$	1,396	$	653

The fair value of the options is amortized to expense on a straight-line basis over the vesting periods of the options. Compensation expense recognized for the three and six months ended June 30, 2006 was based on awards ultimately expected to vest and reflects estimated forfeitures at an annual rate of 11%. As of June 30, 2006, the total unrecognized compensation cost related to non-vested

options granted amounted to $7.7 million, which is expected to be recognized over the options’ remaining weighted-average vesting period of 1.7 years.

Activity under the our stock option plans was as follows:


							Weighted-Average
	Options Available			Number of Options			Exercise Price Per
	for Grant			Outstanding			Share
Balance at December 31, 2005		2,831,668			2,598,797		$	4.43
Options authorized		400,000			—			—
Options granted		(1,271,600	)		1,271,600		$	5.72
Options exercised		—			(94,268	)	$	1.56
Options cancelled:
Options forfeited (unvested)		195,077			(195,077	)	$	5.20
Options expired (vested)		59,459			(59,459	)	$	3.27

Balance at June 30, 2006		2,214,604			3,521,593		$	4.95

Total options exercised during the six months ended June 30, 2006 and June 30, 2005 was 94,268 and 136,114, respectively. The total intrinsic value of the options exercised during the six months ended June 30, 2006 and June 30, 2005 was approximately $0.4 million and $0.8 million, respectively. No income tax benefits were realized by the Company in the six months ended June 30, 2006 or June 30, 2005, as the Company reported an operating loss.

The following table summarizes outstanding options that are vested and expected to vest, and options exercisable under our stock option plans as of June 30, 2006:


					Weighted- Average
			Weighted-Average		Remaining
			Exercise Price Per		Contractual Term		Aggregate Intrinsic
	Number of Shares		Share		(in years)		Value
Outstanding options (vested and expected to vest)		3,124,807	$	4.86		8.3	$	1,696,121
Options exercisable		1,241,250	$	3.98		7.2	$	1,291,032

Employee Stock Purchase Plan

As of June 30, 2006, 496,000 shares were reserved and approved for issuance under the Purchase Plan, subject to adjustment for a stock split, or any future stock dividend or other similar change in the Company’s common stock or capital structure. During the six months ended June 30, 2006, employees acquired 11,352 shares of our common stock under the Purchase Plan. At June 30, 2006, 449,956 shares of our common stock remained available for future purchases.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve a number of risks and uncertainties. Our actual results could differ materially from those indicated by forward-looking statements as a result of various factors, including but not limited to those set forth below and in Risk Factors as well as elsewhere in this document.

This discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and related Notes included in Item 1 of this quarterly report and the Consolidated Financial Statements and related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 16, 2006.

Overview

Dynavax Technologies Corporation (the “Company”) discovers, develops and intends to commercialize innovative products to treat and prevent allergies, infectious diseases, cancer and chronic inflammatory diseases using versatile, proprietary approaches that alter immune system responses in highly specific ways. Our clinical development programs are based on immunostimulatory sequences, or ISS, which are short DNA sequences designed to enhance the ability of the immune system to fight disease and control chronic inflammation. Our most advanced ISS-based clinical pipeline programs are a ragweed allergy immunotherapeutic and a hepatitis B vaccine.

Our clinical development pipeline currently includes: TOLAMBA™, a ragweed allergy immunotherapeutic, for which a major safety and efficacy trial is currently underway, and that is in a supportive clinical trial in ragweed allergic children; HEPLISAV™, a hepatitis B vaccine that is currently in a Phase 3 clinical trial; SUPERVAX™, a hepatitis B vaccine; a cancer therapy currently in a Phase 2 clinical trial and anticipated to enter clinical trials in solid tumors; and an asthma immunotherapeutic that has shown preliminary safety and pharmacology in a Phase 2a clinical trial. We also have preclinical programs in hepatitis B therapy and hepatitis C therapy that are funded by Symphony Dynamo, Inc. (SDI) and preclinical programs focused on chronic inflammation, antiviral therapies and improved, next-generation vaccines using ISS and other technologies.

Recent Developments

TOLAMBA

TOLAMBA (formerly, Amb a 1 ISS Conjugate or AIC) is a novel injectable product candidate to treat ragweed allergy. In early 2006, we announced results from a two-year Phase 2/3 clinical trial of TOLAMBA showing that patients treated with a single six-week course of TOLAMBA prior to the 2004 season experienced a statistically significant reduction in total nasal symptom scores and other efficacy endpoints compared to placebo-treated patients in the second year of the trial. The safety profile of TOLAMBA was favorable. Systemic side effects were indistinguishable from placebo and local injection site tenderness was minor and transient.

Following a discussion with the U.S. Food & Drug Administration (FDA) in the first quarter 2006, we decided to conduct an additional major safety and efficacy trial with the goal of determining whether a more intensive, single-course dosing regimen can elicit a greater treatment effect than prior regimens. In the second quarter of 2006, we initiated the Dynavax Allergic Rhinitis TOLAMBA Trial, or DARTT, and announced that enrollment in the DARTT exceeded expectations relative to the speed and number of study subjects. DARTT is a two-year, multi-center, well-controlled study in 738 ragweed allergic subjects, aged 18 to 55 years, randomized into three arms: prior dosing regimen, higher total dose regimen, and placebo. Subjects receive six injections over six weeks prior to the start of the 2006 ragweed season. Ragweed symptoms will be followed over the 2006 and 2007 ragweed seasons. The primary endpoint is reduction in total nasal symptom scores (TNSS) in the higher total dose arm compared to placebo during the second (2007) ragweed season. The trial design includes an interim analysis to be conducted in early 2007 following completion of the 2006 ragweed season. We anticipate that data from the DARTT interim analysis, if positive, combined with the safety and efficacy data from the recently completed two year Phase 2/3 trial, and from an ongoing trial in ragweed allergic children, could provide sufficient patient data for determining the potential timeline to registration.

HEPLISAV

HEPLISAV, our product candidate for hepatitis B prophylaxis, completed a Phase 2/3 trial conducted in Singapore in adults (40 years of age and older) who are more difficult to immunize with conventional vaccines. Results from the final analysis of this trial showed statistically significant superiority in protective antibody response and robustness of protective effect after three vaccinations when compared to GlaxoSmithKline’s Engerix-B^®. We intend to focus our development activities and resources on maximizing the potential of HEPLISAV’s demonstrated superiority over conventional hepatitis B vaccine in both the younger (under 40 years of age) and older adult populations, and its potential in the worldwide dialysis market.

The pivotal Phase 3 trial in the older, more difficult to immunize population in Asia and the U.S.-based Phase 1 trial in patients with end-stage renal disease (pre-hemodialysis) are ongoing. We are in the process of planning additional trials designed to support registration activities. In the second half of 2006, we plan to initiate pivotal Phase 3 safety and efficacy trials for HEPLISAV in the younger adult population in the U.S., Europe and Canada. Also in the second half of 2006, we anticipate initiating a Phase 2 trial in the dialysis population that would be conducted in Europe and/or Canada.

SUPERVAX

In April 2006, we announced the acquisition of Rhein Biotech GmbH, which we refer to as Dynavax Europe. As a result, we acquired a hepatitis B vaccine product called SUPERVAX that has been tested in more than 600 subjects and has demonstrated safety and 99% seroprotection compared to conventional vaccine when administered on a convenient, 0, 1-month two-dose schedule. We intend to continue development of and registration activities for SUPERVAX as a two-dose vaccine for commercialization in developing countries.

Symphony Dynamo, Inc.

In April 2006, we entered into a series of related agreements with Symphony Capital Partners, LP to advance specific Dynavax ISS-based programs for cancer, hepatitis B therapy and hepatitis C therapy through certain stages of clinical development. Pursuant to the agreements, Symphony Dynamo, Inc. (SDI) has agreed to invest $50.0 million to fund the clinical development of these programs and we have licensed to SDI our intellectual property rights related to these programs. SDI is a wholly-owned subsidiary of Symphony Dynamo Holdings LLC (Holdings), which provided $20.0 million in funding to SDI at closing, and which is obligated to fund an additional $30.0 million in one year following closing. We continue to be primarily responsible for the development of these programs.

Pursuant to the agreements, we issued to Holdings a five-year warrant to purchase 2,000,000 shares of Dynavax common stock at $7.32 per share, representing a 25% premium over the recent 60-day trading range average of $5.86 per share. The warrant exercise price is subject to reduction to $5.86 per share under certain circumstances. The warrant may be exercised or surrendered for a cash payment upon consummation of an all cash merger or acquisition of Dynavax, the obligation for which would be settled by the surviving entity. In consideration for the warrant, Dynavax received an exclusive purchase option (Purchase Option) to acquire all of the programs through the purchase of all of the equity in Symphony Dynamo during the five-year term at specified prices. The Purchase Option exercise price is payable in cash or a combination of cash and shares of Dynavax common stock, at Dynavax’s sole discretion. Dynavax also has an option to purchase either the hepatitis B or hepatitis C program (Program Option) during the first year of the agreement. The Program Option is exercisable at our sole discretion at a price which is payable in cash only and will be fully creditable against the exercise price for any subsequent exercise of the Purchase Option. If the Company does not exercise its exclusive right to purchase some or all of the programs licensed under the agreement, the intellectual property rights to the programs at the end of the development period will remain with SDI.

In cancer, we believe that the potent and multifaceted biological activities of ISS offer a number of distinct approaches to cancer therapy in a wide range of tumor types. We are evaluating the potential of ISS to enhance the effect of monoclonal antibodies in cancer therapies. We have conducted an open-label Phase I, dose-escalation trial of ISS in combination with Rituxan^® (rituximab) in 20 patients with non-Hodgkin’s lymphoma (NHL). Results of this study showed dose-dependent pharmacological activity without significant toxicity. A follow-up Phase 2 trial of ISS with Rituxan in NHL is currently underway in 30 patients with histologically confirmed CD20+, B-cell follicular NHL who have received at least one previous treatment regimen for lymphoma. The primary objective is to assess the proportion of patients who are alive and without disease progression one year after initiating Rituxan therapy. Mechanistic studies will be performed to characterize the enhancement of antitumor activity by ISS.

We anticipate that our cancer product candidate will advance into clinical trials in solid tumors in 2006, and our hepatitis B and hepatitis C therapeutic product candidates are currently planned to enter the clinic in 2007.

Critical Accounting Policies and the Use of Estimates

We believe that there have been no significant changes in its critical accounting policies during the six months ended June 30, 2006 as compared with those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2005, except as discussed below.

Revenue Recognition

Revenues from the manufacturing and sale of vaccine and other materials at the Dynavax Europe facility are recognized upon meeting the criteria for substantial performance and acceptance by the customer. Revenues from license fees and royalty payments are recognized when earned; up-front nonrefundable fees where the Company has no continuing performance obligations are recognized as revenues when collection is reasonably assured.

Stock-Based Compensation

As a result of the adoption of FAS 123R, the Company reduced its deferred stock compensation balance and additional paid in capital by $2.5 million as of January 1, 2006. As of June 30, 2006, the total unrecognized compensation cost related to non-vested options granted amounted to $7.7 million, which is expected to be recognized over the options’ remaining weighted-average vesting period of 1.7 years.

Determining the appropriate fair value model and calculating the fair value of stock-based awards at the grant date requires judgment, including estimating forfeiture rates, stock price volatility and expected option life. The fair value of each option is amortized on a straight-line basis over the option’s vesting period, assuming an annual forfeiture rate of 11%. The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model, which requires the input of highly subjective assumptions including the expected life of the option and expected stock price volatility. The expected life of options granted is estimated based on historical option exercise and employee termination data. Executive level employees, who hold a majority of the options outstanding, were grouped and considered separately for valuation purposes, which resulted in an expected life of 6.25 years. Non-executive level employees were found to have similar historical option exercise and termination behavior resulting in an expected life of 4 years. Expected volatility is based on historical volatility of the Company’s stock and comparable peer data over the life of the options granted to executive and non-executive level employees.

Acquired In-process Research and Development

through the regulatory approval process based on the stage of development in the regulatory process. Such a valuation requires significant estimates and assumptions. We believe the estimated fair value assigned to the in-process research and development and other intangibles is based on reasonable assumptions. However, these assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur. Additionally, estimates for the purchase price allocation may change as subsequent information becomes available.

Goodwill and Other Intangible Assets

Goodwill amounts are recorded as the excess purchase price over tangible assets, liabilities and intangible assets acquired based on their estimated fair value, by applying the purchase method of accounting. The valuation in connection with the initial purchase price allocation and the ongoing evaluation for impairment of goodwill and intangible assets requires significant management estimates and judgment. The purchase price allocation process requires management estimates and judgment as to expectations for various products and business strategies. If any of the significant assumptions differ from the estimates and judgments used in the purchase price allocation, this could result in different valuations for goodwill and intangible assets. We evaluate goodwill for impairment on an annual basis and on an interim basis if events or changes in circumstances between annual impairment tests indicate that the asset might be impaired as required by SFAS No. 142, “Goodwill and Other Intangible Assets.”

Valuation of Long-lived Assets

	•		significant changes in the strategy for our overall business;

	•		significant underperformance relative to expected historical or projected future operating results;

	•		significant changes in the manner of our use of acquired assets;

	•		significant negative industry or economic trends;

	•		significant decline in our stock price for a sustained period; and

	•		our market capitalization relative to net book value.

Consolidation of Variable Interest Entities

Results of Operations

Revenues

The following is a summary of our revenues (in thousands, except percentages):


	Three Months Ended				Increase (Decrease)						Six Months Ended				Increase (Decrease)
	June 30,				from 2006 to 2005						June 30,				from 2006 to 2005
	2006		2005		$			%			2006		2005		$			%
Revenues:
Collaboration revenue	$	—	$	—	$	—			—	%	$	—	$	12,199	$	(12,199	)		(100	)%
Services and license revenue		224		—		224			100	%		224		—		224			100	%
Grant revenue		305		953		(648	)		(68	)%		593		1,452		(859	)		(59	)%

Total revenues	$	529	$	953	$	(424	)		(44	)%	$	817	$	13,651	$	(12,834	)		(94	)%

Total revenues for the six months ended June 30, 2006 were $0.8 million, compared to $13.7 million for the same period in 2005. Total revenues in the second quarter 2006 consisted of services and license fees from Dynavax Europe for the first time and grants awarded by the National Institute of Allergy and Infectious Diseases and by the Alliance for Lupus Research. Collaboration revenue for the six months ended June 30, 2005 included accelerated recognition of $7.0 million in deferred revenue following the end of our collaboration with UCB in March 2005. Our ability to generate future collaboration revenue in 2006 and beyond will be dependent on our ability to enter into new collaborative relationships. Until we enter into new collaboration arrangements, we expect our future

revenues will be limited to grants and services and license revenue from Dynavax Europe.

Research and Development

Research and development expense consists primarily of outside services related to our preclinical experiments and clinical trials, regulatory filings, manufacturing our product candidates for our preclinical experiments and clinical trials; compensation and related personnel costs which include benefits, recruitment, travel and supply costs; allocated facility costs and non-cash stock-based compensation. We expense our research and development costs as they are incurred.

The following is a summary of our research and development expense (in thousands):


	Three Months Ended				Increase (Decrease)					Six Months Ended				Increase (Decrease)
	June 30,				from 2006 to 2005					June 30,				from 2006 to 2005
Research and development:	2006		2005		$		%			2006		2005		$		%
Compensation and related personnel costs	$	3,069	$	2,131	$	938		44	%	$	5,544	$	4,284	$	1,260		29	%
Outside services		6,180		4,334		1,846		43	%		9,046		6,826		2,220		33	%
Facility costs		1,241		885		356		40	%		2,208		1,756		452		26	%
Non-cash stock-based compensation		272		143		129		90	%		556		282		274		97	%

Total research and development	$	10,762	$	7,493	$	3,269		44	%	$	17,354	$	13,148	$	4,206		32	%

Research and development expenses of $17.4 million for the six months ended June 30, 2006 increased by $4.2 million, or 32%, from the same period in 2005. The increase over the prior year was primarily due to increased clinical trial and clinical manufacturing activities related to our lead product candidates TOLAMBA and HEPLISAV, $1.4 million related to Dynavax Europe operations, and programs funded by SDI. Compensation and related personnel costs also increased in 2006 attributed to continued organizational growth to support further development of our clinical candidates. We incurred additional stock-based compensation charges resulting from our adoption of FAS 123R effective January 1, 2006.

We anticipate that our research and development expenses will increase significantly during 2006 primarily in connection with the advancement of our clinical development programs in the areas of allergy and hepatitis B, as well as additional expenses associated with Dynavax Europe and SDI.

General and Administrative

General and administrative expense consists primarily of compensation and related personnel costs, outside services such as accounting, consulting, business development, investor relations and insurance, legal and patent costs, allocated facility costs and non-cash stock-based compensation.

The following is a summary of our general and administrative expense (in thousands):


	Three Months Ended				Increase (Decrease)					Six Months Ended					Increase (Decrease)
	June 30,				from 2006 to 2005					June 30,					From 2006 to 2005
General and administrative:	2006		2005		$		%			2006			2005		$			%
Compensation and related personnel costs	$	1,641	$	1,095	$	546		50	%	$	2,805		$	2,188	$	617			28	%
Outside services		784		720		64		9	%		1,464			1,329		135			10	%
Legal and patent costs, net		348		342		6		2	%		632			677		(45	)		(7	)%
Facility costs		149		122		27		21	%		293			248		45			17	%
Gain on disposal of property and equipment		—		—		—		—	%		(50	)		—		(50	)		(100	)%
Non-cash stock-based compensation		458		193		265		138	%		839			371		468			126	%

Total general and administrative	$	3,380	$	2,473	$	908		37	%	$	5,983		$	4,813	$	1,170			24	%

General and administrative expenses of $6.0 million for the six months ended June 30, 2006 increased by $1.2 million, or 24%, from the same period in 2005. The increase over the prior year primarily reflects the additional compensation and related personnel

costs associated with overall organizational growth, including the impact of Dynavax Europe operations which accounted for approximately $0.4 million of the increase in general and administrative expenses. In addition, we incurred higher stock-based compensation charges resulting from our adoption of FAS 123R effective January 1, 2006.

We expect general and administrative expenses to increase during 2006, resulting from continued organizational growth and expenses incurred to support the advancement of our clinical development programs as well as additional expenses associated with Dynavax Europe, SDI and preparation for integration and compliance of those operations with our public reporting obligations.

Acquired In-process Research and Development

Following our acquisition of Dynavax Europe in April 2006, we recorded the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. As a result, we recorded net tangible assets of $3.0 million, goodwill and other intangible assets of $7.4 million, and expense associated with the acquired in-process research and development of $4.2 million, representing the fair value of research projects that had not yet reached technological feasibility and that have no alternative future use.

Amortization of Intangible Assets

Intangible assets resulting from our acquisition of Dynavax Europe consist primarily of manufacturing process, customer relationships, and developed technology. Amortization of intangible assets was $0.2 million for the three and six months ended June 30, 2006.

Interest and Other Income, Net


	Three Months Ended				Increase (Decrease)					Six Months Ended				Increase (Decrease)
	June 30,				from 2006 to 2005					June 30,				from 2006 to 2005
	2006		2005		$		%			2006		2005		$		%
Interest and other income, net	$	685	$	434	$	251		58	%	$	1,420	$	801	$	619		77	%

Interest and other income, net is comprised of interest income; amortization on marketable securities; and realized gains and losses on investments, disposals of property and equipment and foreign currency translation. Interest and other income, net of $1.4 million for the six months ended June 30, 2006 compared to $0.8 million reported for the same period in 2005. The increase was primarily due to the investment of proceeds from our follow-on equity offering in the fourth quarter of 2005, as well as interest earned on the investments held by SDI.

Non-controlling Interest in Symphony Dynamo, Inc.

Pursuant to the agreements that we entered into with SDI in April 2006, the results of operations of SDI have been included in our condensed consolidated financial statements from the date of formation. Reimbursable expenses related to the SDI programs were $2.0 million for the period from April 18, 2006 through June 30, 2006, as reflected in the loss attributed to the noncontrolling interest in SDI.

Liquidity and Capital Resources

We have financed our operations since inception primarily through the sale of shares of our common stock, shares of our convertible preferred stock, and ordinary shares in a subsidiary, which have yielded a total of approximately $177.9 million in net cash proceeds and, to a lesser extent, through amounts received under collaborative agreements and government grants for biodefense programs. We have also financed certain of our research and development activities under our agreements with SDI. We completed an initial public offering in February 2004, raising net proceeds during fiscal 2004 of approximately $46.5 million from the sale of 6,900,000 shares of common stock. In the fourth quarter of 2005, we completed an underwritten public offering that resulted in net proceeds to the Company of approximately $33.1 million from the sale of 5,720,000 shares of our common stock. As of June 30, 2006, we had $41.7 million in cash, cash equivalents and marketable securities and $19.0 million in investments held by SDI. Our funds are currently invested in a variety of securities, including highly liquid institutional money market funds, commercial paper, government and non-government debt securities and corporate obligations.

Cash used in operating activities of $17.9 million during the six months ended June 30, 2006 compared to $6.7 million for the same period in 2005. The increase in cash usage over the prior year was due primarily to the increase in our net loss from operations and the increase in working capital. Cash provided by investing activities of $1.6 million during the six months ended June 30, 2006

compared to usage of cash of $4.9 million for the same period in 2005. The increase was attributed to sales of marketable securities, net of $14.0 million in cash paid to acquire Dynavax Europe and $19.0 million in purchases of investments held by SDI. Cash provided by financing activities was $17.6 million during the six months ended June 30, 2006 compared to $0.2 million for the same period in 2005, resulting primarily from proceeds from investments in SDI.

Excluding the potential impact of any equity offerings, business collaborations or other transactions that may be entered into, we expect our cash and cash equivalents, marketable securities and investments held by SDI to decline by December 31, 2006, primarily due to cash used for operations. We expect net cash used in operating activities to increase significantly in 2006 as compared to prior years related to the advancement of our clinical development programs.

We currently anticipate that our cash and cash equivalents, marketable securities, and investments in and expected to be made by SDI will enable us to maintain our operations for at least the next twelve months. Because of the significant time it will take for any of our product candidates to complete the clinical trials process, be approved by regulatory authorities and successfully commercialized, we may require substantial additional capital resources. We may raise additional funds through public or private equity offerings, debt financings, capital lease transactions, corporate collaborations or other means. We may attempt to raise additional capital due to favorable market conditions or strategic considerations even if we have sufficient funds for planned operations.

Additional financing may not be available on acceptable terms, if at all. Capital may become difficult or impossible to obtain due to poor market or other conditions that are outside of our control. If at any time sufficient capital is not available, either through existing capital resources or through raising additional funds, we may be required to delay, scale back or eliminate some or all of our research or development programs, to lose rights under existing licenses or to relinquish greater or all rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose or may adversely affect our ability to operate as a going concern.

Contractual Obligations

The following summarizes our significant contractual obligations as of June 30, 2006 and the effect those obligations are expected to have on our liquidity and cash flow in future periods (in thousands):


	Payments Due by Period
Contractual Obligations:	Total		Less than 1 Year		1-3 Years		4-5 Years
Future minimum payments under our operating lease	$	6,869	$	1,051	$	4,331	$	1,487

Total	$	6,869	$	1,051	$	4,331	$	1,487

We lease our facilities in Berkeley, California and Düsseldorf, Germany under operating leases that expire in September 2014 (Berkeley Lease) and August 2009 (Düsseldorf Lease), respectively. The Berkeley Lease can be terminated at no cost to the Company in September 2009 but otherwise extends automatically until September 2014. We have entered into a sublease agreement under the Berkeley Lease for a certain portion of the leased space with scheduled payments to us totaling $0.4 million annually through 2007. This sublease agreement includes an option for early termination by the Company in August 2006 but otherwise extends automatically until August 2007.

During the fourth quarter of 2004, we established a letter of credit with Silicon Valley Bank as security for our Berkeley Lease in the amount of $0.4 million. The letter of credit remained outstanding as of June 30, 2006 and is collateralized by a certificate of deposit which has been included in restricted cash in the consolidated balance sheets as of June 30, 2006 and December 31, 2005. Under the terms of the Berkeley Lease, if the total amount of our cash, cash equivalents and marketable securities falls below $20.0 million for a period of more than 30 consecutive days during the lease term, the amount of the required security deposit will increase to $1.1 million, until such time as our projected cash and cash equivalents will exceed $20.0 million for the remainder of the lease term, or until our actual cash and cash equivalents remains above $20.0 million for a period of 12 consecutive months.

We entered into a series of exclusive license agreements with the Regents of the University of California in March 1997 and October 1998. These agreements provide us with certain technology and related patent rights and materials related to ISS, TNF-alpha inhibitors, vaccines using DNA and immunoregulatory sequences. Under the terms of the agreements, we pay annual license or maintenance fees and will be required to pay milestones and royalties on net sales of products originating from the licensed technologies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of our investment activities is to preserve principal while at the same time maximize the income we receive from our investments without significantly increasing risk. Some of the securities that we invest in may have market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate. To minimize this risk, we maintain our portfolio of cash equivalents and investments in a variety of securities, including commercial paper, money market funds, government and non-government debt securities and corporate obligations. Because of the short-term maturities of our cash equivalents and marketable securities, we do not believe that an increase in market rates would have any significant negative impact on the realized value of our investments.

Interest Rate Risk. We do not use derivative financial instruments in our investment portfolio. Due to the short duration and conservative nature of our cash equivalents and marketable securities, we do not expect any material loss with respect to our investment portfolio.

Foreign Currency Risk. We have certain investments outside the U.S. for the operations of Dynavax Europe and have minimal exposure to foreign exchange rate fluctuations.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures

The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), performed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Changes in internal controls

Since our acquisition of Dynavax Europe, we have expanded our internal control over financial reporting to include consolidation of Dynavax Europe’s results of operations, as well as acquisition-related accounting and disclosures. No other changes in the Company’s internal control over financial reporting occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS.

Various statements in this Quarterly Report on Form 10-Q are forward-looking statements concerning our future products, expenses, revenues, liquidity and cash needs, as well as our plans and strategies. These forward-looking statements are based on current expectations and we assume no obligation to update this information. Numerous factors could cause our actual results to differ significantly from the results described in these forward-looking statements, including the following risk factors.

We have incurred substantial losses since inception and do not have any commercial products that generate revenue.

We have experienced significant operating losses in each year since our inception in August 1996. To date, our revenue has resulted from a collaboration agreement with UCB Farchim, S.A. (UCB), services and license fees from Dynavax Europe, and government and private agency grants. The UCB collaboration agreement ended in March 2005. The grants are subject to annual review based on the achievement of milestones and other factors and will terminate in January 2007 at the latest. Our accumulated deficit was $139.3 million as of June 30, 2006, and we anticipate that we will incur substantial additional operating losses for the foreseeable future. These losses have been, and will continue to be, principally the result of the various costs associated with our research and development activities. We expect our losses to increase primarily as a consequence of our continuing product development efforts.

We do not have any products that generate revenue. In April 2006, we initiated the Dynavax Allergic Rhinitis TOLAMBA Trial, or DARTT, which is designed to complement data derived from the recently completed Phase 2/3 clinical trial and our ongoing trial in ragweed allergic children. The HEPLISAV pivotal Phase 3 trial in Asia and the U.S.-based Phase 1 trial in patients with pre-hemodialysis are ongoing. These and our other product candidates may never be commercialized, and we may never generate product-related revenue. Our ability to generate product revenue depends upon:

	•		demonstrating in clinical trials that our product candidates are safe and effective, in particular, in the current and planned trials for TOLAMBA and HEPLISAV;

	•		obtaining regulatory approvals for our product candidates;

	•		entering into collaborative relationships on commercially reasonable terms for the development, manufacturing, sales and marketing of our product candidates, and then successfully managing these relationships; and

	•		obtaining commercial acceptance of our products, in particular TOLAMBA and HEPLISAV.

If we are unable to generate revenues or achieve profitability, we may be required to significantly reduce or discontinue our operations or raise additional capital under adverse circumstances.

If we are unable to secure additional funding, we will have to reduce or discontinue operations.

We believe our existing capital resources will be adequate to satisfy our capital needs for at least the next twelve months. Because of the significant time and resources it will take to develop our product candidates, potentially commercialize them and generate revenues, we will require substantial additional capital resources in order to continue our operations, and any such funding may not allow us to continue operations as currently planned. We expect capital outlays and operating expenditures to increase over the next several years as we expand our operations, and any change in plans may increase these outlays and expenditures. We may be unable to obtain additional capital from financing sources or from agreements with collaborators on acceptable terms, or at all. If at any time sufficient capital is not available, we may be required to delay, reduce the scope of, or eliminate some or all of our research, preclinical or clinical programs or discontinue our operations.

All of our product candidates are unproven, and our success depends on our product candidates being approved through uncertain and time-consuming regulatory processes. Failure to prove our products safe and effective in clinical trials and obtain regulatory approvals could require us to discontinue operations.

None of our product candidates has been approved for sale. Any product candidate we develop is subject to extensive regulation by federal, state and local governmental authorities in the United States, including the FDA, and by foreign regulatory agencies. Our success is primarily dependent on our ability to obtain regulatory approval for TOLAMBA, our ragweed allergy product candidate, and HEPLISAV, our hepatitis B vaccine product candidate. Approval processes in the United States and in other countries are uncertain, take many years and require the expenditure of substantial resources. Product development failure can occur at any stage of clinical trials and as a result of many factors, many of which are not under our control.

We will need to demonstrate in clinical trials that a product candidate is safe and effective before we can obtain the necessary approvals from the FDA and foreign regulatory agencies. In early 2006, we announced results from a two-year Phase 2/3 clinical trial of TOLAMBA in which the safety profile was favorable. In April 2006, we initiated the DARTT study, which broadens the TOLAMBA clinical program and is designed to complement data derived from the recently completed Phase 2/3 clinical trial and our ongoing trial in ragweed allergic children initiated in 2005. If we identify any safety issues associated with TOLAMBA, we may be restricted from initiating further trials for TOLAMBA. Moreover, we may not see sufficient signs of efficacy in those studies. We have initiated a pivotal Phase 3 trial for HEPLISAV in Asia. We are in the process of planning additional trials designed to support registration activities. The FDA or foreign regulatory agencies may require us to conduct additional clinical trials prior to approval in their jurisdictions.

Many new drug candidates, including many drug candidates that have completed Phase 3 clinical trials, have shown promising results in early clinical trials and subsequently failed to establish sufficient safety and efficacy to obtain regulatory approval. Despite the time and money expended, regulatory approvals are uncertain. Failure to successfully complete clinical trials and show that our products are safe and effective would have a material adverse effect on our ability to eventually generate revenues and could require us to reduce the scope of or discontinue our operations.

Our clinical trials may be extended, suspended, delayed or terminated at any time. Even short delays in the commencement and progress of our trials may lead to substantial delays in the regulatory approval process for our product candidates, which will impair our ability to generate revenues.

We may extend, suspend or terminate clinical trials at any time for various reasons, including regulatory actions by the FDA or foreign regulatory agencies, actions by institutional review boards, failure to comply with good clinical practice requirements, concerns regarding health risks to test subjects or inadequate supply of the product candidate. In addition, our ability to conduct clinical trials for some of our product candidates, notably TOLAMBA, is limited due to the seasonal nature of ragweed allergy. Even a small delay in a trial for any product candidate could require us to delay commencement of the trial until the target population is available for testing, which could result in a delay of an entire year. Our registration and commercial timelines will depend on results of the current and planned clinical trials and further discussions with the FDA. Consequently, we may experience additional delays in obtaining regulatory approval for these product candidates.

In particular for TOLAMBA or HEPLISAV, any extension, suspension, termination or unanticipated delays of our clinical trials could:

	•		adversely affect our ability to timely and successfully commercialize or market these product candidates;

	•		result in significant additional costs;

	•		potentially diminish any competitive advantages for those products;

	•		adversely affect our ability to enter into collaborations, receive milestone payments or royalties from potential collaborators;

	•		cause us to abandon the development of the affected product candidate; or

	•		limit our ability to obtain additional financing on acceptable terms, if at all.

If third parties successfully assert that we have infringed their patents and proprietary rights or challenge the validity of our patents and proprietary rights, we may become involved in intellectual property disputes and litigation that would be costly, time consuming, and delay or prevent development or commercialization of our product candidates.

We may be exposed to future litigation by third parties based on claims that our product candidates, proprietary technologies or the licenses on which we rely, infringe their intellectual property rights, or we may be required to enter into litigation to enforce patents issued or licensed to us or to determine the scope or validity of our or another party’s proprietary rights, including a challenge as to the validity of our issued and pending claims. If we become involved in any litigation, interference or other administrative proceedings related to our intellectual property or the intellectual property of others, we will incur substantial additional expenses and it will divert the efforts of our technical and management personnel.

Two of our potential competitors relative to HEPLISAV, Merck & Co., Inc., or Merck, and GlaxoSmithKline Plc, or GSK, are exclusive licensees of broad patents covering hepatitis B surface antigen. In addition, the Institute Pasteur also owns or has exclusive licenses to patents covering hepatitis B surface antigen. While some of these patents have expired or will soon expire outside of the United States, they remain in force in the United States and are likely to be in force when we commercialize HEPLISAV or a similar product in the United States. To the extent we were to commercialize HEPLISAV in the United States, Merck and/or GSK or the Institute Pasteur may bring claims against us.

If we are unsuccessful in defending or prosecuting our issued and pending claims or in defending potential claims against us, for example, as may arise to the extent we were to commercialize HEPLISAV or any similar product candidate in the United States, we could be required to pay substantial damages and we may be unable to commercialize our product candidates or use our proprietary technologies unless we obtain a license from these or other third parties. A license may require us to pay substantial royalties, require us to grant a cross-license to our technology or may not be available to us on acceptable terms or on any terms. In addition, we may be required to redesign our technology so it does not infringe a third party’s patents, which may not be possible or could require substantial funds and time. Any of these outcomes may require us to change our business strategy and could reduce the value of our business.

Another of our potential competitors, Coley Pharmaceutical Group, or Coley, has issued U.S. patent claims, as well as patent claims pending with the U.S. Patent and Trademark Office, or PTO. If these claims are held to be valid, Coley may seek to enforce its rights under these claims, including, for example, by suing us for patent infringement. Consequently, we may need to obtain a license to one or more of these claims held by Coley by paying cash, granting royalties on sales of our products or offering rights to our own proprietary technologies in order to commercialize one or more of our formulations of ISS in the U.S., including TOLAMBA and HEPLISAV. Such a license may not be available to us on acceptable terms, if at all, which could preclude or limit out ability to commercialize products.

