Document:

exv10w33

 

[ * ] = 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 10.33

LOAN AGREEMENT

     LOAN AGREEMENT (this “Agreement”), dated as of July 18, 2007, between Dynavax
Technologies Corporation, a Delaware corporation (the “Borrower”), Deerfield Private Design Fund,
L.P., (“Deerfield Private Design”) Deerfield Special Situations Fund, L.P., Deerfield Special
Situations Fund International Limited and Deerfield Private Design International, L.P. (each a
“Lender” and, together the “Lenders” and together with the Borrower, the “Parties”).

W I T N E S S E T H:

     WHEREAS, the Borrower wishes to borrow from the Lenders the principal amount of up to thirty
million Dollars ($30,000,000), without interest, for the purposes described in Section 2.1; and

     WHEREAS, the Lenders desire on the terms hereinafter set forth to make loans to the Borrower
from time to time for such purposes;

     NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the Lenders and
the Borrower agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.1 General Definitions. Wherever used in this Agreement, or the Exhibits or
Schedules attached hereto, unless the context otherwise requires, the following terms have the
following meanings:

     “Additional Amounts” has the meaning given to it in Section 2.7(b).

     “Affiliate” means, with respect to a Party, any person, corporation, partnership or
other entity that directly or indirectly controls or is controlled by or is under common control
with such Party. For purposes of this definition, the term “control” (including, with correlative
meaning, the terms “controlled by” or “under common control with”) means the actual power, either
directly or indirectly through one or more intermediaries, to direct or cause the direction of the
management and policies of such entity, whether by the ownership of fifty percent (50%) or more of
the voting stock of such entity, or by contract or otherwise.

     “Available Cash” means cash, cash equivalents and short-term investments set forth in
the balance sheet of the Borrower.

 

			
	[ * ] =	 	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.

 

 

     “Business Day” means a day on which banks are open for business in The City of New
York.

     “Chamber Study” means a randomized, double-blind, placebo-controlled, parallel study.
Approximately 300 subjects will be randomized to receive either Tolamba or placebo treatments to
evaluate the efficacy of Tolamba to control symptoms of ragweed-induced allergic rhinitis in the
Environmental Exposure Chamber (EEC).

     “Commitment Fee” has the meaning given to it in Section 2.4.

     “Commitment Period Expiration Date” means the earliest to occur of (a) the Final
Payment Date and (b) the date on which any Commitment Termination Event occurs.

     “Commitment Termination Event” means: (a) the occurrence of any Event of Default as
each such Event of Default is described in Section 6.1; (b) upon notice by the Borrower to
Deerfield Private Design effective on any date set forth in such notice after the release of the
Chamber Study.

     “Common Stock” means the publicly traded common stock of the Borrower.

     “Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse
by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii)
any obligations with respect to undrawn letters of credit issued for the account of that Person;
and (iii) all obligations arising under any interest rate, currency or commodity swap agreement,
interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency exchange rates or
commodity prices; provided, however, that the term “Contingent Obligation” shall not include
endorsements for collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of
the primary obligation in respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as determined by such
Person in good faith; provided, however, that such amount shall not in any event exceed the maximum
amount of the obligations under the guarantee or other support arrangement.

     “Default” means any event which, at the giving of notice, lapse of time or fulfillment
of any other applicable condition (or any combination of the foregoing), would constitute an Event
of Default.

     “Disbursement” has the meaning given to it in Section 2.2(a).

     “Disbursement Date” means the date on which a Disbursement occurs.

     “Disbursement Request” has the meaning given to it in Section 2.2(a).

 

			
	[ * ] =	 	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.

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     “Dollars” and the “$” sign mean the lawful currency of the United States of
America.

     “Event of Default” has the meaning given to it in Section 6.1.

     “Evidence of Disbursement” has the meaning given to it in Section 2.2(a).

     “Excluded Taxes” means all income taxes, minimum or alternative minimum income taxes,
withholding taxes imposed on gross amounts, any tax determined based upon income, capital gains,
gross income, sales, net profits, windfall profits or similar items, franchise taxes (or any other
tax measured by capital, capital stock or net worth), gross receipts taxes, branch profits taxes,
margin taxes (or any other taxes imposed on or measured by net income, or imposed in lieu of net
income) payable by the Lenders in any jurisdiction to any Governmental Authority (or political
subdivision or taxing authority thereof) in connection with any payments received under this
Agreement by the Lenders, or any such tax imposed in connection with the execution and delivery of,
and the performance of its obligations under, this Agreement.

     “Field Study” means a single blind observational study to assess the efficacy of
Tolamba versus placebo in the control of symptoms of allergic rhinitis during the natural ragweed
season in [ * ]. 

     “Final Payment” means such amount as may be necessary to repay the outstanding
principal of the Loan (together with any other amounts accrued under this Agreement) to the Lenders
pursuant to this Agreement.

     “Final Payment Date” means the earlier of (i) the date on which the Borrower repays
the outstanding principal of the Loan (together with any other amounts accrued under this
Agreement) to the Lenders or (ii) July 18, 2010.

     “Financing Documents” means this Agreement, the Note, the Registration Rights
Agreement, the Warrants and any other document or instrument delivered in connection with any of
the foregoing whether or not specifically mentioned herein or therein.

     “GAAP” means generally accepted accounting principles in the United States of America
in effect from time to time, and applied on a consistent basis.

     “Government Authority” means any government, governmental department, ministry,
cabinet, commission, board, bureau, agency, tribunal, regulatory authority, instrumentality,
judicial, legislative, fiscal, or administrative body or entity, domestic or foreign, federal,
state or local having jurisdiction over the matter or matters and Person or Persons in question,
including, without limitation, the Food and Drug Administration and the Securities and Exchange
Commission.

     “Indebtedness” means (a) all indebtedness for borrowed money, including without
limitation reimbursement and other obligations with respect to surety bonds and letters of credit,
(b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital
lease obligations, and (d) all Contingent Obligations, if any.

 

			
	[ * ] =	 	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.

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     “Indemnified Person” has the meaning given to it in Section 7.12.

     “Indemnity” has the meaning given to it in Section 7.12.

     “Lien” means any lien, pledge, preferential arrangement, mortgage, security interest,
deed of trust, charge, assignment, hypothecation, title retention, privilege or other encumbrance
on or with respect to property or interest in property having the practical effect of constituting
a security interest with respect to the payment of any obligation with, or from the proceeds of,
any asset or revenue of any kind.

     “Loan” means the loan to be made available by the Lenders to the Borrower pursuant to
Section 2.2 in the maximum aggregate amount of thirty million Dollars ($30,000,000) or, as the
context may require, the then outstanding principal amount.

     “Loss” has the meaning given to it in Section 7.12.

     “Material Adverse Effect” means a material adverse effect on (a) the business,
operations, prospects, condition (financial or otherwise) or property related to the Milestone
Products; (b) the validity or enforceability of any provision of any Financing Document; (c) the
ability, including, without limitation, the financial ability of the Borrower to timely perform its
obligations under each Financing Document; or (d) the rights and remedies of the Lenders under any
of the Financing Documents.

     “Milestones” mean the numbered event or events set forth on Exhibit B.

     “Milestone Products” means the products described in Exhibit B.

     “Note” means the Note attached to this Agreement as Exhibit A.

     “Obligations” means all obligations (monetary or otherwise) of the Borrower arising
under or in connection with the Financing Documents.

     “Organizational Documents” means the Certificate of Incorporation and By-laws of the
Borrower.

			
	     “Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lenders
arising under this Agreement or any other Financing Document; (ii) Indebtedness existing as of the
date hereof (which the Borrower represents to not be in excess of $15,000,000); (iii) Indebtedness
(not including the Loan) not to exceed [ * ] in the aggregate in any fiscal year of Borrower
secured by a lien described in clause (iv) of the defined term “Permitted Liens,” provided such
Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed
with such Indebtedness; (iv) Subordinated Debt; (v) Indebtedness to trade creditors incurred in the
ordinary course of business; and (vi) extensions, refinancings and renewals of any items of
Permitted Indebtedness, provided that the principal amount is not increased or the terms modified
to impose more burdensome terms upon Borrower.

 

			
	[ * ] =	 	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.

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     “Permitted Liens” means: (i) statutory Liens created by operation of applicable law;
(ii) Liens arising in the ordinary course of business and securing obligations that are not overdue
or are being contested in good faith by appropriate proceedings; (iii) Liens for Taxes not yet due
and payable or that are being contested in good faith by appropriate proceedings; (iv) Liens upon
or in any equipment acquired or held by Borrower (a) to secure the purchase price of such equipment
or indebtedness incurred solely for the purpose of financing the acquisition or lease of such
equipment, or (b) existing on such equipment at the time of its acquisition, provided that the Lien
is confined solely to the property so acquired and improvements thereon, and the proceeds of such
equipment; (v) Liens incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clause (iv) above, provided that any
extension, renewal or replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not
increase; (vi) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default; (vi) non-exclusive licenses or sublicenses and exclusive licenses
granted in the ordinary course of Borrower’s business and, with respect to any licenses where
Borrower is the licensee or sublicensee, any interest or title of a licensor or sublicensor under
any such license or sublicense; (vii) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), contracts for the purchase of property, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in
each case, incurred in the ordinary course of business and not representing an obligation for
borrowed money; and (viii) Liens in favor of financial institutions arising in connection with
Borrower’s accounts maintained in the ordinary course of Borrower’s business held at such
institutions to secure standard fees for services charged by, but not financing made available by,
such institutions.

     “Person” means and includes any natural person, individual, partnership, joint
venture, corporation, trust, limited liability company, limited company, joint stock company,
unincorporated organization, government entity or any political subdivision or agency thereof, or
any other entity.

     “Primary Endpoint of the Chamber Study or Field Study” means a [ * ] reduction in the
change from baseline of Total Nasal Symptom Score compared with the placebo group with p [ * ].

     “Registration Rights Agreement” means the Registration Rights Agreement, dated as of
the date hereof, by and between the Borrower, the Deerfield Entities (as such term in defined in
the Registration Rights Agreement) and the Lenders.

     “Subordinated Debt” means any debt incurred by Borrower that is subordinated in
writing to the debt owing by Borrower to Lenders pursuant to a Subordination Agreement in
substantially the form of Exhibit D attached hereto (and identified as being such by Borrower and
Deerfield Private Design).

     “Subordination Agreement” means the Subordination Agreement attached hereto as
Exhibit D.

 

			
	[ * ] =	 	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.

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     “Subsidiary or Subsidiaries” means, as to Borrower, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are at the time directly or
indirectly owned by such Borrower.

     “Taxes” means all deductions or withholdings for any and all present and future taxes,
levies, imposts, stamp or other duties, fees, assessments, deductions, withholdings, all other
governmental charges, and all liabilities with respect thereto.

     “Warrants” means the warrants attached hereto as Exhibit C-1 and C-2 issued pursuant
to Section 2.9.

     Section 1.2 Interpretation. In this Agreement, unless the context otherwise requires, all
words and personal pronouns relating thereto shall be read and construed as the number and gender
of the party or parties requires and the verb shall be read and construed as agreeing with the
required word and pronoun; the division of this Agreement into Articles and Sections and the use of
headings and captions is for convenience of reference only and shall not modify or affect the
interpretation or construction of this Agreement or any of its provisions; the words “herein,”
“hereof,” “hereunder,” “hereinafter” and “hereto” and words of similar import refer to this
Agreement as a whole and not to any particular Article or Section hereof; the words “include,”
“including,” and derivations thereof shall be deemed to have the phrase “without limitation”
attached thereto unless otherwise expressly stated; references to a specified Article, Exhibit,
Section or Schedule shall be construed as a reference to that specified Article, Exhibit, Section
or Schedule of this Agreement; and any reference to this Agreement or any of the Financing
Documents means such agreement or document as the same shall be amended, supplemented or modified
and from time to time in effect.

     Section 1.3 Business Day Adjustment. Where the day by which a payment is due to be made is
not a Business Day, that payment shall be made by the next succeeding Business Day unless that next
succeeding Business Day falls in a different calendar month, in which case that payment shall be
made by the Business Day immediately preceding the day by which such payment is due to be made.

ARTICLE II

AGREEMENT FOR THE LOAN

     Section 2.1 Use of Proceeds. The Borrower shall use the Loan proceeds to engage in any
activities related to the preclinical and clinical development of the products identified in the
Milestone Products.

     Section 2.2 Disbursements.

     (a) Subject to satisfaction of the conditions contained in Article IV, a disbursement
of a portion of the Loan (each a “Disbursement”) in an amount determined in
accordance with Exhibit B for each Milestone shall be made when indicated on Exhibit B for
such Milestone upon the Borrower’s request (a “Disbursement Request”) in

 

			
	[ * ] =	 	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.

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the form of Schedule 1, delivered to Deerfield Private Design not less than
five Business Days prior to the proposed date of such Disbursement. Against each
Disbursement, the Borrower shall deliver to Deerfield Private Design a completed receipt
(the “Evidence of Disbursement”) in the form of Schedule 2, which receipt
shall not be effective until the Disbursement is actually advanced to the Borrower.

     (b) The Lenders shall not be required to make any Disbursement if (i) the Commitment
Period Expiration Date shall have occurred, or (ii) after giving effect thereto, the
aggregate outstanding principal amount of the Loan would exceed $30,000,000.

     (c) The Lenders shall not be required to make the Disbursements related to the Tolamba
Payments described in Items 4 and 5 of Exhibit B if the Primary Endpoint of the Chamber
Study is not achieved or subsequent to Borrower’s decision to permanently discontinue the
development of Tolamba.

Section 2.3 Repayment.

     (a) Except as may be [ * ] by Section 2.4, the Borrower shall remit the Final Payment
to Lenders on the earlier to occur of (i) the Final Payment Date and (ii) a Commitment
Termination Event, it being understood that a repayment after a Commitment Termination Event
will be within 3 Business Days of the occurrence of such Commitment Termination Event.

     (b) Notwithstanding 2.3(a), (A) If the Chamber Study is completed and the Primary
Endpoint of the Chamber Study is not achieved, then the outstanding principal amount of the
Loan shall be reduced by the lesser of (i) [ * ] and (ii) [ * ]; and (B) if Borrower decides
to permanently discontinue the development of Tolamba (a “Tolamba Discontinuance”)
after the results of the Field Study have been collected by the Borrower then the
outstanding principal amount of the Loan shall be reduced by the lesser of (i) [ * ] and
(ii) $9,000,000.

