Exhibit 10.53

                                  VAXGEN, INC.

                           WARRANT EXCHANGE AGREEMENT

                               SEPTEMBER 21, 2004

<PAGE>

                                  VAXGEN, INC.

                           WARRANT EXCHANGE AGREEMENT

            This Warrant Exchange Agreement (this "Agreement") is made as of
September 21, 2004 by and between VAXGEN, INC., a Delaware corporation (the
"Company"), and each of KEPLER CAPITAL, LLC, CHEYENNE, LLC, PRISM CAPITAL 5,
L.P. and SOCIETE GENERALE (each a "Warrant Holder" and together the "Warrant
Holders").

                                    RECITALS

      WHEREAS, each Warrant Holder owns a warrant to purchase shares of common
stock of the Company (the "Common Stock"), which warrant was issued in a
transaction completed on May 23, 2001 in connection with the sale of the
Company's Series A Preferred Stock (each a "Series A Warrant" and collectively
the "Series A Warrants");

      WHEREAS, the Company wishes to issue to each Warrant Holder, pursuant to
the exemption from registration provided by Section 3(a)(9) ("Section 3(a)(9)")
under the Securities Act of 1933, as amended (the "Securities Act"), new
warrants to purchase the Common Stock in exchange for the Series A Warrants (the
"Exchange") and to cancel the Series A Warrants upon the terms and conditions
set forth herein; and

      WHEREAS, the Company and CD Investment Partners, Ltd, an owner of a Series
A Warrant, have in connection with the transactions contemplated by this
Agreement, entered into a Warrant Exchange Agreement dated as of September 21,
2004 (the "CD Agreement"), to exchange the Series A Warrant held by CD
Investment Partners, Ltd. for the Exchange Warrants (as defined in the CD
Agreement).

                                    AGREEMENT

            1. Issuance of Exchange Warrants. Subject to the terms and
conditions of this Agreement, in exchange for the Series A Warrant(s) held by
each Warrant Holder, the Company, as of the Closing Date (as defined in Section
3 hereof), shall issue to each Warrant Holder:

                  1.1 A warrant, dated as of the Closing Date, to purchase that
number of shares of Common Stock as set forth on Exhibit A-1 opposite such
Warrant Holder's name, in the form attached hereto as Exhibit B (the "First
Exchange Warrant"), at an exercise price of $0.01 per share of Common Stock; and

                  1.2 A warrant, dated as of the Closing Date, to purchase that
number of shares of Common Stock as set forth on Exhibit A-2 opposite such
Warrant Holder's name, in the form attached hereto as Exhibit C (the "Second
Exchange Warrant" and, together with the First Exchange Warrant, the "Exchange
Warrants"), at an exercise price of $16.00 per share of Common Stock.


                                       1.
<PAGE>

            2. Exchange and Cancellation of Series A Warrants. On the Closing
Date, subject to the terms and conditions of this Agreement, each Warrant Holder
shall tender all of the Series A Warrants held by such Warrant Holder, to the
Company, in exchange for the Exchange Warrants and upon the execution and
delivery to such Warrant Holder of the Exchange Warrants, the Series A Warrants
shall be cancelled, and all rights of such Warrant Holder with respect to the
Series A Warrants shall be immediately terminated.

            3. Closing; Delivery of Exchange Warrants . The closing of the
exchange of the Series A Warrants for the Exchange Warrants pursuant to this
Agreement (the "Closing") shall take place at 11:00 p.m. Pacific time at the
offices of Cooley Godward LLP, 3175 Hanover Street, Palo Alto, California, on
the date of this Agreement or at such other time and place as may be agreed to
by the Company and the Warrant Holders (the "Closing Date"), subject to the
satisfaction or waiver by the appropriate party of the conditions set forth in
Sections 4 and 5 hereof as of the Closing Date. At the Closing, each Warrant
Holder shall deliver the Series A Warrant owned by it to the Company, and the
Company shall deliver the Exchange Warrants to such Warrant Holder in accordance
with the terms hereof.

            4. Conditions to Company's Obligations. The Company's obligation to
issue the Exchange Warrants in exchange for the Series A Warrants at the Closing
shall be subject to the fulfillment on or prior to the Closing of the following
conditions, any one or more of which may be waived in whole or in part by the
written consent of the Company:

                  4.1 Representations and Warranties True and Correct;
Compliance with Covenants. The representations and warranties made by each
Warrant Holder in Section 7 hereof shall be true and correct in all material
respects as of the date hereof and the Closing Date with the same force and
effect as if they had been made as of the Closing Date. Each Warrant Holder
shall have performed, satisfied and complied with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by such Warrant Holder on or prior to the Closing Date.

                  4.2 Compliance with Laws. The exchange of the Series A
Warrants for the Exchange Warrants by each Warrant Holder hereunder shall be
legally permitted by all laws and regulations to which the Company is subject
(including all applicable federal, state and foreign securities laws).

                  4.3 No Injunction or Regulatory Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or governmental entity or other
legal or regulatory restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect; nor shall there be any
action taken by any court of competent jurisdiction or governmental entity, or
any law or order enacted, entered, enforced or deemed applicable to the
transactions contemplated hereby by any court of competent jurisdiction or
governmental entity, that would prohibit their consummation.

                  4.4 Termination of Registration Rights Agreement. As of the
Closing, the Company and the Warrant Holders shall have terminated the
Registration Rights Agreement, dated May 23, 2001 (the "Registration Rights
Agreement"), by executing the Registration


                                       2.
<PAGE>

Rights Termination Agreement attached hereto as Exhibit E. Thereafter no party
to the Registration Rights Agreement shall have any rights, liabilities or
obligations thereunder, including, without limitation, in connection with the
registration or the filing of any registration statement on behalf of the
Warrant Holders pursuant to the Registration Rights Agreement.

                  4.5 Termination of Securities Purchase Agreement. As of the
Closing, the Company and the Warrant Holders shall have terminated the
Securities Purchase Agreement, dated May 23, 2001 (the "Securities Purchase
Agreement"), by executing the Securities Purchase Termination Agreement attached
hereto as Exhibit F. Thereafter neither the Company nor the Warrant Holders
shall have any rights, liabilities or obligations thereunder.

                  4.6 Tender of Series A Warrants. At the Closing, the Warrant
Holders shall tender all of the Series A Warrants for exchange and cancellation.

            5. Conditions to Warrant Holders' Obligations. Each Warrant Holder's
obligation to exchange the Series A Warrants for the Exchange Warrants at the
Closing shall be subject to the fulfillment on or prior to the Closing of the
following conditions, any one or more of which may be waived in whole or in
part, by the written consent of such Warrant Holder:

                  5.1 Representations and Warranties True and Correct;
Compliance with Covenants. The representations and warranties made by the
Company in Section 6 hereof shall be true and correct as of the date hereof and
the Closing Date with the same force and effect as if they had been made as of
the Closing Date, except as otherwise contemplated by this Agreement and except
for those representations and warranties that address matters only as of a
particular date, which shall be true and correct as of such date. The Company
shall have performed, satisfied and complied with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company on or prior to the Closing Date.

                  5.2 Compliance with Laws. The exchange of the Series A
Warrants for the Exchange Warrants by the Warrant Holders hereunder shall be
legally permitted by all laws and regulations to which the Company is subject
(including all applicable federal, state and foreign securities laws).

                  5.3 No Injunction or Regulatory Constraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or governmental entity or other
legal or regulatory restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect; nor shall there be any
action taken by any court of competent jurisdiction or governmental entity, or
any law or order enacted, entered, enforced or deemed applicable to the
transactions contemplated hereby by any court of competent jurisdiction or
governmental entity, that would prohibit their consummation.

                  5.4 Consents. The Company shall have obtained all consents and
approvals necessary for the execution, delivery and performance of the Agreement
and the Exchange Warrants including, without limitation, any consents and
approvals of the Company's


                                       3.
<PAGE>

board of directors, stockholders, governmental authorities, regulatory
authorities or third parties, as appropriate.

