EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement") by and between Lance Ignon
("Ignon") and VaxGen, Inc. ("VaxGen"), is effective September 25, 2001 (the
"Effective Date"). In consideration of the mutual promises made herein, VaxGen
and Ignon agree as follows:

EMPLOYMENT. VaxGen hereby employs Ignon, and Ignon hereby accepts employment
with VaxGen, upon all of the terms and conditions described in this Agreement.
This Agreement supersedes, replaces and restates any and all prior agreements
between the parties hereto relating to the terms of Ignon's employment with
VaxGen, including any prior agreements concerning confidentiality,
non-disclosure and inventions.

WORK RESPONSIBILITIES. Subject to the terms of this Agreement, Ignon is hereby
employed in the position of Vice President, Corporate Communications and shall
perform the functions and responsibilities of that position. Ignon shall devote
the whole of his professional time, attention and energies to the performance of
his work responsibilities. Ignon's position, job description, duties and
responsibilities may be modified from time to time in the sole discretion of
VaxGen.

COMPENSATION. As consideration for the services and covenants described in this
Agreement, VaxGen agrees to compensate Ignon during the term of this Agreement
in the following manner:

Salary/Wages. VaxGen agrees to pay Ignon a base salary of $165,000 per year.
Ignon's salary, less required and authorized deductions, shall be paid in equal,
periodic installments no less frequently than semi-monthly in accordance with
VaxGen's then current payroll practices. The Compensation Committee of the
VaxGen Board of Directors (the "Board") will consider Ignon's salary annually
for potential increase.

Additional Option Grant and Subsequent Option Grants. Subject to Board approval,
Ignon shall be granted an option to purchase 34,967 shares of common stock of
VaxGen at a per share exercise price equal to the fair market value of the
common stock of VaxGen on the Effective Date in accordance with the form of
grant used by VaxGen for grants made to its executive officers (the "Initial
Option"). The Initial Option shall be Incentive Stock Options to the maximum
extent permitted by VaxGen's stock option plan. The Initial Option shall vest
and become exercisable in accordance with the following schedule: twenty-five
percent (25%) of the Initial Option shall vest on the first (1st) anniversary of
the Effective Date and an additional 1/48th of the Initial Option shall vest on
the last day of each of the next 36 months following such anniversary; provided
that, in each case, Ignon has been continuously employed with VaxGen from the
Effective Date through the applicable vesting date, except as otherwise provided
herein or under the terms of VaxGen's stock option plan. Except as otherwise
provided herein, the Initial Option shall be subject to such terms and
conditions, including provisions regarding post-termination exercisability, as
generally apply to stock options granted to other executive officers who
participate in VaxGen's equity incentive plans as such terms and conditions are
in effect on the Effective Date. Ignon will be eligible to receive an annual
award of stock options, which will

                                       41


<PAGE>

be issued, if at all, in accordance with the terms and conditions of this
Agreement and VaxGen's stock option plan as in effect at the time of the award,
in an amount to be determined in the sole discretion of the Board. In the event
that Ignon's employment is terminated by the Company without Cause pursuant to
paragraph 16(a)(iv) below or by Ignon with Good Reason pursuant to paragraph
16(a)(v) below or following a Change in Control pursuant to paragraph 16(d)
below, then Ignon shall have one (1) year from the date of termination to
exercise all options which are then vested or which vest as a result of this
Agreement, provided however that in no event will Ignon be entitled to exercise
such stock options after the expiration of 10 years from the date of grant of
such stock options.

Performance Bonus. Ignon is eligible to receive an annual performance bonus of
up to thirty percent (30%) of his annual base salary in cash, VaxGen securities
or a combination thereof, provided that no more than 50% of the performance
bonus shall be paid in securities. The Chief Executive Officer ("CEO") and Ignon
will mutually cooperate to establish annual performance objectives for Ignon.
Such performance bonus shall be awarded, if at all, in the sole discretion of
the Compensation Committee of the Board. The Compensation Committee of the Board
will consider Ignon's bonus annually for potential increase.

Benefits. Ignon shall be entitled to employment benefits in accordance with
policies established by or at the direction of the Board with respect to
officers of VaxGen, including holidays, leaves of absence, health insurance,
dental insurance, vacation and other benefits, if any, in accordance with any
eligibility requirements, policies, procedures, or benefit plans adopted by
VaxGen from time to time during the existence of this Agreement. Ignon's rights,
or those of Ignon's dependents under any such benefits policies or plans, shall
be governed solely by the terms of such policies or plans. VaxGen's employment
benefits, and policies related thereto, are subject to termination, modification
or limitation at VaxGen's sole discretion.

Total Compensation. Ignon agrees that the compensation stated above constitutes
the full and exclusive monetary consideration and compensation for all services
rendered under this Agreement and for all promises and obligations under this
Agreement.