     Section 2.4 Commitment Fee. Until the Final Payment Date, the Borrower shall pay a quarterly
fee (the “Commitment Fee”) to the Lenders in the amount of $442,500 by the thirtieth day
after the end of each of the Borrower’s fiscal quarters to an account or accounts by wire transfer
specified by Deerfield Private Design in writing to Borrower; provided, however, that during the
fiscal quarter in which this Agreement is executed and if this Agreement is terminated on a day
other than the last day of any fiscal quarter, the Commitment Fee shall be pro-rated for the period
of such fiscal quarter that this Agreement was in effect. Borrower shall make 12 total payments of
the Commitment Fee, with the first payment coming due on October 31, 2007. If a Commitment
Termination Event occurs by notice by the Borrower by the earliest to occur of (a) [ * ] and (b) [
* ], the Lenders shall [ * ].

     Section 2.5 Payments. Payments of any amounts due to the Lenders under this Agreement shall
be made in Dollars in immediately available funds prior to 11:00 a.m. New York City time on such
date that any such payment is due, in such place or places, as Deerfield

 

			
	[ * ] =	 	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.

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Private Design shall from time to time designate in writing. The Borrower shall pay all and
any costs (administrative or otherwise) imposed by banks, clearing houses, or any other financial
institution, in connection with making any payments under any of the Financing Documents, except
for any costs imposed by the Lenders’ banking institutions.

     Section 2.6 Optional Prepayment. Upon the conclusion of the Chamber Study, Borrower may, upon
three Business Day’s written notice to Deerfield Private Design, prepay the total, but not less
than the total, of the Final Payment calculated as of the date written notice is sent to Deerfield
Private Design. If Borrower elects to make such prepayment at a time when Commitment Fees already
paid to the Lenders would be required to be [ * ], the total amount of the Final Payment that would
otherwise be payable at that time will be [ * ]. Upon remittance of such payment in accordance
with Section 2.5, this Agreement shall be terminated.

     Section 2.7 Taxes, Duties and Fees.

     (a) The Borrower shall pay or cause to be paid all present and future Taxes (other than
Excluded Taxes, if any), duties, fees and other charges of whatsoever nature, if any, now or
at any time hereafter levied or imposed by any Government Authority, by any department,
agency, political subdivision or taxing or other authority thereof or therein, by any
organization of which the applicable Government Authority is a member, or by any
jurisdiction through which the Borrower makes payments hereunder, on or in connection with
the payment of any and all amounts due under this Agreement, and all payments of principal
and other amounts due under this Agreement shall be made without deduction for or on account
of any such Taxes, duties, fees and other charges, except for Excluded Taxes, which may be
deducted or withheld from payments made by the Borrower only if such deduction or
withholding is required by applicable law.

     (b) If the Borrower is required to withhold any such amount or is prevented by
operation of law or otherwise from paying or causing to be paid such Taxes, duties, fees or
other charges as aforesaid except for Excluded Taxes, the principal and other amounts due
under this Agreement (as applicable) shall be increased to such amount as shall be necessary
to yield and remit to the Lenders the full amount they would have received taking into
account any such Taxes (except for Excluded Taxes), duties, fees or other charges payable on
amounts payable by the Borrower under this Section 2.7(b) had such payment been made without
deduction of such Taxes, duties, fees or other charges (all and any of such additional
amounts, herein referred to as the “Additional Amounts”).

     (c) If Section 2.7(b) above applies and Deerfield Private Design so requires, the
Borrower shall deliver to the Lenders official tax receipts evidencing payment (or certified
copies of them) of the Additional Amounts within thirty (30) days of the date of payment.

     (d) If any Lender receives a refund from a Government Authority to which the Borrower
has paid withholding Taxes pursuant to this Section 2.7, such Lender shall pay such refund
to the Borrower.

 

			
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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.

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     Section 2.8 Costs, Expenses and Losses. If, as a result of any failure by the Borrower to pay
any sums due under this Agreement on the due date therefor, or to borrow in accordance with a
request for Disbursement made pursuant to Section 2.2, any Lender shall incur costs, expenses
and/or losses, by reason of the liquidation or redeployment of deposits from third parties or in
connection with obtaining funds to make or maintain any Disbursement that such Lender would not
otherwise have incurred, the Borrower shall pay to such Lender upon request by such Lender, the
amount of such documented costs, expenses and/or losses within fifteen (15) days after receipt by
it of a certificate from such Lender setting forth in reasonable detail such costs, expenses and/or
losses along with supporting documentation. For the purposes of the preceding sentence, “costs,
expenses and/or losses” shall include, without limitation, any interest paid or payable to carry
any unpaid amount and any loss, premium, penalty or expense which may be incurred in obtaining,
liquidating or employing deposits of or borrowings from third parties in order to make, maintain or
fund the Loan or any portion thereof.

     Section 2.9 Delivery of Warrants. Upon satisfaction of each condition set forth in Exhibit
C, the Borrower shall issue to the Lenders, on the date such condition has been satisfied, Warrants
to purchase the number of shares of its Common Stock set forth opposite such condition and in the
proportions set forth therein (such amounts of Common Stock, the “Exercise Shares”). Except
as set forth below, the Warrants shall be in the form annexed hereto as Exhibit C-1. The Exercise
Price (as such term is defined in the Warrants) of each Warrant shall be (i) $5.13 in the case of
the Warrants issued on the date of this agreement and (ii) in the case of the other Warrants 120%
of the average of the “Volume Weighted Average Price” of the Common Stock for each of the 15
consecutive trading days ending on the trading day immediately preceding the date of issuance. As
used herein, the “Volume Weighted Average Price” for the Common Stock as of any date means the
daily volume weighted average price (based on a Trading Day from 9:30 a.m. to 4:00 p.m. (New York
time)) of the Common Stock on the NASDAQ Global Market (“NASDAQ”) as reported by Bloomberg
Financial L.P. using the AQR function or an equivalent, reliable reporting service mutually
acceptable to and hereafter designated by Deerfield Private Design and the Borrower (“Bloomberg”)
or, if NASDAQ is not the principal trading market for the Common Stock, the volume weighted average
sale price of the Common Stock on the principal securities exchange or trading market where the
Common Stock is listed or traded as reported by Bloomberg, or, if no volume weighted average sale
price is reported for the Common Stock, then the last closing trade price of the Common Stock as
reported by Bloomberg, or, if no last closing trade price is reported for the Common Stock by
Bloomberg, the average of the bid prices of any market makers for the Common Stock in the over the
counter market maintained by the National Association of Securities Dealers or in the “pink sheets”
maintained by the National Quotation Bureau, Inc. If the Volume Weighted Average Price cannot be
calculated for the Common Stock on such date in the manner provided above, the Volume Weighted
Average Price shall be the fair market value as mutually determined by the Borrower and Deerfield
Private Design. If any of the Lenders or any transferee of a Warrant delivers to the Borrower the
written notice referred to in Section 1 of the Warrant annexed hereto as Exhibit C-1, then all
Warrants thereafter issued to such Lender or such transferee shall be in the form annexed hereto at
Exhibit C-2.

 

			
	[ * ] =	 	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.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

     Section 3.1 Representations and Warranties of the Borrower. The Borrower represents and
warrants to the Lenders as of the date hereof and as of each Disbursement Date, except as limited
by the last sentence of Section 3.4 below, as follows:

     (a) The Borrower is a corporation duly organized and validly existing under the laws of
the State of Delaware.

     (b) The Borrower is conducting its business in compliance with its Organizational
Documents. The Organizational Documents of the Borrower (including all amendments thereto)
as currently in effect have been furnished to Deerfield Private Design and remain in full
force and effect with no defaults outstanding thereunder.

     (c) The Borrower has full power and authority to enter into each of the Financing
Documents and to make the borrowings and the other transactions contemplated thereby.

     (d) All authorizations, consents, approvals, registrations, exemptions and licenses
that are necessary for the borrowing hereunder, the execution and delivery of the Financing
Documents and the performance by the Borrower of its obligations thereunder, have been
obtained and are in full force and effect.

     (e) All authorizations, consents, approvals, registrations, exemptions and licenses
with or from Government Authorities that are necessary for the conduct of its business as
currently conducted and as proposed to be conducted have been obtained and are in full force
and effect, except to the extent any failure to so obtain (i) would not be material to the
business of the Borrower; (ii) would not materially adversely affect the business, financial
position or results of operations or the Borrower or (iii) would not materially adversely
affect the rights and remedies of the Lenders hereunder or under any of the Financing
Documents.

     (f) Each Financing Document has been duly authorized, executed and delivered by the
Borrower, is in full force and effect and constitutes the valid and legally binding
obligation of the Borrower, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization,
moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable
equitable principles (whether considered in a proceeding at law or in equity).

     (g) No Default or Event of Default (or any other default or event of default, however
described) has occurred under any of the Financing Documents.

     (h) Neither the entering into any of the Financing Documents nor the compliance with
any of its terms conflicts with, violates or results in a breach of any of

 

			
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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.

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the terms of, or constitutes a default or event of default (however described) or
requires any consent under, to the extent applicable, (i) any agreement or to which the
Borrower is a party or by which it is bound, (ii) any of the terms of the Organizational
Documents or (iii) any judgment, decree, resolution, award or order or any statute, rule or
regulation applicable to the Borrower or its assets, except, with respect to (i) herein, for
any contravention of or default under any agreement that (x) would not be material to the
business of the Borrower; (y) would not materially adversely affect the business, financial
position or results of operations of the Borrower or (z) would not materially adversely
affect the rights and remedies of the Lenders hereunder or under any of the Financing
Documents

     (i) The Borrower is not engaged in, or a party to any litigation, arbitration,
administrative regulatory compliance proceedings, or investigations, nor are there any
litigation, arbitration, administrative regulatory compliance proceedings or investigations
pending or, to the knowledge of the Borrower, threatened before any court or arbitrator or
before or by any Government Authority against the Borrower that would materially impair
Borrower’s ability to comply with the terms of this Agreement, and the Borrower is not aware
of any facts likely to give rise to any such proceedings.

     (j) The Borrower (i) is capable of paying its debts as they come due and is not unable
and has not admitted its inability to pay debts as they come due, (ii) is not bankrupt or
insolvent and (iii) has not taken action, and no such action has been taken by a third
party, for the Borrower’s winding up, dissolution, or liquidation or similar executory or
judicial proceeding or for the appointment of a liquidator, custodian, receiver, trustee,
administrator or other similar officer for the Borrower or any or all of its assets or
revenues.

     (k) No Lien exists on Borrower’s property, except for Permitted Liens.

     (l) The obligation of the Borrower to make any payment under this Agreement (together
with all charges in connection therewith) is absolute and unconditional, and, except as
expressly provided for in Sections 2.4 and 2.6 of this Agreement, there exists no right of
setoff or recoupment, counterclaim, cross-claim or defense of any nature whatsoever to any
such payment.

     Section 3.2 Borrower Acknowledgment. The Borrower acknowledges that it has made the
representations and warranties referred to in Section 3.1 with the intention of persuading the
Lenders to enter into the Financing Documents and that the Lenders have entered into these
Financing Documents on the basis of, and in full reliance on, each of such representations and
warranties. The Borrower represents and warrants to the Lenders that none of such representations
and warranties omits any matter the omission of which makes any of such representations and
warranties misleading.

     Section 3.3 Representations and Warranties of the Lenders. Each of the Lenders represents and
warrants to the Borrower as of the date hereof and as of each date Warrants are granted pursuant to
this Agreement as follows:

 

			
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24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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     (a) That it is acquiring the Warrants and the Exercise Shares solely for its account
for investment and not with a view to or for sale or distribution of said Warrants or
Exercise Shares or any part thereof. Each of the Lenders also represents that the entire
legal and beneficial interests of the Warrants and Exercise Shares such Lender is acquiring
is being acquired for, and will be held for, its account only.

     (b) That the Warrants and the Exercise Shares have not been registered under the
Securities Act of 1933, as amended (the “Act”) on the basis that no distribution or public
offering of the stock of the Borrower is to be effected. Each of the Lenders realizes that
the basis for the exemption may not be present if, notwithstanding its representations, such
Lender has a present intention of acquiring the securities for a fixed or determinable
period in the future, selling (in connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the securities. None of the Lenders has such
present intention.

     (c) That the Warrants and the Exercise Shares must be held indefinitely unless they are
subsequently registered under the Act or an exemption from such registration is available.
Each of the Lenders recognizes that the Borrower has no obligation to register the Warrants,
or to comply with any exemption from such registration.

     (d) That neither the Warrants nor the Exercise Shares may be sold pursuant to Rule 144
adopted under the Act unless certain conditions are met, including, among other things, the
existence of a public market for the shares, the availability of certain current public
information about the Borrower, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not exceeding
specified limitations.

     (e) That no Lender will make any disposition of all or any part of the Warrants or
Exercise Shares in any event unless and until:

     (i) The Borrower shall have received a letter secured by such Lender from the
Securities and Exchange Commission stating that no action will be recommended to the
Commission with respect to the proposed disposition;

     (ii) There is then in effect a registration statement under the Act covering such
proposed disposition and such disposition is made in accordance with said registration
statement; or

     (iii) Such Lender shall have notified the Borrower of the proposed disposition
and, in the case of a sale or transfer in a so called “4(1) and a half” transaction,
shall have furnished counsel for the Borrower with an opinion of counsel,
substantially in the form annexed as Exhibit C to the Warrant annexed hereto as
Exhibit C-1. The Borrower agrees that it will not require an opinion of counsel with
respect to transactions under Rule 144 of the Securities Act of 1933, as amended,
except in unusual circumstances.

 

			
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24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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     (f) That it understands and agrees that all certificates evidencing the shares to be
issued to the Lenders may bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT INCLUDING, WITHOUT LIMITATION, PURSUANT TO RULES 144 OR 144A
UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL
SEC INTERPRETATION OR GUIDANCE, SUCH AS A SO-CALLED “4(1) AND A HALF” SALE.”

“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS
OF JULY 18, 2007, AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF
ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
COMPANY.”

     (g) That each Lender is an “accredited investor” as defined in Regulation D promulgated
under the Act.