                  5.5 Issuance of Exchange Warrants. At the Closing the Company
shall issue the Exchange Warrants.

            6. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Warrant Holders that as of the Closing:

                  6.1 Organization. The Company is duly incorporated and validly
existing in good standing under the laws of the State of Delaware. The Company
has full corporate power and authority to own, operate and occupy its properties
and to conduct its business as presently conducted and is registered or
qualified to do business and is in good standing in each jurisdiction in which
it owns or leases property or transacts business and where the failure to be so
qualified would have a material adverse effect on the Company, and, to the
Company's knowledge (as defined below), no proceeding has been instituted in any
such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification. For purposes of this
Agreement, the term "knowledge" (including any derivation thereof such as "know"
or "knowing" and regardless of whether such word starts with an initial capital)
in reference to the Company shall mean the actual knowledge of the Company's
executive officers.

                  6.2 Due Authorization. The Company has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and under the Exchange Warrants. This Agreement has been duly
authorized and validly executed and delivered by the Company and no other
corporate action on the part of the Company, its board of directors or its
stockholders is necessary to authorize the execution and delivery by the Company
of this Agreement or the consummation of the transactions contemplated by this
Agreement, including, without limitation, the issuance and delivery of the
Exchange Warrants. Furthermore, the Company's board of directors, after
considering several proposed alternatives to the Exchange, has unanimously
authorized the execution and delivery by the Company of the Agreement and the
transactions contemplated thereunder. Each of this Agreement and each Exchange
Warrant, assuming due and valid authorization, execution and delivery hereof and
thereof by the Warrant Holders, constitutes a legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution may be limited by state or
federal securities laws, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally, and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

                  6.3 Valid Issuance; Reservation of Shares; Preemptive Rights.
The Exchange Warrants are duly authorized and, when issued and exchanged in
accordance with the terms hereof, (i) will be duly and validly issued, free and
clear of any liens, claims or encumbrances ("Liens") imposed by or through the
Company and (ii) assuming the accuracy of each Warrant Holder's representations
contained in this Agreement, will be issued and delivered in compliance with all
applicable Federal and state securities laws. The shares of common stock
issuable upon


                                       4.
<PAGE>

exercise of the Exchange Warrants are duly authorized and reserved for issuance
and, when issued in accordance with the terms of the Exchange Warrants, will be
duly and validly issued, fully paid and nonassessable, free and clear of any
Liens imposed by or through the Company. The Company has duly and validly
authorized and reserved for issuance to the Warrant Holders pursuant to exercise
of the Exchange Warrants at least 1,666,357 shares of its Common Stock. Assuming
the termination of the Registration Rights Agreement and the Securities Purchase
Agreement, and the cancellation of the Series A Warrants upon the Closing,
neither the Exchange nor the performance by the Company of its obligations under
this Agreement or under the Exchange Warrants will trigger any preemptive,
"poison-pill", anti-takeover, anti-dilution, reset or other similar rights.

                  6.4 Non-Contravention. The execution and delivery of this
Agreement, the issuance of the Exchange Warrants, the issuance of shares of
Common Stock upon exercise of the Exchange Warrants and the consummation of the
transactions contemplated hereby and thereby will not (a) conflict with or
constitute a material violation of or default (with the passage of time or
otherwise) under or give rise to any right of termination, material amendment,
cancellation or acceleration or loss of any material rights under (i) any
material contracts to which the Company is a party, or (ii) the certificate of
incorporation or the bylaws of the Company or any similar organizational
document of the Company, or (b) (i) result in the creation or imposition (or the
obligation to create or impose) of any material lien, encumbrance, claim,
security interest, pledge, charge or restriction of any kind upon any of the
properties or assets of the Company or (ii) an acceleration of indebtedness
pursuant to any obligation, agreement or condition contained in agreement or
document to which the Company is a party or is bound, or (c) violate any order
or decree applicable to the Company, or by which it or any of its operations are
bound, and no such violation or default currently exists. No consent, approval,
authorization or other order of, or registration, qualification or filing with,
any regulatory body, administrative agency or other governmental body in the
United States is required for the execution and delivery of the Agreement and
the valid issuance of the Exchange Warrants prior to the Closing except for any
securities filings required to be made under state securities laws.

                  6.5 Exchange Act Compliance. With the exception of the
financial statements and related financial disclosure in the Company's Annual
Report on Form 10-K for the year ended December 31, 2003 (including but not
limited to Management's Discussion and Analysis of Financial Condition and
Results of Operations and Selected Financial Data) disclosed therein, the
documents that the Company filed under the Exchange Act since December 31, 2003
(including all exhibits included therein and documents incorporated by reference
therein hereinafter being referred to as the "Required Documents") complied in
all material respects with the requirements of the Exchange Act, and the rules
and regulations of the Commission promulgated thereunder as of their respective
filing dates, and except as to the financial statements and related financial
disclosure (including but not limited to Management's Discussion and Analysis of
Financial Condition and Results of Operations and Selected Financial Data) none
of the Required Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.


                                       5.
<PAGE>

                  6.6 Investment Company. As of the Closing, the Company is not
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.

                  6.7 Non-Public Information. The Company has not disclosed any
material non-public information to any Warrant Holder, other than information
concerning the Exchange and this Agreement, which will be disclosed to the
public in the press release issued pursuant to Section 11.12.

                  6.8 Exemption from Registration. The Exchange is exempt from
the registration requirements of the Securities Act pursuant to the provisions
of Section 3(a)(9) thereof. The Company has complied in all material respects
with such provisions and, without limiting the generality thereof, has not paid
to any person, directly or indirectly, any commission or other remuneration for
soliciting the Exchange. Neither the Company nor any of its Affiliates, nor any
person acting on its or their behalf, (i) has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the Exchange, (ii) in the three months prior to closing, has,
other than the transactions contemplated with respect to the Series A Warrants
and pursuant to this Agreement, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy or exchange any security, under
any circumstances that would require registration of the Exchange Warrants or
the shares of Common Stock issuable upon exercise of the Exchange Warrants (the
"Shares") under the Securities Act or (iii) has issued any shares of Common
Stock or shares of any series of preferred stock or other securities or
instruments convertible into, exchangeable for or otherwise entitling the holder
thereof to acquire shares of Common Stock which would be integrated with the
Exchange or the issuance of shares of Common Stock upon exercise of the Exchange
Warrants for purposes of the Securities Act or of any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of the NASD, nor will the Company or any of its Affiliates take any
action or steps that would require registration of the Exchange Warrants or such
underlying shares of Common Stock under the Securities Act.

                  6.9 Rule 144(k). At the time of the Closing, assuming the
accuracy of the representation of each Warrant Holder, contained in Section 7.5
below, that such Warrant Holder is not an "affiliate", as such term is defined
in Rule 144 under the Securities Act (an "Affiliate"), of the Company and has
not been an Affiliate in the three months preceding the Closing, the Exchange
Warrants shall be eligible for public resale pursuant to Rule 144(k) of the
Securities Act and the Shares, shall be eligible for public resale pursuant to
Rule 144(k) of the Securities Act, provided that such Warrant Holder exercises
its Exchange Warrant(s) pursuant to Section 1.2 of such Exchange Warrant. At the
time of the Closing, the Company has no knowledge of any fact or circumstance
that could form the basis of an assertion that any Warrant Holder is an
Affiliate of the Company.

                  6.10 No Reliance. In entering into this Agreement, the Company
(i) is not relying on any advice or representation of any Warrant Holder or any
of its affiliates (other than the representations of such Warrant Holder
contained herein), (ii) has not received from any Warrant Holder or any of its
affiliates any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of the Exchange or entering into this
Agreement, (iii) has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting


                                       6.
<PAGE>

advisors to the extent that it has deemed necessary, and (iv) has entered into
this Agreement based on its own independent judgment and on the advice of its
advisors as it has deemed necessary, and not on any view (whether written or
oral) expressed by any Warrant Holder or any of its affiliates. Neither any
Warrant Holder nor any of its affiliates is now or has ever been a financial
advisor, or other fiduciary, with respect to the Company.

                  6.11 Bankruptcy Protection. The Company has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to 11 U.S.C. ss.ss. 101 et seq. (the "Bankruptcy Code") or any similar
state bankruptcy law nor does the Company have any knowledge or reason to
believe that its creditors intend to initiate an involuntary proceeding under
the Bankruptcy Code or any such state law.

