Document:

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                                                                    EXHIBIT 10.1

                           MASTER SECURITY AGREEMENT
                  dated as of February 25, 2002 ("Agreement")

        THIS AGREEMENT is between General Electrical Capital Corporation
(together with its successors and assigns, if any, "SECURED PARTY"), and Corixa
Corporation ("DEBTOR"). Secured Party has an office at 401 Merritt Seven, Suite
23, Norwalk, CT 06856. Debtor is a corporation organized and existing under the
laws of the state of Delaware. Debtor's mailing address and chief place of
business is 1124 Columbia Street, Seattle, WA 98104.

1.      CREATION OF SECURITY INTEREST.

        Debtor grants to Secured Party, its successors and assigns, a security
interest in and against all property listed on any collateral schedule now or in
the future annexed to or made a part of this Agreement ("COLLATERAL SCHEDULE"),
and in and against all additions, attachments, accessories and accessions to
such property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the "COLLATERAL"). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively "NOTES" and each a "NOTE"), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the "INDEBTEDNESS"). Unless otherwise
provided by applicable law, notwithstanding anything to the contrary contained
in this Agreement, to the extent that Secured Party asserts a purchase money
security interest in any items of Collateral ("PMSI COLLATERAL") (i) the PMSI
Collateral shall secure only that portion of the Indebtedness which has been
advanced by Secured Party to enable Debtor to purchase, or acquire rights in or
the use of such PMSI Collateral (the "PMSI INDEBTEDNESS"), and (ii) no other
Collateral shall secure the PMSI Indebtedness.

2.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

        Debtor represents, warrants and covenants as of the date of this
Agreement and as of the date of each Collateral Schedule that

        (a) Debtor's exact legal name is as set forth in the preamble of this
Agreement and Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the preamble of this
Agreement, has its chief executive offices at the location specified in the
preamble, and is, and will remain, duly qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;

        (b) Debtor has adequate power and capacity to enter into, and to perform
its obligations under this Agreement, each Note and any other documents
evidencing, or given in connection with, any of the Indebtedness (all of the
foregoing are called the "DEBT DOCUMENTS");

        (c) This Agreement and the other Debt Documents have been duly
authorized, executed and delivered by Debtor and constitute legal, valid and
binding agreements enforceable in accordance with their terms, except to the
extent that the enforcement of remedies may be limited under applicable
bankruptcy and insolvency laws;

        (d) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already obtained;

        (e) The entry into, and performance by, Debtor of the Debt Documents
will not (i) violate any of the organizational documents of Debtor or any
judgment, order, law or regulation applicable to Debtor, or (ii) result in any
breach of or constitute a default under any contract to which Debtor is a party,
or result in the creation of any lien, claim or encumbrance on any of Debtor's
property (except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

        (f) There are no suits or proceedings pending in court or before any
commission, board or other administrative agency against or affecting Debtor
which could, in the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations under the Debt
Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;

        (g) All financial statements delivered to Secured Party in connection
with the Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtor's financial
condition;

                                                                               7

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     (h) The Collateral is not, and will not be, used by Debtor for personal,
family or household purposes;

     (i) The Collateral is, and will remain, in good condition and repair and
Debtor will not be negligent in its care and use;

     (j) Debtor is, and will remain, the sole and lawful owner, and in
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; and

     (k) The Collateral is, and will remain, free and clear of all liens, claims
and encumbrances of any kind whatsoever, except for (i) liens in favor of
Secured Party, (ii) liens for taxes not yet due or for taxes being contested in
good faith and which do not involve, in the judgment of Secured Party, any risk
of the sale, forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen's, mechanic's, repairmen's and similar liens arising by operation of
law in the normal course of business for amounts which are not delinquent (all
of such liens are called "PERMITTED LIENS").