     (h) Each of the Lenders is a Limited Partnership duly organized and validly existing
under the laws of the State of its formation.

     (i) That each of the Lenders has and at all times shall maintain sufficient Dollars to
fund the Disbursements.

     Section 3.4 Lender Acknowledgment. Each of the Lenders acknowledges that it has made the
representations and warranties referred to in Section 3.3 with the intention of persuading the
Borrower to enter into the Financing Documents and that the Borrower has entered into these
Financing Documents on the basis of, and in full reliance on, each of such representations and
warranties. Each of the Lenders represents and warrants to the Borrower that none of such
representations and warranties omits any matter the omission of which makes any of such
representations and warranties misleading. Each of the Lenders also acknowledges that the
representations and warranties made by the Borrower in Section 3.1, to the extent that they pertain
to the Warrants or the Registration Rights Agreement (with the exception of Subsection (f) of
Section 3.1), are made solely to the extent, and will only survive for so long as, any the Lender
or any of the Deerfield Entities (as such term is defined in the Registration Rights Agreement)
remains a party to the Registration Rights Agreement or a Warrant.

 

			
	[ * ] =	 	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.

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ARTICLE IV

CONDITIONS OF DISBURSEMENTS

     Section 4.1 Conditions to Initial Disbursement of the Loan. The obligation of the Lenders to
make the initial Disbursement of the Loan shall be subject to the fulfillment of the following
conditions:

     (a) Deerfield Private Design shall have received a copy of all documents authorizing
the Borrower to execute, deliver and perform each of the Financing Documents and to engage
in the transactions contemplated thereby and an opinion of Borrower’s counsel satisfactory
to Deerfield Private Design.

     (b) Each of the Financing Documents shall have been duly executed and delivered by the
Borrower and the Lenders and shall be in full force and effect and the Borrower shall be in
compliance with all the terms thereof.

     Section 4.2 Conditions to All Disbursements of the Loan. The obligation of the Lenders to
make any Disbursement of the Loan shall be subject to the fulfillment of the following conditions;
provided, however, such conditions, to the extent that they pertain to the Warrants or the
Registration Rights Agreement, are made solely to the extent, and will only survive for so long as,
any the Lenders or any of the Deerfield Entities (as such term is defined in the Registration
Rights Agreement) remains a party to the Registration Rights Agreement or a Warrant:

     (a) The Borrower shall have delivered to Deerfield Private Design a Disbursement
Request not less than five Business Days prior to the proposed Disbursement Date.

     (b) The Borrower shall have delivered to Deerfield Private Design the relevant Evidence
of Disbursement duly executed by the Borrower, provided that such receipt shall not be
effective until the Disbursement is actually advanced to the Borrower.

     (c) The Borrower shall have complied with and shall be in compliance with all the terms
of the Financing Documents.

     (d) No Default or Event of Default shall have occurred.

     (e) No Material Adverse Effect shall have occurred and be continuing.

     (f) The representations and warranties made in each Financing Document shall be true on
and as of the Disbursement Date with the same effect as though such representations and
warranties had been made on and as of the Disbursement Date.

     (g) The Borrower shall have delivered to Deerfield Private Design such evidence as to
the satisfaction of the applicable Milestone as Deerfield Private Design shall have
reasonably requested.

 

			
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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.

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     Section 4.3 Effect of Disbursement Request. The delivery of a Disbursement Request and the
acceptance by the Borrower of the proceeds of such Disbursement shall constitute a representation
and a warranty by the Borrower that on the date of such Disbursement (both immediately before and
after giving effect to such Disbursement and the application of the proceeds thereof) the
representations and warranties of the Borrower for each Financing Document are true and correct.

     Section 4.4 Saving Rights.

     (a) No course of dealing or waiver by the Lenders in connection with any condition of
Disbursement under this Agreement shall impair any right, power or remedy of the Lenders
with respect to any other condition of Disbursement, or be construed to be a waiver thereof;
nor shall the action of the Lenders in respect of any Disbursement affect or impair any
right, power or remedy of the Lenders in respect of any other Disbursement.

     (b) Unless otherwise notified by the Borrower and without prejudice to the generality
of this Section 4.4, the right of the Lenders to require compliance with any condition under
this Agreement which may be waived by the Lenders in respect of any Disbursement is
expressly preserved for the purposes of any subsequent Disbursement.

ARTICLE V

PARTICULAR COVENANTS

     Section 5.1 Affirmative Covenants. Unless Deerfield Private Design shall otherwise agree:

     (a) The Borrower shall (i) maintain its existence and qualify and remain qualified to
do its business as currently conducted; (ii) maintain all approvals necessary for the
Financing Documents; and (iii) operate its business with due diligence, efficiency and in
conformity with the general business practices now conducted by Borrower.

     (b) The Borrower shall comply in all material respects with all applicable laws, rules,
regulations and orders of any Government Authority, except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings or where the failure to so
comply, individually or in the aggregate, would not have a material adverse effect on the
business, financial position or results of operations of the Borrower.

     (c) The Borrower shall maintain Available Cash, at all times, in an amount no less than
the principal amount then outstanding under the terms of this Agreement.

     (d) The Borrower shall obtain, make and keep in full force and effect all licenses,
contracts, consents, approvals and authorizations from and registrations with Government
Authorities that may be required to conduct its business.

 

			
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24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

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     (e) The Borrower shall promptly notify Deerfield Private Design of the occurrence of
(i) any Default or Event of Default; (ii) any claims, litigation, arbitration, mediation or
administrative or regulatory proceedings that are instituted or threatened against the
Borrower with regard to the Milestone Products; and (iii) each event which, at the giving of
notice, lapse of time, determination of materiality or fulfillment of any other applicable
condition (or any combination of the foregoing), would constitute an event of default
(however described) under any of the Financing Documents.

     (f) The Borrower shall use reasonable commercial efforts to carry out the development
program contemplated by the Milestones.

     (g) The Borrower shall comply with the terms of each of the Financing Documents.

     (h) (i) The Borrower will provide quarterly financials for itself and its Subsidiaries
within 45 days after the end of each quarter, and annual financials within 120 after the end
of each year; (ii) the Borrower will provide any annual reports, quarterly reports and other
periodic reports pursuant to Section 13 or 15(d) of the Exchange Act actually prepared by
the Borrower as soon as available; (iii) the Borrower and its Subsidiaries will provide to
Deerfield Private Design copies of all documents, reports, financial data and other
information as Deerfield Private Design may reasonably request, and permit the Lenders to
visit and inspect any of the properties of the Borrower and its Subsidiaries, and to discuss
its and their affairs, finances and accounts with its and their officers, all at such times
as Deerfield Private Design may reasonably request; and (iv) Lenders shall have the right to
consult with and advise the management of the Borrower and its Subsidiaries on matters
relating to the operation of the Borrower and its Subsidiaries.

     Section 5.2 Negative Covenants. Unless Deerfield Private Design shall otherwise agree:

     (a) The Borrower shall not undertake or permit any (i) conversion of the Borrower into
another form; or (ii) any sale, transfer, lease or exchange or other action with respect to
the disposal of, or disposition of rights to, any assets or business lines of the Borrower
that are necessary for the development of the Milestone Products in a single transaction or
series of transactions; provided, however, Borrower may enter into any collaborative
arrangement, licensing agreement, joint venture or partnership providing for the development
or commercial exploitation of the technology or products of the Borrower whereby its income
or profits are, or might be shared with any other Person .

     (b) The Borrower shall not liquidate or dissolve or enter into any consolidation,
merger, spin-off or reorganization, or acquire the assets or stock of any other business or
company or enter into any partnership, joint venture, syndicate, pool, profit-sharing or
royalty agreement or other combination, or engage in any transaction with an Affiliate,
whereby its income or profits are, or might be shared with any other Person, or enter into
any management contract or similar arrangement whereby its

 

			
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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.

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business or operations are managed by another Person; provided, however, Borrower may
enter into any collaborative arrangement, licensing agreement, joint venture or partnership
providing for the development or commercial exploitation of the technology or products of
the Borrower whereby its income or profits are, or might be shared with any other Person.

     (c) The Borrower shall not; (i) create, incur or suffer any Lien upon any of its
assets, now owned or hereafter acquired, except Permitted Liens; or (ii) assign, sell,
transfer or otherwise dispose of, any of the Financing Documents, or the rights and
obligations thereunder.

     (d) The Borrower shall not create, incur, assume, guarantee or be or remain liable with
respect to any Indebtedness, other than Permitted Indebtedness, or prepay any Indebtedness
or take any actions which impose on Borrower an obligation to prepay any Indebtedness,
except Indebtedness to Lenders.

     (e) The Borrower shall not make any payment in respect of any Subordinated Debt, except
in compliance with the terms of such Subordinated Debt, or amend any provision affecting any
of the Lender’s rights contained in any documentation relating to the Subordinated Debt
without Deerfield Private Design’s prior written consent.

     (f) The Borrower shall not sell, license, transfer, assign, encumber or otherwise
dispose of any ownership rights to the intellectual property relating to any of the
Milestone Products or any product developed from such intellectual property except in
connection with any collaborative arrangement, licensing agreement, joint venture or
partnership to develop or commercially exploit such Milestone Product or other products.

     Section 5.3 Reimbursement of Taxes. The Borrower shall pay all Taxes, duties, fees or other
charges payable on or in connection with the execution, issue, delivery, registration, notarization
or enforcement of the Financing Documents and shall, upon notice from Deerfield Private Design,
reimburse the Lenders for any such Taxes, duties, fees or other charges paid by the Lenders
thereon; provided, however, that notwithstanding the foregoing, under no circumstances shall the
Borrower have any obligation to reimburse the Lenders for Excluded Taxes.

ARTICLE VI

EVENTS OF DEFAULT

     Section 6.1 General Acceleration Provision upon Events of Default. If one or more of the
events specified in this Section 6.1 (each an “Event of Default”) shall have happened and
be continuing, Deerfield Private Design may cancel the Borrower’s right to request Disbursements
and declare the principal of, and all fees on, the Loan or any part of any of them (together with
any other amounts accrued or payable under this Agreement) to be, and the same shall thereupon
become, immediately due and payable without prepayment premium without any further notice and
without any presentment, demand or protest of any kind, all of which are

 

			
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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.

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hereby expressly waived by the Borrower, and take any further action available at law or in
equity, including, without limitation, the sale of the Loan and all other rights acquired in
connection with the Loan:

     (a) A Lender shall have failed to receive its respective Warrant when required to be
issued under this Agreement or payment when due of principal, Commitment Fee, or any other
amounts due under the Loan or the Note and any such failure shall not have been cured by the
Borrower within 3 Business Days after receiving written notice of such failure from
Deerfield Private Design.

     (b) The Borrower shall have defaulted or failed to comply in any material respect with
the due observance or performance of any covenant contained in this Agreement or the Note
and such default or failure to comply shall not have been cured by Borrower within 15 days
after receiving written notice of such default or failure from Deerfield Private Design.

     (c) Any representation or warranty made by the Borrower in any Financing Document shall
be found to have been incorrect, false or misleading in any material respect as of the date
it was made, deemed made, reaffirmed or confirmed.

     (d) (i) The Borrower shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts as they come due or shall make a
general assignment for the benefit of creditors; (ii) the Borrower shall declare a
moratorium on the payment of its debts; (iii) the commencement by the Borrower of
proceedings to be adjudicated bankrupt or insolvent, or the consent by it to the
commencement of bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization, intervention or other similar relief
under any applicable law, or the consent by it to the filing of any such petition or to the
appointment of an intervenor, receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) or of any substantial part of its assets; (iv) the commencement
against the Borrower or any substantial part of its assets of a proceeding in any court of
competent jurisdiction under any bankruptcy or other applicable law (as now or hereafter in
effect) seeking its liquidation, winding up, dissolution, reorganization, arrangement,
adjustment, or the appointment of an intervenor, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official), and any such proceeding shall continue
undismissed, or any order, judgment or decree approving or ordering any of the foregoing
shall continue unstayed or otherwise in effect, for a period of ninety (90) days; (v) the
making by the Borrower of an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debt generally as they become due; or (vi) any other
event shall have occurred which under any applicable law would have an effect analogous to
any of those events listed above in this subsection.

     (e) One or more judgments against the Borrower taken as a whole or attachments against
any of its property, which in the aggregate exceed three million Dollars ($3,000,000), or
which could reasonably expected to interfere materially and adversely with the conduct of
the business of the Borrower remain(s) unpaid, unstayed on

 

			
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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.

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appeal, undischarged, unbonded or undismissed for a period of thirty (30) days from the
date of entry of such judgment.

     (f) Any license, permit or approval held by the Borrower including, without limitation
from any Governmental Authority shall have been suspended, canceled or revoked and such
suspension, cancellation or revocation (i) could reasonably expected to interfere materially
and adversely with the conduct of the business of the Borrower and (ii) shall not have been
cured by Borrower within 15 days after receiving written notice of such default or failure
from Deerfield Private Design.

     (g) Any authorization necessary for the execution, delivery or performance of any
Financing Document or for the validity or enforceability of any of the Borrower’s
obligations under any Financing Document is not effected or given or is withdrawn or ceases
to remain in full force or effect.

     (h) The validity of or any Financing Document shall be contested by any legislative,
executive or judicial body of any jurisdiction, or any treaty, law, regulation, communiqué,
decree, ordinance or policy of any jurisdiction shall purport to render any material
provision of any Financing Document invalid or unenforceable or shall purport to prevent or
materially delay the performance or observance by the Borrower of its obligations hereunder
or thereunder (as applicable).

     (i) The Borrower has failed to comply with the requirements of the Securities and
Exchange Act of 1934 in a manner which could reasonably expected to interfere materially and
adversely with the conduct of the business of the Borrower.

     (j) If there is a default or other failure to perform in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such third party
or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an
amount in excess of $5,000,000.

     (k) If Borrower makes any payment on account of Subordinated Debt, except to the extent
the payment is allowed under any subordination agreement entered into with the Lenders.

     (l) If an Event of Default pursuant to the Warrants (as such term is defined in the
Warrants) shall have occurred, but only if a Lender or any of the Deerfield Entities (as
such term is defined in the Registration Rights Agreement) is a holder of any of the
Warrants at the time of such Event of Default.