In December 2003, the PTO declared an interference to resolve first-to-invent disputes between a patent application filed by the Regents of the University of California, which is exclusively licensed to us, and an issued U.S. patent owned by Coley relating to immunostimulatory DNA sequences. The declaration of interference named the Regents of the University of California as senior party, indicating that a patent application filed by the Regents of the University of California and licensed to us was filed prior to a patent application owned by Coley that led to an issued U.S. patent. The interference provides the first forum to challenge the validity and priority of certain of Coley’s patents. On March 10, 2005, the PTO issued a decision in the interference which did not address the merits of the case, but dismissed it on technical legal grounds based on the timing of Dynavax’s filing of its claims and request for interference. Dynavax appealed this decision to the U.S. Federal Circuit court which on July 17, 2006, upheld the decision of the PTO. Dynavax plans to file a motion for reconsideration and rehearing en banc.

If we receive regulatory approval for our product candidates, we will be subject to ongoing FDA and foreign regulatory obligations and continued regulatory review, which may be costly and subject us to various enforcement actions.

Any regulatory approvals that we receive for our product candidates are likely to contain requirements for post-marketing follow-up studies, which may be costly. Product approvals, once granted, may be modified, resulting in limitations on our labeling indications or marketing claims, or withdrawn completely if problems occur after commercialization. Thus, even if we receive FDA and other regulatory approvals, our product candidates may later exhibit qualities that limit or prevent their widespread use or that force us to withdraw those products from the market.

In addition, we or our contract manufacturers will be required to adhere to federal regulations setting forth current good manufacturing practice. The regulations require that our product candidates be manufactured and our records maintained in a

prescribed manner with respect to manufacturing, testing and quality control activities. Furthermore, we or our contract manufacturers must pass a pre-approval inspection of manufacturing facilities by the FDA and foreign regulatory agencies before obtaining marketing approval and will be subject to periodic inspection by the FDA and corresponding foreign regulatory agencies under reciprocal agreements with the FDA. Further, to the extent that we contract with third parties for the manufacture of our products, our ability to control third-party compliance with FDA requirements will be limited to contractual remedies and rights of inspection.

Failure to comply with regulatory requirements could prevent or delay marketing approval or require the expenditure of money or other resources to correct. Failure to comply with applicable requirements may also result in warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, refusal of the government to renew marketing applications and criminal prosecution, any of which could be harmful to our ability to generate revenues and our stock price.

Our product candidates in clinical trials rely on a single lead ISS compound, 1018 ISS, and most of our earlier stage programs rely on ISS-based technology. Serious adverse safety data relating to either 1018 ISS or other ISS-based technology may require us to reduce the scope of or discontinue our operations.

Our product candidates in clinical trials are based on our 1018 ISS compound, and substantially all of our research and development programs use ISS-based technology. If any of our product candidates in clinical trials produce serious adverse safety data, we may be required to delay or discontinue all of our clinical trials. In addition, as all of our clinical product candidates contain 1018 ISS, a common safety risk across therapeutic areas may hinder our ability to enter into potential collaborations and if adverse safety data are found to apply to our ISS-based technology as a whole, we may be required to significantly reduce or discontinue our operations.

We have licensed some of our development and commercialization rights to certain of our development programs in connection with the Symphony Dynamo funding arrangement and will not receive any future royalties or revenues with respect to this intellectual property unless we exercise an option to repurchase the programs in the future. We may not obtain sufficient clinical data in order to determine whether we should exercise this option prior to the expiration of the development period, and even if we decide to exercise, we may not have the financial resources to exercise this option in a timely manner.

We have granted an exclusive license to the intellectual property for certain ISS compounds for cancer, hepatitis B and hepatitis C therapeutics to Symphony Dynamo, Inc., or SDI, in consideration for a commitment from Symphony Capital Partners, LP and its co-investors to provide $50 million of committed capital to advance these programs. The funding is to be provided in two tranches, $30 million of which remains to be provided by the first anniversary of the agreement. As part of the arrangement, we received an option granting us the exclusive right, but not the obligation, to acquire certain or all of the programs at specified points in time at specified prices during the term of the five-year development period. The development programs under the arrangement will be jointly managed by SDI and us, and there can be no assurance that we will agree on various decisions that will enable us to successfully develop the potential products, or even if we are in agreement on the development plans, that the development efforts will result in sufficient clinical data to make a fully informed decision with respect to the exercise of our option. If we do not exercise the purchase option prior to its expiration, then our rights in and with respect to the SDI programs will terminate and we will no longer have rights to any of the programs licensed to SDI under the arrangement.

If we elect to exercise the purchase option, we will be required to make a substantial payment, which at our election may be paid partially in shares of our common stock. As a result, in order to exercise the option, we will be required to make a substantial payment of cash and possibly issue a substantial number of shares of our common stock. We do not currently have the resources to exercise the option and we may be required to enter into a financing arrangement or license arrangement with one or more third parties, or some combination of these in order to exercise the option, even if we paid a portion of the purchase price with our common stock. There can be no assurance that any financing or licensing arrangement will be available or even if available, that the terms would be favorable to us and our stockholders. In addition, the exercise of the purchase option will likely require us to record a significant charge to earnings and may adversely impact future operating results.

A key part of our business strategy is to establish collaborative relationships to commercialize and fund development of our product candidates. We may be unsuccessful in establishing and managing collaborative relationships, which may significantly limit our ability to develop and commercialize our products successfully, if at all.

We will need to establish collaborative relationships to obtain domestic and international sales, marketing and distribution capabilities for our product candidates. We also intend to enter into collaborative relationships to provide funding to support our

research and development programs. Our collaboration agreement with UCB for TOLAMBA and for grass allergy immunotherapy ended in March 2005. Future collaboration revenue will depend on our ability to enter into new collaborative relationships.

The process of establishing collaborative relationships is difficult, time-consuming and involves significant uncertainty. Moreover, even if we do establish collaborative relationships, our collaborators may seek to renegotiate or terminate their relationships with us due to unsatisfactory clinical results, a change in business strategy, a change of control or other reasons. If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our research, clinical development or commercialization efforts related to that collaboration could be delayed or terminated, or it may be necessary for us to assume responsibility for expenses or activities that would otherwise have been the responsibility of our collaborator. If we are unable to establish and maintain collaborative relationships on acceptable terms, we may have to delay or discontinue further development of one or more of our product candidates, undertake development and commercialization activities at our own expense or find alternative sources of capital.

We rely on third parties to supply materials and perform functions necessary to manufacture our clinical product candidates for our clinical trials. Loss of these suppliers or manufacturers, or failure to replace them may delay our clinical trials and research and development efforts and may result in additional costs, which would preclude us from producing our product candidates on commercially reasonable terms.

We rely on a number of third parties for the multiple steps involved in the manufacturing process of our product candidates, including, for example, the manufacture of the antigens and ISS, the component materials that are necessary for our product candidates, the combination of the antigens and ISS, and the fill and finish. Termination or interruption of these relationships may occur due to circumstances that are outside our control, resulting in higher cost or delays in our product development efforts.

We and these third parties are required to comply with applicable current FDA good manufacturing practice regulations and similar requirements in Canada and other foreign countries. If one of these parties fails to maintain compliance with these regulations, the production of our product candidates could be interrupted, resulting in delays and additional costs. Additionally, these third parties must pass a pre-approval inspection before we can obtain regulatory approval for any of our product candidates.

In particular, we have relied on a single supplier to produce our ISS for clinical trials. ISS is a critical component of both of TOLAMBA and HEPLISAV. To date, we have manufactured only small quantities of ISS ourselves for research purposes. If we were unable to maintain or replace our existing source for ISS, we would have to establish an in-house ISS manufacturing capability, incurring increased capital and operating costs and delays in developing and commercializing our product candidates. We or other third parties may not be able to produce ISS at a cost, quantity and quality that are available from our current third-party supplier.

In addition, we do not currently have a contract manufacturer for TOLAMBA or sufficient TOLAMBA to supply our potential commercial needs. We are currently manufacturing supplies of TOLAMBA for the second year of our current clinical trial in ragweed allergic children. We intend to enter into manufacturing agreements with one or more commercial-scale contract manufacturers to produce additional supplies of TOLAMBA as required for new clinical trials and commercialization. If we are unable to complete such agreements, we may be unable to commence and complete our clinical trials in a timely fashion, and we would have to establish an internal commercial scale manufacturing capability for TOLAMBA, incurring increased capital and operating costs, delays in the commercial development of TOLAMBA and higher manufacturing costs than we have experienced to date.

We have or intend to contract with one or more third parties to conduct our clinical trials for TOLAMBA and HEPLISAV. If these third parties do not carry out their contractual obligations or meet expected deadlines, our planned clinical trials may be delayed and we may fail to obtain the regulatory approvals necessary to commercialize TOLAMBA or HEPLISAV.

We rely on third parties to conduct our planned clinical trials for TOLAMBA or HEPLISAV. If these third parties do not carry out their contractual duties or obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to failure to adhere to our clinical protocols or for other reasons, our planned clinical trials may be extended, delayed or terminated. Any extension, delay or termination of our trials would delay our ability to commercialize TOLAMBA or HEPLISAV and generate revenues.

If any products we develop are not accepted by the market or if regulatory agencies limit our labeling indications or marketing claims, we may be unable to generate significant revenues, if any.

If we obtain regulatory approval for our product candidates and are able to successfully commercialize them, our product candidates may not gain market acceptance among physicians, patients, health care payors and the medical community. The FDA or

other regulatory agencies could limit the labeling indication for which our product candidates may be marketed or could otherwise constrain our marketing claims, reducing our or our collaborators’ ability to market the benefits of our products to particular patient populations. If we are unable to successfully market any approved product candidates, or are limited in our marketing efforts by regulatory limits on labeling indications or marketing claims, our ability to generate revenues could be significantly impaired.

In particular, treatment with TOLAMBA, if approved, will require a series of injections, and we expect that some of the patients that currently take oral or inhaled pharmaceutical products to treat their allergies would not consider using our product. We believe that market acceptance of TOLAMBA will also depend on our ability to offer competitive pricing, increased efficacy and improved ease of use as compared to existing or potential new allergy treatments.

We may seek partners for purposes of commercialization of HEPLISAV in selected markets worldwide. Marketing challenges vary by market and could limit or delay acceptance in any particular country. We believe that market acceptance of HEPLISAV will depend on our ability to offer increased efficacy and improved ease of use as compared to existing or potential new hepatitis B vaccine products.

We face uncertainty related to coverage, pricing and reimbursement and the practices of third party payors, which may make it difficult or impossible to sell our product candidates on commercially reasonable terms.

In both domestic and foreign markets, our ability to generate revenues from the sales of any approved product candidates in excess of the costs of producing the product candidates will depend in part on the availability of reimbursement from third party payors. Existing laws affecting the pricing and coverage of pharmaceuticals and other medical products by government programs and other third party payors may change before any of our product candidates are approved for marketing. In addition, third party payors are increasingly challenging the price and cost-effectiveness of medical products and services. Significant uncertainty therefore exists as to coverage and reimbursement levels for newly approved health care products, including pharmaceuticals. Because we intend to offer products, if approved, that involve new technologies and new approaches to treating disease, the willingness of third party payors to reimburse for our products is particularly uncertain. We will have to charge a price for our products that is sufficiently high to enable us to recover the considerable capital resources we have spent and will continue to spend on product development. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize a return on our investment in product development. If it becomes apparent, due to changes in coverage or pricing of pharmaceuticals in our market or a lack of reimbursement, that it will be difficult, if not impossible, for us to generate revenues in excess of costs, we will need to alter our business strategy significantly. This could result in significant unanticipated costs, harm our future prospects and reduce our stock price.

Many of our competitors have greater financial resources and expertise than we do. If we are unable to successfully compete with existing or potential competitors despite these disadvantages we may be unable to generate revenues and our business will be harmed.

We compete with many companies and institutions, including pharmaceutical companies, biotechnology companies, academic institutions and research organizations, in developing alternative therapies to treat or prevent allergy, infectious diseases, asthma and cancer, as well as those focusing more generally on the immune system. Competitors may develop more effective, more affordable or more convenient products or may achieve earlier patent protection or commercialization of their products. These competitive products may render our product candidates obsolete or limit our ability to generate revenues from our product candidates. Many of the companies developing competing technologies and products have significantly greater financial resources and expertise in research and development, manufacturing, preclinical and clinical testing, obtaining regulatory approvals and marketing than we do.

TOLAMBA, if approved, will compete directly with conventional allergy shots and indirectly with antihistamines, corticosteroids and anti-leukotriene agents, used to treat seasonal allergy symptoms, including those produced by GSK, Merck, Novartis, Schering-Plough and AstraZeneca Plc. Since our TOLAMBA ragweed allergy treatment would require a series of injections, we expect that some patients that currently take oral or inhaled pharmaceutical products to treat their allergies would not consider our product.

HEPLISAV, if approved, will compete with existing vaccines produced by GSK and Merck, among others.

Existing and potential competitors may also compete with us for qualified scientific and management personnel, as well as for technology that would be advantageous to our business. If we are unable to compete with existing and potential competitors we may not be able to obtain financing, sell our product candidates or generate revenues.

We depend on key employees in a competitive market for skilled personnel, and the loss of the services of any of our key employees would affect our ability to develop and commercialize our product candidates and achieve our objectives.

We are highly dependent on the principal members of our management, operations and scientific staff, including our Chief Executive Officer, Dr. Dino Dina. We experience intense competition for qualified personnel. Our future success also depends in part on the continued service of our executive management team, key scientific and management personnel and our ability to recruit, train and retain essential scientific personnel for our drug discovery and development programs, including those who will be responsible for overseeing our preclinical testing and clinical trials as well as for the establishment of collaborations with other companies. If we lose the services of any of these people, our research and product development goals, including the identification and establishment of key collaborations, operations and marketing efforts could be delayed or curtailed.

We intend to develop, seek regulatory approval for and market our product candidates outside the United States, requiring a significant commitment of resources. Failure to successfully manage our international operations could result in significant unanticipated costs and delays in regulatory approval or commercialization of HEPLISAV and therapeutic product candidates.

We plan to introduce HEPLISAV initially in various markets outside the United States. Developing, seeking regulatory approval for and marketing our product candidates outside the United States could impose substantial burdens on our resources and divert management’s attention from domestic operations. We may also conduct operations in other foreign jurisdictions.

International operations are subject to risk, including:

	•		the difficulty of managing geographically distant operations, including recruiting and retaining qualified employees, locating adequate facilities and establishing useful business support relationships in the local community;

	•		compliance with varying international regulatory requirements;

	•		securing international distribution, marketing and sales capabilities;

	•		adequate protection of our intellectual property rights;

	•		difficulties and costs associated with complying with a wide variety of complex international laws and treaties;

	•		legal uncertainties and potential timing delays associated with tariffs, export licenses and other trade barriers;

	•		adverse tax consequences;

	•		the fluctuation of conversion rates between foreign currencies and the U.S. dollar; and

	•		geopolitical risks.

If we are unable to successfully manage our international operations, we may incur significant unanticipated costs and delays in regulatory approval or commercialization of HEPLISAV and therapeutic product candidates, as well as other product candidates that we may choose to commercialize internationally, which would impair our ability to generate revenues.

We recently acquired Rhein Biotech GmbH and any difficulties from integrating the Rhein’s business into ours could disrupt our business and harm our financial condition.

On April 21, 2006, we acquired Rhein Biotech GmbH in a cash transaction of approximately $12.5 million, excluding certain employee and transaction related costs and expenses. Through this acquisition, Dynavax gained ownership of a European Union (EU) GMP-certified vaccine manufacturing facility in Düsseldorf, Germany, certain vaccine and other commercial programs, a management team and personnel with specialized expertise in process development and vaccine manufacturing.

Integrating Rhein’s operations, technology and personnel with our operations and personnel is a complex process. The successful integration of Dynavax and Rhein will require, among other things, ongoing coordination of various integration efforts, relating to our personnel system, technologies and commercial programs. We may not be able to rapidly or efficiently integrate Rhein’s business and

technology into ours and the expected benefits of the combination may not materialize. Our ability to successfully integrate Rhein involves numerous risks, including:

	•		difficulties in integrating the operations, technologies, products and personnel of Rhein;

	•		difficulties in successfully utilizing Rhein’s manufacturing capabilities to produce materials for our existing product candidates in lieu of purchasing such materials from third party vendors;

	•		diversion of management’s attention from normal daily operations of the business;

	•		potential difficulties in integrating different projects;

	•		difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions;

	•		insufficient revenues to offset increased expenses associated with the acquisition; and

	•		potential loss of key employees of Rhein.

The Rhein acquisition may also cause us to:

	•		assume liabilities some of which may be unknown at the time of such acquisitions;

	•		record certain intangible assets in conjunction with our accounting for the transaction in the second quarter of 2006 that may be subject to immediate write-off, ongoing impairment testing, or potential periodic impairment charges, or may cause us to incur future amortization expenses; or

	•		become subject to unknown litigation.

Moreover, we will be required to include Rhein as part our Sarbanes-Oxley compliance requirements beginning in 2007. There can be no assurance that we will be able to successfully integrate Rhein and its technology and personnel into our business.

We use hazardous materials in our business. Any claims or liabilities relating to improper handling, storage or disposal of these materials could be time consuming and costly to resolve.

Our research and product development activities involve the controlled storage, use and disposal of hazardous and radioactive materials and biological waste. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials and certain waste products. We are currently in compliance with all government permits that are required for the storage, use and disposal of these materials. However, we cannot eliminate the risk of accidental contamination or injury to persons or property from these materials. In the event of an accident related to hazardous materials, we could be held liable for damages, cleanup costs or penalized with fines, and this liability could exceed the limits of our insurance policies and exhaust our internal resources. We may have to incur significant costs to comply with future environmental laws and regulations.

We face product liability exposure, which, if not covered by insurance, could result in significant financial liability.

While we have not experienced any product liability claims to date, the use of any of our product candidates in clinical trials and the sale of any approved products will subject us to potential product liability claims and may raise questions about a product’s safety and efficacy. As a result, we could experience a delay in our ability to commercialize one or more of our product candidates or reduced sales of any approved product candidates. In addition, a product liability claim may exceed the limits of our insurance policies and exhaust our internal resources. We have obtained limited product liability insurance coverage in the amount of $1 million for each occurrence for clinical trials with umbrella coverage of an additional $4 million. This coverage may not be adequate or may not continue to be available in sufficient amounts, at an acceptable cost or at all. We also may not be able to obtain commercially reasonable product liability insurance for any product approved for marketing in the future. A product liability claim, product recalls or other claims, as well as any claims for uninsured liabilities or in excess of insured liabilities, would divert our management’s attention from our business and could result in significant financial liability.

If the combination of patents, trade secrets and contractual provisions that we rely on to protect our intellectual property is inadequate, the value of our product candidates will decrease.

Our success depends on our ability to:

	•		obtain and protect commercially valuable patents or the rights to patents both domestically and abroad;

	•		operate without infringing upon the proprietary rights of others; and

	•		prevent others from successfully challenging or infringing our proprietary rights.

We will be able to protect our proprietary rights from unauthorized use only to the extent that these rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. We try to protect our proprietary rights by filing and prosecuting United States and foreign patent applications. However, in certain cases such protection may be limited, depending in part on existing patents held by third parties, which may only allow us to obtain relatively narrow patent protection. In the United States, legal standards relating to the validity and scope of patent claims in the biopharmaceutical field can be highly uncertain, are still evolving and involve complex legal and factual questions for which important legal principles remain unresolved.

The biopharmaceutical patent environment outside the United States is even more uncertain. We may be particularly affected by this uncertainty, given that several of our product candidates may initially address market opportunities outside the United States. For example, we expect to market HEPLISAV, if approved, in various foreign countries with high incidences of hepatitis B, including Canada, Europe and selected markets in Asia, where we may only be able to obtain limited patent protection.

The risks and uncertainties that we face with respect to our patents and other proprietary rights include the following:

	•		we might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;

	•		we might not have been the first to file patent applications for these inventions;

	•		the pending patent applications we have filed or to which we have exclusive rights may not result in issued patents or may take longer than we expect to result in issued patents;

	•		the claims of any patents that are issued may not provide meaningful protection;

	•		our issued patents may not provide a basis for commercially viable products or may not be valid or enforceable;

	•		we might not be able to develop additional proprietary technologies that are patentable;

	•		the patents licensed or issued to us or our collaborators may not provide a competitive advantage;

	•		patents issued to other companies, universities or research institutions may harm our ability to do business;

	•		other companies, universities or research institutions may independently develop similar or alternative technologies or duplicate our technologies and commercialize discoveries that we attempt to patent; and

	•		other companies, universities or research institutions may design around technologies we have licensed, patented or developed.

We also rely on trade secret protection and confidentiality agreements to protect our interests in proprietary know-how that is not patentable and for processes for which patents are difficult to enforce. We cannot be certain that we will be able to protect our trade secrets adequately. Any leak of confidential data into the public domain or to third parties could allow our competitors to learn our trade secrets. If we are unable to adequately obtain or enforce proprietary rights we may be unable to commercialize our products, enter into collaborations, generate revenues or maintain any advantage we may have with respect to existing or potential competitors.

We rely on our licenses from the Regents of the University of California. Impairment of these licenses or our inability to maintain them would severely harm our business.

Our success depends upon our license arrangements with the Regents of the University of California, or UC. These licenses are critical to our research and product development efforts. Our dependence on these licenses subjects us to numerous risks, such as disputes regarding the invention and corresponding ownership rights in inventions and know-how resulting from the joint creation or use of intellectual property by us and UC, or scientific collaborators. Additionally, our agreements with UC generally contain diligence or milestone-based termination provisions. Our failure to meet any obligations pursuant to these provisions could allow UC to terminate any of these licensing agreements or convert them to non-exclusive licenses. In addition, our license agreements with UC may be terminated or may expire by their terms, and we may not be able to maintain the exclusivity of these licenses. If we cannot maintain licenses that are advantageous or necessary to the development or the commercialization of our product candidates, we may be required to expend significant time and resources to develop or license similar technology.

Our stock price is subject to volatility, and your investment may suffer a decline in value.

The market prices for securities of biopharmaceutical companies have in the past been, and are likely to continue in the future to be, very volatile. The market price of our common stock is subject to substantial volatility depending upon many factors, many of which are beyond our control, including:

	•		progress or results of any of our clinical trials, in particular any announcements regarding the progress or results of our planned trials for TOLAMBA and HEPLISAV;

	•		progress of regulatory approval of our product candidates, in particular TOLAMBA and HEPLISAV, and compliance with ongoing regulatory requirements;

	•		our ability to establish collaborations for the development and commercialization of our product candidates;

	•		market acceptance of our product candidates;

	•		our ability to raise additional capital to fund our operations, whether through the issuance of equity securities or debt;

	•		technological innovations, new commercial products or drug discovery efforts and preclinical and clinical activities by us or our competitors;

	•		changes in our intellectual property portfolio or developments or disputes concerning the proprietary rights of our products or product candidates;

	•		our ability to obtain component materials and successfully enter into manufacturing relationships for our product candidates or establish manufacturing capacity on our own;

	•		our ability to form strategic partnerships or joint ventures;

	•		maintenance of our existing licensing agreements with the Regents of the University of California;

	•		changes in government regulations;

	•		issuance of new or changed securities analysts’ reports or recommendations;

	•		general economic conditions and other external factors;

	•		actual or anticipated fluctuations in our quarterly financial and operating results; and

	•		volume of trading liquidity in our common stock

One or more of these factors could cause a decline in the price of our common stock. In addition, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for

us because we have experienced greater than average stock price volatility, as have other biotechnology companies in recent years. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs, and divert management’s attention and resources, which could harm our business, operating results and financial conditions.

Anti-takeover provisions of our certificate of incorporation, bylaws and Delaware law may prevent or frustrate a change in control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.

Provisions of our certificate of incorporation and bylaws may delay or prevent a change in control, discourage bids at a premium over the market price of our common stock and adversely affect the market price of our common stock and the voting or other rights of the holders of our common stock. These provisions include:

	•		authorizing our Board of Directors to issue additional preferred stock with voting rights to be determined by the Board of Directors;

	•		limiting the persons who can call special meetings of stockholders;

	•		prohibiting stockholder actions by written consent;

	•		creating a classified board of directors pursuant to which our directors are elected for staggered three year terms;

	•		providing that a supermajority vote of our stockholders is required for amendment to certain provisions of our certificate of incorporation and bylaws; and

	•		establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

In addition, we are subject to the provisions of the Delaware corporation law that, in general, prohibit any business combination with a beneficial owner of 15% or more of our common stock for five years unless the holder’s acquisition of our stock was approved in advance by our Board of Directors.

We will continue to implement additional finance and accounting systems, procedures or controls as we grow our business and organization and to satisfy new reporting requirements.

As a public company, we are required to comply with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, including expanded disclosures and accelerated reporting requirements and more complex accounting rules. Compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and other requirements may increase our costs and require additional management resources. We may need to continue to implement additional finance and accounting systems, procedures and controls as we grow our business and organization and to comply with new reporting requirements. Specifically, with the Rhein acquisition, we now have foreign operations that will not later than 2007 be required to meet the Section 404 requirements as part of our operations. There can be no assurance that we will be able to maintain a favorable assessment as to the adequacy of our internal control reporting. If we are unable to maintain an unqualified report as to the effectiveness of our internal controls over financial reporting, investors could lose confidence in the reliability of our internal controls over financial reporting and the reliability of our financial statements, which could harm our business and could impact the market price of our common stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 18, 2006, pursuant to agreements with Symphony Capital LP discussed in Note 4 to the Condensed Consolidated Financial Statements included in this Form 10-Q, we issued to Symphony Holdings LLC a five-year warrant to purchase 2,000,000 shares of our common stock at $7.32 per share, representing a 25% premium over the applicable 60-day trading range average of $5.86 per share. The warrant exercise price is subject to reduction to $5.86 per share under certain circumstances. We filed a registration statement on Form S-3 (File No. 333-134688) on June 1, 2006 covering the resale of share of common stock subject to purchase pursuant to the warrants, and the warrants were issued pursuant to Rule 506 promulgated under Regulation D.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual Meeting of Shareholders on June 14, 2006. The proposals voted on by the Company shareholders and the voting results were as follows:

Proposal 1: Election of Class III Directors

The election of directors was approved as follows:


	For		Withhold
Daniel S. Janney		25,986,718		226,048
Arnold L. Oronsky		26,102,663		110,103

Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm

Ernst & Young LLP was ratified as the Company’s independent registered public accounting firm for fiscal year 2006 as follows:


For	Against		Abstain
26,180,441		24,810		7,515

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


Exhibit
Number		Document
10.19		2004 Non-employee Director Option Program (Revised) and 2005 Non-employee Director Cash Compensation Program, effective April 14, 2005 and amended February 23, 2006.

10.20*		Summary of Düsseldorf Lease Agreement as of August 14, 1990, as amended

10.21*†		Definitive Commercial Agreement, dated April 21, 2006, among Dynavax Technologies Corporation, Rhein Biotech NV and Rhein Biotech GmbH

10.22*†		Exclusive License Agreement, dated April 21, 2006, between Green Cross Vaccine Corp. and Rhein Biotech GmbH

10.23*†		Share Sale and Purchase Agreement, dated March 27, 2006, between Dynavax Technologies Corporation and Rhein Biotech N.V.

10.24*†		License and Supply Agreement, dated February 28, 2002, between Corixa Corporation and Rhein Biotech N.V.

10.25*†		Purchase Option Agreement, dated as of April 18, 2006, among Dynavax Technologies Corporation, Symphony Dynamo Holdings LLC and Symphony Dynamo, Inc.

10.26*†		Registration Rights Agreement, dated as of April 18, 2006, between Dynavax Technologies Corporation and Symphony Dynamo Holdings LLC

10.27*†		Warrant Purchase Agreement, dated as of April 18, 2006, between Dynavax Technologies Corporation and Symphony Dynamo Holdings LLC

10.28*†		Amended and Restated Research and Development Agreement, dated as of April 18, 2006, among Dynavax Technologies Corporation, Symphony Dynamo Holdings LLC and Symphony Dynamo, Inc.

10.29*†		Novated and Restated Technology License Agreement, dated as of April 18, 2006, among Dynavax Technologies Corporation, Symphony Dynamo Holdings LLC and Symphony Dynamo, Inc.

21.1*		List of Subsidiaries

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


Exhibit
Number		Document
32.1*		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*		Filed herewith

†		We have been granted confidential treatment with respect to certain portions of this agreement. Omitted portions have been filed separately with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto due authorized, in the City of Berkeley, State of California.


	DYNAVAX TECHNOLOGIES CORPORATION
	By:	/s/ DINO DINA, M.D.
		Dino Dina, M.D.
		President, Chief Executive Officer and Director (Principal Executive Officer)

Date: August 4, 2006



	By:	/s/ DEBORAH A. SMELTZER
		Deborah A. Smeltzer
		Vice President, Operations and Chief Financial Officer (Principal Financial Officer)

Date: August 4, 2006



	By:	/s/ TIMOTHY G. HENN
		Timothy G. Henn
		Vice President, Finance and Administration and Chief Accounting Officer (Principal Accounting Officer)

Date: August 4, 2006

exv10w20

Exhibit 10.20

Dynavax Technologies Corporation

The following is summary of a Lease Agreement (“Lease Agreement”) for 9 and 11 Eichsfelder Strasse, Düsseldorf dates as of August 14, 1990, as amended. The Lease Agreement is in German and this summary in English is provided pursuant to Rule 12b-12(d)(3).

Effective Date: Lease for 9 and 11 Eichsfelder Strasse, Düsseldorf – Dated 8/14/1990 (the building was not completed until 1994 when the lease term began)


		Amendment No. 1 – Undated
		Amendment No. 2 – Dated 03/24/1997
		Amendment No. 3 – Dated 07/03/1999
		Amendment No. 4 – Dated 10/11/2002
		Amendment No. 5 – Dated 07/02/2003
		Amendment No. 6 – Dated 5/17/2004

Landlord:		The name of the landlord effective April 2006 is: HBI Düsseldorf S.a.r.l. They are represented by Halverton Real Estate Investment Management GmbH, Friedrichstraße 185-187, D-10117 Berlin.

Term:		The current term expires on August 31, 2009. The Lease Agreement provides an option for the Company to extend the term an additional 5 years; provided that the option is exercised not later than 18 months from the scheduled expiration date.

Leased Premises:

Area (m2=square meters):

Offices: 1.649 m2 (Eichsfelderstr. 11 – B1)
Offices: 159 m2 (Eichsfelderstr. 9 – B4)
Warehouse: 652 m2 (Eichsfelderstr. 11 – B2)
Warehouse: 544 m2 (Eichsfelderstr. 9 – B3)
Warehouse: 467 m2 (Eichsfelderstr. 9 – B4)
Parking space: 28
Underground parking: 11
(According to Addendum No. 6, dated 17.05.2004)

Rent/month (EUR=Euros):

Office: 9.71 EUR/m2
Warehouse: Eichsfelderstr. 11–B2 — 4.09 EUR/m2

Eichsfelderstr. 9–B3 — 3.80 EUR/m2
Eichsfelderstr. 9–B4 – 4.09 EUR/m2

Parking space: 30.67 EUR, flat rate
Underground parking: 40.90 EUR. flat rate

Total: 25,508.25 EUR/month Plus VAT, plus ancillary expenses (prepayment of 6,630 EUR/month).

Payments are made monthly.

Annual increases in the foregoing apply based on the local consumer price increase index.

Structural alterations are at the expense of the Company. At the end of the contract term, the landlord has right to request that the leased premises be returned to their original condition.

A long term deposit of Euro 115,000 was required to be made and held as security for the lease.

Other Provisions:

The remaining provisions of the Lease Agreement contain requirements with respect to habitability of the premises; provision of services by the landlord with respect to the leased premises; tenant obligations with respect to occupancy; terms of payments; effect of breach.

exv10w21

CONFIDENTIAL

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit 10.21

DEFINITIVE COMMERCIAL AGREEMENT

This Definitive Commercial Agreement (the “Agreement”) is entered into this 21st day of April, 2006 by and between:

Rhein Biotech NV, incorporated under the laws of the Netherlands having its registered office at Oude Maasstraat 47, NL 6229 BC Maastricht, The Netherlands (hereinafter “RBNV”);

And

Rhein Biotech GmbH, formed and in good standing under the laws of Germany, having its seat in Dusseldorf, Eichsfelder Strasse 11, 40595, Germany, (“RBG”);

And

Dynavax Technologies Corporation, a USA corporation having its offices at 2929 Seventh Street, Suite 100, Berkeley, CA 94710 USA (“Dynavax”).

(With each of RBNV, RBG and Dynavax, referred individually as a “Party” and collectively as the “Parties”)

RECITALS

Whereas, Crucell NV (“Parent”) is the owner of substantially all of the share capital of Berna Biotech AG (“Berna”), which is the owner of substantially all of the share capital of RBNV, which is in the vaccine business and owns 100 percent of the share capital of RBG;

Whereas, Dynavax is in the vaccine development business and is a party to a License and Supply Agreement with Berna;

Whereas, Dynavax is purchasing RBG, and RBNV is selling RBG to Dynavax, under the Share Sale and Purchase Agreement dated March 27, 2006;

Whereas, RBNV and Dynavax have entered into a Letter of Intent dated March 10, 2006, in connection with the purchase of the RBG stock and the commercial agreements associated therewith (the “Letter of Intent”), for the purpose of reaching non-binding understanding as to certain terms and binding understanding as to others (as set forth therein), in order to negotiate a written share purchase agreement and written commercial agreements (jointly the “Definitive Agreements,” more particularly defined below);

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

CONFIDENTIAL

And Whereas, RBNV and Dynavax have negotiated the Definitive Agreements, including the terms of the Agreement, which provides, inter alia, for the termination of certain pre-existing agreements among the Parties (including superseding such Letter of Intent with regard to the subject matter of this Agreement), and the granting of certain license and other rights, as more specifically described hereinbelow.

NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth below, the Parties agree as follows:

SECTION 1. DEFINITIONS. The following initially capitalized terms have the following meanings when used in this Agreement (and derivative forms of them will be interpreted accordingly):

	1.1		“Affiliate” means, as to any person or entity, any other person or entity, which controls, is controlled by, or is under common control with such person or entity. A person or entity shall be regarded as in control of another entity only if it owns or controls, directly or indirectly, at least fifty percent (50%) of the equity securities or other ownership interests in the subject entity entitled to vote in the election of directors or with the power to direct or elect management of such subject entity. Affiliates of RBNV include Parent, Green Cross Vaccine Corp. (an entity organized under the laws of the Republic of Korea), Rhein Vaccines B.V., Berna Biotech A.G., and Crucell Holland B.V.,. Affiliation shall be determined based on RBG being wholly owned by Dynavax, and not owned at all by RBNV.