3.   COLLATERAL.

     (a) Until the declaration of any default, Debtor shall remain in possession
of the Collateral, except that Secured Party shall have the right to possess (i)
any chattel paper or instrument that constitutes a part of the Collateral, and
(ii) any other Collateral in which Secured Party's security interest may be
perfected only by possession. Secured Party may inspect any of the Collateral
during normal business hours after giving Debtor reasonable prior notice. If
Secured Party asks, Debtor will promptly notify Secured Party in writing of the
location of any Collateral.

     (b) Debtor shall (i) use the Collateral only in its trade or business, (ii)
maintain all of the Collateral in good operating order and repair, normal wear
and tear excepted, (iii) use and maintain the Collateral only in compliance with
manufacturers recommendations and all applicable laws, and (iv) keep all of the
Collateral free and clear of all liens, claims and encumbrances (except for
Permitted Liens).

     (c) Secured Party does not authorize and Debtor agrees it shall not (i)
part with possession of any of the Collateral (except to Secured Party or for
maintenance and repair), (ii) remove any of the Collateral from the continental
United States, or (iii) sell, rent, lease, mortgage, grant a security interest
in or otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral.

     (d) Debtor shall pay promptly when due all taxes, license fees, assessments
and public and private charges levied or assessed on any of the Collateral, on
its use, or on this Agreement or any of the other Debt Documents. At its option,
Secured Party may discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on the Collateral and may pay for the
maintenance, insurance and preservation of the Collateral and effect compliance
with the terms of this Agreement or any of the Debt Documents. Debtor agrees to
reimburse Secured Party, on demand, all costs and expenses incurred by Secured
Party in connection with such payment or performance and agrees that such
reimbursement obligation shall constitute Indebtedness.

     (e) Debtor shall, at all times, keep accurate and complete records of the
Collateral, and Secured Party shall have the right to inspect and make copies of
all of Debtor's books and records relating to the Collateral during normal
business hours, after giving Debtor reasonable prior notice.

     (f) Debtor agrees and acknowledges that any third person who may at any
time possess all or any portion of the Collateral shall be deemed to hold, and
shall hold, the Collateral as the agent of, and as pledge holder for, Secured
Party. Secured Party may at any time give notice to any third person described
in the preceding sentence that such third person is holding the Collateral as
the agent of, and as pledge holder for, the Secured Party.

4.   INSURANCE.

     (a) Debtor shall at all times bear the entire risk of any loss, theft,
damage to, or destruction of, any of the Collateral from any cause whatsoever.

     (b) Debtor agrees to keep the Collateral insured against loss or damage by
fire and extended coverage perils, theft, burglary, and for any or all
Collateral which are vehicles, for risk of loss by collision, and if requested
by Secured Party, against such other risks as Secured Party may reasonably
require. The insurance coverage shall be in an amount no less than the full
replacement value of the Collateral, and deductible amounts, insurers and
policies shall be acceptable to Secured Party. Debtor shall deliver to Secured
Party policies or certificates of insurance evidencing such coverage. Each
policy shall name Secured Party as a loss payee, shall provide for coverage to
Secured Party regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-insurance, and shall
provide that coverage may not be canceled or altered by the insurer except upon
thirty (30) days prior written notice to Secured Party. Debtor appoints Secured
Party as its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or endorse all
documents, checks or drafts in connection with insurance payments. Secured Party
shall not act as Debtor's attorney-in-fact unless Debtor is in default. Proceeds
of insurance shall be applied, at the option of Secured Party, to repair or
replace the Collateral or reduce any of the Indebtedness.
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5.   REPORTS.

     (a) Debtor shall promptly notify Secured Party of (i) any change in the
name of Debtor, (ii) any change in the state of its incorporation or
registration, (iii) any relocation of its chief executive offices, (iv) any
relocation of any of the Collateral, (v) any of the Collateral being lost,
stolen, missing, destroyed, materially damaged or worn out, or (v) any lien,
claim or encumbrance other than Permitted Liens attaching to or being made
against any of the Collateral.