     Section 6.2 Automatic Acceleration on Dissolution or Bankruptcy. Notwithstanding any other
provisions of this Agreement, if an Event of Default under Section 6.1(d) shall occur, the
principal of the Loan (together with any other amounts accrued or payable under this Agreement)
shall thereupon become immediately due and payable without any presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the Borrower.

 

			
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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.

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     Section 6.3 Recovery of Amounts Due. If any amount payable hereunder is not paid as and when
due, the Borrower hereby authorizes Deerfield Private Design to proceed, to the fullest extent
permitted by applicable law, without prior notice, by right of set-off, banker’s lien or
counterclaim, against any moneys or other assets of the Borrower to the full extent of all amounts
payable to the Lenders.

ARTICLE VII

MISCELLANEOUS

     Section 7.1 Notices. Any notice, request or other communication to be given or made under
this Agreement to the Borrower or Deerfield Private Design shall be in writing. Such notice,
request or other communication shall be deemed to have been duly given or made when it shall be
delivered by hand, international courier (confirmed by facsimile), or facsimile (with a hard copy
delivered within two (2) Business Days) to the Party to which it is required or permitted to be
given or made at such Party’s address specified below or at such other address as such Party shall
have designated by notice to the Party giving or making such notice, request or other
communication, it being understood that the failure to deliver a copy of any notice, request or
other communication to whom copies are to be sent shall not affect the validity of any such
notice, request or other communication or constitute a breach of this Agreement.

          For the Borrower:

2929 Seventh Street, Suite 100

Berkeley, CA 94710-2753

Attention: Chief Executive Officer

Facsimile: (510) 848-1327

          with a copy (which shall not constitute notice) to:

Cooley Godward Kronish LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA 94306-2155

Facsimile: 650-849-7400

Attention: Glen Sato, Esq.

          For Deerfield Private Design:

780 Third Avenue, 37th Floor

New York, New York 10017

Attention: James E. Flynn

Facsimile: (212) 573-8111

          with a copy (which shall not constitute notice) to:

 

			
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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.

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	 	Katten Muchin Rosenman LLP
	 

	 	575 Madison Avenue
	 

	 	New York, New York 10022-2585
	 

	 	Facsimile: (212) 894-5511
	 

	 	Attention: Robert I. Fisher

     Section 7.2 Waiver of Notice. Whenever any notice is required to be given to Deerfield
Private Design or the Borrower under the any of the Financing Documents, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.

     Section 7.3 Reimbursement of Legal and Other Expenses. If any amount owing to the Lenders
under any Financing Document shall be collected through enforcement of this Agreement, any
refinancing or restructuring of the Loan in the nature of a work-out, settlement, negotiation, or
any process of law, or shall be placed in the hands of third Persons for collection, the Borrower
shall pay (in addition to all monies then due in respect of the Loan or otherwise payable under any
Financing Document) all reasonable, documented attorneys’ and other fees and expenses incurred in
respect of such collection.

     Section 7.4 Applicable Law and Consent to Non-Exclusive New York Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of New York, United
States of America, without giving effect to the conflicts of laws principles thereof other than
Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York.

     (a) The Financing Documents, and any rights of the Lenders arising out of or relating
to any Financing Documents, may, at the option of Deerfield Private Design, be enforced by
Deerfield Private Design in the courts of the United States of America located in the
Southern District of the State of New York or in any other courts having jurisdiction. For
the benefit of the Lenders, the Borrower hereby irrevocably agrees that any legal action,
suit or other proceeding arising out of any Financing Document may be brought in the courts
of the State of New York or of the United States of America for the Southern District of New
York. By the execution and delivery of this Agreement, the Borrower hereby irrevocably
consents and submits to the jurisdiction of any such court in any such action, suit or other
proceeding. Final judgment against the Borrower in any such action, suit or other
proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment. Nothing contained in any Financing Document shall affect the right of the Lenders
to commence legal proceedings or otherwise sue the Borrower in any court having
jurisdiction, or concurrently in more than one jurisdiction, or to serve process, pleadings
and other legal papers upon the Borrower in any manner authorized by the laws of any such
jurisdiction.

     (b) The Borrower irrevocably waives, to the fullest extent permitted by applicable law,
any objection which it may now or hereafter have to the laying of venue of any action, suit
or other proceeding arising out of or relating to any Financing

 

			
	[ * ] =	 	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.

21

 

 

Document, brought in the
courts of the State of New York or in the United States District
Court for the Southern District of New York, and any claim that any such action, suit
or other proceeding brought in any such court has been brought in an inconvenient forum.

     (c) The Borrower hereby waives any and all rights to demand a trial by jury in any
action, suit or other proceeding arising out of any Financing Document or the transactions
contemplated by any Financing Document.

     (d) To the extent that the Borrower or Deerfield Private Design may, in any suit,
action or other proceeding brought in any court arising out of or in connection with any
Financing Document, be entitled to the benefit of any provision of law requiring the
Borrower or the Lenders, as applicable, in such suit, action or other proceeding to post
security for the costs of the Borrower or Deerfield Private Design, as applicable, or to
post a bond or to take similar action, the Borrower and Deerfield Private Design hereby
irrevocably waive such benefit, in each case to the fullest extent now or hereafter
permitted under any applicable laws.

     Section 7.5 Successor and Assigns. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of the Parties, except that the Borrower may not assign or
otherwise transfer all or any part of its rights or obligations under this Agreement without the
prior written consent of Deerfield Private Design. Notwithstanding the foregoing, nothing herein
shall be deemed to limit or otherwise restrict a merger, reorganization or sale of substantially
all of the assets of Borrower.

     Section 7.6 Entire Agreement. The Financing Documents contain the entire understanding of the
Parties with respect to the matters covered thereby and supersede any and all other written and
oral communications, negotiations, commitments and writings with respect thereto. The provisions
of this Agreement may be waived, modified, supplemented or amended only by an instrument in writing
signed by the authorized officer of each Party; provided, however, that any provision hereof that
is solely for the Lenders’ benefit may be waived by written instrument signed by an authorized
officer of such Lender.

     Section 7.7 Amendments. Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Borrower and Deerfield Private
Design.

     Section 7.8 Severability. If any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
The Parties shall endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

     Section 7.9 Counterparts. This Agreement may be executed in several counterparts, and by each
Party on separate counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.

 

			
	[ * ] =	 	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.

22

 

     Section 7.10 Survival.

     (a) This Agreement and all agreements, representations and warranties made in this
Agreement, and in any document, certificate or statement delivered pursuant thereto or in
connection therewith shall be considered to have been relied upon by the other Parties and
shall survive the execution and delivery of this Agreement and the making of the Loan
hereunder regardless of any investigation made by any such other Party or on its behalf, and
shall continue in force until all amounts payable under the this Agreement shall have been
fully paid in accordance with the provisions hereof and thereof, and the Lenders shall not
be deemed to have waived, by reason of making the Loan, any Default that may arise by reason
of such representation or warranty proving to have been false or misleading, notwithstanding
that the Lenders may have had notice or knowledge of any such Default or may have had notice
or knowledge that such representation or warranty was false or misleading at the time any
Disbursement was made hereunder.

     (b) The obligations of the Borrower under Sections 2.7 and 2.8 and the obligations of
the Borrower and the Lenders under this Article VII hereof shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loan, or the termination of this Agreement or any provision hereof.

     Section 7.11 Waiver. Neither the failure of, nor any delay on the part of, any Party in
exercising any right, power or privilege hereunder, or under any agreement, document or instrument
mentioned herein, shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder, or under any agreement, document or instrument mentioned
herein, preclude other or further exercise thereof or the exercise of any other right, power or
privilege; nor shall any waiver of any right, power, privilege or default hereunder, or under any
agreement, document or instrument mentioned herein, constitute a waiver of any other right, power,
privilege or default or constitute a waiver of any default of the same or of any other term or
provision. No course of dealing and no delay in exercising, or omission to exercise, any right,
power or remedy accruing to the Lenders upon any default under this Agreement, or any other
agreement shall impair any such right, power or remedy or be construed to be a waiver thereof or an
acquiescence therein; nor shall the action of the Lenders in respect of any such default, or any
acquiescence by it therein, affect or impair any right, power or remedy of the Lenders in respect
of any other default. All rights and remedies herein provided are cumulative and not exclusive of
any rights or remedies otherwise provided by law.

     Section 7.12 Indemnity.

     (a) The Parties shall, at all times, indemnify and hold each other harmless (the
“Indemnity”) and each of their respective directors, members, officers, employees,
agents, counsel and advisors (each, an “Indemnified Person”) in connection with any
losses, claims (including the cost of defending against such claims), damages, liabilities,
penalties, or other expenses arising out of, or relating to, this Agreement, the extension
of credit hereunder or the Loan, the use or intended use of the Loan or any investment or

 

			
	[ * ] =	 	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.

23

 

proposed investment, which an Indemnified Person may incur or to which an Indemnified Person
may become subject (each, a “Loss”). The Indemnity shall not apply
to the extent that a court or arbitral tribunal with jurisdiction over the subject
matter of the Loss, and over the Lenders or the Borrower, as applicable, and such other
Indemnified Person that had an adequate opportunity to defend its interests, determines that
such Loss resulted from the gross negligence or willful misconduct of the Indemnified
Person, which determination results in a final, non-appealable judgment or decision of a
court or tribunal of competent jurisdiction. The Indemnity is independent of and in
addition to any other agreement of any Party under any Financing Document to pay any amount
to the Lenders or the Borrower, as applicable, and any exclusion of any obligation to pay
any amount under this subsection shall not affect the requirement to pay such amount under
any other section hereof or under any other agreement.

     (b) Without prejudice to the survival of any other agreement of any of the Parties
hereunder, the agreements and the obligations of the Parties contained in this Section 7.12
shall survive the termination of each other provision hereof and the payment of all amounts
payable to the Lenders hereunder.

     Section 7.13 No Usury. This Agreement is hereby expressly limited so that in no contingency
or event whatsoever, whether by reason of acceleration or otherwise, shall the amount paid or
agreed to be paid to the Lenders for the Loan exceed the maximum amount permissible under
applicable law. If from any circumstance whatsoever fulfillment of any provision hereof, at the
time performance of such provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstance the Lenders shall ever receive anything which
might be deemed interest under applicable law, that would exceed the highest lawful rate, such
amount that would be deemed excessive interest shall be applied to the reduction of the principal
amount owing on account of the Loan, or if such deemed excessive interest exceeds the unpaid
balance of principal of the Loan, such deemed excess shall be refunded to the Borrower. All sums
paid or agreed to be paid to the Lenders for the Loan shall, to the extent permitted by applicable
law, be deemed to be amortized, prorated, allocated and spread throughout the full term of the Loan
until payment in full so that the deemed rate of interest on account of the Loan is uniform
throughout the term thereof. The terms and provisions of this paragraph shall control and
supersede every other provision of this Agreement and the Note.

     Section 7.14 Further Assurances. From time to time, the Borrower shall perform any and all
acts and execute and deliver to Deerfield Private Design such additional documents as may be
necessary or as requested by Deerfield Private Design to carry out the purposes of this Agreement
or any or to preserve and protect the Lenders’ rights as contemplated therein.

{SIGNATURE PAGE 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.

24

 

     IN WITNESS WHEREOF, the Parties, acting through their duly authorized representatives, have
caused this Agreement to be signed in their respective names as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	BORROWER:	 	 	 	LENDER:	 	 
	DYNAVAX TECHNOLOGIES CORPORATION	 	 	 	DEERFIELD PRIVATE DESIGN FUND, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Dino Dina
	 	 	 	By:
	 	/s/ James Flynn	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name: Dino Dina, MD
	 	 	 	 	 	Name: James Flynn	 	 
	 

	 	Title: President and Chief Executive Officer
	 	 	 	 	 	Title: General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LENDER:	 	 	 	LENDER:	 	 
	DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P.	 	 	 	DEERFIELD SPECIAL SITUATIONS FUND, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ James Flynn
	 	 	 	By:
	 	/s/ James Flynn	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Name: James Flynn
	 	 	 	 	 	Name: James Flynn	 	 
	 

	 	Title: General Partner
	 	 	 	 	 	Title: General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	LENDER:	 	 
	 	 	 	 	 	 	DEERFIELD SPECIAL
SITUATIONS FUND INTERNATIONAL LIMITED	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ James Flynn	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name: James Flynn	 	 
	 

	 	 	 	 	 	 	 	Title: General Partner	 	 

 

			
	[ * ] =	 	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.

25

 

SCHEDULE 1

FORM OF DISBURSEMENT REQUEST

{LETTERHEAD OF THE BORROWER}

{Date}

Ladies and Gentlemen:

     Request for Disbursement of the Loan

     1. Please refer to the Loan Agreement (the “Loan Agreement”), dated as of July 18,
2007, between Dynavax Technologies Corporation (the “Borrower”) Deerfield Private Design
Fund, L.P., (“Deerfield Private Design) Deerfield Special Situations Fund, L.P., Deerfield Special
Situations Fund International Limited and Deerfield Private Design International, L.P. (each a
“Lender” and, together the “Lenders” and together with the Borrower, the “Parties”).

     2. Terms defined in the Loan Agreement shall have the same meanings herein.

     3. The Borrower hereby requests a Disbursement, on {date}, of the amount of {amount of
drawdown}, in accordance with the provisions of Section 2.2 of the Loan Agreement. You are
requested to pay the amount to the following account {account number} at {name of bank}.

     4. Attached hereto is a signed but undated receipt for the amount hereby requested to be
disbursed, and we hereby authorize Deerfield Private Design to date such receipt as of the date of
actual disbursement by the Lenders of the funds hereby requested to be disbursed.

     5. The Borrower hereby certifies as follows:

     (a) The representations and warranties in Article III of the Loan Agreement are true in
all material respects on the date hereof with the same effect as though such representations
and warranties had been made on today’s date;

 

			
	[ * ] =	 	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.

26

 

     (b) All of the conditions set forth in Article IV of the Loan Agreement have been
satisfied; and

     (c) The date or Milestone required to be satisfied before the Borrower may request the
Disbursement provided for herein has been achieved and the Borrower has provided evidence to
Deerfield Private Design evidencing such achievement. Such Disbursement is to be used
solely to reimburse the Borrower for expenses it incurred in achieving such Milestone.

