EXECUTIVE EMPLOYMENT AGREEMENT
JAMES M. CUNHA

                This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is
entered into by and between James M. Cunha (hereinafter “Executive”) and VaxGen,
Inc. (hereinafter “VaxGen” or the “Company”), as of the date that it has been
signed by both parties (the “Effective Date”). In consideration of the mutual
promises made herein, VaxGen and Executive agree as follows:

                1.              EMPLOYMENT BY THE COMPANY. VaxGen hereby employs
Executive, and Executive hereby accepts employment with VaxGen upon the terms
and conditions set forth in this Agreement, as of the Effective Date. On the
Effective Date, Executive will be employed as the Company’s Chief Financial
Officer (“CFO”) and Executive will cease serving as Interim Chief Financial
Officer.

                2.              WORK RESPONSIBILITIES. As CFO, Executive shall
perform the functions and responsibilities provided for that position in the
Company’s by-laws and articles of incorporation, customarily associated with
that position, and as may be assigned from time to time by the Company’s Chief
Executive Officer (“CEO”), including, but not limited to, managing the Company’s
Finance and Administration Department. VaxGen may assign additional or different
duties to Executive. Executive will report to the CEO. Executive shall devote
the whole of his professional time, attention and energies to the performance of
his work responsibilities (except for vacation periods and reasonable periods of
illness or other incapacity permitted by the Company’s general employment
policies, or as otherwise permitted by this Agreement). Executive will be
located in the Company’s Brisbane, California corporate headquarters.
Executive’s position, title, job description, reporting relationship, office
location, duties and responsibilities may be modified from time to time in the
sole discretion of VaxGen.

                3.              COMPENSATION AND BENEFITS.

                                 (a)            Base Salary. VaxGen will pay
Executive an initial base salary at the annualized rate of two hundred sixty
thousand dollars ($260,000), less standard payroll deductions and withholdings
and payable in accordance with the Company’s regular payroll schedule. Such
compensation is subject to change from time to time in the Company’s
discretion. Executive’ base salary shall be reviewed on the next compensation
review date for all executive employees, and annually thereafter.

                                 (b)            Signing Bonus.  Executive shall
be entitled to a one-time signing bonus of Forty Thousand Dollars ($40,000), to
be paid in a single lump sum (subject to standard payroll deductions and
withholdings) within five (5) business days after the Effective Date.

                                 (c)            Bonus Potential. Executive is
eligible to receive an annual bonus of up to thirty percent (30%) of his annual
base salary. Such bonuses, if any, are awarded at the sole discretion of the
Company’s Board of Directors (the “Board”) based on its assessment of
Executive’s performance as measured by  the performance standards agreed upon
and memorialized in writing between Executive and the CEO, subject to approval
by the Compensation Committee of the Board of Directors (the “Compensation
Committee”). No bonuses are earned until the Board confirms such bonuses in
writing. The Company shall have

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the sole discretion to change or eliminate the annual bonus program at any time,
and to determine the amount of bonus earned by Executive, if any.

                                 (d)            Stock Option Grant. Subject to
Board approval, following the Employment Date, the Company will grant to
Executive under the VaxGen, Inc. 1996 Stock Option Plan (“the Plan”) options to
purchase one hundred fifty thousand (150,000) shares of the Company’s common
stock at an exercise price equal to the fair market value of that Common stock
as of March 19, 2004, the date Executive commenced employment as the Company’s
Interim Chief Financial Officer (the “Option”). The Option will be subject to
the terms and conditions of the Plan and Executive’s grant agreement, which will
include a four-year vesting schedule under which, during Executive’s continuous
service to the Company (as defined in the Plan), twenty-five percent (25%) of
the Option shares will vest on the one-year anniversary of the Employment Date
and the remaining Option shares will vest in equal monthly installments over the
subsequent three (3) years. Executive acknowledges that there are no further
commitments on behalf of the Company to grant to Executive any additional stock
options, although the Board may consider granting additional stock options at
its sole discretion. Executive further acknowledges that the Option will not
qualify as an incentive stock option.