                  6.12 Solvency. To the Company's knowledge, as of the date of
this Agreement and, based upon fair and reasonable estimates made by the
Company, after giving effect to the Exchange, (a) the fair value of the
Company's assets will exceed the amount of its liabilities, contingent or
otherwise, as determined in accordance with generally accepted accounting
principles, and (b) the Company will be able to pay its debts as they mature.

            7. Representations and Warranties of the Warrant Holders. The
Warrant Holders hereby represent and warrant severally and not jointly to the
Company as follows:

                  7.1 Investment Experience and Interest. Each Warrant Holder
represents and warrants to, and covenants with, the Company that: (a) such
Warrant Holder is an "accredited investor" as defined in Regulation D under the
Securities Act, (b) such Warrant Holder is acquiring the Exchange Warrants in
the ordinary course of its business and for its own account and with no present
intention of distributing any of such Exchange Warrants or any arrangement or
understanding with any other persons regarding the distribution of such Exchange
Warrants provided that, in making such representation, such Warrant Holder does
not agree to hold the Exchange Warrant or the Shares for any minimum or specific
period of time, and reserves the right to sell, transfer or otherwise dispose of
such securities at any time in accordance with the provisions of this Agreement
and with Federal and state securities laws applicable to such sale, transfer or
disposition (c) such Warrant Holder will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Exchange Warrants
except in compliance with the Securities Act, applicable state securities laws
and the respective rules and regulations promulgated thereunder and (d) such
Warrant Holder has, in connection with its decision to exchange the Series A
Warrants for the Exchange Warrants, relied only upon the Required Documents and
the representations, warranties and covenants of the Company contained herein
and in the Exchange Warrants.

                  7.2 Registration or Exemption Requirements. Each Warrant
Holder acknowledges and understands that the Exchange Warrants and the Shares
may not be resold or otherwise transferred except in a transaction registered
under the Securities Act, or unless an exemption from such registration is
available. Each Warrant Holder understands that the certificates evidencing the
Shares will be imprinted with a legend that prohibits the transfer of such
securities unless (a) the Warrant Holder has complied with the provisions of
Section 10.1


                                       7.
<PAGE>

below, (b) they are registered or such registration is not required or (c) if
the transfer (other than a transfer conducted in accordance with the provisions
of Section 6.9 hereof) is pursuant to an exemption from registration under the
Securities Act and, if the Company shall so request in writing, an opinion of
counsel reasonably satisfactory to the Company is obtained (at the Company's
expense) to the effect that the transaction is so exempt.

                  7.3 Due Authorization. Each Warrant Holder represents and
warrants to, and covenants with, the Company that such Warrant Holder has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement, and the Agreement has been duly authorized and
validly executed and delivered by such Warrant Holder and no other corporate
action on the part of such Warrant Holder is necessary to authorize the
execution and delivery by such Warrant Holder of the Agreement. Each Warrant
Holder represents and warrants to, and covenants with, the Company that the
Agreement constitutes a legal, valid and binding agreement of each Warrant
Holder, enforceable against such Warrant Holder in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally, and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

                  7.4 No Legal, Tax or Investment Advice. Each Warrant Holder
understands that nothing in the Agreement or any other materials presented to
such Warrant Holder in connection with the Exchange constitutes legal, tax or
investment advice, and represents and warrants to the Company that it has
consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with the Exchange.

                  7.5 Affiliate Status. As of Closing, each Warrant Holder
represents and warrants that such Warrant Holder is not an Affiliate of the
Company, and has not been an Affiliate of the Company for the three months
preceding the Closing.

            8. Amendment and Waiver. No provision of this Agreement may be
amended or modified except upon the written consent of the Company and each
Warrant Holder, and no provision hereof may be waived other than by a written
instrument signed by the party against whom enforcement of any such waiver is
sought.

            9. Termination.

                  9.1 Termination Events. Without prejudice to other remedies
that may be available to the parties by law or this Agreement, this Agreement
may be terminated and the rights hereunder may be abandoned at any time by the
written consent of both the Company and each Warrant Holder.

                  9.2 Effect of Termination. In the event of any termination of
this Agreement pursuant to Section 9.1, all rights and obligations of the
parties hereunder shall terminate without any liability on the part of any party
or its Affiliates in respect thereof; provided, however, that such termination
shall not relieve the Company or the Warrant Holders


                                       8.
<PAGE>

of any liability for any willful breach of this Agreement that occurred prior to
the effective date of such termination.

            10. Legends.

                  10.1 At any time after the issuance of the Exchange Warrants
at the Closing, a Warrant Holder, or its permitted successors or assigns,
exercises any Exchange Warrant pursuant to Section 1.2 of such Exchange Warrant
(the "Exercise"), and provided that such Warrant Holder, or its permitted
successor or assign, has certified in writing to the Company that it is not is
not an Affiliate of the Company and has not been an Affiliate in the three
months preceding the Exercise, such certification to be in the form attached
hereto as Exhibit D, the Company shall issue an instruction letter to the
Company's transfer agent, instructing the transfer agent to issue the stock
certificates covering the Shares pursuant to the Exercise, without any legend or
restriction; provided, however, that if following the date of this Agreement,
Rule 144(k) of the Securities Act is amended or modified so that, as a result of
such amendment or modification, a Warrant Holder, upon a sale of Shares pursuant
to the terms hereof, would be deemed to be an "underwriter" within the meaning
of Section 2(11) of the Securities Act, the Company shall not issue such
instruction letter until such time as such sale would not cause such Warrant
Holder to be deemed an "underwriter".

                  10.2 In accordance with Section 10.1 above, the Company agrees
to provide any further documentation requested by the Company's transfer agent
in connection with the issuance of the stock certificates representing the
Shares without any legends or restrictions, including an opinion of counsel,
completely at the expense of the Company.

            11. Miscellaneous.

                  11.1 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by registered mail,
certified mail (return receipt requested) or by internationally recognized
express courier (e.g., FedEx), postage prepaid, or sent by fax or electronic
mail or otherwise delivered by hand or by messenger addressed:

                        (a)   if to the Company, to:

                              VaxGen, Inc.
                              1000 Marina Boulevard, Suite 200
                              Brisbane, CA 94005
                              Attention: James M. Cunha
                              Telephone: (650) 624-1000
                              Telecopy: (650) 624-1001


                                       9.
<PAGE>

                        (b)   with a copy mailed to:

                              Cooley Godward LLP
                              Five Palo Alto Square
                              3000 El Camino Real
                              Palo Alto, CA 94306
                              Attn: Laura A. Berezin
                              Telephone: (650) 843-5000
                              Telecopy: (650) 849-7400

                        (c) if to a Warrant Holder, to such address for such
Warrant Holder as shall appear on the signature page hereof executed by such
Warrant Holder, or at such other address or addresses as may have been furnished
to the Company in writing.

                        (d) Each such notice shall for all purposes of this
Agreement be treated as effective or having been given on the earliest to occur
of the following:

                              (i) The date of personal delivery or delivery by
messenger, or if such date is not a business day, then on the next succeeding
business day;

                              (ii) One (1) business day after transmission by
facsimile or electronic mail, with confirmation of transmission and copy by
first class mail, postage prepaid;

                              (iii) One (1) business day after deposit with an
internationally recognized express courier for United States deliveries, or
three (3) business days after such deposit for deliveries outside of the United
States; or

                              (iv) Upon receipt if sent by registered or
certified mail (return receipt requested) for United States deliveries.

                  11.2 Attorneys' Fees. In the event that any suit or action is
instituted under or in relation to this Agreement, including without limitation
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

                  11.3 Headings; Construction . The headings of the various
sections of this Agreement have been inserted for convenience of reference only
and shall not be deemed to be part of this Agreement. The language used in this
Agreement is and will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied
against any party.

                  11.4 Pronouns. All pronouns contained herein, and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neutral, singular or plural, as to the identity of the parties hereto may
require.