     (b) Debtor will deliver to Secured Party Debtor's complete financial
statements, certified by a recognized firm of certified public accountants,
within ninety (90) days of the close of each fiscal year of Debtor. If Secured
Party requests, Debtor will deliver to Secured Party copies of Debtor's
quarterly financial reports certified by Debtor's chief financial officer,
within ninety (90) days after the close of each of Debtor's fiscal quarter.
Debtor will deliver to Secured Party copies of all Forms 10-K and 10-Q, if any,
within 30 days after the dates on which they are filed with the Securities and
Exchange Commission.

6.   FURTHER ASSURANCES.

     (a) Debtor shall, upon request of Secured Party, furnish to Secured Party
such further information, execute and deliver to Secured Party such documents
and instruments (including, without limitation, Uniform Commercial Code
financing statements) and shall do such other acts and things as Secured Party
may at any time reasonably request relating to the perfection or protection of
the security interest created by this Agreement or for the purpose of carrying
out the intent of this Agreement. Without limiting the foregoing, Debtor shall
cooperate and do all acts deemed necessary or advisable by Secured Party to
continue in Secured Party a perfected first security interest in the
Collateral, and shall obtain and furnish to Secured Party any subordinations,
releases, landlord waivers, lessor waivers, mortgagee waivers or control
agreements, and similar documents as may be from time to time requested by, and
in form and substance satisfactory to, Secured Party.

     (b) Debtor authorizes Secured Party to file a financing statement and
amendments thereto describing the Collateral and containing any other
information required by the applicable Uniform Commercial Code. Debtor
irrevocably grants to Secured Party the power to sign Debtor's name and
generally to act on behalf of Debtor to execute and file applications for
title, transfers of title, financing statements, notices of lien and other
documents pertaining to any or all of the Collateral, this power is coupled
with Secured Party's interest in the Collateral. Debtor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain and promptly deliver to Secured Party such certificate showing the lien
of this Agreement with respect to the Collateral. Debtor ratifies its prior
authorization for Secured Party to file financing statements and amendments
thereto describing the Collateral and containing any other information required
by the Uniform Commercial Code if filed prior to the date hereof.

     (c) Debtor shall indemnify and defend the Secured Party, its successors
and assigns, and their respective directors, officers and employees, from and
against all claims, actions and suits (including, without limitation, related
attorneys' fees) of any kind whatsoever arising, directly or indirectly, in
connection with any of the Collateral.

7.   DEFAULT AND REMEDIES.

     (a) Debtor shall be in default under this Agreement and each of the other
Debt Documents if:

          (i)   Debtor breaches its obligation to pay when due any installment
or other amount due or coming due under any of the Debt Documents;

          (ii)  Debtor, without the prior written consent of Secured Party,
attempts to or does sell, rent, lease, mortgage, grant a security interest in,
or otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral,

          (iii) Debtor breaches any of its insurance obligations under Section
4.

          (iv)  Debtor breaches any of its other obligations under any of the
Debt Documents and fails to cure that breach within thirty (30) days after
written notice from Secured Party.

          (v)   Any warranty, representation or statement made by Debtor in any
of the Debt Documents or otherwise in connection with any of the Indebtedness
shall be false or misleading in any material respect;

          (vi)  Any of the Collateral is subjected to attachment, execution,
levy, seizure or confiscation in any legal proceeding or otherwise, or if any
legal or administrative proceeding is commenced against Debtor or any of the
Collateral, which in the good faith judgment of Secured Party subjects any of
the
<PAGE>

Collateral to a material risk of attachment, execution, levy, seizure or
confiscation and no bond is posted or protective order obtained to negate such
risk;

                (vii) Debtor breaches or is in default under any other agreement
between Debtor and Secured Party;

                (viii) Debtor or any guarantor or other obligor for any of the
Indebtedness (collectively "GUARANTOR") dissolves, terminates its existence,
becomes insolvent or ceases to do business as a going concern.

                (ix) If Debtor or any Guarantor is a natural person, Debtor or
any such Guarantor dies or becomes incompetent;

                (x) A receiver is appointed for all or of any part of the
property of Debtor or any Guarantor, or Debtor or any Guarantor makes any
assignment for the benefit of creditors; or

                (xi) Debtor on any Guarantor files a petition under any
bankruptcy, insolvency or similar law, or any such petition is filed against
Debtor or any Guarantor and is not dismissed within forty-five (45) days.

