<PAGE>   1
                                                                    EXHIBIT 10.6


THE SECURITIES OFFERED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND ANY SALE OF SUCH SECURITIES IS SUBJECT TO COMPLIANCE WITH, OR THE
AVAILABILITY OF EXEMPTIONS FROM COMPLIANCE WITH, THE REGISTRATION AND
QUALIFICATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THIS INSTRUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANY PERSON IN
ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE MADE.
TRANSFER OF THIS INSTRUMENT AND THE SECURITIES OFFERED HEREBY IS RESTRICTED AS
PROVIDED IN SECTIONS 7 AND 8 BELOW.


                             STOCK OPTION AGREEMENT


        THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into,
effective as of ______________________, by VAXGEN, INC., a Delaware corporation
(the "Company"), and [NAME OF HOLDER] (the "Holder").

                                    RECITALS

        A. The Company has adopted the VaxGen, Inc. 1996 Stock Option Plan (the
"Plan"), a copy of which is attached as Exhibit A. Capitalized terms that are
used but not defined in this Agreement will have the meanings given those terms
in the Plan.

        B. The Holder has been designated to receive an option under the Plan.

        NOW, THEREFORE, the Company and the Holder agree as follows:

        1. GRANT OF THE OPTION. The Company grants to the Holder an option (the
"Option") to acquire from the Company _________________ (_____) shares of Common
Stock (the "Shares") at the price of $_______ per share (the "Purchase Price").
The Option is intended to be a [Non-Qualified] Stock Option.

        2. TERM OF THE OPTION. Unless earlier terminated pursuant to the Plan,
the Option will terminate on the earliest to occur of the following: (a)
_________________; (b) the expiration of ninety (90) days following the date of
termination of the Holder's employment with the Company for any reason other
than death, Disability or cause; (c) the expiration of one (1) year following
the date of termination of the Holder's employment with the Company by reason of
death or Disability; and (d) the date of termination of the Holder's employment
with the Company for cause.



                                                                Option No. 96-__
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        3. EXERCISABILITY. The Option will become exercisable in accordance with
the following schedule:

<TABLE>
<CAPTION>
                                         CUMULATIVE NUMBER
                                         OF SHARES FOR WHICH
               DATE                      OPTION IS EXERCISABLE
<S>                                      <C>
            --/--/--                                 ---%
            --/--/--                                 ---%
            --/--/--                                 ---%
            --/--/--                                 ---%
</TABLE>

The number of Shares for which the Option becomes exercisable on any date shall,
if necessary to eliminate a fractional share of Common Stock, be rounded down to
the nearest whole number. After the Holder's employment with the Company
terminates for any reason, the Option will thereafter be exercisable only for
the Shares for which it was exercisable on the date of termination.

        4. PROVISIONS OF PLAN. The Option is subject to all of the provisions of
the Plan, including but not limited to Section 5(n) (which permits adjustments
to the Option upon the occurrence of certain corporate events such as stock
dividends and reorganizations) and Section 5(o) (which may apply upon the
occurrence of a change of control or certain other events affecting the
Company).

        5. EXERCISE OF THE OPTION. In order to exercise the Option, the Holder
must do the following:

               (a) deliver to the Company a written notice, substantially in the
form of the attached Exhibit B, specifying the number of Shares for which the
Option is being exercised;

               (b) surrender this Agreement to the Company;

               (c) tender payment to the Company of the aggregate Purchase Price
for the Shares for which the Option is being exercised, which amount may be paid
(i) in cash or by certified or cashier's check; or (ii) in any other manner
permitted by the Plan;

               (d) pay, or make arrangements satisfactory to the Board for
payment to the Company of, all taxes required to be withheld by the Company in
connection with the exercise of the Option;

               (e) if requested by the Board, deliver to the Company, at the
Holder's expense, a legal opinion, satisfactory in form and substance to the
Company, of legal counsel designated by the Holder and satisfactory, to the
Company, to the effect that exercise of the Option by the Holder, and the
acquisition of Shares pursuant thereto, may be effected without registration or
qualification of the


                                                                Option No. 96-__



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Shares under the Securities Act of 1933, as amended (the "1933 Act"), or any
applicable state securities laws; and

               (f) execute and deliver to the Company any documents required
from time to time by the Board in order to promote compliance with the 1933 Act,
applicable state securities laws, or any other applicable law, rule or
regulation.