                                 (e)            Benefits. Executive shall be
entitled to participate in the Company’s employee benefit plans which may be in
effect from time to time and provided by the Company to its senior officers
generally, including paid holidays, leaves of absence, health insurance, dental
insurance, life insurance, vacation and other benefits, if any, in accordance
with and subject to the eligibility requirements of such employee benefit plans
and other applicable policies and procedures. Executive’s rights under such
employee benefit plans, or the rights of Executive’s dependents, shall be
governed solely by the terms of such plans and any applicable policies and
procedures. The Company’s employee benefit plans, and policies and procedures
related thereto, are subject to termination, modification or limitation at any
time at the Company’s sole discretion.

                                 (f)             Business Expenses. VaxGen shall
reimburse Executive for all 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. To be eligible for reimbursement, Executive must submit
business expense reimbursement requests to VaxGen on a monthly basis, which
includes supporting documentation (including receipts) satisfactory to VaxGen.

                                 (g)            Total Compensation. Executive
agrees that the compensation stated above constitutes the full and exclusive
monetary consideration and compensation for all services provided by Executive
to the Company, and for all promises and obligations under this Agreement.

                4.              VAXGEN EMPLOYMENT POLICIES. Executive’s
employment relationship will be governed by the general employment policies and
practices of the Company, and Executive agrees to abide by all such policies,
practices and procedures, written and unwritten, as they may from time to time
be adopted or modified by VaxGen at its sole discretion. Executive also agrees
to review and abide by the policies in VaxGen’s Employee Handbook (as they may
be

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modified by the Company from time to time) and to acknowledge in writing that he
has read and will abide by the Employee Handbook.

                5.              PROTECTION OF COMPANY INFORMATION. As a
condition of his continued employment, Executive agrees to continue to abide by
the Employee’s Proprietary Information and Inventions Agreement (the
“Proprietary Information Agreement”) that he signed on March 19, 2004. A copy of
the signed Proprietary Information Agreement is attached hereto as Exhibit A.

                6.              INDEMNIFICATION. VaxGen shall maintain, for the
benefit of Executive, 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 Executive against liability as an
officer and director of VaxGen or any subsidiary or affiliate of VaxGen to the
maximum extent permitted by applicable law. Executive’s rights under this
Paragraph 6 shall continue so long as he may be subject to such liability,
whether or not his employment may have terminated prior thereto. A copy of a
signed Indemnity Agreement by Executive on May 20, 2004 is attached hereto as
Exhibit B.

                7.              OUTSIDE ACTIVITIES.

                                 (a)            Non-Company Activities.  Except
for Executive’s existing commitments which are noted on a separate writing
 signed and dated by Executive and the CEO and which have been approved by the
CEO, and any additional commitments consented to in writing by the CEO after the
Effective Date, Executive will not during the term of this Agreement undertake
or engage in any other employment, occupation or business enterprise, other than
ones in which he is a passive investor. Executive may engage in civic and
not-for-profit activities so long as such activities do not materially interfere
with the performance of his duties hereunder.

                                 (b)            No Adverse Interests. During his
employment, Executive agrees not to acquire, assume or participate in, directly
or indirectly, any position, investment or interest known by him to be adverse
or antagonistic to the Company, its business or prospects, financial or
otherwise, except as permitted by Section 7(c).

                                 (c)            Noncompetition. During the term
of his employment by the Company, except on behalf of the Company, Executive
will not directly or indirectly, whether as an officer, director, stockholder,
partner, proprietor, associate, representative, consultant, employee, or in any
capacity whatsoever, engage in, become financially interested in, be employed by
or have any business connection with any other person, corporation, firm,
partnership or other entity whatsoever which competes directly with the Company,
anywhere throughout the world, in any line of business engaged in (or planned to
be engaged in) by the Company; provided, however, that Executive may own, as a
passive investor, securities of any competing public corporation, so long as his
direct holdings in any one such corporation shall not in the aggregate
constitute more than one percent (1%) of the voting stock of such corporation
and any ownership interest in a competitor is disclosed in writing to the
Company’s CEO.