                                      10.
<PAGE>

                  11.5 Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

                  11.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of California,
without giving effect to the principles of conflicts of law. The parties agree
that any action brought by either party under or in relation to this Agreement,
including without limitation to interpret or enforce any provision of this
Agreement, shall be brought in, and each party agrees to and does hereby submit
to the jurisdiction and venue of, any state or federal court located in the
County of San Mateo, California.

                  11.7 Entire Agreement. This Agreement, including the Exhibits
hereto, and the Exchange Warrants constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof, and no
party shall be liable or bound to any other in any manner by any oral or written
representations, warranties, covenants and agreements except as specifically set
forth herein. Each party expressly represents and warrants that it is not
relying on any oral or written representations, warranties, covenants or
agreements outside of this Agreement or the Exchange Warrants.

                  11.8 Counterparts. This Agreement may be executed in two (2)
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one (1) instrument, and shall
become effective when one (1) or more counterparts have been signed by each
party hereto and delivered to the other parties.

                  11.9 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of Shares. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of each Warrant Holder except by operation of law. No consent of any
Warrant Holder shall be required in connection with the assignment of this
Agreement or any rights or obligations hereunder by the Company in connection
with a merger, consolidation, reorganization or acquisition of all or
substantially all of the Company's assets, provided that the successor company,
if not the Company, shall assume the obligations of the Company under this
Agreement and under the Exchange Warrants. A Warrant Holder may assign some or
all of its rights hereunder without the consent of the Company to an Affiliate
of such Warrant Holder or to a party reasonably acceptable to the Company in
accordance with the terms of the Exchange Warrant, in which event such assignee
shall be deemed to be a Warrant Holder with respect to such assigned rights.

                  11.10 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assignees, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.

                  11.11 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably


                                      11.
<PAGE>

request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.

                  11.12 Press Release; Form 8-K. The Company agrees that it will
(i) on or before 9:30 a.m., eastern time, on the second Business Day immediately
following the date on which this Agreement is executed and delivered by the
Company and each Warrant Holder, issue a press release disclosing the material
terms of this Agreement and the transactions contemplated by this Agreement and
(ii) prior to 5:00 p.m. on such second Business Day, file with the Commission a
Current Report on Form 8-K disclosing the material terms of this Agreement and
the Exchange Warrants and the transactions contemplated hereby and thereby and
including as exhibits this Agreement and the Exchange Warrants; provided,
however, that each Warrant Holder shall have a reasonable opportunity to review
and comment on any such press release or Form 8-K prior to the issuance or
filing thereof; and provided, further, that, if the Company fails to issue a
press release in accordance with clause (i) above, each Warrant Holder shall
have the right to issue a press release containing the information described in
clause (i), without any liability to the Company or any person, and no Warrant
Holder shall be deemed to possess material non-public information as a result of
the issuance of any such press release.

                           [Signature Page to Follow]


                                      12.
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this WARRANT
EXCHANGE AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                    WARRANT HOLDERS:

VAXGEN, INC.                                SOCIETE GENERALE


By:                                         By:
      ----------------------------                ------------------------------

Name: Lance K. Gordon                       Name:
      ----------------------------                ------------------------------

Title: Chief Executive Officer              Title:
      ----------------------------                ------------------------------

                                            Address for Notices:


                                                  ------------------------------

                                                  ------------------------------

                                                  ------------------------------


                                            KEPLER CAPITAL, LLC

                                            By:
                                                  ------------------------------

                                            Name:
                                                  ------------------------------

                                            Title:
                                                  ------------------------------

                                            Address for Notices:


                                                  ------------------------------

                                                  ------------------------------

                                                  ------------------------------

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have executed this
WARRANT EXCHANGE AGREEMENT as of the date set forth in the first paragraph
hereof.

                                            WARRANT HOLDERS:

                                            CHEYENNE, LLC

                                            By:
                                                  ------------------------------

                                            Name:
                                                  ------------------------------

                                            Title:
                                                  ------------------------------

                                            Address for Notices:


                                                  ------------------------------

                                                  ------------------------------

                                                  ------------------------------


                                            PRISM CAPITAL 5, L.P.

                                            By:
                                                  ------------------------------

                                            Name:
                                                  ------------------------------

                                            Title:
                                                  ------------------------------

                                            Address for Notices:


                                                  ------------------------------

                                                  ------------------------------

                                                  ------------------------------

<PAGE>

EXHIBIT A-1

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                              Shares covered under First        Exercise Price per       Expiration Date of
Name                               Exchange Warrant                    Share                   Warrant
----                               ----------------                    -----                   -------
----------------------------------------------------------------------------------------------------------------
<S>                                     <C>                           <C>                <C>
Kepler Capital, LLC                      57,322                        $0.01             September 21, 2005
----------------------------------------------------------------------------------------------------------------
Cheyenne, LLC                           429,895                        $0.01             September 21, 2005
----------------------------------------------------------------------------------------------------------------
Prism Capital 5, L.P.                   429,894                        $0.01             September 21, 2005
----------------------------------------------------------------------------------------------------------------
Societe Generale                        143,299                        $0.01             September 21, 2005
----------------------------------------------------------------------------------------------------------------
</TABLE>

EXHIBIT A-2

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                              Shares covered under Second       Exercise Price per       Expiration Date of
Name                               Exchange Warrant                    Share                   Warrant
----                               ----------------                    -----                   -------
----------------------------------------------------------------------------------------------------------------
<S>                                     <C>                           <C>                <C>
Kepler Capital, LLC                      32,755                       $16.00             September 21, 2007
----------------------------------------------------------------------------------------------------------------
Cheyenne, LLC                           245,654                       $16.00             September 21, 2007
----------------------------------------------------------------------------------------------------------------
Prism Capital 5, L.P.                   245,654                       $16.00             September 21, 2007
----------------------------------------------------------------------------------------------------------------
Societe Generale                         81,885                       $16.00             September 21, 2007
----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                    EXHIBIT B

                                                                   No. CW - ____

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.

                           WARRANT TO PURCHASE SHARES
                               OF COMMON STOCK OF
                                  VAXGEN, INC.
                         (Void after September 21, 2005)

      This certifies that ________________________, or its permitted assigns
(the "Holder"), for value received, is entitled to, upon the terms and
conditions hereinafter set forth, subscribe for and purchase from VAXGEN, INC.,
a Delaware corporation (the "Company"), having a place of business at 1000
Marina Boulevard, Suite 200, Brisbane, California 94005, _______ fully paid and
nonassessable shares (the "Warrant Shares") of the Company's common stock, $0.01
par value per share ("Common Stock") at the initial exercise price of $0.01 per
Warrant Share (the "Exercise Price") at any time and from time to time, in whole
or in part, up to and including 5:00 p.m. (Pacific time) on September 21, 2005
(the "Expiration Date") upon surrender to the Company at its principal office
(or at such other location as the Company may advise the Holder in writing) of
this Warrant, with the Form of Subscription attached hereto duly filled in and
signed and upon payment in cash or wire transfer of the aggregate Exercise Price
for the number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof, or in accordance with the provisions of
Section 1.2 hereof. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment as provided in Section 3 of this Warrant.