     6. The above certifications are effective as of the date of this request for Disbursement and
will continue to be effective as of the Disbursement Date. If any of these certifications is no
longer valid as of or prior to the Disbursement Date, the Borrower will immediately notify
Deerfield Private Design and will repay the amount disbursed upon demand by Deerfield Private
Design if Disbursement is made prior to the receipt of such notice.

	 	 	 	 	 	 	 
	 	 	DYNAVAX TECHNOLOGIES CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

 

			
	[ * ] =	 	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.

27

 

SCHEDULE 2

FORM OF EVIDENCE OF DISBURSEMENT

{LETTERHEAD OF THE BORROWER}

{Date}

Ladies and Gentlemen:

     Re:          Disbursement Receipt

     Dynavax Technologies Corporation (the “Borrower”) hereby acknowledge receipt of the
sum of {insert amount of disbursement} disbursed to us by Deerfield Private Design Fund, L.P.,
Deerfield Special Situations Fund, L.P., Deerfield Special Situations Fund International Limited
and Deerfield Private Design International, L.P. (each a “Lender” and, together the “Lenders”)
under the Loan provided for in the Loan Agreement, dated as of July 18, 2007, between the Borrower
and the Lenders.

	 	 	 	 	 	 	 
	 	 	Yours faithfully,	 	 
	 
	 	 	 	 	 	 
	 	 	DYNAVAX TECHNOLOGIES CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title	 	 	 	 
	 

	 	 	 	 	 	 

 

			
	[ * ] =	 	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.

28

 

EXHIBIT A

FORM OF PROMISSORY NOTE

PROMISSORY NOTE

			
	$30,000,000.00
	 	July 18, 2007          

     FOR VALUE RECEIVED, DYNAVAX TECHNOLOGIES CORPORATION, a Delaware corporation (the
“Maker”), by means of this Promissory Note (this “Note”) hereby unconditionally
promises to pay to Deerfield Private Design Fund, L.P. (Deerfield Private Design”), Deerfield
Special Situations Fund, L.P., Deerfield Special Situations Fund International Limited and
Deerfield Private Design International, L.P., (each a Payee and, together, the
“Payees”), or order, the aggregate principal sum of THIRTY MILLION DOLLARS
(US$30,000,000.00) or so much thereof as may be advanced by the Payees from time to time hereunder
to or for the benefit of the Maker (the “Loan”), in lawful money of the United States of
America and in immediately available funds, on the dates provided in the Loan Agreement. The
Payees may make notations on the Disbursement Grid attached hereto reflecting the dates and amounts
of Disbursements of the Loan.

     The principal balance of this Note outstanding at any time shall be subject to the Loan
Agreement, dated as of July 18, 2007, between the Maker and the Payees (as modified and
supplemented and in effect from time to time, the “Loan Agreement”).

     The Maker shall make all payments to the Payees of principal under this Note in the manner
provided in and otherwise in accordance with the Loan Agreement. The outstanding principal balance
of this Note shall be due and payable in full on the Final Payment Date.

     This Note is the “Note” referred to in the Loan Agreement with respect to the Loan made by the
Payees thereunder. Capitalized terms used herein and not expressly defined in this Note shall have
the respective meanings assigned to them in the Loan Agreement.

     If default is made in the punctual payment of principal or any other amount under this Note in
accordance with the Loan Agreement, or if any other Event of Default has occurred, this Note shall,
at Deerfield Private Design’s option be exercised at any time upon or after the occurrence of any
such payment default or other Event of Default and in accordance with the applicable provisions of
the Loan Agreement, become immediately due and payable.

     All payments of any kind due to the Payees from the Maker pursuant to this Note shall be made
in the full face amount thereof. All such payments will be free and clear of, and without
deduction or withholding for, any present or future taxes. The Maker shall pay all and any costs
(administrative or otherwise) imposed by banks, clearing houses, or any other financial
institution, in connection with making any payments hereunder, except for any costs imposed by
Payees’ banking institutions.

 

			
	[ * ] =	 	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.

29

 

     The Maker shall pay all costs of collection, including, without limitation, all reasonable,
documented legal expenses and attorneys’ fees, paid or incurred by Payees in collecting and
enforcing this Note.

     The Maker and every endorser of this Note, or the obligations represented hereby, expressly
waive presentment, protest, demand, notice of dishonor or default, and notice of any kind with
respect to this Note and the Loan Agreement or the performance of the obligations under this Note
and/or the Loan Agreement. No renewal or extension of this Note or the Loan Agreement, no release
of any Person primarily or secondarily liable on this Note or the Loan Agreement, including the
Maker and any endorser, no delay in the enforcement of payment of this Note or the Loan Agreement,
and no delay or omission in exercising any right or power under this Note or the Loan Agreement
shall affect the liability of the Maker or any endorser of this Note.

     No delay or omission by the Payees in exercising any power or right hereunder shall impair
such right or power or be construed to be a waiver of any default, nor shall any single or partial
exercise of any power or right hereunder preclude the full exercise thereof or the exercise of any
other power or right. The provisions of this Note may be waived or amended only in a writing
signed by the Maker and Deerfield Private Design Fund.

     Every holder of this Note shall have and may exercise all of the rights and powers given to
the Payees in this Note.

     THIS NOTE, AND ANY RIGHTS OF THE PAYEES ARISING OUT OF OR RELATING TO THIS NOTE, MAY, AT THE
OPTION OF THE PAYEES, BE ENFORCED BY THE PAYEES IN THE COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK OR IN ANY OTHER COURTS HAVING
JURISDICTION. FOR THE BENEFIT OF THE PAYEES, THE MAKER HEREBY IRREVOCABLY AGREES THAT ANY LEGAL
ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND HEREBY CONSENTS THAT PERSONAL SERVICE OF SUMMONS OR OTHER LEGAL PROCESS MAY BE MADE AS
SET FORTH IN SECTION 7.1 OF THE LOAN AGREEMENT, WHICH SERVICE THE MAKER AGREES SHALL BE SUFFICIENT
AND VALID. THE MAKER HEREBY WAIVES ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY IN ANY ACTION,
SUIT OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED
BY THIS NOTE.

     This Note shall be governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts made and to be performed in such State, without giving effect to the
conflicts of laws principles thereof other than Sections 5-1401 and 5-1402 of the General
Obligations Law of the State of New York.

 

			
	[ * ] =	 	 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.

30

 

     IN WITNESS WHEREOF, an authorized representative of the Maker has executed this Note as of the
date first written above.

	 	 	 	 	 	 	 
	 	 	DYNAVAX TECHNOLOGIES CORPORATION.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

 

			
	[ * ] =	 	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.

31

 

DISBURSEMENT TO

PROMISSORY NOTE HELD BY PAYEES

	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	 	 	 
	Date	 	Disbursement	 	 	Payee’s Initials	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 

 

			
	[ * ] =	 	 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.

32

 

EXHIBIT B

SCHEDULE OF AND CONDITIONS TO DISBURSEMENTS

TOLAMBA PAYMENTS

	 	1.	 	Lenders shall pay to Borrower the aggregate of [ * ] on [ * ].
	 
	 	2.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ].
	 
	 	3.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ]. Borrower shall provide Deerfield Private Design with [ *
].
	 
	 	4.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ].
	 
	 	5.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ]. Borrower shall provide Deerfield Private Design with [ *
].
	 
	 	6.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ]. Borrower shall provide to Deerfield Private Design [ * ].

PRECLINICAL PEANUT/CAT PAYMENTS

	 	7.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ]. Borrower shall provide to Deerfield Private Design [ * ].
	 
	 	8.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ]. Borrower shall provide to Deerfield Private Design [ * ].
	 
	 	9.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ]. Borrower shall provide to Deerfield Private Design [ * ].
	 
	 	10.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ]. Borrower will provide Deerfield Private Design with [ *
].
	 
	 	11.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ]. Borrower will provide Deerfield Private Design with [ *
].
	 
	 	12.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of
(a) [ * ] and (b) [ * ] If requested, Borrower will provide Deerfield Private
Design with [ * ].

 

			
	[ * ] =	 	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.

33

 

CLINICAL PEANUT/CAT PAYMENTS

	 	13.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of (a) [ * ]
and (b) [ * ]. Borrower shall provide Deerfield Private Design [ * ].
	 
	 	14.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of (a) [ * ]
and (b) [ * ]. Borrower will provide Deerfield Private Design with [ * ].
	 
	 	15.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of (a) [ * ]
and (b) [ * ]. Borrower shall provide Deerfield Private Design [ * ].
	 
	 	16.	 	Lenders shall pay to Borrower the aggregate of [ * ] on the later of (a) [ * ]
and (b) [ * ]. Borrower will provide Deerfield Private Design with [ * ].

     Deerfield Private Design shall determine, in the exercise of its reasonable discretion, if the
Milestone identified for each Disbursement have been achieved. In making such determination,
Deerfield Private Design shall use principles generally accepted for the development of
pharmaceutical products.

 

			
	[ * ] =	 	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.

34

 

Exhibit C

	 	 	 	 	 
	 	 	Number of Shares of
	 	 	Common Stock
	Condition	 	Subject to Warrant
	1. Execution of Agreement
	 	 	1,250,000	 
	2. [ * ]
	 	 	[ * ]	 
	3. [ * ]
	 	 	[ * ]	 
	4. [ * ]
	 	 	[ * ]	 
	5. [ * ]
	 	 	[ * ]	 

Allocation of Warrants

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Deerfield	 	 	 	 
	 	 	 	 	Deerfield	 	Special	 	Deerfield Special	 	 
	 	 	Deerfield Private	 	Private Design	 	Situations	 	Situations	 	 
	Condition	 	Design Fund	 	International	 	Fund	 	International	 	Total
	1.

	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	1,250,000
	2.
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]

	3.
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]

	4.
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]

	5.
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]
	 	[ * ]

 

			
	[ * ] =	 	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.

35

 

Exhibit D

FORM OF SUBORDINATION AGREEMENT

 

			
	[ * ] =	 	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.

36

 

SUBORDINATION AGREEMENT

          SUBORDINATION AGREEMENT (this “Agreement”), dated {       }, between {          } (the
“Subordinating Creditor”) and Deerfield Private Design Fund, L.P., (“Deerfield Private
Design”) Deerfield Special Situations Fund, L.P., Deerfield Special Situations Fund International
Limited and Deerfield Private Design International, L.P. (each a “Lender” and, together the
“Lenders”).

RECITALS

     A. Dynavax Technologies Corporation (“Dynavax”) intends to enter into a financing arrangement
pursuant to which Deerfield Private Design will provide Dynavax with financial accommodations, all
as more fully described in the Loan Agreement dated as of the date hereof (the “Loan
Agreement”) among Dynavax and the Lenders (such arrangement and all related transaction
documents as they may be amended, amended and restated, supplemented or otherwise modified from
time to time, and the commitment of the Lenders to extend financing to Dynavax thereunder, the
“Senior Debt”).

     B. As a condition to the Lenders entering into the Senior Debt, the Lenders require that the
Subordinating Lender enter into this Agreement.

          NOW, THEREFORE, for in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Lenders and the
Subordinating Creditor hereby agree as follows:

          1. Definitions. For purposes of this Agreement, the following terms shall be defined
in the following manner:

          Bankruptcy Code: the United States Bankruptcy Code, 11 U.S.C. §§101-1331, as amended
from time to time.

          Dynavax: as defined in the recitals to this Agreement, together with any successor
to, or assignee of, Dynavax, including, without limitation, Dynavax operating as a
debtor-in-possession or a trustee appointed for Dynavax under the Bankruptcy Code.

          Commence Legal Action: assert or participate in, or bring any legal action (including
any bankruptcy or insolvency proceeding) either at law or in equity for the enforcement, collection
or realization on all or any part of the Subordinated Debt from or against Dynavax or exercise any
right of offset against amounts owing to Dynavax or any property of Dynavax at any time held by the
Subordinating Creditor.

          Event of Bankruptcy: any of the following: (i) Dynavax’s filing of a voluntary
petition in bankruptcy under any provision of the Bankruptcy Code, or the fling by Dynavax of any
other petition to take advantage of any receivership or insolvency laws, including, without
limitation, any petition seeking the dissolution, winding up, total or partial liquidation,
reorganization, composition, arrangement, adjustment or readjustment or other relief of Dynavax or
its respective debts or assets; (ii) Dynavax’s admission in writing of its inability to pay its

 

			
	[ * ] =	 	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.

37

 

debts generally as they become due; (iii) the appointment of a receiver, liquidator, trustee,
custodian or other similar official for Dynavax or all or a material part of its assets; (iv) the
filing of any petition against Dynavax under any provision of the Bankruptcy Code or any other
receivership or insolvency law, including, without limitation, any petition seeking the
dissolution, winding up, total or partial liquidation, reorganization, composition, arrangement,
adjustment or readjustment or other relief of Dynavax or its respective debts or assets; (v) an
assignment by Dynavax for the benefit of creditors or any other marshalling of the assets and
liabilities of Dynavax; or (vi) any corporate action taken by Dynavax to authorize any of the
foregoing.

          Senior Debt : as defined in the recitals to this Agreement.

          Subordinated Debt: all present and future obligations, liabilities and indebtedness
owed by Dynavax to the Subordinating Creditor (whether matured or unmatured) including, without
limitation, all obligations, liabilities and indebtedness owed by Dynavax to the Subordinating
Creditor pursuant to the Subordinating Creditor Loan Documents, all interest accruing thereon and
all costs and expenses (including attorneys’ fees) payable by Dynavax to the Subordinating Creditor
in connection with the exercise of the Subordinating Creditor’s rights under, and the enforcement
of, the Subordinating Creditor Loan Documents, and including any Subordinated Debt purchased or
otherwise acquired by the Subordinating Creditor and any participations in any Subordinated Debt
purchased or otherwise acquired by the Subordinating Creditor.

          Subordinating Creditor Loan Documents: {          } as such documents may be amended,
supplemented or restated from time to time.

          2. Subordination. The Subordinating Creditor hereby subordinates the payment by
Dynavax of all or any part of the Subordinated Debt to the full and final payment in cash and
satisfaction of the Senior Debt.