Business Expenses. VaxGen shall pay Ignon's reasonable business expenses,
including expenses incurred for travel on VaxGen business, in accordance with
the policies and procedures of VaxGen, as may be adopted or amended from time to
time at VaxGen's sole discretion. If Ignon incurs business expenses under this
Agreement, he shall submit monthly to VaxGen a request for reimbursement
together with supporting documentation satisfactory to VaxGen.

VAXGEN POLICIES. Ignon agrees to abide by VaxGen's written policies, and
procedures that have been communicated or made available to him, as they may
from time to time be adopted or modified by VaxGen in its sole discretion.
VaxGen's written policies and procedures, including the Employee Handbook, shall
be binding on Ignon unless superseded by, or in conflict with, this Agreement.
Copies of written policies and procedures are available to Ignon in the offices
of VaxGen, and Ignon shall be responsible at all times to review, and make
himself familiar with, these policies and procedures.

WARRANTIES. Ignon hereby represents and warrants that he has not unlawfully
misappropriated any confidential, proprietary or trade secret information from
Ignon's prior

                                       42
<PAGE>

employer or employers and, except to the extent such information has become
publicly available, will not knowingly disclose such information to VaxGen or
improperly use any such information on behalf of VaxGen. Ignon acknowledges that
VaxGen has specifically requested that, if Ignon has any such confidential,
proprietary or trade secret knowledge or information, Ignon not use such
information while employed by VaxGen for the benefit of VaxGen. Ignon further
warrants that by entering into this Agreement with VaxGen he is not violating
any of the terms, agreements or covenants of any previous employment or
association.

PRIOR INVENTIONS. Ignon acknowledges that, except for the inventions disclosed
on Appendix A, Ignon does not have any right or claim to any invention, idea,
process, formula, discovery, copyright, patent or other such item or matter. No
rights are hereby conveyed by Ignon to VaxGen with respect to inventions, if
any, made by Ignon prior to employment by VaxGen, which inventions are listed in
Schedule A, attached hereto.

SUBSEQUENT INVENTION DISCLOSURE. Ignon hereby agrees to promptly disclose to
VaxGen any and all inventions that he develops during the term of his
employment. Ignon will also disclose to the CEO all inventions made, conceived,
reduced to practice, or developed by Ignon within six months of the termination
of his employment with VaxGen that resulted from his prior work with VaxGen.
Such disclosures shall be received by VaxGen in confidence and do not extend the
assignment of inventions disclosed beyond that required by law.

ASSIGNMENT OF INVENTIONS. Ignon hereby assigns and agrees to assign to VaxGen or
its designee, Ignon's entire right, title and interest in and to all inventions,
works of authorship, developments, concepts, discoveries, ideas, trademarks and
trade secrets, whether or not patentable or registrable under copyright or other
intellectual property laws ("Inventions") which Ignon may solely or jointly
develop, conceive or reduce to practice, during the period of employment, except
as provided in paragraph 10 below. Ignon agrees that all such Inventions are the
sole property of VaxGen. Ignon further agrees that all such Inventions,
including works of authorship, are "works for hire" for purposes of VaxGen's
rights under copyright laws. Ignon agrees to keep and maintain adequate and
current written records of all Inventions made by him (solely or jointly with
others) during the term of his employment with VaxGen. The records will be in
the form of notes, sketches, drawings, and any other format that may be
specified by VaxGen. The records will be available to and remain the sole
property of VaxGen at all times. Ignon understands and agrees that the decision
whether or not to commercialize or market any Invention developed by him solely
or jointly with others is within VaxGen's sole discretion and for VaxGen's sole
benefit and that no royalty will be due to him as a result of VaxGen's efforts
to commercialize or market any such Invention. Ignon further agrees to perform,
during and after employment with VaxGen, all acts deemed necessary or desirable
by VaxGen to permit and assist VaxGen, at VaxGen's expense, in obtaining and
enforcing the full benefits, enjoyment, rights and title, throughout the world,
of and to the Inventions hereby assigned by Ignon to VaxGen as set forth above.

PATENT AND COPYRIGHT REGISTRATIONS. Ignon agrees to assist VaxGen, or its
designee, at VaxGen's expense, in every proper way to secure VaxGen's rights in
the Inventions and any copyrights, patents, trademarks, and trade secret rights
or other intellectual property

                                       43

<PAGE>

rights in connection with any such Inventions in any and all countries,
including the disclosure to VaxGen of all pertinent information and data with
respect thereto, the execution of all applications, specifications, oaths,
assignments and all other instruments or papers which VaxGen shall deem
necessary in order to apply for and obtain such rights and in order to assign
and convey to VaxGen, its successors, assigns, and nominees the sole and
exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, trademark and other intellectual property rights relating
thereto. Ignon further agrees that his obligation to execute or cause to be
executed, when it is in his power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If VaxGen is unable, because
of Ignon's mental or physical incapacity or for any other reason, to secure his
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to VaxGen as above, then Ignon hereby irrevocably
designates and appoints VaxGen and its duly authorized officers and agents as
his agent and attorney in fact to act for and in his behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by
Ignon.