                (xii) Debtor's improper filing of an amendment or termination
statement relating to a filed financing statement describing the Collateral.

        (b) If Debtor is in default, the Secured Party, at its option, may
declare any or all of the Indebtedness to be immediately due and payable,
without demand or notice to Debtor or any Guarantor. The accelerated obligations
and liabilities shall bear interest (both before and after any judgment) until
paid in full at the lower of eighteen percent (18%) per annum or the maximum
rate not prohibited by applicable law.

        (c) After default, Secured party shall have all of the rights and
remedies of a Secured Party under the Uniform Commercial Code, and under any
other applicable law. Without limiting the foregoing, Secured Party shall have
the right to (i) notify any account debtor of Debtor or any obligor on any
instrument which constitutes part of the Collateral to make payment to the
Secured Party, (ii) with or without legal process, enter any premises where the
Collateral may be and take possession of and remove the Collateral from the
premises or store it on the premises, (iii) sell the Collateral at public or
private sale, in whole or in part, and have the right to bid and purchase at
said sale, or (iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds from such disposition to the obligations then in default. If
requested by Secured party, Debtor shall promptly assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to both parties. Secured Party may also render
any or all of the Collateral unusable at the Debtor's premises and may dispose
of such Collateral on such premises without liability for rent or costs. Any
notice that Secured Party is required to give to Debtor under the Uniform
Commercial Code of the time and place of any public sale or the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice is given to the
last known address of Debtor at least five (5) days prior to such action.

        (d) Proceeds from any sale or lease or other disposition shall be
applied first, to all costs of repossession, storage, and disposition including
without limitation attorneys', appraisers', and auctioneers' fees; second, to
discharge the obligations then in default; third, to discharge any other
Indebtedness of Debtor to Secured Party, whether as obligor, endorser,
guarantor, surety or indemnitor; fourth, to expenses incurred in paying or
settling liens and claims against the Collateral; and lastly, to Debtor, if
there exists any surplus. Debtor shall remain fully liable for any deficiency.

        (e) Debtor agrees to pay all reasonable attorneys' fees and other costs
incurred by Secured Party in connection with the enforcement, assertion, defense
or preservation of Secured Party's rights and remedies under this Agreement, or
if prohibited by law, such lesser sum as may be permitted. Debtor further agrees
that such fees and costs shall constitute Indebtedness.

        (f) Secured Party's rights and remedies under this Agreement or
otherwise arising are cumulative and may be exercised singularly or
concurrently. Neither the failure nor any delay on the part of the Secured Party
to exercise any right, power or privilege under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise of that or any other right,
power or privilege. SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS
RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER
SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY
SECURED PARTY. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.

        (g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS

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AGREEMENT, ANY OTHER DEBT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION.  THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

8.   MISCELLANEOUS.

     (a)  This Agreement, any Note and/or any of the other Debt Documents may be
assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor agrees not to assert against any such assignee, or assignee's assigns,
any defense, set-off, recoupment claim or counterclaim which Debtor has or may
at any time have against Secured Party for any reason whatsoever. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to confirm in
writing receipt of the notice of assignment as may be reasonably requested by
Secured Party or Assignee.

     (b)  All notices to be given in connection with this Agreement shall be in
writing, shall be addressed to the parties at their respective addresses set
forth in this Agreement (unless and until a different address may be specified
in a written notice to the other party), and shall be deemed given (i) on the
date of receipt if delivered in hand or by facsimile transmission, (ii) on the
next business day after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified mail. As used
herein, the term "business day" shall mean and include any day other than
Saturdays, Sundays, or other days on which commercial banks in New York, New
York are required or authorized to be closed.

     (c)  Secured Party may correct patent errors and fill in all blanks in this
Agreement or in any Collateral Schedule consistent with the agreement of the
parties.