          3. Permitted Payments to Subordinating Creditor.

               (a) So long as no Event of Default (as such term is defined in the Loan Agreement) has
occurred in accordance with Section 6.1 of the Loan Agreement, Dynavax may make payments to the
Subordinating Creditor and the Subordinating Creditor may accept from Dynavax payments of principal
and interest when due, strictly in accordance with the terms the Subordinating Creditor Loan
Documents.

               (b) If the Subordinating Creditor receives a payment in any form and from any source
(including by offset against amounts owing to Dynavax) with respect to the Subordinated Debt other
than a payment permitted to be made under paragraph (a) of this Section 3, the Subordinating
Creditor shall immediately deliver to the Lenders, for application against the Senior Debt, in the
form received (except for proper endorsements or assignments, if necessary), such payment. Pending
such delivery the Subordinating Creditor shall hold all such payment trust for the account of the
Lenders.

 

			
	[ * ] =	 	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.

38

 

     4. Enforcement of Subordinating Creditor’s Rights.

               (a) The Subordinating Creditor shall not accelerate the maturity or payment of any
Subordinated Debt or Commence Legal Action unless there occurs an Event of Bankruptcy;
provided, however, that with respect to any insolvency or bankruptcy proceeding commenced
against Dynavax, the Subordinating Creditor may only accelerate the Subordinated Debt or Commence
Legal Action if such proceeding is not dismissed or discharged within 60 days.

               (b) Notwithstanding the provisions of paragraph (a) of this Section 4, the Subordinating
Creditor at no time will commence or join with any other creditor or creditors of Dynavax in the
filing of any bankruptcy, reorganization, receivership or insolvency proceeding against Dynavax, or
(ii) take any action to exercise any rights or remedies which the Subordinating Creditor may have
under the Subordinating Creditor Loan Documents unless and until the Senior Debt has been fully and
finally paid in full in cash and satisfied.

               (c) Any amounts received by the Subordinating Creditor from Dynavax or by exercise of any
right of offset against amounts owing to Dynavax as a result of any acceleration, action, suit or
proceeding permitted in this Section 4, if received prior to the full and final payment in full in
cash and satisfaction of the Senior Debt, shall be held in trust by the Subordinating Creditor for
the Lenders and promptly paid to the Lenders in accordance with the provisions of this Agreement.

     5. Insolvency Proceedings. Although the Subordinating Creditor retains its rights to
vote its claims and otherwise act on its own behalf in any case or proceeding related to an Event
of Bankruptcy, the following provisions shall apply upon the occurrence of any Event of Bankruptcy:

               (a) Any payment or distribution of assets of Dynavax of any kind or character with respect to
the Subordinated Debt that occurs after any Event of Bankruptcy, whether such payment or
distribution consists of cash, property or securities, to which the Subordinating Creditor would be
entitled except for the provisions of this Agreement shall be paid or delivered by the person or
entity making such payment or distribution, directly to the Lenders for application to the payment
of the Senior Debt, to the extent necessary to pay the Senior Debt in full in cash after giving
effect to any concurrent payment or distribution to the Lenders with respect to the Senior Debt.
To facilitate the foregoing, at the request of the Lenders, the Subordinating Creditor shall
authorize and direct Dynavax, or any receiver, liquidator, custodian, conservator, trustee or other
entity making any payment or distribution with respect to Dynavax or any of its assets, to make
such payment or distribution directly to the Lenders.

               (b) Without the prior written consent of the Lenders:

                    (i) The Subordinating Creditor shall not seek or request relief from the automatic stay under
any provision of the Bankruptcy Code, or seek or request any

 

			
	[ * ] =	 	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.

39

 

adequate protection of the Subordinating Creditor’s claims under any provision of the
Bankruptcy Code; and

                    (ii) The Subordinating Creditor shall not contest, oppose, object or withhold its consent to,
directly or indirectly, (A) any action by the Lender sfor adequate protection of the claims of the
Lenders under the Bankruptcy Code, (B) any objection filed by the Lenders to any motion, relief,
action or proceeding, if such objection is based (in whole or in part) on a lack of adequate
protection of the claims of the Lenders, (C) the entry of any cash collateral order supported by
the Lenders, (D) the entry of any financing order involving the Lenders (whether under §364 of the
Bankruptcy Code or otherwise).

               (c) In order to implement the provisions of this Agreement, upon the Lenders’ request, the
Subordinating Creditor shall expressly subordinate the payment of the Subordinated Debt to the
payment of all Senior Debt consisting of post-petition indebtedness under any debtor-in-possession
financing provided to Dynavax by the Lenders.

               (d) The Subordinating Creditor shall not, directly or indirectly, take any action or vote in
any way that would be inconsistent with or result in a breach of this Agreement, or challenge or
contest (i) the validity or enforceability of the Senior Debt, (ii) the rights of the Lenders set
forth in the Senior Debt or (iii) the validity or enforceability of any provision of this
Agreement.

               (e) The Subordinating Creditor irrevocably authorizes and empowers the Lenders, following. any
Event of Bankruptcy, to file proof of claim with respect to any Subordinated Debt held by it if the
Subordinating Creditor fails to file a proof of claim prior to 30 days before the expiration of the
time period during which such claim must be submitted, and to accept and receive any payment or
distribution which may be payable or deliverable at any time on or with respect to the Subordinated
Debt until all Senior Debt has be finally paid in full in cash and satisfied. The Subordinating
Creditor will provide to the Lenders all information and documents necessary to present claims and
to seek to enforce the Subordinated Debt in accordance with this paragraph.

               (f) The obligations of the Subordinating Creditor under this Agreement shall continue to be
effective, or be reinstated, as the case may be, as to any payment in respect of any Senior Debt
that is rescinded or must otherwise be returned by the Lenders upon the occurrence or as a result
of any Event of Bankruptcy, all as though such payment had not been made.

          6. Representations, Warranties and Covenants of Subordinating Creditor. The
Subordinating Creditor represents and warrants to the Lenders and covenants with the Lenders, that:

               (a) it has not relied and will not rely on any representations or information of any nature
made by or received from the Lenders relating to Dynavax in deciding to execute this Agreement;

 

			
	[ * ] =	 	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.

40

 

               (b) all of the Subordinating Creditor Loan Documents to which it is a party currently in
existence are set forth on Exhibit A attached hereto, and the Subordinating Creditor has
delivered to the Lenders true, correct and complete copies of the Subordinating Creditor Loan
Documents;

               (c) it is the lawful owner of the Subordinated Debt held by it, free and clear of all liens
and encumbrances, and has not subordinated, encumbered, assigned or transferred any right, claim or
interest of any kind in or to the Subordinated Debt;

               (d) it will not (i) assign or transfer the Subordinated Debt to any assignee unless such other
assignee acknowledges in writing to the Lenders that such interests remain subject to this
Agreement or (ii) subordinate or encumber any right, claim or interest of any kind in or to the
Subordinated Debt;

               (e) it has full power and legal capacity to execute and deliver this Agreement to the Lenders
and this Agreement constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms; and

               (f) without the prior written consent of the Lenders, it shall not amend, modify, restate or
supplement any of the Subordinating Creditor Loan Documents in any manner which might terminate or
impair the subordination of the Subordinated Debt.

          7. Exercise of the Lenders’ Rights.

               (a) The Subordinating Creditor agrees that the Lenders may from time to time, in its sole
discretion:

                    (i) increase the principal amount of the indebtedness under the Senior Debt;

                    (ii) renew, extend or otherwise modify in any manner (A) the rate of interest on the Senior
Debt, (B) the time and/or terms of payment of the Senior Debt or (C) any condition, term or
provision of the Senior Debt; and

                    (iii) lend additional monies, extend additional credit and make other financial accommodations
to or for the account of Dynavax, whether under the Senior Debt or otherwise;

in each case, without necessity of notice to or consent from the Subordinating Creditor, and
without impairing any of the Lenders’ rights under this Agreement or affecting the Subordinating
Creditor’s undertakings and obligations under this Agreement. The Subordinating Creditor
acknowledges that the Lenders have not made any warranties or representations with respect to the
due execution, legality, validity, completeness or enforceability of the Senior Loan Agreements, or
the collectibility of the Senior Debt, and that the priorities provided in this Agreement shall not
be affected or impaired in any manner whatsoever, including, without limitation, on account of the
invalidity, irregularity or unenforceability of all or any part of the Senior Loan Agreements.

 

			
	[ * ] =	 	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.

41

 

               (b) So long as any Senior Debt remains unpaid or outstanding or the Lenders have any
commitments to extend further financing under the Loan Agreement, the Lenders shall have the
exclusive right (whether exercised before or after the occurrence of an Event of Bankruptcy),
without the consent of the Subordinating Creditor:

                    (i) to enforce all rights and privileges of the Lenders under the Loan Agreement (including,
without limitation, all consent and approval rights), and to exercise the Lenders’ power to act as
attorney-in-fact of Dynavax and/or for purposes of carrying out the terms of the Senior Debt; and

                    (ii) to take any and all appropriate action, and to execute any and all documents and
instruments which may be necessary or desirable, to accomplish the purposes of this Agreement.

In exercising the rights and privileges described above, the Lenders shall have sole control over
the timing, circumstances and manner of exercising such rights and privileges.

          8. Waiver of Subrogation Rights. The Subordinating Creditor waives any and all rights
to be subrogated to the rights of the Lenders with respect to any of the Senior Debt, until the
Senior Debt is fully and finally’ paid in cash and satisfied and all commitments to extend further
financing to Dynavax have been terminated.

          9. Miscellaneous.

               (a) THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ANY CONFLICTS OF LAW PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GNEREAL
OBLIGATION LAW. This Agreement contains the entire agreement between the Subordinating Creditor and
the Lenders with respect to the Senior Debt and the Subordinated Debt and may be modified only by a
writing signed by the Subordinating Creditor and the Lenders.

               (b) The Lenders’ failure to exercise any right hereunder shall not be construed as a waiver of
the Lenders’ right to exercise the same or any other right at any other time and from time to time
thereafter, and such rights shall be cumulative and not exclusive.

               (c) The knowledge by the Lenders of any breach or other non-observance by the Subordinating
Creditor of the terms of this Agreement shall not constitute a waiver thereof, or of any
obligations to be performed by the Subordinating Creditor.

               (d) In the event of any conflict between any term of this Agreement and any of the
Subordinating Creditor Loan Documents, the provisions of this Agreement shall govern and control.
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

 

			
	[ * ] =	 	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.

42

 

               (e) This Agreement shall continue in full force and effect until the Senior Debt is fully and
finally paid in cash and satisfied and all commitments of the Lenders to extend further financing
to Dynavax have been terminated, and shall be binding upon the Subordinating Creditor and its
successors and assigns, including, without limitation, any future holder of all or any part of the
Subordinated Debt, and shall inure to the benefit of the Lenders and its successors and assigns,
including, without limitation, any future holder of all or any part of the Senior Debt, it being
expressly acknowledged that the Lenders’ rights under this Agreement may be assigned by the Lenders
in connection with any assignment or transfer of all or any portion of Senior Debt and that each
subsequent holder of any portion of Senior Debt shall be equally and ratably entitled to the
benefits of this Agreement.

               (f) This Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original hereof, and all of which together shall be deemed to be a single
agreement.

               (g) All notices and other communications hereunder shall be in writing, and shall be deemed to
have been duly made when delivered in person or sent by same day or overnight carrier, or when
deposited in the United States first class or registered or certified mail return receipt
requested, postage prepaid. Notices shall be sent:

If to the Subordinating Creditor:

{                }

{                }

{                }

{                }

If to the Lenders:

{                }

{                }

{                }

{                }

 

			
	[ * ] =	 	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.

43

 

          IN WITNESS WHEREOF, the Lenders and the Subordinating Creditor have executed this Agreement as
of the date first written above.

	 	 	 	 	 	 	 	 	 	 	 
	DEERFIELD PRIVATE DESIGN FUND, L.P.	 	 	 	DEERFIELD SPECIAL SITUATIONS FUND

INTERNATIONAL LIMITED	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

Name:
	 	 	 	 	 	 

Name:
	 	 
	 

	 	Title:
	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LENDER:	 	 	 	LENDER:	 	 
	DEERFIELD PRIVATE DESIGN INTERNATIONAL,
L.P.	 	 	 	DEERFIELD SPECIAL SITUATIONS FUND, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

Name:
	 	 	 	 	 	 

Name:
	 	 
	 

	 	Title:
	 	 	 	 	 	Title:	 	 

	 	 	 	 	 	 	 
	 	 	{                                                                      }	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	   Name:
	 	 

	 	 
	 

	 	   Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

			
	[ * ] =	 	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.

44

 

ACKNOWLEDGMENT OF DYNAVAX

          The undersigned acknowledges receipt of a copy of the foregoing Subordination Agreement and
consent to all of the terms and conditions thereof.

	 	 	 	 	 	 	 
	 	 	DYNAVAX TECHNOLOGIES CORPORATION            	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	   Name:
	 	 

	 	 
	 

	 	   Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

			
	[ * ] =	 	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.

1exv10w1

 

Exhibit 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE

     This Separation Agreement and General Release (“Separation Agreement”) dated November 5, 2007
is entered into by and between Michael A. Christopher (“Executive” or “you”) and Legacy Bancorp,
Inc. (the “Company”) and Legacy Banks (the “Bank”), and confirms the agreement that has been
reached with you in connection with your termination of employment with the Bank, Company and any
of the Bank’s affiliates and direct and indirect subsidiaries.

     1. a. Executive’s employment with the Company, the Bank, The Legacy Banks Foundation and all
subsidiaries and affiliates of each (herein referred collectively as “Company Entities”), and
Executive’s status as an officer of any Company Entity, is hereby terminated effective January 1,
2008 (“Separation Date”). The parties agree that this termination constitutes an Event of
Termination as set forth in Section 4(a) of each of the employment agreements (the “Employment
Agreements”) between you and the Company, dated October 26, 2005 (the “Legacy EA”), and with you
and the Bank and the Company dated October 26, 2005.

          b. Executive acknowledges and agrees that prior to signing this Agreement, Executive has
executed and submitted to the Company and the Bank a letter (in the form attached hereto as
Exhibit A), by which Executive has irrevocably resigned as a member of the Board of
Directors of any Company Entity. Such resignation as a director of any such Company Entity shall be
effective on the Separation Date. As such, Executive’s status as a director, employee, officer, or
agent of all Company Entities shall have terminated not later than the Separation Date.