	1.2		“Alum” means any composition that is or contains aluminum in any form, regardless of whether *[ ]**

	1.3		“Asian Country” means any country geographically located on the continent of Asia. To be clear, the Asian Countries exclude Australia and New Zealand.

	1.4		“Closing Date” means the first date set forth above.

	1.5		“Control” means, with respect to a particular item of know-how or a particular Patent at a given date, the ownership of or a license under, together with the right to grant a license or sublicense of the scope set forth in the Agreement under, such item of know-how or Patent, without breaching any written agreement with a third party in existence as of such date.

	1.6		“Cytovax” means the prophylactic cytomegalovirus vaccine currently under development in NovoVacs BV.

	1.7		“Cytovax Program Products” means *[ ]** , including Cytovax.

	1.8		“Definitive Agreements” means (i) the Share Sale and Purchase Agreement (parties are RBNV and Dynavax) dated as of March 27, 2006; (ii) this Agreement (parties are RBNV, RBG, and Dynavax); (iii) the Supervax Exclusive License Agreement dated as of the Closing Date (parties are RBNV, RBG and Green

CONFIDENTIAL

			Cross); (iv) the Termination Agreement dated as of the Closing Date (parties are Berna and Dynavax); and (v) the Waiver Agreement relating to the employee stock plans (by managers and employees of RBG) dated as of the Closing Date.

	1.9		*[ ]**

	1.10		“Dynavax Notice” has the meaning given in the first paragraph of Section 3.1.

	1.11		“Existing Contracts” has the meaning given in Section 2.1.

	1.12		“Heplisav” means Dynavax’s current Hepatitis B vaccine containing Hepatitis B surface antigen and Dynavax’s 1018 ISS.

	1.13		“Heplisav Program Product” means *[ ] In this context, [ * ]** The product Heplisav is included among the Heplisav Program Products.

	1.14		*[ ]**

	1.15		“High Cost Registration European Countries” means all countries that are members of the European Union as of the Closing Date, and Norway, Switzerland and Iceland, other than the Low Cost Registration European Countries.

	1.16		“Know How” means all materials, information, experience and data, formulae, procedures, results and specifications, in written or electronic form, that (i) are Controlled by RBG or RBNV as of the Closing Date, (ii) are not generally known and (iii) are not subject to a third party confidentiality obligation that prevents RBG or RBNV from disclosing the same. Know How includes the Master Cell Line.

	1.17		“Low Cost Registration European Countries” means any country within the European Union as of the Closing Date, and Norway, Switzerland and Iceland, in which the approval for marketing of a vaccine product *[ ]**

	1.18		“Master Cell Line “ means the *[ ] strain, designated as [ * ] that exists as master cell banks designated as [ * ] and working cell banks designated as [ * ] as such cell line is described and referred to in the following IND filed with the FDA: [ * ] This strain is referred to between the Parties as the [ * ]** strain.

	1.19		“Patents” means all granted patents, including utility models and certificates of invention, and reissues, reexaminations, supplementary protection certificates, extensions, and term restorations thereof, and patent applications, including any continuations, continuations-in-parts, divisionals thereof, and the like.

	1.20		*[ ] is defined by reference to [ * ] it [ * ] to [ * ] or [ * ] for a [ * ]**

(a)

[ * ] means to [ * ] and [ * ] a [ * ] or [ * ] of [ * ] are [ * ] pursuant to a [ * ] that provides that [ * ] of [ * ] as a [ * ] from [ * ]

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(b)

[ * ] to [ * ] or [ * ] for [ * ] of a [ * ] in [ * ] or [ * ] for the [ * ] of [ * ] the [ * ] in a [ * ] for [ * ] which [ * ] is [ * ] of this definition [ * ] qualify [ * ]

	1.21		“RBG IP” means RBG Patents and the related Know How, both as of the Closing Date.

	1.22		“RBG Patents” means Patents Controlled by RBG as of the Closing Date that are listed in Exhibit 1.16.

	1.23		“Supervax” shall mean the current prophylactic two dose Hepatitis B vaccine that includes the *[ ] adjuvant. [ * ]**

	1.24		“Supervax Program Products” means all prophylactic Hepatitis B vaccines that contain all of the following: *[ ]** The Supervax Program Products include Supervax.

	1.25		“Theravax” means a therapeutic Hepatitis B vaccine that contains all of *[ ]**

	1.26		“Theravax Program Products” means all therapeutic Hepatitis B vaccines that contain all of *[ ]** The Theravax Program Products include Theravax.

	1.27		“Traditional Hepatitis B Vaccine” means any vaccine that contains *[ ] For the avoidance of doubt, Traditional Hepatitis B Vaccine includes the following Hepatitis B vaccines registered at Closing: [ * ]**

In addition, throughout this Agreement the words “include” (and all conjugations of it), “such as” and “for example” shall each be deemed to be followed by the words “without limitation,” “but without limitation,” or similar language against construing the language as limiting.

SECTION 2. CONFIRMATION, AMENDMENT AND TERMINATION OF EXISTING CONTRACTS AMONG THE PARTIES

	2.1		Confirmation of Existing Contract Obligations. Except for the March 1, 2005 Agreement between RBG, RBNV and Berna (which is terminated by the Share Sale and Purchase Agreement), and except to the extent specifically modified herein and/or by a separate amendment attached hereto as an Exhibit, all terms of pre-existing (prior to the Closing Date) contracts among RBG on the one hand and RBNV, and its Affiliates, on the other hand the “Existing Contracts;” the Existing Contracts exclude the Definitive Agreements), are hereby confirmed and remain in full force and effect.

	2.1.1		The Parties hereby agree that this Agreement sets forth the entire understanding between the Parties and their Affiliates with respect to the ownership of, all licenses to, and all rights to use and practice, the RBG IP and the *[ ] strain (here and everywhere else used in this Agreement where we refer to [ * ] we mean the strain [ * ] as described in [ * ]** Release Testing, Genetic and Product Characterisation). That is to say, where we refer above to “except to the extent

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			specifically modified hereunder,” the grants of licenses under and rights to use and practice the RBG IP set forth in this Agreement is, together with the remainder of this Section 2.1.1 and Sections 2.4 and 2.5, are intended to supersede all prior understandings with respect to the ownership of, licenses under, and rights to use RBG IP and the *[ ] strain, and to set forth the Parties’ entire agreement with respect to all of the foregoing matters mentioned in this sentence. RBNV and its Affiliates hereby acknowledge that they have no ownership or license rights in the RBG IP (excluding the Master Cell Line) and the [ * ] strain other than the license rights set forth in this Agreement. RBNV acknowledge that they have no financial interest in the RBG IP or [ * ]** strain other than as set forth in Section 2.4 and 2.5.

	2.2		Termination of Berna Agreement. The Termination Agreement between Dynavax and Berna, which sets forth the Parties’ mutual agreement to terminate the License and Supply Agreement, dated November 19, 2003, is attached as Exhibit 2.2. Thus, such License and Supply Agreement is terminated. Section 2.1 of this Agreement shall not viewed or deemed in any way to resurrect it.

	2.3		Assignment of Supervax Trademark Rights. The Supervax Trademark Assignment Agreement between RBG and Berna is attached as Exhibit 2.3.

	2.4		Fully Paid-Up License Rights. All Patent and Know-How rights, including RBG Patents rights, granted to RBNV, RBG, and their Affiliates, in pre-existing agreements between or among RBNV, RBG and their Affiliates, are hereby paid-up and royalty-free at the Closing Date. With the exception of (1) any outstanding invoices at Closing, (2) the arrangements specifically made and/or referenced in the Definitive Agreements executed at Signing and/or Closing (such as the profit share for Supervax, the loan repayments, any outstanding accounts payable, any open invoices, and the payments under Section 2.5) and (3) the *[ ] between RBG and RBNV described in the October 1, 2005 Addendum to License Agreement (between RBG and GCVC dated June 30, 1998) with respect to the License and Technology Transfer Agreement between [ * ]** sharing arrangement is also referred to at the end of Section 2.5). RBG and RBNV hereby waive all rights to any and all claims to all monies owed under such pre-existing agreements. If RBNV or RBG requests in writing, RBG or RBNV, respectively, shall promptly execute, and deliver to the other, any formal amendment documents confirming the waiver of any monetary obligations owing thereto and/or to its Affiliates and specific to the aforesaid pre-existing documents. Such confirmations must be consistent with this Agreement and the other Definitive Agreements. Such confirmations shall not have any force of effect to the extent inconsistent with this Agreement and/or any of the other Definitive Agreements.

	2.5		RBNV Rights to RBG Third Party License Revenues. RBG shall pay to RBNV all monies (excluding those already included in RBG’s accounts receivable as of the Closing Date) received by RBG from third parties pursuant to obligations in license agreements with RBG, which agreements exist on the Closing (other than current licenses with RBNV and its Affiliates and specifically

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excluding [ * ] and the License and Technology Transfer Agreement between [ * ] ) (“Current Licenses”), to the extent that such monies exceed [ * ] annually after adjustment for payments owed (a) based on agreements existing at Closing, to other third parties from such monies (including any royalties due to such other third parties on in-licensed IP sublicenses to the RBG licensees), and (b) for intellectual property that becomes licensed under the Current Licenses due to RBG obtaining control thereof after the Closing Date, to such third parties pursuant to the written agreement by which RBG obtains such control. For the purposes of clarity, these payments shall not include any payments received by RBG with respect to its Supervax Program Products, Theravax Program Products and Cytovax Program Products. RBNV shall have reasonable audit access to records of such payments on reasonable terms and at reasonable times. Such audits must be performed by a reputable certified public accountant, under appropriate obligations of confidentiality. Such audits shall not be made more frequently than once annually, no later than three (3) years after the payment period being audited.

Current Licenses specifically exclude the following:

	(a)		*[ ]**

	(b)		*[ ]**

With respect to such [ * ] the [ * ] referred to in the October 1 2005 Addendum to License Agreement (between RBG and GCVC dated June 30, 1998) shall continue in full force and effect.

SECTION 3. SUPERVAX RIGHTS OF FIRST REFUSAL AND FIRST NEGOTIATION

	3.1		European Countries (other then Low Cost Registration European Countries). Dynavax, or an Affiliate thereof, shall promptly notify RBNV in writing within *[ ] of taking its decision to develop the first Supervax Program Product (and thereafter within [ * ] after it takes such decision with respect to each subsequent Supervax Program Product not already (at the time of such decision) subject to a pre-existing third party agreement) for any High Cost Registration European Countries (“Dynavax Notice”). Dynavax, and/or an Affiliate thereof, shall not [ * ]** the (i) development and commercialization (including marketing and selling), and/or (ii) distribution and/or sale of such Supervax Program Product(s) for and in High Cost Registration European Countries until after the Parties have exercised their commercially reasonable efforts according to this Section 3.1 (unless RBNV fails to provide within the time period stated in Section 3.1.1 a notice that RBNV wishes to negotiate with Dynavax or its Affiliate under that Section).

	3.1.1		Schedule and Procedure. Within *[ ]** of receiving notification pursuant to Section 3.1, RBNV, or an Affiliate thereof, may notify Dynavax in writing of RBNV’s, or an Affiliate’s, intention to negotiate a development and commercialization agreement with Dynavax or an Affiliate thereof (the “RBNV

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			Notice”). If RBNV, or an Affiliate thereof, does not provide the RBNV Notice, then Dynavax may deem the failure to answer as a negative response and shall be free to proceed with third-party transactions regarding such Supervax Program Product rights in any and/or all of the countries mentioned in the Dynavax notice, without restriction.

	3.1.2		Within *[ ] of receiving the RBNV Notice, Dynavax, or an Affiliate thereof, shall provide RBNV with a good faith written proposal for a development and commercialization agreement (at a term sheet or greater level of detail, but not required to be at the level of a fully drafted agreement), which may, at Dynavax’s discretion, [ * ]** for such Supervax Program Product in the specific country or countries (“Dynavax Proposal”).

	3.1.3		Within *[ ] of receipt by RBNV of the Dynavax Proposal (“Negotiation Period”), RBNV and Dynavax, or their designated Affiliates, shall exercise their commercially reasonable efforts to negotiate, [ * ] the terms of such development and commercialization arrangement, including [ * ]** .

	3.1.4		Dynavax, or an Affiliate thereof, shall not offer more favorable terms, such as an offer that does not require the sharing of development costs (if the offer to RBNV included such sharing), than those offered to RBNV under Section 3.1.2 (if a proposal under such Section was required of Dynavax), within *[ ] from the expiration of the Negotiation Period, unless those terms have first been offered to, and rejected by, RBNV, which rejection or approval shall be provided within [ * ] of notification. A failure to respond within such [ * ] shall be considered a rejection. After such [ * ]** period, Dynavax, RBG and their Affiliates shall be free to proceed with third-party transactions regarding such Supervax Program Products rights in any and/or all of the countries mentioned in the Dynavax notice, without restriction.

Dynavax is entitled to provide the Dynavax Notice to RBNV with respect to one or more High Cost Registration European Countries. Dynavax may also choose (in its sole discretion) to include in the Dynavax Notice Low Cost Registration European Countries, and is not required to proceed separately, contemporaneously or later under Section 3.2. RBNV is not entitled to pick and choose among countries in a Dynavax Notice, but rather must respond on a group basis to the country or countries that is or are included in the Dynavax Notice.

Dynavax is entitled to provide the Dynavax Notice to RBNV with respect to one or more Supervax Program Products. RBNV is not entitled to pick and choose among Supervax Program Products in a Dynavax Notice, but rather must respond on a group basis to the Supervax Program Product(s) that is or are included in the Dynavax Notice.

3.2

Asian Countries and Low Cost Registration European Countries. Dynavax, or an Affiliate thereof, shall promptly notify RBNV in writing within [ * ] of taking its decision to [ * ] in any Asian Country(ies) and/or Low Cost Registration European Country(ies). Such decision must only be made if the Supervax Program Product and data regarding it is such that it shall be at a stage

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			that it would be reasonable to *[ ] it being understood and agreed that if in the particular country it is customary that [ * ] Dynavax, and/or an Affiliate thereof, shall not [ * ]** any third party for the sale and/or distribution of Supervax for and in any Asian Country(ies) and/or Low Cost Registration European Country(ies) until after the Parties have exercised their commercially reasonable efforts according to this Section 3.2 (unless RBNV fails to provide a notice that it wishes to negotiate with Dynavax or its Affiliate under Section 3.2.1 within the deadline stated in such Section in which case Dynavax and RBG are free to proceed regarding such Supervax Program Product rights for the country(ies) mentioned in the notice, without restriction).

	3.2.1		Schedule and Procedure. Within *[ ]** of receiving notification pursuant to Section 3.2, RBNV, or an Affiliate thereof, may notify Dynavax in writing of RBNV’s, or an RBNV Affiliate’s, intention to negotiate a commercialization agreement with Dynavax, or an Affiliate thereof, with respect to the Asian Country(ies) and/or Low Cost Registration European Country(ies) mentioned in Dynavax’s or its Affiliate’s notice (such notice from RBNV, the “RBNV Notice”). If RBNV, or an Affiliate thereof, does not provide the RBNV Notice, then Dynavax may deem the failure to answer as a negative response. In that case, Dynavax and RBG are free to proceed regarding such Supervax Program Product rights for the country(ies) mentioned in their notice, without restriction.

	3.2.2		Within *[ ] of receipt of the RBNV Notice, RBNV and Dynavax, or their designated Affiliates, shall exercise their commercially reasonable efforts to negotiate, [ * ] in good faith, the essential terms and conditions of sales and distribution, including [ * ]** .

	3.2.3		In case negotiations under Section 3.2.2 (if required to be initiated thereunder) do not result, within the specified *[ ] in an agreement as specified in Section 3.2.2, Dynavax, or an Affiliate thereof, may [ * ] provided that Dynavax, or an Affiliate thereof, shall not offer to such third parties more favorable terms than those offered to RBNV, within [ * ] after the end of discussions under Section 3.2.2 without first offering such more favorable terms to RBNV. RBNV is obliged to respond yes or no to the more favorable terms within [ * ] A failure to respond within such [ * ]** is considered a rejection.

The principles of the last two paragraph of Section 3.1 apply to Section 3.2 as well. To avoid any doubt, this Section 3.2 does not apply to Supervax Program Product rights for Low Cost Registration European Countries where such rights for the particular countries have already been passed upon by RBNV through the mechanism of Section 3.1.

3.3

First Negotiation. Dynavax and RBNV agree that, for [ * ] after the Closing Date, neither Party nor their Affiliates, shall negotiate with any third parties, without first negotiating and discussing in good faith with each other, any possible joint development, research, collaboration and/or marketing agreement for [ * ]

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SECTION 4. GRANT OF LICENSES.

	4.1		Supervax. RBG hereby confirms its exercise of the exclusive (even as to the grantor) license option in the License Option Agreement Supervax dated November 9, 2005, between RBG and Green Cross Vaccine Corporation (the “Superseded Option”). The terms of such resulting exclusive license are described in the Exclusive License Agreement attached hereto as Exhibit 4.1, which terms supersede the Superseded Option.

	4.2		*Master Cell Line and Hepatitis B Surface Antigen [ ]** . Subject to any pre-existing third party agreements and the terms of this Agreement (including the covenants specified in Section 6 hereof), RBNV and its Affiliates, hereby with respect to Section 4.2.1 agree that RBG and Dynavax have, and with respect to Section 4.2.2 grant, and confirm the grant, to RBG and Dynavax, of the following rights:

	4.2.1		The right to use the Master Cell Line for Hepatitis B surface antigen (*[ ]** ) currently in RBG’s possession (including progeny of such cell line) for any and all permitted purposes, including clinical and commercial production. “Permitted purposes” in this context means all activities outside the scope of the exclusive license of Section 4.3.2, other than activities forbidden in Section 6, during the time period forbidden therein.

	4.2.2		A non-exclusive license under all Patents (if any) owned, or controlled with the right to sublicense, by RBNV to develop, make, have made, use, offer to sell, sell, store and import Hepatitis B surface antigen (*[ ]** ) produced on the Master Cell Line, but while the license of Section 4.3.2 is in effect only outside the scope of the exclusive license of Section 4.3.2; and excluding activities forbidden in Section 6, during the time period forbidden therein.

	4.2.3		Sublicense Rights. The rights and licenses specified in 4.2.1 and 4.2.2 above are sublicensable without RBNV’s and its Affiliates’ consent through one or more tiers or layers of sublicensees to RBG’s and Dynavax’s Affiliates, third party contract manufacturers, contract clinical and analytical service providers, distributors, and commercial development and/or marketing partners (including licensees).

	4.2.4		The rights and licenses granted in this Section 4.2 are royalty-free and fully paid-up as far as any payments to RBNV and its Affiliates are concerned, and are perpetual.

	4.3		RBG License Grants to RBNV. Subject to the terms of this Agreement and any restrictions stated in in-licenses by which RBG acquired Control of any RBG IP that is not owned by RBG, RBG hereby grants to RBNV and its Affiliates, and RBNV and its Affiliates shall hereby receive, the following rights:

	4.3.1		a fully paid-up, royalty-free, non-exclusive, license under RBG IP, in perpetuity, to develop, make, have made, use, sell, offer to sell, store, import and export any

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and all products, except for Supervax Program Products, Theravax Program Products, Cytovax Program Products and Heplisav Program Products.

4.3.1.1

The exclusion of Supervax Program Products, Theravax Program Product, Cytovax Program Products and Heplisav Program Products from the foregoing license means (without limitation) that such license does not extend to the making and selling of Hepatitis B surface antigen (or any other ingredient covered by or made using the RBG IP) for inclusion (or under contractual terms that would permit their inclusion) in any Supervax Program Product(s), Theravax Program Product(s), Cytovax Program Product(s) and/or Heplisav Program Product(s). Accordingly, RBNV and their Affiliates shall only supply Hepatitis B surface antigen, made using RBG IP, and such other ingredients to third parties under circumstances in which such third parties (and any entities to which they may transfer such antigen and other ingredients) are legally forbidden and precluded from making Supervax Program Products, Theravax Program Products, Cytovax Program Product and Heplisav Program Products using the supplied quantities of such antigen and other ingredients. Notwithstanding the foregoing, RBNV and its Affiliates shall not be required to amend their existing agreements to comply with the restrictions specified in this Section 4.3.1, but shall exert its reasonable diligent efforts, which do not adversely financially impact RBNV, to include such terms upon amendment thereof and shall include them on any voluntary extension to the relationship (i.e. one that is not required without RBNV’s or its Affiliate’s consent under the contract that exists as of the Closing Date).

4.3.2

a fully paid-up exclusive license under RBG IP, to develop, make, use, offer to sell, store, sell and import Traditional Hepatitis B Vaccines (such as [ * ] and any combination vaccines (containing two (2) or more vaccines directed against diseases caused by independent agents) that (a) include a Traditional Hepatitis B Vaccine (such as [ * ] ), but (b) exclude Heplisav Program Products. Such license shall be exclusive, even as to Dynavax and RBG, for a term lasting until the longer of the end of ten years or the life of the last-to-expire applicable RBG Patent.

4.3.2.1

10.

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antigen and other ingredients. Notwithstanding the foregoing, RBNV and its Affiliates shall not be required to amend their existing agreements to comply with the restrictions specified in this Section 4.3.2, but shall exert its reasonable diligent efforts, which do not adversely financially impact RBNV, to include such terms upon amendment thereof and shall include them on any voluntary extension to the relationship (i.e. one that is not required without RBNV’s or its Affiliate’s consent under the contract that exists as of the Closing Date).

	4.3.3		For the avoidance of doubt, the licenses of Section 4.3.1 and 4.3.2 do not in any way diminish the scope of RBG’s rights to the Supervax Program Products, Theravax Program Products and Cytovax Program Products.

	4.3.4		Sublicense Rights and Restrictions. The licenses of both Sections 4.3.1 and 4.3.2 are subject to restrictions on RBG’s ability to license and sublicense pursuant to pre-existing third-party agreements (i.e. agreements with entities other than Affiliates). Other than such third party licensing restrictions:

	(1)		RBNV’s non-exclusive license rights provided in subsection 4.3.1 above are sublicensable in conjunction with the grant of a license or sublicense under *[ ]**

	(2)		RBNV’s exclusive license rights provided in subsection 4.3.2 above, are sublicensable *[ ]** without any requirement that RBNV license other intellectual property in conjunction with the grant of the sublicense.

	(3)		To avoid any doubt, any sublicensees under the license of subsection 4.3.1 and any sublicensees under the license of Section 4.3.2 shall be subject to the same restrictions as stated in Sections 4.3.1.1 and 4.3.2.1, respectively, as if such sublicensees were RBNV or an RBNV Affiliate.

4.3.5

RBG Obligation to Secure Third Party Licensor Consent. At RBNV’s written request, RBG shall promptly notify each third party licensor of RBG IP, of RBG’s obligation under Section 4.3 to sublicense rights in such RBG IP to RBNV, and if consent or amendment under the appropriate license agreement is required, then RBG shall [ * ] to obtain written consent from each such third party licensor. Promptly upon securing each required consent from a third party licensor, if the terms of the consent are acceptable to RBNV, then the Parties shall execute a formal sublicense agreement with RBNV providing for (1) the sublicense of RBG IP rights to RBNV, and (2) the assumption of obligations by RBNV as provided for in such third party license agreements. If any such sublicense requires the payment of monies to the third party licensor (including any payment in the form of an amendment that results in a payment of less money to RBG under the contract than without such amendment), RBNV shall be informed in writing of such potential financial obligation, and RBNV shall be responsible for the payment of all such fees to said third party licensor. RBNV shall be entitled to terminate such sublicense in accordance with its terms, but shall not in this manner be able to avoid responsible for any non-cancelable sublicensing-related fees.

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	4.3.6		Licensed RBG Patent Maintenance. Given the non-exclusive nature of the license of Section 4.3.1, RBG and Dynavax will be under no requirement to prosecute or maintain RBG Patents, which do not specifically claim *[ ]** If RBG and Dynavax elect to abandon any RBG Patent, RBG and/or Dynavax will first give RBNV reasonable notice of such intention and the opportunity to prosecute or maintain such RBG Patent. In this case, optionally, at RBNV’s sole discretion, RBNV may do so in its own name; provided that RBG and Dynavax will receive a non-exclusive license to such RBG Patents, consistent with the licenses granted herein and with any pre-existing third party agreements (i.e. if 3rd party obligations exist that apply to the practice of the inventions claimed in the RBG Patents taken over by RBNV, then RBNV must comply with such 3rd party license obligations respecting such practice). If RBG and Dynavax choose, as part of a strategic move, to abandon a particular RBG Patent, which does not claim specifically *[ ] and which would reasonably benefit the RBG Patent portfolio, then the Parties will diligently [ * ]**

	4.4		Defense of Patent Litigation. If either Party after the Closing is warned or sued by a third party alleging or charging infringement of any Patents claiming the licensed Know How or the use thereof by either Party or its Affiliates, then the Party that was warned or sued shall notify promptly the other Party. Except only if, as and to the extent otherwise provided in Article 8, each Party shall be responsible, at its expense, for settling and/or defending such warning, allegation or charge (including associated litigation) to the extent relating to such Party’s or its Affiliates’ use of the licensed Know-How. *[ ]** Upon a Party’s reasonable request, the other Party agrees to reasonably assist in any such defense on mutually agreed reasonable terms, provided that the requesting Party agrees to reimburse the other Party for the reasonable out of pocket expenses incurred by the other Party for the provision of such assistance. Dynavax and RBG are considered a single “Party” for purposes of this Section 4.4.

	4.5		Patent Enforcement.

	4.5.1		Notification. In the event that a Party obtains actual knowledge that a third party’s activities likely infringe one or more of the RBG Patents within the scope of the exclusive license granted in Section 4.3.2, it shall promptly notify the other Party of any such likely infringement.

	4.5.2		Control of Suit:

4.5.2.1

As to the infringement of exclusively licensed RBG Patents pursuant to Section 4.3.2, RBG shall have the first right to effect termination of such infringement, including bringing suit or other proceedings against the infringer in its own name and the other Parties hereto shall be kept informed at all times of all such proceedings taken by RBG. If RBNV, or

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			another Party licensee, requests, such Party may join with RBG as a Party to the lawsuit or other proceeding in a monitoring capacity only at its own expense. However, even if RBNV chooses to join the suit in such a monitoring capacity, RBG shall retain sole control of the prosecution of such suit or proceedings, as the case may be.

	4.5.2.2		If (a) RBG elects not to file legal proceedings against a third party within *[ ]** such possible infringing activities, and has not engaged in, or has terminated, reasonably diligent business discussions to terminate such infringement, and (b) the infringement involves the commercialization of a product that competes directly with any then-marketed product of RBNV or any of its Affiliates, and if the alleged infringement is likely to have a more than insignificant impact on RBNV’s business in the country(ies) where sales of allegedly infringing product is occurring, then RBNV shall have the right to effect termination of such infringement, including bringing suit or other proceedings against the infringer in its own name. The other Parties hereto shall be kept informed at all times of all such proceedings taken by RBNV. RBNV shall not be authorized to make any admission, consent, or other representation during the proceeding, which would admit the invalidity or unenforceability of an RBG Patent, without the advice and consent, in writing, from RBG, which RBG is entitled to withhold in its reasonable discretion. If RBG (or an RBG Affiliate) requests, such entity may join with RBNV as a party to the lawsuit or other proceeding at its own expense. In this case, RBNV shall retain control of the prosecution of such suit or proceedings, as the case may be, except that RBG shall have the sole right to control the prosecution of such suit or proceedings as regards all matters affecting validity and/or enforceability of the RBG Patent(s).

	4.5.3		Costs and Monetary Recovery: Each Party shall bear all its costs incurred in connection with such lawsuit or other proceeding. Any monetary recovery shall first be paid to the Parties (and their Affiliates) to reimburse their legal and other costs associated with the legal proceeding. *[ ] remaining recovery shall be paid to or retained by RBNV, [ * ]** remaining recovery shall be paid to or retained by RBG.

	4.5.4		Disclaimer. Nothing in this Agreement shall be construed as obligating any Party the right, to proceed against a third party infringer.

	4.5.5		Area of No RBNV Enforcement Rights. RBNV and its Affiliates shall not have any right to enforce the RBG Patents outside the scope of the exclusive license in Section 4.3.2 during the time period while it remains exclusive. Without limitation, this means that RBNV and its Affiliates have no right to enforce the RBG Patents within the scope of the non-exclusive license of Section 4.3.1, to the extent broader than the license of Section 4.3.2 (i.e. outside of any overlap between Section 4.3.1 and Section 4.3.2).

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SECTION 5. TECHNICAL ASSISTANCE AND COOPERATION

	5.1		Master Cell Line Issues-Cooperation. Dynavax and RBNV acknowledge that the Master Cell Line is (1) used by RBNV and its Affiliates for the production of products that are approved by Governmental Authorities, and that are currently on the market, and (2) is confidential and of crucial importance to the Parties. Accordingly, *[ ] ensure the best and most informed approach. To avoid any doubt, [ * ] Dynavax and RBNV further agree to use reasonable efforts to promptly notify the other party of any and all communications to and from Governmental Authorities relating to the safety of the Master Cell Line, as well as of any communication and/or concerns expressed by such regulatory authority relating to the safety, quality or characterization of the Master Cell Line, and agree to consult promptly with each other to resolve any such concerns with the FDA or such other Governmental Authorities. The Parties agree to share all safety, toxicity and tumorogenicity data regarding the Master Cell Line that any of them (or their Affiliates) generates (or receives or contracts for) [ * ]**

	5.2		Production Technology Assistance. RBG will provide to RBNV and to its Affiliates reasonable access to assistance regarding the Hepatitis B and Hansensula polymorpha production technologies as in existence at RBG on the Closing (with no updating), as follows:

	5.2.1		Troubleshooting. For a period of *[ ] after Closing, RBG will make available for general diagnosis and troubleshooting, in each year during this [ * ] period up to [ * ] at a cost of [ * ] per FTE month, which cost may be adjusted for inflation every year, plus all travel and related expenses, provided that RBNV provides RBG at least [ * ] advance notice of such request. [ * ]** RBG’s technical personnel supplied by RBG for such general diagnosis and troubleshooting.

	5.2.2		Long Term Projects. For a period of *[ ] after Closing, RBG will make available for long term projects, including training of Parent’s personnel, up to an aggregate of [ * ] of which no more then [ * ] within [ * ] at a cost of [ * ] per FTE month, which cost may be adjusted for inflation every year, plus all travel and related expenses, provided that Parent provides RBG at least [ * ] advance notice of such request. [ * ]** RBG technical personnel supplied by RBG for such long term projects.

	5.2.3		The aggregate FTEs stated in Sections 5.2.1 and 5.2.2 are stated collectively for RBNV and its Affiliates together. They are not each separately entitled to this number of FTEs.

	5.3		No Transfer or Supply Obligations. Other than is mentioned in Sections 5.1 and 5.2, there are no obligations for RBG or RBNV to supply each other or their Affiliates, Know How, products or other materials pursuant to the license grants herein. Any such existing obligations are hereby waived. The Parties remain free to contract in writing for new such obligations in the future in their sole discretions.

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SECTION 6. COVENANTS NOT TO COMPETE

	6.1		*[ ] RBG and Dynavax, for [ * ] after Closing, will not develop and/or market, and/or license others to develop and/or market, for [ * ]** Hepatitis B vaccine, other than Heplisav Program Products.

	6.2		*[ ] RBG and Dynavax, for [ * ] after Closing, will not develop and/or market, and/or license others to develop and/or market, [ * ]** other than Heplisav Program Products.

SECTION 7. REPRESENTATIONS AND WARRANTIES

	7.1		RBG warrants and represents to RBNV that any and all RBG IP rights licensed from third parties, which rights are necessary for the research, development, manufacture, marketing, sale or importation of the products known as (a) *[ ]** and/or (b) HepavaxGene, are sublicensable, and have been sublicensed, to RBNV and its Affiliates, without the need to secure the prior consent from such third parties.

	7.2		RBNV, RBG and Dynavax warrant and represent to each other that (i) it has the full right and authority to enter into this Agreement and to grant the rights granted herein; (ii) it has not previously granted any rights to third parties in conflict with the rights and options granted herein; (iii) it shall not violate the law or existing contractual obligations by executing this Agreement; (iv) it is not bound by any obligations to third parties that would impair its ability to perform its obligations or grant the licenses contemplated herein; and (v) it has duly executed this Agreement. UNLESS OTHERWISE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT, PATENT VALIDITY, TECHNICAL FEASIBILITY, FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY WARRANTIES CONCERNING THE INHERENT PROPERTIES OF KNOW HOW AND RBG IP SUPPLIED OR LICENSED UNDER THIS AGREEMENT. EACH PARTY MAKES NO WARRANTY AS TO THE MERCHANTABILITY OF THE PRODUCTS, ITS LICENSED KNOW HOW OR LICENSED PATENTS.

SECTION 8. INDEMNIFICATIONS AND INSURANCE

	8.1		Licensee Third Party Responsibilities.

	8.1.1		Dynavax/RBG Responsibility. Dynavax and RBG shall be responsible, and shall hold RBNV harmless for: (i) all financial obligations to third parties (i.e. parties that are not Parties hereto and Affiliates thereof) due to the receipt or exercise by Dynavax or RBG of the rights addressed in section 4.2; and (ii) all requirements in relation to RBNV’s existing (as of the Closing Date) third-party licenses, arising out of Dynavax’s or RBG’s receipt or exercise of the rights addressed in section 4.2 of which RBNV informs Dynavax (i.e. if third-party

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			obligations exist (meaning that they are provided for in a written agreement with a third party executed before the Closing Date) for the use of the Master Cell Line by RBG and Dynavax under the license of Section 4.2, then fulfillment of those obligations shall not be RBNV’s responsibility, but RBNV must inform RBG and Dynavax of such third-party obligations in order for RBG and Dynavax to be able to fulfill them). For the avoidance of any doubt, RBNV shall not be liable for any financial obligations to third parties, including for example upstream royalties or other payments, arising out of Dynavax’s, RBG’s or their Affiliates’ exercise of rights to third-party technology the rights in which have been sublicensed hereunder.