     (d)  Time is of the essence of this Agreement. This Agreement shall be
binding, jointly and severally, upon all parties described as the "Debtor" and
their respective heirs, executors, representatives, successors and assigns, and
shall inure to the benefit of Secured Party, its successors and assigns.

     (e)  This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior understandings (whether written, verbal or
implied) with respect to such subject matter. THIS AGREEMENT AND ITS COLLATERAL
SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT
ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings contained in this
Agreement have been included for convenience only, and shall not affect the
construction or interpretation of this Agreement.

     (f)  This Agreement shall continue in full force and effect until all of
the Indebtedness has been indefeasibly paid in full to Secured Party or its
assignee. The surrender, upon payment or otherwise, of any Note or any of the
other documents evidencing any of the Indebtedness shall not affect the right of
Secured Party to retain the Collateral for such other Indebtedness as may then
exist or as it may be reasonably contemplated will exist in the future. This
Agreement shall automatically be reinstated if Secured Party is ever required to
return or restore the payment of all or any portion of the Indebtedness (all as
though such payment had never been made).

     (g)  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
EQUIPMENT.

          IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.

SECURED PARTY:                                    DEBTOR:

GENERAL ELECTRIC CAPITAL CORPORATION              CORIXA CORPORATION

By:  /s/ THOMAS G. ANNINO                         By: /s/ STEVE GILLIS, Ph.D.
   -------------------------------------             ---------------------------

Name:    Thomas G. Annino                         Name:   Steve Gillis, Ph.D.
     -----------------------------------              --------------------------

Title:  S.V.P. & GM Life Science &                Title:   Chairman & CEO
        Tech. Finance                                   ------------------------
      ----------------------------------

<PAGE>
                                   AMENDMENT

      THIS AMENDMENT is made as of the 25th day of February, 2002, between
General Electric Capital Corporation ("Secured Party") and Corixa Corporation
("Debtor") in connection with that certain Master Security Agreement, dated or
dated as of February 25, 2002, ("Agreement"). The terms of this Amendment are
hereby incorporated into the Agreement as though fully set forth therein.
Section references below refer to the section numbers of the Agreement. The
Agreement is hereby amended as follows:

      1. CREATION OF SECURITY INTEREST

      The following is hereby added as a new paragraph in Section 1:

          Secured Party shall not be obligated to make any loan to Debtor,
          accept any Note from Debtor or enter into any Collateral Schedule with
          Debtor if: (a) any representation or warranty by Debtor contained
          herein or in any of the other Loan Documents shall be untrue or
          incorrect as of such date, except to the extent that such
          representation or warranty expressly relates to an earlier date; or
          (b) Debtor is in default under this Agreement or any of the other Debt
          Documents. The request and acceptance by Debtor of the proceeds of any
          Note, the execution of a Note or the execution of a Collateral
          Schedule shall be deemed to constitute, as of the date of such
          request, acceptance, or execution, a representation and warranty by
          Debtor that the foregoing conditions are true and correct and a
          reaffirmation by Debtor of the granting and continuance of Secured
          Party's lien on the Collateral.

      2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

      In subsection 2(a), the following is added after the word "operations"
and before the semicolon:

          except where the failure to so qualify would not result in a material
          adverse change in the financial condition of Debtor or on its ability
          to perform its obligations under this Agreement and any other Debt
          Documents (as defined below)

      Section 2(g) of the Agreement is hereby amended and replaced to read in
its entirety as follows:

          (g) All financial statements delivered to Secured Party in connection
          with the Indebtedness have been prepared in accordance with generally
          accepted accounting principles, and since the date of the most recent
          financial statement, there has been no material adverse change in
          (i) Debtor's business, assets, operations, prospects or financial
          condition, (ii) Debtor's ability to pay and fulfill its obligations
          under the Notes and the other Debt Documents, (iii) Secured Party's
          liens on the Collateral or the priority of such liens, or (iv) Secured
          Party's rights and remedies under this Agreement and the other Debt
          Documents, provided, however, the parties agree that a "material
          adverse change" shall include, but shall not be limited to, the
          failure of the Federal Drug Administration (the "FDA") to grant
          approval for the Debtor's product, "Bexxar" on or before June 30, 2002
          or the FDA's denial of such approval at any time.