      This Warrant is subject to the following terms and conditions:

            1. Exercise; Issuance of Certificates; Payment for Shares.

                  1.1 General. This Warrant is exercisable at the option of the
Holder of record hereof, at any time and from time to time and including, up to
the Expiration Date for all or any part of the Warrant Shares (but not for a
fraction of a share) which may be purchased hereunder. The Company agrees that
the Warrant Shares purchased under this Warrant shall be and are deemed to be
issued to the Holder hereof as the record owner of such shares as of the


                                       1.
<PAGE>

close of business on the date on which this Warrant shall have been surrendered,
the completed and executed Form of Subscription delivered and (except for an
exercise effected pursuant to Section 1.2 hereof) payment made for such shares.
Certificates for the Warrant Shares so purchased, together with any other
securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered to the Holder hereof by the Company at the
Company's expense on or before the later to occur of (i) the third (3rd)
business day following the Company's receipt of the Form of Subscription by
facsimile transmission and (ii) the business day following the Company's receipt
of the original Warrant and Form of Subscription and, except for an exercise
effected pursuant to Section 1.2 hereof, payment for such shares (the later of
(i) and (ii) being referred to herein as the "Delivery Date"). In case of a
purchase of less than all the Warrant Shares which may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time; provided, however, that the Holder may validly exercise this
Warrant at any time following such purchase without having received such new
Warrant. Provided that the Holder complies with Section 10.1 of the Warrant
Exchange Agreement, dated September 21, 2004 (the "Exchange Agreement"), the
Company shall effect delivery of Warrant Shares to the Holder by, as long as the
Company's transfer agent (the "Transfer Agent") participates in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program ("FAST"),
crediting the account of the Holder or its nominee at DTC (as specified in the
applicable Exercise Notice) with the number of Warrant Shares required to be
delivered, no later than the close of business on the applicable Delivery Date.
In the event that the Transfer Agent is not a participant in FAST, or if the
Warrant Shares are not otherwise eligible for delivery through FAST, or if the
Holder so specifies in an Exercise Notice or otherwise in writing, the Company
shall effect delivery of Warrant Shares by delivering to the Holder or its
nominee physical certificates representing such Warrant Shares, no later than
the close of business on such Delivery Date. Each stock certificate so delivered
shall be in such denominations of Common Stock as may be requested by the Holder
hereof and shall be registered in the name of such Holder or in the name of
Holder's affiliate and/or subsidiary as may be requested by the Holder. The
Holder shall have the right to pursue actual damages for the Company's failure
to issue and deliver Warrant Shares (without any restriction legends) on the
applicable Delivery Date (including, without limitation, damages relating to any
purchase of Common Stock by the Holder to make delivery on a sale effected in
anticipation of receiving Warrant Shares upon exercise), and the Holder shall
have the right to pursue all other remedies available to it at law or in equity
(including, without limitation, a decree of specific performance and/or
injunctive relief).

                  1.2 Net Issue Exercise. Notwithstanding any provisions herein
to the contrary, if the fair market value of one share of the Company's Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant for cash, the Holder may elect
to receive shares equal to the value (as determined below) of this Warrant (or
the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the executed Form of Subscription
with notice of such election in which event the Company shall issue to the
Holder a number of Warrant Shares computed using the following formula:

                  X = Y (A-B)
                      -------
                         A


                                       2.
<PAGE>

      Where X = the number of Warrant Shares to be issued to the Holder

                              Y = the number of Warrant Shares purchasable under
                              the Warrant or, if only a portion of the Warrant
                              is being exercised, the portion of the Warrant
                              being exercised (at the date of such calculation)

                              A = the fair market value of one share of the
                              Company's Common Stock (at the date of such
                              calculation)

                              B = Exercise Price (as adjusted to the date of
                              such calculation)

      For purposes of the above calculation, if the Common Stock is traded on
any established stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, then the fair market value of one share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or market (or the exchange or market
with the greatest volume of trading in the Common Stock) on the last market
trading day prior to the day of determination, as reported in The Wall Street
Journal (or such other source as the Company's Board of Directors reasonably
deems reliable). In the event the fair market value of one share of Common Stock
cannot be determined in accordance with the foregoing sentence, such fair market
value shall be the last reported sales price of the Common Stock as reported in
the "pink sheets" by Pink Sheets LLC. In the absence of such markets for the
Common Stock, the fair market value of one share of Common Stock shall be
reasonably determined by the Company's Board of Directors in good faith.

            2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any stockholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities and property, when and as required to
provide for the exercise of the rights represented by this Warrant. The Company
will take all such action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any securities exchange or market upon
which the Common Stock may be listed or traded; provided, however, that the
Company shall not be required to effect a registration under federal or state
securities laws solely because of such exercise. The Company will not take any
action which would result in any adjustment of the Exercise Price (as set forth
in Section 3 hereof) if the total number of shares of Common Stock issuable
after such action upon exercise of all outstanding warrants, together with all
shares of Common Stock then outstanding and all shares of Common


                                       3.
<PAGE>

Stock then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of shares
of Common Stock then authorized by the Company's Certificate of Incorporation.

            3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 3. Upon each adjustment of the Exercise Price,
the Holder of this Warrant shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price resulting
from such adjustment.

                  3.1 Subdivision or Combination of Stock. In case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.

                  3.2 Dividends in Common Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,

                        (a) Common Stock or any shares of stock or other
securities which are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of dividend or other
distribution,

                        (b) any cash paid or payable otherwise than as a cash
dividend, or

                        (c) Common Stock or additional stock or other securities
or property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than shares of
Common Stock issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 3.1 above),

then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of Warrant Shares
receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (a) and (b) above) which such Holder would
hold on the date of such exercise had such Holder been the holder of record of
such Common Stock as of the date on which holders of Common Stock received or
became entitled to receive such shares or all other additional stock and other
securities and property.


                                       4.
<PAGE>

                  3.3 Reorganization, Reclassification, Consolidation, Merger or
Sale. If any recapitalization, reclassification or reorganization of the capital
stock of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, or other assets or property (an
"Organic Change"), then, as a condition of such Organic Change, lawful and
adequate provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby) such shares of stock,
securities or other assets or property as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In the event of
any Organic Change, appropriate provision shall be made by the Company with
respect to the rights and interests of the Holder of this Warrant such that the
provisions hereof (including, without limitation, provisions for adjustments of
the Exercise Price and of the number of shares purchasable and receivable upon
the exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. The Company will not effect any such consolidation, merger or sale
unless, prior to the consummation thereof, the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument the obligation to
deliver to such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase.

                  3.4 Certain Events. If any change in the outstanding Common
Stock of the Company or any other event occurs as to which the other provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of the Company
shall make an adjustment in the number and class of shares available under the
Warrant, the Exercise Price or the application of such provisions, so as to
protect such purchase rights as aforesaid. The adjustment shall be such as will
give the Holder of the Warrant upon exercise for the same aggregate Exercise
Price the total number, class and kind of shares as such Holder would have owned
had the Warrant been exercised prior to the event and had such Holder continued
to hold such shares until after the event requiring adjustment.

                  3.5 Notices of Change.

                        (a) Immediately upon any adjustment in the number or
class of shares subject to this Warrant and of the Exercise Price, the Company
shall give written notice thereof to the Holder, setting forth in reasonable
detail and certifying the calculation of such adjustment.

                        (b) The Company shall give written notice to the Holder
at least ten (10) calendar days prior to the date on which the Company closes
its books or takes a record for determining rights to receive any dividends or
distributions or any right to subscribe


                                       5.
<PAGE>

for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right.

                        (c) The Company shall give written notice to the Holder
at least ten (10) calendar days prior to the date on which an Organic Change
shall take place, including in such notice the date as of which the Organic
Change is expected to become effective and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
Common Stock for securities or other property, if any, deliverable upon such
Organic Change.

                        (d) The Company shall initiate the delivery of written
notice to the Holder of any voluntary or involuntary dissolution, liquidation or
winding-up of the Company (the "Dissolution") on the date such Dissolution is
publicly announced, including in such notice the date as of which the
Dissolution is expected to become effective and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property, if any.

            4. LISTING. The Company shall file any forms and do any acts as
shall be required from time to time to secure the listing or quotation of the
Common Stock issuable upon exercise of the Warrant with each national securities
exchange or automated quotation system, if any, upon which shares of such
securities are then listed or traded and shall use its commercially reasonable
efforts to maintain, so long as any other shares of such securities shall be so
listed or traded, such listing or quotation of all securities issued or issuable
upon the exercise of this Warrant.

            5. ISSUE TAX. The issuance of certificates for Warrant Shares upon
the exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.

            6. CLOSING OF BOOKS. The Company will at no time close its transfer
books against the transfer of any warrant or of any shares of Common Stock
issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant.

            7. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a stockholder of
the Company or any other matters or any rights whatsoever as a stockholder of
the Company. Except as expressly set forth herein, no dividends or interest
shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised. No provisions hereof, in
the absence of affirmative action by the Holder to purchase Warrant Shares, and
no mere enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of such Holder for the Exercise


                                       6.
<PAGE>

Price or as a stockholder of the Company, whether such liability is asserted by
the Company or by its creditors.