	8.1.2		RBNV/Affiliate Responsibility. RBNV is responsible, and shall hold RBG and Dynavax harmless for: (i) all financial obligations to third parties (i.e. parties that are not Parties hereto and Affiliates thereof) due to the receipt or exercise by RBNV and its Affiliates of the license of subsection 4.3.1 and/or 4.3.2, and (ii) all requirements in relation to RBG’s existing (as of the Closing Date) third-party licenses for RBG IP, arising out of RBNV’s or its Affiliates’ receipt or exercise of the licenses of subsections 4.3.1 and 4.3.2 of which RBG and/or Dynavax informs RBNV (i.e. if third-party obligations exist (meaning that they are provided for in a written agreement with a third party executed before the Closing Date) for the exercise of the licenses of Sections 4.3.2 and 4.3.2 shall not be Dynavax’s nor RBG’s responsibility, but Dynavax or RBG must inform RBNC of such third-party obligations in order for RBNV and its Affiliates to be able to fulfill them. For the avoidance of any doubt, RBG and Dynavax shall not be liable for any financial obligations to third parties, including for example upstream royalties or other payments, arising out of RBNV’s or its Affiliates’ exercise of rights to third-party RBG IP sublicensed hereunder.

	8.1.3		Cooperation. The Parties shall cooperate in the mechanics of making payment to any upstream licensors. This includes that the sublicensing Party will forward payments and reports received from the sublicensed Party to the third-party licensor, promptly after receipt, and will share promptly all notices of delinquency and non-payment received.

	8.2		General Product Indemnification.

(a)

Each licensing Party herein (“Licensor”) shall not be liable for, and each licensed Party herein (“Licensee”) shall defend indemnify and hold Licensor together with its Affiliates and the directors, officers and employees of all of them (the “Licensor Indemnitees”) harmless against, any and all liabilities (including product liability and infringement of third party Patents insofar as such infringement relates to activities carried out by Licensee under this Agreement), damages, losses costs, and expenses, including reasonable attorney’s fees (collectively “Damages”), resulting in any manner from third-party claims, demands and actions (collectively, “Claims”) arising out of (a) the use by Licensee or its Affiliates of the Master Cell Line and/or the licensed Know How, or (b) the Licensee’s

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			other activities in exercise of a license granted it hereunder, including the development or manufacture of licensed (hereunder) prototypes or clinical supplies by Licensee or its Affiliates, or the use of any licensed (hereunder) product manufactured, or used by Licensee or its Affiliates by any human being regardless of whether such use was contemplated by the Parties, except in the case of each (a) and (b) to the extent such liabilities result from (x) the willful misconduct, or gross negligence by the Licensor Indemnitees and/or (y) the Licensor’s breach of its representations and warranties under this Agreement. For purposes of illustration, Dynavax shall not be responsible and shall be defended and held harmless by RBNV for product liabilities relating to *[ ]** while RBNV shall not be responsible for and shall be defended and held harmless by Dynavax and RBG for product liabilities relating to Supervax Program Products, Theravax Program Products and Cytovax Program Products. RBG is the Licensor, and RBNV and its Affiliates are the Licensees, regarding the licenses of Section 4.3. RBNV is the Licensor, and RBG, Dynavax and their Affiliates are the Licensees, regarding the licenses of Section 4.2.

	(b)		RBG hereby agrees to indemnify, defend and hold harmless RBNV and its Licensor Indemnitees from and against all Damages resulting from Claims to the extent arising out of (1) a breach of RBG’s representations and warranties under this Agreement, and/or (2) RBG Indemnitees’ willful misconduct, or gross negligence. Likewise, RBNV hereby agrees to indemnify, defend and hold harmless RBG and its Licensor Indemnitees (including Dynavax and its people) from and against all Damages resulting from Claims to the extent arising out of (1) a breach of RBNV’S representations and warranties under this Agreement, and/or (2) RBNV Indemnitees’ willful misconduct, or gross negligence.

8.3

Indemnification Procedure. If a Party (the “Indemnitee”) intends to claim indemnification under Section 8, Indemnitee shall promptly notify the other Party (the “Indemnitor”) of any claim, demand, action, or other proceeding for which the Indemnitee intends to claim such indemnification. The Indemnitor shall have the right to participate in, and to the extent the Indemnitor so desires jointly with any other Indemnitor similarly noticed, to assume the defense thereof with counsel selected by the Indemnitor; provided, however, that the Indemnitee shall have the right to retain its own counsel at Indemnitee’s own expense. The indemnity obligations under this Article 8 shall not apply to amounts paid in settlement of any claim, demand, action or other proceeding if such settlement is effected without the prior express written consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. The failure to deliver notice to the Indemnitor within a reasonable time after notice of any such claim or demand, or the commencement of any such action or other proceeding, only to the extent actually prejudicial to its ability to defend such claim, demand, action or other proceeding, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 8 with respect thereto, but the omission so to deliver notice to the Indemnitor shall not relieve it of any liability that it may have to the

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Indemnitee otherwise than under this Article 8. The Indemnitor may not settle or otherwise consent to an adverse judgment in any such claim, demand, action or other proceeding, that diminishes the rights or interests of the Indemnitee without the prior express written consent of the Indemnitee, which consent shall not be unreasonably withheld or delayed. The Indemnitee, its Affiliates, and all of their employees and agents, shall reasonably cooperate with the Indemnitor and its legal representatives in the investigation of any claim, demand, action or other proceeding covered by this Section 8.

If the Parties cannot in good faith agree as to the application of Section 8.2 to any particular Claim, then each Party may the conduct its own defense of such Claim and reserves the right to claim indemnification (to the extent provided for in Section 8.2) from the other Party upon resolution of the underlying Claim.

	8.4		Insurance. Each Party shall maintain insurance against all foreseeable risks and claims arising from its performance of activities licensed hereunder.

	8.5		Limitation of Liability. EXCEPT TO THE EXTENT A PARTY MAY BE REQUIRED TO INDEMNIFY THE OTHER FOR AMOUNTS PAID TO THIRD PARTIES OR AS REGARDS A BREACH OF A CONFIDENTIALITY OBLIGATION, NEITHER PARTY (NOR ITS AFFILIATES) SHALL BE LIABLE TO THE OTHER PARTY (NOR ITS AFFILIATES) FOR PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES (SUCH AS LOST PROFITS, OPPORTUNITY COSTS, MISSED BUSINESS OPPORTUNITIES, OR OTHER THINGS CAUSED BUT NOT PROXIMATELY CAUSED BY ANY BREACH OR DEFAULT UNDER THIS AGREEMENT, WHETHER THE THEORY OF LIABILITY IS GROUNDED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) PRODUCT LIABILITY OR OTHERWISE). EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES.

SECTION 9. MISCELLANEOUS

	9.1		Governing Law. This Agreement will be governed by the laws of *[ ] (without giving effect to its conflict of law rules and regulations). Any dispute shall be resolved by arbitration before the London Court of International Arbitration in accordance with the [ * ] applying the substantive law of [ * ]** excluding conflicts of law rules.

	9.2		Arbitration Procedure.

			Any controversy, dispute or claim which may arise out of or in connection with this Agreement, including the exhibits attached hereto, or the interpretation, enforceability, performance, breach, termination or validity thereof, including disputes relating to alleged breach or termination of the foregoing, but excluding any determination as to the infringement, validity or claim interpretation of Patents of each Party related to the subject matter hereof and/or the misuse and/or

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misappropriation of a Party’s Information, (each a “Dispute”) shall be resolved by binding arbitration in accordance with the [ * ] except where this rules conflict with this provision, in which case this provision controls. The Arbitration shall be held in English and shall take place in London. The Dispute shall be construed in accordance with the laws of [ * ] exclusive of conflicts of law rules. The arbitration tribunal shall consist of three neutral arbitrators, each of whom shall be an attorney who (a) has at least fifteen (15) years of experience in the biopharmaceutical field in a law firm or corporate law department of over twenty-five (25) lawyers or (b) was a judge of a court of general jurisdiction. However: (X) at least one of the arbitrators must be an attorney described in clause (a) of the foregoing sentence; (Y) at least one of the arbitrators must be trained in [ * ] and have been admitted to practice in [ * ] ; and (Z) at least one of the arbitrators must be a native English speaker. The arbitrators shall be neutral, independent, disinterested, and impartial. Each Party shall nominate in the request for arbitration and the answer thereto one arbitrator and the two arbitrators so named will then jointly appoint the third arbitrator as chairman of the arbitration tribunal. After appointment, the Parties shall have no ex-parte communication with their proposed arbitrator. If one Party fails to nominate its arbitrator or, if the Parties’ arbitrators cannot agree on the person to be named as chairman within [ * ] the President of the London Court of International Arbitration shall make the necessary appointments. Within [ * ] of initiation of arbitration, the Parties shall reach agreement upon and thereafter follow procedures assuring that the arbitration will be concluded and the award rendered within no more than eight months from selection of the arbitrators. Failing such agreement, the Arbitration Rules of the London Court of International Arbitration will control the procedures and scheduling and the Parties will follow procedures that meet such a time schedule. Each Party has the right before or, if the arbitrators cannot hear the matter within an acceptable period, during the arbitration to seek and obtain from the appropriate court provisional remedies such as attachment, preliminary injunction, replevin, etc., to avoid irreparable harm, maintain the status quo or preserve the subject matter of the arbitration. Any request for such provisional measures by a Party to a court shall not be deemed a waiver of this agreement to arbitrate. In addition, the Arbitrator Tribunal may, at the request of a Party, order provisional or conservatory measures (including, without limitation, preliminary injunctions to prevent breaches hereof) and the Parties shall be able to enforce the terms and provisions of such orders in any court having jurisdiction. The decision of the arbitration tribunal must be in writing and must specify the basis on which the decision was made, and the award of the arbitration tribunal shall be final and judgment upon such an award may be entered in any competent court or application may be made to any competent court for judicial acceptance of such an award and order of enforcement. AS IS CONSISTENT WITH SECTION 8.5, THE ARBITRATOR SHALL BE EMPOWERED TO AND SHALL NOT AWARD ANY PARTY PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES (SUCH AS LOST PROFITS, OPPORTUNITY COSTS, MISSED BUSINESS OPPORTUNITIES, OR OTHER THINGS CAUSED BUT NOT PROXIMATELY CAUSED BY ANY BREACH OR

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			DEFAULT UNDER THIS AGREEMENT, WHETHER THE THEORY OF LIABILITY IS GROUNDED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) PRODUCT LIABILITY OR OTHERWISE), AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES. NO PARTY MAY SEEK OR OBTAIN PREJUDGMENT INTEREST OR ATTORNEY’S FEES OR COSTS.

	9.3		Notice and Reports. All notices required by this Agreement shall be in writing. All notices and reports shall be sent by fax followed by overnight courier to the Parties at the following addresses or such other addresses as may be designated in writing by the respective Parties:


		To RBNV:		Rhein Biotech NV
				Oude Maasstraat 47,
				NL 6229 BC Maastricht,
				The Netherlands
				*[ ]**

		To RBG:		Rhein Biotech GmbH
				Eichsfelder Strasse 11
				Dusseldorf 40595
				Germany
				*[ ]**

		To Dynavax:		Dynavax Technologies Corporation
				2929 Seventh Street, Suite 100
				Berkeley, CA 94710
				USA
				*[ ]**
				ATTN: CEO

				With a required copy to Dynavax at the same address and fax, to “ATTN: LEGAL DEPARTMENT.”

Any notices shall be deemed given when received by the other Party, including in the case of notices sent by facsimile, if the sender has a valid confirmation of the facsimile going through.

9.4

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			(with each Party for this purpose being deemed to include its Affiliates) shall be deemed exchanged under the Confidentiality Agreement) and protected thereunder; and provided, further, that notwithstanding any restriction on use stated in such Confidentiality Agreement, the right of a Party and its Affiliates to use items of confidential information, materials and know-how as stated in this Agreement shall not be restricted by such Confidentiality Agreement within the scope of a right or license granted hereunder to such Party and its Affiliates and instead the Parties’ (and their Affiliates’) rights stated in this Agreement shall prevail. This Agreement and the Exclusive License Agreement between Green Cross and RBG and the Trademark Assignment Agreement both signed on the Closing Date together state the Parties entire agreement with respect to Supervax Program Products, as if they were a single agreement, with none of such agreement superseding any of the others of them.

	9.5		Assignability. This Agreement may not be assigned without the prior written consent of the other Party, except (i) to an Affiliate, (ii) upon merger of a Party, or (iii) upon the sale of all or substantially all of Licensee’s assets relating to the manufacture of antibodies or proteins. Any attempted assignment contrary to the terms of this provision shall be void.

	9.6		Force Majeure. Neither Party or its Affiliates shall be liable for any unforeseeable event beyond its reasonable control not caused by the fault or negligence of such Party, which causes such Party to be unable to perform its obligations under this Agreement, and which it has been unable to overcome by the exercise of due diligence. In the event of the occurrence of such a force majeure event, the Party unable to perform shall promptly notify the other Party. It shall further use its best efforts to resume performance as quickly as possible and shall suspend performance only for such period of time as is necessary as a result of the force majeure event

	9.7		Expenses. Each Party shall bear its own expenses, if not expressly agreed otherwise in this Agreement.

	9.8		Amendment and Waiver. This Agreement may be amended or modified only by a writing executed by each of the Parties. No waiver of any breach of this Agreement will be deemed to constitute a continuing waiver of any subsequent breach, whether of the same or of any other provision hereof.

	9.9		Severability. If any provision of this Agreement is held or found to be unenforceable, such provision shall be deemed severed and stricken from this Agreement, but the remainder of this Agreement shall under all circumstances remain in full force and effect. The Parties intend that even is a provision is found to be unenforceable and thus deemed severed and stricken from this Agreement, the remaining terms of this Agreement shall continue in effect in all cases, and there shall be no right to rescind or terminate this Agreement.

	9.10		Counterparts. This Agreement may be executed in multiple counterparts, each

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of which will constitute an original, but all of which when taken together will constitute a single agreement. Delivery of an executed counterpart signature page of this Agreement by facsimile, email or other electronic transmission will be effective as delivery of a manually executed counterpart of this Agreement.

{REMAINDER OF PAGE INTENTIONALLY BLANK}

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CONFIDENTIAL

THIS AGREEMENT HAS BEEN EXECUTED BY DYNAVAX, RBG AND RBNV, TO HAVE EFFECT ON THE DATE FIRST WRITTEN ABOVE ON THE FIRST PAGE OF THIS AGREEMENT.


For RBNV:

By:		/s/ P.G.J. Heijmanns

Name:		P.G.J. Heijmanns
Title:		Managing Director

For Dynavax:

By:		/s/ Dino Dina

Name:		Dino Dina, M.D.
Title:		President and CEO

For RBG:

By:		/s/ Frank Ubags

Name:		Frank Ubags
Title:		CEO

23.

CONFIDENTIAL

Exhibit 1.16
The RBG Patents

[ * ]

24.

CONFIDENTIAL

Exhibit 2.2
Termination of Berna Agreement

TERMINATION AGREEMENT

This Termination Agreement (“Agreement”) is made as of the 21st day of April 2006 (hereinafter the “Effective Date”) by and between

BERNA BIOTECH AG, a Swiss Company having its registered Head Office at Rehhagstrasse 79, CH-3018 Bern, Switzerland (“Berna”)

And

DYNAVAX TECHNOLOGIES CORPORATION, a USA corporation having its offices at 2929 Seventh Street, Suite 100, Berkeley, CA 94710 USA (“Dynavax”).

(With each of Berna and Dynavax, referred individually as a “Party” and collectively as the “Parties”).

WITNESSETH

WHEREAS, Berna is the owner of 100 per cent of the share capital of Rhein Biotech NV (hereinafter “RBNV”), which prior to the Effective Date owned 100 percent of the share capital of Rhein Biotech GmbH (hereinafter “RBG”);

WHEREAS, Berna and Dynavax are parties to the License and Supply Agreement dated November 19, 2003 (“November 19 Agreement”), a copy of which is attached hereto as Exhibit 1;

WHEREAS, Dynavax is purchasing RGB, and RBNV is selling RGB to Dynavax;

WHEREAS, the sale of RBG to Dynavax is conditioned on the Parties’ mutual termination of the November 19, 2003 Agreement on the terms and conditions set forth in this Termination Agreement;

NOW THEREFORE, in consideration of the premises, the mutual understandings and the obligations herein contained, and intending to be legally bound, the Parties do hereby agree as follows,:

	1.		Pursuant to Section 15.2 of the November 19 Agreement, the Parties mutually agree to terminate the November 19 Agreement as of the Effective Date.

	2.		With the exceptions of (a) any payments already made under the November 19 Agreement, (b) any payments due and owed as of Closing to Berna, and (c) the Parties’ obligations under Section 14 of the November 19 Agreement, all financial and other obligations based on the November 19 Agreement are forever waived and forgiven.

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Without limiting the generality of the foregoing, neither Party shall be bound by the surviving Sections 4.4 thorough 4.9, 8, 9 through 13 and 16 of the November 19 Agreement, notwithstanding Section 15.6 of the November 19 Agreement. The confidentiality clause 14 shall, however, survive termination.

Any and all rights of the Parties relating to the subject matter of the November 19 Agreement, shall be only as set forth in the Definitive Commercial Agreement dated as of the Effective Date, among Dynavax, RBG and Rhein Biotech NV.

(Signature page follows)

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CONFIDENTIAL

IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be executed, in two copies, each an original, by their respective duly authorized officers and representatives with effect as of the date first above written.

DYNAVAX TECHNOLOGIES CORPORATION


/s/ Dino, Dina

By:	Dino Dina, M.D.	By:	blank

Title:	President & CEO	Title:	blank

Date:	blank	Date:	blank

BERNA BIOTECH AG


/s/ René Beukema

By:	René Beukema	By:	blank

Title:	General Counsel & Corporate
	Secretary of Crucell Holland, B.V.	Title:	blank


Date:	21 April, 2006	Date:	blank

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CONFIDENTIAL

Exhibit 2.3
Supervax Trademark Assignment Agreement
TRADEMARK ASSIGNMENT AGREEMENT

This Trademark Assignment Agreement (“Agreement”) is made as of the .... day of March 2006 (hereinafter the “Effective Date”) by and between

BERNA BIOTECH AG, a Swiss Company having its registered Head Office at Rehhagstrasse 79, CH-3018 Bern, Switzerland (“Assignor”)

And

RHEIN BIOTECH GmbH, formed and in good standing under the laws of Germany, having its seat in Dusseldorf, Eichsfelder Strasse 11, 40595, Germany, (“Assignee”);

WITNESSETH

WHEREAS, Assignor has adopted, and used, the mark “SUPERVAX” (hereinafter the “Trademark”), which it has registered worldwide. Attached Exhibit 1 identifies the specific registrations by country;

WHEREAS, Assignor has exclusively licensed, on a worldwide basis, the Trademark to Assignee in a Trademark License Agreement having the Effective Date of October 24, 2005;

WHEREAS, Assignor is selling its equity interest in Assignee to another Party, and as a consequence, is willing to assign the Trademark to Assignee, and Assignee is willing to acquire title to such Trademark;

NOW THEREFORE, in consideration of the premises, the mutual understandings and the obligations herein contained, and intending to be legally bound, Assignor and Assignee do hereby agree as follows,:

	1.		For good and valuable consideration, the receipt of which is hereby acknowledged, Assignor does hereby assign to Assignee all rights, title and interest in and to said Trademark, the goodwill of the business symbolized by said mark, along with the registrations thereof worldwide.

	2.		Assignor shall cooperate with all of Assignee’s reasonable requests for the execution of formal documents, which Assignee may require to record its title to said registrations with, and assume responsibilities for representation before, the trademark office authorities of the various countries in which the Trademark is registered.

	3.		As of Closing, Assignee shall assume all responsibilities for the filing, prosecution, and maintenance of the Trademark worldwide.

28.

	4.		The terms and conditions of this Assignment Agreement, including the Attachments hereto, constitute the entire agreement and understanding of the Parties, supersede all previous communications, whether oral or written, between the Parties, including any previous agreement or understanding varying or extending the same. There are no further or other agreements or understandings, written or oral, in effect between the Parties with respect to the subject matter hereof.

	5.		This Agreement may be released, discharged, abandoned, changed or modified in any manner, only by an instrument in writing of equal formality, signed by the duly authorized officer or representative of the Parties.

	6.		Notices. All notices required by this Agreement shall be in writing. All notices shall be sent by fax followed by overnight courier to the Parties at the following addresses or such other addresses as may be designated in writing by the respective Parties:

	To Berna:		Berna Biotech AG Rehhagstrasse 79 CH-3018 Berne Switzerland *[ ]**

	To RBG:		Rhein Biotech GmbH Eichsfelder Strasse 11 Dusseldorf 40595 Germany *[ ]**

			Any notices shall be deemed given when received by the other Party.

	7.		Force Majeure. No Party, or its Affiliates, shall be liable for any failure or delay in performance under this Agreement which is due in whole or in part directly or indirectly to any cause of any nature beyond the reasonable control of such Party or its Affiliate.

(Signature page follows)

29.

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RHEIN BIOTECH GmbH


/s/ Frank Ubags		/s/ Z. Janowicz

By:	Frank Ubags	By:	Z. Janowicz
Title:	managing director	Title:	COO

Date:	21 April, 2006	Date:	21 April, 2006

BERNA BIOTECH AG


/s/ René Beukema

By:	René Beukema	By: blank
Title:	General Counsel & Corporate
	Secretary of Crucell Holland, B.V.	Title: blank

Date:	21 April 2006	Date: blank

30.

exv10w22

CONFIDENTIAL

EXHIBIT 10.22

EXCLUSIVE LICENSE AGREEMENT

This Exclusive License Agreement (“Agreement”) is made as of the 21st day of April 2006 (hereinafter the “Effective Date”) by and between

GREEN CROSS VACCINE CORP., a corporation organized and existing under the laws of the Republic of Korea, having its registered offices at 227-3, Kugai-Ri, Kiheung-Eup, Yongin City, Kyounggi Province, Republic of Korea, (“Licensor”)

And

RHEIN BIOTECH GmbH, formed and in good standing under the laws of Germany, having its seat in Düsseldorf, Eichsfelder Strasse 11, 40595, Germany, (“Licensee” or “RBG”);

(With Licensor and Licensee, referred individually as a “Party” and collectively as the “Parties”).

WITNESSETH

WHEREAS,

Berna Biotech AG (“Berna”) is the owner of substantially all of the share capital of (1) Rhein Biotech NV, incorporated under the laws of the Netherlands having its registered office at Oude Maasstraat 47, NL 6229 BC Maastricht, The Netherlands (hereinafter “RBNV”), which prior to the Effective Date owned 100 percent of the share capital of RBG and of (2) Rhein Vaccines B.V., which owns 100% of the share capital of Licensor;

WHEREAS,

the Parties entered into a Development agreement dated January 1, 2003 (“Development Agreement”), whereby Licensee provided services for the development of Supervax (defined below) for and on behalf of Licensor; and subsequent thereto, the Parties enter into the “License Option Agreement Supervax” dated November 9, 2005 (“Option Agreement”), which grants the Licensee an exclusive worldwide option to an exclusive license for Supervax;

WHEREAS,

Dynavax, a vaccine company based in the USA, and RBNV entered into a Letter of Intent dated March 10, 2006, to sell RBG to Dynavax (the “Letter of Intent);

WHEREAS,

among other things the Letter of Intent also provided certain licensing terms regarding Supervax, which licensing terms regarding Supervax are being superseded by this Agreement;

CONFIDENTIAL

WHEREAS,

as an ancillary condition to the sale of RBG to Dynavax, Dynavax shall cause RBG to exercise the exclusive license option in the Option Agreement, and Licensor shall grant such exclusive license as provided for hereinbelow.

NOW THEREFORE, in consideration of the premises, the mutual understandings and the obligations herein contained, and intending to be legally bound, Licensor and Licensee do hereby agree as follows:

SECTION 1: DEFINITIONS

		Plural used in this Agreement shall mean singular and vice versa. The following initially capitalized terms shall have the following meanings when used in this Agreement (and derivative forms of them will be interpreted accordingly):

1.1		“Actual Cost for Filling and Packaging of vials” shall mean the cost *[ ]**

1.2		“Affiliate” shall mean (i) any corporation or business entity of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by a Party; or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds fifty percent (50%) (or the maximum ownership interest permitted by law) or more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general-partnership interest, of a Party. Affiliates of Licensor include Crucell N.V., a Dutch corporation; RBNV; Rhein vaccines B.V.; and Berna Biotech AG. Affiliation shall be determined based on RBG being wholly owned by Dynavax, and not owned at all by RBNV.

1.3		“Cost for Registration” shall mean all costs related to entering into registrations, or obtaining regulatory approvals (such as BLAs and NDAs in the U.S. and regulatory approvals have a similar effect in other countries), in each case for Supervax for prophylactic applications or indications, including all direct, indirect, internal and external costs related to:

[ * ]

		The Parties recognize that there is some overlap among different categories included in (a) – (b). Individual costs, however, shall not be double-counted across multiple categories. Any overlap between the categories shall not, however, be used or interpreted to narrow any of (a) – (b).

1.4		“Cost for Technology Transfer” shall mean all *[ ]** respecting Supervax.

1.5		“Development Agreement” shall have the meaning given in the second recital above.

1.6		“Effective Date” shall have the meaning stated above in the first paragraph of this Agreement.

1.7		“Field” means the prevention (or prophylaxis) of disease in humans.

1.8		“Letter of Intent” shall have the meaning given in the third recital above.

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1.9

“License Revenues” shall mean all [ * ] in respect of such sublicense. To be clear, the following, even if received from a Sublicensee pursuant to such an agreement, are excluded from License Revenues:

[ * ]

		As regards (c) and (d), the recovered (through the payment from the Sublicensee) expenses shall not then be included under any cost category that is included as a deduction to arrive at Net Profit. As regards (a), *[ ] As regards (b), [ * ] As regards (c), this exclusion from License Revenues is limited to actual cost and as regards internal personnel costs is limited to reasonable FTE rates at the rate of [ * ] adjusted for inflation every year by reference to [ * ] with the first adjustment to be made with respect to FTEs devoted in [ * ]** plus all materials, travel and related expenses.

1.10		“Marketing, Sales & Distribution Expenses” shall mean Licensee’s and its Affiliates’ direct, indirect, internal and external costs to market, sell and distribute Supervax Program Products, including the following types of such costs: *[ ]**

1.11		“Net Profit” shall mean the sum of *[ ] minus all of the following: [ * ]**

		To the extent such calculation results in a negative number (i.e., a loss) for the applicable reporting period, then *[ ]**

		Internal costs included in Net Sales shall be accounted for based on actual cost, with internal labor costs being billed at a rate of *[ ] adjusted for inflation every year by reference to [ * ] with the first adjustment to be made with respect to FTEs devoted in [ * ]** External costs shall be accounted for at the amount equal to amounts paid out to third parties. RBG is entitled to do all accounting hereunder in accordance with U.S. generally accepted accounting principles, consistently applied.

		If there is any overlap among different cost deduction categories used in the calculation of Net Sales and Net Profits, such individual costs, however, shall not be double-counted across multiple such deducted categories. Any overlap between the categories shall not be used or interpreted to narrow, however, any such deducted cost category.

1.12		“Net Sales” shall mean the gross invoice price of sales of Supervax Program Products made by Licensee, and its Affiliates to third parties (including distributors and Sublicensees) less deductions for *[ ]** Sales made by third parties, such as Sublicensees, which sales are used to calculate the payment of License Revenues to Licensee, shall not be included in Net Sales. Sales from Licensee or its Affiliate to third-party selling agents or contractors, where Licensee or its Affiliate has no royalty or profit interest in the resales by the such agents or contractors (as in the case of a traditional distributor), shall be included in the calculation of Net Sales (although resales by such agents or contractors shall not be).

1.13		“Option Agreement” shall have the meaning given in the second recital above.

1.14		“Patent” shall mean granted patents, including utility models and certificates of invention, and reissues, re-examinations, supplementary protection certificates,

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		extensions, and term restorations thereof, and patent applications therefor, including any continuations, continuations-in-parts, divisionals thereof, and the like.

1.15		“Patent Costs” shall mean all direct, indirect, internal and external patent preparation, prosecution, extension and maintenance costs specifically relating to Supervax Program Products or the manufacture, use, clinical testing thereof, including fees to patent offices and outside and counsel, and a reasonable accounting of internal legal resources, together with those costs referred to in the last sentence of Section 4.2 below as well as those referred to in the last sentence of Section 8.1.1 below.

1.16		“Payment Term” means, for a given country, the period from first commercial sale of the first Supervax Program Product in a given country, to *[ ]** thereafter. Payment Term is determined on a country-by-country basis.

1.17		“Supervax Technology” shall mean all materials, information, experience and data, formulae, procedures, culture medium and growth conditions, results and specifications, manufacturing processes, equipment specifications, purification processes, regulatory filings, and rights of reference thereto, product registrations, and vaccine-related clinical and pre-clinical data, in written or electronic form, which are related specifically to Supervax, which (i) are in the possession of Licensor at the Effective Date, and/or has been transferred to Licensee prior to the Effective Date pursuant to the obligations of preceding Research/License Agreement, and the Development Agreement (as defined herein), (ii) are necessary or useful in connection with the research, development, manufacture of Supervax, (iii) are not subject to a third party confidentiality obligation that prevents Licensor from disclosing the same, and (iv) are not generally known or published. Schedule 1.11 provides an exemplary list of Supervax Know How. This list is not all-inclusive. Items otherwise fitting within the foregoing definition but not stated on such list remain nevertheless included in the Supervax Technology.

1.18		“Sublicensee” shall mean a third party to whom Licensee has granted a license and/or sublicense under the Supervax Technology to make, use, offer to sell, import, use or sell Supervax in the Field.

1.19		“Supervax” shall mean the current prophylactic two dose Hepatitis B vaccine that includes the *[ ] adjuvant. [ * ]**

1.20		“Supervax Program Products” means all prophylactic Hepatitis B vaccines that contain all of the following: *[ ]** The Supervax Program Products include Supervax.

		In addition, throughout this Agreement the words “include” (and all conjugations of it), “such as” and “for example” shall each be deemed to be followed by the words “without limitation,” “but without limitation,” or similar language against construing the language as limiting.

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SECTION 2: LICENSE GRANT

2.1		Exclusive License. Licensor grants to Licensee and its Affiliates a profit share-bearing (solely as set forth in this Agreement), worldwide, exclusive (even as to Licensor and its Affiliates) license under the Supervax Technology to develop, make, have made, use, sell, offer to sell, store, import, export and distribute Supervax Program Products in the Field for the Term.

2.1.1		Sublicense Right. The license grant of Section 2.1 shall include the right to sublicense third parties (through one or more tiers or layers of sublicensees without consent from Licensor) the right to develop, make, have made, use, offer for sale, store, sell, import and/or export Supervax Program Products in the Field in one (1) or more countries of the world.

2.2		Retained Rights. Licensor shall retain the right to use the Supervax Technology to perform and have performed research and development in the Field, and any other activities, including commercial activities, provided the subject matter of such other activities are not *[ ]** Supervax Program Products in the Field. As long as the exclusive license is in effect, the right to reference product registration files is not included. However to the extent any third party may reference such regulatory file for a generic marketing approval (i.e. an ANDA-like filing) Licensor may do the same, provided that it is understood and agreed Licensor must derive rights thereto in the same manner as third parties, and does not obtain any additional rights or access to such data through this agreement.

2.3		License Field Restrictions. The license grant of Section 2 is restricted by Section 6 of the Definitive Commercial Agreement among Licensee, RBNV, and Dynavax Technologies Corporation, of even date herewith, as quoted below:

“SECTION 6: COVENANTS NOT TO COMPETE

6.1 [ * ] RBG and Dynavax, for [ * ] after Closing, will not develop and/or market, and/or license others to develop and/or market, for [ * ] Hepatitis B vaccine, other than Heplisav Program Products.

6.2 [ * ] RBG and Dynavax, for [ * ] after Closing, will not develop and/or market, and/or license others to develop and/or market, [ * ] other than Heplisav Program Products.”

SECTION 3: DEVELOPMENT AND COMMERCIALIZATION OBLIGATIONS

3.0

Definition of Efforts. “Commercially Reasonable Diligent Efforts” shall mean a reasonable level of efforts, commensurate with the efforts that a similarly situated biotechnology company would devote to a product of similar potential and having similar commercial advantages and disadvantages, taking into account all relevant commercial factors such as: [ * ] In assessing Commercially Reasonable Diligent Efforts

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		Efforts RBG and its Affiliates will ignore any negative impact to RBG and its Affiliates of Licensor’s Net Profit share or RBNV’s rights set forth in Section 3.1 and 3.2 of the Definitive Commercial Agreement among RBG, RBNV and Dynavax of even date with this Agreement.

3.1		Exertion of Efforts. RBG, and/or its Affiliates, shall exert Commercially Reasonable Diligent Efforts to develop and commercialize Supervax in those countries where it is reasonable in applying the Commercially Reasonable Diligent Efforts standard to do, including via the following kinds of activities:

3.1.1		progress a Supervax Program Product through development to registration, including conducting clinical trials and preparing and filing applications for registration;

3.1.2		scaling up the manufacturing process for a Supervax Program Product to the scale required for the clinical trials of Section 3.1.1;

3.1.3		developing a commercial production process for a Supervax Program Product, and implementing the same in a commercial manufacturing facility; and

3.1.4		marketing, offering to sell, selling, importing and distributing Supervax.

3.2		Decision as to for which Countries to Develop and Commercialize Supervax.

3.2.1		Licensee is entitled to decide for which countries it wishes to develop and commercialize Supervax, provided such decision is consistent with the Commercially Reasonable Diligent Efforts standard.

3.3		If Licensee takes the decision to file for marketing approval, and/or to market, no Supervax Program Product in any particular country in or for which Licensee has made a contrary decision for a Heplisav Program Product, and the Commercially Reasonable Diligent Efforts standard would require marketing Supervax in such country (taking into account all factors provided for in the definition of such standard above, including gray market effects on countries where Licensee will be marketing a Supervax Program Product and the potential impact on the selling price in such countries), then Licensee shall promptly inform Licensor in writing. Licensor may then inform Licensee, that for such country, Licensee’s exclusive license is revoked, and, thereafter Licensor or an Affiliate theoreof, will have the rights to register, market, offer to sell and sell Supervax in such country. Licensor shall have the right to reference regulatory dossiers useful for registration in such market. Licensor shall in this case be entitled under its license in Section 4.3.1 of the Definitive Commercial Agreement between the Parties of even date with this Agreement to manufacture Supervax Program Product solely to supply itself solely for such reverted countries. In addition, Licensee agrees to discuss in good faith with Licensor the possibility of Licensee supplying Licensor with quantities of Supervax Program Product for Licensor’s sales in any such reverted countries, but Licensor shall not be required to supply Licensor unless the Parties reach written agreement as to such supply and in any case Licensee shall not be required under any circumstances to prioritize supply for the reverted countries ahead of supply for countries where Licensee retains its license nor shall Licensee be required to increase its capacity for production of

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		Supervax Program Products. Licensor will owe Licensee and shall pay Licensee *[ ]** of Net Profits on Supervax in each reverted country (if there ever are any), applying the cost definitions and mechanics of set forth in this Agreement mutatis mutandis to calculate Licensor’s Net Profits and provide for it to pay Licensee’s share of it to Licensee.

