Document:

EX-10.1

SEPARATION AND RELEASE AGREEMENT

This Separation and Release Agreement (“Agreement”) is entered into by and between INTEGRA
BANK CORPORATION (the “Company”) and ARCHIE M. BROWN, JR. (“Brown”).

Recitals

A. Brown has been employed with the Company in an executive capacity.

B. Brown and the Company are parties to that certain Restated Employment Agreement dated May
22, 2007 (the “Employment Agreement”).

C. Brown desires to resign his employment with the Company to accept employment as the Chief
Executive Officer and President (the “Position”) of MainSource Financial Group, Inc., Greensburg,
Indiana, or its affiliates (“MainSource”). Brown has requested that the Company waive certain of
its rights, and his obligations, under the non-competition covenant set forth in Section 9.1 of the
Employment Agreement so as to allow Brown to accept employment with MainSource.

D. Brown and the Company also desire to clarify Brown’s rights and obligations pursuant to the
non-solicitation covenants of the Employment Agreement, and in particular in Sections 9.2 through
9.6 of the Employment Agreement, so as to allow Brown to accept employment with MainSource and to
perform the duties of the Position or his duties as an executive officer of MainSource.

E. Brown is willing to release and waive all claims he may have against the Company Released
Parties (as defined below) and to provide certain other covenants and considerations contained in
this Agreement in exchange for the Company’s waiver of certain of its rights under Section 9.1 of
the Employment Agreement and other consideration as set forth in this Agreement.

F. The Company is willing to waive certain of its rights under Section 9.1 of the Employment
Agreement and to provide certain other consideration in exchange for Brown’s release and waiver of
all claims he may have against the Company Released Parties and the other covenants, promises and
considerations as set forth in this Agreement.

Agreement

In consideration of the foregoing recitals and the covenants and promises hereby provided, the
Company and Brown agree as follows:

1. Resignation of Employment. Brown and the Company agree that Brown has voluntarily resigned
and terminated his employment with the Company without Good Reason pursuant to Section 7.7 of the
Employment Agreement effective July 22, 2008 (the “Separation Date”). Brown hereby resigns from
his position of Executive Vice President—Commercial and Consumer Banking of the Company and from
any and all other positions he may hold with Company or any of its affiliates effective as of the
Separation Date.

2. Final Salary and Incentives. The Company will pay Brown his salary accrued through the
Separation Date on the Company’s first customary payroll date after the Separation Date. Brown
acknowledges that, except for the final salary payment, the Company has paid him all compensation,
including, without limitation, all salary and incentive compensation, to which he is entitled under
the Employment Agreement or otherwise in connection with his employment with the Company. Brown
acknowledges that he will not be entitled to any payment under the Company’s Annual Cash Incentive
Plan for 2008 and that any awards under the Company’s 2007 Equity Incentive Plan or any predecessor
plan that are not vested as of the Separation Date will be forfeited. Attachment A is a summary of
the terms of Brown’s outstanding equity awards that will be vested as of the Separation Date.
Brown acknowledges that any vested equity awards must be exercised no later than three (3) months
following the Separation Date.

3. Termination of Employee Benefits. Except for his rights under COBRA or as otherwise
provided by the terms of any applicable benefit plan or applicable law, Brown’s eligibility to
participate in, and/or his receipt of, all employee benefits and perquisites will terminate as of
the Separation Date.

4. Modification of Restrictive Covenants. Brown is subject to certain restrictive covenant
obligations pursuant to Sections 9.1 – 9.9 of the Employment Agreement. The Company and Brown
agree to modify such restrictive covenants as follows:

(a) The Company agrees to release Brown from, and to waive enforcement of, the
non-competition covenant set forth in Section 9.1 of the Employment Agreement so as to allow
Brown to accept employment with MainSource and work in the Position; provided, however, this
release/waiver is conditional and limited as follows: (i) this release/waiver applies only
to Section 9.1 of the Employment Agreement; and (ii) this release/waiver applies only to
Brown’s employment with MainSource, and if during the two (2) years following the Separation
Date, Brown’s employment with MainSource were to terminate or Brown were to become employed
with any entity other than MainSource (or its affiliates or successors), this release/waiver
would extinguish and Brown would again be subject to the non-competition covenant
obligations of Section 9.1 of the Employment Agreement.