            8. REPRESENTATIONS OF HOLDER. Holder further represents that it
understands that neither this Warrant nor the Warrant Shares issuable upon the
exercise thereof have been registered under the Act, and are being offered
pursuant to an exemption from registration contained in the Act based in part
upon Holder's representations contained in this Section 8. Holder represents
that by reason of its own, or of its management's, knowledge and experience in
financial and business matters, Holder is capable of evaluating the merits and
risks of its investment in the Company and has the capacity to protect its own
interests in connection with the issuance of this Warrant and the Warrant Shares
issuable upon the exercise thereof, and is able to bear risk, including a
complete loss, of the investment. Holder represents that it is an "accredited
investor" within the meaning set forth in Regulation D under the Act. Holder
represents that it is acquiring such securities for its own account for
investment only, and not with a view towards their distribution, except pursuant
to sales that are registered under the Act or are exempt from the registration
requirements of the Act; provided, however, that, in making such representation,
such Holder does not agree to hold such securities for any minimum or specific
term and reserves the right to sell, transfer or otherwise dispose of such
securities at any time in accordance with the provisions of this Agreement and
with Federal and state securities laws applicable to such sale, transfer or
disposition.

            9. TRANSFERABILITY. Subject to compliance with any applicable
securities laws, this Warrant may be transferred, provided that Holder provides
prior written notice of such transfer to the Company, such transferee agrees to
be bound by the obligations hereunder and such transferee agrees to execute
certain documentation requested by the Company including an investment letter.
Upon the transfer of this Warrant, the Company may treat such transferee as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant.

            10. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights
and obligations of the Company, of the Holder of this Warrant and of the holder
of Warrant Shares issued upon exercise of this Warrant, shall survive the
exercise of this Warrant.

            11. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.

            12. NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof or the Company shall be
in writing, shall refer specifically to this Warrant and shall be delivered and
deemed received in accordance with Section 11.1 of the Exchange Agreement.

            13. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and
permitted assigns of the Holder hereof.


                                       7.
<PAGE>

            14. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings
of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California.

            15. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.

            16. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Exercise Price.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]


                                       8.
<PAGE>

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its officers, thereunto duly authorized this ___ day of September, 2004.

                                                VAXGEN, INC.


                                                By:
                                                   ----------------------------
                                                   Lance K. Gordon
                                                   Chief Executive Officer

<PAGE>

                                SUBSCRIPTION FORM

                                              Date: _________________, 200_

VaxGen, Inc.
1000 Marina Boulevard, Suite 200
Brisbane, California 94005
Attn: Chief Financial Officer

Ladies and Gentlemen:

|_|   The undersigned hereby elects to exercise the warrant issued to it by
      VaxGen, Inc. (the "Company") and dated September 21, 2004 Warrant No.
      CW-___ (the "Warrant") and to purchase thereunder
      __________________________________ shares of the Common Stock of the
      Company (the "Shares") at a purchase price of $0.01 per Share or an
      aggregate purchase price of ________________ Dollars ($__________) (the
      "Purchase Price"). Pursuant to the terms of the Warrant the undersigned
      has delivered the Purchase Price herewith in full in cash or wire
      transfer.

|_|   The undersigned hereby elects to convert ______________________ percent
      (___%) of the value of the Warrant pursuant to the provisions of Section
      1.2 of the Warrant.

                                         Very truly yours,


                                         ---------------------------------------
                                             Print Entity Name, if applicable


                                         By:
                                            ------------------------------------

                                         Print Name:
                                                    ----------------------------

                                         Title:
                                               ---------------------------------

<PAGE>

                                    EXHIBIT C

                                                                   No. CW - ____

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.

                           WARRANT TO PURCHASE SHARES
                               OF COMMON STOCK OF
                                  VAXGEN, INC.
                         (Void after September 21, 2007)

      This certifies that ________________________, or its permitted assigns
(the "Holder"), for value received, is entitled to, upon the terms and
conditions hereinafter set forth, subscribe for and purchase from VAXGEN, INC.,
a Delaware corporation (the "Company"), having a place of business at 1000
Marina Boulevard, Suite 200, Brisbane, California 94005, _______ fully paid and
nonassessable shares (the "Warrant Shares") of the Company's common stock, $0.01
par value per share ("Common Stock") at the initial exercise price of $16.00 per
Warrant Share (the "Exercise Price") at any time and from time to time, in whole
or in part, up to and including 5:00 p.m. (Pacific time) on September 21, 2007
(the "Expiration Date") upon surrender to the Company at its principal office
(or at such other location as the Company may advise the Holder in writing) of
this Warrant executed with the Form of Subscription attached hereto duly filled
in and signed and upon payment in cash or wire transfer of the aggregate
Exercise Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof, or in accordance
with the provisions of Section 1.2 hereof. The Exercise Price and the number of
shares purchasable hereunder are subject to adjustment as provided in Section 3
of this Warrant.

      This Warrant is subject to the following terms and conditions:

            1. Exercise; Issuance of Certificates; Payment for Shares.

                  1.1 General. This Warrant is exercisable at the option of the
Holder of record hereof, at any time and from time to time and including, up to
the Expiration Date for all or any part of the Warrant Shares (but not for a
fraction of a share) which may be purchased hereunder. The Company agrees that
the Warrant Shares purchased under this Warrant shall be and are deemed to be
issued to the Holder hereof as the record owner of such shares as of the


                                       1.
<PAGE>

close of business on the date on which this Warrant shall have been surrendered,
the completed and executed Form of Subscription delivered and (except for an
exercise effected pursuant to Section 1.2 hereof) payment made for such shares.
Certificates for the Warrant Shares so purchased, together with any other
securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered to the Holder hereof by the Company at the
Company's expense on or before the later to occur of (i) the third (3rd)
business day following the Company's receipt of the Form of Subscription by
facsimile transmission and (ii) the business day following the Company's receipt
of the original Warrant and Form of Subscription and, except for an exercise
effected pursuant to Section 1.2 hereof, payment for such shares (the later of
(i) and (ii) being referred to herein as the "Delivery Date"). In case of a
purchase of less than all the Warrant Shares which may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new
Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time; provided, however, that the Holder may validly exercise this
Warrant at any time following such purchase without having received such new
Warrant. Provided that the Holder complies with Section 10.1 of the Warrant
Exchange Agreement, dated September 21, 2004 (the "Exchange Agreement"), the
Company shall effect delivery of Warrant Shares to the Holder by, as long as the
Company's transfer agent (the "Transfer Agent") participates in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program ("FAST"),
crediting the account of the Holder or its nominee at DTC (as specified in the
applicable Exercise Notice) with the number of Warrant Shares required to be
delivered, no later than the close of business on the applicable Delivery Date.
In the event that the Transfer Agent is not a participant in FAST, or if the
Warrant Shares are not otherwise eligible for delivery through FAST, or if the
Holder so specifies in an Exercise Notice or otherwise in writing, the Company
shall effect delivery of Warrant Shares by delivering to the Holder or its
nominee physical certificates representing such Warrant Shares, no later than
the close of business on such Delivery Date. Each stock certificate so delivered
shall be in such denominations of Common Stock as may be requested by the Holder
hereof and shall be registered in the name of such Holder or in the name of
Holder's affiliate and/or subsidiary as may be requested by the Holder. The
Holder shall have the right to pursue actual damages for the Company's failure
to issue and deliver Warrant Shares (without any restriction legends) on the
applicable Delivery Date (including, without limitation, damages relating to any
purchase of Common Stock by the Holder to make delivery on a sale effected in
anticipation of receiving Warrant Shares upon exercise), and the Holder shall
have the right to pursue all other remedies available to it at law or in equity
(including, without limitation, a decree of specific performance and/or
injunctive relief).