3.4		Commercial Partners/Sublicensee Efforts. Licensee’s Affiliates’, Sublicensees’ and distributors’ efforts shall count as Licensees’ efforts for purposes of evaluating diligence under this Article 3.

3.5		Tolling in Case of *[ ] Licensee’s diligence obligations under this Article 3 shall be tolled for the period of any [ * ] of [ * ] of the [ * ] from [ * ] that [ * ]**

3.6		Sole Diligence Obligations. Licensee’s sole obligations to practice or work the licensed technology and to diligently develop and commercialize hereunder shall be those explicitly set forth above in this Article 3. No other such obligations of any kind shall be imposed on License or any of its Affiliates, whether implied at law or in equity, or provided in statute.

SECTION 4: PAYMENT FOR GRANTED RIGHTS

4.1		Profit Sharing. The Parties hereby agree to share the Net Profits realized from the sale and licensing of Supervax in accordance with the following:

4.1.1		Development Reimbursement Share. Licensee shall pay Licensor *[ ] of the Net Profit until Licensee has paid Licensor an amount equal to the principal development investment made by Licensor pursuant to the Development Agreement, plus accumulated interest at [ * ] per annum, as per Schedule 1. Payment for Supervax attached hereto (“Development Investment”). This [ * ] share of Net Profits is payable until the Development Investment has been fully repaid to Licensor, even if [ * ]**

4.1.2		Fully Reimbursed Share. During the Payment Term but after Licensee’s payments of Net Profit have equaled the Development Investment, Licensee shall pay Licensor *[ ]** of the Net Profit earned in such time period.

4.1.3		No More Profit-Sharing After the Payment Term, Except to Reimburse the Development Investment. Except as provided in Section 4.1.1, Licensee shall not owe Licensor any further Net Profit with respect to each country in which the Payment Term has expired.

4.2		Licensee Obligations. Licensee shall be solely responsible for the payment of any royalties, license fees, and milestone or other payments due to third parties contracted by Licensee under licenses or similar agreements necessary to allow the manufacture, use or sale of Supervax in the Field. However, these amounts shall be included as a deduction in the calculation of Net Profits.

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SECTION 5: PAYMENTS; BOOKS AND RECORDS; AUDIT

5.1		Net Profit Reports and Payments. After the first Net Sale is recorded, Licensee agrees to submit quarterly written reports to Licensor within ninety (90) days after the end of each calendar quarter (December 31, April 1, July 1, and October 1), stating in each such report the number, description, and aggregate Net Sales sold during the calendar quarter by Licensee and its Affiliates (if applicable), the Net Profit and the amount owed to Licensor. Concurrently with the submission of such reports, Licensee, as the case may be, shall pay the Net Profit Share in accordance with Section 4.1.

5.2		Method of Payment.

5.3		All payments due hereunder to Licensor shall be paid in Euros in immediately available funds, for Licensor’s account, to a bank designated in writing by Licensor.

5.4		Interest. If any payment under this Agreement is not made by the date on which the same becomes due and payable, the late Party shall owe the other Party interest at the rate of LIBOR plus two percent (2%) per annum on any outstanding amount until payment is made in full.

5.5		No Refunds. Payments referred to herein shall not be refundable.

5.6		Currency Conversion. If any currency conversion shall be required in connection with the calculation of Profit Share hereunder, such conversion shall be calculated at the published rate of *[ ]** for such period.

5.7		Withholding Taxes. If Licensee is required by law to withhold taxes from any payments due hereunder to Licensor, then Licensee shall be entitled to deduct the entire amount of the required withholding from the amount otherwise due hereunder, shall pay the amount required to be withheld to the relevant tax authority, and shall provide evidence of such payment to Licensor within sixty (60) days thereafter. Licensee agrees to reasonably cooperate with Licensor as to from what country payments required hereunder are made, provided that any change in country requested by Licensor does not have a negative impact on taxes due by Licensee (i.e., does not cause Licensee to owe greater taxes) that Licensor is unwilling to reimburse Licensee.

5.8		Records; Inspection. Licensee, its Affiliates and their Sublicensees, shall keep complete, true, and accurate books of account and records for the purpose of determining the Profit Share amounts payable under this Agreement. Such books and records shall be kept at the principal place of business of Licensee, or its Affiliate, or Sublicensee, as the case may be, for at least three (3) years following the end of the calendar quarter to which they pertain. Such records will be open for inspection during such three (3) year period by an independent public accounting firm of national prominence retained by the other Party for the purpose of verifying the Net Profit Share statements, no more than once per set of records. Such inspections may be made no more than once each calendar year, at reasonable times mutually agreed by Licensee and Licensor. The Licensor’s representative or agent will be obliged to execute a reasonable confidentiality agreement prior to commencing any such inspection. Inspections conducted under this Section shall be at the expense of the

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Licensor, unless a variation or error producing an increase exceeding [ * ] of the amount stated for any period covered by the inspection is established in the course of any such inspection, whereupon all costs relating to the inspection for such period will be paid the Licensee.

SECTION 6: CONFIDENTIALITY

6.1		This section 6 amends and restates the confidentiality provisions, as they pertain solely to Supervax, pursuant to (1) Section 4.1 of the Research License Agreement dated October 16, 1992, (2) Section 5a. of the Development Agreement dated January 1, 2003, and (3) Section 7 of the License Option Agreement Supervax dated November 9, 2005, each of (1), (2) and (3) between Licensee and Licensor’s Affiliate, Green Cross Vaccine Corp.

6.2		All documents, materials and know-how which may be furnished to the receiving Party hereto (the “Recipient”) by the disclosing Party hereto (the “Disclosing Party”) pursuant to this Agreement, and the predecessor agreements referred to in Section 6.1 hereinabove, shall be, if suitably marked or designated in tangible form, deemed the Disclosing Party’s “Proprietary Information” and, therefore, considered confidential and shall not be used by Recipient other than for the purposes licensed under this Agreement and for the exercise of the Recipient’s rights under this Agreement. Recipient shall use the same degree of care regarding Disclosing Party’s Proprietary Information as it uses in protecting and preserving its own proprietary/confidential information of like kind to avoid disclosure or dissemination thereof, but no less than a reasonable degree of care. Information which is disclosed orally or otherwise than in tangible form shall be considered Proprietary Information if: (a) the information is identified as confidential at the time of disclosure and a written summary is provided to the Recipient within thirty (30) days thereafter, or (b) the information is identified as confidential in writing and provided to the Recipient prior to or at the time of disclosure by the Disclosing Party.

6.3		This confidentiality obligation shall not apply to information if the information: (a) is publicly known or which the Recipient has documentary records which establish its or its Affiliate’s knowledge prior to this disclosure; (b) subsequently becomes publicly known and/or published through no fault of the Recipient; (c) is independently developed without use or reference to the other Party’s Proprietary Information; (d) is required by operation of law or requirement of a governmental authority or rules of any securities exchange having jurisdiction to be disclosed (provided that the Party making the required disclosure gives reasonable (under the circumstances) advance notice of the required disclosure and all reasonable assistance to seek confidential treatment or a protective order if appropriate ); or (e) is or was brought to the Recipient’s attention by a third Party who has a legal right to do so.

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SECTION 7: PUBLICATIONS AND PUBLICITY

7.1		Each Party agrees not to use the name of the other Party or any member of its staff in sales promotion work or advertising, or in any other form of publicity, without the written permission of the other Party.

7.2		Neither Party shall disclose in any press release, public statement, or public release, the terms of this Agreement or any information with respect to this Agreement (including, without limitation, any release of information in connection with any scientific and medical conference) without the other Party’s express written permission. The foregoing shall not apply to disclosures under an understanding of confidentiality or to information, which had theretofore been disclosed by or with the consent of the other Party. Either Party will be free to publish the results of the Supervax project after providing the other Party with a *[ ]** (which period shall commence to the date that the other Party receives the text which is to be published and a summary of the manner of intended publication) in which to review and approve each publication, which approval shall not be unreasonably withheld. In any such publication by Licensor, Licensee’s contribution shall be acknowledged by Licensor. Notwithstanding any of the foregoing, nothing in this Agreement shall be deemed to prevent a Party (or its Affiliate) from complying with its reporting requirements as part of its responsibilities as a public company. This includes public company reporting requirements of Dynavax Technologies Corporation, a Delaware corporation. Accordingly, while Licensee will attempt to give Licensor advance notice of any such required disclosures, and will reasonably consider Licensee’s comments thereon if provided on a timeline that is reasonable in view of the required disclosure, Licensee and its Affiliates retain the right to make all legally required disclosures (including as legally required based on SEC interpretations), based on the good faith advice of its outside corporate counsel.

SECTION 8: INTELLECTUAL PROPERTY

8.1		Defense of Third Party Infringement Claims.

8.1.1		Infringement Claims. If the production, sale or use of any Supervax in the Field results in a claim, suit or proceeding alleging patent infringement against Licensee or Licensor (or their respective Affiliates or Sublicenses), such Party shall promptly notify the other Party hereto in writing setting forth the facts of such claim in reasonable detail. The Party subject to such claim shall have the exclusive right to defend and control the defense of any such claim, suit or proceeding, at its own expense, using counsel of its own choice, provided, however, it shall not enter into any settlement which admits or concedes that any aspect of the Patent or Know How of the other Party hereto is invalid or unenforceable without the prior written consent of such other Party. Such Party shall keep the other Party hereto reasonably informed of all material developments in connection with any such claim, suit or proceeding. All liabilities under this Section are and shall be deemed deductible costs in the calculation of Net Profits via inclusion within the Patent Costs.

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SECTION 9: WARRANTIES, INDEMNIFICATION AND INSURANCE

9.1		Disclaimer. UNLESS EXPRESSLY STATED HEREIN, LICENSOR DISCLAIMS ALL WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER, INCLUDING BUT NOT LIMITED TO WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, OR MERCHANTABILITY CONCERNING THE SUPERVAX KNOW HOW, AND THAT LICENSEE’S USE OF SUPERVAX KNOW HOW WILL BE FREE FROM INFRINGEMENT OF PATENTS OF THIRD PARTIES.

9.2		Warranties and Representations.

9.2.1		Both Parties. Licensor and Licensee warrant and represent that: (i) they have the power and authority to enter into this Agreement and perform the responsibilities and obligations herein and the execution and delivery of this Agreement has been duly authorized; (ii) they have the power to carry out their obligations under this Agreement; and (iii) nothing in this Agreement or in the execution or performance thereof shall constitute a breach, violation or default of any provision contained in such Party’s certificate or articles of incorporation or other organizing instruments nor violate any contract or other commitment of such Party.

9.2.2		Licensor Representations. Licensor represents and warrants to Licensee the following:

9.2.2.1		Licensor shall not grant, during the Term, any rights to third parties, or take any actions or fail to take any actions, which grant or action(s) would impair the rights granted to Licensee herein.

9.2.2.2		As of the Effective Date, Licensor has sufficient legal and/or beneficial title to, and/or the right to license, the Supervax Technology necessary for the purposes contemplated under this Agreement and to grant the licenses contained herein, including those items of Supervax Technology listed in Schedule 1.1.

9.2.2.3		As of the Effective Date, Licensor is not aware, nor should it be aware, of any third party communications alleging that any Supervax Technology licensed under this Agreement would infringe any valid patent rights of any third party.

9.2.2.4		As of the Effective Date, Licensor does not own, does not control, and has not filed, any Patent that claims one or more inventions relating to the composition, formulation, manufacture and/or the use, of Supervax Program Products, and is not entitled to assignment from any other entity any Patent claiming an invention made prior to the Effective Date which invention relates to the composition, formulation, manufacture and/or use of Supervax Program Products.

9.3		Indemnification.

9.3.1		Except to the extent resulting from the willful misconduct or gross negligence, or breach of representation and warranty of Licensor or any of its Affiliates, Licensor shall not be liable for and Licensee shall indemnify and hold Licensor harmless against any and all liabilities, damages, losses, costs, and expenses, whether direct or indirect, consequential, incidental, including reasonable attorney’s fees, in all cases that are paid

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to third parties (“Damages”), resulting from claims, demands, actions, other proceedings and judgments in all cases brought or obtained by third parties (“Third-Party Claims”) arising out of: the offer for sale, sale, manufacture, importation and/or use of Supervax by Licensee, its licensees, distributors, employees, consultants and investigators, or agents during or after Licensee-authorized pre-clinical and clinical studies, and as a result of the manufacture and/or sale of Supervax.

9.3.2		Licensor shall indemnify, defend and hold harmless Licensee and its Affiliates and their directors, officers and employees from and against all Damages to the extent resulting from Third-Party Claims arising out of the willful misconduct or gross negligence, or breach of representation and warranty of, Licensor and/or any of its Affiliates.

9.4		Indemnification Procedure. If a Party (the “Indemnitee”) intends to claim indemnification hereunder, Indemnitee shall promptly notify the other Party (the “Indemnitor”) of any claim, demand, action, or other proceeding for which the Indemnitee intends to claim such indemnification. The Indemnitor shall have the right to participate in, and to the extent the Indemnitor so desires jointly with any other Indemnitor similarly noticed, to assume the defense thereof with counsel selected by the Indemnitor; provided, however, that the Indemnitee shall have the right to retain its own counsel at Indemnitee’s own expense. The indemnity obligations under Section 9.3 shall not apply to amounts paid in settlement of any claim, demand, action or other proceeding if such settlement is effected without the prior express written consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. The failure to deliver notice to the Indemnitor within a reasonable time after notice of any such claim or demand, or the commencement of any such action or other proceeding, only to the extent actually prejudicial to its ability to defend such claim, demand, action or other proceeding, shall relieve such Indemnitor of any liability to the Indemnitee under Section 9.3 with respect thereto, but the omission so to deliver notice to the Indemnitor shall not relieve it of any liability that it may have to the Indemnitee otherwise than under Section 9.3. The Indemnitor may not settle or otherwise consent to an adverse judgment in any such claim, demand, action or other proceeding, that diminishes the rights or interests of the Indemnitee without the prior express written consent of the Indemnitee, which consent shall not be unreasonably withheld or delayed. The Indemnitee, its Affiliates, and all of their employees and agents, shall reasonably cooperate with the Indemnitor and its legal representatives in the investigation of any claim, demand, action or other proceeding covered by this Section 9.4.

		If the Parties cannot in good faith agree as to the application of Section 9.3’s subsections to any particular Claim, then each Party may the conduct its own defense of such Claim and reserves the right to claim indemnification (to the extent provided for in Section 9.3) from the other Party upon resolution of the underlying Claim.

9.5		LIMITATION OF LIABILITY. EXCEPT TO THE EXTENT A PARTY IS REQUIRED TO INDEMNIFY THE OTHER FOR AMOUNTS PAID TO THIRD PARTIES OR AS REGARDS THE BREACH OF ANY CONFIDENTIALITY

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OBLIGATION, PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES (SUCH AS LOST PROFITS, OPPORTUNITY COSTS, MISSED BUSINESS OPPORTUNITIES, OR OTHER THINGS CAUSED BUT NOT PROXIMATELY CAUSED BY ANY BREACH OR DEFAULT UNDER THIS AGREEMENT, WHETHER THE THEORY OF LIABILITY IS GROUNDED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) PRODUCT LIABILITY OR OTHERWISE), AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES. NO PARTY MAY SEEK OR OBTAIN PREJUDGMENT INTEREST OR ATTORNEY’S FEES OR COSTS. To be clear, this does not negate Licensor’s right to its direct damages equal to its share of Net Profits as provided for hereunder, if notwithstanding earning such Net Profits Licensee does not pay to Licensor the required share.

SECTION 10: TERM AND TERMINATION

10.1		Term. This Agreement shall become effective as of the Effective Date and, unless earlier terminated pursuant to the other provisions of this Section 10, shall continue in full force and effect in perpetuity, even though the payment obligation under Section 4.1.1 ends once the Development Investment has been repaid and the obligations to pay a share of Net Profits in Section 4.1.2 ends on a country-by-country basis as the Payment Term expires in each country.

10.2		Termination for Cause. Either Party to this Agreement may terminate this Agreement in the event the other Party shall be in material breach of this Agreement (including by default), and such material breach shall have continued uncured for *[ ] after written notice thereof was provided to the breaching Party by the non-breaching Party. Any termination shall become effective at the end of such [ * ] period unless the breaching Party (or any other Party on its behalf) has cured any such breach or default prior to the expiration of the [ * ]** period, or in the case of a breach incapable of cure during such time period, delivered a plan to cure the breach as promptly as practicable by the application of Commercial Reasonable Diligent Efforts, together with an undertaking to carry out such plan. However, if Licensee terminates this Agreement due to Licensor being in material breach of this Agreement, which breach cannot be or is not cured as provided in this Section, the licenses granted by Licensor in Section 2.1 shall continue after such termination.

10.3		Entire Agreement. Licensee and Licensor may terminate this Agreement upon mutual agreement at any time.

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10.4		Termination Upon Insolvency or Bankruptcy. The Parties acknowledge that the Supervax Technology are ‘intellectual property’ for purposes of Section 365(n) of the U.S. Bankruptcy Code and that Licensee will have the ability to exercise all rights provided by Section 365(n) with respect to the Supervax Technology licensed hereunder. In this regard, the Parties agree that Section 365(n) of the U.S. Bankruptcy Code will govern Licensee’s and Licensor’s rights to intellectual property licensed under this Agreement in the event Licensor files for or is placed in bankruptcy. The Parties explicitly intend that to the extent the laws of another country whose laws govern the bankruptcy (or similar status) of Licensor afford or allow for similar protection of a license in bankruptcy, such protection shall extend to the license granted in Section 2.1 hereof and such license shall not be terminated based on the bankruptcy (or similar status) of Licensor.

10.5		Rights and Obligations on Term, Termination, or Suspension.

10.5.1		Termination by either Party pursuant to this Article shall not prejudice any other remedy that a Party might have. Termination of this Agreement for any reason shall not release any Party hereto from any liability which, at the time of such termination, has already accrued to the other Party or which is attributable to a period prior to such termination nor preclude either Party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement.

10.5.2		Except for termination by Licensee pursuant to Section 10.2, upon termination of this Agreement by either Party, at Licensor’s written request, Licensee and its Affiliates shall destroy all supplies of Supervax Technology, and all documents describing Supervax Technology, and shall promptly thereafter confirm such destruction in writing to Licensor.

10.5.3		Return of Materials. Upon any termination of this Agreement, Licensee and Licensor shall promptly return to the other all Confidential Information received from the other (except one copy of which may be retained for archival purposes).

10.5.4		Stock on Hand. In the event this Agreement is terminated for any reason, the Licensee and their respective Affiliates and Sublicenses shall have the right to sell or otherwise dispose of the stock of any Supervax then on hand, subject to the payment of Profit Share as provided herein.

10.5.5		Survival on Termination. If this Agreement terminates or expires for any reason, Sections 1, 5.8, 6, 7, 8 (as applied to Damages resulting from Third-Party Claims arising out of activities occuring during the term of the Agreement and 9-12 shall survive such termination or expiration.

10.5.6		No Prejudice of Rights. Termination by either Party pursuant to this Article shall not prejudice any other remedy that a Party might have, nor shall it affect either Party’s accrued rights.

SECTION 11: DISPUTE RESOLUTION

11.1

Disputes. The Parties recognize that disputes as to certain matters may from time to time arise during the Term, which disputes relate to either Party’s rights and/or

CONFIDENTIAL

obligations hereunder. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the Parties agree to follow the procedures set forth in this Section 11 if and when a dispute arises under this Agreement. Unless otherwise specifically recited in this Agreement, disputes between the Parties will be resolved as recited in this Section 11.

11.2		Dispute Resolution through Party Management. If the Parties are unable to resolve a dispute within thirty (30) days of being requested by a Party to resolve a dispute, any Party may, by written notice to the other, have such dispute referred to their respective chief executive officers or duly authorized designees, for attempted resolution by good faith negotiations within thirty (30) days after such notice is received. In the event the designated executive officers are not able to resolve such dispute within such period, either Party may at anytime after the thirty (30) day period invoke the provisions of Section 11.3 hereinafter.

11.3		Arbitration. Any controversy, dispute or claim which is not resolved pursuant to Section 11.2 and which may arise out of or in connection with this Agreement, including the exhibits attached hereto, or the interpretation, enforceability, performance, breach, termination or validity thereof, including disputes relating to alleged breach or termination of the foregoing (each a “Dispute”) shall be resolved by binding arbitration in accordance with the Rules of the London Court of International Arbitration then pertaining, except where this rules conflict with this provision, in which case this provision controls. The Arbitration shall be held in English and shall take place in London. Subject to Section 11.6, the Dispute shall be construed in accordance with the laws of *[ ] exclusive of its conflicts of law rules. The arbitration tribunal shall consist of three neutral arbitrators, each of whom shall be an attorney who has at least fifteen (15) years of experience in the biopharmaceutical field with a law firm or corporate law department or was a judge of a court of general jurisdiction who has at least fifteen (15) years of experience in the biopharmaceutical field. However: (X) at least one of the arbitrators must be an attorney described in clause (a) of the foregoing sentence; (Y) at least one of the arbitrators must be trained in [ * ] law and have been admitted to practice in [ * ] ; and (Z) at least one of the arbitrators must be a native English speaker. The arbitrators shall be neutral, independent, disinterested, and impartial. Each Party shall nominate in the request for arbitration and the answer thereto one arbitrator and the two arbitrators so named will then jointly appoint the third arbitrator as chairman of the arbitration tribunal. After appointment, the Parties shall have no ex-parte communication with their proposed arbitrator. If one Party fails to nominate its arbitrator or, if the Parties’ arbitrators cannot agree on the person to be named as chairman within thirty (30) days, the President of the London Court of International Arbitration shall make the necessary appointments. Within thirty (30) days of initiation of arbitration, the Parties shall reach agreement upon and thereafter follow procedures assuring that the arbitration will be concluded and the award rendered within no more than eight (8) months from selection of the arbitrators. Failing such agreement, the Arbitration [ * ]** will control the procedures and scheduling and the Parties will follow such procedures and meet

CONFIDENTIAL

such a time schedule. Each Party has the right before or, if the arbitrators cannot hear the matter within an acceptable period, during the arbitration to seek and obtain from any court of competent jurisdiction provisional remedies such as attachment, preliminary injunction, replevin, etc., to avoid irreparable harm, maintain the status quo or preserve the subject matter of the arbitration. Any request for such provisional measures by a Party to a court shall not be deemed a waiver of this agreement to arbitrate. In addition, the Arbitrator Tribunal may, at the request of a Party, order provisional or conservatory measures (including, without limitation, preliminary injunctions to prevent breaches hereof) and the Parties shall be able to enforce the terms and provisions of such orders in any court having jurisdiction. The decision of the arbitration tribunal must be in writing and must specify the basis on which the decision was made, and the award of the arbitration tribunal shall be final and judgment upon such an award may be entered in any competent court or application may be made to any competent court for judicial acceptance of such an award and order of enforcement. THE ARBITRATOR SHALL NOT AWARD ANY PARTY PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES. NO PARTY MAY SEEK OR OBTAIN PREJUDGMENT INTEREST OR ATTORNEY’S FEES OR COSTS.

11.4		Enforcement. The arbitral award, including any injunctive relief granted, may be enforced in any court of competent jurisdiction (i.e. any court having subject matter jurisdiction over the dispute and personal jurisdiction over the Parties).

11.5		Confidential Information. With respect to any dispute relating to the misuse and/or misappropriation of a Party’s Confidential Information, in each case, a Party may seek preliminary injunctive relief pending resolution of the Dispute under Section 11.3, and submit such dispute to any court of competent jurisdiction (i.e. any court having subject matter jurisdiction over the dispute and personal jurisdiction over the Parties).

SECTION 12: MISCELLANEOUS

12.1		Entire Agreement. This Agreement, together with the Definitive Commercial Agreement, contains the entire agreement of the Parties regarding the subject matter hereof and supersedes all prior agreements, understandings, and negotiations regarding the license rights to Supervax, including the Development Agreement, the Letter of Intent and the Option Agreement. Such superseded agreements shall not be used to interpret this Agreement. This Agreement may not be changed, modified, amended, or supplemented except by a written instrument signed by both Parties hereto.

12.2		Severability. If any portion of this Agreement shall be finally determined by any court or governmental agency of competent jurisdiction to violate applicable law or otherwise not to conform to requirements of law, then the remainder of the Agreement shall not be affected thereby; provided, however, that if any provision hereof is invalid or unenforceable, then a suitable and equitable provision shall be substituted therefore

CONFIDENTIAL

		in order to carry out,so far as may be valid and enforceable, the intent and purpose of the Agreement including the invalid or unenforceable provision.

12.3		Force Majeure. Neither Party or its Affilaites shall be liable for any unforeseeable event beyond its reasonable control not caused by the fault or negligence of such Party, which causes such Party to be unable to perform its obligations under this Agreement, and which it has been unable to overcome by the exercise of due diligence. In the event of the occurrence of such a force majeure event, the Party unable to perform shall promptly notify the other Party. It shall further use its best efforts to resume performance as quickly as possible and shall suspend performance only for such period of time as is necessary as a result of the force majeure event..

12.4		Independent Contractors. Both Parties are independent contractors under this Agreement. Nothing contained in this Agreement is intended nor is to be construed so as to constitute Licensee and Licensor as partners or joint venturers with respect to this Agreement. Neither Party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement, or undertaking with any third party.

12.5		Notices Any notices required by this Agreement shall be in writing, shall specifically refer to this Agreement and shall be forwarded to the respective addresses set forth below unless subsequently changed by written notice to the other Party:


		If to Licensor:		Green Cross Vaccine Corp.
				227-3, Kugai-Ri, Kiheung-Eup
				Yongin City
				Kyounggi Province
				Republic of Korea
				*[ ]**

		Required copy to Rhein Biotech NV:
				Rhein Biotech NV
				Oude Maasstraat 47,
				NL 6229 BC Maastricht,
				The Netherlands
				*[ ]**

		If to Licensee:		Rhein Biotech GmbH
				Eichsfelder Strasse 11
				Dusseldorf 40595
				Germany
				*[ ]**

		Required copy to Dynavax Technologies Corporation:
				Dynavax Technologies Corporation
				2929 Seventh Street, Suite 100
				Berkeley, CA 94710
				USA

CONFIDENTIAL


				*[ ]**
				ATTN: LEGAL DEPARTMENT

12.6		Headings. The paragraph headings herein are inserted for convenience only and shall not be construed to limit or modify the scope of any provision of this Agreement.

12.7		Assignment and Successors Rights/Waiver. Except in connection with a sale by a Party of all or substantially all of its assets to which this Agreement relates, or a Party’s merger with another entity, or an assignment to a Party’s Affiliate, this Agreement may not be assigned without the prior written consent of either Party, and is binding upon and shall inure to the benefit of the Parties hereto, their representatives, successors and permitted assigns. No failure or successive failures on the part of either Party, its successors or permitted assigns, to enforce any covenant or agreement, and no waiver or successive waivers on its or their part of any condition of this Agreement, shall operate as a discharge of such covenant, agreement or condition, or render the same invalid, or impair the right of either Party, its successors and permitted assigns to enforce the same in the event of any subsequent breach or breaches by the other Party, its successors or permitted assigns.

12.8		Choice of Law. Subject to the bankruptcy treatment of intellectual property pursuant to Section 11.6, this Agreement shall be exclusively governed by and construed in accordance with the laws of *[ ]** (without giving effect to its conflict of law rules and regulations).

IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be executed, in two copies, each an original, by their respective duly authorized officers and representatives with effect as of the date first above written.

RHEIN BIOTECH GmbH


	/s/ Frank Ubags

By:	Frank Ubags	By:	blank
Title:	CEO	Title:	blank
Date:	21 April, 2006	Date:	blank

GREEN CROSS VACCINE CORP


	/s/ C.P.E. Moonen

By:	C.P.E. Moonen	By:	blank
Title:	Managing Director	Title:	blank
Date:	21 April, 2006	Date:	blank

CONFIDENTIAL

Schedule 1.1
Examples of Supervax Technology
[ * ]

CONFIDENTIAL

Schedule 1
Development Investment

[ * ]

exv10w23

EXHIBIT 10.23

DATED MARCH 27, 2006

Between

Dynavax Technologies Corporation

(as Purchaser)

and

Rhein Biotech N.V.

(as Seller)

SHARE SALE AND PURCHASE AGREEMENT
RHEIN BIOTECH GMBH

EXECUTION COPY

Baker & McKenzie Amsterdam NV
1017 PS Leidseplein
Amsterdam, The Netherlands
Tel: +31-20-5517555
Fax: +31-20-6267949

TABLE OF CONTENTS


	Page
Clause
ARTICLE 1 - DEFINITIONS AND INTERPRETATION		3
ARTICLE 2 - SALE AND PURCHASE OF THE SHARE		3
ARTICLE 3 - CONSIDERATION		3
ARTICLE 4 - CONDITIONS PRECEDENT		5
ARTICLE 5 - CLOSING		7
ARTICLE 6 - ACTION BEFORE CLOSING		9
ARTICLE 7 - REPRESENTATIONS AND WARRANTIES		13
ARTICLE 8 - REMEDIES FOR BREACHES		14
ARTICLE 9 - OTHER CONVENANTS		17
ARTICLE 10 - ACCESS TO INFORMATION		18
ARTICLE 11 - RESTRICTIONS ON ANNOUNCEMENTS		18
ARTICLE 12 - CONFIDENTIAL INFORMATION		18
ARTICLE 13 - MISCELLANEOUS		19
ARTICLE 14 - NOTICES		20
ARTICLE 15 - GOVERNING LAW AND ARBITRATION		22

Schedules
SCHEDULE 1.1 DEFINITIONS		24
SCHEDULE 3.3 PRELIMINARY CDWC CALCULATION		34
SCHEDULE 4.3(D) LEGAL OPINION ON RBNV		36
SCHEDULE 4.4(C) LEGAL OPINION ON DYNAVAX		38
SCHEDULE 5.2(B)(I) NOTARIAL TRANSFER DEED		39
SCHEDULE 5.2(B) (II) NOTIFICATION OF TRANSFER		42
SCHEDULE 5.2 (B) (III) COMMERCIAL AGREEMENT		43
SCHEDULE 5.2 (B) (IV) EMMP AGREEMENT		114
SCHEDULE 5.3(C) (V)(I) WAIVER AGREEMENT		117
SCHEDULE 5.3(C)(V)(II) WAIVER AGREEMENT		119
SCHEDULE 7.1 COMPANY WARRANTIES		121
SCHEDULE 7.2 DISCLOSURE LETTER		173
SCHEDULE 7.3 SELLER’S WARRANTIES		237
SCHEDULE 7.4 PURCHASER’S WARRANTIES		238
SCHEDULE 7.5 SELLER ADDITIONAL AGREEMENT		239
SCHEDULE 11.1 JOINT STATEMENT		241

THIS SHARE SALE AND PURCHASE AGREEMENT is made on this 27th day of March 2006 (the “Agreement”)

Between:

(1)		Dynavax Technologies Corporation, a corporation organized and existing under the laws of the State of Delaware, having its registered and business offices at 2929 Seventh Street, Suite 100, Berkeley, CA 94710, United States of America (“Purchaser”);

		and

(2)		Rhein Biotech N.V., a public limited liability company organized and existing under the laws of The Netherlands, with its corporate seat at Maastricht and its registered office at Oude Maasstraat 47, 6229 BC Maastricht, The Netherlands (“Seller”);

WHEREAS :

(A)		The Seller is the legal and beneficial owner of the entire issued share capital of Rhein Biotech Gesellschaft für Neue Biotechnologische Prozesse und Produkte m.b.H., a private limited liability company organized and existing under the laws of Germany (Gesellschaft mit beschränkter Haftung), registered with the commercial register of the local court of Düsseldorf under HRB 20023, with its corporate seat at Düsseldorf, Germany and its principal place of business at Eichfelder Strasse 11, 40595 Düsseldorf, Germany (“Company”), with a registered share capital (Stammkapital) of *[ ] , consisting of 1 share, with a nominal value of [ * ] (the “Share**”).

(B)		The Company is involved in the business of the development of biotechnological processes and products.

(C)		The Purchaser is in the business of discovering, developing, and commercializing innovative products to treat and prevent allergies, infectious diseases, cancer and chronic inflammatory diseases.

(D)		The Seller and the Purchaser have entered into a confidentiality and standstill agreement effective as of March 10, 2006, pursuant to which certain confidential information relating to the Company was made available to (representatives of) the Purchaser.

(E)		The Seller and the Purchaser have laid down certain basic terms and conditions related to the purchase, sale and transfer of the Share in a non-binding and conditional letter of intent dated March 10, 2006.

[ * ] =CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.


(F)		The Purchaser has performed, with the assistance of professional advisers, a due diligence investigation with respect to the Company and its business, on the basis of the information provided by the Seller and the senior management of the Company, including legal, financial, technical and tax information.

(G)		The Seller and the Purchaser have agreed that the Seller shall sell and transfer the Share to the Purchaser and the Purchaser shall purchase and acquire the Share from Seller, for the consideration and on the terms and subject to the conditions contained in this Agreement.

THEREFORE IT IS HEREBY AGREED as follows:

ARTICLE 1 — DEFINITIONS AND INTERPRETATION

1.1		Definitions. In this Agreement, unless the context otherwise requires the words and expressions used in this Agreement shall have the meanings set out in Schedule 1.1.

1.2		Headings. Headings are inserted for convenience only and shall not affect the construction of this Agreement.

ARTICLE 2 — SALE AND PURCHASE OF THE SHARE

2.1

Sale and Purchase. Seller hereby, subject to the terms and conditions of the Agreement, sells the Share to Purchaser, and agrees to transfer the Share to Purchaser at the Closing, free and clear of Encumbrances, and Purchaser hereby, subject to the terms and conditions of this Agreement, purchases the Share from Seller and agrees to accept the transfer of the Share at the Closing.