INVENTIONS NOT ASSIGNED. The parties agree that the assignment of inventions
under this Agreement does not apply to an invention which qualifies fully for
protection under Section 2870 of the California Labor Code, which states that
"Any provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities or trade secret information except for those inventions
that either: (1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or (2) Result from any work performed
by the employee for the employer[.]"

CONFIDENTIAL, PROPRIETARY AND TRADE SECRET INFORMATION. During the course of his
employment, will come into possession of or acquire knowledge of confidential,
proprietary and trade secret information of VaxGen. Ignon hereby covenants and
agrees that he will not, either during his employment or at any time thereafter,
disclose any such confidential, proprietary or trade secret information to any
person, firm, corporation, association, partnership or other entity (other than
those in VaxGen's organization qualified and authorized to receive such
information) for any purpose or reason whatsoever. Such confidential and
proprietary information shall be deemed to include, but not be limited to,
manuals, discs, tapes, and summaries or originals of any papers, documents,
plans, specifications, client lists, contracts, licenses or licensing
agreements, data bases, or portions thereof, related to the research and
development, products or operations of VaxGen, provided that such information is
confidential, proprietary or falls within the definition of a "trade secret"
under the Uniform Trade Secrets Act. Ignon specifically agrees that he will not
make use of any such confidential or proprietary information for his own
purpose, or for the benefit of any person, firm, corporation or other entity
except VaxGen. Ignon will abide by VaxGen's policies and procedures, as
established from time to time for the protection of its trade secrets and
confidential information.

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<PAGE>

RETURN OF PROPERTY. All confidential, proprietary and trade secret information,
and all other documents, records, apparatus, equipment and other physical
property which is furnished to or obtained by Ignon in the course of employment
with VaxGen, shall be and remain the sole property of VaxGen. Ignon agrees that
upon request by VaxGen or the termination of Ignon's employment (whichever
occurs first), Ignon shall return all such property, and agrees not to make or
retain copies, reproductions or summaries of any such property without the
express written consent of VaxGen.

NON-SOLICITATION, ANTI-RAIDING. For a period of one (1) year immediately
following the termination of his employment, Ignon agrees that he will not,
either directly or indirectly, (a) attempt to recruit, solicit or take away any
of the employees of VaxGen who worked for VaxGen at any time during the term of
this Agreement; make known to any person, firm or corporation the names or
addresses of, or any information pertaining to, any current or former employees
of VaxGen; (b) use any confidential or proprietary information to attempt to
call on, solicit or take away any clients of VaxGen or any other persons,
entities, or corporations with which VaxGen has had or contemplated any business
transaction or relationship during Ignon's employment with VaxGen, including,
but not limited to, investments, licenses, joint ventures, and agreements for
development.

EQUITABLE RELIEF. Ignon and VaxGen each agree that in the event of a breach or
threatened breach of paragraphs 7 through 13 of this Agreement each party will
not have an adequate remedy at law. Thus, in the event of such a breach or
threatened breach by one party, the other party will be entitled to such
equitable and injunctive relief in a court of law as may be available to prevent
and restrain a breach of the provisions of paragraphs 7 through 13. Said
availability to obtain injunctive relief will not prevent either party from
pursuing any other equitable or legal relief, including the recovery of damages
from such breach or threatened breach.

AT-WILL EMPLOYMENT. Ignon understands and agrees that employment at VaxGen is
at-will. This means that, for any reason or no reason, Ignon's employment may be
terminated, with or without cause, at any time by either Ignon or by VaxGen,
subject to the severance and notice provisions contained in Section 16 below.
Nothing in this or any other document or statement shall limit the right of
VaxGen to terminate Ignon's employment at-will. Only the Board has the authority
to amend this Agreement on behalf of VaxGen, and then only in a writing that is
signed by both Ignon and VaxGen pursuant to authority expressly granted by the
Board.


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<PAGE>


TERMINATION OF EMPLOYMENT.

Subject to the survivability provisions of Section 18 below, Ignon's employment
under this Agreement and all compensation and benefits provided for herein shall
terminate upon the occurrence of any of the following events.

Death: In the event of Ignon's death, the termination shall be effective upon
the date thereof.