      Subsection 2(i) is hereby amended to insert the following after the words
      "in good condition and repair:" ",reasonable wear and tear excepted,".

      3. COLLATERAL

      Subsection (c) is hereby amended and replaced with the following:

          "(c) "Debtor shall not, without the prior written consent of Secured
          Party, (i) part with possession of any of the Collateral (except to
          Secured Party or for maintenance and repair), (ii) remove any of the
          Collateral from the address specified in the Collateral Schedule, or
          (iii) sell, rent, lease, mortgage, grant a security interest in or
          otherwise transfer or encumber (except for Permitted Liens) any of the
          Collateral."

      5. REPORTS.

      Section 5 is hereby amended and replaced with the following:

          5. REPORTS.

          (a) Debtor shall promptly notify Secured Party of (i) any change in
          the name of Debtor, (ii) any relocation of its chief executive offices
          or its state of organization, (iii) any relocation of any of the
          Collateral, which relocation may not be made unless Debtor has
          obtained the prior written consent of Secured Party, (iv) any of the
          Collateral being lost, stolen, missing, destroyed, materially damaged
          or worn out, or (v) any lien, claim or encumbrance other than
          Permitted Liens attaching to or being made against any of the
          Collateral.
<PAGE>

          (b) Debtor will deliver to Secured Party financial statements as
          follows. If Debtor is a privately held company, then Debtor agrees to
          provide monthly financial statements, certified by Debtor's president
          or chief financial officer including a balance sheet, statement of
          operations and cash flow statement within 30 days of each month end
          and its complete audited annual financial statements, certified by a
          recognized firm of certified public accountants, within 120 days of
          fiscal year end or at such time as Debtor's Board of Directors
          receives the audit. If Debtor is a publicly held company, then Debtor
          agrees to provide quarterly unaudited statements and annual audited
          statements, certified by a recognized firm of certified public
          accountants, within 10 days after the statements are provided to the
          Securities and Exchange Commission ("SEC"). All such statements are
          to be prepared using generally accepted accounting principles
          ("GAAP") and, if Debtor is a publicly held company, are to be in
          compliance with SEC requirements."

     6. FURTHER ASSURANCES.

     The fifth line of subsection (a) is hereby amended by adding the words
     "make its best efforts to" before the words "obtain and furnish."

     7. DEFAULT AND REMEDIES.

     Section 7(a)(i) is hereby amended by adding the following after the word
     "Documents" and prior to the semicolon "subject to any applicable cure
     periods in such Debt Documents."

     Section 7(a)(viii) is hereby amended and replaced with the following:

          (viii) Debtor or any guarantor or other obligor for any of the
          Indebtedness (collectively "Guarantor") dissolves, terminates its
          existence, becomes insolvent, ceases to do business as a going
          concern, or, without the prior written consent of Secured Party, (A)
          Debtor sells all or substantially all of its assets, or sells assets
          which constitute, or are an integral part of, the primary
          intellectual property of Debtor, or sells all or substantially all of
          the assets of the division of Debtor purchasing or using the
          Collateral, if applicable, or (B) Debtor becomes a party to any
          consolidation or merger where the Debtor is not the surviving entity,
          or (C) the stockholders of Debtor sell or transfer more than 50% of
          the outstanding voting stock of Debtor in a single transaction or a
          series of related transactions, or, (D) if Debtor is a publicly held
          company, any person or group of persons (within the meaning of the
          Securities Exchange Act of 1934, as amended (the "Exchange Act"))
          shall have acquired beneficial ownership (within the meaning of Rule
          13d-3 promulgated by the Securities and Exchange Commission under the
          Exchange Act) of 20% or more of the outstanding voting stock of
          Debtor.