ARTICLE 3 — CONSIDERATION

3.1		Consideration. The consideration payable by Purchaser to Seller for the Share shall be the Euro equivalent of CHF 10,000,000.—, payable in euros by using the conversion rate between Swiss Franks and the Euros being fixed two business days prior to the Closing at the close of business as published by the Wall Street Journal, subject to an adjustment, if applicable, pursuant to Articles 3.2 through 3.7, the “Consideration”.

3.2		Adjustment of Consideration. The Consideration shall be adjusted as follows:

[ * ] =CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

		The Consideration shall be increased by the amount by which the working capital of the Company as at the March 31, 2006 (the “March 2006 Working Capital”) exceeds (is less negative) than *[ ] and decreased by the amount by the Closing Date Working Capital is less (more negative) than [ * ] (“Working Capital Adjustment”). For the avoidance of doubt the Parties confirm and acknowledge that the Consideration will not change due to the Working Capital Adjustment in case the Closing Date Working Capital is equal to an amount between [ * ] and [ * ]** .

3.3		The Seller’s good-faith estimate and projection of the March 2006 Working Capital amounts to *[ ] , as reflected in an un-audited special purpose statement of the relevant assets and liabilities of the Company (“Preliminary WC Calculation”), attached hereto as Schedule 3.3**.

3.4		Not later than on April 6, 2006, the Purchaser shall cause the Seller to deliver an un-audited special purpose statement of the relevant assets and liabilities of the Company as of March 31, 2006, prepared in accordance with the Preliminary WC Calculation (“Proposed WC Calculation”), setting forth the amount of March 2006 Working Capital.

3.5		Seller and Purchaser shall endeavor to agree on a definitive March 2006 Working Capital Calculation (“Final WC Calculation”) prepared in accordance with the Preliminary WC Calculation, prior to the Closing Date.

3.6		If Seller and Purchaser fail so to agree prior to the Closing Date (which failure, however, will not constitute a cause for postponing the Closing), the parties will agree to refer any dispute for resolution to a reputable “Big Four” international accounting firm (other than the existing auditors of Seller or Purchaser) appointed (i) by Seller and Purchaser or (ii) in default of agreement on such appointment within 7 days, by the President for the time being of the Netherlands Institute for Chartered Accountants (NIVRA). Such accounting firm shall be instructed to render its opinion as soon as practicable and in any event within 30 days after being instructed. In making such determination such accounting firm shall act as an expert and not as an arbitrator and its decision shall (in the absence of manifest error) be final and binding on the parties hereto. The expenses of such accounting firm shall be borne by the Seller and Purchaser in proportion to the allocation of the amounts in dispute between the Seller and Purchaser as made by such accounting firm, such that the prevailing party pays the less proportion of the fees and expenses. The Proposed WC Calculation shall be adjusted on the basis of such accounting firm’s resolution of such dispute and as so adjusted shall become the Final WC Calculation.

3.7		After the Final WC Calculation has been agreed in accordance with Article 3.5, or has been finally determined in accordance with Article 3.6, the Working Capital Adjustment shall to the extent applicable be computed on the basis of the Final WC Calculation as so determined. To the extent the amount paid by Purchaser to Seller at Closing, as computed

[ * ] =CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

using the Preliminary WC Calculation, differs from the Consideration as finally computed on the basis of the Final WC Calculation, then Seller shall pay the excess to Purchaser or Purchaser shall pay the deficiency to Seller, as the case may be, within seven Business Days after the Final WC Calculation is finally determined, in each case with interest from the Closing Date through the date of payment at the rate of [ * ] .

ARTICLE 4 — CONDITIONS PRECEDENT

4.1		Conditions Precedent to the Obligations of Parties. The obligation of Seller and Purchaser to affect the Closing is conditional upon fulfillment or waiver (to the extent legally possible) by the relevant Party of the conditions precedent (“opschortende voorwaarden”) described in articles 4.2 and 4.3 (“Conditions”).

4.2		Conditions to the Obligations of Seller and Purchaser. The obligation of Seller and Purchaser to effect the Closing is conditional upon fulfillment or waiver by both Parties of the following conditions:

	a.		Legal Requirements. No Legal Requirement shall be in effect and no proceeding is pending or threatened in writing by a Governmental Authority at the Closing Date which in itself, or is reasonably and substantially likely to, prohibits or materially restricts the consummation of the transactions contemplated by this Agreement, or which otherwise in itself, or is reasonably and substantially likely to, adversely affects in any material respect the right or ability of Purchaser to own, operate or control the Company, in whole or material part.

	b.		Shareholders Approval. The Seller’s shareholders meeting (the “Shareholders’ Meeting”) shall have given its approval to the transactions contemplated hereby (the “Transaction”), it being understood that a Seller’s shareholders meeting shall be convened to be held on *[ ]** to resolve on such approval;

4.3

Conditions to the Obligations of Purchaser. The obligation of Purchaser to effect the Closing is conditional upon fulfillment or waiver by the Purchaser of the following conditions:

Representations and Warranties. The Warranties of Seller set forth in this Agreement, or in any written statement or certificate that shall be delivered to Purchaser by Seller under this Agreement at Closing, shall be true and correct on and as of the date made and as of the Closing Date as if made on the date thereof, except (i) to the extent such representation or warranty specifies an earlier date, and (ii) where the failure of such representations and warranties to be so true and correct would not have individually, or in the aggregate, a Material Adverse Effect, and Purchaser shall have received a

			certificate to such effect as set forth in Section 5.2(d) of this agreement. For the avoidance of doubt, the effecting of the Closing by Purchaser shall not limit or otherwise affect the Purchaser’s rights under the Warranties given by the Seller.

	b.		Performance of Obligations. Seller shall have performed all obligations and covenants (other than under Article 4.3.a) required to be performed by it prior to the Closing Date under this Agreement and any other agreement or document referenced herein and entered into in connection herewith.

	c.		No Material Adverse Change. That during the period between the date of this Agreement and the Closing Date, no event shall have occurred that has a Material Adverse Effect.

	d.		Legal Opinion. Baker & McKenzie Amsterdam NV has delivered its legal opinion in relation to Seller, substantially in form of Schedule 4.3(d).

4.4

Conditions to the Obligation of Seller. The obligation of Seller to effect the Closing is conditional upon fulfillment or waiver by the Seller of the following Conditions:

	(a)		Supervisory Board approval. The Seller’s supervisory board shall have given its final approval to the transactions contemplated hereby, it being understood that Seller’s supervisory board has convened a meeting to be held on the Date of this Agreement to resolve on such approval; and

	(b)		Performance of Obligations. Purchaser shall have performed all obligations and covenants required to be performed by it prior to the Closing Date under this Agreement and any other agreement or document referenced herein and entered into in connection herewith;

	(c)		Legal Opinion. Morrison Foerster LLP has delivered its legal opinion in relation to Purchaser, substantially in form of Schedule 4.4(c).

4.5		Notice. If a Party becomes aware of a circumstance which will or may prevent the fulfillment of a Condition to its obligations to effect the Closing, it will notify the other Party thereof in writing without delay.

4.6		Fulfillment Date. If any of the conditions to a Party’s obligation to effect the Closing shall for reasons other than breach by such Party of its obligations hereunder not be fulfilled on or before April 30, 2006 then such party may at its option and without prejudice to any of its other rights and claims (including, even if this Agreement is terminated, any right to payment of Damages), by notifying the other Party:

(a)

to the extent permitted by applicable law, waive the unfulfilled conditions; or

(b)

postpone Closing.

		If any Party postpones Closing, this Agreement shall apply as if the postponed Closing were the original Closing, provided however that if Closing has not occurred by April 30, 2006, either Party may terminate this Agreement by written notice to the other Party unless the failure of the Closing to occur by such date is the result of a breach by the former Party of its obligations hereunder.

4.7		Effect of Termination. Without prejudice to Article 4.6, if either Party terminates this Agreement, this Agreement shall cease to have any effect, (i) except Article 13.1 (Parties’ Costs), Article 14 (Notices), Article 11 (Restriction on Announcements), Article 12 (Confidential Information) and Article 15 (Governing Law and Arbitration) which shall remain in full force and effect, and (ii) save in respect of claims for costs, damages, compensation or otherwise arising out of any breach of the terms of this Agreement.

ARTICLE 5 — CLOSING

5.1		Time and Place of Closing. Subject to the provisions Article 4, the Closing shall take place simultaneously at the offices of Baker & McKenzie Amsterdam N.V. and the Civil Law Notary, at 10:00 A.M. on the 2nd Business Day following the date upon which all of the Conditions to the obligations of the Parties to effect the Closing are satisfied or waived or at such other place and time as shall be mutually agreed between the Parties, where all (and not some only) of the events described in this Article 5 shall occur.

5.2		Seller’s Closing Obligations. At Closing, the Seller shall:

	(a)		deliver or cause to be delivered to the Purchaser evidence satisfactory to the Purchaser of the satisfaction of the Conditions to Seller’s obligation to effect the Closing, being a copy of the minutes of the meeting of the Supervisory Board and of the shareholders meeting of the Seller approving the sale of the Share;

	(b)		execute:

	(i)		the Notarial Transfer Deed in the form of Schedule 5.2(b)(i) attached hereto;

	(ii)		the notification of the transfer of the Share to the Company according to § 16 of the Act on Companies with Limited Liability (GmbHG), in the form of Schedule 5.2(b) (ii) attached hereto;

	(iii)		the commercial agreement, together with the further agreements and documents referred to therein (jointly the “Commercial Agreement”), in the form of Schedule 5.2 (b) (iii) attached hereto;

	(iv)		the agreement with regard to employee and management participation plan (the “EMPP Agreement”), in the form of Schedule 5.2 (b) (iv) attached hereto;

	(c)		cause a managing director of the Company to submit the new list of shareholders to the commercial register pursuant to § 40 GmbHG;

	(d)		deliver a certificate executed on behalf of Seller by its managing director, certifying to the matters set forth in section 4.3 (a), (b) and (c).

5.3

Purchaser’s Closing Obligations. At Closing, the Purchaser shall:

	(a)		pay the Consideration on the Notary Account, such that the relevant amount shall have arrived at the Notary Account with a value date not being later than the Closing Date;

	(b)		cause the Company to repay all of its debts to Seller (the “Seller Debts”), the principal amount of which is *[ ]** which the Seller agrees will be satisfaction in full of all the Seller Debts, and to the extent necessary make available to the Company sufficient funds in order to enable the Company to repay such debts, the amount of which repayment shall be paid on the Notary Account, such that the relevant amount shall have arrived at the Notary Account with a value date not being later than the Closing Date;

	(c)		(cause to) execute:

	(i)		the Funds Flow Letter thus authorizing the release of the Consideration and the amount in relation to the debts repayment by the Company from the Notary Account to such bank account{s} designated by the Seller;

	(ii)		the Notarial Transfer Deed;

	(iii)		the Commercial Agreement;

	(iv)		the EMPP Agreement;

	(v)		the waiver agreements entered into between (i) Purchaser and the Company’s management personnel, in the form of Schedule 5.3(c)(v)(i) attached hereto and (ii) Purchaser and the Company, in the form of Schedule 5.3(c)(v)(ii) attached hereto ;

(d)

deliver a certificate executed on behalf of Purchaser by its Chief Executive Officer or Chief Financial Officer, certifying to the matters set forth in sections 4.4 (a), (b) or (c).

5.4

Non-Compliance. If the Seller or Purchaser fails to perform any action required from it under Article 5.2 and 5.3, the other Party may, at its option and without prejudice to any of its other rights and claims (including, also if this Agreement is terminated, any right to payment of damages):

	(a)		demand that the defaulting Party performs the relevant actions on a day and at a time to be determined by the non-defaulting Party; or

	(b)		terminate this Agreement by written notice (without any liability towards the defaulting Party).

If either Party terminates this Agreement pursuant to this Article 5.4, Article 4.7 shall apply mutatis mutandis.

ARTICLE 6 — ACTION BEFORE CLOSING

6.1

Conduct of Business. From the date of this Agreement until the Closing Date, Seller shall use its commercially reasonable efforts in order to cause the Company to be operated only in the ordinary course of business and in a manner consistent with past practice, and that the Company shall preserve substantially intact the business organization of Company, to keep available the services of the current officers, employees and consultants of Company and to preserve the current relationships of Company with customers, partners, suppliers and other persons with which Seller has significant business relations. Seller shall promptly notify Purchaser of any event or occurrence not in the ordinary course of business of Company, and any event of which it is aware which reasonably would be expected to have a Material Adverse Effect on the Company (even if the likelihood of such event has previously been disclosed or could result from any item set forth in the Disclosure Letter). Without limiting the generality of the foregoing, except as expressly contemplated by this Agreement or disclosed in the Disclosure Letter, Seller shall not, from the date of this Agreement until the Closing Date, directly or indirectly, cause, or permit the Company to do any of the following without the prior written consent of Purchaser:

	(i)		amend its articles of association or other constitutional documents;

	(ii)		issue, sell, or dispose of any shares in its capital, any options, warrants or rights of any kind to acquire any shares in its capital or any securities which are convertible into or exchangeable for any shares in its capital;

	(iii)		split, combine or reclassify any shares in its capital, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any shares in its capital, or redeem or otherwise acquire any shares in its capital;

	(iv)		create, incur, or guarantee long-term indebtedness for borrowed money or short-term indebtedness for borrowed money which in the aggregate exceeds Euro 50,000.—;

	(v)		mortgage or encumber any of its assets or properties which are material to the Company;

	(vi)		enter into any commitment or transaction not in the ordinary course of business;

	(vii)		terminate any employees or grant severance or termination pay to any director, officer, employee or consultant;

	(viii)		enter into any transaction with its officers, directors or stockholders or their Affiliates;

	(ix)		mend or otherwise modify the material terms of any material contract of Company or Governmental Approval;

	(x)		other than pursuant to the Commercial Agreement, Transfer to any person or entity any rights to Company’s Intellectual Property Rights;

	(xi)		sell, lease, license or otherwise dispose of any of Company’s assets outside of the ordinary course of business;

	(xii)		Commence a legal proceeding other than for the routine collection of bills or in connection with routine labor (employee dismissal) disputes;

	(xiii)		Acquire or agree to acquire by merging, consolidating or entering into a joint venture arrangement with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the financial condition, results of operations, business or properties of Company taken as a whole;

	(xiv)		adopt, amend or terminate any employee benefit plans, programs, policies or other arrangements, or enter into any employment contract, pay any special bonus or special remuneration to any director, employee or consultant, or increase the salaries, bonuses or wage rates of its directors, officers, or employees;

	(xv)		revalue any of its assets, including writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business and consistent with past practice;

	(xvi)		pay, discharge or satisfy any Liability, other than the payment, discharge or satisfaction of obligations in the ordinary course of business or liabilities reflected or reserved against in the Financial Statements;

	(xvii)		make any material tax election other than in the ordinary course of business and consistent with past practice, change any material tax election, adopt any material tax accounting method other than in the ordinary course of business and consistent with past practice, change any material tax accounting method, file any material tax return (other than any estimated tax returns, payroll tax returns or sales tax returns) or any amendment to a material tax return, enter into any closing agreement, settle any tax claim or assessment, or consent to any extension or waiver of the limitation period, applicable to any tax claim or assessment;

	(xviii)		fail to pay or otherwise satisfy its monetary obligations as they become due, except such as are being contested in good faith;

	(xix)		forgive any indebtedness owed to Company;

	(xx)		cancel, materially amend or renew any insurance policy other than in the ordinary course of business;

	(xxi)		take any action or intentionally fail to take any action that would cause a Material Adverse Effect; or

	(xxii)		enter into any contract or agree, in writing or otherwise, to take any of the actions described above in this Section 6.1, or any action that would make any of its representations or warranties contained in this Agreement untrue or incorrect in any material respect or prevent it from performing or cause it not to perform its covenants hereunder.

6.2

Certain Notifications. Seller shall give prompt notice to Purchaser, and Purchaser shall give prompt notice to Seller, of:

	(i)		the occurrence or non-occurrence of any event, the occurrence or non-occurrence of which reasonably could be expected to cause any representation or warranty of such party contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Closing Date, and

	(ii)		any failure of Seller or Purchaser, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, that the delivery of any notice pursuant to this Section 6.2 shall not limit or otherwise affect any remedies available to the party receiving such notice.

6.3

Access to Information. From the date of this Agreement until the Closing Date, upon reasonable notice, Seller shall cause the Company to cooperate with Purchaser in the development of integration plans for implementation by Purchaser following the Closing, and in connection therewith give Purchaser, upon its reasonable request, access to Company’s buildings, offices, and other facilities, and to its books and records, whether located on the Company’s premises or at another location; provided, that no investigation pursuant to this Section 6.3 shall affect or be deemed to modify any representation or warranty made by Seller or Buyer herein.

6.4

Consents. Seller will use best efforts to obtain prior to Closing all Consents from Governmental Authorities. At the request of Seller, Purchaser shall provide Seller with such assistance and information as is reasonably requested by Seller to obtain such Consents. Any costs incurred in obtaining the Consents shall be borne by the Seller.

6.5		Best Efforts. From the date of this Agreement until the Closing, each of Seller and Purchaser shall use their respective best efforts to cause to be fulfilled and satisfied all of the other party’s conditions to Closing set forth in Article 4.

6.6		Shareholders’ Meeting. The Seller, acting through its management board and/or supervisory board, shall, subject to and according to applicable law and its articles of incorporation, promptly and duly call, give notice of, convene and hold as soon as practicable to ensure obtaining requisite shareholder approval following the date hereof, the Shareholders’ Meeting for the purpose of voting to approve and adopt the Transaction (the “Seller Voting Proposal”). The board of directors of the Seller shall, subject to the fiduciary duties of the management board and supervisory board of the Seller under applicable Law, (i) recommend approval and adoption of the Seller Voting Proposal by the stockholders of the Seller and include in the related Shareholder Circular to the stockholders of the Company such recommendation and (ii) take all reasonable and lawful action to solicit and obtain such approval and take all other action necessary or advisable to secure the vote or consent of the Seller’s stockholders required by Netherlands Law or applicable Frankfurt Exchange requirements to obtain such approval. The Seller represents that the Seller stockholder vote required for the approval of the Seller Voting Proposal shall be a majority of the outstanding shares of Seller Common Stock on the record date for the Shareholders’ Meeting.

6.7		Seller Debts. Prior to the Closing Date, Seller has taken all legal actions and has executed all documents and certificates and has made such filings with any applicable Governmental Authorities, so that (i) any obligations of the Company to Seller under the Seller Debts have been terminated and extinguished in full, and (ii) any legal rights that Seller has with respect to the Company relating to such Seller Debts have been terminated and extinguished in full, including without limitation any the removal of any Liens or Encumbrances Seller may have in connection therewith.

ARTICLE 7 — REPRESENTATIONS AND WARRANTIES

7.1		Warranties. The Seller represents, warrants and undertakes (“verklaart, staat er voor in en garandeert") to the Purchaser that each of the representations and warranties relating to the Company as set forth in Schedule 7.1 (“Warranties”) is at the date of this Agreement and as of the Closing Date true and accurate.

		The Purchaser acknowledges and agrees that:

the Warranties are the only representations, warranties or other assurances of any kind in relation to the Share, the Company and its business and its assets and liabilities given or made by or on behalf of the Seller on which the Purchaser may rely (and has relied upon) in entering into this Agreement. The Purchaser acknowledges that no

			representations or warranties, express or implied, have been or are given in relation thereto other than the Warranties;

	b.		unless expressly and explicitly provided for in other provision of this Agreement, no forward-looking statement, projection, promise, forecast or estimate (whether oral or in writing) made by or on behalf of the Seller or the Company shall form a basis of any claim by the Purchaser in connection with this Agreement;

	c.		unless expressly and explicitly provided for in other provision of this Agreement, the Seller makes no representation nor any warranty, nor accepts any duty of care in relation to the Purchaser as to the accuracy or completeness of information insofar as it concerns projections, forecasts, estimates, statements of intent or statements of opinion howsoever provided to the Purchaser, whether contained in presentations, information memoranda, in the information disclosed to it or otherwise;

	d.		at the time of entering into this Agreement it is not aware of any matter or thing which constitutes a Breach of the Warranties.

7.2		Disclosures. The Warranties are limited by, and the Seller shall not be in Breach in respect of, any specific exceptions and qualifications to the Warranties set forth or referred to in the Disclosure Letter attached hereto as Schedule 7.2.

7.3		Seller’s Warranties. The Seller represents and warrants that each of the representations and warranties relating to the Seller as set forth in Schedule 7.3 (“Seller’s Warranties”) is at the date of this Agreement and as of the Closing Date true and accurate.

7.4		Purchaser’s Warranties. The Purchaser represents and warrants that each of the representations and warranties relating to the Purchaser as set forth in Schedule 7.4 (“Purchaser’s Warranties”) is at the date of this Agreement and as of the Closing Date true and accurate.

7.5		Seller Additional Agreement. Seller hereby agrees to the representations, warranties, covenants and agreements set forth in Schedule 7.5.

ARTICLE 8 — REMEDIES FOR BREACHES

8.1

Remedies. In the event of a breach of any of the Warranties given by the Seller (“Breach") or in the event of a default in the compliance by Seller of any other obligations under this Agreement (“Default"), the Seller shall reimburse and hold harmless the Purchaser for all direct Damages suffered by the Purchaser as a result of such Breach or Default, subject to the provisions of Article 8.3 through 8.5, and it furthermore being understood that the Seller shall in no event be liable towards the Purchaser for any Damages suffered or incurred by the Purchaser as a result of any breach by the Seller under this Agreement or otherwise:

	1.		to the extent that Damages include any derived, punitive, special, indirect, incidental damages or any consequential damages, including but not limited to damage to reputation and goodwill, loss of profits (actual, anticipated or otherwise) or savings or expected future business of any of the Company or the Purchaser;

	2.		if and to the extent that the matter giving rise to a Breach or Damages results in an adjustment of the Purchase Price or has been taken into account in calculating and deciding on the Purchase Price or any part thereof;

	3.		to the extent that a claim is based upon a liability that is contingent only, except to the extent that such contingent liability has resulted in Damages to Purchaser;

	4.		to the extent that a claim relates to any Damages which are recovered by the Purchaser or the Company from its insurers, provided, however, that any rights an insurer may have to be subrogated to the rights of Purchaser shall be preserved;

	5.		if and to the extent that such Damages have been recovered by the Purchaser or the Company from any third party, whereby the person so entitled shall use its reasonable commercial efforts to recover that sum, shall be repaid to the Seller;

	6.		if and to the extent that Damages relate to any matter included as a liability in the Financial Statements and/or are covered by means of a reserve or provision in the Financial Statements;

	7.		if and to the extent that any Damages result from the failure by the Purchaser or the Company to ensure that all reasonable steps are taken to prevent or mitigate any Damages that could give rise to a claim;

	8.		if and to the extent that the act, omission, event, circumstance or Breach giving rise to such Damages was disclosed to the Purchaser in the Agreement and/or the Disclosure Letter;

	9.		to the extent that Damages or the liability therefore occurs or is increased as a result of (i) changes in any legislation or regulations, or (ii) any legislation or regulations or other action of any governmental authority not in force on the date hereof, or (iii) any change in case-law after the such date.

		The Purchaser shall not be entitled to recover from the Seller more than once in respect of any one matter even if more than one Warranty is breached. Any payment made by the Seller in respect of a Breach or Default shall be deemed to be a reduction of the Consideration that the Seller has received hereunder. To the extent any applicable law would entitle the Purchaser to enforce additional rights against the Seller with respect to this Agreement other than the ones explicitly granted to Purchaser herein, including but not limited to any rights to rescind or cancel this Agreement (other than in the absence of fraud or intentional misstatements), Parties hereby exclude such rights, and to the extent such rights are incapable of being excluded the Purchaser hereby waives such rights, which waiver is hereby accepted by the Seller.

8.2		Breaches of Seller’s Warranties and Purchaser’s Warranties. In the event of a breach of any of the Seller’s Warranties or the Purchaser’s Warranties, covenants, or other

		agreements in this Agreement, the Party in breach shall reimburse and hold harmless the other Party for all Damages suffered by such Party.

8.3		Survival. All Warranties shall survive the Closing Date for 18 months, except for fraud or intentional misstatements. All such Warranties shall expire after said 18 months period, except for Claims asserted by the Purchaser prior to such date.

8.4		Threshold.

	(a)		The Purchaser shall not be entitled to seek indemnification for any individual Claim unless the amount of Damages relating to such Claim exceeds *[ ] , and until the aggregate amount of all indemnifiable Claims exceeds [ * ]** and then the Purchaser shall be entitled to recover all Claims in excess of the above amount.

	(b)		None of the thresholds set forth in Article 8.4(a) shall apply to fraud, intentional Breaches and Defaults, or to the provisions set forth in Article 7.5 and Schedule 7.5.

	(c)		For purposes of this Article 8.4, the existence and extent of any Breach shall be determined by reading the relevant Warranties as if all materiality standards contained in such Warranties (i.e. without reference to the qualifier “material,” “materially,” “in all material respects,” in any material respect,” “material adverse effect” or similar qualifiers), have been deleted from such representation and warranty in its entirety.

	(d)		Limitation of Liability. The aggregate amount to which the Purchaser shall be subject pursuant to this indemnification provision shall be limited to *[ ]** , except that such limit will not apply in case of any of the following (and any payments by Seller to Purchaser relating to the following):

	a.		fraud or intentional misstatements by Seller;

	b.		breaches of Seller’s covenants or other agreement in this Agreement;

	c.		any breach relating to the matters set forth in Article 7.5 and Schedule 7.5.

8.5

Claim Procedure.

(a)

The Purchaser shall give the Seller written notice (“Indemnification Notice”) of any facts and the circumstances giving rise to a Claim promptly after the Purchaser becoming aware of the facts and circumstances giving rise to such Claim, but the failure to notify the Seller will not relieve the Seller of any liability that it may have

			to Purchaser, except to the extent that the Seller demonstrates that the defense of such action is prejudiced by the Purchaser’s failure to give such notice.

	(b)		If the Claim relates to a claim or the commencement of an action or proceeding (a “Proceeding”) by a Third Party against the Company and/or the Purchaser, then the Seller shall have, upon request within 20 business days after receipt of the Indemnification Notice, the right to defend, at its own expense and by its own counsel (and such counsel reasonably satisfactory to Purchaser), any such matter involving the asserted liability of the Company and/or the Purchaser. If the Seller assumes the defense of such a Claim, no compromise or settlement of such Claim may be effected by the Seller without the Purchaser’s consent (which may not be unreasonably withheld) unless (i) the sole relief provided is monetary damages that are paid in full by Seller, and (ii) the Purchaser will have no liability with respect to any compromise or settlement of such Claim effected without its consent. Notwithstanding the foregoing, if Purchaser determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its affiliates (other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement), the Purchaser may, by notice to the Seller assume the exclusive right to defend, compromise or settle such Proceeding, but the Seller will not be bound by and determination of a Proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld).

	(c)		If the Claim does not relate to a claim or the commencement of a Proceeding by a Third Party, the Seller shall have 20 business days after receipt of the Indemnification Notice during which it shall have the right to object to the subject matter and the amount of the Claim set forth in the Indemnification Notice by delivering written notice thereof to the Purchaser. If the Seller sends notice to the Purchaser objecting to the matters set forth in the Indemnification Notice, the Seller and the Purchaser shall use their best efforts to settle the Claim. If the Seller and the Purchaser are unable to settle the Claim, the matter shall be resolved in the manner set forth in Article 15 of this Agreement.

	(d)		The provisions of sections 8.5 shall not apply to the provisions set forth in Article 7.5 and Schedule 7.5.

ARTICLE 9 — OTHER CONVENANTS

Undertaking Seller vis-à-vis the Company. The Purchaser confirms and acknowledges that it is aware that the Company shall require further funding in order to continue its

operations in the future, and that the Purchaser’s commitment to provide funding to the Company as soon as practicably possible after Closing in order to allow the Company to continue its operations for at least twelve months has been a key element for the Seller in entering into this Agreement under the terms and conditions as set forth herein.

ARTICLE 10 — ACCESS TO INFORMATION

Access. After the Closing Date, the Purchaser shall procure that the Seller and any persons authorized by it will be given – for as long required by Seller to fulfill its legal obligations — all such information relating to the Company and such access (at reasonable times and with sufficient reasonable advance notice) to the premises and all books, records, accounts and other documentation of the Company as the Seller may reasonably request in order to file any tax returns or otherwise comply with any provisions of law to which it is bound and be permitted to take copies of any such books, records, accounts and other documentation and that the officers and employees of the Company shall be instructed to give promptly all such information and explanations to any such persons as aforesaid as may be requested by it or them.

ARTICLE 11 — RESTRICTIONS ON ANNOUNCEMENTS

11.1		The Parties undertake that upon the execution of this Agreement their public statements in the form of Schedule 11.1 attached will be issued to conform with the rules applicable to the Parties due to their listings at the Frankfurt (Seller) and NASDAQ (Purchaser) stock exchanges.

11.2		Each of the Parties hereto undertake that prior to Closing and thereafter it will not (save as mentioned in Article 11.1 or required by law) make any announcement in connection with this Agreement, unless the other Party hereto shall have given its written consent to such announcement (which consent may not be unreasonably withheld and may be given either generally or in a specific case or cases and may be subject to conditions).

ARTICLE 12 — CONFIDENTIAL INFORMATION

12.1

Non-disclosure. The Parties undertake that they shall treat as strictly confidential all Confidential Information received or obtained by them or their employees, agents or advisers as a result of entering into or performing this Agreement including information relating to the provisions of this Agreement, the negotiations leading up to this Agreement, the subject matter of this Agreement or the business or affairs of each of the Parties or any member of their group, and subject to the provisions of Article 12.2 that they will not at any time hereafter make use of or disclose or divulge to any person any such Confidential Information

		and shall use their best endeavors to prevent the publication or disclosure of any such information. In addition, from and after Closing, Seller shall treat as confidential all information relating to the Company, as if such information had been disclosed to Seller by Purchaser pursuant to the confidentiality and standstill agreement dated as of March 10, 2006.

12.2		Exceptions. The restrictions contained in Article 12.1 shall not apply so as to prevent the Parties from making any disclosure required by law or by any securities exchange or supervisory or regulatory or governmental body pursuant to rules to which the relevant Party is subject or from making any disclosure to any professional adviser for the purposes of obtaining advice (provided always that the provisions of this Article shall apply to and the Parties shall procure that they apply to, and are observed in relation to, the use or disclosure by such professional adviser of the information provided to him) nor shall the restrictions apply in respect of any information which comes into the public domain otherwise than by a breach of this Article by the Parties.

ARTICLE 13 — MISCELLANEOUS

13.1		Parties’ Costs. Each Party to this Agreement shall pay its own costs and disbursements of and incidental to this Agreement and the sale and purchase of the Share, provided that all costs associated with the Notarial Transfer Deed shall be borne by the Purchaser.

13.2		Waiver. No failure or delay by the Purchaser in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of the same preclude any further exercise thereof or the exercise of any other right, power or remedy. Without limiting the foregoing, no waiver by the Purchaser of any breach by the Seller of any provision hereof shall be deemed to be a waiver of any subsequent breach of that or any other provision hereof.

13.3		Assignment. The Seller and the Purchaser may not assign this Agreement (“contractsoverneming”) or assign or encumber its rights there under, without the prior written consent of the other Party, which shall not be unreasonably withheld. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the Parties, pursuant to a merger, de-merger, acquisition, sale of substantially all the assets or other type of reorganization. Nothing expressed or referred to in the Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.

13.4		Entire Agreement. This Agreement (together with any documents referred to herein or executed contemporaneously or at Closing by the Parties in connection herewith)

		constitutes the whole agreement between the Parties and supersedes any previous agreements or arrangements between them relating to the subject matter of this Agreement (including without limitation that certain Letter of Intent entered into between the parties, effective as of March 10, 2006 relating to the subject matter of this Agreement) and it is expressly declared that no variations of this Agreement shall be effective unless made in writing and executed by the Parties.

13.5		Continuity of obligations. All the provisions of this Agreement shall remain in full force and effect notwithstanding Closing (except insofar as they set out obligations that have been fully performed at Closing).

13.6		Severability. If any provision or part of a provision of this Agreement shall be, or be found by any authority or court of competent jurisdiction to be, invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions or parts of such provisions of this Agreement, all of which shall remain in full force and effect.

13.7		Further acts. Upon and after Closing the Seller shall do and execute or cause to be done and executed all such further acts, deeds, documents and things as may be necessary to give effect to the terms of this Agreement.

13.8		Interpretation. This Agreement shall constitute an allocation of risks between the parties. The Parties deem the security they may derive from the provisions of this Agreement essential.

13.9		Third Party Beneficiary Rights. Unless this Agreement explicitly provides otherwise, it contains no stipulations for the benefit of a Third Party which could be invoked by a Third Party against a Party.

13.10		Counterparts. The Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Agreement by signing any such counterpart.

ARTICLE 14 — NOTICES

Notices. Each notice, demand or other communication given or made under this Agreement shall be in writing and delivered or sent to the relevant Party at its address or fax number set out below (or such other address or fax number as the addressee has by 5 days’ prior written notice specified to the other Parties):


To the Purchaser:	Dynavax Technologies Corporation
	Address:	2929 Seventh Street, Suite 100,
		Berkeley, CA 94710, USA
	Telephone No:	+1 (510) 848 5100
	[ * ]
	Attention:	Chief Financial Officer

With a copy to:	Morrison & Foerster LLP
	Address:	425 Market Street, 33rd Floor
		San Franciso, CA 94131, USA
	[ * ]
	No:
	[ * ]
	Attention:	John W. Campbell III

To the Seller:	Rhein Biotech N.V.
	Address:	Oude Maasstraat 47,
		6229 BC Maastricht, the Netherlands
	[ * ]
	No:
	[ * ]
	Attention:	Managing Director

With a copy to:	Baker & McKenzie Amsterdam NV
	Address:	Leidseplein 29
		1017 PS Amsterdam, the Netherlands
	[ * ]
	No:
	[ * ] No:
	Attention:	Edwin T.H. Liem

Any notice, demand or other communication so addressed to the relevant Party shall be deemed to have been delivered (a) if given or made by letter, when actually delivered to the relevant address; and (b) if given or made by fax, when dispatched. The Parties shall, as soon as possible after the contact details of such party have changed, inform the other Parties thereof. Failure to inform the other Parties of such change, as well as any adverse consequences thereof, shall be for the sole account of such defaulting Party.