Disability: In the event that Ignon should become "disabled," VaxGen may
terminate Ignon's employment under this Agreement. For purposes of this
paragraph, "disabled" shall mean Ignon's inability, despite reasonable
accommodation, to perform the essential duties of his position for a period of
five (5) consecutive months, and failure to resume the performance of such
duties on a full-time basis within thirty (30) days of notice from VaxGen of
intent to terminate this Agreement on such grounds. The termination shall be
effective upon the date specified in VaxGen's notice to Ignon as provided for
herein. Any base salary payable to Ignon by VaxGen may be offset by any benefits
paid to Ignon under any applicable short-term or long-term disability plan.

Cause: VaxGen may terminate Ignon's employment under this Agreement upon the
occurrence of "cause" for termination as herein defined. "Cause" shall mean (A)
Ignon's fraud, misappropriation, embezzlement or other willful commission of a
dishonest or unlawful act that has the effect of materially injuring VaxGen or
its reputation, (B) Ignon's conviction of a crime involving moral turpitude or a
felony, (C) Ignon's willful or reckless violation of VaxGen's written policies
or procedures that has the effect of materially injuring VaxGen, or Ignon's
breach of the confidential information and invention assignment provisions of
this Agreement, and, if any such violation or breach under this Section
16(a)(iii)(C) is curable, Ignon's failure to cure such violation or breach
within 15 business days of receiving notice of such violation or breach from the
Board, or (D) Ignon's habitual failure to perform his job duties, as determined
by the Board in its reasonable judgment, and after notice of such failure has
been given to Ignon by the Board and Ignon has had a 15 business-day period
within which to cure such failure. The Parties acknowledge that the reference to
a "for Cause" termination herein does not alter the employment at-will
relationship, but merely sets forth circumstances under which VaxGen has no
obligation to pay severance to Ignon. The termination shall be effective upon
the date specified in VaxGen's notice to Ignon.


Without Cause: Either VaxGen or Ignon may terminate Ignon's employment under
this Agreement without Cause at any time upon thirty (30) days written notice to
the other party. The termination shall be effective upon the date specified in
the notice given pursuant hereto.

By Ignon with Good Reason: Ignon may terminate his employment under this
Agreement for Good Reason (A) in the event VaxGen breaches a material term
hereof and, after receiving written notice from Ignon detailing the specific
provision allegedly breached, does not remedy said breach within thirty (30)
days of receiving notice, (B) there is a demotion of Ignon from the position of
Vice President, Corporate Communications or the

                                       46

<PAGE>

assignment of job duties or responsibilities materially inconsistent with such
position, (C) VaxGen moves Ignon's principal place of business more than
thirty-five (35) miles from VaxGen's current principal place of business at 1000
Marina Blvd, Brisbane, California, (D) there is a reduction in Ignon's
then-current base salary and/or performance bonus opportunity, or (E) there is a
material and substantial reduction in the aggregate of Ignon's employee
benefits. The termination shall be effective on the date specified in the notice
given hereunder, which date shall not be earlier than the date such notice is
given, nor more than 30 days after the date such notice is given.

In the event that Ignon's employment under this Agreement is terminated by
VaxGen under paragraphs 16(a)(i), 16(a)(ii) or 16(a)(iii) above, or by Ignon
under paragraph 16(a)(iv) above, no severance pay will be due to Ignon; however
Ignon shall be entitled to payment for any earned but unpaid base salary through
the date of termination as well as payment for any accrued but unused vacation
time and any accrued employee benefits, subject to the terms of the applicable
employee benefit plans.

In the event that Ignon's employment under this Agreement is terminated by
VaxGen under paragraph 16(a)(iv) above or by Ignon under paragraph 16(a)(v)
above, Ignon shall be entitled to receive: (i) severance pay in the amount of
six (6) months of his then-existing annual base salary plus one additional month
of base salary for each full year of employment with VaxGen (such severance
being limited strictly to annual base salary and will not include any amount
paid or payable as a bonus or stock option grant) up to a maximum severance
payment of twelve (12) months annual base salary, less required and authorized
deductions, payable on VaxGen's ordinary payroll cycles until fully paid out;
and (ii) accelerated vesting of all his outstanding stock options to fully
vested status as of the date of termination.

Ignon shall be entitled to the severance benefits provided for in 16(c) above
if, within twelve (12) months following a Change in Control (as defined below),
VaxGen or its successor in interest terminates Ignon's employment for any reason
other than for Cause (as defined above) or Ignon terminates his employment on
account of any of the following: (i) in the event VaxGen breaches a material
term hereof and, after receiving written notice from Ignon detailing the
specific provision allegedly breached, does not remedy said breach within thirty
(30) days of receiving notice; or (ii) there is a material reduction in Ignon's
job duties or responsibilities, including, without limitation, demotion from the
position of Vice President; or (iii) VaxGen or its successor in interest moves
Ignon's principal place of business more than thirty-five (35) miles from
VaxGen's current principal place of business at 1000 Marina Blvd, Brisbane,
California; or (iv) there is a reduction in Ignon's then-current base salary
and/or performance bonus opportunity; or (v) there is a material and substantial
reduction in the aggregate of Ignon's employee benefits.

For purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred if: (i) there is an acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (for the purposes of this Section,
a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the voting power of the
then outstanding voting securities of VaxGen entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this

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<PAGE>

subsection 16(e), any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by VaxGen or any corporation controlled by VaxGen
shall not constitute a Change in Control; or (ii) individuals who, as of the
date hereof, constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual (other than an individual whose initial assumption of office occurs
as a result of an actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board) who becomes a director subsequent to
the date hereof whose election or nomination for election by VaxGen's
shareholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board; or (iii) there is a consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of VaxGen (a "Business Combination") unless,
following such Business Combination, (A) individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of the voting power of the then Outstanding Company Voting Securities of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns VaxGen or
all or substantially all of VaxGen's assets either directly or through one or
more subsidiaries) and (B) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or (iv) approval by the shareholders of VaxGen of a complete
liquidation or dissolution of VaxGen.

In the event Ignon's employment with VaxGen is terminated, Ignon agrees that he
will, unless otherwise requested by the Board, resign his position on the Board
within ten (10) days of the date his employment is terminated.

INDEMNIFICATION. VaxGen shall maintain, for the benefit of Ignon, director and
officer liability insurance in form at least as comprehensive as, and in an
amount that is at least equal to, that maintained by VaxGen as of the Effective
Date of this Agreement for its other officers and directors. In addition, VaxGen
shall indemnify Ignon against liability as an officer and director of VaxGen or
any subsidiary or affiliate of VaxGen to the maximum extent permitted by
applicable law. Ignon's rights under this Paragraph 17 shall continue so long as
he may be subject to such liability, whether or not his employment may have
terminated prior thereto.

SURVIVABILITY. The respective rights and obligations of the Parties hereunder,
including, without limitation, Sections 7, 8, 9, 10, 11, 12, 13, 14, 16(c), 17,
19 and 28 of this Agreement, shall, to the extent necessary, survive any
termination of Ignon's employment or this Agreement.

GOVERNING LAW. This Agreement shall be construed in accordance with and governed
by the laws of the State of California without regard to its conflict of law
rules. This Agreement shall be interpreted in accordance with the plain meaning
of its terms and not strictly for or against either party.

ENTIRE AGREEMENT. This Agreement embodies the complete agreement and
understanding of the parties related to Ignon's employment by VaxGen,
superseding any and all other prior or contemporaneous oral or written
agreements between the parties hereto with

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<PAGE>


respect to the employment of Ignon by VaxGen, and contains all of the covenants
and agreements of any kind whatsoever between the parties with respect to such
employment. Each party acknowledges that no representations, inducements,
promises or agreements, whether oral or written, express or implied, have been
made by either party or anyone acting on behalf of a party, that are not
incorporated herein and that no agreement or promise not contained herein shall
be valid or binding.

WAIVER. The failure of either party to insist, in any one or more instances,
upon performance of the terms or conditions of this Agreement shall not be
construed as a waiver or a relinquishment of any right granted under this
Agreement or of the future performance of any such term, covenant or condition.

INVALIDITY. Should any provision, portion or part of this Agreement be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions, portions or parts shall be unaffected and shall continue
in full force and effect, and said invalid, void or unenforceable provision(s),
portion(s) or part(s) shall be deemed not to be part of this Agreement.

NO THIRD PARTY BENEFICIARIES. This Agreement is not intended by either party to
create any third-party beneficiaries, and shall not be so construed in any
proceeding. The sole parties to this Agreement are Ignon and VaxGen, and it is
their mutual intent that they alone shall have standing to enforce the
provisions of this Agreement, subject to the provisions of Section 26 below.

VOLUNTARY AGREEMENT. Ignon and VaxGen represent and agree that each has reviewed
all aspects of this Agreement, has carefully read and fully understands all
provisions of this Agreement, and is voluntarily entering into this Agreement.
Each party represents and agrees that such party has had the opportunity to
review any and all aspects of this Agreement with the legal, tax or other
advisor or advisors of such party's choice before executing this Agreement.

CAPTIONS. The captions of the various paragraphs of this Agreement are placed
herein for the convenience of the parties and the reader, do not constitute a
substantive term or terms of this Agreement, and shall not be considered in any
issue involving the interpretation or application of this Agreement.

SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against Ignon's heirs, beneficiaries
and legal representatives. It is agreed that the rights and obligations of Ignon
may not be delegated or assigned except as specifically set forth in this
Agreement. In the event of a Change in Control (as defined above), VaxGen may
assign its rights and obligations under this Agreement to its
successor-in-interest, and in that event such successor-in-interest shall be
deemed to have acquired all rights and assumed all obligations of VaxGen under
this Agreement.

NOTICES. Notices given under the terms of this Agreement shall be in writing and
shall be deemed delivered when personally delivered to the person identified
below, or three (3) days after deposited, proper first class postage prepaid, in
the U. S. Mail and addressed as set forth below, or one day after properly
consigned to a recognized national next-day delivery service

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<PAGE>

(e.g., Federal Express) prepaid and addressed as set forth below, or faxed to
the number provided below and confirmed by a delivery report from the sending
fax transmitter. The officer, addresses and facsimile numbers below may be
changed by written notice given pursuant to this paragraph. Notices shall be
given:


         If to VaxGen:              Chief Executive Officer of VaxGen, Inc.
                                    1000 Marina Blvd., Suite 200
                                    Brisbane, California 94005
                                    Fax number:  650-624-1001

         With a copy to:            Garrett Waltzer, Esq.
                                    Skadden, Arps, Slate, Meagher & Flom
                                    LLP 525 University Avenue, Suite
                                    1100 Palo Alto, California 94301 Fax
                                    number: 650-470-4570

         If to Ignon:               Lance Ignon,
                                    2609 Sutter St. Unit C
                                    San Francisco, California  94115
                                    Fax number:  ________________


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<PAGE>


ALTERNATIVE DISPUTE RESOLUTION PROGRAM. Except as to efforts to seek injunctive
relief as specifically addressed in paragraphs 7 through 14, the parties
understand and agree that any dispute arising out of Ignon's employment by
VaxGen, the termination of that employment, or arising out of or relating to
this Agreement shall be submitted to binding arbitration in accordance with the
terms of the Alternative Dispute Agreement set forth in Appendix B to this
Agreement and incorporated herein.


Dated:  ___________                               ______________________________
                                                  Lance Ignon



Dated:  ___________                               VaxGen, Inc.


                                                  By: __________________________

                                                  Title:________________________




<PAGE>



                                   APPENDIX A

Inventions. Except as set forth below, I hereby acknowledge that at this time I
have no right, title or other interest in any invention, patent, copyright or
other such material other than the following (if none, so state):

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Dated:
       ----------------------------------  ------------------------------------
-----------------------------------------  Lance Ignon




<PAGE>


                                   APPENDIX B
ALTERNATIVE DISPUTE AGREEMENT

     AGREEMENT TO ARBITRATE

     o    In the event that any employment dispute arises between VaxGen, Inc.
          ("VaxGen") and Lance Ignon ("Ignon"), the parties involved will make
          all efforts to resolve any such dispute through informal means.
          However, if within thirty (30) days of the event giving rise to the
          dispute, these informal attempts at resolution fail and if the dispute
          arises out of or is related to Ignon's Employment Agreement, Ignon's
          employment, the termination of Ignon's employment or alleged unlawful
          discrimination, including but not limited to sexual or other unlawful
          harassment (an "Arbitrable Dispute"), VaxGen and Ignon will submit the
          dispute to final and binding arbitration, except as set forth in
          Paragraphs 7-14 of the Employment Agreement.

     The parties expressly understand and agree that arbitration is the
exclusive remedy for all such Arbitrable Disputes; with respect to such
disputes, no other action may be brought in court or any other forum (except
actions to compel arbitration or enforce an award issued hereunder). THIS
ALTERNATIVE DISPUTE RESOLUTION ("ADR") AGREEMENT IS A WAIVER OF THE PARTIES'
RIGHTS TO A CIVIL COURT ACTION FOR A DISPUTE RELATING TO BREACH OF THE PARTIES'
EMPLOYMENT AGREEMENT, TERMINATION OF THAT EMPLOYMENT OR ALLEGED UNLAWFUL
DISCRIMINATION, WHICH INCLUDES RETALIATION OR SEXUAL OR OTHER UNLAWFUL
HARASSMENT; ONLY AN ARBITRATOR, NOT A JUDGE OR JURY, WILL DECIDE THE DISPUTE.

     Arbitrable Disputes arising out of or related to employment, or the
termination of such employment or alleged unlawful discrimination, including
retaliation or sexual or other unlawful harassment, shall include, but not be
limited to, the following: alleged violations of federal, state and/or local
constitutions, statutes or regulations; claims based on any purported breach of
contractual obligation, including breach of the covenant of good faith and fair
dealing; and claims based on any purported breach of duty arising in tort,
including violations of public policy.