(b) Sections 9.2, 9.3 and 9.5 are hereby amended such that the two-year post-employment
period contemplated in Sections 9.2, 9.3 and 9.5 of the Employment Agreement is extended to
a three-year period; accordingly, all of the restrictive covenants set forth in Sections
9.2, 9.3 and 9.5 of the Employment Agreement shall run for a period of three (3) years
following the Separation Date.

5. Clarification of Restrictive Covenants. The parties hereto acknowledge and agree that the
Company has not released Brown from the non-solicitation and non-inducement covenants set forth in
Sections 9.2, 9.3 and 9.5 of the Employment Agreement. Notwithstanding the foregoing, the parties
also acknowledge and agree that Brown’s acceptance of employment as an executive officer of
MainSource, and his performance of the usual and customary duties of the Position, will not violate
those non-solicitation and non-inducement covenants; provided, however, that (a) any actions that
Brown may take or direct with respect to providing or selling MainSource’s products and services
will be undertaken in the normal course of his employment in the Position and shall not involve any
direct or targeted efforts by Brown towards the Company’s customers; and (b) Brown shall not
specifically direct others at MainSource to contact any of the Company’s customers falling within
the provisions of Sections 9.2 and 9.3 of the Employment Agreement. Additionally, the Company and
Brown acknowledge and agree that to the extent an employee of the Company voluntarily leaves his or
her employment to seek alternative employment, MainSource will comply with the law in considering
such individual for employment and such compliance with the law will not constitute a violation of
Section 9.5 of the Employment Agreement.

6. Notification to MainSource. Prior to commencing employment with MainSource, Brown (a) will
notify MainSource in writing fully disclosing his non-disclosure and restrictive covenant
obligations under the Employment Agreement, as modified herein, and (b) will cause MainSource to
provide Integra with a written acknowledgement that it has received from Brown full disclosure of
his non-disclosure and restrictive covenant obligations under the Employment Agreement, as modified
herein. Such written notification by MainSource shall be directed to the Company as follows:
Integra Bank Corporation, Attention: Michael T. Vea, Chief Executive Officer, 21 S.E. Third
Street, Evansville, Indiana 47708.

7. Special Payment. The Company will make a special payment to Brown in the sum of One
Hundred Dollars ($100.00) (the “Special Payment”). The Special Payment, less all applicable
payroll withholdings, shall be made within thirty (30) days after this Agreement becomes effective.