ARTICLE 15 — GOVERNING LAW AND ARBITRATION

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

15.1		Governing Law. This Agreement shall be governed by and construed in accordance with the laws of *[ ]** .

15.2		Arbitration. All disputes arising in connection with this Agreement, or further agreements or contracts resulting thereof, shall be finally settled in accordance with the Arbitration *[ ] . The arbitral tribunal shall be composed of three arbitrators. The place of arbitration shall be [ * ]** . The arbitral procedure shall be conducted in the English language. The arbitral tribunal shall decide according to the rules of law (“naar de regelen des rechts”). Consolidation of the arbitral proceedings with other arbitral proceedings pending in *[ ] , as provided in [ * ]** is excluded.

IN WITNESS WHEREOF this Agreement has been executed on the day and year first above written.

Purchaser:

for and on behalf of DYNAVAX TECHNOLOGIES CORPORATION


/s/ Dino Dina			blank
By:	Dino Dina	By:	blank
Title:	CEO	Title:	blank

Seller:

for and on behalf of RHEIN BIOTECH N.V.


/s/ C.P.E. Moonen		/s/ P.G.J. Heijmanns
By:	C.P.E. Moonen	By:	P.G.J. Heijmanns
Title:	Managing Director	Title:	Managing Director

SCHEDULE 1.1

DEFINITIONS

1. Definitions


		“Act”		Means the Federal Food Drug and Cosmetics Act in the U.S., its implementing regulations and FDA guidances, and all counterparts outside the U.S. to each of the foregoing, including International Conference on Harmonization guidelines.

		“Agreement”		Means this share sale and purchase agreement, including all schedule and annexes thereto;

		“Affiliate”		Means, with respect to a company, (i) any Person (directly or indirectly) in Control of such company, (ii) any Person (directly or indirectly) under Control by such company or (iii) any Person (directly or indirectly) under common Control with such company, and (iv) any “Affiliate” of a natural person (directly or indirectly) in Control of such company; for the purposes of this definition with respect to any natural person “Affiliate” means (x) the spouse of such natural person, (y) any other natural person related to such first-mentioned natural person, or such first-mentioned natural person’s spouse or registered partner, by blood or marriage in the third degree or closer;

		“Berna Agreement”		Means that certain License and Supply Agreement between the Purchaser and Berna Biotech AG dated October 28, 2003.

		“Breach”		Has the meaning ascribed to it in Article 8.1;

		“Business Day”		Means any day on which the banks are not required or authorized to be closed for business in The Netherlands, excluding Saturdays and Sundays;

		“Civil Law Notary”		Means the civil law notary who shall execute the Notarial Transfer Deed;

		“Claim”		any notice provided under the notice provisions of the Agreement pursuant to which either party asserts a claim under Article 8;


		“Clinical Data”		Means all laboratory, analytical, pre-clinical and clinical data prepared by, for or on behalf of Company or its Affiliates or in Company’s and/or its Affiliates’ or suppliers’ or distributors’ possession in any form, or to which any of them has rights, which data is with respect to hepatitis B surface antigen or any Product.

		“Closing”		Means completion of the sale and purchase of the Shares as specified in Article 4;

		“Closing Date”		Means the date on which the Closing occurs;

		“Closing Date Working Capital”		Has the meaning ascribed to it in Article 3.2

		“Commercial Agreement”		Means the agreement setting forth certain commercial arrangements between the Seller on the one hand and the Company and the Purchaser, on the other hand;

		“Company”		Has the meaning ascribed to it in the Recitals, and shall also be deemed to include Novovacs BV for purposes of the Company Warranties set forth in Schedule 7.1.

		“Conditions”		Has the meaning ascribed to it in Article 4.1;

		“Confidential Information”		Means any and all data and information relating to the Company and/or to the business and affairs of a Party that may be provided, orally, in writing or digitally, to the other Party that is marked or expressly stated as being “confidential”;

		“Contract”		Means any agreement, contract, consensual obligation, promise, understanding, arrangement, commitment or undertaking of any nature (whether written or oral and whether express or implied), whether or not legally binding.

		“Control”		Person or Persons (each a “controller”) shall be taken to have Control of another Person (“the controlled person”) if one or more of the controllers, whether by law or in fact has, or is entitled to acquire, the right or the power to secure whether directly or indirectly, that the controlled person’s affairs are conducted in accordance with the wishes of the controller and in particular, but without prejudice to the generality of the foregoing, if one or more of the controllers holds:

	(i)		the greater part of the share capital of the controlled person or of the voting rights attaching to the controlled person’s shares; or

	(ii)		the power to control the composition of any board of directors or governing body of the controlled person;

For the purposes of the foregoing and without limitation there shall be attributed to any controller:

	(i)		any rights or powers which another Person possesses on his behalf or is or may be required to exercise on his direction or behalf; and

	(ii)		all rights and powers of any body corporate of which any controller alone or together with another or other controllers has control or of any two or more such bodies corporate;


		“Consideration”		Has the meaning ascribed to it in Article 3.1;

		“Damages”		Has the meaning of damages (schade) as defined in *[ ]** , subject to any limitations set forth in the Agreement;

		“DCC”		Means the *[ ]** ;

		“Default”		Has the meaning ascribed to it in Article 8.1;

		“Disclosure Letter”		Means the disclosure from the Seller to the Purchaser disclosing information constituting exceptions to the Warranties;

		“Encumbrance”		Means any mortgage, assignment of receivables, debenture, lien, charge, pledge, title retention, right to acquire, security interest, option, right of first refusal, pre-emption righ, usufruct (“vruchtgebruik”) or limited right (beperkt recht) and any other encumbrance, attachment (“beslag”) or condition whatsoever;

		“EMPP Agreement”		Has the meaning ascribed to it in Article 5.2(b) (iv)

		“Environment”		Means any ambient workplace or indoor air, surface water, drinking water supply, groundwater, land surface or subsurface strata, river sediment and buildings, structures and fixtures.

		“Environmental Claim”		Means any Action, or demand from any Governmental


				Entity or any Person alleging Liability under Environmental Law, resulting from or based upon:
				(a) the failure to comply with Environmental Law; (b) the failure to comply with any Environmental Permit; (c) the presence in the Environment or Release of, or human exposure to, any Regulated Substance or any other substance, material or waste alleged to be toxic, hazardous or dangerous; or (d) the obligation to conduct any Remedial Action.

		“Environmental Contamination”		Means (i) the pollution of the soil (schädliche Bodenverunreinigung) within the meaning of Section 2 para. 3 Federal Soil Protection Act (Bundesbodenschutzgesetz), (ii) the pollution or contamination of, or the presence of Regulated Substances (Schadstoffe), or (iii) the pollution or contamination by or the presence of Regulated Substances (Schadstoffe) in the ground water or surface water beneath or on real property, provided, however, that in each case such Environmental Contamination existed at, or prior to, the Closing Date.

		“Environmental Matters”		Means: (i) the disposal, release, spillage, deposit, escape, discharge, leak or emission of, contact with and/or exposure of any person or the environment to Regulated Substances or waste; (ii) the creation of any odocer, emissions to air, noise, vibration, radiation, dust, legal or statutory nuisance, or other adverse impact on the environment; and (iii) any other matter relating to the condition, protection, maintenance, restoration or replacement of the environment or any part of it arising directly or indirectly out of the manufacturing, processing, treatment, keeping, handling, use (including as a building material), possession, distribution, disposal, supply, receipt, sale, purchase, import, export, transportation or presence of Regulated Substances or waste and any risk relating thereto.

		“Environmental Permit”		Means any permit, registration, approval, identification number, license or other authorization required under or issued pursuant to any Environmental Law.

		“Euro” or “EUR”		Means Euro, the lawful currency of certain participating States members of the European Union;



		“Final CDWC Calculation”		Has the meaning ascribed to it in Article 3.5

		“Financial Statements”		Has the meaning ascribed to it in Section 3 of the Warranties Schedule;

		“Funds Flow Letter”		Means the letter executed by the Seller and the Purchaser setting out flow of funds at Closing;

		“GAAP”		Means the generally accepted accounting principles of Germany;

		“GMP” or “cGMP”		Means current good manufacturing practices within the meaning of the Act.

		“Governmental Authority”		Means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, parliament, local, municipal, foreign or other government; (c) governmental or quasi governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Entity and any court or other tribunal), including any Regulatory Agency, whether domestic or foreign; (d) multinational organization or body; or (e) individual, Entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

		“Governmental Rule”		Means any applicable law (Gesetz, Verordnung Satzung), judgment, order, decree, statute, ordinance, directive, rule or regulation issued, rendered or promulgated by any Governmental Authority.

		“Indemnification Notice”		Has the meaning ascribed to it in Article 8.6;

		“Insurance Policies”		Has the meaning ascribed to it in Section 10 of the Warranties Schedule;

		“IP Rights”		Has the meaning ascribed to it in Section 7 of the Warranties Schedule;

		“IT System”		Has the meaning ascribed to it in Section 8 of the Warranties Schedule;


		“Legal Requirement”		Means any federal, state, local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, Order, edict, decree, proclamation, treaty, convention, rule, regulation, permit, ruling, directive, pronouncement, requirement (licensing or otherwise), specification, determination, decision, opinion or interpretation that is, has been or may in the future be issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

		“Liabilities”		Means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, direct or indirect, primary or secondary, matured or unmatured, or determined or determinable, known or unknown, including those arising under any Governmental Rule, Contract, or otherwise.

		“Licensed Rights”		Has the meaning ascribed to it in Section 7 of the Warranties Schedule;

		“Material Adverse Effect”		Means any event, change, circumstance or effect that when taken individually or together with all other adverse events, changes and effects, is or is reasonably likely (a) to be materially adverse to the condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations or prospects of the Company; or (b) to prevent or materially delay consummation of the Transaction or otherwise to prevent the Seller from performing its obligations under this Agreement or the other Transaction Documents, but excluding any change, circumstance or effect caused by or relating to: (i) changes in conditions generally affecting (A) the healthcare or biotechnology industry or (B) the economies in which the Companies operates, or world economy or securities markets; and (ii) the execution or announcement of this Agreement or the consummation of the transactions contemplated hereby, and (iii) the deterioration of the working capital of the Company substantially from the amount set forth in Section 3.3 of the Agreement.


		“Manufacturing Specifications”		Has the meaning ascribed to it in Section 10(g) of the Warranties Schedule.

		“Material Contracts”		Has the meaning set forth in Section 9(a) of the Warranties Schedule.

		“Non-Registered IP Rights”		Has the meaning ascribed to it in Section 7 of the Warranties Schedule;

		“Notary Account”		Means the trust account of the Civil Law Notary

		“Notarial Transfer Deed”		Means the notarial deed executed by a civil law notary authorized in Germany pursuant to which the Shares are transferred;

		“Order”		Means any: (a) temporary, preliminary or permanent order, judgment, injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, verdict, sentence, stipulation, subpoena, writ or award that is or has been issued, made, entered, rendered or otherwise put into effect by or under the authority of any court, administrative agency or other Governmental Authority or any arbitrator or arbitration panel; or (b) Contract with any Governmental Authority that is or has been entered into in connection with any Proceeding.

		“Party”		Means any Party in this Agreement;

		“Permits”		Has the meaning ascribed to it in Section 7 of the Warranties Schedule;

		“Person”		Means any legal entity, firm, corporation, partnership or other business or legal person, as well as any natural person;

		“Preliminary CDWC Calculation”		Has the meaning ascribed to it in Article 3.3

		“Proposed CDWC Calculation”		Has the meaning ascribed to it in Article 3.4

		“Products”		Means Cytovax Program Products, Supervax Program Products and Theravax Program Products, as each is defined in the Commercial Agreement.

		“Purchaser”		Has the meaning ascribed to on page 2;

		“Purchaser’s Warranties”		Has the meaning ascribed to it in Article 7.4;

		“Real Property Leased”		Has the meaning ascribed to it in Section 5 of the Warranties Schedule;


		“Recitals”		Means the recitals of this Agreement;

		“Real Property Owned”		Has the meaning ascribed to it in Section 5 of the Warranties Schedule;

		“Registered IP Rights”		Has the meaning ascribed to it in Section 7 of the Warranties Schedule;

		“Regulated Substance”		Means any substance and/or material that in relevant quantity, form or concentration is listed, defined or regulated as a pollutant, contaminant, hazardous, dangerous or toxic substance, material or waste pursuant to any Environmental Law, including any explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products (including waste petroleum and petroleum products) as well as any material which – without being listed, defined or regulated in the above described manner – is hazardous, dangerous or toxic relating to soil, groundwater, surface-water, noise, air (emissions), which is capable of causing harm or damage to property, human health, environment or to men or any other organisms protected by Environmental Law including, without limitation, mineral oils, solvents, substances (including liquids, solids, gases, noises), pollutants, contaminants, petroleum, petroleum products and radioactive materials.

		“Regulatory Agency”		Means any Governmental Entity — whether foreign, domestic, national, regional or provincial — that regulates the safety, efficacy, reliability, manufacture, investigation, sale, marketing or promotion of pharmaceuticals, medical products, biologics or biopharmaceuticals, including the FDA, the EMEA, and their counterparts.

		“Regulatory Applications”		Means (a) all applications for Regulatory Approval for the Products anywhere in the world, and (b) all applications and/or licenses required to legally clinically test in humans Products anywhere in the world, such as investigational new drug applications in the U.S.

		“Regulatory Approvals”		Means all approvals to legally sell the Products as a pharmaceutical.


		“Release”		Means any release, spill, emission, discharge, leaking, pumping, injection, deposit or disposal (as those terms are defined in any Environmental Law) at, into or onto the Environment.

		“Remedial Action”		Means any Action, including any capital expenditure, which the Company is required to undertake pursuant to Environmental Law to (a) investigate, monitor, clean up, remove or treat any Regulated Substance in the Environment; or (b) prevent the Release or threat of Release, or minimize the further Release, of any Regulated Substance so it does not endanger or threaten to endanger the Environment or public health or welfare.

		“Research and Development Materials”		Means all research and development materials used in or related to the Company’s business with respect to hepatitis B surface antigen production or Products. This includes (without limitation) all production and other cell lines expressing any Product’s active ingredient.

		“Seller”		Has the meaning ascribed to on page 2;

		“Seller’s knowledge.” “Seller’s awareness,” “Seller’s best knowledge” or words of similar import		Means (i) the actual knowledge of the Seller’s statutory directors or after having made reasonable enquiries into the affairs of the Company in respect of the relevant matter to which this qualification applies, with the managing directors of the Company, but no other enquiries have been made by such Seller’s statutory directors, and (ii) the actual knowledge of the Company’s statutory directors, managing directors, and manager and higher level employees (including any outside consultants of the Company performing functions of such employees).

		“Share”		Has the meaning ascribed to in the Recitals;

		“Tax” or “Taxes”		Means all forms of taxation, duties and levies including public impositions deriving from the refunding of subsidies or grants, whether in Germany or elsewhere, including but not limited to income tax (including amounts equivalent to or in respect of income tax required to be deducted or withheld


				from or accounted for in respect of any payment), corporate taxes, trade tax, wealth tax, wage tax, value added tax, customs and other import or export duties, excise duties, stamp duty, stamp duty reserve tax, development land tax, national insurance, customs, social security or other similar contributions, and any interest, penalty, surcharge or fine in connection with it.

		“Third Party”		Means any person who is not a Party;

		“Transaction Agreements”		Means this Agreement, the Commercial Agreement, the

		“Warranties”		Has the meaning ascribed to it in Article 7.1.

		“Warranties Schedule”		Means Schedule 7.1 to the Agreement.

		“Working Capital Adjustment”		Has the meaning ascribed to it in Article 3.2

2.		An action taken by a person will be deemed to have been taken in the ordinary course of business only if such action is consistent with the past practices of such person and is taken in the ordinary course of the normal day-to-day operations of such person.

3.		Where any obligation is qualified or phrased by reference to use reasonable endeavors, best efforts or wording of a similar nature, it means the efforts that a person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditious as possible and, regard shall be had, among other factors, to (i) the price, financial interest and other terms of the obligation; (ii) the degree of risk normally involved in achieving the expected result; (iii) the ability of an unrelated person to influence the performance of the obligation.

4.		The singular shall include the plural and vice versa and references to words importing one gender will include both genders.

SCHEDULE 3.3

PRELIMINARY CDWC CALCULATION
[ * ]

SCHEDULE 4.3(D)

LEGAL OPINION ON RBNV

Opinions to be delivered by Baker & McKenzie (subject to its standard form of opinion) prior to Closing:

(a) The Seller is a corporation that is duly organized and validly existing under the laws of the jurisdiction in which it was incorporated, with the requisite power and authority to enter into and perform its obligations under this Agreement and all other agreements entered in connection with the transactions contemplated thereby, and has taken all necessary corporate action to authorize the execution and performance thereof.

(b) The Agreement and all other agreements and obligations undertaken in connection with the transactions contemplated hereby constitute or will constitute, following the execution and delivery thereof, the valid and legally binding obligations of Seller, enforceable against it in accordance with the respective terms, subject to enforcement of remedies to applicable bankruptcy, insolvency, reorganization and other laws affecting generally the enforcement of the rights of creditors and subject to the discretionary authority of a court of competent jurisdiction with respect to the granting of a decree ordering specific performance or other equitable remedies.

(c) The execution, delivery and performance by Seller of this Agreement, and the agreements contemplated herein do not violate (i) to our knowledge, the provisions of the law applicable to Seller and (ii) its articles of association (or comparable charter documents, each as amended from time to time), or any resolution of its supervisory board or management board.

(d) Seller is not precluded by the terms of any contract, agreement or other instrument from (i) entering into this Agreement, or (ii) entering into any agreement or transaction contemplated in this Agreement, or (iii) from the consummation of any of the foregoing.

(e) To our knowledge, no material consents, approvals, orders or authorizations of, or registrations, or declarations of filing with, any person are required in connection with the execution and delivery and consummation of the Agreement, or the agreements contemplated herein, other than the ones obtained or contemplated to be obtained by this Agreement.

(f) The registered share capital (Stammkapital) of the Company is [ * ] . The Seller is the sole shareholder of the Company. The only capital stock of the Company issued is the Share and there are no other shares of capital stock of the Company issued and outstanding. Neither the Company nor the Seller is under any obligation to increase the registered share capital of the Company, and no shareholders’ resolution has been passed resolving an increase of the (registered) share capital / the issuance of new shares or a redemption of shares. The Seller has full right and title to the Share.

(g) Neither the Company nor the Seller has given to any person any right to acquire or subscribe for shares in the Company that will survive the Closing. No rights, including but not limited to option rights, warrants, convertibles and similar rights, have been

granted or issued relating to any shares of the Company that will survive the Closing. There are no resolutions of the general meeting of shareholders of the Company that have not yet been fully effectuated providing for the issuance of shares in the capital of the Company or the grant of options or other rights to acquire shares in the capital of (or any interest in) the Company.

(h) Except as set forth in the Agreement and the Disclosure Letter, to our knowledge, there is no litigation or proceeding pending against the Seller before any court or administrative agency which is likely to materially and adversely affect the ability of the Seller to perform its obligations under the Agreement or which seeks to prevent the consummation of the transactions contemplated by the Agreement.

SCHEDULE 4.4(C)

LEGAL OPINION ON DYNAVAX

Opinions to be delivered by Morrison & Foerster LLP (subject to its standard form of opinion) prior to closing:

(a) The Purchaser is a corporation that is duly organized and validly existing under the laws of the jurisdiction in which it was incorporated, with the requisite power and authority to enter into and perform its obligations under this Agreement and all other agreements entered in connection with the transactions contemplated thereby, and has taken all necessary corporate action to authorize the execution and performance thereof.

(b) The Agreement and all other agreements and obligations undertaken in connection with the transactions contemplated hereby constitute or will constitute, following the execution and delivery thereof, the valid and legally binding obligations of Purchaser, enforceable against it in accordance with the respective terms, subject to enforcement of remedies to applicable bankruptcy, insolvency, reorganization and other laws affecting generally the enforcement of the rights of creditors and subject to the discretionary authority of a court of competent jurisdiction with respect to the granting of a decree ordering specific performance or other equitable remedies.

(c) The execution, delivery and performance by the Purchaser of this Agreement, and the agreements contemplated herein do not violate (i) to our knowledge, the provisions of any federal or California statute or regulation applicable to the Company, (ii) the Company’s certificate of incorporation or bylaws, or (iii) to our knowledge, any resolutions of its board of directors.

(d) Purchaser is not precluded by the terms of any contract, agreement or other instrument from (i) entering into this Agreement, or (ii) entering into any agreement or transaction contemplated in this Agreement, or (iii) from the consummation of any of the foregoing.

(f) Except as set forth in the Agreement, to our knowledge, there is no litigation or proceeding pending against the Purchaser before any court or administrative agency which is likely to materially and adversely affect the ability of the Purchaser to perform its obligations under the Agreement or which seeks to prevent the consummation of the transactions contemplated by the Agreement.

SCHEDULE 5.2(B)(I)

NOTARIAL TRANSFER DEED

Notarial Protocol

Transacted in , this of 2006

Before me, the undersigned notary

officiating at , appeared today:

{ }

acting not in his/her own name, but in the name and on behalf of

1.		Dynavax Technologies Corporation, a corporation organized and existing under the laws of the State of Delaware, having its registered and business offices at 2929 Seventh Street, Suite 100, Berkeley, CA 94710, United States of America (“Transferee”),

		by virtue of Power of Attorney dated , the original of which has been submitted and a certified copy of which is attached to this Notarial Protocol as Annex 1

		and

2.		Rhein Biotech N.V., a public limited liability company organized and existing under the laws of The Netherlands, with its corporate seat at Maastricht and its registered office at Oude Maasstraat 47, 6229 BC Maastricht, The Netherlands (“Transferor”);

		by virtue of Power of Attorney dated , the original of which has been submitted and a certified copy of which is attached to this Notarial Protocol as Annex 2.

Acting as aforesaid, the person appearing then asked for the notarial recording of the following share transfer agreement:

§ 1 Object of the Transfer

1.1

The Transferor is the legal owner of the entire issued share capital of Rhein Biotech Gesellschaft für Neue Biotechnologische Prozesse und Produkte m.b.H., a private limited liability company organized and existing under the laws of Germany (Gesellschaft mit beschränkter Haftung), with its corporate seat at Düsseldorf, Germany and its principal place of business at Eichfelder Strasse 11, 40595 Düsseldorf, Germany (“Company”), consisting of 1 share, with a nominal value of [ * ] (the “Share”).

§ 2 Transfer of Shares

2.1		Transferor hereby transfers the Shares to Transferee. Transferee hereby accepts such transfer.

2.2		The transfer of the Shares shall include any and all rights pertaining to the Shares as at the date and time of transfer.

§ 3 The Underlying Sale Contract

3.1		The underlying contract (Verpflichtungsgeschäft) for the sale and purchase of the shares has been concluded and documented in a separate document, being the Share Sale and Purchase Agreement dated (the “Sale and Purchase Agreement”).

3.2		This notarial deed effects only the transfer of the shares (Verfügungsgeschäft), and all rights and obligations of the Transferor and Transferee relating to the sale and purchase of the Share are governed exclusively by the Sale and Purchase Agreement.

§ 4 Costs and transfer taxes

4.1		Each Party to this deed hall bear its own costs and expenses in connection with the preparation, execution and consummation of this deed, including, without limitation, any and all professional fees and charges of its advisors.

4.2		The costs of the notarisation of this deed shall be borne by .

4.3		Any transfer taxes including, without limitation, real estate transfer tax (Grunderwerbssteuer) which are triggered by the execution of this deed shall be borne as stipulated in the Sale and Purchase Agreement.

§ 5 Miscellaneous

5.1		This deed contains all of the terms and conditions relating to the subject matter of this deed.

5.2		If any provision of this deed shall be invalid or unenforceable for any reason whatsoever, the remaining provisions of this deed shall not be affected thereby. The invalid or unenforceable provision shall be replaced by a valid and enforceable provision in order to achieve the intent of the Parties to the fullest extent possible.

8.3

All changes and amendments to this deed shall require written form unless notarial form is required by law. This requirement shall also apply to any changes or amendments to the provision contained in the foregoing sentence.

8.4 This deed shall be governed and construed in accordance with the laws of the Federal Republic of Germany. In the event of any dispute arising out of this Agreement, such dispute shall be resolved in accordance with the dispute resolution provisions of the Sale and Purchase Agreement.

SCHEDULE 5.2(B)(II)

NOTIFICATION OF TRANSFER

To:
The Directors
Rhein Biotech Gesellschaft für Neue Biotechnologische Prozesse und Produkte m.b.H.,
Eichfelder Strasse 11
40595 Düsseldorf
Germany

Notification of Transfer

Notice is hereby given pursuant to § 16 of the German Limited Company Act (GmbHG) that:

Rhein Biotech N.V., a public limited liability company organized and existing under the laws of The Netherlands, with its corporate seat at Maastricht and its registered office at Oude Maasstraat 47, 6229 BC Maastricht, The Netherlands

has, by notarial deed executed today, transferred its holding of 1 share with a nominal value of [ * ] in Rhein Biotech GmbH, such share being the entire issued share capital, to

Dynavax Technologies Corporation, a corporation organized and existing under the laws of the State of Delaware, having its registered and business offices at 2929 Seventh Street, Suite 100, Berkeley, CA 94710, United States of America,

and Dynavax Technologies Corporation is thus now the new sole shareholder of Rhein Biotech GmbH.

for and on behalf of RHEIN BIOTECH N.V.




By:

Title:

Date:

SCHEDULE 5.2 (B)(III)

COMMERCIAL AGREEMENT

CONFIDENTIAL

DEFINITIVE COMMERCIAL AGREEMENT

This Definitive Commercial Agreement (the “Agreement”) is entered into this 21st day of April, 2006 by and between:

Rhein Biotech NV, incorporated under the laws of the Netherlands having its registered office at Oude Maasstraat 47, NL 6229 BC Maastricht, The Netherlands (hereinafter “RBNV”);

And

Rhein Biotech GmbH, formed and in good standing under the laws of Germany, having its seat in Dusseldorf, Eichsfelder Strasse 11, 40595, Germany, (“RBG”);

And

Dynavax Technologies Corporation, a USA corporation having its offices at 2929 Seventh Street, Suite 100, Berkeley, CA 94710 USA (“Dynavax”).

(With each of RBNV, RBG and Dynavax, referred individually as a “Party” and collectively as the “Parties”)

RECITALS

Whereas, Dynavax is in the vaccine development business and is a party to a License and Supply Agreement with Berna;

Whereas, Dynavax is purchasing RBG, and RBNV is selling RBG to Dynavax, under the Share Sale and Purchase Agreement dated March
27, 2006;

NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth below, the Parties agree as follows:

SECTION 1. DEFINITIONS. The following initially capitalized terms have the following meanings when used in this Agreement (and derivative forms of them will be interpreted accordingly):

CONFIDENTIAL

	1.1		“Affiliate” means, as to any person or entity, any other person or entity, which controls, is controlled by, or is under common control with such person or entity. A person or entity shall be regarded as in control of another entity only if it owns or controls, directly or indirectly, at least fifty percent (50%) of the equity securities or other ownership interests in the subject entity entitled to vote in the election of directors or with the power to direct or elect management of such subject entity. Affiliates of RBNV include Parent, Green Cross Vaccine Corp. (an entity organized under the laws of the Republic of Korea), Rhein Vaccines B.V., Berna Biotech A.G., and Crucell Holland B.V.,. Affiliation shall be determined based on RBG being wholly owned by Dynavax, and not owned at all by RBNV.

	1.2		“Alum” means any composition that is or contains aluminum in any form, regardless of whether *[ ]**

	1.3		“Asian Country” means any country geographically located on the continent of Asia. To be clear, the Asian Countries exclude Australia and New Zealand.

	1.4		“Closing Date” means the first date set forth above.

	1.5		“Control” means, with respect to a particular item of know-how or a particular Patent at a given date, the ownership of or a license under, together with the right to grant a license or sublicense of the scope set forth in the Agreement under, such item of know-how or Patent, without breaching any written agreement with a third party in existence as of such date.

	1.6		“Cytovax” means the prophylactic cytomegalovirus vaccine currently under development in NovoVacs BV.

	1.7		“Cytovax Program Products” means *[ ]** , including Cytovax.

	1.8		“Definitive Agreements” means (i) the Share Sale and Purchase Agreement (parties are RBNV and Dynavax) dated as of March 27, 2006; (ii) this Agreement (parties are RBNV, RBG, and Dynavax); (iii) the Supervax Exclusive License Agreement dated as of the Closing Date (parties are RBNV, RBG and Green Cross); (iv) the Termination Agreement dated as of the Closing Date (parties are Berna and Dynavax); and (v) the Waiver Agreement relating to the employee stock plans (by managers and employees of RBG) dated as of the Closing Date.

	1.9		*[ ]**

	1.10		“Dynavax Notice” has the meaning given in the first paragraph of Section 3.1.

	1.11		“Existing Contracts” has the meaning given in Section 2.1.

	1.12		“Heplisav” means Dynavax’s current Hepatitis B vaccine containing Hepatitis B surface antigen and Dynavax’s 1018 ISS.

CONFIDENTIAL

	1.13		“Heplisav Program Product” means *[ ] In this context, [ * ]** The product Heplisav is included among the Heplisav Program Products.

	1.14		*[ ]**

	1.15		“High Cost Registration European Countries” means all countries that are members of the European Union as of the Closing Date, and Norway, Switzerland and Iceland, other than the Low Cost Registration European Countries.

	1.16		“Know How” means all materials, information, experience and data, formulae, procedures, results and specifications, in written or electronic form, that (i) are Controlled by RBG or RBNV as of the Closing Date, (ii) are not generally known and (iii) are not subject to a third party confidentiality obligation that prevents RBG or RBNV from disclosing the same. Know How includes the Master Cell Line.

	1.17		“Low Cost Registration European Countries” means any country within the European Union as of the Closing Date, and Norway, Switzerland and Iceland, in which the approval for marketing of a vaccine product *[ ]**

	1.18		“Master Cell Line “ means the *[ ] strain, designated as [ * ] that exists as master cell banks designated as [ * ] and working cell banks designated as [ * ] as such cell line is described and referred to in the following IND filed with the FDA: [ * ] This strain is referred to between the Parties as the [ * ]** strain.

	1.19		“Patents” means all granted patents, including utility models and certificates of invention, and reissues, reexaminations, supplementary protection certificates, extensions, and term restorations thereof, and patent applications, including any continuations, continuations-in-parts, divisionals thereof, and the like.

	1.20		*[ ] is defined by reference to [ * ] it [ * ] to [ * ] or [ * ] for a [* ]**

			*[ ] means to [ * ] and [ * ] a [ * ] or [ * ] of [ * ] are [ * ] pursuant to a [ * ] that provides that [ * ] of [ * ] as a [ * ] from [ * ] to [ * ] or [ * ] for [ * ] of a [ * ] in [ * ] or [ * ] for the [ * ] of [ * ] the [ * ] in a [ * ] for [ * ] which [ * ] is [ * ] of this definition [ * ] qualify [ * ]**

	1.21		“RBG IP” means RBG Patents and the related Know How, both as of the Closing Date.

	1.22		“RBG Patents” means Patents Controlled by RBG as of the Closing Date that are listed in Exhibit 1.16.

	1.23		“Supervax” shall mean the current prophylactic two dose Hepatitis B vaccine that includes the *[ ] adjuvant. [ * ]**

	1.24		“Supervax Program Products” means all prophylactic Hepatitis B vaccines that contain all of the following: *[ ]** The Supervax Program Products include Supervax.

CONFIDENTIAL


	1.25		“Theravax” means a therapeutic Hepatitis B vaccine that contains all of *[ ]**

	1.26		“Theravax Program Products” means all therapeutic Hepatitis B vaccines that contain all of *[ ]** The Theravax Program Products include Theravax.

	1.27		“Traditional Hepatitis B Vaccine” means any vaccine that contains *[ ] For the avoidance of doubt, Traditional Hepatitis B Vaccine includes the following Hepatitis B vaccines registered at Closing: [ * ]**

SECTION 2. CONFIRMATION, AMENDMENT AND TERMINATION OF EXISTING CONTRACTS AMONG THE PARTIES

	2.1		Confirmation of Existing Contract Obligations. Except for the March 1, 2005 Agreement between RBG, RBNV and Berna (which is terminated by the Share Sale and Purchase Agreement), and except to the extent specifically modified herein and/or by a separate amendment attached hereto as an Exhibit, all terms of pre-existing (prior to the Closing Date) contracts among RBG on the one hand and RBNV, and its Affiliates, on the other hand the “Existing Contracts;” the Existing Contracts exclude the Definitive Agreements), are hereby confirmed and remain in full force and effect.

	2.1.1		The Parties hereby agree that this Agreement sets forth the entire understanding between the Parties and their Affiliates with respect to the ownership of, all licenses to, and all rights to use and practice, the RBG IP and the *[ ] strain (here and everywhere else used in this Agreement where we refer to [ * ] we mean the strain [ * ] as described in [ * ] Release Testing, Genetic and Product Characterisation). That is to say, where we refer above to “except to the extent specifically modified hereunder,” the grants of licenses under and rights to use and practice the RBG IP set forth in this Agreement is, together with the remainder of this Section 2.1.1 and Sections 2.4 and 2.5, are intended to supersede all prior understandings with respect to the ownership of, licenses under, and rights to use RBG IP and the [ * ] strain, and to set forth the Parties’ entire agreement with respect to all of the foregoing matters mentioned in this sentence. RBNV and its Affiliates hereby acknowledge that they have no ownership or license rights in the RBG IP (excluding the Master Cell Line) and the [ * ] strain other than the license rights set forth in this Agreement. RBNV acknowledge that they have no financial interest in the RBG IP or [ * ]** strain other than as set forth in Section 2.4 and 2.5.

	2.2		Termination of Berna Agreement. The Termination Agreement between Dynavax and Berna, which sets forth the Parties’ mutual agreement to terminate the License and Supply Agreement, dated November 19, 2003, is attached as

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			Exhibit 2.2. Thus, such License and Supply Agreement is terminated. Section 2.1 of this Agreement shall not viewed or deemed in any way to resurrect it.

	2.3		Assignment of Supervax Trademark Rights. The Supervax Trademark Assignment Agreement between RBG and Berna is attached as Exhibit 2.3.