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                8.              FORMER EMPLOYMENT.

                                 (a)            Prior Employee Agreements and
Information. Executive represents and warrants that his employment by the
Company will not conflict with and will not be constrained by any prior
employment or consulting agreement, noncompetition agreement, proprietary
information agreement or other relationship with any third party. Executive
further represents and warrants that he does not possess or control confidential
information arising out of prior employment, consulting, or other third party
relationships, which would be utilized in connection with his employment by the
Company, except as expressly authorized by that third party. Executive further
warrants that by entering into this Agreement with VaxGen, he is not violating
any of the terms, agreements or covenants of any agreement with any third party,
including but not limited to any previous employer, and that he is not under any
contractual obligation that would restrict his activities on behalf of the
Company.

                                 (b)            Use or Disclosure of Third Party
Information. If, in spite of the second sentence of Section 8(a), Executive
should find that confidential or proprietary information belonging to any third
party might be usable in connection with the Company’s business, he will not
disclose it to the Company or use it on behalf of the Company except as
expressly authorized by such third party; but during his employment by the
Company, Executive will use in the performance of his duties only information
which is generally known and used by persons with training and experience
comparable to his own, common knowledge in the industry, otherwise legally in
the public domain, or which is obtained or developed by the Company or by
Executive in the course of his work for the Company.

                9.              NONINTERFERENCE.

                                While employed by the Company and for a period
of one (1) year immediately following the termination of his employment,
Executive agrees that he will not, without the express consent of an officer of
the Company, or in the course and scope of performing his duties for the
Company, interfere with the business of the Company by, either directly or
indirectly:

                                 (a)            soliciting, recruiting,
inducing, encouraging, or otherwise causing any employee of VaxGen to terminate
his or her employment in order to become an employee, consultant or independent
contractor to or for any other person or entity, or attempting to do so;

                                 (b)            disclosing to any person or
entity the names or addresses of, or any information pertaining to, any current
or former employees of VaxGen; or

                                 (c)            using Proprietary Information
(as defined in the Proprietary Information Agreement) to call on, solicit or
take away any clients or customers of VaxGen or any other persons, entities, or
corporations with which VaxGen has had or contemplated any business transaction
or relationship during Executive’s employment with VaxGen (such Proprietary
Information to include, but not be limited to, investments, licenses, joint
ventures, and agreements for development), or attempting to do so.

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                10.           TERMINATION OF EMPLOYMENT.

                                 (a)          At-Will Employment Relationship.
 Executive’s employment relationship is at-will. This means that Executive’s
employment and/or this Agreement may be terminated with or without Cause (as
defined herein), and with or without advance notice, at any time by either
Executive or by VaxGen. Nothing in this document shall limit the right to
terminate employment at will or to terminate this Agreement at any time. This
at-will employment relationship can only be changed in a written agreement
approved by the Board and signed by Executive and a duly authorized officer of
the Company.

                                 (b)           Termination Without Cause. In the
event that Executive’s employment is terminated without Cause by the Company,
Executive shall be eligible to receive the following as his sole severance
benefits (collectively, the “Severance Benefits”): (i) severance pay in the
amount of twelve (12) months of his base salary in effect as of the termination
date (such severance being limited strictly to base salary and will not include
any amount paid or payable as a bonus or stock option grant), less standard
withholdings and deductions, and payable in the Company’s ordinary payroll cycle
as salary continuation until fully paid unless a different payment schedule is
agreed upon in writing by the parties; and (ii) all stock option grants then
held by Executive shall be subject to accelerated vesting such that all unvested
shares will become fully vested and exercisable effective as of the employment
termination date (the “Accelerated Vesting”). In the event that Executive’s
employment is terminated without Cause by the Company within thirteen (13)
months after a Change of Control (defined below), then in addition to receiving
the Severance Benefits, Executive shall receive a bonus payment for the
compensation year in which the termination occurs, such payment to be prorated
based on the termination date and calculated based on the target bonus amount
for which Executive is eligible for the compensation year in which the
termination occurs, if any, provided that Executive will not be entitled to such
bonus payment if he otherwise received a bonus payment for the compensation year
in which the termination occurs (the “Prorated Bonus”). Also in the event that
Executive’s employment is terminated without Cause by the Company after a Change
in Control, Executive may be entitled to receive a Gross-Up Payment, as defined
in Section 10(b)(ii), in accordance with the provisions of Sections
10(b)(ii)-(iv). As a condition of and prior to the receipt of all or any of the
Severance Benefits, Accelerated Vesting, or Prorated Bonus, Executive shall
provide the Company with an effective general release of all known and unknown
claims, in the form attached as Exhibit C.