                  1.2 Net Issue Exercise. Notwithstanding any provisions herein
to the contrary, if the fair market value of one share of the Company's Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant for cash, the Holder may elect
to receive shares equal to the value (as determined below) of this Warrant (or
the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the executed Form of Subscription
with notice of such election in which event the Company shall issue to the
Holder a number of Warrant Shares computed using the following formula:

                  X = Y (A-B)
                      -------
                         A


                                       2.
<PAGE>

      Where X = the number of Warrant Shares to be issued to the Holder

                              Y = the number of Warrant Shares purchasable under
                              the Warrant or, if only a portion of the Warrant
                              is being exercised, the portion of the Warrant
                              being exercised (at the date of such calculation)

                              A = the fair market value of one share of the
                              Company's Common Stock (at the date of such
                              calculation)

                              B = Exercise Price (as adjusted to the date of
                              such calculation)

      For purposes of the above calculation, if the Common Stock is traded on
any established stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, then the fair market value of one share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or market (or the exchange or market
with the greatest volume of trading in the Common Stock) on the last market
trading day prior to the day of determination, as reported in The Wall Street
Journal (or such other source as the Company's Board of Directors reasonably
deems reliable). In the event the fair market value of one share of Common Stock
cannot be determined in accordance with the foregoing sentence, such fair market
value shall be the last reported sales price of the Common Stock as reported in
the "pink sheets" by Pink Sheets LLC. In the absence of such markets for the
Common Stock, the fair market value of one share of Common Stock shall be
reasonably determined by the Company's Board of Directors in good faith.

            2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any stockholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities and property, when and as required to
provide for the exercise of the rights represented by this Warrant. The Company
will take all such action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any securities exchange or market upon
which the Common Stock may be listed or traded; provided, however, that the
Company shall not be required to effect a registration under federal or state
securities laws solely because of such exercise. The Company will not take any
action which would result in any adjustment of the Exercise Price (as set forth
in Section 3 hereof) if the total number of shares of Common Stock issuable
after such action upon exercise of all outstanding warrants, together with all
shares of Common Stock then outstanding and all shares of Common


                                       3.
<PAGE>

Stock then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of shares
of Common Stock then authorized by the Company's Certificate of Incorporation.

            3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 3. Upon each adjustment of the Exercise Price,
the Holder of this Warrant shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price resulting
from such adjustment.

                  3.1 Subdivision or Combination of Stock. In case the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.

                  3.2 Dividends in Common Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,

                        (a) Common Stock or any shares of stock or other
securities which are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of dividend or other
distribution,

                        (b) any cash paid or payable otherwise than as a cash
dividend, or

                        (c) Common Stock or additional stock or other securities
or property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than shares of
Common Stock issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 3.1 above),

then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of Warrant Shares
receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (a) and (b) above) which such Holder would
hold on the date of such exercise had such Holder been the holder of record of
such Common Stock as of the date on which holders of Common Stock received or
became entitled to receive such shares or all other additional stock and other
securities and property.


                                       4.
<PAGE>

                  3.3 Reorganization, Reclassification, Consolidation, Merger or
Sale. If any recapitalization, reclassification or reorganization of the capital
stock of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, or other assets or property (an
"Organic Change"), then, as a condition of such Organic Change, lawful and
adequate provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby) such shares of stock,
securities or other assets or property as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In the event of
any Organic Change, appropriate provision shall be made by the Company with
respect to the rights and interests of the Holder of this Warrant such that the
provisions hereof (including, without limitation, provisions for adjustments of
the Exercise Price and of the number of shares purchasable and receivable upon
the exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. The Company will not effect any such consolidation, merger or sale
unless, prior to the consummation thereof, the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument the obligation to
deliver to such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase.

                  3.4 Certain Events. If any change in the outstanding Common
Stock of the Company or any other event occurs as to which the other provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of the Company
shall make an adjustment in the number and class of shares available under the
Warrant, the Exercise Price or the application of such provisions, so as to
protect such purchase rights as aforesaid. The adjustment shall be such as will
give the Holder of the Warrant upon exercise for the same aggregate Exercise
Price the total number, class and kind of shares as such Holder would have owned
had the Warrant been exercised prior to the event and had such Holder continued
to hold such shares until after the event requiring adjustment.

                  3.5 Notices of Change.

                        (a) Immediately upon any adjustment in the number or
class of shares subject to this Warrant and of the Exercise Price, the Company
shall give written notice thereof to the Holder, setting forth in reasonable
detail and certifying the calculation of such adjustment.

                        (b) The Company shall give written notice to the Holder
at least ten (10) calendar days prior to the date on which the Company closes
its books or takes a record for determining rights to receive any dividends or
distributions or any right to subscribe


                                       5.
<PAGE>

for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right.

                        (c) The Company shall give written notice to the Holder
at least ten (10) calendar days prior to the date on which an Organic Change
shall take place, including in such notice the date as of which the Organic
Change is expected to become effective and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
Warrant Shares for securities or other property, if any, deliverable upon such
Organic Change.

                        (d) The Company shall initiate the delivery of written
notice to the Holder of any voluntary or involuntary dissolution, liquidation or
winding-up of the Company (the "Dissolution") on the date such Dissolution is
publicly announced, including in such notice the date as of which the
Dissolution is expected to become effective and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Warrant Shares for securities or other property, if any.

            4. LISTING. The Company shall file any forms and do any acts as
shall be required from time to time to secure the listing or quotation of the
shares of Common Stock issuable upon exercise of the Warrant with each national
securities exchange or automated quotation system, if any, upon which shares of
such securities are then listed or traded and shall use its commercially
reasonable efforts to maintain, so long as any other shares of such securities
shall be so listed or traded, such listing or quotation of all securities issued
or issuable upon the exercise of this Warrant.

            5. ISSUE TAX. The issuance of certificates for Warrant Shares upon
the exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.

            6. CLOSING OF BOOKS. The Company will at no time close its transfer
books against the transfer of any warrant or of any shares of Common Stock
issued or issuable upon the exercise of any warrant in any manner which
interferes with the timely exercise of this Warrant.

            7. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a stockholder of
the Company or any other matters or any rights whatsoever as a stockholder of
the Company. Except as expressly set forth herein, no dividends or interest
shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised. No provisions hereof, in
the absence of affirmative action by the Holder to purchase Warrant Shares, and
no mere enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of such Holder for the Exercise


                                       6.
<PAGE>

Price or as a stockholder of the Company, whether such liability is asserted by
the Company or by its creditors.

            8. REPRESENTATIONS OF HOLDER. Holder further represents that it
understands that neither this Warrant nor the Warrant Shares issuable upon the
exercise thereof have been registered under the Act, and are being offered
pursuant to an exemption from registration contained in the Act based in part
upon Holder's representations contained in this Section 8. Holder represents
that by reason of its own, or of its management's, knowledge and experience in
financial and business matters, Holder is capable of evaluating the merits and
risks of its investment in the Company and has the capacity to protect its own
interests in connection with the issuance of this Warrant and the Warrant Shares
issuable upon the exercise thereof, and is able to bear risk, including a
complete loss, of the investment. Holder represents that it is an "accredited
investor" within the meaning set forth in Regulation D under the Act. Holder
represents that it is acquiring such securities for its own account for
investment only, and not with a view towards their distribution, except pursuant
to sales that are registered under the Act or are exempt from the registration
requirements of the Act; provided, however, that, in making such representation,
such Investor does not agree to hold such securities for any minimum or specific
term and reserves the right to sell, transfer or otherwise dispose of such
securities at any time in accordance with the provisions of this Agreement and
with Federal and state securities laws applicable to such sale, transfer or
disposition.

            9. TRANSFERABILITY. Subject to compliance with any applicable
securities laws, this Warrant may be transferred, provided that Holder provides
prior written notice of such transfer to the Company, such transferee agrees to
be bound by the obligations hereunder and such transferee agrees to execute
certain documentation requested by the Company including an investment letter.
Upon the transfer of this Warrant, the Company may treat such transferee as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant.

            10. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights
and obligations of the Company, of the Holder of this Warrant and of the holder
of Warrant Shares issued upon exercise of this Warrant, shall survive the
exercise of this Warrant.

            11. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.

            12. NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof or the Company shall be
in writing, shall refer specifically to this Warrant and shall be delivered and
deemed received in accordance with Section 11.1 of the Exchange Agreement.

            13. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and
permitted assigns of the Holder hereof.


                                       7.
<PAGE>

            14. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings
of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California.

            15. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.

            16. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Exercise Price.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its officers, thereunto duly authorized this ___ day of September, 2004.

                                                VAXGEN, INC.