8. General Release of Claims. To the fullest extent permitted by applicable laws, Brown
hereby generally, irrevocably and unconditionally releases and forever discharges and covenants not
to sue the Company and all of its affiliated entities and all of its and their current and/or
former employees, officers, directors, trustees, representatives, agents, attorneys, employee
benefit plans and their fiduciaries and administrators, and all persons acting by, through, or
under or in concert with any of them, both individually and in their representative capacities
(collectively, including without limitation the Company, the “Company Released Parties”) from any
and all claims, demands, liabilities, obligations, injuries, actions or rights of action of any
nature whatsoever, (including without limitation claims for damages, attorneys’ fees, interest and
costs), whether known or unknown, disclosed or undisclosed, administrative or judicial, suspected
or unsuspected, that exist as of the date Brown signs this Agreement, including, but not limited
to: (a) any claims based upon, arising out of or in any manner connected with Brown’s employment
with the Company, the separation of Brown’s employment with the Company, and/or the Employment
Agreement; (b) all claims arising under the Age Discrimination in Employment Act of 1967, as
amended (including the Older Workers Benefit Protection Act), 29 U.S.C. § 621 et seq. (the “Age
Act”); (c) all claims arising under all other federal, state and local laws; (d) all claims based
on contract, tort, common law or other theories of recovery; and (e) all claims based upon, arising
out of or in any manner connected with any acts, events or omissions occurring on or before the
date Brown signs this Agreement. Brown and the Company acknowledge that the foregoing
release/covenant not to sue is to be construed as broadly as possible, except the foregoing
release/covenant not to sue does not release or affect (i) any rights Brown may have with respect
to any vested benefits under any of the Company’s employee benefit or stock option plans, (ii) any
of Brown’s rights under this Agreement or (iii) any rights Brown may have for indemnification of
(or insurance coverage with respect to) any third-party claim relating to Brown’s service as an
officer and/or employee of the Company. Brown has been advised by the Company that this Agreement
does not prohibit Brown from filing an administrative charge against any of the Company Released
Parties with the United States Equal Employment Opportunity Commission (“EEOC”) relating to his
employment with the Company; provided, however, Brown waives and releases, to the fullest extent
permitted by law, any and all entitlement to any form of personal relief arising from such charge
or any legal action relating to such charge. Should the EEOC, any other administrative agency or
other person bring a complaint, charge or legal action on Brown’s behalf against any of the Company
Released Parties based on any acts, events or omissions occurring on or before the date Brown signs
this Agreement, Brown hereby waives any rights to, and will not accept, any remedy obtained through
the efforts of such agency or person.

9. Return of Company Property. Brown represents and covenants (a) that on or before the later
of the Separation Date or the date this Agreement becomes effective, he will return to the Company
all property belonging to the Company, including, but not limited to, keys, access cards, credit
cards, files, equipment, business plans, financial statements, computer disks or files, documents
and/or any such other Company property in Brown’s possession or custody or under Brown’s control,
and (b) that he will not retain copies of any of the Company’s files, documents or other property,
including, without limitation, any electronically-stored data or files.

10. No Corporate Compliance Issues. Brown affirms that he is not aware of any undisclosed or
unresolved corporate compliance issues arising under any federal, state or local law or regulation
involving the Company or any of its affiliates. Brown also affirms that he has not and will not
alter, destroy, remove, or inappropriately limit access by the Company to, any of the Company’s
records, documents or electronically-stored data.

11. No Severance Benefits. Brown acknowledges and agrees that, except as expressly provided
in this Agreement, he is not entitled to any severance payments or benefits from the Company under
any plan, program or contract.

12. Age Act Advisements. Brown acknowledges : (a) the Company has advised him that his
employment with the Company was covered by the Age Act, and that by signing this Agreement, Brown
is releasing and waiving all claims he has against the Company Released Parties, including, without
limitation, all claims under the Age Act as of the date Brown signs this Agreement; (b) the Company
has advised him to consult with an attorney prior to signing this Agreement; (c) the Company has
advised him that he has up to twenty-one (21) days to consider and accept this Agreement by signing
and returning this Agreement to the Company’s Chief Executive Officer; and (d) the Company has
advised him that for a period of seven (7) days following Brown’s signing of this Agreement, Brown
may revoke this Agreement by written notice to the Company’s Chief Executive Officer; this
Agreement will not become binding and enforceable until the seven-day revocation period has
expired, without Brown having exercised his revocation right. All notices to the Company hereunder
should be directed as follows: Michael T. Vea, Chief Executive Officer, Integra Bank Corporation,
21 S.E. Third Street, Evansville, Indiana 47708.

13. No Admission. This Agreement and the actions taken pursuant to this Agreement do not
constitute an admission by either party of any wrongdoing or liability, and each party expressly
denies any wrongdoing or liability.

14. Governing Law; Choice of Forum. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Indiana, without application of
conflict-of-law principles. The parties agree that any legal action relating to this Agreement
shall be commenced and maintained exclusively before any appropriate state court of record in
Vanderburgh County, Indiana, or the United States District Court for the Southern District of
Indiana, Evansville Division; further, the parties hereby irrevocably consent and submit to the
jurisdiction and venue of such courts and waive any right to challenge or object to personal
jurisdiction or venue in any action commenced or maintained in such courts relating to this
Agreement.