                                                (i)             Definition of
Change in Control.  For the purposes of this Agreement, 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 subsection 10(b), 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

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(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.

                                                (ii)            Gross-Up
Payment.  Subject to the limitation of Section 10(b)(iv), if it shall be
determined that any payment or distribution of any type to or for the benefit of
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (the “Total Payments”), is or will be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”), or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are collectively referred to as the “Excise Tax”), then Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Total Payments.

                                                (iii)          Determination By
Accountant.  All mathematical determinations, and all determinations as to
whether any of the Total Payments are “parachute payments” (within the meaning
of Section 280G of the Code), that are required to be made under Section
10(b)(ii), including determinations as to whether a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be made by an independent
accounting firm selected by Executive from among the four (4) largest accounting
firms in the United States (the “Accounting Firm”), subject to the limitation of
Section 10(b)(iv). The Accounting Firm shall provide its determination (the
“Determination”), together with detailed supporting calculations regarding the
amount of any Gross-Up Payment and any other relevant matter, both to the
Company and Executive by no later than ten (10) days following the date of
Executive’s termination of employment, if applicable, or such earlier time as is
requested by the Company or Executive (if Executive reasonably believes that any
of the Total Payments may be subject to the Excise Tax). If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall furnish
Executive and the Company with a written statement that such Accounting Firm has
concluded that no Excise Tax is payable (including the reasons therefor) and
that Executive has substantial authority not to report any Excise Tax on his
federal income tax return. If a Gross-Up Payment is determined to

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be payable, it shall be paid to Executive within twenty (20) days after the
Determination (and all accompanying calculations and other material supporting
the Determination) is delivered to the Company by the Accounting Firm. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive, absent manifest error. As a result of uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments not made by the
Company should have been made (“Underpayment”), or that Gross-Up Payments will
have been made by the Company which should not have been made (“Overpayments”).
In either such event, the Accounting Firm shall determine the amount of the
Underpayment or Overpayment that has occurred. In the case of an Underpayment,
the amount of such Underpayment shall be promptly paid by the Company to or for
the benefit of Executive. In the case of an Overpayment, Executive shall, at the
direction and expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for refund), follow
reasonable instructions from, and procedures established by, the Company, and
otherwise reasonably cooperate with the Company to correct such Overpayment;
provided, however, that (i) Executive shall not in any event be obligated to
return to the Company an amount greater than the net after-tax portion of the
Overpayment that he has retained or has recovered as a refund from the
applicable taxing authorities and (ii) this provision shall be interpreted in a
manner consistent with the intent of Section 10(b)(ii), which is to make
Executive whole, on an after-tax basis, from the application of the Excise Tax,
it being understood that the correction of an Overpayment may result in
Executive repaying to the Company an amount which is less than the Overpayment.