     TERMS USED, BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN
TO THEM IN THE AGREEMENT. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT
SHALL REMAIN IN FULL FORCE AND EFFECT. IF THERE IS ANY CONFLICT BETWEEN THE
PROVISIONS OF THE AGREEMENT AND THIS AMENDMENT, THEN THIS AMENDMENT SHALL
CONTROL.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment
simultaneously with the Agreement by signature of their respective authorized
representative set forth below.

GENERAL ELECTRIC CAPITAL CORPORATION      CORIXA CORPORATION

By  /s/ THOMAS G. ANNINO                  By  /s/ STEVEN GILLIS
   --------------------------------          --------------------------------
Name  Thomas G. Annino                    Name  Steven Gillis
    -------------------------------           -------------------------------
Title:  SVP & GM                          Title:  CEO
      -----------------------------             -----------------------------EXHIBIT 10.32

                              EMPLOYMENT AGREEMENT

      This  Employment   Agreement   ("Agreement")  by  and  between  Carmen  M.
Betancourt  ("Betancourt") and VaxGen, Inc. ("VaxGen"), is effective January 28,
2002 (the  "Effective  Date").  In  consideration  of the mutual  promises  made
herein, VaxGen and Betancourt agree as follows:

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

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

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

Salary/Wages.  VaxGen  agrees to pay  Betancourt  a base salary of $205,000  per
year.  Betancourt's  salary, less required and authorized  deductions,  shall be
paid in equal,  periodic  installments no less  frequently than  semi-monthly in
accordance  with  VaxGen's  then current  payroll  practices.  The  Compensation
Committee  of  the  VaxGen  Board  of  Directors  (the  "Board")  will  consider
Betancourt's salary annually for potential increase.

Initial  Option Grant and  Subsequent  Option  Grants.  On the  Effective  Date,
Betancourt  shall be granted an option to purchase 75,000 shares of common stock
of VaxGen at a per share  exercise  price equal to the fair market  value of the
common  stock of VaxGen on the  Effective  Date in  accordance  with the form of
grant used by VaxGen  for grants  made to its  senior  executive  officers  (the
"Initial  Option").  The Initial Option shall be Incentive  Stock Options to the
maximum extent permitted by VaxGen's stock option plan. The Initial Option shall
vest  and  become  exercisable  in  accordance  with  the  following   schedule:
twenty-five  percent  (25%) of the Initial  Option shall vest on the first (1st)
anniversary of the Effective Date and an additional 1/48th of the Initial Option
shall  vest on the  last  day of  each of the  next  36  months  following  such
anniversary;  provided  that,  in each case,  Betancourt  has been  continuously
employed  with VaxGen from the  Effective  Date through the  applicable  vesting
date,  except as otherwise  provided herein or under the terms of VaxGen's stock
option plan.  Except as otherwise  provided herein,  the Initial Option shall be
subject  to  such  terms  and   conditions,   including   provisions   regarding
post-termination exercisability,  as generally apply to stock options granted to
other senior  executive  officers who participate in VaxGen's  equity  incentive
plans as such terms and

<PAGE>

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

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

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

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

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

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

<PAGE>

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

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

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

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

PATENT AND COPYRIGHT  REGISTRATIONS.  Betancourt agrees to assist VaxGen, or its
designee,  at VaxGen's expense, in every proper way to secure VaxGen's rights in
the Inventions

<PAGE>

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

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

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

<PAGE>

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

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

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

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

TERMINATION OF EMPLOYMENT.