15. Successors and Assigns. The Company shall have the right to assign this Agreement, and
this Agreement shall inure to the benefit of, and may be enforced by, any and all successors and
assigns of the Company, including, without limitation, by asset assignment, merger, consolidation
or other corporate reorganization, and shall be binding on Brown. Brown shall not have the right
to assign this Agreement.

16. Entire Agreement. This Agreement constitutes the entire agreement of the parties with
respect to the subject matter addressed herein and supersedes any prior understandings,
negotiations or representations, oral or written, with respect to the subject matter addressed
herein; provided, however, this Agreement does not supersede or affect the Company’s continuing
rights, and Brown’s continuing obligations, under the Employment Agreement, including, without
limitation, Brown’s non-disclosure and restrictive covenant obligations (as modified herein) under
the Employment Agreement. Brown acknowledges that he is not relying on any representations,
statements, promises or inducements, whether oral or written, made by the Company, its
representatives or attorneys except as expressly stated in this Agreement.

17. Modification. This Agreement may not be amended, supplemented, or modified except by a
written document signed by both Brown and the Chief Executive Officer of the Company.

18. Severability. The provisions of this Agreement are severable, and the invalidity of any
one or more provisions shall not affect or limit the enforceability of the remaining provisions.
Should any covenant or provision be held unenforceable for any reason, then such covenant or
provision shall be enforced to the maximum extent permitted by law.

19. Construction. This Agreement is the result of negotiations between the parties, and
neither party shall be deemed to be the drafter of this Agreement. The language of this Agreement
shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or
against either party. This Agreement shall be interpreted and construed without any presumption
or inference based upon or against the party causing this Agreement to be drafted.

20. Counterparts. This Agreement may be executed in one or more counterparts (or upon
separate signature pages bound together into one or more counterparts), all of which taken together
shall constitute but one agreement. Signatures transmitted by facsimile or other electronic means
shall be effective the same as original signatures for execution of this Agreement.

21. Acknowledgement. Brown acknowledges that he has read this Agreement, that he has had
ample opportunity to consult with his own attorney concerning this Agreement, and that he is
knowingly and voluntarily entering into this Agreement.

IN WITNESS WHEREOF, the Company and Brown have executed this Agreement on the dates indicated
below, intending it to become effective as set forth above.

	 	 	 
	ARCHIE M. BROWN, JR.	 	INTEGRA BANK CORPORATION
	/s/ ARCHIE M. BROWN, JR.

	 	By: /s/ MICHAEL T. VEA
	 

	 	 
	Archie M. Brown, Jr.

	 	Michael T. Vea

Chief Executive Officer
	Date: July 22, 2008

	 	Date: July 22, 2008

1

Attachment A

EQUITY AWARDS VESTED AS OF SEPARATION DATE

	 	 	Stock Options

	 	 	 	 	 	 	 	 	 
	 	 	Number of	 	 
	Grant Date	 	Vested Options	 	Exercise Price
	03/12/01

	 	 	25,000	 	 	$	23.38	 
	05/01/01

	 	 	5,000	 	 	$	23.25	 
	03/20/02

	 	 	15,000	 	 	$	19.69	 
	06/18/03

	 	 	16,432	 	 	$	17.00	 
	05/19/04

	 	 	14,732	 	 	$	20.42	 
	05/10/05

	 	 	11,363	 	 	$	21.66	 
	05/08/06

	 	 	9,000	 	 	$	22.90	 

	 	 	Stock Appreciation Rights

	 	 	 	 	 	 	 	 	 
	 	 	Number of
	Grant Date	 	Vested SARs	 	Base Price
	05/22/07

	 	 	3,833	 	 	$	23.30	 

	 	 	Restricted Stock

	 	 	 	None

2Filed by Bowne Pure Compliance

Exhibit 10.1

NOTE REPURCHASE AGREEMENT

THIS NOTE REPURCHASE AGREEMENT (this “Agreement”) to repurchase VaxGen, Inc. 51/2% Convertible
Senior Subordinated Notes Due April 1, 2010 is made as of July 22, 2008, by and between QVT Fund
LP, a Cayman limited partnership (“Holder”), on the one hand, and VaxGen, Inc., a Delaware
corporation (“Company”), on the other hand.