                                                (iv)          Certain
Limitations.  Notwithstanding Sections 10(b)(ii) and 10(b)(iii), the amount of
the Gross-Up Payment shall be subject to the limitation that the aggregate
amount of gross-up payments in respect of the excise tax imposed by Section 4999
of the Code, including the Gross-Up Payment, that may be paid to employees of
the Company, including Executive, shall not exceed 2.5% of the aggregate cash
equivalent value of consideration delivered by the individuals or entities
effecting the Change in Control, excluding from this calculation any
consideration that is contingent on uncertain future events (such limitation is
hereinafter referred to as the “Gross-Up Payment Limitation”). If the Gross-Up
Payment Limitation would be exceeded, then the gross-up payment of each
employee, including Executive, shall be reduced pro rata so that the sum of all
gross-up payments, including the Gross-Up Payment, will equal the Gross-Up
Payment Limitation. Moreover, if gross-up payments may be paid to employees of
the Company in addition to Executive, the Accounting Firm for purposes of
Section 10(b)(iii) shall be the accounting firm engaged by the Company for
general audit purposes as of the day prior to the effective date of the Change
in Control; provided, however, that if such accounting firm is serving as
accountant or auditor for the individual or entity effecting the Change in
Control, the Company shall appoint a nationally recognized accounting firm as
the Accounting Firm for purposes of Section 10(b)(iii). Upon the occurrence of a
Change in Control, the Accounting Firm shall calculate the Gross-Up Payment
Limitation. The limitation on the gross-up payment of each employee, including
the Gross-Up Payment of Executive, as a result of the Gross-Up Payment
Limitation shall be applied as if all employees, including Executive, had
terminated employment and become entitled to gross-up payments on the earliest
date that any employee, including Executive, terminates employment with
entitlement to a gross-up payment, including the Gross-Up Payment, and there
shall be no re-determination of such limitations at any time thereafter, even if
one or more of such employees thereafter do not become entitled to receive a
gross-up payment.

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                                 (c)           Termination for Cause.

                                                (i)             No Severance. In
the event Executive’s employment is terminated at any time for Cause, Executive
will be entitled to payment of all accrued salary and accrued and unused
vacation, but Executive will not be entitled to the Severance Benefits, pay in
lieu of notice, or any other such compensation.

                                                (ii)            Cause
Definition. For purposes of this Agreement, “Cause” for termination shall mean
any of the following: (A) fraud or illegal acts committed by Executive; (B)
Executive’s material breach of any written agreement with the Company, including
but not limited to this Agreement or the Proprietary Information Agreement; (C)
Executive’s material failure to perform his job duties as determined by the
Company in its reasonable judgment, and after notice of such failure has been
given to Executive by the CEO and Executive has had a fifteen (15) business-day
period within which to cure such failure (such notice to be provided only if
Executive’s failure is reasonably susceptible to cure); or (D) a material
violation of any VaxGen employment policy, including but not limited to VaxGen’s
policies against harassment and discrimination, and/or VaxGen’s substance abuse
policy, which violation causes harm to the Company.

                                 (d)            Voluntary or Mutual Termination.
In the event Executive terminates his employment, or in the event that
Executive’s employment terminates at the parties’ mutual agreement, Executive
will be entitled to payment of all accrued salary and accrued and unused
vacation, but Executive will not be entitled to Severance Benefits, pay in lieu
of notice, or any other such compensation.

                                 (e)            Termination Due to Death. In the
event of Executive’s death, Executive’s employment will terminate on the date
thereof, and Executive and Executive’s heirs or estate will be entitled to
payment of all accrued salary and accrued and unused vacation, but Executive
will not be entitled to Severance Benefits, pay in lieu of notice or any other
such compensation.

                11.           GENERAL PROVISIONS.

                                 (a)            Governing Law.  This Agreement
shall be construed in accordance with and governed by the laws of the State of
California without regard to conflict of laws principles that would otherwise
apply the law of another jurisdiction. Any ambiguity in this Agreement shall not
be construed against either party as the drafter.

                                 (b)            Complete Agreement.  This
Agreement, including the Proprietary Information Agreement and the Indemnity
Agreement, constitutes the complete, final and exclusive embodiment of the
entire agreement and understanding of the parties with regard to the subject
matter hereof. It is entered into without reliance on any promise, warranty or
representation other than those expressly contained herein, and it supersedes
and replaces any and all prior or contemporaneous agreements, promises or
representations between VaxGen and Executive, whether oral, written or implied,
including but not limited to Executive’s March 19, 2004 offer letter agreement
concerning the Interim Chief Financial Officer position. The terms of this
Agreement and any changes in Executive’s employment terms (other than those

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employment terms expressly reserved to the Company’s discretion in this
Agreement), require a written amendment to the Agreement signed by Executive and
a duly authorized officer of the Company.