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

<PAGE>

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

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

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

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

By Betancourt  with Good Reason:  Betancourt may terminate her employment  under
this Agreement for Good Reason (A) in the event VaxGen  breaches a material term
hereof and,  after  receiving  written  notice  from  Betancourt  detailing  the
specific provision allegedly breached, does not remedy said breach within thirty
(30) days of receiving  notice,  (B) there is a demotion of Betancourt  from the
position of Vice  President,  Regulatory  Affairs and Quality  Assurance  or the
assignment of job duties or responsibilities  materially  inconsistent with such
position, (C) VaxGen moves

<PAGE>

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

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

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

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

For purposes of this  Agreement,  a "Change in Control"  shall be deemed to have
occurred  if: (i) there is an  acquisition  by any  individual,  entity or group
(within the meaning of Section  13(d)(3) or 14(d)(2) of the Securities  Exchange
Act of 1934, as amended (the "Exchange Act")) (for the purposes of this Section,
a  "Person")  of  beneficial   ownership  (within  the  meaning  of  Rule  13d-3
promulgated  under the  Exchange  Act) of 50% or more of the voting power of the
then outstanding  voting  securities of VaxGen entitled to vote generally in the
election of directors (the "Outstanding Company Voting  Securities");  provided,
however,  that for purposes of this  subsection  16(e),  any  acquisition by any
employee benefit plan (or related trust) sponsored or

<PAGE>

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

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

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

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

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

ENTIRE   AGREEMENT.   This  Agreement   embodies  the  complete   agreement  and
understanding  of the  parties  related to  Betancourt's  employment  by VaxGen,
superseding  any

<PAGE>

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

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

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

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

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

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

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

NOTICES. Notices given under the terms of this Agreement shall be in writing and
shall be deemed  delivered when  personally  delivered to the person  identified
below, or three (3) days

<PAGE>

after  deposited,  proper  first class  postage  prepaid,  in the U. S. Mail and
addressed  as set  forth  below,  or  one  day  after  properly  consigned  to a
recognized  national next-day  delivery service (e.g.,  Federal Express) prepaid
and  addressed as set forth  below,  or faxed to the number  provided  below and
confirmed by a delivery  report from the sending fax  transmitter.  The officer,
addresses  and facsimile  numbers  below may be changed by written  notice given
pursuant to this paragraph. Notices shall be given:

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

   If to Betancourt:  Carmen M. Betancourt,
                                                            35534 Collier Place
                                                            Fremont, CA  94536

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

Dated:_______________                   _______________________________
                                        Carmen M. Betancourt

                                        VaxGen, Inc.
Dated:_______________
                                        By:____________________________

                                        Title:_________________________

<PAGE>
                                   APPENDIX A

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

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Dated:___________________________       __________________________________
                                        Carmen M. Betancourt

<PAGE>

                                   APPENDIX B

ALTERNATIVE DISPUTE AGREEMENT

I. AGREEMENT TO ARBITRATE

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

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

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

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

<PAGE>

II. REQUEST FOR ARBITRATION

Attempt At Informal Resolution Of Disputes

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

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

Arbitration Procedures

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

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

      2. The date when the dispute first arose;

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

      4. The relief requested by requesting party.

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

Selection Of The Arbitrator

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

<PAGE>

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

The Arbitrator's Authority

      The Arbitrator shall have the powers enumerated below:

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

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

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

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

Discovery

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

Hearing Procedure

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

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

<PAGE>

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

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

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

Substantive Law

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

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

Opinion And Award

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

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

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

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

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

Enforcement Of Arbitrator's Award

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

      Fees And Costs

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

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

<PAGE>

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

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

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

Severability

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

Dated:_______________                   _______________________________
                                        Carmen M. Betancourt

                                        VaxGen, Inc.
Dated:_______________
                                        By:____________________________

                                        Title:_________________________

                                   APPENDIX C

REQUEST FOR ARBITRATION FORM

ALTERNATIVE DISPUTE RESOLUTION AGREEMENT

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

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

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

State the nature of the claim in detail:

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

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

<PAGE>

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

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

(Continue on reverse and add pages if necessary)

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

                                             Month         Day        Year

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

Name                               Job Title                       Work Location

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

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

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

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

<PAGE>

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

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

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

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

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

(Please attach any documents relevant to the dispute.)

Signature of Party Requesting Arbitration:

Dated:_______________                   _______________________________
                                        Carmen M. Betancourt

                                        VaxGen, Inc.
Dated:_______________
                                        By:____________________________

                                        Title:_________________________

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