W I T N E S S E T H:

WHEREAS, the Holder is the owner and holder of that certain 51/2% Convertible Senior
Subordinated Note Due April 1, 2010 (the “Note”) identified on Schedule A hereto, issued
under an Indenture, dated as of April 5, 2005 (the “Indenture”), between the Company and U.S. Bank
National Association, as trustee (the “Trustee”);

WHEREAS, the Note, to date, has not matured; and

WHEREAS, the Holder, desiring to sell the Note, approached the Company with respect thereto,
and the Company in turn desires to repurchase the Note.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Holder and the Company hereby agree as follows:

1. Sale of Note. Subject to the terms and conditions of this Agreement, the Company
agrees to purchase from the Holder, and the Holder agree to sell to the Company, the Note
identified on Schedule A hereto, in the principal amount and for an aggregate purchase
price set forth on Schedule A hereto. The purchase and sale of the Note shall take place
at the offices of Cooley Godward Kronish, 3175 Hanover Street, Palo Alto, California 94304 at 9:00
A.M. (local time), on July 24, 2008 (which time and place are designated as the “Closing” and the
date thereof the “Settlement Date”). At the Closing, the Holder shall deliver to the Company the
Note, duly endorsed or accompanied by an assignment duly endorsed and in a form acceptable to the
Trustee, against payment of the aggregate purchase price described on Schedule A hereto
(the “Purchase Price”), by wire transfers as follows: (i) $10,000 of such Purchase Price to an
account in the care of Jesup & Lamont, pursuant to wire instructions to be provided separately to
the Company by Jesup & Lamont and (ii) the remainder of such Purchase Price, $1,370,648.15 as of
the Closing Date, to the account designated by the Holder, pursuant to wire instructions to be
provided separately to the Company by the Holder. Upon receipt by the Holder of the Purchase
Price, the Company shall become the legal and beneficial owner of the Note and of all rights and
interest therein or related thereto and to the monies due and to become due under the terms of the
Note. The Holder hereby agrees that upon receipt of the Purchase Price, the Note shall be
cancelled and the Company shall have no further obligation to the Holder thereunder.

2. Representations and Warranties of the Holder. The Holder hereby represents and
warrants to the Company with respect to the Note issued to such Holder that:

 

 

 

2.1 Ownership of Note. The Holder has, and at the Closing will have, good and marketable right, title and interest (legal and beneficial) in and to the Note, free
and clear of all liens, pledges, security interests, charges, contractual obligations, claims or
encumbrances of any kind. Upon payment for the Note in accordance with this Agreement, the Holder
will convey the Note to the Company free and clear of all liens, pledges, security interests,
charges, contractual obligations, claims or encumbrances of any kind.

2.2 Organization; Authorization. The Holder has full power and authority to enter
into this Agreement. The execution, delivery and performance by the Holder of this Agreement has
been duly authorized by all requisite action by the Holder and this Agreement constitutes a valid
and binding obligation of the Holder, enforceable against the Holder in accordance with its terms,
except as enforcement may be limited by general principles of equity and by bankruptcy, insolvency
and similar laws affecting creditors’ rights and remedies generally.

2.3 No Consent Required. No consent, authorization, approval, order, license,
certificate or permit or act of or from, or declaration or filing with, any foreign, federal,
state, local or other governmental authority or regulatory body or any court or other tribunal or
any party to any contract, agreement, instrument, lease or license to which the Holder is a party,
is required for the execution, delivery or performance by the Holder of this Agreement or any of
the other agreements, instruments and documents being or to be executed and delivered hereunder or
in connection herewith or for the consummation of the transactions contemplated hereby.