     The following types of employment disputes are not subject to this ADR
Agreement: (1) disputes related to workers' compensation and unemployment
insurance; (2) claims for benefits covered by a separate benefit plan that
provides for arbitration; and (3) claims subject to Sections 7 through 14 of the
Employment Agreement. Also, nothing in the Employment Agreement or in the ADR
Agreement shall be construed as precluding Ignon from filing a charge with the
Equal Employment Opportunity Commission ("EEOC"), the National Labor Relations
Board ("NLRB") or other federal, state or local agencies, seeking administrative
assistance in resolving claims. However, any claim that cannot be resolved
administratively through such an agency shall be subject to the Employment
Agreement and the ADR Agreement.



<PAGE>


REQUEST FOR ARBITRATION

Attempt At Informal Resolution Of Disputes

     Prior to the submission of any Arbitrable Dispute to arbitration, Ignon and
VaxGen shall attempt to resolve the dispute informally as set forth below.

     Ignon and VaxGen will select a mediator from a list provided by the Federal
Mediation and Conciliation Service or other similar agency who will assist the
parties in attempting to reach a settlement of the dispute. The mediator may
make settlement suggestions to the Parties but shall not have the power to
impose a settlement upon them. If the dispute is resolved in mediation, the
matter shall be deemed closed. If the dispute is not resolved in mediation and
goes to the next step (binding arbitration), any proposals or compromises
suggested by either of the parties or the mediator shall not be referred to in
or have any bearing on the arbitration procedure. The mediator cannot also serve
as the arbitrator in the subsequent proceeding unless all parties expressly
agree in writing.

Arbitration Procedures

     The party desiring arbitration, whether Ignon or VaxGen, must submit a
"Request For Arbitration" in writing to the other party within the time period
required by the law that applies to the claim under the applicable statute of
limitations. If the "Request for Arbitration" is not submitted in accordance
with the aforementioned time limitations, the party failing to do so will not be
able to bring his claims to this or any other forum. The requesting party may
use a "Request for Arbitration" form supplied by VaxGen (Appendix C).
Alternatively, the requesting party may create a "Request For Arbitration" form
that, unless otherwise required by law, clearly states "Request For Arbitration"
at the beginning of the first page and includes the following information:

          1. A factual description of the dispute in sufficient detail to advise
     the other party of the nature of the dispute;

          2. The date when the dispute first arose;

          3. The names, work locations and telephone numbers of any individuals,
     including employees or supervisors, with knowledge of the dispute; and

          4. The relief requested by requesting party.

     The responding party may submit counterclaim(s) in accordance with
applicable law. Any dispute as to the sufficiency of the foregoing notice shall
be submitted to the Arbitrator for resolution and shall not be a basis for
avoiding arbitration.

Selection Of The Arbitrator

     All disputes will be resolved by a single Arbitrator, the Arbitrator will
be mutually selected by VaxGen and Ignon. If the parties cannot agree on an
Arbitrator, then a list of seven (7) arbitrators, experienced in employment
matters, shall be provided by the Judicial

<PAGE>

Arbitration Mediation Services ("JAMS/Endispute"). The Arbitrator will be
selected by the parties who will alternately strike names from the list. The
last name remaining on the list will be the Arbitrator selected to resolve the
dispute. Upon selection, the Arbitrator shall set an appropriate time, date and
place for the arbitration, after conferring with the parties to the dispute.

The Arbitrator's Authority

     The Arbitrator shall have the powers enumerated below:

     1. Ruling on motions regarding discovery, and ruling on procedural and
evidentiary issues arising during the arbitration.

     2. Ruling on motions to dismiss and/or motions for summary judgment
applying the standards governing such motions under the Federal Rules of Civil
Procedure.

     3. Issuing protective orders on the motion of any party or third party
witness. Such protective orders may include, but are not limited to, sealing the
record of the arbitration, in whole or in part (including discovery proceedings
and motions, transcripts, and the decision and award), to protect the privacy or
other constitutional or statutory rights of parties and/or witnesses.

     4. Determining only the issue(s) submitted to him/her. The issue(s) must be
identifiable in the "Request For Arbitration" or counterclaim(s). Except as
required by law, any issue(s) not identifiable in those documents is outside the
scope of the Arbitrator's jurisdiction and any award involving such issue(s),
upon motion by a party, shall be vacated.

Discovery

     The discovery process shall proceed and be governed by the standards of the
California Code of Civil Procedure and the Federal Arbitration Act. Each party
may obtain discovery necessary to adequately explore and arbitrate their
respective claims. The Arbitrator shall have the power to enforce the
aforementioned discovery rights and obligations by the imposition of the same
terms, conditions, consequences, liabilities, sanctions and penalties as can or
may be imposed in like circumstances in a civil action under the California Code
of Civil Procedure, except the power to order the arrest or imprisonment of a
person.