	2.4		Fully Paid-Up License Rights. All Patent and Know-How rights, including RBG Patents rights, granted to RBNV, RBG, and their Affiliates, in pre-existing agreements between or among RBNV, RBG and their Affiliates, are hereby paid-up and royalty-free at the Closing Date. With the exception of (1) any outstanding invoices at Closing, (2) the arrangements specifically made and/or referenced in the Definitive Agreements executed at Signing and/or Closing (such as the profit share for Supervax, the loan repayments, any outstanding accounts payable, any open invoices, and the payments under Section 2.5) and (3) the *[ ] between RBG and RBNV described in the October 1, 2005 Addendum to License Agreement (between RBG and GCVC dated June 30, 1998) with respect to the License and Technology Transfer Agreement between [ * ]** sharing arrangement is also referred to at the end of Section 2.5). RBG and RBNV hereby waive all rights to any and all claims to all monies owed under such pre-existing agreements. If RBNV or RBG requests in writing, RBG or RBNV, respectively, shall promptly execute, and deliver to the other, any formal amendment documents confirming the waiver of any monetary obligations owing thereto and/or to its Affiliates and specific to the aforesaid pre-existing documents. Such confirmations must be consistent with this Agreement and the other Definitive Agreements. Such confirmations shall not have any force of effect to the extent inconsistent with this Agreement and/or any of the other Definitive Agreements.

	2.5		RBNV Rights to RBG Third Party License Revenues. RBG shall pay to RBNV all monies (excluding those already included in RBG’s accounts receivable as of the Closing Date) received by RBG from third parties pursuant to obligations in license agreements with RBG, which agreements exist on the Closing (other than current licenses with RBNV and its Affiliates and specifically excluding *[ ] and the License and Technology Transfer Agreement between [ * ] ) (“Current Licenses”), to the extent that such monies exceed [ * ]** annually after adjustment for payments owed (a) based on agreements existing at Closing, to other third parties from such monies (including any royalties due to such other third parties on in-licensed IP sublicenses to the RBG licensees), and (b) for intellectual property that becomes licensed under the Current Licenses due to RBG obtaining control thereof after the Closing Date, to such third parties pursuant to the written agreement by which RBG obtains such control. For the purposes of clarity, these payments shall not include any payments received by RBG with respect to its Supervax Program Products, Theravax Program Products and Cytovax Program Products. RBNV shall have reasonable audit access to records of such payments on reasonable terms and at reasonable times. Such audits must be performed by a reputable certified public accountant, under appropriate obligations of confidentiality. Such audits shall not be made more frequently than once annually, no later than three (3) years after the payment period being audited.

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Current Licenses specifically exclude the following:

[ * ]

With respect to such [ * ] the [ * ] referred to in the October 1 2005 Addendum to License Agreement (between RBG and GCVC dated June 30, 1998) shall continue in full force and effect.

SECTION 3. SUPERVAX RIGHTS OF FIRST REFUSAL AND FIRST NEGOTIATION

	3.1		European Countries (other then Low Cost Registration European Countries). Dynavax, or an Affiliate thereof, shall promptly notify RBNV in writing within *[ ] of taking its decision to develop the first Supervax Program Product (and thereafter within [ * ] after it takes such decision with respect to each subsequent Supervax Program Product not already (at the time of such decision) subject to a pre-existing third party agreement) for any High Cost Registration European Countries (“Dynavax Notice”). Dynavax, and/or an Affiliate thereof, shall not [ * ]** the (i) development and commercialization (including marketing and selling), and/or (ii) distribution and/or sale of such Supervax Program Product(s) for and in High Cost Registration European Countries until after the Parties have exercised their commercially reasonable efforts according to this Section 3.1 (unless RBNV fails to provide within the time period stated in Section 3.1.1 a notice that RBNV wishes to negotiate with Dynavax or its Affiliate under that Section).

	3.1.1		Schedule and Procedure. Within *[ ]** of receiving notification pursuant to Section 3.1, RBNV, or an Affiliate thereof, may notify Dynavax in writing of RBNV’s, or an Affiliate’s, intention to negotiate a development and commercialization agreement with Dynavax or an Affiliate thereof (the “RBNV Notice”). If RBNV, or an Affiliate thereof, does not provide the RBNV Notice, then Dynavax may deem the failure to answer as a negative response and shall be free to proceed with third-party transactions regarding such Supervax Program Product rights in any and/or all of the countries mentioned in the Dynavax notice, without restriction.

	3.1.2		Within *[ ] of receiving the RBNV Notice, Dynavax, or an Affiliate thereof, shall provide RBNV with a good faith written proposal for a development and commercialization agreement (at a term sheet or greater level of detail, but not required to be at the level of a fully drafted agreement), which may, at Dynavax’s discretion, [ * ]** for such Supervax Program Product in the specific country or countries (“Dynavax Proposal”).

	3.1.3		Within *[ ] of receipt by RBNV of the Dynavax Proposal (“Negotiation Period”), RBNV and Dynavax, or their designated Affiliates, shall exercise their commercially reasonable efforts to negotiate, [ * ] the terms of such development and commercialization arrangement, including [ * ]** .

	3.1.4		Dynavax, or an Affiliate thereof, shall not offer more favorable terms, such as an

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offer that does not require the sharing of development costs (if the offer to RBNV included such sharing), than those offered to RBNV under Section 3.1.2 (if a proposal under such Section was required of Dynavax), within [ * ] from the expiration of the Negotiation Period, unless those terms have first been offered to, and rejected by, RBNV, which rejection or approval shall be provided within [ * ] of notification. A failure to respond within such [ * ] shall be considered a rejection. After such [ * ] period, Dynavax, RBG and their Affiliates shall be free to proceed with third-party transactions regarding such Supervax Program Products rights in any and/or all of the countries mentioned in the Dynavax notice, without restriction.

	3.2		Asian Countries and Low Cost Registration European Countries. Dynavax, or an Affiliate thereof, shall promptly notify RBNV in writing within *[ ] of taking its decision to [ * ] in any Asian Country(ies) and/or Low Cost Registration European Country(ies). Such decision must only be made if the Supervax Program Product and data regarding it is such that it shall be at a stage that it would be reasonable to [ * ] it being understood and agreed that if in the particular country it is customary that [ * ] Dynavax, and/or an Affiliate thereof, shall not [ * ]** any third party for the sale and/or distribution of Supervax for and in any Asian Country(ies) and/or Low Cost Registration European Country(ies) until after the Parties have exercised their commercially reasonable efforts according to this Section 3.2 (unless RBNV fails to provide a notice that it wishes to negotiate with Dynavax or its Affiliate under Section 3.2.1 within the deadline stated in such Section in which case Dynavax and RBG are free to proceed regarding such Supervax Program Product rights for the country(ies) mentioned in the notice, without restriction).

	3.2.1		Schedule and Procedure. Within *[ ]** of receiving notification pursuant to Section 3.2, RBNV, or an Affiliate thereof, may notify Dynavax in writing of RBNV’s, or an RBNV Affiliate’s, intention to negotiate a commercialization agreement with Dynavax, or an Affiliate thereof, with respect to the Asian Country(ies) and/or Low Cost Registration European Country(ies) mentioned in Dynavax’s or its Affiliate’s notice (such notice from RBNV, the “RBNV Notice”). If RBNV, or an Affiliate thereof, does not provide the RBNV Notice, then Dynavax may deem the failure to answer as a negative response. In that case, Dynavax and RBG are free

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			to proceed regarding such Supervax Program Product rights for the country(ies) mentioned in their notice, without restriction.

	3.2.2		Within *[ ] of receipt of the RBNV Notice, RBNV and Dynavax, or their designated Affiliates, shall exercise their commercially reasonable efforts to negotiate, [ * ] in good faith, the essential terms and conditions of sales and distribution, including [ * ]** .

	3.2.3		In case negotiations under Section 3.2.2 (if required to be initiated thereunder) do not result, within the specified *[ ] in an agreement as specified in Section 3.2.2, Dynavax, or an Affiliate thereof, may [ * ] provided that Dynavax, or an Affiliate thereof, shall not offer to such third parties more favorable terms than those offered to RBNV, within [ * ] after the end of discussions under Section 3.2.2 without first offering such more favorable terms to RBNV. RBNV is obliged to respond yes or no to the more favorable terms within [ * ] A failure to respond within such [ * ]** is considered a rejection.

3.3

SECTION 4. GRANT OF LICENSES.

	4.1		Supervax. RBG hereby confirms its exercise of the exclusive (even as to the grantor) license option in the License Option Agreement Supervax dated November 9, 2005, between RBG and Green Cross Vaccine Corporation (the “Superseded Option”). The terms of such resulting exclusive license are described in the Exclusive License Agreement attached hereto as Exhibit 4.1, which terms supersede the Superseded Option.

	4.2		*Master Cell Line and Hepatitis B Surface Antigen [ ]** . Subject to any pre-existing third party agreements and the terms of this Agreement (including the covenants specified in Section 6 hereof), RBNV and its Affiliates, hereby with respect to Section 4.2.1 agree that RBG and Dynavax have, and with respect to Section 4.2.2 grant, and confirm the grant, to RBG and Dynavax, of the following rights:

	4.2.1		The right to use the Master Cell Line for Hepatitis B surface antigen (*[ ]** ) currently in RBG’s possession (including progeny of such cell line) for any and all permitted purposes, including clinical and commercial production. “Permitted purposes” in this context means all activities outside the scope of the exclusive

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license of Section 4.3.2, other than activities forbidden in Section 6, during the time period forbidden therein.

	4.2.2		A non-exclusive license under all Patents (if any) owned, or controlled with the right to sublicense, by RBNV to develop, make, have made, use, offer to sell, sell, store and import Hepatitis B surface antigen (*[ ]** ) produced on the Master Cell Line, but while the license of Section 4.3.2 is in effect only outside the scope of the exclusive license of Section 4.3.2; and excluding activities forbidden in Section 6, during the time period forbidden therein.

	4.2.3		Sublicense Rights. The rights and licenses specified in 4.2.1 and 4.2.2 above are sublicensable without RBNV’s and its Affiliates’ consent through one or more tiers or layers of sublicensees to RBG’s and Dynavax’s Affiliates, third party contract manufacturers, contract clinical and analytical service providers, distributors, and commercial development and/or marketing partners (including licensees).

	4.2.4		The rights and licenses granted in this Section 4.2 are royalty-free and fully paid-up as far as any payments to RBNV and its Affiliates are concerned, and are perpetual.

	4.3		RBG License Grants to RBNV. Subject to the terms of this Agreement and any restrictions stated in in-licenses by which RBG acquired Control of any RBG IP that is not owned by RBG, RBG hereby grants to RBNV and its Affiliates, and RBNV and its Affiliates shall hereby receive, the following rights:

	4.3.1		a fully paid-up, royalty-free, non-exclusive, license under RBG IP, in perpetuity, to develop, make, have made, use, sell, offer to sell, store, import and export any and all products, except for Supervax Program Products, Theravax Program Products, Cytovax Program Products and Heplisav Program Products.

4.3.1.1

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their existing agreements to comply with the restrictions specified in this Section 4.3.1, but shall exert its reasonable diligent efforts, which do not adversely financially impact RBNV, to include such terms upon amendment thereof and shall include them on any voluntary extension to the relationship (i.e. one that is not required without RBNV’s or its Affiliate’s consent under the contract that exists as of the Closing Date).

4.3.2

4.3.2.1

The foregoing license explicitly does not extend to the making and selling of Hepatitis B surface antigen (or any other ingredient covered by or made using the RBG IP) for inclusion (or under contractual terms that would permit their inclusion) in any Supervax Program Product(s), Theravax Program Product(s), Cytovax Program Product(s) and/or Heplisav Program Products. Accordingly, RBNV and their Affiliates shall only supply Hepatitis B surface antigen, made using RBG IP, and such other ingredients to third parties under circumstances in which such third parties (and any entities to which they may transfer such antigen and other ingredients) are legally forbidden and precluded from making Supervax Program Products, Theravax Program Products, Cytovax Program Product and Heplisav Program Products using the supplied quantities of such antigen and other ingredients. Notwithstanding the foregoing, RBNV and its Affiliates shall not be required to amend their existing agreements to comply with the restrictions specified in this Section 4.3.2, but shall exert its reasonable diligent efforts, which do not adversely financially impact RBNV, to include such terms upon amendment thereof and shall include them on any voluntary extension to the relationship (i.e. one that is not required without RBNV’s or its Affiliate’s consent under the contract that exists as of the Closing Date).

	4.3.3		For the avoidance of doubt, the licenses of Section 4.3.1 and 4.3.2 do not in any way diminish the scope of RBG’s rights to the Supervax Program Products, Theravax Program Products and Cytovax Program Products.

	4.3.4		Sublicense Rights and Restrictions. The licenses of both Sections 4.3.1 and 4.3.2 are subject to restrictions on RBG’s ability to license and sublicense pursuant to pre-existing third-party agreements (i.e. agreements with entities other than Affiliates). Other than such third party licensing restrictions:

(1)

RBNV’s non-exclusive license rights provided in subsection 4.3.1 above

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			are sublicensable in conjunction with the grant of a license or sublicense under *[ ]**

	(2)		RBNV’s exclusive license rights provided in subsection 4.3.2 above, are sublicensable *[ ]** without any requirement that RBNV license other intellectual property in conjunction with the grant of the sublicense.

	(3)		To avoid any doubt, any sublicensees under the license of subsection 4.3.1 and any sublicensees under the license of Section 4.3.2 shall be subject to the same restrictions as stated in Sections 4.3.1.1 and 4.3.2.1, respectively, as if such sublicensees were RBNV or an RBNV Affiliate.

4.3.5

4.3.6

Licensed RBG Patent Maintenance. Given the non-exclusive nature of the license of Section 4.3.1, RBG and Dynavax will be under no requirement to prosecute or maintain RBG Patents, which do not specifically claim [ * ] If RBG and Dynavax elect to abandon any RBG Patent, RBG and/or Dynavax will first give RBNV reasonable notice of such intention and the opportunity to prosecute or maintain such RBG Patent. In this case, optionally, at RBNV’s sole discretion, RBNV may do so in its own name; provided that RBG and Dynavax will receive a non-exclusive license to such RBG Patents, consistent with the licenses granted herein and with any pre-existing third party agreements (i.e. if 3rd party obligations exist that apply to the practice of the inventions claimed in the RBG Patents taken over by RBNV, then RBNV must comply with such 3rd party license obligations respecting such practice). If RBG and Dynavax choose, as part of a strategic move, to abandon a particular RBG Patent, which does not claim specifically [ * ] and which would reasonably benefit the RBG Patent portfolio, then the Parties will diligently [ * ]

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	4.4		Defense of Patent Litigation. If either Party after the Closing is warned or sued by a third party alleging or charging infringement of any Patents claiming the licensed Know How or the use thereof by either Party or its Affiliates, then the Party that was warned or sued shall notify promptly the other Party. Except only if, as and to the extent otherwise provided in Article 8, each Party shall be responsible, at its expense, for settling and/or defending such warning, allegation or charge (including associated litigation) to the extent relating to such Party’s or its Affiliates’ use of the licensed Know-How. *[ ]** Upon a Party’s reasonable request, the other Party agrees to reasonably assist in any such defense on mutually agreed reasonable terms, provided that the requesting Party agrees to reimburse the other Party for the reasonable out of pocket expenses incurred by the other Party for the provision of such assistance. Dynavax and RBG are considered a single “Party” for purposes of this Section 4.4.

	4.5		Patent Enforcement.

	4.5.1		Notification. In the event that a Party obtains actual knowledge that a third party’s activities likely infringe one or more of the RBG Patents within the scope of the exclusive license granted in Section 4.3.2, it shall promptly notify the other Party of any such likely infringement.

	4.5.2		Control of Suit:

	4.5.2.1		As to the infringement of exclusively licensed RBG Patents pursuant to Section 4.3.2, RBG shall have the first right to effect termination of such infringement, including bringing suit or other proceedings against the infringer in its own name and the other Parties hereto shall be kept informed at all times of all such proceedings taken by RBG. If RBNV, or another Party licensee, requests, such Party may join with RBG as a Party to the lawsuit or other proceeding in a monitoring capacity only at its own expense. However, even if RBNV chooses to join the suit in such a monitoring capacity, RBG shall retain sole control of the prosecution of such suit or proceedings, as the case may be.

	4.5.2.2		If (a) RBG elects not to file legal proceedings against a third party within *[ ]** such possible infringing activities, and has not engaged in, or has terminated, reasonably diligent business discussions to terminate such infringement, and (b) the infringement involves the commercialization of a product that competes directly with any then-marketed product of RBNV or any of its Affiliates, and if the alleged infringement is likely to have a more than insignificant impact on RBNV’s business in the country(ies) where sales of allegedly infringing product is occurring, then RBNV shall have the right to effect termination of such infringement, including bringing suit or other proceedings against the infringer in its own name. The other Parties hereto shall be kept informed at all times of all such proceedings taken by RBNV. RBNV shall not be authorized to make any admission, consent, or other representation during the proceeding, which

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would admit the invalidity or unenforceability of an RBG Patent, without the advice and consent, in writing, from RBG, which RBG is entitled to withhold in its reasonable discretion. If RBG (or an RBG Affiliate) requests, such entity may join with RBNV as a party to the lawsuit or other proceeding at its own expense. In this case, RBNV shall retain control of the prosecution of such suit or proceedings, as the case may be, except that RBG shall have the sole right to control the prosecution of such suit or proceedings as regards all matters affecting validity and/or enforceability of the RBG Patent(s).

	4.5.3		Costs and Monetary Recovery: Each Party shall bear all its costs incurred in connection with such lawsuit or other proceeding. Any monetary recovery shall first be paid to the Parties (and their Affiliates) to reimburse their legal and other costs associated with the legal proceeding. *[ ] remaining recovery shall be paid to or retained by RBNV, [ * ]** remaining recovery shall be paid to or retained by RBG.

	4.5.4		Disclaimer. Nothing in this Agreement shall be construed as obligating any Party the right, to proceed against a third party infringer.

	4.5.5		Area of No RBNV Enforcement Rights. RBNV and its Affiliates shall not have any right to enforce the RBG Patents outside the scope of the exclusive license in Section 4.3.2 during the time period while it remains exclusive. Without limitation, this means that RBNV and its Affiliates have no right to enforce the RBG Patents within the scope of the non-exclusive license of Section 4.3.1, to the extent broader than the license of Section 4.3.2 (i.e. outside of any overlap between Section 4.3.1 and Section 4.3.2).

SECTION 5. TECHNICAL ASSISTANCE AND COOPERATION

	5.1		Master Cell Line Issues-Cooperation. Dynavax and RBNV acknowledge that the Master Cell Line is (1) used by RBNV and its Affiliates for the production of products that are approved by Governmental Authorities, and that are currently on the market, and (2) is confidential and of crucial importance to the Parties. Accordingly, *[ ] ensure the best and most informed approach. To avoid any doubt, [ * ] Dynavax and RBNV further agree to use reasonable efforts to promptly notify the other party of any and all communications to and from Governmental Authorities relating to the safety of the Master Cell Line, as well as of any communication and/or concerns expressed by such regulatory authority relating to the safety, quality or characterization of the Master Cell Line, and agree to consult promptly with each other to resolve any such concerns with the FDA or such other Governmental Authorities. The Parties agree to share all safety, toxicity and tumorogenicity data regarding the Master Cell Line that any of them (or their Affiliates) generates (or receives or contracts for) [ * ]**

	5.2		Production Technology Assistance. RBG will provide to RBNV and to its Affiliates reasonable access to assistance regarding the Hepatitis B and

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			Hansensula polymorpha production technologies as in existence at RBG on the Closing (with no updating), as follows:

	5.2.1		Troubleshooting. For a period of *[ ] after Closing, RBG will make available for general diagnosis and troubleshooting, in each year during this [ * ] period up to [ * ] at a cost of [ * ] per FTE month, which cost may be adjusted for inflation every year, plus all travel and related expenses, provided that RBNV provides RBG at least [ * ] advance notice of such request. [ * ]** RBG’s technical personnel supplied by RBG for such general diagnosis and troubleshooting.

	5.2.2		Long Term Projects. For a period of *[ ] after Closing, RBG will make available for long term projects, including training of Parent’s personnel, up to an aggregate of [ * ] of which no more then [ * ] within [ * ] at a cost of [ * ] per FTE month, which cost may be adjusted for inflation every year, plus all travel and related expenses, provided that Parent provides RBG at least [ * ] advance notice of such request. [ * ]** RBG technical personnel supplied by RBG for such long term projects.

	5.2.3		The aggregate FTEs stated in Sections 5.2.1 and 5.2.2 are stated collectively for RBNV and its Affiliates together. They are not each separately entitled to this number of FTEs.

	5.3		No Transfer or Supply Obligations. Other than is mentioned in Sections 5.1 and 5.2, there are no obligations for RBG or RBNV to supply each other or their Affiliates, Know How, products or other materials pursuant to the license grants herein. Any such existing obligations are hereby waived. The Parties remain free to contract in writing for new such obligations in the future in their sole discretions.

SECTION 6. COVENANTS NOT TO COMPETE

	6.1		*[ ] RBG and Dynavax, for [ * ] after Closing, will not develop and/or market, and/or license others to develop and/or market, for [ * ]** Hepatitis B vaccine, other than Heplisav Program Products.

	6.2		*[ ] RBG and Dynavax, for [ * ] after Closing, will not develop and/or market, and/or license others to develop and/or market, [ * ]** other than Heplisav Program Products.

SECTION 7. REPRESENTATIONS AND WARRANTIES

7.1

RBG warrants and represents to RBNV that any and all RBG IP rights licensed from third parties, which rights are necessary for the research, development, manufacture, marketing, sale or importation of the products known as (a) [ * ] and/or (b) HepavaxGene, are sublicensable, and have been sublicensed, to RBNV and its Affiliates, without the need to secure the prior consent from such third parties.

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7.2

RBNV, RBG and Dynavax warrant and represent to each other that (i) it has the full right and authority to enter into this Agreement and to grant the rights granted herein; (ii) it has not previously granted any rights to third parties in conflict with the rights and options granted herein; (iii) it shall not violate the law or existing contractual obligations by executing this Agreement; (iv) it is not bound by any obligations to third parties that would impair its ability to perform its obligations or grant the licenses contemplated herein; and (v) it has duly executed this Agreement. UNLESS OTHERWISE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT, PATENT VALIDITY, TECHNICAL FEASIBILITY, FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY WARRANTIES CONCERNING THE INHERENT PROPERTIES OF KNOW HOW AND RBG IP SUPPLIED OR LICENSED UNDER THIS AGREEMENT. EACH PARTY MAKES NO WARRANTY AS TO THE MERCHANTABILITY OF THE PRODUCTS, ITS LICENSED KNOW HOW OR LICENSED PATENTS.

SECTION 8. INDEMNIFICATIONS AND INSURANCE

	8.1		Licensee Third Party Responsibilities.

	8.1.1		Dynavax/RBG Responsibility. Dynavax and RBG shall be responsible, and shall hold RBNV harmless for: (i) all financial obligations to third parties (i.e. parties that are not Parties hereto and Affiliates thereof) due to the receipt or exercise by Dynavax or RBG of the rights addressed in section 4.2; and (ii) all requirements in relation to RBNV’s existing (as of the Closing Date) third-party licenses, arising out of Dynavax’s or RBG’s receipt or exercise of the rights addressed in section 4.2 of which RBNV informs Dynavax (i.e. if third-party obligations exist (meaning that they are provided for in a written agreement with a third party executed before the Closing Date) for the use of the Master Cell Line by RBG and Dynavax under the license of Section 4.2, then fulfillment of those obligations shall not be RBNV’s responsibility, but RBNV must inform RBG and Dynavax of such third-party obligations in order for RBG and Dynavax to be able to fulfill them). For the avoidance of any doubt, RBNV shall not be liable for any financial obligations to third parties, including for example upstream royalties or other payments, arising out of Dynavax’s, RBG’s or their Affiliates’ exercise of rights to third-party technology the rights in which have been sublicensed hereunder.

	8.1.2		RBNV/Affiliate Responsibility. RBNV is responsible, and shall hold RBG and Dynavax harmless for: (i) all financial obligations to third parties (i.e. parties that are not Parties hereto and Affiliates thereof) due to the receipt or exercise by RBNV and its Affiliates of the license of subsection 4.3.1 and/or 4.3.2, and (ii) all requirements in relation to RBG’s existing (as of the Closing Date) third-party licenses for RBG IP, arising out of RBNV’s or its Affiliates’ receipt or exercise of the licenses of subsections 4.3.1 and 4.3.2 of which RBG and/or Dynavax informs RBNV (i.e. if third-party obligations exist (meaning that they are provided for in a

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			written agreement with a third party executed before the Closing Date) for the exercise of the licenses of Sections 4.3.2 and 4.3.2 shall not be Dynavax’s nor RBG’s responsibility, but Dynavax or RBG must inform RBNC of such third-party obligations in order for RBNV and its Affiliates to be able to fulfill them. For the avoidance of any doubt, RBG and Dynavax shall not be liable for any financial obligations to third parties, including for example upstream royalties or other payments, arising out of RBNV’s or its Affiliates’ exercise of rights to third-party RBG IP sublicensed hereunder.

	8.1.3		Cooperation. The Parties shall cooperate in the mechanics of making payment to any upstream licensors. This includes that the sublicensing Party will forward payments and reports received from the sublicensed Party to the third-party licensor, promptly after receipt, and will share promptly all notices of delinquency and non-payment received.

8.2

General Product Indemnification.

	(a)		Each licensing Party herein (“Licensor”) shall not be liable for, and each licensed Party herein (“Licensee”) shall defend indemnify and hold Licensor together with its Affiliates and the directors, officers and employees of all of them (the “Licensor Indemnitees”) harmless against, any and all liabilities (including product liability and infringement of third party Patents insofar as such infringement relates to activities carried out by Licensee under this Agreement), damages, losses costs, and expenses, including reasonable attorney’s fees (collectively “Damages”), resulting in any manner from third-party claims, demands and actions (collectively, “Claims”) arising out of (a) the use by Licensee or its Affiliates of the Master Cell Line and/or the licensed Know How, or (b) the Licensee’s other activities in exercise of a license granted it hereunder, including the development or manufacture of licensed (hereunder) prototypes or clinical supplies by Licensee or its Affiliates, or the use of any licensed (hereunder) product manufactured, or used by Licensee or its Affiliates by any human being regardless of whether such use was contemplated by the Parties, except in the case of each (a) and (b) to the extent such liabilities result from (x) the willful misconduct, or gross negligence by the Licensor Indemnitees and/or (y) the Licensor’s breach of its representations and warranties under this Agreement. For purposes of illustration, Dynavax shall not be responsible and shall be defended and held harmless by RBNV for product liabilities relating to *[ ]** while RBNV shall not be responsible for and shall be defended and held harmless by Dynavax and RBG for product liabilities relating to Supervax Program Products, Theravax Program Products and Cytovax Program Products. RBG is the Licensor, and RBNV and its Affiliates are the Licensees, regarding the licenses of Section 4.3. RBNV is the Licensor, and RBG, Dynavax and their Affiliates are the Licensees, regarding the licenses of Section 4.2.

	(b)		RBG hereby agrees to indemnify, defend and hold harmless RBNV and its

CONFIDENTIAL

Licensor Indemnitees from and against all Damages resulting from Claims to the extent arising out of (1) a breach of RBG’s representations and warranties under this Agreement, and/or (2) RBG Indemnitees’ willful misconduct, or gross negligence. Likewise, RBNV hereby agrees to indemnify, defend and hold harmless RBG and its Licensor Indemnitees (including Dynavax and its people) from and against all Damages resulting from Claims to the extent arising out of (1) a breach of RBNV’S representations and warranties under this Agreement, and/or (2) RBNV Indemnitees’ willful misconduct, or gross negligence.

8.3

	8.4		Insurance. Each Party shall maintain insurance against all foreseeable risks and claims arising from its performance of activities licensed hereunder.

	8.5		Limitation of Liability. EXCEPT TO THE EXTENT A PARTY MAY BE REQUIRED TO INDEMNIFY THE OTHER FOR AMOUNTS PAID TO

CONFIDENTIAL

THIRD PARTIES OR AS REGARDS A BREACH OF A CONFIDENTIALITY OBLIGATION, NEITHER PARTY (NOR ITS AFFILIATES) SHALL BE LIABLE TO THE OTHER PARTY (NOR ITS AFFILIATES) FOR PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES (SUCH AS LOST PROFITS, OPPORTUNITY COSTS, MISSED BUSINESS OPPORTUNITIES, OR OTHER THINGS CAUSED BUT NOT PROXIMATELY CAUSED BY ANY BREACH OR DEFAULT UNDER THIS AGREEMENT, WHETHER THE THEORY OF LIABILITY IS GROUNDED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) PRODUCT LIABILITY OR OTHERWISE). EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES.

SECTION 9. MISCELLANEOUS

	9.1		Governing Law. This Agreement will be governed by the laws of *[ ] (without giving effect to its conflict of law rules and regulations). Any dispute shall be resolved by arbitration before the London Court of International Arbitration in accordance with the [ * ] applying the substantive law of [ * ]** excluding conflicts of law rules.

	9.2		Arbitration Procedure.

			Any controversy, dispute or claim which may arise out of or in connection with this Agreement, including the exhibits attached hereto, or the interpretation, enforceability, performance, breach, termination or validity thereof, including disputes relating to alleged breach or termination of the foregoing, but excluding any determination as to the infringement, validity or claim interpretation of Patents of each Party related to the subject matter hereof and/or the misuse and/or misappropriation of a Party’s Information, (each a “Dispute”) shall be resolved by binding arbitration in accordance with the *[ ] except where this rules conflict with this provision, in which case this provision controls. The Arbitration shall be held in English and shall take place in London. The Dispute shall be construed in accordance with the laws of [ * ] exclusive of conflicts of law rules. The arbitration tribunal shall consist of three neutral arbitrators, each of whom shall be an attorney who (a) has at least fifteen (15) years of experience in the biopharmaceutical field in a law firm or corporate law department of over twenty-five (25) lawyers or (b) was a judge of a court of general jurisdiction. However: (X) at least one of the arbitrators must be an attorney described in clause (a) of the foregoing sentence; (Y) at least one of the arbitrators must be trained in [ * ] and have been admitted to practice in [ * ]** ; and (Z) at least one of the arbitrators must be a native English speaker. The arbitrators shall be neutral, independent, disinterested, and impartial. Each Party shall nominate in the request for arbitration and the answer thereto one arbitrator and the two arbitrators so named will then jointly appoint the third arbitrator as chairman of the arbitration tribunal. After appointment, the Parties shall have no ex-parte communication with their proposed arbitrator. If one Party fails to nominate its arbitrator or, if the Parties’ arbitrators cannot agree on the person to be named as chairman within

CONFIDENTIAL

[ * ] the President of the London Court of International Arbitration shall make the necessary appointments. Within [ * ] of initiation of arbitration, the Parties shall reach agreement upon and thereafter follow procedures assuring that the arbitration will be concluded and the award rendered within no more than eight months from selection of the arbitrators. Failing such agreement, the Arbitration Rules of the London Court of International Arbitration will control the procedures and scheduling and the Parties will follow procedures that meet such a time schedule. Each Party has the right before or, if the arbitrators cannot hear the matter within an acceptable period, during the arbitration to seek and obtain from the appropriate court provisional remedies such as attachment, preliminary injunction, replevin, etc., to avoid irreparable harm, maintain the status quo or preserve the subject matter of the arbitration. Any request for such provisional measures by a Party to a court shall not be deemed a waiver of this agreement to arbitrate. In addition, the Arbitrator Tribunal may, at the request of a Party, order provisional or conservatory measures (including, without limitation, preliminary injunctions to prevent breaches hereof) and the Parties shall be able to enforce the terms and provisions of such orders in any court having jurisdiction. The decision of the arbitration tribunal must be in writing and must specify the basis on which the decision was made, and the award of the arbitration tribunal shall be final and judgment upon such an award may be entered in any competent court or application may be made to any competent court for judicial acceptance of such an award and order of enforcement. AS IS CONSISTENT WITH SECTION 8.5, THE ARBITRATOR SHALL BE EMPOWERED TO AND SHALL NOT AWARD ANY PARTY PUNITIVE, EXEMPLARY, MULTIPLIED OR CONSEQUENTIAL DAMAGES (SUCH AS LOST PROFITS, OPPORTUNITY COSTS, MISSED BUSINESS OPPORTUNITIES, OR OTHER THINGS CAUSED BUT NOT PROXIMATELY CAUSED BY ANY BREACH OR DEFAULT UNDER THIS AGREEMENT, WHETHER THE THEORY OF LIABILITY IS GROUNDED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) PRODUCT LIABILITY OR OTHERWISE), AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES. NO PARTY MAY SEEK OR OBTAIN PREJUDGMENT INTEREST OR ATTORNEY’S FEES OR COSTS.

9.3

Notice and Reports. All notices required by this Agreement shall be in writing. All notices and reports shall be sent by fax followed by overnight courier to the Parties at the following addresses or such other addresses as may be designated in writing by the respective Parties:


To RBNV:	Rhein Biotech NV
		Oude Maasstraat 47,
		NL 6229 BC Maastricht,
		The Netherlands
		*[ ]**

To RBG:		Rhein Biotech GmbH

CONFIDENTIAL


		Eichsfelder Strasse 11 Dusseldorf 40595
		Germany
		*[ ]**

To Dynavax:	Dynavax Technologies Corporation 2929 Seventh Street, Suite 100 Berkeley, CA 94710 USA

		*[ ]**
		ATTN: CEO

		With a required copy to Dynavax at the same
		address and fax, to “ATTN: LEGAL
		DEPARTMENT.”

Any notices shall be deemed given when received by the other Party, including in the case of notices sent by facsimile, if the sender has a valid confirmation of the facsimile going through.

9.4

Priority of Agreement. The Parties agree and acknowledge that this Agreement supersedes any and all prior written or oral agreements between the Parties and any of their affiliates concerning the subject matter of this Agreement. In particular, this Agreement supersedes the Letter of Intent in all respects regarding the subject matter of this Agreement. The Letter of Intent shall not be used to interpret or deemed to limit or modify the terms of this Agreement. However, the Confidentiality Agreement will remain in effect and will not be superseded by this Agreement; provided, however, that information exchanged between the Parties (with each Party for this purpose being deemed to include its Affiliates) shall be deemed exchanged under the Confidentiality Agreement) and protected thereunder; and provided, further, that notwithstanding any restriction on use stated in such Confidentiality Agreement, the right of a Party and its Affiliates to use items of confidential information, materials and know-how as stated in this Agreement shall not be restricted by such Confidentiality Agreement within the scope of a right or license granted hereunder to such Party and its Affiliates and instead the Parties’ (and their Affiliates’) rights stated in this Agreement shall prevail. This Agreement and the Exclusive License Agreement between Green Cross and RBG and the Trademark Assignment Agreement both signed on the Closing Date together state the Parties entire agree

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