2.4 Disclosure of Information. The Holder has received all the information it
considers necessary or appropriate to determine whether to sell the Note to the Company pursuant to
this Agreement. The Holder acknowledges (i) the Company has not made any representation or
warranty, express or implied, except as set forth herein, regarding any aspect of the sale and
purchase of the Note, the operation or financial condition of the Company or the value of the Note,
(ii) that it is not relying upon the Company in making its decision to sell the Note to the Company
pursuant to this Agreement and (iii) that the Company is relying upon the truth of the
representations and warranties in this Section 2 in connection with the purchase of the Note
hereunder.

2.5 Tax Consequences. The Holder has had an opportunity to review the federal, state
and local tax consequences of the sale of the Note to the Company and the transactions contemplated
by this Agreement with its own tax advisors. The Holder is relying solely on such advisors and not
on any statements or representations of the Company.

2.6 No Conflict. Neither the execution and delivery of this Agreement or the
consummation of any of the transactions contemplated hereby nor compliance with or fulfillment of
the terms, conditions and provisions hereof or thereof will conflict with, result in a breach of
the terms, conditions or provisions of, or constitute a default (with or without notice or lapse of
time, or both), or an event creating rights of acceleration, termination or cancellation or a loss
of rights under (i) any material note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to which the Holder is a party or
by which the Holder or any of its properties is bound, (ii) any judgment or decree
applicable to, or affecting, the Holder or (iii) any statute, law or rule to which the Holder
is subject.

 

-2-

 

2.7 No Solicitation. The Holder has made no general solicitation in connection with
the sale of the Note, acknowledges that it independently approached the Company regarding the
transactions contemplated hereby and that the Company did not initiate or attempt to initiate the
transactions contemplated hereby.

3. Representations and Warranties of the Company. The Company hereby represents and
warrants to the Holder that:

3.1 Organization; Authorization. The Company has full power and authority to enter
into this Agreement. The execution, delivery and performance by the Company of this Agreement has
been duly authorized by all requisite action by the Company and this Agreement constitutes a valid
and binding obligation of the Company, enforceable against the Company in accordance with its
terms, except as enforcement may be limited by general principles of equity and by bankruptcy,
insolvency and similar laws affecting creditors’ rights and remedies generally.

3.2 No Consent Required. No consent, authorization, approval, order, license,
certificate or permit or act of or from, or declaration or filing with, any foreign, federal,
state, local or other governmental authority or regulatory body or any court or other tribunal or
any party to any contract, agreement, instrument, lease or license to which the Company is a party,
is required for the execution, delivery or performance by the Company of this Agreement or any of
the other agreements, instruments and documents being or to be executed and delivered hereunder or
in connection herewith or for the consummation of the transactions contemplated hereby.

3.3 No Conflict. Neither the execution and delivery of this Agreement or the
consummation of any of the transactions contemplated hereby nor compliance with or fulfillment of
the terms, conditions and provisions hereof or thereof will conflict with, result in a breach of
the terms, conditions or provisions of, or constitute a default (with or without notice or lapse of
time, or both), or an event creating rights of acceleration, termination or cancellation or a loss
of rights under (i) any material note, instrument, agreement, mortgage, lease, license, franchise,
permit or other authorization, right, restriction or obligation to which the Company is a party or
by which the Company or any of its properties is bound, (ii) any judgment or decree applicable to,
or affecting, the Company or (iii) any statute, law or rule to which the Company is subject.

3.4 No Litigation. There is no action, suit, proceeding, judgment, claim or
investigation pending or, to the knowledge of the Company, threatened against the Company which
could reasonably be expected in any manner to challenge or seek to prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement.

4. Securities Act; Transfer Restrictions. The Company hereby acknowledges that the
(i) securities are not registered pursuant to the Securities Act of 1933, as amended, and (ii) the Note
and the common stock underlying the Note may only be disposed of in compliance
with Federal and State securities laws.