                                                By:
                                                   ----------------------------
                                                   Lance K. Gordon
                                                   Chief Executive Officer

<PAGE>

                                SUBSCRIPTION FORM

                                             Date: _________________, 200_

VaxGen, Inc.
1000 Marina Boulevard, Suite 200
Brisbane, California 94005
Attn: Chief Financial Officer

Ladies and Gentlemen:

|_|   The undersigned hereby elects to exercise the warrant issued to it by
      VaxGen, Inc. (the "Company") and dated September 21, 2004 Warrant No.
      CW-___ (the "Warrant") and to purchase thereunder
      __________________________________ shares of the Common Stock of the
      Company (the "Shares") at a purchase price of $16.00 per Share or an
      aggregate purchase price of ________________ Dollars ($__________) (the
      "Purchase Price"). Pursuant to the terms of the Warrant the undersigned
      has delivered the Purchase Price herewith in full in cash or wire
      transfer.

|_|   The undersigned hereby elects to convert ______________________ percent
      (___%) of the value of the Warrant pursuant to the provisions of Section
      1.2 of the Warrant.

                                         Very truly yours,


                                         ---------------------------------------
                                             Print Entity Name, if applicable


                                         By:
                                            ------------------------------------

                                         Print Name:
                                                    ----------------------------

                                         Title:
                                               ---------------------------------

<PAGE>

                                    EXHIBIT D

                              FORM OF CERTIFICATION

[Date]

VaxGen, Inc.
Attn: Corporate Secretary
1000 Marina Boulevard, Suite 200
Brisbane, California, 94005

The undersigned is submitting this letter to you in order to present you with
the facts necessary, pursuant to subparagraph (k) of Rule 144 of the Securities
Act of 1933, as amended, to authorize the transfer agent for VaxGen, Inc. (the
"Company") to issue shares of common stock in connection with the exercise of a
warrant to purchase common stock issued in connection with the Warrant Exchange
Agreement, dated September 21, 2004 (the "Agreement"), without a restrictive
legend on the stock certificate. In connection with the following, the
undersigned represents to the Company that:

      1. The undersigned is not at present and has not been during the preceding
three months an officer, director, or 10% shareholder of the Company and during
said period has not been an "affiliate" of the Company within the meaning of
Rule 144(a);

      2. The undersigned has exercised the warrant issued in connection with the
Agreement, pursuant to Section 1.2 of such warrant, and in accordance with
section 10.1 of the Agreement; and

      3. The undersigned agrees that, at any time or times that the undersigned
proposes to offer for sale or sell any of the above common stock, the
undersigned will make reasonable inquiry to assure that he/she is not and has
not been during the three months preceding any sale of the above common stock an
affiliate of the Company.

Very truly yours,


----------------------------
[SIGNATURE]

<PAGE>

                                    EXHIBIT E

                                  VAXGEN, INC.

                    REGISTRATION RIGHTS TERMINATION AGREEMENT

      This Registration Rights Termination Agreement (the "Registration Rights
Termination Agreement") is entered into as of this 21st day of September, 2004,
by and between VaxGen, Inc., a Delaware company (the "Company"), and each holder
of a warrant to purchase Common Stock of the Company listed on the signature
pages hereto (the "Holders"):

      WHEREAS, the Holders are parties to the Registration Rights Agreement,
dated as of May 23, 2001 (the "Rights Agreement");

      WHEREAS, the Company and the Holders intend to enter into an Exchange
Agreement of even date herewith (the "Agreement");

      WHEREAS, as a condition to consummating the transactions contemplated by
the Agreement, the Rights Agreement shall be terminated;

      WHEREAS, pursuant to Section 13(h) of the Rights Agreement, such agreement
may be terminated, by the Company and the holders of more than sixty-six and
two-thirds percent (66 2/3%) of Registrable Securities (as defined in the
Agreement), voting on an as-exercised, as-converted basis (such holders
collectively referred to as the "Required Holders"); and

      WHEREAS, the undersigned constitute the Required Holders.

      NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Registration Rights
Termination Agreement, the parties mutually agree as follows:

1.    In accordance with the provisions of Section 13(h) of the Rights
      Agreement, the Company and the undersigned Holders, who together
      constitute the Required Holders, hereby agree that, effective immediately
      prior to, and conditioned upon, the Closing (as defined in the Agreement),
      the Rights Agreement be terminated in its entirety and shall be of no
      further force and effect.

2.    This Registration Rights Termination Agreement may be executed in
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one instrument. This Registration Rights
      Termination Agreement shall be effective at such time as it has been
      executed by the Company and Required Holders, subject to the completion of
      the Closing.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

      IN WITNESS WHEREOF, the undersigned have executed this Registration Rights
Termination Agreement as of the date first set forth above.

COMPANY                                      HOLDERS:

VAXGEN, INC.                                 SOCIETE GENERALE

By:                                          By:
   -------------------------------------        --------------------------------
   Lance K. Gordon
   President and Chief Executive Officer     Name:
                                                  ------------------------------

                                             Title:
                                                   -----------------------------


                                             KEPLER CAPITAL, LLC

                                             By:
                                                --------------------------------

                                             Name:
                                                  ------------------------------
                                             Title:


                                             CHEYENNE, LLC

                                             By:
                                                --------------------------------

                                             Name:
                                                  ------------------------------

                                             Title:
                                                   -----------------------------


                                             PRISM CAPITAL 5, L.P.

                                             By:
                                                --------------------------------

                                             Name:
                                                  ------------------------------

                                             Title:
                                                   -----------------------------

<PAGE>

                                    EXHIBIT F

                                  VAXGEN, INC.

                    SECURITIES PURCHASE TERMINATION AGREEMENT

      This Securities Purchase Termination Agreement (the "Securities Purchase
Termination Agreement") is entered into as of this 21st day of September, 2004,
by and between VaxGen, Inc., a Delaware company (the "Company"), and each holder
of a warrant to purchase Common Stock of the Company listed on the signature
pages hereto (the "Holders"):

      WHEREAS, the Holders are parties to the Securities Purchase Agreement,
dated as of May 23, 2001 (the "Purchase Agreement");

      WHEREAS, the Company and the Holders intend to enter into an Exchange
Agreement of even date herewith (the "Agreement");

      WHEREAS, as a condition to consummating the transactions contemplated by
the Agreement, the Purchase Agreement shall be terminated;

      WHEREAS, pursuant to Section 7.5(a) of the Purchase Agreement, such
agreement may be amended by the Holders and the Company; and

      NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Securities Purchase
Termination Agreement, the parties mutually agree as follows:

1.    In accordance with the provisions of Section 7.5(a) of the Purchase
      Agreement, the Company and the undersigned Holders hereby waive the rights
      of the Holders set forth in the Purchase Agreement and further waive
      compliance with all provisions of the Purchase Agreement.

2.    The Company and the Holders hereby agree that, effective immediately prior
      to, and conditioned upon, the Closing (as defined in the Agreement), the
      Purchase Agreement be terminated in its entirety and shall be of no
      further force and effect, and the Purchase Agreement shall be deemed
      modified or amended as necessary to effect such termination.

3.    This Securities Purchase Termination Agreement may be executed in
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one instrument. This Securities Purchase
      Termination Agreement shall be effective at such time as it has been
      executed by the Company and Holders, subject to the completion of the
      Closing.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

      IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Termination Agreement as of the date first set forth above.

COMPANY                                              HOLDERS:

VAXGEN, INC.                                         SOCIETE GENERALE

By:                                          By:
   -------------------------------------        --------------------------------
   Lance K. Gordon
   President and Chief Executive Officer     Name:
                                                  ------------------------------

                                             Title:
                                                   -----------------------------


                                             KEPLER CAPITAL, LLC

                                             By:
                                                --------------------------------

                                             Name:
                                                  ------------------------------
                                             Title:


                                             CHEYENNE, LLC

                                             By:
                                                --------------------------------

                                             Name:
                                                  ------------------------------

                                             Title:
                                                   -----------------------------


                                             PRISM CAPITAL 5, L.P.

                                             By:
                                                --------------------------------

                                             Name:
                                                  ------------------------------

                                             Title:
                                                   -----------------------------