                                 (c)            Waiver.  Any waiver of a breach
of this Agreement shall be in writing and shall not be deemed to be a waiver of
any successive breach.

                                 (d)           Severability.  Whenever possible,
each provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
and such invalid, illegal or unenforceable provision will be reformed, construed
and enforced in such jurisdiction so as to render it valid, legal, and
enforceable consistent with the general intent of the parties insofar as
possible.

                                 (e)            Voluntary Agreement.  Executive
and VaxGen represent and warrant 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 and tax advisors of such party’s
choice before executing this Agreement, and each party has had a full
opportunity to negotiate the terms of this Agreement prior to signing this
Agreement.

                                 (f)             Headings. The headings and
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 the interpretation or
application of this Agreement.

                                 (g)            Counterparts. This Agreement may
be executed in separate counterparts, any one of which need not contain
signatures of more than one party, but all of which taken together will
constitute one and the same Agreement. Signatures transmitted via facsimile
shall be deemed the equivalent of originals.

                                 (h)            Successors and Assigns.  This
Agreement shall be binding upon and inure to the benefit of and shall be
enforceable by and against Executive and the Company, and their respective
successors, assigns, heirs, executors and administrators; except that it is
agreed that Executive may not assign any of his duties hereunder; and Executive
may not assign any of Executive’s rights hereunder without the written consent
of the Company, which shall not be unreasonably withheld.

                                 (i)             Notices. Any notices provided
hereunder must be in writing and shall be deemed effective upon, as applicable,
the date of personal delivery (including personal delivery by facsimile
transmission), the date of delivery by express delivery service (e.g. Federal
Express), or the third day after mailing by certified or registered mail, return
receipt requested, to the attention of the CEO sent to the Company’s corporate
headquarters, and to Executive at his address as listed on the Company’s
payroll, or as otherwise provided in writing by Executive to the CEO.

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                                 (j)             Alternative Dispute Resolution.
To ensure rapid and economical resolution of any disputes which may arise
concerning the relationship between Executive and the Company, the parties
hereby agree that any and all claims, disputes or controversies of any nature
whatsoever arising out of, or relating to, this Agreement, Executive’s
employment with the Company, or the termination of such employment, shall be
resolved, to the fullest extent permitted by law, by final, binding and
confidential arbitration in San Francisco, California conducted before a single
arbitrator by JAMS, Inc. (“JAMS”) or its successor, under the then applicable
JAMS arbitration rules. The parties each acknowledge that by agreeing to this
arbitration procedure, they waive the right to resolve any such dispute, claim
or demand through a trial by jury or judge or by administrative proceeding.
Executive will have the right to be represented by legal counsel at any
arbitration proceeding. The arbitrator shall: (i) have the authority to compel
adequate discovery for the resolution of the dispute and to award such relief as
would otherwise be available under applicable law in a court proceeding; and
(ii) issue a written statement signed by the arbitrator regarding the
disposition of each claim and the relief, if any, awarded as to each claim, the
reasons for the award, and the arbitrator’s essential findings and conclusions
on which the award is based. The arbitrator, and not a court, shall also be
authorized to determine whether the provisions of this paragraph apply to a
dispute, controversy, or claim sought to be resolved in accordance with these
arbitration procedures. The Company shall bear all JAMS’ arbitration fees and
administrative costs. Nothing in this Agreement is intended to prevent either
Executive or the Company from obtaining injunctive relief in court to prevent
irreparable harm pending the conclusion of any arbitration.

                                 (k)            Right To Work. As required by
law, this Agreement is subject to satisfactory proof of Executive’s right to
work in the United States.

                IN WITNESS WHEREOF, the parties have executed this Agreement on
the dates specified below.

      VAXGEN, INC.       By:   /s/ Lance Gordon    

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         Lance Gordon, Ph.D.          Chief Executive Officer       Date:
    May 20, 2004    

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ACCEPTED AND AGREED:      /s/ James M. Cunha

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James M. Cunha      May 20, 2004

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Date

10.

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