 

-3-

 

5. Miscellaneous.

5.1 Governing Law. This Agreement shall be governed by and construed under the laws
of the State of New York, without regard to its choice of law provisions. The parties hereto
hereby agree that any action brought under this Agreement or related to the transactions
contemplated hereby shall be brought in a Federal or State court located in the County of San
Francisco in the State of California.

5.2 Counterparts. This Agreement may be executed in two or more counterparts and by
facsimile or electronic signature, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

5.3 Publicity. The Holder will use reasonable commercial efforts to keep the terms
and existence of this transaction confidential, provided that the Holder may share the details of
this transaction in confidence with its attorneys, investors and financial and tax advisors, and
may advise other potential purchasers of the Note that the Note has been repurchased by the
Company. The Holder shall not be prohibited from referring communications with any other party
regarding the transactions contemplated hereby to the Company.

5.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.

5.5 Notices. All notices and other communications given or made pursuant hereto shall
be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed facsimile if sent during the normal business hours of the
recipient; if not, then on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid or (iv) one (1) day after
deposit with a nationally-recognized overnight courier, specifying next-day delivery, with written
verification of receipt. All communications shall be sent to the respective parties at the
addresses set forth on the signature pages attached hereto (or at such other addresses as shall be
specified by notice given in accordance with this Section 5.5).

5.6 Amendment and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of Holder and
the Company.

5.7 Further Assurances. Each party hereby agrees to execute any additional documents
and take any additional actions as may be reasonably necessary to carry out the terms of this
Agreement.

 

-4-

 

5.8 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from this Agreement
and the balance of this Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.

5.9 Entire Agreement. This Agreement and the documents referred to herein constitute
the entire agreement among the parties and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as specifically set forth herein
or therein.

[signature page follows]

 

-5-

 

IN WITNESS WHEREOF, the Holder and the Company have executed this Agreement effective as of
the date and year first above written.

	 	 	 	 	 
	QVT FUND LP,	 	 
	BY ITS GENERAL PARTNER,	 	 
	QVT ASSOCIATES GP LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Peter Bonney	 	 
	 

	 	 	 	 
	 

	 	Name: Peter Bonney	 	 
	 

	 	Title: Authorized Signatory	 	 
	 
	 	 	 	 
	Address for notices:	 	 
	 
	 	 	 	 
	C/O QVT FINANCIAL LP	 	 
	1177 Avenue of the Americas	 	 
	New York, NY 10036	 	 
	 
	 	 	 	 
	Phone No: (212) 705-8800
	 	 
	Facsimile No.: (212) 705-8801	 	 
	 
	 	 	 	 
	VAXGEN, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ James P. Panek	 	 
	 

	 	 	 	 
	 

	 	Name: James P. Panek	 	 
	 

	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 
	Address for notices:	 	 
	 
	 	 	 	 
	VaxGen, Inc.	 	 
	349 Oyster Point Boulevard	 	 
	South San Francisco, CA 94080	 	 
	Attn: Mr. James Panek	 	 
	Facsimile No.: (650) 624-4785	 	 

 

-6-

 

SCHEDULE A

			
	Title of Securities:	 	5 1/2% Convertible Senior Subordinated Notes due April 1 2010 (the “Notes”)

			
	Principal Amount of Notes:	 	$1,649,000

			
	Purchase Price:	 	$1,352,180.00 ($820 for each $1,000 principal amount of Notes), plus accrued and
unpaid interest thereon to the Settlement Date.

			
	Accrued Interest:	 	$28,468.15 plus an additional $251.9306 per day in the event that the Settlement
Date is extended to a later date by mutual agreement of the parties.

			
	Aggregate Purchase Price:	 	$1,380,648.15 plus an additional $251.9306 per day in the event that the
Settlement Date is extended to a later date by mutual agreement of the parties.

			
	Settlement Date:	 	July 24, 2008

 

-7-

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