Unless the Option has terminated or been exercised in full, the Company shall
affix to this Agreement an appropriate notation indicating the number of Shares
for which the Option was exercised and return this Agreement to the Holder.

        6. LEGENDS. Each certificate representing Shares issued upon exercise of
the Option shall, unless the Board otherwise determines, contain on its face the
notice "SEE TRANSFER RESTRICTIONS ON REVERSE" and on its reverse a legend in
form substantially as follows, together with any other legends that the Board
determines to be necessary or appropriate:

               NOTICE:  TRANSFER AND OTHER RESTRICTIONS

               THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY STATE
               SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
               ENCUMBERED, OR OTHERWISE DISPOSED OF EXCEPT UPON SATISFACTION OF
               CERTAIN CONDITIONS. INFORMATION CONCERNING THESE RESTRICTIONS MAY
               BE OBTAINED FROM THE CORPORATION. ANY OFFER OR DISPOSITION OF
               THESE SECURITIES WITHOUT SATISFACTION OF SAID CONDITIONS WILL BE
               WRONGFUL AND WILL NOT ENTITLE THE TRANSFEREE TO REGISTER
               OWNERSHIP OF THE SECURITIES WITH THE CORPORATION.

               THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
               TO RESTRICTIONS ON TRANSFER OR OTHER RESTRICTIONS PURSUANT TO THE
               PROVISIONS OF THE CORPORATION'S 1996 STOCK OPTION PLAN AND/OR AN
               AGREEMENT BETWEEN THE HOLDER AND THE CORPORATION AND/OR AN
               AGREEMENT AMONG THE SHAREHOLDERS OF THE CORPORATION. INFORMATION
               CONCERNING THESE RESTRICTIONS MAY BE OBTAINED FROM THE
               CORPORATION.

        7. REPRESENTATIONS AND WARRANTIES. By executing this Agreement:

               (a) The Holder accepts the Option and agrees to comply with and
be bound by all of the provisions of this Agreement and the Plan.



                                                                Option No. 96-__



                                       3
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               (b) The Holder acknowledges that no registration statement under
the 1933 Act, or under any state securities laws, has been filed with respect to
the Option or any Shares that may be acquired upon exercise of the Option, and
the Company is under no obligation to do so.

               (c) The Holder represents and warrants that the Option, and any
Shares acquired upon exercise of the Option, will be acquired and held by the
Holder for the Holder's own account, for investment purposes only, and not with
a view towards the distribution or public offering thereof nor with any present
intention of reselling or distributing the same at any particular future time.

               (d) The Holder agrees not to sell, transfer or otherwise dispose
of the Option except as specifically permitted by this Agreement, the Plan and
any applicable securities laws.

               (e) The Holder agrees not to sell, transfer or otherwise dispose
of any Shares acquired upon exercise of the Option unless (i) there is an
effective registration statement under the 1933 Act covering the proposed
disposition and compliance with governing state securities laws, (ii) the Holder
delivers to the Company, at the Holder's expense, a "no-action" letter or
similar interpretative opinion, satisfactory in form and substance to the
Company, from the staff of each appropriate securities agency, to the effect
that such Shares may be disposed of by the Holder in the manner proposed, or
(iii) the Holder delivers to the Company, at the Holder's expense, a legal
opinion, satisfactory in form and substance to the Company, of legal counsel
designated by the Holder and satisfactory to the Company, to the effect that the
proposed disposition may be effected without registration or qualification of
such Shares under the 1933 Act or any applicable state securities laws.