     2. In consideration of your execution of this Separation Agreement and your compliance with
its terms and conditions, and provided that you execute the General Release attached hereto as
Exhibit B (the “General Release”), the Bank agrees to pay or provide you with the following
benefits

          a. A payment described in Regulation §1.409A-1(b)(9)(iii) to Internal Revenue Code Section 409
A, subject to the provision of Section 17 hereof, in settlement of your rights to receive severance
under Section 4(b)(i) of the Legacy EA, the Bank shall pay you $138,476 on the later of the
Separation Date or eight days following the date you sign this Agreement and the General Release,
providing that you have not revoked your consent.

          b. Subject to the provision of Section 17 hereof, the Bank shall pay you an aggregate of
$951,076 (the “Lump Sum Amount”) which shall be paid on July 2, 2008, which date shall not be less
than six months and one day from the Separation Date.

          c. The amounts set forth in Paragraphs 2a and 2b shall be reduced by all applicable federal,
state and local withholding taxes and other appropriate deductions.

          d. If you so elect, you shall be entitled to continue, at your expense, the existing medical,
dental and disability coverage provided to you under the Employment Agreements through the term of
the Consulting Agreement (defined in Paragraph 2e). In the

 Page 1

 

alternative, if you are eligible for, and you so elect, continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act (COBRA), the you shall be responsible for paying
the entire cost of such coverage for the period of months following the Separation Date for which
coverage is available.

          e. You acknowledge and agree that you are party to the Restricted Stock Award Agreement (the
“Restricted Stock Agreement”) dated November 29, 2006, under which you have been granted an
aggregate of 49,500 restricted stock units (the “RSUs”) relating to shares of common stock of the
Company. Simultaneously with the execution of this Separation Agreement, you are executing the
Consulting Agreement of even date among the Company, the Bank and you, a copy of which is attached
hereto as Exhibit C (the “Consulting Agreement”). In consideration of your execution of
this Separation Agreement and the Consulting Agreement, the Company and the Compensation Committee
of the Board of Directors, have agreed, in accordance with the Legacy Bancorp, Inc. 2006 Equity
Incentive Plan (the “Plan”), that the Restricted Stock Agreement shall be continued and the shares
granted thereunder shall continue to vest in accordance with the original schedule as set forth
therein; provided, however, that such vesting shall be subject to your compliance with the terms
and conditions of the Plan and Paragraphs 5 and 7 of this Separation Agreement.

          f. You acknowledge and agree that you are party to the Stock Option Agreements (the “Option
Agreements”) dated November 29, 2006, under which you have been granted stock options to purchase
82,500 shares of common stock of the Company (the “Options”). You acknowledge and agree that all
Options are unvested. You further acknowledge and agree that, effective on the Separation Date,
all Options granted under the Option Agreements, whether vested or unvested, shall be forfeited and
that the Option Agreements shall terminate and shall thereafter be of no force and effect.

          g. The Bank’s obligation to make the payments and to provide the benefits set forth in
Paragraphs 2a through 2e above shall cease as of the date of any breach of your obligations under
the restrictive covenants set forth in Paragraphs 5 and 7 hereof. In the event Bank believes there
is a violation of Paragraph 5 or Paragraph 7, the Bank must give Executive written notice and
opportunity to cure within 15 days of Executive’s receipt of the notice. This notice and cure
provision only applies to the cessation of payments and does not affect the Bank’s ability to seek
a protective order against Executive.

     3. Whether or not you execute this Separation Agreement, you will be paid for any accrued but
unused vacation days on or before the Separation Date. Requests by Executive for previously
submitted un-reimbursed business expenses (made in accordance with usual Bank guidelines and
practices), to the extent not theretofore paid must be submitted on or before 5 days after
Separation date, and payment shall be made on or before 15 days after Separation Date. In
addition, following the Separation Date, you will be entitled to receive vested amount, if any,
payable to you under the Company’s or Bank’s 401(k) plan, ESOP and other retirement and deferred
compensation plans in accordance with the terms of such plans and applicable law, except that, as a
condition to your receipt of the Lump Sum Amount, you agree to forgo any and all vested benefits
available under the Supplemental Executive Retirement Agreement between you and the Bank, dated
January 1, 2004 (the “SERP Agreement”). Except as specifically set forth herein, your
participation in all Company and Bank plans shall remain subject to the terms

 Page 2

 

and conditions of such plans as in effect from time to time and you agree that such terms and
conditions are binding on you and the Company and Bank.

     4. You agree that, as a condition to your receipt of the payments and benefits set forth in
Paragraphs 2a through 2e, you will execute the General Release attached hereto as Exhibit B on the
Separation Date. None of the payments or benefits described in Paragraphs 2a through 2e above
shall commence prior to the Separation Date.

     5. a. You agree that you will cooperate in good faith and in accordance with the advice of
counsel, with the Company Entities and their directors, officers, employees, and agents (“Persons”)
and its or their respective counsel, in connection with any investigation, inquiry, administrative
proceeding or litigation relating to any matter in which you were involved or of which you have
knowledge by providing truthful information, provided that such cooperation does not unreasonably
interfere with your then current professional and personal commitments. The Company agrees to
promptly reimburse you for reasonable expenses necessarily incurred by you, in connection with your
cooperation pursuant to this paragraph.

          b. You agree that, in the event you are subpoenaed by any person or entity (including, but not
limited to, any government agency) to give testimony (in a deposition, court proceeding or
otherwise) which in any way relates to your employment by any Company Entity, you will give prompt
notice of such request to the General Counsel of the Company, and will provide the Company or Bank
with a reasonable opportunity to contest the right of the requesting person or entity to such
disclosure before making such disclosure. Nothing in this provision shall require you to violate
your obligation to comply with valid legal process.

     6. a. The Bank shall issue a press release announcing your termination of service from the
Bank and Company, the form of which is attached as Exhibit D. In accordance with the
Company and Bank policy, the Company and the Bank shall respond to any questions from the public
regarding your employment with the Bank solely with reference to your title, dates of employment at
the Bank and the contents of the press release. All requests for references for you shall be
directed to the Head of the Bank’s Human Resources Department. Nothing herein shall limit in any
way any Company Entity’s or any Person’s ability to respond to, or take any action in any legal,
administrative or regulatory inquiry, investigation or proceeding.

          b. Each of the Company, the Bank and Executive (collectively, the “Parties”) agree that under
no condition or circumstance shall any of the Parties make any disparaging remarks in any manner or
in any form about any of the other Parties (including, in the case of Executive, any Company
Entity, or any Person), their respective business activities or business or personal relationships.

     7. a. You recognize and acknowledge and agree that during your employment with the Company and
the Bank you have had access to highly confidential and proprietary information relating to the
Company Entities and Persons and trade secrets (“Proprietary Information,” as described herein) and
the use, misappropriation or disclosure of Proprietary Information would cause irreparable injury
to the Company Entities; and it is essential to the protection of the Company Entities’ good will
and to the maintenance of the Company Entities’

 Page 3

 

competitive position that Proprietary Information be kept secret and that you not disclose
Proprietary Information to others, or use any Proprietary Information to your own advantage or the
advantage of any third parties. For purposes of this Separation Agreement, the term “Proprietary
Information” shall include any and all material non-public information, and shall include and not
be limited to non-public information relating to any Company Entities’ past, present or planned or
considered business activities; any Company Entities’ depositors, borrowers and investors;
techniques; processes; tools; market research, data and strategy; strategic initiatives including
mergers, acquisitions, sales and branch openings and closings; and, information relating to sales
and pricing, including customer-specific information, pricing policies and strategies. Proprietary
Information shall include information in any form whatsoever, including but not limited to, hard
copy, computer floppy diskette, CD, CD-ROM drive, information retained in electronic storage, or
other information storage means. “Proprietary Information” shall not include (a) information in
the public domain, or (b) information disclosed to Executive by third-parties entitled to make such
disclosures. You acknowledge and agree that your obligations under this paragraph shall survive
the Separation Date. Notwithstanding anything contained herein to the contrary, Executive may
disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which
are not derived from the business plans or activities of the Company Entities. Further, Executive
may disclose information regarding the business activities of the Bank to the OTS, Massachusetts
Department of Banking or the FDIC pursuant to a formal regulatory request.

          b. In exchange for the consideration from the Company and the Bank under Section 2 hereof, the
Executive, the Company and the Bank agree that Executive shall not compete with the Company or the
Bank for a period ending on January 1, 2012, in any city, town or county in which the Company or
the Bank has an office or has filed an application for regulatory approval to establish an office,
except as agreed to pursuant to a resolution duly adopted by the Board of Directors. Executive
agrees that during such period and within said cities, towns and counties, Executive shall not work
for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of the Company or the
Bank. The parties hereto, recognizing that irreparable injury will result to the Company or the
Bank, their businesses and properties in the event of Executive’s breach of this Section 7, agree
that in the event of any such breach or threatened breach by Executive, the Company or the Bank
will be entitled, in addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive’s partners, agents, servants, employees and
all persons acting for or under the direction of Executive. Nothing herein will be construed as
prohibiting the Company or the Bank from pursuing any other remedies available to the Company or
the Bank for such breach or threatened breach, including the recovery of damages from Executive.

     In addition, the Executive shall comply with the following provisions of this Separation
Agreement until January 1, 2012: Executive will not, directly or indirectly:

               i) Solicit, induce, or attempt to induce employees of any Company Entity to terminate their
employment with, or otherwise cease their relationship with the Company Entity, or

 Page 4

 

               ii) Solicit, induce, hire or attempt to solicit, induce or hire any employee of any Company
Entity to work or provide services to any third party; or

               iii) Solicit to divert or take away or attempt to divert or to take away, the business or
patronage of any Company Entities’ clients, customers or accounts, or prospective clients,
customers or accounts.

     8. You represent that as of the Separation Date, you will have returned to the Company all
property belonging to the Company Entities and Persons (“Company Property”) including but not
limited to computers, cell phones, personal communication devices, keys, card access to the
building and office floors, credit card(s) and phone card(s).

     9. The Executive shall be indemnified as provided under the Company’s and Bank’s articles of
incorporation, charter and bylaws and any applicable laws in each case to the extent permitted by
applicable laws, including the laws of the State of Delaware and the rules and regulations of the
Massachusetts Department of Banking, if the Executive is made a party, or is threatened to be made
a party, to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, in connection with acts or omissions occurring during his tenure with the Company or
the Bank, against all cost, expense, liability and loss (including, without limitation, attorney’s
fees, judgments, fines, or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Executive in connection therewith.

     10. You agree that in consideration of the benefits to be provided to you pursuant Paragraphs
2a through 2e above, except for the obligations of the Company and the Bank under this Separation
Agreement, the Restricted Stock Agreement and the Plan (collectively, the “SA Obligations”), you
hereby waive, release and forever discharge any and all claims and rights which you ever had, now
have or may have against any Company Entity, and their respective successors and assigns, current
and former officers, agents, board of directors members, representatives and employees, various
benefits committees, and their respective successors and assigns, heirs, executors and personal and
legal representatives, based on any act, event or omission occurring before you execute this
Separation Agreement arising out of, during or relating to your employment or services with a
Company Entity or the termination of such employment or services, except for rights granted herein.
This waiver and release includes, but is not limited to, any claims which could be asserted now or
in the future, under: the Employment Agreements, the Option Agreements and the SERP Agreement,
and any other employment related contract, but specifically excluding the Restricted Stock
Agreement, the common law, including, but not limited to, breach of express or implied duties,
wrongful termination, defamation, or violation of public policy; any policies, practices, or
procedures of any Company Entity; any federal or state statutes or regulations including, but not
limited to, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq. , the
Civil Rights Act of 1866 and 1871, the Americans With Disabilities Act, 42 U.S.C. §12101 et seq. ,
the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §1001 et seq. (excluding those
rights relating exclusively to employee pension benefits as governed by ERISA), the Family and
Medical Leave Act, §2601 et. seq., any contract of employment, express or implied; any provision of
the United States or Massachusetts Constitutions; any provision of any other law, common or
statutory, of the United States, Massachusetts or any other state. This waiver and release
excludes the SA Obligations.

 Page 5

 

     11. By signing this Separation Agreement, you represent that you have not and will not in the
future commence any action or proceeding arising out of the matters released hereby, and that you
will not seek or be entitled to any award of legal or equitable relief in any action or proceeding
that may be commenced on your behalf in regard to such released matters.

     12. The Company and the Bank have advised the Executive to consult with an attorney of his
choosing regarding the legal and tax implications hereof prior to signing this Agreement. The
Executive represents that he understands and agrees that the Executive has the right and has been
given the opportunity to review this Agreement and, specifically, the Release, with an attorney.
The Executive further represents that he understands and agrees that no Company Entity is under any
obligation to offer the Executive this Agreement, and that the Executive is under no obligation to
consent to the Release. You acknowledge that you: (a) have carefully read this Separation
Agreement in its entirety; (b) have been provided at least twenty-one (21) days to consider the
terms of this agreement, although you may choose to sign this Separation Agreement and return it to
the Bank sooner; (e) have seven (7) additional days from the date you sign it (the “Effective
Date”) to revoke your consent, in which case this Separation Agreement shall become null and void;
and (f) are signing this Separation Agreement voluntarily and of your own free will and agree to
abide by all the terms and conditions contained herein.

     13. If any provision of this Separation Agreement is held by an arbitrator or court of
competent jurisdiction to be illegal, void or unenforceable, such provision shall have no effect;
however, the remaining provisions shall be enforced to the maximum extent possible. Further, if a
court or arbitrator should determine that any portion of this Separation Agreement is overbroad or
unreasonable, such provision shall be given effect to the maximum extent possible by narrowing or
enforcing in part that aspect of the provision found overbroad or unreasonable. Additionally, you
agree that any breach of the terms of Paragraphs 5 or 7 shall constitute a material breach of this
Separation Agreement as to which the Company or Bank may seek all relief available under the law in
addition to the relief provided for in Paragraph 2g. In addition, you agree that your willful and
knowing failure to return Company Property that relates to the maintenance of security of the
Company Entities and Persons or the maintenance of Proprietary Information constitutes a material
breach of this Separation Agreement as to which the Company or Bank may seek all available relief
under the law.