Hearing Procedure

     The hearing shall be held at a location mutually agreed upon by the
parties, or as determined by the Arbitrator in the absence of an agreement, and
shall proceed according to the current version of the American Arbitration
Association's "National Rules for the Resolution of Employment Disputes" (the
"Rules") with the following amendments:

     1. The Arbitrator shall rule at the outset of the arbitration on procedural
issues that bear on whether the arbitration is allowed to proceed.


<PAGE>

     2. Each party has the burden of proving each element of its claims or
counterclaims, and each party has the burden of proving any of its affirmative
defenses.

     3. In addition to, or in lieu of closing argument, either party shall have
the right to present a post-hearing brief, and the due date for exchanging any
post-hearing briefs shall be mutually agreed on by the parties and the
Arbitrator, or determined by the Arbitrator in the absence of agreement.

     4. The Rules shall otherwise be modified to the extent necessary to be
consistent with applicable law.

Substantive Law

     1. The parties agree that they will be afforded the identical legal,
equitable, and statutory remedies as would be afforded them were they to bring
an action in a court of competent jurisdiction.

     2. The applicable substantive law shall be the law of the State of
California and/or federal law. Choice of substantive law in no way affects the
procedural aspects of the arbitration, which are exclusively governed by the
provisions of this ADR Agreement.

Opinion And Award

     The Arbitrator shall issue a written opinion and award, in conformance with
the following requirements:

     1. The opinion and award must be signed and dated by the Arbitrator.

     2. The Arbitrator's opinion and award shall decide all issues submitted.

     3. The Arbitrator's opinion and award shall set forth the findings of fact
and conclusions of law supporting each part of the opinion.

     4. The Arbitrator shall have the same authority to award remedies, damages
and costs as provided to a judge and/or jury under parallel circumstances.

Enforcement Of Arbitrator's Award

     Following the issuance of the Arbitrator's decision, any party may petition
a court to confirm, enforce, correct or vacate the Arbitrator's opinion and
award under the Federal Arbitration Act, and/or applicable State law.

Fees And Costs

     Unless otherwise required by law, fees and costs shall be allocated in the
following manner:

     1. Each party shall be responsible for its own attorneys' fees, except as
otherwise provided by law for the particular claim(s) at issue.


<PAGE>

     2. VaxGen shall pay the entire cost of the arbitrator's services, the
facility in which the arbitration is to be held, and any similar costs that
Ignon would not have otherwise incurred if the dispute were adjudicated in a
court of law rather than through arbitration.

     3. VaxGen shall pay the entire cost of a court reporter to transcribe the
arbitration proceedings. Each party shall advance the cost for said party's
transcript of the proceedings. Each party shall advance its own costs for
witness fees, service and subpoena charges, copying, or other incidental costs
that each party would bear during the course of a civil lawsuit.

     4. Each party shall be responsible for its costs associated with discovery,
except as required by law or court order.

Severability

     Each term, clause and provision of this ADR Agreement is separate and
independent, and should any term, clause or provision of this ADR Agreement be
found to be invalid or unenforceable, the validity of the remaining terms,
clauses, and provisions shall not be affected. As to those terms, clauses and
provisions found to be invalid or unenforceable, they shall be replaced with
valid and enforceable terms, clauses or provisions or shall be modified, in
order to achieve, to the fullest extent possible, the economic, business and
other purposes of the invalid or unenforceable terms, clauses or provisions.


Dated: _________                  ___________________________________
                                  Lance Ignon



Dated: _________                  VaxGen, Inc.



                                  By: _______________________________

                                  Title: ____________________________



<PAGE>


                                   APPENDIX C

REQUEST FOR ARBITRATION FORM

ALTERNATIVE DISPUTE RESOLUTION AGREEMENT

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Submission     This form (or, alternatively, a form that includes the
Requirement    information below) must be submitted by the individual claimant
               to the CEO within the time period required by the law that
               applies to the claim. If VaxGen requests arbitration, the form
               must also be served on the individual within the appropriate time
               period.

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State the nature of the claim in detail:

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(Continue on reverse and add pages if necessary)

Enter the date of termination or date(s) of alleged incident(s) (e.g., date of
last instance of unlawful discrimination, sexual or other unlawful harassment):
_______/________/_______
 Month    Day     Year

Provide the names and work locations of any individuals, including employees or
supervisors, with knowledge of the dispute:

Name                          Job Title                     Work Location


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<PAGE>


Describe the relief requested (i.e., what you want done):

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(Please attach any documents relevant to the dispute.)

Signature of Party Requesting Arbitration:


Dated: ________________                           ______________________________
                                                  Lance Ignon



Dated: ________________                           VaxGen, Inc.


                                                  By: __________________________

                                                  Title: _______________________

Source: OneCLE Business Contracts.