               (f) The Holder agrees that, in the event of an initial public
offering (the "Offering") by the Company of its Common Stock, for a period of
180 days after the effective date of the Registration Statement filed with the
Securities and Exchange Commission relating to the Offering, the Holder will not
directly or indirectly sell or offer to sell or otherwise dispose of any Shares,
or any securities convertible into or exchangeable for, or any rights to
purchase or acquire Common Stock owned by the Holder, whether owned on such
effective date or thereafter acquired, without the prior written consent of each
managing underwriter in the Offering, which consent may be withheld at the sole
discretion of any managing underwriter.

        8. PROCEDURES UPON PERMITTED TRANSFER. Prior to any sale, transfer or
other disposition of any Shares acquired upon exercise of the Option, the Holder
agrees to give written notice to the Company of the Holder's intention to effect
such disposition. The notice must describe the circumstances of the proposed
transfer in reasonable detail and must specify the manner in which the
requirements of Section 7(d) above will be satisfied in connection with the
proposed disposition. After (a) legal counsel to the Company has determined that
the requirements of Section 7(d) above will be satisfied, (b) the Holder has
executed such documentation as may be necessary to effect the proposed
disposition, and (c) the Holder has paid, or made arrangements satisfactory to



                                                                Option No. 96-__



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<PAGE>   5
the Board for the payment of any taxes, if any, required to be withheld by the
Company in connection with the proposed disposition, the Company will, as soon
as practicable, transfer such Shares in accordance with the terms of the notice.
Any stock certificate issued upon such transfer will bear a restrictive legend
in the form required by Section 6, unless in the opinion of legal counsel to the
Company such legend is not required.

        9. ENTIRE AGREEMENT; AMENDMENTS; BINDING EFFECT. This Agreement,
together with the Plan, constitutes the entire agreement and understanding
between the Company and the Holder regarding the subject matter hereof. Except
as permitted by the Plan, no amendment of the Option or this Agreement, or
waiver of any provision of this Agreement or the Plan, shall be valid unless in
writing and duly executed by the Company and the Holder. The failure of any
party to enforce any of that party's rights against the other party for breach
of any of the terms of this Agreement or the Plan shall not be construed as a
waiver of such rights as to any continued or subsequent breach. This Agreement
shall be binding upon the Holder and his or her heirs, successors and assigns.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

"Company"                                   VAXGEN, INC.
                                            A DELAWARE CORPORATION



                                            By__________________________________


"Holder"                                    ____________________________________
                                            [NAME OF HOLDER]




                                                                Option No. 96-__


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<PAGE>   6
                           FORM OF EXERCISE OF OPTION




To:     VAXGEN, INC.
        1420 Fifth Ave., Ste. 2200
        Seattle, WA 98101

        The undersigned holds Option Number 96-____ (the "Option"), represented
by a Stock Option Agreement dated effective as of _________________ (the
"Agreement"), granted to the undersigned pursuant to the VaxGen, Inc. 1996 Stock
Option Plan (the "Plan"). The undersigned hereby exercises the Option and elects
to purchase ________________ shares (the "Shares") of Common Stock of VaxGen,
Inc. (the "Company") pursuant to the Option. This notice is accompanied by full
payment of the Purchase Price for the Shares in cash or by check or in another
manner permitted by Section 5(c) of the Agreement. The undersigned has also
paid, or made arrangements satisfactory to the Board for payment of, all taxes,
if any, required to be withheld by the Company in connection with the exercise
of the Option.

        The undersigned acknowledges that no registration statement under the
1933 Act, or under any state securities laws, has been filed with respect to the
Shares, and the Company is under no obligation to do so. The undersigned
represents and warrants that the undersigned is acquiring and will hold the
Shares for the undersigned's own account, for investment purposes only, and not
with a view towards the distribution or public offering of the Shares nor with
any present intention of reselling or distributing the Shares at any particular
future time. The undersigned consents to the appearance of a restrictive legend,
in the form required by Section 6 of the Agreement, on the certificate for the
Shares.


        Date:  __________________, ____



                                            ____________________________________
                                            Name of Holder



                                                                Option No. 96-__


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