     14. a. This Separation Agreement is not intended, and shall not be construed, as an admission
that either the Executive or the Company Entities and Persons have violated any federal, state or
local law (statutory or decisional), ordinance or regulation, breached any contract or committed
any wrong whatsoever.

          b. Should any provision of this Separation Agreement require interpretation or construction,
it is agreed by the parties that the entity interpreting or construing this Separation Agreement
shall not apply a presumption against one party by reason of the rule of construction that a
document is to be construed more strictly against the party who prepared the document.

     15. This Separation Agreement is binding upon, and shall inure to the benefit of, the parties
and their respective heirs, executors, administrators, successors and assigns.

 Page 6

 

     16. a. This Separation Agreement shall be construed and enforced in accordance with the laws
of the State of Massachusetts without regard to the principles of conflicts of law, except to the
extent governed by Federal law.

          b. With the exception of a claim for injunctive relief, for which jurisdiction shall be
reserved in the United States District Court, District of Massachusetts, Western Division and/or
state courts in Massachusetts, and with respect to which the parties consent to personal
jurisdiction, any controversy or claim arising out of or relating to this Separation Agreement or
the breach thereof shall be settled in an arbitration to be held in Pittsfield, Massachusetts by a
single arbitrator, in accordance with the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association then in effect. The decision of the arbitrators shall be
final and binding on the parties hereto and judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. To the extent permitted by law, if you are
the prevailing party on all material claims, you shall be entitled to all reasonable attorneys’
fees and costs incurred in such arbitration; otherwise, each party shall pay his or its own costs
and attorneys’ fees, and arbitration fees shall be equally divided.

     17. Notwithstanding anything in this Separation Agreement to the contrary, the parties hereby
agree that it is the intention that any payments or benefits provided under this Separation
Agreement comply in all respects with Section 409A of the Internal Revenue Code of 1986, as amended
(“Code”) and any guidance issued thereunder, and this Separation Agreement be interpreted
accordingly. In addition, in the event that additional guidance with respect to Section 409A of
the Code becomes available prior to the Separation Date, upon the Executive’s reasonable request,
the parties will cooperate in good faith with a view towards amending this Separation Agreement
solely to the extent necessary and appropriate to avoid adverse tax consequences pursuant to
Section 409A of the Code, while retaining the economic benefits and burdens of the Separation
Agreement to the fullest extent possible.

     18. In furtherance of Paragraph 12 hereof, the parties hereto recognize that certain
provisions of this Agreement may be affected by Section 409A of the Internal Revenue Code and it is
understood and agreed that you are responsible for consulting with your tax advisor regarding the
potential impact of Section 409A regarding the pay and benefits provided herein. It is also
understood and agreed that the Company Entities are not responsible for any adverse consequence
from the application of Section 409A or any other adverse consequence for Executive to the pay and
benefits provided herein.

     19. You acknowledge that this Separation Agreement, the General Release, the Restricted Stock
Agreement and the Consulting Agreement constitute the complete understanding between the Company,
the Bank and you, and, supersedes any and all agreements, understandings, and discussions, whether
written or oral, between you and any of the Company Entities and Persons, including the Employment
Agreements, the SERP Agreement and the Option Agreements, and any and all other employment related
agreements, excluding the Restricted Stock Agreement, all of which shall terminate on the
Separation Date. To the extent necessary to conform to Section 409A of the Internal Revenue Code,
this Separation Agreement shall constitute an amendment of the Employment Agreements effective as
of October 26, 2005 and of the SERP Agreement effective as of January 1, 2005. No other promises
or agreements

 Page 7

 

shall be binding on any Company Entity unless in writing and signed by both the Company Entity and
you after the date of this Separation Agreement.

     20. You may accept this Separation Agreement by signing it and returning it to Kim Mathews,
General Counsel, Legacy Bancorp, Inc., 99 North Street, P.O. Box 1148, Pittsfield, Massachusetts
01202-1148. The effective date of this Separation Agreement shall be the date it is signed by both
parties, provided that the provisions of Paragraphs 2a through 2f shall not become effective until
the Effective Date. In the event you do not accept this Separation Agreement as set forth above,
this Separation Agreement, including but not limited to the obligation of the Company to provide
the payments and other benefits referred to in Paragraph 2 above, shall be deemed automatically
null and void.

	 	 	 	 	 	 
	SIGNATURES	 	  
 	 
	 
	 	 	
 	 
	Date 	 	Michael A. Christopher            	 
	 	 	 	 
	 
	 	 	LEGACY BANKS 

 	 
	 	 	By:  	 	 
	Date 	 	 	J. Williar Dunlaevy           	 
	 	 	 	Title:  	 	 
	 
	 	 	

LEGACY BANCORP, INC. 

 	 
	 	 	By:  	 	 
	Date 	 	 	J. Williar Dunlaevy         	 
	 	 	 	Title:  	 	 

 Page 8

 

	 	 	 	 	 

EXHIBIT A

November 5, 2007

Mr. J. Williar Dunlaevy

President

Legacy Banks

99 North Street

Pittsfield, Massachusetts 01201

     Re: Resignation

Dear Mr. Dunlaevy:

     I hereby resign any and all positions I hold with Legacy Bancorp, Inc., Legacy Banks, The
Legacy Banks Foundation and each of their subsidiaries and affiliates, and their respective boards,
including but not limited to any positions as a director, employee, officer, or agent of these
entities. This resignation is effective as of January 1, 2008, and is final and irrevocable for all
purposes.

	 	 	 	 	 
	 	Sincerely,

 	 
	 	
 	 
	 	Michael A. Christopher 	 
	 	 	 

 

 

	 	 	 	 	 

EXHIBIT B

GENERAL RELEASE

     THIS GENERAL RELEASE, entered into January 1, 2008 by Michael A. Christopher, residing at 32
Meadow Ridge Drive, Pittsfield, Massachusetts 01201 (hereinafter referred to as the “Executive”).

WITNESSETH:

     WHEREAS, the Executive and Legacy Banks (the “Bank”) and Legacy Bancorp, Inc. (the “Company”),
having their principal offices in Pittsfield, Massachusetts, entered into a Separation Agreement
and General Release, dated as of November 5, 2007 (as such agreement may be amended from time to
time, the “Separation Agreement”), pursuant to Paragraph 4 of which the Executive agreed and
covenanted, to execute this General Release in favor of Legacy Bancorp, Inc., Legacy Banks, their
affiliates and/or their respective officers, directors, employees, agents and representatives; and

     WHEREAS, the employment of the Executive terminated as of January 1, 2008;

     NOW, THEREFORE, in exchange for the benefits to be provided to the Executive pursuant
Paragraphs 2a through 2eof the Separation Agreement, it is agreed as follows:

1. Except for the SA Obligations (defined in Paragraph 10 of the Separation Agreement),
Executive agrees to waive, release and forever discharge any and all claims and rights which
Executive ever had, now has or may have against Legacy Bancorp, Inc. and Legacy Banks and
all subsidiaries and affiliates of each (herein referred collectively as “Company
Entities”), and their respective successors and assigns, current and former officers,
agents, board of directors members, representatives and employees, various benefits
committees, and their respective successors and assigns, heirs, executors and personal and
legal representatives, based on any act, event or omission arising out of, during or
relating to his employment or service with a Company Entity or termination of such
employment or service occurring before Executive executes this General Release and
subsequent to the date on which the Executive executed the Separation Agreement. This
waiver and release includes, but is not limited to, any claims which could be asserted now
or in the future, under: the employment agreement between you and the Bank and between you
and the Company and the Bank, each of which is dated October 26, 2005, the Supplemental
Executive Retirement Agreement between you and the Bank dated, January 1, 2004, common law,
including, but not limited to, breach of express or implied duties, wrongful termination,
defamation, or violation of public policy; any policies, practices, or procedures of any
Company Entity.; any federal or state statutes or regulations including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq. , the Civil
Rights Act of 1866 and 1871, the Americans With Disabilities Act, 42 U.S.C. §12101 et seq.,
the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §1001 et seq.
(excluding those rights relating exclusively to employee pension benefits as governed by
ERISA), the Family and Medical Leave Act, §2601 et. seq., any contract of employment,
express or implied;

 

 

any provision of the United States, or Massachusetts Constitutions; any provision of any
other law, common or statutory, of the United States, the State of Massachusetts, or any
other state.

2. Anything herein to the contrary not withstanding, the Executive is not releasing: (i)
any rights to indemnification under the Articles of Incorporation, Charter or By-Laws of the
Company or the Bank, or under any applicable insurance policy, or any right to obtain
contributions as permitted by law, in each case to the extent permitted by applicable laws,
including the laws of the State of Delaware and the rules and regulations of the
Massachusetts Department of Banking; (ii) his right to enforce the terms and conditions of
the Separation Agreement and General Release, including, without limitation, the SA
Obligations; (iii) any rights or claims that arise after the Effective Date; or (iv) any
vested rights under the Company’s benefit plans.

3. By signing this General Release, the Executive represents that he has not and will not in
the future commence any action or proceeding arising out of the matters released hereby, and
that he will not seek or be entitled to any award of legal or equitable relief in any action
or proceeding that may be commenced on his behalf in regard to such released matters.

4. The Executive acknowledges that the Company and Bank have hereby advised him to consult
with an attorney of his choosing prior to signing this General Release. The Executive
represents that he has had the opportunity to review this General Release and, specifically,
the release in paragraph 1, with an attorney of his choice. The Executive also agrees that
he has entered into this General Release freely and voluntarily.

5. In the event that any one or more of the provisions of this General Release shall be held
to be invalid, illegal or unenforceable, the validity, legality and enforceability of the
remainder of this General Release shall not in any way be affected or impaired thereby.

6. This General Release shall be governed by the law of the State of Massachusetts without
reference to its choice of law rules, except to the extent governed by Federal law.

     IN WITNESS WHEREOF, the Executive has executed this General Release as of the date first set
forth above.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Michael A. Christopher 	 
	 	 	 

 

 

	 	 	 	 	 

EXHIBIT C

CONSULTING AGREEMENT

 

 

EXHIBIT D

For Immediate Release

Date: November 6, 2007

	 	 	 	 	 
	Contacts:

	 	J. Williar Dunlaevy
	 	Stephen M. Conley
	 
	 	 	 	 
	 

	 	Chairman & Chief Executive Officer
	 	Chief Financial Officer
	 
	 	 	 	 
	Phone:

	 	413-445-3500
	 	413-445-3530
	 
	 	 	 	 
	Email:

	 	bill.dunlaevy@legacybanks.com
	 	steve.conley@legacybanks.com

LEGACY BANCORP, INC.

ANNOUNCES RETIREMENT OF CHIEF OPERATING OFFICER

PITTSFIELD,
MASSACHUSETTS (November 6, 2007) — Legacy Bancorp, Inc.
(the “Company”) (NASDAQ:LEGC), the holding company for
Legacy Banks (the “Bank” or “Legacy”) announced today that Michael A. Christopher, President and Chief Operating
Officer and a Director of Legacy Bancorp and Legacy Banks intends to retire from those
positions, and as a Director of The Legacy Banks Foundation, effective January 1, 2008.
Christopher has oversight for the Commercial Lending Division as well as Legacy Portfolio
Management, the trust, investment management and insurance division of the Bank.

CEO J. Williar Dunlaevy said, “Mike Christopher has made a significant contribution and lasting
imprint on Legacy Banks. I and we will miss him as a colleague, friend and advisor. Almost a year
ago Mike began discussing his long anticipated and well deserved retirement with me.
Characteristically, during this time he has also pushed ahead with several important initiatives
within the Bank. We want to thank Mike for all he has done to build Legacy, and we wish him and his
family health and happiness in his retirement.”

Michael Christopher became CEO of the former Lenox Savings Bank in 1993. In 1995 he was
instrumental in forming The Trust Company of the Berkshires as a joint venture with the former City
Savings Bank. Again in 1999 he was instrumental as Lenox Savings Bank and City Savings Bank came
together to form Legacy Bancorp, the first multi-bank mutual holding company in the country. The
banks themselves were merged in 1999, and the successor bank took on the new identity of Legacy
Banks with Mr. Christopher as its President. Subsequently, the original joint venture, The Trust
Company, became the bank’s investment management division, Legacy Portfolio Management. In 2005
Legacy Bancorp executed a successful initial public offering and became a public company, listed on
NASDAQ as LEGC.

Prior to 1993, Mr. Christopher held positions of increasing responsibility in commercial lending
and management with the former First Agricultural Bank, Bay Banks, and Multibank.

2

 

Mr. Christopher is a graduate of Massachusetts College of Liberal Arts, and attended numerous
banking schools and courses over the course of his career. He is a U.S. Navy veteran, having
served in Panama and Viet Nam.

His extensive community involvement includes being trustee and chairman of The Berkshire Museum,
director of Berkshire Healthcare System, former trustee and president of the Lenox Library, and
former director of Berkshire Health Systems.

About the Company.

Legacy Banks is headquartered in Pittsfield, Massachusetts. It employs 179 people and has eleven
offices throughout Berkshire County in Great Barrington, Lee, Lenox, North Adams, Otis and
Pittsfield, and a loan production office in Colonie, New York. Legacy offers Personal Banking,
Mortgage Lending, Commercial Services, Insurance, Investments, Portfolio Management, Credit and
Debit Card products, and Online Services. Legacy Banks, through its predecessors City Savings Bank,
chartered in 1893, Lenox Savings Bank, chartered 1890, and Lee National Bancorp, chartered 1835 has
a 172-year banking history in Berkshire County.

Legacy Bancorp, Inc.’s press releases are available at no charge by visiting us on the worldwide
web at http://www.legacybanks.com.

Forward-Looking Statements 

This news release contains certain forward-looking statements which are based on certain
assumptions and describe future plans, strategies and expectations of the Company. These
forward-looking statements are generally identified by use of the words “believe,” “expect,”
“intend,” “anticipate,” “estimate,” “project,” or similar expressions. The Company’s ability to
predict results or the actual effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse effect on the operations of the Company and the subsidiaries
include, but are not limited to, changes in interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including
policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan
or investment portfolios, demand for loan products, deposit flows, competition, demand for
financial services in the Company’s market area and accounting principles and guidelines. These
risks and uncertainties should be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements. The Company does not undertake — and
specifically disclaims any obligation — to publicly release the result of any revisions which may
be made to any forward-looking statements to reflect events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or unanticipated events.

###

3

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